Consolidated Financial Statements >
CONSOLIDATED FINANCIAL STATEMENTS AND EXPLANATORY NOTES
190
| 2012 annual report prysmian group
C.2
FAIR VALUE
The fair value of financial instruments listed on an active
market is based on market price at the reporting date. The
market price used for derivatives is the bid price, while for
financial liabilities the ask price is used. The fair value of
instruments not listed on an active market is determined
using valuation techniques based on a series of methods and
assumptions linked to market conditions at the reporting date.
Other techniques, such as that of estimating discounted cash
flows, are used for the purposes of determining the fair value
of other financial instruments.
The fair value of interest rate swaps is calculated on the basis
of the present value of forecast future cash flows. The fair
value of currency futures is determined using the forward
exchange rate at the reporting date. The fair value of metal
derivative contracts is determined using the prices of such
metals at the reporting date.
Financial instruments are classified according to the following
fair value hierarchy:
Level 1:
fair value is determined with reference to quoted
(unadjusted) prices in active markets for identical financial
instruments;
Level 2
: fair value is determined using valuation techniques
where the input is based on observable market data;
Level 3
: fair value is determined using valuation techniques
where the input is not based on observable market data.
Financial assets classified in fair value level 3 reported no
significant movements in either 2012 or 2011.
Given the short-term nature of trade receivables and payables,
their book values, net of any allowance for doubtful accounts,
are treated as a good approximation of fair value.
(in millions of Euro)
31 December 2012
Level 1
Level 2
Level 3
Total
ASSETS
Financial assets at fair value through profit or loss:
Derivatives
-
10
-
10
Financial assets held for trading
74
4
-
78
Hedging derivatives
-
9
-
9
Available-for-sale financial assets
-
-
14
14
Total assets
74
23
14
111
LIABILITIES
Financial liabilities at fair value through profit or loss:
Derivatives
-
16
-
16
Hedging derivatives
-
49
-
49
Total liabilities
-
65
-
65
(in millions of Euro)
31 December 2011
Level 1
Level 2
Level 3
Total
ASSETS
Financial assets at fair value through profit or loss:
Derivatives
-
12
-
12
Financial assets held for trading
61
19
-
80
Hedging derivatives
-
18
-
18
Available-for-sale financial assets
-
-
6
6
Total assets
61
49
6
116
LIABILITIES
Financial liabilities at fair value through profit or loss:
Derivatives
-
50
-
50
Hedging derivatives
-
57
-
57
Total liabilities
-
107
-
107
