TELEPERFORMANCE_Registration_document_2017

CONSOLIDATED FINANCIAL STATEMENTS

7.6 Notes to the consolidated financial statements

NOTE D.3 Determination of the recoverable amount of CGUs The recoverable value of CGUs is represented by the value in use. The Group has not used any other measurement methods, for example that of fair value less costs to sell.

value using the weighted average cost of capital (WACC) of each geographical region.Reasonableness checks are made to ensure that the WACC is consistent with the ROCE (see notebA.5 Glossary ). In the event that cash flow forecasts have been shown subsequently on a number of occasions to be inaccurate or when there is uncertainty in respect of a particular market, the Group may decide to limit the forecasts to a three-year horizon. In 2017, due to the shortfall on the Central Europe CGU budget and to uncertainty surrounding the principal customer of the FSM CGU, the forecasts used in calculating the recoverable amounts were therefore limited to a three-year horizon. Impairment losses on goodwill were recognized on the Central Europe and FSM CGUs, amounting to €44bmillion and €23bmillion, respectively.

Recoverable amounts are determined by geographical region, calculated using the estimated cash flow forecasts of the next five years. The cash flows of the first year are based on the following year’s budget. The cash flows of the following two years are obtained from the three-year plans prepared and approved by CGU and Group managements respectively. Those of the final two years are based on the three-year plans integrating growth and profitability rates judged to be reasonable for the specific CGU. The terminal values calculated after five years assume perpetual future growth equal to inflation and are based on the cash flows of the final year. The cash flows are discounted to present

NOTE D.4 Change in goodwill and Allocation of goodwill by CGU

Changes in goodwill in 2016band 2017bare set out below:

Accumulated impairment losses

Goodwill

Gross 1,146

Carrying amount

AT DECEMBERb31 ST , 2015 Change in consolidation scope * Translation differences AT DECEMBERb31 ST , 2016 Change in consolidation scope *

-23

1,123

766

b b

766

49

49

1,961

-23

1,938

4

b

4

Translation differences

-200

1

-199

Impairment losses

b

-67 -89

-67

AT DECEMBERb31 ST , 2017

1,765

1,676

* The line items “Change in consolidation scope” relate to the acquisitions of LanguageLine Solutions LLS in Septemberb2016band of Wibilong in Novemberb2017.

The following schedule sets out the allocation of goodwill and the discount rate for the principal CGUs.

7

Goodwill

Discount rate

12/31/2017

2017

12/31/2016

2016

Carrying amount

Carrying amount

Gross

Gross

LanguageLine Solutions LLC

714 587 106

714 571 106

810 714 118

810 698 118

6.9% 6.9% 9.1% 5.7% 6.0% 5.8%

b

North America & FHCS

7.3%

Nearshore

10.0%

Central Europe United Kingdom

93 68 53

49 68 30

94 70 53

94 70 53 95

5.7% 7.0% 6.4%

FSM

Other

144

138

102

b b

b b

TOTAL

1,765

1,676

1,961

1,938

The reduction in the discount rates between 2016band 2017bis principally due to a reduction in the beta risk utilized in the calculations.

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Teleperformance bb - bb Registration documentbb 2017