QUADIENT - 2020 Universal Registration Document

6

FINANCIAL STATEMENTS Consolidated financial statements

For the main cash-generating units or group of CGUs, the following assumptions were used:

EBITDA average growth rate over 5 years

Sales average growth rate over 5 years

Average growth rate to perpetuity

Discount rate

3.8

2.7 19.3 2.0 6.6 3.2

(1.0) 2.0 0.0 0.4 0.3 2.0 (2.0)

6.3 7.4 6.9 6.9 6.4 6.8 6.8

North America

Parcel Pending

n/a

0.0 10.0

France-Benelux

UK – Ireland

4.5

DACH-IT

4.9 - 13.9

6.8 - 9.3

International

>20

2.8

Additional Operations

The average perpetual growth rate applied to the Mail-Related Solutions business has been revised downwards in 2020 to take into consideration the recent developments in the various markets in which Quadient operates. This rate may be modified in the future depending on changes in the economic outlook for these various markets. Impairment test of the goodwill As part of the “Back to Growth” strategy, the Group has followed and reviewed the different elements reported within the Additional Operations portfolio. In 2019, the Group concluded that some additional activities would not present a potential for growth or synergies with the Group’s strategic solutions. Within the Additional Operations, Australia and Nordics countries had in particular an important graphics activity regarded as non-strategic by Quadient. Those elements have led the Group to decide to stop its investments in these activities in decline which are so continued as they stand.

Projections made in 2019 by the Group on those bases for the purposes of the impairment led to the depreciation of the goodwill recognized for Australia, Nordic countries and shipping software business in France for a total amount of 70.4million euros. In 2020, Quadient Oceania divestment has resulted in the reversal of the associated goodwill impairment booked in 2019. Sensitivity Sensitivity tests have been performed on the different assumptions used for the goodwill impairment test: (i) the EBITDA average growth rate over 5 years (ii) the infinite growth rate and (iii) the weighted average cost of capital to determine at which rates the valuation of goodwill becomes equal to the value of the discounted cash flow.

The results of these tests are presented in the table below for the main CGU or groups of CGUs:

Breaking point

EBITDA average growth rate over 5 years

Infinite average growth rate

Discount rate

(9.2)

(26.9)

16.1 8.8 14.5 9.3 8.7

North America

0.1

Parcel Pending

n/a

(8.0)

(16.2) (3.2) (3.0)

France-Benelux

5.0

UK – Ireland

(0.9)

DACH-IT

(6.7) -9.4

(8.2) -1.1

7.5 - 12.8

International

>20

(9.1)

10.7

Additional Operations

In key assumptions, any reasonably possible change of one parameter at a time cannot lead to a recoverable value of CGU or group of CGUs becoming equal to its carrying amount.

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UNIVERSAL REGISTRATION DOCUMENT 2020

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