163 348
163
[b] Interest rate risk
The interest rate risk to which the Group is exposed is mainly
on long-term financial liabilities, carrying both fixed and
variable rates.
Fixed rate debt exposes the Group to a fair value risk. The
Group does not operate any particular hedging policies in
relation to the risk arising from such contracts.
Variable rate debt exposes the Group to a rate volatility risk
(cash flow risk). In order to hedge this risk, the Group can use
derivative contracts that limit the impact of interest rate
changes on the income statement.
The Group Finance Department monitors the exposure to
interest rate risk and adopts appropriate hedging strategies
to keep the exposure within the limits defined by the Group
Administration, Finance and Control Department, arranging
derivative contracts, if necessary.
The following sensitivity analysis shows the effects on conso-
lidated net profit of an increase/decrease of 25 basis points in
interest rates on the interest rates at 31 December 2014 and
31 December 2013, assuming that all other variables remain
equal.
The potential effects shown below refer to net liabilities
representing the most significant part of Group debt at the
reporting date and are determined by calculating the effect on
net finance costs following a change in annual interest rates.
The net liabilities considered for sensitivity analysis include
variable rate financial receivables and payables, cash and cash
equivalents and derivatives whose value is influenced by rate
volatility.
2014
2013 (*)
-0.25%
+0.25%
-0.25%
+0.25%
Euro
0.10
(0.10)
(0.19)
0.19
US Dollar
(0.03)
0.03
(0.05)
0.05
British Pound
(0.05)
0.05
(0.03)
0.03
Other currencies
(0.38)
0.38
(0.35)
0.35
Total
(0.36)
0.36
(0.62)
0.62
(*) The previously published prior year consolidated financial statements have been restated following the adoption of IFRS 10 and IFRS 11. Further details can
be found in Section C. Restatement of comparative figures.
At 31 December 2014, the increase/decrease in the fair value
of derivatives designated as cash flow hedges arising from
an increase/decrease of 25 basis points in interest rates on
year-end rates would have respectively increased other equity
reserves by Euro 0.3 million and decreased them by Euro 0.3
million for hedges of underlying transactions in Euro.
At 31 December 2013, the increase/decrease in the fair value
of derivatives designated as cash flow hedges arising from
an increase/decrease of 25 basis points in interest rates on
year-end rates would have respectively increased other equity
reserves by Euro 0.8 million and decreased them by Euro 1.5
million for hedges of underlying transactions in Euro.
(in millions of Euro)