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287
The Company's objective in capital risk management is mainly
to safeguard business continuity in order to guarantee returns
for shareholders and benefits for other stakeholders. The
Company also aims to maintain an optimal capital structure in
order to reduce the cost of debt and to comply with a series of
covenants under the various credit agreements (Note 10. Bor-
rowings from banks and other lenders and Note 29. Financial
covenants).
The fair value of financial instruments quoted in an active
market is based on market price at the reporting date. The
market price used for derivatives is the bid price, while for
financial liabilities the ask price is used.
The fair value of instruments not listed on an active market
is determined using valuation techniques based on a series of
methods and assumptions linked to market conditions at the
reporting date.
The change in the gearing ratio is largely attributable to:
• the increase of Euro 113,714 thousand in the net financial
position, mainly due to the greater liquidity available
to the Company after contracting the EIB Loan and the
C.1 CAPITAL RISK MANAGEMENT
C.2 FAIR VALUE
The Company monitors capital on the basis of its gearing
ratio (i.e. the ratio between net financial position and capital).
Details of how the net financial position is determined can be
found in Note 10. Borrowings from banks and other lenders.
Capital is defined as the sum of equity and the net financial
position.
The gearing ratios at 31 December 2014 and 31 December 2013
are shown below:
Other techniques, such as that of estimating discounted cash
flows, are used for the purposes of determining the fair value
of other financial instruments.
Given the short-termnature of trade receivables and payables,
their book values, net of any allowance for doubtful accounts,
are treated as a good approximation of fair value.
Revolving Credit Facility 2014;
• the increase of Euro 85,975 thousand in equity, reflecting
an improvement in net profit, more details of which can
be found in Note 9. Share capital and reserves.
31 December 2014 31 December 2013
Net financial position
726,381
612,667
Equity
1,107,027
1,021,052
Total capital
1,833,408
1,633,719
Gearing ratio
40%
38%
(in thousands of Euro)