Annual Report 2017

32. Derivative Financial Instruments

The fair value of the derivative financial instruments is as follows:

in thousands of EUR

31 December 2017

31 December 2016

Assets

Liabilities

Assets

Liabilities

Non-current

Interest rate derivatives – cash flow hedges

-

3,135

-

4,169

-

3,135

-

4,169

Current

Interest rate derivatives – cash flow hedges

-

85

-

74

Currency derivatives – cash flow hedges

1,427

4,304

5,233

675

Currency derivatives – fair value hedges

-

-

-

116

1,427

4,389

5,233

865

Total derivatives

1,427

7,524

5,233

5,034

The valuation of the derivatives is based on valuations provided by banks and other parties. In note 3.1.3 the maturity of the expected cash flows to occur is shown.

Interest rate derivatives

The nominal amount of the bank borrowings (see note 26) hedged by interest rate derivatives amounts to €400 million (2016: €300 million) which include €375 million (2016: €300 million) of 0% floors to hedge the impact of negative interest rates. The interest rate derivatives meet the requirements for hedge accounting in full.

Currency derivatives

The Group has transactional cash flows in multiple currencies and is exposed to the volatility of these currencies against the euro. The treasury policy is to hedge between 25% and 80% of the transactional cash flows based on a rolling 12-month forecast. Derivative financial instruments are aimed at reducing the exposure to adverse currency change. In relation to the Brexit event in 2016, in 2017 the Group continued to hedge its British Pound Sterling transactional exposures to the higher end of this range.

In 2017, the currency derivatives met the requirements for hedge accounting in full. In 2016, the currency derivatives that did not qualify for cash flow hedge accounting were carried at fair value through profit or loss as fair value derivatives.

At the end of 2017 the notional principal amounts of the outstanding forward foreign exchange contracts were:

in thousands of EUR

31 December 2017

31 December 2016

Currency

Euro (EUR)/United States Dollar (USD)

109,618

58,360

British Pound Sterling (GBP)/ Euro (EUR)

30,159

32,212

Norwegian Krone (NOK)/Danish Krone (DKK)

16,784

2,988

Swedish Krona (SEK)/Danish Krone (DKK)

37,119

7,603

Other/Euro (EUR)

37,485

53,247

Other /United States Dollar (USD)

9,389

7,838

All these foreign exchange deals are partially hedging underlying forecasted transactions of Group entities in the corresponding foreign currency.