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4.1 CONSOLIDATED FINANCIAL STATEMENTS AND NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 4. Associates
DANONE
REGISTRATION DOCUMENT 2015
90
Main financial information
2014
2015
(in € millions)
Financial statements
for the half-year
ended June 30
Financial statements
for the year
ended December 31
Financial statements
for the half-year ended
June 30
Non-current assets
(a)
3,136
3,549
3,971
Current assets
(a)
2,324
2,698
3,252
Equity
(a)
2,742
3,250
3,782
Non-current liabilities
(a)
809
1,093
1,183
Current liabilities
(a)
1,910
1,904
2,258
Sales
(a)
3,056
6,111
3,683
Net income
(a)
145
329
206
Other comprehensive income
(a)
21
17
(15)
(a) Published financial statements prepared in accordance with IFRS. Income statement items have been translated into euros at the average exchange rate for
the reporting period. Balance sheet items and the market capitalization have been translated at the exchange rate ruling at the end of the reporting period.
Measurement review as of December 31, 2015
The Group noted a significant fall in the share price of the Mengniu
group as compared with the average purchase price paid by the
Group for its shareholding. This resulted from a financial perfor-
mance in 2015 that was below expectations and the general decline
in the Chinese stock market, said decline constituting an indication
of impairment.
As of December 31, 2015, the carrying amount of the Group's stake
in Mengniu (€843 million) was the subject of an impairment test
based on cash flow forecasts.
The assumptions used as regards the discount rate and long-term
growth rate were 9.2% and 3.0% respectively.
Since the value in use calculated on these bases was higher than
the stake's carrying amount, no impairment provision was reco-
gnized as of December 31, 2015. The sensitivity analysis on the key
assumptions involved in the calculation of this value in use, taken
individually, gives the following results:
•
a 200 bps fall, applied each year to the assumptions concerning
growth in net sales over five years, would not result in the reco-
gnition of an impairment provision;
•
a 100 bps fall, applied each year to the assumptions concerning
trading operating margin over five years, would not result in the
recognition of an impairment provision;
•
a 100 bps fall in the long-term growth rate would not result in
the recognition of an impairment provision;
•
a 100 bps increase in the discount rate would not result in the
recognition of an impairment provision.
Measurement review as of December 31, 2014
The Group noted a fall in the share price of the Mengniu group as
compared with the average purchase price paid by the Group for
its shareholding. However, the Group did not consider this fall to
be long-term or material with regard to (i) the price as of Decem-
ber 31, 2014, its volatility and recent movements, (ii) the outlook for
valuations of the shares as published by the main brokers, and (iii)
qualitative information available on Mengniu's performance. The
Group therefore concluded that there was no indication that these
shares were to be impaired as of December 31, 2014.
Yashili (Medical Nutrition, China)
This shareholding, acquired under the terms of its strategic agreement
with Mengniu, is recognized within Investments in associates. As of
December 31, 2015, Danone held 25% of Yashili's share capital, had
significant influence over its operating policies and was involved in
its governance, in particular through its right to appoint a member
of the board of directors and it proposed the candidate for appoint-
ment as Chief Executive Officer. Consequently, its shareholding is
recognized within investments in associates.
Measurement review as of December 31, 2015
The Group noted a significant fall in Yashili's share price as com-
pared with the average purchase price paid by the Group for its
shareholding. This resulted from a financial performance in 2015
that was below expectations and the general decline in the Chinese
stock market, said decline constituting an indication of impairment.
As of December 31, 2015, the carrying amount of the Group's stake
in Yashili (€502 million) was the subject of an impairment test based
on cash flow forecasts.
The forecasts used reflected the results expected from strategic
changes decided on by Yashili management and implemented gra-
dually since the end of 2015,
i.e.
dynamic sales growth during the
period from 2016 to 2020 and a significant increase in profitability.
In addition, the assumptions used as regards the discount rate and
long-term growth rate were 10.2% and 3.0% respectively.
Since the value in use calculated on these bases corresponded to
the stake's carrying amount, no impairment provision was reco-
gnized as of December 31, 2015. The sensitivity analysis on the key
assumptions involved in the calculation of this value in use, taken
individually, gives the following results:
•
a 500 bps fall, applied each year to the assumptions concerning
growth in net sales over eight years, would result in the reco-
gnition of a €127 million impairment provision;
•
a 200 bps fall, applied each year to the assumptions concerning
trading operating margin over eight years, would result in the
recognition of a €88 million impairment provision;
•
a 100 bps fall in the long-term growth rate would result in the
recognition of a €41 million impairment provision;
•
a 100 bps increase in the discount rate would result in the reco-
gnition of a €66 million impairment provision.