Sopra Steria - 2018 Registration document

2018 CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements

p the use of the percentage-of-completion method to recognise revenue. IFRS 15 diverges from the previous rules by setting specific criteria for determining the transfer of control of goods or services to a customer over time and therefore applying the percentage-of-completion method for revenue recognition. Accordingly, fixed-price construction contracts in integration activities and the development of new features or specific modules for certain customers in software solutions did not, in a very limited number of cases, satisfy the criteria for the recognition of revenue on a percentage-of-completion basis. The revenue and the related expenses were therefore deferred and recognised on completion; p the role of principal or agent . The standard modifies the criteria identifying the situations in which, for a distinct performance

obligation, the Group acts as either a principal or an agent. The Group acts as a principal when it controls the services performed by a subcontractor or the goods purchased from a supplier before transferring control of them to its client. In all other cases, it acts as an agent. Revenue is recognised on a gross basis (with purchases recognised in expenses for the full amount) where the Group acts as a principal. Where it acts as an agent, revenue is limited to the fees or commission to which the Group is entitled under the terms of the contract, representing the margin on this contract (revenue recognition on a net basis). Revenue from equipment sales contracts and licences – a very marginal activity for the Group – was therefore recognised on a net basis rather than gross, as previously.

The information below presents the impacts of the changes arising from application of the new standard on the various financial statement items presented for comparison purposes with those for the period ended 31 December 2018:

❙ STATEMENT OF NET INCOME FOR THE PERIOD ENDED 31 DECEMBER 2017

2017 before IFRS 15

2017 after IFRS 15

Impact

(in millions of euros)

Revenue

3,845.4 -3,515.6

-14.2

3,831.1 -3,500.4

Operating expenses

15.2

Operating profit on business activity

329.8 8.6% 286.8 7.5% 261.7 6.8% -73.5 173.3 173.3 4.5% -9.8

0.9

330.7 8.6% 287.7 7.5% 262.6 6.9% -73.9 175.1 175.1 4.6% -8.5

as % of revenue

Profit from recurring operations

0.9

as % of revenue Operating profit as % of revenue

0.9

Other financial income and expenses

1.3

Tax expense

-0.4 1.9

Net profit from continuing operations

Consolidated net profit

1.9

as % of revenue

Non-controlling interests

1.8

0.8 1.1

2.6

NET PROFIT ATTRIBUTABLE TO THE GROUP

171.4

172.5

as % of revenue

4.5%

4.5%

115

SOPRA STERIA REGISTRATION DOCUMENT 2018