The Group has reassessed the recoverability of its deferred tax assets. Deferred tax assets whose recoverability was determined to be uncertain in the near term, after taking into account deductible temporary differences, were written down. The deductible temporary differences and unused tax loss carryforwards (tax credits) generated during Fiscal 2020 by the related subsidiaries were not recognized as deferred tax assets. The negative impact on consolidated tax expense was 122 million euro (see note 9 “Income tax”).
In the context of the Covid-19 pandemic, on April 27, 2020 and July 17, 2020, the Group issued two bonds for a total principal amount of 2.5 billion euro, extending the debt maturity and strengthening long-term cash reserves (see note 12.4.2 “Bond issues”).
In addition, to allow for greater independence and agility, the Group reimbursed 1.6 billion U.S. dollars of its USPP (U.S private placements) debt. In accordance with the terms of the U.S private placements debt agreement, the reimbursement includes an indemnity of 168 million U.S. dollars (150 million euro) recognized as financial expense. As a result of this transaction, which is described in note 12.1 “Financial income and expenses” and note 12.4.3.3 “U.S private placements”, Sodexo is no longer subject to any financial covenant with respect to its borrowings.
On October 9, 2015, Octoplus filed a complaint with the French Competition Authority (Autorité de la concurrence) concerning several French meal voucher issuers, including Sodexo Pass France. Following the hearing of the parties concerned in April and July 2016, the Competition Authority decided on October 6, 2016 to pursue investigation on the merits, without requesting protective measures.
On February 27, 2019, the prosecution services sent their final investigation report to Sodexo Pass France. In its response filed on April 29, 2019, the Group contested both grievances (information sharing and foreclosure of the meal voucher market through the Centrale de Règlement des Titres). On December 17, 2019, the Competition Authority issued an adverse decision against meal voucher issuers, and fined Sodexo Pass France, jointly and severally with Sodexo S.A., 126 million euro. Sodexo Pass France and Sodexo S.A. received notification of this decision on February 6, 2020. As the Covid-19 pandemic has strongly impacted the Group activities and performance, Sodexo requested and obtained from the French Tax authority, a payment deferral without any penalties against a guarantee of the same amount. The payment will be due on March 15, 2021.
However, Sodexo firmly contests this decision which manifests an inaccurate appreciation of the alleged practices and of the market dynamics and therefore has appealed this decision to the Paris Court of Appeal. After consultation with its legal advisors, the Group considers that it has strong arguments which could lead to the annulment or revision of the French Competition Authority decision. As a result, no provision has been made for this litigation .
Pursuant to European regulation 1606/2002 of July 19, 2002, the consolidated financial statements of the Sodexo Group have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and approved by the European Union as of the year end. A comprehensive list of the accounting standards adopted by the European Union is available for consultation on the European Commission website at https://ec.europa.eu/commission/index_en.
Information for the comparative year presented has been prepared using the same principles.
The Group does not apply IFRS standards that are not approved by the European Union at the closing date. During the past three years, considering the Company closing date, the IFRS application dates as approved by the European Union have been the same as those for the IFRS standards published by the IASB.
Furthermore, the Group did not elect to early adopt non-mandatory new standards, amendments and interpretations for Fiscal 2020, except for the IFRS 16 amendment “Covid-19-Related Rent Concessions”. The Group does not anticipate the application of other non-mandatory new standards, amendments and interpretations to have a material impact on its consolidated financials statements.
