BIC_REGISTRATION_DOCUMENT_2017

FINANCIAL STATEMENTS Statutory Auditors’ Report on the consolidated financial statements

Impairment test of the Cello goodwill

Risk identified

Our answer

Goodwill represents an important part of the total assets of the Bic Group (€ 277 million out of € 2 352 million at December 31, 2017). The assessment of the recoverability of those goodwill, especially the one related to the most recent acquisition (Cello in India – € 96 million), is a matter of attention for management as the underlying business plan is ambitious reflecting existing opportunities in the country. 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 Pens 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 as well as the sensitivity analysis for the main parameters (discounted cash flows, discount rate and perpetual growth rate) are presented in Note 10 to the consolidated financial statements.

We have examined how the CGUs’ value in use were determined with a specific focus on the Cello Pens’ value in use. 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 future cash • flows forecast. Verifying consistency of the main data used in the future cash flows • determination comparing them with the historical performance and the CGU strategical plan validate by the appropriate level of governance. Corroborating the perpetual growth rate and discount rate used with • historical data observed on those markets. We finally performed our own sensitivity analysis to evaluate the impact of a modification of the main assumptions on the value in use. We finally assessed the appropriateness of the sensitivity information provided in note 10 to the consolidated financial statements.

Valuation of year end rebates or volume rebates

Risk identified

Our answer

As part of its normal business, the Bic Group commits itself to certain discounts that are generally based on volumes purchased or to certain commercial efforts with its main customers (collectively the “rebates”). The accrual for such rebates are determined by management using both the actual contract terms as well as existing relationships with each customer. We have considered this rebates evaluation as a key audit matter considering the judgement that applied by management in the accrual determination and utilization of those accruals.

We have considered the basis upon which those accruals are accounted for. Our work mainly consisted in: Test internal control used by the Group to ensure that it properly • identifies and gathers the contractual clauses that generate an expected rebate payment to be accrued for. Test the computation of the accruals using the underlying contractual • agreements Verify reliability of the accrual estimates comparing the amounts • effectively paid to the customers with the original estimates (“backtesting” procedures for a selection of customers and agreements).

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BIC GROUP - 2017 REGISTRATION DOCUMENT