Sopra Steria - 2020 Universal registration document

5 2020 CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements

Provisions for disputes mainly cover disputes before employment tribunals and end-of-contract bonuses for employees (€4.6 million at 31 December 2020, versus €3.1 million at 31 December 2019). The remainder corresponds to customer disputes, primarily in France. Provisions for tax risks other than income tax mainly concern risks relating to the R&D tax credit in France. 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, mainly in Germany (€5.7 million) and France (€1.4 million). Other provisions for contingencies mainly cover risks relating to clients and projects (€36.3 million, including €2.4 million in France, €4.4 million in the United Kingdom, €3.7 million in Germany and €23.5 million for Sopra Banking Software from the acquisition of Fidor Solutions), contractual risks (€3.7 million) and employee-related risks (€4.1 million). 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.

Contingent liabilities 11.2.

The contingent liabilities recognised arose as a result of the Sopra-Steria business combination in 2014 and the acquisition of Sodifrance in 2020. At 31 December 2020, they totalled €6.9 million after tax, including €6.0 million corresponding to tax and contractual risks in India. To the extent that a liability is not probable or may not be reliably estimated, a contingent liability is disclosed by the Group among its commitments given. By exception, in connection with business combinations, the Group may recognise a contingent liability on the balance sheet if it results from a present obligation arising from past events and its fair value can be reliably estimated, even where it is not probable that an outflow of resources will be necessary to extinguish the obligation.



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