SOPRA_STERIA_REGISTRATION_DOCUMENT_2017

2017 CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements

1.4. Format of the financial statements and foreign currency translation

1.4.2. Foreign currency translation

a. Functional and presentation currencies Items included in the financial statements of each Group entity are measured using the currency of the primary economic environment in which that entity operates, i.e. its “functional currency”. The consolidated financial statements are presented in euros, the functional and presentation currency of the parent company Sopra Steria Group. b. Translation of the financial statements of foreign subsidiaries The accounts of all Group entities whose functional currency differs from the Group’s presentation currency are translated into euros as follows: p assets and liabilities are translated at the end-of-period exchange rate; p income, expenses and cash flows are translated at the average exchange rate for the period; p all resulting foreign exchange differences are recognised as a distinct equity component under Other comprehensive income and included in Accumulated translation reserves within equity (see Note 13.1.4). In accordance with IAS 21 The Effects of Changes in Foreign Exchange Rates , translation gains and losses arising from the translation of net investments in foreign operations are recognised as a distinct component of equity. Translation gains and losses in respect of intercompany loans are considered an integral part of the Group’s net investment in the foreign subsidiaries in question. When a foreign operation is divested, the cumulative translation difference is recycled to profit or loss as part of the gain or loss arising on disposal. Goodwill and fair value adjustments arising on the acquisition of foreign operations are treated as assets and liabilities of the operation and, as such, are translated at the end-of-period exchange rate. The Group does not own any consolidated entities operating in a hyperinflationary economy.

1.4.1. Format of the financial statements With regard to the presentation of its consolidated financial statements, Sopra Steria Group applies Recommendation 2013-03 of the French Accounting Standards Authority ( Autorité des Normes Comptables – ANC) of 7 November 2013 on the format of the income statement, the cash flow statement and the statement of changes in equity. The format of the income statement was adapted several years ago to improve the presentation of the Company’s performance. A financial aggregate known as Operating profit on business activity was added before Profit from recurring operations . This is an indicator used internally by management to assess performance. It corresponds to Profit from recurring operations before: p the expense relating to the costs and advantages granted to the recipients of stock option, free share and employee share ownership plans; p the amortisation of allocated intangible assets. Operating profit is then obtained by taking Profit from recurring operations and subtracting Other operating income and expenses . The latter contains any material items of operating income and expenses that are unusual, abnormal, infrequent or unpredictable, presented separately in order to give a clearer picture of performance based on ordinary activities. Lastly, in the analysis of the change in its net financial debt, the Group splits out EBITDA . This figure corresponds to Operating profit on business activity , after adding back in the depreciation, amortisation and provisions included in the latter indicator.

The applicable exchange rates for the translation of foreign currencies are as follows:

Average rate for the period

Period-end rate

€1/Currency

2017

2016

31/12/2017

31/12/2016

Danish krone

7.4386 9.3270 9.6351 2.7257 10.9562 1.1297 1.4647 1.5588 1.1117 0.8767 3.6054 73.5324 7.6290 4.2570

7.4452 9.2906 9.4689 2.3751 10.8512 1.1069 1.4659 1.5275 1.0902 0.8195 3.8561 74.3717 7.3522 4.3632

7.4449 9.8403 9.8438 2.9985 11.2234 1.1993 1.5039 1.6024 1.1702 0.8872 3.9729 76.6055 7.8044 4.1770

7.4344 9.0863 9.5525 2.4263 10.6751 1.0541 1.4188 1.5234 1.0739 0.8562 3.4305 71.5935 7.3202 4.4103

Norwegian krone Swedish krona

Tunisian dinar

Moroccan dirham

US dollar

Canadian dollar Singapore dollar

Swiss franc

Pound sterling Brazilian real Indian rupee Chinese yuan

Polish zloty

138

SOPRA STERIA REGISTRATION DOCUMENT 2017