49. Sensitivity analysis
Foreign currency
The Group undertakes certain transactions denominated in foreign currencies. Hence, exposure to exchange rate fluctuations arises. Exchange rate exposures are managed within approved policy parameters utilizing derivative instruments.
The Group is mainly exposed to the USD and the EUR. The following table details the Group's sensitivity to a 10% increase and decrease to the USD and a 10% increase or decrease to the EUR compared to the presentation currency. The sensitivity rate used approximates the fluctuation considered by management when performing risk analysis. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a here above mentioned change in foreign currency rates. The sensitivity analysis includes external loans as well as loans to foreign operations within the Group where the denomination of the loan is in a currency other than the currency of the lender or the borrower. A positive number indicates an increase in post-tax profit where the foreign currency strengthens against the relevant currency.
| USD | EUR | ||||
| In CHF'000 | 2009 | 2008 | 2009 | 2008 | |
| Post-tax net income | |||||
| – Increase | 3 579 | 16 200 | 2 165 | 2 264 | |
| – Decrease | -3 733 | -16 200 | -2 165 | -2 264 | |
| Equity (post-tax effect) | |||||
| – Increase | 12 619 | 7 501 | 24 797 | 27 488 | |
| – Decrease | -12 631 | -7 501 | -24 797 | -27 488 | |
Interest rates
The sensitivity analyses below have been determined based on the exposure to interest rates for financial instruments at the balance sheet date and the stipulated change taking place at the beginning of financial year and held constant throughout the reporting period in the case of financial instruments that have floating rates. The following rates have been selected in order to report the sensitivity analysis corresponding to the treasury which represent management's assessment of the reasonably possible change in interest rates:
- USD: 100 basis points (2008: 100 basis points)
- EUR: 100 basis points (2008: 100 basis points)
- CHF: 50 basis points (2008: 50 basis points)
If interest rates had been higher/lower on the above mentioned possible change in interest rates and all other variables were held constant, the Group's:
- post-tax profit for the year ended December 31, 2009 would increase/decrease by kCHF 84 (2008: decrease/increase by kCHF 1 274). This is mainly due to the interest rate exposure on cash balances.
- other equity reserves would increase/decrease by kCHF 302 (2008: decrease/increase by kCHF 83) mainly as a result of the fact that available-for-sale marketable securities are linked to debt instruments.
Equity prices
The Group is not materially exposed to any equity price fluctuation.