Vilmorin & Cie - Annual report 2017-2018

1 ANNUAL REPORT Vilmorin & Cie 61 2017-2018 The Company has a wide portfolio of customers: Evolution of the weight of the main customers (as a % of consolidated sales) 17-18 16-17 15-16 Weight of the top 5 customers 8.3 9.8 7.1 Weight of the top 10 customers 12.3 14.8 10.8 The risks of non-recovery are usually moderate. Vilmorin & Cie’s subsidiaries each provide the answers adapted to their activity. The amount considered as posing a risk of non-recovery, and written into provisions, is disclosed in Note 20 “Trade receivables” in the notes to the consolidated financial statements. It stands at about 3% of gross trade receivables. The breakdown of accounts receivable by due date is presented in Note 30, section 2.5 “Information concerning credit risk” of the notes to the consolidated financial statements. Finally, as far as its relations with suppliers are concerned, Vilmorin & Cie pays careful attention to make sure there is no economic dependence, and manages a significant part of its procurement and purchasing conditions through a dedicated internal organization, comprising representatives from different Business Units, structured in steering Committees for each major category of products and services. In this respect it should be noted that some of the corn seed supplies to European markets are dispatched from the Limagrain cooperative. These supplies are made within the framework of the annual preparation of production plans, and in accordance with the conditions of contract and remuneration defined yearly on the basis of market practices. Weight of the main suppliers (1) (as a % of purchases) 17-18 16-17 Weight of the top 5 suppliers 4.1 3.8 Weight of the top 10 suppliers 6.0 5.4 This data was not consolidated for fiscal year 2015-2016. 1.7.4.2. Risks related to exchange rate, interest rates and markets Identification of the risk As it conducts its business, Vilmorin & Cie is naturally exposed to risks related to exchange rates and to the volatility of interest rates, and the prices of certain agricultural raw materials. Managing the risk Bearing in mind the size of Vilmorin & Cie and its international dimension, procedures have been set up in order to better identify these risks and control them. For this reason, the Corporate Finance Department more particularly manages both for Vilmorin & Cie and its subsidiaries: the search for diversified and suitable financial resources, an intra-group mutual management procedure to deal with currency translation risks with group forward cover strategies. Vilmorin & Cie manages 14 currencies as part of this intra-group pooling procedure, the main currencies of which are the US dollar (USD), the British pound (GBP) and the yen (JPY). During fiscal year 2017-2018, the Israeli shekel (ILS) was integrated into the pooling procedure. The hedging methodology and the values involved are described in Note 30, section 2.1 “Information regarding currency exchange risks” in the notes to the consolidated financial statements; an analysis of sensitivity to currency risk after management is described in section 2.1.5 “Information on risk exposure to instruments set up to hedge currency exchange” in the notes to the consolidated financial statements, specialized cash flow and interest rate risk management tools (cash flow agreements, forward cover instruments). Information concerning interest rate risks is presented in Note 30, section 2.2 “Information concerning interest rate risks” in the notes to the consolidated financial statements; an analysis of sensitivity to interest rate risks is described in section 2.2.4 “Information on exposure to interest rate risks” in the notes to the consolidated financial statements. On June 30, 2018, Vilmorin & Cie’s consolidated financial debt mainly comprised funding at a fixed rate, with 450 million euros from a debenture loan and 120 million euros from Schuldschein funding. This point is set out in Note 27 section 2.4 “Analysis of loans by nature of rates”, in the notes to the consolidated financial statements. Information related to liquidity risks is presented in Note 30 section 2.4 “Information concerning liquidity risks” in the notes to the consolidated financial statements. In addition, in order to consolidate the financial resources dedicated to the North American activities, Vilmorin USA Corp made an early renewal of its syndicated loan in May 2017 for an amount of 120 million USD and for a term of 5 years. This credit had been fully used on June 30, 2018, and the financial covenant was fully respected. On June 30, 2018, Vilmorin & Cie had 300 million euros of resources available from the syndicated bank loan of May 2014 for which the maturity was extended to May 2021, since this credit facility (1) These particularly concern seed multiplication farmers* whose role is described on page 35. 1.7. Risk factors PRESENTATION of Vilmorin & Cie