SOPRA_STERIA_REGISTRATION_DOCUMENT_2017

PARENT COMPANY FINANCIAL STATEMENTS Notes to the balance sheet

b. Foreign exchange hedge Sopra Steria Group is subject to three main types of risks linked to fluctuations in exchange rates: p currency translation risk associated with the repatriation of dividends of subsidiaries whose base currency is not the euro; p transactional risk associated with (i) purchases and sales of services in foreign currencies and (ii) internal foreign currency forwards granted to subsidiaries in connection with the centralised management of foreign currency risk; p financial foreign currency risk arising from foreign-currency borrowings (risk arising from changes in the value of the financial debt denominated in pounds sterling).

Transactions not qualifying as hedges relate to contracts for swaps and options not written on an underlying at 31 December 2017. At 31 December 2017, the fair value of interest rate instruments was negative €0.495 million. The portfolio’s sensitivity in the event of a change in interest rates is: p a decrease of €2.5 million in the event of a drop of 50 basis points in interest rates; p an increase of €5.2 million in the event of a rise of 50 basis points in interest rates.

Nominal value

Fair value

(in thousands of euros)

Foreign exchange hedge (1)

72,876 475,000

177

Interest rate hedge (2)

-508

(1) Including internal foreign currency forwards. (2) Excluding swaption contracts.

Details on transactional risk: As part of the Group’s general risk management policy, Sopra Steria Group systematically hedges against transactional foreign currency risks that constitute material risks. In addition, centralised management of foreign exchange transaction risk is in place with the Group’s main entities (apart from India). Sopra Steria Group acts as the centralising entity, granting exchange rate guarantees to subsidiaries in pounds sterling, US dollars and Polish zlotys. After netting internal exposures, Sopra Steria Group hedges the residual exposure through the use of derivatives. Changes in fair value corresponding to these hedges are taken to profit or loss for invoiced items and to equity for future cash flows. The remeasurement through profit or loss of these financial instruments hedging balance sheet items is balanced by the revaluation of foreign currency receivables over the period.

At 31 December 2017, the fair value of foreign exchange instruments was €177 thousand. The portfolio’s sensitivity in the event of a change in interest rates is: p an increase of €0.9 million in the event of a 5% fall in the euro; p a decrease of €0.9 million in the event of a 5% rise in the euro. Details on foreign currency risk Sopra Steria Group SA grants loans in sterling to UK subsidiaries whose outstanding balance is £80 million, financed by an equivalent debt in sterling. This debt provides a partial coverage of the assets comprised of shares in the UK subsidiaries, which amounted to £148 million at 31 December 2017.

3.5.3. TRADE ACCOUNTS PAYABLE

2017

2016

(in thousands of euros)

Non-Group suppliers and related accounts

37,241 48,010 28,901

39,601 44,930 34,772

Accrued expenses

Group suppliers (including accrued expenses)

TOTAL

114,152

119,303

3.5.4. TAX AND SOCIAL SECURITY PAYABLES

2017

2016

(in thousands of euros)

Staff costs and related accounts

105,078 113,571

98,663 107,714

Social security

State and local authorities p Corporate income tax

-

-

p VAT

104,835

103,943

p Other tax

4,904

5,131

TOTAL

328,388

315,451

211

SOPRA STERIA REGISTRATION DOCUMENT 2017