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LISI 2011 —
46
— financial report
Consolidated financial statements
Commodities price fluctuation risk
The Group is also exposed to fluctuations in the price of commodities
such as titanium, nickel and steel. The price effect on raw materials in
2011 is oriented upward on the twomain divisions: on LISI AEROSPACE,
the increase varies from 3% to 10% depending on the type of alloys;
on LISI AUTOMOTIVE, the increase is more uniform and comes out
on average to nearly 10% (increase of more than €90 per ton of wire
between December 2010 and December 2011). In order to prevent the
risk of tension on the markets for its principal rawmaterials, the Group
has signed supplier agreements with its major business partners
within the aerospace division. In that context of sharp rise, the LISI
AUTOMOTIVE Division was able to maintain the implementation of
procurement contracts during the quarter, thereby guaranteeing firm
prices for steel without resorting to hedging instruments, and strove
to propagate the rises to the selling prices.
Sensitivity to changes in commodity prices affects the main indicator
of operating profitability as follows:
– for LISI AEROSPACE, a 1% rise in raw materials results in EBIT losing
nearly 0.2 point,
– for LISI AUTOMOTIVE, the same rise results in EBIT losing 0.3 point,
– in total across the LISI Group, the impact in terms of sensitivity to a
1% increase of raw materials results in a 0.2 point drop of EBIT.
No hedging is available on the commodity futures market.
Currency risk
The main incoming cash flows in foreign currencies, outside the euro
zone (US and Canadian dollar, Sterling, Turkish pound and yuan) are
offset by outgoing cash flows (in particular for the purchase of raw
materials). The exposure to currency risks mainly concerns selling and
purchasing volumes on dollars. An analysis of flows over financial
2011 shows a net sale/purchase balance of nearly USD22 million, and
an impact of approximately €1m, upwards or downwards, on the EBIT
related to a 5% fluctuation in the USD/euro exchange rate.
Due to its worldwide presence (USA, Canada, UK, Turkey, etc.), and its
lines of business, the LISI Group is exposed to currency fluctuations.
In order to cover its exposure to currency risk, LISI has decided to hedge
its main currencies.
LISI thus hedged its net requirements in pounds sterling, Turkish lira
and Canadian dollar for the years 2012 and 2013, and his well as its net
surplus in dollars for 2012.
The hedging was ensured by the use of optional instruments,
that enable the Group to improve its visibility on profitability by
neutralizing the changes in currency exchange rates.
2.5
Detail of balance sheet items
2.5.1 Non-current assets
2.5.1.1 Intangible assets
a) Goodwill
(In €’000)
Survaleur
Gross goodwill at December 31, 2010
152,287
Impairment at December 31, 2010
Net goodwill at December 31, 2010
152,287
Increase
36,517
Decrease
(7,302)
Changes in foreign exchange rates
1,109
Gross goodwill at December 31, 2011
182,611
Impairment at December 31, 2011
Net goodwill at December 31, 2011
182,611
The €36,517k increase relates to the acquisition of CREUZET
AERONAUTIQUE and INDRAERO SIREN. The decrease results from the
divestiture of LISI COSMETICS. Changes in currency exchange rate only
concern LISI AEROSPACE and result from translation differentials on
the dollar.