Consolidated financial statement 2011 - Aquafin

n
a. Projects in progress on behalf of third parties
For projects in progress on behalf of third parties that do
not fall under the concession agreement, the revenues
are shown in the profit and loss account based on
the stage of completion of the project activities (the
percentage of completion method). That method can
only be used if the result of a project in progress on
behalf of third parties can be estimated reliably.
On the balance date, the group prepares an estimate
of the results of the project: the difference between the
expected contract revenues and the contract costs, as
well as the stage of completion of the project activities.
On the reporting date, that completion level is applied
to the total of the expected revenues and costs in order
to determine the amount of costs and revenues that
are to be applied to the profit and loss account for
the period.
If the group expects a loss on the project in progress on
behalf of third parties, that is posted against the results
immediately.
If the result of a project in progress on behalf of third
parties cannot be estimated in a reliable way, only the
revenues are shown to the value of the costs that will
probably be recoverable.
Costs of financing
Financing costs are shown as an immediate charge in
the period in which they are incurred. The group has no assets
for which financing costs must be activated.
n
Hedging
The group uses derivatives to hedge interest risks arising
from the financing activities. Active interest management is
done in accordance with the objectives and regulations
imposed by the managing body. It is group policy not to enter
into speculative transactions or leverage transactions.
Hedge categories
A distinction is made between two hedge categories: fair
value hedges and cash flow hedges.
Fair value hedges are hedges of the risk of change to
the fair value of assets and liabilities. Both the derivatives
that were designated as real-value hedges and their
covered assets or liabilities are valued at fair value in the
balance statement and changes in fair value are shown in
the profit and loss account. If a hedge appears to no longer
be very effective, the hedge accounting will be stopped and
the adjustment to the book value of the covered interestbearing
financial instrument will be written off linearly
in the profit and loss account up to the expiry date of
the covered position.
Cash flow hedges are hedges of the possible variability of
future cash flows that are related to the assets or liabilities
shown, very probable expected future transactions or
not-taken fixed commitments. Changes to the fair value of
a hedging instrument that serves as a very effective
cash flow hedge are shown in the overview of the
unrealised results, more specifically in the hedge reserve.
The ineffective part is shown in the profit and loss account
immediately.
Fair value hedge
Cash flow hedge
Qualified • Variation in time value = • Variation in time value =
impact on results account
impact on results account
• Variation in intrinsic value = • Variation in intrinsic value =
to be compensated mutually
component of unrealised results
• Coupon: calculated pro rata over the year
• Coupon: calculated pro rata over the year
Unqualified • Variation in total value = • Variation in total value =
impact on results account
impact on results account
• Coupon: cash flow in that year
• Coupon: cash flow in that year
Consolidated financial statement
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