Sopra Steria - 2019 Universal registration document

5 2019 CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements

Reconciliation of statutory and effective tax expense 6.2.

Financial year 2019

Financial year 2018

(in millions of euros)

Net profit

173.1

128.7

Adjustment for:

-

-

Net profit from associates p

1.8

3.6

Tax expense p

-87.3

-82.0

Profit before tax

258.7

207.2

Theoretical tax rate

34.43%

34.43%

Theoretical tax expense Permanent differences

-89.1

-71.3

-9.3

-5.2 -0.6 21.2

Change in uncapitalised loss carryforwards

1.4 9.9

Impact of tax credits Tax rate differences

14.1

7.6 0.8

Prior year tax adjustments

3.2

CVAE (net of tax) Tax reassessment

-16.4

-15.2 -15.1

-

Other tax

-1.1

-4.1

ACTUAL TAX EXPENSE

-87.3

-82.0

Effective tax rate

33.77%

39.60%

The reconciliation between the statutory tax expense and the effective tax expense is conducted using the statutory tax rate in France for the Group’s parent company. This statutory tax rate consists of the 33.33% corporate tax rate plus the 1.1% Contribution Sociale de Solidarité des Sociétés (C3S) social security tax. The Cotisation sur la Valeur Ajoutée des Entreprises (CVAE) – a tax on corporate value added, which is a component of the Contribution Économique Territoriale (CET) regional business tax in France – is recognised as part of the corporate income tax expense, as is the Imposta Regionale Attività Produttive (IRAP) regional production tax in Italy. The Group operates in many countries with differing tax laws and tax rates. Within each country, tax rates may also vary depending on the tax policies implemented by local governments and can lead to differences between the current and deferred tax rates, as is the

case mainly in France, the United Kingdom and Belgium. Local weighted average tax rates applicable to Group companies can therefore vary from year to year depending on the relative level of taxable profit. These movements are reflected in Tax rate differences. This also takes into account the impact of the lower tax rate in France, which nevertheless represents an immaterial amount. The decrease in Impact of tax credits in 2019 with respect to 2018 resulted from the transformation of the French tax credit for competitiveness and jobs (CICE) into a reduction in deductible social security contributions starting in financial year 2019. In 2019, as in 2018, Other tax essentially consisted of unrecovered withholdings. Lastly, in 2018 Tax reassessment reflected movements in tax liabilities to cover tax risks, mainly in France.

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SOPRA STERIA UNIVERSAL REGISTRATION DOCUMENT 2019