SOPRA_STERIA_REGISTRATION_DOCUMENT_2017

2017 CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements

10.2.Contingent liabilities The only contingent liabilities recognised arose as a result of the Sopra-Steria business combination in 2014. At 31 December 2017, they totalled €12.2 million, or €12.2 million after tax. Reflecting tax, employee and contractual risks, they mainly relate to India (€6.8 million after tax), and to France for the remainder.

To the extent that a liability is not probable or may not be reliably estimated, a contingent liability is disclosed by the Group among its commitments given. By exception, in connection with business combinations, the Group may recognise contingent liabilities on the balance sheet if they result from a present obligation arising from past events and their fair value can be reliably estimated, even where it is not probable that an outflow of resources will be necessary to extinguish the obligation.

NOTE 11 FINANCING AND FINANCIAL RISK MANAGEMENT

11.1.Financial income and expenses

11.1.1. Cost of net financial debt

2017

2016

(in millions of euros)

Interest income

6.7 6.7

9.6 9.6

Income from cash and cash equivalents

Interest expenses

-11.8

-14.3

Gains and losses on hedges of gross financial debt

-1.6

-2.1

Cost of gross financial debt COST OF NET FINANCIAL DEBT

-13.4

-16.3

-6.8

-6.7

The decrease of €2.9 million in financial income is attributable in part to the decline in average investments outstanding in India (€102.7 million in 2017, versus €122.4 million in 2016) following the repatriation of cash in the form of a dividend distribution and in part to the decline in the return on cash investments in Indian rupees. The cost of gross financial debt fell by €2.9 million, mainly as a result of the decline in benchmark indexes and borrowing requirements.

The average amount of debt outstanding in respect of bank borrowings, bonds and NEU CP (Negotiable EUropean Commercial Paper, the new name for commercial paper) was €912 million in 2017, versus €923 million in 2016. The average borrowing rate after hedging was 1.47% in 2017, compared with 1.77% in 2016. The cost of net financial debt was stable at €6.8 million.

11.1.2. Other financial income and expenses

2017

2016

(in millions of euros)

Foreign exchange gains and losses

-1.9 7.2 -0.6 -9.9 -0.3 -0.8 -1.5 -1.9

2.7 1.8 -0.8 -7.7 -0.7 -0.8 -0.6 -1.6

Other financial income

Discounts granted

Net interest expense on retirement benefit obligations

Interest on employee profit-sharing liability

Expense on unwinding of discounted non-current liabilities

Change in the value of derivatives

Other financial expenses

Total other financial expenses

-15.1

-12.1

TOTAL OTHER FINANCIAL INCOME AND EXPENSES

-9.8

-7.6

170

SOPRA STERIA REGISTRATION DOCUMENT 2017