Kinepolis Annual Report 2015

USE OF FINANCIAL INSTRUMENTS

Kinepolis Group is exposed to a number of financial risks in

its daily operations, such as interest risk, currency risk,

credit risk and liquidity risk.

Derivative financial products concluded with third parties

can be used to manage these financial risks. The use of

derivative financial products is subject to strict internal

controls and rules. It is Group policy not to undertake any

trading positions in derivative financial instruments.

Kinepolis manages its debts by combining short-, medium-

and long-term borrowings. The mix of debts with fixed and

floating interest rates is established at Group level. At the

end of December 2015 the Group’s net financial debt was

€ 162 million. Forward foreign exchange contracts were

entered into for a nominal amount of US $ 2 million to

hedge exchange rate risks resulting from the purchase and

guarantee obligations.

The notes to the consolidated financial statements provide

a detailed description of how the Group manages the

aforementioned risks.

COMPLIANCE WITH THE

CORPORATE GOVERNANCE CODE

Kinepolis Group NV complies with the principles of the

Belgian Corporate Governance Code.

In line with the ‘comply or explain principle’, the Company

has decided that it was in the best interests of the Company

and its shareholders to depart from the stipulations of the

Code in a limited number of specific cases in addition to the

circumstances described above:

★

Contrary to Stipulation 5.5. of the Code, the Board of

Directors believes that, bearing in mind its own limited

composition, an Audit Committee comprising two

independent members – both with the requisite

auditing and accounting expertise – provides sufficient

guarantees with regard to the efficient functioning of

the committee;

★

Contrary to Stipulation 7.13., the Board of Directors

approved the Share Option Plan 2007-2016 for the

executive directors and members of the senior manage-

ment on 5 November 2007. This plan serves, among

other things, to more closely align the interests of the

abovementioned persons with the interests of the

Company by allowing them to participate in future value

creation and to enable the Company to offer a competi-

tive remuneration package and as such to be able to

hire, remunerate and retain the right persons in these

positions. Bearing in mind that the above objectives are

in the best interest of the Company, the Board of

Directors does not deem it necessary to submit this

point to the General Meeting;

★

Contrary to Stipulation 4.6. of the Code, the professional

qualifications and duties of the directors to be re-ap-

pointed were not stipulated in the convening notices to

the General Shareholders’ Meeting of 13 May 2015,

given that these qualifications are already published in

several press releases and annual reports.

Kinepolis Ghent (BE)

03 / MANAGEMENT REPORT

KINEPOLIS GROUP

ANNUAL REPORT 2015