Nabaltec_E_GB2016

98 OTHER DISCLOSURES S T N E M E T A T S L A I C N A N I F D E T A D I L O S N O C 12/31/2015 in TEUR Assets Level 1 Level 2 Level 3 Total Positive market values of currency derivatives Liabilities Negative market values of interest rate derivatives Negative market values of currency derivatives 0 0 0 0 2,476 0 0 0 0 0 2,476 0 No assets or liabilities were reclassified between the measurement levels in Financial Year 2016. Fair value is determined in each case based on the mark-to-market valuation of the participat- ing banks. Hedging transactions Interest rate swaps are executed to hedge against fluctuations in future cash flows for loans with variable rates of interest resulting from changes in market interest rates. In addition, a US dollar currency derivative was entered into in Financial Year 2016 to hedge against for- eign exchange risks arising from sales transactions. Designated and effective cash flow hedges are recognized in accordance with the hedge accounting rules in IAS 39. Accordingly, risks arising from fluctuations in interest and exchange rates are deliberately managed with a view to reducing volatility. At the commencement of the hedge, both the hedging transaction and the Group’s risk management goals and strategies with regard to the hedge are formally defined and documented. The documentation is to include a definition of the hedging instrument and the hedged item, as well as the type of risk and a description of how the Group will measure the effectiveness of the hedging instrument in compensating for risks arising from changes in cash flow associated with the hedged item. Hedging transactions are continually examined to ascertain whether they actually were highly effective for the entirety for the reporting period for which the hedging transaction was defined. Among the requirements imposed by IAS 39 within the framework of hedge accounting is the requirement that designated hedges must be effective. To meet this requirement, changes in the fair value of the hedging instrument must fall within a range of 80% to 125% of the opposite changes in the fair value of the hedged item, both prospectively and retrospectively. The effective portion of a hedge, i.e. that which falls within the above range, is recognized in shareholders’ equity with no effect on profit and loss, while the ineffective portion is immediately recognized as profit and loss in the consolidated statement of comprehensive income. As of 31 December 2016, the Group recognized interest rate derivatives in the amount of EUR –3,130 thousand (year before: EUR –2,378 thousand) and currency derivatives in the amount of EUR –175 thousand (year before: EUR 0 thousand) as hedging instruments as part of a cash flow hedge. Realization of the fair value of the interest rate and currency derivative, with no effect on profit and loss, resulted in changes in value in Financial Year 2016 of EUR –752 thousand (year before: EUR 430 thousand) and EUR –175 thousand (year before: EUR –1,211 thousand) respectively, the full amount of which was recognized in shareholders’ equity. The cash flow hedges are designed to hedge cash flows in the form of routine interest payments, in the case of the interest rate derivatives, and routine US dollar payments, in the case of the currency derivative. |||| Nabaltec AG | Annual Report 2016

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