VALLOUREC
Société anonyme
12, rue de la Verrerie 92190 Meudon
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Statutory Auditors' Report on the Financial Statements
For the year ended December 31, 2023
KPMG S.A. | Deloitte & Associés |
2, avenue Gambetta | 6, place de la Pyramide |
92066 Paris-La Défense Cedex | 92908 Paris-La Défense Cedex |
VALLOUREC
Société anonyme
12, rue de la Verrerie 92190 Meudon
_______________________________
Statutory Auditors' Report on the Financial Statements
For the year ended December 31, 2023
_______________________________
This is a free translation into English of the Statutory Auditors' Report on the financial statements of the Company issued in French and it is provided solely for the convenience of English-speaking users.
This Statutory Auditors' Report includes information required by European regulations and French law, such as information regarding the appointment of the Statutory Auditors or verification of the management report and other documents provided to shareholders.
This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France.
To the Annual General Meeting of Vallourec,
Opinion
In compliance with the engagement entrusted to us at your Annual General Shareholders' Meeting, we have audited the accompanying financial statements of Vallourec S.A. (hereafter, "the Company") for the year ended December 31st, 2023.
In our opinion, the financial statements give a true and fair view of the assets and liabilities and of the financial position of the Company as at December 31st, 2023 and of the results of
its operations for the year then ended in accordance with French generally accepted accounting principles.
The audit opinion expressed above is consistent with our report to the Audit Committee.
Basis for opinion
Audit framework
We conducted our audit in accordance with the professional standards applicable in France. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the Statutory Auditors' Responsibilities for the Audit of the Financial Statements section of our report.
Independence
We conducted our audit engagement in compliance with independence requirements of the French Commercial Code (code de commerce) and the French Code of Ethics (code de déontologie) for statutory auditors for the period from January 1st, 2023 to the date of our report and specifically we did not provide any prohibited non-audit services referred to in Article 5(1) of Regulation (EU) N° 537/2014.
Justification of assessments - Key Audit Matters
In accordance with the requirements of Articles L.821-53 and R.821-180 of the French Commercial Code (Code de commerce) relating to the justification of our assessments, we inform you of the key audit matters relating to risks of material misstatement that, in our professional judgment, were of most significance in our audit of the financial statements of the current period, as well as how we addressed those risks.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on specific items of the financial statements.
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Statutory Auditors' Report on the Finanial Statements for the year ended December 31, 2023
Measurement of equity interests and Loans from Vallourec Tubes
Notes B "Accounting policies - Equity interests", C.1 "Equity Interest and Receivables, loans, other financial assets" and E.6 "Subsidiaries and equity investments" to the financial statements
Key Audit Matter | Audit Approach | |||||||||||||||
Equity interests on the balance sheet | Our work consisted in gaining an | |||||||||||||||
amounted to €4.856 million as at | understanding of | |||||||||||||||
December 31st, 2022, and represent the | - | the | process | for | preparing | and | ||||||||||
most significant balance sheet item. They | ||||||||||||||||
approving | the | estimates | and | |||||||||||||
correspond to shares in Vallourec Tubes, | ||||||||||||||||
assumptions used by Management | ||||||||||||||||
a | sub-holding | of | the | Vallourec | Group. | |||||||||||
to | estimate | the | value | in use of | ||||||||||||
Loans | from | Vallourec | Tubes | amount to | ||||||||||||
Vallourec | Tubes | equity | interests, | |||||||||||||
€1.701 million. | ||||||||||||||||
and | ||||||||||||||||
As | described | in | the | Note | "Equity | - | procedures | for | approving | the | ||||||
interests" to the financial statements, the | ||||||||||||||||
results by the governance entities, | ||||||||||||||||
Company recognizes a provision for | ||||||||||||||||
We also assessed the appropriateness of the | ||||||||||||||||
impairment when the value in use of | ||||||||||||||||
equity interests falls below their net | model used to determine the utility value of | |||||||||||||||
carrying amount. Similarly, the related | these equity interests and related receivables. | |||||||||||||||
receivables | are, | where | applicable, | We | obtained | the cash | flows and | operating | ||||||||
impaired when the risk is greater than the | ||||||||||||||||
forecasts for the Vallourec Group prepared by | ||||||||||||||||
value of the equity interest and when the | ||||||||||||||||
the Company, and verified their consistency | ||||||||||||||||
latter have already been impaired. | ||||||||||||||||
with the 2024 budget, as approved by the | ||||||||||||||||
Value in use is based on expected cash | Board of Directors, assessment made by the | |||||||||||||||
flows, estimated based on the Group's | Management on business forecasts. | |||||||||||||||
strategic plan | for | the | first | five | years, | With the assistance of our valuation experts, | ||||||||||
extrapolated over | the | following | three | |||||||||||||
we | assessed, | with | regards | to the Group's | ||||||||||||
years and a terminal value. | ||||||||||||||||
internal and external industry and | ||||||||||||||||
The measurement prepared as at | macroeconomic data, the appropriateness of | |||||||||||||||
December 31st, 2023 leads to, as | the various underlying assumptions used in | |||||||||||||||
indicated in the section "Equity interests" | preparing cash flow forecasts, including | |||||||||||||||
of | the | C.1 | of | financial | statements, a | - | regional | price | and | volume | ||||||
reversal of €887 million for the period. | ||||||||||||||||
assumptions, which are dependent | ||||||||||||||||
Cash forecasts used to identify | on investments in the exploration | |||||||||||||||
recoverable values are based on available | and production of oil and natural | |||||||||||||||
data at the date of the closing of the | gas, | |||||||||||||||
accounts, in a context of recovery in the | - | forecasts of changes in costs in the | ||||||||||||||
Oil and Gas business. | ||||||||||||||||
context of the "New Vallourec" | ||||||||||||||||
However, | uncertainties | remain | when | strategic plan, and | ||||||||||||
considering future outlook, particularly in | - | exchange rates, growth rates and | ||||||||||||||
connection | with the inflationary | context | ||||||||||||||
discount rates. | ||||||||||||||||
which | may | adversely | impact | raw | ||||||||||||
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Statutory Auditors' Report on the Finanial Statements for the year ended December 31, 2023
materials and energy prices as well as the | We also assessed the consistency of cash flow | |||||||
impact of climate change on Company's | forecasts with past performances, market | |||||||
business model. | outlook, and forecast data presented to the | |||||||
In this context, realization could digress | Company's Board of Directors. | |||||||
these estimations and the variable nature | Lastly, we (i) performed our own sensitivity | |||||||
of | some | estimation | could | be | analysis, (ii) verified the arithmetic accuracy | |||
strengthened. | of the calculations and (ii) verified that the | |||||||
We | considered | that | Vallourec | Tubes | value resulting from the cash flow forecasts | |||
has been adjusted to take the Vallourec | ||||||||
equity | interests' | valuation | and related | |||||
Group's net debt into account. | ||||||||
Loans is a key audit matter due to its | ||||||||
importance in the financial statements | ||||||||
assets and the fact that the determination | ||||||||
of the value in use of these interests | ||||||||
require | judgement | and | estimations | |||||
calculation from Management to build | ||||||||
future cash flow previsions, used to | ||||||||
identify its value. | ||||||||
Specific verifications
We have also performed, in accordance with professional standards applicable in France, the
specific verifications required by French laws and regulations.
Information provided in the Management Report and in the other documents with respect to the financial position and the financial statements provided to shareholders
We have no matters to report as to the fair presentation and consistency with the financial statements of the information provided in the Management Report and in the other documents with respect to the financial position and the financial statements provided to the Shareholders.
We attest to the fair presentation and consistency with the financial statements of the information relating to payment terms, required under Article D.441-6 of the French Commercial Code.
Report on corporate governance
We attest that the corporate governance section of the Board of Directors' management report 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.
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Statutory Auditors' Report on the Finanial Statements for the year ended December 31, 2023
Concerning the information given in accordance with the requirements of Article L.22-10-9 of the French Commercial Code relating to remuneration and benefits paid or awarded to corporate officers and any other commitments made in their favour, 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 the Company from controlled companies within its scope of consolidation. Based on this work, we attest to the accuracy and fair presentation of this information.
Concerning the information given in accordance with the requirements of Article L.22-10-11 of the French Commercial Code relating to those items the Company has deemed liable to have an impact in the event of a takeover bid or exchange offer, we have verified its consistency with the underlying documents that were disclosed to us. Based on this work, we have no matters to report with regard to this information.
Other information
In accordance with French law, we have verified that the required information concerning the identity of shareholders and holders of the voting rights has been properly disclosed in the management report.
Report on other legal and regulatory requirements
Format of presentation of the financial statements intended to be included in the Annual Financial Report
In accordance with professional standards applicable to the Statutory Auditors' procedures for annual and consolidated financial statements presented according to the European single electronic reporting format, we have verified that the presentation of the financial statements to be included in the annual financial report referred to in paragraph I of Article L.451-1-2 of the French Monetary and Financial Code (Code monétaire et financier) and prepared under the Chief Executive Officer's responsibility, complies with this format, as defined by European Delegated Regulation No. 2019/815 of 17 December 2018.
On the basis of our work, we conclude that the presentation of the financial statements to be included in the annual financial report complies, in all material respects, with the European single electronic reporting format.
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Statutory Auditors' Report on the Finanial Statements for the year ended December 31, 2023
It is not our responsibility to ensure that the financial statements to be included by the Company in the annual financial report filed with the AMF correspond to those on which we carried out our work.
Appointment of the Statutory Auditors
We were appointed as Statutory Auditors of Vallourec at the Annual General Shareholders' Meeting held on June 1st, 2006 for both audit firms.
As at 31 December 2023, KPMG S.A. was in the 18th year of an uninterrupted engagement and Deloitte & Associés in the 22nd year of an uninterrupted engagement, given the succession of mandates between legal entities of the Deloitte network.
Responsibilities of Management and those charged with governance for the financial
statements
Management is responsible for the preparation and fair presentation of the financial statements in accordance with French accounting principles and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the 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.
The Financial and Audit Committee is responsible for monitoring the financial reporting process and the effectiveness of internal control and risk management systems and where applicable, internal audit, regarding accounting and financial reporting procedures.
The financial statements were approved by the Board of Directors.
Statutory Auditors' responsibilities for the audit of the financial statements
Objectives and audit approach
Our role is to issue a report on the financial statements. Our objective is to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with professional standards will always detect a material
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Statutory Auditors' Report on the Finanial Statements for the year ended December 31, 2023
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As specified in Article L.821-55 of the French Commercial Code, our statutory audit does not include assurance on the viability of the Company or the quality of management of the affairs of the Company.
As part of an audit conducted in accordance with professional standards applicable in France, the Statutory Auditor exercises professional judgment throughout the audit and furthermore:
- Identifies and assesses the risks of material misstatement of the financial statements, whether due to fraud or error, designs and performs audit procedures responsive to those risks, and obtains audit evidence considered to be sufficient and appropriate to provide a basis for his opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;
- Obtains an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control;
- Evaluates the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management in the financial statements;
- Assesses the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. This assessment is based on the audit evidence obtained up to the date of his audit report. However, future events or conditions may cause the Company to cease to continue as a going concern. If the Statutory Auditor concludes that a material uncertainty exists, there is a requirement to draw attention in the audit report to the related disclosures in the financial statements or, if such disclosures are not provided or inadequate, to modify the opinion expressed therein;
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Statutory Auditors' Report on the Finanial Statements for the year ended December 31, 2023
- Evaluates the overall presentation of the financial statements and assesses whether these statements represent the underlying transactions and events in a manner that achieves fair presentation.
Report to the Audit Committee
We submit a report to the Audit Committee which includes, in particular, a description of the scope of the audit and the audit programme implemented, as well as the results of our audit. We also report any significant deficiencies in internal control that we have identified regarding the accounting and financial reporting procedures.
Our report to the Audit Committee includes the risks of material misstatement that, in our professional judgment, were the most significant in the audit of the financial statements of the current period and which are therefore key audit matters. We describe these matters in this audit report.
We also provide the Audit Committee with the statement required under Article 6 of Regulation (EU) No. 537/2014, confirming our independence within the meaning of the rules applicable in France as set out in Articles L.821-27 to L.821-34 of the French Commercial Code and the French Code of Ethics applicable to Statutory Auditors. Where appropriate, we discuss with the Audit Committee the risks that may bear on our independence, and the related safeguards.
Paris-La-Défense, March 8th, 2024
The Statutory Auditors,
KPMG S.A. | Deloitte & Associés |
Alexandra Saastamoinen | Véronique Laurent |
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Vallourec SA published this content on 02 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 02 May 2024 11:52:11 UTC.