Universal Registration Document 2019

72 LISI 2019 UNIVERSAL REGISTRATION DOCUMENT Consolidated financial statements 2 4.2  /  Statutory Auditors’ Report on the consolidated financial statements for the Financial year ended December 31, 2019 Opinion Pursuant to the assignment entrusted to us by your Shareholders’ General Meeting, we have conducted the audit of the Company’s consolidated financial statements LISI regarding the financial year ended December 31, 2019, as appended to this report. These statements were approved by the Board of Directors on February 19, 2020 on the basis of the information available at that date against the changing backdrop of the health crisis caused by Covid-19. We certify that the consolidated financial statements for the period are, in respect of the IFRS standard as adopted in the European Union, correct and genuine and give a true and fair view of the earnings 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, 2019 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-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 misstatementswhich, 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 approved in the circumstances described previously, 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 How we tackled it At December 31, 2019, the net value of goodwill stood at €354,552 for a balance sheet total of €2,000,748. These goodwill amounts correspond to differences recognized between the cost of business combinations and the Group share of fair value, at the acquisition date, of assets and liabilities relating to these companies, as detailed in Note 3.4.1.1 in the notes to the consolidated financial statements. Goodwill is subject to an impairment test at each year-end and each time that a risk of impairment is identified. Note 3.4.1.1 in the notes to the consolidated financial statements describes the methods used and the assumptions made for this test. For the purpose of this test, goodwill is allocated to each group of Cash Generating Units (CGU) which, for the Group, corresponds to the three divisions: LISI Aerospace, LISI Automotive and LISI Medical. The recoverable value of each of the Group’s CGUs is compared to the net book value of the corresponding assets. The recoverable amount is defined as the higher of the realizable value and the value in use. If the recoverable value is lower than the net book value of the CGU tested, the discrepancy is recognized as a loss of value. 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 of: • examining the discount rates used bymanagement by comparing them with our own estimates of these rates, as established in conjunction with our own specialists, and by analyzing the different constituent components; • 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.