SOPRA_STERIA_REGISTRATION_DOCUMENT_2017

PARENT COMPANY FINANCIAL STATEMENTS Notes to the balance sheet

At 31 December 2017, the net financial debt/pro forma EBITDA ratio covenant was met, with the ratio coming in at 1.44 compared with a covenant of 3.0. It is calculated as follows:

31/12/2017

31/12/2016

(in thousands of euros)

Short-term borrowings (< 1 year) Long-term borrowings (> 1 year)

273,600 398,900 -162,398

368,700 402,700 -265,400

Cash and cash equivalents Other financial guarantees

-

-

Net financial debt (including financial guarantees)

510,102 354,091

506,000 344,832

EBITDA

Net financial debt/pro forma EBITDA ratio

1.44

1.47

For the interest coverage ratio, pro forma EBITDA is as defined above and the cost of net financial debt is also calculated on a rolling 12-month basis. At 31 December 2017, the covenant for pro forma EBITDA/cost of net financial debt, requiring a ratio of at least 5.0, was also met, with the ratio coming in at 52.18. It is calculated as follows:

31/12/2017

31/12/2016

(in thousands of euros)

EBITDA

354,091

344,832

Cost of net financial debt

6,786 52.18

6,712 51.38

Pro forma EBITDA/cost of net financial debt ratio

3.5.2. FINANCIAL INSTRUMENTS

The eligible counterparties for interest rate hedging and investments are leading financial institutions which belong to the Sopra Steria banking syndicate. These financial instruments are managed by the Group Finance Department. For transactions qualifying as hedges, the underlying hedged risk consists of a group of floating-rate financial liabilities. At 31 December 2017, floating-rate financial liabilities include mainly the euro- denominated tranche of the 2014 syndicated loan (€144 million) and the NEU CPs (€210 million). The Company has anticipated the refinancing of its €180 million bond due to mature in July 2019 by setting up a €100 million swaption contract.

a. Interest rate hedge Within the framework of the Group’s policy, the Company’s aim is to protect itself against interest rate fluctuations by hedging part of its floating rate debt and investing its cash over periods of less than three months. The Company does not conduct speculative transactions on financial markets. The derivative financial instruments used to hedge the debt are interest rate swap contracts or options, which may or may not be eligible for hedge accounting.

Fair value

31/12/2017

Maturity

Non- current assets

Non- current liabilities

Current assets

Current liabilities

Notional amount < 1 year

from 1 to

5 years > 5 years

(in thousands of euros)

Swap (cash flow hedge) in euros Swap (cash flow hedge) in foreign currency Options eligible for hedge accounting in euros Options eligible for hedge accounting in foreign currency Swaps not eligible for hedge accounting in euros Options not eligible for hedge accounting in euros TOTAL INTEREST RATE HEDGES

-

-

510.5

-

50,000.0

-

50,000.0

-

-

-

-

-

-

-

-

-

635.6

-

347.9

- 300,000.0

- 200,000.0 100,000.0

-

-

-

-

-

-

-

-

-

-

-

47.7 15,000.0 15,000.0

-

-

-

- -

225.0

- 110,000.0 10,000.0 100,000.0

-

635.6

1,083.5

47.7 475,000.0 25,000.0 350,000.0 100,000.0

210

SOPRA STERIA REGISTRATION DOCUMENT 2017