Vilmorin & Cie - Annual report 2017-2018

Financial INFORMATION 5 ANNUAL REPORT Vilmorin & Cie 164 2017-2018 2.2.3 Analysis by function 17-18 16-17 Administration 1,058 1,017 Research 1,945 1,899 Agronomic production and factory 1,803 1,784 Sales and marketing 1,847 1,860 Total 6,653 6,560 Note 7: Provisions for the depreciation, amortization and impairment of tangible and intangible fixed assets In millions of euros 17-18 16-17 Provisions for the amortization and impairment of intangible fixed assets > Development programs (1) -155.0 -149.3 > Other intangible fixed assets -13.1 -14.3 Sub-total -168.1 -163.6 Provisions for the depreciation and impairment of tangible fixed assets -31.4 -32.2 Total -199.5 -195.8 (1) The increase in provisions concerning development costs is an indication of the intensification of investment in research. Note 8: Research and development costs 1- Evolution of costs In millions of euros 17-18 16-17 Development programs activated during the fiscal year 171.3 164.8 Provisions for the amortization of development programs recorded as fixed assets -155.0 -149.3 Total research and development costs -241.4 -240.2 Tax relief for research 30.7 32.3 Net costs for the year -194.4 -192.4 Vilmorin & Cie records the cost of its development programs in the conditions set out in Note 1 paragraph 9 of the “Accounting methods and principles in IFRS standards.” Research and development costs which fail to meet these conditions are recorded directly as charges for the fiscal year. 2- Further information 2.1 - Net increase in activated research and development costs In millions of euros 17-18 16-17 Costs identified and recorded as intangible fixed assets (cf. Note 15) 171.3 164.8 Provisions for amortization -155.0 -149.3 Net increase in activated research and development costs 16.3 15.5 It is important to note that out of a total investment in research and development of 241.4 million euros, only 171.3 million euros met the criteria set out in Note 1 paragraph 9 of the “Accounting methods and principles in IFRS standards.” Research and development costs increased by 1.2 million euros. The increase in activated costs is due to the intensification of development programs. 2.2 - Effect of activation on the cash flow statement In millions of euros 17-18 16-17 Effect on the income for the period 16.3 15.5 Effect on amortization and depreciation 155.0 149.3 Effect on the cash flow 171.3 164.8 Effect on the investment flows -171.3 -164.8 Total - - 3- Treatment of French tax relief on research Since the implementation of the French system for tax relief on research (CIR) based only on a volume percentage of eligible research expenses made, this tax relief is assimilated to a public subsidy since it is used to fund part of the capitalized development expenses, and its accounting treatment comes within the scope of standard IAS 20. Therefore, this tax relief should be allocated between the part concerning development costs which, in application of standard IAS 38, have been recorded as assets, and the part concerning other expenditure, recorded in the income statement. In terms of presentation, this tax relief on research, recorded as a subsidy and deducted from the research costs in the income statement, must be recorded as immediate income, as far as the part concerning expenses recorded in the charges is concerned; the part concerning capitalized expenses must be recorded as deferred income that is to be amortized at the same rhythm as the amortization of the associated assets. 5.1. Consolidated Financial Statements