Annual Report 2010

r 2 o 1 o ANNUAL REPORT NOTES TO THE SEPARATE FINANCIAL STATEMENTS FORTHE YEARENDED 31 DECEMBER2010 (in euros) To decrease risks resulting trom fluctuations in both foreign currency exchange rates and interes! rates, the Company uses the following financial derivatives: Amortised euro interes/ rate swap contracts Financial derivatives were entered into in order to hedge risks resulting trom fluctuations in interes! rates. The euro interes! rate swap contract is the combination of an interes! rate swap and sold currency options. During the year, the Company closed all open currency financial derivatives. In 2010, the Company recorded a loss in the amount of EUR 151 thousand trom realised derivatives. The financial derivatives are marketable on the Slovak over-the-counter market. 29. FINANCIAL RISK MANAGEMENT POLICIES 29.1. Capital risk management The Company manages its capital to ensure that the Company is able to continue as a going concern with the objective to achieve an optimum debl and equity balance. The Company's overall strategy remains unchanged trom 2009. The gearing ratio at the year-end was as follows: Debl 1' 1 Cash and cash equivalents Net debt Equity Net debl to equity ratio (i) Debl is defined as current and non-current interes/ bearing loans and borrowings. 29.2. Categories of financial instruments Available for sale investments Financial derivatives Loans and receivables (including cash and cash equivalents) Financial assets Financial derivatives Bank loans and borrowings recognised at amortised costs Obligations under finance lease Trade payables and other liabilities Financial liabilities a) Financial risk factors 31 December 2010 -42 957 901 801 196 -42 156 705 -180 238 457 23% 31 December 2010 126 813 28 534 696 28 661 509 521 719 42 656 059 301 842 25 609 383 69 089 003 31 December 2009 -55 433 407 907 758 -54 525 649 -172 593 417 32% 31 December 2009 128112 138 247 28 720 798 28 987 157 1 605 164 54 972 840 460 567 18 288 892 75 327 463 The Company's activities expose ii to a variety of financial risks, which include the effects of changes in foreign currency exchange rates and loan and bond interes! rates. The Company's overal! risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Com pany's financial periormance. The Company uses derivative financial instruments such as interes! rate swaps to manage certain exposures. Creditrisk Management has a credit policy in place and exposure to credit risk is monitored on an ongoing basis. Cred it evaluations are periormed on all customers requiring credit over a certain amount. The Company does not require collateral in respect of financial assets. At the reporting date there were no significant concentrations of credit risk. Derivative counterparties and cash transactions are limited to high credit quality financial institutions. The Company did not limit the amount of credit exposu res to any one financial institution. Interes/ rate risk The Company's operating income and operating cash flows are relatively independent of changes in market interes! rates. Interes! rate risk arises on long-term borrowings, which are issued at fixed rates and expose the Company to a fair value interes! rate risk. The sensitivity analysis (see below) was determined based on the exposure to interes! rates for both derivative and non– derivative instruments at the reporting date. For floating rate liabilities, the analysis is prepared under the assumption that the amount of liability outstanding at the reporting date was outstanding for the whole year. lf interes! rates had been 50 basis points higher/lower and all other variables were held constant, the Company's profit for the year ended 31 December 2010 would have increased/decreased by EUR 224 thousand (2009: increase/decrease by EUR 208 thousand). This is mainly attributable to the Company's exposure to interes! rates for variable rate borrowings. Foreign currency risk The Company incurs foreign currency risk on sales, purchases and borrowings that are denominated in a currency other than the euro. The carrying amount of the Company's cash assets and cash liabilities denominated in a foreign currency as at the reporting date is as follows: USD CZK PLN CHF Liabilities 31 December 2010 31 December 2009 45594 16281 867 727 1 274 809 52 919 50 137 Assets 31 December 2010 31 December 2009 4 670 46 962 1 183 182 6 482 788 2 886 605 3 574 957 66120 1