rapport activite annuel 20 05 2009 - zonebourse.com bélier... · dear shareholders, le bélier has...
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Annual Report
History
1961Foundry set up at Vérac in south-west France tomanufacture parts for the railway and electricalindustries
1981Aluminium safety parts developed for cars
1994The company embarks on its internationalexpansion with the acquisition of a majorityholding in a foundry in Hungary
1999Initial public offering of Le Bélier on the SecondMarket of Paris stock exchange
2003Changes made to the company’s administrationwith the adoption of the conventional system ofcorporate governance for French limited liabilitycompanies.
2004Increase in equity capital by €10, 596,000
20063-year plan implemented by the managementteam
2008Le Bélier pursued the industrial restructuringmeasures in line with its 2006-2008 roadmap.
2009Major global economic crisisSlump in worldwide automotive marketGroup response involves a highly flexible orga-nisation
2010Bank negotiations completed€12 million capital increaseBusiness up 30% compared with 2009Return to profitability
Group profile
A global player in the automotive industry
Revenue: €196 millionWorldwide production sites: 7Export sales: 75% of total revenue30% worldwide market share in braking systems Employees: 2,279 at 31 December 2010
Dear shareholders,
Le Bélier has entered a re-conquest phase.
Five years of restructuring have enabled the Group to build a new economic model based on flexibility ,
responsiveness and competitiveness. Having emerged from the crisis, Le Bélier has naturally returned to a
pattern of healthy growth and strong results.
Thanks to a sharp rise in volumes and a greater proportion of high added value products, Le Bélier’s revenue grew
by almost 30% in 2010. Furthermore, with productivity having improved by more than 30% in five years, the Group
has recorded a solid and sustainable oper ating performance once again, thus r ewarding the perseverance of our
staff in rebuilding the fundamentals.
Finalised in August 2010, the €12.3 million capital increase consolidated our balance sheet, opening up new
possibilities for our future development.
Savoir-faire, innovation, international presence and commercial success are just some of the strengths that
give us confidence for the years ahead.
We would not be in this str ong position today without the suppor t and trust of all our emplo yees,
shareholders and industrial and financial partners who have accompanied us along the path to
growth.
The President’s message
Philippe Galland, President
1
Key figures
2
2006 2007 2008
1.73.0
20
15
10
5
0
5.5 5.6
2009 2010
15.2
2006 2007 2008 2009
-3.2
-15-12
-9-6-30369
12
-6.9
-12.2
-1.4
2010
10.0
2006 2007 2008 2009
220.3
0
50
100
150
200
250246.8
212.1
152.6
2010
196.2
Brackets 4.6%
Other automotive & trucks parts 11.7%
Chassis & Suspension 4%
Air intake 15.7% Brakingsystems 64%
Consolidated sales in €M Sales by product family
Current operating result in €M
Consolidated net income in €M
France 15%
America13%
China 13%
Eastern Europe59%
Sales by geographical production area
2006 2007 2008 20090
500
1000
1500
2000
2500
3000
35002,950
3,189
2,125
2,895
2010
2,253
Average workforce (including temporary workers)
Key figures
3
2007 2008-3.6
20
16
12
8
4
0
-4
6.9
2009 2010
10.0
15.7
2007 2008
42.5
25.1
50
40
30
20
10
0
22.0
2009 2010
43.6
2007 2008
74.567.6
80
60
40
20
0
57.6
2009 2010
30.6
Shareholder’s equity in €M Net financial debts in €M
Free Cash Flow evolution in €M
2006 2007 2008
20.0
13.3 12.4
25
20
15
10
5
0
3.5
2009 2010
6.2
Investments in €M
Key consolidated figures in €M
Sales
Current operating result
% Sales
Net income
% Sales
EBITDA
Cash flow
% Sales
Shareholder's equity
Net financial debt
Total assets
(1)
2007
246.8
3.0
1.2%
-6.9
-2.8%
21.4
12.1
4.9%
42.5
74.5
200.4
2006
220.3
1.7
0.8%
-3.2
-1.5%
19.2
9.8
4.4%
51.5
66.1
212.6
2008
212.1
5.5
2.6%
-12.2
-5.7%
20.4
10.1
4.8%
25.1
67.6
145.8
2009
152.6
5.6
3.6%
-1.4
-0.9%
15.8
7.7
5.0%
22.0
57.6
132.1
2010
196.2
15.2
7.8%
10.0
5.1%
27.4
21.0
10.7%
43.6
30.6
156.0
(1) Capital increase of €12.3 M achieved in August 2010.
is a global group specialised in the manufacture of moulded aluminium safety components for cars.
The group has a comprehensive offering ranging from prototypes to machined parts, representing three mainactivities: foundry, machining and tool-making.
Foundry
This transformation process involves casting a liquid metal or alloy into a mould in order to reproduce a specific part, after cooling.The activity covers a number of technologies, including:
– Pressure die-casting for precision parts;– Gravity die-casting, which is Le Bélier's core business and is a technique for achieving superior mechanical char acteristics;– Rheocasting, which offers superior mechanical characteristics and a lighter weight product;– Sand-casting for the production of small series.
Machining
This manufacturing technique produces high-precision foundry parts (in the region of one micron).In many cases, machining forms an integral part of the foundry business given the service level expected by the customer.
Tool-making
The mechanical and tool-making design depar tment defines upfront the tools needed for the mass production of parts.The design department produces the prototyping, forming the basis for the product design and prototypes required to develop future products.
AluminiumA fundamental trend in the automotive industry
The relative weight of aluminium used in cars has risen stea-dily over the years.
This fundamental trend is a robust one. Aluminium is a light-weight metal that can be fully recycled, and since it meetsanti-corrosion requirements, it is now a natural choice in the automotive industry.
Consequently, aluminium has become the second most widely used metal after steel.
Activity
4
5
Le Bélier’s business characteristics:
– The orders it receives for parts for large series auto production are usually based on 3- to 7-year commitments, which in most cases arelinked to vehicle life cycles.– It is awarded contracts 1 to 3 years prior to the launch of series pr oduction, which is the time required to design and develop new partsin its design department.– Its different parts feature on the same platform of an auto builder, having been used by various component suppliers, who fulfil differentfunctions.
R&D
Le Bélier has had its own integrated R&D department since 1993 and possesses highly effective facilities and resources with which itdevelops all its products.Le Bélier also pursues research programmes prior to development, enabling it to offer the innovation that the market seeks.
Quality process
The group and all its production sites are certified ISO/TS16949, which is the international Quality System standard required by all carmanufacturers.
Environmental policy
Le Bélier implements an environmental management system.Four of its plants are already ISO 14000 certified.
Other 1.9%Tool making 3.7%
Machining 13.4%
Foundry 81.0%
Sales by activity
Activity
Highlights of the year
Le Bélier’ s business rose significantly, in line with the global automotive production market, and for the 5th consecutive six-monthperiod, the Group recorded a marked improvement in all its financial ratios.Le Bélier is reaping the first rewards of its new business model, created as a result of the restructuring measures implemented by the Group over thelast five years, and which has enabled Le Bélier to successfully emerge from the deep crisis experienced by the automotive sector in 2009.
Key figures for the year– Activity up sharply: + 28.5% compared with 2009– EBITDA represented 14% of revenue– Sharp reduction in net financial expenses to €0.4 million from €3.1 million in 2009– Positive free cash flow of €15.7 million
A stronger financial structureThanks to the €12.3 million capital increased staged in August 2010 and the y ear’s results, the Group had shareholders’ equity of €43.6 million at 31 December 2010 and net borr owings of €30.6 million.Borrowings thus equated to 70% of shareholders’ equity at 31 December 2010, giving the Gr oup the means to support its futuregrowth.
New business won in 2010
Le Bélier won €57 million of new orders during the year, giving a market share index of 29%;20% market share index, allowing the Group to maintain activity levels in a stable market
Significant breakthrough with German carmakers
New contracts, particularly in air intake
2011: Further growth
New business won in 2010, and the anticipated growth in the global automotive market,mean we can expect to see further growth in business in 2011.Le Bélier plans to launch 48 new products in 2011 compared with just 28 in 2010.
In this favourable climate, Le Bélier will continue its efforts to further improve itsperformance, with the aim of preserving its competitiveness and high ratios.The industrial challenges faced concern the industrialisation of new products, capacityincreases in China and improving performances in Mexico and France.
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7
Outlook
Strategy
Le Bélier’s strategic plan is highly appreciated by its main customers.
- Partnership with our customers to improve their competitiveness (costs, weight, CO2)
- Reinforcement of the market value of the products- Global presence in America, in Asia and Europe - Innovation and commercial competitiveness in order to keep our
leadership
Thanks to this strategy and to its economic model which pr oved its efficiency from 2009,Le Bélier is ready to ensure profitable development for the following years.
Tomorrow’s economic challenges
– Take advantage of opportunities created byenvironmental and energy issues
– Accompany the growth in the automotive market,especially in emerging countries
Products
Le Bélier is the undisputed world leader in the pr oduction of aluminium foundry par ts forbraking systems (master cylinders and callipers) with a market shar e estimated at more than 30%
worldwide.
The Group has also had a strong presence in engine boosting systems since 1999 (turbo and supercharger housings)and is successfully pursuing its development in suspension parts.
Le Bélier possesses unique exper tise and offers highly engineered parts. By way of example, in 2006 the Gr oup began toproduce higher added value suspension parts.
Le Bélier focuses on three product families: braking systems, engine boosting systems and suspension parts.
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Customers
Le Bélier has developed strong relationships over the years with a number of prestigious customers, all over the world. Thegroup makes special efforts to partner with its customers in order to engineer unique parts that are a perfect match for theirrequirements, thereby further strengthening these very close links and the concomitant unwavering mutual trust.
Le Bélier supplies most of its production to global component suppliers (85% of turnover) but the share represented by carmanufacturers is steadily rising.
Thus via the various component suppliers that it works with, Le Bélier's parts are necessarily present in the vehicles producedby all of the world car manufacturers.
9
Component Suppliers
CONTI TEVESTRWBOSCHBORG WARNER HONEYWELL GARRETTDELPHIEATONFTEBENTELERKONSBERGMHI
Auto Builders
VOLKSWAGENBMWPSARENAULT NISSANDAIMLER CHRYSLERDAFSCANIA
The group’s main customers
MexicoFoundry: 246Machining: 89
Le Bélier’s workforce
Le Bélier's business will be sustained if w e improve our profitability and satisfy both our external customers and our internal customers: our employees.
Our Ambition
Our ambition is to ensure that the people working for Le Bélier find continuous motivation in carrying outthe duties they are responsible for, to create a favourable environment that will allow everyone's talentsto flourish and to offer realistic career development prospects for all.
Our management is based on seven values which are: responsibility, innovation, communication,involvement, reliability, transparency and respect for environment.
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A global presence
Le Bélier has gradually built up its international presence since 1994, in order to increase its production capacity and move geographically closer to its main customers.
Today, Le Bélier is present on the three main continents with 7 production sites:
France, Hungary and Serbia in Europe ;Mexico in America,China in Asia.
Each site complies with the quality standards required by the global industry.
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HungaryFoundry: 647Machining: 223
ChinaFoundry: 392
SerbiaFoundry: 411
FranceFoundry: 211Holding : 60
Total workforce is 2,279 at December 31st, 2010
Workforce by country at December 31st, 2010 (including interim):
Stock market
Securities Market information
Market : Euronext ParisSegment: Compartment C (Small Caps)ISIN code: FR0000072399 – BELIReuters code : BELI.PABloomberg code: BELI.FPIndex : CAC AllShares
Market maker:Gilbert DupontFinancial communication adviser: Asset Com
COPERNIC (controlled by GALLAND family) 57.7%
Pineaud family 12.2%
Employees 0.6%
Public 29.5%Shareholders
Upcoming publication and events
24 May 2011: AGM (Chamber of Commerce and Industry, Libourne - France)29 July 2011: Publication of 2011 second quarter salesSeptember 2011: Letter to shareholders27 September 2011 Presentation of 2011 half year results28 October 2011: Publication of 2011 third-quarter salesEnd of January 2012: Publication of 2011 consolidated sales
Share price trends and tradingvolume
0
50
100
150
10
8
6
4
2
0
€
07/2009 10/2009 01/2010 04/2010 07/2010 10/2010 01/2011 04/2011
Volume in thousands
12
13
Combined ordinary and extraordinary General meetinG of 24 may 2011
1. MANAGEMENT REPORT FOR THE YEAR ENDED 31 DECEMBER 2010
2. SUPPLEMENT TO THE BOARD OF DIRECTORS’ REPORT TO THE GENERAL MEETING
3. CONSOLIDATED FINANCIAL STATEMENTS AND NOTES FOR THE YEAR ENDED 31 DECEMBER 2010
Le Bélier
Combined Ordinary and Extraordinary General Meeting of 24 May 2011
Management report for the year ended 31 December 2010
Supplement to the Board of Directors’ Report to the General Meeting
Consolidated financial statements and notes for the year ended 31 December 2010
16
manaGement rePort on tHe ConSolidated finanCial StatementS
year ended 31 deCember 2010
1. CONSOLIDATION SCOPE
The following companies form part of the consolidation scope.
Company(Business)
Abbreviation Registered office French company registration
number (SIRET)
Control (%) Ownership (%)
Le Bélier (Holding company) Plantier de la Reine - Vérac (33) France
39362977900017 100% 100%
Fonderies et Ateliers du Bélier (Foundry for light alloys)
FAB Verac (33) France 59615014400019 100% 100%
Le Bélier Dalian (Foundry for light alloys)
LBD Dalian - China Foreign subsidiary 100% 100%
BMP Manfredonia S.p.A. (Foundry for light alloys)
BMP Manfredonia - Italy Foreign subsidiary 100% 100%
Le Bélier Hongrie (Foundry for light alloys)
LBH Ajka - Hungary Foreign subsidiary 100% 100%
BSM Hungary Machining Ltd (Machining)
BSM Szolnok - Hungary Foreign subsidiary 100% 100%
LBQ Foundry S.A. de C.V. (Foundry for light alloys)
LBQ Queretaro - Mexico Foreign subsidiary 100% 100%
BQ Machining S.A. de C.V. (Machining)
BQM Queretaro - Mexico Foreign subsidiary 100% 100%
Le Bélier Kikinda(Foundry for light alloys)
LBK Kikinda- Serbia Foreign subsidiary 100% 100%
LBO (Equipment leasing)
LBO Plantier de la Reine - Vérac (33) France
40307761300012 100% 100%
No variation of the consolidation scope at 31 December 2010.
2. CONSOLIDATED COMPANIES
2.1. HIGHLIGHTS
Le Bélier (Holding company)
– A prolific year for new business, especially in the air intake parts business.
– Equilibrium in favour of increases in prices compared with decreases.
– Like in 2009, the Group continued to focus its efforts on innovation.
FAB (France)
– FAB’s strategy in highly engineered parts remained unchanged in both the automotive and aerospace sectors.
– FAB saw its business grow by 25% compared with 2009, with a performance close to breakeven point in terms of gross operating profit.
– Final year of staff departures under the manpower planning exercise.
17
LBH (Foundry, Hungary)
– Volumes grew by 20% compared with 2009, with an improvement in profitability.
– Industrialisation of first BMW steering knuckle.
BSM (Machining, Hungary)
– Business trends were the same as for LBH.
– Machining of the first turbos in the Group.
LBD (China)
– Business up 80% compared with 2009, with an improved performance.
– Implementation of additional capacity investments to meet needs.
– Development of first gas-fired heat treatment furnace with a view to reducing the site’s electricity needs.
LBQ (Foundry, Mexico) and BQM (Machining, Mexico)
– Despite business being weak, the economic performance improved significantly thanks to better technical control and substantial price increases.
LBK (Serbia)
– Business up 27% compared with 2009. Major progress in Quality that, in particular, enabled the site to swing into profit for the period.
– Fairly significant investment programme for site modernisation.
2.2. CONSOLIDATED RESULTS
2.2.1. Revenue
Consolidated revenue grew significantly in 2010 to reach €196.2 million, up 28.5% compared with 2009.
Based on like-for-like aluminium prices (LME), i.e. €1.7 million, revenue increased by 27.4% in 2010.
€ thousands 2010 2009 Change in %
1st quarter 45,985 33,309 38.1%
2nd quarter 50,142 39,162 28.0%
3rd quarter 48,751 39,079 24.7%
4th quarter 51,285 41,062 24.9%
TOTAL 196,163 152,612 28.5%
€ thousands 2010 2009 Change in %
Foundry 158,957 122,015 30.3%
Machining 26,282 20,659 27.2%
Toolmaking 7,180 7,559 -5.0%
Other 3,744 2,379 57.3%
TOTAL 196,163 152,612 28.5%
Against the backdrop of the ongoing policy of reducing CO2 emissions, the Group’s performance reflects the benefits of its strategic positioning, which enables it to offer a service that is both competitive and global on products incorporating a high degree of technology. Furthermore, the success of German carmakers together with the latest ramping up of Chinese business contributed to this growth.
In 2010, the proportions represented by the main product families were as follows: braking systems 63%, engine boosting 16% and chassis and suspensions 4%.
2.2.2. Income statement highlights
€ thousands 31/12/2010 31/12/2009
Income from ordinary activities 196,569 153,193
Current operating income 15,213 5,564
Operating profit (loss) 14,135 3,668
Total net income (loss) 9,963 (1,390)
Group share of net income (loss) 9,963 (1,390)
The operating profit benefitted from the business growth but the group also implemented measures in 2010 aimed at improving profitability:
– Improvement in product added value,
– tight control of des energy costs,
– workforce productivity,
– stringent management of fixed costs.
The Group thus recorded an operating profit of €14.1 million in 2010 compared with €3.7 million the previous year.
These initiatives were complemented by a reduction in borrowing costs (capital increase and positive free cash flow) and positive unrealised currency effects of €1.5 million, reducing net financial charges to €0.4 million, an improvement of €2.7 million compared with 2009.
The tax charge came to €3.7 million and related to the taxable subsidiaries in Hungary and China.
The Group share of net profit thus came to €10 million in 2010 compared with a loss of €1.4 million in 2009.
2.2.3. Number of employees in 2010
The Group employed a total of 2,279 staff at 31 December 2010 compared with 2,128 one year earlier.
In 2010, the average number of employees came to 2,253 compared with 2,125 in 2009.
2.2.4 Financial structure and change in net debt
Free cash flow increased to €21 million in 2010, representing 10.7% of revenue.
Against this backdrop of strong business growth (up 28.5% compared with 2009), the Group saw another slight improvement in its working capital requirement.
Cash increased by €20.9 million over the year (including the capital increase of €11.8 million) to reach €21.5 million at the year end.
Industrial investments amounted to €6.2 million (see breakdown below).
The Group continued to reduce its debt load thanks to the capital increase staged in August 2010 for €12.3 million (€11.8 million net of expenses) as well as the free cash flow of €15.7 million generated during the period. Net debt stood at €30.6 million at end-2010.
2.2.5. Net property, plant and equipment by country
€ thousands 31/12/2010 31/12/2009
France 10,731 12,066
China 4,384 3,303
Hungary 22,353 25,896
Mexico 10,735 11,860
Serbia 6,605 7,916
TOTAL 54,808 61,041
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2.2.6. Investments
The following table provides a breakdown of investments, including finance leases although excluding financial assets and goodwill.
€ thousands 2010 2009
Intangible assets 172 253
Land, buildings and fixtures 236 829
Industrial equipment 4,628 4,360
Other non-current assets 320 129
Assets in progress and payments on account 819 (2,099)
TOTAL BY TYPE 6,175 3,472
France 1,011 115
Hungary 2,646 360
China 1,148 798
Mexico 495 161
Serbia 875 2,038
TOTAL BY PLANT 6,175 3,472
2.2.7. Transactions with related parties
There were no transactions with related parties that had a significant influence on the Group’s financial position or performance during 2010.
The nature of the transactions entered into by Le Bélier with related parties is explained in Note 4.5 to the consolidated financial statements for the year ended 31 December 2010. They essentially involve Le Bélier Participations, which controls Le Bélier.
3. GROUP RESEARCH AND DEVELOPMENT
The Group has a continual focus on innovative work in order to enhance the performance of its products and processes in matters of cost, weight and quality. The successful outcome of this work is made available to the new products that we are required to develop and subsequently put into production.
In 2010 research and development expenses recorded directly in profit and loss amounted to €901,000, including €841,000 of staff costs, compared with €864,000 and €850,000 respectively in 2009.
4. STAFF-RELATED INFORMATION
4.1. GROUP POLICY
In terms of its staff, the Group’s aim is to help develop each employee’s skills and to offer realistic prospects for advancement, with a view to improving performance associated with staff development.
To this end, the Group’s approach is based on:
– integrating new staff,
– promoting internal information,
– skills assessment and development,
– training,
– enhancement and recognition of new ideas,
– sharing of common languages,
– development of management quality founded on the Group’s values.
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20
4.2. OTHER INFORMATION
Information on the number of Group employees is presented in point 2.2.3 of this report.
The amount of wages and salaries and social security charges recognised in 2010 is disclosed in Note 3.1.2 to the Group’s consolidated financial statements.
No changes were made to the number of working hours.
5. ENVIRONMENTAL INFORMATION
Conscious of its responsibilities towards the environment and future generations, Le Bélier has made respect for the environment one of the Group’s values, which each member of the business applies in his or her day-to-day behaviour.
Also, in compliance with the Environmental policy defined at Group level in March 2007, each subsidiary follows an Environment Management System (EMS) and endeavours to assess any impact on the environment and to prevent pollution as well as to comply with the regulatory requirements in this matter.
This environmental management system has been established by the Le Bélier Group in accordance with ISO 14001 requirements. Four Group subsidiaries now have ISO 14000 certification.
In 2010, the Group’s energy spend amounted to €307 per tonne compared with €334 per tonne in 2009..
6. POST-BALANCE SHEET EVENTS
None.
7. FORESEEABLE CHANGES IN THE GROUP’S SITUATION AND OUTLOOK
Prospects for the automotive market in 2011 are expected to strengthen given the market information available in this early part of the year.
In addition, thanks to the programmes implemented in recent years, our vision for a volume of 47,000 tonnes for 2013 is confirmed. This volume compares with 41,000 tonnes produced in 2010.
We thus anticipate gradual growth in the intervening period.
The key industrial challenges concern the industrialisation of new products (48 new product launches planned in 2011 compared with 28 achieved in 2010) that will form the foundation for this growth.
8. MAIN RISKS AND UNCERTAINTIES
Liquidity risk
In 2010, the financial risk factors eased substantially as a result of the bank negotiations in France that reached a successful conclusion on 8 January 2010, the €12.3 million capital increase staged in August 2010 and the economic performance achieved by the Group in 2010
We remain vigilant as far as business is concerned, across all continents, which may be subject to various economic or political events influencing the automotive sector and, like in 2009, we stand ready to implement effective flexibility initiatives.
Nevertheless, apart from optimising its operating cash flows, the Group must have the financial resources needed to finance its day-to-day activity, the investments required for its development and its medium-term financing commitments.
Liquidity risk therefore continues to be monitored closely and regularly.
During the period, the Group finalised the following negotiations:
– in Hungary, new medium-term financing facilities (€8.5 million);
– in France, a comprehensive and formative agreement was signed with the banks on 8 January 2010, notably providing for:
- the rescheduling of repayments due on medium-term debt,
- the consolidation of short-term financing lines into medium-term loans.
The impact of this agreement on financial charges for 2010 amounted to €173,000;
– in China, a new short-term line.
21
The new debt repayment schedule is presented in Note 3.2.12 to the consolidated financial statements.
Having completed the debt renegotiations, and given the achievements of 2010 and the Group’s proven financial strength, Le Bélier conducted a specific review of its liquidity risk and concluded that it is in a position to meet its future maturitie
In France, concerning the risk associated with the financial covenants, the agreements resulted in the cancellation of the financial covenant type clauses.
At the financial year end, all the official agreement amendments resulted in the cancellation of all financial covenants.
Outside France, loans and borrowings entered into in Hungary (€24.7 million at 31 December 2010) included financial covenant clauses that must be met and which are calculated on the basis of the full-year consolidated financial statements:
– EBITDA/net change in long- and medium-term debt > 2;
– long- and medium-term debt/EBITDA < 4.29.
The Group expects to be in a position to meet its financial obligations over the next 12 months.
Other loans and borrowings entered into abroad (Mexico, Serbia and China) do not contain any financial covenant clauses to be met.
Credit risk
Credit risk on customers is managed by each operational line in accordance with the credit risk management policies, procedures and controls put in place by the Group.
However, even though special attention is paid to our customers in terms of risk and settlement periods, we believe that the favourable market trend is helping to reduce insolvency risks.
9. USE OF FINANCIAL INSTRUMENTS
Le Bélier’s policy on interest-rate risk and currency risk is as follows:
Interest-rate risk
– the Group’s policy it to give preference to fixed-rate loans. If market conditions prevent the application of this priority, the loan is indexed to a variable Euribor or USD Libor rate;
– the Group uses several types of instruments to optimise its financial charges and manage the split between fixed-rate and variable-rate borrowings;
– swaps allow the Group to borrow long term at variable rates and to swap the interest rate on such borrowings, either on inception or during the life of the borrowing, for a fixed interest rate;
– caps allow the Group, in exchange for payment of a premium, to set an upper limit on the cost of a borrowing bearing a variable interest rate.
Note 4.7 to the consolidated financial statements provides notably:
– a sensitivity analysis;
– a breakdown of debt between variable and fixed interest rates.
Currency risk
– currency risk on borrowings: Group policy dictates that any borrowings entered into by a Group company must be in that entity’s functional currency;
– risk on operating cash flows denominated in currencies other than the functional currency;
- for purchases: in Hungary, hedging in local currency of purchases made from local suppliers and of staff costs,
- for sales: for the record, the billing currency of both Hungary and Serbia is the euro, while for Mexico and China it is mainly the US dollar.
Financial instruments used by the Group are managed centrally, their purpose being to reduce exposure to currency risk on future cash flows on its transactions and to the risk of movements in interest rates on the cash flows on its borrowings. They are not used for speculative purposes.
At 31 December 2010, no currency hedging instruments were in force, nor had the Group put in place any currency hedging contracts for 2011 at that date.
Information on the sensitivity analysis is provided in Note 4.7 to the consolidated financial statements.
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manaGement rePort on tHe Parent ComPany finanCial StatementS for tHe year ended 31 deCember 2010
ordinary General meetinG
1. SIGNIFICANT EVENTS
The highlights for 2010 were as follows:
– On 8 January 2010, finalisation of a comprehensive agreement between Le Bélier and its French banks for the restructuring and/or resizing of the Company’s borrowings, providing notably for:
- the rescheduling of repayments on medium-term debt,
- the consolidation of short-term financing lines into medium-term loans.
Capital increase:
– A capital increase was finalised on 6 August 2010 amounting to €12,315,000 (before deducting associated expenses of €524,000). This resulted in the issue of 2,218,991 new shares, bringing the total number of shares in issue to 6,582,120 for share capital of €10,004,822.40.
In 2010, the Company stepped up its innovation plan in order to boost its competitiveness.
Further steps were taken in 2010 in connection with the liquidation of the Italian subsidiary BMP and an additional provision of €442,000 was raised for impairment of the current account. In addition, the Company agreed to cancel receivables of €2,842,000 due from its subsidiary and thus reversed the provision of the same amount raised previously.
The manpower planning agreement signed in late 2008 came to an end in 2010. Two staff left during the year under in connection with this plan.
Le Bélier provided support to its subsidiaries, notably FAB, by waiving any rent due on property in 2010, with an option to renew this decision at the meeting of the Board of Directors that will be held to approve the accounts for the year ended 31 December 2011.
2. POST-BALANCE SHEET EVENTS
None.
3. PARENT COMPANY INCOME STATEMENT HIGHLIGHTS
In 2010:
– revenue: €12,361,000 (€11,617,000 in 2009);
– operating income: €13,115,000 (€12,412,000 in 2009);
– operating expenses: €12,959,000 (€11,223,000 in 2009);
– operating profit: €156,000 (€1,189,000 in 2009);
– after taking into account net financial income of €2,003,000 (including €1,354,000 of dividends received from subsidiaries), income on ordinary activities before tax came to €2,160,000 (€2,964,000 in 2009);
– extraordinary loss of €280,000 (loss of €145,000 in 2009);
– taking into account all the above, the Company reported a net profit of €1,973,000 (€2,818,000 in 2009).
In compliance with Article R.225-102 paragraph 2, a table of earnings is appended to this report, along with a statement of changes in shareholders’ equity as presented in the notes to the parent company financial statements.
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4. RESEARCH AND DEVELOPMENT
The Company has a continual focus on innovative work in order to enhance the performance of its products and processes in matters of cost, weight and quality. The successful outcome of this work is made available to the new products that we are required to develop and subsequently put into production.
In 2010 research and development expenses recorded directly in profit and loss amounted to €901,000, including €841,000 of staff costs, compared with €864,000 and €850,000 respectively in 2009.
5. REVIEW OF OPERATIONS
Sales and earnings
Revenue reflects the terms and conditions for the recharging of Group expenses.
The operating profit declined by €1,736,000, while operating income increased by 5.7%, reflecting mainly:
– ignificantly higher staff costs, notably due to the maximum profit-sharing distributed in respect of the year amounting to €651,000;
– an increase in depreciation and amortisation charges of €368,000, relating mainly to the rheocasting process;
– an increase in taxes, notably amounts withheld at source in China due to the substantial growth in the subsidiary’s business..
Net financial income improved further, with an increase of €229,000 compared with 2009, this despite a decrease in dividends received of €1,086,000. This improvement reflects reversals of provisions for impairment of securities amounting to €775,000, the introduction of remuneration on commitments assumed by the holding company in favour of the subsidiaries amounting to €203,000 and the balance being due to favourable exchange rate movements.
The net extraordinary result weakened by €135,000, mainly due to a further charge for excess tax depreciation amounting to €239,000 on the exercise of the property lease option in 2009.
The Company benefitted from a research tax credit of €93,000, bringing its net profit to €1,973,000 compared with €2,818,000 in 2009. The bulk of this movement stemming from the operating items described above.
Financial position
On 8 January 2010, the discussions between the Company and its French banks with a view to the restructuring and/or resizing of the Company’s borrowings culminated in a comprehensive agreement, providing notably for:
– the rescheduling of repayments on medium-term debt;
– the consolidation of short-term financing lines into medium-term loans.
In addition, the Company staged a €12,315,000 capital increase on 6 August 2010, thereby strengthening its equity base and hence its financial stability.
6. PRESENTATION OF THE PARENT COMPANY FINANCIAL STATEMENTS
The parent company financial statements for the year ended 31 December 2010 that we are submitting for your approval were prepared in accordance with the presentation rules and the valuation methods prescribed by the prevailing regulations.
The presentation rules and valuation methods used are unchanged from the year before.
All details and explanations can be found in the notes to the financial statements.
7. SUPPLIERS PAYMENT TIMES
At 31 December 2010, trade payables represented a credit balance of €1,191,000 compared with €1,660,000 in 2009.
This balance consisted of:
– French external suppliers: €295,000 in 2010 (€301,000 in 2009);
– foreign external suppliers: €2,000 in 2010, (nil in 2009);
– Group suppliers: €213,000 in 2010 (€771,000 en 2009);
– suppliers’ invoices not yet received €681,000 (€587,000 in 2009).
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With effect from 1 January 2009, the French law on the modernisation of the economy (Loi de Modernisation de l’Économie) introduced a cap on settlement periods at 60 days from the date on which the invoice is issued (or 45 days from the month end). When this limit is exceeded, the Company’s French suppliers are entitled to receive compensation for late payment corresponding to three times the statutory interest rate.
At 31 December 2010, trade payables comprised:
– invoices not yet due amounting to €384,000 thousand (€706,000 in 2009) for which the settlement periods complied with the law;
– invoices issued by third parties and outstanding for less than 30 days amounting to €12,000 (€28,000 in 2009);
– invoices issued by subsidiaries and outstanding for less than 30 days amounting to €1,000 (€218,000 in 2009) and outstanding for more than 30 days amounting to €112,000 (€118,000 in 2009);
– the balance corresponds to invoices in dispute.
8. SUBSIDIARIES AND ASSOCIATES
The list of subsidiaries and associates is provided in the notes.
Key comments on the subsidiaries’ activity are set out in the presentation of consolidated companies provided in the first section of this report.
9. APPROPRIATION OF INCOME
We propose to allocate the net profit for the year of €1,972,817.87 plus retained earnings brought forward as follows:
Source:
– Retained earnings brought forward: €11,125,509.57
– Net profit for the year: €1,972,817.87
Appropriation:
– To retained earnings: €13,098,327.44
Dividends paid
In compliance with the provisions of Article 243 bis of the French General Tax Code, we remind you that the Company has not distributed any dividends in the last three years.
10. EXPENSES DISALLOWED FOR TAX PURPOSES
In compliance with the provisions of Article 223 quater and 223 quinquies of the French General Tax Code, we bring to your attention the fact that the accounts for the year under review include €57,527 of expenses that are disallowed for tax purposes.
However, the Company was not liable for any tax on said expenses and charges.
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11. CORPORATE OFFICERS
List of corporate officers
In compliance with the provisions of Article L.225-102-1, paragraph 4 of the French Commercial Code, we hereby provide a list of all appointments and functions exercised by each of the Company’s corporate officers in other companies.
Name Function Company
Philippe GALLAND Chairman of the Board of DirectorsGroup:Le Bélier
Chairman of the Supervisory Board Le Bélier HongrieChairman of the Board of Directors LBQ Foundry SA de CVChairman of the Board of Directors BQ MACHINING SA de CVBélier’s representative in his capacity as Chairman of the Board of Directors
Le Bélier Dalian
Chairman of the Supervisory Board BV Hungary MachiningChairman of the Board of Directors BMP Manfredonia SpABélier’s representative in his capacity as Chairman of the Supervisory Board
Le Bélier Kikinda d.o.o
Manager LBO SARL
ChairmanNon-Group:Le Bélier Participations SAS
Chairman of the Administration Committee Copernic SASManager Société Civile de Choisy le Roi
Philippe DIZIER Chief Executive OfficerGroup: Le Bélier (France)
Chairman of the Board of Directors Fonderies et Ateliers du BélierChairman of the Board of Directors Le Bélier HongrieMember of the Supervisory Board BV Hungary MachiningBoard Member BMP Manfredonia SpABoard Member Le Bélier Dalian Member of the Administration Committee
Non-Group:Copernic SAS
Le Bélier Participations SAS Board MemberGroup: Le Bélier
Denis GALLAND Le Bélier Participations’ permanent representative, Board Member Chief Executive OfficerMember of the Administration Committee
Group: Le Bélier
Non-Group:Le Bélier Participations SASCopernic SAS
Consolidation et Développement Gestion Board Member Member of the Supervisory CommitteeMember of the Supervisory BoardMember of the Strategic CommitteeMember of the Board of Directors
Group: Le BélierNon-Group:Girard-Agediss SASGimaex SAMarchal Technologies SASFinancière Baudet SA
Charles-Henri ROSSIGNOL Consolidation et Développement Gestion’s permanent representative, Board Member
ManagerManagerMember of the Administration CommitteeMember of the Administration CommitteeMember of the Administration Committee
Group:Le Bélier
Non-Group:Equinoxe Industries SARLTrianon SCICopernic SASGlobal Cast SASSPS SAS
Copernic SAS Board MemberGroup: Le Bélier
Thierry RIVEZ Copernic’s permanent representativeBoard MemberMember of the Supervisory BoardMember of the Supervisory Board
Manager
Group: Le BélierFonderies et Ateliers du BélierBV Hungary MachiningLe Bélier HongrieNon-Group:K Management
Christian LOSIK Board MemberGroup: Le Bélier
Corporate officers’ compensation
For the performance of their functions as members of the Board of Directors, the corporate officers were paid a total of €660,000.
Total compensation and benefits-in-kind paid by the Company during the year under review to all corporate officers amounted to €665,000.
For the year ended 31 December 2010, none of the Company’s corporate officers received any compensation or benefits-in-kind of any nature whatsoever from any companies controlled by Le Bélier.
Gross compensation and benefits-in-kind paid in 2010 (in €)
Name Corporate appointmen
Employmentcontract
Benefits-in-kind
Attendance fees, etc.
Total
P. GALLAND LB (1/1/2010 - 31/12/2010) 268,304 (1) 2,115 270,419
P. DIZIER LB (1/1/2010 - 31/12/2010) 391,297 suspended (1) 2,971 394,268
D, GALLAND permanent representative of LBP LB (1/1/2010 - 31/12/2010) -
N. GALLAND LB (1/1/2010 - 21/12/2010) -
C. GALLAND LB (1/1/2010 - 24/09/2010) -
C. LOSIK LB (27/05/2010 - 31/12/2010) -
C.H. ROSSSIGNOL permanent representative of FCDE LB (24/09/2010 - 31/12/2010) -
T. RIVEZ permanent representative of COPERNIC LB (21/12/2010 - 31/12/2010) -
TOTAL 659,601 - 5,086 - 664,687
(1) company car
The compensation shown above includes a variable or exceptional component of €100,000.
The Chief Executive benefits from an unemployment insurance policy for which the Company bears the cost, being €7,786 in 2010.
The Company has no other commitments in respect of the corporate officers.
However, on the date on which his duties as Chief Executive are terminated, the effects of the contract under which Mr Philippe Dizier is employed as Director of Operations will be automatically reinstated.
12. FORESEEABLE CHANGE SIN THE SITUATION AND OUTLOOK
Recent market studies anticipate growth in the global automotive market, especially in the regions in which we operate. Thanks to the programmes acquired in recent years, our business is expected to grow, particularly in Asia and Europe.
Assuming this market growth materialises, the ongoing industrial advances mean we can expect to see an increase in the gross operating profit in 2011.
The industrial challenges faced by the Company will be the industrialisation of new products, the addition of new capacity in China and improving performances in Mexico and France.
13. FINANCIAL INSTRUMENTS
Le Bélier did not make use of any financial instruments in 2010.
14. HOLDINGS OF SELECTED SHAREHOLDERS
In compliance with the provisions of Article 233-13 of the French Commercial Code, and taking into account the information and notifications received pursuant to Articles L.233-7 and L.233-12 of said Code, we provide below information on the identity of those shareholders holding
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more than one twentieth, one tenth, three twentieths, one fifth, one quarter, one third, one half, two thirds, eighteen twentieths or nineteen twentieths of the Company’s share capital or voting rights:
– Copernic holds more than 50% of the share capital and voting rights;
– Duaenip holds more than 10% of the share capital and voting rights;
– Bestinver Gestion, SGIIC, SA holds more than 10% of the share capital and voting rights. On 24 January 2011, Bestinver Gestion, SGIIC, SA reported that its shareholding had fallen below the threshold to represent 9.95% of the share capital of Le Bélier.
During the year ended 31 December 2010, the following changes in shareholdings occurred:
– Le Bélier Participations transferred to Copernic 2,319,185 shares in Le Bélier that it owned. Le Bélier Participations is the majority shareholder in Copernic;
– Duaenip’s holding was diluted during the capital increase.
15. SUMMARY OF TRANSACTIONS COVERED BY ARTICLE L.621-18-2 OF THE FRENCH MONETARY AND FINANCIAL CODE
To the best of the Company’s knowledge, there were no transactions involving the Company’s shares during the year ended 31 December 2010 that were subject to the disclosure obligations imposed by Article L.621-18-2 of the French Monetary and Financial Cod, other than transactions carried out during the capital increase and examined and approved beforehand by the French securities regulator, Autorité des Marchés Financiers (decision and information no. 210C0526).
16. SOCIAL AND ENVIRONMENT CONSEQUENCES OF THE BUSINESS
In compliance with the provisions of Article L.225-102-1, paragraph 5, of the French Commercial Code, we provide below information on the consideration given to the social and environmental consequences of our business:
Given that the Company is a holding company, there is no specific information to report in this regard.
17. PREVENTION OF TECHNOLOGICAL RISKS
In compliance with the provisions of Article L.225-102-2 of the French Commercial Code, we provide below information on the risk prevention policy in respect of technological incidents, the Company’s civil liability coverage and the means employed to manage compensation of victims in the event of technological incidents:
Given that the Company is a holding company, there is no specific information to report in this regard.
18. EMPLOYEE INFORMATIONNumber of employees
2010 2009 2008 2007
Executives 60 59 67 67
Non-executive dtaff 26 20 24 26
TOTAL 86 79 91 93
The figures shown above correspond to the number of employees at the year end.
The average age of employees is 42 years and the average length of service is 10 years.
19. ACQUISITION OF PARTICIPATING AND CONTROLLING INTERESTS
Nothing to report.
20. TREASURY SHARES AND STOCK OPTIONS
Le Belier does not hold any of its own shares.
Stock options:
The Company has not implemented any new stock option plans since expiry of the previous plans on 30 June 2005.
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21. EMPLOYEE SHARE OWNERSHIP
In compliance with the provisions of Article L.225-102 of the French Commercial Code, information is hereby provided on the proportion of Company shares held by employees on the last day of the financial year, i.e. 31 December 2010: 0.57%.
22. STOCK OPTIONS
There are currently no Company stock option plans in force.
Trading charges: nil.
23. HOLDINGS IN CONNECTION WITH THE SHARE BUYBACK PROGRAMME
In compliance with the provisions of Article L.225-211, paragraph 2, of the French Commercial Code, information is provided below on purchases and sales of own shares during the year ended 31 December 2010:
– number of shares purchased: none,
– number of shares sold: none,
– average purchase price: n/a,
– average sale price: n/a,
– number of shares registered in the Company’s name at the year end: none,
– purchase cost: n/a,
– nominal value: €1.52,
– reason for acquisitions: n/a,
– shares held as a percentage of the total share capital: 0%.
Le Bélier held no own shares at 31 December 2010.
24. SHARE BUYBACK PROGRAMME
We remind you that the Ordinary General Meeting of 27 May 2010 authorised the Board of Directors to repurchase up to 5% of the Company’s share capital.
This programme is governed by the provisions of Article L.225-209 of the French Commercial Code and also by European Regulation no. 2273/2003 of 22 December 2003 in application of the Market Abuse Directive that came into force on 13 October 2004.
The Company did not make use of this authorisation during the year ended 31 December 2010, nor has it done so since that date, but wishes to implement a new share buyback programme.
Own shares held by the Company will be applied in decreasing order of priority for the following purposes:
– to regulate the share price by means of a liquidity contract with an investment services provider in compliance with the code of ethics of the French Association of Investment Firms (AFEI), recognised by the French securities regulator (AMF);
– to cover stock option plans for the Group’s employees and corporate officers, and sell or allocate shares to employees in accordance with prevailing legislation;
– to acquire shares with a view to later using them in exchange or as payment for acquisitions;
– to cover securities giving entitlement to the allocation of Company shares.
The Company does not intend to cancel any shares that it may eventually own.
This authorisation will allow the Company to repurchase its own shares:
– over a period of 18 months from the date of the General Meeting, i.e. until 24 November 2012;
– representing a maximum of 10% of the Company’s share capital as it stood on the date of the Ordinary General Meeting of 24 May 2011, i.e. up to 658,212 shares;
– at a maximum price of €30 per share;
– maximum proportion of the share capital acquired in the form of blocks of shares: nil.
As part of its overall financial management, the Company reserves the right to use some of its available cash to finance share buybacks and to resort to short- or medium-term borrowings to finance any additional needs in excess of funding from own resources.
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The share buyback programme will not have a material financial impact on earnings per share or shareholders’ equity per share.
All additional information is provided in the reference document prepared by the Company. This document is available to the general public on request and may be consulted on-line on the Company’s website and the AMF’s website.
25. COMPANY FEATURES THAT MAY BE RELEVANT IN THE EVENT OF A TAKEOVER BID (ARTICLE L.225-100-3 OF THE FRENCH COMMERCIAL CODE)
In compliance with Article L.225-100-3 of the French Commercial Code, we must disclose and, where applicable, explain, certain facts that may be relevant in the event of a takeover bid.
The objective of this measure is to ensure the transparency of any information that may have an influence on influence on the conduct of a takeover bid.
Consequently, and in compliance with Article L.225-100-3 of the French Commercial Code, the information required by this Article is provided below.
1. Shareholder structure
Shareholder
31/12/2010 31/12/2009 31/12/2008
Number of shares
% of share capital and
voting rights
Number of shares
% of share capital and
voting rights
Number of shares
% of share capital and
voting rights
Copernic SAS 3,796,771 57.68% 0 0.00% 0 0.00%
Le Bélier Partic. SAS 866 0.01% 2,213,064 50.72% 2,213,064 50.72%
Sté Civile de Choisy Le Roi 0 0.00% 94,301 2.16% 94,301 2.16%
Philippe GALLAND 320 0.00% 320 0.01% 320 0.01%
Denis GALLAND 270 0.00% 15,270 0.35% 15,270 0.35%
Noèle GALLAND 20 0.00% 20 0.00% 50 0.00%
Cécile GALLAND 100 0.00% 100 0.00% 100 0.00%
Hélène GALLAND 420 0.01% 420 0.01% 420 0.01%
Divers GALLAND 0.00% 0.00% 0.00%
Total GALLAND family 3,798,767 57.71% 2,323,495 53.25% 2,323,525 53.25%
DUAENIP 729,227 11.08% 729,227 16.71% 729,227 16.71%
Patrick PINEAUD 36,472 0.55% 36,472 0.84% 36,472 0.84%
Jack PINEAUD 10 0.00% 10 0.00% 10 0.00%
Claude VIDAL 39,770 0.60% 39,770 0.91% 39,770 0.91%
Total PINEAUD family 805,479 12.24% 805,479 18.46% 805,479 18.46%
Le Bélier 0 0.00% 0 0.00% 0 0.00%
Employee savings fund 37,500 0.57% 35,653 0.54% 52,700 0.80%
PUBLIC 1,940,374 29.48% 1,198,502 18.21% 1,181,425 17.95%
TOTAL 6,582,120 100.00% 4,363,129 90.46% 4,363,129 90.46%
2. Statutory restrictions on the exercise of voting rights and share transfers and clauses in conventions brought to the Company’s attention pursuant to Article L. 233-11: not applicable.
3. Direct and indirect holdings in the Company’s shares of which the Company is aware by virtue of Articles L.233-7 and L. 233-12 (significant holdings and treasury shares): see section XIV entitled “Holdings of selected shareholders”.
4. List of holders of any shares bearing special control rights and description of these rights: not applicable.
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5. The control mechanisms envisaged in any employee share ownership scheme, when the control rights are not exercised by these employees: see section XXI entitled “Employee share ownership”.
6. Shareholder agreements of which the Company is aware and which may result in restrictions on share transfers and the exercise of voting rights:
On 13 December 2003, the shareholders belonging to the Galland group signed a Collective Undertaking for the Conservation of Shareholdings (Engagement Collectif de Conservation d’Actions).
On 29 October 2004, the shareholders belonging to the Galland group signed a rider to the Collective Undertaking for the Conservation of Shareholdings of 13 December 2003 in an effort to harmonise the policy for family shareholdings in Le Bélier.
In particular, this rider provides for [free translation from the original French text]:
– A preferential right granted to Mr Philippe Galland by the shareholders belonging to the Galland group in the event of a transfer of shares, even between shareholders;
– A joint and proportional right of sale granted by the shareholders to Mr Philippe Galland in the event of a transfer of shares;
– An undertaking on share ownership, the intention being that all shareholders combined hold shares representing at least 20% of the share capital and voting rights of Le Bélier, notably so that they may benefit from the provisions of Article 885 I bis of the French General Tax Code;
– A commitment to attend the Company’s meetings and to vote on all collective decisions taken by the Company in accordance with the wishes indicated beforehand by Mr Philippe Galland, in order to preserve a united front with regard to the strategy for managing Le Bélier and so as to protect its corporate interest.
On 28 December 2009, the shareholders belonging to the Galland group signed a rider to the Collective Undertaking for the Conservation of Shareholdings of 13 December 2003. In particular, this rider provides for the extension of its term until 31 December 2010 and its tacit renewal for one-year periods with effect from this date.
7. Rules governing the appointment and replacement of Members of the Board of Directors or of the Executive Board and amendment of the Company’s Memorandum and Articles of Association [free translation from the original French text]:
ARTICLE 12 - Board of Directors
1 - Barring any statutory dispensations, the Company is administered by a Board of Directors comprised of at least three but no more than eighteen Members.
2 - During the Company’s life, the Directors are appointed or re-elected by the Ordinary General Meeting. However, in the event of a merger, they may be appointed by the Extraordinary General Meeting ruling on the operation.
3 - Each Board Member must own, for his entire term of office, at least one share in the Company.
4 - The Board Members are appointed for a period of six years.
These functions come to an end at the close of the Ordinary General Meeting called to rule on the financial statements for the year just ended and held during the year in which the term of office of the Board Member concerned expires.
Board Members are eligible for re-election. Their appointment may be revoked at any time by the Ordinary General Meeting.
5 - No person can be appointed as a Board Member if, being more than 75 years of age, his appointment would result in more than one third of the Board Members exceeding this age. If this proportion is breached, the oldest Board Member is automatically deemed to resign at the close of the Ordinary General Meeting called to rule on the financial statements for the year in which the breach occurs.
6 - Board Members may be natural persons or legal entities. Board Members who are legal entities must, when appointed, designate a permanent representative who is subject to the same conditions and obligations and who bears the same responsibilities as if he was a Board Member in his own name, all this without prejudice to the joint responsibility of the legal entity that he represents.
When a legal entity Board Member terminates the appointment of its permanent representative, this entity must immediately notify the Company, by registered post, of its decision along with the identity of its new permanent representative. Likewise in the event of the death or resignation of the permanent representative.
7 - In the event that one or more Board seats becomes vacant due to death or resignation, the Board of Directors may, between two General Meetings, make temporary appointments in order to make up the required Board complement. These appointments must be made within three months of the vacancy arising when the number of Board Members falls below the minimum stated in the Company’s Articles but is not less than the legal minimum.
Any temporary appointments thus made by the Board are subject to ratification by the next Ordinary General Meeting. Even when not ratified, however, all deliberations and actions taken remain valid.
When the number of Board Members falls below the legal minimum, the remaining Board Members must immediately convene an Ordinary Meeting with a view to making up the required Board complement.
The Member appointed to replace another Member remains in office only for the remainder of his predecessor’s term of office.
8 - Board Members who are natural persons cannot sit at the same time on more than five boards of directors or supervisory boards of limited liability companies whose head offices are located in metropolitan France, other than the exceptions provided for by the law.
9 - A Company employee can be appointed as a Board Member only if his contract corresponds to effective employment. He does not lose the benefit of this employment contract. The number of Board Members linked to the Company by an employment contract cannot exceed one third of the Board Members in office.
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8. Powers of the Board of Directors or Executive Board, particularly the issue and redemption of shares: see section above entitled “Share buyback programme”.
9. Agreements concluded by the Company that are modified or terminated in the event of a change of control over the Company, except when this disclosure, other than in the case of a legal obligation of disclosure, would seriously undermine its interests: not applicable.
10. Agreements providing for compensation to be paid to the Members of the Board of Directors or Executive Board or employees in the event that they resign or are made redundant without due cause or if their employment is terminated as a result of a takeover. Five individuals are concerned for a total of €541,896. This amount notably concerns Mr Philippe Dizier, whose employment contract has been suspended.
26. STATUTORY AUDIT
We will now read the statutory auditors’ general report and their special report on the agreements covered by Articles L.225-38 et seq. of the French Commercial Code.
27. ATTENDANCE FEES
Lastly, you are required to rule on the attendance fees allocated to the Board of Directors for 2010.
We propose that you allocate the sum of €75,000 to Members of the Board.
28. RATIFICATION OF THE CO-OPTING OF TWO DIRECTORS
We propose that you ratify the co-opting by the Board of Consolidation et Développement Gestion and Copernic as directors of the Company to replace two resigning Directors, Mrs Cécile Galland and Mrs Noèle Galland.
Consolidation et Développement Gestion is the management company for Fonds de Consolidation et de Développement des Entreprises (FCDE), a venture capital fund that has invested around €7.8 million in the Company via a capital increase staged by Copernic, a holding company formed with the Galland family and certain managers of the Company.
FCDE holds a 31.89% stake in the share capital and voting rights of Copernic. Copernic used the amount of this investment to finance its subscription to the capital increase staged by our Company on 6 August 2010.
29. APPOINTMENT OF A NEW DIRECTOR
Law no. 2011-103 of 27 January 2011 introduced certain measures on the equal representation of men and women on boards of directors and supervisory boards.
The first of these measures involves, for companies whose shares are admitted for trading on a regulated market, when one of the two genders is not represented on a board of directors or supervisory board on the date of the law’s publication, appointing at least one representative from this gender at the next ordinary general meeting called to rule on the appointment of directors or members of the supervisory board.
In the absence of a female representative on the Board and your General Meeting having to rule on the ratification of the co-opting of a Director, a female Director must be appointed.
Mrs Noèle Galland, a former Company Director, would be willing to take up this role once again.
Consequently, we submit to you the candidacy of Madame Noèle Galland.
30. RATIFICATION BY THE GENERAL MEETING OF AGREEMENTS CONCLUDED WITH MESSRS PHILIPPE GALLAND AND PHILIPPE DIZIER GOVERNED BY ARTICLES L.225-38 ET SEQ. AND ARTICLE L.225-42-1 OF THE FRENCH COMMERCIAL CODE
Mr Philippe Galland and Mr Philippe Dizier benefit from the same supplementary collective coverage in respect of pension, provident fund and healthcare as the Company’s senior executives. The Company’s commitments in their respect comply meet the characteristics of mandatory collective pension and provident fund schemes governed by Article L.242-1 of the French Social Security Code.
Such commitments, being in favour of chairmen, chief executive officers or chief operating officers, and insofar as they correspond to items of compensation, indemnities or benefits payable or likely to be payable as a result of the cessation or change of functions, or subsequent to such functions, are considered as agreements regulated by Article L.225-42-1, last paragraph, of the French Commercial Code, in its version arising from the so-called TEPA law (for the promotion of labour, employment and purchasing power) no. 2007-1223 of 21 August 2007.
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These commitments were awarded prior to publication of the TEPA law and should thus have been brought into compliance with the new statutory provisions and submitted for approval by the General Meeting of shareholders within 18 months of the law’s publication. This formality was neglected.
The Company has not suffered any claims as a result of these commitments, but the procedure should nevertheless be regularised by having each one specifically approved by the Meeting, based on a special report of the statutory auditors.
Consequently, we submit for your approval two separate resolutions intended to regularise this situation.
31. RATIFICATION BY THE GENERAL MEETING OF AN AGREEMENT AUTHORISED BY THE BOARD IN 2011, CONCERNING COMMITMENTS GIVEN IN FAVOUR OF MR THIERRY RIVEZ, CHIEF OPERATING OFFICER, IN ACCORDANCE WITH THE PROVISIONS OF ARTICLES L.225-38 ET SEQ. AND L.225-42-1 OF THE FRENCH COMMERCIAL CODE
At its meeting of 24 March 2011, the Board gave authorisation for Mr Thierry Rivez, Chief Operating Officer since 1 January 2011, to benefit from the same supplementary collective coverage in respect of pension, provident fund and healthcare as the Company’s senior executives. Your statutory auditors have been advised of this commitment given by the Company.
Consequently, we propose that you approve this commitment at the next General Meeting, based on a special report of the statutory auditors.
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extraordinary General meetinG
32. REMINDER OF AUTHORISATIONS TO ISSUE CURRENTLY VALID MARKETABLE SECURITIES AND AUTHORISATIONS TO ISSUE SHARES AND MARKETABLE SECURITIES GIVING ACCESS TO THE COMPANY’S CAPITAL
Reminder of authorisations to issue currently valid marketable securities
At the Combined Ordinary and Extraordinary General Meeting held on 27 May 2010, the Company’s Board of Directors was authorised, for a period of 26 months, i.e. until 27 July 2012, to stage one or more capital increases provided that the amount of the capital increases that may be made by the Company issuing marketable securities giving access to the capital does not exceed a nominal amount of €6,000,000, with or without preferential subscription rights.
The Board of Directors used these authorisations during the year ended 31 December 2010 for an amount totalling €3,372,866.32.
At its meeting of 5 July 2010, the Board of Directors agreed in principle, in connection with the delegation of power conferred by the Combined Ordinary and Extraordinary General Meeting of 27 May 2010, to increase the share capital by staging a public issue, with preferential subscription rights, for a unit price of between €4.5 and €6.5 per share, i.e. giving total gross proceeds, including additional paid-in capital, of between €12 million and €14 million, in order to facilitate notably the setting of an exercise parity limiting the number of odd lots, this amount may be increased by 15%, in the event of surplus demand, giving a total of between €13.8 million and €16.1 million. The Board sub-delegated to its Chief Executive Officer full powers to set the definitive terms and conditions of this operation.
By a decision du 6 July 2010, the Chief Executive Officer, making use of the powers conferred by this delegation decided notably on the number of shares to be issued in connection with the capital increase and the issue price and he established the other definitive terms and conditions for the issue.
All in all, the total number of shares issued in connection with the capital increase came to 2,218,991 shares with a nominal value of €1.52 per share, giving total gross issue proceeds of €12,315,400.05, including additional paid-in capital of €8,942,533.73.
As a result, the share capital increased from €6,631,956.08 to €10,004,822.40, consisting of 6,582,120 shares with a nominal value of €1.52 per share, all belonging to the same class.
In accordance with the provisions of Articles L.225-129-5 and R.225-116 of the French Commercial Code, the Chief Executive Officer issued a supplementary report to the Board of Directors’ report to the Extraordinary General Meeting of 27 May 2010 describing the conditions in which the Board of Directors and, under the Board’s delegation, the Chief Executive Officer, used the authorisation voted in connection with the nineteenth resolution of the General Meeting.
This report, immediately made available to the shareholders at the registered office, is brought to your attention at the next General Meeting.
In order to enable the Company to put in place the financing that is so vital for its further development, your Board considers it necessary to renew the authorisations to increase the capital previously voted by the Combined Ordinary and Extraordinary General Meeting of 27 May 2010.
In future, the Company may, in connection with its development strategy, be prompted to make a further call on the French and/or international markets by staging a public issue in order to obtain the necessary capital.
Authorisation to issue marketable securities
The purpose of the resolutions proposed is to provide the Board of Directors with various delegated powers and authorisations enabling it, where necessary and on its decision alone, to stage, a series of increases in the Company’s capital, with or without preferential subscription rights.
As provided for by the law, these resolutions are intended to give the Board maximum latitude to act in the Company’s best interests.
Given the diversity of the financial products available and the rapid pace of market changes, extreme flexibility is called for in order to determine the most beneficial issue terms and conditions for the Company and its shareholders and to carry out operations quickly, as a function of any opportunities that might arise.
We propose that you give your Board of Directors the option, under any circumstances and both in France and elsewhere, to issue shares in the Company other than preference shares, as well as all forms of marketable securities, whether they give access immediately and/or over time to the Company’s shares. It is thus a matter of enabling the Company, subject to the cap indicated below, to issue all types of marketable securities giving access to the capital provided for by company law.
The amount of the share capital increases likely to be made immediately and/or over time, whilst preserving preferential subscription rights, shall not exceed SIX MILLION euros (€6,000,000), this overall limit being unchanged from that granted by the Combined Ordinary and Extraordinary General Meeting of 27 May 2010 and to which shall be added, where applicable, the nominal amount of any additional shares to be issued in order to preserve, in accordance with the law as well as contractual stipulations, the rights of holders of marketable securities giving entitlement to shares.
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These issues may involve either maintaining shareholders’ preferential subscription rights or withdrawing shareholders’ preferential subscription rights.
We request that you withdraw the preferential subscription rights so as to enable the Company to make these issues, on French and/or international markets, either as part of a private placement (up to 20% of the share capital) or a public offering.
In order that the voting conditions for the authorisations comply with the principles of transparency and good governance, on the one hand, and shareholders’ rights, we propose that you approve, as recommended by the AMF, two distinct resolutions aimed at delegating your competence with a view to enabling your Board to issue ordinary shares and/or marketable securities giving access to the Company’s capital, with suppression of shareholders’ preferential subscription rights, by private placement and by public offering.
The amount of the capital increases likely to be made immediately and/or over time under either one of these two delegations shall not exceed SIX MILLION euros (€6,000,000).
We also ask you to note that this delegation automatically implies that shareholders waive their preferential subscription rights to the shares to which these marketable securities give entitlement in favour of the holders of marketable securities giving access to the capital.
However, we should highlight to you that, in all cases of issues without preferential rights:
– Your Board of Directors may confer on shareholders the option to subscribe to the securities in priority for all or part of the issue;;
– i) The issue price for the ordinary shares will be at least equal to the minimum amount stipulated by the law and regulations in force when this delegation is used, after correcting this amount, where applicable, to take into account the difference in the date of entitlement to interest or dividends and ii) the issue price for the marketable securities will be such that the amount received immediately by the Company, plus, where applicable, that which may be received subsequently by the Company is, for each ordinary share issued as a result of the issue of these marketable securities, at least equal to the amount indicated in part “i)” above after correcting this amount, where applicable, to take into account the difference in the date of entitlement to interest or dividends;
We propose, to facilitate more flexibility in staging capital increases, to delegate to your Board of Directors the option to increase the number of securities to be issued in the event of an increase in the Company’s share capital, with or without preferential subscription rights, in the statutory and regulatory conditions, with a sub-delegation option under the conditions stipulated by the law, if the Board observes surplus subscription demand, notably with a view to granting a greenshoe option in accordance with market practices and subject to the overall limit of SIX MILLION euros (€6,000,000) mentioned above and at the same price as that used for the initial issue.
We also propose that you delegate, by means of a specific resolution, your competence to the Board of Directors for the purposes of issuing ordinary shares and/or marketable securities giving access to ordinary shares with a view to remunerating the contributions-in-kind granted to the Company and consisting of equity securities or marketable securities giving access to the capital, excluding a public exchange offer. The total nominal amount of the capital increases likely to be staged under this delegation shall not exceed 10% of the share capital and will be allocated against the cap of SIX MILLION euros (€6,000,000) mentioned above that will be allocated against the overall cap also indicated above.
We also propose that you authorise your Board of Directors, with a sub-delegation option under the conditions stipulated by the law, in accordance with the provisions of Article L.225-136, paragraph 1, of the French Commercial Code, and up to a maximum of 10% of the share capital per annum, to dispense with the conditions for setting the price set out in the resolutions submitted to you above and to set the issue price for ordinary shares or marketable securities giving access to ordinary shares at an amount that cannot, however, be less than the weighted average of the prices for the last three trading sessions preceding its setting, less potentially a maximum discount of 10%.
In the case, your Board must prepare an additional report certified by the statutory auditors describing the definitive terms and conditions of the operation and providing the information required to assess the actual impact on the shareholder’s situation.
We also propose that you delegate to your Board the power to increase the share capital up to a maximum nominal amount of SIX MILLION euros (€6,000,000) that will be allocated against the overall cap indicated above, with a view to remunerating the contributions-in-kind granted to the Company and consisting of equity securities or marketable securities giving access to the capital of another company, excluding a public exchange offer. We also propose that you delegate your competence to the Board in order to increase the share capital, without preferential subscription rights, for the purpose of remunerating contributions of securities in the event of a public exchange offer initiated by the Company.
Lastly, we propose that you delegate to the Board of Directors, pursuant to the provisions of Article L.225-130 of the French Commercial Code, the option to increase the share capital, on one or more occasions, up to a maximum nominal amount of SIX MILLION euros (€6,000,000) that will be allocated against the overall cap indicated above, by incorporation into capital of all or part of the reserves, earnings, additional paid-in capital or other sums whose capitalisation would be allowed by the issue and free allocation of new shares or by increasing the nominal amount of the shares or using a combination of these two processes..
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Issue of marketable debt securities giving access to the capital
We also request you to authorise the issue of marketable debt securities giving access to the capital.
The maximum nominal amount of marketable debt securities giving access to the capital or other debt securities to be issued, with or without preferential subscription rights, shall be SIXTY MILLION euros (€60,000,000).
We ask that you give full powers to your Board of Directors, with an option to sub-delegate, to make these capital increases.
33. AUTHORISATION TO STAGE A CAPITAL INCREASE RESERVED FOR EMPLOYEES
We remind you that pursuant to the provisions of Article L.225-129-6 of the French Commercial Code, the Extraordinary General Meeting must, when making any decision to increase the capital, give a decision on a draft resolution on the staging of a capital increase reserved for employees of the Company and carried out under the conditions stipulated in Articles L.3332-18 to L.3332-24 of the French Labour Code.
We therefore propose that you delegate to the Board of Directors full powers, in accordance with the provisions of Articles L.225-129-2, L.225-129-6 and L.225-138-1 of the French Commercial Code, such that it may, on one or more occasions, under the conditions stipulated in Articles
L.3332-18 to L.3332-24 of the French Labour Code, stage a cash-based capital increase for a maximum nominal amount of ONE HUNDRED THOUSAND euros (€100,000) reserved for Company employees who are members of the company savings plan.
This authorisation would be granted for a period of twenty-six months from the date on which the decision is taken by the Meeting.
The share subscription price shall be set in accordance with the provisions of Articles L.3332-18 to L.3332-24 of the French Labour Code.
Lastly, if you vote in favour of this authorisation to stage a capital increase, you will also be required to give full powers to your Board of Directors, with an option to sub-delegate in accordance with the legal conditions, to undertake any practical operations to facilitate completion of this capital increase.
34. BRINGING THE MEMORANDUM AND ARTICLES OF ASSOCIATION INTO COMPLIANCE WITH VARIOUS LEGAL PROVISIONS
The Company’s Memorandum and Articles of Association include a number of Articles that do not comply with several legal and regulatory provisions, notably:
– the provisions relating to application of the procedure for regulated agreements to agreements entered into between the Company and one of its shareholders owning 10% of the Company’s capital (and not just 5%);
– the provisions of decree no. 2009-295 of 16 March 2009 enacted for application of order no. 2009-15 of 8 January 2009 relating to financial instruments, and setting notably the conditions for shareholders’ participation in General Meetings;
– the provisions relating to new quorums and majority in General Meetings of shareholders, we therefore propose that you modify the relevant Articles in the Memorandum and Articles of Association (Articles 17 and 22 to 24).
We hope that you will support this proposal and that you will vote in favour of the resolutions submitted for your approval.
The Board of Directors
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SUPPlement to tHe board of direCtorS’ rePort to tHe Combined ordinary and extraordinary General meetinG of 24 may 2011
To the shareholders,
The purpose of the Combined Ordinary and Extraordinary General Meeting to which you are invited is to propose that you rule on the following projects (additional points 30 and 31 inserted into the agenda, with the points currently numbered 30 and 31 to become points 32 and 33 on the agenda):
– Authorisation to be granted to the Board of Directors for the purpose of granting stock options to employees and/or corporate officers of the Company and related entities;
– Authorisation to be granted to the Board of Directors for the purpose of awarding existing shares free of charge to employees and/or corporate officers of the Company and related entities.
OBJECTIVE AND CONTEXT
The proposed implementation of stock options plans and a free share plan responds to the wish to allow certain employees and corporate officers of the Company and its subsidiaries to share in the Company’s performances, given their contribution to its development. The purpose of such plans would be to enhance the loyalty and motivation of these individuals by involving them, over time, in the Company’s share capital, provided they meet certain conditions relating to presence and performance, that should reflect the change in the Company’s value.
In accordance with the provisions of Articles L.225-186-1 of the French Commercial Code and L.225-197-6 of the French Commercial Code, any award of stock options or free shares or free shares that would be decided by the Board of Directors pursuant to the authorisations granted to it for this purpose could take place only after the decision to pay a collective additional profit share.
You are reminded that on matters relating to corporate governance, our Company refers to the Afep-Medef Corporate Governance Code for Listed Companies of December 2008, available on the MEDEF website (hereafter referred to as the “Afep-Medef Code”), and that, in accordance with the provisions of Article L.225-37 of the French Commercial Code, are indicated, when applicable, the Afep-Medef Code’s recommendations that have been dismissed and the reasons why.
Lastly, you are reminded that the Company’s Works Council was consulted on these projects and issued its opinion on 4 April 2011.
REVIEW OF THE PROJECT TO IMPLEMENT A STOCK OPTION PLAN
In accordance with Articles L.225-177 et seq. of the French Commercial Code, it is proposed that the General Meeting of shareholders authorises the Board of Directors to grant options giving the right to purchase the Company’s existing ordinary shares to certain employees and corporate officers of the Company and related companies within the meaning of Article L.225-180 of the French Commercial Code, under the prevailing legal and regulatory conditions.
The main features of the authorisation would be as follows:
– the total amount of shares to which the options that would be granted give entitlement shall not exceed 6% of the Company’s capital (on the day the options are awarded);
– the options should be exercised within a maximum of ten years starting from the day on which they are granted;
– the purchase price for the underlying shares would be established in accordance with the provisions of Articles L.225-177 paragraph 4 and L.225-179 paragraph 2 of the French Commercial Code. As such, the purchase price could not be less than 80% of the average of the listed prices on the market during the twenty trading sessions preceding the day of the Board Meeting at which the options are granted. Furthermore, the share purchase price, on the day on which the option is granted, also could not be less than 80% of the average purchase price paid by the Company for shares it holds under Articles L.225-208 and L.225-209 et seq. of the French Commercial Code. No discount is applied to stock options granted to corporate officers.
– the authorisation would be granted for a period of thirty-eight (38) months.
The General Meeting would grant full powers to the Board of Directors to determine, in compliance with the prevailing laws and regulations, all the conditions and procedures for the granting of the options and their exercise and, notably to designate the beneficiaries of the options, set the share purchase price, determine the exercise period for the options and set the conditions of presence and performance required for the exercise of the options.
The Board of Directors could stipulate a ban on the resale of all or some of the shares acquired by exercising the options during a period that cannot exceed three years starting from the option exercise date, bearing in mind that, in any event, the Board of Directors is responsible, in respect of the options giving the right to purchase shares that would be granted to corporate officers within the meaning of Article L.225-185 paragraph 4 of the French Commercial Code, either to decide that the options could not be exercised by the parties concerned before they cease their functions, or to set the quantity of shares arising from the option exercises that they would be required to retain in registered form until they cease their functions.
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You will be given a reading of the report prepared by the statutory auditors in accordance with the provisions of Article R.225-144 paragraph 2 of the French Commercial Code.
Lastly, it is specified that the authorisation for repurchase by the Company of its own shares under the conditions stipulated by Articles L.225-209 et seq. of the French Commercial Code, on which you are requested to give a ruling (and replacing the authorisation granted by the Combined Ordinary and Extraordinary General Meeting of 27 May 2010) will guarantee coverage for this stock option plan.
REVIEW OF THE PROJECT TO IMPLEMENT A PLAN FOR THE GRANTING OF FREE SHARES
In accordance with Articles L.225-197-1 et seq. of the French Commercial Code, it is proposed that the General Meeting of shareholders authorises the Board of Directors to grant free shares to certain employees and corporate officers of the Company and related companies under the conditions set out in Article L.225-197-2 of the French Commercial Code, in accordance with the prevailing legal and regulatory conditions.
The main features of the authorisation would be as follows:
– the total amount of the free shares granted shall not exceed 4% of the Company’s capital (on the day the shares are granted);
– the grant would be definitive either: i) at the end of a vesting period of at least two years, the beneficiaries then being required to retain said shares for at least two years starting from their definitive grant date; or ii) at the end of a vesting period of at least four years, in this case there is no minimum retention period1;
– the minimum period for which the shares must be held by their beneficiaries would be set at two years starting from their definitive grant date (except in the case of death or disability corresponding to classification in the second or third of the categories stipulated in Article L.341-4 of the French Social Security Code). However, this obligation could be reduced or cancelled by the Board of Directors for shares whose vesting period was set at four years;
– the authorisation would be granted for a period of thirty-eight (38) months.
The General Meeting would grant full powers to the Board of Directors to designate the beneficiaries of the grants, set the performance conditions required for the exercise of the options and retention period for the shares.
The Board of Directors would be required, for the shares that would be granted, where applicable, to corporate officers within the meaning of Article L.225-197-1, II paragraph 4 of the French Commercial Code, either to decide that these shares could not be sold by the parties concerned before they cease their functions, or to set the quantity of these shares that they would be required to retain in registered form until they cease their functions.
Lastly, it is specified that the authorisation for repurchase by the Company of its own shares under the conditions stipulated by Articles L.225-209 et seq. of the French Commercial Code, on which you are requested to give a ruling (and replacing the authorisation granted by the Combined Ordinary and Extraordinary General Meeting of 27 May 2010) will guarantee coverage for this plan for the granting of free shares.
You will be given a reading of the report prepared by the statutory auditors in accordance with the provisions of Article L.225-197-1, I paragraph 1 of the French Commercial Code.
This is the subject of resolutions nos. 24 and 25 that we propose and which we hope you will approve.
The Board of Directors
(1) However, a retention period of at least two years is required to benefit from the favourable tax and social security treatment.
Le Bélier
Consolidated financial statements and notes to the financial statements for the year ended 31 December 2010
ConSolidated inCome Statement ifrS, in tHoUSandS of eUroS
Notes 31/12/2010 (12 months) 31/12/2009 (12 months)
REVENUE 3.1.1 4.1. 196,163 152,612Other operating income 406 581
INCOME FROM ORDINARY ACTIVITIES 196,569 153,193Purchases consumed (93,255) (70,287)
Staff costs 3.1.2 (32,711) (29,029)
External charges (40,257) (32,826)
Taxes and duties other than corporation tax (1,917) (1,816)
Net charge for depreciation, amortisation and impairment of non-current assets
(12,172) (10,611)
Net charge to provisions 3.1.4 (864) (62)
Change in inventory of work-in-progress and finished goods 628 (3,436)
Other current operating income and expenses (808) 438
CURRENT OPERATING INCOME 15,213 5,564Other operating income and expenses 3.1.5 (1,078) (1,896)
OPERATING PROFIT/(LOSS) 14,135 3,668Income from cash and cash equivalents 3.1.6 184 101
Interest expense 3.1.6 (1,889) (2,265)
NET FINANCE COSTS (1,705) (2,164)Other financial income and expense 3.1.6 1,277 (954)
INCOME BEFORE TAX 13,707 550Corporation tax 3.1.7 (3,744) (1,940)
NET INCOME/(LOSS) FROM CONTINUING OPERATIONS 9,963 (1,390)Net income/(loss) from discontinued operations
NET INCOME/(LOSS) 9,963 (1,390)Group share 9,963 (1,390)
Minority interests
Earnings per share (in euros) 3.1.8 1.81 -0.29
Diluted earnings per share (in euros) 3.1.8 1.81 -0.29
40
Statement of ComPreHenSiVe inCome
In thousands of euros 31/12/2010 (12 months) 31/12/2009 (12 months)
NET INCOME/(LOSS) 9,963 (1,390)Actuarial gains and losses on employee benefits (48) 33
- of which, income/(charges) borne in equity (48) 33
- of which, income/(charges) transferred to profit or loss for the period 0 0
Gains and losses arising from translating the financial statements of foreign operations
(85) (2,162)
Hedges of future cash flows 0 459
- of which, income/(charges) borne in equity 0 0
- of which, income/(charges) transferred to profit or loss for the period 0 459
Sub-total of net income (and charges) recognised directly in equity (133) (1,670)
COMPREHENSIVE INCOME 9,830 (3,060)Group share 9,830 (3,060)
Minority interests 0 0
41
balanCe SHeet ifrS, in tHoUSandS of eUroS
ASSETS Notes 31/12/2010 31/12/2009
NON-CURRENT ASSETSGoodwill 3.2.1 à 3.2.3; 3.2.5 550 550Other intangible assets 3.2.1 à 3.2.3; 3.2.5 1,972 2,487Property, plant and equipment 3.2.1 à 3.2.3; 3.2.5 54,809 61,041
of which, land 3,211 3,096
of which, buildings 18,157 19,514 of which, industrial equipment 29,981 35,142 of which, other property, plant and equipment 3,460 3,289
Investment property 3.2.10 658 0Equity interests 0 0Available-for-sale securities 0 0Other non-current financial assets 203 186Deferred tax assets 3.2.13 468 330
Sub-total 58,660 64,594CURRENT ASSETS
Inventories 3.2.6 17,055 16,230
Trade receivables 3.2.7 39,202 29,743
Other current assets 3.2.8 9,478 8,205
Current tax assets 157 2,119
Cash and cash equivalents 3.2.9 30,463 10,370
Financial instruments 3.2.9 944 0
Assets slated for disposal 3.2.10 0 851
Sub-total 97,299 67,518TOTAL ASSETS 155,959 132,112
LIABILITIES AND SHAREHOLDERS’ EQUITY Notes 31/12/2010 31/12/2009
SHAREHOLDERS’ EQUITY
Share capital 3.2.11 10,005 6,632
Additional paid-in capital 9,826 1,744
Reserves 21,992 23,108
Translation adjustments (8,157) (8,072)
Treasury shares 0 0
Net profit (loss) for the year 9,963 (1,390)
Minority interests
Sub-total 43,629 22,022NON-CURRENT LIABILITIES
Long-term borrowings 3.2.12 37,449 27,912
Deferred tax liabilities 3.2.13 1,416 1,284
Non-current provisions 3.2.15 1,845 1,634
Other non-current liabilities 3.2.16 381 560
Sub-total 41,091 31,390CURRENT LIABILITIES
Short-term borrowings 3.2.18 8,920 9,776
Current portion of long-term borrowings 3.2.12; 3.2.18 15,674 29,893
Current tax liabilities 0 0
Current provisions 3.2.14 923 2,245
Financial instruments 3.2.18 0 379
Trade payables 30,652 26,692
Other current liabilities 3.2.17 15,070 9,715
Sub-total 71,239 78,700TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 155,959 132,112
Statement of CHanGeS in ConSolidated SHareHolderS’ eQUity
in tHoUSandS of eUroS
Share capital
Addi-tional
paid-in capital
Consolidated reserves and
net income
Trans-lation
re-serves
Other income and
expenses recognised directly in
equity
Group share of
equity
Minority interests
Total
SHAREHOLDERS’ EQUITY AT 31/12/2008 6,632 14,726 10,545 (5,910) (911) 25,082 0 25,082
2009 net income (loss) (1,390) (1,390) (1,390)
Actuarial gains (losses) on employee benefits 33 33 33
Gains and losses arising from translating the financial statements of foreign operations
(2,162) (2,162) (2,162)
Hedges of future cash flows 459 459 459
2009 comprehensive income 0 0 (1,390) (2,162) 492 (3,060) 0 (3,060)
Dividends paid 0 0
Appropriation (12,982) 12,982
Other changes 0 0
SHAREHOLDERS’ EQUITY AT 31/12/2009 6,632 1,744 22,137 (8,072) (419) 22,022 0 22,022
2010 net income (loss) 9,963 9,963 9,963
Actuarial gains (losses) on employee benefits (48) (48) (48)
Gains and losses arising from translating the financial statements of foreign operations
(85) (85) (85)
Hedges of future cash flows
2010 comprehensive income 0 0 9,963 (85) (48) 9,830 0 9,830
Dividends paid 0 0
Capital increase 3,373 8,082 337 11,792 11,792
Other changes (15) (15) (15)
SHAREHOLDERS’ EQUITY AT 31/12/2010 10,005 9,826 32,422 (8,157) (467) 43,629 0 43,629
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ConSolidated CaSH floW Statement
in tHoUSandS of eUroS
43
2010 2009
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) for the year 9,963 (1,390)
Non-cash items
Depreciation, amortisation and provisions 12,530 9,030
Unrealised exchange gains and losses arising from changes in fair value of financial instruments and exchange rate movements
(1,485) 189
Change in deferred taxes 11 171
Reversal of investment grants (165) (397)
Gains and losses on disposal of non-current assets 204 98
Minority interests in consolidated subsidiaries’ net income
Cash flow from operations 21,058 7,701Impact of change in timing of cash flows
Change in working capital requirement 812 5,885
Net cash flow from operating activities (A) 21,870 13,586
CASH FLOWS FROM INVESTING ACTIVITIESOutflows resulting from the acquisition of non-current assets (6,175) (3,472)
Inflows resulting from the sale of no-current assets 41 31
Changes in long-term investments (107)
Investments grants received
Net cash allocated to acquisitions and disposals of subsidiaries (change in scope)
Net cash flow from (used in) investing activities (B) (6,134) (3,548)
CASH FLOWS FROM FINANCING ACTIVITIESAmounts received from shareholders from capital increase 11,792
Dividends paid to shareholders of the parent company
Dividends paid to minority shareholders of consolidated subsidiaries
Cash inflows/outflows on borrowings (6,214) (6,432)
Advances received from third parties
Net cash flow from (used in) financing activities (C) 5,578 (6,432)
Impact of changes in the consolidation scope (E)
Impact of net changes in exchange rates – translation adjustments (D) (365) 25
Net change in cash position (A+B+C+D+E) 20,949 3,631
Opening cash and cash equivalents (F) 594 (3,037)
CLOSING CASH AND CASH EQUIVALENTS (A+B+C+D+E+F) 21,543 594
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noteS to tHe ConSolidated finanCial StatementS
FOR THE YEAR ENDED 31 DECEMBER 2010
1. ACCOUNTING POLICIES
1.1. APPROVAL OF THE ACCOUNTS
The consolidated financial statements for the year ended 31 December 2010 were approved by the Board of Directors on 24 March 2011.
1.2. BASIS FOR PREPARATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
1.2.1. Statement of compliance
The consolidated financial statements for the year ended 31 December 2010 were prepared in accordance with the framework of IFRS (International Financial Reporting Standards) as adopted by the European Union and available on the European Commission’s website:http://ec.europa.eu/internal_market/accounting/ias/index_fr.htm
The IFRS framework comprises the IFRS and IAS (International Accounting Standards), together with their interpretations or IFRIC (International Financial Reporting Interpretations Committee).
The standards used in the preparation of the 2010 financial statements and the comparative statements for 2009 are those published in the Official Journal of the European Union at 31 December 2010 and whose application is mandatory.
The accounting policies used have been applied in a consistent manner to all financial years presented.
Le Bélier has applied the new standards and interpretations applicable with effect from 1 January 2010, in particular: IFRS 3 Business Combinations (revised) and IAS 27 Consolidated and Separate Financial Statements (amended).
– IFRS 3 (revised) introduces significant changes in the method used for the recognition of business combinations occurring after this date. The changes concern the measurement of minority interests, the recognition of transaction-related costs, the recognition of liabilities subsequent to the acquisition of control and combinations achieved in several stages. These changes impact the amount of goodwill recognised, the profit for the period in which the acquisition takes place and subsequent results. For the Le Bélier Group, this new standard had no impact on the period.
– IAS 27 amended stipulates that a change in the percentage interest in a subsidiary, without loss of control, is to be recognised as a transaction with a Group member. As such, these transactions must not give rise to the recognition of goodwill, nor a profit or a loss. Furthermore, the amendment introduces a change in the method for recognising the subsidiary’s losses and in the method for recognising loss of control. This amendment had no impact on the period.
The other amendments whose application is mandatory with effect from 1 January 2010, IFRS 2 Share-based Payment – Group Cash-settled Share-based Payment Transactions, IAS 39 Eligible Hedged Items and IFRIC 17 Distributions of Non-cash Assets to Owners, together with the IFRS annual improvements of April 2009, had no material impact on the Group’s financial statements.
Furthermore, the Group has not opted for the early application of any standards.
1.2.2. Basis of consolidation
All subsidiaries included in the consolidation scope are fully consolidated.
1.2.3. Closing date
All consolidated companies closed their accounts on 31 December 2010.
1.2.4. Assumptions and estimates
In preparing the Group financial statements, management has used assumptions and estimates that impact the amounts presented in these financial statements. In particular, these concern valuations used for impairment testing, the measurement of pension obligations, calculation of provisions (mainly for restructuring), useful lives for non-current assets, deferred taxes and commitments.
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These estimates are established on the basis of information available at the time the financial statements were prepared. Estimates may be revised if the circumstances on which they are based change or pursuant to new information emerging. Actual results may differ from those based on these assumptions and estimates.
The main assumptions concerning future events and other potential uncertainties resulting from the use of estimates at the closing date, including changes in the period that may result in a material change in the carrying amounts of assets and liabilities, concern in particular the impairment of non-financial assets, deferred tax assets and provisions for contingencies and expenses (see below).
1.2.5. Post-balance sheet events
None.
1.3. ACCOUNTING CHANGES
1.3.1. Change in presentation
No changes in presentation were made during the year.
The presentation of the Group’s consolidated financial statements for the year ended 31 December 2010 is identical to that used for the 2009 consolidated financial statements.
1.4. MAIN ACCOUNTING POLICIES
1.4.1. Presentation of the statement of financial position
In compliance with IAS 1 Presentation of Financial Statements, the presentation of the statement of financial position separates current assets and liabilities from non-current assets and liabilities. Operating assets and liabilities as well as those due in less than 12 months from the end of the reporting period are classified as current, all others as non-current.
1.4.2. Non-current assets
1.4.2.1. Intangible assets
Only intangible assets meeting the definition set out in IAS 38 are reported in the statement of financial position.
“Other intangible assets” consist mainly of software acquired or developed in-house and research and development costs.
Research and development costs are expensed in the year in which they are incurred. Development costs incurred on the basis of an indi-vidual project or are recognised in intangible assets when the Group is able to demonstrate:
– the technical feasibility of the intangible asset with a view to it being brought into service or sold;
– its intention to complete this asset and its capacity to either use it or sell it;
– the fact that this asset will generate future economic benefits;
– the existence of available resources to complete development of the asset; and
– its capacity to accurately assess the costs incurred in respect of the development project.
Subsequent to their initial recognition as an asset, the development costs are assessed using the cost model, i.e. at cost less cumulative amortisation and impairment losses. Amortisation of the asset commences once the development is complete and the asset is ready to be brought into service. It is amortised on a straight-line basis over the period, not exceeding five years, in which economic benefits are expected to be derived from the project.
Other intangible assets are amortised using the straight-line method over their useful lives, which must not exceed five years.
The Group has no business goodwill arising from business combinations prior to 1 January 2004, nor any start-up costs or brands.
1.4.2.2. Property, plant and equipment
In compliance with the option available under IFRS 1 First-time Adoption of International Financial Reporting Standards, the Group has opted for re-measurement at fair value on the basis of deemed cost, corresponding to the new depreciated historical cost, of certain categories of property, plant and equipment in the opening balance sheet as at 1 January 2004.
These re-measurements are supported by appraisals by an independent firm. They covered all assets subject to the component approach and property, itself recognised under the component approach, except for assets in China and Serbia that were immaterial in the opening balance sheet as at 1 January 2004 in terms of non-current asset value.
Gross values of non-current assets represent their acquisition or production cost, including direct and indirect production expenses in connection with normal activity. These costs include notably transfer taxes, fees, commissions and legal costs directly attributable to the acquisition or construction of the assets.
Borrowing costs that are directly attributable to the acquisition, construction or production of an asset that requires a long period of prepa-ration before being brought into use are incorporated into the initial cost of this asset, in accordance with IAS 23 (revised).
Depreciation of property, plant and equipment is calculated to reflect the pattern of consumption of the expected economic benefits for each asset based on the acquisition cost and subject to allowing for any residual value. The straight-line method is used.
The Group reviews these depreciation schedules annually on the basis of the actual useful lives of its property, plant and equipment.
The Group has analysed all its industrial processes and has isolated from among its industrial equipment those major components for which a specific depreciation schedule must be used.
Main depreciation periods and methods Period Depreciation method
Research and development costs 5 years Straight-line
Concessions, patents and licences 5 years Straight-line
Except for standard and specific software 3 years Straight-line
Buildings, fixtures and fittings 25 years Straight-line
Component-based approach
- shell 40 years Straight-line
- roof 25 years Straight-line
- cable networks 15 years Straight-line
- internal fixtures and fittings 20 years Straight-line
Renovation of old buildings 15 years Straight-line
Industrial equipment, general case 6 years 2/3 Straight-line
Except for industrial equipment managed using the component approach
5 to 15 years(depending on component)
Straight-line
Production moulds 3 years Straight-line
Vehicles 5 years Straight-line
Other non-industrial non-current assets 4 years Straight-line
IT equipment 2 years Straight-line
Items financed using finance leases are recognised as non-current assets as if they had been financed by means of borrowings when the leases substantially transfer to the Group all the risks and rewards inherent to ownership of these assets.
In compliance with IAS 17, the criteria used for assessing finance leases are notably as follows:
– the relationship between the useful lives of the assets leased and the lease term;
– the comparison between future payments and the asset’s fair value;
– the existence of a clause for transfer of ownership or a purchase option;
– the specific nature of the asset.
Significant non-current assets transferred through a leaseback arrangement are retained in the statement of financial position as their original value and continue to be depreciated. The corresponding obligations to the lessors are recognised in borrowings. Lease payment instalments are broken down between repayment of the principal and borrowing costs.
1.4.2.3. Impairment of assets
In accordance with IAS 36 Impairment of Assets, the recoverable value of goodwill, property, plant and equipment and intangible assets is tested for impairment as soon as any indicators of impairment are identified, and reviewed at the end of each reporting period.
The notion of impairment of assets is applied, in compliance with IFRS, to the concept of cash-generating units (CGUs). Le Bélier Group’s CGUs are based on its operational organisation by business. A cash-generating unit is the smallest identifiable group of assets that gener-ates cash inflows from continuing use that are largely independent of the cash inflows generated by other groups of assets.
46
Non-current assets (goodwill, intangible assets and property, plant and equipment) are impaired when, because of events or circumstances occurring in the period (obsolescence, physical deterioration, significant changes in the method of use, weaker-than-expected performances, decline in revenue and other external indicators, etc.), their recoverable amount is considered to be durably lower than the carrying amount.
The recoverable amount is defined as the higher of fair value less costs to sell and value in use.
Fair value less costs to sell represents the best estimate of the amount obtainable from the sale of an asset in an arm’s length transaction between knowledgeable, willing parties. This estimate is determined on the basis of available market information and taking into account specific situations.
The value in use retained by the Group corresponds to the value of the expected future economic benefits derived from an asset’s use and subsequent disposal. This is determined on the basis of the present value of the future cash flows of each CGU, including goodwill. Such amounts are determined by reference to economic assumptions and projections of operating conditions used by Group management.
Assets or groups of assets are tested for impairment by comparing their recoverable amount with their carrying amount. When a write-down is considered necessary, the amount recognised is equal to the difference between the carrying amount and the recoverable amount.
When reversing impairment provisions, the amount reversed must not exceed the carrying amount of the asset that would have been recorded if no impairment losses had been recognised in prior periods.
1.4.2.4. Inventories
In accordance with IAS 2, inventories are measured at the lower of cost and net realisable value.
Goods purchased for resale and supplies are measured at acquisition cost, comprising the purchase price and incidental expenses.
Products and work-in-progress are measured at production cost, comprising purchases consumed and direct and indirect production costs based on normal activity.
Finished goods and tooling and parts in progress are valued at the lower of production cost and realisable value.
The principles applied in respect of impairment are as follows:
An impairment loss is recognised for raw materials, supplies, consumables, packaging and finished goods to take into account a potential net realisable value or, failing this, criteria for slow inventory turnover.
1.4.2.5. Financial assets and liabilities – financial instruments
1.4.2.5.1. Financial assets
Financial assets included in the scope of IAS 39 are classified, according to the case, as financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments or available-for-sale financial assets.
The Group determines the classification of its financial assets on initial recognition and, when authorised and appropriate, reviews this classification at the end of each financial year end.
The Group does not have any held-to-maturity investments or available-for-sale financial assets.
Financial assets are recognised at fair value on initial recognition.
Receivables
Receivables are recognised at face value.
An impairment loss is recorded, on a case-by-case basis, when there is a risk of non-collection.
Balances relating to the financing of trade receivables are included in trade receivables with a corresponding financial liability in current bank facilities.
1.4.2.5.2. Bank borrowings
All borrowings are recorded at fair value on initial recognition, less any directly attributable transaction costs.
Subsequent to initial recognition, interest-bearing liabilities are stated at amortised cost using the effective interest rate method.
Gains and losses are recognised in profit or loss when the liability is de-recognised, using the amortised cost method.
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1.4.2.5.3.Short-term investment securities and cash and cash equivalents
Short-term investment securities are readily convertible into known amounts of cash and are subject to an insignificant risk of changes in value. They are recognised at fair value at the end of the reporting period.
1.4.2.5.4. Financial derivatives and hedge accounting
The Group uses financial derivatives such as forward currency agreements, interest rate swaps and currency swaps in order to hedge against the risks associated with interest rates and movements in foreign exchange rates. These financial derivatives are initially recognised at fair value as soon as the contract is negotiated and are subsequently measured at fair value.
Derivatives are recognised as financial assets when the fair value is positive and as financial liabilities when the fair value is negative.
The fair value of forward currency agreements represents the difference between the forward exchange rate and the contract rate. The forward exchange rate is calculated by reference to current rates for contracts with similar maturity profiles. The fair value of interest rate swaps and currency swaps is determined by reference to market values for similar instruments.
For the purposes of hedge accounting, hedges are classified as:
– fair value hedges when they hedge the exposure to changes in the fair value of a recognised asset or liability; or
– cash flow hedges when they hedge the exposure to changes in cash flows as a result of a specific risk associated with a recognised asset or liability.
Fair value hedges
Changes in the fair value of a derivative classified as a fair value hedge are recognised in profit or loss. Changes in the fair value of the hedged item that are attributable to the hedged risk adjust the carrying amount of the hedged item and are also recognised in profit or loss.
Cash flow hedges
The profit or loss corresponding to the effective part of the hedging instrument is recognised directly in equity, while the ineffective part is recognised in profit or loss.
1.4.2.6. Transactions denominated in foreign currency
Recognition and measurement of foreign currency transactions are governed by IAS 21 The Effects of Changes in Foreign Exchange Rates.
In accordance with this standard, transactions denominated in foreign currency are translated by the subsidiary into its functional currency at the exchange rate prevailing on the transaction date.
Payables and receivables in foreign currency are measured at the exchange rate prevailing at the end of the reporting period and any dif-ferences are recognised directly in financial income and expense.
Foreign exchange gains and losses arising on the translation of the financial statements of foreign subsidiaries are recognised in “Translation adjustments”. This heading is also used to record the effects of net investments in foreign subsidiaries.
1.4.2.7. Deferred tax
In compliance with IAS 12 Income Taxes, deferred tax assets and liabilities are recognised on temporary timing differences between the carrying amounts of assets and liabilities and their tax bases, using the liability method, on the basis of the tax rate that is most likely to apply on the date of reversal.
For each tax entity:
– deferred tax assets and liabilities are offset in order to establish a net position;
– deferred tax assets on temporary differences or on losses carried forward are recognised only up to the amount of the net deferred tax liability when they are unlikely to be recovered.
In compliance with IAS 12, deferred tax assets and liabilities are not discounted.
1.4.2.8. Investment grants
The Group may receive investment grants in connection with its activities.
These grants are recognised at their gross value in Other non-current liabilities.
They are released to the income statement, in Other operating income, according to the same pattern as for the depreciation charges on the equipment financed by the grants.
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1.4.2.9. Non-current provisions and liabilities
Provisions are recognised at the end of the reporting period when the Group has a present obligation as a result of a past event that is likely to result in an outflow of resources whose timing is still uncertain at the end of the reporting period but for which the amount of the obligation can be reliably
1.4.2.10. Employee benefits
In accordance with IAS 19 Employee Benefits, all identified benefits granted to personnel are recognised. These include notably retirement indemnities and enhanced severance packages.
These employee benefits are subject to an annual actuarial valuation based on:
– assumptions concerning inflation, wage increases, returns on plan assets and the rates used to discount the obligations. These assumptions may change from one year to the next;
– differences between these assumptions and actual outcomes.
The gross amount of these benefits is recognised in the statement of financial position in “Non-current provisions” while changes during the year are recognised in the income statement in “Net charge to provisions” and “Other financial income and expense” for the amount corre-sponding to financial expenses, with the exception of actuarial gains and losses on retirement indemnities, which are recognised in equity.
1.4.2.11. Share-based payments
For stock options, IFRS 2 stipulates, inter alia, that employee benefits relating to stock option plans granted after 7 November 2002 must be recognised in staff costs. The Group has not granted any stock option plans after this date.
1.4.2.12. Revenue recognition
For parts, income is recognised on delivery, or on the basis of consumption in the case of consignment stock.
For toolmaking, income is recognised on acceptance of the standard product designs by the customer.
This income is recognised in Revenue.
1.4.2.13. Other operating income and expenses
The Group uses current operating profit as the main performance indicator and draws on the provisions of CNC recommendation 2009-R03 for its definition.
This financial aggregate corresponds to the operating profit of companies controlled before taking into account “Other operating income and expenses”.
This latter item comprises income and expenses of a material amount that are considered as non-recurring or unusual.
In particular, these relate to:
– the cost of restructuring measures, being mainly the cost of staff departures, external charges generated by these measures and site closure costs;
– changes in provisions raised for these restructurings, e.g. provisions for the business rescue plan (plan de sauvegarde de l’emploi - PSE) and the manpower plan (Gestion Prévisionnelle de l’Emploi et des Compétences - GPEC).
The costs provisioned include pay in lieu of notice, contractual and statutory redundancy payments, voluntary redundancy payments, financial assistance for the creation or acquisition of a business, mobility allowances, outplacement services costs, training expenses and travel costs for staff covered by the agreement.
The provisions do not include costs for the retraining or relocation of staff retained:
– changes in provisions for asset impairment following sharp declines in activity and litigation provisions of an unusual or non-recurring nature;
– any material litigation, not directly linked to the Group’s operations.
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1.4.2.14. Earnings per share
Earnings per share are calculated by dividing Group net income by the weighted average number of ordinary shares in issue during the period. The weighted average number of ordinary shares in issue during the period is the number of ordinary shares in issue at the start of the period, adjusted for the number of ordinary shares redeemed or issued during the period, multiplied by a time-based weighting factor.
Diluted earnings per share are determined by dividing Group net income by the total of the weighted average number of shares in issue during the period plus the total number of any diluting instruments.
1.4.2.15. Cash and cash equivalents
Cash and cash equivalents recognised in the statement of financial position comprise cash at bank, cash in hand and short-term deposits with an original term of three months or less.
For the purposes of the consolidated cash flow statement, cash and cash equivalents comprise cash and cash equivalents as defined above, net of current bank facilities and short-term financing.
1.4.2.16 Investment property
Investment property is recognised at historical cost less cumulative depreciation and impairment.
These buildings are depreciated over a period not exceeding 25 years.
2. CONSOLIDATION SCOPE
2.1. Changes in the consolidation scope
There were no changes in the consolidation scope at 31 December 2010.
2.2. LIST OF CONSOLIDATED COMPANIES
Company(Business)
Abbreviation Registered office French company registration
number (SIRET)
Control (%) Ownership (%)
Le Bélier (Holding company) Plantier de la Reine - Vérac (33) France
39362977900017 100% 100%
Fonderies et Ateliers du Bélier (Foundry for light alloys)
FAB Verac (33) France 59615014400019 100% 100%
Le Bélier Dalian (Foundry for light alloys)
LBD Dalian - China Foreign subsidiary 100% 100%
BMP Manfredonia S.p.A. (Foundry for light alloys)
BMP Manfredonia - Italy Foreign subsidiary 100% 100%
Le Bélier Hongrie (Foundry for light alloys)
LBH Ajka - Hungary Foreign subsidiary 100% 100%
BSM Hungary Machining Ltd (Machining)
BSM Szolnok - Hungary Foreign subsidiary 100% 100%
LBQ Foundry S.A. de C.V. (Foundry for light alloys)
LBQ Queretaro - Mexico Foreign subsidiary 100% 100%
BQ Machining S.A. de C.V. (Machining)
BQM Queretaro - Mexico Foreign subsidiary 100% 100%
Le Bélier Kikinda(Foundry for light alloys)
LBK Kikinda- Serbia Foreign subsidiary 100% 100%
LBO (Equipment leasing)
LBO Plantier de la Reine - Vérac (33) France
40307761300012 100% 100%
– Le Bélier is a holding company that provides services on behalf of the Group.
– The other consolidated subsidiaries are manufacturers of aluminium cast parts for carmakers and components manufacturers, with the exception of LBO, which is an equipment leasing company.
SCI Plantier de la Reine, which leased property to the French subsidiaries, was wound up on 27 March 2009 following the transfer of its assets and liabilities to the holding company Le Bélier.
2.3. Non-consolidated companies
None.
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3. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
All amounts are expressed in thousands of euros.
3.1. CONSOLIDATED INCOME STATEMENT
3.1.1. Consolidated revenue by activity
€’000 31/12/2010 31/12/2009 Variation
Foundries 158,957 122,015 30.3%
Machining 26,282 20,659 27.2%
Toolmaking 7,180 7,559 -5.0%
Other (1) 3,744 2,379 57.4%
Total 196,163 152,612 28.5%
(1) Services
3.1.2. Staff costs and number of employees of consolidated companies
3.1.2.1. Staff costs
€’000 31/12/2010 31/12/2009
Wages and salaries 23,374 20,386
Social security charges 9,337 8,643
Total staff costs 32,711 29,029
3.1.2.2. Number of employees (including temporary staff)
By countryYear end Average
31/12/2010 31/12/2009 2010 2009
France 271 273 278 297
Hungary 870 901 875 867
Serbia 411 398 399 406
China 392 301 354 263
Mexico 335 255 347 292
Total 2,279 2,128 2,253 2,125
By typeYear end Average
31/12/2010 31/12/2009 2010 2009
Direct labour 1,422 1,322 1,421 1,328
Indirect labour 654 595 631 582
Administrative staff 203 211 201 215
Total 2,279 2,128 2,253 2,125
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3.1.3. Research and development costs
In 2010, the amount of research and development costs recognised directly in profit or loss in was €901,000, including €841,000 of staff costs, compared with €864,000 and €850,000 respectively in 2009.
In 2010, the Group recorded income of €108,000 in respect of a research tax credit in France. This amount is included in “Other operating income”.
3.1.4. Net provisions
This item can be analysed as follows:
€’000
31/12/2010 31/12/2009
Additions Reversals Net additions Net additions
Impairment of trade receivables (839) 4 (835) (116)
Provision for contingencies and expenses (1,007) 978 (29) 54
Total net charge to provisions (1,846) 982 (864) (62)
Note: net impairment of inventories is included as follows:
– for inventories of materials and consumables, - €635,000 in “Purchases consumed”;
– for inventories of work-in-progress and finished goods, - €61,000 in “Change in inventory of work-in-progress and finished goods”.
3.1.5. Other operating income and expenses
This item includes income and expenses relating to the restructuring plans implemented at the Group’s various sites in response to the need to adapt to the weaker economic conditions that have prevailed since 2008.
This item can be analysed as follows:
€’000 2010 2009
Restructuring costs (828) (3,516)
Net charge to provisions (250) 1,620
Other operating income (expenses) (1,078) (1,896)
of which, France 279 200
of which, Italy (499) (397)
of which, Mexico (621) (369)
of which, Eastern Europe (237) (1,330)
of which, China 0 0
By country, the costs in 2010 concern:
– France: €500,000 for staff departures under the manpower plan (GPEC), which was covered by the reversal of a provision for €800,000, and €200,000 of related restructuring costs;
– Italy: costs relating to the site, closed and in the process of being liquidated (depreciation of the building and liquidation costs);
– Mexico: impairment of property, plant and equipment;
– Eastern Europe: €500,000 for impairment of property, plant and equipment; €500,000 for the reversal of a provision for litigation and €200,000 for the impairment of receivables.
3.1.6. Net financial income (expense)
€’000 2010 2009
Income from cash and cash equivalents 184 101
Borrowing costs (1,889) (2,265)
Net finance costs (1,705) (2,164)
Realised currency gains/(losses) (213) (784)
Unrealised currency gains/(losses) 1,485 (189)
Charges to provisions 0 0
Other financial income (expenses) 5 19
Other financial income and expenses 1,277 (954)
Net financial expense (428) (3,118)
Amounts recycled during the year out of equity:
Nil.
Fair value hedges:
In 2010, a €1,323,000 increase in the fair value of cross currency swaps (instruments used to hedge borrowings) was recognised in net financial expense and was offset by a loss of the same amount on bank borrowings. There was no material impact due to ineffective hedges in 2010.
Positive and negative cash flows relating to net financial expense:
€’000 2010 2009
Financial income received 184 101
Financial income not received 0 0
Total income from cash and cash equivalents 184 101Financial expenses disbursed (1,810) (2,157)
Financial expenses not disbursed (79) (108)
Total borrowing costs (1,889) (2,265)
Financial expenses not disbursed essentially relate to interest on employee benefits.
3.1.7. Corporation tax
3.1.7.1. Analysis of the tax charge:
€’000 2010 2009
Current tax income/(charge) (3,733) (1,769)
Deferred tax income (charge) (11) (171)
Total tax income/(charge) (3,744) (1,940)
The current tax charge relates to the Hungarian and Chinese companies that generate taxable profits.
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3.1.7.2. Deferred tax rates
2010 2009
China 25% 25%
Hungary 17% 19%
France 33.33% 33.33%
Italy 33% 33%
Mexico 30% 28%
Serbia 10% 10%
In Hungary, the tax legislation provides for the tax rate to be gradually reduced to 10% by 1 January 2013. For 2010, a rate of 17% was used for the two Hungarian companies.
3.1.7.3. Tax reconciliation
€’000 2010 2009
Income before tax 13,707 550
Theoretical tax (33.33%) (4,569) (183)
Deferred tax assets not recognised (464) (1,924)
Impact of differences in tax rates 2,296 538
Impact of permanent differences (1,007) (371)
Corporation tax recognised (3,744) (1,940)
3.1.8. Earnings per share
2010 2009
Net income in €’000 (A) 9,963 (1,390)
Number of shares on 1 January 4,363,129 4,363,129
Number of shares created during the year (on 5 August 2010) 2,218,991 0
Number of shares on 31 December 6,582,120 4,363,129
Adjusted weighted average number of ordinary shares for basic earnings per share (B)
5,501,628 4,764,703
Number of dilutive instruments 0 0
Adjusted weighted average number of ordinary shares for diluted earnings per share (C)
5,501,628 4,764,703
Earnings per share (in euros) (Ax1,000/B) 1.81 -0.29
Diluted earnings per share (in euros) (A*1,000/C) 1.81 -0.29
3.2. CONSOLIDATED STATEMENT OF FINANCIAL POSITION3.2.1. Goodwill
€'000 31/12/2010 31/12/2009
Gross value 778 778
Impairment (1) (228) (228)
Net amount 550 550
Analysis by company
LBH 66 66
BSM 453 453
BMP 0 0
LBK 31 31
TOTAL 550 550
(1) Impairment of goodwill relating to BMP
3.2.2. Intangible assets and property, plant and equipment (cost)
Cost at 31 December 2009 (including goodwill)
Movements during the year €’000 31/12/2008 ‘Translation differences
‘Acquisitions/Transfers
Disposals 31/12/2009
Goodwill 778 778
Research and development costs (2) 1,682 (3) 15 1,694
Concessions and patents 4,425 (41) 238 (29) 4,593
Other intangible assets 0 0
Advances and payments on account 0 0
Other intangible assets 6,107 (44) 253 (29) 6,287
Land (1) 3,237 (1) 1 3,237
Buildings and fixtures and fittings (1) 33,702 (513) 828 34,017
Technical installations (1) 118,979 (1,990) 4,360 (425) 120,924
Other property, plant and equipment, assets in progress and advances and payments on account
14,811 (336) (1,970) (147) 12,358
Property, plant and equipment 170,729 (2,840) 3,219 (572) 170,536
Total non-current assets 177,614 (2,884) 3,472 (601) 177,601
(1) Including non-current assets under finance leases of €43,459,000 at the end of the reporting period.
(2) Research costs relate mainly to the rheocasting project. With regard to the production and marketing phase, negotiations with one of our main customers are under way with a view to launching actual production in 2010.
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Cost at 31 December 2010 (including goodwill):
Movements during the year €’000 31/12/2009 Translation differences
Acquisitions/Transfers
Disposals 31/12/2010
Goodwill 778 778
Research and development costs (2) 1,694 (4) 25 1,715
Concessions and patents 4,593 62 147 (17) 4,785
Other intangible assets 0 0
Advances and payments on account 0 0
Other intangible assets 6,287 58 172 (17) 6,500
Land (1) 3,237 175 (60) 3,352
Buildings and fixtures and fittings (1) 34,017 108 236 (43) 34,318
Technical installations (1) 120,924 317 4,628 (672) 125,197
Other property, plant and equipment, assets in progress and advances and payments on account
12,358 (123) 1,139 (312) 13,062
Property, plant and equipment 170,536 477 6,003 (1,087) 175,929
Total non-current assets 177,601 535 6,175 (1,104) 183,207
(1) Including non-current assets financed under finance leases of €43,318,000 at the end of the reporting period.
(2) Research costs relate essentially to the rheocasting project. They are amortised over a period of four years with effect from 1 January 2010.
3.2.3. Amortisation, depreciation and impairment of intangible assets and property, plant and equipment
Amortisation, depreciation and impairment at 31 December 2009
Movements during the year €’000
31/12/2008 Translation differences
Charges for amortisation
and depreciation
Reversals(on disposals)
Charges to impairment
provisions
Reversals of impairment
provisions
31/12/2009
Goodwill 228 228
Research and development costs 19 1 33 53
Concessions and patents 3,390 (20) 404 (29) 3,745
Other intangible assets 0 0
Other intangible assets 3,409 (19) 437 (29) 0 0 3,798
Land (1) 128 1 12 141
Buildings and fixtures and fittings (1) 12,687 (180) 1,996 14,503
Technical installations (1) 79,557 (1,178) 7,633 (297) 67 85,782
Other property, plant and equipment, assets in progress and advances and payments on account
8,602 (132) 533 (145) 211 9,069
Property, plant and equipment 100,974 (1,489) 10,174 (442) 278 0 109,495
TOTAL NON-CURRENT ASSETS 104,611 (1,508) 10,611 (471) 278 0 113,521
(1) Including non-current assets financed under finance leases of €32,020,000 at the end of the reporting period.
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Amortisation, depreciation and impairment at 31 December 2010
Situations et mouvements de l'exercice en KEUR
31/12/2009 Translation differences
Charges for amortisation
and depreciation
Reversals(on disposals)
Charges to impairment
provisions
Reversals of impairment
provisions
31/12/2010
Goodwill 228 228
Research and development costs 53 (1) 421 473
Concessions and patents 3,745 24 304 (17) 4,056
Other intangible assets 0 0
Other intangible assets 3,798 23 725 (17) 0 0 4,529
Land (1) 141 12 (12) 141
Buildings and fixtures and fittings (1) 14,503 (103) 1,782 (21) 16,161
Technical installations (1) 85,782 50 9,233 (498) 649 95,216
Other property, plant and equipment, assets in progress and advances and payments on account
9,069 (136) 420 (307) 556 9,602
Property, plant and equipment 109,495 (189) 11,447 (838) 1,205 0 121,120
TOTAL NON-CURRENT ASSETS 113,521 (166) 12,172 (855) 1,205 0 125,877
(1)Including non-current assets financed under finance leases of €33,284,000 at the end of the reporting period.
3.2.4. Leases
3.2.4.1. Carrying amount of non-current assets under finance leases
At 31 December 2010:
Type of asset under finance lease €’000
Cost Amortisation and depreciation
Carrying amount
Concessions, patents and licences 1,404 1,394 10
Land 791 791
Buildings 13,063 5,362 7,701
Equipment 28,060 26,528 1,532
Non-current assets in progress 0 0
Total 43,318 33,284 10,034
At 31 December 2009:
Type of asset under finance lease €’000
Cost Amortisation and depreciation
Carrying amount
Concessions, patents and licences 1,404 1,286 118
Land 809 809
Buildings 13,230 4,877 8,353
Equipment 28,016 25,857 2,159
Non-current assets in progress 0 0
Total 43,459 32,020 11,439
The finance leases entered into by the Group relate to property and IT and industrial equipment.
They do not include any conditional lease payments and do not provide for sub-letting.
59
3.2.4.2. Minimum future payments under finance leases
€'000
At 31/12/2010 At 31/12/2009
Due within 1 year
Interest pay-able
Minimum future
payments
Present value
Interest payable
Minimum future
payments
Minimum future pay-ments
Due within 1 year 1,205 137 1,342 1,471 256 1,727
Due between 1 and 5 years 2,615 213 2,828 3,462 133 3,595
Due in more than 5 years 4,017 702 4,719 4,398 895 5,293
Total 7,837 1,052 8,889 9,331 1,284 10,615
3.2.4.3. Lease payments maintained in the income statement
Operating lease payments recognised in the income statement amounted to €343,000 in 2010 compared with €310,000 in 2009.
3.2.5. Impairment of assets
In accordance with the principle explained in Note 1.4.2.3, the carrying amount of each group of assets corresponding to each production site, including related goodwill, has been compared with their value in use, which is equal to the sum of the discounted future net cash flows expected for each group of assets.
Discounting of the future cash flows was based on the Group’s 2011-2015 medium-term plan, compiled at the end of 2010, and the latest budget assumptions, applying a discount rate of 10% and a growth rate to infinity of 0.5%, these two parameters being unchanged from those used in 2009.
The test performed at the end of 2010 provided confirmation of the value of goodwill and other non-current assets in the statement of financial position.
The test’s sensitivity to changes in the assumptions used to determine the value in use of the asset groups tested at the end of 2010 gave the following results for the two sites with the lowest test margin:
Test margin (carrying amount - value in use)
Impact of a 0.5pp cut in the growth rate to infinity
Impact of a 0.5pp increase in the discount rate
Site 1 5.9 -0.6 -0.8
Site 2 2.6 -0.3 -0.4
Individual impairment of intangible assets and property, plant and equipment was also recognised during the year, based on a technical analysis of each industrial facility. This concerns assets whose future use by the Group is uncertain due to, for example, their use being discontinued or their technical obsolescence.
The main movements recognised during the period were as follows:
Provisions for impairment €’000
Opening balance at 31 December
2009
Translation difference
Charges for impairment
ReversalsClosing balance at 31 December
2010
On goodwill 228 228
On intangible assets and property, plant and equipment
2,615 1,205 3,820
Total 2,843 0 1,205 0 4,048
3.2.6. Inventories
€'000 31/12/2010 31/12/2009
Gross value 19,112 17,580
Impairment (2,057) (1,350)
Net amount 17,055 16,230
Analysis by type
€'000 31/12/2010 31/12/2009
Raw materials/supplies 5,573 5,806
Goods in progress 3,839 2,848
Intermediate and finished goods 7,643 7,576
Total inventories 17,055 16,230
3.2.7. Trade receivables
€'000 31/12/2010 31/12/2009
Gross value 40,429 30,226
Impairment (1,227) (483)
Net amount 39,202 29,743
Receivables assigned under factoring agreements in France and maintained in trade receivables amounted to €3,621,000 at 31 December 2010 and €2,300,000 at 31 December 2009, with an equivalent amount of borrowings recorded in current bank facilities.
No amounts were de-recognised during the year.
Analysis of receivables overdue but not written down at the year end:
Total in €’000
Not overdue and not
written down
Overdue but not written down
< 30 days 30-60 days 60-90 days 90-120 days > 120 days
2010 39,202 33,457 2,644 529 354 196 2,027
2009 29,743 25,776 1,615 481 256 99 1,516
3.2.8. Current operating assets
€'000 31/12/2010 31/12/2009
Advances to suppliers 532 862
Amounts due to government bodies, staff and others 8,334 6,726
Prepaid expenses 612 617
Other current assets 9,478 8,205
Current tax asset (current tax receivable) 157 2,119
Total 9,635 10,324
The amount of the research tax credit receivable is €108,000 and is included in the line “Current tax asset”.
60
3.2.9. Cash and cash equivalents
€'000 31/12/2010 31/12/2009
Short-term investment securities 13,315 0
Cash 17,148 10,370
Short-term investment securities and cash 30,463 10,370
Current bank facilities and short-term financing (8,920) (9,776)
Net cash 21,543 594
The short-term investment securities are risk-free instruments with short maturities and are available.
Financial assets
€'000 31/12/2010 31/12/2009
Financial assets 944 0
(1) The amount of financial assets at the end of 2010 corresponds to the fair value of swaps into euros of three Hungarian loans denominated in US dollars. In 2009, their fair value of -€379,000 was recorded in financial liabilities.
3.2.10. Investment property – assets slated for disposal
After operations were shut down at the Group’s Italian site in June 2008, all the Italian property was reclassified in Assets slated for disposal with effect from 1 July 2008, representing an amount of €851,000, being its carrying amount at this date.
Having failed to finalise negotiations quickly for the sale of this asset, the Group reclassified this asset in Investment property with effect from 1 July 2010 and reinstated the asset’s initial depreciation schedule.
Depreciation of €193,000 was thus recognised, covering the period from 1 July 2008 to 31 December 2010. This depreciation is not included in the current operating profit, like all the costs relating to the closed site.
The carrying amount of this asset thus stood at €658,000 at 31 December 2010.
3.2.11. Shareholders’ equity
Share capital
In July 2010, Le Bélier staged a capital increase while preserving preferential subscription rights that was finalised on 6 August 2010 for an amount of €12.3 million, including additional paid-in capital. It resulted in the issue of 2,218,991 new shares with a nominal value of €1.52 per share.
As a result, the share capital increased from €6,631,956.28 to €10,004,822.40 and now consists of 6,582,120 shares of €1.52 each.
The expenses associated with this capital increase amounted to €524,000. Given Le Bélier’s tax position, the gross amount of these expenses was deducted from the additional paid-in capital.
At 31 December 2010, reserves totalled €21,992,000 and comprised:
– the parent company’s legal reserve of €1,000,000;
– the parent company’s distributable reserves of €10,530,000;
– consolidated reserves of €10,462,000.
Employee stock options
The Group has not implemented any new share option plans since the expiry of the previous plans on 30 June 2005.
Treasury shares
The Group does not hold nay shares in Le Bélier.
Dividends paid and proposed
No dividends were paid or proposed in the current or previous financial year.
61
3.2.12. Long-term borrowings
3.2.12.1. Changes in borrowings during the year
€'000 31/12/2009 Translation differences
Change in fair value
Increases Decreases 31/12/2010
Long-term borrowings 57,549 208 1,323 10,762 (16,884) 52,958
- equipment finance leases 2,372 (1,083) 1,289
- property finance leases 6,959 (411) 6,548
- bank loans (1) 48,218 208 1,323 10,762 (15,390) 45,121
Other borrowings 256 4 - 8 (102) 166
- employee profit-sharing and other 36 4 8 (2) 46
- repayable advance 220 (100) 120
Total medium- and long-term borrowings 57,805 212 1,323 10,770 (16,986) 53,124
(1) Impact of hedging instruments on the amount of borrowings.
€'000 31/12/2009 31/12/2010
Borrowings at amortised cost not covered by hedging instruments
27,159 33,942
Borrowings at amortised cost covered by cross currency swaps 21,438 10,235
Impact of fair value hedges (379) 944
Total fair value of borrowings after hedges 48,218 45,121
3.2.12.2. Maturity analysis of borrowings:
€'000 31/12/2010Due within
1 year
Due in more than 1 year but less
than 5 years
Due in more than
5 years
Long-term borrowings 52,958 15,553 33,198 4,207
- equipment finance leases 1,289 756 533 0
- property finance leases 6,548 449 2,082 4,017
- bank loans 45,121 14,348 30,583 190
Other borrowings 166 121 45 0
- employee profit-sharing and other 46 1 45
- repayable advance 120 120
TOTAL LONG-TERM BORROWINGS 53,124 15,674 33,243 4,207
During the year, the Group finalised the negotiation of the following agreements:
– in Hungary, two new medium-term loans of €8,500,000 for a period of 5 years;
– in France, a comprehensive agreement was signed with the banks on 8 January 2010 notably providing for:
- the rescheduling of repayments on medium-term debt;
- the consolidation of short-term financing lines into medium-term loans;
– in China, a new short-term line.
62
63
(1) Covenants
Certain loan agreements entered into by the Group contain clauses for early repayment in the event of failure to comply with certain financial ratios calculated on the basis of the annual financial statements, i.e. at 31 December 2010.
In compliance with IAS 1 Presentation of Financial Statements, any borrowings due in more than one year that do not meet these ratios are reclassified in “Current portion of long-term borrowings”.
At 31 December 2010, all covenants were complied with.
3.2.12.3. Analysis of long-term borrowings by repayment currency
€'000 31/12/2010 31/12/2009
Euros 51,514 55,860
US dollars 1,610 1,945
Total 53,124 57,805
3.2.12.4. Analysis of long-term bank borrowings by interest rate type
€'000 31/12/2010 31/12/2009
Fixed rates 17 862 10 584
Variable rates 26 315 38 013
Total 44 177 48 597
3.2.13. Deferred tax assets and liabilities
€’00031/12/2010
Net31/12/2009
Net
Finance leases (1,222) (784)
Measurement of non-current assets and depreciation (411) (1,073)
Employee benefits 445 453
Temporary differences 137 (126)
Regulated provisions (29) (43)
Other (385) (266)
Recognition of tax losses 517 885
Total net amount (948) (954)
Total deferred tax assets 468 330
Total deferred tax liabilities (1,416) (1,284)
During the year, the Group recorded: – a charge of €11,000 in the income statement;
– income of €9,000 in equity.
The Group did not recognise a deferred tax asset on the tax losses over and above the net amounts of the deferred tax liabilities for the French, Italian, Serbian and Mexican entities as it considered their utilisation in the short term unlikely.
– In France, tax losses that did not give rise to a deferred tax asset amounted to €31,315,000 at 31 December 2010. Deferred tax losses may be carried forward indefinitely.
– In Mexico, tax losses that did not give rise to a deferred tax asset amounted to €19,094,000 at 31 December 2010. – In Serbia, tax losses that did not give rise to a deferred tax asset amounted to €6,931,000 at 31 December 2010.
The tax losses in Mexico and Serbia can be carried forward for a maximum of 10 years.
Maturity analysis of deferred tax assets not recognised:
2012 118 2013 171 2014 125 2015 247 2016 and beyond 5,759 Indefinite 10,437
64
3.2.14. Provisions
3.2.14.1. Changes during the year
Provisions for contingen-cies and expenses €’000
31/12/2009 Translation differences
Other changes
Additions Reversals (utilised)
Reversals (not utilised)
31/12/2010
Customer/supplier disputes 704 (6) 701 (310) (799) 290
Staff disputes 281 (3) 115 (55) (75) 263
Employee benefits (1) 1,634 136 194 (68) (51) 1,845
Manpower plan and restructuring 1,051 (1) 0 (391) (427) 232
Tax provisions 208 57 (113) (14) 138
Total 3,878 (10) 136 1,067 (937) (1,366) 2,768
of which, current operating income 1 007 (348) (630)
of which, other operating income and expenses (restructuring)
60 (589) (736)
– Other changes relate to employee benefits and consist of €79,000 of financial expenses recognised in the income statement and €57,000 of actuarial gains and losses recognised directly in equity.
– Of the provisions for the manpower plan and restructuring at 31 December 2010, €130,000 concerns the manpower planning agreement in France (GPEC), based on Group management’s estimate of the number of staff likely to be affected by these measures.
There were no other disputes in existence at 31 December 2010 that might materially affect the financial statements for the year ended 31 December 2010.
3.2.14.2. Maturity analysis of provisions
€’000Provisions for contingencies and expenses
31/12/2010
Current portion Non-current portion
Due within 1 yearDue in more than
1 year
Customer/supplier disputes 290 290
Staff disputes 263 263
Employee benefits 1,845 1,845
Manpower plan and restructuring 232 232
Tax provisions 138 138
TOTAL 2,768 923 1,845
3.2.15. Employee benefits
Employee benefits essentially consist of lump-sum retirement payments as well as termination benefits.
The breakdown at 31 December 2010 is as follows:
– Lump-sum retirement payments €1,303,000
– Termination benefits €542,000
– Other long-term benefits €0
The following assumptions are used when calculating pension commitments:
3.2.15.1. Measurement
The commitment is calculated using the projected unit credit method as recommended by IAS 19.
3.2.15.2. Measurement assumptions for the two main countries (France and Hungary)
Actuarial assumptions
Date of the actuarial measurement of commitments: 31/12/2010
Data extraction date: 30/10/2010
Life expectancy table: INSEE 00/02
Discount rate: 4.6% for France (4.80% in 2009)6% for Hungary (7.70% in 2009)
For France, the proposed discount rate corresponds to the interest rate on AA-rated Eurozone corporate bonds with a maturity of more than 10 years.
For Hungary, it is based on the central bank’s intervention rates.
Category-related assumptions
Pensions (France and Hungary)
Country Category Pension rights Retirement age
Nature of retirement
Employer's contributions
Wage increase
France
Executives Metallurgy engineers and executives (*) Voluntary FAB: 42.7% LB: 38.8%
2.5%
Non-executives Metallurgy Gironde - Landes (*) Voluntary FAB: 42.7% LB: 38.8%
2.5%
Hungary
Women Le Belier Hungary table 65 years Voluntary 37% 4%
Men Le Belier Hungary table 65 years Voluntary 37% 4%
(*) Retirement age for France:
Executives: born in 1951 or earlier: 63 years
born in 1952 or later: 64 years
Non-executives: born in 1951 or earlier: 60 years
born between 1952 and 1954: 61 years
born in 1955 or later: 62 years
The rights are those prevailing during 2010.The Group has no commitments in respect of its staff in China.The plans covered by this measurement are not funded.
Notes:
– the pension reform that has pushed back the retirement age in France, like in Hungary, is reflected in actuarial differences;
– a rider to the National Metallurgy agreement, published in July 2010, calls for a scale of entitlement in the event of voluntary departure, more favourable than previously. This event is treated as an amendment to the plan: it increases the commitment by €185,000 and generates an additional full-year charge in the income statement of €5,000 corresponding to the expense for five months.
3.2.15.3. Assumptions for Mexico
In Mexico, measurement is made in accordance with the NIF-D3 standard, which is similar, in terms of both terminology and rules, to the IASB and FASB international standards.
The following assumptions were used:
– discount rate: 7.5 % (8% in 2009),
– wage increase: between 3.5% and 5.9% (same in 2009).
65
66
3.2.15.4. Change in the group’s commitments
€'000 2010 2009
Change in commitment (defined benefit obligations)
Opening commitment 1,634 1,589
Cost of services rendered 156 89
Interest expense 79 93
Actuarial losses/(gains) 46 63
Services paid during the year (46) (37)
Plan amendments 185 0
Plan reductions/liquidation (29) (153)
Translation difference 0 (10)
Closing commitment 2,025 1,634
Analysis of the charge for the year
Cost of services rendered 156 89
Interest expense 79 93
Amortisation of past services 5 0
Losses/(gains) on plan reductions (29) (153)
Expense/(income) for the year 211 29
Change in the provision
Opening provision 1,634 1,589
Expense/(income) for the year 211 29
Actuarial losses/(gains) recognised in equity 57 0
Actuarial losses/(gains) recognised in profit or loss (11) 63
Services paid during the year (46) (37)
Translation difference 0 (10)
Closing provision 1,845 1,634
The charge for 2010 is recognised as follows:
– in net charges to provisions: €132,000,
– in other financial income and expense: €79,000.
The total amount of actuarial gains and losses recognised directly in equity amounts to:
– €0 at 31 December 2009,
– €57,000 at 31 December 2010.
3.2.16. Other non-current liabilities – investment grants
en KEUR 31/12/2009 Translation differences
Increases Decreases 31/12/2010
Hungary 560 -14 - -165 381
Total investment grants 560 -14 - -165 381
67
3.2.17. Other current liabilities
Operating liabilities and liabilities on non-current assets
€'000 31/12/2010 31/12/2009
Customer advances 690 90
Tax and social security liabilities 9,988 6,400
Liabilities on non-current assets 721 242
Other liabilities 1,378 876
Deferred income 2,293 2,107
Other current liabilities 15,070 9,715
3.2.18. Current financing liabilities (due within one year)
€’000 31/12/2010 31/12/2009
Bank overdrafts 8,920 9,776
Current portion of long-term borrowings 15,674 29,893
Financial instruments - liabilities (1) - 379
TOTAL 24,594 40,048
(1) The amount recognised as financial instruments at 31 December 2009 corresponds to the fair value of swaps into euros of three Hungarian loans denominated in US dollars.
68
4. OTHER INFORMATION
4.1. SEGMENT INFORMATION
4.1.1. Key figures by segment
For the purpose of managing its business, the Group is organised into operating units based on the location of its production sites and especially the location of its customers:
– the European sites (France, Hungary and Serbia) for European customers;
– the Mexican and Chinese sites for its American customers and Asian customers respectively.
The Group’s senior executives manage these operating units independently in terms of monitoring their performance and allocating resourc-es. The indicators used to measure segment performances, particularly operating profit, are reconciled below with the consolidated financial statements. Borrowings, financial results and corporation tax are tracked at Group level i.e. they are not allocated to individual segments.
For reporting purposes, the Mexican and Chinese operating units are combined in the “Outside Europe” segment. These operating units share common features, notably with regard to customer type and billing currency (mostly in US dollars).
Inter-segment transfers are made using internal transfer prices that are comparable with market prices.
Income statement
Year ended 31 December 2010, €’000 Europe Outside Europe Other Total
Revenue 177,347 56,494 (37,678) 196,163
Charges (166,160) (52,487) 37,697 (180,950)
Current operating income 11,187 4,007 19 15,213
Other operating income and expenses (459) (621) 2 (1,078)
Operating profit 10,728 3,386 21 14,135
Net financial income/(expense) (428)
Corporation tax (3,744)
Net income 9,963
Other information Investments 4,532 1,643 6,175
Net charge for depreciation and amortisation 9,253 2,919 12,172
Net charge to impairment provisions 233 1,165 1,398
Year ended 31 December 2009, €’000 Europe Outside Europe Other Total
Revenue 148,853 37,991 (34,232) 152,612
Charges (143,021) (38,193) 34,166 (147,048)
Current operating income 5,832 (202) (66) 5,564
Other operating income and expenses (1,527) (369) (1,896)
Operating profit/(loss) 4,305 (571) (66) 3,668
Net financial income/(expense) (3,118)
Corporation tax (1,940)
Net income/(loss) (1,390)
Other information Investments 2,513 959 3,472
Net charge for depreciation and amortisation 7,960 2,651 10,611
Net charge to impairment provisions 278 0 278
69
Balance sheet
31/12/2010, €’000 Europe Outside Europe Other Total
Segment assets:
Net intangible assets and property, plant and equipment 41,221 15,560 56,781
Inventories and receivables 62,066 20,626 (26,435) 56,257
Other assets (unallocated) 42,921
Total assets 155,959
Segment liabilities and shareholders' equity:
Trade payables 41,555 15,216 (26,119) 30,652
Deferred tax liabilities (unallocated) 1,416
Other liabilities (unallocated) 18,219
Borrowings (unallocated) 62,043
Shareholders' equity (unallocated) 43,629
Total liabilities and shareholders' equity 155,959
31/12/2009, €’000 Europe Outside Europe Other Total
Segment assets:
Net intangible assets and property, plant and equipment 47,900 15,628 63,528
Inventories and receivables 56,972 14,452 (25,451) 45,973
Other assets (unallocated) 22,611
Total assets 132,112
Segment liabilities and shareholders' equity:
Trade payables 39,454 12,557 (25,319) 26,692
Deferred tax liabilities (unallocated) 1,284
Other liabilities (unallocated) 14,533
Borrowings (unallocated) 67,581
Shareholders' equity (unallocated) 22,022
Total liabilities and shareholders' equity 132,112 4.1.2. Revenue by main customers
Revenue can be analysed as follows:
€ 000,000 31/12/2010 31/12/2009
Continental Teves 55.4 28% 43.0 28%
TRW 40.1 20% 32.8 21%
Bosch 21.2 11% 16.5 11%
Other customers 79.5 41% 60.3 40%
Total revenue 196.2 100% 152.6 100%
70
4.1.3. Key figures relating to French and foreign operations
Revenue
Revenue generated from French groups totalled €13,761,000 in 2010 compared with €13,099,000 in 2009.
Revenue generated from foreign groups totalled €182,808,000 in 2010 compared with €139,513,000 in 2009.
Non-current assets (goodwill, intangible assets, property, plant and equipment, non-current financial assets and deferred tax assets)
Non-current assets located in France totalled €11,450,000 at 31 December 2010 compared with €13,780,000 one year earlier.
Non-current assets located outside France totalled €47,210,000 at 31 December 2010 compared with 50 814 one year earlier.
4.2. TRANSACTIONS INVOLVING FINANCIAL INSTRUMENTS
4.2.1. Hedging and currency instruments
The financial instruments used by the Le Bélier Group are managed centrally. Their purpose is to reduce the Group’s exposure to currency risk on future cash flows from its transactions and to the risk of interest rate changes on cash flows arising on its borrowings. The financial instruments used have no speculative objective whatsoever. The policy on such instruments is unchanged from that at 31 December 2009.
At 31 December 2010
Notional amount in €’000
Residual maturity
Less than 1 year
2 to 5 years5 years or more
Currency and interest rate swaps (cross currency)
USD/EUR and fixed rate/Euribor 10,950 5,517 5,433 0
At 31 December 2010 and 31 December 2009, the Group had entered into several cross currency swaps, representing a notional amount of €10,950,000 at 31 December 2010 and €20,272,000 at 31 December 2009, under which it received a fixed interest rate of between 3.87% and 5.75% and paid a variable interest rate linked to 3-month or 6-month Euribor plus a margin. These contracts are used to hedge the Group’s exposure to the risk of a change in the fair value of four US dollar-denominated borrowings.
At 31 December 2010, these contracts had a positive fair value of €944,000.
At 31 December 2009, these contracts had a negative fair value of €379,000.
As a result of these fair value hedges, the Group recognised:
– a loss of €1,323,000 on the hedged item;
– a gain of the same amount on the hedging instrument.
71
4.3. COMPARATIVE DATA
Exchange rates used for the foreign subsidiaries:
For 1 EUR
Balance sheet:closing rate
Income statement average rate
Change
31/12/2010 31/12/2009 31/12/2010 31/12/2009Balance
sheetIncome
statement
Hungary (HUF) 278.7500 270.8400 275.4085 280.4051 2.9% -1.8%
Mexico (MXN) 16.5475 18.9223 16.7582 18.8237 -12.6% -11.0%
China (CNY) 8.8220 9.8350 8.9795 9.5240 -10.3% -5.7%
Serbia (RSD) 105.4982 95.8888 102.4352 93.7159 10.0% 9.3%
USD 1.3362 1.4406 1.3266 1.3942 -7.2% -4.9%
4.4. OFF-BALANCE SHEET COMMITMENTS
€’000 31/12/2010 31/12/2009
Off-balance sheet commitments relating to the Group consolidation scope - -
Off-balance sheet commitments relating to Group financing
- Guaranteed liabilities
Business goodwill pledges 1,500
Equipment pledges 26,528 34,569
Securities pledges 762 1,945
Commitment to pledge securities - 53
Mortgages on buildings 6,711 1,894
- Other commitments given
Guarantees and pledges to banks 1,770 -
- Commitments received
OSEO guarantee 3,662 -
Bank guarantees - -
Unutilised medium-term loan - -
Unutilised short-term loan 7,923 5,057
Third-party guarantees 1,945 1,945
Off-balance sheet commitments relating to the Group's operating activities
-Commitments given
Supplier guarantees and pledges 280 3,658
- Commitments received
Third-party guarantees 735 923
- Contractual obligations
Operating leases - equipment 572 178
Operating leases - property 13 29
Firm orders for non-current assets 330 158
Firm orders for raw materials 17,641 17,064
Finance leases: minimum expected future lease payments 8,889 10,615
4.5. RELATED PARTIES
4.5.1. Relations with Le Bélier Participations and Fonds de Consolidation et de Développement des Entreprises
At the beginning of the year, the Le Bélier Group was directly controlled by the Le Bélier Participations (LBP) group.
Following the company’s capital reorganisation in July 2010, Fonds de Consolidation et de Développement des Entreprises (FCDE) acquired a significant minority stake in alongside Le Bélier Participations in a joint company owning 57.68% of the Group’s share capital named Copernic.
Transactions with LBP and its subsidiaries are recognised:
– in the income statement for the year as follows: €30,000 in expenses in respect of administrative services and €386,000 in income;
– in the statement of financial position as follows: €130,000 in trade receivables and €3,000 in trade payables.
There are no transactions recognised with FCDE or Copernic that impact the profit for the year.
There are no payables or receivables between the Group and FCDE or Copernic.
4.5.2. Compensation paid to the directors
In accordance with IAS 24, compensation paid to the members of the Board of Directors recognised in the income statement for the year ended 31 December 2010 was as follows:
– Short-term benefits €665,000
– Post-employment benefits 0
– Other long-term benefits 0
– Termination benefits 0
– Share-based payments 0
No attendance fees were paid in 2010 in respect of 2009.
Provisions for employee benefits include other long-term benefits of €59,000 and termination benefits of €275,000 in respect of the directors.
4.6. STATUTORY AUDITORS’ FEES
Le Bélier GroupIn euros
Cabinet Ernst & Young ACEFI CL Other
Amount (excl. VAT)
% Amount (excl. VAT)
% Amount (excl. VAT)
%
2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009
AUDIT Statutory audit and certification of parent company and consolidated financial statements 153,637 162,007 85.4% 93.5% 119,700 121,830 95.6% 100.0% 41,511 61,763 58.3% 48.2%
- issuer 71,500 82,000 39.8% 47.3% 64,700 62,200 51.7% 51.1% 0 0 0.0% 0.0%
- wholly-consolidated subsidiaries 82,137 80,007 45.7% 46.2% 55,000 59,630 43.9% 48.9% 41,511 61,763 58.3% 48.2%
Services directly related to the statutory audit 26,212 3,000 14.6% 1.7% 5,500 0 4.4% 0.0% 0 0 0.0% 0.0%
- issuer 24,212 3,000 13.5% 1.7% 5,500 0 4.4% 0.0% 0 0 0.0% 0.0%
- wholly-consolidated subsidiaries 2,000 0 1.1% 0.0% 0 0 0.0% 0.0% 0 0 0.0% 0.0%
Sub-total 179,849 165,007 100.0% 95.2% 125,200 121,830 100.0% 100.0% 41,511 61,763 58.3% 48.2%
OTHER SERVICES
Legal, tax, staff 0 8,279 0.0% 4.8% 0 0 0.0% 0.0% 29,717 66,459 41.7% 51.8%
- issuer 0 0 0.0% 0.0% 0 0 0.0% 0.0% 0 0.0% 0.0%
- wholly-consolidated subsidiaries 0 8,279 0.0% 4.8% 0 0 0.0% 0.0% 29,717 66,459 41.7% 51.8%
TOTAL 179,849 173,286 100.0% 100.0% 125,200 121,830 100.0% 100.0% 71,228 128,221 100.0% 100.0%
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4.7. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
4.7.1. Interest rate and currency risk
The financial instruments used by the Le Bélier Group are managed centrally. Their purpose is to reduce the Group’s exposure to currency risk on future cash flows from its transactions and to the risk of interest rate changes on cash flows arising on its borrowings. The financial instruments used have no speculative objective whatsoever.
Le Bélier’s interest rate and currency risk management policy is as follows:
4.7.1.1. Interest rate risk
– the Group’s policy is to give preference to fixed-rate loans. If market conditions prevent the application of this priority, the loan is indexed to a variable Euribor or USD Libor rate;
– the Group uses several types of instruments to optimise its financial charges and manage the split between fixed-rate and variable-rate borrowings;
– swaps allow the Group to borrow long term at variable rates and to swap the interest rate on such borrowings, either on inception or during the life of the borrowing, for a fixed interest rate;
– caps allow the Group, in exchange for payment of a premium, to set an upper limit on the cost of a borrowing bearing a variable interest rate.
The group’s exposure to variable interest rates before and after hedging is as follows:
Long-term bank borrowings at variable interest rates €’000
Before hedging After hedging
At 31 December 2010 16,080 26,315
At 31 December 2009 16,576 38,013
Based on the borrowings at variable interest rates after hedging at 31 December of each year, the sensitivity to interest rate risk, i.e. the change in the amount of financial expenses resulting from a 1% shift in interest rates, is:
– +/- €263,000 at 31 December 2010;
– +/- €380,000 at 31 December 2009.
Interest rate types for variable-rate borrowings:
Variable-rate borrowings 31/12/2010 31/12/2009
6-month Euribor 13,745 52% 26,609 70%
3-month Euribor 11,005 42% 9,503 25%
3-month USD Libor 1,565 6% 1,901 5%
Total 26,315 100% 38,013 100%
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4.7.1.2. Currency risk
Currency risk on borrowings: Group policy dictates that any borrowings entered into by a Group company must be in that entity’s functional currency.
Risk on operating cash flows denominated in a currency other than the functional currency:
– for purchases: in Hungary, hedging in local currency of purchases made from local suppliers and of staff costs;
– for sales: for the record, the billing currency of both Hungary and Serbia is the euro, while for Mexico and China it is mainly the US dollar.
The Group’s exposure to currency risk is as follows
€’000
Currency
Consolidated risk
USD HUF MXN RSD CNY
Operations
Sales 33,908 23,722
Purchases and expenses (20,453) (22,420) (6,532) (5,368) (22,368)
13,455 (22,420) (6,532) (5,368) 1,354
Sensitivity +1% (euro up) (135) 224 65 54 (14)
Financing
Borrowings (2,887) (2,241)
Sensitivity +1% (euro up) 28.9 22.41
-105.7 224.2 65.3 53.7 8.9
Note: the sensitivity analysis is calculated based on the assumption of a 1% shift in the same direction for each currency.
There were no currency hedging instruments in force at 31 December 2010.
4.7.2. Liquidity risk
In 2010, the financial risk factors eased substantially as a result of the bank negotiations in France that reached a successful conclusion on 8 January 2010, the €12.3 million capital increase staged in August 2010 and the economic performance achieved by the Group in 2010.
We remain vigilant as far as the business is concerned, across all continents, which may be subject to various economic, diplomatic or political events influencing the automotive sector and, like in 2009, we stand ready to implement effective flexibility initiatives.
Nevertheless, apart from optimising its operating cash flows, the Group must have the financial resources needed to finance its day-to-day activity, the investments required for its development and its medium-term financing commitments.
Liquidity risk therefore continues to be monitored closely and regularly.
During the period, the Group finalised the following negotiations
– in Hungary, new medium-term financing facilities (€8.5 million);
– in France, a comprehensive and formative agreement was signed with the banks on 8 January 2010, notably providing for:
- the rescheduling of repayments due on medium-term debt,
- the consolidation of short-term financing lines into medium-term loans.
The impact of this agreement on financial charges for 2010 amounted to €173,000.
– in China, a new short-term line.
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The new debt repayment schedule is presented in Note 3.2.12 to the consolidated financial statements.
Having completed the debt renegotiations, and given the achievements of 2010 and the Group’s proven financial strength, Le Bélier con-ducted a specific review of its liquidity risk and concluded that it is in a position to meet its future maturities.
In France, concerning the risk associated with the financial covenants, the agreements resulted in the cancellation of the financial covenant type clauses.
At the financial year end, all the official agreement amendments resulted in the cancellation of all financial covenants.
Outside France, loans and borrowings entered into in Hungary (€24.7 million at 31 December 2010) included financial covenant clauses that must be met and which are calculated on the basis of the full-year consolidated financial statements:
– EBITDA/net change in long- and medium-term debt > 2;
– long- and medium-term debt/EBITDA < 4.29.
Other loans and borrowings entered into abroad (Mexico, Serbia and China) do not contain any financial covenant clauses to be met.
The Group expects to be in a position to meet its financial obligations over the next 12 months.
4.7.3. Credit risk
Credit risk on customers is managed by each operational line in accordance with the credit risk management policies, procedures and controls put in place by the Group.
However, even though special attention is paid to our customers in terms of risk and settlement periods, we believe that the favourable market trend is helping to reduce insolvency risks.
BP 103 - 33240 Vérac - FranceTél. : + 33 (0) 5 57 55 03 00Fax : +33 (0) 5 57 55 03 99
e-mail : [email protected]
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