AtoS : 2023 Consolidated financial statements

2023 Consolidated financial statements

This is a free translation into English of the consolidated financial statements of the Company issued in French available on the website of the Issuer.

Financial statements

1.1 Consolidated financial statements

1.1.1

Consolidated income statement

months ended

1.1.2

Consolidated statement of comprehensive income

• 1.1.3 Consolidated statement of financial position

  (in € million)	Notes	December 31, 2023	December 31, 2022
  ASSETS
  Goodwill	Note 8.1	2,875	5,305
  Intangible assets	Note 8.2	529	919
  Tangible assets	Note 8.3	355	414
  Right-of-use assets	Note 9	687	892
  Equity-accounted investments	Note 10	11	8
  Non-current financial assets	Note 6.3	142	171
  Non-current financial instruments	Note 6.6	0	13
  Deferred tax assets	Note 7.4	206	294
  Total non-current assets	4,806	8,017
  Trade accounts and notes receivable	Note 3.2	2,459	2,603
  Current taxes	83	64
  Other current assets	Note 4.4	1,637	1,485
  Current financial instruments	Note 6.6	13	18
  Cash and cash equivalents	Note 6.2	2,295	3,331
  Total current assets	6,488	7,501
  Assets held for sale	-	876
  TOTAL ASSETS	11,294	16,394

  (in € million)	Notes	December 31, 2023	December 31, 2022
  LIABILITIES AND SHAREHOLDERS' EQUITY
  Common stock	Note 14.2	111	111
  Additional paid-in capital	1,499	1,499
  Consolidated retained earnings	1,887	3,195
  Net income (loss) attributable to the owners of the parent	Note 14.1	-3,441	-1,012
  Equity attributable to the owners of the parent	Note 14.2	55	3,793
  Non-controlling interests	Note 14.3	5	7
  Total shareholders' equity	61	3,799
  Provisions for pensions and similar benefits	Note 11	741	639
  Non-current provisions	Note 12	282	496
  Borrowings	Note 6.4	2,530	2,450
  Derivative liabilities	Note 6.6	-	13
  Deferred tax liabilities	Note 7.4	35	148
  Non-current lease liabilities	Note 9	588	704
  Other non-current liabilities	1	1
  Total non-current liabilities	4,177	4,451
  Trade accounts and notes payable	Note 4.3	2,066	2,187
  Current taxes	74	63
  Current provisions	Note 12	280	245
  Current financial instruments	Note 6.6	2	11
  Current portion of borrowings	Note 6.4	2,124	2,412
  Current lease liabilities	Note 9	234	309
  Other current liabilities	Note 4.5	2,276	2,260
  Total current liabilities	7,056	7,487
  Liabilities related to assets held for sale	-	656
  TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	11,294	16,394

• 1.1.4 Consolidated cash flow statement

1.1.5

Consolidated statement of changes in shareholders' equity

1.1.6

Notes to the consolidated financial statements

1.1.6.1

General information

Atos SE, the Group parent company, is a société européenne (public limited company) incorporated under French law, whose registered office is located at 80, Quai Voltaire, 95870 Bezons, France. It is registered with the Registry of Commerce and Companies of Pontoise under the reference 323,623,603. Atos SE shares are traded on the Euronext Paris market under ISIN code FR0000051732. The shares are not listed on any other stock exchange market. The Company is administrated by a board of directors.

Atos is a global leader in digital transformation and is the European number one in cloud, cybersecurity and high-performance computing. Atos provides end-to-end vertical solutions, smart data platforms and infrastructure solutions, working closely with global technology partners and leveraging innovations in business platforms, customer experience and digital workplace, artificial intelligence and hybrid cloud.

The consolidated financial statements of the Group comprise the Group parent company, its subsidiaries and the Group interests in associates and jointly controlled entities (together referred to as the "Group").

The Atos Group did not change its corporate name compared to the previous period.

These consolidated financial statements were approved by the Board of Directors on March 25, 2024. The consolidated financial statements will be submitted to the approval of the next Annual General Meeting.

1.1.6.2

Basis of preparation

All amounts are presented in millions of euros unless otherwise indicated. Certain totals may have rounding differences.

Accounting framework

The consolidated financial statements of the Group for the twelve months ended December 31, 2023 have been prepared in accordance with the international accounting standards endorsed by the European Union and whose application was mandatory as at December 31, 2023.

The international accounting standards comprise the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), the International Accounting Standards (IAS), the interpretations of the Standing Interpretations Committee (SIC) and the IFRS Interpretations Committee (IFRS IC).

Accounting policies applied by the Group comply with those standards and interpretations.

At December 31, 2023, the Group applied the same accounting policies and measurement methods as were applied in its consolidated financial statements for the year ended December 31, 2022, with the exception of changes required by the enforcement of new standards and interpretations presented hereafter as well as the accounting treatment of certain third-party software resale transactions as described in Note 3.

New standards and interpretations applicable from January 1, 2023

In response to the "Pillar Two" international tax reform that aims at introducing a minimum global tax rate of 15%, the IASB has amended IAS 12 to introduce a temporary mandatory relief from accounting for deferred tax arising from legislation implementing the GloBE - global anti-base erosion model rules, effective immediately and applied retrospectively in accordance with IAS 8. Under the relief, entities are exempt from providing for and disclosing deferred tax related to the top-up tax.

The application of the amendments to IAS 12 - Income taxes: International Tax Reform - Pillar Two Model Rules was mandatory for the Group effective for the fiscal year beginning January 1, 2023.

In accordance with the relief, the Group did not account for any deferred income taxes in connection with Pillar Two in the consolidated financial statements.

Besides, based on the available information, the Group has carried out a first assessment of the potential impacts related to the implementation of Pillar Two: this work revealed a limited exposure to the top-up tax which effects would be non-material. This assessment will nevertheless have to be reviewed in light of the contemplated disposals.

The following other new standards, interpretations or amendments whose application was mandatory for the Group effective for the fiscal year beginning January 1, 2023 had no material impact on the consolidated financial statements:

• ⚫ Narrow scope amendments to IAS 1;

• ⚫ Narrow scope amendments to IAS 8;

• ⚫ Amendment to IAS 12 - Deferred tax related to assets and liabilities arising from a single transaction;

• ⚫ IFRS 17- Insurance contracts.

Other standards

The Group does not apply IFRS standards and interpretations that have not yet been approved by the European Union at the closing date. In addition, none of the new standards effective for annual periods beginning after January 1, 2023 and for which an earlier application is permitted have been applied by the Group.

The potential impacts of these new pronouncements are currently being analyzed.

Use of estimates and judgments

The preparation of consolidated financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities, income and expense in the financial statements and disclosures of contingent assets and liabilities at the closing date. As a function of changes in these assumptions or in circumstances that may arise, the amounts appearing in the future financial statements of the Group may differ from current estimates, particularly in the following areas:

• ⚫ Revenue recognition: estimates of percentage of completion, cost to complete and potential loss at completion, principal versus agent analyses (Note 3 - Revenue, trade receivables, contract assets, contract liabilities and contract costs, and Note 12 - Provisions);

• ⚫ Business combinations: fair value of the consideration transferred (including contingent consideration) and fair value of the assets acquired and liabilities assumed (Note 1 - Changes in the scope of consolidation);

• ⚫ Impairment test of goodwill and other fixed assets: key assumptions underlying recoverable amounts (Note 8 - Goodwill and fixed assets);

• ⚫ Recognition and measurement of deferred tax assets: availability of future taxable profits against which deductible temporary differences and tax losses carried forward can be utilized (Note 7 - Income tax);

• ⚫ Recognition and measurement of provisions and contingencies: key assumptions about the likelihood and magnitude of outflow of resources with no counterpart, estimates and judgments regarding the outcome of disputes in progress and, more generally, estimates regarding all provisions and contingent liabilities (Note 12 - Provisions and Note 16 - Litigations);

• ⚫ Measurement of defined benefit obligations: key actuarial assumptions (Note 11 - Pension plans and other long-term benefits);

⚫ Lease liabilities and right-of-use assets: assessment of the lease term and incremental borrowing rates used (Note 9 - Leases);

⚫

Financial assets: estimates and judgments relating to the recoverability of accounts receivable (Note 3 - Revenue, trade receivables, contract assets, contract liabilities and contract costs) and other financial assets.

On a regular basis, estimates on long-term contracts are reviewed taking into consideration potential loss-making situations or risks of recoverability on contract assets and contract costs. The expected credit loss valuation is also reviewed to consider potential increased bankruptcy risk of customers.

Effects of climate-related matters on financial statements

In preparing the consolidated financial statements, the impact of climate change has been considered by Atos, particularly in the context of the disclosures required in the Corporate Social Responsibility section of the Universal Registration Document. There has not been any material impact on judgments and estimates arising from those considerations, consistent with the assessment made by Atos that climate change is not expected to have a meaningful impact on the viability of the Group in the medium term.

In addition, in November 2021, the Group issued a sustainability-linked bond (refer to Note 6). The coupon of the last three years will be unchanged if Atos achieves the following Sustainability Performance Target (SPT): reduction in 2025 of Atos annual GreenHouse Gas CO2 emissions (Scopes 1, 2 and 3) by 50% compared to 2019. In case the SPT is not met, the last three coupons shall be increased by 0.175%.

Finally, an objective of carbon dioxide reduction was included in the performance criteria for the performance share plans attributed between 2020 and 2022 (see Note 5). This indicator measures the percentage of CO2 emission variation per € million of revenue (tCO2/€ million) over a 3-year period.

Significant accounting policies

Financial assets classification and business model

IFRS 9 defines three approaches to classify and measure financial assets based on their initial recognition:

• ⚫ Amortized cost;

• ⚫ Fair value through other components of comprehensive income;

• ⚫ Fair value through income statement.

Financial assets are classified according to these three categories by reference to the business model the Group uses to manage them, and the contractual cash flows they generate.

Loans, receivables and other debt instruments considered "basic lending arrangements" as defined by IFRS 9 (contractual cash flows that are solely payments of principal and interest) are carried at amortized cost when they are managed with the purpose of collecting contractual cash flows, or at fair value through other components of comprehensive income when they are managed with the purpose of collecting contractual cash flows and selling the asset, while debt instruments that are not "basic lending arrangements" or do not correspond to these business models are carried at fair value through income statement. Equity instruments are carried at fair value through income statement or, under an irrevocable option, at fair value through other comprehensive income.

The business model of the Group is to collect its contractual cash flows for its trade receivables.

Trade receivables can be transferred to third parties (banks) with conditions of the transfers meeting IFRS 9 requirements, meaning transfer of contractual cash flows and transfer of substantially all risks and rewards are achieved. Those trade receivables are in that case derecognized, further to the analysis of the actual transfer of risks, the non-materiality of any dilution risk based on experience, and the absence of continuing involvement.

Current and non-current assets and liabilities

Assets and liabilities classified as current are expected to be realized, used or settled during the normal cycle of operations. All other assets and liabilities are classified as non-current. The Group working capital requirement is defined in Note 4.6.

Foreign currency translation

The presentation currency is the euro, which is the Group functional currency.

Financial statements denominated in foreign currencies

The financial statements of consolidated companies are prepared in their functional currency, corresponding to the currency of the primary economic environment in which they operate. The financial statements of foreign operations whose functional currency is not the euro are translated into euros as follows:

• ⚫ assets and liabilities are translated at the closing exchange rate;

• ⚫ income and expense are translated at the average exchange rate for the period;

• ⚫ the resulting translation gains and losses are recognized in other comprehensive income on the line

  "Exchange differences on translation of foreign operations". When all or part of the investment in the foreign operation is derecognized (i.e., when the Group no longer exercises control, joint control or significant influence over the company) the share of accumulated foreign currency translation adjustments is recycled to profit or loss.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity have been treated as assets and liabilities of that foreign entity and translated into euros at the closing date.

The Group does not have any entity operating in a hyperinflationary economy except Argentina and Turkey. Argentina is a hyperinflationary economy since July 1, 2018 and Turkey since April 1, 2022. As such, all income statement items from Argentinian and Turkish entities have been restated from inflation in accordance with IAS 29.

Foreign currency transactions

Foreign currency transactions are translated into the functional currency using the exchange rate prevailing at the dates of the transactions. At closing date, the corresponding receivables and payables are translated using the closing exchange rate.

The resulting foreign exchange gains and losses are recognized in financial income and expense under the heading "Other financial income and expense", except where hedge accounting is applied as explained in

Note 13 - Fair value and characteristics of financial instruments.

1.1.6.3

Financial risk management

The Group activities are exposed to a variety of financial risks including liquidity risk, interest rate risk, credit risk and currency risk. Financial risk is managed by the Group Treasury department and involves minimizing potential adverse effects on the Group financial performance.

Liquidity risk

Liquidity risk management involves maintaining sufficient cash and marketable securities and ensuring the availability of funding through an adequate amount of committed credit facilities.

Atos policy is to cover in full its expected liquidity requirements by long-term committed loans or other appropriate long-term financial instruments. Terms and conditions of these loans include maturity and covenants leaving sufficient flexibility for the Group to finance its operations and expected developments.

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AtoS SE published this content on 26 March 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 March 2024 09:15:04 UTC.