Sopra Steria - 2018 Registration document

DETAILED PRESENTATION OF SOPRA STERIA Risk factors and internal control

❙ RISK RELATED TO BREXIT

Risk description

Risk management

Major uncertainties remain concerning the terms of the United Kingdom’s departure from the European Union. Against this backdrop, the effects remain uncertain. Brexit could have an unfavourable impact on the economy and market conditions, as well as an impact in terms of instability on the financial markets and international forex markets. In addition, Brexit may result in legal uncertainties and have associated effects such as certain decisions being delayed while awaiting greater visibility. The most significant risks seem to involve political disturbances and uncertainties and macroeconomic impacts. Each of these effects, as well as others that are not yet known and cannot be anticipated, could have an unfavourable impact on the Group’s activities, performance and financial position. It should be noted that although the Group may appear to be exposed to the increased volatility of euro and sterling exchange rates, which could have an impact in the consolidated financial statements of transactions carried out in the United Kingdom, the Group’s exposure to foreign exchange transaction risk seems limited insofar as its activities are conducted primarily by subsidiaries that operate in their own country and their own currency. It should also be noted that in spite of this context, business opportunities remain available. Sopra Steria Group provides its employees with retirement benefits in several countries, including the United Kingdom (which accounts for 48% of the Group’s retirement benefit obligations). The Group’s financial statements may be affected by provisions for obligations under defined-benefit pension plans and the associated liabilities. Within the framework of commitments made, the employer is obliged to cover any difference (deficit) between the value of the fund assets and the pension obligations to be paid. The evaluation of pension fund liabilities can be impacted by regulatory developments, changes in long-term interest rates, life expectancy and more generally any changes in the financial markets, as well as any changes in macroeconomic parameters. These parameters, which are external to the company, can have a non-neutral impact on the valuation of both assets and liabilities. The Group may also be compelled to meet calls for funds to make up for low pension contribution levels as part of the three-yearly negotiations with trustees in the United Kingdom or as a result of regulatory developments. Furthermore, assets are managed by fund trustees and invested in different asset classes (including shares) that are subject to the risk of fluctuations in financial markets. ❙ RISKS ASSOCIATED WITH RETIREMENT BENEFIT OBLIGATIONS Risk description

With respect to Brexit, Sopra Steria’s management in the United Kingdom and the Group’s Executive Committee are keeping a close eye on any political decisions made by the United Kingdomor the European Union in this area so as to take any requisite measures to reduce risk. Sopra Steria has set up a Brexit working group. This working group tracks and manages the potential risks identified in the following areas: human resources; financial, tax, legal, regulatory and IT systems; and data security. This involves an analysis by segment of Brexit’s implications for client requirements. Mitigation measures have been put in place, such as communications campaigns, and requests have been sent to certain key suppliers, particularly with regard to the hosting of data and data flows. This subject and its developments are being addressed in regular exchanges with clients in the United Kingdom. The Group has not identified any logistics risk of service interruption. In fact, more than two-thirds of business activities in sales, services and solutions are recurring in nature, the majority of clients are local, and both resources and organisations remain local, with the exception of the service centre in India, whose activity is not affected by Brexit. Nevertheless, a number of minor preventive and anticipatory measures have been decided, particularly with respect to communications and relations with suppliers. Since 2010, defined-benefit plans in the United Kingdom have been replaced by defined-contribution plans (pension benefits are based on the performance of the fund’s investments over the contribution period), although benefits vested prior to this decision remain in effect. The defined benefit plans are exceptionally maintained in connection with a few public-sector outsourcing projects, to comply with the legislation and commitments made to clients. All elements relating in particular to the management and review of assets and liabilities, as well as the three-yearly negotiations, are monitored by the Group’s Finance Department. The Finance Department takes part in the regular exchanges with the trusts managing pension fund assets in the United Kingdom, and also participates in the three- yearly negotiations. The next round of three-yearly negotiations is to be held in 2020. It should be noted that the proceedings previously initiated by the Steria Pension Plan trustees before the High Court of Justice to confirm the validity and effective date of an amendment signed in 2006 have been settled amicably. For more information, see Note 5.3 to the consolidated financial statements in Chapter 4 of this document (pages 128 to 133). Risk management

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SOPRA STERIA REGISTRATION DOCUMENT 2018