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financial statements 2011
47
28. Financial risk management
The Group is exposed to a number of financial risks in its normal business operations. The goal of the Group’s
risk management policy is to minimize the adverse effects of financial market movements on the Group’s result.
Under the risk management policy, risks are managed through a risk management process. This process identifies
the risks threatening operations, assesses and updates them, develops the appropriate risk management actions
and regularly reports on risks to the Group management team and Board of Directors. Financial risk management
is an integral part of the Group’s risk management policy. Financial risks are divided in the Group as follows:
Currency risk
A majority of the cash flow from the Group’s operations is denominated in euros. Business outside the euro zone
accounts for just under 50% of the net revenue and consists mainly of sales denominated in Swedish krona. No
currency derivatives were open in the Group on the balance sheet date. The risk due to the translation of long-
term foreign net investments was not hedged on the balance sheet date, December 31, 2011. According to the
currency risk policy confirmed by Edita’s Board of Directors, currency risks are monitored regularly and hedged
when necessary.
The parent company’s operating currency is the euro. The assets and liabilities of foreign subsidiaries,
denominated in foreign currencies and translated into euros at the rate of the balance sheet date, are as follows:
Nominal values
eur 1000
2011
2010
Non-current assets
21 519
22 799
Non-current liabilities
5 539
5 784
Exchange rate changes in non-current items
103
2 101
Current assets
20 806
18 675
Current liabilities
16 345
14 494
Exchange rate changes in current items
25
507
Currency risk sensitivity analysis in accordance with ifrs 7
The table below shows the strengthening of the euro against the Swedish krona. The sensitivity analysis is based
on the assets and liabilities denominated in foreign currencies on the balance sheet date.
eur 1000
2011
2010
Percentage of change
10%
10%
Effect on Group’s profit after tax
30
18
Effect on the Group’s shareholders’ equity
-1 829
-1 850
Interest rate risk
The Group’s interest rate risk mainly comprises movements in market rates and margins affecting the loan
portfolio. The effect of the interest rate risk on the Group’s net profit was reduced by hedging with interest rate
derivatives. The Group had a total of eur 20.8 million (eur 25.4 million) in interest-bearing debt from financial
institutions on December 31, 2011. All loans were tied to variable rate debt instruments. In analyzing the interest
rate risk, a +/- 1 percentage unit change in the interest rate is assumed. The effect of such a change over 12
months on the amount of debt prevailing on December 31, 2011, with all other factors remaining the same, is eur
+/- 184,000 (+/- 236,000) on the Group’s pre-tax profit.