Compagnies des Alpes // 2019 Universal Registration Document

5 FINANCIAL INFORMATION

Consolidated financial statements

1.15 IMPAIRMENT OF ASSETS Definition of cash-generating units and allocation of assets An asset’s recoverable amount is the higher of its fair value less selling costs and its value in use. The recoverable amount of property, plant and equipment and intangible assets is tested when events, market developments or internal factors indicate a risk of a permanent loss of value. It is tested at least once a year, at the reporting date, for assets with an inde fi nite useful life (category limited to goodwill, brands and trademarks). As goodwill and the main items of property, plant and equipment and intangible assets relate to operation of the sites, these are allocated to groups of cash-generating units, which equate to the sites on which the Group’s strategic development is focused. An impairment loss is recognised if the recoverable amount of the asset or group of assets tested is lower than its book value. Goodwill impairment losses are irreversible. Impairment losses for other items of property, plant and equipment and intangible assets may be reversed if the recoverable amount of the asset increases. Impairment of goodwill is shown on the “impairment” line of the income statement, below the operating items. Allocation of goodwill and operating assets to cash-generating units (CGUs) The Group’s CGUs comprise the sites it operates. For impairment testing purposes, goodwill is allocated at the level of the groups of CGUs, which constitute homogeneous entities generating cash fl ows that are largely independent of the cash fl ows generated by the other CGUs. As part of an initiative to make the measurement of CGU value creation more consistent with the Group’s performance monitoring, internal organisation and strategy, the impairment loss testing procedures were modified as of 30 September 2014. In particular, this change re fl ects management of a homogeneous o ff ering in the Leisure parks segment following a series of acquisitions carried out since 2002 and the overall management of o ff ering development in the Ski areas business line. Consequently, the CGUs that the Group intends to continue to operate and hold have been reorganised as follows: l Ski areas portfolio: grouping together all the ski areas whose arbitration regarding operation and investments is pooled in a single decision-making body; l Leisure parks portfolio: grouping together all the Leisure parks and Musées Grévin in France and abroad, whose arbitration regarding operation and investments is pooled in a single decision-making body. The other Group companies are included in the Holdings and supports Division (consulting, tour-operator, real estate agencies and holding companies activities).

Procedures for determining the recoverable amount The recoverable amount of groups of CGUs, as defined above, corresponds to the sum of the values in use of the CGUs comprising the groups of CGUs, which is determined by discounting projections of future cash fl ows from operating of the sites based on the medium-term plans ( fi ve years) approved by the Group’s Executive Management and presented to the Strategy Committee and to the Board of Directors, and using a terminal value based on the forecast future standardised cash fl ows to perpetuity generated by the asset under consideration. For the CGUs operated under concession agreements (Ski areas) or leases (Leisure parks), the CDA Group manages these contracts on a going concern basis (both in terms of site management and in terms of capital expenditure to maintain/increase its business). The Group has never been confronted with a company operating a concession (Ski areas) or lease (Leisure parks) having to cease operations due to the expiration of its contract. Accordingly, the Group measures the recoverable amount of the groups of CGUs on the assumption that its concession-holding activities will continue beyond the end of the concession, in light of the extensions already obtained in the past. The daily management and investment policy are therefore implemented with a view to maintaining or increasing the appeal of the leisure park or ski area concerned. FINANCIAL ASSETS Pursuant to IFRS 9, the non-current fi nancial assets are broken down into three categories: l fi nancial assets measured at amortised cost: These are fi nancial assets whose economic model aims to receive contractual fl ows, and the contractual conditions of which provide for speci fi ed dates of fl ows corresponding only to repayments of capital and interest. They represent the loans and receivables linked to the shareholdings and the deposits and guarantees; l fi nancial assets measured at fair value, with recognition as other comprehensive income, which cannot be recycled as income: They represent shareholdings of non-controlled companies; l fi nancial assets measured at fair value through income: They mainly represent securities of non-consolidated controlled companies. This primarily concerns shareholdings of Ski areas in real estate agencies and lease or building ownership companies, which are not signi fi cant with regard to the consolidated fi nancial statements (see Notes 6.7 and 6.8). The implementation of IFRS 9 eliminated the notion of available-for- sale fi nancial assets. Fair value is determined according to the methodology de fi ned by IFRS 13, based on the three levels of fair value de fi ned in Note 6.15. INVENTORIES Inventories are stated at the lower of cost and net realisable value ( i.e. the market price less costs to sell). Inventories are measured at weighted average cost. 1.16 1.17

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Compagnie des Alpes I 2019 Universal registration document