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LISI 2011 —
45
— financial report
Consolidated financial statements
The cash table for all financial liabilities is as follows:
Financial liabilities recorded on balance sheet
(In €’000)
At 12/31/2011
Breakdown of contractual flows not discounted on due date
Net value value
Within less than
one year
Between 1 and
5 years
Over 5 years
Total
Long-term borrowings
136,408
128,214
8,194
136,408
Other long-term financial liabilities (excl. PCA)
4,237
4,091
146
4,237
Short-term borrowings
63,788
63,788
63,788
Trade and other accounts payable
194,711
194,711
194,711
Total financial liabilities
399,144
258,499
132,305
8,340
399,144
Financial liabilities recorded on balance sheet
(In €’000)
At 12/31/2010
Breakdown of contractual flows not discounted on due date
Net value value Within less than
one year
Between 1 and
5 years
Over 5 years
Total
Long-term borrowings
72,647
70,100
2,547
72,647
Other long-term financial liabilities (excl. PCA)
1,022
997
25
1,022
Short-term borrowings
25,709
25,709
25,709
Trade and other accounts payable
162,440
162,440
162,440
Total financial liabilities
261,818
188,149
71,097
2,572
261,818
Market risk
Market risk is the risk of variation in market prices, such as
interest rates, affecting the Group result or the value of financial
instruments held. Managing market risk involves controlling market
risk and maintaining it within acceptable limits, whilst optimizing the
profitability:risk ratio.
The Group buys and sells derivatives and supports financial liabilities
in order to manage market risk.
Hedging and market transactions on interest rates, exchange rates
or securities using futures instruments are recorded in accordance
with the provisions of CRBF rules nos. 88-02 and 90-15. Commitments
relating to these transactions are posted to off-balance sheet accounts
for the nominal value of the contracts. As at December 31, 2011, the
sum of these commitments represented the volume of transactions
that remained unsettled at year-end.
The accounting principles applied vary according to the nature of the
instruments and the operator’s initial intentions.
The commitments are detailed in paragraph 2.7.4.1 of this annual
report.
Interest rate risk
Group exposure to interest rate fluctuations involves the following
risk: the Groupmainly has variable rate liabilities, for which the initially-
agreed maturity period was greater than 1 year. These liabilities are
exposed to a cash flow fluctuation risk due to fluctuations in interest
rates. Within the framework of its policy to reduce its exposure to
interest rate fluctuations, the Group partly converts its fixed-interest
liabilities into financial instruments such as interest rate swaps and
interest rate options (the features of these instruments are described
in note 2.7.4 “Commitments”). These hedging positions are negotiated
by private contracts with banks. The Group took out such hedging
positions in 2011 to the tune of €24.5m in order to profit from the
observed decrease in rates. Therefore, as at December 31, 2011, its
hedging position stood at €49.8m. The hedging rate at December 31,
2011 stood at 36%. Market risks related to interest rate fluctuations are
handled in a centralized manner by the Group’s financial department.
Interest rate instruments outstanding at December 31, 2011 are not
considered by the Group to be hedging instruments and are recorded
at fair value to the income statement.
As at December 31 of each year, the Group’s net variable rate position
breaks down as follows:
(In €’000)
2011
2010
Loans – variable rates
138,446
71,841
Short-term banking facilities
29,565
7,923
Other current and non-current
financial assets
(24,472)
(38,605)
Cash and cash equivalents
(45,675)
(22,261)
Net position prior to management
97,864
18,897
Interest rate swap
51,500
27,000
Hedging
51,500
27,000
Net position after management
46,364
(8,103)
The approach taken consisted in taking into account as a calculation
basis for the sensitivity to rates the net, lending and borrowing
positions.
As at December 31, 2011, the impact of the non hedged portion of
100 basis points of variable rate change stood at +/- €0.5 million.