TomTom 2011 Annual Report Download - page 21

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19
The facilities agreement start date is 31 December 2012. It will
mature on 31 March 2016.
The contractual maturity of our trade and other liabilities is less
than one year.
Loan covenants
The terms of the current facility agreement as amended in June
2009 require us to meet certain performance indicators relating
to interest cover and leverage. In case of breach of our loan
covenants, the banks are contractually entitled to request early
repayment of the outstanding amount.
In 2011 we repaid €175 million ahead of schedule. The remaining
repayment of €35 million was repaid in December 2011.
We closely monitor these contractual performance indicators.
Based on the group’s plan for 2012, management expects to be
able to comply with the loan covenants.
Foreign currencies
We operate internationally and are exposed to foreign exchange
risk arising from multiple currencies, primarily with respect to
the US dollar. Foreign currency exposures on our commercial
transactions relate mainly to our estimated purchases and sales
transactions that are denominated in currencies other than our
reporting currency – the euro (€).
We manage our foreign currency transaction risk through the
buying and selling of options to cover forecasted net exposures
and by entering into forward contracts for near-term forecasts
and commitments. We aim to cover our exposure for both
purchases and sales for the relevant term based on our business
characteristics. All such transactions are carried out within the
guidelines set by the Treasury Policy, which has been approved by
the Audit Committee.
A 2.5% strengthening/weakening of the euro as of 31 December
against the currencies listed in the table below would result in
increased (decreased) profi t or loss by the amounts as shown.
This analysis assumes that all other variables remain constant.
The analysis was performed on the same basis as that for 2010.
Interest rates
Our interest rate risk arises primarily from the existing long-term
borrowings. These borrowings have a fl oating interest coupon
based on Euribor plus 1.50%. Interest rate risk is hedged with
appropriate hedging instruments whenever deemed necessary in
accordance with the Treasury Policy.
The Euribor element of the interest coupon of the current
borrowings that matures on 31 December 2012 is hedged with
swap instruments up to 31 December 2011. Changes in Euribor
during 2012 may have an impact on the group’s results for the
coming year.
Market-related interest income is received on the cash balances. It
is our intention to earn a reasonable interest income using vanilla
investment instruments such as bank deposits and money market
fund investments. All transactions are governed by the Treasury
Policy.
Effect of 2.5% strengthening/weakening of USD, GBP and AUD versus the euro on net profi t after tax
(In €) 2011 2010
Strengthen Weaken Strengthen Weaken
AUD 23,112 – 22,698 584,065 – 587,030
GBP – 294,344 279,986 796,912 – 778,473
USD 499,013 – 474,068 1,852,634 – 2,037,586