ASSYSTEM_Registration_Document_2017

FINANCIAL STATEMENTS PARENT COMPANY FINANCIAL STATEMENTS

VALUATION OF INVESTMENTS IN SUBSIDIARIES AND OTHER NON-CONTROLLING INTERESTS Notes to the financial statements 2, 3.2, and 4

Risks

Our response

For each investment, we have highlighted the method used by the Company for calculating the value in use of the investment and have assessed whether the method used was appropriate with regards to the economic characteristics of the investment. When the approach based on projected cash flows was used, we have: ● assessed the consistency of the budgetary data used with those presented to the Audit Committee and approved by the Board of Directors, and the consistency of forecast data with budgetary assumptions; ● checked the consistency of the assumptions made for the long term growth rate with the economic environment prevailing as at the financial statements closing date; ● checked, with the assistance of our evaluation specialists, the reasonableness of the assumptions used in determining the discounting rate; ● compared the forecasts used in the past with the actual performance shown with a view to assessing whether past objectives were met or not; ● checked that the value resulting from the cash flow forecasts was adjusted by the amount of indebtedness of the investment concerned. When the approach based on multiples was used, we have assessed the consistency of the aggregate used with the financial statements and the rationale behind the multiples used in comparison with those applied in similar business sectors. When a patrimonial approach was implemented, we have checked that the net equity data used were in line with the financial statements of the investments concerned, either audited or subject to agreed-upon procedures, and that the restatements made to the net equity, if any, were supported by a relevant documentation. Should have these investments been made close to the year end date, we have examined the available documentation used in the determination of the shares purchase price. We have also assessed the appropriateness of the information disclosed in the notes 2 “Accounting rules and principles", 3.2 “Financial assets” and 4 “List of subsidiaries and other non-controlling interests” to the financial statements.

As at 31 December 2017, the net book value of the investments held in subsidiaries and other non-controlling interests amounted to 338 million of euros, accounting for 68% of the Company’s balance sheet total. As mentioned in Note 2 “Accounting rules and principles – Investments in subsidiaries and other non-controlling interests” to the financial statements, the investments are recorded at cost at the date of acquisition or at their contribution value. At each year-end, the Company estimates the value in use of its investments in order to determine whether the value in use of each investment is lower than its carrying value. An impairment is recognised when the value in use appears to be lower than the carrying value. For the purpose of estimating the value in use, and depending on the nature of the business operated by the investment, the Company uses one of the following methods: an economic approach (based on projected cash flows or on the multiples method) or a patrimonial approach (based on the percentage held in the investment’s net equity). We have considered the valuation of investments in subsidiaries and other non-controlling interests as a key audit matter, given their materiality to the Company’s balance sheet, the high degree of estimation and judgement required from management in choosing the calculation method for the value in use and the sensitivity, depending on the calculation method adopted, of this value to changes in forecast assumptions.

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ASSYSTEM

REGISTRATION DOCUMENT 2017