AtoS : 2022 Consolidated financial statements

2022

Consolidated financial

statements

This is a translation into English of the universal registration document of the Company issued in French and it is available on the website of the Issuer.

Atos | 2022 Consolidated financial statements

1

6. FINANCIAL STATEMENTS

6.1. Consolidated financial statements

6.1.1. Statutory auditors' report on the consolidated financial statements for the year ended December 31, 2022

This is a translation into English of the statutory auditors' report on the consolidated financial statements of the Company issued in French and it is provided solely for the convenience of English speaking users.

This statutory auditors' report includes information required by European regulation and French law, such as information about the appointment of the statutory auditors or verification of the information concerning the Group presented in the management report.

This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France.

To the annual general meeting of Atos S.E.,

Opinion

In compliance with the engagement entrusted to us by the annual general meetings, we have audited the accompanying consolidated financial statements of Atos S.E. ("Atos", the "Company" or the "Group") for the year ended December 31, 2022.

In our opinion, the consolidated financial statements give a true and fair view of the assets and liabilities and of the financial position of the Group as at December 31, 2022 and of the results of its operations for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union.

The audit opinion expressed above is consistent with our report to the Audit Committee.

Basis for Opinion

Audit Framework

We conducted our audit in accordance with professional standards applicable in France. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Our responsibilities under those standards are further described in the Statutory Auditors' Responsibilities for the Audit of the Consolidated Financial Statements section of our report.

Independence

We conducted our audit engagement in compliance with independence requirements of the French Commercial Code (code de commerce) and the French Code of Ethics (code de déontologie) for statutory auditors for the period from January 1, 2022 to the date of our report, and specifically we did not provide any prohibited non-audit services referred to in Article 5(1) of Regulation (EU) N° 537/2014.

Justification of Assessments - Key Audit Matters

In accordance with the requirements of Articles L.823-9 and R.823-7 of the French Commercial Code (code de commerce) relating to the justification of our assessments, we inform you of the key audit matters relating to risks of material misstatement that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period, as well as how we addressed those risks.

These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on specific items of the consolidated financial statements.

Atos | 2022 Consolidated financial statements

2



we performed interviews with financial controllers and / or operational managers to assess the estimated costs yet to be incurred and the percentage of completion on the contract, which is the basis on which revenue and margin is recognized, we have furthermore analyzed the



we analyzed standard hourly rates' calculation methodology;



we corroborated the amount of costs incurred, notably hours per project with the data from the timesheet application system;

Revenue recognition on long term fixed-price contracts

Note 3 "Revenue, trade receivables, contract assets and contract costs", note 5 "Other operating income and expenses (Other items)", note 12 "Provisions" to consolidated financial statements

Key Audit Matter

Our audit approach

Regarding fixed-price contracts performed

We have updated our understanding of the internal

over the course of several years, particularly

control environment relating to the monitoring of

related to consulting and system integration

contracts , costs estimates and margin, in

activities, revenues are recognized, in

particular controls relating to the costs incurred on

accordance with IFRS 15 'Revenue from

contract and those relating to the costs to

contracts with customers' based on the

complete.

transfer

of

the

control

of

the

service

For a number of contracts that were selected based

provided.

upon quantitative and qualitative criteria (notably,

For multi-element service contracts, which

contracts that experienced technical difficulties or

may be a combination of different services,

low profitability), we performed the following

revenue is recognized separately for each

procedures:

performance obligation when the control is

-

For new contracts,

transferred

to

the

customer.

Revenue

recognized depends on fair value of the



When contracts

included

multiple

performance obligation and its allocated

elements,

we

corroborated

the

transaction price.

analysis

and

accounting

treatment

Total contract costs and expected remaining

retained (allocation of the transaction

price

to

the

different

performance

costs are subject to regular monitoring and

obligations identified, and definition of

estimate

to

determine

the

stage of

recognition conditions of the revenue

completion and the margin to be recognized.

recognized for

each

performance

If these estimates indicate that the contract

obligation) with contractual terms and

will be unprofitable, the entire estimated loss

our

understanding

of

the services

for the remainder of the contract is recorded

provided ;

immediately through a provision for onerous

contracts.



We corroborated initial budget margin

We consider

revenue

recognition

on long-

to the financial data within the signed

contract

and

the

associated

costs

term contracts and the associated costs as a

estimation.

key audit matter as identification of

performance

obligations

and

related

allocations of the transaction price requires

-

For contracts in progress, we performed the

judgment from management. When revenue

following procedures on the completion degree

is recognized on the basis of costs incurred,

when revenue is recognized over time on the

the completion degree relies on operational

basis of costs incurred:

assumptions and estimates which impact the

Group consolidated revenue and operating



we

reconciled

the

financial

data

margin.

(revenue,

billing

and

work-in-

progress) included in the work progress spreadsheet that is updated monthly by the financial controller to the accounting records;

Atos | 2022 Consolidated financial statements

3

- we assessed the appropriateness of the assumptions and the methodology used by the Group with the assistance of external advisors in the multicriteria approach to determine the fair value less cost to sell;

appropriateness of these estimates by comparing the forecasted data with the actual performance of the contract;

 we analyzed assumptions used by management to determine the loss recognized for onerous contracts and confirmed these assumptions with historical performance on the contract and the the performance to be achieved and the corresponding estimates made.

Goodwill and other fixed assets valuation including the assets classified as held for sale.

Note 1.1 "Contemplated and completed disposal", Note 5 "Other operating income and expense", Note 8 "Goodwill and fixed assets", Note 9 "Leases" to consolidated financial statements

Key Audit Matter			Our audit approach
As of December 31, 2022, the net carrying	As part of our audit, we examined the process
value of fixed assets amounts to €7,530 million,	implemented by the Group regarding the
namely 46% of the total assets. The fixed assets	performance of impairment tests.
comprise goodwill (€5,305 million), intangibles	We assessed whether the methodology used by
assets (€919 million), tangible	assets	(€414
management complies with the accounting
million), as well as right-of-use	assets	(€892
standards, including the CGU definition, the net
million).
		assets allocation and the models used to
The net carrying value of goodwill and other	determine the recoverable amounts.
fixed assets classified as held for sale amounts

to €543 million.	We performed the following procedures, on the
impairment tests for each CGUs:

Goodwill and other fixed assets are tested for impairment when there is any indication that they may be impaired. This test is performed at least annually for goodwill.

With regards to the contemplated separation of the Group and the ongoing disposals of activities:

- The Group deemed that at December	-	we	reconciled the	cash-flow	projections
	with	the revised	mid-term	plan of	the
31, 2022 SpinCo (Evidian) did not meet
	Group ;
the IFRS 5 criteria to be classified as
held for sale and discontinued	-	we	analyzed the	overall consistency	of
operations;								assumptions used (including the estimation
- The Group determined that the Unified		of the perpetual growth rate), especially
	through interviews with the management
Communications	&		Collaboration
		and future growth prospects;
disposal and the sale of its Italian
operations (Atos Italia S.p.a) met the	- we assessed, with the support of our
held for sale classification criteria at the		valuation specialists, the appropriateness of
end of December 2022 considering the		the valuation models including the discount
advanced	negotiations	with	their		rates used in relation with market
respective buyers. The assets and		benchmarks.
liabilities related	to	these	disposal	For the Unified Communications & Collaboration
groups are	classified	as	held	for	sale
group and the Italian	operations	(Atos Italia
and measured at fair value less costs to
S.p.a), we assessed the appropriateness of the
sell ;
						assumptions used by management to determine
The cash-generating units (CGUs) correspond
their fair value less costs to sell on the basis of
to the Regional Business Unit (RBU) in which the	the advanced negotiations related to these
Atos Group operates.						ongoing disposals.

The annual impairment test is based on the fair . value less costs to sell of each CGU, determined

Atos | 2022 Consolidated financial statements

4

on the basis of a multicriteria approach,	We verified the arithmetical accuracy of the
including Discounted Cash Flows (DCF) and	valuations used by the Group.
trading multiples.	We performed our own sensitivity calculations
The recoverable values are determined based	and compare them to the analysis performed by
on particularly sensitive forward-looking	management.
assumptions and other estimates.	We verified the information disclosed in the
We considered the valuation of goodwill and	notes to the consolidated financial statements,
other fixed assets as a key audit matter, given	including assumptions used and the sensitivity
the weight of these assets in the consolidated	analysis is appropriate.
statement of financial position, the importance
of management's judgment in determining cash
flow assumptions, discount rates and long-term
average growth rate, as well as the sensitivity
of the valuation of their recoverable value to
these assumptions.

Litigations

Note 16 "Litigations" to consolidated financial statements

Key Audit Matter					Our audit approach
The Group is engaged in legal proceedings	In order to obtain a sufficient understanding of the
for a litigation mainly concerning intellectual	existing litigations and claims and the related
property rights against TriZetto Group and	judgements, we interviewed management and
Cognizant	Technology	Solutions	analysed the procedures implemented by the
(Cognizant/TriZetto) in the United States of	Group to identify disputes.
America, the status of which as at December	With regard to the Cognizant/TriZetto litigation,
31, 2022 is	described in	note	16 to the
we :
consolidated financial statements.
On October 27, 2020, a jury in the United	- conducted interviews with Group management
to assess the current status of the ongoing
States District Court for the Southern District
litigation;
of New York found Syntel, which is now a
subsidiary of Atos, liable for trade secrets	- consulted available procedural elements and
misappropriation and copyright infringement	other relevant information concerning the
and specified approximately $855 million in	litigation and the likelihood and possible
damages, due to Cognizant and its	impact of the risk;
subsidiary TriZetto.					- performed a critical review of the estimates
On April 20, 2021, the United States District
and positions taken by management;
Court for the Southern District of New York	- assessed whether the latest developments
granted in part the post-trial motion filed by
have been taken into account.
Syntel.	The	Court	reduced	the	jury's
$855 million damages award to $570 million	We also assessed whether the disclosures in note
and denied Cognizant and TriZetto's request	16 to the consolidated financial statements are
for an	additional	$ 75	million in	pre-	appropriate.

judgment interest.

The Court also found that the jury' $570 million punitive damages award was excessive and should be reduced to $285 million.

On May 26, 2021, Syntel appealed the portion of the jury's verdict affirmed by the Court. The oral argument in the Court of Appeals took place on September 19, 2022. The appeal process typically takes 18 months or more.

We considered this matter to be a key audit issue because of the uncertainty of the

Atos | 2022 Consolidated financial statements

5