such thing as zero risk. The Group’s product liability insurance contract covers it against adverse monetary consequences arising from claims that could result from its sales of systems or provision of services. The property damage program provides for payment of claims for material damage to buildings or physical assets in accordance with the declared value of each of its sites worldwide, which the Group reports annually. The program comprises additional guarantees to ﬁnance the continuity or reorganization of activity following a loss event. Special emphasis is placed on protecting the Bordeaux-Cestas (France) site, which houses research and development and production activities as well as critical services for the Group as a whole. The program notably comprises “business continuity” cover against ﬁnancial loss in the event of a major accident affecting the Bordeaux-Cestas site and jeopardizing the continuity of all or part of the Group’s business. This program is backed up by risk prevention measures at this site.
may be cancelled in accordance with contract terms. These commitments are discussed in the notes to the consolidated ﬁnancial statements.
6. APPROPRIATION OF EARNINGS
As recommended by the Board of Directors, the company resumed in 2011 its dividend payment policy. In its report on ﬁscal year 2012, the Board stated that, barring further changes to the taxation of dividends in France, the total dividend is expected to represent a payout ratio of around 33% of net income (excluding non-recurring items), the remaining 67% serving to ﬁnance the company’s growth internally. Exceptionally, this ratio could rise to or exceed 50% until the investments for the future have produced their impact in full, insofar as they are already taken into account in the computation of net income and free cash ﬂow. The Board of Directors has proposed to increase the dividend to €0.25 per share, in respect of ﬁscal 2014. The gross dividend represents a payout ratio of 53% of 2014 net income and a yield of 2.7% based on the December 31, 2014 closing share price. Subject to approval by the annual Shareholders’ Meeting of April 30, 2015, the dividend will be made payable on May 7, 2015.
5. OFF BALANCE SHEET ITEMS
Off-Balance Sheet Commitments Relating to the Group Financing The parent company, Lectra SA, provided a total of €2.2 million at December 31, 2014 (€2.3 million at December 31, 2013) in sureties to banks, mainly to guarantee loans made by the latter to the company’s subsidiaries and in guarantees given to customers or to lessors. These sureties were previously authorized by the Board of Directors, as required under article L. 225-34 al. 4 of the French Commercial Code. Exchange risk hedging instruments of balance sheet positions at December 31, 2014 were comprised of forward sales or purchases of foreign currencies (mainly U.S. dollars, British pounds and Hong Kong dollars) for a net total equivalent value (sales minus purchases) of €7.5 million (€1.9 million at December 31, 2013). Off-Balance Sheet Commitments Relating to Operating Activities The only off-balance sheet commitments relating to operating activities concern normal ofﬁce, motor vehicle and ofﬁce equipment leasing and rental contracts, which
7. SHARE CAPITAL OWNERSHIP SHARE PRICE