ANNUAL REPORT 2011 REGISTRATION DOCUMENT - Saft

6
2011 CONSOLIDATED FINANCIAL STATEMENTS
Notes to the Consolidated Financial Statements
The general principles for the accounting treatment of derivatives
used to hedge the risks of fl uctuations in commodities prices are
explained above in Note 2.29 to the Consolidated Financial
Statements in the paragraph relating to cash fl ow hedges.
Gains and losses resulting from hedging contracts are
recognised in cost of sales of the division whose future needs
are hedged when these contracts satisfy the criteria for hedge
accounting under IAS 39.
If these contracts are not eligible for hedge accounting under
IAS 39, then the realised gains and losses are recorded in
“Other operating income and expenses”.
As at 31 December 2011, the Group purchased the following fi nancial derivatives to hedge the risk of changing commodities
prices:
Nominal value
of contracts
Contract market value at 31 December 2011
Future cash
fl ow hedge
Fair value
hedge
Non allocated
(trading) Total
Silver swaps 2.0 0.04 - - 0.04
Nickel swaps 14.6 (0.02) - - (0.02)
TOTAL 14.6 0.02 - - 0.02
The impact from existing hedges on the Group’s Consolidated Financial Statements at fi nancial year end is shown below:
Amount in shareholders’
equity as at
31 December 2011
Impact on 2011
income statement
Sensitivity of impact
on shareholders’ equity
to an increase of 10%
in the nickel
and silver prices
Silver swaps 0.1 - -
Nickel swaps (1.1) - 0.7
TOTAL (1.0) - 0.7
As indicated in the above table, the impact from existing nickel
and silver hedging instruments on Group consolidated equity
resulting from a 10% increase of nickel and silver market prices
would be €0.7 million. A decrease by 10% of the nickel and
silver prices would result in a symmetrical positive impact of
€0.7 million.
CURRENCY RISK
Risk identification and measurement
Given the geographic diversity of its facilities and its activities,
the Group is exposed to exchange rate fl uctuations, particularly
in the euro-US dollar parity, but also in the euro- and US dollar-
Swedish krona parities and in the US dollar-Israeli shekel parity.
Changing parities can thus have a signifi cant impact on the
Group’s fi nancial position and on the comparability of certain
data from one year to the next. The impact may arise in two
ways:
� translation risk: the risk associated with movements in a
currency other than the euro in which a Group company
maintains its fi nancial accounts; and
� transaction risk (operational and fi nancial): the risk
associated with movements in a currency other than that in
which a Group company maintains its fi nancial accounts.
The Group‘s exposure to currency risk stemming from its
companies’ purchases and sales in currencies other than
their functional one (transaction risk) mainly affects those units
engaged in both manufacturing and marketing, while the
purely sales units mainly make their purchases and bill their
clients in their functional currency.
The principal currency risk affecting manufacturing units with
an extensive international activity concerns their local currency’s
parity with the euro and the US dollar, a currency in which
the Group earns an average of between 35% and 40% of its
revenue.
SAFT - ANNUAL REPORT 2011 / 145