BIC - 2019 Universal Registration Document

FINANCIAL STATEMENTS

Statutory auditor's report on the consolidated financial statements

III.

JUSTIFICATIONOF ASSESSMENTS - KEY AUDIT MATTERS

In accordance with the requirements of Articles L.823-9 and R.823-7 of the French Commercial Code (code de commerce) relating to the justification of our assessments, we inform you of the key audit matters relating to risks of material misstatement that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period, as well as how we addressed those risks. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on specific items of the consolidated financial statements.

Impairment test of the Cello goodwill (Note 10 “Goodwill” to the consolidated financial statements) Risk identified Our answer The assessment of the recoverability of goodwill (€ 204 million out of € 2 392 million at December 31, 2019), and especially the one related to the Cello acquisition in India, is a matter of attention for management as the underlying business plan is ambitious, reflecting existing opportunities in the country. The Cello goodwill amounting to a 93 million euros gross value as of December 31,2019 had been depreciated by 69 million euros in 2018. The annual impairment test performed in June 2019 did not result in any additional depreciation. In December 2019 and as described in note 10 to the notes of the consolidated financial statements, (i) the transfer of the Cello trademark from India to France, which triggered a depreciation of part of the trademark based on a valuation performed by an independent expert as well as (ii) the adverse business environment of Cello both in India and its major export markets, Bic performed an additional impairment test of the Cello unit which led the Group to account for the full depreciation of the Cello goodwill of 23 million euros which has now been fully written off.

We have reviewed how the Cello CGU value in use was determined. Besides the assessment of management’s competency and objectivity, we have performed certain specific audit procedures: Testing of internal control related to the preparation of the most recent • Cello UGT future cash flows forecast. Verifying consistency of the main data used in the Cello CGU future • cash flows forecast comparing them with both the historical performance and the strategic plan validated by the appropriate level of governance. Corroborating the perpetual growth rate and discount rate used in the • impairment test with the assistance of our valuation specialists.

A high degree of judgement is exercised by management around the assumptions used to determine the value in use of the cash generating unit (“CGU”) to which the Cello goodwill has been allocated and which was determined using discounted cash flows of the Cello Pens CGU. We have therefore considered the Cello goodwill valuation as a key audit matter. The main assumptions used to determine the value in use are presented in Note 10 to the consolidated financial statements.

IV.

SPECIFIC VERIFICATIONS

As required by law we have also verified in accordance with professional standards applicable in France the information pertaining to the Group presented in the management report of the board of directors. We have no matters to report as to its fair presentation and its consistency with the consolidated financial statements. We attest that the consolidated non-financial statement required by Article L.225-102-1 of the French Commercial Code is included in Group management report, being specified that, in accordance with the provisions of Article L.823-10 of the code, we have not verified the fair presentation and the consistency with the consolidated financial statements of the information contained therein and should be reported on by an independent insurance services provider.

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• BIC GROUP - 2019 UNIVERSAL REGISTRATION DOCUMENT •