e. Fair Value of Financial Instruments
Fair value calculation
The fair value of forward foreign exchange contracts is determined using forward exchange market rates at the balance sheet date.
At the balance sheet date, the fair values of forward contracts designated as cash flow hedges were as follows:
| (in TEUR) | 2006 | 2005 | |
| Forward contracts with positive fair values | 15,039 | 4,886 | |
| Forward contracts with negative fair values | (3,774) | (11,299) | |
| 11,265 | (6,413) |
rep06-en-fair_values_forward_contracts.xls (Download size 16 KB)
The change in fair values of forward contracts from in total negative to in total positive fair values was mostly due to the change in fair values of forward contracts to hedge cash flows in US dollars because of the weakening of the US dollars against the Euro.
The fair value of the interest swaps presenting a total negative fair value as of end of 2006 was EUR 2,647 thousand (EUR 4,024 thousand as of end of 2005 being a positive fair value).
Cash and cash equivalents, current and non-current financial assets
The carrying amount of cash and other financial assets approximates fair value due to the relatively short-term maturity of these financial instruments.
Non-current and current securities
The fair values of publicly traded instruments are based on quoted market prices. For all other instruments for which there are no quoted market prices, a reasonable estimate of fair value has been calculated based on the expected cash flows or the underlying net asset base for each investment. Non-current securities of the Group are classified as "available for sale” and are valued at their quoted market price at the balance sheet date.
Receivables and payables
The historical carrying amounts of receivables and payables which are all subject to normal trade credit terms correspond basically to their fair values.
Short-term borrowings
The carrying amount approximates fair value because of the short period to maturity of those instruments.
Long-term borrowings
The fair value of the long-term debts is based on the current interest rates available for debt with the same maturity profile. The fair value of non-current borrowings and other payables with variable interest rates approximates their carrying amounts.
The interest risk of the bond has been hedged by an interest swap. Management believes that the exposure to interest rate risk of the remaining financial assets and liabilities is negligible.
IAS 39 Reserve
The table below shows the movements in the IAS 39 reserve in equity:
| (in TEUR) | 2006 | 2005 | ||
| Balance as at 1 January | (3,172) | 21,097 | ||
| Movements in the period: | ||||
| Gains and losses from changes in fair value | (1,095) | (11,744) | ||
| Deferred income taxes thereon | 339 | 3,641 | ||
| Transfers to income statement | 6,501 | (23,737) | ||
| Deferred income taxes thereon | (2,015) | 7,358 | ||
| Change in fair value of financial assets | 178 | 314 | ||
| Deferred income taxes thereon | (63) | (101) | ||
| Balance as at 31 December | 673 | (3,172) |
rep06-en-ias_39_reserve.xls (Download size 17 KB)
