Full RSDB annual report for 2008 - Roto Smeets Group

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33. Contingent liabilities / rights GUARANTEED TURNOVER THIEME GRAFIMEDIA GROUP At the divestment of PlantijnCasparie Beheer BV and its participations, Thieme GrafiMedia Group BV obtained a guaranteed turnover which will be cut back over a number of years. The orders connected with this guarantee will be distributed evenly over the year in question. The agreed guarantee turnover amounts to € 3.5 million (for 2006), € 2.5 million (for 2007) and € 1.5 million (for 2008). When the actual turnover in any calendar year is less than the agreed amount of the guarantee, RSDB will pay PlantijnCasparie Beheer BV a compensation of 50% of the added value attributed to the lost turnover. Of the lost turnover, a maximum of 15% can be compensated by turnover in the next guarantee year. The outsourcing must be done at market rates. GUARANTEED TURNOVER ADNOVATE HOLDING BV At the divestment of Logic Use BV to Adnovate Holding BV, Adnovate Holding BV obtained a guaranteed turnover with a term to 2013. The amount of guaranteed turnover for the financial year 2008 is € 0.3 million, and will be cut back by € 0.05 million per year to € 0.05 in the year 2012. Excesses and shortfalls will be settled between years. INVESTMENT COMMITMENT Investment commitments had been entered to at balance sheet date to an amount of € 9.4 million (2007 € 0.3 million). LEASE AND OPERATIONAL LEASING ARRANGEMENTS Long-term commitments pursuant to lease contracts and operational leasing arrangements had been entered into to an amount of € 5.2 million (2007: € 3.6 million). Long-term obligations on account of operational lease agreements were entered into for the amount of € 2.5 million (2007: € 2.5 million). Non of these operational lease agreements has a life of more than five years. The profit and loss account includes € 2.4 million (2007: € 2.4 million) of lease payments, under other operating costs. The rental obligations relate to company buildings, the operational lease agreements on production equipment PlantijnCasparie and cars. LIABILITY IN ACCORDANCE WITH ARTICLE 403 OF THE NETHERLANDS CIVIL CODE Pursuant to Section 403, subsection 1 (f) of Book 2 of the Netherlands Civil Code, the company has assumed joint and several liability with respect to liabilities pursuant to legal transactions entered into of all domestic group companies. The relevant declarations have been submitted for inspection of the offices of the Commercial Register in the district where the legal entity on whose behalf the joint and several liability was assumed has its registered offices. 34. Financial risk management objectives and policies RSDB’s principal financial instruments (other than derivatives) comprise bank loans and overdraft, financial leases and trade liabilities. With exception of the financial derivatives, all these items qualify as loans and receivables that are counted for at cost price less amortisation. The main purpose of these financial instruments is to raise finance for RSDB’s operations. RSDB has various other financial assets such as trade receivables, which arise directly from its operations. RSDB also enters into derivative transactions, including principally interest rate swaps and forward currency contracts. The purpose is to manage the interest rate and currency risks arising for RSDB’s operations and its sources of finance. It is RSDB’s policy that no trading in financial instruments shall be undertaken. The main risks arising from RSDB’s financial instruments are interest rate risk, liquidity risk, foreign currency risk and credit risk. The Management Board reviews and agrees policies for managing each of these risks and they are summarised below. INTEREST RATE RISK RSDB’s policy is to manage its interest cost using a mix of fixed and variable rate debts. RSDB’s policy is to keep between 40% and 60% of its borrowings at fixed coupon. To manage this mix in a cost-efficient manner, RSDB enters into interest rate swaps, in which RSDB agrees to exchange, at specified intervals, the difference between fixed and variable rate interest amounts calculated by reference to an agreed-upon notional principal amount. These swaps are designated to hedge underlying debt obligations. RSDB’s exposure to the risk for changes in market interest rate relates primarily to RSDB’s long-term obligations with a floating coupon. RSDB through an interest rate swap exchanged € 10 million of variable debt in debt with an interest rate RSDB Annual Report 2008 81
of 3-month EURIBOR (at year-end 2008: 4.08%) with a remaining term through 2012. A reduction or increase of interest rates by 1% would not result in a material change of the result or capital on the basis of the composition of the portfolio as at December 31, 2008. If at December 31, 2008 the EURIBOR interest rate had been 100 basis points higher/lower with all other variables constant, the result after tax for the year would have been € 0.05 million lower/higher (2007: € 0.05 million higher/lower). LIQUIDITY RISK The primary objective of cash management is making sure that there is sufficient cash, at any time and place, for RSDB to meet its obligations. RSDB has two committed credit facilities of € 25.0 million and € 39.8 million, respectively, a total of € 64.8 million (2007: € 67.4 million). For a more detailed review of the interest-bearing loans and lease obligations arranged in order on the basis of the end of the term reference is made to note 29. Further details concerning the derivatives can be found in note 22. For the short-term receivables and debts, there is a regular maturity calendar of 60 days. FOREIGN CURRENCY RISK RSDB has transactional currency exposures. Such exposure arises from sales or purchases by an operating unit in currencies other than the unit’s functional currency. Approximately 20% of RSDB’s sales are denominated in currencies other than the functional currency of the operating unit making the sale, whilst almost 95% of costs are denominated in the unit’s functional currency. RSDB requires all its operating units to use forward currency contracts to eliminate the currency exposures on any individual transactions in excess of € 0.1 million, for which payment is anticipated more than one month after RSDB has entered into a firm commitment for a sale or purchase. The forward currency contracts must be in the same currency as the hedged item. It is RSDB’s policy not to enter into forward contracts until a firm commitment is in place. It is RSDB’s policy to negotiate the terms of the hedge derivatives to match the terms of hedged item to maximise hedge effectiveness. If the euro had fallen/increased by 10% versus Sterling/ Swedish Krona as at December 31, 2008 with all other variables constant, this would have had only a minimal impact on the result, in view of the hedging. A 10% increase or decline of the euro versus the Hungarian Forint would have increased/decreased the capital by EUR 0,2 million as at December 31, 2008. CREDIT RISK The credit risk relates to non-observance of an obligation by another party. This concerns both actual late payments and negative valuation changes as a result of increased probability of late payments. RSDB has procedures and guidelines to limit the extent of credit risk for each party or in each market. These procedures and the spreading over a large number of clients limit the exposure of RSDB to credit risks. RSDB limits the credit risk by using credit limits per financial institution and by dealing exclusively with financial institutions with a high creditworthiness. As at the balance sheet date, there were no significant concentrations of credit risk. With regard to treasury activities RSDB ensures that financial transactions are only completed with counterparties which have a Moody’s credit rating of P1 (for short-term instruments) or A3 (for long-term instruments). On a business group level, the receivables are constantly monitored by the management of the groups, mainly due to breakdown by age (see note 20). The recognised credit risks, which are shown in the table, are thereby adequately accounted for. It is therefore not likely that significant losses will be incurred with regard to receivables not taken into account. The maximum credit risk to which RSDB is exposed equals the book value of the financial assets included in the balance sheets, including derivative financial instruments with a positive market value. As at the reporting date, there were no significant agreements or financial instruments available to reduce the maximum credit risk to which the company is exposed. In general, the maximum exposure to credit risk consists of the book value of financial assets, including financial derivatives, in the balance sheet. The following table shows the maximum credit risk: 82 RSDB Annual Report 2008
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RSDB in 2008 Annual Report
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Chairman’s report Dear shareholde
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Report of the Supervisory Board The
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Shareholders. The company has also
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Full RSDB annual report for 2008 - Roto Smeets Group

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