DANONE - Registration document 2015

4.1 CONSOLIDATED FINANCIAL STATEMENTS AND NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 6.Events and transactions outside the Group's ordinary activities

DANONE

REGISTRATION DOCUMENT 2015

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Note 6.3. Savings and adaptation plan for the Group's organizations in Europe

Since 2010, the lasting downturn in the economy and consumer trends

in Europe have resulted in a significant decrease in sales in this part

of the world. Despite signs of a gradual increase in volumes, the

Fresh Dairy Products Division in Europe has experienced a decrease

in its global activity and overcapacity in the region.

On December 13, 2012, Danone announced the preparation of a cost

reduction and adaptation plan to win back its competitive edge in

order to address a lasting downturn in the economy and the consu-

mer trends in Europe. On February 19, 2013, Danone presented the

organizational part of its plan for savings and adaptation in Europe.

In addition to this project to reorganize its structure, in order to

address the overcapacity in Europe, on June 11, 2014, Danone

announced the planned closure of its sites in Casale Cremasco

(Italy), Hagenow (Germany) and Budapest (Hungary), these three

countries having been particularly badly affected by the drop in

sales. The planned closure of these three plants and the gradual

reallocation of volumes to Belgium, Poland, Germany and France

should enable the Fresh Dairy Products Division to improve the

use of its production facilities and its competitiveness in Europe.

Costs relating to this plan mainly comprise (i) costs of employee-

related measures (measures with respect to mobility, redundancy

and support for departing employees), (ii) impairment losses in

respect of property, plant and equipment and intangible assets,

and (iii) other reorganization costs (notably compensation for early

termination of contracts and consulting fees). As this plan consists

in a strategic restructuring, the costs incurred directly in connection

to the plan are accounted for as Other operating income (expense).

Costs recognized consist in costs (i) paid (ii) incurred or (iii) provisio-

ned. Provisions are recognized based on the Group's best estimate

as of the closing date of the costs to be incurred in connection with

these measures, given the information then available to the Group.

Cash flows related to initiatives that may be taken by the Group to

deploy this plan are presented in Cash flows provided by (used in)

operating activities in the consolidated statement of cash flows.

Costs and cash flows relating to this plan

Year ended December 31

(in € millions)

2014

2015

Costs

Employee-related measures

(75)

(8)

Impairment of intangible assets and property, plant and equipment

(11)

(5)

Other reorganization costs

(74)

(41)

Total

(160)

(54)

Of which, provisions as of December 31

Cash flows net of taxes

(123)

(61)

(a) Including a tax saving calculated on the basis of the applicable tax rate in the respective countries.

Note 6.4. Danone 2020 transformational plan

In order to generate strong, profitable and sustainable growth

between now and 2020, Danone has launched its “Danone 2020”

transformational plan. 2015 was a preparatory year which enabled

the foundations to be laid for the Group's transformation.

In 2015, the expenses relating to this plan concerned mainly (i) the

costs of employee-related measures (measures with respect to

internal mobility, redundancy and support for departing employees)

and (ii) other reorganization costs (notably compensation for the

early termination of property leases and consulting fees).

As this plan consists in a strategic restructuring, costs incurred

directly in connection with the plan are recognized as Other ope-

rating income (expense). Costs recognized consist of costs paid,

incurred or provisioned.

Costs relating to this plan