2017 CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements
IAS 36 Impairment of Assets requires that an entity assess at each reporting date whether there is any indication that an asset may be impaired. If so, the asset’s recoverable amount must be estimated. Irrespective of whether there is any indication of impairment, an entity must also: p test intangible assets with indefinite useful lives annually; p test the impairment of goodwill acquired in a business combination. In practice, impairment testing is above all relevant to goodwill, which constitutes the majority of Sopra Steria Group’s consolidated non-current assets. Impairment testing is performed at the level of the cash-generating units (CGUs) to which assets are allocated. A CGU is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. The Group’s segmentation into CGUs is consistent with the operating structure of its businesses, its management and reporting system, and its segment reporting (see Note 3). Impairment testing involves comparing CGUs’ carrying amounts with their recoverable amounts. A CGU’s recoverable amount is the higher of its fair (generally market) value less costs of disposal and its value in use.
The value in use of a CGU is determined using the discounted cash flow (DCF) method: p cash flows for an explicit forecast period of five years, with the first year of the period based on the budget; p cash flows beyond the five-year explicit period are calculated using a perpetual growth rate reflecting the anticipated rate of real long- term economic growth adjusted for long-term inflation forecasts. The discount rate is based on the weighted average cost of capital. This is compared with the estimates produced by financial analysts. The final discount rate used for each CGU is derived from this comparison and falls between the weighted average cost of capital and the average of analyst estimates. Perpetual growth rates are based on an average of analyst estimates. Impairment losses are recognised to the extent of any excess of a CGU’s carrying amount over its recoverable amount. Impairment losses are first allocated against goodwill and are charged to profit or loss as part of Other operating income and expenses . Reversal of impairment losses for goodwill arising on fully consolidated investments is prohibited.
8.2. Other intangible assets
Gross value Amortisation
(in millions of euros)
0.5 0.5 0.9
Software acquired and other intangible assets
Other intangible assets comprise technologies, client relationships, favourable contracts, order backlogs and brands allocated as part of the purchase price allocation process for a business combination.
Expenses relating to the amortisation of allocated intangible assets enter into the calculation of Profit from recurring operations .
SOPRA STERIA REGISTRATION DOCUMENT 2017
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