EXEL industries - 2019 Universal Registration Document

Management report 3 Risk factors

The Group protects itself from the volatility of rawmaterial prices by negotiating long-term contracts with its largest suppliers in order to guarantee availability, delivery deadlines and price. Furthermore the Group can commit to fi rm orders when market opportunities arise. This policy means that stable production costs can be guaranteed over a period which is consistent with our pricing policy.

The risk relating to the price of raw materials and components

3.6.2.3

EXEL Industries’ exposure to changes in the price of raw materials, either directly or through components purchased from suppliers, mainly concerns steel and to a lesser extent, plastic materials.

3.6.3 Financial risks

3.6.3.1 Foreign exchange risk The EXEL Industries group’s exposure to foreign exchange risk is mainly connected to its operating activities and its banking debts in USD and GBP. Sales through foreign retail subsidiaries outside the Euro zone are invoiced in local currencies. Given the large number of billings in US and Australian dollar markets, the Group has exposure to the fl uctuating exchange rates of these currencies. Trade payables in US dollars owed to French companies of the Group were converted at the closing exchange rate at the end of the fi scal year. The majority of sales by the Group’s French subsidiaries to non-Group foreign buyers are in euros. Invoices issued in foreign currencies by French subsidiaries of the Group are converted into euros at the exchange rate in force on the date of delivery. Sales and invoices of French subsidiaries of EXEL Industries to their foreign subsidiaries are in euros. As an exception to this practice, subsidiaries in the US and the UK are invoiced in their respective local currencies and subsidiaries in China are invoiced in US dollars The Group’s general policy is to hedge significant engineering contracts denominated in a currency other than the euro, mainly in USD. In the last fi scal year, there has been no signi fi cant contract of this type denominated in a currency other than in euros. The Group has recourse to cash fl ow hedges for a portion of cash fl ows in US dollars on a case-by-case basis. At 09/30/2019, trade receivables, cash and cash equivalents and payables of the Group denominated in the main currencies were as follows:

In pounds sterling

„ Receivables and cash in GBP

£29,514 c K

„ Payables in GBP

£(31,800) c K

„ Net receivables in GBP

£(2,285) c K I.E. €(2,580) c K

In Australian dollars

„ Receivables and cash in AUD

AUD 8,871 c K

„ Payables in AUD

AUD (10,202) c K

„ Net receivables in AUD

AUD (1,331) c K I.E. €(826) c K

In Chinese yuan

„ Receivables and cash in CNY

CNY 89,848 c K

„ Payables in CNY

CNY (20,149) c K

„ Net receivables in CNY

CNY 693,699 c K I.E. €8,961 c K

In US dollars

TOTAL NET RECEIVABLES IN OTHER CURRENCIES

€12,130 c K

„ Receivables and cash in USD

USD 26,534 c K*

Consolidated foreign exchange losses to September c 30, 2019, totaled €1,290 c thousand. Most of this amount originated from US dollars, pounds sterling and Australian dollars, breaking down as follows: „ losses on payments: €502 c thousand; „ gains on revaluation of receivables and payables: €1,313 c thousand; „ gains on sales of currencies and fl uctuations on currencies in bank: €480 c thousand.

„ Payables in USD

USD (25,966) c K

„ Net receivables in USD USD 569 c K I.E. €522 c K * Assets in US dollars are not covered by an exchange rate hedge at the end of the fi scal year.

In Danish crowns

„ Receivables and cash in DKK

DKK 45,214 c K

„ Payables in DKK

DKK (111,629) c K

„ Net receivables in DKK DKK (66,415) c K I.E. €(8,895) c K** ** Historically, the Danish Krone has fl uctuated within a narrow range of margins relative to the euro, of below 0.20%.

EXEL Industries Group I 2019 Universal Registration Document

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