Estados Financieros, (Inglés, Español) - Túnel San Cristóbal

4. FINANCIAL INSTRUMENTS
4.1 Policies on Financial Instruments
a) Hedge instruments
Hedge instruments are those the purpose of which is to
minimize risks that may have an impact on the Company’s
results, such as variations in the exchange rates and interest
rates.
The Company has expressly defined a general policy on
hedge, which mainly refers to the following:
a.1 Derivative financial instruments are those contracts that
meet the following characteristics:
• Their value changes on the basis of one or more underlying,
pre-established variables (specified interest rate, price of a
financial instrument, raw material quoted, exchange rate,
price or interest rate index, credit rating or index or on the
basis of another variable) and it has one or more notionals
or payment arrangements (or both), and these contractual
terms determine the amount of the compensation or
compensations.
• They do not require an initial investment or it is very small
in comparison with what would be required for other kinds
of contract that are expected to behave in a similar fashion
when faced with changes in the market factors.
• Their liquidation will be performed on a previously
established future date and their contractual terms require
or allow net compensation, either by payment in cash or
the physical delivery of an asset that places the receiving
counterpart in a similar position to the compensation in
cash.
a.2 Contracting this kind of instruments is only authorized
for fair value, cash flow or net foreign investment hedges,
under no circumstances for trading or speculating. In this
framework, contracting derivative products for managing
exchange rate, interest rate or other risks to which the
Company might be exposed, under the terms defined by the
Board of Directors.
Accounting hedges may be:
i) Fair value hedges. These consist in designating hedge
instruments to hedge exposure to changes in the fair value
of an asset, liability or firm commitment not recognized in
the balance sheet, or a proportion of them, to the extent that
such changes: i.1) are attributable to a particular risk; and
i.2) may affect future losses and profits. (e.g. variation in the
market price of an asset or liability).
ii) Cash Flow Hedges. These consist of designating hedge
instruments to hedge exposure to variability in the cash
flows of an asset, liability or future transaction that has
been planned and will very probably be executed, or a
proportion of them, to the extent that such variability: ii.1)
is attributable to a particular risk; and i.2) may affect future
losses and profits. (e.g. hedge variations in the interest rate
and exchange rate)
• The Company’s Board of Directors is the only instance
authorized to approve financial derivative operations,
pursuant to the company’s hedge needs and the business’
current circumstances.
• In all cases, operations with derivative financial
instruments must meet the criteria set forth in IAS 39. In
this context, emphasis must be made on the fact that only
assets, liabilities, firm commitments not recognized in the
balance sheet, future transactions that are planned and will
very probably be executed, and net investments abroad that
may be made, may be designated as hedge objects.
•The performance of derivative instrument operations will
be monitored frequently and regularly during the term of
the contract. To that end, the effectiveness or any deviations
that might be generated during the hedge relationship will
be measured at lease on a quarterly basis.
• The operations involving financial derivative instruments
will be carried out using counterparts authorized by the
Company’s Board of Directors.
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