Sopra Steria - 2019 Universal registration document

5 2019 CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements

PROVISIONS AND CONTINGENT LIABILITIES NOTE 11

Current and non-current provisions 11.1.

Non- current portion

Change in scope Charges

Reversals (used)

Reversals (not used)

Translation adjustments 31/12/2019

Current portion

01/01/2019

Other

(in millions of euros)

Provisions for disputes Provisions for guarantees

4.8

0.5

1.2

-1.8

-0.5

-

-

4.1

2.3

1.8

0.6

-

0.1

-0.3

-

-

-

0.4

0.2

0.2

Provisions for losses on contracts

1.2

-

0.5

-1.2

-

-

-

0.6

0.3

0.4

Provisions for restructuring

7.0

-

2.9

-5.6

-0.2

-

-

4.0

-

4.0

Provisions for the cost of renovating premises Provisions for tax risks other than income tax Other provisions for contingencies

-

2.0

0.7

-

-0.1 6.0

0.2

8.8

6.9

1.9

44.2

-

2.7

-

-1.4 -4.8

-

40.8

40.8

-

23.6 81.5

0.1

6.3

-3.3

-3.0 -6.0 -5.2 -4.7

0.5 0.8

18.2

11.8

6.4

TOTAL

2.6 14.4 -12.3

77.0 62.3 14.8

Provisions for disputes mainly cover disputes before employment tribunals and end-of-contract bonuses for employees (€3.1 million at 31 December 2019, versus €4.1 million at 31 December 2018). At 31 December 2018, provisions for tax risks mainly related to tax risks in France, in particular the R&D tax credit and withholdings applied by foreign clients. With the application of IFRIC 23 "Uncertainty over Income Tax Treatments" (see Note 1.2.4), €4.7 million in provisions for withholding tax risks were reclassified at 1 January 2019 under Income tax liabilities , and the remainder consisting of provisions for R&D tax credit risks under Other provisions for contingencies . 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

Provisions for restructuring correspond to the cost of one-off restructuring measures in Germany (€2.6 million) and Sopra Steria integration costs mainly relating to facilities (€1.4 million in France). Other provisions for contingencies and Provisions for tax risks other than income tax mainly cover risks relating to R&D tax credits in France (€40.8 million), clients and projects (€7.9 million), contracts (€2.9 million) and employees (€4.0 million). Lastly, the Group has split out on a separate line provisions for buildings and renovation, which had been classified within Other provisions for contingencies at 31 December 2018. 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 UNIVERSAL REGISTRATION DOCUMENT 2019