TELEPERFORMANCE_Registration_document_2017

CONSOLIDATED FINANCIAL STATEMENTS

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7.6 Notes to the consolidated financial statements

D. Goodwill

NOTE D.1 Accounting policies and methods

In a business combination, goodwill is calculated as disclosed in notebB.1.3 Business combinations .

The recoverable amount of an asset or CGU is the higher of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows net of tax are discounted to their present value using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Discount rates are post-tax rates applied to cash flows after tax, and result in the determination of recoverable amounts identical to those that would have been obtained using pre-tax rates to cash flows excluding tax. The Group determines its discount rates by taking into account the average risk-free rates with a maturity of between 20band 30byears observed over 12bmonths, the market risk premium, and Teleperformance’s average weekly beta over 2byears (given the absence of comparable enterprises). The risk-free rate and the risk premium are specific to each geographical area with similar characteristics. An impairment loss in respect of goodwill may not be reversed. United Kingdom CGU This CGU is formed by the Core services businesses of subsidiaries located in the United Kingdom and the offshore subsidiary in South Africa. The recoverable amount represented by this CGU is €303bmillion. French Speaking Market (FSM) CGU This CGU is formed by the Core services business of the French subsidiary and the production subsidiaries in Tunisia, Morocco, Lebanon and Madagascar. These companies were brought together in 2008bunder common management and a single brand name. The recoverable amount represented by this CGU is €47bmillion. LanguageLine Solutions CGU This CGU was created in 2016bfollowing the acquisition of LanguageLine Solutions LLC in September 2016band belongs to Specialized services business. The recoverable amount represented by this CGU is €2,051bmillion. As disclosed in notebB.2 Change in consolidation scope , the Group has finalized the measurement of the fair values of the identifiable assets and liabilities acquired, which resulted in goodwill and a brand name with an indefinite life, with carrying amounts of €713.9bmillion and €87.6bmillion, respectively, at Decemberb31 st , 2017. Other CGUs There are 13bother CGUs, including the Spanish market, Southern Europe, Eastern Europe, TLScontact and ARM, but which represent individually less than 3% of total goodwill.

Impairment The recoverable amount of goodwill is estimated at each reporting date. Goodwill is measured at cost less accumulated impairment losses. It is allocated to cash-generating units (CGUs) or groups of cash-generating units, and is not subject to amortization but is tested for impairment at least annually. An impairment loss is recognized whenever the carrying amount of an asset or its CGU or groups of CGUs exceeds its recoverable amount. Impairment losses are recognized in profit or loss. An impairment loss recognized in respect of a CGU (or groups of CGUs) is allocated to a reduction in the carrying amount of assets in the CGU (or groups of CGUs) in the following order:

goodwill; then

■

■ other intangible assets and property, plant and equipment, proportionate to their carrying amounts.

NOTE D.2 Determination of the principal cash-generating units (“CGUs”) or groups of cash-generating units Subsidiaries are grouped together to form a CGU in the following cases:

■ there are significant inter-relationships formed by the existence of the same customers with common cash flows; ■ existence of close ties of certain subsidiaries with their offshore production units; ■ presence in the same geographical region, with a similar economic context and common management. At Decemberb31 st , 2017, the principal CGUs were determined to be as follows: North America CGU This CGU is formed by the Core services subsidiaries located in the USA and Canada, and the offshore subsidiaries in India, the Philippines, Jamaica and Guyana. The recoverable amount represented by this CGU is €1,655bmillion. Nearshore CGU This CGU is formed by the Core services businesses of subsidiaries located in Mexico, Costa Rica, El Salvador and the Dominican Republic. The recoverable amount represented by this CGU is €724bmillion. Central Europe CGU This CGU is formed by the Core services businesses of subsidiaries located in Germany, Switzerland and the Netherlands. The recoverable amount represented by this CGU is €92bmillion.

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Teleperformance bb - bb Registration documentbb 2017