Ubisoft 2012 Annual Report Download - page 43

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Management Report
2012
38
FOREIGN-EXCHANGE RISK
In light of its international presence, the Group may be exposed to exchange-rate fluctuations 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 such as license agreements and
intercompany invoicing are denominated in another currency. The operating margin of the subsidiaries
concerned may therefore be exposed to fluctuations in exchange rates involving their operational
currency;
through its financing activities: in line with its policy of centralizing risks, the Group has to
manage financing 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,
fluctuations in foreign currency exchange rates against the euro may have an impact on the Group's
income statement. These fluctuations also affect the carrying amount of assets and liabilities
denominated in foreign currencies and appearing in the consolidated balance sheet.
The Group first uses natural hedges provided by transactions in the other direction (development costs
in foreign currency offset by royalties from subsidiaries in the same currency). The parent company
uses foreign currency borrowings, forward sales or foreign-exchange options to hedge any residual
exposures and non-commercial transactions (such as inter-company loans in foreign currencies).
The sensitivity of Group earnings to changes in the value of its main currencies is described in Note 16
to the consolidated financial statements.
YEAR-END MARCH 31, 2012
Impact of a +/-1% variation in the main currencies on revenue and operating income/loss
In thousands of euros for FY 2011/2012
Currency
Impact on revenue
Impact on operating income/loss
USD
4,904
1,396
GBP
1,247
780
CAD
729
877
Impact of a variation (+/-1%) in the main currencies on goodwill and brands
Currency
Impact on shareholders' equity (1)
USD
629
GBP
12
CAD
141
(1) In thousands of euros
FINANCING AND LIQUIDITY RISK
In the course of its operating activity, the group has no recurrent or significant debts. Operating cash
flows are generally sufficient to finance operating activity and organic growth. However, the group may
need to increase its debt by using credit lines to finance merger & acquisition activity. In order to
finance temporary needs related to increases in working capital during especially busy periods, the
group has a €180 million syndicated loan, €95 million in confirmed credit facilities and other bank
credit facilities totaling €74.3 million at March 31, 2012.
The Group's liquidity risk is mainly induced by payment flows on derivatives and is therefore not
material.