Michelin Luxembourg SCS
Société en Commandite Simple
Audited accounts
as of and for the year ended December 31, 2012
69, Boulevard de la Pétrusse
L-2320, Luxembourg
R.C.S. - B96.546
Table of Contents
Management report 4-6
Auditor's report 7-8
Balance sheet 9
Profit and loss account 10
Notes to the annual accounts 11-17
Michelin Luxembourg SCS
Declarations
COMPAGNIE FINANCIERE DU GROUPE MICHELIN, "Senard et Cie" a « société en commandite par actions » under Swiss law, with its registered office at 1763 Granges-Paccot (Switzerland), Rte Louis-Braille 10, duly represented by Mr. Georges-Henri BARRAS , ExecutiveVice-President, sole Managing Partner of the company MICHELIN Luxembourg SCS, a « société en commandite simple » under Luxembourg law, with its registered office at 2320 Luxembourg (Luxembourg), 69 Bvd de la Pétrusse, registered with the Registre du Commerce et des Sociétés in Luxembourg under number B 96.546 (hereinafter « the Issuer »);
state that to the best of their knowledge, the financial statements prepared in accordance with the applicable set of accounting standards give a true and fair view of the assets, liabilities, financial position and profit or loss of the Issuer and that the management report includes a fair review of the development and performance of the business and the position of the Issuer, together with a description of the principal risks and uncertainties that it faces.
| COMPAGNIE FINANCIERE DU GROUPE MICHELIN, "Senard et Cie" Signed by Georges-Henri BARRAS, Executive Vice-President | |
Management report
Michelin Luxembourg SCS (« the Partnership ») principal activity is the provision of loans to affiliated undertakings within the Michelin group of companies. These loans have been financed by the issue of guaranteed bonds on the Luxembourg Stock Exchange and by the issuing of short term promissory notes and Commercial Papers.
Developments 2012:
During the financial year ended December 31st, 2012, the Partnership continued with the repurchases of bonds. The Partnership repurchased for a total of EUR 165'204'000 of the 8,625% guaranteed bonds 2014. This operation had a negative impact on the profit and loss account of EUR 22'175'295,60. On the other hand the Partnership and COMPAGNIE FINANCIERE DU GROUPE MICHELIN, "Senard et Cie" agreed to amend the loan agreement between the two parties maintaining the loans at arm's length. These amendments produced an extra income of EUR 30'231'651,77 for the Partnership.
On April 16th, 2012, the remaining outstanding amount of the 6,5% guaranteed bonds 2012 being EUR 437'587'000,00 was fully reimbursed. On the same date the EUR 495'000'000 loan between the Partnership and COMPAGNIE FINANCIERE DU GROUPE MICHELIN, "Senard et Cie" was also fully reimbursed by COMPAGNIE FINANCIERE DU GROUPE MICHELIN, "Senard et Cie".
On June 20th, 2012, the Partnership issued a 2,75% EUR 400'000'000 Guaranteed Bond 2019.
During the year 2012, the Partnership has registered a total interest charge of EUR 65'592'683,79 on the guaranteed bonds and an interest income of EUR 72'427'712,52 on the loans to COMPAGNIE FINANCIERE DU GROUPE MICHELIN, "Senard et Cie".
The Partnership has also registered a charge of EUR 563'690,52 linked to the guarantee granted by COMPAGNIE FINANCIERE DU GROUPE MICHELIN, "Senard et Cie" on the bond issues.
On April 12th, 2012, the Partnership entered into Commercial Paper Dealer Agreements with Merill Lynch, Pierce, Fenner & Smith Incorporated, Citigroup Global Markets Inc. and J.P. Morgan Securities LLC as dealers and with Bank of America as paying agent. ("US Commercial Papers").
The Obligations issued and the Issuer payments shall be denominated solely in United States Dollars. The purpose of the Program is to comply with short term financing needs; Commercial Papers are being issued for an average of one month at an average interest rate of 0,31 fixed paid in advance.
Risks
Market Risk:
The Partnership is not significantly exposed to interest-rate fluctuations as it borrows fixed-rate and lends fixed -rate. Any conversion to floating-rate is done at Group level on the head of COMPAGNIE FINANCIERE DU GROUPE MICHELIN, "Senard et Cie". The Group policy is to systematically switch all new issues to floating-rates.
The exposure on the US Commercial Papers is also not significant. The company borrows United States Dollars and lends United States Dollars. The exposure is limited to the margin realized by the Partnership which is on average amounting to 23,000 euro per month for the year ended December 2012.
Credit Risk:
The credit risk of the Partnership is considered low, the main income being generated by the loans to COMPAGNIE FINANCIERE DU GROUPE MICHELIN, "Senard et Cie", a group company. No significant risks are expected relating to the financial capability of COMPAGNIE FINANCIERE DU GROUPE MICHELIN, "Senard et Cie".
Liquidity Risk:
The Partnership does not run significant liquidity risk due to low credit risk and the Partnership uses COMPAGNIE FINANCIERE DU GROUPE MICHELIN, "Senard et Cie"as internal bank.The Group liquidity is managed centrally at COMPAGNIE FINANCIERE DU GROUPE MICHELIN, "Senard et Cie".
Result
The Annual General Meeting held on April 3rd, 2012 approved the allocation of the loss for the year 2011, being EUR 8'800'496 to the Partners on a pro-rata basis of their participation in the Partnership. The corresponding amounts have been paid to the Partnership by the Partners on January 19th, 2012.
The result for the financial year 2012 is a profit of EUR 11'400'112,18.
Subsequent events:
From January 1st until March 19th, 2013 the Partnership proceeded to additional repurchases on the EUR 750 million bond. As a consequence, as at 2013, the outstanding amount of the EUR 750 million bond is EUR 476'715'000.
Future developments:
The Partnership will continue with the repurchases of bonds whenever the market conditions are favourable.
Research and Development:
The Partnership has not been active in the field of research and development during the year 2012.
Others
For the financial year 2013 we do not foresee any new operations or actions.
Corporate Governance:
The Partnership's capital is set at one million euros (EUR 1'000'000), divided into two classes of Partnership units comprising ninety-eight thousand (98'000) unlimited Partnership units and two thousand (2'000) limited Partnership units, with a par value of ten euro's (EUR 10) each.
Each class of Partnership units entitles to the same rights and privileges.
COMPAGNIE FINANCIERE DU GROUPE MICHELIN, "Senard et Cie" holds ninety-eight thousand (98'000) unlimited Partnership units. COMPAGNIE FINANCIERE DU GROUPE MICHELIN, "Senard et Cie" is the general Partner and Manager of the Partnership.
The Partnership is being managed exclusively by the General Partner (Manager) who is vested with the broadest power to perform all acts of administration and disposition necessary or useful for accomplishing the Partnership's objects.
Annually the general meeting of Partners decides on amendment of the articles of association.
Internal control is the process that is run by the company management for the purpose of building confidence that the company:
- Has an appropriate and efficient organization for its business operations
- Produces reliable financial reports, and
- Complies with applicable laws and regulations
Michelin Luxembourg is a Partnership whose activity is limited to the provision of loans to affiliated undertakings within the Michelin Group of companies. The business and the legal structure is straight forward.
In order to produce reliable financial information, upon which business decisions can be made, the company has a number of control activities in place. For example reconciliation of bank-accounts on a monthly basis, follow-up of decisions made an analysis and follow-up of the financial position of major holdings. All payments are approved by the General Partner and executed by a different individual in order to have segregation of duties.
Michelin conducts annual reviews and evaluations of risk areas for the purpose of identifying and managing risks through consultation between management and other parties.
Policies, guidelines and internal manuals are continuously updated and communicated within the Michelin Group and promptly adopted by company.
Considering that the company has a simple structure and organization, the General Partner has not found it necessary to set-up an internal audit, based on the view that the monitoring and examination described above are sufficient to maintain effective internal controls in respect of financial reporting.
March 19th, 2013
The Management,
| ASSETS | Note(s) | 31.12.2012 | 31.12.2011 | |||||
| '000 EUR | '000 EUR | |||||||
| C. Fixed assets | ||||||||
| III. Financial assets | ||||||||
| 2. Loans to affiliated undertakings | 4 | 915'390 | 750'000 | |||||
| 915'390 | 750'000 | |||||||
| D. Current assets | ||||||||
| II Debtors | 5 | |||||||
| 2. Amounts owed by affiliated undertakings | ||||||||
| 197'747 | 564'821 | ||||||
| IV. Cash at bank and in hand | 17 | 23 | ||||||
| 197'764 | 564'844 | |||||||
| E. Prepayments | 6 | 2'292 | 3'030 | |||||
| Total Assets | 1'115'446 | 1'317'874 | ||||||
| LIABILITIES | ||||||||
| A. Capital and Reserves | ||||||||
| I. Subscribed capital | 7 | 1'000 | 1'000 | |||||
| IV. Reserves 1. Legal reserve | 8 | 100 | 100 | |||||
| 4. Other reserves | 8'800 | |||||||
| VI. Result for the financial year | 9 | 11'400 | (8'800) | |||||
| 12'500 | 1'100 | |||||||
| D. | Non-subordinated debts | |||||||
| 1. Debenture loans | ||||||||
| b.Non-convertible loans | ||||||||
| i. becoming due and payable after less than one year | 10 | 36'567 | 498'210 | |||||
| ii. becoming due and payable after more than one year | 10 | 915'390 | 680'594 | |||||
| 2. Amounts owed to credit institutions | ||||||||
| a. Becoming due and payable after less than one year | 10 | 150'978 | - | |||||
| 6. Amounts owed to affiliated undertakings | ||||||||
| a. becoming due and payable after less than one year | 10 | - | 137'964 | |||||
| 9. Other creditors | ||||||||
| a. becoming due and payable after less than one year | 11 | 6 | ||||||
| 1'102'946 | 1'316'774 | |||||||
| Total liabilities | 1'115'446 | 1'317'874 | ||||||
The Accompanying notes form an integral part of the Annual Accounts.
| Note(s) | 31.12.2012 | 31.12.2011 | ||
| '000 EUR | '000 EUR | |||
| A. CHARGES | ||||
| 2. Other external charges | 465 | 119 | ||
| 8. Interest payable and similar charges | ||||
| a. concerning affiliated undertakings | 10 | 1'071 | 933 | |
| b. other interest payable and similar charges | 6,10 | 90'661 | 107'310 | |
| 12. Profit for the financial year | 11'400 | - | ||
| Total charges | 103'597 | 108'362 | ||
| B. INCOME | ||||
| 6. Income from financial fixed assets | ||||
| a. derived from affiliated undertakings | 4 | 92'867 | 65'820 | |
| 7. Income from financial current assets | ||||
| a. derived from affiliated undertakings | 5 | 10'730 | 33'742 | |
| 10. Loss for the financial year | - | 8'800 | ||
| Total income | 103'597 | 108'362 | ||
The Accompanying notes form an integral part of the Annual Accounts.
1 General Information
MichelinLuxembourgSCS("the Partnership") is a limited liability Partnership ("sociétéencommanditesimple")incorporatedunderthelawsoftheGrand-DuchyofLuxembourgonOctober 31, 2003.
The Partnership is established for an unlimited period.
The Partnership's financial year starts on January 1st and ends on December 31st of each year.
The principal activity of the Partnership is the provision of loans to affiliated undertakings within the Michelin group of companies. These loans have been financed by the issue of guaranteed bonds on the Luxembourg Stock Exchange. On April 2, 2009, the Partnership set up a Euro Medium Term Note Programme registered with the Luxembourg Stock Exchange. The Partnership launched a Bond issue on June 20, 2012 at the Luxembourg Stock Exchange and issued on April 12, 2012 a US Commercial Paper Programme. The US Commercial Papers are being issued for an average term of one month at an average interest rate of 0,31 fixed. The US Commercial Papers Programme is also guaranteed by COMPAGNIE FINANCIERE DU GROUPE MICHELIN, "Senard et Cie".
The principal activities of Michelin Group companies include the manufacture and distribution of vehicle tyres and the publication of travel guides and maps.
The registered office of the Partnership is established at 69, boulevard de la Pétrusse,
L-2320, Luxembourg. The Partnership is registered with the Registre de Commerce of Luxembourg under the section B Number 96 546.
98% of the share capital of the Partnership is held by COMPAGNIE FINANCIERE DU GROUPE MICHELIN, "Senard et Cie" ("CFM") and the remaining 2% is held by Nitor S.A. (together the "Partners"). These companies are both subsidiaries of Compagnie Générale des Etablissements Michelin. The registered office of CFM and Nitor S.A. is at Route Louis-Braille 10 CH-1763 Granges-Paccot, Switzerland.
The Partnership is included in the consolidated accounts of CFM. The consolidated accounts are available at CFM's registered office.
2 Presentation of the comparative financial data
Figures for the year ended December 31st, 2011 have been reclassified to ensure comparability with the figures for the year ended December 31st, 2012.
3 Summary of significant accounting policies
3.1 Basis of preparation
The accounts of the Partnership have been prepared in accordance with Luxembourg legal and regulatory requirements under the historical cost convention.
Accounting policies and valuation rules are, besides the ones laid down by the Law of 19 December 2002, determined and applied by the Management.
3.2 Financial and current assets
Financial assets consist of intercompany loans bearing accrued interest. In case of durable depreciation in value according to the opinion of the Management, value adjustments are made in respect of fixed assets, so that they are valued at the lower figure to be attributed to them at the balance sheet date. These value adjustments are not continued if the reasons for which the value adjustments were made have ceased to apply.
3.3 Foreign currencies translation
The Partnership maintains its financial records in euros ("EUR"). Assets and liabilities denominated in other currencies are translated into EUR at the rate effective at the balance sheet date. Income and expense transactions are recorded at the rate effective at the date of the transactions. Realized exchange gains and losses, and unrealized exchange losses, are recorded in the profit and loss account.
Currently the company has an asset of USD 200'185'163,74 on CFM and a liability of USD 200'000'000 on the US Commercial Papers.
3.4 Prepayments
Prepayments represent costs associated with the issuance of the guaranteed bonds which are amortized to the profit and loss account over the contractual term of the bonds, and the interest paid in advance on the US Commercial Papers.
3.5 Debts
Debts are recorded at their reimbursement value.
Loans and amounts owed to affiliated undertakings bear interests which are accrued on a pro rata temporis basis.
3.6 Non-convertible loans
Non-convertible loans are represented by guaranteed bonds such are valued at their nominal value and bear interests which are accrued on a pro rata temporis basis.
3.7 US Commercial Papers
US Commercial Papers are recorded at their reimbursement value. Where the amount repayable is greater than the amount received, the difference is shown as an asset and is written off over the period of the debt.
The movements for 2012 were as follows:
| Amount issued USD | 2'020'127'000 | |
| Amount reimbursed USD | 1'820'127'000 | |
| Balance at December 31, 2012 USD | 200'000'000 | |
| The maximum outstanding amount at any time is USD 700'000'000. The Partnership has no commitment to perform monthly issuance of USCP, issuances are performed only upon Partnership request. | ||
4 Financial assets
Amounts owed by affiliated undertakings represent interest bearing loans made to finance the development of the Michelin group's operations. Movements for the year are as follows:
| '000 EUR ) | |||
| Book value-opening balance | 750'000 | ||
| Partial repayment | (234'610) | ||
| Issuing of new loan | 400'000 | ||
| Book value closing balance | 915'390 | ||
Financial assets
| Within one year | After one year and within five years | After five year | Total 31.12.2012 | Total 31.12.2011 | |
| '000 EUR | '000 EUR | '000 EUR | '000 EUR | '000 EUR | |
| Compagnie Financière du Groupe Michelin, "Senard et Cie" 6.83% Repayable on April 16th , 2012 | 495'000 | ||||
| Compagnie Financière du Groupe Michelin, "Senard et Cie" 8.87% Repayable on April 24th , 2014 | 515'390 | 515'390 | 750'000 | ||
| Compagnie Financière du Groupe Michelin, "Senard et Cie" 2.85% Repayable on June 20th , 2019 | 400'000 | 400'000 | |||
| Reclassified to current ( note 5) | (495'000) | ||||
| Total | 515'390 | 400'000 | 915'390 | 750'000 | |
5 Debtors
| 31.12.2012 | 31.12.2011 | |||
| '000 EUR | '000 EUR | |||
| Debtors are mainly composed of amounts owed by affiliated undertakings becoming due and payable within one year | ) | ) | ||
| Amounts owed by affiliated undertakings | 160'094 | 495'000 | ||
| Interest receivable | 37'653 | 69'821 | ||
| 197'747 | 564'821 | |||
6 Prepayments
| 31.12.2012 | 31.12.2011 | |||
| '000 EUR | '000 EUR | |||
| Prepayments are mainly composed of issuance costs relating to the guaranteed bonds | ||||
| Opening net book value | 3'030 | 5'551 | ||
| Issuing costs new bond | 1'351 | |||
| Amortization for the year | (2'100) | (2'521) | ||
| Closing net book value | 2'281 | 3'030 | ||
| Advance interest payment USCP | 11 | 0 | ||
| Total prepayments | 2'292 | 3'030 | ||
7 Subcribed Capital
The Partnership's subscribed capital is set at EUR 1'000'000 divided into two classes of Partnership units, comprising 98'000 unlimited Partnership units (parts commanditées) and 2'000 limited Partnership units (parts commanditaires) with a par value of EUR 10 per unit, each one of them fully paid up.
The authorized capital amounts to EUR 1'000'000
The unlimited Partnership units are owned by CFM and the limited Partnership units by Nitor S.A..
No movement in the subscribed capital during the current period occurred.
8 Legal reserve
The company is required to allocate to a legal reserve a minimum of 5% of the annual net income, until this reserve equals 10% of the subscribed share capital. This reserve may not be distributed.
9 Result for the financial year
The Annual General Meeting held on April 3rd, 2012 approved the loss for the financial year 2011, being EUR 8'800'495, 96 and the contribution by the Partners on a pro rata basis. The Partnership's result for the period ended December 31st, 2012 is a profit of EUR 11'400'112,18.
According to art. 19 of Articles of Association of the Partnership, the net result of the Partnership as reported in the annual accounts, be it a profit or a loss, will be automatically recorded in the profit and loss of the Partners on a pro rata basis of their participation, in the Partnership. The net profit will be distributed among the Partners, unless the Annual General Meeting of the Partners decides that the profit be either carried forward or transferred to a reserve. In case the net result is a loss, this will be immediately covered by the Partners on a pro rata basis of their participation.
| Legal reserve (EUR) | Other reserves (EUR) | Result for the financial year (EUR) | |
| As at December 31st, 2012 | 100 | 8'800 | (8'800) |
| Movements for the year: | |||
| (8'800) | 8'800 | |
| 11'400 | ||
| |||
| As at December 31st , 2012 | 100 | 11'400 |
10 Non-subordinated debts
The loans to COMPAGNIE FINANCIERE DU GROUPE MICHELIN, "Senard et Cie" are being financed by guaranteed bond issuances and by USCP totaling EUR 1'066'368 as per December 31st, 2012.
Non-convertible guaranteed bonds/amounts owed to credit institutions.
| Within one year | After one year and within five years | After five year | Total 31.12.2012 | Total 31.12.2011 | |
| '000 EUR | '000 EUR | '000 EUR | '000 EUR | '000 EUR | |
| 500 million bond - 6.5% guaranteed bonds repayable on April 16th, 2012 | 437'587 | ||||
| 750 million bond - 8.625% guaranteed bonds repayable on April 24th, 2014 | 515'390 | 515'390 | 680'594 | ||
| 400 million bond - 2.75% guaranteed bonds repayable on June 20th, 2019 | 400'000 | 400'000 | |||
| Interest payable on bonds | 36'567 | 36'567 | 60'623 | ||
| Amounts owed to credit institutions | 150'978 | 150'978 | |||
| Total | 187'545 | 515'390 | 400'000 | 1'102'935 | 1'178'804 |
The total interest payable on the above guaranteed bonds amounts to EUR 65'592'684 for the period January 1st, 2012 up to December 31st, 2012.
The accrued interest payable as at December 31st, 2012 amounts to EUR 36'567'012.
The remaining outstanding amount of the 500 million 6.5% guaranteed bond was paid in full on its maturity date April 16th, 2012.
On April 24, 2009, under its Euro Medium Term Note Programme, the Partnership issued the 8.625% bonds of EUR 750'000'000 due April 24, 2014.
The entity repurchased on the EUR 750 million bond, for a total of EUR 234'610'000 of which EUR 165'204'000 during 2012.
The entity realized a loss of EUR 22'175'296 with the repurchases during the year.
On June 20th, 2012, the Partnership issued the 2.75% bonds of EUR 400'000'000 due June 20th, 2019.
On April 12th, 2012, the Partnership started issuing US Commercial Paper. As per December 31st, 2012 the total debt amount to USD 200'000'000 equivalent to EUR 150'977'600.
Both bonds are listed on the Luxembourg Stock Exchange and guaranteed by CFM.
Amounts owed to affiliated undertakings
| Total | Total | ||
| 31.12.2012 | 31.12.2011 | ||
| Within one year '000 EUR | '000 EUR | '000 EUR | |
| Compagnie Financière du Groupe Michelin, 'Senard et Cie' | 137'314 | ||
| Compagnie Financière du Groupe Michelin, 'Senard et Cie' | |||
| Guarantee fee | 650 | ||
| Total | - | - | 137'964 |
11 Staff
The Partnership does not have any employee, same in 2011.
12 Related parties transactions
During the financial year, the transactions entered with related parties, described in the previous notes, have been carried out at arm's length.
13 Auditor's fees
The total fees accrued by the Company and paid to the audit firm are presented as follows:
| 2012 | 2011 | |
| '000 EUR | '000 EUR | |
| Audit fees | 16'000 | 19'388 |
| Total | 16'000 | 19'388 |
