| Financial and market risks/Financial equity risk | |
|---|---|
| Risk identification | Risk management |
| The main equity risk for L’Oréal is the 9.36% stake it held in Sanofi at 31December 2021 (see note 9.3. “Non-current financial assets” of the Consolidated Financial Statements), the value of which fluctuates primarily as a function of global market trends, Sanofi’s results and, more generally, economic and financial data from Sanofi and its sector. A significant decrease in the amount of the dividend paid by Sanofi or a significant or extended decline in its market price could have an impact on L’Oréal’s share price. | This interest and changes in the market in which Sanofi operates are monitored on a regular basis. As at 31 December 2021, the market value of the Sanofi share was significantly higher than the value recorded on the L’Oréal balance sheet (see note 9.3. “Non-current financial assets” to the Consolidated Financial Statements). |
| Financial and market risks/Risk relating to the impairment of intangible assets | |
|---|---|
| Risk identification | Risk management |
|
L’Oréal’s intangible assets, which are primarily its 35 major international brands, and the goodwill recognised at the time of external growth transactions, are susceptible to impairment. |
As detailed in note 7. “Intangible assets” of the Consolidated Financial Statements, brands with an indefinite useful life and goodwill are not amortised but are tested for periodic impairment at least once a year. Where the recoverable amount of a brand is lower than its net book value, an impairment loss is recognised. Similarly, any difference between the recoverable amount of each cash-generating unit and the net book value of the assets including goodwill would lead to an impairment loss in respect of the asset, recorded in the income statement. The amounts for the last three financial years are provided in note 4. “Other operational income and expenses” of the Consolidated Financial Statements. The data and assumptions used in impairment tests carried out on Cash-Generating Units for which the goodwill and non-amortisable brands are significant, are presented in note 7.3. “Impairment tests on intangible assets” of the Consolidated Financial Statements. |
