TELEPERFORMANCE_Registration_document_2017

PARENT COMPANY FINANCIAL STATEMENTS

8.4 Notes to the parent company financial statements

Note 1

Accounting principles, rules and methods

The parent company financial statements are based on information available at the time of preparation and are presented in compliance with the principles and methods of the revised general chart of accounts in force since Octoberb16 th , 2014band of ANC regulation No.b2014-03 revised, in compliance with the principles of matching and prudence, and using the going concern basis. Recognition of assets and liabilities, and income and expenses in the financial statements is made on the basis of historical costs.

The accounting principles applying to derivative financial instruments and to hedging operations were modified by ANC regulation n° 2015-05 dated Julyb2 nd , 2015bwhich was required to be applied to financial statements in respect of years commencing on or after Januaryb1 st , 2017. The Company has applied the regulation since Januaryb1 st , 2017bwith retrospective effect, but with no impact on opening shareholders’ equity. The Company has elected to apply the simplified transitional option under which only those contracts in force at Januaryb1 st , 2017bwere required to be restated.

NOTE 1.1

Highlights of the financial year

During 2017, the Company made a bond issue of €600bmillion at a nominal interest rate of 1.50%, redeemable on Aprilb3 rd , 2024, in order to complete the refinancing of its acquisition of LanguageLine Solutions LLC.

NOTE 1.2 Investments in subsidiaries and affiliates

Investments in subsidiaries and affiliates are recognized at acquisition cost, including transaction costs. Teleperformance carries out impairment tests of its investments in subsidiaries and affiliates at each reporting date. The recoverable amount of investments in subsidiaries and affiliates is represented by their value in use. This is determined on the basis of the Company’s share of equity in each investment, adjusted using discounted estimated future cash flows when these result in a lower amount. The cash flows of the first year are based on the budget approved by Group management. For the following two years, cash flows are based on forecasts prepared by the management of each subsidiary on the basis of their knowledge of the business sector, future growth possibilities, and the risk profile. 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 of the forecast. In the event that cash flow forecasts have been shown on a number of occasions to be inaccurate or when there is uncertainty in respect of a particular market, the Company may decide to limit the forecasts to a three-year horizon. Cash flows are discounted using the weighted average cost of capital of the geographical zone in which the subsidiary is based. The estimates are based on information available at the time of preparation of the financial statements, and may be revised in a future period if circumstances change or if new information is available.

The 2017bimpairment testing resulted in the following changes to the amount of accumulated impairment losses:

(in thousands of euros)

Increase Decrease

Teleperformance France Teleperformance Spain S.A.U

70,000

b

b b b

22,500 20,000

Inb&bOut S.p.A (Italy)

Teleperformance Intermediation Teleperformance Europe, Middle East and Africa

2,000

b b

1,312

Fonomerk (Spain)

133

TOTAL

70,000 45,945

The principal discount rates, which are applied are specific to each geographical zone, are as follows:

United Kingdom Central Europe

6.0% 5.7% 5.8% 6.9% 7.5%

8

France

North America Southern Europe

Increases and decreases in provisions for impairment losses of investments in subsidiaries and affiliates are included in the financial result, except for any reversals on the disposal of shares, which are included in the exceptional result.

NOTE 1.3 Receivables from subsidiaries and affiliates

Loans made to Group companies are presented under the heading “Receivables from subsidiaries and affiliates’’ within financial fixed assets. When denominated in a currency other than the euro, they are translated to euro at closing rates.

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Teleperformance bb - bb Registration documentbb 2017