Atos - Registration Document 2016

E Financial

E.4

Consolidated financial statements

subject to a five-year lock-up period restriction. Fair values of such plans are measured taking into account: Employee Share Purchase Plans offer employees the opportunity to invest in Group’s shares at a discounted price. Shares are quoted over the 20 trading days preceding the date of grant; the exercise price based on the average opening share prices • the 20 percent discount granted to employees; • participant would pay for that share; and the consideration of the five-year lock-up restriction to the • extent it affects the price that a knowledgeable, willing market the grant date: the date on which the plan and its term and • conditions, including the exercise price, is announced to employees. Fair values of such plans are fully recognized in “Other operating income and expenses” at the end of the subscription period. The Group has also granted to management and certain employees free share plans. The fair value of those plans corresponds to the value of the shares at the grant date and takes into account employee turnover during the vesting period as well as the value of the lock-up period restriction when applicable. Free share plans result in the recognition of a personnel expense spread over the vesting period. tax is valued using the enacted tax rate at the closing date that will be in force when the temporary differences reverse. differences occur between the tax base and the consolidated base of assets and liabilities, using the liability method. Deferred expenses. Deferred tax is calculated wherever temporary The income tax charge includes current and deferred tax In case of a change in tax rate, the deferred tax assets and liabilities are adjusted through the income statement except if those changes relate to items recognized in other comprehensive income or in equity. Deferred tax assets and liabilities are netted off at the taxable entity level, when there is a legal right to offset. Deferred tax forecast information. assets corresponding to temporary differences and tax losses carried forward are recognized when they are considered to be recoverable during their validity period, based on historical and Deferred tax liabilities for taxable temporary differences relating to goodwill are recognized to the extent they do not arise from the initial recognition of goodwill. Deferred tax assets are tested for impairment at least annually at the closing date based on December actuals, business plans and impairment test data. Corporate income tax

Other operating income and expenses “Other operating income and expenses” covers income or expense items that are unusual, abnormal and infrequent. They are presented below operating margin. Charges to (or releases from) restructuring and rationalization plans and associated costs are classified in the income statement according to the nature of the plan: Operating margin; plans directly related to operations are classified within • income; plans relating to business combinations or qualified as • unusual, infrequent and abnormal are classified in Operating if a restructuring plan qualifies for Operating income, the • related real estate rationalization & associated costs regarding premises are also presented in Operating income. When accounting for business combinations, the Group may record provisions for risks, litigations, etc. in the opening balance sheet for a period of 12 months beyond the business combination date. After the 12-month period, unused provisions arising from changes in circumstances are released through the income statement under “Other operating income and expenses”. “Other operating income and expenses” also include major litigations, and non-recurrent capital gains and losses on the disposal of tangible and intangible assets, significant impairment losses on assets other than financial assets, the amortization of customer relationships and Trademarks, amortization of equity based compensation and any other item that is deemed infrequent, unusual or abnormal. directly in equity. straight-line method, with the offsetting credit recognized value of options after the grant date have no impact on the initial valuation. The fair value of share options is recognized in “other operating income and expense” on a straight-line basis over the period during which those rights vest, using the Stock options are granted to management and certain employees at regular intervals. These equity-based compensations are measured at fair value at the grant date using the binomial option-pricing model. Changes in the fair when stock options are exercised, based on the Group share price at the date of exercise. In some tax jurisdictions, Group entities receive a tax deduction In those instances, a deferred tax asset is recorded for the difference between the tax base of the employee services directly in the equity. and are recorded in income tax provided that the amount of tax deduction does not exceed the amount of the related cumulative stock option expenses to date. The excess, if any, is recorded received to date (being the future tax deduction allowed by local tax authorities) and the current carrying amount of this deduction, being nil by definition. Deferred tax assets are estimated based on the Group’s share price at each closing date, Equity-based compensation

E

Atos | Registration Document 2016

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