Financial Report and Registration Document 2010 - Groupe Seb

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3 NOTES CONSOLIDATED FINANCIAL STATEMENTS TO THE CONSOLIDATED FINANCIAL STATEMENTS 25.2. DERIVATIVE INSTRUMENTS The fair value of derivative instruments is as follows: (in € millions) Nominal amount 2010 2009 Assets Liabilities Assets Liabilities Fair value Nominal amount Fair value Nominal amount Fair value FAIR VALUE HEDGES 20.5 0.7 Nominal amount Fair value Forward sales of foreign currencies 38.9 1.3 14.9 (0.3) 77.4 1.3 51.9 (1.5) Forward purchases of foreign currencies 3.5 0.4 44.6 (1.3) TOTAL 1.7 (1.6) 2.0 (1.5) SUPERHEDGES AND TRADING TRANSACTIONS Currency swaps and other hedges EUR 5.5 (0.1) 6.8 (0.2) GBP 20.0 0.2 4.9 (0.1) 9.0 (0.1) HUF 44.2 0.8 MXN 22.0 0.5 6.7 0.1 3.0 (0.1) RUB 21.5 0.6 USD 244.3 4.9 63.0 (0.4) 13.0 2.5 254.2 (3.2) Other currencies 17.1 1.0 TOTAL 8.0 (0.6) 2.6 (3.6) CASH FLOW HEDGES Forward purchases and sales of foreign currencies 57.4 2.8 18.9 (0.7) Floating/fixed rate swaps 60.0 (0.3) Aluminium derivatives 26.6 3.1 21.6 (2.9) 58.1 (8.5) Nickel derivatives 4.3 1.0 3.6 0.6 0.5 (0.1) Copper derivatives 2.8 (0.1) TOTAL 6.9 (3.9) 0.6 (8.7) TOTAL DERIVATIVE INSTRUMENTS 16.6 (6.1) 5.2 (13.8) NET IMPACT ON EQUITY (INCLUDING FAIR VALUE ADJUSTMENTS RECOGNISED IN PROFIT) 10.5 (8.6) The only derivatives with maturities beyond one year are cash flow hedges. The non-current portion of the fair value of these hedges is as follows: At 31 December 2010 Expiring in less than 1 year Expiring in 1 to 5 years Expiring in more than 5 years Total Floating/fixed rate swaps (0.3) (0.3) Aluminium derivatives (0.4) 0.6 0.2 Nickel derivatives 0.9 0.1 1.0 Copper derivatives TOTAL 0.5 0.4 0.9 The fair value of derivative instruments is determined by the discounted cash flows method using forward exchange rates, market interest rates and aluminium prices at 31 December 2010. 104 FINANCIAL REPORT AND REGISTRATION DOCUMENT 2010 GROUPE SEB
3 CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 25.3. INFORMATION ON ASSETS AND FINANCIAL LIABILITIES MEASURED AT FAIR VALUE In accordance with the amended IFRS 7, fair value measurements are classifi ed using a fair value hierarchy that refl ects the signifi cance of the inputs used in making the measurements. The hierarchy breaks down into three levels, as follows: level 1: quoted prices in active markets for the same instrument; level 2: quoted prices in active markets for similar assets or liabilities or other valuation techniques for which all significant inputs are based on observable market data; level 3: valuation techniques for which any significant input is not based on observable market data. 31 December 2010 (in € millions) Total Level 1 Level 2 Level 3 ASSETS Derivative instruments 16.5 16.5 Cash and cash equivalents 236.6 236.6 TOTAL FINANCIAL ASSETS MEASURED AT FAIR VALUE 253.1 236.6 16.5 0.0 LIABILITIES Derivative instruments 6.0 6.0 TOTAL FINANCIAL LIABILITIES MEASURED AT FAIR VALUE 6.0 0.0 6.0 0.0 The portfolio of derivatives used by the Group to manage risk mainly includes forward currency contracts, interest rate and currency swaps and commodities options. These instruments are classified as Level 2, as their fair value is calculated using internal valuation models based on observable data. NOTE 26 MARKET RISK MANAGEMENT 3 26.1. RISK MANAGEMENT Risks are managed by Corporate Finance, based on financial market conditions and in accordance with procedures established by the Group. Hedging transactions are carried out in the financial markets with a limited number of high-quality partners in order to avoid counterparty risk. Subsidiaries’ risks are hedged at corporate level when this is allowed under the laws and regulations of the country concerned and when the hedges can be arranged on the financial markets. Subsidiaries that are prevented from hedging financial risks through Corporate Finance due to local laws and regulations enter into hedging transactions directly with local banks in compliance with Group procedures and policies. 26.2. MARKET RISKS 26.2.1. Currency risks The majority of Group sales are billed in currencies other than the euro, mainly the US dollar, Russian ruble, Brazilian real and Japanese yen. Most billing currencies correspond to the functional currencies of the subsidiaries concerned and do not give rise to any transactional currency risk at the local level. Similarly, goods purchased for resale billed in US dollars are bought from Asian suppliers by SEB Asia whose functional currency is also the US dollar. The main sources of transactional currency risks therefore arise from: intra-group billings between two Group companies with different functional currencies, as follows: exports by manufacturing subsidiaries in the euro zone billed in the local currency of the marketing subsidiaries, imports of goods from SEB Asia billed in US dollars by marketing subsidiaries whose functional currency is not the US dollar; purchases of industrial components from external suppliers by the manufacturing subsidiaries, that are billed in a currency other than their functional currency (for example, components purchases by French subsidiaries that are billed in US dollars). These risks are managed at Group level by SEB S.A., which acts as the subsidiaries’ sole counterparty except where this is not possible due to local regulations. The resulting balance sheet currency positions in the main currencies are partly hedged by means of forward sales and purchases of foreign currency against the euro. Part of SEB Asia’s US dollar billings to subsidiaries is hedged. In 2010, 2009 and 2008 the Group was a net buyer of US dollars. The Group’s overall currency risk management policy sets very strict rules for the hedging of currency risks associated with highly probable future transactions. GROUPE SEB FINANCIAL REPORT AND REGISTRATION DOCUMENT 2010 105
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FINANCIAL REPORT AND REGISTRATION D
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GROUP PROFILE AND KEY FIGURES 2010
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GROUPE SEB IN 2010 1 GROUPE SEB IN
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1 GROUPE SEB IN 2010 MILESTONES IN
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1 GROUPE SEB IN 2010 BUSINESS SECTO
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1 GROUPE SEB IN 2010 RISK MANAGEMEN
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1 GROUPE SEB IN 2010 SOCIAL PERFORM
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1 GROUPE SEB IN 2010 ENVIRONMENT PE
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CORPORATE GOVERNANCE 2 CORPORATE GO
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2 CORPORATE GOVERNANCE ORGANIZATION
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2 CORPORATE GOVERNANCE CHAIRMAN’S
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6 ADDITIONAL INFORMATION FINANCIAL
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6 ADDITIONAL INFORMATION EMPLOYEE S
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6 ADDITIONAL INFORMATION STOCK MARK
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NOTES GROUPE SEB FINANCIAL REPORT A
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FINANCIAL AGENDA 2011 26 APRIL AFTE
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Financial Report and Registration Document 2010 - Groupe Seb

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