Südzucker International Finance B. V. Südzucker AG ... - Xetra

Consolidated financial statements1.10 Derivative instrumentsSüdzucker Group uses derivative instruments to a limited extent to hedge part of the risks arising from its operating activities andplanned funding needs for its capital expenditures. The Südzucker Group mainly hedges the following risks:Interest-rate change risk on money market interest rates mainly resulting from fluctuations in liquidity levels during the campaignseason, or existing or planned floating rate debt.Foreign currency change risk which can primarily arise from sales of sugar on the world market in US dollars and from paymentobligations in foreign currencies.Product price change risk which can arise from price fluctuations on the global sugar market as well as in the energy sector.Only normal market instruments are used for hedging purposes, such as interest-rate swaps, caps and futures, and foreign currencyfutures. These instruments are used within the framework of Südzucker’s risk management system as laid down in groupguidelines, which set limits based on underlying business volumes, define authorisation procedures, prohibit the use of derivativeinstruments for speculative purposes, minimise credit risks and determine the content of internal reporting and segregation ofduties. Reviews are carried out regularly to ensure compliance with these guidelines and the correct processing and valuation oftransactions, and adherence to segregation of duties.The nominal and fair values of derivative instruments and their credit risks within the Südzucker Group are as follows:D million Nominal volume Fair value Credit risk2002/03 2001/02 2002/03 2001/02 2002/03 2001/02Interest rate hedges 1,061.9 1,086.6 (90.6) (57.6) – 0.0Currency hedges 54.1 143.8 2.2 (0.8) 3.0 1.3Product price hedges 37.6 14.1 (4.1) (0.1) 0.3 0.2Total 1,153.6 1,244.5 (92.5) (58.5) 3.3 1.5Maturities of the currency derivatives and product derivatives are less than one year, and of the interest rate derivatives arebetween one and five years.The nominal volumes of a derivative hedge instrument are the imputed call amounts upon which the payments are calculated.The hedged transaction and risk is not the nominal value itself, but rather the related price or interest-rate change.F-26