Sopra Steria - 2018 Registration document

PARENT COMPANY FINANCIAL STATEMENTS Notes to the balance sheet

a. Syndicated loan As part of the Group’s funding policy, in 2014 the Company arranged a €1,200 million five-year borrowing facility with two options to extend the expiry date by one year. This facility comprised a €200 million amortising tranche, an £80 million amortising tranche and a €900 million multi-currency revolving credit line. In 2018, following the exercise of the second one-year extension option, the expiry date was postponed to 6 July 2023. At 31 December 2018, the outstanding amount drawn on the loan was from the two amortising tranches (€128 million and £51.2 million after contractual amortisations for the period). The €900 million multi- currency revolving credit facility is undrawn. The Company also renegotiated the bilateral bank facility arranged in April 2017, with the outstanding amount drawn rising from €30 million to €60 million and maturity extended to the beginning of 2021, and arranged another non-reducing €50 million bilateral facility, which was undrawn at 31 December 2018. b. Details on the NEU CP programme In 2015, as part of the Group’s funding policy, the Company arranged an unrated multi-currency NEU CP (previously referred to as commercial paper) programme of short-term negotiable securities that was not underwritten, with a maximum amount of €700 million. This programme is presented in documentation available on the Banque de France website, which was last updated on 30 June 2018. The average amount outstanding under the NEU CP programme was €295.5 million in 2018, compared with €458.2 million in 2017 and was very active throughout 2018. The Company benefited from negative short-term euro rates as well as investor interest in maturities of 6 to 12 months. The outstanding amount under the NEU CP programme at 31 December 2018 was €157.0 million (€210.6 million at 31 December 2017). c. Details on the NEU MTN programme In December 2017, as part of its efforts to diversify its borrowings, the Company arranged an NEU MTN programme of medium- term negotiable securities that was not underwritten, with a maximum amount of €300 million. As is the case for the earlier NEU CP programme, the NEU MTN programme is presented in documentation available on the Banque de France website. The NEU MTN programme pays fixed or floating rates, with a spread at each issue date, and maturities range from one to five years. At 31 December 2018, the outstanding amount under the NEU MTN programme was €99.0 million, with maturities of two to five years.

d. Other financial debt The Other financial debt item includes:

p bank overdrafts in the amount of €151.914 million relating to the management of a notional cash pooling arrangement. These amounts correspond to the debit positions of subsidiaries taking part in the cash pooling arrangement; p a bilateral medium-term bank facility arranged in April 2017 and renegotiated in 2018, with the outstanding amount drawn rising from €30 million to €60 million and maturity extended to the beginning of 2021. The Company also arranged another five-year non-reducing €50 million bilateral facility, which was undrawn at 31 December 2018. e. Bonds The bond issue in the original amount of €180 million has the following characteristics: The terms and conditions to which the syndicated loan and bond issue are subject include a commitment to comply with certain financial covenants. Two financial ratios are calculated every six months using the consolidated financial statements on a 12-month rolling basis: p the first – known as the leverage ratio – is equal to net financial debt divided by pro forma EBITDA; p the second – known as the interest coverage ratio – is equal to pro forma EBITDA divided by the cost of net financial debt. The first financial ratio must not exceed 3.0 at any reporting date. The second ratio must not fall below 5.0. Net financial debt is defined on a consolidated basis as all loans and related borrowings (excluding intercompany liabilities), less available cash and cash equivalents. Pro forma EBITDA is consolidated operating profit on business activity adding back depreciation, amortisation and provisions included in operating profit on business activity. It is calculated on a 12-month rolling basis and is therefore restated so as to be presented in the financial statements on a like-for-like basis over 12 months. Accordingly, pro forma EBITDA for 2018 was restated in order to present the result for entities acquired over the 12-month period. p subscription date: 12 April 2013; p coupon rate: 4.25%; p redemption date: 12 July 2019. f. Covenants

At 31 December 2018, the net financial debt/pro forma EBITDA ratio covenant was met, with the ratio coming in at 1.68 compared with a covenant of 3.0. It is calculated as follows:

31/12/2018

31/12/2017

(in thousands of euros)

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

452,900 338,300 -170,300

273,600 398,900 -162,398

Cash and cash equivalents Other financial guarantees

-

-

Net financial debt (including financial guarantees)

620,900 369,640

510,102 354,091

EBITDA

Net financial debt/pro forma EBITDA ratio

1.68

1.44

For the second ratio, pro forma EBITDA is as defined above and the cost of net financial debt is also calculated on a rolling 12-month basis.

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SOPRA STERIA REGISTRATION DOCUMENT 2018