The following tables provide an overview of the composition of financial instruments as of December 31, 2013, by class within the meaning of IFRS 7 as well as by measurement category. The tables also include financial assets and liabilities, as well as derivatives that are included in recognized hedging relationships, that do not belong to any of the IAS 39 measurement categories.
Measurement in accordance with IAS 39
(EUR thousand) Carrying amount 12/31/2013 Amortized cost Fair value through profit or loss Fair value recognized in other comprehensive income Measurement in accordance with other
IFRSs 12/31/2013Fair value
Assets
Trade receivables 929,156 663,580 – – 265,576 929,156
of which PoC receivables 265,576 – – – 265,576 265,576
Income tax receivables 8,332 – – – 8,332 8,332
Cash and cash equivalents 683,520 683,520 – – – 683,520
Other financial assets 151,007 64,383 4,809 16,025 65,790 151,007 of which derivatives included in hedging
relationships 6,450 – – 6,450 – 6,450
By IAS 39 measurement category
Loans and receivables 1,384,075 1,384,075 – – – 1,384,075
of which cash and cash equivalents 683,520 683,520 – – – 683,520
of which trade receivables 663,580 663,580 – – – 663,580
of which other financial assets 36,975 36,975 – – – 36,975
Available-for-sale investments 36,983 27,408 – 9,575 – 36,983
Financial assets at fair value through profit or loss (derivatives not included in a recognized hedging
relationship) 4,809 – 4,809 – – 4,809
Liabilities
Trade payables 646,529 646,529 – – – 646,529
Financial liabilities 1,025,653 972,464 10,985 6,006 36,198 1,076,221 of which liabilities under finance leases 36,198 – – – 36,198 36,198 of which derivatives included in hedging
relationships 6,006 – – 6,006 – 6,006
Income tax liabilities 32,038 – – – 32,038 32,038
Other liabilities 606,280 59,748 – – 546,532 606,280
By IAS 39 measurement category
Financial liabilities at amortized cost 1,678,741 1,678,741 – – – 1,729,309
of which trade payables 646,529 646,529 – – – 646,529
of which bonds and other securitized liabilities 710,578 710,578 – – – 755,341
of which liabilities to banks 260,756 260,756 – – – 266,561
of which loan liabilities to unconsolidated
subsidiaries 1,130 1,130 – – – 1,130
of which other liabilities to affiliated companies 22,047 22,047 – – – 22,047
of which other liabilities 37,701 37,701 – – – 37,701
Financial liabilities at fair value through profit or loss (derivatives not included in a hedging
Measurement in accordance with IAS 39 (EUR thousand) Carrying amount 12/31/2012 Amortized cost Fair value through profit or loss Fair value recognized in other comprehensive income Measurement in accordance with other IFRSs Fair value 12/31/2012 Assets Trade receivables 1,249,863 909,847 – – 340,016 1,249,863
of which PoC receivables 340,016 – – – 340,016 340,016
Income tax receivables 19,350 – – – 19,350 19,350
Cash and cash equivalents 743,524 743,524 – – – 743,524
Other financial assets 215,080 91,886 3,237 14,943 105,014 215,567 of which derivatives included in hedging
relationships 3,880 – – 3,880 – 3,880
By IAS 39 measurement category
Loans and receivables 1,714,458 1,714,458 – – – 1,714,458
of which cash and cash equivalents 743,524 743,524 – – – 743,524
of which trade receivables 909,847 909,847 – – – 909,847
of which other financial assets 61,087 61,087 – – – 61,087
Available-for-sale investments 41,862 30,799 – 11,063 – 42,349
Financial assets at fair value through profit or loss (derivatives not included in a recognized hedging
relationship) 3,237 – 3,237 – – 3,237
Liabilities
Trade payables 839,143 839,143 – – – 839,143
Financial liabilities 1,137,910 1,070,988 17,031 7,266 42,625 1,199,443 of which liabilities under finance leases 42,625 – – – 42,625 42,625 of which derivatives included in hedging
relationships 7,266 – – 7,266 – 7,266
Income tax liabilities 39,912 – – – 39,912 39,912
Other liabilities 802,879 83,150 – – 719,729 802,879
By IAS 39 measurement category
Financial liabilities at amortized cost 1,993,281 1,993,281 – – – 2,054,814
of which trade payables 839,143 839,143 – – – 839,143
of which bonds and other securitized liabilities 765,144 765,144 – – – 818,947
of which liabilities to banks 303,889 303,889 – – – 311,619
of which loan liabilities to unconsolidated
subsidiaries 1,955 1,955 – – – 1,955
of which other liabilities to affiliated companies 21,781 21,781 – – – 21,781
of which other liabilities 61,369 61,369 – – – 61,369
Financial liabilities at fair value through profit or loss (derivatives not included in a hedging
relationship) 17,031 – 17,031 – – 17,031
The fair values of the financial instruments recognized under assets held for sale and liabilities held for sale are not presented separately, since their carrying amounts represent reasonable approximations of their fair value.
Financial assets and liabilities that are measured at fair value, or for which a fair value is disclosed in the notes to the consolidated financial statements, are required to be categorized according to the fair value hierarchy described in the following. Categorization within the levels of the fair value hierarchy is based on the measurement of the underlying inputs:
Level 2 inputs: quoted market prices that are observable as direct (prices) or indirect (derived from prices) inputs used to measure fair value and that are not quoted prices as defined by Level 1.
Level 3 inputs: inputs that are not based on observable market data.
The following table shows the categorization of financial assets and financial liabilities into the three-level fair value hierarchy:
Recurring fair value measurements 12/31/2013 12/31/2012
Carrying amount
Fair value Carrying amount
Fair value
(EUR thousand) Level 1 Level 2 Level 3 Level 1 Level 2 Level 3
Financial assets measured at fair value
Derivatives included in hedging relationships 6,450 – 6,450 – 3,880 – 3,880 – Derivatives not included in hedging relationships 4,809 – 4,809 – 3,237 – 3,237 – Available-for-sale financial assets valued at fair value 9,575 – – 9,575 11,063 – – 11,063
Financial liabilities measured at fair value
Derivatives included in hedging relationships 6,006 – 6,006 – 7,266 – 7,266 – Derivatives not included in hedging relationships 10,985 – 10,985 – 17,031 – 17,031 –
Financial liabilities not measured at fair value
Bonds 410,220 438,866 – – 409,601 445,980 – –
Promissory note bonds 300,358 – 316,475 – 355,543 – 372,967 –
Liabilities to banks 260,756 – 266,561 – 303,889 – 311,619 –
There were no transfers into or out of the levels of the fair value hierarchy in fiscal year 2013. The fair value of the bond is calculated on the basis of quoted bid prices on an active market and is therefore categorized within Level 1. The fair value includes the interest deferred as of the reporting date. The fair value of derivatives is calculated using quoted exchange rates and yield curves observable in the market. Accordingly, these are categorized within Level 2 of the fair value hierarchy.
The fair value of borrower’s note loans and liabilities to banks is measured on the basis of the yield curve, taking into account credit spreads. They are therefore categorized within Level 2 of the fair value hierarchy. The interest deferred as of the reporting date is included in the fair values.
The fair values of trade receivables, cash and cash equivalents, and other financial receivables and liabilities essentially correspond to the carrying amounts; this is due to the predominantly short remaining maturities.
A receivable relating to the former raw material activities of Metallgesellschaft AG that had previously been written off was allocated to Level 3 financial instruments; its fair value is determined by means of a present value calculation on the basis of the debtor’s payment plan.
The following table shows the changes in fair value in fiscal year 2013: (EUR thousand) Fair value 12/31/2012 11,063 Redemption –494 Interest income 346 Currency translation –1,016 Revaluation –325 Fair value 12/31/2013 9,575
As the debtor operates a copper mine, its payment plan is influenced by the price of copper.
Unrealized gains recognized directly in equity for this financial instrument amounted to EUR 370 thousand as of the reporting date (previous year: EUR 695 thousand).
GEA Group Aktiengesellschaft has entered into netting agreements with banks under the German Master Agreement for Financial Derivatives Transactions. As a general rule, the amounts owed under such agreements by each counterparty from all outstanding transactions in the same currency on a single day are aggregated to a single net amount payable by one party to the other.
The following table shows the financial assets and liabilities for which the complete group has entered into netting agreements:
(EUR thousand)
Gross amounts of financial assets/liabilities
Net amounts of financial assets/liabilities, presented
in the balance sheet netted in the balance sheetRespective amounts not Net amounts
12/31/2013
Receivables from derivates 9,049 9,049 5,378 3,671
Liabilities from derivates 17,110 17,110 5,378 11,732
12/31/2012
Receivables from derivates 6,137 6,137 3,701 2,436
Liabilities from derivates 24,297 24,297 3,701 20,596
Nonderivative financial assets
The carrying amount of the trade receivables and other financial assets that are subject to the IAS 39 measurement requirements corresponds to their fair value. Assets allocated to the “available-for-sale financial assets” category are measured at amortized cost. These are shares in unconsolidated subsidiaries and other equity investments whose fair value cannot be determined reliably.
Nonderivative financial liabilities
The carrying amount of the trade payables and other current liabilities that are subject to the measurement rules of IAS 39 corresponds to their fair value. The fair value of fixed-rate liabilities is the present value of their expected future cash flows. They are discounted at the rates prevailing at the reporting date. The carrying amount of variable-rate liabilities corresponds to their fair value.
Derivative financial instruments
The fair value of currency forwards at the reporting date is calculated on the basis of the spot exchange rate, taking into account forward premiums and discounts corresponding to the relevant remaining maturities. Forward premiums and discounts are derived from yield curves observable at the reporting date. The fair value of currency options is calculated on the basis of recognized valuation models. Fair value is affected by the remaining term of the option, the current exchange rate, the volatility of the exchange rate, and the underlying yield curves.
The fair value of interest rate swaps and options is determined on the basis of discounted expected future cash flows. Market interest rates applicable to the remaining maturities of these financial instruments are used. Cross-currency swaps also include the exchange rates of the relevant foreign currencies in which the cash flows are generated.
The fair value of commodity futures and options is calculated by measuring these at the market terms prevailing at the reporting date, and thus corresponds to its value at the end of the fiscal year. The fair value of exchange-traded contracts is derived from their quoted market price. Measurements are performed both internally and by external financial institutions as of the reporting date.
GEA Group uses derivative financial instruments, including currency forwards, interest rate swaps, cross-currency swaps, and commodity futures. Derivative financial instruments serve to hedge foreign currency risk, interest rate risk, and commodity price risk for existing or planned underlying transactions.
The following table presents the notional values and fair values of the derivative financial instruments in use as of the reporting date. The notional value in foreign currency is translated at the closing rate.
12/31/2013 12/31/2012 (EUR thousand) Notional value Fair value Notional value Fair value
Assets
Currency derivatives not included in a hedging relationship 192,880 4,809 314,322 3,233 Currency derivatives included in a cash flow hedge 231,089 6,450 172,492 3,880 Interest rate and cross-currency derivatives not included in a hedging relationship – – 1,440 4 Interest rate and cross-currency derivatives included in a cash flow hedge – – – – Commodity derivatives not included in a hedging relationship – – – –
Total 423,969 11,259 488,254 7,117
Equity and liabilities
Currency derivatives not included in a hedging relationship 344,011 5,775 318,964 5,689 Currency derivatives included in a cash flow hedge 128,657 2,741 118,052 1,728 Interest rate and cross-currency derivatives not included in a hedging relationship 43,348 5,210 52,379 11,244 Interest rate and cross-currency derivatives included in a cash flow hedge 50,000 3,265 178,000 5,538 Commodity derivatives not included in a hedging relationship – – 691 98
Total 566,016 16,991 668,086 24,297
Derivative financial instruments included in recognized hedging relationships
Derivative financial instruments included in recognized hedging relationships serve exclusively to hedge foreign currency risks from future sale and procurement transactions, as well as interest rate risks from long-term financing (cash flow hedges). Fair value hedges are recognized to hedge changes in the fair value of assets, liabilities, or firm commitments. As in the previous year, the group had not entered into any fair value hedges as of December 31, 2013.
Derivatives are measured at fair value, which is split into an effective and an ineffective portion. The effective portion and any change in this amount are recognized in other comprehensive income until the hedged item is recognized in the balance sheet. The ineffective portion is recognized in the income statement. When the hedged item is recognized in the balance sheet, gains and losses recognized in
recognized as revenue, whereas in the case of a procurement transaction the cost is adjusted accordingly. In the case of interest rate derivatives, the gains and losses recognized in equity are reversed to net interest income.
As of December 31, 2013, the complete group recognized gains of EUR 7,860 thousand (previous year: EUR 4,229 thousand) and losses of EUR 7,168 thousand (previous year: EUR 7,420 thousand) from currency and interest rate derivatives directly in equity.
In the course of fiscal year 2013, EUR 1,956 thousand (previous year: EUR 1,910 thousand) was recognized in the income statement due to the hedged items being recognized in the balance sheet, and EUR 2,335 thousand (previous year: EUR −6,233 thousand) was offset against the cost of assets. The amounts recognized in the income statement resulted in an increase in revenue of EUR 1,010 thousand (previous year: EUR 1,939 thousand). In addition, gains of EUR 4,330 thousand (previous year: gains of EUR 9,829 thousand) and losses of EUR −4,061 thousand (previous year: losses of EUR −9,858 thousand) were reported in net exchange rate gains/losses. EUR −826 thousand (previous year: EUR −45 thousand) from interest rate derivatives was recognized in net interest income.
As in the previous year, there was no significant hedge ineffectiveness.
93 percent (previous year: 91 percent) of the hedged cash flows from the underlying transactions designated at the reporting date are expected to fall due in the following year. The remaining 7 percent (previous year: 9 percent) are due by 2017 (previous year: 2017). If financial assets are hedged, the derivatives are recognized in the income statement at the same time as the hedged items are recognized in the income statement and balance sheet. If financial liabilities from procurement transactions are hedged, the derivatives are recognized in the income statement when the purchased goods or services are recognized in the income statement.
Derivative financial instruments not included in recognized hedging relationships
If the criteria for recognizing a hedging relationship are not met, any change in fair value is recognized in the income statement
Income and expenses
The measurement effects from financial instruments have largely been recognized in profit or loss. The following table shows net income from financial instruments, broken down by the IAS 39 measurement categories:
12/31/2013 12/31/2012
(EUR thousand) Net income
of which interest income/ expense of which impairment losses/ reversals of impairment
losses Net income
of which interest income/ expense of which impairment losses/ reversals of impairment losses
Loans and receivables 5,949 5,132 –3,104 3,188 6,000 –6,192
Available-for-sale investments –1,660 7 –280 752 579 –469
Financial assets/liabilities at fair value
through profit or loss –2,469 555 – –8,074 –2,670 –
Financial liabilities at amortized cost –44,500 –43,453 – –43,946 –42,852 –