SOPRA_STERIA_REGISTRATION_DOCUMENT_2017

2017 CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements

NOTE 10 PROVISIONS AND CONTINGENT LIABILITIES

10.1.Current and non-current provisions

Non- current portion

Changes in scope Charges

Reversals (used)

Reversals (not used) Other

Translation adjustments 31/12/2017

Current portion

01/01/2017

(in millions of euros)

Provisions for disputes

20.6

0.2

1.0

-8.9

-1.0 -6.1

-0.2

5.5

1.0

4.5

Provisions for guarantees

0.5

-

-

-0.1

-0.1

-

-

0.3

0.2

0.1

Provisions for losses on contracts Provisions for taxes

8.9

1.4

0.9 0.8

-9.0 -2.8

- -

-1.2

-0.2

0.7

-

0.7

31.1

-

-

-

29.1 29.1

-

Provisions for restructuring

18.3

-

3.6 -10.5

-0.5

-

-

11.0

3.3

7.6

Other provisions for contingencies

37.1

0.1

9.7 -14.5

-12.5 7.4

-1.0 -1.4

26.2 22.6

3.6

TOTAL

116.4

1.7 16.0 -45.8

-14.1

-

72.8 56.2 16.6

Provisions for disputes cover disputes before employment tribunals and severance benefits (€4.5 million at 31 December 2017, versus €5.4 million at 31 December 2016) as well as amounts in excess of insurance franchises and client risks provisioned in respect of commercial disputes (€1.0 million at 31 December 2017, versus €15.2 million at 31 December 2016). Provisions for taxes mainly relate to tax risks in France, and in particular the R&D tax credit and withholdings applied by foreign clients. Provisions for restructuring correspond to residual costs under the transformation programme within the original scope of Steria in France (€1.7 million), the cost of one-off restructuring measures in Germany (€2.8 million) and Sopra Steria integration costs mainly relating to facilities (€5.5 million in France). Other provisions for contingencies mainly cover costs relating to premises (€7.5 million, including €7.1 million in restoration costs, mostly in the United Kingdom), clients and projects (€11.1 million, including €8.2 million in the United Kingdom and €2.9 million in Germany), contractual risks (€4.1 million), and tax and employee risks (€2.1 million).

Present obligations resulting from past events involving third parties are recognised in provisions only when it is probable that such obligations will give rise to an outflow of resources to third parties, without consideration from the latter that is at least equivalent and if the outflow of resources can be reliably measured. Since provisions are estimated based on future risks and expenses, such amounts include an element of uncertainty and may be adjusted in subsequent periods. The impact of discounting provisions is taken into account if significant. In the specific case of restructuring, an obligation is recognised as soon as the restructuring has been publicly announced and a detailed plan presented or the plan implementation has commenced. This cost mainly corresponds to severance payments, early retirement, costs related to notice periods not worked, training costs for departing employees and other costs relating to site closures. A provision is recognised for the rent and related costs to be paid, net of estimated sub-leasing income, in respect of any property if the asset is sub-leased or vacant and is not intended to be used in connection with main activities. Scrapped assets and impairment of inventories and other assets directly related to the restructuring measures are also recognised in restructuring costs.

169

SOPRA STERIA REGISTRATION DOCUMENT 2017