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4.1 CONSOLIDATED FINANCIAL STATEMENTS AND NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 12. Organization of financial risks and derivatives management
DANONE
REGISTRATION DOCUMENT 2015
129
Gains and losses related to fair value changes
recognized in profit or loss
Gains and losses recognized in profit or loss involve the following
items:
•
the ineffective portion, during the year, of the change in fair value
of instruments designated as cash flow hedges: in 2015 as in
2014, the amounts are not material;
•
the effective portion deferred in equity the previous year of
instruments designated as cash flow hedges and recycled to
income during the year: in 2015 as in 2014, the amount recycled
corresponded to the portion of hedges recorded in equity as of
December 31 of the previous year, with these hedges having for
the most part a maturity of less than one year.
Note 12.4. Derivatives used to hedge currency and translation risk on net assets
The Group has established a policy for monitoring and hedging the
net situation of certain subsidiaries, with regular assessments of
risks and opportunities to use hedging instruments.
The Group's policy consists of maintaining the debtor and/or surplus
cash positions of Danone and its subsidiaries in their respective
functional currencies. Furthermore, in compliance with its policy
of managing risks centrally, the Group may manage multi-currency
borrowings and surplus cash.
As part of these policies, the Group therefore uses cross-currency
swaps.
Notional amount and fair value amount
As of December 31
2014
2015
(in € millions)
Notional
Fair value
Of which,
recognized
in equity
Notional
Fair value
Of which,
recognized
in equity
Fair value hedge
138
59
–
138
74
–
Cash flow hedge
682
9
9
682
94
14
Net investment hedge
240
92
92
132
61
61
No hedge accounting applied
(a)
157
(10)
–
153
(22)
–
Total
1,217
150
101
1,105
207
75
(a) For currency risk related to financing and to net investment in foreign operations, hedge accounting might not be applied to minor amounts. In such cases,
both the derivative and the underlying are revalued and the change in value is recorded in the consolidated income statement.
Sensitivity of equity and net income to changes in fair value
A change in the fair value of these derivative financial instruments induced by a change in foreign exchange rates at the reporting date
would not have a significant impact on the Group's equity or net income. Changes in the foreign exchange rates of the financial instru-
ments are offset by changes in the foreign exchange rates on loans and borrowings in hedged currencies or on net foreign investments.