The consolidated financial statements of L’Oréal and its subsidiaries (“the Group”) published in 2021, have been prepared in accordance with International Financial Reporting Standards (IFRS), as adopted in the European Union as of 31 December 2021.
On 9 February 2022, the Board of Directors closed the consolidated financial statements at 31 December 2021. The financial statements will not become final until they have been approved by the Annual General Meeting of shareholders to be held on 21 April 2022.
The Group did not anticipate any standards or interpretations not mandatorily applicable in 2021.
The Group is currently reviewing a decision of the IFRS IC:
In April 2021, a decision relating to IAS 38 “Intangible Assets” was published. It addressed the matter of how to account for the costs of configuring or customising software accessed via the cloud under a “Software as a service” (SaaS) agreement. At 31 December 2021, this analysis has not yet been finalised due to the operational complexity of implementing this decision.
The method traditionally used to recognise obligations arising from defined benefit pension schemes involved attributing the rights on a straight-line basis over the entire career of the beneficiaries.
The IFRS IC recommended adjusting this method for defined benefit schemes that had the following characteristics:
For this type of scheme, the decision published in late May 2021 states that rights vested over the period prior to retirement age should be attributed on a straight-line basis by limiting its duration to the specified number of years of service at which rights are capped.
Impact at Group level is focused on France and stands at €137. 4 million gross and €102.2 million after tax, recorded as an increase in shareholders’ equity. The impact on the income statement for the period is marginal.
At 31 December 2020, the Group completed its analysis of IFRS Interpretation Committee (IC) decision dated 26 November 2019. This decision relates to the duration of certain leases (indefinite term or short initial contractual term which is automatically renewable) as well as to the depreciation period for fixtures and fittings that are inseparable from the leased asset. This decision does not have a significant impact at the Group level.
The Group applied the amendment to IFRS 16, adopted by the European Union on 12 October 2020 and on 31 March 2021, relating to Covid-19-related rent relief reducing lease payments due on or before 30 June 2022. The amendments allow changes in terms of rent relief to be recognized immediately in income rather than spread over the term of the contract.
The impact is not material at the Group level.
