Fiscal 2022 Universal Registration Document

4.2 Notes to the consolidated financialstatements

Note 10. Provisions, litigation and contingent liabilities

Unrecognized deferred tax assets arising from tax loss carry-forwards because their recovery is considered to be uncertain amounted to 215 million euros as of August 31, 2022 (192 million euros as of August 31, 2021). France is the main country with unrecognized deferred tax assets on tax loss carry-forwards. Unrecognized deferred tax assets arising from tax losses generated within the French tax group in Fiscal 2022 amount to 8 million euros.

Temporary differences on employee-related liabilities relate primarily to post-employment benefits.

NOTE 10. PROVISIONS, LITIGATION AND CONTINGENT LIABILITIES

ACCOUNTING PRINCIPLES AND POLICIES

A provision is recognized if the Group has a legal or constructive obligation at the closing date and it is probable that settlement of the obligation will require an outflow of resources and the amount of the liability can be reliably measured.

Provisions primarily cover commercial, employee-related and tax-related risks and litigation (other than those related to income tax) arising in the course of operating activities, and are measured using assumptions that take account of the most likely outcomes.

Where the effect of the time value of money is material, the amount of the provision is determined by discounting the expected future cash flows at a pre-tax discount rate that reflects current market assessments of the time value of money and any risks specific to the liability.

A provision for onerous contracts is established where the unavoidable costs of meeting the obligations under a contract exceed the economic benefits expected to be received under it.

10.1 Provisions

(in million euros)	AUGUST 31, 2021	INCREASES/CHARGES	REVERSALS WITH UTILIZATION	REVERSALS WITHOUT UTILIZATION	CURRENCY TRANSLATION ADJUSTMENT AND OTHER	CHANGES IN SCOPE OF CONSOLIDATION	AUGUST 31, 2022
Reorganization costs	Reorganization costsAUGUST 31, 2021 67	Reorganization costsINCREASES/CHARGES 9	Reorganization costs REVERSALS WITH UTILIZATION (45)	Reorganization costs REVERSALS WITHOUT UTILIZATION (15)	Reorganization costs CURRENCY TRANSLATION ADJUSTMENT AND OTHER 2	Reorganization costsCHANGES IN SCOPE OF CONSOLIDATION (1)	Reorganization costsAUGUST 31, 2022 17
Employee claims and litigation	Employee claims and litigationAUGUST 31, 2021 56	Employee claims and litigationINCREASES/CHARGES 17	Employee claims and litigation REVERSALS WITH UTILIZATION (10)	Employee claims and litigation REVERSALS WITHOUT UTILIZATION (8)	Employee claims and litigation CURRENCY TRANSLATION ADJUSTMENT AND OTHER 1	Employee claims and litigationCHANGES IN SCOPE OF CONSOLIDATION (1)	Employee claims and litigationAUGUST 31, 2022 55
Tax and social security exposures	Tax and social security exposuresAUGUST 31, 2021 30	Tax and social security exposuresINCREASES/CHARGES 5	Tax and social security exposures REVERSALS WITH UTILIZATION (1)	Tax and social security exposures REVERSALS WITHOUT UTILIZATION (3)	Tax and social security exposures CURRENCY TRANSLATION ADJUSTMENT AND OTHER 1	Tax and social security exposuresCHANGES IN SCOPE OF CONSOLIDATION —	Tax and social security exposuresAUGUST 31, 2022 32
Contract termination and loss-making contracts	Contract termination and loss-making contractsAUGUST 31, 2021 27	Contract termination and loss-making contractsINCREASES/CHARGES 6	Contract termination and loss-making contracts REVERSALS WITH UTILIZATION (10)	Contract termination and loss-making contracts REVERSALS WITHOUT UTILIZATION (6)	Contract termination and loss-making contracts CURRENCY TRANSLATION ADJUSTMENT AND OTHER 4	Contract termination and loss-making contractsCHANGES IN SCOPE OF CONSOLIDATION —	Contract termination and loss-making contractsAUGUST 31, 2022 21
Client/supplier claims and litigation	Client/supplier claims and litigationAUGUST 31, 2021 23	Client/supplier claims and litigationINCREASES/CHARGES 22	Client/supplier claims and litigation REVERSALS WITH UTILIZATION (10)	Client/supplier claims and litigation REVERSALS WITHOUT UTILIZATION —	Client/supplier claims and litigation CURRENCY TRANSLATION ADJUSTMENT AND OTHER 2	Client/supplier claims and litigationCHANGES IN SCOPE OF CONSOLIDATION —	Client/supplier claims and litigationAUGUST 31, 2022 37
Negative net assets of associates^*	Negative net assets of associates^* AUGUST 31, 2021 6	Negative net assets of associates^* INCREASES/CHARGES —	Negative net assets of associates^* REVERSALS WITH UTILIZATION —	Negative net assets of associates^* REVERSALS WITHOUT UTILIZATION —	Negative net assets of associates^* CURRENCY TRANSLATION ADJUSTMENT AND OTHER 2	Negative net assets of associates^* CHANGES IN SCOPE OF CONSOLIDATION —	Negative net assets of associates^* AUGUST 31, 2022 8
Other provisions	Other provisionsAUGUST 31, 2021 45	Other provisionsINCREASES/CHARGES 11	Other provisions REVERSALS WITH UTILIZATION (9)	Other provisions REVERSALS WITHOUT UTILIZATION (5)	Other provisions CURRENCY TRANSLATION ADJUSTMENT AND OTHER —	Other provisionsCHANGES IN SCOPE OF CONSOLIDATION 2	Other provisionsAUGUST 31, 2022 44
TOTAL PROVISIONS	TOTAL PROVISIONS AUGUST 31, 2021254	TOTAL PROVISIONS INCREASES/CHARGES70	TOTAL PROVISIONS REVERSALS WITH UTILIZATION (85)	TOTAL PROVISIONS REVERSALS WITHOUT UTILIZATION (37)	TOTAL PROVISIONS CURRENCY TRANSLATION ADJUSTMENT AND OTHER 12	TOTAL PROVISIONS CHANGES IN SCOPE OF CONSOLIDATION—	TOTAL PROVISIONS AUGUST 31, 2022214

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*Investments in companies accounted for using the equity method that have negative net assets (see note 8).

(in million euros)	AUGUST 31, 2020	INCREASES/CHARGES	REVERSALS WITH UTILIZATION	REVERSALS WITHOUT UTILIZATION	CURRENCY TRANSLATION ADJUSTMENT AND OTHER	CHANGES IN SCOPE OF CONSOLIDATION	AUGUST 31, 2021
Reorganization costs⁽¹⁾	Reorganization costs⁽¹⁾ AUGUST 31, 2020 81	Reorganization costs⁽¹⁾ INCREASES/CHARGES 49	Reorganization costs⁽¹⁾ REVERSALS WITH UTILIZATION (54)	Reorganization costs⁽¹⁾ REVERSALS WITHOUT UTILIZATION (12)	Reorganization costs⁽¹⁾ CURRENCY TRANSLATION ADJUSTMENT AND OTHER 3	Reorganization costs⁽¹⁾ CHANGES IN SCOPE OF CONSOLIDATION —	Reorganization costs⁽¹⁾ AUGUST 31, 2021 67
(in million euros) Employee claims and litigation	AUGUST 31, 2020 42	INCREASES/CHARGES 32	REVERSALS WITH UTILIZATION (14)	REVERSALS WITHOUT UTILIZATION (4)	CURRENCY TRANSLATION ADJUSTMENT AND OTHER (1)	CHANGES IN SCOPE OF CONSOLIDATION —	AUGUST 31, 2021 56
Tax and social security exposures	Tax and social security exposuresAUGUST 31, 2020 27	Tax and social security exposures INCREASES/CHARGES 9	Tax and social security exposures REVERSALS WITH UTILIZATION (4)	Tax and social security exposures REVERSALS WITHOUT UTILIZATION (3)	Tax and social security exposures CURRENCY TRANSLATION ADJUSTMENT AND OTHER 1	Tax and social security exposures CHANGES IN SCOPE OF CONSOLIDATION —	Tax and social security exposuresAUGUST 31, 2021 30
Contract termination and loss-making contracts	Contract termination and loss-making contractsAUGUST 31, 2020 37	Contract termination and loss-making contracts INCREASES/CHARGES 9	Contract termination and loss-making contracts REVERSALS WITH UTILIZATION (14)	Contract termination and loss-making contracts REVERSALS WITHOUT UTILIZATION (1)	Contract termination and loss-making contracts CURRENCY TRANSLATION ADJUSTMENT AND OTHER (5)	Contract termination and loss-making contracts CHANGES IN SCOPE OF CONSOLIDATION —	Contract termination and loss-making contractsAUGUST 31, 2021 27
Client/supplier claims and litigation	Client/supplier claims and litigationAUGUST 31, 2020 18	Client/supplier claims and litigation INCREASES/CHARGES 16	Client/supplier claims and litigation REVERSALS WITH UTILIZATION (11)	Client/supplier claims and litigation REVERSALS WITHOUT UTILIZATION —	Client/supplier claims and litigation CURRENCY TRANSLATION ADJUSTMENT AND OTHER —	Client/supplier claims and litigation CHANGES IN SCOPE OF CONSOLIDATION —	Client/supplier claims and litigationAUGUST 31, 2021 23
Negative net assets of associates⁽²⁾	Negative net assets of associates⁽²⁾ AUGUST 31, 2020 7	Negative net assets of associates⁽²⁾ INCREASES/CHARGES —	Negative net assets of associates⁽²⁾ REVERSALS WITH UTILIZATION —	Negative net assets of associates⁽²⁾ REVERSALS WITHOUT UTILIZATION —	Negative net assets of associates⁽²⁾ CURRENCY TRANSLATION ADJUSTMENT AND OTHER —	Negative net assets of associates⁽²⁾ CHANGES IN SCOPE OF CONSOLIDATION —	Negative net assets of associates⁽²⁾ AUGUST 31, 2021 6
Other provisions	Other provisionsAUGUST 31, 2020 43	Other provisions INCREASES/CHARGES 21	Other provisions REVERSALS WITH UTILIZATION (18)	Other provisions REVERSALS WITHOUT UTILIZATION (4)	Other provisions CURRENCY TRANSLATION ADJUSTMENT AND OTHER 2	Other provisions CHANGES IN SCOPE OF CONSOLIDATION —	Other provisionsAUGUST 31, 2021 45
TOTAL PROVISIONS	TOTAL PROVISIONS AUGUST 31, 2020255	TOTAL PROVISIONS INCREASES/CHARGES 137	TOTAL PROVISIONS REVERSALS WITH UTILIZATION (114)	TOTAL PROVISIONS REVERSALS WITHOUT UTILIZATION (24)	TOTAL PROVISIONS CURRENCY TRANSLATION ADJUSTMENT AND OTHER 1	TOTAL PROVISIONS CHANGES IN SCOPE OF CONSOLIDATION (1)	TOTAL PROVISIONS AUGUST 31, 2021254

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The provisions for reorganization mainly consist of the restructuring and right-sizing costs resulting from the rigorous measures implemented in the context of the Covid-19 pandemic in all segments and activities to adjust on-site staff costs, as government employment measures progressively fell apart, and to sustainably reduce the Selling, General and Administrative costs.
Investments in companies accounted for using the equity method that have negative net assets (see note 8).

Provisions for exposures and litigation are determined on a case-by-case basis and rely on management’s best estimate of the outflows deemed likely to satisfy legal or implicit obligations to which the Group is exposed as of the end of the fiscal year.