154 / 168
154
DOCUMENTS SPECIFIC TO THE SHAREHOLDERS’ GENERAL MEETING
8
3.
I
AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS - FINANCIAL YEAR
ENDED DECEMBER 31, 2017
To the Shareholders’ General Meeting of LISI,
Opinion
In accordancewith the terms of our appointment by your Shareholders’
General Meeting, we have conducted the audit of the accompanying
consolidated financial statements of LISI for the financial year ended
December 31, 2017.
We certify that the consolidated financial statements for the period
are, in respect of the IFRS standard as adopted in the European Union,
correct andgenuine andgive a true and fair viewof theearnings derived
from the Company’s activity during the year, as well as the financial
position and the assets and liabilities at the end of the financial year,
of all consolidated companies of the consolidated group.
The opinion expressed above is consistent with the content of our
report to the Audit Committee.
Basis of our opinion
Audit repository
We have carried out our audit in accordance with the professional
standards in use in France. We consider that the items we have
gathered form both a sufficient and an appropriate basis for our
opinion.
Our responsibilities under these standards are specified in the section
“Responsibilities of Auditors relating to the audit of the consolidated
financial statements” of this report.
Independence
We have carried out our audit in compliance with the rules of
independence applicable to us, for the period running from January 1,
2017 to the date of issue of this report, and in particular, we have not
provided services prohibited under Article 5, paragraph 1, of Regulation
(EU) No. 537/2014 or under the French Code of Ethics for Auditors.
Justification of our assessments - Key audit matters
Pursuant to the provisions of Articles L.823-9 and R.823-7 of the
French Commercial Code on the justification of our assessments,
we inform you of the key audit matters relating to the risk of material
misstatements which, in our professional judgment, have been more
significant for the audit of the consolidated financial statements of
the financial year, and how we tackled these risks.
These assessments form part of our task as Auditors of the
consolidated financial statements, taken as a whole, and have helped
us to form our opinion, as it is described above. We do not express
an opinion on elements of these consolidated financial statements
taken separately.
Goodwill - impairment test
Risk identified
At December 31, 2017, goodwill stood at €321,377 thousand for a
balance sheet total of €1,827,319 thousand. These goodwill amounts
correspond to differences recognized between the cost of business
combinations and LISI’s share of the fair value, at the acquisition date,
of assets and liabilities relating to these companies, as detailed in
Note 2.2.7.1 to the consolidated financial statements.
Goodwill is subject to an impairment test at least once a year and
each time that a risk of impairment is identified. Note 2.2.8.5
describes the methods used and the assumptions made for this test;
where necessary, an impairment loss of the net carrying amount is
recognized to reduce it to the recoverable amount. The recoverable
amount is defined as the higher of the realizable value and the value
in use.
For the purposes of these tests, described in Note 2.2.8.5 to the
consolidated financial statements, goodwill is allocated to each group
of Cash Generating Units (CGU) which, for the LISI Group, correspond
to the three divisions: Aerospace, Automotive and Medical. The
combinations of cash generating units (CGU) are determined in
accordance with the operational reporting.
We deemed the goodwill amount to be a key audit matter considering
their importance in the Group’s consolidated financial statements
and because the determination of their value in use, used in the
impairment tests, calls for the use of estimates and assumptions
requiring significant judgment by management, in particular as
regards assumptions of the growth of sales, future cash flows and
the discount rate.
How we tackled it
As part of our work, we reviewed the process for preparation and
approval of estimates and assumptions made by management for the
purposes of impairment tests. Our work consisted in particular in:
■■
appraising the discount rate used by management, by comparing
it to our own estimate of this rate, established with the help of
our valuation experts, and by analyzing the different constituent
elements;
■■
examining, using sample testing techniques, the future cash flows
used, with regard to the budget figures approved by the Board
of Directors, the historical results, as well as the economic and
financial environment in which the Group operates;
■■
checking, using sample testing techniques, the mathematical
correctness of the impairment tests performed by management;
■■
assessing whether the disclosure in Note 2.5.1.1.a) to the
consolidated financial statements, in particular as regards the key
assumptions and sensitivity analysis carried out, are adequately
presented.
LISI 2017 FINANCIAL REPORT