Annual Report 2010 - Falck

90 Falck Annual Report 2010 | Group
Notes to the Group financial statements
Note DKK million
36 Financial instruments
Financial risks
As a consequence of its operations, investments and financing, the Group is exposed to a number of financial risks, including market risk
(foreign exchange and interest rate risk), credit risk and liquidity risk.
Group policy is not to speculate actively in financial risks. Accordingly, the Group’s financial management exclusively involves the management
and mitigation of financial risks that arise as a direct consequence of the Group’s operations, investments and financing.
There were no changes in the Group's risk exposure or risk management as compared with 2009.
Foreign exchange risk
The Group’s foreign subsidiaries are not severely exposed to exchange rate fluctuations, as both revenue and most costs of the individual
subsidiaries are denominated in the same currencies. The main exchange rate exposure faced by the Group relates to the translation of
the financial results and equity of foreign subsidiaries into Danish kroner.
The Group regularly assesses its foreign exchange risks in order to determine whether the exposure should be hedged by same-currency
loans or forward exchange contracts. The forward exchange contracts stated below were entered into with a view to reducing the Group’s
foreign exchange risks in respect of the translation risk for investments in subsidiaries. See the section below regarding hedging.
63% of the Group’s revenue and earnings is denominated in Danish kroner (DKK) (2009: 65%). Other currencies that account for more
than 5% of revenue or earnings are Norwegian kroner (NOK), euros (EUR) and Swedish kroner (SEK).
The income statement is affected to a minor extent by changes in exchange rates, as the profit of foreign subsidiaries is translated into
Danish kroner using average exchange rates.
Foreign exchange risk 2010 2009
The hypothetical impact on the Probable Hypothetical Probable Hypothetical
profit for the year and the Group's 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 10% - - 10% - 25
BRL/DKK 10% - 6 - - -
NOK/DKK 5% - 3 5% - 3
GBP/DKK 5% - 4 5% - 2
PLN/DKK 10% - 6 10% - 5
SEK/DKK 5% - 14 5% - 6
Assumptions regarding sensitivity information:
The sensitivities related to financial instruments have been determined on the basis of the financial instruments recognised at 31
December. The sensitivities stated have been determined on the basis of an assumption that sales, price level and interest rate level are
unchanged. The foreign exchange risk stated above thus does not take into account the translation risk on the translation into DKK of
the profit and equity of foreign subsidiaries.