CAPGEMINI_REGISTRATION_DOCUMENT_2017

FINANCIAL INFORMATION

4.2 Consolidated Financial Statements

Cash-generating units and asset impairment tests Note{15

Cash-generating units The cash-generating units identified by the Group represent geographic areas. impairment tests Intangible assets and property, plant and equipment with a definite useful life are tested for impairment when there is an indication at the period end that their recoverable amount may be less than their carrying amount. Goodwill and assets with an indefinite useful life are tested for impairment at least once a year. The impairment test consists of assessing the recoverable amount of each asset or group of assets generating cash flows that are separate from the cash flows generated by other assets or groups of assets (cash-generating units or CGU). The recoverable amount is defined as the higher of the fair value less costs to sell of the cash-generating unit and its value in use: fair value is the amount obtainable in an arm’s length X transaction and is determined with reference to the price in

a binding agreement or the market price in recent and comparable transactions; value in use is based on the discounted future cash flows to X be derived from these cash-generating units. The value in use of each cash-generating unit is measured using the discounted future cash flow method, based on the various assumptions in the three-year strategic plan extrapolated over a period of five years, including growth and profitability rates considered reasonable. Long-term growth rates and discount rates are determined taking account of the specific characteristics of each of the Group’s geographic areas and the main component countries. Discount rates reflect the weighted average cost of capital, calculated notably based on market data and a sample of sector companies. When the recoverable amount of a cash-generating unit is less than its carrying amount, the impairment loss is deducted from goodwill to the extent possible and charged under “Other operating income and expenses”.

4

Goodwill per cash-generating unit The allocation of goodwill to cash-generating units breaks down as follows:

December{31, 2016

December{31, 2017

Net carrying amount

Net carrying amount

Gross value Impairment

Gross value Impairment

in{millions of euros

North America

2,193 1,469 1,014 1,003

(8) (1)

2,185 1,468 1,014

2,129 1,431

(7) (1)

2,122 1,430

France

United Kingdom and Ireland

-

928 964 121 296 393 514 149

-

928 952 121 296 362 514 105

Benelux

(12)

991 132 297 388 581 120

(12)

Southern Europe Nordic countries

132 297 420 581 170

- -

- -

Germany and Central Europe

(32)

(31)

Asia-Pacific

-

-

Latin America

(50)

(44)

GOODWILL

7,279

(103)

7,176

6,925

(95)

6,830

Goodwill was tested for impairment at December{31, 2017 in line with the Group valuation procedure for such assets. During{2017, the Group decided to refine its method of calculating discount and long-term growth rates, factoring in the specific characteristics of each geographic zone and market data for a sample of comparable companies.

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REGISTRATION DOCUMENT 2017 — CAPGEMINI