2024 universal registration document

Valuation of investments and intangible assets (excluding software and assets in progress)

See Notes “1.6 - Accounting principles - Intangible assets”, “1.8.1 – Investments”, “11 - Intangible assets”, “13 - Financial fixed assets” and “29 - List of subsidiaries and investments” to the financial statements

Risk identified	Our response
As at December 31, 2024, investments and intangible assets (excluding software and assets in progress) were recorded in the balance sheet for a net book value of €18.3 billion and €3.7 billion, respectively, i.e. 74% of the balance sheet total. They were recorded at their date of entry at acquisition cost. An impairment loss is recognized if their value in use falls below their net book value. As described in Notes 1.6 and 1.8 to the financial statements, their value is examined annually by reference to their value in use, which takes into account: for investments: the current and projected profitability of the concerned holding and the share of equity held; for intangible assets: discounted future cash flows. Estimating the value in use of these assets requires Management’s judgment in determining future cash flow projections and key assumptions used. Given the weight of investments and intangible assets in the balance sheet and the uncertainties inherent in certain items, including the realization of forecasts used in the valuation of the value in use, we considered the valuation of these assets to be a key audit matter with a risk of material misstatements.	As at December 31, 2024, investments and intangible assets (excluding software and assets in progress) were recorded in the balance sheet for a net book value of €18.3 billion and €3.7 billion , respectively, i.e. 74% of the balance sheet total. They were recorded at their date of entry at acquisition cost. An impairment loss is recognized if their value in use falls below their net book value. As described in Notes 1.6 and 1.8 to the financial statements, their value is examined annually by reference to their value in use, which takes into account: for investments: the current and projected profitability of the concerned holding and the share of equity held; for intangible assets: discounted future cash flows. Estimating the value in use of these assets requires Management’s judgment in determining future cash flow projections and key assumptions used. Given the weight of investments and intangible assets in the balance sheet and the uncertainties inherent in certain items, including the realization of forecasts used in the valuation of the value in use, we considered the valuation of these assets to be a key audit matter with a risk of material misstatements. Our response We examined the methodology employed by Management to estimate the value in use of investments and intangible assets (excluding software and assets in progress). Our audit work mainly focused on examining, on the basis of the information provided to us, that the estimated values determined by Management were based on an appropriate valuation method, and in assessing the quality of these estimates by considering the data, assumptions and calculations used. We focused our work primarily on investments and intangible assets with a value in use close to their net book value. We assessed the appropriateness of the key estimates, and more specifically: the consistency of revenue projections and the margin rate, compared to past performance and to the economic and financial context; the corroboration of the growth rates used with the performance analyses of the global cosmetics market, taking into account the specificities of the local markets and of the distribution channels in which the Company operates; the discount rates applied to future cash flows by comparing their parameters with external references, by including valuation experts into our team.

Risk identified

Our response

As at December 31, 2024, investments and intangible assets (excluding software and assets in progress) were recorded in the balance sheet for a net book value of €18.3 billion and €3.7 billion, respectively, i.e. 74% of the balance sheet total. They were recorded at their date of entry at acquisition cost.

An impairment loss is recognized if their value in use falls below their net book value.

As described in Notes 1.6 and 1.8 to the financial statements, their value is examined annually by reference to their value in use, which takes into account:

for investments: the current and projected profitability of the concerned holding and the share of equity held;
for intangible assets: discounted future cash flows.

Estimating the value in use of these assets requires Management’s judgment in determining future cash flow projections and key assumptions used.

Given the weight of investments and intangible assets in the balance sheet and the uncertainties inherent in certain items, including the realization of forecasts used in the valuation of the value in use, we considered the valuation of these assets to be a key audit matter with a risk of material misstatements.

We examined the methodology employed by Management to estimate the value in use of investments and intangible assets (excluding software and assets in progress).

Our audit work mainly focused on examining, on the basis of the information provided to us, that the estimated values determined by Management were based on an appropriate valuation method, and in assessing the quality of these estimates by considering the data, assumptions and calculations used.

We focused our work primarily on investments and intangible assets with a value in use close to their net book value.

We assessed the appropriateness of the key estimates, and more specifically:

the consistency of revenue projections and the margin rate, compared to past performance and to the economic and financial context;
the corroboration of the growth rates used with the performance analyses of the global cosmetics market, taking into account the specificities of the local markets and of the distribution channels in which the Company operates;
the discount rates applied to future cash flows by comparing their parameters with external references, by including valuation experts into our team.

Specific Verifications

We have also performed, in accordance with professional standards applicable in France, the specific verifications required by laws and regulations.

Information given in the management report and in the other documents with respect to the financial position and the financial statements provided to the shareholders

We have no matters to report as to the fair presentation and the consistency with the financial statements of the information given in the Board of Directors’ management report and in the other documents with respect to the financial position and the financial statements provided to the shareholders.

We attest the fair presentation and the consistency with the financial statements of the information relating to payment deadlines mentioned in Article D. 441‑6 of the French Commercial Code (Code de commerce).

Information relating to Corporate Governance

We attest that the section of the Board of Directors’ management report on corporate governance sets out the information required by Articles L. 225‑37‑4, L. 22‑10‑10 and L. 22‑10‑9 of the French Commercial Code (Code de commerce) .

Concerning the information given in accordance with the requirements of Article L. 22‑10‑9 of the French Commercial Code (Code de commerce) relating to the remuneration and benefits received by, or allocated to the directors and any other commitments made in their favor, we have verified its consistency with the financial statements, or with the underlying information used to prepare these financial statements and, where applicable, with the information obtained by your Company from companies controlled thereby, included in the consolidation scope. Based on these procedures, we attest the accuracy and fair presentation of this information.

With respect to the information relating to items that your Company considered likely to have an impact in the event of a takeover bid or exchange offer, provided pursuant to Article L. 22‑10‑11 of the French Commercial Code (Code de commerce), we have agreed this information to the source documents communicated to us. Based on these procedures, we have no observations to make on this information.

Other information

In accordance with French law, we have verified that the required information concerning the purchase of investments and controlling interests and the identity of the shareholders and holders of voting rights has been properly disclosed in the management report.