APC 2003 Annual Report Download - page 100

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Consolidated and Parent Company Financial Statements
98
21.6 - Interest rate risk
The main interest rate swaps put in place by the
Group are as follows:
a) SEISAS: swap on perpetual bonds (notional
amount: €443.5 million at December 31, 2003).
b) SE (UK) Ltd: swaps on lines of credit (two swaps,
both on a notional amount of €58.9 million).
c) Boissière Finance: In 2003, interest rate swaps
were set up as a protection against a possible cut in
interest rates. The Group is the fixed rate lender and
the variable rate borrower. The inception date of the
swaps was January 2, 2004 and their expiry date is
July 4, 2004. The portfolio comprises two contracts
on a total notional amount of €800 million.
Sensitivity to changes in interest rates
The Group’s gross debt amounts to €2,688.3 million,
of which 85% is at a fixed rate (including variable rate
debt swapped for fixed rate. The Group also has cash
and cash equivalents of €3,087.5 million, including
€800 million converted into fixed rate by means of
swaps.
A one point increase or decrease in interest rates
would have the effect of increasing or reducing the
Group’s net financial expense by €19 million.
21.7 - Market value of financial instruments (on and off balance sheet)
(
€
millions)
December 31, 2003
Book value Market value
Perpetual bond rate swaps - (83.1)
Other swaps, caps and collars - (5.0)
Current options and other hedges - 9.1
Forward purchases and sales of foreign currencies - 63.9
Metal price hedges - (9.0)
Derivative instruments - (24.1)
Non-consolidated investments 369.6 416.9
Cash and cash equivalents 3,087.5 3,087.5
Other financial assets 585.4 585.4
Bonds (2,151.0) (2,194.0)
Syndicated loan (Lexel) (16.7) (18.8)
Perpetual bonds (113.6) (113.6)
Other borrowings (407.0) (407.0)
Other financial instruments 1,354.2 1,356.4
Total 1,354.2 1,332.3
The fair value of swaps is estimated either internally, by discounting the future differential cash flows at
current market interest rate, or by third party banks.
For other derivative instruments, fair value has been obtained from third-party banks.