TDC Group Annual Report 2011(6,4MB) - TDC Annual Report 2011

C: Undrawn credit lines
The undrawn credit lines at 31 December 2011 are specified as follows:
TDC Group Annual Report 2011
Maturities DKKm
Committed
credit lines
Committed
syndicated
credit lines Total
< 1 year 0 0 0
> 1 year 1,253 3,717 4,970
Total 1,253 3,717 4,970
D: Financial management and market risk disclosures
TDC is exposed to financial market and credit risks when
buying and selling goods and services denominated in
foreign currencies as well as due to its investing and
financing activities. As a consequence of TDC’s capital
structure and financing, TDC faces interest and exchangerate
risks. TDC’s Group Treasury identifies, monitors and
manages these risks through policies and procedures
approved by the Board of Directors. Maximum risk levels
have been set for interest, exchange-rate and credit
exposures. Together with market values of financial assets
and liabilities, these exposures are calculated and
monitored weekly. All risk measures are reported to the
Group Chief Financial Officer on a weekly basis.
Group Treasury is responsible for the treasury management
system and methodologies used to calculate and estimate
risk positions. Further, TDC’s independent accountants
review Group Treasury’s procedures and methodologies on
a regular basis to ensure compliance with regulations and
internal guidelines and procedures. Group Treasury uses
derivatives for hedging interest and exchange-rate
exposure. The derivatives are used for hedging purposes
only and not for taking speculative positions.
The general policies and procedures for TDC’s financial risk
management are set out in the financial strategy, which is
revised on an annual basis, if necessary. The financial
strategy is approved by TDC’s Board of Directors.
TDC’s financial strategy was approved in December 2010
and defines maxima/minima for interest-rate, exchangerate
and counterparty risks as well as maxima/minima for a
range of other variables.
Liquidity risk
To reduce refinancing risk, the maturity profile of the debt
portfolio is spread over several years. The committed
Revolving Credit Facility of up to EUR 700m (or DKK
5,200m) and cash generated by the business activities are
deemed sufficient to handle upcoming redemption of debt.
In TDC’s opinion, the available cash, interest-bearing
receivables and undrawn credit lines are sufficient to
maintain current operations to complete projects underway,
to finance stated objectives and plans, and to meet shortand
long-term cash requirements.
TDC continuously monitors the international capital
markets and expects to refinance the EMTN bond of EUR
457m maturing in April 2012 in the bond market provided
that terms and conditions are deemed favourable.
Interest rate risks
TDC is exposed mainly to interest-rate risks in the euro
area, as 71% the nominal gross debt is denominated or
swapped into EUR whereas 29% is swapped to DKK. The
interest-rate risk emerges from fluctuations in market
interest rates, which affect the market value of financial
instruments and financial income and expenses.
Throughout 2011, TDC monitored and managed its
interest-rate risks using several variables in accordance
with TDC’s financial strategy to protect primarily TDC’s
financial policy targets. The following variables are
monitored:
• Floating interest-rate debt shall not exceed 60% of the
total gross debt (including related derivatives)
• The maximum share of TDC’s fixed-rate debt (including
related derivatives) to be reset within one year shall not
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