APC 2013 Annual Report Download - page 236

5CONSOLIDATED FINANCIALSTATEMENTS ATDECEMBER 31, 2013
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
26.3 – Derivative instruments
exchange rates between the functional currencies and other
currencies can have a significant impact on its results and distort
26.3.1 Foreign currency
year-on-year performance comparisons. As a result, the Group
uses derivative instruments to hedge its exposure to exchange
rates mainly through futures and natural hedge. Furthermore,
Due to the fact that a significant proportion of affiliates’
some long term loans and borrowings granted to the affiliates are
transactions are denominated in currencies other than their
considered as net investment according to IAS21.
functional currencies, the Group is exposed to currency risks. If
the Group is not able to hedge these risks, fluctuations in
Dec. 31, 2013 Carrying amount Nominal amount
Sale Purchase
Cash flow hedges 119 - (3,206)
Net investment hedges 2 961 (199)
Fair value hedges - - -
Trading 13 2,797 (1,620)
134 3,758 (5,025)
Dec. 31, 2012 Carrying amount Nominal amount
Sale Purchase
Cash flow hedges (16) - (738)
Net investment hedges 30 1,007 (199)
Fair value hedges - - -
Trading 26 3,386 (2,268)
40 4,393 (3,205)
We manage our exposure to currency risk to reduce the sensitivity be hedged based on cash flow forecasting using contracts that
of earnings to changes in exchange rates through hedging expire in 12 months or less. Schneider Electric’s currency hedging
programs relating to receivables, payables and cash flows, which policy is to protect its subsidiaries against risks on all transactions
are primarily hedged by means of forward purchases and sales. denominated in a currency other than their functional currency.
Depending on market conditions, risks in the main currencies may
234 2013 REGISTRATION DOCUMENT SCHNEIDER ELECTRIC