Fiscal 2020 Universal Registration Document

The following assumptions were used for actuarial valuations for the principal countries as of August 31, 2020 and 2019:

AUGUST 31, 2020	FRANCE	NETHERLANDS	UNITED KINGDOM	ITALY
Discount rate⁽¹⁾	Discount rate ⁽¹⁾ FRANCE 1.2%	Discount rate ⁽¹⁾ NETHERLANDS 0.95%	Discount rate ⁽¹⁾ UNITED KINGDOM 1.7%	Discount rate ⁽¹⁾ ITALY 0.65%
Salary long-term inflation rate⁽²⁾	Salary long-term inflation rate ⁽²⁾ FRANCE 2.25%	Salary long-term inflation rate ⁽²⁾ NETHERLANDS N/A	Salary long-term inflation rate ⁽²⁾ UNITED KINGDOM 3.4%	Salary long-term inflation rate ⁽²⁾ ITALY N/A
General long-term inflation rate	General long-term inflation rate FRANCE 1.75%	General long-term inflation rate NETHERLANDS 1.75%	General long-term inflation rate UNITED KINGDOM 2.1%-2.9% ⁽³⁾	General long-term inflation rate ITALY 1.75%
Net liability (in millions of euro)	Net liability (in millions of euro) FRANCE 87	Net liability (in millions of euro) NETHERLANDS 1	Net liability (in millions of euro) UNITED KINGDOM 4	Net liability (in millions of euro) ITALY 1
Average term of the plans (in years)	Average term of the plans (in years) FRANCE 9	Average term of the plans (in years) NETHERLANDS 19	Average term of the plans (in years) UNITED KINGDOM 19	Average term of the plans (in years) ITALY 8

(1) Discount rates in each country have been adjusted to reflect the term of the plans. For the euro zone and the United Kingdom, the Group uses discount rates based on yield curves for high quality corporate bonds drawn up by an external actuary.
(2) The salary inflation rate disclosed includes general inflation.
(3) Retail Price Index (RPI): 2.9%; Consumer Price Index (CPI): 2.1% for Fiscal 2020.
(4) Excluding 104 million euro in retirement benefit obligations in the 6 UK companies (offset by an asset in the same amount).

AUGUST 31, 2019	FRANCE	NETHERLANDS	UNITED KINGDOM	ITALY
Discount rate⁽¹⁾	Discount rate ⁽¹⁾ FRANCE 0.75%-1.25%	Discount rate ⁽¹⁾ NETHERLANDS 1.25%-2.25%	Discount rate ⁽¹⁾ UNITED KINGDOM 1.8%-2.8%	Discount rate ⁽¹⁾ ITALY 0.3%
Salary long-term inflation rate⁽²⁾	Salary long-term inflation rate ⁽²⁾ FRANCE 2.75%	Salary long-term inflation rate ⁽²⁾ NETHERLANDS 2%	Salary long-term inflation rate ⁽²⁾ UNITED KINGDOM 3.5%	Salary long-term inflation rate ⁽²⁾ ITALY N/A
General long-term inflation rate	General long-term inflation rate FRANCE 1.75%	General long-term inflation rate NETHERLANDS 1.75%	General long-term inflation rate UNITED KINGDOM 2%-3% ⁽³⁾	General long-term inflation rate ITALY 1.75%
Net liability (in millions of euro)	Net liability (in millions of euro) FRANCE 89	Net liability (in millions of euro) NETHERLANDS 10	Net liability (in millions of euro) UNITED KINGDOM 38	Net liability (in millions of euro) ITALY 20
Average term of the plans (in years)	Average term of the plans (in years) FRANCE 12	Average term of the plans (in years) NETHERLANDS 20	Average term of the plans (in years) UNITED KINGDOM 19	Average term of the plans (in years) ITALY 8

(1) Discount rates in each country have been adjusted to reflect the term of the plans. For the euro zone and the United Kingdom, the Group uses discount rates based on yield curves for high quality corporate bonds drawn up by an external actuary.
(2) The salary inflation rate disclosed includes general inflation.
(3) Retail Price Index (RPI): 3%; Consumer Price Index (CPI): 2% for Fiscal 2019.
(4) Excluding 90 million euro in retirement benefit obligations in the 6 UK companies (offset by an asset in the same amount).

With respect to the assumptions provided in the above table, for Fiscal Year 2020, and excluding the 104 million euro retirement benefit obligations in the 6 UK companies (off set by an asset in the same amount), a reduction of 1% in the discount rate would increase the gross obligation to 1,641 million euro (compared with 1,372 million euro based on the assumptions used as of August 31, 2020), while a rise of 0.5% in the general long-term inflation rate would increase the gross obligation to 1,460 million euro.

Based on estimates derived from reasonable assumptions, Sodexo will pay 18 million euro into defined benefit plans in Fiscal 2021.

Multiemployer plans

In the USA, as of August 31, 2020, Sodexo contributed to 78 multiemployer defined benefit pension plans under the terms of collective-bargaining agreements (“CBA”) that cover its union-represented employees. The risks of participating in these multiemployer plans are different than those of single-employer plans in the following respects:

assets contributed to the multiemployer plan are used to provide benefits to all beneficiaries of the plan, including beneficiaries of other participating employers;
if a multiemployer plan is considered to be in “critical” status as defined by the U.S. Pension Protection Act of 2006, the plan will be required to adopt a rehabilitation plan which may require the Company to increase its required contributions to the plan;
if a participating employer ceases to contribute to the plan, the unfunded obligations of the plan may have to be borne by the Company and the other remaining participating employers; and
if the Company ceases to participate in a multiemployer plan, entirely or partially in excess of a threshold, or if substantially all of the participating employers of a given plan cease to participate, the Company may be required to pay that plan an amount based on the value of unfunded vested benefits of the plan and the Company’s pro-rata share of total plan contributions, referred to as withdrawal liability.

The Company does not have the ability to account for these multiemployer plans as defined benefit plans because it does not have timely access to information about plan assets, plan obligations, actuarial gains and losses, service costs, and interest costs. As such, the multiemployer plans are accounted for as defined contribution plans.

The Company contributed 8 million euro to U.S. multiemployer defined benefit plans in Fiscal 2020 and 13 million euro in Fiscal 2019. Of the contributions made by the Company, 49% and 1% were made to plans considered to be in “critical” status or “endangered” status, respectively, as defined by the U.S. Pension Protection Act of 2006 and per each plan’s most-recent notice of plan funding status. Plans are generally considered to be in “critical” status when they are funded at less than 65%, among other factors, and are considered to be “endangered” when they are funded at 65% or more, but at less than 80%, among other factors.

Fiscal 2020 Universal Registration Document

3. Consolidated financial statements

Multiemployer plans