2005 Annual Report - Touax

Risk factors
These risks or any of these or other risks, not currently
identified or considered to be insignificant by
TOUAX, may have a negative effect on the business,
financial position or results of TOUAX, or on its share
price.
Dependence factors
The Group is not significantly dependent on any holders
of patents or licenses, industrial, commercial
or financial supply contracts, new manufacturing
processes, suppliers or public authorities.
Leasing is a recurrent and stable activity. Leasing
revenues consequently have low volatility. The business
sectors are distinct and the customers and
suppliers in each business are different. The businesses
use low-technology equipment which is easy
to construct. In each of its businesses, the Group has
diversified customers and suppliers and is not in a
significant position of Dependence on any of its customers
or suppliers.
Management on behalf of third parties is also a
recurrent activity. However, the conclusion of new
management programs and hence equipment sales
or asset disposals may fluctuate widely from one
quarter to the next or from one year to the next. To
minimize the risk of Dependence on investors, the
Group seeks to increase and diversify the number of
investors with whom it operates. However, it should
be noted that 61.5% of revenues from equipment
sales were generated with a single investor in 2005.
In other words, the Group concluded several new
management programs in 2005, the most significant
of which represents 61.5% of equipment sales.
Risk factors
Market risk
The Group does not have any open positions in the
derivative markets and has not used any speculative
financial instrument which could have significantly
exposed it to financial risks.
The Group’s financial flows are therefore only exposed
to changes in interest and exchange rates up to
the level of its foreign currency positions and borrowings
from financial institutions.
Interest rate and currency risks are monitored by
means of monthly reports prepared by subsidiaries
for the Group Treasury department; these reports
include loans granted by external institutions and
loans concluded between the subsidiaries of the
Group. This information is checked, analyzed,
consolidated and reported to the Executive
Committee. The Group Treasury department makes
suggestions on the management of interest and currency
risks and the decisions are taken by the
Executive Committee. Standard office automation
tools meet the Group’s requirements for the monitoring
of these risks.
In addition, off balance sheet liabilities are regularly
listed, particularly on the drawing of each new loan,
in order to ensure that comprehensive information is
provided.
Liquidity risk
A liquidity risk arises from the difference in term
between the underlying assets and liabilities.
In other words, when the assets are of a longer term
than the liabilities, there is a theoretical liquidity risk
in that it might prove impossible to sell assets to
meet the due dates or possible early repayment
demands under bank lines of credit. In order to analyze
this risk, it is necessary to compare the Group’s
gross indebtedness to its net fixed assets and cash
position and then to analyze the repayment dates in
relation to cash flow. The Group’s indebtedness,
which is set out in detail in the notes to the consolidated
financial statements, may be summarized as
follows:
Balance
Proportion
sheet amount Breakdown Average rate subject to
variable rate
Short-term credit 32.2 M€ 35% 3,59% 100%
Medium and long-term credit 59.2 M€ 65% 5,10% 57%
TOTAL 91.4 M€ 100% 4,57% 75%
annual report 2005
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