SOPRA_STERIA_REGISTRATION_DOCUMENT_2017

2017 CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements

8.1.2. Breakdown of goodwill by CGU The net carrying amounts of goodwill by CGU are as follows:

31/12/2017

31/12/2016

(in millions of euros)

France

491.1 575.0 288.3 223.6

458.8 593.5 269.5 222.7

United Kingdom Other Europe (1)

Sopra Banking Software

Sopra HR Software

12.5

12.5

TOTAL

1,590.6

1,557.0

(1) “Other Europe” comprises the following CGUs, which are tested separately: Germany, Scandinavia, Spain, Italy, Switzerland, Belgium and Luxembourg.

For each business combination, the Group may elect to recognise under its balance sheet assets either partial goodwill (corresponding only to its percentage of ownership interest) or full goodwill (also including the goodwill corresponding to minority interests) according to the method for business combinations presented in Note 2.1. This decision is made on an acquisition-by-acquisition basis.

Should the calculation of goodwill result in a negative difference (bargain purchase), the Group recognises the resulting gain entirely in profit or loss. Goodwill is allocated to cash-generating units for the purposes of impairment tests as set out in Note 8.1.3. Such tests are performed when there is an indication of impairment, and in any event at the balance sheet date of 31 December.

8.1.3. Impairment testing The Group performed impairment tests as at 31 December 2017. These tests were performed using the following parameters:

Discount rate

Perpetual growth rate

31/12/2017

31/12/2016

31/12/2017

31/12/2016

7.7% 8.5%

8.3% 9.0%

2.0% 2.0% 2.0% 2.0% 2.0%

2.0% 2.0% 2.0% 2.0% 2.0%

France

United Kingdom

7.1-9.0%

7.3-9.6%

Other Europe

7.7% 7.7%

8.3% 8.3%

Sopra Banking Software

Sopra HR Software

The Group tested 0.5-point changes in these assumptions. A 0.5-point decrease in the perpetual growth rate, a 0.5-point increase in the discount rate, or both, would not lead to any recognition of impairment. Additional testing was performed to measure sensitivity to key assumptions (such as the discount rate, perpetual growth rate, operating margin and revenue growth rate) for each cash-generating unit. The Group performed tests using the following hypotheses: p an increase of 2 points in the discount rate; or p a decrease of 2 points in the perpetual growth rate (no perpetual growth); or p the combination of an increase of 2 points in the discount rate and a decrease of 2 points in the perpetual growth rate; or

p a decrease of 2 points in the projected operating margin; or p a decrease of 2 points in the projected growth rate. With the exception of the United Kingdom cash-generating unit, the Group would not recognise an impairment in any of these situations, all other things being equal. Tests performed on the United Kingdom cash-generating unit were all satisfactory, except for the 2-point decrease in the operating margin. Accordingly, the Group might be required to write down its assets in the United Kingdom in the event of a decrease in the operating margin greater than 1.5%, all other things being equal. With respect to the other cash-generating units, management believes that there is no reasonably possible change that could make the carrying amount of a cash-generating unit exceed its recoverable amount, given their value in use.

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SOPRA STERIA REGISTRATION DOCUMENT 2017