Annual Report 2010/11 - Sonova

financial RisK manaGement
consolidated financial statements 127
due to sonova Group’s worldwide activities, the Group is exposed to a variety of financial risks such as market risks,
credit risks and liquidity risks. financial risk management aims to limit these risks and seeks to minimize potential
adverse effects on the Group’s financial performance. the Group uses selected financial instruments for this purpose. they
are exclusively used as hedging instruments for cash in- and outflows and not for speculative positions.
the fundamentals of sonova Group’s financial risk policy are periodically reviewed by the audit committee and carried
out by the Group finance department. Group finance is responsible for implementing the policy and for ongoing financial
risk management.
maRKet RisK
exchange rate risk
the Group operates globally and is therefore exposed to foreign currency fluctuations, mainly with respect to the Us dollar
and the euro. as the Group uses swiss francs as presentation currency and holds investments in different functional currencies,
net assets are exposed to foreign currency translation risk. additionally, a foreign currency trans action risk exists
in relation to future commercial transactions which are denominated in a currency other than the functional currency.
to minimize foreign currency exchange risks, which also include intercompany sales and the settlement of intercompany
loans, forward currency contracts and options are entered into. the Group hedges its net foreign currency exposure based
on future expected cash in- and outflows. the hedges have a duration of between one and twelve months. no hedge accounting
has been applied to these hedges, since they do not qualify for such treatment under ias 39.
Positive replacement values from hedges which do not qualify for hedge accounting are recorded as financial assets at fair
value through profit or loss whereas negative replacement values are recorded as financial liabilities at fair value through
profit or loss.
as of march 31, 2011 and 2010, no forward currency contracts were open.