Danone // 2020 Universal Registration Document

DANONE UNIVERSAL REGISTRATION DOCUMENT 2020 70 4.1 Consolidated financial statements and notes to the consolidated financial statements Note 4. Fully consolidated companies and non-controlling interests • more specifically with regard to liquidity risk, Danone launched two €800 million bond issues in the first half of 2020 and, as of December 31, 2020, held a portfolio of more than €3 billion of available committed credit facilities and more than €4 billion of cash and short-term investments. In addition, as a reminder, Danone is not subject to any financial covenant; • finally, the Group did not make use of guaranteed financing and support measures granted by some states. NOTE 4. FULLY CONSOLIDATED COMPANIES AND NON-CONTROLLING INTERESTS Note 4.1. Accounting principles Fully consolidated companies The Group fully consolidates all subsidiaries over which it has the ability to exercise exclusive control, whether directly or indirectly. Exclusive control over an investee is assessed (i) by the power the Group has over said investee, (ii) whether it is exposed, or has rights, to variable returns from its relationship with the investee, and (iii) whether it uses its power over the investee to affect the amount of the Group’s returns. Full consolidation enables the recognition of all assets, liabilities and income statement items relating to the companies concerned in the Group’s consolidated financial statements, after the elimination of intercompany transactions, the portion of the net income and equity attributable to owners of the Company (Group share) being distin- guished from the portion relating to other shareholders’ interests (Non-controlling interests). Intercompany balances and all material intercompany transactions between consolidated entities (including dividends) are eliminated in the consolidated financial statements. Business combinations: acquisitions resulting in control being obtained, partial disposals resulting in control being lost The accounting treatment of acquisitions resulting in control being obtained and partial disposals resulting in control being lost is as follows: • when control is obtained, the incidental transaction costs are recognized in the income statement under the heading Other operating income (expense), and presented in the cash flow statement within cash flows from operating activities, in the year in which they are incurred. In addition, price adjustments are initially recognized at their fair value in the acquisition price and their subsequent changes in value are recognized in the income statement under the heading Other operating income (expense), and all payments relating to these adjustments are presented in the cash flow statement within cash flows from operating activities; • when control is obtained (or lost), the revaluation at its fair value of the interest previously held (or the residual interest) is recognized in the income statement under the heading (i) Other operating income (expense) when control is lost, (ii) Share of profit of associates when control is obtained of an entity pre- viously accounted for as an associate, and (iii) Other financial income (expense) when control is obtained of an entity previously accounted for as an investment in a non-consolidated company; • when control is obtained, non-controlling interests are recognized, either at their share of the fair value of the assets and liabilities of the acquired entity, or at their fair value. In the latter case, the goodwill is then increased by the portion relating to these non-controlling interests. The treatment adopted is selected on an individual basis for each acquisition. Business combinations may be recognized on a provisional basis, as the amounts allocated to the identifiable assets acquired, liabilities assumed and goodwill may be amended during a maximum period of one year from their acquisition date. Acquisitions or disposals of interests in controlled companies with no impact on control Purchases or disposals of interests in controlled companies that do not result in control being obtained or lost are recognized di- rectly in equity under the heading Retained earnings, as transfers between the Group share and the non-controlling interests’ share in the consolidated equity, with no impact on profit or loss, and the corresponding cash flows are presented within cash flows relating to financing activities. The same accounting treatment is applied to the costs associated with these transactions.