Danone // 2020 Universal Registration Document

Business highlights in 2020 and outlook for 2021 3.6 Financial indicators not defined in IFRS DANONE UNIVERSAL REGISTRATION DOCUMENT 2020 56 3.6 FINANCIAL INDICATORS NOT DEFINED IN IFRS Like-for-like changes in sales, recurring operating income and recurring operating margin reflect Danone’s organic performance and essentially exclude the impact of: • changes in consolidation scope, with indicators related to a given fiscal year calculated on the basis of previous-year scope and, since January 1 st , 2019, previous-year and current-year scope excluding Argentinian entities; • changes in applicable accounting principles; • changes in exchange rates with both previous-year and cur- rent-year indicators calculated using the same exchange rates (the exchange rate used is a projected annual rate determined by Danone for the current year and applied to both previous and current years). Recurring operating income is defined as Danone’s operating income excluding Other operating income and expenses. Other operating income and expenses comprise items that, because of their significant or unusual nature, cannot be viewed as inherent to Danone’s recurring activity and have limited predictive value, thus distorting the assessment of its recurring operating performance and its evolution. These mainly include: • capital gains and losses on disposals of fully consolidated com- panies; • impairment charges on intangible assetswith indefinite useful lives; • costs related to strategic restructuring or transformation plans; • costs related to major external growth transactions; • costs related to major crisis and major litigations; • in connection with of IFRS 3 (Revised) and IAS 27 (Revised) re- lating to business combinations, (i) acquisition costs related to business combinations, (ii) revaluation profit or loss accounted for following a loss of control, and (iii) changes in earn-outs relating to business combinations and subsequent to acquisition date. Recurring operating margin is defined as Recurring operating income over Sales ratio. Other non-recurring financial income and expense corresponds to financial income and expense items that, in view of their significant or unusual nature, cannot be considered as inherent to Danone’s recurring financial management. These mainly include changes in value of non-consolidated interests. Non-recurring income tax corresponds to income tax on non-recurring items as well as tax income and expense items that, in view of their significant or unusual nature, cannot be considered as inherent to Danone’s recurring performance. Recurringeffective tax rate measures the effective tax rate of Danone’s recurring performance and is computed as the ratio income tax related to recurring items over recurring net income before tax. Non-recurring results from associates include items that, because of their significant or unusual nature, cannot be viewed as inherent to the recurring activity of those companies and thus distort the assessment of their recurring performance and its evolution. These mainly include (i) capital gains and losses on disposal and impair- ment of Investments in associates, and (ii) non-recurring items, as defined by Danone, included in the net income from associates. Recurring net income (or Recurring net income – Group Share) corresponds to the Group share of the consolidated Recurring net income. The Recurring net income excludes items that, because of their significant or unusual nature, cannot be viewed as inherent to Danone’s recurring activity and have limited predictive value, thus distorting the assessment of its recurring performance and its evolution. Such non-recurring income and expenses correspond to Other operating income and expenses, Other non-recurring financial income and expenses, Non-recurring income tax, and Non-recurring income from associates. Such income and expenses, excluded from Net income, represent Non-recurring net income. Recurring EPS (or Recurring net income – Group Share, per share after dilution) is defined as the ratio of Recurring net income adjusted for hybrid financing over Diluted number of shares. In compliance with IFRS, income used to calculate EPS is adjusted for the coupon related to the hybrid financing accrued for the period and presented net of tax. Free cash-flow represents cash flows provided or used by operating activities less capital expenditure net of disposals and, in connection with IFRS 3 (Revised) relating to business combinations, excluding (i) acquisition costs related to business combinations, and (ii) earn- outs related to business combinations and paid subsequently to acquisition date. Net financial debt represents the net debt portion bearing interest. It corresponds to current and non-current financial debt (i) excluding Liabilities related to put options granted to non-controlling interests and (ii) net of Cash and cash equivalents, Short term investments and Derivatives – assets managing net debt. 3.7 DOCUMENTS AVAILABLE TO THE PUBLIC The by-laws, the minutes of Shareholders’ Meetings, reports of the Statutory auditors, and other corporate documentsmay be consulted at the Company’s registered office. Moreover, historical financial information and certain information regarding the organization and businesses of the Company and its subsidiaries are available on Danone’s website www.danone.com (section Regulated information).