CONSOLIDATED FINANCIAL STATEMENTS >
EXPLANATORY NOTES
152
| 2013 ANNUAL REPORT | PRYSMIAN GROUP
When assessing the potential impact of the above, the
assets and liabilities of each Group company in currencies
other than their accounting currency were considered, net of
any derivatives hedging the above-mentioned flows.
The following sensitivity analysis shows the post-tax effects
The above analysis ignores the effects of translating the
equity of Group companies whose functional currency is not
the Euro.
(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
on equity reserves of an increase/decrease in the fair value
of derivatives designated as cash flow hedges following a 5%
and 10% increase/decrease in exchange rates versus closing
exchange rates at 31 December 2013 and 31 December 2012.
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
consolidated net profit of an increase/decrease of 25 basis
points in interest rates on the interest rates at 31 December
2013 and 31 December 2012, 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.
(in millions of Euro)
2013
2012
-5%
+5%
-5%
+5%
US Dollar
1.31
(1.45)
1.88
(2.08)
United Arab Emirates Dirham
0.38
(0.42)
0.51
(0.57)
Qatari Riyal
1.86
(2.05)
2.21
(2.44)
Saudi Riyal
-
-
0.03
(0.03)
Other currencies
0.48
(0.53)
0.45
(0.50)
Total
4.03
(4.45)
5.08
(5.62)
(in millions of Euro)
2013
2012
-10%
+10%
-10%
+10%
US Dollar
2.50
(3.06)
3.59
(4.39)
United Arab Emirates Dirham
0.72
(0.88)
0.98
(1.19)
Qatari Riyal
3.54
(4.33)
4.22
(5.15)
Saudi Riyal
0.01
(0.01)
0.05
(0.06)
Other currencies
0.92
(1.12)
0.86
(1.05)
Total
7.69
(9.40)
9.70
(11.84)
