Sopra Steria : 2023 Consolidated financial statements

5. 2023 consolidated financial statements

Consolidated statement of net income

Consolidated statement of comprehensive income

Consolidated statement of financial position

Consolidated statement of changes in equity

Consolidated cash flow statement

Notes to the consolidated financial statements

Statutory Auditors' report on the consolidated financial statements

1

2023 CONSOLIDATED FINANCIAL STATEMENTS

Consolidated statement of net income

Consolidated statement of net income

(in millions of euros)	Notes	Financial year 2023	Financial year 2022
Revenue	4.1	5,805.3	5,101.2
Staff costs	5.1	-3,577.1	-3,150.5
External expenses and purchases	4.2.1	-1,471.9	-1,331.3
Taxes and duties		-42.6	-42.8
Depreciation, amortisation, provisions and impairment		-178.6	-141.7
Other current operating income and expenses	4.2.2	13.0	18.3
Operating profit on business activity		548.2	453.1
as % of revenue		9.4%	8.9%
Expenses related to stock options and related items	5.4	-43.0	-23.2
Amortisation of allocated intangible assets	8.2	-38.0	-32.3
Profit from recurring operations		467.2	397.6
as % of revenue		8.0%	7.8%
Other operating income and expenses	4.2.3	-137.4	-36.3
Operating profit		329.9	361.3
as % of revenue		5.7%	7.1%
Cost of net financial debt	12.1.1	-19.5	-8.7
Other financial income and expenses	12.1.2	-16.3	-5.7
Tax expense	6.1	-111.7	-83.2
Net profit from associates	10.1	6.7	-14.7
Net profit from continuing operations		189.1	249.0
Net profit from discontinued operations		-	-
Consolidated net profit		189.1	249.0
as % of revenue		3.3%	4.9%
Non-controlling interests	14.1.5	5.4	1.2
NET PROFIT ATTRIBUTABLE TO THE GROUP		183.7	247.8
as % of revenue		3.2%	4.9%
EARNINGS PER SHARE (IN EUROS)	Notes
Basic earnings per share	14.2	9.08	12.23
Diluted earnings per share	14.2	8.94	12.13

2

2023 CONSOLIDATED FINANCIAL STATEMENTS

Consolidated statement of comprehensive income

Consolidated statement of comprehensive income

(in millions of euros)	Notes	Financial year 2023	Financial year 2022
Consolidated net profit		189.1	249.0
Other comprehensive income:
Actuarial gains and losses on pension plans	5.3.1	-29.6	127.2
Tax impact		6.2	-33.4
Related to associates	10.2	-0.4	0.1
Change in fair value of financial assets (non-consolidated securities)		1.2	16.7
Subtotal of items recognised in equity and not reclassifiable
to profit or loss		-22.6	110.7
Translation differences	14.1.4	9.7	-58.4
Change in net investment hedges		-10.6	14.7
Tax impact on net investment hedges		1.9	-4.3
Change in cash flow hedges		-5.1	0.7
Tax impact on cash flow hedges		1.4	-0.1
Related to associates		-2.3	4.6
Subtotal of items recognised in equity and reclassifiable to
profit or loss		-5.0	-42.8
Other comprehensive income, total net of tax		-27.6	67.9
COMPREHENSIVE INCOME		161.4	316.9
Non-controlling interests	14.1.5	9.3	3.4
Attributable to the Group		152.2	313.5

3

2023 CONSOLIDATED FINANCIAL STATEMENTS

Consolidated statement of financial position

Consolidated statement of financial position

Assets (in millions of euros)	Notes	31/12/2023	31/12/2022
Goodwill	8.1	2,668.9	1,943.9
Intangible assets	8.2	211.7	166.7
Property, plant and equipment	8.3	164.6	141.5
Right-of-use assets	9.1	457.1	359.9
Equity-accounted investments	10.2	185.9	183.5
Other non-current assets	7.1	73.8	114.0
Retirement benefits and similar obligations	5.3	40.6	38.5
Deferred tax assets	6.3	188.3	127.0
Non-current assets		3,990.9	3,075.1
Trade receivables and related accounts	7.2	1,372.4	1,104.2
Other current assets	7.3	515.5	410.6
Cash and cash equivalents	12.2	191.7	355.9
Current assets		2,079.6	1,870.7
Assets held for sale		-	-
TOTAL ASSETS		6,070.5	4,945.8
Liabilities and equity (in millions of euros)	Notes	31/12/2023	31/12/2022
Share capital		20.5	20.5
Share premium		531.5	531.5
Consolidated reserves and other reserves		1,324.7	1,298.3
Equity attributable to the Group		1,876.7	1,850.3
Non-controlling interests		48.4	43.1
TOTAL EQUITY	14.1	1,925.1	1,893.4
Financial debt - Non-current portion	12.3	619.5	320.1
Lease liabilities - Non-current portion	9.2	392.9	312.8
Deferred tax liabilities	6.3	90.0	68.5
Retirement benefits and similar obligations	5.3	226.2	190.3
Non-current provisions	11.1	59.4	51.8
Other non-current liabilities	7.4	21.6	15.5
Non-current liabilities		1,409.5	959.0
Financial debt - Current portion	12.3	518.2	187.7
Lease liabilities - Current portion	9.2	110.0	77.7
Current provisions	11.1	53.9	46.7
Trade payables and related accounts		354.5	318.2
Other current liabilities	7.5	1,699.2	1,463.0
Current liabilities		2,735.9	2,093.4
Liabilities held for sale		-	-
TOTAL LIABILITIES		4,145.4	3,052.4
TOTAL LIABILITIES AND EQUITY		6,070.5	4,945.8

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2023 CONSOLIDATED FINANCIAL STATEMENTS

Consolidated statement of changes in equity

Consolidated statement of changes in equity

				Consolidated	Other	Total	Non-
	Share	Share	Treasury	reserves and	comprehensive	attributable	controlling
(in millions of euros)	capital	premium	shares	retained earnings	income	to the Group	interests	Total
AT 31/12/2021	20.5	531.5	-51.6	1,209.1	-63.0	1,646.5	49.0	1,695.5
Share capital transactions	-	-	-	-	-	-	-	-
Share-based payments	-	-	-	22.3	-	22.3	0.2	22.5
Transactions in treasury shares	-	-	-17.0	-19.8	-	-36.8	-	-36.8
Ordinary dividends	-	-	-	-65.1	-	-65.1	-6.4	-71.5
Changes in scope	-	-	-	-	-	-	-	-
Other movements	-	-	-	-30.0	-	-30.0	-3.1	-33.2
Shareholder transactions	-	-	-17.0	-92.7	-	-109.7	-9.3	-119.0
Net profit for the period	-	-	-	247.8	-	247.8	1.2	249.0
Other comprehensive income	-	-	-	-	65.7	65.7	2.2	67.9
Comprehensive income
for the period	-	-	-	247.8	65.7	313.5	3.4	316.9
AT 31/12/2022	20.5	531.5	-68.6	1,364.2	2.7	1,850.3	43.1	1,893.4
Share capital transactions	-	-	-	-	-	-	-	-
Share-based payments	-	-	-	38.1	-	38.1	0.1	38.2
Transactions in treasury shares	-	-	-26.9	-11.5	-	-38.4	-	-38.4
Ordinary dividends	-	-	-	-87.6	-	-87.6	-7.0	-94.6
Changes in scope	-	-	-	-37.9	-	-37.9	3.0	-34.9
Other movements	-	-	-	-	-	-	-	-
Shareholder transactions	-	-	-26.9	-98.9	-	-125.8	-3.9	-129.7
Net profit for the period	-	-	-	183.7	-	183.7	5.4	189.1
Other comprehensive income	-	-	-	-	-31.5	-31.5	3.9	-27.6
Comprehensive income
for the period	-	-	-	183.7	-31.5	152.2	9.3	161.4
AT 31/12/2023	20.5	531.5	-95.5	1,449.0	-28.8	1,876.7	48.4	1,925.1

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2023 CONSOLIDATED FINANCIAL STATEMENTS

Consolidated cash flow statement

Consolidated cash flow statement

(in millions of euros)	Notes	Financial year 2023	Financial year 2022
Consolidated net profit (including non-controlling interests)		189.1	249.0
Net increase in depreciation, amortisation and provisions		291.6	189.4
Unrealised gains and losses related to changes in fair value		5.4	-2.0
Expenses and income related to stock options and related items	5.4	37.1	21.4
Gains and losses on disposal		1.3	3.7
Share of net profit/(loss) of equity-accounted companies	10.1	-6.7	14.7
Cost of net financial debt (including cost related to lease liabilities)	12.1.1	31.0	15.0
Dividends from non-consolidated securities		-	-0.1
Tax expense	6.1	111.7	83.2
Cash from operations before change in working capital
requirement (A)		660.3	574.4
Tax paid (B)		-82.6	-87.8
Change in operating working capital requirement (C)	13.2	44.9	17.1
Net cash from operating activities (D) = (A + B + C)		622.6	503.6
Purchase of property, plant and equipment and intangible assets		-100.6	-94.2
Proceeds from sale of property, plant and equipment and intangible
assets		6.9	0.1
Purchase of non-current financial assets		-8.6	-4.9
Proceeds from sale of non-current financial assets		-	0.7
Cash impact of changes in scope		-912.4	-13.1
Dividends received (equity-accounted companies, non-consolidated
securities)		2.7	2.8
Proceeds from/(Payments on) loans and advances granted		-3.2	-4.5
Net interest received		4.3	-0.2
Net cash from/(used in) investing activities (E)		-1,010.9	-113.2
Proceeds from shareholders for capital increases		-	-
Purchase and sale of treasury shares		-26.1	-17.5
Dividends paid to shareholders of the parent company	14.1.3	-87.5	-65.0
Dividends paid to the minority interests of consolidated companies		-7.0	-6.6
Proceeds from/(Payments on) borrowings	13.1	492.6	-33.5
Lease payments		-106.0	-94.5
Net interest paid (excluding interest on lease liabilities)		-24.4	-11.0
Additional contributions related to defined-benefit pension plans		-12.3	-18.9
Other cash flows relating to financing activities		-0.9	0.6
Net cash from/(used in) financing activities (F)		228.4	-246.5
Impact of changes in foreign exchange rates (G)		-4.8	-4.6
NET CHANGE IN CASH AND CASH EQUIVALENTS
(D+E+F+G)		-164.7	139.3
Opening cash position		356.2	216.9
Closing cash position	12.2	191.5	356.2

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2023 CONSOLIDATED FINANCIAL STATEMENTS

Notes to the consolidated financial statements

Notes to the consolidated financial statements

Note 1 Accounting policies

1. Basis of preparation
2. Application of new standards and interpretations
3. Material estimates and accounting judgments
4. Format of the financial statements and foreign currency translation

Note 2 Scope of consolidation

1. Main acquisitions
2. Other changes in scope

Note 3 Segment information

1. Results by reporting unit
2. Revenue by geographic area
3. Non-current assets by geographic area

Note 4 Operating profit

1. Breakdown of revenue by reporting unit
2. Other operating income and expenses included in Operating profit

Note 5 Employee benefits and share-based payments

1. Staff costs
2. Workforce
3. Retirement benefits and similar obligations
4. Share-based payments
5. Compensation of senior management (related parties)

Note 9 Leases

1. Right-of-use assets by category of leased assets
2. Breakdown of lease liabilities by maturity

Note 10 Equity-accounted investments

1. Net profitfrom associates
2. Carrying amount of investments in associates

Note 11 Provisions and contingent liabilities

1. Current and non-current provisions
2. Contingent liabilities

Note 12 Financing and financial risk management

1. Financial income and expenses
2. Cash and cash equivalents
3. Financial debt - Net financial debt
4. Derivatives reported in the balance sheet
5. Financial risk management

Note 13 Cash flows

1. Change in net financial debt
2. Reconciliation of WCR with the cash flow statement
3. Other cash flows in the consolidated cash flow statement

Note 14 Equity and earnings per share

1. Equity
2. Earnings per share

Note 6 Corporate income tax

1. Tax expense
2. Reconciliation of statutory and effective tax expense
3. Deferred tax assets and liabilities

Note 15 Related-party transactions

1. Transactions with equity-accounted associates and non-consolidated entities
2. Subsidiaries and equity interests

Note 7 Components of the working capital requirement and other financial assets and liabilities

1. Other non-current financial assets
2. Trade receivables and related accounts
3. Other current assets
4. Other non-current liabilities
5. Other current liabilities

Note 8 Property, plant and equipment and intangible assets

8.1. Goodwill

8.2 Other intangible assets

8.3. Property, plant and equipment

Note 16 Off-balance sheet commitments

1. Commitments given related to current operations
2. Commitments received

Note 17 Subsequent events

Note 18 List of Group companies

Note 19 Statutory Auditors' fees

The Group's consolidated financial statements for the year ended 31 December 2023 were approved by the Board of Directors at its meeting held on 21 February 2024.

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2023 CONSOLIDATED FINANCIAL STATEMENTS

Notes to the consolidated financial statements

NOTE 1 ACCOUNTING POLICIES

The main accounting policies applied in the preparation of the consolidated financial statements are presented below. They have been applied consistently for all of the financial years presented.

1.1. Basis of preparation

The consolidated financial statements for the year ended 31 December 2023 have been prepared in accordance with International Financial Reporting Standards (IFRS) as published by the IASB and adopted by the European Union. Information on these standards is provided on the European Commission website:

https://ec.europa.eu/info/business-economy-euro/company-reporting- and-auditing/company-reporting/financial-reporting_en#ifrs-financial- statements.

1.2. Application of new standards and interpretations

1.2.1. New mandatory standards and interpretations

New standards and amendments to existing standards adopted by the European Union, the application of which is mandatory for accounting periods beginning on or after 1 January 2023, mainly consist of amendments to the following standards :

• IAS 1 Presentation of Financial Statements regarding the disclosure of accounting policies;
• IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors regarding the definition of accounting estimates;
• IAS 12 Income Taxes regarding deferred tax related to assets and liabilities arising from a single transaction.

The application of these new requirements does not have an impact on the consolidated financial statements or their notes.

IAS 12 Income Taxes was also amended to take into account international tax reform and the OECD Pillar Two rules. Its effects are presented in Note 6, "Corporate income tax".

In	addition, in the first half of financial year 2023 the
IFRS	Interpretations Committee (IFRS IC) published a final decision

on the definition of a lease and substitution rights under IFRS 16 Leases. This decision, applicable in 2023, has no impact on the Group's financial statements. The IFRS IC also amended IFRS 3 Business Combinations in respect of payment contingent on continued employment during handover periods. These two interpretations have no impact on the Group's financial statements.

1.2.2. Standards and interpretations published by the IASB but not applied early

The Group did not identify any new standards or amendments to existing standards adopted by the European Union, the application of which is mandatory after 31 December 2023 and which may be applied in advance.

1.3. Material estimates and accounting judgments

The preparation of financial statements entails the use of estimates and assumptions in measuring certain consolidated assets and liabilities, as well as certain income statement items. Group management is also required to exercise judgment in the application of its accounting policies.

Such estimates and judgments, which are continually updated, are based both on historical information and on a reasonable anticipation of future events according to the circumstances. However, given the uncertainty implicit in assumptions as to future events, the related accounting estimates may differ from the ultimate actual results.

The main assumptions and estimates that may leave scope for material adjustments to the carrying amounts of assets and liabilities in the subsequent period are as follows:

• revenue recognition (see Note 4.1);
• post-employment benefits for staff (see Note 5.3);
• measurement of deferred tax assets (see Note 6.3);
• the recoverable amount of property, plant and equipment and intangible assets, and of goodwill in particular (see Note 8.1);
• lease terms and the measurement of right-of-use assets and lease liabilities (see Note 9);
• the recoverable amount of investments in associates recorded in the balance sheet (see Note 10.2);
• provisions for contingencies (see Note 11.1).

These accounting judgments and estimates take into account the trajectory for reducing GHG emissions and, in particular, the process of transitioning its activities towards meeting the Climate Neutral Now programme's target of climate neutrality. This is reflected in particular in the projections used to measure assets. It is also reflected in consumption shown in the income statement, in particular electricity consumption from renewable sources under green power purchase agreements entered into directly with suppliers or using Guarantee of Origin certificates.

Furthermore, the Group's activities have only a minor impact on greenhouse gas emissions trends, as shown by its green taxonomy report set out in Section 3.6 of Chapter 4, "Corporate responsibility".

Lastly, the Group considers that, to date, it has not been affected by major climate events.

8

2023 CONSOLIDATED FINANCIAL STATEMENTS

Notes to the consolidated financial statements

1.4. Format of the financial statements and foreign currency translation

1.4.1. Format of the financial statements

With regard to the presentation of its consolidated financial statements, Sopra Steria Group applies Recommendation 2013-03 of the French Accounting Standards Authority (Autorité des Normes Comptables - ANC) of 7 November 2013 on the format of the income statement, the cash flow statement and the statement of changes in equity.

The format of the income statement was adapted several years ago to improve the presentation of the Company's performance, with the addition of a financial aggregate known as Operating profit on business activity before Profit from recurring operations. This indicator is used internally by management to assess performance. It corresponds to Profit from recurring operations before:

• the expense relating to the costs and benefits granted to the recipients of stock option, free share and employee share ownership plans;
• the amortisation of allocated intangible assets.

Operating profit is then obtained by taking Profit from recurring operations and subtracting Other operating income and expenses. The latter contains any material items of operating income and expenses that are unusual, abnormal, infrequent or unpredictable, presented separately in order to give a clearer picture of performance based on ordinary activities.

Finally, the Group splits out EBITDA in the analysis of Change in net financial debt. This figure corresponds to Operating profit on business activity, after adding back in the depreciation, amortisation and provisions included in the latter indicator.

1.4.2. Foreign currency translation

a. Functional and presentation currencies

Items included in the financial statements of each Group entity are

measured using the currency of the primary economic environment in which that entity operates, i.e. its "functional currency".

The consolidated financial statements are presented in euros, the functional and presentation currency of the Sopra Steria Group parent company.

b. Translation of the financial statements of foreign subsidiaries

The accounts of all Group entities whose functional currency differs from the Group's presentation currency are translated into euros as follows:

• assets and liabilities are translated at the end-of-period exchange rate;
• income, expenses and cash flows are translated at the average exchange rate for the period;
• all resulting foreign exchange differences are recognised as a distinct equity component under Other comprehensive income and included in Accumulated translation reserves within equity (see Note 14.1.4).

In accordance with IAS 21 The Effects of Changes in Foreign Exchange Rates, translation gains and losses arising from the translation of net investments in foreign operations are recognised as a distinct component of equity. Translation gains and losses in respect of intercompany loans are considered an integral part of the Group's net investment in the foreign subsidiaries in question.

When a foreign operation is divested, the cumulative translation difference is recycled to profit or loss as part of the gain or loss arising on disposal.

Goodwill and fair value adjustments arising on the acquisition of foreign operations are treated as assets and liabilities of the operation and, as such, are translated at the end-of-period exchange rate.

The applicable exchange rates for the translation of the main foreign currencies used within the Group are as follows:

	Average rate for the period	Period-end rate
€1/Currency	Financial year 2023	Financial year 2022	31/12/2023	31/12/2022
Norwegian krone	11.4248	10.1026	11.2405	10.5138
Swedish krona	11.4788	10.6296	11.0960	11.1218
Tunisian dinar	3.3556	3.2568	3.3969	3.3289
Moroccan dirham	10.9532	10.6438	10.9017	11.1608
US dollar	1.0813	1.0530	1.1050	1.0666
Singapore dollar	1.4523	1.4512	1.4591	1.4300
Swiss franc	0.9718	1.0047	0.9260	0.9847
Pound sterling	0.8698	0.8528	0.8691	0.8869
Brazilian real	5.4010	5.4399	5.3618	5.6386
Indian rupee	89.3001	82.6864	91.9045	88.1710
Polish zloty	4.5420	4.6861	4.3395	4.6808

9

2023 CONSOLIDATED FINANCIAL STATEMENTS

Notes to the consolidated financial statements

c. Translation of foreign currency transactions

Transactions denominated in foreign currencies are translated to the functional currency at the exchange rate applying on the transaction date. Foreign exchange gains and losses arising on settlement, as well as those arising from the translation of monetary assets and liabilities that are denominated in foreign currencies at the end-of-period exchange rate, are recognised in profit or loss under Other current operating income and expenses for transactions hedged against foreign exchange risk and under Other financial income and expenses for all other transactions.

d. Hyperinflation in Lebanon

The Lebanese economy is a hyperinflationary economy. IAS 29 Financial Reporting in Hyperinflationary Economies lays down the restatements that need to be carried out in such circumstances.

The US dollar is the functional currency of the Group's subsidiary in Lebanon. As a result, the standard does not require any adjustments.

NOTE 2 SCOPE OF CONSOLIDATION

Consolidation methods

Sopra Steria Group SA is the consolidating company.

The companies over which Sopra Steria Group has exclusive control are fully consolidated. An investor controls an investee where that investor is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Consequently, an investor controls an investee if and only if all the following criteria are met:

• it has power over the investee;
• it is exposed - or has rights - to variable returns from its involvement with the investee;
• it has the ability to exercise its power over the investee in such a way as to affect the amount of returns it obtains.

Investments in entities over which the Group exerts significant influence (associates) are accounted for under the equity method. Significant influence is deemed to exist, unless clearly demonstrated not to be the case, when a parent company directly or indirectly holds 20% or more of the voting rights of the investee.

Intercompany transactions as well as balances and unrealised profits on transactions between Group companies are eliminated.

The accounts of all consolidated companies are prepared as at 31 December. Where applicable, those accounts have been restated to ensure the consistency of accounting and measurement rules applied by the Group.

The scope of consolidation is presented in Note 18.

2.1. Main acquisitions

In 2023, the Group made the following acquisitions:

• CS Group - On 28 February 2023, Sopra Steria Group SA acquired a controlling stake in CS Group. This acquisition followed the acquisition of a main block comprising 29.73% of the company's share capital as well as the fulfilment of commitments made on 27 July 2022 to sell stakes comprising 29.15% and 6.38% of the company's share capital. Following these acquisitions, and taking into account the 9.80% stake already held in the company, the Group held a controlling interest of 75.06% at 28 February 2023. The Group subsequently carried out a simplified public tender offer and a delisting offer.

All of these transactions were carried out on the basis of a unit price of €11.50 per ordinary share. The Group held 100% of CS Group's share capital at 31 December 2023.

CS Group is a benchmark player in designing, integrating and operating critical systems in the fields of defence, security, space and nuclear energy. It also strengthens the Group's positions in France in cybersecurity and aeronautics, as well as digital sovereignty and digital trust. It is part of the "France" cash-generating unit.

The Group has opted to value minority interests, at the date of acquisition of a controlling interest, based on the "partial goodwill method". Net assets acquired include recognition of the following intangible assets: an order book (€12.0 million), customer relationships (€5.1 million) and technologies (€10.1 million). In addition, a deferred tax asset relating to tax loss carryforwards generated in France was recognised in the amount of €63.5 million.

10