Sopra Steria - 2018 Registration document

2018 CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements

NOTE 10 PROVISIONS AND CONTINGENT LIABILITIES

10.1.Current and non-current provisions

Reversals (not

Non- current portion

Changes in scope Charges

Reversals (used)

Translation adjustments 31/12/2018

Current portion

(in millions of euros) 01/01/2018

used) Other

Provisions for disputes Provisions for guarantees Provisions for losses on contracts Provisions for tax risks Provisions for restructuring Other provisions for contingencies

5.5

-

1.1

-1.4

-0.2 -0.4

-

4.8

1.0

3.8

0.3

-

0.4

-

-

-

-

0.6

0.3

0.3

0.7

0.9

0.4

-0.8

-

-

-

1.2

-

1.2

29.1

-

20.5

-5.4

-

-

-

44.2

44.2

-

11.0

-

3.7

-7.7

-

0.1

-

7.0

1.3

5.7

26.2 72.8

0.8 1.7

4.3

-6.4

-2.7 1.6 -2.9 1.3

-0.3 -0.3

23.6

13.0

10.5

TOTAL

30.4 -21.6

81.5 59.9 21.6

Provisions for disputes mainly cover disputes before employment tribunals and end-of-contract bonuses for employees (€4.1 million at 31 December 2018, versus €4.5 million at 31 December 2017). At 31 December 2017, they also covered insurance excesses and client risks provisioned in respect of commercial disputes for €1.0 million. Provisions for tax risks mainly relate to tax risks in France, in particular the R&D tax credit and withholdings applied by foreign clients. Provisions for restructuring correspond to the cost of one-off restructuring measures in Germany (€2.7 million) and Sopra Steria integration costs mainly relating to facilities (€3.3 million in France). Other provisions for contingencies mainly cover costs relating to premises (€8.6 million, including €8.2 million in restoration costs, mostly in the United Kingdom), clients and projects (€7.9 million, including €5.2 million in the United Kingdom and €2.1 million in Germany), contractual risks (€2.9 million) and employee risks (€4.1 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 said parties 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 subleasing income, in respect of any property if the asset is subleased 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.

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SOPRA STERIA REGISTRATION DOCUMENT 2018