Danone // 2020 Universal Registration Document

Business highlights in 2020 and outlook for 2021 3.4 Balance sheet and financial security review DANONE UNIVERSAL REGISTRATION DOCUMENT 2020 54 Net debt/EBITDA and Return on invested capital (ROIC) Danone tracks these ratios on a yearly basis. Net debt/EBITDA The net debt/EBITDA ratio corresponds to the ratio of net debt to operating income restated for depreciation, amortization and impairment of tangible and intangible assets. The ratio for 2020 fiscal year was 2.8x: (in € millions except ratio) 2019 2020 Net debt as of December 31 12,819 11,941 Operating income 3,237 2,798 Depreciation, amortization and impairment of property, plant and equipment and intangible assets 1,386 1,452 EBITDA of the year 4,623 4,250 Net debt/EBITDA of the year 2.8x 2.8x ROIC ROIC is the ratio of net operating income in the current year to average capital invested in the current and prior years. Invested capital = goodwill and other tangible and intangible assets + investments in non-consolidated companies and other financial investments + assets held for sale net of liabilities + working capital requirements – provisions and other net liabilities. The ROIC stood at 8.5% in 2020: (in € millions except percentage) January 1, 2019 (a) 2019 2020 Recurring operating income 3,846 3,317 Recurring income tax rate 27.5% 27.5% Tax on recurring operating income (1,058) (914) Recurring income from associates 98 85 Operating income 2,887 2,489 Intangible assets 24,445 24,803 23,037 Property, plant and equipment 6,842 6,844 6,572 Goodwill and other tangible and intangible assets 31,288 31,647 29,609 Investments in associates 2,104 2,055 915 Other financial investments 278 482 569 Short-term loans 13 6 40 Investments in non-consolidated companies and other financial investments 2,394 2,542 1,524 Assets held for sale net of liabilities − 43 851 Deferred taxes net of deferred tax assets (777) (766) (689) Provisions for retirement and other long-term benefits (868) (1,091) (1,220) Other non-current provisions and liabilities (1,079) (1,178) (1,104) Provisions and other net liabilities (2,724) (3,034) (3,013) Working capital (1,162) (1,000) (733) Invested capital of the year 29,796 30,197 28,239 Average invested capital 29,997 29,218 ROIC 9.6% 8.5% (a) After the application of IFRIC 23 and IFRS 16.