With respect to production, the Groupe acts as “Agent” only on contracts for which it only performs production supervision that is wholly done by an external third party. If the agency incorporates or significantly transforms the work done by a third party, the Groupe considers that this involves a single performance obligation for which it acts as “Principal.”
When the Groupe acts as “Principal,” the revenue is recognized for the gross amount invoiced to the client. When the Groupe acts as “Agent,” revenue is recognized net of the costs pass through to clients, which means that revenue recorded is solely comprised of fees or commission.
In any case, travel expenses reimbursed by clients (transport, hotels, meals, etc.) are always recognized in revenue.
Revenue recognition period
Almost all of the Groupe’s revenue is recognized over time because the Groupe’s services benefit the client as they are performed or generate an asset with no alternative use and for which the Groupe is entitled to payment for the work done to date in the event of termination by the client.
For fixed-price projects, revenue is recognized over time on the basis of costs incurred usually based on the hours worked and direct external costs incurred on the project.
For retainer arrangements with a dedicated team, generally involving annual contracts, the Groupe considers that its performance obligation is to be ready at all times to make resources available to our client. In this instance, revenue is recognized on a straight-line basis over the term of the contract.
For commission-based media contracts, we recognize revenue when the media is broadcast. Revenue related to the sale of data is recognized when control of the data is transferred from the Groupe to the client, i.e. upon delivery.
Contract modifications
On occasion, the client may ask for changes to the scope of the services in the course of the contract. These changes are generally negotiated as new contracts encompassing the additional needs with the related compensation.
The breakdown of revenue
The Groupe supplies a range of integrated communication services for its clients that combine all the Groupe’s areas of expertise. The Groupe enhanced its geographic approach, which best presents the manner in which revenue is affected by economic factors.
The breakdown of revenue by geographic region is similar to previous financial years and is presented in the operating segment information (see Note 31).
Practical expedients adopted
The Groupe decided to apply practical expedients regarding outstanding performance obligations and not to disclose information when the performance obligation is part of a contract that has an original expected duration of one year or less and those for which the Groupe is entitled to payment for the hours worked to date.
The amounts on the remaining performance obligations on other types of contracts than those listed above are not material and are not presented in the notes.
Net revenue is calculated as revenue less pass-through costs.
Whether the Groupe acts as “Agent” or “Principal,” the Groupe incurs third-party costs on behalf of clients, directly re-invoiced to the clients. These costs mainly relate to production and media activities, as well as out-of-pocket expenses (especially travel costs) and are recorded into operational costs. As these items can be re-invoiced to clients, they are not included in the scope of assessment of operations, then the “net revenue” indicator used to measure the Groupe’s operational performance excludes the re-invoicing of such costs.
The Publicis stock option and the free share plans for the Company’s executives, employees and consultants are equity-settled share-based plans, for which the Groupe does not provide liquidity.
The fair value of the free shares granted is recognized in personnel costs, with a corresponding increase in equity, over the vesting period of the awards. This value is determined by an independent expert and corresponds to:
The amount recognized as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognized is based on the actual number of awards that meet the service and non-market performance conditions at the vesting date. By way of exception, where the plan includes market conditions, the Monte-Carlo method is used.
The operating margin is equal to revenue after deducting personnel costs, freelancers costs and other operating costs (excluding other non-current income and expenses as defined below).
