Carrying value of intangible assets Key audit matter How the scope of our audit responded to the key audit matter As of 31 December 2021, Givaudan carries intangible assets of CHF 4,853 million of which goodwill of CHF 3,496 million and other intangible assets of CHF 1,357 million. The goodwill has been allocated to the following four Cash Generating Units (“CGUs”): – T aste & Wellbeing: CHF 2,370 million, – Fragrance & Beauty: CHF 889 million, – Expressions Parfumées: CHF 129 million, – Fragrance Oils: CHF 108 million. Furthermore, Givaudan holds intangible assets that were recognised from previous business combinations amounting to CHF 1,156 million. These assets are mainly technology-related assets, customer and suppliers’ relationships and brand names. These assets have been recognised during the initial purchase price allocations in accordance with IFRS 3 Business Combination. The valuation of software is not part of our Key Audit Matter consideration as Software and ERP system assets (carrying value CHF 201 million as of 31 December 2021) have not been recognised from acquisition accounting. As stated in Note 2.17 to the consolidated financial statements, the carrying value of goodwill and intangible assets with infinite useful economic life is tested for impairment annually or more frequently if impairment indicators are present. Management has not identified any indicators of impairment in the period. For Goodwill, Management has proceeded to an evaluation of the recoverable amount of the CGUs by comparing the recoverable value of the assets with their carrying values. Management performed its annual impairment test of goodwill in the fourth quarter of 2021 and has calculated the value-in-use in order to estimate the recoverable value of the assets. In order to derive the value in use of the assets attributable to the CGUs, Management has prepared discounted cash flows models. The key inputs that require judgment are: – The identification of the relevant CGUs; – The estimate of the future cash flows the entity expects to derive from each of the CGUs; – The discount rates; and – The long-term growth rate used to derive the terminal value. Management concluded that in all cases, value-in-use formed the basis of the impairment conclusions and that no impairment should be recognised on that basis. A sensitivity analysis considering changes in assumptions in the cash flows and in the discount rates does not give rise to any material impairment. Further details in relation to management impairment considerations have been provided in Note 22, with details regarding the discount rates used for each of the CGUs. We assessed the internal controls in relation to the identification of impairment indicators. We independently performed our own assessment of impairment indicators. We gained an understanding of the internal controls relating to the projected financial information process and approval, the preparation and review of the weighted average cost of capital and preparation and review of the asset impairment models for Goodwill and intangible assets with indefinite useful life. We have inquired with management about the presence of impairment indicators for the intangible assets that have been recognised from current and past business combinations. We have corroborated the results of our inquiries with a review of the financial performance of the underlying markets and legal entities as well as inquiries with personnel outside the finance function. We evaluated and challenged the key assumptions and inputs to the impairment models by independently estimating a range of acceptable outcome and performing sensitivity analyses in order to evaluate the impact of selecting alternative assumptions. In challenging the assumptions, we have: – Considered the appropriateness of the judgment that Expressions Parfumées and Fragrance Oils constitute separate CGUs and that the 2021 acquisitions are integrated to the Fragrance & Beauty and Taste & Wellbeing CGUs; – Assessed the appropriateness of the discount rates used by involving our internal valuation specialists to evaluate the reasonableness of management’s key inputs used in deriving the discount rates. This included benchmarking these inputs against available market data; – Evaluated the appropriateness of the long-term growth rates applied to derive the terminal value by tracing them back to a prominent source of macroeconomic projections; – Tested the extent to which projected financial information can be reliably prepared by management by performing retrospective review to compare prior period forecasts with actual results and reviewed any budget revision and considering management track record in delivering their forecast; – Confirmed that forecasted cash flows were consistent with Board approved forecasts and analysed reasonably possible downside sensitivities; – Evaluated the sensitivity in the valuation resulting from changes to the key assumptions applied. We audited the integrity of the impairment models and cash flow forecasts. We considered the compliance of management’s impairment models with the requirements of IAS 36 Impairment of Assets. We have compared management estimates of economic useful life with the actual usage of the assets. We also reviewed the appropriateness of the amortisation method and related charges for intangible assets with a definite useful economic life. 101 Givaudan — 2021 Governance, Compensation and Financial Report Governance Report Compensation Report Consolidated Financial Report Statutory Financial Report Appendix