Danone // 2020 Universal Registration Document

4 117 DANONE UNIVERSAL REGISTRATION DOCUMENT 2020 4.1 Consolidated financial statements and notes to the consolidated financial statements STATUTORY AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS Tax assets and liabilities DESCRIPTION OF RISK HOW OUR AUDIT ADDRESSED THIS RISK Your group operates inmany different tax jurisdictions throughout the world. Consequently, the Company and its subsidiaries may be subject to audits or questioning by local tax authorities. The situations where outflows of resources are considered probable give rise to liabilities measured on the basis of facts known in the jurisdiction involved. As indicated in Note 15 of the Notes to the consolidated financial statements, liabilities for tax risks, including territorial risks, amounted to €683 million as of December 31, 2020. As of 31 December 2020, the amount of 302 million euros is recognized in the consolidated balance sheet in respect of the deferred tax assets relating to tax loss carryforwards as set out in Note 9.3 of the Notes to the consolidated financial statements. The recoverability of these deferred tax assets resulting from tax loss carryforwards is based primarily on the ability of the entities concerned to meet their targets defined in the business plans drawn up by management, It is to be noted, as mentioned in the note 3.2 in the Notes to the consolidated financial statements, that the Group proceeded to a deferred tax assets review in the context of the pandemic crisis due to Covid-19. The recognition of tax assets and liabilities and liabilities for tax risks constitutes a key audit matter, given (i) the judgment required to assess the recoverability of deferred taxes notably in the context of the pandemic crisis due to Covid-19 and (ii) the probable outflows of resources related to tax disputes. We gained an understanding the procedures implemented within the Group to identify the main tax risks, as well as management’s assessments of these risks. We also gained an understanding of the opinions of third parties, and analyzed past and current experience with the tax authorities in the jurisdictions concerned. Furthermore, we involved in the audit team, tax specialists in order to assess the assumptions used by management to determine the liabilities for tax risks. We examined the deferred tax positions for the most significant entities. Our work consisted primarily in examining (i) the awar- eness of the Covid-19 consequences in the business projections prepared by the management, (ii) the consistency with these assumptions concerning the use of the tax loss carryforwards against future taxable profits with those derived from manage- ment’s business projections, used in particular within the scope of the impairment tests on goodwill and on brands. Specific verifications We have also performed, in accordance with professional standards applicable in France, the specific verification required by laws and regulations of the Group’s information given in the management report of the Board of Directors. We have no matters to report as to their fair presentation and their consistency with the consolidated financial statements. We attest that the consolidated non-financial statement required by Article L.225-102-1 of the French Commercial Code is included in the information relating to the Group presented in the management report, being specified that, in accordance with the provisions of Article L. 823-10 of the Code, we have verified neither the fair presentation nor the consistency with the consolidated financial statements of the information contained therein. This information should be reported on by an independent third party. Report on Other Legal and Regulatory Requirements Format of the presentation of the consolidated financial statements intended to be included in the annual financial report In accordance with Article 222-3, III of the AMF General Regulation, the Company’s management informed us of its decision to postpone the presentation of the consolidated financial statements in compliance with the European single electronic format as defined in the European Delegated Regulation No 2019/815 of 17 December 2018 to years beginning on or after January 1st, 2021. Therefore, this report does not include a conclusion on the compliance with this format of the presentation of the consolidated financial statements intended to be included in the annual financial report mentioned in Article L. 451-1-2, I of the French Monetary and Financial Code ( code monétaire et financier ). Appointment of the Statutory Auditors We were appointed as statutory auditors of Danone by the Annual General Meeting held on May 21, 1992 for PricewaterhouseCoopers Audit and Avril 28, 2016 for ERNST & YOUNG Audit. PricewaterhouseCoopers Audit and ERNST & YOUNG Audit were in the 29th year and 5th year of total uninterrupted engagement, respectively. Previously, ERNST & YOUNG Audit have been appointed as a statutory auditor from 2010 to 2015. Responsibilities of management and those charged with governance for the consolidated financial statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and for such internal control as management determines is ne- cessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless it is expected to liquidate the Company or to cease operations.