annual report 2008 Pelikan Holding AG

Pelikan Group
Employee pensions
The pension obligations of group companies in relation to retirement, death and disability benefits are based
on local rules and customs in each country. Regular contributions are paid to government bodies, autonomous
pension funds or insurance companies. The pension and benefit payments made during the accounting period
and the regular contributions to the various pension funds are charged to the income statement. Actuarial
reviews are undertaken regularly. There are defined benefit and contribution plans.
Due to the international organisation and various local pension regulations the Group presents the economical
impact of pension obligations according to the dynamic method in compliance with IAS 19 - Accounting for
Employee Benefits. The Group recognises actuarial gains and losses using the corridor method.
Other Provisions
Provisions are recognized if present obligations based on past events are known and probable, and a reliable
estimate of the amount can be made.
Research and development
Research expenditure is recognised as an expense when incurred. Development costs are capitalized when it is
probable that the project will be a success considering its commercial and technological feasibility, and only if
the costs can be measured reliably and are amortised from the commencement of commercial production of
the product to which they relate over the period of their expected benefit, not exceeding 10 years.
Derivative Financial Instruments
Derivative financial instruments are used to hedge against foreign currency risks. For such transactions, the
same valuation principles apply as for the underlying transaction.
Leases
Operating lease instalments are charged to the income statement over the lease term on a straight-line basis.
There are no finance lease contracts.
2. Risk Management
Beside the assessment of strategies, the exploration of market opportunities and the periodical analysis of
results, the Board of Directors has also assessed the risks inherent in the business of the Group. The enterprise
risk management policy of Pelikan Group is to identify, measure and control risks that may prevent the Group
from achieving its business objectives. Pelikan Group seeks to apply risk management in all parts of its business
to ensure risks are minimized and opportunities are explored.
The key elements of the Group’s risk management strategies are:
- Clearly defined lines of accountability and delegated authority;
- Regular and comprehensive information provided to management, covering operating and financial
performance and key business indicators such as resource utilisation and cash flow performance;
- Detailed budgeting process where operating units prepare budgets for the coming year, which are approved
both at operating unit level and by the Board;
- Monthly monitoring of results against budget, with major variances being followed up and management
action taken; and
- Regular visits to operating units by members of the Board and senior management.
25