APC 2003 Annual Report Download - page 113

6. Auditors' Report
on the Consolidated
Financial Statements
Year ended December 31, 2003
To the Shareholders of Schneider Electric S.A.
In accordance with the terms of our appointment at
the Annual Shareholders' Meeting, we have audited
the accompanying consolidated financial statements
of Schneider Electric SA and its subsidiaries for the
year ended December 31, 2003.
These financial statements have been approved by
the Board of Directors. Our responsibility is to express
an opinion on these financial statements, based on
our audit.
Opinion on the consolidated financial
statements
We conducted our audit in accordance with the pro-
fessional standards applied in France. Those stan-
dards require that we plan and perform the audit to
obtain reasonable assurance about whether the con-
solidated financial statements are free of material
misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclo-
sures in the financial statements. An audit also
includes assessing the accounting principles used
and significant estimates made by management, as
well as evaluating the overall financial statement pre-
sentation. We believe that our audits provide a rea-
sonable basis for our opinion.
In our opinion, the consolidated financial statements
give a true and fair view of the assets and liabilities
and financial position of Schneider Electric SA and
its subsidiaries as of December 31, 2003, and of the
results of their operations for the year then ended in
accordance with French accounting principles and
regulations.
Basis of opinion
In accordance with Article L.225-235, paragraph 2,
of the Commercial Code requiring the auditors to
explain the basis of their opinion, which is applicable
for the first time this year, we draw your attention to
the matters set out below which contribute to the
opinion expressed above in relation to the consoli-
dated financial statements taken as a whole:
■As explained in note 13 to the consolidated finan-
cial statements, deferred tax assets recognized in
the balance sheet at December 31, 2003 include
€497.3 million corresponding to tax loss carryfor-
wards. Net income for the year ended December 31,
2003 includes a net deferred tax benefit of €114.6
million. This amount corresponds essentially to the
recognition of deferred tax assets for the entire tax
loss carryforwards of the French tax group, following
a change in French tax law allowing these losses to
be carried forward indefinitely. It also includes a €53
million impact of canceling discounting adjustments
recorded in 2002.
We obtained assurance about the reasonableness of
the assumptions used to produce the estimates of
future taxable income used to support assessments
of the recoverability of these deferred tax assets and
the resulting valuations.
■As explained in notes 2.6 and 2.10 to the consoli-
dated financial statements, goodwill is tested for
impairment when triggering events that may load to
a loss of value are identified. Tests on the Positec
goodwill led to the decision to record an impairment
loss of €10 million, as explained in note 4. We
reviewed the indicators of a loss of value and the
other information evidencing the absence of any loss
of value.
■Note 24 to the consolidated financial statements
states that the cost of restructuring programs
launched by Group entities in 2003 amounted to
€135.2 million. These costs concern restructuring
measures initiated or announced before December
31, 2003, for which provisions have been recorded
based on an estimate of the costs to be incurred. We
reviewed the approach used by the Group, based on
currently available information.
During our assessment of these accounting esti-
mates, no matters came to our attention that would
be likely to affect the reasonableness of these esti-
mates or the resulting valuations.
Specific procedures
We also reviewed the information about the Group
given in the report of the Board of Directors. We have
no matters to report concerning the fairness of this
information and its consistency with the consolidated
financial statements.
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Paris and Neuilly-sur-Seine, February 19, 2004
The Statutory Auditors
PricewaterhouseCoopers Audit Barbier Frinault et Autres / Ernst & Young
Anne Monteil Christian Chochon / Pierre Jouanne