Fiscal 2021 Universal Registration Document

The Group holds, through its wholly-owned subsidiary Sofinsod, a 19.61% stake in Bellon SA, a company that controls Sodexo S.A. with 42.75% of its shares and 57.25% of its voting rights exercisable on August 31, 2021 . This shareholding does not give the Group significant influence over Bellon SA, as voting rights attached to Bellon SA shares cannot be exercised by Sofinsod, in accordance with the provisions of article L.233-31 of Code de commerce.

Due to the application of IFRS 9, the Group assessed this investment at its fair value, determined in accordance with IFRS 13, and opted for accounting for subsequent changes in fair value in other non recyclable items of consolidated comprehensive income.

The management conducted a fair value assessment of the equity participation in the first application of IFRS 9, with the support of two independent experts. The valuation of the fair value of the investment depends, among other things, on the revalued Net Asset Value (NAV) of Bellon SA which has limited debt and holds no assets other than shares of Sodexo S.A.

These shares are valued at their closing share price for the calculation of the NAV of Bellon SA. The bylaws of Bellon SA include a clause which restricts the sale of Bellon SA shares to non-shareholder third parties, subject to the prior approval of its Supervisory Board. Bellon SA is controlled 72.6% by Mr. and Mrs. Pierre Bellon, and their four children who signed in June 2015 a 50-year agreement preventing the direct descendants of Mr. and Mrs. Pierre Bellon from freely disposing of their Bellon SA shares. The sole asset of Bellon SA being its interest in Sodexo, it can be inferred that Bellon SA does not intend to sell this interest to third parties.

These specific characteristics imply very limited liquidity for the shares that Sofinsod holds in Bellon SA. The valuation method used by management (Level 3 of the hierarchy defined by IFRS 13) incorporates this illiquidity on the one hand, as well as all of the characteristics of the holding’s ownership structure, on the other hand. This method results in a discount to net asset value on Bellon SA estimated at 40% as of September 1, 2018 and August 31, 2020.

As of August 31, 2021 , the fair value of the investment is assessed at 481 million euro, and its change since the opening of the year has been recorded in other non-recyclable items of comprehensive income. Its fair value was assessed to 410 million euro as of August 31, 2020 .

The Group policies and procedures adopted by the Board of Directors, the Chief Executive Officer and the Group Chief Financial Officer are designed to prevent speculative positions. Furthermore, under them:

• substantially all borrowings must be at fixed rates of interest, or converted to fixed-rate using hedging instruments; 
• in the context of financing policy, foreign exchange risk on loans to subsidiaries must be hedged; 
• the maturity of hedging instruments must not exceed the maturity of the borrowings they hedge.

13.1 Analysis of sensitivity to interest rates

As of August 31, 2021, an increase or a decrease in interest rates would have had no material impact on profit before tax or on shareholders’ equity as 95% of all liabilities at those dates were at a fixed rate of interest.

13.2 Analysis of sensitivity to foreign exchange rates and exchange rate exposures on principal currencies

Because Sodexo has operations in 56 countries, all components of the financial statements are influenced by foreign currency translation effects, and in particular by fluctuations in the U.S. dollar. However, exchange rate fluctuations do not generate any operational risk, because each of the Group’s subsidiaries invoices its revenues and incurs its expenses in the same currency.

Sodexo S.A. uses derivative instruments to manage the Group’s risk exposure resulting from the volatility of exchange rates.

SENSITIVITY TO EXCHANGE RATES