Aéroport de Paris - 2018 Registration document

RISK MANAGEMENT AND CONTROL 04 RISK FACTORS

Market risk

RISK IDENTIFICATION

RISK MONITORING AND MANAGEMENT

Market risk Market risk corresponds to the risk that market price variations, such as exchange rates, interest rates and equity instrument prices, may affect the Group’s income or the value of financial instruments held. The objective for the management of market risk is to manage and control exposure to market risk within acceptable limits, whilst optimising the profitability/risk ratio. Sensitivity analyses to interest rate risks and exchange risks are included in Note 9 to the Chapter 20 of the 2018 Registration document “Analysis of risks related to financial instruments”. Interest rate risk In addition to its operating cash flow, Aéroports de Paris has access to borrowing to fund its investment programme. The majority of Groupe ADP’s exposure to interest rate risk derives from its financial indebtedness and to a lesser extent its portfolio of rates derivatives.

The Company has a limited interest rate exposure policy. Low rates have led the Group to retain most of its debt at a fixed rate. The variability of the debt is studied on a case-by-case basis. Exchange rate risk is handled at each operation, with the use of hedging being favoured.

The rates risk relating to the debt is managed by modulating the respective proportions of fixed rates and variable rates in line with market developments. The management of this risk depends on the putting in place or cancellation of interest rate operations ( swaps ). The group’s policy consists of managing its interest expense by using a combination of fixed-rate and variable-rate loans such that 50% to 100% of its debt is fixed rate. In line with this objective, the Group puts in place interest rate swaps through which it exchanges, at specific intervals, the difference between the amount of interest at fixed rates and the amount of interest at variable rates, calculated on a nominal loan amount agreed between the parties. These swaps are assigned to loan hedging. As of 31 December 2018, 78% of the financial Groupe debt is at fixed-rate. Following the takeover of TAV Airports, the Group is henceforth exposed to exchange risk. TAV Airports converts its financial statements in a currency other than its functional currency, therefore the main risk of change relates to the variations of the euro currency compared to the Turkish lira (TRY) and American dollar. The currencies in which transactions are mainly denominated are euro, Turkish lira (TRY) and American dollar, as well as few currencies from the Persian Gulf liked to American dollar with a fixed parity, e.g. Sudanese rial, United Arab Emirates dirham and the Oman rial. In order to reduce exposure to exchange fluctuations, the Group has a hedging policy consisting of implementing derivative instruments, neutralising exchange rate risk as far as possible by reducing the balance of revenue and expense in these currencies, if necessary making partial forward sales of dollars for residual balances.

Exchange risk The main currencies in which transactions are denominated are the Euro and certain other currencies such as the US dollar and the Persian Gulf currencies.

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AÉROPORTS DE PARIS ® REGISTRATION DOCUMENT 2018