Econocom - 2020 annual report

06 consolidated financial statements

notes to the consolidated financial statements

Derivative financial instruments 13.2. The Group uses the financial markets only for hedging exposure related to its business activities and not for speculative purposes. Given the low exchange rate risk, forward purchases and sales of foreign currency are recognised as instruments measured at fair value through profit or loss.

This financial instrument is designated as a cash flow hedge and is eligible for hedge accounting under IFRS 9. Gains or losses on the hedging instrument are recognised directly in other comprehensive income until the hedged item is itself recognised in the income statement. Hedging reserves are then transferred to the income statement.

The Group uses an interest rate swap to hedge its interest rate risk on a floating-rate tranche of its new Schuldschein notes.

Other comprehensive income (expense) (1)

Change through profit or loss

31 Dec. 2019

31 Dec. 2020

Derivative instruments (positive fair value)

-

-

Derivative instruments (negative fair value)

0.9

-

0.2

1.1

Total

(0.2)

Classification of financial instruments 13.3. and fair value hierarchy

IFRS 7 “Financial Instruments: Disclosures” sets out a fair value hierarchy, as follows: level 1: fair value based on quoted prices in • active markets; level 2: fair value measured using • observable market inputs (other than the quoted market prices included in Level 1); level 3: fair value measured using • unobservable market inputs. The fair value of financial instruments is determined using market prices resulting from trades on a national stock exchange or over-the-counter markets. When no

market price is available, fair value is measured using other valuation methods such as discounted future cash flows. In any event, estimates of market value are based on certain interpretations required when measuring financial assets. As such, these estimates do not necessarily reflect the amounts that the Group would actuallyreceiveor pay if the instrumentswere traded on the market. The use of different estimates, methods and assumptions may have a material impact on estimated fair values.

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2020 annual report