Michelin Luxembourg SCS
Société en Commandite Simple
Non-audited accounts
as of and for the period ended June 30, 2020.
65, avenue de la Gare L-1611, Luxembourg R.C.S. - B96.546
Michelin Luxembourg SCS
Table of Contents
Declarations | 3 |
Half-year management report | 4-5 |
Balance sheet | 6 |
Profit and loss account | 7 |
Notes to the half-yearlynon-audited accounts | 8-16 |
2
Michelin Luxembourg SCS
Declarations
Michelin Finance (Luxembourg) S.à r.l. a « société à responsabilité limitée » under Luxembourg law, with its registered office at 1611 Luxembourg, 65, avenue de la Gare, duly represented by Mr. Eric PASKOFF and Victor-Alin TRIF, Managers, sole Managing Partner of the company MICHELIN LUXEMBOURG SCS, a « société en commandite simple » under Luxembourg law, with its registered office at 1611 Luxembourg 65, avenue de la Gare, registered with the Registre du Commerce et des Sociétés in Luxembourg under number B 96.546 (hereinafter « the Issuer »);
states that to the best of its knowledge, the financial accounts prepared in accordance with Luxembourg legal and regulatory requirements relating to the preparation of the half-yearly unaudited accounts 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.
Michelin Finance (Luxembourg) S.à r.l.
____________________ | _________________ |
Eric PASKOFF | Victor-Alin TRIF |
Manager | Manager |
3
Michelin Luxembourg SCS
Half-yearly management report
Michelin Luxembourg SCS's (« the Partnership ») principal activity is the provision of loans to affiliates 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:
During the period ended June 30, 2020, the Partnership has registered a total interest charge of EUR 9'171'813 on the guaranteed bonds and an interest income of EUR 10'051'952 on the loans to Compagnie Financière Michelin SCmA.
The Partnership has also registered a charge of EUR 702'147 linked to the guarantee granted by Compagnie Financière Michelin SCmA on the bond issues and EUR 158'463 linked to the Commercial Paper Dealer Agreements.
The Partnership also continued with the "US Commercial Paper program". For 2020
the Partnership issued USD 110'000'000 in USCP's while 110'000'000 were reimbursed.
Risks
Market Risk:
The Partnership is not significantly exposed to interest-rate fluctuations as it borrows at a fixed-rate and lends at a fixed-rate. Any conversion to floating-rates is done at Group level at the Compagnie Financière Michelin SCmA. The Group policy is to systematically switch all new issues to floating-rates.
The Partnership borrows United States Dollars on the US market and lends United States Dollars to Group Companies. The exposure is limited to the margin realized by the Partnership.
Credit Risk:
The credit risk of the Partnership is considered low, the main income being generated by the loans to Compagnie Financière Michelin SCmA, a Group company. No significant risks are expected relating to the financial capability of Compagnie Financière Michelin SCmA.
Liquidity Risk:
The Partnership does not run significant liquidity risk due to low credit risk and the Partnership uses Compagnie Financière Michelin SCmA as an internal bank. The Group liquidity is managed centrally at Compagnie Financière Michelin SCmA.
Result:
The Annual General Meeting held on April 23, 2020 approved the loss for the year 2019 of EUR 69'657.25 and the covering of the loss by the Partners on a pro-rata basis of their participation in the Partnership.
The result for the period up to June 30, 2020 is a loss of EUR 30'440.09 substantially generated by professional fees related to the outsourcing of accounting, legal/General Partner fees, bank fees related
4
Michelin Luxembourg SCS
to the US commercial paper issuance and the weak volume of the US Commercial Paper program, which was not sufficient to cover the fees incurred to secure the Commercial Paper Dealer Agreement.
Subsequent events:
The appearance of the Coronavirus COVID-19 in China in December 2019 and its recent global expansion in many countries in the first months of 2020, led to classify the viral epidemic as a pandemic by the World Health Organization since March 2020. The consequences on the Company's operations are uncertain and will depend largely on the development and the spread of the pandemic in the coming months, as well as on the capacity of everyone affected to react and adapt.
No impact has been considered in the annual accounts as of June 30, 2020. However, this pandemic could still have a negative impact in 2020, although it is not possible to anticipate or quantify its impact, nor to assess whether this situation will continue and to what extent in the future.
The spread of the Coronavirus is being continually monitored and the Company is taking all the actions required to minimize as much as possible the negative impacts of this pandemic on its operations and its annual accounts as well as to manage its liquidity risk.
Research and Development:
The Partnership has not been active in the field of research and development during the year.
Others
For the second half of 2020 we do not foresee any new operations or actions.
July 31, 2020
_____________________ | ________________ |
Eric PASKOFF | Victor-Alin TRIF |
5
Michelin Luxembourg SCS
BALANCE SHEET
ASSETS | Note(s) | 30.06.2020 | 31.12.2019 | |
EUR | EUR | |||
C. Fixed assets | ||||
III. Financial assets | ||||
2. Loans to affiliated undertakings | 3 | 916'960'172.42 | 916'960'172.42 | |
916'960'172.42 | 916'960'172.42 | |||
D. Current assets | ||||
II. Debtors | 4 | |||
2. Amounts owed by affiliated undertakings | ||||
a) becoming due and payable within | 53'655'187.22 | 53'794'508.05 | ||
one year | ||||
IV. Cash at bank and in hand | 7'759.13 | 8'099.13 | ||
53'662'946.35 | 53'802'607.18 | |||
E. Prepayments | 5 | 5'394'873.90 | 5'842'670.92 | |
5'394'873.90 | 5'842'670.92 | |||
Total Assets | 976'017'992.67 | 976'605'450.52 | ||
LIABILITIES | ||||
A. Capital and Reserves | ||||
I. Subscribed capital | 6 | 1'000'000.00 | 1'000'000.00 | |
IV. Reserves | ||||
1. Legal reserve | 7 | 100'000.00 | 100'000.00 | |
VI. Profit or loss for the financial year | 8 | -30'440.09 | -69'657.25 | |
1'069'559.91 | 1'030'342.75 | |||
C. Creditors | ||||
1. Debenture loans | 9 | |||
b) Non-convertible loans | ||||
i) becoming due and payable within one year | 52'602'783.13 | 52'296'070.49 | ||
ii) becoming due and payable after | 902'000'000.00 | 902'000'000.00 | ||
more than one year | ||||
6. Amounts owed to affiliated undertakings | ||||
a) becoming due and payable within one year | 5'199'899.25 | 5'836'417.01 | ||
8. Other creditors | ||||
c) | Other creditors | |||
i | becoming due and payable within one year | 35'976.24 | 33'642.68 | |
959'838'658.62 | 960'166'130.18 | |||
D. Deferred income | 10 | 15'109'774.14 | 15'408'977.59 | |
15'109'774.14 | 15'408'977.59 | |||
Total Liabilities | 976'017'992.67 | 976'605'450.52 | ||
The accompanying notes form an integral part of the Annual Accounts.
6
Michelin Luxembourg SCS
PROFIT AND LOSS ACCOUNT
PROFIT AND LOSS ACCOUNT | Note(s) | 30.06.2020 | 31.12.2019 |
EUR | EUR |
5. Raw materials and consumables and other external expenses
b) Other external expenses | -81'353.50 | -197'061.91 |
11. Other interest receivable and similar income
a) | derived from affiliated undertakings | 3 | 10'400'085.94 | 27'589'663.14 | |
b) other interest and similar income | 10 | 299'203.45 | 598'406.89 | ||
14. | Interest payable and similar expenses | ||||
a) | concerning affiliated undertakings | -863'137.84 | -1'821'848.82 | ||
b) other interest and similar expenses | 9 | -9'785'238.14 | -26'238'816.55 | ||
16. | Profit or loss after taxation | ||||
-30'440.09 | -69'657.25 | ||||
18. | Profit or loss for the financial year | -30'440.09 | -69'657.25 | ||
The accompanying notes form an integral part of the Annual Accounts.
7
Michelin Luxembourg SCS
Notes to the half-yearly unaudited accounts as at June 30, 2020
1. General Information
Michelin Luxembourg SCS ("the Partnership") is a limited liability Partnership ("société en
commandite simple") incorporated under the laws of the Grand-Duchy of Luxembourg on
October 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 affiliates within the Michelin group of companies. These loans have been financed by issuing guaranteed bonds on the Luxembourg Stock Exchange on June 20, 2012, May 28, 2015 (two separate issues), September 30, 2015 and September 30, 2016.
The Partnership also issued on April 12, 2012 a US Commercial Paper Program. Such US Commercial Papers are being issued for an average term of one two months at an average interest rate of 1.6 fixed and are guaranteed by Compagnie Financière Michelin SCmA ("CFM").
The principal activities of Michelin Group companies include the manufacture and distribution of vehicle tires and the publication of travel guides and maps.
The registered office of the Partnership is established at 65, avenue de la Gare, L- 1611, Luxembourg. The Partnership is registered with the Registre de Commerce of Luxembourg under the section B Number 96 546.
98% of the Partnership units are held by CFM and the remaining 2% are held by Michelin Finance (Luxembourg) S.à r.l. (together the "Partners"). These companies are both subsidiaries of Compagnie Générale des Etablissements Michelin. The registered office of CFM is at Route Louis-Braille 10 CH- 1763 Granges-Paccot, Switzerland and Michelin Finance (Luxembourg) S.à r.l. is 65, avenue de la Gare, L-1611 Luxembourg.
The Partnership is included in the consolidated accounts of Compagnie Générale des Etablissements Michelin in Clermont-Ferrand, France forming the largest body of undertakings of which the Partnership forms a part as an indirect subsidiary undertaking. The consolidated accounts are available at the registered office of this company, 23, Place des Carmes-Déchaux, 63000 Clermont-Ferrand, France.
In addition, the Partnership is included in the consolidated accounts of CFM forming the smallest body of undertakings included in the body of undertakings referred to in the above-mentioned paragraph of which the Partnership forms part as a subsidiary undertaking. The consolidated accounts are available at CFM's registered office.
2. Summary of significant accounting policies
2.1 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, as amended, determined and applied by the General Partner.
8
Michelin Luxembourg SCS
Notes to the half-yearly unaudited accounts as at June 30, 2020
The preparation of annual accounts requires the use of certain critical accounting estimates. It also requires the General Partner to exercise its judgment in the process of applying the accounting policies. Changes in assumptions may have a significant impact on the annual accounts in the period in which the assumption changed. General Partner believes that the underlying assumptions are appropriate and that the annual accounts therefore present the financial position and results fairly.
The Partnership makes estimates and assumptions that affect the reported amounts of assets and liabilities in the next financial year. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
2.2 Financial fixed and current assets
Financial Fixed assets
Financial fixed assets consist of loans to affiliates and are valued at their nominal value. These Financial fixed assets bear interest that are accounted for in the current assets.
If the General Partner determines that a durable impairment has occurred in the value of a financial fixed asset, a value adjustment is made in order to reflect that loss.
These value adjustments are not continued if the reasons for which they were made have ceased to apply.
Current Assets
Current assets consist of amounts owed by affiliates becoming due and payable within one year and are recorded at their nominal value.
A value adjustment is made when their recovery is partly or completely in doubt.
These value adjustments are not continued if the reasons for which they were made have ceased to apply.
2.3 Foreign currencies translation
The Partnership maintains its books and records in euro ("EUR").
Transactions expressed in currencies other than EUR are translated into EUR at the exchange rate effective at the time of the transaction. Formation expenses and long-term assets expressed in currencies other than EUR are translated into EUR at the exchange rate effective at the time of the transaction. At the balance sheet date, these assets remain translated at historical exchange rates.
Cash at bank is translated at the exchange rate effective at the balance sheet date. Exchange losses and gains are recorded in the profit and loss account of the year/period.
Other assets and liabilities are translated separately respectively at the lower or at the higher of the value converted at the historical exchange rate or the value determined on the basis of the exchange rates effective at the balance sheet date. Only the unrealized exchange losses are recorded in the profit and loss account. The exchange gains are recorded in the profit and loss account at the moment of their realization.
Where there is an economic link between an asset and liability, these are valued in total according to the method described above and the net unrealized losses are recorded in the profit and loss account whereas the net unrealized exchange gains are not recognized.
9
Michelin Luxembourg SCS
Notes to the half-yearly unaudited accounts as at June 30, 2020
2.4 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.
2.5 Creditors
Debts 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 based on a linear method.
Loans and amounts owed to affiliates bear interests which are accrued on a pro rata temporis basis.
US Commercial Papers ("USCP") and guaranteed bonds are also accounted for under this caption.
2.6 Deferred income
This liability item includes income received during the financial year but relating to a subsequent financial year.
10
Michelin Luxembourg SCS
Notes to the half-yearly unaudited accounts as at June 30, 2020
3. Financial assets
Amounts owed by affiliates represent interest bearing loans made to finance the development of the Michelin group's operations.
After one | |||||
year and | |||||
within five | After five | Total | Total | ||
years | years | 30.06.2020 | 31.12.2019 | ||
'000 EUR | '000 EUR | '000 EUR | '000 EUR | ||
Compagnie Financière Michelin | |||||
SCmA 1,357% | 300'000 | 0 | 300'000 | 300'000 | |
Repayable on May 28th , 2022 | |||||
Compagnie Financière Michelin | |||||
SCmA 1,966% | 0 | 300'000 | 300'000 | 300'000 | |
Repayable on May 28th , 2027 | |||||
Compagnie Financière Michelin | |||||
SCmA 3,462% | 0 | 209'000 | 209'000 | 209'000 | |
Repayable on September 30th | , | ||||
2045 | |||||
Compagnie Financière Michelin | |||||
SCmA 2,529% | 0 | 93'000 | 93'000 | 93'000 | |
Repayable on September 30th | , | ||||
2045 | |||||
Compagnie Financière Michelin | |||||
SCmA 2,385% | 2'394 | 12'566 | 14'960 | 14'960 | |
Repayable on September 30th | , | ||||
2045 | |||||
Total | 302'394 | 614'566 | 916'960 | 916'960 | |
All loans are receivable from Limited Partner and no allowance for uncollectible amount has been recorded in consideration of its profitability and good financial position.
The above loans to Compagnie Financière Michelin SCmA are being financed by guaranteed bond issuances. Refer also to note 9 below.
11
Michelin Luxembourg SCS
Notes to the half-yearly unaudited accounts as at June 30, 2020
The movements for the year are as follows :
Opening | Increase of | Decrease of | Total | |
Balance | the year | the year | 30.06.2020 | |
'000 EUR | '000 EUR | '000 EUR | '000 EUR | |
Compagnie Financière Michelin SCmA | ||||
1,357% | 300'000 | 0 | 0 | 300'000 |
Repayable on May 28, 2022 | ||||
Compagnie Financière Michelin SCmA | 0 | 0 | ||
1,966% | 300'000 | 300'000 | ||
Repayable on May 28, 2027 | ||||
Compagnie Financière Michelin SCmA | ||||
3,4626% | 209'000 | 0 | 0 | 209'000 |
Repayable on September 30, 2045 | ||||
Compagnie Financière Michelin SCmA | ||||
2,529% | 93'000 | 0 | 0 | 93'000 |
Repayable on September 30, 2045 | ||||
Compagnie Financière Michelin SCmA | ||||
2,385% | 14'960 | 0 | 0 | 14'960 |
Repayable on September 30, 2045 | ||||
Total | 916'960 | 0 | 0 | 916'960 |
Total interest income of the year amounts to EUR 10'400'086 of which EUR 8'514'697 remain accrued as at June 30, 2020.
4. Debtors
30.06.2020 | 31.12.2019 | ||
'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 | 45'140 | 45'197 | |
Interest receivable | 8'515 | 8'598 | |
Total | |||
53'655 | 53'795 | ||
The actual amounts owed by affiliates of EUR 45'140'489.81 correspond to the loans to CFM related to the US Commercial Papers Program launched in 2020 EUR 44'542'082.92 (USD 50'132'114.48) and EUR 598'406.89 yearly instalment due on 30.09.2020 on CFM Loan 2,385 %.
12
Michelin Luxembourg SCS
Notes to the half-yearly unaudited accounts as at June 30, 2020
5. 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:
Opening net book value Amortization for the year USCP discount
Total
30.06.2020 31.12.2019
'000 EUR '000 EUR
5'843 6'320
-279-650
-169173
5'395 5'843
6. Subscribed Capital
The Partnership's subscribed capital is set at EUR 1'000'000 divided into two classes of Partnership units, comprising 98'000 limited Partnership units (parts commanditées) and 2'000 unlimited Partnership units (parts commanditaires) with a par value of EUR 10 per unit, each of them fully paid up.
Each class of Partnership unit has the same rights and privileges. The authorized capital amounts to EUR 1'000'000.
The limited Partnership units are owned by CFM and the unlimited Partnership units by Michelin Finance (Luxembourg) S.à r.l.
No movement in the subscribed capital during the current period occurred.
7. Legal reserve
The Partnership 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.
8. Movements for the year on the reserves and profit or loss items
The Annual General Meeting held on April 23, 2020 approved the loss for the financial year 2019, being EUR 69'657.25 and the covering of the loss by the Partners on a pro rata basis. The Partnership's result for the period ended June 30, 2020 is a loss of EUR 30'440.09.
According to art. 18 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 and meanwhile recorded as "other reserves".
13
Michelin Luxembourg SCS
Notes to the half-yearly unaudited accounts as at June 30, 2020
9. Creditors
Creditors are mainly represented by guaranteed bond issues amounting to EUR 902'000'000 (December 31, 2019: EUR 902'000'000).
400 million bond - 2,75% guaranteed bonds repayable on June 20th, 2019
300 million bond - 1,125% guaranteed bonds repayable on May 28th, 2022
300 million bond - 1,75% guaranteed bonds repayable on May 28th, 2027
209 million bond - 3,250% guaranteed bonds repayable on September 30th, 2045
93 million bond - 3,250% guaranteed bonds repayable on September 30th, 2045
Interest payable on bonds US Commercial Papers
Amounts owed to affiliated undertakings Other creditors
Total
After one | Total | Total | ||
Within | year and | After five | ||
one year | within | year | 30.06.2020 | 31.12.2019 |
five years | ||||
'000 | '000 | '000 | '000 EUR | '000 EUR |
EUR | EUR | EUR | ||
0 | 0 | 0 | 0 | 0 |
0 | 300'000 | 0 | 300'000 | 300'000 |
0 | 0 | 300'000 | 300'000 | 300'000 |
0 | 0 | 209'000 | 209'000 | 209'000 |
0 | 0 | 93'000 | 93'000 | 93'000 |
8'178 | 0 | 0 | 8'178 | 7'631 |
44'425 | 0 | 0 | 44'425 | 44'665 |
5'200 | 0 | 0 | 5'200 | 5'836 |
36 | 0 | 0 | 36 | 34 |
57'839 | 300'000 | 602'000 | 959'839 | 960'166 |
On June 20, 2019, the Partnership reimbursed the 2,75% guaranteed bonds of EUR 382'600'000 issued on June 20, 2012 (EUR 400'000'000, of which 500'000 was repurchased in 2015 and 16'900'000 in 2016).
On May 28, 2015, the Partnership issued two bonds: i) 1,125% guaranteed bonds of EUR 300'000'000 due May 28, 2022, ii) 1,75% guaranteed bonds of EUR 300'000'000 due May 28, 2027.
On September 30, 2015, the Partnership issued the 3,250% guaranteed bonds of EUR 209'000'000 due September 30, 2045.
On September 30, 2016, the Partnership issued an additional amount on the EUR 209'000'000 guaranteed bonds a 3,250% September 30, 2045 of EUR 93'000'000.
The bonds are listed on the Luxembourg Stock Exchange and guaranteed by CFM.
The total interest payable on the above guaranteed bonds amounts to EUR 9'171'813 for the period January 1st, 2020 up to June 30, 2020 and the accrued interest payable as at June 30, 2020 amounts to EUR 8'178'083.
14
Michelin Luxembourg SCS
Notes to the half-yearly unaudited accounts as at June 30, 2020
Regarding the "US Commercial Papers program" started in 2012, as per June 30, 2020 there is one outstanding US Commercial Papers (one as per December 31, 2019). The table below summarizes the movements of the last two years:
The movements for 2020 are as follows:
USD | EUR | ||
Openings balance | 50'000'000 | 44'664'800 | |
Amount issued | 110'000'000 | 98'262'560 | |
Amount reimbursed | -110'000'000 | -98'502'660 | |
Balance at June 30, 2020 | 50'000'000 | 44'424'700 | |
The movements for 2019 were as follows: | |||
USD | EUR | ||
Openings balance | 0 | 0 | |
Amount issued | 537'000'000 | 479'699'952 | |
Amount reimbursed | -487'000'000 | -435'035'152 | |
Balance at December 31, 2019 | 50'000'000 | 44'664'800 | |
The maximum outstanding amount at any time is USD 700'000'000. The Partnership has no commitment to perform monthly issuance of Commercial Papers. Issuances are performed only upon Partnership request. The total interest payable for the year January 1, 2020 up to June 30, 2020 amounts to USD 366'777.77 equivalent to EUR 333'356.98.
Finally, amount owed to affiliates is represented by advances from CFM for payment of legal fees of bonds and also the payment of the quarterly guarantee fee.
10.Deferred Income
Deferred income represent the above par issuing of the 93 million 3,250% guaranteed bond issued September 30, 2016. It is straight-lined over the duration period of the bond.
2020 | 2019 |
'000 EUR | '000 EUR |
Opening balance 1.1.
Amortization of the year Closing balance 30.06.
15'40916'007
-299-598
15'11015'409
11.Staff
The Partnership does not have any employees, as in 2019.
15
Michelin Luxembourg SCS
Notes to the half-yearly unaudited accounts as at June 30, 2020
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.Subsequent events
The appearance of the Coronavirus COVID-19 in China in December 2019 and its recent global expansion in many countries in the first months of 2020, led to classify the viral epidemic as a pandemic by the World Health Organization since March 2020. The consequences on the Company's operations are uncertain and will depend largely on the development and the spread of the pandemic in the coming months, as well as on the capacity of everyone affected to react and adapt.
No impact has been considered in the annual accounts as of June 30, 2020. However, this pandemic could still have a negative impact in 2020, although it is not possible to anticipate or quantify its impact, nor to assess whether this situation will continue and to what extent in the future.
The spread of the Coronavirus is being continually monitored and the Company is taking all the actions required to minimize as much as possible the negative impacts of this pandemic on its operations and its annual accounts as well as to manage its liquidity risk.
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Compagnie Générale des établissements Michelin SA published this content on 31 July 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 31 July 2020 12:06:06 UTC