2009 - Jaarverslag

CORPORATE INFORMATIONWith regard to currencies, Ten Cate draws a distinction betweencompetition, transaction and translation risk.The competition risk concerns the changing competitive position vis-àviscompetitors in areas with a different currency. This risk is hedgedover the subsequent six months by means of options. Thereafter apermanent answer must be found to the new situation.Transactions in foreign currencies are immediately hedged by meansof futures or options. These are mainly transactions by Europeanoperating companies denominated in US dollars and British pounds.The translation risk arises when operating companies outside theeurozone make a substantial profit contribution, while their currencyweakens against the euro. This occurs regularly in the case of theAmerican operating companies. These translation risks are hedged bymeans of options. They are also offset by means of opposite positionswith regard to competitive risk. In the latter case, significant savingsare made in premium costs. In such cases any decrease in the dollarhas a very limited impact on the group result.Pension provisionsTenCate has placed the pension provision for Dutch employees withStichting Pensioenfonds Koninklijke TenCate. This average salaryscheme is designated as ‘defined benefit’ in accordance with IFRSreporting rules. A sharp fall in prices on international securitiesexchanges could lead to a decrease in the value of the pension fund’sinvestments. In the event of a decrease in interest rates, the presentvalue of the liabilities increases. In such situations the cover ratio mayfall sharply. That happened in 2008 and 2009, as a result of which thecompany had to pay € 2.3 million in additional pension contributions.The result of this and of interest rate developments may be that theprovision for pension liabilities on the Royal Ten Cate balance sheetincreases under the new IFRS guidelines. The pension fund has takenmeasures itself within its investment policy, partly as a result of theFinancial Assessment Framework (including interest rate riskmanagement), involving a reduction in the risk profile.The company has concluded an implementation contract with StichtingPensioenfonds Koninklijke TenCate, under which the financialcontribution remains limited to an average contribution. This moveswithin an agreed range depending on the financial situation of thefund.In the other countries there are defined contribution schemesin the vast majority of cases.RISK MANAGEMENT AND CONTROL SYSTEMThe overall risk management and control measures are based on anumber of key elements.CultureThe company strives for a culture of openness, integrity,professionalism, enthusiasm, efficiency and respect. Core values areentrepreneurship, innovation and a focus on results. Every employee ismade aware of these cultural elements and the obligation to complywith all applicable legislation and regulations.The Integrity Code and the Confidential Adviser Scheme set out thegeneral rules of conduct with which employees must comply.OrganisationTenCate’s organisational structure is based on providing support fora co-operation structure in which each person’s responsibilities areclearly defined and performances are measurable. This is reflected ina group structure in which groups and operating companies bearresponsibility for results. The group managements determine the groupstrategy, promote consistency and synergy and are responsible forexploiting the market positions in the value chain.64Royal Ten Cate