Sopra Steria - 2019 Universal registration document

5 2019 CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements

Contingent liabilities 11.2. The only contingent liabilities recognised arose as a result of the Sopra-Steria business combination in 2014. At 31 December 2019, they totalled €6.5 million after tax and corresponded to tax and contractual risks in India.

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 a contingent liability on the balance sheet if it results from a present obligation arising from past events and its fair value can be reliably estimated, even where it is not probable that an outflow of resources will be necessary to extinguish the obligation.

FINANCING AND FINANCIAL RISK MANAGEMENT NOTE 12

Financial income and expenses 12.1.

Cost of net financial debt 12.1.1.

Financial year 2019 Financial year 2018

(in millions of euros)

Interest income

2.7 2.7

4.5 4.5

Income from cash and cash equivalents

Interest expenses

-11.4

-10.9

Gains and losses on hedges of gross financial debt

-1.2

-1.4

Cost of gross financial debt

-12.6

-12.3

COST OF NET FINANCIAL DEBT

-9.9

-7.8

The Cost of gross financial debt (€12.6 million) remained stable. The average amount of debt outstanding in respect of bank borrowings, bonds, NEU CP (Negotiable European Commercial Paper) and NEU MTN (Negotiable European Medium-Term Notes) was €828 million in 2019, versus €853 million in 2018. The average cost of borrowing after hedging was 1.52% in 2019 (1.44% in 2018).

The €1.8 million decrease in financial income resulted from the decline in average investments outstanding in India (€37.1 million in 2019, versus €63.2 million in 2018) following the repatriation of cash in the form of a dividend distribution for the financial year for the third year in a row.

Other financial income and expenses 12.1.2.

Financial year 2019 Financial year 2018

(in millions of euros)

Foreign exchange gains and losses

0.1 0.9 -9.9 -6.9 -0.9

0.3 1.2

Other financial income

Net interest expense on lease liabilities

-

Net interest expense on retirement benefit obligations Expense on unwinding of discounted non-current liabilities

-7.9 -0.6 -0.6

Change in the value of derivatives

-

Gain or loss on disposal of financial assets

2.7

-

Other financial expenses

-0.5

-4.1

Total other financial expenses

-15.7 -14.7

-13.2 -11.7

TOTAL OTHER FINANCIAL INCOME AND EXPENSES

Other financial expenses now include interest expenses on lease liabilities following the application at 1 January 2019 of IFRS 16 Leases (see Note 1.2.3).

The net interest expense on retirement benefit obligations saw a favourable €1 million change. This item is detailed in Note 5.3 “Retirement benefits and similar obligations”.

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SOPRA STERIA UNIVERSAL REGISTRATION DOCUMENT 2019

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