SOPRA_STERIA_REGISTRATION_DOCUMENT_2017

PARENT COMPANY FINANCIAL STATEMENTS Accounting principles and policies

2.10. Retirement benefits Sopra Steria Group sets aside provisions for all of its retirement benefit commitments in accordance with the retirement clauses of the Syntec collective bargaining agreement. Sopra Steria Group’s obligation towards its employees is determined on an actuarial basis, using the projected unit credit method: the employer’s present obligation is recognised in proportion to the probable length of service of the employees, taking into account actuarial assumptions such as the level of future salary, life expectancy and staff turnover. Changes in actuarial assumptions that affect the valuation of the obligation are recognised as actuarial gains and losses. Actuarial gains and losses representing more than 10% of the amount of obligations are recognised and amortised over the expected average working lives of the employees participating in the plan. 2.11. Foreign currency transactions Foreign currency income and expense items are recorded at their euro equivalent at the transaction date. Foreign currency receivables and payables are recorded in the balance sheet at their euro equivalent determined using the closing exchange rate. Any gains or losses arising on the retranslation of foreign currency receivables and payables are recorded in the balance sheet under Translation adjustments . A provision for contingencies and losses is recognised in respect of foreign currency translation losses in the amount of such losses, unless the term of the transactions is sufficiently close. In this case, the unrealised gains and losses are considered to form part of the overall foreign exchange position and the charge to the provision is restricted to the amount by which losses exceed gains. 2.12. Financial instruments All of the foreign exchange and interest rate positions are taken using listed financial instruments traded over the counter or through organised markets with minimal counterparty risk. Gains and losses on financial instruments accounted for as hedges are recognised symmetrically with the items hedged. The fair value of financial instruments, which is not recognised in the Company’s financial statements in accordance with accounting principles generally accepted in France, is estimated on the basis of quoted prices in active markets or values provided by banks. Gains or losses arising on derivatives used to hedge forecast transactions with separately identifiable risks are deferred and taken into account in the valuation of the transaction in question, which occurs when it is settled. The application of ANC Regulation 2015-05 of 2 July 2015 relating to forward financial instruments and hedges has not had any material impact on the presentation of the financial statements. 2.13. Provisions for contingencies and losses Provisions for contingencies and losses are set aside to cover probable outflows of resources to third parties, without consideration for the Company. They may include, inter alia, provisions to cover the following: p commercial risks (estimated costs of guarantee expenses, “losses on completion” on some long-term contracts);

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 above. 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 above. 2.8. Inventories and work in progress Costs incurred in the start-up phase of a contract may be deferred over the term of the contract and 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. Work in progress is recognised at its direct production cost and does not include administrative or commercial costs. 2.9. Trade accounts receivable Trade accounts receivable are recognised using the methods specified above. A separate estimate is made for trade accounts receivable at the end of the financial year and an impairment loss is recognised in the event of a risk of non-recovery, particularly when linked to collective proceedings. Doubtful debts for which legal proceedings have not been instigated are treated as accrued credit notes.

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SOPRA STERIA REGISTRATION DOCUMENT 2017