Eurazeo / 2018 Registration document

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CONSOLIDATED FINANCIAL STATEMENTS Notes to the Consolidated Financial Statements

Impairment losses on fixed assets 6.4 Impairment testing methodology 6.4.1 Pursuant to IAS 36, Eurazeo allocates goodwill to Cash-Generating Units (CGUs) for the purpose of conducting impairment tests. Following the change in the Eurazeo group’s business model, the level of breakdown of the CGUs was reviewed to better reflect the monitoring and analyses conducted by Eurazeo group management. Calculating future cash flows The value in use of each CGU is determined using the following method for calculating the recoverable amount: expected future cash flows are estimated based on the five-year • business plans prepared by the management of each subsidiary. An explicit period of more than five years may be adopted where cash flows can be estimated with sufficient reliability; cash flows are determined using the discounted cash flow method • (EBITDA +/- changes in WCR – standard tax expense – capital expenditure); the terminal value is calculated based on a perpetual return; • cash flows are discounted at the Weighted Average Cost of Capital • (WACC), determined based on financial factors reflecting rates of return and segment-specific risk in the markets in which the investment tested operates.

of a review of the consistency of the most recent business plan and the business plan underlying the investment case. The business plans of investments were prepared based on Management’s best estimates of the impacts of the current economic environment. On intangible assets with an indefinite life Intangible assets with an indefinite life consist of trademarks. As these assets were obtained on a business combination, their recoverable amount was estimated using the same methodology as that applied to establish their fair value for the purpose of allocating the purchase price, i.e. the royalties method (royalty flows discounted to infinity; flows are calculated by applying a theoretical royalty rate to actual revenue). The useful life of these assets is considered indefinite as there is no foreseeable time limit on the generation of cash flows; the assets are not amortized and are subject to annual impairment testing. The majority of intangible assets with an indefinite life are tested at CGU level and not individually. Following these tests, impairment was recognized on the goodwill and a trademark of the MK Direct group (Eurazeo PME) of €34.9 million and €4.9 million, respectively. Sensitivity of impairment tests 6.4.3 The sensitivity of impairment tests was tested with respect to changes in the two main assumptions: WACC and the perpetual growth rate. For the main subsidiaries tested, the sum of test margins (difference between the recoverable amount and the carrying amount) subject to the sensitivity of assumptions is presented below:

Impairment tests 6.4.2 On goodwill

Impairment tests are performed for each investment, each of which represents a CGU. Exceptionally, when the goodwill of an investment is in the course of allocation (see Note 6.1), impairment testing consists

WORLDSTRIDES

EURAZEO PME

Perpetual growth rate

2.5%

3.0%

3.5%

1.5%

2.0%

2.5%

(In millions of euros)

WACC

8.68% 9.18% 9.68%

499 368 256

563 424 306

630 483 358

8.51% 9.01% 9.51%

517

621 461 388

744 559 476

376 313

SOMMET EDUCATION

IBERCHEM

Perpetual growth rate

1.0%

1.5%

2.0%

1.0%

1.5%

2.0%

(In millions of euros)

WACC

6.95% 7.45% 7.95%

143 108

181

227 177 136

7.49% 7.99% 8.49%

124

157 112

197 145 102

140 104

PLANET

SEQENS

Perpetual growth rate

1.0%

1.5%

2.0%

1.3%

1.8%

2.3%

(In millions of euros)

WACC

9.20% 9.70% 10.20%

93 37

130

173 104

8.17% 8.67% 9.17%

788 652 535

903 748 616

1,038

69 24

616 710

-3

The sensitivity analyses presented at investment level demonstrate that the recoverable amount of Eurazeo’s investments remains higher than the carrying amount. For each CGU, no reasonably likely change in assumption (i.e. within the sensitivity range presented) would lead to the recognition of material additional impairment.

Eurazeo

239

2018 Registration Document

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