Vilmorin & Cie - Annual report 2017-2018

Financial INFORMATION 5 ANNUAL REPORT Vilmorin & Cie 152 2017-2018 Technical feasibility of the projects is shown. There is both an intention and capacity to see the projects through to the end, and use or sell any products that result from these projects. There is a potential market for the production generated by these projects, or their internal utility has been demonstrated. The resources necessary to run the projects right up to their conclusion are available. Vilmorin & Cie considers that it is capable of satisfying these conditions as described above. As a consequence, its development projects are recorded as fixed assets in the following conditions: Projects recorded as fixed assets correspond to work leading to the development of new products, or to industrial processes relative to Vilmorin & Cie’s business. The business field concerned is that of Vilmorin & Cie’s seed activities. Work taken into account when costing development projects recorded as fixed assets includes, in particular: Plant improvement as such, and particularly conventional breeding*, genome* analysis work on species the company does research into, molecular marking* and routine laboratory work used by breeders. Trials, tests and experiments, the production of seeds at a pilot stage, registration fees, homologation fees or fees to maintain rights on products being launched. The development of new technologies that aim to improve the performance of seeds such as: coating, pelleting, priming, etc. Intellectual property activities connected to the registration of patents, Soleau envelopes, Proprietary Variety Protection Certificates, freedom to operate studies, etc. The development of new processes or industrial pilots for the transformation of plant-based raw materials or more elaborate products, including food and ingredients. Work done before the above-described process is not taken into account in the definition of development costs (for example: transgenesis*, or the search for new genetic resources*). Moreover, only the charges that can be directly allocated to the programs concerned can be included in the calculation of the cost of projects recorded as fixed assets. Development programs recorded as fixed assets are amortized using the straight-line method over a five-year period as of the first year. 9.2 - Goodwill Goodwill represents the difference between the acquisition cost of consolidated securities and the share of Vilmorin & Cie in the fair value of their assets, liabilities and any potential liabilities that can be identified on the date of the purchase of the participation. Goodwill is subject to a value loss test at least once every year. The methodology adopted is described hereafter in Note 1 paragraph 11. Any impairment recorded is irreversible. Goodwill concerning companies consolidated under the equity method is recorded in “Equity shares.” In compliance with the standard IAS 28, the group applies the provisions of the standard IAS 39 to determine whether it is necessary to conduct an impairment test on the basis of a value loss indicator, determined according to the rules defined by standard IAS 36. If, at a later date, the recoverable value increases, a value loss write-back is recorded. 9.3 - Brands, patents, licenses The cost of these assets corresponds to: The purchasing price plus any cost that can be directly shown to be due to the preparation of the asset for its planned use, for assets acquired separately. The fair price, at acquisition date, for any assets acquired through business combinations. Any amortization should be linear over their estimated duration of use. 9.3.1 Brands Their economic life span is considered to be indefinite and consequently brands are not amortized. The classification of a brand as an asset with an unlimited life results, in particular, from the following indicators: positioning of the brand on its market in terms of volume of business and image, long-term perspectives for profitability, risk factor with regard to one-off accidents, major event occurring in the business sector, likely to leave its mark on the future of the brand, age of the brand, regular expenses on advertising and promotion. They are regularly assessed and tested using defined Cash Generating Units (CGUs). 5.1. Consolidated Financial Statements