CAPGEMINI_REGISTRATION_DOCUMENT_2017

FINANCIAL INFORMATION

4.2 Consolidated Financial Statements

Consolidation principles and Group structure Note{2

Consolidation methods The accounts of companies directly or indirectly controlled by the parent company are fully consolidated. The parent company is deemed to exercise control over an entity when it has the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities. Investments in associates over whose management the parent company directly or indirectly exercises significant influence, without however exercising full or joint control, are accounted for by the equity method. This method consists of recording the Group’s share in profit for the year of the associate in the Income Statement. The Group’s share in net assets of the associate is recorded under “Other non-current assets” in the Consolidated Statement of Financial Position. Details of the scope of consolidation are provided in Note{32 - List of the main consolidated companies by country. All consolidated companies prepared their accounts to December{31, 2017 in accordance with the accounting policies adopted by the Group. Inter-company transactions are eliminated on consolidation, as well as inter-company profits. The Group does not control any special purpose entities that have not been consolidated.

Foreign currency translation The consolidated accounts presented in these consolidated financial statements have been prepared in{euros. The Consolidated Statements of Financial Position of subsidiaries denominated in foreign currencies are translated into{euros at year-end rates of exchange with the exception of equity accounts, which are carried at their historical values. Income statements denominated in foreign currencies are translated into{euros at the average rates of exchange for the year. However, for certain material transactions, it may be relevant to use a specific rate of exchange. Differences arising from translation at these different rates are recognized directly in equity under “Translation reserves” and have no impact on the Income Statement. Exchange differences arising on monetary items which form an integral part of the net investment in foreign subsidiaries are recognized in equity under “Translation reserves”. Exchange differences on receivables and payables denominated in a foreign currency are recorded in operating income or expense or financial income or expense, depending on the type of transaction concerned.

4

The exchange rates used to translate the financial statements of the Group’s main subsidiaries into euros are as follows:

Average rate

Closing rate

{

2016

2017

2016

2017

Australian dollar

0.67230 0.26057 0.68234 0.13609 0.01345 0.10765 0.22920 1.22455 0.10567 0.90404

0.67970 0.27831 0.68334 0.13122 0.01362 0.10728 0.23497 1.14188 0.10379 0.88730

0.68512 0.29150 0.70482 0.13661 0.01397 0.11006 0.22674 1.16798 0.10469 0.94868

0.65164 0.25171 0.66494 0.12813 0.01305 0.10162 0.23941 1.12710 0.10159 0.83382

Brazilian real

Canadian dollar

Chinese renminbi yuan

Indian rupee

Norwegian krone

Polish zloty

Pound sterling

Swedish krona

US dollar

combinations Business combinations are accounted for using the acquisition method. Under this method, the identifiable assets acquired and liabilities assumed are recognized at fair value at the acquisition date and may be adjusted during the 12{months following this date. Exchange gains and losses on inter-company transactions The results and financial position of a foreign subsidiary are included in the Group’s consolidated financial statements after the elimination of inter-company balances and transactions. However, a foreign exchange gain or loss

arising on an inter-company monetary asset or liability (e.g. an inter-company receivable denominated in a currency different from the functional currency of the subsidiary) cannot be eliminated. Such foreign exchange gains and losses are recognized in the Income statement or in Income and expense recognized directly in equity, if the underlying forms an integral part of the net investment in the foreign operation (e.g. a loan with no fixed maturity). The fair values of hedging instruments relating to inter-company operating transactions performed as part of the centralized management of currency risk in the parent company are eliminated.

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REGISTRATION DOCUMENT 2017 — CAPGEMINI