Financial Statements 2023

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Estimations related to revenues and costs at completion for the accounting of onerous contracts and material over time contracts (Reference is made to the disclosure on Note 4 Material Accounting Policies, Note 5 Key Estimates and Judgements, Note 12 Revenues and Gross Margin and Note 24 Provisions, Contingent Assets and Contingent Liabilities of the financial statements) Risk The Group has a large portfolio of long-term contracts for which it needs to assess the revenues and costs at completion in order to recognize a provision for onerous contract if needed, and to account for revenue related to material over time contracts.

Provisions for onerous contracts such as for the A400M contract are recognized when it becomes probable that the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under the contract. The identification and determination of the provisions for onerous contracts and revenue recognition of over time contracts require management’s significant judgment and assumptions associated with estimated revenue and costs at completion of the program, the achievement of technical milestones, production plan, performance guarantees as well as key risks such as expected outcome from ongoing negotiations with customers, penalties for delay or technical non-compliance. We also considered the potential risk of management override of controls or other inappropriate influence over the financial reporting process. Our audit procedures included, amongst others, evaluating the appropriateness of the Company’s accounting policies related to estimations for onerous contracts according to IAS 37 “Provisions, contingent liabilities and contingent assets” and whether the accounting policies have been applied consistently or whether changes, if any, are appropriate in the circumstances. We evaluated the design and implementation and, if considered appropriate in the context of our audit of the financial statements, tested the operating effectiveness of controls for accounting for onerous contracts and for the assessment of revenues and costs at completion. We also performed substantive procedures on individually significant programs. We evaluated management’s assumptions in the identification and determination of, amongst others, the stage of completion of a project and estimates to complete for both revenue and costs. We tested the costs incurred to date and the accuracy or appropriateness, and completeness of the data used in developing these key estimates. We also evaluated management’s assessment of key contract risks and opportunities to determine whether these are appropriately reflected in the total estimated costs at completion, paid specific attention to technical and market developments including inflation risks and ongoing litigations, contractual obligations and negotiations with customers. We performed inquiries with the program teams and Heads of Programs in order to confirm our understanding of the program status and associated risks which may affect total estimated costs at completion.

Our audit approach

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Airbus

Financial Statements 2023