Econocom - 2020 annual report

04 risk factors financial risk

Supplier dependency 3.3. risk Given the broad choice of potential suppliers and the fact that they are largely interchangeable, Econocom’s dependence on suppliers is very limited. For the Technology Management & Financing, Products & Solutions and Services activities, the choice of suppliers is ultimately made by our clients. For these activities, in the event of a supplier default, an alternativesupplier is chosen. At 31 December 2020, no supplier accounted for more than 15% of the Group’s total purchases. Financial risk 4. The Group’s activities are subject to certain financial risks: market risk (including currency risk, interest rate risk and price risk), liquidity risk and credit risk. The Group’s overall financial risk management policy focuses on reducing exposure to credit risk and interest rate risk by transferring finance lease receivables to refinancing institutions and by using factoring solutions on a non-recourse basis in the Services and Products & Solutions businesses. Market risk 4.1. Financial market risks (interest rate and currency risk) and liquidity risks are handled by Group Management. FOREIGN EXCHANGE RISK 4.1.1. The Group operates chiefly in the eurozone; however, following the expansion of operations in non-eurozone countries in Europe, as well as North and South America, the Group may be exposed to currency risk

Technology 3.4. dependency risk

For its Technology Management & Financing, Services and Products & Solutions activities, the Group develops partnerships with hardware manufacturers, telecoms operators, software vendors and solutions providers. However, it strives to remain independent from these companies in order to offer the best possible solution in terms of architecture, hardware and software.

on other currencies. The currencies concerned are the pound sterling, the US and Canadian dollars, the Moroccan dirham, the Czech crown, the Swiss franc, the new Romanian leu, the Polish zloty, the Brazilian real and the Mexican peso. Since the large majority of subsidiaries’ purchases and sales are denominated in the same currency, this exposure is limited. Econocom group does not deem this risk to be material, but has nevertheless signed a number of foreign exchange hedging agreements to hedge risks on internal flows. INTEREST RATE RISK 4.1.2. Econocom’s operating income and cash flows are substantially independent of changes in interest rates. Sales of leases to refinancing institutions are systematically based on fixed rates. Income arising on these contracts is therefore set at the outset and only varies if the contract is amended. The Group uses a combination of fixed rates and floating rates to hedge its interest rate exposure.

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2020 annual report