The 2025 annual financial statements of L’Oréal SA have been prepared in accordance with French law and regulations, as set out in Regulation ANC 2014-03 (French Chart of Accounts) as amended by Regulation ANC 2022-06 and generally accepted accounting principles and basic assumptions designed to provide a true and fair view of the Company:
Items recorded in the financial statements are valued using the historical cost method, except for fixed assets that have been revalued for statutory purposes.
As this new regulation applies prospectively, its provisions have no impact on financial statements for previous years. Only the information that is relevant and necessary for an understanding of the changes brought about by this new regulation has been presented in the relevant notes to the financial statements.
The main accounting methods used are described below.
Sales have mainly comprised services and technology royalties.
Expenses relating to the advertisement and promotion of products to customers and consumers are recognised as expenses for the financial year in which the advertisement or promotional initiative takes place.
Research and innovation costs are recognised in expenses in the period in which they are incurred.
Issuance costs of borrowings are expensed immediately in the financial year in which they are incurred.
Only income and expenses directly linked to a major and unusual event are recognised as non-recurring items (see note 8).
A major and unusual event is an event whose consequences can significantly influence the judgement made on the financial statements and which is not related to the entity’s normal and ongoing business. An event is considered unusual when it has not occurred in recent accounting periods and is unlikely to recur in future accounting periods.
The Company has opted for the French tax group regime. French subsidiaries included in the scope of tax consolidation recognise an income tax charge in their own accounts on the basis of their own taxable profits and losses.
L’Oréal, as the parent company of the tax group, recognises as tax income the difference between the aggregate tax charges recognised by the subsidiaries and the tax due on the basis of consolidated taxable profit or loss of the tax group.
Established by the OECD and transposed in December 2023 in France, the Pillar 2 global tax reform aims to establish a minimum taxation of multinational groups at 15% and is applicable from the 2024 financial year (see note 9).
Intangible assets are recorded in the balance sheet at purchase cost, including acquisition costs.
Technical merger losses are allocated to the corresponding underlying assets and amortised where appropriate.
The value of newly acquired trademarks is calculated based on a multi-criteria approach taking into consideration their reputation and their future contribution to profits.
In accordance with Regulation No. 2004-06 on assets, certain trademarks have been identified as amortisable regarding their estimated useful life.
Non-amortisable trademarks are tested for impairment at least once a year on the basis of the valuation model used at the time of their acquisition. An impairment is recorded where appropriate. Initial trademark registration costs are recorded as expenses.
Patents are amortised over a period ranging from 2 to 10 years.
Business goodwill is not amortised. It is impaired whenever the present value of future cash flows is less than the carrying amount. Impairment tests are conducted at least once a year, even when there is no evidence of impairment loss.
Software is amortised using the straight-line method over its probable useful life, generally between three and eight years.
Other intangible assets are usually amortised over periods not exceeding 20 years.
