Danone // 2020 Universal Registration Document

4 121 DANONE UNIVERSAL REGISTRATION DOCUMENT 2020 4.2 Financial statements of Danone SA, the parent company Note 1. Accounting principles NOTES TO THE FINANCIAL STATEMENTS OF THE PARENT COMPANY DANONE SA The financial statements of the parent company Danone (“the Company”) for the year ended December 31, 2020 were approved by Danone’s Board of Directors on February 18, 2021 and will be submitted for approval to the Shareholders’ Meeting on April 29, 2021. Danone and its consolidated subsidiaries constitute “the Group”. Unless indicated otherwise, amounts are expressed in millions of euros and rounded to the nearest million. Generally speaking, the values presented in the financial statements of the parent company Danone and in the Notes to the financial statements of the parent company Danone are rounded to the nearest unit. Consequently, the sum of the rounded amounts may differ, albeit to an insignificant extent, from the reported total. In addition, ratios and variances are calculated on the basis of the underlying amounts and not on the basis of the rounded amounts. Contents GENERAL INFORMATION: ACCOUNTING PRINCIPLES AND HIGHLIGHTS OF THE YEAR Note 1. Accounting principles 121 Note 2. H ighlights of the year 123 INCOME STATEMENT ITEMS Note 3. Operating income 123 Note 4. P ersonnel costs and compensation of the members of the management bodies and the Board of Directors 123 Note 5. O ther operating expense 124 Note 6. N et financial income (expense) 124 Note 7. N et non-recurring income (expense) 124 Note 8. Income tax 125 BALANCE SHEET ITEMS – ASSETS Note 9. Financial assets 126 Note 10. S hort-term loans and receivables 128 Note 11. Marketable securities 128 BALANCE SHEET ITEMS – EQUITY AND LIABILITIES Note 12. Equity 128 Note 13. P rovisions for risks and charges 129 Note 14. B onds, Other equity and Other financial debt 129 Note 15. Other liabilities 131 OTHER INFORMATION Note 16. Net debt 132 Note 17. P ost-employment benefit commitments and commitments to management bodies and to the Board of Directors 132 Note 18. O ff-balance sheet commitments 133 Note 19. Workforce 134 Note 20. R elated party transactions 134 Note 21. S ummary of shares held in portfolio 134 Note 22. R esults and other significant information relating to the last five years 135 Note 23. Subsequent events 135 NOTE 1. ACCOUNTING PRINCIPLES The Company’s financial statements are prepared in accordance with French statutory and regulatory provisions and generally ac- cepted accounting principles. The general rules for drawing up and presenting annual financial statements comply with ANC regulation 2018-01. The main accounting methods used are detailed hereafter. Intangible assets and property, plant and equipment Intangible assets and property, plant and equipment are valued at cost of acquisition (including acquisition-related costs) and are amortized or depreciated on a straight-line basis over the estimated useful lives as follows: Buildings 15 to 20 years Fixtures and fittings 8 to 12 years Other property, plant and equipment 4 to 10 years Software 1 to 10 years Financial assets Financial assets comprise Equity interests and Other financial assets. Equity interests are shares in companies, the long-term holding of which is deemed to be useful for the Company’s activity, notably because it enables the Company to exercise influence on or control over the issuing company. Investments that do not meet this defi- nition are classified as Other financial assets. Equity interests are recognized at acquisition cost, including acquisition-related costs, which are amortized over five years as of the date of acquisition. For tax purposes, these assets are subject to accelerated tax amortization rates. An impairment provision is recognized when the recoverable amount of Equity interests is below their carrying amount. Recoverable amount is determined using various criteria including: • market value; • value in use based on forecast discounted cash flows; • revalued equity. Assumptions, estimates or appraisals used to determine the re- coverable amount are made on the basis of available information and conditions at the end of the financial period presented, which may differ from the reality, particularly in an economically and fi- nancially volatile context. Impairment provisions are recognized as Other financial income (expense), with the exception of reversals of impairment in connection with disposals of equity interests, which are recognized as Net non-recurring income (expense). Gains or losses on disposals of equity interests are recognized as Net non-recurring income (expense). Other financial assets consist mainly of a portion of the DANONE treasury shares held in connection with the authorizations given by the Shareholders’ Meeting (see hereinafter) and long-term loans and receivables granted by the Company.