Danone // 2020 Universal Registration Document

DANONE UNIVERSAL REGISTRATION DOCUMENT 2020 72 4.1 Consolidated financial statements and notes to the consolidated financial statements Note 5. Associates NOTE 5. ASSOCIATES Note 5.1. Accounting principles Accounting treatment All companies in which the Group exercises a significant influence, directly or indirectly, are accounted for using the equity method. Under this method, the Group recognizes in the carrying amount of the shares held in the associated or jointly-controlled entity the acquisition-related cost of the shares adjusted by its proportionate share of changes in the entity’s net assets since its acquisition. Upon the acquisition of investments accounted for using the equity method, the acquisition price of the shares is allocated on a fair value basis to the identifiable assets acquired and liabilities assumed. The difference between the acquisition price and the Group’s share in the fair value of the assets acquired and liabilities assumed represents goodwill, which is added to the carrying amount of the shares. The main components of Net income of associates are: • the Group’s share of the profits or losses of its associates, cal- culated on the basis of estimates; • gains or losses on disposals of shareholdings in associates; • the revaluation reserve resulting from a loss of influence where there is no disposal of shares; • impairment of investments in associates. Impairment review The Group reviews themeasurement of its investments in associates when events or circumstances indicate that impairment is likely to have occurred. Regarding listed shares, a significant or prolonged fall in their stock price below their historical stock price constitutes an indication of impairment. An impairment provision is recognized within Share of profit of associates when the recoverable amount of the investment falls below its carrying amount. Note 5.2. Main associates in terms of net income and consolidated net assets As of December 31 2019 2020 (in € millions, except percentage) Notes Country Listing market (a) Ownership Ownership Market capitalization (a)(b) Mengniu (c) 5.7 China Hong Kong 9.8% 9.8% (d) 19,447 Yashili (e) 5.7 China Hong Kong 25.0% 25.0% 456 Yakult (f) 5.6 Japan Tokyo 6.6% – – (a) If the company is listed. (b) The amount disclosed is 100% of the company’s market capitalization. (c) INNER MONGOLIA MENGNIU DAIRY (GROUP) CO LTD. (d) Investment reclassified as assets held for sale as of December 31, 2020. (e) YASHILI INTERNATIONAL HOLDINGS LTD. (f) YAKULT HONSHA CO LTD. The Group acquired its stake in Mengniu and Yashili on the one hand and Yakult on the other hand under the terms of broader agreements, the main aim of which was operational collaboration and the development of regional categories and markets. Note 5.3. Main changes during the period 2020 fiscal year Ownership as of December 31 (in percentage) Notes Reporting entity Country Transaction date (a) 2019 2020 Main companies accounted for using the equity method for the first time during 2020 – – – – – – Main associates with changes in ownership percentage – – – – – – Main companies no longer accounted for using the equity method as of December 31 Yakult 5.6 EDP Japan October 6.6% – (a) Month in the 2020 fiscal year.