Sopra Steria - 2020 Universal registration document

6 2020 PARENT COMPANY FINANCIAL STATEMENTS Notes to the balance sheet

At 31 December 2020, the net financial debt/pro forma EBITDA ratio covenant was met, with the ratio coming in at 1.12 compared with a covenant of 3.0. It is calculated as follows:

31/12/2020

31/12/2019

26 ;17<:*6-: 7/ .<97:

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

106,600 564,500 - 245,500

217,100 494,400 -197,500

Cash and cash equivalents Other financial guarantees

-

-

Net debt (including financial guarantees)

425,600

513,900 408,288

EBITDA

379,414

" ( " " ( ( & ( #

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. At 31 December 2020, the pro forma EBITDA to cost of net financial debt covenant – requiring a ratio of at least 5.0 – was met, with the ratio coming in at 38.27. It is calculated as follows:

31/12/2020

31/12/2019

26 ;17<:*6-: 7/ .<97:

EBITDA

379,414

408,288

Cost of net debt

9,915

9,873

( #'( # " ( " " ( & ( #

The Company’s financial covenants were renegotiated to consider pro forma EBITDA before application in the consolidated financial statements of IFRS 16 Leases and net financial debt excluding lease liabilities.

Interest rate hedge a.

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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’s Finance Department. For transactions qualifying as hedges, the underlying hedged risk consists of a group of floating-rate financial liabilities. At 31 December 2020, floating-rate financial liabilities mainly comprised the euro-denominated tranche of the 2014 syndicated loan (€96 million), the NEU CPs (€65 million) and a portion of the NEU MTNs (€109 million).

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.

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SOPRA STERIA UNIVERSAL REGISTRATION DOCUMENT 2020