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•
exchange rate risk on intercompany financial transactions
:
these hedges aim to reduce volatility arising from changes
in exchange rates on intercompany transactions, when such
transactions create an exposure to exchange rate gains or
losses that are not completely eliminated on consolidation.
The economic effects of the hedged item and the related
transfer of the reserve to the income statement occur
at the same time as recognising the exchange gains and
losses on intercompany positions in the consolidated
financial statements;
•
interest rate risk
: these hedges aim to reduce the volatility
of cash flows relating to finance costs arising on variable
rate debt.
Sales of goods and services/Raw Finance income (costs)
materials, consumables used and
goods for resale
Exchange rate risk on construction contracts
Exchange rate risk on intercompany financial transactions
Interest rate risk
When the economic effects of the hedged items occur, the gains and losses from the hedging instruments are taken to the
following lines in the income statement:
B.11
TRADE AND OTHER RECEIVABLES
Trade and other receivables are initially recognised at fair
value and subsequently valued on the basis of the amortised
cost method, net of the allowance for doubtful accounts.
Impairment of receivables is recognised when there is
objective evidence that the Group will not be able to recover
the receivable owed by the counterparty under the terms of
the related contract.
Objective evidence includes events such as:
(a) significant financial difficulty of the issuer or debtor;
(b) ongoing legal disputes with the debtor relating to
receivables;
(c) likelihood that the debtor enters bankruptcy or starts
other financial reorganisation procedures;
(d) delays in payments exceeding 30 days from the due date.
The amount of the impairment is measured as the difference
between the book value of the asset and the present value
of future cash flows and is recorded in the income statement
under “Other expenses”.
Receivables that cannot be recovered are derecognised with a
matching entry through the allowance for doubtful accounts.
The Group makes use of without-recourse factoring of trade
receivables. These receivables are derecognised because such
transactions transfer substantially all the related risks and
rewards of the receivables to the factor.
