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10.- Derivative financial instruments
The Company uses derivative financial instruments to hedge the risks to which its business
activities, operations and future cash flows are exposed. As part of these transactions, the
Company has arranged certain hedging financial instruments, the detail of which is as follows:
Foreign currency hedges
The Company uses currency derivatives to hedge significant future transactions and cash flows in
US dollars, thereby mitigating the foreign currency risk.
All these relationships are cash flow
hedges of firm payment commitments in US dollars relating to the purchase of broadcasting rights
(underlying), in which the exposure to the USD/EUR exchange rate is hedged (hedged risk), which
results in variability in the cash flows payable in euros for broadcasting rights. This variability
affects the profit or loss of the period(s) in which the planned payment transaction has not been
performed. The Company applies hedge accounting and documents the hedging relationships and
the measurement of their effectiveness as required by current legislation.
In general, on assumption of the commitment to purchase the broadcasting rights, the Company
arranges a foreign currency derivative that expires on the payment dates of the accounts payable
to suppliers. A hedging relationship is arranged that covers the entire term of the derivative, i.e.
the derivative is considered to be a hedging instrument from its arrangement (when the
commitment to purchase the broadcasting rights is assumed) up to the date of payment of the
contracted broadcasting rights. . Changes in the fair value of the derivative are recognised
temporarily in equity up to the beginning of the term of the right, and are finally reclassified from
equity to profit or loss in order to offset the impact on profit or loss of changes in the value of the
hedged item, as detailed as follows:
a)
At the date of entry into force (which is the date on which Atresmedia may use the
broadcasting rights and, therefore, recognises the acquisition thereof under “Inventories”
in the balance sheet), the changes in fair value from arrangement up to that date which
have been recognised in equity as the effective portion, are included as an increase
in/reduction of the carrying amount at which the inventories were recognised.
b)
Once the inventories and the corresponding accounts payable to suppliers have been
recognised, the changes in the fair value of the foreign currency derivatives and the value
of the accounts payable are recognised in the statement of profit or loss at each
accounting close.
At 31 December 2015, the Company had arranged instruments to hedge its foreign currency asset
and liability positions amounting to USD 244,048 thousand, at a weighted average exchange rate
of EUR 1.1821/USD 1. At 31 December 2014, the Company had arranged hedging instruments
amounting to USD 230,233 thousand, at a weighted average exchange rate of EUR 1.3279/USD 1.