QUADIENT - 2019 Universal Registration Document

6

FINANCIAL STATEMENTS Consolidated financial statements

Changes recognized

Changes recognized

Changes recognized in the income statement – Fair value via P&L

Changes recognized in the income statement – Non aligned cost of hedge

through equity – Fair value via OCI*

through equity – Aligned cost of hedge

31 January 2019

31 January 2020

Notional value

Financial assets

0.1

-

0.3

-

-

0.4

Cash flow hedge •

-

-

0.3

-

-

0.3

Ineffective • hedge

0.1

-

-

-

-

0.1

Financial liabilities Cash flow hedge •

0.2

-

(0.1)

-

-

0.1

0.2

-

(0.1)

-

-

0.1

Ineffective • hedge

-

-

-

-

-

-

*

OCI: Other Comprehensive Income.

Sensitivity of the instruments Concerning the financial instruments hedging the operations carried out in financial year 2019 for which the commitments are still in the balance sheet at year-end 2019, the impact of a 10 % increase in the foreign currency versus the euro would be a (2.7) million euros loss. The impact of a 10 % decrease in the foreign currency versus the euro would be a 2.7 million euros gain.

Concerning the operations hedging the 2020 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

1.2

0.1

Financial liabilities

(2.4)

(0.7)

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

Impact on equity

Impact on net income

Financial assets

2.6

-

Financial liabilities

(0.9)

(0.2)

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

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.

Interest rate risk Risk management policy

To limit the impact of a rise in interest rates on its interest expenses, the Quadient group has a risk-hedging policy aimed at protecting a maximum annual interest rate for the three years ahead at all times. A rolling management horizon is used in order to always have three years of management. The Group has a policy of centralizing its interest rate risk, enabling it to monitor the Group’s overall interest rate risk exposure and to fully control 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.

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UNIVERSAL REGISTRATION DOCUMENT 2019