LensCrafters 2011 Annual Report Download - page 204

ANNUAL REPORT 2011> 128 |
The Group’s commercial exposure is regularly monitored through automated control
instruments.
Moreover, the Group has entered into an agreement with the insurance company Euler
Hermes Siac in order to cover the credit risk associated with customers of Luxottica
Trading and Finance Ltd. in those countries where the Group is not present directly.
c2) With regard to credit risk related to the management of financial resources and cash
availabilities, the risk is managed and monitored by the Group Treasury Department
through financial guidelines to ensure that all the Group subsidiaries maintain relations
with primary bank counterparties. Credit limits with respect to the primary financial
counterparties are based on evaluations and analyses that are implemented by the
Group Treasury Department.
Within the Group there are various shared guidelines governing the relations with the
bank counterparties, and all the companies of the Group comply with the “Financial
Risk Policy” directives.
Usually, the bank counterparties are selected by the Group Treasury Department and
cash availabilities can be deposited, over a certain limit, only with counterparties with
elevated credit ratings, as defined in the policy.
Operations with derivatives are limited to counterparties with solid and proven
experience in the trading and execution of derivatives and with elevated credit ratings,
as defined in the policy, in addition to being subordinate to the undersigning of an
ISDA Master Agreement. In particular, counterparty risk of derivatives is mitigated
through the diversification of the counterparty banks with which the Group deals. In
this way, the exposure with respect to each bank is never greater than 25 percent of
the total amount of the derivatives portfolio of the Group.
During the course of the year, there were no situations in which credit limits were
exceeded. Based on the information available to the Group, there were no potential
losses deriving from the inability of the abovementioned counterparties to meet their
contractual obligations.
(d) Liquidity risk
The management of the liquidity risk which originates from the normal operations of
the Group involves the maintenance of an adequate level of cash availabilities as well as
financial availabilities through an adequate amount of committed credit lines.
With regard to the policies and actions that are used to mitigate liquidity risks, the Group
takes adequate actions in order to meet its obligations. In particular, the Group:
• utilizes debt instruments or other credit lines in order to meet liquidity
requirements;
• utilizes different sources of financing and, as of December 31, 2011, had unused
lines of credit of approximately Euro 1,440.0 million (of which Euro 692.2 million are
committed lines);