Assystem - 2018 Register document

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BUSINESS REVIEW AND FINANCIAL STATEMENTS

CONSOLIDATED FINANCIAL STATEMENTS

3.4 Impairment testing The recoverable amount of the CGUs was calculated based on their value in use. In order to determine value in use, the Group projects the future cash flows that it expects to derive from each CGU. These projections are based on four-year budgets and cash flows beyond this four-year period are estimated by extrapolating the projections using a perpetuity growth rate (see below). This growth rate must not exceed the medium- to long-term average growth rate for the industry as a whole. The future cash flows are discounted using the weighted average cost of capital (WACC) of the sector.

The cash flows used were based on budget forecasts drawn up by the operating management teams of each CGU/operating segment when determining their medium and long-term strategy. The Group applied a normative cost of debt weighted for the Group as a whole and a cost of equity specific to each country in order to determine the WACC. The table below presents the main factors used for modelling the assumptions applied for the impairment tests:

2018

Perpetuity growth rate used for extrapolating future cash flows beyond the projection period

CGU

Discount rate

Energy & Infrastructure

1.5% 1.5%

9.0%

Staffing

10.2%

2017

Perpetuity growth rate used for extrapolating future cash flows beyond the projection period

CGU

Discount rate

Energy & Infrastructure

1.5% 1.5%

9.2%

Staffing

10.7%

If any impairment is identified based on the calculation of discounted future cash flows and/or market values of the assets concerned, or if there is a change in market conditions or in the cash flows that were originally estimated, then previously recognised impairment losses may need to be revised or modified.

A 0.5% increase in the discount rate or a 0.5% decrease in the perpetuity growth rate assumptions used for the impairment tests carried out on the Energy & Infrastructure and Staffing CGUs would not result in the recognition of an impairment loss for these CGUs. There were no significant changes in assumptions between 31 December 2017 and 2018.

SEGMENT REPORTING

NOTE 4

Operating segments are components of the Group about which separate financial information is available that is evaluated regularly by Group management in deciding how to allocate resources and in assessing performance. The Group has two operating segments: Energy & Infrastructure (complex infrastructure engineering) and Staffing (worldwide assignment of consultants specialised in Oil & Gas and Industry). The main accounting policies used for operating segments are as follows: ● each segment has its own resources and may share certain resources with other segments to create synergies. This sharing is carried out through a reallocation of costs or through contractual relations between different legal entities; ● management costs that are directly attributable to the two operating segments are allocated to each segment concerned;

● the indicator, “EBITA including share of profit of equity-accounted investees”, excludes non-recurring income and expenses. Analysis by operating segment Assets and liabilities allocated by operating segment correspond to operating assets and liabilities used by each division in its operating activities and which are directly attributable to the segment or can be allocated to the segment on a reasonable basis. They correspond to: ● goodwill, intangible assets and property, plant and equipment; ● trade receivables, other receivables and other current assets; ● trade payables, amounts due to suppliers of non-current assets, accrued taxes and payroll costs, current liabilities related to share acquisitions, short-term provisions and other current liabilities.

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ASSYSTEM

REGISTRATION DOCUMENT 2018