Financial instruments
The following table shows a comparison between the book value of the Group's financial instruments and their fair value.
Analysing the table shows that the fair value is different from the book value only in the case of short-term and long-term financial debts. This difference, corresponding to Euro 1,833 thousand, is generated by the fixed-rate loans outstanding at the end of the reporting period, for which the value has been recalculated at current market rates.
(in thousands of Euro) | Book value | Fair value | ||
---|---|---|---|---|
12.31.2012 | 12.31.2011 | 12.31.2012 | 12.31.2011 | |
Financial assets | ||||
Cash and cash equivalents | 85,209 | 102,461 | 85,209 | 102,461 |
Securities held for trading | 15 | 11 | 15 | 11 |
Held-to-maturity investments | 8,199 | 1,893 | 8,199 | 1,893 |
Assets for derivative financial instruments | 15 | 8 | 15 | 8 |
Current financial receivables | - | - | - | - |
Trade receivables | 155,161 | 178,655 | 155,161 | 178,655 |
Other receivables | 32,477 | 32,141 | 32,477 | 32,141 |
Other assets | 3,559 | 2,800 | 3,559 | 2,800 |
Other financial assets available for sale | 489 | 490 | 489 | 490 |
Non-current trade receivables | - | 918 | - | 918 |
Non-current financial receivables | - | - | - | - |
Other non-current receivables | 17,022 | 14,102 | 17,022 | 14,102 |
Financial liabilities | ||||
Short-term financial debts | 97,973 | 56,789 | 98,150 | 57,057 |
Other short-term liabilities for derivative financial instruments | 1,011 | 632 | 1,011 | 632 |
Trade and other payables | 307,984 | 314,841 | 307,984 | 314,841 |
Other current liabilities | 8,765 | 7,324 | 8,765 | 7,324 |
Medium/long-term financial debts | 276,594 | 338,378 | 278,250 | 338,491 |
Other medium/long-term liabilities for derivative financial instruments | 13,708 | 8,416 | 13,708 | 8,416 |
Financial risk management
Given that the Group operates on world markets, its activity is exposed to various kinds of financial risks, including fluctuations, up or down, of interest and exchange rates, and cash flow risks (for cash flows generated outside of the Eurozone). In order to minimise these risks, the Group uses derivatives as part of its risk management activities, whereas it does not use or hold derivatives or similar instruments purely for trading purposes.
The Group also has available a whole series of financial instruments other than derivatives, such as bank loans, financial leases, rentals, sight deposits, payables and receivables deriving from normal operating activities.
The Group handles its main hedging operations centrally. Precise instructions have also been issued, laying down guidelines on risk management, while procedures have been introduced to control all transactions in derivatives.
Interest risk
The interest risk to which the Group is exposed mainly arises from long-term debts.
These debts may be fixed or floating rate.
Fixed rate debts expose the Group to a fair value risk. For this kind of risk arising from said contracts, the Group does not implement specific hedging policies, as it deems the risk to be limited to the modest amount of the fixed term loans.
Floating rate debts, which represent 93% of the net book value of Group loans, expose the Group to a risk arising from interest rate volatility (cash flow risk).
With regard to this risk, for the purposes of the related hedging, the Group may use derivative contracts which limit the impacts on the income statement of changes in the interest rate. At present, hedging transactions cover around 31% of the net book value of the Group's floating-rate debts. After such transactions, floating-rate loans exposing the Group to a cash flow risk fall to 64% of the net book value of the Group's total loans.
The following table gives a breakdown, by maturity, of the book value of the Group's financial assets and liabilities instruments, which are exposed to interest rate risk as of December 31, 2012, split according to whether they are contractually at a fixed or floating rate (for further details see the table shown in the analysis of “Liquidity risk”):
(in thousands of Euro) | within 12 months | between 1 and 2 years | between 2 and 3 years | between 3 and 4 years | between 4 and 5 years | beyond 5 years | Total |
---|---|---|---|---|---|---|---|
TOTAL FIXED RATE | (11,678) | (4,022) | (2,687) | (2,302) | (2,135) | (2,756) | (25,580) |
TOTAL FLOATING RATE - ASSET | 94,438 | - | - | - | - | - | 93,438 |
TOTAL FLOATING RATE - LIABILITIES | (87,306) | (49,235) | (69,886) | (105,634) | (51,644) | - | (363,705) |
Financial instruments booked to “Total floating rate – Asset” refer to “Cash and cash equivalents” and “Other financial assets” (Securities held for trading, Held-to-maturity investments, Assets for derivative financial instruments).
Below there is a sensitivity analysis which shows the impact on the Income Statement, net of tax, and on Equity of a change in interest rates that is considered reasonably possible.
An increase or decrease in interest rates of 100 basis points, applied to floating-rate financial assets and liabilities in existence as of December 31, 2012, including interest-rate hedges, would have the following effects:
(in thousands of Euro) | 12.31.2012 | 12.31.2011 | ||
---|---|---|---|---|
Sensitivity Analysis | Net profit |
Equity |
Net profit | Equity |
+ 100 basis points | (1,113) | 2,841 | (1,041) | 3,351 |
-100 basis points | 1,113 | (2,841) | 1,041 | (3,351) |
It should be noted that as of December 31, 2012, the KIRD (Key Interest Rate Duration) method was adopted for the sensitivity analysis of interest-rate hedges in place of the full revaluation approach used in the previous years; values as of December 31, 2011 were recalculated according to the new method.
The effect on Equity differs from the effect on the Income Statement by Euro 3,954 thousand, which reflects the change in fair value of the instruments hedging the interest rate risk.
Foreign currency risk
As it operates at an international level, the Group is exposed to the risk that changes in exchange rates could have an impact on the fair value of some of its assets or liabilities.
Moreover, as can be seen from the segment information given in note 4, the Group produces and sells mainly in countries of the Eurozone, but it is exposed to currency risk, above all in respect of the British Pound, Brazilian Real, US Dollar, Argentine Peso, Chinese Renminbi and Canadian Dollar.
Generally speaking, the Group is not particularly exposed to exchange risk, which is mainly related to the translation of foreign subsidiaries' financial statements, as the currencies in which the foreign operating companies bill and those in which they are invoiced tend to be much the same.
As regards borrowings, there are also policies stating that any funds raised from third parties have to be in the same currency as the functional currency of the company obtaining the loan. If any exception is made to this principle, then systematic hedging of the risk is used through forward currency purchases.
A sensitivity analysis is provided below, which shows the impact on the Income Statement, especially on “Exchange (gains) losses”, net of tax, and on Equity of a change that is considered reasonably possible in exchange rates of the main foreign currencies. Note that the exchange effect of translating the financial statements of foreign subsidiaries into Euro has not been taken into consideration here.
What has been taken into consideration are the financial assets and liabilities outstanding as of December 31, 2012 denominated in a currency other than the functional currency of the individual subsidiaries. This analysis also takes into account any changes in the fair value of the financial instruments used to hedge exchange risk.
As of December 31, 2012, exchange risk was concentrated mainly in transactions with the Euro.
A 5% appreciation or depreciation of the Euro against the other main currencies would have the following effects:
(in thousands of Euro) | 12.31.2012 | 12.31.2011 | ||
---|---|---|---|---|
Sensitivity Analysis | Net profit |
Equity |
Net profit | Equity |
+ 5% | (613) | (613) | (711) | (711) |
- 5% | 661 | 661 | 774 | 774 |
These effects are mainly due to the following exchange rates:
- EUR/GBP mainly due to the net debt exposure for the trade payables in Euro of the UK subsidiaries net of the change in the fair value of the relative hedge (subsidiaries Sogefi Filtration Ltd and Allevard Springs Ltd);
- EUR/CNY mainly due to the debt exposure for the trade and financial payables in Euro of Chinese subsidiaries;
- EUR/ARP mainly due to the debt exposure for the trade payables in Euro of Argentinian subsidiaries.
Price risk
The Group is partially exposed to price risk as it makes purchases of various raw materials such as steel, plastics, aluminium, cellulose products.
The risk is handled in the best way possible thanks to centralised purchasing and a policy of having various suppliers for each kind of raw material, operating in different parts of the world.
We would also point out that price risk is generally mitigated by the Group's ability to pass on part of the increase in raw material costs to selling prices.
The price risk on Group investments classified as “Securities held for trading” and “Other financial assets available for sale” is not significant.
Credit risk
This is the risk that one of the parties signing a contract of a financial nature defaults on an obligation, thereby provoking a financial loss. This risk can derive from strictly commercial aspects (granting and concentration of credits), as well as from purely financial aspects (choice of counterparties used in financial transactions).
From a commercial point of view, the Group does not have excessive concentrations of credit risk as it operates on distribution channels, both Original Equipment and the Aftermarket, that make it possible not to depend too much on individual customers. For example, Original Equipment sales are largely to car and industrial vehicle manufacturers.
As regards the Aftermarket, on the other hand, the Group’s main customers are important international purchasing groups.
In order to minimise credit risk, however, procedures have in any case been implemented to limit the impact of any customer insolvencies.
As regards counterparties for the management of financial resources, the Group only has recourse to partners that have a safe profile and a high international standing.
The Group's maximum exposure to credit risk as of December 31, 2012 is represented by the book value of the financial assets shown in the financial statements (Euro 302,146 thousand), as well as by the nominal value of the guarantees given in favour of third parties, as mentioned in note 43 (Euro 10,946 thousand).
The exposure to credit risk is essentially linked to trade receivables which amounted to Euro 156,245 thousand as of December 31, 2012 (Euro 180,581 thousand as of December 31, 2011), written down by Euro 5,263 thousand (Euro 5,319 thousand as of December 31, 2011).
Receivables are backed by insurance guarantees for Euro 4,652 thousand (Euro 4,861 thousand as of December 31, 2011). The Group does not have any other guarantees covering trade receivables.
The following table shows the changes in the allowance for doubtful accounts:
(in thousands of Euro) | 12.31.2012 | 12.31.2011 |
---|---|---|
Opening balance | 5,319 | 5,852 |
Change to the scope of consolidation | - | 65 |
Accruals for the period | 706 | 1,009 |
Utilisations | (627) | (1,226) |
Provisions not used during the period | (104) | (375) |
Other changes | 6 | 25 |
Exchange differences | (37) | (31) |
TOTAL | 5,263 | 5,319 |
The following is an ageing analysis of gross receivables and the related allowance for doubtful accounts to help evaluate credit risk:
(in thousands of Euro) | 12.31.2011 | ||
---|---|---|---|
Gross value | Allowance for doubtful accounts | Net value | |
Receivables past due: | |||
0-30 days | 15,502 | (69) | 15,433 |
30-60 days | 3,393 | (181) | 3,212 |
60-90 days | 1,143 | (201) | 942 |
over 90 days | 7,045 | (4,868) | 2,177 |
Total receivables past due | 27,083 | (5,319) | 21,764 |
Total receivables still to fall due | 153,498 | - | 153,498 |
TOTAL | 180,581 | (5,319) | 175,262 |
(in thousands of Euro) | 12.31.2012 | ||
---|---|---|---|
Gross value | Allowance for doubtful accounts | Net value | |
Receivables past due: | |||
0-30 days | 12,631 | (3) | 12,628 |
30-60 days | 3,981 | (39) | 3,942 |
60-90 days | 1,783 | (153) | 1,630 |
over 90 days | 8,938 | (5,068) | 3,870 |
Total receivables past due | 27,333 | (5,263) | 22,070 |
Total receivables still to fall due | 128,912 | - | 128,912 |
TOTAL | 156,245 | (5,263) | 150,982 |
As of December 31, 2012, gross receivables past due were Euro 250 thousand higher than at the end of the previous year. The increase is observed in the “over 90 days” bracket (+ Euro 1,893 thousand) and mainly relates to receivables from certain OE customers of the subsidiary Sogefi Rejna S.p.A.; part of these receivables had already been collected at the date of this report.
The “0-30 days” bracket has decreased (- Euro 2,871 thousand) mainly thanks to subsidiary Systèmes Moteurs S.A.S..
The impact of gross receivables past due on total receivables stands at 17.5% compared to 15% in the previous year.
Past due receivables have been written down by 19.3% of the total (19.6% as of December 31, 2011) and 56.7% (69.1% as of December 31, 2011) considering only the “over 90 days” bracket. Writedowns refer mainly to disputed amounts or receivables that have been due for a significant period of time and can no longer be collected.
Net receivables past due account for 14.6% of total net receivables, compared to 12.4% in the previous year.
The item “Total receivables still to fall due” does not contain significant positions that have been renegotiated.
Considering the nature of the Sogefi Group's customers (cars and industrial vehicles manufacturers and important international purchasing groups), a Credit risk analysis by type of customer is not considered meaningful.
Liquidity risk
The Group is subject to a minimum amount of liquidity risk, namely having to handle a situation where it is not able to raise sufficient funds to meet its liabilities.
The Group has always taken an extremely prudent approach to its financial structure, using mainly medium/ long-term funding, whereas forms of short-term financing are generally used only to cope with moments of peak requirement.
The fact that it has a significant level of cash flow, together with its solid capital structure, makes it relatively easy for the Group to find additional sources of financing.
It should also be mentioned that the Group has implemented a cash pooling system for all of the main European subsidiaries, which makes it possible to optimise liquidity and cash flow management at a supranational level.
The following table shows an analysis of the Group's financial assets and liabilities instruments by maturity, including the amount of future interests to be paid and trade receivables and payables:
(in thousands of Euro) | within 12 months | between 1 and 2 years | between 2 and 3 years | between 3 and 4 years | between 4 and 5 years | beyond 5 years | Total |
---|---|---|---|---|---|---|---|
Fixed rate | |||||||
Finance lease Sogefi Filtration Ltd | (145) | (164) | (186) | (207) | (233) | (1,642) | (2,577) |
Finance lease Allevard Sogefi U.S.A. Inc. | (341) | (353) | (365) | (377) | (389) | (620) | (2,445) |
Sogefi Filtration do Brasil Ltda loan | (6,533) | - | - | - | - | - | (6,533) |
Systèmes Moteurs S.A.S. loan | (1,694) | (1,710) | (437) | - | - | - | (3,841) |
Sogefi Engine Systemes Moteurs Canada Corp loan | (373) | (670) | (710) | (752) | (730) | - | (3,235) |
Government financing | (627) | (589) | (613) | (602) | (490) | (494) | (3,415) |
Other fixed rate loans | (1,965) | (536) | (376) | (364) | (293) | - | (3,534) |
Future interest | (1,006) | (631) | (465) | (363) | (258) | (552) | (3,275) |
TOTAL FIXED RATE | (12,684) | (4,653) | (3,152) | (2,665) | (2,393) | (3,308) | (28,855) |
Floating rate | |||||||
Cash and cash equivalents | 85,209 | - | - | - | - | - | 85,209 |
Financial assets | 8,214 | - | - | - | - | - | 8,214 |
Assets for derivative financial instruments | 15 | - | - | - | - | - | 15 |
Current financial receivables | - | - | - | - | - | - | - |
Non-current financial receivables | - | - | - | - | - | - | - |
Bank overdrafts and other short-term loans | (8,377) | - | - | - | - | - | (8,377) |
Sogefi S.p.A. loans | (58,123) | (46,531) | (67,290) | (91,584) | (48,016) | - | (311,544) |
Shangai Sogefi Auto Parts Co., Ltd loans | (8,807) | - | - | - | - | - | (8,807) |
Sogefi Filtration S.A. loan | (1,400) | (1,400) | (1,400) | (700) | - | - | (4,900) |
Systèmes Moteurs S.A.S. loan | (3,000) | - | - | - | - | - | (3,000) |
Sogefi Engine Systems Canada Corp. loan | (371) | (667) | (710) | (754) | (733) | - | (3,235) |
Bank loans | (5,268) | (293) | (486) | (679) | (1,104) | - | (7,830) |
Finance lease Allevard Rejna Autosuspensions S.A. | (328) | (344) | - | - | - | - | (672) |
Other floating rate loans | (621) | - | - | - | - | - | (621) |
Future interest | (10,462) | (8,337) | (7,509) | (5,123) | (2,295) | - | (33,726) |
Liabilities for derivative financial instruments - exchange risk hedging | (166) | - | - | - | - | - | (166) |
Future financial expences on derivative instruments - interest risk hedging * | (3,056) | (3,726) | (3,726) | (3,726) | (2,941) | (1,126) | (18,401) |
TOTAL FLOATING RATE | (6,541) | (61,298) | (81,121) | (102,566) | (55,089) | (1,126) | (307,841) |
Trade receivables | 155,161 | - | - | - | - | - | 155,161 |
Trade and other payables | (307,984) | - | - | - | - | - | (307,984) |
TOTAL FINANCIAL INSTRUMENT - ASSET | 248,599 | - | - | - | - | - | 248,599 |
TOTAL FINANCIAL INSTRUMENT - LIABILITIES | (420,647) | (65,951) | (84,273) | (105,231) | (57,482) | (4,534) | (738,118) |
* The amount is different compared to Liabilities for derivative instruments - interest risk hedging (equal to a total amount of Euro 14,553 thousands) representing not discounted cash flow.
Hedging
a) exchange risk
The Sogefi Group has the following contracts to hedge the exchange risk on financial balances. Note that even though the Group considers these instruments as exchange risk hedges from a financial point of view, it has chosen not to adopt hedge accounting, as this treatment is not considered suitable for the Group's operating requirements. It therefore measures such contracts at fair value, posting the differences to the Income Statement (this difference is offset within Income Statement by the fair value change of the asset/liability denominated in a certain currency).
As of December 31, 2012, the Holding Company Sogefi S.p.A. held the following forward sale contract to hedge exchange risk on intercompany financial positions:
Forward sale | Date opened | Spot price €/currency | Date closed | Forward price €/currency |
---|---|---|---|---|
USD 7,230,000 | 12/20/2012 | 1.31780 | 03/20/2013 | 1.31910 |
As of December 31, 2012, the fair value of this contract was positive for Euro 2 thousand in terms of net value and was recognised in “Other financial assets – Assets for derivative financial instruments” (Euro 7 thousand) and to “Other short-term liabilities for derivative financial instruments” (Euro 5 thousand).
Fair value was calculated using the forward curve of exchange rates as of December 31, 2012.
The subsidiary Sogefi Filtration Ltd held the following forward purchase contracts to hedge the exchange risk on intercompany financial positions (EUR) and on trade positions (USD).
Forward purchase | Date opened | Spot price GBP/currency | Date closed | Forward price GBP/currency |
---|---|---|---|---|
EUR 2,500,000 | 12/20/2012 | 0.81280 | 03/20/2013 | 0.81376 |
USD 300,000 | 12/27/2012 | 0.61962 | 01/09/2013 | 0.61962 |
USD 300,000 | 12/27/2012 | 0.61962 | 02/06/2013 | 0.61966 |
USD 300,000 | 12/27/2012 | 0.61962 | 03/06/2013 | 0.61972 |
As of December 31, 2012, the fair value of these contracts amounted to Euro 8 thousand and was booked to “Other financial assets – Assets for derivative financial instruments”.
The fair value of contracts denominated in USD is equal to zero.
Fair value was calculated using the forward curve of exchange rates as of December 31, 2012.
The subsidiary Systèmes Moteurs S.A.S. holds the following forward purchase contract to hedge the exchange risk on intercompany financial positions:
Forward sale | Date opened | Spot price €/currency | Date closed | Forward price €/currency |
---|---|---|---|---|
CAD 17,000,000 | 12/20/2012 | 1,29720 | 03/20/2013 | 1.30060 |
As of December 31, 2012, the fair value of this contract was negative for Euro 161 thousand and was booked to “Other short-term liabilities for derivative financial instruments”.
Fair value was calculated using the forward curve of exchange rates as of December 31, 2012.
As of December 31, 2012, subsidiary Filtrauto S.A. held the following forward purchase contracts to hedge the exchange risk on trade positions:
Forward purchase | Date opened | Spot price €/currency | Date closed | Forward price €/currency |
---|---|---|---|---|
USD 35,000 | 12/31/2012 | 1.31900 | 01/09/2013 | 1.31907 |
USD 250,000 | 12/31/2012 | 1.31900 | 02/06/2013 | 1.31937 |
USD 250,000 | 12/31/2012 | 1.31900 | 03/06/2013 | 1.31970 |
As of December 31, 2012, the fair value of these contracts calculated using the forward curve of exchange rates as of December 31, 2012 was equal to zero.
The subsidiary Allevard Springs Ltd held the following forward purchase contracts to hedge the exchange risk on trade positions:
Forward purchase | Date opened | Spot price GBP/currency | Date closed | Forward price GBP/currency |
---|---|---|---|---|
EUR 300,000 | 12/31/2012 | 0.81670 | 01/09/2013 | 0.81677 |
EUR 300,000 | 12/31/2012 | 0.81670 | 02/06/2013 | 0.81703 |
As of December 31, 2012, the fair value of these contracts calculated using the forward curve of exchange rates as of December 31, 2012 was equal to zero.
The subsidiary Sogefi Rejna S.p.A. held the following forward purchase contracts to hedge the exchange risk on trade positions:
Forward purchase | Date opened | Spot price €/currency | Date closed | Forward price €/currency |
---|---|---|---|---|
USD 50,000 | 12/27/2012 | 1.32610 | 01/09/2013 | 1,32633 |
USD 100,000 | 12/27/2012 | 1.32610 | 02/06/2013 | 1,32660 |
As of December 31, 2012, the fair value of these contracts calculated using the forward curve of exchange rates as of December 31, 2012 was equal to zero.
b) interest risk
At the end of the year, the Holding Company Sogefi S.p.A had the following contracts in place to hedge its interest rate risk (in thousands of Euro) on financial debts drawdown:
Description of IRS | Date opened | Contract maturity | Notional | Fixed rate | Fair value |
---|---|---|---|---|---|
Hedging of Sogefi S.p.A. loan for € 100 million (09/29/2006 maturity 03/31/2014), rate: Euribor 3 months + 70 bps | 11/18/2009 | 04/30/2013 | 5,000 | 2.210% | (51) |
Hedging of Sogefi S.p.A. loan for € 100 million (09/29/2006 maturity 03/31/2014), rate: Euribor 3 months + 70 bps | 11/27/2009 | 04/30/2013 | 5,000 | 2.150% | (49) |
Hedging of Sogefi S.p.A. loan for € 120 million (12/04/2012 maturity 12/04/2017), rate: Euribor 3 months + 425 bps | 11/18/2009 | 05/06/2013 | 5,000 | 2.230% | (52) |
Hedging of Sogefi S.p.A. loan for € 120 million (12/04/2012 maturity 12/04/2017), rate: Euribor 3 months + 425 bps | 11/27/2009 | 05/06/2013 | 5,000 | 2.170% | (51) |
Hedging of Sogefi S.p.A. loan for € 120 million (12/04/2012 maturity 12/04/2017), rate: Euribor 3 months + 425 bps | 12/20/2010 | 05/06/2013 | 5,000 | 1.733% | (39) |
Hedging of Sogefi S.p.A. loan for € 120 million (12/04/2012 maturity 12/04/2017), rate: Euribor 3 months + 425 bps | 12/20/2010 | 05/06/2013 | 5,000 | 1.733% | (40) |
Hedging of Sogefi S.p.A. loan for € 120 million (12/04/2012 maturity 12/04/2017), rate: Euribor 3 months + 425 bps | 12/21/2010 | 05/06/2013 | 5,000 | 1.7075% | (38) |
Hedging of Sogefi S.p.A. loan for € 120 million (12/04/2012 maturity 12/04/2017), rate: Euribor 3 months + 425 bps | 12/22/2010 | 05/06/2013 | 10,000 | 1.685% | (76) |
Hedging of Sogefi S.p.A. loan for € 120 million (12/04/2012 maturity 12/04/2017), rate: Euribor 3 months + 425 bps | 03/11/2011 | 05/06/2013 | 10,000 | 2.693% | (127) |
Hedging of Sogefi S.p.A. loan for € 120 million (12/04/2012 maturity 12/04/2017), rate: Euribor 3 months + 425 bps | 03/11/2011 | 05/06/2013 | 10,000 | 2.805% | (133) |
Hedging of Sogefi S.p.A. loan for € 120 million (12/04/2012 maturity 12/04/2017), rate: Euribor 3 months + 425 bps | 03/23/2011 | 05/06/2013 | 10,000 | 2.800% | (132) |
Hedging of Sogefi S.p.A. loan for € 120 million (12/04/2012 maturity 12/04/2017), rate: Euribor 3 months + 425 bps | 03/23/2011 | 05/06/2013 | 5,000 | 2.445% | (57) |
Hedging of Sogefi S.p.A. loan for € 60 million (04/29/2011 maturity 12/31/2016), rate: Euribor 3 months + 200 bps | 05/11/2011 | 12/31/2016 | 28,000 | 2.990% | (1,791) |
TOTAL | 108,000 | (2,636) |
As of December 31, 2012, the Holding Company Sogefi S.p.A. held the following Interest Rate Swap contracts (in thousands of Euro) as part of a macro cash flow hedge strategy aimed at hedging the risk of fluctuations in future cash flows deriving from the envisaged future long term indebtedness of the company; future indebtedness is believed to be highly probable as it is envisaged by the long-term plan approved by management.
Relating cash flows will be exchanged from 2013 onwards:
Description of IRS | Date opened | Contract maturity | Notional | Fixed rate | Fair value |
---|---|---|---|---|---|
Hedging of Sogefi S.p.A. future financial indebtedness for 2013-2018 | 02/10/2011 | 06/01/2018 | 10,000 | 3.679% | (1,386) |
Hedging of Sogefi S.p.A. future financial indebtedness for 2013-2018 | 02/23/2011 | 06/01/2018 | 10,000 | 3.500% | (1,387) |
Hedging of Sogefi S.p.A. future financial indebtedness for 2013-2018 | 03/11/2011 | 06/01/2018 | 10,000 | 3.545% | (1,407) |
Hedging of Sogefi S.p.A. future financial indebtedness for 2013-2018 | 03/23/2011 | 06/01/2018 | 10,000 | 3.560% | (1,345) |
Hedging of Sogefi S.p.A. future financial indebtedness for 2013-2018 | 03/27/2011 | 06/01/2018 | 10,000 | 3.670% | (1,470) |
Hedging of Sogefi S.p.A. future financial indebtedness for 2013-2018 | 05/13/2011 | 06/01/2018 | 10,000 | 3.460% | (1,365) |
Hedging of Sogefi S.p.A. future financial indebtedness for 2013-2018 | 06/24/2011 | 06/01/2018 | 10,000 | 3.250% | (1,261) |
Hedging of Sogefi S.p.A. future financial indebtedness for 2013-2018 | 06/28/2011 | 06/01/2018 | 10,000 | 3.250% | (1,260) |
Hedging of Sogefi S.p.A. future financial indebtedness for 2013-2018 | 11/28/2011 | 06/01/2018 | 10,000 | 2.578% | (925) |
TOTAL | 90,000 | (11,806) |
As of December 31, 2012, the subsidiary Sogefi Filtration S.A. holds the following interest rate hedging instrument (in thousands of Euro) on the existing loan with Banco Sabadell:
Description of IRS | Date opened | Contract maturity | Notional | Fixed rate | Fair value |
---|---|---|---|---|---|
Hedging of Sogefi Filtration S.A. loan for € 7 million (05/30/2011 maturity 05/30/2016), rate: Euribor 3 months + 225 bps | 08/30/2011 | 05/30/2016 | 2,450 | 2.6509% | (111) |
These financial instruments envisage payment by the Group of an agreed fixed rate and payment by the counterparty of the floating rate that is the basis of the underlying loan.
The aim of these contracts is to limit the risk of changes in interest rates. They have been treated in hedge accounting as hedging instruments and the related fair value is booked to equity, except for an amount of Euro 194 thousand that was booked to Income Statement under “Total financial expenses (income), net” as the ineffective portion of the hedge relationship.
Reference should be made to the paragraph on “Interest risk” for further information on the level of hedging of interest risk.
Equity management
The main objectives pursued by the Group through its equity risk management are the creation of value for shareholders and the safeguarding of business continuity. The Group also sets itself the objective of maintaining an optimal equity structure so as to reduce the cost of indebtedness and meet the covenants established by the loan agreements.
he Group monitors equity on the basis of the net financial position/total equity ratio (“gearing ratio”). For the purposes of determination of the net financial position reference is made to note 22. Total equity is analysed in note 21.
As of December 31, 2012, gearing stands at 1.37 (1.40 as of December 31, 2011).
Categories of financial assets and liabilities stated in the financial statements and fair value hierarchy
In compliance with the requirements of IFRS 7, the table below provides the information on the categories of financial assets and liabilities held by the Group as of December 31, 2012.
For the financial instruments measured at fair value in the statement of financial position the IFRS 7 requires a classification by hierarchy determined by reference to the source of inputs used to derive the fair value. This classification uses the following three levels:
- level 1: if the financial instrument is quoted in an active market;
- level 2: if the fair value is determined using valuation techniques and the inputs used for the valuation (other than quoted prices of financial instruments) are observable in the market. Specifically, fair value was calculated using the forward curves of exchange and interest rates;
- level 3: if the fair value is determined using valuation techniques and the inputs used for the valuation are non-observable in the market.
The following table therefore shows the fair value level of financial assets and liabilities measured at fair value, as of December 31, 2012.
* of which € 439 thousand relating to financial assets valued at cost, as permitted by IAS 39, insofar as a reliable fair value is not avaible.
** of which € 14,553 thousand relating to hedge instruments accounted according to the cash flow hedge method.
The following table therefore shows the fair value level of financial assets and liabilities measured at fair value, as of December 31, 2011
* of which € 439 thousand relating to a financial asset valued at cost, as permitted by IAS 39, insofar as a reliable fair value is not avaible.
** of which € 8,988 thousand relating to hedge instruments accounted according to the cash flow hedge method.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents amount to Euro 85,209 thousand versus Euro 102,461 thousand as of December 31, 2011 and break down as follows:
(in thousands of Euro) | 12.31.2012 | 12.31.2011 |
---|---|---|
Short-term cash investments | 84,627 | 102,369 |
Cheques | 521 | 16 |
Cash on hand | 61 | 76 |
TOTAL | 85,209 | 102,461 |
“Short-term cash investments” earn interest at a floating rate.
For further details, please refer to the Analysis of the Net Financial Position in note 22 and to the Consolidated Cash Flow Statement included in the financial statements.
As of December 31, 2012, the Group has unutilised lines of credit for the amount of Euro 246,765 thousand. These funds are available for use on demand, because the conditions required for their availability are met.
Please note that this item includes Euro 4,117 thousand held by the Argentinian subsidiaries; use of this amount is temporarily subject to government restrictions that require an official authorisation of foreign payments (including dividend payouts).
OTHER FINANCIAL ASSETS
“Other financial assets” can be broken down as follows:
(in thousands of Euro) | 12.31.2012 | 12.31.2011 |
---|---|---|
Securities held for trading | 15 | 11 |
Held-to-maturity investments | 8,199 | 1,893 |
Assets for derivative financial instruments | 15 | 8 |
TOTAL | 8,229 | 1,912 |
“Securities held for trading” are measured at fair value based on official sources at the time the financial statements are drawn up. They represent readily marketable securities which are used by the companies to optimise cash management.
“Held-to-maturity investments” are valued at amortised cost and include bonds of a Spanish prime banking institution.
“Assets for derivative financial instruments” total Euro 15 thousand and refer to the fair value of forward foreign exchange contracts. Further details can be found in the analysis of financial instruments contained in note 39.
TRADE AND OTHER RECEIVABLES
Current receivables break down as follows:
(in thousands of Euro) | 12.31.2012 | 12.31.2011 |
---|---|---|
Trade receivables | 156,245 | 179,663 |
Less: allowance for doubtful accounts | 5,263 | 5,319 |
Trade receivables, net | 150,982 | 174,344 |
Due from subsidiaries | 4,179 | 4,311 |
Tax receivables | 21,815 | 19,564 |
Other receivables | 32,477 | 32,141 |
Other assets | 3,559 | 2,800 |
TOTAL | 213,012 | 233,160 |
“Trade receivables, net” are non-interest bearing and have an average due date of 42 days, against 45 days recorded at the end of the previous year.
It should be noted that as of December 31, 2012, the Group factored trade receivables for Euro 65,114 thousand (Euro 57,557 thousand as of December 31, 2011), including an amount of Euro 34,151 thousand which was not notified and for which the Group continues to manage collection services. The risks and benefits related to these receivables have been transferred to the factor; therefore these receivables have been derecognised in the Statement of Financial Position debiting the consideration received from the factoring company.
If the factoring transactions (Euro 65,114 thousand as of December 31, 2012 and Euro 57,557 thousand as of December 31, 2011) are excluded, new trade receivables show a decrease of Euro 15,860 thousand for the most part due to a slowdown in business during the last portion of the year 2012 compared to the previous year and to a negative exchange effect (Euro 4,575 thousand).
Further adjustments were booked to “Allowance for doubtful accounts” during the year for a total of Euro 706 thousand, against net utilisations of the allowance for the amount of Euro 731 thousand (see note 39 for further details). Writedowns, net of provisions not used during the period, were charged to Income Statement under the item “Variable cost of sales – Variable sales and distribution costs”.
“Due from Parent Company” as of December 31, 2012 is the amount receivable from the Parent Company CIR S.p.A. arising from the participation in the Group tax filing system on the part of the Italian companies of the Group.
See chapter F for the terms and conditions governing these receivables from CIR S.p.A..
“Tax receivables” as of December 31, 2012 include tax credits due to the Group companies by the tax authorities of the various countries. The increase in this item mainly reflects increased VAT credits. It does not include deferred taxes which are treated separately.
“Other receivables” are made up as follows:
(in thousands of Euro) | 12.31.2012 | 12.31.2011 |
---|---|---|
Amounts due from social security institutions | 468 | 276 |
Amounts due from employees | 293 | 235 |
Advances to suppliers | 1,289 | 1,475 |
Due from others | 30,427 | 30,155 |
TOTAL | 32,477 | 32,141 |
"Due from others" include an indemnification asset of Euro 23,368 thousand owed by the seller of Systèmes Moteurs S.A.S.’s shares relating to the recovery of expenses charged by customers following claims on the quality of products sold, based on warranties given by the same seller (after possible partial indemnities obtained from insurers and suppliers). This amount was booked during the Purchase Price Allocation process as outlined in “Note 2.2 Business combinations”.
The item “Other assets” essentially includes accrued income and prepayments on royalties, insurance premiums, indirect taxes relating to buildings and on costs incurred for sales activities. The increase in this item reflects for the most part prepaid rents of subsidiary Sogefi Filtration do Brasil Ltda relating to the year 2013.
OTHER FINANCIAL ASSETS AVAILABLE FOR SALE
As of December 31, 2012, these totalled Euro 489 thousand, compared with Euro 490 thousand as of December 31, 2011 and break down as follows:
(in thousands of Euro) | 12.31.2012 | 12.31.2011 |
---|---|---|
Equity investments in other companies | 489 | 490 |
Other securities | - | - |
TOTAL | 489 | 490 |
The balance of “Equity investments in other companies” essentially refers to the 22.62% shareholding in the company AFICO FILTERS S.A.E.. The equity investment was not classified as associate due to the lack of group’s members in the management bodies of the company.
FINANCIAL RECEIVABLES AND OTHER NON-CURRENT RECEIVABLES
As at December 31, 2012, there are no non-current trade receivables. The amount of Euro 918 thousand pertaining to subsidiary Systèmes Moteurs S.A.S. as at December 31, 2011 was reclassified under short-term items because it is repayable within the next twelve months.
“Other receivables” break down as follows:
(in thousands of Euro) | 12.31.2012 | 12.31.2011 |
---|---|---|
Substitute tax | 576 | 576 |
Pension fund surplus | 12,864 | 11,298 |
Other receivables | 3,582 | 2,228 |
TOTAL | 17,022 | 14,102 |
“Substitute tax” refers to the amount paid by the Holding Company Sogefi S.p.A. for the revaluation of buildings at the end of 2005.
“Pension fund surplus” refers to the subsidiaries Sogefi Filtration Ltd, since the company presents a reimbursement right for the contingent surplus at the end of the plan. For further details, refer to note 19.
The item “Other receivables” mainly includes tax credits, including fiscal credits on purchases of assets made by the Brazilian subsidiaries, and non-interest bearing guarantee deposits for leased properties. These receivables will be collected over the coming years.
The increase in the item reflects the non-current portion of prepaid rents of subsidiary Sogefi Filtration do Brasil Ltda relating to the year 2014 for the amount of Euro 590 thousand, tax credits of subsidiaries Allevard Rejna Autosuspensions S.A. and S.ARA Composite S.A.S. for the amount of Euro 447 thousand for research and development activities, and other receivables mainly consisting in tax credits for the remaining portion.
FINANCIAL DEBTS TO BANKS AND OTHER FINANCING CREDITORS
These break down as follows:
Current portion
(in thousands of Euro) | 12.31.2012 | 12.31.2011 |
---|---|---|
Bank overdrafts and short-term loans | 8,377 | 9,827 |
Current portion of medium/long-term financial debts | 89,596 | 46,962 |
of which: leases | 814 | 1,674 |
TOTAL SHORT-TERM FINANCIAL DEBTS | 97,973 | 56,789 |
Other short-term liabilities for derivative financial instruments | 1,011 | 632 |
TOTAL SHORT-TERM FINANCIAL DEBTS AND DERIVATIVE FINANCIAL INSTRUMENTS | 98,984 | 57,421 |
Non-current portion
(in thousands of Euro) | 12.31.2012 | 12.31.2011 |
---|---|---|
Financial debts to banks | 267,773 | 330,462 |
Other medium/long-term financial debts | 8,821 | 7,916 |
of which: leases | 4,880 | 5,686 |
TOTAL MEDIUM/LONG-TERM FINANCIAL DEBTS | 276,594 | 338,378 |
Other medium/long-term liabilities for derivative financial instruments | 13,708 | 8,416 |
TOTAL MEDIUM/LONG-TERM FINANCIAL DEBTS AND DERIVATIVE FINANCIAL INSTRUMENTS | 290,302 | 346,794 |
Bank overdrafts and short-term loans
For further details, please refer to the Analysis of the Net Financial Position in note 22 and to the consolidated Cash Flow Statement included in the financial statements.
Current portion of medium/long-term financial debts
As of December 31, 2012, this item principally includes the following loans:
- the current portion of Euro 27,850 thousand of a Euro 100,000 thousand loan obtained by the Holding Company Sogefi S.p.A. from Unicredit S.p.A. in 2006 (the residual amount as of December 31, 2012 was Euro 33,276 thousand). The loan expires in March 2014 and has a floating interest rate corresponding to the 3-month Euribor plus a base spread of 70 basis points. The spread actually applied at the end of 2012 corresponded to 90 basis points. The loan is not secured against any of the company's assets. During the year, the Holding Company benefited from a temporary suspension of capital payments due on July 31 and on October 31, 2012 (for a total amount of Euro 11,100 thousand) granted to entities affected by the earthquake that affected the Mantua area in May 2012. As a result of this suspension, the final expiry date of the loan was put off from September 2013 to March 31, 2014;
- the current portion of Euro 10,000 thousand of a Euro 40,000 thousand loan obtained by the Holding Company Sogefi S.p.A. from the Banca Europea degli Investimenti (BEI) in 2010 (the residual amount as of December 31, 2012 was Euro 34,838 thousand). The loan expires in April 2016 and has a floating interest rate corresponding to the 3-month Euribor plus an average spread of 256 basis points. The loan is not secured against any of the company's assets;
- the current portion of Euro 6,250 thousand of a Euro 25,000 thousand loan obtained by the Holding Company Sogefi S.p.A. from Banca Monte de Paschi di Siena S.p.A. in 2011 (the residual amount as of December 31, 2012 was Euro 24,793 thousand). The loan expires in December 2016 and has a floating interest rate corresponding to the 3-month Euribor plus a base spread of 150 basis points. The spread actually applied at the end of 2012 corresponded to 200 basis points. The loan is not secured against any of the company's assets;
- the current portion of Euro 6,000 thousand of a Euro 60,000 thousand loan obtained by the Holding Company Sogefi S.p.A. from Intesa Sanpaolo S.p.A. in 2011 (the residual amount as of December 31, 2012 was Euro 59,471 thousand), divided into two tranches of Euro 30,000 thousand each, with one tranche at amortised capital instalments starting in June 2013 and one of the revolving type made available in December 2012. The loan expires in December 2016 and has a floating interest rate corresponding to the 3-month Euribor plus a base spread of 200 basis points. The spread actually applied at the end of 2012 corresponded to 230 basis points. The loan is not secured against any of the company's assets;
- a Euro 6,533 thousand loan denominated in Brazilian real obtained by the subsidiary Sogefi Filtration do Brasil Ltda from Banco do Brasil in 2010 (the residual amount as of December 31, 2012 corresponded to the full amount). The loan expires in July 2013 and has a 4.5% fixed interest rate. The loan is not secured against any of the company's assets;
- a Euro 5,959 thousand loan (partly denominated in Euro and partly in Renminbi) obtained by the subsidiary Shanghai Sogefi Auto Parts Co., Ltd from Unicredit in 2012 (the residual amount as of December 31, 2012 corresponded to the full amount). The loan expires in May 2013 and has a floating interest rate corresponding to the six-monthly PBOC multiplied by 130% for the portion denominated in Renminbi, whereas the portion denominated in Euro has an interest rate established by Unicredit (“cost of funding”) plus a spread of 250 basis points. The loan is not secured against any of the company's assets;
- the current portion of Euro 4,677 thousand of a Euro 25,000 thousand loan obtained by the Holding Company Sogefi S.p.A. from Banca Carige S.p.A. in 2011 (the residual amount as of December 31, 2012 was Euro 23,602 thousand). The loan expires in September 2017 and has a floating interest rate corresponding to the 3-month Euribor plus a fixed spread of 225 basis points. During the year, the Holding Company benefited from a temporary suspension of the capital payment due on September 30, 2012 (for a total amount of Euro 1,142 thousand) granted to entities affected by the earthquake that affected the Mantua area in May 2012. As a result of this suspension, the final expiry date of the loan was put off from June 30, 2017 to September 30, 2017. The loan is not secured against any of the company's assets;
- the current portion of other minor medium/long-term loans, including financial lease payments in accordance with IAS 17.
Other short-term liabilities for derivative financial instruments
The item includes the short-term portion of the fair value of interest risk hedging contracts and exchange risk hedging contracts.
Reference should be made to chapter E for a further discussion of this matter.
Medium/long-term financial debts
This mainly includes the following loans:
- Euro 115,277 thousand reflect drawdowns on the five-year syndicated revolving loan for a total of Euro 200,000 thousand obtained by the Holding Company Sogefi S.p.A. on December 4, 2012 from banks IMI, BNP Paribas, ING Bank N.V. and Mediobanca, with a portion of Euro 120,000 thousand at amortised capital instalments and a portion of Euro 80,000 thousand of the revolving type, expiring in December 2017. Base spreads are 425 basis points on Euribor for the amortised portion and 350 basis points on Euribor for the revolving portion. In December, the Holding Company Sogefi S.p.A. paid Euro 4.6 million comprising up front fees, documentation fees and registry duty in relation to this loan. On December 20, 2012 the Holding Company Sogefi S.p.A. drew down the entire amount of Euro 120,000 thousand of the loan portion at amortised capital instalments.
As at December 31, 2012 the spread applied to this syndicated loan was 425 basis points on 3-month Euribor.
The loan is not secured against any of the company's assets.
As it drew down the Euro 120 million portion of the new syndicated loan, the Holding Company Sogefi S.p.A. extinguished the syndicated loan of Euro 140 million obtained in June 2008 from lead banks Ing Bank N.V. and Intesa Sanpaolo S.p.A. which expires in June 2013; - the medium-long term portion of Euro 5,426 thousand of the Euro 100,000 thousand loan obtained by the Holding Company Sogefi S.p.A. from Unicredit S.p.A. in 2006;
- the medium-long term portion of Euro 24,838 thousand of the Euro 40,000 thousand loan obtained by the Holding Company Sogefi S.p.A. from the Banca Europea degli Investimenti (BEI) in 2010;
- the medium-long term portion of Euro 18,543 thousand of the Euro 25,000 thousand loan obtained by the Holding Company Sogefi S.p.A. from Banca Monte dei Paschi di Siena S.p.A. in 2011;
- the medium-long term portion of Euro 53,471 thousand of the Euro 60,000 thousand loan obtained by the Holding Company Sogefi S.p.A. from Intesa Sanpaolo S.p.A. in 2011;
- the medium-long term portion of Euro 18,925 thousand of the Euro 25,000 thousand loan obtained by the Holding Company Sogefi S.p.A. from Banca Carige S.p.A. in 2011.
On December 19, 2012, the Holding Company Sogefi S.p.A. extinguished the loan of Euro 40 million signed with Banca Nazionale del Lavoro S.p.A. in July 2011 and expiring in January 2013.
On December 21, 2012 the Holding Company Sogefi S.p.A. entered into a loan agreement for a total amount of Euro 15 million at amortised capital instalments with Banco do Brasil S.A.. The loan expires in December 2016 and provides for a fixed spread of 315 basis points on Euribor. As at December 31, 2012, the Holding Company Sogefi S.p.A. has not drawn down this loan.
Please note that as at December 31, 2012 the Canadian subsidiary Sogefi Engine Systems Canada Corp. has a loan agreement with GE Capital for a total amount of Euro 6,471 thousand, Euro 5,727 thousand of which are classified as medium/long-term loans. As at December 31, 2012 one contract provision concerning guarantees given to the bank was not complied with in full. GE Capital later issued a waiver to release the company from these guarantees. Considering the situation as at December 31, 2012, it was deemed appropriate to maintain the existing loan classification partly as short-term debts and partly as medium/long-term debts.
The item "Other medium/long-term financial debts" includes other minor loans, as well as financial lease payments in accordance with IAS 17.
It is specified that, contractually, the spreads of the loans of the Holding Company Sogefi S.p.A. are reviewed every six months on the basis of the computation of the consolidated NFP/normalised consolidated EBITDA ratio.
For an analysis of the covenants relating to loans outstanding at the end of the period, please refer to note 22.
Other medium/long-term financial liabilities for derivative financial instruments
The item includes the medium/long-term portion of the fair value of the interest risk hedging instruments.
Reference should be made to chapter E for a further discussion of this matter.
Finance leases
The Group has finance leases as well as rental and hire contracts for building, plant and machinery that, according to their type, cover almost the entire useful life of the asset concerned. The assets held under these leases, rental and hire contracts are booked in accordance with IAS 17 as though they were fixed assets owned by the company, disclosing their historical cost, depreciation, financial cost and residual liability.
Future payments deriving from these contracts can be summarised as follows:
(in thousands of Euro) | Instalments | Capital |
---|---|---|
Within 12 months | 1,273 | 814 |
Between 1 and 5 years | 3,782 | 2,618 |
Beyond 5 years | 2,812 | 2,262 |
Total lease payments | 7,867 | 5,694 |
Interests | (2,173) | - |
TOTAL PRESENT VALUE OF LEASE PAYMENTS | 5,694 | 5,694 |
The contracts included in this item refer to the following subsidiaries:
- Sogefi Filtration Ltd for a long-term rental contract for the production site in Tredegar. The contract expires in September 2022 and the original total amount of the contract was Euro 3,247 thousand; the future capital payments amount to Euro 2,577 thousand and the annual nominal rate of interest applied by the lessor is 11.37%.
The Group has given sureties for this contract.
This rental contract has been accounted for as financial leases, as required by IAS 17, where the present value of the rent payments coincided approximately with the fair value of the asset at the time the contract was signed. - Allevard Rejna Autosuspensions S.A. has a lease contract for the Lieusaint production site. The contract expires in October 2014 and the original total amount of the contract was Euro 2,108 thousand, the future capital payments amount to Euro 673 thousand and the annual nominal rate of interest applied by the lessor is 3-month Euribor plus a spread of 60 basis points. The Group has not given any sureties for this contract.
There are no restrictions of any nature on this lease. There is a purchase option at the end of the contracts to buy the assets at the price of Euro 1. Given that it is probable that the options will be exercised, considering the low redemption value of the assets, this contract has been accounted for as a finance lease, as foreseen by IAS 17.
It should be noted that the lease agreements of the Fronville facility and part of the lease agreement of the Lieusaint facility have expired during the year 2012 and subsidiary Allevard Rejna Autosuspensions S.A. exercised the option to purchase at the price of Euro 305 thousand and Euro 3, respectively. - Allevard Sogefi USA Inc. has entered into the following lease contracts for the Prichard production site relating to:
- plants, machinery and improvements to the building for an original amount of Euro 1,213 thousand. The contract expires in May 2019, the future capital payments amount to Euro 832 thousand and the annual interest rate applied by the lessor is equal to 3.92%. The Group has given sureties for this contract;
- plants, machinery and improvements to the building for an original amount of Euro 2,274 thousand. The contract expires in July 2019, the future capital payments amount to Euro 1,612 thousand and the annual interest rate applied by the lessor is equal to 3%. The Group has given sureties for this contract.
There are no restrictions of any nature on these leases. Upon expiry of the contracts ownership of the assets is transferred to the lessee without payment of any purchase price. These contracts are therefore accounted for as financial leases, as required by IAS 17.
TRADE AND OTHER CURRENT PAYABLES
The amounts shown in the financial statements can be broken down into the following categories:
(in thousands of Euro) | 12.31.2012 | 12.31.2011 |
---|---|---|
Trade and other payables | 307,984 | 314,841 |
Tax payables | 12,203 | 8,615 |
TOTAL | 320,187 | 323,456 |
Details of trade and other payables are as follows:
(in thousands of Euro) | 12.31.2012 | 12.31.2011 |
---|---|---|
Due to suppliers | 212,891 | 218,217 |
Due to the parent company | 597 | 433 |
Due to tax authorities for indirect and other taxes | 10,846 | 9,698 |
Due to social and security institutions | 20,710 | 20,931 |
Due to employees | 30,024 | 27,911 |
Other payables | 32,916 | 37,651 |
TOTAL | 307,984 | 314,841 |
The amounts “Due to suppliers” are not subject to interest and on average are settled in 74 days, in line with the year 2011.
There is no significant concentration of payables due to any one supplier or small group of suppliers.
The amounts “Due to suppliers” decreased by Euro 5,326 thousand; this is due to a negative exchange effect for Euro 3,062 thousand, whereas the remainder is traced back to a slowdown of business during the last portion of the year 2012.
Item “Due to the Parent Company” reflects the consideration due for the fiscal surplus transferred by companies that have joined the CIR Group tax filing system. For further details, please refer to note 40.
The increase in amounts “Due to tax authorities for indirect and other taxes” reflects VAT debts for the most part relating to the Suspension Components Division and other tax debt relating to the Engine Systems Division.
The amounts “Due to employees” were impacted by pay rises, especially in South America, and larger bonus amounts to be paid.
“Other payables” reflect liabilities connected with product warranty risks of the Systèmes Moteurs Group and other liabilities booked to accounts during the Purchase Price Allocation process totalling Euro 25,934 thousand at December 31, 2012 (in comparison with July 31, 2011 the group has already returned Euro 6,020 thousands against these liabilities; for further details please see note 2.2).
The increase in “Tax payables” mainly reflects the higher tax burden of subsidiary Sogefi Engine Systems Canada Corp. resulting from the improved results achieved in this period and the unavailability of past losses to carry over (unlike the previous year).
OTHER CURRENT LIABILITIES
“Other current liabilities” include adjustments to costs and revenues for the period so as to ensure compliance with the accruals based principle (accrued expenses and deferred income) and advances received from customers for orders still to be delivered.
The increase in the item for the amount of Euro 1,441 thousand mainly refers to advances paid by customers for tooling to be built.