BIC_REGISTRATION_DOCUMENT_2017

FINANCIAL STATEMENTS Consolidated financial statements

Notes

Gross value Impairment loss

Net value

(in thousand euros)

At January 1, 2016

341,818

(16,924)

324,894

Transfers to assets held for sale

20 

(33,939)

33,939

-

Impairment loss

-

(33,965)

(33,965)

Exchange differences At January 1, 2017

6,467

(91)

6,376

314,345

(17,041)

297,304

Liquidation of Hungarian subsidiary

(3,057)

3,057

-

Exchange differences

(20,897) 290,391

444

(20,453) 276,851

At December 31, 2017

(13,540)

The balance, as of December 31, 2017, includes the following principal net goodwill:

Dec. 31, 2016

Dec. 31, 2017

(in thousand euros)

BIC CORPORATION  (a)

122,634 102,579

110,166 95,908 49,174

Cello Pens BIC Violex PIMACO  (a)

49,174

7,046

6,084

Others  (a)

15,871

15,519

TOTAL

297,304

276,851

These goodwill amounts are linked to cash-generating units represented by distribution subsidiaries. (a)

To perform the impairment tests, the Group used the following discounted and perpetual growth rates:

Weighted average cost of capital (wacc) before tax

Perpetual growth rate

2016

2017

2016

2017

BIC CORPORATION

10.0% 13.5% 13.3% 19.7%

10.6% 14.1% 14.1% 20.3%

1.5% 8.0% 2.9% 1.7%

1.5% 8.6% 2.9%

Cello Pens

BIC Violex

PIMACO

0%

Each goodwill item has been allocated to a cash-generating unit (“CGU”) representing the lowest level at which goodwill is monitored by the Group. The goodwill on BIC CORPORATION is thus mainly allocated to cash-generating units linked to the distribution by BIC CORPORATION of stationery products and lighters. The goodwill on Cello Pens is allocated to the cash-generating units linked to the production and distribution of stationery products by Cello. The remaining goodwill on BIC Violex is allocated to the cash-generating unit linked to shavers developed and/or produced by BIC Violex and sold all over the world. This cash-generating unit also includes the portion of BIC CORPORATION goodwill allocated to shavers. As every year, as of June 30, 2017, the Group performed 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 rate; 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. At December 31, the Group assesses whether there is an indicator that the various cash-generating units tested annually at June 30 may be impaired. When assessing the financial performance of Cello at that date compared to what was budgeted , the Group concluded that an indicator existed that the cash-generating unit may be impaired. As a consequence, an additional impairment test was performed using the latest long-term strategic plan available, a 14.1 % weighted average cost of capital (WACC) before tax and an 8.6% perpetual growth rate.

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BIC GROUP - 2017 REGISTRATION DOCUMENT