Danone // 2020 Universal Registration Document

4 95 DANONE UNIVERSAL REGISTRATION DOCUMENT 2020 4.1 Consolidated financial statements and notes to the consolidated financial statements Note 10. Intangible assets Goodwill of the CGUs in the Waters Reporting Entity In 2020, the pandemic had a major impact on the Waters Reporting Entity’s activities, due to their significant exposure to away-from- home consumption (see Note 3.1 of the Notes to the consolidated financial statements) However, their indefinite-life intangible assets accounted for less than 4% of total consolidated intangible assets and did not result from any recent transactions. Consequently, their recoverable amount significantly exceeds their carrying amount, including after taking into account assumptions of a major and pro- longed downturn in activity due to the health crisis. This Reporting Entity’s recoverable amounts have therefore been measured on the basis of scenarios in which a return to pre-Covid activity levels only happens in the final year. These assumptions have resulted in a significant reduction in the difference between the carrying amounts and the recoverable amounts thus estimated for the CGUs in the Waters Reporting Entity without an impairment provision being required. However, for the CGUs for which these differences were lower than the value of their invested capital, Danone then carried out additional stress tests. Likewise, these even more unfavorable scenarios did not indicate any impairment. Goodwill of the Global Specialized Nutrition CGU and the EDP Noram CGU As of December 31, 2020, the recoverable amount exceeded the carrying amount by the following amounts: (in € billions) Global Specialized Nutrition 22.5 EDP Noram 3.8 Sensitivity analysis for the key value in use assumptions Year ended December 31 (in € billions, except percentage) Impact on recoverable amount Annual decrease tomake recoverable amount equal carrying amount Sales – 50bps decrease (a) Global Specialized Nutrition (1.9) 7.8% EDP Noram (0.6) 3.7% Recurring operating margin – 100bps decrease (b) Global Specialized Nutrition (1.9) 11.5% EDP Noram (0.9) 4.3% Long-term growth rate – 50bps decrease Global Specialized Nutrition (2.5) EDP Noram (0.9) Discount rate – 50bps increase Global Specialized Nutrition (3.6) EDP Noram (1.2) (a) Decrease applied, each year, to the assumed growth in sales, including the final year, on the basis of the 2021 projections. (b) Decrease applied, each year, to the assumed recurring operating margin, including the final year, on the basis of the 2021 projections. Goodwill of the other CGUs in the Specialized Nutrition and EDP Reporting Entities As of December 31, 2020, (i) the CGUs in the EDP Reporting Entity other than EDPNoramand (ii) theHappy Family CGU in the Specialized Nutrition Reporting Entity represented in total 17% of the carrying amount of the Group’s goodwill and comprised more than 20 CGUs located in diverse geographical areas and in different countries. Following the goodwill impairment test of these CGUs, the Group recognized an impairment provision in respect of two CGUs in the EDP Reporting Entity totaling €32 million. As of December 31, 2019, following the goodwill impairment test of these CGUs, the Group did not recognize any impairment provision. Brands with indefinite useful lives The Group’s main brands are Nutricia , International Delight , Silk and Alpro . As of December 31, 2020, they represented more than 50% of the carrying amount of the Group’s brands with indefinite useful lives. The other brands are spread over all Reporting Entities and located in diverse geographical areas and different countries and none represented individually more than 8% of the carrying amount of the Group’s brands with indefinite useful lives as of December 31, 2020. Impairment review of the main brands with indefinite useful lives As of December 31, 2020, the Group tested the value of the Nutricia , International Delight , Silk and Alpro brands in accordance with the methodology and the valuation model described above and on the basis of assumptions based on those of the groups of CGUs concerned. These tests did not result in the recognition of any impairment provisions. In addition, analysis of the sensitivity of the value in use to the key assumptions was carried out on each of these main brands. The key assumptions involved in the valuation model used by the Group are