Annual Report 2010 - Frauenthal Holding AG

138 Annual Report 2010
Consolidated Financial Statements Frauenthal Holding Group 2010
Most of the rest of the Group’s borrowing is at variable rates of interest. Of this, 12.4m (2009: EUR 15.5m) is long term and
EUR 14.0m (2009: EUR 11m) is short term. The corporate treasury function keeps a close watch on interest rate trends and
the related risk. If necessary, interest rate hedges can be employed. During the reporting period the average rate of interest
on the Group’s interest bearing borrowings was 2.60 % (2009: 3.07 %).
The Group subjects its interest rate risk to sensitivity analyses in accordance with IFRS 7. These reveal the effects of changes
in market interest rates on interest payments, income and expense, other income statement items and equity. The interest
rate sensitivity analyses are based on the following assumptions.
Changes in the market interest rates of fixed-rate underlying financial instruments only affect the Group’s results when these
instruments are remeasured to fair value. Fixed interest financial instruments measured at amortised cost are not exposed
to interest rate risk.
Changes in market interest rates affect net interest income from variable rate underlying financial instruments and are therefore
included in the calculation of profit sensitivity.
If the market interest rate of variable rate financial liabilities at the end of the reporting period had been 200 basis points
higher/lower, then profit would have been approx. EUR 176,000 lower/higher. If the rate had been 500 basis points higher/
lower at the end of the reporting period, this would have led to a profit EUR 302,000 lower/higher than the actual result.
Equity would have been EUR 302,000 lower/higher.
A discount rate of 4.5 % is applied to the provisions for employee benefits. If the level of market interest rates had been 60
basis points higher at the end of the reporting period (5.1 % discount rate as in 2009), then equity would have been EUR
1.3m higher.
Fair values
The fair values of the derivative financial instruments held, and their measurement categories and carrying values are shown
in the table below. The fair values of the underlying financial instruments are effectively identical to the carrying values due
to the daily or short-term maturities.