Econocom - 2019 Universal registration document

06 consolidated financial statements

notes to the consolidated financial statements

Assessments made by 24. Management and sources of ژ uncertainty

valuation of the Group’s residual interest • in leased assets: this valuation is performed using the method described in note ژ 11.1 and verified each ژ year using statistical methods; assessments of the probability of • recovering the tax loss carryforwards and tax credits of the Group’s subsidiaries (see note ژ 7 on tax loss carryforwards); provisions (note ژ 16): provisions are • recognised to cover probable outflows of resources to a third party with no equivalent consideration for the Group. They include provisions for litigation of any nature which are estimated on the basis of the most probable, conservative settlement assumptions. To determine these assumptions, Group Management relies, where necessary, on assessments made by external consultants; like most digital service companies, • Econocom benefits from a research tax credit ( Crédit d’Impôt Recherche) and competitiveness and employment tax credit ( Crédit d’impôt pour la compétitivité et l’emploi ) in France. The findings of the completed tax audits confirmed the positions adopted by the Group in its financial statements. Lastly, the accounting methods used in the event of acquisitions are described in the note on business combinations.

The main areas in which judgement was exercised by Group Management were as follows: impairment of goodwill (note ژ 9.3): • each ژ year, the Group reviews the value of the goodwill in its consolidated financial statements. These impairment tests are particularly sensitive to medium-term financial projections and to the discount rates used to estimate the value in use of CGUs; measurement of provisions for pensions • (see note ژ 17): an actuary calculates the provision for retirement benefits using the projected unit credit method. This calculation is particularly sensitive to assumptions regarding the discount rate, salary increase rate and employee turnover rate; valuation of the stock options granted • since November ژ 2002: the actuarial formulae used are sensitive to assumptions concerning employee turnover, changes in and volatility of the share price of Econocom Group SE, as well as the probability of Management achieving its objectives (see note ژ 15.3.1);

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2019 annual report