Cap Gemini - Registration Document 2016

FINANCIAL INFORMATION

4.2 Consolidated financial statements

for the United Kingdom (8.7% in 2015) and 8.4% for the rest of the Group (8.5% in 2015). a result of these impairment tests. No impairment losses were recognized at December 31, 2016 as 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; ◗ +/-1 point in the operating margin rate* for the first five years; (*) ◗ +/-0.5 points in the discount rate; ◗ +/-0.5 points in the long-term growth rate. ◗ did not identify any recoverable amounts below the carrying amount for any cash-generating units, with the exception of the Latin America cash-generating unit, where the difference between the recoverable amount resulting from this test and the net carrying amount is considered immaterial. This cash-generating unit remains sensitive to the environment and economic climate in Brazil. assets is reviewed at each period end. This amount is reduced to the extent that it is no longer probable that additional taxable 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 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, taking account of the probability of realization of future taxable profits. profit will be available against which to offset all or part of the if, the subsidiaries have a legally enforceable right to offset The main deferred tax assets and liabilities are offset if, and only current tax assets against current tax liabilities, and when the deferred taxes relate to income taxes levied by the same taxation authority.

This goodwill was tested for impairment at December 31, 2016 in line with the Group valuation procedure for such assets. In 2016, the Group used estimates produced by 11 financial analysts, most of whom were included in the 2015 group of financial analysts selected for the calculation of long-term growth rates and discount rates. Long-term growth and discount rates used for Brazil and India have been calculated separately, taking account of the specific characteristics of these countries. Value in use is measured using the discounted future cash flow method and based on the following main assumptions: based on data taken from the three-year strategic plan process, with extrapolation of this data for the remaining period; number of years over which cash flows are estimated: five years, ◗ long-term growth rate used to extrapolate to perpetuity final year ◗ estimated cash flows: 7.0% for Brazil (8% in 2015), 4% for India (3.8% in 2015) and 2.4% for the rest of the Group (stable on 2015); discount rate: 8.4% for North America (9.0% in 2015), 14.2% for ◗ Brazil (14.7% in 2015), 14.9% for India (13.4% in 2015), 7.9% Deferred taxes are: recorded to take account of temporary differences between ◗ the carrying amounts of certain assets and liabilities and their tax basis; recognized in income or expenses in the Income Statement, ◗ 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 (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. Deferred taxes Note 16

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

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Registration Document 2016 — Capgemini