Annual Report 2014

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Financial report Consolidated financial statements 16.2 Financial derivatives The Group uses derivative financial instruments to hedge its exposure to currency and interest rate risk. In accordance with its treasury policy, the Group does not hold or issue derivative financial instruments for trading purposes. All derivatives are measured at fair value. The following table provides an overview of the outstanding derivative financial instruments at 31 December: IN THOUSANDS OF EUR 2013 2014 Foreign exchange contracts Assets 1,289 1,844 Liabilities -5,248 -5,835 Cross currency interest rate swaps Assets 2,299 1,473 Interest rate swaps Liabilities -22,900 -34,531 Total -24,560 -37,049 The following table indicates in which caption of total comprehensive income, the changes in fair value of the derivative financial instruments outstanding at 31 December 2014, have been recognised: IN THOUSANDS OF EUR COST OF SALES PROFIT FOR THE YEAR INTEREST EXPENSE OTHER FINANCIAL INCOME OTHER FINANCIAL CHARGES OTHER COMPREHENSIVE INCOME Foreign exchange contracts Assets 88 - - - 491 Liabilities -183 - - - -288 Cross currency interest rate swaps Assets - - - -826 - Interest rate swaps Liabilities - - - - -11,631 Total -95 - - -826 -11,428 A. Cash flow hedges At 31 December 2014, the Group holds forward exchange contracts designated as hedges of expected future raw material purchases from suppliers for purchases denominated in US Dollar and Japanese Yen, of expected future sales denominated in Polish Zloty, and of expected future purchases denominated in euro by companies whose functional currency is the British Pound and Polish Zloty. At 31 December 2014, the Group had interest rate swap agreements in place with a notional amount of € 250,000 thousand (€ 280,000 thousand in 2013) whereby it receives a variable interest rate based on Euribor three or six months, as the case may be, and pays a fixed rate on the notional amount. The swaps are being used to hedge the exposure to interest rate risk on its floating debt. The floating rate debt and the interest rate swaps have the same critical terms. The Group did not recognise any ineffectiveness in 2013 and 2014. 116
Etex Annual Report 2014 Financial report Consolidated financial statements The following tables indicate the period in which the undiscounted cash flows are or were expected to occur. This is the same period as the period in which the cash flows are expected to impact the income statement (cost of sales if relating to forward exchange contracts covering sales and purchases in foreign currencies and interest expense if concerning interest rate swaps): At 31 December 2014 IN THOUSANDS OF EUR CARRYING AMOUNT TOTAL EXPECTED CASH FLOWS 1 YEAR OR LESS 1-2 YEARS 2-5 YEARS MORE THAN 5 YEARS Foreign currency Foreign exchange contracts Assets 1,673 1,673 1,627 46 - - Liabilities -5,021 -5,021 -3,763 -1,258 - - Interest rate Interest rate swaps Assets - - - - - - Liabilities -34,531 -44,132 -9,909 -6,856 -20,530 -6,837 At 31 December 2013 IN THOUSANDS OF EUR CARRYING AMOUNT TOTAL EXPECTED CASH FLOWS 1 YEAR OR LESS 1-2 YEARS 2-5 YEARS MORE THAN 5 YEARS Foreign currency Foreign exchange contracts Assets 1,205 1,205 1,205 - - - Liabilities -4,617 -4,617 -4,617 - - - Interest rate Interest rate swaps Liabilities - 22,900 - 29,870 - 9,416 - 5,658 - 11,028 - 3,768 B. Derivatives without hedging relationship Certain derivative transactions, while providing effective hedges under the Group’s risk management policy, may not qualify for hedge accounting due to the complexity of the instruments. Some of the Group’s Chilean subsidiaries took out borrowings denominated in euro and then entered into cross currency interest swaps to hedge the principal amounts and interest payments into their functional currency, the Chilean Peso. The cross currency interest rate swap payments mature on the same dates that the borrowings and interest are due for payment. At the end of 2014, the cross currency swap has a positive fair value of € 1,473 thousand (positive fair value of € 2,299 thousand in 2013). 117
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Annual Report 2014
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ABOUT ETEX 1 Our company & strategy
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Etex Annual Report 2014 About Etex
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worldwide presence with local ancho
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Annual Report 2014

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