5.2 Transactions and balances
Transactions in foreign currencies are translated to the functional currency at the foreign exchange rate effective at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are retranslated into the functional currency at the exchange rates prevailing at the balance sheet date. Foreign exchange differences arising on translation are recognised in profit or loss, except when deferred in other comprehensive income as qualifying cash flow hedges to the extent the hedge is effective.
Non-monetary assets and liabilities denominated in foreign currencies not qualifying as foreign operations that are stated at historical cost are translated into the functional currency at foreign exchange rates at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are retranslated into functional currency at foreign exchange rates effective at the dates the fair values were determined. Foreign exchange differences arising on retranslation are recognised in profit or loss, except when qualifying as a net investment hedge or cash flow hedges to the extent the hedge is effective. Other comprehensive income is recognised directly in equity.
5.3 Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated to Euro at foreign exchange rates effective at the balance sheet date. The income and expenses of foreign operations, excluding foreign operations in hyperinflationary economies, are translated to Euro at the average foreign exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions). Foreign currency differences related to foreign operations are recognised in other comprehensive income, and presented in the foreign currency translation reserve (translation reserve) in equity.
However, if the foreign operation is a non-wholly owned subsidiary, then the relevant proportion of the translation difference is allocated to non-controlling interests. When a foreign operation is disposed of such that control, significant influence or joint control is lost, the cumulative amount in the translation reserve related to that foreign operation is reclassified to profit or loss as part of the gain or loss on disposal. When the Group disposes of only part of its interest in a subsidiary that includes a foreign operation while retaining control, the relevant proportion of the cumulative amount is reattributed to non-controlling interests. When the Group disposes of only part of its investment in an associate or joint venture that includes a foreign operation while retaining significant influence or joint control, the relevant proportion of the cumulative amount is reclassified to profit or loss.
When the settlement of a monetary item, receivable from or payable to a foreign operation, is neither planned nor likely in the foreseeable future, foreign exchange gains and losses arising from such a monetary item are considered to form part of a net investment in a foreign operation and are recognised in other comprehensive income, and presented in the translation reserve in equity.
The income and expenses of foreign operations in hyperinflationary economies are translated to Euro at the exchange rate at the reporting date. Prior to translating the financial statements of foreign operations in hyperinflationary economies, their financial statements are restated to account for changes in the general purchasing power of the local currency. The restatement is based on relevant price indices at the reporting date.
In case of hyperinflationary economies (i.e. Venezuela), the financial statements of associates are adjusted for the effects of changing prices of local currency and are presented within equity in the translation reserve.
5.4 Hedge of a net investment in foreign operation
The Group applies hedge accounting to foreign currency differences arising between the functional currency of the foreign operation and Nutreco’s functional currency (Euro), regardless of whether the net investment is held directly or through an intermediate parent.
FINANCIAL ST
Statement of financial position Statement of comprehensive income
31 December 2012 31 December 2011 2012 2011
Australian dollar per unit 0.79 0.79 0.81 0.74
Brazilian real per unit 0.37 0.41 0.40 0.43
British pound per unit 1.23 1.20 1.23 1.15
Canadian dollar per unit 0.76 0.76 0.78 0.73
Chinese yuan renminbi per 100 12.17 12.27 12.33 11.12
Japanese yen per 1,000 8.81 9.99 9.74 9.01
Mexican peso per 100 5.82 5.53 5.91 5.78
Norwegian krone per 100 13.57 12.88 13.38 12.82
Russian ruble per 100 2.49 2.40 2.50 2.45
US dollar per unit 0.76 0.77 0.78 0.72
6. Financial instruments
6.1 Non-derivative financial instruments
Non-derivative financial instruments are comprised of equity and debt securities, trade and other receivables, cash and cash equivalents, interest-bearing borrowings and trade and other payables.
Non-derivative financial instruments are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition non-derivative financial instruments are measured as described in the specific accounting principles.
Non-derivative financial instruments entered into and continued to be held in accordance with the Group’s expected purchase, sales and usage are accounted for at the trade date or the date that they are originated. Dividends are recognised when the Group’s right to receive payments is established and interest is recognised based on the effective interest method. Gains and losses, if any, are recorded in net financing costs. Non-derivative financial instruments are derecognised when the contractual rights to the cash flow from the asset expire, or when the rights to receive the contractual cash flow in a transaction are transferred, subsequently all the risk and rewards of ownership of the financial asset are transferred. Any interest in such transferred financial assets that is
created or retained by the Group is recognised as a separate asset or liability.
Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.
6.1.1 Financial assets at fair value through profit or loss A financial asset is classified as at fair value through profit or loss if it is classified as held for trading or is designated as such on initial recognition. Financial assets are designated as at fair value through profit or loss if the Group manages such investments and makes purchase and sale decisions based on their fair value in accordance with the Group’s documented risk management or investment strategy. Attributable transaction costs are recognised in profit or loss as incurred. Financial assets at fair value through profit or loss are measured at fair value and changes therein, which takes into account any dividend income, are recognised in profit or loss.
6.1.2 Available-for-sale financial assets
Available-for-sale financial assets are initially measured at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses and foreign currency differences on available-for-sale debt Foreign currency differences arising on the retranslation of
a financial liability designated as a hedge of a net investment in a foreign operation are recognised in other comprehensive income to the extent that the hedge is effective, and are presented in the translation reserve within equity. To the extent that the hedge is ineffective, such differences are recognised in profit or loss. When the hedged net investment
is disposed of, the relevant amount in the translation reserve is transferred to profit or loss as part of the gain or loss on disposal.
The principal exchange rates against the Euro (€) used in the statement of financial position and the statement of comprehensive income are: