NEOPOST_REGISTRATION_DOCUMENT_2017

5

Financial statements

Consolidated financial statements

Instrument valuations Derivative instruments are recognized in accordance with the accounting principles and methods presented in note 11-4-1. As of 1 st February 2013 and according to IFRS 13 standards Neopost set up a credit risk methodology concerning the valuation of financial instruments. In light of the immaterial impact of credit risk, Neopost decided not to recognize them in the financial statements at 31 January 2018. Hedging instruments relating to the 2017 financial year, i.e. hedging assets and liabilities on the balance sheet as at 31 January 2018, have been fully valued and recognized at

their market value at 31 January 2018 in the financial income. Derivative instruments relating to the 2018 financial year, i.e. hedging anticipated financial flows, have been fully valued and recognized at their market value at 31 January 2018. The time value of these hedging instruments has been recognized in the income statement, as has the change in intrinsic value of non-hedging transactions. Changes in the intrinsic value of hedging transactions have been recognized as a shareholders’ equity adjustment.

Changes recognized in the income statement

Changes recognized through equity

Notional value

31 January 2017

31 January 2018

Financial assets

0.2

1.9

(0.1)

2.0

• • • •

Cash flow hedge

0.2

1.9

(0.2)

1.9

Ineffective hedge

-

-

0.1

0.1

Financial liabilities

0.4

0.1

(0.4)

0.1

Cash flow hedge

0.4

0.1

(0.5)

-

Ineffective hedge

-

-

0.1

0.1

Sensitivity of the instruments Concerning the financial instruments hedging the operations carried out in financial year 2017 for which the commitments are still in the balance sheet at year-end 2017, the impact of a 10% increase in the foreign currency versus the euro would be a (0.9) million euros loss. The impact of a 10% decrease

in the foreign currency versus the euro would be a 0.9 million

euros gain.

Concerning the operations hedging the 2018 budget positions, the sensitivity to an exchange rate change is detailed in the tables below.

For a 10% increase in foreign currency versus the euro:

Impact on equity

Impact on net income

Financial assets

0.6

0.0

Financial liabilities

(4.1)

(1.1)

For a 10% decrease in foreign currency versus the euro:

Impact on equity

Impact on net income

Financial assets

5.2

0.0

Financial liabilities

(0.5)

(0.1)

Exchange rate deal counterparty risk Operations are carried out with first rank international banks that take part in the revolving credit facility.

Neopost has a policy of centralizing its interest rate risk, enabling it to monitor the Group’s overall interest rate risk exposure and to gain full control over the market instruments used in hedging operations. The Group hedges its interest rate risk depending on its current debt levels, but also according to likely future movements in debts, arising from drawings on its revolving credit facilities. Financial instruments are carried by the legal entities that have the corresponding debt on their balance sheet.

Interest rate risk Risk management policy

To limit the impact of a rise in interest rates on its interest expenses, the Neopost group has a risk-hedging policy aimed at protecting a maximum annual interest rate for the three years ahead at all times.

152

REGISTRATION DOCUMENT 2017 / NEOPOST