Consolidated financial statements
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LISI 2014FINANCIALREPORT
2.4
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FINANCIALRISKMANAGEMENT
TheGroup isexposed to themain following risksarising from theuseof
financial instruments:
■■
creditrisk,
■■
liquidityrisk,
■■
marketrisk,
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interestraterisk,
■■
currencyrisk.
2.4.1Creditrisk
Credit risk is theGroup's riskof financial loss in theevent thatacustomer
or other party in a financial instrument fails tomeet their contractual
obligations.Thisriskderivesmainly fromtradereceivablesandsecurities
held forsale.
Tradeandother receivables
Groupexposuretocreditrisk ismainly influencedby individualcustomer
profiles.TheGrouphasapolicyofmonitoringtradereceivables,allowing
it to constantly control its thirdparty riskexposure. TheGroupbelieves
thatthecreditriskofwrite-offofpastduereceivables isminimal.
At December 31, 2014 the amount of provisions for doubtful debts
amounted to€4.3M, tobe compared to total receivablesof €248.2M.
The amount of the permanent losses recognized over the year was
€0.2M.
Riskon investment securities
OnDecember 31, 2014, theGroup'sbalance sheet showedcashandcash
equivalents of € 110.8M (see §2.5.2.3 Cash and cash equivalents). The
cashequivalents aremainlymadeofmarketable securities represented
bymonetarymutual funds, invested in very short maturity securities
and representing no risk in capital, in accordance with the Group's
cash management policy. In accordance with accounting rules, these
investmentsarevaluedattheirmarketpriceatyear-end.
2.4.2Liquidityrisk
TheGroup's cashmanagement is centralized: Theverygreatmajorityof
the cash surpluses or financing requirements of its subsidiaries, where
local legislationpermits it, is investedorfinancedbytheparentcompany
onnormalmarket terms. The central cashmanagement teammanages
the financingof theGroup,currentand forecast,andensures itscapacity
tomeet its financial commitments. For thatpurpose, itmaintainsa level
of the available cash and confirmed credit facilities compatiblewith its
sizeandthematuritiesof itsdebt.
AsatDecember31,2014, theGrouphadavailable inaddition toundrawn
medium-term lines, unusedbankoverdraft linesof€35M, andnet cash
of€110.8M, resulting ina total financingcapacityof€145.8M,making it
insensitiveto liquidityrisk.
TheGroups financing contracts provide for compliancewith twomain
ratiorestrictions:
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Netdebt /Shareholders’ equity<1.2
■■
Consolidatednetdebt /ConsolidatedEBITDA<3.5
As at December 31, 2014, the former amounted to0.256 and the latter
to 0.938, comparedwith 0.108 and 0.379, respectively, as at December
31, 2013. TheGroup therefore has a very comfortablemargin of safety,
confirming its low liquidityrisk.
(in€'000)
12/31/2014
12/31/2013
Cashandcashequivalents
110,818
94,000
Cashavailable [A]
110,818
94,000
Short-termbanking facilities [B]
10,066
8,224
Netcash [A-B]
100,752
85,776
Credits
255,986
134,665
Other financial creditors
26,001
18,928
Netdebt [C]
281,987
153,593
Netdebt [D=C+A-B]
181,235
67,817
Groupequity [E]
707,657
625,179
Debtratio (expressedas%) [D /E]
25.6% 10.8%
N.B. :2012reminderofthedebtratioasa%: 13,3%.
