Sopra Steria - 2019 Universal registration document

8 ADDITIONAL INFORMATION

Disclosures arising from specific obligations – Other risks

EQUITY RISK 1.2.4.

Risk description

Risk management

The Group’s exposure to equity risk mainly arises from: equity risk in connection with equity interests held: p shares held by the Group in Axway Software, a listed • company, accounted for using the equity method, shares held in CS Communication & Systèmes, • risk related to treasury shares and other shares held and p managed by SSET Trust in the United Kingdom on behalf of shareholders and employees; risk related to assets invested in pension funds. •

The Group does not hold any investments in equities or any equity interests in listed companies other than the Axway Software shares and the shares in CS Communication & Systèmes, which represented €195 million and €9.9 million, respectively, in the Group’s consolidated financial statements at 31 December 2019. These non-controlling equity investments are made for strategic rather than financial reasons. Given the limited number of treasury shares it holds, these shares do not represent a significant risk factor for the Group (287,640 shares held in treasury at 31 December 2019). Furthermore, since the value of treasury shares is deducted from equity, changes in the share price have no impact on the 2019 consolidated income statement. For more information, see Note 12.5.5 to the consolidated financial statements in Chapter 5 of this Universal Registration Document (page 206). The Finance Department takes part in the regular exchanges with the trusts managing pension fund assets in the United Kingdom, and also participates in the three-yearly negotiations. The next round of three-yearly negotiations is to be held in 2020.

BANK COUNTERPARTY RISK 1.2.5.

Risk description

Risk management

The Group’s exposure to financial counterparty risk arises from positions recognised as assets on its consolidated balance sheet and from cash invested with financial institutions as a result of transactions performed in the financial markets for risk management and cash management purposes.

All foreign currency and interest rate hedges are put in place with leading banks belonging to the Group’s banking syndicate, with which market transaction agreements have been signed. The Group favours short-term investments with banks that form part of its banking syndicate. These investments are subject to approval by the Group Finance Department, and comply with internally defined prudential principles. For more information, see Note 12.5.2 to the 2019 consolidated financial statements in Chapter 5 of this Universal Registration Document (page 201).

CLIENT CREDIT RISK 1.2.6.

Risk description

Risk management

A large proportion of the Group’s revenue is generated by business with public authorities and European government entities. A very small proportion of revenue is generated by business with clients residing outside the OECD, and the largest proportion of revenue is generated by key accounts, in line with the Group’s business strategy, which reduces the risk of client insolvency. Nonetheless, the Group may be exposed to client credit risks. Days sales outstanding (DSO) stood at 55 days at 31 December 2019 (61 days at 31 December 2018 and 68 days at 31 December 2017). Provisions for doubtful debtors represented 0.5% of the Group’s consolidated revenue in the year ended 31 December 2019.

The Group monitors developments in trade receivables across its entire scope. Days sales outstanding (DSO) is a performance indicator considered as one of the Group’s key operating indicators. It records the number of days worth of turnover generated in the accounts but not yet invoiced and/or received. It is also included among the objectives for managers. Regular reviews are conducted to put in place actions to address specific issues, in particular the collection of receivables. For more information, see Note 7.2 to the 2019 consolidated financial statements in Chapter 5 of this Universal Registration Document (page 183).

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SOPRA STERIA UNIVERSAL REGISTRATION DOCUMENT 2019