2021 Universal Registration Document

5 2021 CONSOLIDATED FINANCIAL STATEMENTS

Statutory Auditors’ report on the consolidated financial statements

Our response We familiarised ourselves with the internal control procedures implemented by the Group and tested the key controls relating to determining income from fixed-price contracts. For a sample of contracts deemed material due to their financial impact and risk profile: we reconciled contractual data, including any contractual p changes resulting from additional requests and contractual claims, with management and accounting data; we talked to management and project managers in order to p assess the reasonable nature of the estimates made by management and corroborate the estimated amount allocated to cover the total number of person-days remaining to be performed, particularly in comparison with prior estimates and by reviewing correspondence with the client and assessing whether this has been translated correctly into the accounts. In performing this work we drew on experience acquired in previous financial years relating to similar contracts; for contracts subject to claims, we talked to the Group’s legal p department and reviewed correspondence with the client in order to assess the estimates made by management. We also used substantive checks on a sample of trade receivables and accrued income in order to assess management’s estimates relating to the prospect of recovering these receivables. VALUATION AND IMPAIRMENT OF GOODWILL (Notes 2.1, 8.1.2 and 8.1.3 to the consolidated financial statements) Risk identified As at 31 December 2021, the net value of goodwill in the Group’s consolidated financial statements was €1,984.3 million, equal to 41.6% of total assets. As set in out in Notes 2.1, 8.1.2 and 8.1.3 to the consolidated financial statements, goodwill is allocated to cash-generating units (CGUs) for the purposes of impairment tests. The Group’s segmentation into CGUs is consistent with the operating structure of its businesses, its management and reporting system, and its segment reporting. Impairment tests are performed whenever there is an indication of impairment, and in any event at the balance sheet date of 31 December. These tests consist in comparing the CGU’s carrying amount with its recoverable amount, which corresponds to the higher of (i) its fair value less costs of disposal and (ii) its value in use. An impairment loss is recognised whenever the recoverable amount of goodwill is lower than the carrying amount the weighted average cost of capital. To determine the value in use of the CGU, management primarily uses the discounted cash flow (DCF) method, which involves the use of key assumptions relating to each asset category, including in particular the perpetual growth rate and the discount rate based on the weighted average cost of capital. Determining the recoverable amount of goodwill, which represents a particularly significant amount relative to total assets, is primarily based on management’s judgment, in particular as regards the perpetual growth rate used to forecast cash flows and the discount rate applied. We therefore considered the valuation of goodwill and the implementation of impairment testing to be a key audit matter.

Our response Our work consisted primarily of: reviewing the compliance of the methodology used by the Group p with applicable accounting standards; assessing whether the allocation of assets to CGUs is exhaustive p and complies with applicable accounting standards; checking the calculation of goodwill recognised over the period; p assessing the reasonable nature of assumptions used to p determine future cash flows, with regard to the business and financial context for the Group’s operations and their consistency with the most recent estimates presented to the Board of Directors within the framework of budgetary processes; assessing, with the help of our valuation experts, the consistency p of the perpetual growth rate and the weighted average unit cost of capital in all components; analysing the sensitivity of the value in use determined by p management to a change in the main assumptions made, particularly for the Sopra Banking Software CGU. Lastly, we verified that Notes 2.1 and 8.1 to the consolidated financial statements provided appropriate information. VALUATION AND IMPAIRMENT OF EQUITY-ACCOUNTED INVESTMENTS (Note 10.2 to the consolidated financial statements) Risk identified As at 31 December 2021, the net value of equity-accounted investments in the Group’s consolidated financial statements was €198.1 million, equal to 4.3% of total assets. These equity interests mainly correspond to the Group’s stake in Axway Software for €195.9 million. As explained in Note 10.2 to the consolidated financial statements, impairment tests are performed whenever there is an indication of impairment, and in any event at the balance sheet date of 31 December. These tests consist in comparing the carrying amount of equity-accounted investments with their recoverable amount, which corresponds to the higher of (i) their fair value less costs of disposal and (ii) their value in use: as Axway Software’s shares are listed, their fair value less costs of p disposal is equal to market price less costs to sell; to determine the value in use of equity-accounted investments, p management primarily uses the discounted cash flow (DCF) method, which involves the use of key assumptions relating to each asset category, including in particular the perpetual growth rate and the discount rate based on the weighted average cost of capital.

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SOPRA STERIA UNIVERSAL REGISTRATION DOCUMENT 2021