Sopra Steria - 2018 Registration document

2018 CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements

8.1.2. Breakdown of goodwill by cash-generating unit (CGU) The net carrying amounts of goodwill by CGU are as follows:

31/12/2018

31/12/2017

(in millions of euros)

France

498.7 570.3 326.9 300.1

491.1 575.0 288.3 223.6

United Kingdom Other Europe (1)

Sopra Banking Software

Sopra HR Software

12.5

12.5

TOTAL

1,708.5

1,590.6

(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, after reassessing whether all assets and liabilities have been correctly identified. 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 2018. These tests were performed using the following parameters:

Discount rate

Perpetual growth rate

31/12/2018

31/12/2017

31/12/2018

31/12/2017

8.4% 9.0%

7.7% 8.5%

2.0% 2.0% 2.0% 2.0% 2.0%

2.0% 2.0% 2.0% 2.0% 2.0%

France

United Kingdom

7.7–10.5%

7.1–9.0%

Other Europe

8.4% 8.4%

7.7% 7.7%

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 a 2-point decrease in the perpetual growth rate (no perpetual growth); or p the combination of a 2-point increase in the discount rate and a 2-point decrease in the perpetual growth rate; or p a 2-point increase in the discount rate; or

p a 2-point decrease in the projected operating margin; or p a 2-point decrease in the projected growth rate. For the “United Kingdom” CGU, the Group might be required to write down its assets in the event of a 1.4-point decrease in the operating margin, all other things being equal. With regard to the “Sopra Banking Software” CGU, an increase of more than 1.8 points in the discount rate, or a 1-point increase in the discount rate combined with a simultaneous 1-point decrease in the perpetual growth rate, might require the Group to write down its assets, all other things being equal. For the other CGUs, additional tests run to measure sensitivity to key hypotheses would not lead to the recognition of any impairment.

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SOPRA STERIA REGISTRATION DOCUMENT 2018