Econocom - 2019 Universal registration document

06 consolidated financial statements

notes to the consolidated financial statements

Risk management 19. Capital adequacy 19.1. framework

businesses. Financial market risks (interest rate and currency risk) and liquidity risks are handled by Group Management. MARKET RISK 19.2.1. At the end of the ژ year, Group Management fixes all of the rates to be applied in the following ژ year’s budgeting process. The Group manages its exposure to interest rate and currency risks by using hedging instruments such as swaps and foreign exchange forward contracts. These derivative financial instruments are used purely for hedging and never for speculative purposes. Currency risk 19.2.1.1. The Group operates chiefly in the eurozone; however, following the expansion of operations in non-eurozone countries in Europe, as well as North and South America, the Group may be exposed to currency risk on other currencies. The table below summarises the sensitivity of certain consolidated income statement lines to an increase or decrease of 10% in exchange rates against the euro, linked to the translation of the subsidiaries’ foreign currency accounts.

The gearing or net debt/equity ratio came out at 52.1% at 31 ژ December 2019, compared to 51.2% at 31 ژ December 2018. It is calculated by taking financial debt as presented in Note ژ 14, less cash and total equity as shown on the statement of financial position at the reporting date. The Group seeks a level of gearing that maximises value for shareholders while maintaining the financial flexibility that is required to implement its strategic projects. Risk management 19.2. policy The Group’s activities are subject to certain financial risks: market risk (including currency risk, interest rate risk and price risk), liquidity risk and credit risk. risk management policy focuses on reducing exposure to credit risk and interest rate risk by transferring finance lease receivables to refinancing institutions and by using factoring solutions on a non-recourse basis in the Digital Services & Solutions The Group’s overall financial

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2019 annual report