Notes to the consolidated financial statements NOTE 31 - Financial risks (continued) Currency hedging agreements regarding future transactions Net amounts outstanding for currency hedging agreements at December 31, for the Group and the parent company, which satisfy the requirements for hedge accounting and which relate to future transactions 2011 Currency
22.2 0.0 21.3 0.8 2.2 90.1 0.0 0.0 49.8 0.0
Capital gain (loss) recognised in equity
1.5 0.0 (0.9) 0.0 0.1 5.0 0.0 0.0 (0.3) 0.0 5.4
3 0 3 3 3 3 0 0 3 0
Notional principal 1)
41.2 15.1 91.6 1.4 4.3 123.7 2.0 (99.5) 120.5 6.6
Capital gain (loss) recognised in equity
Maximum number of months to expiry
(0.3) 0.1 (0.8) (0.1) 0.1 (4.4) 0.0 (2.7) (4.8) (0.3) (13.2)
2 2 2 2 2 2 2 5 2 2
Consolidated statement
USD / DKK NOK / DKK USD / GBP EUR / GBP DKK / GBP USD / NOK GBP / EUR MYR / EUR EUR / NOK Other Recognised in equity in total
Notional principal 1)
2010 Maximum number of months to expiry
1) Positive principal amounts on forward currency contracts indicate a purchase of the currency in question. Negative principal amounts indicate a sale. Forward currency contracts relate to hedging of goods sold and goods purchased. Hedging of future cash flows is primarily done in BioMar, where considerable contracts are often made on the purchase of fish oil and fish meal in currencies other than the functional currency of Group companies. At the time of purchase, it is therefore custom to hedge the currency risk on every purchase of raw materials. 2011 2010 Hedging agreements regarding future transaction recognised in equity Currency hedging Interest rate hedging Hedging agreements before tax Tax on hedging agreements Hedging agreements after tax
Capital gain (loss) recognised in equity
5.4 (42.8) (37.4) 8.9 (28.5)
Maximum number of months to expiry
3 180
Capital gain (loss) recognised in equity
(13.2) (20.1) (33.3) 8.6 (24.7)
Maximum number of months to expiry
5 192
Financial investments. Schouw & Co. is exposed to fluctuations in the price of Vestas and Lerøy shares. Price developments in 2010 had a negative effect of DKK 456.4 million on the Vestas shares and a negative effect of DKK 99,8 million on the Lerøy shares. Note 14 contains a more detailed description of developments in the value of Schouw & Co.’s shares in Vestas and Lerøy. Risks on raw material. Risk on raw materials prices is not hedged by way of financial instruments. Interest rate risk. The Group hedges parts of the interest rate risk on its debt subject to a case-by-case assessment. Interest rate risk is further described in note 21. Credit risk. The Group’s credit risk is primarily related to trade receivables (see note 16) and cash deposits. The Group is not exposed to significant risks concerning individual customers or business partners. The Group’s policy for undertaking credit risks involves an ongoing credit assessment of all major customers. At December 31, 2011, the maximum credit risk considering the collateral provided was DKK 2,673.8 million (trade receivables less collateral + cash). Liquidity risk. It is group policy when raising loans to maximise flexibility by diversifying borrowing in respect of maturity/renegotiation dates and counterparties, with due consideration to costs. The Group’s cash reserves consist of cash, readily marketable shares in Vestas and Lerøy and undrawn credit facilities. The Group’s objective is to have sufficient cash resources to allow it to continue in an adequate manner to operate the business and to react to unforeseen fluctuations in its cash holdings. 2011 Breakdown of the group’s cash resources at December 31: Operating credit facility Drawn operating credits, see note 21 Cash and cash equivalents Financial investments Cash resources
3,056.3 (2,004.3) 541.3 328.5 1,921.8
2010 2,881.7 (1,457.0) 451.6 893.7 2,770.0
The Group’s credit facilities have mainly been raised with large Scandinavian banks, with whom the Group has had a longstanding relationship. Most operating credits can be terminated at short notice, with the exception of the DKK 800 million credit facility, which is interminable on the part of the bank until June 30, 2013, subject to compliance with covenants. The maturity profile of the Group’s interest-bearing debt is shown in note 21. Capital management Schouw & Co. gives priority to having a high equity ratio in order to ensure financial versatility. The company’s significant undrawn credit limits and its highly liquid portfolio of securities means that it has substantial cash resources. See the table above. The Group’s dividend policy normally calls for a pay-out ratio of 20–30%, although it may be less than 20% in years with a large positive value adjustment on the holding of Vestas shares, or it may by higher than 30% in years with large positive cash flows. Otherwise, the dividend declared will always take account of the Group’s plans for growth and its liquidity requirements.
All amounts in millions of Danish kroner.
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