Assystem - 2018 Register document

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BUSINESS REVIEW AND FINANCIAL STATEMENTS

CONSOLIDATED FINANCIAL STATEMENTS

For vehicle leases, the average remaining term of the Group’s current leases is less than two years. Discount rates The discount rates used for measuring the right-of-use assets and associated lease liabilities have been estimated based on the remaining terms of the leases concerned, as described above. Estimated impacts on the opening balance sheet at 1 January 2019 The Group’s first-time application of IFRS 16 will lead to changes in the presentation of its consolidated financial statements, effective from its interim financial statements for the six months ended 30 June 2019. An amount estimated at between €32 million and €38 million will need to be recognised in the opening balance sheet at 1 January 2019 for right-of-use assets related to leases and the associated lease liabilities. These assets and liabilities – which will primarily concern real-estate leases – will be recognised in “Right-of-use assets – leases” and “Lease liabilities”. The first-time application of IFRS 16 will not affect opening equity at 1 January 2019. The amount of lease liabilities that will have to be recognised in the opening balance sheet is not directly comparable with the amount recorded in off-balance sheet commitments for operating leases at 31 December 2018, as set out in Note 13.1 – Operating leases. This is mainly due to differences in the scope of application of IFRS 16 and the commitment terms applied. PRESENTATION OF THE FINANCIAL STATEMENTS AND YEAR-ON-YEAR COMPARISONS The presentation of the financial statements was the same for 2018 as for 2017. The preparation of financial statements in accordance with IFRS requires the use of judgement, estimates and assumptions that can affect the reported amounts of certain assets and liabilities and income and expenses. The impact of any changes in estimates is accounted for on a prospective basis. The estimates are made by Management based on the going concern principle using information available at the reporting date. They may change, however, due to circumstances or new information that could require a reconsideration of the context in which they were prepared. Actual results may therefore differ from the estimates. The random nature of certain estimates may make it difficult to ascertain the Group’s economic outlook, particularly in relation to asset impairment tests (see Note 3.3 – Goodwill). The accounting items that are the most exposed to the risk of estimation uncertainty are described below. Recognition of revenue from fixed-price contracts As explained in Note 5.1 – Revenue and working capital requirement, revenue from fixed-price contracts is recognised using the percentage- of-completion method. The percentage of completion and the revenue to be recognised depends on numerous estimates based on the monitoring of contract costs and past experience. The assumptions used and estimates of costs MAIN SOURCES UNCERTAINTY ARISING FROM USE OF JUDGEMENT, ESTIMATES AND ASSUMPTIONS

● amendments to IFRS 2, “Classification and Measurement of Share- based Payment Transactions”. The application of the above standards, amendments and interpretations did not have a material impact on the Group’s consolidated financial statements. NEW STANDARDS, AMENDMENTS AND INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE ● amendments to IFRS 9, “Prepayment Features with Negative Compensation”; ● amendments to IAS 28, “Long-term Interests in Associates and Joint Ventures”; ● IFRIC 23, “Uncertainty over Income Tax Treatments”; ● amendments to IFRS 3, “Definition of a Business”; ● amendments to IAS 1 and IAS 8, “Definition of Material”; ● amendments to References to the Conceptual Framework in IFRS Standards. The Group does not expect its first-time application of any of the above standards, amendments or interpretations to have a significant impact on its consolidated financial statements in future years. As from 1 January 2019, Assystem will apply IFRS 16, “Leases”. The Group has elected to apply the modified retrospective approach (also known as the “cumulative catch-up” approach) on its first-time application of IFRS 16, without restating comparative prior-period information. The term used for determining the discount rate applied at the transition date will correspond to the residual term of the contracts concerned. IFRS 16 contains various transition options and practical expedients. Assystem has decided to use the practical expedient whereby it is not required to apply the lessee accounting model to short-term leases (with terms of less than 12 months) or leases of low-value items. Consequently, for these types of leases no right-of-use asset or corresponding lease liability will be recognised. In view of the amounts of the lease payments involved, the leases entered into by Group entities where they are lessees mainly concern operating leases for office and technical premises as well as leases for vans and cars. The main assumptions that Assystem intends to use for its first-time application of IFRS 16, as well as the estimated impact of this new standard on its opening balance sheet at 1 January 2019 are set out below. Lease terms For real estate leases, the term used to determine the lease payments that will be discounted corresponds to the longest term within the non-cancellable period of the lease. In France most leases for office buildings have a nine-year term (known as “3/6/9” leases as they can be terminated by the lessee after three and six years). For this type of lease, Assystem considers that it is reasonably certain the Group entities concerned will not exercise their early termination options and for discounting purposes has therefore used the remaining period of the initial nine-year term. ● annual improvements to IFRSs, “2015-2017 Cycle”; ● amendments to IAS 19, “Plan Amendment, Curtailment or Settlement”;

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ASSYSTEM

REGISTRATION DOCUMENT 2018

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