BIC - 2020 Universal Registration Document

FINANCIAL STATEMENTS

Consolidated financial statements

The goodwill on Rocketbook is allocated to the cash-generating unit linked to the distribution of the Core and Fusion notebooks, reusable notebooks used with erasable pens by Rocketbook. As every year, as of June 30, 2020, the Group performed annual impairment tests on these goodwill amounts. The goodwill impairment test methodology is based on a comparison between the recoverable amount of each of the Group’s cash-generating units and the corresponding assets’ net book value (including goodwill). Such recoverable amounts correspond to the value in use and are determined using discounted future cash flow projections over a maximum of five years and a terminal value using the perpetual annuity method, including notably the following: the discount rate before taxes used is the weighted average ● cost of capital. Particular attention has been paid to the analysis of the main market items used for the calculation of the discount rates; the perpetual growth rates were determined based on ● external (inflation rate) and internal (business growth) sources. Perpetual growth rates above 2% take into account market specifics.

Regarding the test performed on Cello Pens on June 30, 2020, the recoverable amount of the CGU is lower than its net carrying amount. On this basis, as goodwill was fully impaired as December 2019, the impairment was allocated to the other assets of the CGU prorated on the basis of the carrying amount of each asset in the unit. Thus, property, plant and equipment were impaired amounting 26.8 million euros and the trademark amounting 14.9 million euros. The impairment is explained due to the lower than anticipated sales resulting from lockdown, and lower volumes than initially expected, impacting the planned costs efficiencies. In the last half of 2020, in light of Cello's unfavorable business environment, both in India and in its major export markets, the Group performed an additional impairment test on the Cello unit using the latest available long-term strategic plan, a pre-tax weighted average cost of capital (WACC) of 14.7% and a perpetual growth rate of 3.4%. This test did not lead to any additional impairment as of December 31, 2020. Considering the impairment on part of the assets on the CGU Cello assets, any negative variance of drivers (discount rate, performance and perpetual growth rates) would lead to an additional impairment of other assets. The sensitivity of the other impairment tests to changes in the key assumptions indicates that no reasonably likely change would lead to impairment, taking into account the observed headroom on the other tests conducted.

NOTE 11

OTHER INTANGIBLE ASSETS

Accounting policies Internally-generated intangible assets – research and development expenditure An internally-generated intangible asset arising from the development or a development phase of an internal project is only recognized on the balance sheet if an entity can demonstrate all of the following: the technical feasibility of completing the intangible asset so that it will be available for use or sale; ● its intention to complete the intangible asset and use or sell it; ● its ability to use or sell the intangible asset; ● how the intangible asset will generate probable future economic benefits. Among other things, the entity must demonstrate the ● existence of a market for the output of the intangible asset or the intangible asset itself or, if it is to be used internally, the usefulness of the intangible asset; the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible ● asset; its ability to measure reliably the expenditure attributable to the intangible asset during its development. ● Internally-generated intangible assets are amortized on a straight-line basis over their estimated useful life. When the requirements for recognition of internally-generated intangible assets are not satisfied, development expenditure is charged to profit or loss in the period in which it is incurred. Patents, trademarks, licenses and software Patents, trademarks, licenses and softwares are measured initially at purchase cost less accumulated amortization and impairment loss. Amortization is booked to proft or loss so as to reduce the carrying amount of assets over their estimated useful life, using the straight-line method. Impairment of intangible assets (excluding goodwill) See Note 9-2.

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• BIC GROUP - 2020 UNIVERSAL REGISTRATION DOCUMENT •