43 JOTUN GROUP Note 20 CONTRACTUAL OBLIGATIONS AND GUARANTEES Purchase obligations The Group’s contractual purchase obligations are mainly related to investments in new plants and buildings. For the major on-going investment projects in Russia, Brazil, Indonesia, Oman and Turkey the contractually committed capital expenditures as of 31 December 2014 is approximately NOK 325 million. For purchase of raw materi-als there are no actual commitments for the Group. In general these contracts can be terminated more or less without penalties. Sales obligations The Jotun Group has several sales contracts that are material for each entity. We have evaluated existing contracts with contract value of NOK 10 million or more. These contracts are mainly related to the Protective Coatings and the Marine Coatings business. Products are often considered to be commodities in these markets, and alter-native suppliers and products are available. Contracts can easily be transferred to other suppliers without inconvenience to the customer and therefore there is no actual commitment involved. Some con-tracts include breach penalty clauses. Should the Group be forced to cancel any agreement with penalty clause that situation could involve compensation of 10 per cent of contract value. The actual commitment related to these contracts is approximately NOK 43 million. There are also contracts within the Marine Coatings segment where certain performance guarantees are given. The actual commitment related to these contracts is approximately NOK 27 million. For most sales contracts within the Group there are no penalty clauses involved. In some situations breach could cause obligation to compensate the customer for change of supplier, including price variations. This type of commitment is considered to be insignificant for the Group. Other obligations On behalf of subsidiaries and Joint Ventures Jotun A/S issued Letters of Comfort amounting to NOK 2 032 million in 2014 (2013: NOK 1 332 million). Guarantees covering tax withholding and other guarantees for subsidiaries amounts to approximately NOK 340 million in 2014 (2013: NOK 300 million). Note 21 LEASES Operating lease expenses included in other operating expenses are: (NOK thousand) 2014 2013 Operating lease expenses Machinery, vehicles and equipment 50 696 52 721 Factory, premises and buildings 50 778 41 077 Land 2 287 2 768 Total 103 761 96 566 Overview of future minimum lease payments related to operating leases: Costs next year 83 853 79 607 Costs next 2-5 years 123 383 153 264 Costs after 5 years 75 056 73 566 Total 282 293 306 437 Leasing commitments show Jotun Group’s current and non-current commitments arising from leasing contracts for property, plant and equip-ment. All leasing contracts included in this disclosure note are regarded as operating leases and lease amounts are presented as operating expenses in the income statement. Finance leases are capitalised. There are no capitalised financial leases as of 31 December 2014.
Jotun Annual Report 2014
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