PDF (7.3 MB) - GILDEMEISTER Interim Report 3rd Quarter 2012

Consolidated Financial Statements of gildemeister Aktiengesellschaft: Notes to the Consolidated Financial Statements 153measured at fair value through the discounting of future expected cash flows. In doing so,the market interest rates applicable for the remaining term of the contract are taken as abasis. Recognised models for determining option prices are applied to currency options.In addition to the residual term of an option, the fair value of an option is additionallyinfluenced by other determining factors, such as, for example, the current amount andvolatility of the respective underlying exchange rate or underlying basic interest rate.Value adjustments of financial instruments that are not classified as hedginginstruments within hedge accounting are immediately recognised in the income statement.Insofar as a hedging instrument fulfils the pre-conditions for hedge accounting, dependingon the respective type of the hedge accounting relationship, it is measured as follows:Fair Value HedgeChanges in the fair value of hedging instruments that hedge risk arising from changesin the fair value of recognised assets or liabilities are recognised together with the changein fair value of the hedged underlying transaction in the income statement. Fair valuehedges were not made in the reporting year.Cash flow HedgeChanges in fair value of hedging instruments that have been concluded to hedge cashflow fluctuations are recognised directly in equity for the effective portion of the hedginginstrument, taking into account deferred tax effects. The ineffective portion of the changein fair value is recognised in the income statement. Amounts reported in equity arebooked to the income statement as soon as the hedged underlying transaction affectsprofit and loss.The risk of rising expenditure on interest for re-financing is limited by concludinginterest rate swaps. In this way gildemeister receives a variable interest rate and pays afixed interest rate (payer interest rate swap). The residual term of these interest rateswaps is up to four and a half years. In 2008 gildemeister concluded interest rate swapsin order to limit the impact of future interest rate changes on financing costs of thevariable interest rate borrowers’ notes.Foreign exchange future contracts and currency options are used to hedge futurecash flows from expected incoming payments on the basis of present order intake.Payment is expected within in a period of up to one year. Derivative financial instrumentsare neither held nor issued for speculative or trading purposes. However, derivativesare measured as for held for trading if the pre-conditions for a cash flow hedge arenot fulfilled.consolidated financialstatements