Annual Report 2010 - Falck

108 Falck Annual Report 2010 | Parent Company
Notes to the parent company financial statements
Note DKK million 2010 2009
15 Other movements relating to shareholders
Capital increase - 39
Acquisition of treasury shares (6) (5)
Disposal of treasury shares 30 -
Payment received for change of warrant terms - 1
Total other movements relating to shareholders 24 35
16 Contingent liabilities, contractual obligations and collateral security
Falck A/S is jointly and severally liable for the Group’s overall VAT liability together with other jointly registered Danish enterprises.
A portion of the company's cash is deposited in bank accounts which are included in a cash pool under which Falck Danmark A/S controls
the principal facility account. The companies are jointly and severally liable with the total deposits on the said accounts vis-à-vis the bank
in question.
The shares in the subsidiary Falck Danmark A/S have been provided as collateral for debt in Falck A/S
17 Financial instruments
There were no changes in the risk exposure or risk management of Falck A/S as compared with 2009. See also note 36 to the consolidated
financial statements of the Group.
Foreign exchange risk 2010 2009
The hypothetical impact on the Probable Hypothetical Probable Hypothetical
profit for the year and the change in impact Hypothetical change in impact Hypothetical
equity from reasonably probable exchange on profit impact exchange on profit impact
changes in exchange rates: rate for the year on equity rate for the year on equity
EUR/DKK 1% 9 9 1% 10 10
USD/DKK 1% - 25 1% - -
Interest rate risk
The company’s interest rate risk is mainly affected by the company’s overall financing. Based on the current market situation, the Executive
Management Board and Board of Directors have resolved that the financing is to be based on short-term interest rates. The company
is therefore sensitive to fluctuations in market interest rates, and a fluctuation by 1% would change the interest expense for the year by
DKK 13 million (2009: DKK 10 million) as the market rate for the current year is below the floor of interest rate collars. Without an interest
rate collar, a fluctuation by 1% would change the company's interest expense by DKK 34 million (2009: DKK 28 million.).
The company monitors developments in market interest rates closely so that it can react if the market situation changes.
In order to hedge interest rate risk, the company has entered into an interest rate collar which hedges a substantial part of the increased
interest exposure if market interest rates exceed 5.5%. The interest rate collar also includes a floor rate fixed at 3.25% and thereby resulting
in the hedged amount at all times being subject to interest in the range of 3.25% to 5.5%.
Assumptions regarding sensitivity information:
The sensitivity stated has been determined based on the recognised financial assets and liabilities as at 31 December 2010. No adjustment
has been made for servicing and raising of debt or the like in 2010. Furthermore, it is assumed that all hedges of floating-rate loans
are effective.