4.3.21Derivative Financial Instruments
Further information about the financial risk management objectives and policies, the fair value measurement and hedge accounting of financial derivative instruments is included in note 4.3.29 Financial Instruments − Fair Values and Risk Management.
In the ordinary course of business and in accordance with its hedging policies as of December 31, 2019, the Company held multiple forward exchange contracts designated as hedges of expected future transactions for which the Company has firm commitments or forecasts. Furthermore, the Company held several interest rate swap contracts designated as hedges of interest rate financing exposure. The most important floating rate is the US$ 3-month LIBOR. Details of interest percentages of the long-term debt are included in note 4.3.24 Borrowings and Lease Liabilities.
The fair value of the derivative financial instruments included in the statement of financial position is summarized as follows:
Derivative financial instruments
|
31 December 2019 |
31 December 2018 |
|||||
|---|---|---|---|---|---|---|
|
Assets |
Liabilities |
Net |
Assets |
Liabilities |
Net |
|
|
Interest rate swaps cash flow hedge |
8 |
166 |
(159) |
6 |
42 |
(36) |
|
Forward currency contracts cash flow hedge |
14 |
48 |
(35) |
18 |
41 |
(23) |
|
Forward currency contracts fair value through profit and loss |
22 |
27 |
(5) |
22 |
32 |
(11) |
|
Total |
43 |
241 |
(198) |
46 |
116 |
(70) |
|
Non-current portion |
5 |
156 |
(150) |
12 |
41 |
(29) |
|
Current portion |
37 |
85 |
(48) |
34 |
75 |
(41) |
The ineffective portion recognized in the income statement (please refer to note 4.3.9 Net Financing Costs ) arises from cash flow hedges which totaled less than a US$3 million loss in 2019 (2018: US$0 million loss). The maximum exposure to credit risk at the reporting date is the fair value of the derivative assets in the statement of financial position.