Airbus 2015 Annual Report Download - page 285

AIRBUS GROUP FINANCIAL STATEMENTS 2015 l 103 l
Notestothe IFRSCompanyFinancialStatements
4.
The Company can receive loans from issued commercial papers
under the so called “billet de trésorerie” programme at floating
or fixed interest rates corresponding to the individual maturities
ranging from 1day to 12months. The programme has been set
up in 2003 with a maximum volume of € 2billion, increased in
2013 to a maximum volume of € 3billion.
The decrease in long-term financing liabilities is mainly due
to a reclassification between long-term and short-term bonds,
partly offset by the issue of a convertible bond for € 500million
on 1July 2015, with a 7 year-maturity. This bond bears a coupon
of 0% and was issued at 102% of par. Its effective interest rate,
after separation of the equity conversion option (€ 53million),
is 1.386%.
Included in the short-term financing liabilities is the irrevocable
part of the share buyback commitment in the amount of
€ 223million.
13. Information about Financial Instruments
13.1 Financial Risk Management
The Company acts as an intermediary for its subsidiaries when
they wish to enter into derivative contracts to hedge against
foreign exchange risk or other market risks such as interest rate
risk, commodity price risk or equity price risk. The Company’s
practice is to set up a derivative contract with a subsidiary and
at the same time enter into a back-to-back derivative transaction
with a bank. Contracts with subsidiaries being thus mirrored (on
a one-to-one basis) by contracts with banks, the Company’s net
exposure is virtually zero. There are, however, a few derivative
contracts the Company holds in order to hedge its own market
risk exposure.
As the Company’s back-to-back hedge contracts are entered
into with different counterparties, their fair values are reflected
separately in the statement of Financial Position and recognised
as other financial assets and financial liabilities as disclosed in
Note8 “Financial assets and liabilities” of the Company Financial
Statements.
In the Statement of Income the results of the back-to-back hedge
transactions, both realised and unrealised, are presented on a
net basis as the Company acts as an agent for its subsidiaries.
The Company’s overall financial risk management activities and
their objectives are described in detail in section35.1 “Financial
risk management” of the Notes to the Consolidated Financial
Statements.
Market Risk
Foreign exchange risk — The Company manages a
long-term hedge portfolio with maturities of several years
for its subsidiaries, mainly Airbus, and to a small extent for
its joint ventures or associates. This hedge portfolio covers a
large portion of AirbusGroup’s firm commitments and highly
probable forecast transactions. As explained above, owing to
the Company’s back-to-back approach, its own exposure to
foreign exchange risk is very limited.
Interest rate risk — The Company uses an asset-liability
management approach with the objective to limit its interest
rate risk. The Company undertakes to match the risk profile
of its interest-bearing assets with those of its interest-bearing
liabilities, the remaining net interest rate exposure being
managed through several types of interest rate derivatives. If
the derivative instruments qualify for hedge accounting in the
Company Financial Statements the Company applies cash flow
hedge accounting or fair value hedge accounting. For more
information on the risk management and hedging strategies
used by the Group please refer to section35.1 “Financial
risk management” of the Notes to the Consolidated Financial
Statements.
Equity price risk — The Company is to a small extent invested
in quoted equity securities mainly for strategic reasons. The
Company’s exposure to equity price risk is hence limited.
Furthermore, AirbusGroup is exposed under its long-term
incentive plan (LTIP) to the risk of AirbusGroup share price
movements. In order to limit these risks for the Group, the
Company enters into equity derivatives that reference the
AirbusGroup SE share price.
Sensitivities of market risks — The approach used to
measure and control market risk exposure within the Group’s
financial instrument portfolio is amongst other key indicators
the value-at-risk (“VaR”). For information about VaR and
the approach used by the Company to assess and monitor
sensitivities of market risks please refer to section35.1 “Financial
Risk Management” of the Notes to the Consolidated Financial
Statements.
The Company is part of the Group risk management process,
which is more fully described in section35.1 “Financial risk
management” of the Notes to the Consolidated Financial
Statements.
Financial Statements 2015
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Annual Report 2015 Financial Statements 2015
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