NEOPOST_REGISTRATION_DOCUMENT_2017

5

Financial statements

Consolidated financial statements

Capitalized/amortized debt costs 11-3-3: Costs relating to the arrangement of the different debts totaled 3.1 million euros in 2017. The difference between the straight-line amortization of these costs and the calculation of the amortized cost of capital is not material. As a result, there is no restatement for the IFRS accounts.

Hedging of net investments in foreign operations The 30 million United States dollars tranche of the private placement issued in September 2014, payable in September 2020, is intended to cover the net investment in subsidiaries based in the United States. This loan is used to hedge the Group’s exposure to exchange rate risk on these investments. Translation gains or losses on this loan are recognized in shareholders’ equity to offset any gain or loss on translation of the net investment in the subsidiaries. 11-3-4:

11-4

Risk management Accounting principles

11-4-1:

Neopost uses derivative instruments to limit its exposure to the risk of fluctuations in interest rates and exchange rates. In accordance with IAS 39, Neopost initially recognizes all derivative instruments on the balance sheet under financial instruments at fair value. This is estimated on the basis of market conditions. The fair value of the derivatives is then re-assessed at each accounting date thereafter. Accounting for hedging transactions On instigation of the hedge, the Group clearly identifies the hedging and hedged items. This hedging is formally documented by identifying the hedging strategy, the risk hedged and the method used to assess the effectiveness of the hedge. Tests are then carried out to demonstrate the effectiveness of the hedge. The treatment of derivative instruments identified as forming hedges varies in accordance with IAS 39 definitions, according to whether they are:

This approach is applied in particular to swaps of fixed to variable rate and to the corresponding hedged debt. Future cash flow hedges For changes in the fair value of derivative instruments, changes in the effective portion of the hedging relationship are charged to shareholders’ equity, while changes in the fair value of the ineffective portion are charged to the income statement. Profits and losses that are recognized through equity are posted to the income statement for the period during which the hedged transaction affects net income. This treatment is applied in particular to swaps of fixed to variable rate, as well as to the purchase and sale of currency futures or options. Net investment hedges The accounting principle is similar to future cash flow hedges. The gain or loss relating to the effective portion of the hedging instrument is charged directly to shareholders’ equity, while the ineffective portion is charged to the income statement. When the Group withdraws from a foreign business, the cumulative value of profits and losses that have been recognized directly in shareholders’ equity is recognized through the income statement. Recognition of derivatives not qualifying as  hedging instruments For derivatives, which do not meet the criteria for recognition as hedging instruments as described above, any gain or loss resulting from changes in fair value is charged to the income statement.

• •

fair value hedges;

future cash flow hedges;

• Fair value hedges

net investment hedges.

Changes in the fair value of derivative instruments are charged to the income statement. At the same time, the item hedged is also recognized at fair value up to the risk hedged. As a consequence, changes in the two items are recognized symmetrically under net financial expenses, so that only ineffective hedging impacts the income statement.

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REGISTRATION DOCUMENT 2017 / NEOPOST