Download - Ferrovial - Annual Report 2012

Consolidated financial statements at 31 December 2011
Ferrovial S.A. and Subsidiaries
As regards these instruments, a linear variation of 100 basis
points in the market interest rate curves at 31 December 2011
would, in the case of the effective hedges, have a net impact of
EUR -462 million on the equity attributable to the Parent (-EUR
177 million at companies accounted for using the equity
method and EUR -285 million at fully consolidated companies).
4.2 Foreign currency risk
Foreign currency risk management is generally centralised
through the Group Finance Department, on the basis of its
global policies that seek to minimise the impact caused by
fluctuations in the exchange rates of the currencies in which
Ferrovial operates, by means of hedging mechanisms.
Ferrovial has significant investments in developed countries
with a currency other than the euro, including most notably,
pounds sterling, US dollars, Canadian dollars and Polish zlotys.
Ferrovial sets up hedging strategies for these long-term
investments by issuing debt in the same currency as that in
which the investment is denominated.
With regard to management of foreseeable cash flow risks, the
following transactions are analysed:
Investments or divestments in projects.
Income obtained from foreign subsidiaries in the form
of dividends or capital reimbursements expected to be
received from those subsidiaries.
Intra-Group loans to foreign subsidiaries. Cash
surpluses at foreign subsidiaries.
Foreign currency collections from customers and
payments to suppliers.
The following table shows the values of assets, liabilities, noncontrolling
interests and equity attributable to the Parent by
type of currency at December 2011:
Millions 2011
Currency Assets Liabilities
Noncontrolling
Equity of
the Parent
interests
Euro 10,642 10,734 -294 186
Pound sterling 3,765 818 2,946 1
US dollar 4,377 4,114 375 -112
Canadian dollar 2,825 0 2,824 0
Polish zloty 1,213 1,004 151 75
Chilean peso 141 9 132 0
Other 9 6 3 0
Total Group 22,972 16,684 6,138 150
An analysis of the table above shows that the Group's equity is
particularly exposed to the Canadian dollar and to the pound
sterling.
In general, they are treated as long-term investments
denominated in strong currencies that historically have not
fluctuated significantly.
On the basis of all the data provided above, a 10%
appreciation of the euro at year-end against the main
currencies in which the Group has investments would have an
impact on the Parent’s equity of EUR -643 million, of which
46% would relate to the impact of the pound sterling and 44%
to the impact of the Canadian dollar. This fluctuation in the
value of the euro would have an impact on total assets of EUR
-1,232 million, of which 36% would relate to the investments in
the US dollar and 31% to the investments in pounds sterling.
The hedging strategy is analysed on a case-by-case basis,
avoiding significant effects that might hinder the fulfilment of
the business plan and impair Ferrovial’s capital. The factors
considered are:
(1) Size of the investment/transaction versus the level of
capitalisation required;
(2) Financing sources to be used (debt, cash flows received,
etc.);
(3) Risk of currency appreciation/depreciation;
(4) Financial cost of the possible hedge.
In general, the Group attempts to finance all the infrastructure
projects that it invests in using the currencies in which each
project’s income is denominated. Where this is not feasible, the
Group arranges derivatives to hedge potential changes in the
value of the debt caused by exchange rate fluctuations.
Also, in construction or services contracts in which the price is
received in a currency other than that in which the related
costs are paid, hedges are arranged to avoid changes in the
profit margin caused by exchange rate fluctuations.
Ferrovial, S.A. Consolidated financial statements at 31 December 2011 20