Annual report 2011 - Trelleborg

The elevated risk level has been determined
based on such criteria as the
degree of product exposure, the size of
contracts and the launch of new products
and technologies. The Contract Risk
Pack process highlights the physical and
technical risks of the product, solution
and manufacturing process, and links
these to the legal risk and the Group’s
insurance situation.
Understanding and application of
prevailing competition legislation is ensured
through such activities as comprehensive
training seminars and e-learning,
a thorough review and examination of
distributor and agent agreements, and
established procedures and approval of
membership in organizations. In the US,
Trelleborg carried out an Enhanced
Compliance and Training Program to
further raise the level of knowledge
regarding competition legislation among
the Group’s employees, particularly in
respect of public procurement.
The purchasing process’s risks
based on the capacity of major suppliers
Financial risks
Risk description and policy Exposure and comments
Foreign exchange risks
Foreign exchange risks relate to the risk of adverse impacts on the consolidated income statement, balance sheet and/or cash flow
as a result of exchange-rate fluctuations. Foreign exchange risks exist in the form of transaction and translation risks.
Transaction risks
Currency flows arising primarily in connection with the acquisition or sale of
goods and services in currencies other than the local currency of the relevant
subsidiary give rise to transaction exposure. Trelleborg’s global operations
generate substantial cash flows in foreign currencies. Group Treasury works
actively to match these flows to reduce the Group’s foreign exchange risk
and transaction costs. At Group level, the bulk of these flows is netted. A
portion of the remaining net flows is hedged by Group Treasury based on
the business area’s hedging resolutions to reduce the impact on earnings.
Hedging is mainly conducted using currency forward contracts, supplemented
by currency swaps and currency options.
Policy. Subsidiaries may hedge a maximum of 100 percent of their forecast
net exposure per currency pair over a rolling forward period of 12 months as
well as up to 100 percent of invoiced flows per currency pair. Contracted
projects with an order value exceeding an amount of eur 1 m must be
hedged. Subsidiaries’ hedges shall be conducted through Group Treasury.
to comply with Trelleborg’s Code of
Conduct have previously been inventoried.
A new inventory is being performed
from the perspective of new dimensions,
including overriding risks, credit risks,
and the risk of production disruptions
caused by natural disasters.
Trelleborg’s Code of Conduct is the
principal tool used to counteract corruption.
Application is ensured through the
establishment of procedures involving
Acceptance Letters issued by the
Group’s President, whereby employees
sign a letter each year confirming knowledge
of, and compliance with, the Group’s
steering instruments, including the Code
of Conduct. This is supplemented by a
process for whistleblowers. Trelleborg’s
whistleblower policy implies that each
employee is entitled, without any repercussions,
to report suspicions of legal or
regulatory violations.
Environmental risks
Environmental impact is mainly caused
through emissions to air and water,
GOVERNANCE AND RESPONSIBILITY – RISKS AND RISK MANAGEMENT
and the production of noise and waste
involving the risk of accidents and
breaches of regulations. On the basis of
a risk perspective, Trelleborg has mainly
focused on adverse environmental impacts
due to site accidents.
Risk analyses are conducted in conjunction
with signing property insurance
agreements, ISO 14000 certification
processes, collection of data and analysis
of chemicals in connection with, for
example, REACH activities, and reviews
performed by local authorities. The
analyses provide valuable information
about the various risks at the sites.
To make it easier to assess the
impact on the Group, the process to
identify risks at an overall and accumulated
level has been improved. At sites
with a potential risk of impact on the
environment, action programs were
implemented primarily aimed at identifying
the hazardous chemicals that exist on
site and how they are used, stored and
protected.
The Group’s net exposure is estimated at an annual value of about sek 2,600
m (1,900). The currency pairs with the greatest net flows, meaning those expected
to exceed the equivalent of sek 100 m over a period of 12 months
from the fourth quarter of 2011 and the amounts hedged per currency pair at
December 31, 2011 are shown in the table below. For the stated forward period,
the currencies with the greatest budgeted net flows are eur (sek 739 m
equivalent), usd (neg: sek 600 m equivalent) and sek (neg: sek 298 m equivalent).
Expected annual exposure per currency pair with the highest
12-month net flow from the fourth quarter of 2011 (sek m)
Currency pair Net flow Hedging
EUR/USD * 544 –23
USD/CNY 330
EUR/DKK 278 –263
EUR/CZK 149
USD/SEK 128 –82
EUR/PLN 109 –104
* EUR/USD includes flows in currencies that covary with EUR, such as DKK, and
with USD, such as LKR.
GRI: 1.2 Annual Report 2011 Trelleborg AB 31