eurochem-annual-report-2011

Financial information
Notes to the consolidated financial statements continued
for the year ended 31 December 2011
(all amounts are presented in thousands of Russian Roubles, unless otherwise stated)
17 Derivative financial assets and liabilities
At 31 December 2011 the Group did not hold any current derivative financial assets (31 December 2010: current financial assets comprised RR/US$
non-deliverable forward contracts accounted for at a fair value of RR 35,251 thousand and cross currency interest rate swap accounted for at a fair value
of RR 1,500 thousand). The non-current derivative financial assets comprised RR/US$ non-deliverable forward contracts accounted for at a fair value of
RR 124,353 thousand.
The non-current derivative financial liabilities were represented by a cross currency interest rate swap and RR/US$ non-deliverable forward contracts accounted
for at a fair value of RR 324,493 thousand and RR 169,246 thousand, respectively.
The current derivative financial liabilities were represented by EUR/US$ non-deliverable forward contracts and European call options over K+S Group ordinary
shares accounted for at a fair value of RR 167,044 thousand and RR 6 thousand, respectively (31 December 2010: European call options over K+S Group
ordinary shares accounted for at a fair value of RR 127,981 thousand).
At 31 December 2011 the derivative financial assets and liabilities were:
Assets Liabilities
Non-current Current Non-current Current
RR/US$ non-deliverable forward contracts 124,353 – 169,246 –
EUR/US$ non-deliverable forward contracts – – – 167,044
Cross currency interest rate swap – – 324,493 –
Option contracts over K+S Group ordinary shares – – – 6
Total 124,353 – 493,739 167,050
At 31 December 2010 the derivative financial assets and liabilities were:
Assets Liabilities
Non-current Current Non-current Current
RR/US$ non-deliverable forward contracts – 35,251 – –
Cross currency interest rate swap – 1,500 – –
Option contracts over K+S Group ordinary shares – – – 127,981
Total – 36,751 – 127,981
Cross currency interest rate swap
In 2010 the Group transacted a US$/RR cross currency swap in connection with its issue of a RR-denominated bond due November 2018 and callable by
investors in November 2015 (Note 16), as a result of which the Group pays US$ fixed 3.85% and receives RR fixed 8.25% interest the latter being the coupon
rate under the subject rouble bond. The swap will mature on 16 November 2015.
As at 31 December 2011 the Group recognised a net loss of RR 104,002 thousand (Note 25) comprised of a loss from revaluation of the cross currency interest
rate swap amounting to RR 325,993 thousand offset by net interest income of RR 221,991 thousand.
Call options over K+S Group ordinary shares
At 31 December 2010 the Group had outstanding European call options giving counterparties the right to buy over 1,400,000 K+S Group ordinary shares, which
matured in March and June 2011. These call options were not exercised.
During the year ended 31 December 2011, the Group sold European call options over 16,958,000 K+S Group ordinary shares for a total premium of RR 421,858
thousand. Out of these, 14,100,000 call options over K+S Group ordinary shares matured in the second half of 2011 without being exercised.
At 31 December 2011 the Group had outstanding European call options giving counterparties the right to buy over 2,858,000 K+S Group ordinary shares secured
by these shares as collateral with a fair value of RR 4,158,861 thousand with reference to the share price quoted on the Xetra trading system (Note 9). Out of
these, 1,108,000 K+S Group ordinary shares call options matured on 20 January 2012 without being exercised and 1,750,000 K+S Group ordinary shares call
options expire on 17 February 2012.
Foreign exchange non-deliverable forward contracts
At 31 December 2010 the Group had RR/US$ non-deliverable forward contracts to sell the nominal amount of US$ 300 million, which matured in March and
June 2011. During the second half of 2011, the Group entered into RR/US$ non-deliverable forward contracts and EUR/US$ non-deliverable forward contracts to
buy the nominal amount of RR 11,500 million and EUR 400 million, respectively. The contractual settlement dates for EUR/US$ non-deliverable forward contracts
are 28 March 2012 and for RR/US$ non-deliverable forward contracts vary from 18 December 2014 to 20 September 2016. As at 31 December 2011 the Group
recognised a gain of RR 573,664 thousand from the revaluation of forward contracts in profit and loss (Note 25), and proceeds of RR 820,852 thousand from
forward contracts which reached their maturity dates.
100 EuroChem Annual Report and Accounts 2011