2017 CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements
income or Other financial expenses . Fair value gains and losses on the hedged item attributable to the hedged risk adjust the carrying amount of the hedged item and are also recognised in profit or loss. b. Cash flow hedges The gain or loss corresponding to the effective portion of the hedging instrument is recognised directly in equity, while the ineffective portion is taken to profit or loss, in Other financial income and expense . Gains and losses recognised directly in equity are released to profit or loss in the period during which the hedged transaction impacts profit or loss. If the Group does not expect the realisation of the forecast transaction or commitment, the gains and losses previously recognised directly in equity will be released to profit or loss. If the hedging instrument matures, is sold, cancelled or exercised and is not replaced or renewed or if its designation as a hedging instrument is revoked, amounts previously recognised in equity will be held in equity until realisation of the forecast transaction or firm commitment. c. Hedges of a net investment Hedges of a net investment in a foreign operation, including hedges of monetary items recognised as part of a net investment, are recognised in the same way as cash flow hedges. The gain or loss corresponding to the effective portion of the hedging instrument is recognised directly in equity, while the ineffective portion is taken to profit or loss. On the disposal of the foreign operation, cumulative gains and losses recognised directly in equity are released to profit or loss.
The Group uses derivative instruments such as currency forwards, swaps and options to hedge its exposure to interest rate risk and fluctuations in foreign currencies. Derivative instruments are recognised at fair value. Any gains or losses resulting from fair value movements in derivatives not designated as hedging instruments are recognised directly in profit or loss as Other financial income and expenses . The fair value of currency forwards is calculated by reference to current rates for contracts with similar maturity profiles. The fair value of interest rate swaps is determined by reference to the market value of similar instruments. For hedge accounting purposes, hedges are classified as either: p fair value hedges, which hedge exposure to changes in the fair value of a recognised asset or liability or a firm commitment (except foreign currency risk); p cash flow hedges, which hedge exposure to fluctuations in cash flows attributable either to a specific risk associated with a recognised asset or liability or a highly probable future transaction or foreign currency risk on a firm commitment; p hedges of a net investment in a foreign operation. Hedging instruments that satisfy hedge accounting criteria are recognised as follows: a. Fair value hedges Changes in the fair value of a derivative designated as a fair value hedge are recognised in profit or loss ( Other operating income and expenses or Other financial income and expenses according to the type of hedged item). The ineffective portion of the hedges is recognised immediately in profit or loss as part of Other financial
11.5.Management of risk factors
11.5.1.Liquidity risk The Group’s policy is to have borrowing facilities at its disposal that are much larger than its needs and to manage cash centrally at Group level where permitted under the local legislation. Moreover, subsidiaries’ cash surpluses or borrowing requirements are managed centrally, being invested or met by the Sopra Steria Group parent company, which carries the bulk of the Group’s borrowings and bank credit lines.
As part of its efforts to diversify its borrowings, the Group launched a €300 million NEU MTN programme in December 2017 to supplement its €700 million NEU CP programme and also arranged a €30 million bilateral two-year term loan drawn down in April 2017. At 31 December 2017, the Group had lines of credit totalling €1.5 billion, 30% of which was drawn down.
SOPRA STERIA REGISTRATION DOCUMENT 2017
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