Ubisoft 2008 Annual Report Download - page 85

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UBISOFT ANNUAL REPORT 2009
ma n a G e m e n t r e p o r t 01
1.1.7.3 Industrial or environment-related risks
The Group currently has no knowledge of any industrial or environmental risk.
Ubisoft did not record any provision, purchase any insurance to cover potential environmental risks, or pay any compensation in
this regard during the nancial year.
Nevertheless, the Company remains alert to regulatory changes in countries where it is present.
1.1.7.4 Market risks
In the course of its business, the Group is exposed to varying degrees of nancial risk (foreign-exchange, nancing, liquidity,
interest-rate), counterparty risk and equity risk.
Group policy consists of:
• minimising the impact of its exposure to market risks on both its income and, to a lesser extent, its balance sheet.
• tracking and managing this exposure centrally whenever regulatory and monetary circumstances allow,
• using derivatives for hedging purposes only.
The risk management policy and its organisation within the Group – notably through the Treasury Department, attached to the
Finance Division – are described in the Chairman’s internal audit report.
Additional information and gures on exposure to these different risks appear in Note 16 to the consolidated nancial
statements.
1.1.7.4.1 Financial risks
1/ Foreign-exchange risk
In light of its international presence, the Group may be exposed to exchange-rate uctuations in the following three cases:
• through its operating activities: sales and operating expenses of Group subsidiaries are largely denominated in local currency.
However, some transactions, for example licence agreements and intercompany invoicing are denominated in another currency.
The operating margin of subsidiaries concerned may therefore be exposed to uctuations in exchange rates involving their
operational currency;
• through its nancing activities: applying its policy of centralising risks, the Group has to manage nancing and cash in various
currencies;
• during the process of translating the accounts of its subsidiaries from foreign currencies into euros: current operating income
may be generated in currencies other than the euro. As a result, uctuations in the exchange rates of foreign currencies against
the euro may have an impact on the Group’s income statement. These uctuations also affect the carrying amount of assets and
liabilities denominated in foreign currencies and appearing in the consolidated balance sheet.
The sensitivity of Group earnings to changes in the value of its main currencies is described in Note 16 to the consolidated nancial
statements.
2/ Financing and liquidity risk
In the course of its operating activity, the Group has no recurrent or signicant debts. Operating cash ows are generally sufcient
to nance operating activity and organic growth. However, the Group may need to increase its debt by using credit lines to nance
M&A activity. Moreover, in order to nance temporary needs related to increases in working capital during especially busy periods,
the Group has a €180 million syndicated loan, €30 million in conrmed credit facilities and other bank credit facilities totalling
€73.5 million as of March 31, 2009.
The Group’s liquidity risk mainly lies with the maturity of the €20 million debt on which interest is paid, as well as payment ows
on derivatives, and this risk is therefore not signicant.