Unilever 2014 Annual Report Download - page 79
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Please find page 79 of the 2014 Unilever annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.16A. MANAGEMENT OF LIQUIDITY RISK ONTINUED
The followng table shows cash flows for whch cash flow hedge accountng s appled The dervatves n the cash flow hedge relatonshps
are expected to have an mpact on proft and loss n the same perods as the cash flows occur
mllon
Due
wthn
1 year
mllon
Due
between
1 and 2
years
mllon
Due
between
2 and 3
years
mllon
Due
between
3 and 4
years
mllon
Due
between
4 and 5
years
mllon
Due
after
5 years
mllon
Total
mllon
Net
carryng
amount of
related
dervatves(a)
2014
Foregn exchange cash nflows 1,506 2 – 347 – – 1,855
Foregn exchange cash outflows (1,503) (2) – (304) – – (1,809) 34
Interest rate cash flows (97) – – – – – (97) (100)
ommodty contracts cash flows (421) – – – – – (421) (15)
2013
Foregn exchange cash nflows 1,088 –––––1,088
Foregn exchange cash outflows (509) –––––(509) 1
Interest rate cash flows (2) (111) (2) (1) – – (116) (41)
ommodty contracts cash flows (313) –––––(313) 14
(a) See note 16 on page 118
16B. MANAGEMENT OF MARKET RISK
Unlever’s sze and operatons result n t beng exposed to the followng market rsks that arse from ts use of fnancal nstruments
• commodty prce rsk
• currency rsk and
• nterest rate rsk
The above rsks may affect the roup’s ncome and expenses, or the value of ts fnancal nstruments The objective of the roup’s
management of market rsk s to mantan ths rsk wthn acceptable parameters, whle optmsng returns enerally, the roup
apples hedge accountng to manage the volatlty n proft and loss arsng from market rsk
The roup’s exposure to, and management of, these rsks s explaned below It often ncludes dervatve fnancal nstruments,
the uses of whch are descrbed n note 16
POTENTIAL IMPAT OF RISK MANAEMENT POLIY AND
HEDIN STRATEY
SENSITIVITY TO THE RISK
I) OMMODITY PRIE RISK
The roup s exposed to the rsk of
changes n commodty prces n relaton
to ts purchase of certan raw materals
At 31 December 2014, the roup had
hedged ts exposure to future commodty
purchases for 197 mllon (2013 318
mllon) wth commodty dervatves
The roup uses commodty forward
contracts to hedge aganst ths rsk
All commodty forward contracts hedge
future purchases of raw materals and
the contracts are settled ether n cash
or by physcal delvery
ommodty dervatves are generally
desgnated as hedgng nstruments n
cash flow hedge accountng relatons
All commodty forward contracts are done
n lne wth approvals from the lobal
ommodty Executve whch s chared by the
Unlever hef Supply han Offcer (SO)
A 10% ncrease n commodty prces as
at 31 December 2014 would have led to
an 18 mllon gan on the commodty
dervatves n the cash flow hedge reserve
(2013 32 mllon gan n the cash flow
hedge reserve) A decrease of 10% n
commodty prces on a full-year bass
would have the equal but opposte effect
II) URRENY RISK
urrency rsk on sales, purchases
and borrowngs
Because of Unlever’s global reach, t s
subject to the risk that changes in foreign
currency values impact the roup’s sales,
purchases and borrowngs
The roup manages currency exposures
wthn prescrbed lmts, manly through the
use of forward foregn currency exchange
contracts
Operatng companes manage foregn
exchange exposures wthn prescrbed lmts
Local complance s montored centrally
As an estmaton of the approxmate mpact
of the resdual rsk, wth respect to fnancal
nstruments, the roup has calculated the
mpact of a 10% change n exchange rates
116 Unilever Annual Report and Accounts 2014Financial statements
NOTES TO THE ONSOLIDATED FINANIAL STATEMENTS
UNILEVER ROUP ONTINUED