Reserves

Translation reserve
The translation reserve comprises all foreign exchange differences arising from the translation of the financial statements of foreign operations, as well as borrowings denominated in currencies other than the Euro. Furthermore, the foreign exchange differences arising on goodwill denominated in foreign currencies is recognised in the translation reserve.

Dividends/payment from reserves
After the balance sheet date the following dividends were proposed by the Board of Management. The dividends have not been provided for and there are no income tax consequences.

	2005	2004
€0.25 per ordinary share (2004: €0.20)	42	33
€6.00 per preference B share (2004: €6.00) and in 2004 also €0.12 on preference A shares	-	4
	42	37
Bank loans and overdrafts
	2005	2004
Syndicated credit facility	568	397
Medium term loans	43	40
Commitment from profit sharing in France	13	19
Other loans	35	83
Overdrafts	31	68
	690	607
	2005	2004
The borrowings are repayable as follows:
On demand or within one year	87	135
In the second year	168	24
In the third year	13	153
In the fourth year	1	1
In the fifth year	418	292
After five years	3	2
	690	607
Less: Amounts due for settlement within 12 months	-87	-135
Amounts due for settlement after 12 months	603	472

The carrying amounts of Vedior’s borrowings are denominated in the following currencies:

Syndicated credit facility
On 22 November 2004, the Company agreed an €800 million multicurrency revolving credit facility (‘the Facility’) with a syndicate of banks.

The Facility is split into two tranches:

	Tranche A, for €650 million, has an initial term of five years.This term can be extended twice (in 2005 and 2006) for a further one year each, with a final maturity no later than 2011. In 2005 the first extension took place.
	Tranche B, for €150 million, has an initial term of three years. This term can be extended twice (in 2007 and 2008) for a further one year, with a final maturity no later than 2009.

The Facility will be used for general corporate purposes.

The Company’s Facility contains a number of affirmative and negative covenants as well as two financial covenants. These financial covenants are measured quarterly, on a rolling aggregate basis for the immediately preceding four quarters and are:

Interest cover
(I) the ratio of EBITDA to net interest may not be less than 4 to 1;

Leverage
(II) the ratio of average net debt to EBITDA may not be greater than 3.5 to 1 in respect of any measurement period ending on or prior to 22 November 2006 and 3.25 to 1 at any time thereafter.

The definitions of net debt and EBITDA (earnings before interest, taxes, depreciation and amortisation) in the Facility Agreement include certain adjustments, principally relating to acquisitions and disposals. At 31 December 2005, the relevant ratios were Interest cover 11.2 and Leverage 1.9 (2004: 6.2 and 2.3).

The Company’s failure to maintain these covenants would constitute an event of default under the Facility, entitling the lenders to accelerate the repayment obligations. Throughout the year and as at 31 December 2005, the Company was in compliance with the covenants of the Facility.

The initial interest margin for Tranche A is 55 basis points (‘bps’) and thereafter between 30 bps and 65 bps linked to a leverage grid. For Tranche B the initial interest margin is 52.5 bps and thereafter between 27.5 and 62.5 bps linked to a leverage grid. At 31 December 2005, the interest margin was 37.5 bps for Tranche A and 35 bps for Tranche B.

In July 2003, the Company entered into several medium term loans with a number of banks, of which €43 million was outstanding as at 31 December 2005. These medium term loans are repayable over a three year period.

In addition to the facilities described above, the Company has a number of uncommitted short-term credit facilities amounting to some €274 million. These are primarily used to meet short-term liquidity requirements. At 31 December 2005, approximately €61 million was drawn down under these facilities.