Fiscal 2022 Universal Registration Document

4 CONSOLIDATED FINANCIAL STATEMENTS

Impairment charges against property, plant and equipment and intangible assets (including goodwill) amounted to 1 million euros as of August 31, 2022 (32 million euros as of August 31, 2021), and is recognized in other operating expenses in Fiscal 2022 for 1 million euros (27 million euros in Fiscal 2021).

The main assumptions used are as follows:

  FISCAL 2022 FISCAL 2021
DISCOUNT RATE LONG-TERM GROWTH RATE DISCOUNT RATE LONG-TERM GROWTH RATE
On-Site Services :        
Corporate Services 9.0% 2.2% 8.0% 2.2%
Energy & Resources 9.0% 2.5% 8.2% 2.6%
Government & Agencies 8.5% 2.0% 7.5% 2.1%
Sports & Leisure 8.4% 1.9% 7.3% 2.2%
Healthcare 8.6% 2.1% 7.3% 2.1%
Seniors 8.5% 1.8% 7.6% 2.0%
Schools 8.5% 1.9% 7.5% 2.0%
Universities 8.4% 2.0% 7.0% 2.0%
Other non-segmented activities  9.1%  2.3%  7.9%  2.0% 
Benefits & Rewards Services 9.5% 2.4% 8.8% 2.7%
Americas 10.4% 2.9% n/a n/a
Europe 8.9% 1.9% n/a n/a
Rest of the World 13.0% 6.2% n/a n/a

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The discount rates used by segment (group of CGUs) were set based on the weighted average of the discount rates for each geographic region, taking into account the relative weighting of each segment in the segment’s revenues.

The discount rates of the main regions are as follows:

  DISCOUNT RATE
FISCAL 2022 FISCAL 2021
Continental Europe 9.1% 7.9%
North America 8.4% 7.0%
United Kingdom and Ireland 8.3% 7.5%
Latin America 9.2% 9.1%
France 8.5% 7.6%

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SENSITIVITY ANALYSIS

Sodexo has analyzed the sensitivity of goodwill impairment test results to different financial and operational scenarios:

  • the results of the goodwill sensitivity analysis indicated no probable scenario where a change in the discount rate or long-term growth rate would result in the recoverable amount of segment assets becoming less than its carrying amount. In fact, the results of the impairment testing demonstrate that even an increase of 150 basis points in the discount rate or a reduction of 150 basis points in the long-term growth rate would not result in an impairment of the assets tested for any segment;
  • the Group also performed a sensitivity analysis on the operational assumptions used in order to determine whether a 10% decrease in forecast net cash flows over the time period of the business plans prepared by management and in terminal value would result in the recognition of an impairment in the Group’s consolidated financial statements as of August 31, 2022. The results of this analysis did not indicate any risk of impairment for any of the segments.