Compagnies des Alpes // 2019 Universal Registration Document

5 FINANCIAL INFORMATION

Consolidated financial statements

Accounting treatment of the concessions for ski areas Risk identified The operation of the ski areas by Compagnie des Alpes lies within a complex legal framework: l the speci fi cs of the mechanical-ski-lifts public service are recognised at the legislative and regulatory level via the Mountain Act of 9 January 1985, the major provisions of which were incorporated in the French Tourism Code; l public service concessions (PSC) signed between the subsidiaries of Compagnie des Alpes and the local authorities set the main economic parameters for the equilibrium of the PSC relative essentially to investments, fees paid, changes to prices and the devolution of assets at the end of the concession. We considered that the accounting translation of the elements in the life of these contracts is a key point of the audit, because recording transactions directly related to these contracts is complex: l each subsidiary signs a speci fi c contract with the local authority upon which the ski area is dependent; l the accounting treatment of assets is speci fi c to each of the concessions; l the determination of the recovery value of assets at the end of the concession may, according to the contracts, require the use of judgements and estimates by the management; l the management’s assumption that the concessions will be renewed made by the management when carrying out its impairment tests must take into account the latest discussions with the local authorities. Our solution We have taken note of the legal commitments and transactions related to the implementation of these contracts. We have checked the correct accounting translation of these transactions, particularly with regard to the treatment of the concession assets and the investment commitments. Where applicable, we have corroborated our analyses by interviews with the Financial Department and Legal Department, notably to understand the judgements and estimates adopted. We have taken note of the negotiations in progress for concessions that will shortly expire, in order to check the reasonable character of the assumptions made by the management to perform its impairment tests. We have also assessed the appropriate character of the information referred to in the Consolidated Financial Statements, notably in Note 1.14 relating to the concessions. At 30 September 2019, the value of intangible and tangible assets stood at €1,554 million compared with a balance sheet total of €1,843 million. These assets are composed of goodwill (€331 million, see Note 6.1), intangible assets (€69 million, see Note 6.2) and property, plant and equipment (€1,154 million, see Note 6.3). The value of these assets is tested by the management as soon as events or changes to the market environment or internal events indicate a risk of sustainable loss of value and at least once a year for assets with an inde fi nite service life. We have considered that the valuation of these assets is a key point of the audit due, fi rstly, to the determination of their recoverable value, based on forecasts for discounted future cash fl ows, which require the use of assumptions, estimates or assessments, and, secondly, due to the high sensitivity of assumptions on the results of the test used. The main assumptions, the methodology used and the sensitivity tests are presented in Notes 1.12, 1.15 and 6.1 to 6.3 to the consolidated fi nancial statements. As indicated in Note 1.15, the impairment tests are implemented under an approach that involves grouping cash-generating units at the level of two operating sectors: Ski Areas and Leisure Parks. Our solution We have examined the procedures for implementing the impairment tests performed by the Group. These are based in particular on medium- term plans prepared for each site, reviewed and approved by the Group’s governance. We have assessed: l the quality of the process for the preparation and approval of budgets and forecasts; l the appropriateness of the main estimates used, in particular cash fl ow forecasts and the long-term growth rates and discount rates used. We have also analysed the consistency of forecasts and performed our own sensitivity analyses on the impairment tests. These analyses were carried out with the assistance of our valuation experts and have been shared with the group’s Executive Management. We have also assessed the appropriate character of the information presented for the impairment tests for assets and checked the quanti fi ed information provided in Note 6.1 to the consolidated fi nancial statements and relating to the sensitivity tests. Specific checks We also carried out, in accordance with the standards of professional practice applicable in France, the speci fi c checks required by the law and regulations on disclosures relating to the Group, given in the Board of Directors’ management report. We have no comment to make regarding their fairness and consistency with the consolidated fi nancial statements. Impairment test for intangible assets and property, plant and equipment Risk identified

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Compagnie des Alpes I 2019 Universal registration document