Siegfried Annual Report 2009

Financial risk management
Financial risk management within the Group is governed by
policies and guidelines approved by management. These
policies cover foreign exchange risk, interest rate risk, market
risk, credit risk and liquidity risk. Group policies also cover
the investment of excess funds and the raising of debts.
Both the investment of excess funds and the raising of current
and non-current debts are centralized. Risk management
strives to minimize the potential negative effects on
the Group‘s financial position.
Market risk Siegfried is exposed to market risks which consist
mainly of foreign exchange risk, interest rate risk and
market value risk.
Foreign exchange risk Siegfried operates across the world
and is exposed to movements in foreign currencies affecting
its reporting in Swiss francs. Foreign exchange risks arise on
business transactions that are not conducted in the Group‘s
functional currency. Siegfried continues to monitor its currency
exposures and, when appropriate, uses forward contracts,
swaps or currency options to hedge its risks. Specific
net investments in Group companies are hedged through
bank credits in the same foreign currencies.
The Siegfried Group is exposed principally to currency risk in
respect of the Euro and the USD. The following table illustrates
the sensitivity of a possible change in the USD and
Euro exchange rates on the after tax profit and on other
equity components, assuming that all other variables remain
constant.
Impact on other
Impact on
components
Increase/decrease post-tax profit of equity
Currency in FX rate (in CHF 1000) (in CHF 1000)
2009 2008 2009 2008 2009 2008
EUR + 3% + 3% 135 –412 – –
– 3% – 3% –135 412 – –
USD + 8% + 8% 1 516 1 588 –2 258 –2 298
– 8% – 8% –1 516 –1 612 2 258 2 298
Interest rate risk Interest rate risks arise from movements
in interest rates, which could have adverse effects on the
Group’s net profit or financial position. Interest rate movements
can result in changes in interest income and expense
on interest bearing assets and liabilities. In addition they can
also, as described under the market value risks below,
impact specific assets, liabilities and financial instruments.
Within the Siegfried Group interest rate management is centralized.
The Siegfried Group does not own significant interest
bearing assets and therefore the effects of movements in
the market interest rate on interest income are not material.
More important are the effects of interest rate movements
on the interest expense. The interest bearing liabilities
amounted on the reporting date 31.12.2009 to CHF 71.3
million (2008: CHF 86.1 million), the average interest rate on
the CHF, Euro and USD borrowings was 4.0 %
(2008: 5.3%).
The following table illustrates the sensitivity of a possible
movement in the interest rates in the CHF, Euro and USD
environment on the after tax profit and on other equity
components, assuming all other variables remain constant.
Impact on other
Increase/decrease Impact on components
of interest rate post-tax profit of equity
Currency (basis points) (in 1000 CHF) (in CHF 1000)
2009 2008 2009 2008 2009 2008
CHF + 50bp + 50bp 304 482 – –
– 50bp – 50bp –304 –482 – –
EUR + 50bp + 50bp 34 –81 – –
– 50bp – 50bp –34 81 – –
USD + 50bp + 100bp 57 71 344 1 027
– 50bp – 100bp –57 –71 –344 –1 027
Financial Statements Siegfried Group 81