Sopra Steria - 2019 Universal registration document

5 2019 CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements

As part of the transition, the Group opted not to exclude from the new rules leases for which the lease term ends within 12 months of the date of initial application, and to exclude the initial direct costs of measuring right-of-use assets at the date of initial application. It also opted to reclassify, at that same date, the carrying amounts of fixed assets and finance lease liabilities under leases previously identified as finance leases under IAS 17, within Right-of-use assets and Lease liabilities , respectively.

For the assets and liabilities identified as part of the first-time application of IFRS 16, the Group recognised corresponding deferred tax liabilities and assets, respectively, at the transition date. At 1 January 2019, the application of IFRS 16 "Leases" was therefore reflected by the recognition of Right-of-use assets in balance sheet assets and Lease liabilities in balance sheet liabilities, with the difference taken to equity. Its impact broke down as follows:

Assets (in millions of euros)

01/01/2019

Property, plant and equipment

-16.0 302.6

Right-of-use assets

Deferred tax

7.1

Non-current assets Other current assets

293.7

-5.7 -5.7

Current assets TOTAL ASSETS

288.0

Liabilities and equity (in millions of euros) Consolidated reserves and other reserves Equity attributable to the Group

01/01/2019

-22.9 -22.9

Non-controlling interests

-0.4

TOTAL EQUITY

-23.3

Financial debt – Non-current portion Lease liabilities – Non-current portion

-8.6

236.3 227.7

Non-current liabilities

Financial debt – Current portion Lease liabilities – Current portion

-8.3 91.9 83.7

Current liabilities TOTAL LIABILITIES

311.3 288.0

TOTAL LIABILITIES AND EQUITY

The weighted average incremental borrowing rate applied to value lease liabilities at the date of initial application of the new standard was 2.85%. The difference between total lease liabilities and off-balance sheet commitments for operating leases recognised at 31 December 2018 broke down as follows:

1 January 2019

(in millions of euros)

Lease commitments at 31/12/2018 as presented in the consolidated financial statements

364.9 -38.1 -15.4

Impact of discounting according to rates at 1 January 2019

Impact of exemptions and conditions upon initial application of IFRS 16

IAS 17 finance lease liabilities

16.9

LEASE LIABILITIES RECOGNISED AT 1 JANUARY 2019 UNDER IFRS 16

328.2

The application of IFRS 16 "Leases" had a marginally positive impact on Operating profit on business activity due to the replacement of lease expenses with slightly lower expenses related to the depreciation of right-of-use assets. EBITDA – which is split out in the analysis of Change in net financial debt – changed significantly due to the restatement of lease expenses. Other financial expenses also changed, as they now include net interest expenses on lease liabilities.

In addition, the Group has chosen to exclude lease liabilities from Net financial debt , which makes it possible to compare Free cash flow determined within Change in net financial debt with this item in previous financial years. Lastly, in December 2019, the Group’s financial covenants were renegotiated to consider pro forma EBITDA before the application of IFRS 16 "Leases" and net financial debt excluding lease liabilities.

159

SOPRA STERIA UNIVERSAL REGISTRATION DOCUMENT 2019