APC 2012 Annual Report Download - page 214

2012 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC212
CONSOLIDATED FINANCIAL STATEMENTS AT DECEMBER31, 2012
5NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note26 Financial instruments
The Group uses fi nancial instruments to manage its exposure to
fl uctuations in interest rates, exchange rates and metal prices.
Due to the fact that a signifi cant proportion of Group’s transactions
are denominated in currencies other than the euro, the Group is
exposed to currency risk. The main exposures in terms of currency
exchange risk are related to the U.S. dollar and the Chinese yuan.
The Group uses derivative instruments to hedge its exposure to
exchange rates mainly through futures and natural hedge.
Fluctuations in interests rates impact the Group interest expenses
and income and the value of the Group’s fi nancial liabilities and
assets. Interest rate risk on borrowings is managed at the Group
level, based on consolidated debt and taking into consideration
market conditions in order to optimize overall borrowing costs. The
Group uses derivative instruments to hedge its exposure to interest
rates through swaps.
The Group is exposed to fl ucuations in raw material prices, including,
the prices of steel, copper, aluminium, silver, lead, nickel, zinc and
plastics. the Group is also exposed to fl uctuations in energy prices.
The Group uses derivative instruments to hedge its exposure to
energy and raw material price fl uctuations through futures and
options.
Exposure to these risks is described in the chapter on risk factors in
the Registration Document.
26.1 – Carrying amount and nominal amount of derivative financial instruments
Dec.31, 2011 Dec.31, 2012 Dec.31, 2012
Change over the period
Carrying
amount
Nominal amount
IFRS
designation Carrying amount Statement of income (1) Equity (2) Other Sale Purchase
Foreign exchange
Futures - cash fl ow hedges CFH* (59) 33 1 1 (24) - (738)
Futures - net investment
hedges NIH* (50) 4 76 - 30 1,007 (199)
Futures - hedges of balance
sheet items
Trading/
FVH* (84) 117 1 - 34 3,386 (2,268)
Metal prices
Futures and options CFH* (12) - 10 - (2) - (236)
Share-based payment
Call options CFH* 34 30 8 (2) 70 - (141)
Interest rates
Interest rates Swaps CFH*/FVH* (14) (10) 10 - (14) - (1,126)
DERIVATIVES FINANCIAL
INSTRUMENTS (185) 174 106 (1) 94
* Cash fl ow hedge/Fair value hedge/Net investment hedge.
(1) Gains and losses on hedging instruments for the period are offset by changes in the fair value of the underlying items, which are also
recognized in net result.
(2) Reported in equity under Retained earnings or Translation adjustment.
(3) 3,317,727 Schneider Electric stocks are hedged in relation to Stock Appreciation Rights granted to US employees.
The carrying amount refl ects the fair value of fi nancial instruments.