NEOPOST - 2018 Registration document

6

Financial statements

Consolidated financial statements

Sensitivity of the instruments Concerning the financial instruments hedging the operations carried out in financial year 2018 for which the commitments are still in the balance sheet at year-end 2018, the impact of a 10% increase in the foreign currency versus the euro would be a (1.4) million euros loss. The impact of a 10% decrease

in the foreign currency versus the euro would be a 1.5 million

euros gain.

Concerning the operations hedging the 2019 budget positions, the sensitivity to an exchange rate change is detailed in the tables below.

For a 10% increase in foreign currency versus the euro:

Impact on equity

Impact on net income

Financial assets

0.6

0.1

Financial liabilities

(1.8)

(0.9)

For a 10% decrease in foreign currency versus the euro:

Impact on equity

Impact on net income

Financial assets

2.1

0.1

Financial liabilities

(0.5)

0.1

Exchange rate deal counterparty risk Operations are carried out with first rank international banks that take part in the revolving credit facility.

Interest rate risk Risk management policy

To limit the impact of a rise in interest rates on its interest expenses, the Neopost group has a risk-hedging policy aimed at protecting a maximum annual interest rate for the three years ahead at all times. Management horizon used is rolling in order to always have three years of management. Neopost has a policy of centralizing its interest rate risk, enabling it to monitor the Group’s overall interest rate risk exposure and to gain full control over the market instruments used in hedging operations. The Group hedges its interest rate risk depending on its current debt levels, but also according to likely future movements in debts, arising from drawings on its revolving credit facilities. Financial instruments are carried by the legal entities that have the corresponding debt on their balance sheet.

A hedging strategy is adopted on the basis of the position to be managed and the reference interest rate adopted. The strategy is aimed at protecting the reference interest rate and at taking advantage, at least to some extent, of favorable movements. Hedging strategies involve definite and optional derivative instruments, and open positions are maintained if possible. The valuation of the open position based on market forward interest rates, along with the interest rates obtained through hedging operations, should always protect the reference interest rate. Hedging strategies cover the period three years ahead at all times. However, the level of coverage and the weightings of the various derivative instruments may vary from one year to the next, since the aim is to maintain greater scope for optimizing positions in later years.

Year-end position The table below sets out Neopost’s position as at 31 January 2019 by maturity for the major currencies:

Notional value

EUR

USD

1 to 5 years > 5 years Total

1 to 5 years > 5 years Total

< 1 year

< 1 year

Debt

161.5

387.1

- 548.6

32.2

306.5

- 338.7

Of which fixed-rate debts

155.8

202.2

-

357.8

27.8

83.5

-

111.3

CORRESPONDING HEDGE MATURITIES

50.0

-

-

50.0

15.0 170.0

- 185.0

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REGISTRATION DOCUMENT 2018 / NEOPOST