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Annual Report 2008 - AMG Advanced Metallurgical Group NV

Annual Report 2008 - AMG Advanced Metallurgical Group NV

13. Derivative financial

13. Derivative financial instruments Foreign currency forward contracts At any point in time, the Company uses foreign exchange forward contracts to hedge intergroup loans that will be repaid in different functional currencies. These contracts are negotiated to match the expected terms of the commitments and generally mature within one year. When necessary, these contracts are rolled over at maturity. The Company’s foreign exchange forward contracts, although part of the risk management strategy are treated as economic hedges. The fair value of these contracts are recorded in the balance sheet. As of December 31, 2008, the Company had a derivative financial instrument asset of $5,644 and a derivative financial liability of $2,438. As of December 31, 2007, the Company only had a derivative financial liability in the amount of $1,869. 14. Commitments and contingencies The Company has entered into a lease for office space in Amsterdam. The lease term is through March 31, 2013. Future minimum lease payments under this lease as at December 31 are payable as follows: 2008 2007 Less than one year 195 – Between one and five years 634 – More than five years – – 829 – 15. Related parties Approximately 27% of the Company is owned by a group of investors led by and including Safeguard International Fund, L.P. (“Safeguard International”), an international private equity fund that invests primarily in equity securities of companies in process industries. Two members of the management board of the Company are Managing Directors of Safeguard International. Other Transactions During 2007, the Company incurred legal and accounting fees in association with the initial public offering. Safeguard International offered a portion of their own shares for sale in the initial public offering and therefore a proportionate amount of the costs approximating $4,526 were billed to Safeguard International. Of this amount, $142 and $228 remains outstanding at December 31, 2008 and 2007, respectively. 16. Employees At December 31, 2008, the Company had 13 employees (2007: 10). 17. Audit fees Ernst and Young Accountants LLP has served as the Company’s independent auditors for each of the two years in the periods ended December 31, 2008 and December 31, 2007. The following table sets forth the total fees in accordance with Part 9 of Book 2, article 382a of the Netherlands Civil Code. 2008 2007 Audit fees 486 448 Audit related fees 112 1,223 Other 424 375 1,022 2,046 Audit related fees mainly comprise audit services regarding the Company's prospectus for its initial public offering during July 2007. 18. Other information Article 25 of the Articles of Association 25. Adoption of Annual Accounts 25.1 The annual accounts shall be adopted by the general meeting. 25.2 Without prejudice to the provisions of article 23.2, the company shall ensure that the annual accounts, the annual report and the additional information that should be made generally available together with the annual accounts pursuant to or in accordance with the law, are made generally available from the day of the convocation of the general meeting at which they are to be dealt with. 25.3 The annual accounts cannot be adopted if the general meeting has not been able to take notice of the auditor’s report, unless a valid ground for the absence of the auditor’s report is given under the other additional information referred to in article 25.2 Amsterdam, March 30, 2009 150 Notes to the Parent Company Financial Statements

Other Information Appropriation of Net Profit Pursuant to section 26 of the Articles of Association, the Management Board shall, subject to the approval of the Supervisory Board, be authorized to reserve the profits in whole or in part. The General Meeting is authorized to distribute and/or reserve any remaining part of the profits. AMG’s dividend policy is to retain future earnings to finance the growth and development of its business. As a result, the Management Board, with the approval of the Supervisory Board, has resolved that no dividend will be paid in respect of 2008 and that the 2008 net profits will be added to the retained earnings. Other Information 151

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