29) Fair value of financial instruments (excluding commodity contracts)
A) Impact on the statement of income per nature of financial instruments
Operating assets and liabilities
The impact on the statement of income is detailed as follows:
The impact in the statement of income mainly includes:
- Dividends and gains or losses on disposal of other investments classified as “Other investments”;
- Financial gains and depreciation on loans related to equity affiliates, non-consolidated companies and on receivables reported in “Loans and receivables”.
Assets and liabilities from financing activities
The impact on the statement of income of financing assets and liabilities is detailed as follows:
The impact on the statement of income mainly includes:
- Financial income on cash, cash equivalents, and current financial assets (notably current deposits beyond three months) classified as “Loans and receivables”;
- Financial expense of long term subsidiaries financing, associated hedging instruments (excluding ineffective portion of the hedge detailed below) and financial expense of short term financing classified as “Financing liabilities and associated hedging instruments”;
- Ineffective portion of bond hedging; and
- Financial income, financial expense and fair value of derivative instruments used for cash management purposes classified as “Assets and liabilities held for trading”.
Financial derivative instruments used for cash management purposes (interest rate and foreign exchange) are considered to be held for trading. Based on practical documentation issues, the Group did not elect to set up hedge accounting for such instruments. The impact on income of the derivatives is offset by the impact of loans and current liabilities they are related to. Therefore these transactions taken as a whole do not have a significant impact on the Consolidated Financial Statements.
B) Impact of the hedging strategies
Fair value hedge
The impact on the statement of income of the bond hedging instruments which is recorded in the item “Financial interest on debt” in the Consolidated statement of income is detailed as follows:
The ineffective portion is not representative of the Group’s performance considering the Group’s objective to hold swaps to maturity. The current portion of the swaps valuation is not subject to active management.
Net investment hedge
These instruments are recorded directly in other comprehensive income under “Currency translation adjustments”. The variations of the period are detailed in the table below:
As of December 31, 2014, 2013 and 2012 the Group had no open forward contracts under these hedging instruments.
Cash flow hedge
The impact on the statement of income and on equity of the hedging instruments qualified as cash flow hedges is detailed as follows:
As of December 31, 2014, 2013 and 2012, the ineffective portion of these financial instruments is equal to zero.
C) Maturity of derivative instruments
The maturity of the notional amounts of derivative instruments, excluding the commodity contracts, is detailed in the following table:
D) Fair value hierarchy
The fair value hierarchy for financial instruments excluding commodity contracts is as follows:
The description of each fair value level is presented in Note 1) "Accounting policies" paragraph M) "Financial assets and liabilities" (v) "Fair value of financial instruments" to the Consolidated Financial Statements.