303
C.1
CAPITAL RISK MANAGEMENT
C.2
FAIR VALUE
The Company’s objective in capital risk management is mainly
to safeguard business continuity in order to guarantee returns
for shareholders and benefits for other stakeholders. The
Company also aims to maintain an optimal capital structure
in order to reduce the cost of debt and to comply with a series
of covenants required by the various Credit Agreements
(Notes 8 and 27).
The Company monitors capital on the basis of its gearing
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
ratio (ie. the ratio between net financial position and capital).
Note 8 contains details of how the net financial position is
determined. Capital is defined as the sum of equity and the
net financial position.
The gearing ratios at 31 December 2012 and 31 December 2011
are shown below:
The change in the gearing ratio is largely attributable to the
deterioration in the net financial position, resulting from the
increased level of debt mainly after activating the “Credit
Agreement 2010” on 3 May 2012 (see Note 8).
flows, are used for the purposes of determining the fair value
of other financial instruments.
It is reported that the Company’s statement of financial
position does not contain any assets or liabilities measured at
fair value.
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 thousands of Euro)
31 December 2012
31 December 2011
Net financial position
920,587
682,977
Equity
871,588
786,439
Total
1,792,175
1,469,416
Gearing ratio
51%
46%
