Ubisoft 2014 Annual Report Download - page 139

Financial statements
2014
134
Note 15. Information on the management of financial risks
In the course of its business, the Group may be exposed to varying degrees of interest-rate, foreign
exchange, financing, liquidity, counterparty and credit risks. The Group has put in place a policy for
managing these risks, which is described below for each of the risks.
Interest-rate risk
Interest-rate risk is mainly incurred through the Group’s interest-bearing debt. It is essentially euro-
denominated and centrally managed. Interest-rate risk management is primarily designed to minimize
the cost of the Group’s borrowings and reduce exposure to this risk. For this purpose, the Group uses
primarily fixed-rate loans for its long-term financing needs and variable-rate loans to finance specific
needs relating to increases in working capital during particularly busy periods.
As at March 31, 2014, the Group’s debt included bonds, loans, commercial papers and bank
overdrafts, which were used essentially to finance the high year-end working capital requirements
relating to the highly seasonal nature of the business.
Analysis of variable-rate net debt’s sensitivity to interest-rate risk
The Group’s exposure to a change in interest rates on net debt is presented in the following table:
Liabilities
Type of
rate
Rate
Nominal
Interest
p.a.
Change of
1%
Difference
Net cash from bank overdrafts
Variable
0.46%
122,505
568
1,793
1,225
Investment securities
Variable
0.19%
8,618
17
103
86
Committed line of credit
Variable
0.31%
(15,000)
(47)
(197)
(150)
TOTAL
116,123*
538
1,699
1,161
* Excluding accrued interest and finance lease borrowing
LIQUIDITY RISK
As at March 31, 2014, the Group had financial debt of €251 million and net cash (including liquid
assets and short-term investment securities) of €(13) million.
03/31/14
03/31/13
Financial liabilities excluding derivatives
(250,612)
(133,184)
Cash
229,328
195,214
Net investment securities
8,618
42,490
Net cash
(12,666)
104,520
To finance specific needs related to the increase in working capital during periods of high activity, the
Group took out as at March 31, 2014, a syndicated loan for €214.5 million, loans of €4 million, bilateral
credit lines for €75 million, credit lines with banks for €55 million, and issued bonds for €60 million and
current commercial papers for €63 million (as part of a program for a maximum amount of €300
million).
The Group implemented cash agreements allowing centralized management at parent bank level of
the bank accounts of the majority of Group companies.
Covenants
Under the terms of the syndicated loan and bilateral credit lines, the Company is required to fulfill
certain financial ratios (covenants).
The covenants are as follows: