Vilmorin & Cie - Annual report 2017-2018

5 ANNUAL REPORT Vilmorin & Cie 153 2017-2018 9.3.2 Patents The duration of use of patents corresponds to their legal duration of protection. 9.3.3 Licenses The duration of use of licenses corresponds to the period during which they can be used by contract. 9.3.4 Software Depending on the field of application of the software, and taking technological obsolescence into account, the economic life varies from three to seven years. For certain specific needs, Vilmorin & Cie sometimes develops its own software applications. In such cases, the costs considered for recording them as fixed assets include: The costs of materials and services used. Salaries and other labor costs directly involved in the production of these assets. 9.4 - Germplasm Germplasm comprises all the plant material used to breed new varieties of seeds, the prerequisite of which is a collection of plants that is as wide and diversified as possible. Generally acquired by Vilmorin & Cie at a fair price and through business combinations, it is systematically worked on with a view to enriching, characterizing and maintaining it to preserve its quality and ensure it is available to the different research teams. These research teams constantly sift through this plant library to make use of the primary resources that are required for the creation of new products. Built up over the years, this genetic material has been improved as seed companies and breeding* programs have been acquired, and research partnerships have been set up. Bearing in mind that it needs to be kept permanently in good condition, regularly maintained and continually used in the process of plant breeding, Vilmorin & Cie considers that its economic life is indefinite. Consequently these assets are not amortized. In compliance with the standard IAS 36, an impairment test is conducted on germplasm to compare its recoverable value to its book value; such a test is conducted every year and each time there is any indication of value loss. Since this germplasm does not produce any independent cash flows, it is tested in the Cash Generating Unit (CGU) to which it belongs during the annual goodwill impairment test (cf. Note 1 paragraph 9.2). 10- Tangible fixed assets (IAS 16) Tangible fixed assets are recorded at their acquisition cost or, where appropriate, their production cost less depreciation and losses of value. 10.1 - Loan interests In compliance with standards IAS 16 and IAS 23R, interests on loans taken out for purposes of construction and the acquisition of tangible assets are incorporated into the cost of the assets unless they fail to meet the criteria listed in paragraph 12 of the standard IAS 23R. 10.2 - Components approach The different components of a tangible fixed asset are recorded separately when their estimated duration of use, and therefore their impairment durations, are significantly different. 10.3 - Depreciation 10.3.1 Basis for depreciation Bearing in mind their specific nature, most of Vilmorin & Cie’s industrial assets are intended to be used until the end of their life span, and as a general rule, it is not envisaged that they should be sold, which justifies the fact that there is no residual value for these fixed assets. 10.3.2 Depreciation method Tangible fixed assets are depreciated using the straight-line method in the income statement over the estimated duration of use for each component. 10.3.3 Duration of depreciation Depreciation is calculated according to the estimated durations of use for the following assets, reviewed every year: Land: not depreciated Landscaping: 10 to 20 years Constructions: 10 to 40 years (1) Specialized complex installations: 5 to 10 years Machines, industrial equipment: 3 to 10 years Office equipment: 3 to 10 years Other tangible fixed assets: 3 to 10 years 10.3.4 Presentation in the income statement Amortization, depreciation and impairment are recorded in the income statement in accordance with the purpose of the fixed asset (cost of sales, commercial expenses, research costs, overheads and administrative costs, etc.). (1) 10 to 20 years for light constructions, 20 to 40 years for more robust constructions. 5.1. Consolidated Financial Statements Financial INFORMATION