CAPGEMINI_REGISTRATION_DOCUMENT_2017

4

FINANCIAL INFORMATION

4.2 Consolidated Financial Statements

The main assumptions used were therefore:

December{31, 2017

Long-term growth rate

Discount rate

{

North America

2.9% 6.3% 4.7% 2.9% 2.4%

7.4%

Latin America

12.1% 11.9%

Asia-Pacific

United Kingdom and Ireland

7.2% 6.7%

Continental Europe

Furthermore, an analysis of the calculation’s sensitivity to a combined change in the following key assumptions: +/-2{points in the revenue growth rate for the first{five{years; X +/-1{point in the operating margin rate{ (1) for the X first{five{years; +/-0.5{points in the discount rate; X +/-0.5{points in the long-term growth rate; X did not identify any recoverable amounts below the carrying amount for any cash-generating units.

No impairment losses were recognized at December{31, 2017 as a result of these impairment tests. For the Latin America cash-generating unit, which was tested for impairment at June{30, 2017, the use at December{31, 2017 of discount and long-term growth rates calculated using the 2016{calculation method, would not have resulted in the recognition of an impairment loss at December{31, 2017. Similarly, it would not have impacted the sensitivity tests presented below.

Deferred taxes Note{16

Deferred tax assets are recognized when it is probable that taxable profits will be available against which the recognized tax asset can be utilized. The carrying amount of deferred tax assets is reviewed at each period end. This amount is reduced to the extent that it is no longer probable that additional taxable profit will be available against which to offset all or part of the deferred tax assets to be utilized. Conversely, the carrying amount of deferred tax assets will be increased when it becomes probable that future taxable profit will be available in the long-term against which to offset tax losses not yet recognized. The probability of recovering deferred tax assets is primarily assessed based on a 10-year plan, weighted for the probability of realization of future taxable profits. The main deferred tax assets and liabilities are offset if, and only if, the subsidiaries have a legally enforceable right to offset current tax assets against current tax liabilities, and when the deferred taxes relate to income taxes levied by the same taxation authority.

Deferred taxes are: recorded to take account of temporary differences between X the carrying amounts of certain assets and liabilities and their tax basis; recognized in income or expenses in the Income Statement, X in income and expense recognized in equity, or directly in equity in the period, depending on the underlying to which they relate; measured taking account of known changes in tax rates X (and tax regulations) enacted or substantively enacted at the year-end. Adjustments for changes in tax rates to deferred taxes previously recognized in the Income Statement, in income and expense recognized in equity or directly in equity are recognized in the Income Statement, in income and expense recognized in equity or directly in equity, respectively, in the period in which these changes become effective.

Operating margin, an alternative performance measure monitored by the Group, is defined in Note{3 - Alternative performance measures. (1)

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REGISTRATION DOCUMENT 2017 — CAPGEMINI