2007 Reference document (PDF) - Valeo

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3 Consolidated PAGE 128 fi nancial statements at December 31, 2007 Notes to consolidated financial statements Net investment risk The Group is also exposed to foreign currency risk through its investments in its foreign subsidiaries, particularly risks of movements in the exchange rate of the currency of the country in which a subsidiary is located against the euro, which is the Group’s functional currency. Such movements can impact Group stockholders’ equity. The Group can thus decide, on a case-by-case basis, to hedge the net investment. Any gain or loss resulting from such a hedge is deferred and recognized through stockholders’ equity until such time as all or part of the foreign investment is sold. No derivative instrument hedging a net investment in a foreign operation is recognized in the Group balance sheet at December 31, 2007. ■ Metal price risk Exposure to metal price risk The Group is exposed to the risk of fluctuations in the price of non-ferrous metals when its purchase contracts with suppliers are indexed whereas the sale contracts entered into with customers do not provide for any such price escalation clauses. In most cases, the Group hedges its future purchases of base metals over a period which is generally less than six months. The commodities currently hedged (copper, zinc, aluminum, processed aluminum) are quoted on organized markets. The Group favors hedging instruments which do not involve physical delivery of the underlying commodity, such as swaps and options based on the average monthly price. The volume of non-ferrous metals hedged at December 31, 2007, 2006 and 2005 was 63,000 tons, 53,000 tons, and 56,400 tons, respectively. Base metals derivatives used by the Group are designated as cash flow hedges under IAS 39. An unrealized loss of 12 million euros related to hedges in place at December 31, 2007 has been recognized through Group stockholders’ equity. 2007 Reference document - VALEO The unrealized gain of 6 million euros recognized in stockholders’ equity at December 31, 2006 arose on hedges of commodity purchases in the second-half of 2006 and was fully taken to operating income during the first half of 2007. Analysis of the sensitivity of net equity to metal price risk A 10% increase in metal futures prices at December 31, 2007 would increase net equity by 9 million euros due to the recognition of derivatives as cash flow hedges. The same calculation for the year ending December 31, 2006 would also lead to a 9 million euro increase in net equity. A fall of 10% in metal futures prices would lead to a 9 million euro decrease in net equity. For the purposes of the sensitivity analysis, it is assumed that all other variables remain unchanged over the period. ■ Interest rate risk At year-end, the Group’s net interest rate position based on nominal values can be analyzed as follows: At December 31, 2007 (In millions of euros) Exposure to interest rate risk The Group uses interest rate swaps to convert rates on its debt into either a variable or a fixed rate, either as from origination or during the term of the loan. Cash and cash equivalents are mainly invested in variable-rate instruments. Long-term debt is essentially at fixed rates. The interest rate derivatives used by the Group to hedge against changes in value of its fixed-rate debt are designated as fair value hedges under IAS 39. These derivatives are recorded at fair value in the balance sheet, with changes in fair value taken to income. For the effective portion of the hedge, the impact on income is offset by a symmetrical revaluation of the hedged item. The interest rate derivatives used by the Group to hedge its variable-rate debt do not qualify as hedging instruments within the meaning of IAS 39. The Group’s financing rate was 4.6% in 2007 (4.7% in 2006 excluding non-strategic activities). Less than 1 year 1 to 5 years More than 5 years Total Fixed portion Variable portion Fixed portion Variable portion Fixed portion Variable portion < Contents > Fixed portion Variable portion Financial liabilities 27 262 698 3 614 1 1,339 266 1,605 Cash and cash equivalents Net position before - (771) - (2) - - - (773) (773) hedging 27 (509) 698 1 614 1 1,339 (507) 832 Derivative instruments - 225 (225) - - - (225) 225 - Net position after hedging 27 (284) 473 1 614 1 1,114 (282) 832 Total 1 2 3 4 5 6
At December 31, 2006 (In millions of euros) Analysis of sensitivity to interest rate risk At December 31, 2007, 83% of long-term debt is at a fixed rate (82% at December 31, 2006). Accordingly, fixed-rate debt carried at amortized cost is not included in the calculation of sensitivity to interest rate risk. The Group’s exposure to interest rate risk arises solely on its variable-rate debt. Taking into account the derivatives, the maximum impact on consolidated income before tax of a sudden 1% rise in shortterm interest rates applied to financial assets and liabilities at variable rates is a gain of 3 million euros (2006: gain of 1 million euros). Similarly, a sudden 1% fall in short-term interest rates would have a negative 3 million euro impact on consolidated income before tax. Consolidated fi nancial statements at December 31, 2007 Notes to consolidated financial statements Less than 1 year 1 to 5 years More than 5 years Total Fixed portion Variable portion Fixed portion Variable portion Fixed portion Variable portion 5.3.2. Liquidity risk Fixed portion Variable portion Financial liabilities 53 276 474 2 826 1 1,353 279 1,632 Cash and cash equivalents Net position before - (618) - (16) - - - (634) (634) hedging 53 (342) 474 (14) 826 1 1,353 (355) 998 Derivative instruments 2 223 - - (225) - (223) 223 - Net position after hedging 55 (119) 474 (14) 601 1 1,130 (132) 998 At December 31, 2005 (In millions of euros) Less than 1 year 1 to 5 years More than 5 years Total Fixed portion Variable portion Fixed portion Variable portion Fixed portion Variable portion < Contents > Fixed portion Variable portion Financial liabilities 529 159 50 4 1,290 1 1,869 164 2,033 Cash and cash equivalents Net position before - (949) - (12) - - - (961) (961) hedging 529 (790) 50 (8) 1,290 1 1,869 (797) 1,072 Derivative instruments (493) 722 - (4) (225) - (718) 718 - Net position after hedging 36 (68) 50 (12) 1,065 1 1,151 (79) 1,072 The Group aims to maximize operating cash flows in order to be in a position to finance both the investments required for its development and growth and the dividend paid to its stockholders. The Group’s strategy also aims to ensure that it has the cash resources necessary to meet all circumstances. For these reasons, the Group borrows long-term funds either through banks or public debt markets. In 2003, Valeo issued 463 million euros worth of bonds convertible into shares (OCEANE) maturing in 2011, and in 2005, it issued a 600 million euros Medium Term Note maturing in 2013. It also took out two syndicated loans for a total amount of 225 million euros maturing in 2012. Valeo also has several confirmed bank credit lines available for an average period of two years in a total amount of 1.3 billion euros. None of these credit lines had been drawn down at December 31, 2007. 2007 Reference document - VALEO Total Total 3 PAGE 129 1 2 3 4 5 6
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2007 Reference document
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Group profile 2007 Valeo is an inde
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Gross margin In % of net sales Oper
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Basic earnings per share for the ye
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valeo added TM < Contents > 1 Activ
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1998 ■ Acquisition of the Electri
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The Group 1. Description and organi
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■ ■ ■ ignition components; in
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■ LED front and rear lighting and
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Valeo Climate Control has four prod
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4.1.1.2. Internal mobility and indi
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4.2.2. Environment Environmental pr
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4.3.1. Purchasing The role of Valeo
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4.3.4. Projects The Projects Depart
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Geographical presence The Group opt
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■ In a world first, the Volkswage
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Other contributions from Valeo Prod
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■ ■ The Group also continued to
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valeo added TM Accounting methods 3
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production (source: J.D. Power). In
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Change in stockholders’ equity 1.
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Provisions The balance sheet at Dec
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At the Board of Directors meeting h
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1.2. Environmental risks In the var
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4.3. Credit risk Valeo is exposed t
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Outlook In 2008, Valeo is aiming to
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Valeo addresses these challenges th
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Percentage of ISO 14001 and OHSAS 1
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The 2007 reporting scope excludes s
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The increase in the ratio of energy
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Overall, Valeo used higher tonnages
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All Valeo Group sites will be certi
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2.6. Reducing all types of pollutio
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Social indicators This social indic
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1.2.1. Permanent contracts Number o
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Breakdown of 2007 departures by geo
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3. Equality between men and women i
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Valeo’s “Well-being and effecti
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At December 31, 2007, 11,738 employ
Page 79 and 80: 8. Disabled employees Valeo amended
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Page 83 and 84: Consolidated statements of income (
Page 85 and 86: Consolidated statements of cash flo
Page 87 and 88: Consolidated statement of changes i
Page 89 and 90: The proportionate consolidation met
Page 91 and 92: 1.11. Property, plant and equipment
Page 93 and 94: ■ OCEANE bonds Bonds convertible
Page 95 and 96: 2. Changes in the scope of consolid
Page 97 and 98: 2.3.3. Balance sheet Consolidated f
Page 99 and 100: 3.3.1. Claims and litigation In the
Page 101 and 102: 3.6.2. Effective tax rate The effec
Page 103 and 104: 4.2. Other intangible assets At Dec
Page 105 and 106: Changes in property, plant and equi
Page 107 and 108: Summarized financial data in respec
Page 109 and 110: 4.8. Stockholders’ equity 4.8.1.
Page 111 and 112: 2006 Consolidated fi nancial statem
Page 113 and 114: 4.8.7. Minority interests Changes i
Page 115 and 116: ■ Breakdown of obligations At Dec
Page 117 and 118: (In millions of euros) France Other
Page 119 and 120: Consolidated fi nancial statements
Page 121 and 122: 4.10.3. Short-term debt At December
Page 123 and 124: 5. Additional disclosures 5.1. Segm
Page 125 and 126: 5.2. Financial instruments 5.2.1. F
Page 127 and 128: 5.2.2. Fair value of derivatives At
Page 129: Consolidated fi nancial statements
Page 135 and 136: 5.6. Contingent liabilities The Gro
Page 137 and 138: 6. Restatement of prior year financ
Page 139 and 140: Companies Countries % voting rights
Page 147 and 148: valeo added TM < Contents > 4 Corpo
Page 149 and 150: appointed Gérard Blanc, Pascal Col
Page 151 and 152: ■ to check that internal procedur
Page 153 and 154: 1.10. General Management of the Com
Page 155 and 156: 2. Internal control procedures 2.1.
Page 157 and 158: 2.4. Review of work carried out in
Page 159 and 160: Composition of the Board of Directo
Page 161 and 162: Name First appointed Helle Kristoff
Page 163 and 164: valeo added TM 5 < Contents > Infor
Page 165 and 166: Auditors Statutory Auditors ■ −
Page 167 and 168: Martin Haub Vice-President, Product
Page 169 and 170: Name/business address Jérôme Cont
Page 171 and 172: Name/business address Georges Pauge
Page 173 and 174: Jérôme Contamine graduated from
Page 175 and 176: Under these R ules, independent Dir
Page 177 and 178: Fixed compensation and benefits-in-
Page 179 and 180: compensation, 1,905,169 euros to va
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Share grants to the ten employees r
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Information on the Company and its
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2. Authorized, unissued capital Sec
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Exercise date and conditions Nbre d
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1.1. Major shareholders To the best
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the relevant disclosure threshold h
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2. Dividends Dividends per share ov
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3. Ownership structure Primarily on
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8. Monthly trading volumes Informat
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Information on the Company and its
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valeo added TM 6 < Contents > Other
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Annual information document Other i
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Other i nformation Annual informati
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November 2007 November 9, 2007 - Ex
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Other i nformation Person responsib
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The printer of this report is envir
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