Sales breakdown 2004 - Solvay

Global Annual Report Solvay 2004
70
Analysis of total financial debt by currency
Average
interest
EUR million EUR USD GBP Others Total rate paid
2003 1 866 341 8 111 2 326 6%
2004 1 787 293 2 118 2 200 5%
Borrowings and credit lines
The largest borrowings maturing after 2004 are:
in Belgium: EMTN-note type bond issues by Solvay SA :
- 5.5% EUR 700 million, maturing 2006*;
- 4.99% EUR 500 million, maturing 2014 ;
- 4.75% EUR 300 million, maturing 2018 ;
in the United States: USD 105 million repayable in equal installments from 2004 to 2007, at an interest rate of 8.55%*
in Germany: our 75% share in the EUR 110 million borrowed to finance SolVin (of which EUR 90 million at the fixed rate
of 3.54%; final maturity 2008) ;
in Thailand: our 48.6% share in the THB 2.7 billion borrowed to finance Vinythai (straight-line repayment, 5.75% variable
interest rate, final maturity 2006).
In addition the Group has access to:
a USD 500 million commercial paper program, USD 220 million of which was utilized at the end of 2004. This program is
covered by back-up credit lines which were unused at the end of 2004;
a EUR 350 million bank credit line (unused at end-2004), maturing in July 2008;
a EUR 850 million bank credit line (unused at end-2004), maturing in October 2011.
* Issue swapped at a floating interest rate in December 2003
Cash and cash equivalents
Cash and cash equivalents amounted to EUR 1 406 million. This is EUR 200 million higher than at the end of 2003.
EUR million 2003 2004
Fixed-income securities 6 18
Term deposits 974 1 251
Cash 226 137
Cash and cash equivalents 1 206 1 406
(31) Derivative financial instruments
The Solvay Group uses derivatives to cover clearly identified foreign exchange and interest rate risks (hedging instruments).
However, the required criteria to apply hedge accounting according to IFRS are not met in all cases. This means that this form
of accounting is not always applicable when the Group covers its economic risks.
Managing the transactional exchange risk
This is the exchange risk which attaches to a specific transaction, such as a Group company buying or selling in a currency
other than its functional currency.
a) Hedging transactional exchange risk when certain
Subsidiaries are required to transfer their foreign exchange positions when certain (e.g. customer invoices, supplier invoices,
etc.) to the Coordination Center-CICC, which is a consolidated subsidiary. This systematic hedging has the effect of centralizing
the Group’s foreign exchange position at CICC and relieving operating subsidiaries of the administrative burden of managing
the exchange risk.
CICC’s foreign exchange position is then managed under rules and specific limits which have been set by the Group.
The main management tools are the spot and forward purchase and sale of currencies, and the purchase of options.