Atari 2009 Annual Report Download - page 111

ANNUAL FINANCIAL REPORT – REGISTRATION DOCUMENT
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NOTE 25 – MAN AGEMENT OF M ARKET RISKS
25.1. RISK MANAGEMENT
Risk exposure is handled by the Group‟s parent company based on conditions in the financial markets and in accordance
with procedures set by management. Foreign currency transactions are carried out in accordance with local regulations
and depending on access to the financial markets. Subsidiaries may do business directly with local banks under the
supervision of the parent company, provided that they comply with Group procedures and policies.
25.2. CURRENCY RISKS
The Group has not set up a currency hedging strategy for commercial transactions as there is an overall balance
between revenue and expenses in euros and US dollars, which are the Group‟s main operating currencies.
Exposure to currency risk associated with the financing of subsidiaries is managed by the parent company, which sets up
specific hedges as required depending on the type of financing concerned. At March 31, 2009, the Group had not
hedged its overall exchange-rate exposure on these sums as they represent long-term financing for its US operations.
Nevertheless, as the Group's financial statements are presented in euros, assets, liabilities, revenue and expenses
denominated in other currencies have to be translated into euros at the applicable exchange rate in order to be reported
in the Group's consolidated financial statements. Whenever the value of the euro increases in relation to another
currency, the value in euros of the Group's assets, liabilities, revenue and expenses originally denominated in that other
currency declines. The reverse effect occurs whenever the exchange value of the euro declines. Consequently,
fluctuations in euro exchange rates can have an impact on the value in euros of the Group's assets, liabilities, revenue
and expenses outside the eurozone, even if their value in local currencies remains unchanged. The Group‟s highest
degree of exposure to currency risks relates to revenue and the earnings of subsidiaries operating in US dollars, as well
as to the value of US dollar denominated intangible assets and goodwill.
An unfavorable change in EUR/USD exchange rate would not have a material impact on the Group‟s overall net currency
position. For information purposes, a 1% decline in the value of the US dollar in relation to the euro would have resulted
in a €0.9 million decrease in consolidated revenue in the financial statements for the year ended March 31, 2009 and
would have had respective positive impacts of €0.6 million and €1.9 million on the consolidated loss for the year and
equity.
The table below summarizes the Company's exposure to the US dollar:
(US D millions)
Marc h 31, 2009
Total as s ets 138.7
Total liabilities 74.6
Net 64.1
Off-balanc e s heet pos ition 43.9
Net pos ition after hedg ing 64.1
25.3. INTEREST-R AT E RISKS
The Group does not have an aggressive interest-rate risk management policy. As of March 31, 2009, borrowings at
floating interest rates amounted to €50.0 million.
In the event of a 100 basis point increase in interest rates, the resulting additional interest expense for the year ended
March 31, 2009 would have been approximately €0.4 million or 5.2% of the cost of consolidated debt at that date.
In view of the afore-described risk sensitivity analysis, the Group considers that a change in interest rates would not have
a material impact on its financial position.
25.4. CREDIT RISKS
The Group has a worldwide customer base and manages its commercial risks so as not to be exposed to excessive
concentration of credit risks.