2010 REGISTRATION DOCUMENT (3.4 Mo) - Groupe Casino

3CONSOLIDATED FINANCIAL STATEMENTSNotes to the consolidated fi nancial statementsTo protect its financial margin from interest rate volatility, Banque duGroupe Casino hedges its interest rate risk, as follows:■■borrowings used to finance fixed rate loans are either convertedto fixed rate or hedged by fixed rate caps. The notional amountof the hedges is adjusted to reflect the gradual reduction in theoutstanding balance of the corresponding loans;borrowings used to finance adjustable rate loans are convertedto fixed rate over a rolling period of at least three months, for anamount corresponding to forecast loans for the period.The Group’s other financial instruments are not interest-bearing andare therefore not exposed to any interest rate risk.Note 31.2.2. Exposure to currency riskThe Group is exposed to currency risks mainly through purchasesmade in a currency other than the Group’s functional currencyand particularly purchases in US dollars, which are hedged usingforward currency purchases and currency swaps. Group policyconsists of hedging substantially all budgeted purchases usingderivative instruments with the same maturities as the underlyingtransactions.Due to its geographical diversification, the Group is also exposed totranslation risk, in other words its balance sheet and income statementare sensitive to movements in exchange rates on consolidation ofthe financial statements of its foreign subsidiaries outside the eurozone.The Group’s net exposure based on notional amounts after hedging is mainly to the following currencies (excluding the functional currenciesof entities):€ millions USD JYP EURTotal 2010exposureTotal 2009exposureTrade receivables exposed (10) - - (10) (1)Other financial assets exposed (434) - - (434) (14)Trade payables exposed 90 - 2 92 80Financial liabilities exposed 456 19 1 477 480Gross exposure payable/(receivable) 101 19 3 124 545Trade receivables hedged (6) - - (6) -Other financial assets hedged - - - - -Trade payables hedged 25 - - 25 2Financial liabilities hedged 450 19 - 470 479NET EXPOSURE PAYABLE/(RECEIVABLE) (369) - 3 (365) 64The net balance sheet exposure of €(365) million at 31 December2010 mainly includes receivables from the Venezuelan governmentdenominated in US dollars for €338 million. These receivables havenot been hedged.At 31 December 2009, the net balance sheet exposure of €64 millionbroke down as follows by currency:■■US dollar: €65 million;euro: €(1) million.Sensitivity of net exposure after hedging to exchangerate changesA 10% appreciation or depreciation of the euro against thosecurrencies at 31 December would have increased or decreased netprofit by the amounts shown in the table below. For the purposes ofthe analysis, all other variables, particularly interest rates, are assumedto be constant.€ millions 2010 2009US dollar (37) 7Japanese yen - -Other - -TOTAL (37) 6112 Casino Group | Registration Document 2010