eurochem-annual-report-2011

32 Financial and capital risk management
32.1 Financial risk management
The Group’s activities expose it to a variety of financial risks: market risk (including foreign currency exchange risk, interest rate risk and price risk), credit risk
and liquidity risk. The overall risk management programme seeks to minimise potential adverse effects on the financial performance of the Group.
(a) Market risk
(i) Foreign currency risk
The Group’s revenues, expenses, capital expenditure, investments and borrowings are denominated in foreign currencies as well as Russian Roubles. The Group
is exposed to foreign exchange risk to the extent that its future cash inflows and outflows over a certain period of time are denominated in different currencies.
The objective of the Group’s foreign exchange risk management is to minimise the volatility of the Group’s cash flows arising from fluctuations in foreign exchange
rates. Management focuses on assessing the Group’s future cash flows in foreign currencies and managing the gaps arising between inflows and outflows.
Translation gains and losses arising from the revaluation of its monetary assets and liabilities are therefore not viewed as an indicator of the total impact of foreign
exchange fluctuations on its future cash flows since such gains or losses do not capture the impact on cash flows of foreign exchange-denominated revenues,
costs, future capital expenditure, investment and financing activities.
The table below summarises the Group’s financial assets and liabilities which are subject to foreign currency risk at the reporting date:
31 December 2011
ASSETS
Non-current financial assets:
US$ Euro
Other foreign
currency
Restricted cash – 1,701 6,278
RR/US$ non-deliverable forwards 124,353 – –
Total non-current financial assets
Current financial assets:
124,353 1,701 6,278
Trade receivables 2,306,374 44,173 48
Interest receivable 50,362 – –
Fixed-term deposits 7,283,471 32,139 –
Cash and cash equivalents 3,169,942 1,678,260 20,124
Total current financial assets 12,810,149 1,754,572 20,172
Total financial assets
LIABILITIES
Non-current liabilities:
12,934,502 1,756,273 26,450
Bank borrowings 53,430,421 1,365,495 –
US$/RR cross currency swap (gross amount) 5,121,874 – –
RR/US$ non-deliverable forwards 169,246 – –
Total non-current financial liabilities
Current liabilities:
58,721,541 1,365,495 –
Bank borrowings – 4,167,140 –
Bonds issued 9,336,869 – –
Euro/US$ non-deliverable forwards – 167,044 –
Trade payables 1,072,806 251,192 38,177
Interest payable 271,445 19,166 –
Total current financial liabilities 10,681,120 4,604,542 38,177
Total financial liabilities 69,402,661 5,970,037 38,177
Annual Report and Accounts 2011 EuroChem 111
Financial information