SOPRA_STERIA_REGISTRATION_DOCUMENT_2017

2017 CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements

NOTE 4 OPERATING PROFIT

4.1. Revenue

2017

2016

(in millions of euros)

41.5% 20.8% 21.5% 10.5%

40.8% 24.8% 19.5%

France

1,597.0

1,528.1

United Kingdom

801.7 827.6 402.2 216.9

927.9 728.1 350.9 206.4

Other Europe

9.4% 5.5%

Sopra Banking Software

5.6%

Other Solutions

TOTAL REVENUE

3,845.4

3,741.3

100.0%

100.0%

Revenue recognition

b. Services relating to the Group’s Software and Solutions operations Services provided within the scope of the Group’s Software and Solutions operations (Banking, Property Management and Human Resources) include: p the right of use under licence of the software and solutions provided; p maintenance; p ancillary services: installation, configuration, adjustments, training, etc. In general, separate contracts are entered into with clients for licences and maintenance on the one hand and ancillary services on the other hand In this situation, the various elements comprising the contracts are accounted for as follows: p the licence fee is recognised when delivery takes place, which is considered to be the case when all contractual obligations have been fulfilled, i.e. when any remaining services to be provided are non-material and not liable to endanger the client’s acceptance of goods supplied or services rendered; p maintenance is generally billed in advance and is recognised on a pro rata basis; p ancillary services are usually provided on a time and materials basis and are recognised when performed, which generally means when invoiced. They are sometimes performed within the scope of fixed-price contracts in which case they are recognised using the percentage-of-completion method described in Section a. Sometimes, contracts comprising multiple elements (licence, maintenance, ancillary services, etc.) may be negotiated for a fixed price In this situation, the amount of revenue attributable to the licence is obtained by calculating the difference between the total contract amount and the fair value of its other components, e.g. maintenance and ancillary services. The fair value of the other components is determined when possible by reference to the prices invoiced to customers based on their best estimates, as the component is sold separately (based on a price list) or is sold at a sale price determined by the management. The residual amount attributed to the licence is recognised at the time of delivery. In fairly rare instances, ancillary services may be considered essential to the operation of a software package This may be the case for very complex projects, the completion of which may be subject to particular risks. The project is then examined as a whole and is the focus of specific monitoring by the Industrial Department. Such projects are recognised using the percentage-of- completion method described in Section a.

a. Services in Consulting, Systems Integration, Application and Infrastructure Management, and Outsourcing Production, consulting and assistance services provided on a time and materials basis These services are recognised when performed, which generally means when invoiced. Operations are reviewed at each balance sheet date: p services already performed but not yet, or only partially, invoiced are assigned a value on the basis of the contractual billing rates and billable time or units of work. They give rise to revenue recognition, with a corresponding entry to Accrued income reflected in the balance sheet as part of Trade accounts receivable ; p services already billed but not yet entirely performed are deducted from invoiced revenue and included in the balance sheet as Deferred Fixed-price contracts are characterised by commitments relating to the price, the end result and the deadline. Services performed under such contracts are recognised as follows using the percentage-of- completion method: p revenue and profit generated by a contract are recognised on the basis of a technical assessment, in line with the Group’s quality procedures, of the contract’s degree of completion. During performance of a project, this assessment is generally based on 90%of the contract amount with the remaining 10%deferred until completion upon receipt in operational condition; p the amount of revenue recognised at each balance sheet date is based on the difference between 90%of the contract value and the amount required to cover the total number of man-days remaining to be performed. This amount is included in the balance sheet as Accrued income within Trade accounts receivable . Payments on account received are deducted from the amount of Trade accounts receivable , which are therefore stated in the balance sheet at their net amount. Moreover, costs incurred in the start-up phase of a contract may be recognised in the balance sheet as work-in-progress when they relate to future activities of the contract and provided it is probable that they will generate future economic benefits. These capitalised transition costs are reported in the balance sheet under Trade accounts receivable . Should a contract become loss-making, losses at completion are systematically recorded in Provisions for contingencies and losses . income within Other current liabilities . Services covered by fixed-price contracts

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SOPRA STERIA REGISTRATION DOCUMENT 2017