LISI 2012 FINANCIAL REPORT
45
3
Consolidated financial statements
Interest rate risk
Group exposure to interest rate fluctuations involves the
following risk: the Group mainly 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 2012 to the tune of €32.9m in
order to profit from the observed decrease in rates. Therefore,
as at December 31, 2012, its hedging position stood at €75.3m.
The hedging rate at December 31, 2012 stood at 54.2%. 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, 2012
are not considered by the Group to be hedging instruments and
are recorded at fair value to the income statement.
As at December 31
st
of each year, the Group’s net variable rate
position breaks down as follows:
(in €'000)
31/12/12
31/12/11
Loans – variable rates
138,900 138,446
Short-term banking facilities
10,892 29,565
Other current and non-current financial
assets
(35,892) (24,472)
Cash and cash equivalents
(30,625) (45,675)
Net position prior to management
83,275 97,864
Interest rate swap
75,353 51,500
Hedging
75,353 51,500
Net position after management
7,922 46,364
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, 2012, the impact of the non hedged
portion of 100 basis points of variable rate change stood at
+/- €0.1 million.
Commodities price fluctuation risk
This issue is dealt with in Chapter 5 § 4.6.1.
Currency risk
Due to its worldwide presence and its lines of business, the LISI
Group is exposed to currency fluctuations.
The Group's main currencies for receivables, related to its
customers' billing currencies, are the euro and the US dollar.
The main currencies for accounts payable, related to the
production countries, are the euro, the US dollar, the pound
sterling, the Canadian dollar and the Turkish pound and, to a
lesser extent, the Czech crown, the Polish zloty, the Moroccan
dirham, and the yuan.
In order to cover its exposure to currency risk, LISI has decided
to hedge its main currencies.
LISI has thus hedged its net requirements in pounds sterling,
Turkish lira and Canadian dollar for the years 2013 and 2014,
and his well as its net surplus in dollars for 2013 to 2015.
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)
Goodwill
Gross goodwill at December 31, 2011
182,611
Impairment at December 31, 2011
0
Net goodwill at December 31, 2011
182,611
Increase
2,406
Decrease
(2,300)
Changes in foreign exchange rates
(705)
Gross goodwill at December 31, 2012
182,012
Impairment at December 31, 2012
(3,400)
Net goodwill at December 31, 2012
178,612
The €2,300K decrease is associated with the sale of KNIPPING
Umformtechnik GmbH.
The €2,406K decrease is associated with the discounting of
the goodwill of the Creuzet Group for the fiscal year 2012.
Risks relating to events or circumstances existing at the date
of acquisition and that would have changed the accounting
for the combination at the date of acquisition, if they had
been known at that date, have been observed since December
31, 2011. In accordance with IFRS 3, the Group changed the
goodwill accordingly.
