Annual report 2014

28 Financial risk management

In the context of its operating activities, the Haniel Group is exposed to financial risks. These primarily include liquidity risks, default risks, risks resulting from changes in interest and exchange rates, and price fluctuations in the commodity markets. The purpose of financial risk management is to reduce the extent of these financial risks.

The Management Board lays down the basic guidelines for financial risk management and determines the general procedures to be followed for hedging financial risks. The holding companies of the fully consolidated divisions have their own treasury departments, which identify, analyse and assess the financial risks before initiating preventive or mitigating measures. The central treasury department advises the subsidiaries and, in addition to its own Hedging transactions, enters into hedges on their behalf as well. All hedges relate to an underlying hedged item. No derivative financial instruments are used for speculative purposes.

For financing purposes, the Haniel Group uses a variety of financing instruments in keeping with industry and commercial practice and subject to customary contractual provisions. No special financial risks arise from this practice. The two rating agencies Standard & Poor’s and Moody’s raised Haniel’s rating in the previous year to BB+ and Ba1. This reduced the interest rate for the two euro benchmark bonds issued in 2009 and 2010 by 125 basis points back to the original rate. The contractual conditions governing the euro bonds issued in February 2012 by Franz Haniel & Cie. GmbH with an issuing volume of EUR 400 million provide for an interest rate increase of 125 basis points if Haniel’s rating falls below BB or Ba2.

LIQUIDITY RISK

Liquidity risk is the risk of being unable to guarantee the Haniel Group’s solvency at all times. Liquidity risk is managed by financial planning measures taken by the fully consolidated divisions’ holding companies to ensure that the necessary resources are available to fund the operating business and investments. The financing requirement is determined according to the financial plans of the subsidiaries and the Holding Company. In order to cover the financing requirement, the Holding Company has at its disposal committed, unutilised credit facilities as well as a commercial paper programme and a Debt Issuance Programme. The liquidity risk is also managed within the fully consolidated divisions, which also have their own unutilised bilateral short- and long-term credit facilities. The Haniel Group seeks as a general rule to maintain an appropriate reserve of available credit facilities.

DEFAULT RISK

The default or credit risk is the risk of the Haniel Group’s contractual partners not fulfilling their obligations. The Haniel Group is exposed to a default risk both in its operating business and in connection with financial instruments.

In view of the Haniel Group’s diverse activities and the large number of existing customer relationships, entailing as a rule minor individual receivables, a concentration of default risks generally does not arise from trade receivables or from receivables from investments and other current assets. From the Group’s perspective, the default risk is not significant. In the ELG division, however, due to its industry there are some significant individual trade receivables vis-à-vis major customers that are hedged with default insurance policies as necessary.

The investment of cash in selected financial products is governed by directives in the Haniel Group. Depending on the assessment of the counterparty’s creditworthiness, corresponding limits are prescribed and monitored in order to avoid a concentration of default risks. Based on internal and external ratings, the default risks with respect to current and non-current financial assets as well as cash and cash equivalents may be summarized as follows.

EUR million 31 Dec. 2014 31 Dec. 2013
Low credit risk 612 29
Medium credit risk 95 16
Total 707 45

In addition to the carrying amounts of the (derivative) financial instruments with positive fair values recognised in the statement of financial position, the maximum default risk of the Haniel Group also includes the nominal amount of the financial guarantee contracts issued. As at the reporting date, financial guarantee contracts with a nominal volume totalling EUR 21 million (previous year: EUR 21 million) had been granted.

INTEREST RATE RISK

Interest rate risk is the risk of profit or loss being negatively affected by fluctuating market interest rates. The interest rate risk is limited with derivative financial instruments, chiefly interest rate swaps. Decisions on the use of derivative financial instruments are made on the basis of the planned indebtedness, the investment position and interest rate expectations. The interest rate hedging strategy is reviewed and new targets are defined at regular intervals. The Haniel Group generally seeks to maintain an appropriate hedged interest rate position.

The following interest rate sensitivity analysis illustrates the hypothetical effects on profit before taxes, other comprehensive income and equity, had the prevailing market interest rates changed on the reporting date. It is based on the assumptions that the figures as at the reporting date are representative for the whole year, and that the supposed change in market interest rates could have occurred on the reporting date. Tax effects are disregarded.

31 Dec. 2014 +100 basis points -100 basis points
EUR million Profit before taxes Other compre- hensive income Equity Profit before taxes Other compre- hensive incomeEquity
Euro market interest rates 0 0
USD market interest rates 2 1 3 -2 -1-3
GBP market interest rates -1 1 0 1 -10
31 Dec. 2013 +100 basis points -100 basis points
EUR million Profit before taxes Other compre- hensive income Equity Profit before taxes Other compre- hensive incomeEquity
Euro market interest rates -1 8 7 1 -9-8
USD market interest rates -1 4 3 1 -4-3
GBP market interest rates -1 1 0 1 -10

EXCHANGE RATE RISK

Exchange rate risks arise from investments and financing measures undertaken in foreign currencies, and from the operating business in connection with buying and selling merchandise and services in currencies other than the functional currency. The resulting risk exposure is determined continually and hedged primarily by entering into forward currency contracts and currency swaps. The majority of exchange rate risks originate from changes in the EUR-USD and EUR-GBP rates.

Micro-hedges are the principal instruments used to hedge exchange rate risks. These entail the direct hedging of an underlying transaction with a currency derivative. Currency derivatives are also used to hedge forecast transactions in foreign currencies. In this case, the currency derivative (or a combination of several derivatives) that best reflects the probability of occurrence and timing of the forecast transaction is selected.

An exchange rate sensitivity analysis illustrates the theoretical effects on profit before taxes, other comprehensive income and equity of changes in the exchange rates of the currencies that are significant for the Haniel Group. The exchange rate sensitivity analysis is based on the non-derivative and derivative financial instruments held by the Group companies in non-functional currencies on the reporting date. It assumes that the exchange rates change by an indicated percentage rate on the reporting date. Movements over time, actual observed changes in other market parameters and tax effects are disregarded.

The medium- and long-term borrowing is predominantly done by the Franz Haniel & Cie. GmbH, the holding companies of the fully consolidated divisions and the financing companies located in Germany and the Netherlands. Depending on the borrowing requirements of the individual Group companies, these companies can also obtain loans in currencies other than the euro for disbursement within the Group. Since these loans are not taken out in the companies’ functional currency, IFRS 7.40 requires that they be taken into account when measuring the exchange rate risk, even though such a risk does not exist from the perspective of the Group as a whole.

31 Dec. 2014 +10% -10%
EUR million Profit before taxes Other compre- hensive income Equity Profit before taxes Other compre- hensive incomeEquity
USD-EUR exchange rate 36 36 -36 -36
GBP-EUR exchange rate 7 7 -7 -7
31 Dec. 2013 +10% -10%
EUR million Profit before taxes Other compre- hensive income Equity Profit before taxes Other compre- hensive incomeEquity
USD-EUR exchange rate 18 18 -19 -19
GBP-EUR exchange rate 4 4 -5 -5

OTHER PRICE RISKS

These price risks concern the risks arising from fluctuating commodity prices, especially the price of nickel. The ELG division continually determines the risk exposures resulting from the purchase and sale of products and hedges these with respect to nickel primarily through the use of derivative financial instruments (nickel futures).

The sensitivities are measured, taking into account the effect on profit or loss of value changes in the (derivative) financial instruments, disregarding the compensating value changes in the hedged items.

A hypothetical increase (decrease) in the nickel price by USD 1,774 per tonne (previous year: USD 1,900 per tonne) (financial year: 12 per cent; previous year: 14 per cent of the spot nickel price as at the reporting date) would have reduced (raised) profit before taxes by EUR 18 (18) million (previous year: EUR 18 (18) million). The assumed change in the nickel price corresponds to the initial margin established by the London Metal Exchange (LME). This is the amount that must be deposited as margin when entering into a contract.

HEDGE ACCOUNTING

The Haniel Group enters into hedging transactions for the purpose of hedging both the fair values of certain assets or liabilities and future cash flows. This also includes currency hedges of planned sales and purchases of merchandise and services, and of investments and divestments.

In accordance with IAS 39, all derivatives entered into by the Haniel Group are initially recognised in the statement of financial position at cost, corresponding to fair value, and are subsequently measured at their fair value as at the reporting date. When accounting for hedges, the hedge accounting rules are sometimes applied. Under the hedge accounting rules, a derivative is classified either as a hedging instrument in a cash flow hedge if it is used to hedge future cash flows, as a hedging instrument in a fair value hedge if it is used to hedge the fair values of certain assets and liabilities, or as a hedging instrument in a hedge of a net investment in a foreign operation if it is used to hedge an investment recognised in a foreign currency.

Currency derivatives used to hedge existing items of the statement of financial position are usually not subjected to formal hedge accounting. The changes in the fair values of these derivatives, which, from an economic point of view, represent effective hedges in the context of the Group strategy, are recognised in profit or loss. Those changes are generally matched by opposite changes in the fair values of the hedged items.

CASH FLOW HEDGES – INTEREST RATE HEDGING

The Haniel Group obtains financing largely by way of long-term and short-term bilateral credit facilities, bonds and promissory loan notes. The bilateral credit facilities are generally utilised on a revolving basis with a short-term fixed-rate period. By entering into derivative financial instrument transactions, the Group hedges against rising market interest rates and thus against future increases in interest expenses. At the reporting date, the Group has hedged interest payments amounting to EUR 1 million, USD 1 million and GBP 1 million. These hedges originate from floating-rate liabilities with a nominal amount of EUR 25 million, USD 30 million and GBP 15 million. In the previous year interest payments in the amount of EUR 4 million, USD 2 million and GBP 1 million were hedged in continuing operations. These hedges originated from floating-rate liabilities with a nominal amount of EUR 263 million, USD 150 million and GBP 15 million.

CASH FLOW HEDGES – CURRENCY HEDGING

The Haniel Group enters into forward exchange contracts to hedge euro-denominated payments. The designated hedged items are highly probable payments denominated in various foreign currencies.

The designated underlying transactions as at 31 December 2014 amount to EUR 27 million. They mature in the amount of EUR 12 million in Q1 2015, in the amount of EUR 10 million in Q2 2015, and in the amount of EUR 5 million in Q3 2015.

The designated underlying transactions in continuing operations as at 31 December 2013 amounted to EUR 31 million. They matured in the amount of EUR 13 million in Q1 2014, in the amount of EUR 11 million in Q2 2014, and in the amount of EUR 7 million in Q3 2014.

In connection with cash flow hedges, losses of EUR 7 million (previous year: gains of EUR 12 million) were recognised in other comprehensive income for the financial year. Losses of EUR 19 million (previous year: losses of EUR 7 million) were transferred from other comprehensive income to finance costs and losses of EUR 3 million (previous year: losses of EUR 14 million) were transferred to profit after taxes from discontinued operations. Of these amounts, EUR 16 million were recognised in finance costs in the financial year (previous year: EUR 0 million) because previously existing hedges were revoked upon the disposal of the hedged items. In the previous year, EUR 2 million was also recognised in profit after taxes from discontinued operations for the same reason.

As in the previous year, there was no ineffectiveness from cash flow hedges.

FAIR VALUE HEDGE

As in the previous year, fair value hedge accounting was not applied in the financial year.

HEDGE OF A NET INVESTMENT IN A FOREIGN OPERATION

Non-derivative financial liabilities denominated in foreign currency are used to hedge the net investment in a foreign operation. As in the previous year, there were no significant ineffective portions of the net investment hedges.

In compliance with the hedging strategy pursued by the Haniel Group, the total derivative financial instruments position is composed as follows:

  31 Dec. 2014  31 Dec. 2013 
EUR million Fair value of which cash flow hedges Fair value of which cash flow hedges
Assets        
Interest rate instruments        
Currency instruments 1   8
Other derivative financial instruments 10   2
  11 0 10 0
Liabilities
Interest rate instruments 13 9 23 23
Currency instruments 5 1
Other derivative financial instruments 1 1
19 9 25 23

The table below shows the contractually agreed, undiscounted payments of interest and principal over time of the non-derivative financial liabilities, derivative liabilities and financial guarantee contracts existing as at 31 December 2014:

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EUR million Cash flows 2015 Cash flows 2016 Cash flows from 
2017 to 2019
Cash flows from
2020 to 2024
Cash flows from
2025 onwards
Non-derivative financial liabilities and financial guarantee contracts
Liabilities due to banks -199 -108 -194 -49
Bonds, commercial paper and other securitised debt -131 -35 -517  
Liabilities to shareholders -68 -48 -66  
Lease liabilities -4 -4 -16 -15 -13
Other financial liabilities -39 -12 -34 -41 -2
Liabilities from business combinations -61
Trade payables -146
Financial guarantee contracts -4 -1 -2 -5 -9
-652 -208 -829 -110 -24
Derivative liabilities
Hedge accounting
Derivatives (net settled) -3 -3 -5 -1
Derivatives (gross settled) inflows 19
Derivatives (gross settled) outflows -19
-3 -3 -5 -1 0
Without hedge accounting
Derivatives (net settled) -1 -1 -3 -1
Derivatives (gross settled) inflows 385 1 18
Derivatives (gross settled) outflows -390 -1 -18
-6 -1 -3 -1 0
-9 -4 -8 -2 0

For the financial guarantee contracts, the disclosure is made not on the basis of the estimated probable amount, but in the amount of the agreed maximum guarantee at the earliest possible date.

The contractually agreed, undiscounted payments of interest and principal over time of the non-derivative financial liabilities, derivative liabilities and financial guarantee contracts that existed in continuing operations as at 31 December 2013 were as follows:

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EUR million Cash flows 2014 Cash flows 2016 Cash flows from
2017 to 2019
Cash flows from
2020 to 2024
Cash flows from
2025 onwards
Non-derivative financial liabilities and 
financial guarantee contracts
Liabilities due to banks -172 -130 -245 -64
Bonds, commercial paper and other securitised debt -567 -229 -1,100  
Liabilities to shareholders -64 -52 -60  
Lease liabilities -6 -4 -12 -23 -14
Other financial liabilities -37 -15 -31 -46
Liabilities from business combinations -54
Trade payables -120
Financial guarantee contracts -4 -1 -2 -4 -10
-970 -485 -1,450 -137 -24
Derivative liabilities
Hedge accounting
Derivatives (net settled) -8 -8 -17 -4
Derivatives (gross settled) inflows 21
Derivatives (gross settled) outflows -21
-8 -8 -17 -4 0
Without hedge accounting
Derivatives (net settled)
Derivatives (gross settled) inflows 88 1
Derivatives (gross settled) outflows -89 -1
  -1 0 0 0 0
  -9 -8 -17 -4 0

The repayments of principal are classified by the earliest period in which the creditors may demand repayment.

IAS 39 CATEGORISATION OF FINANCIAL INSTRUMENTS

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ASSETS
EUR million Carrying amounts as at 31 Dec. 2014 Financial assets held for trading Loans and receivables Financial assets available for sale No IAS 39 category Outside the scope of IFRS 7
Financial assets available for sale 167     167    
Other securities 5 5    
Loans 16 9 7  
Non-current financial assets 188 0 14 167 7 0
Trade receivables 407 0 407 0 0 0
Receivables from investments 8 8
Other current assets 72 45 27
Receivables from investments and other current assets 80 0 53 0 0 27
Derivative financial instruments 11 11
Financial assets available for sale 160 160
Other securities and fixed-term deposits 237 237
Current financial assets 408 11 237 160 0 0
Cash and cash equivalents 111 0 111 0 0 0
Assets held for sale 29 0 8 0 0 21
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EUR million Carrying amounts as at 31 Dec. 2013 Financial assets held for trading Loans and
receivables
Financial  assets
available
for  sale
No IAS 39 category Outside the scope of IFRS 7
Financial assets available for sale 6     6    
Other securities 0      
Loans 7   7    
Non-current financial assets 13 0 7 6 0 0
Trade receivables 360 0 360 0 0 0
Receivables from investments 6 6
Other current assets 75 47 28
Receivables from investments and other current assets 81 0 53 0 0 28
Derivative financial instruments 10 10
Financial assets available for sale 0
Other securities and fixed-term deposits 0
Current financial assets 10 10 0 0 0 0
Cash and cash equivalents 22 0 22 0 0 0
Assets held for sale 7,677 1 2,845 62 41 4,728

IAS 39 CATEGORISATION OF FINANCIAL INSTRUMENTS

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LIABILITIES
EUR million Carrying amounts as at 31 Dec. 2014 Financial liabilities held for trading Other financial liabilities No IAS 39 category Outside the scope of IFRS 7
Liabilities due to banks 338   338  
Bonds, commercial paper and other securitised debt 531   531  
Liabilities to shareholders 100   100    
Lease liabilities 35   35  
Other financial liabilities 72   72  
Non-current financial liabilities 1,076 0 1,041 35 0
Other non-current liabilities 2 0 0 0 2
Liabilities due to banks 194 194
Bonds, commercial paper and other securitised debt 102 102
Liabilities to shareholders 63 63
Lease liabilities 2 2
Other financial liabilities 31 31
Current financial liabilities 392 0 390 2 0
Trade payables and similar liabilities 151 0 146 0 5
Liabilities for other taxes 17 17
Liabilities for payroll and social security 11 11
Accrued expenses 100 30 70
Derivative financial instruments 19 10 9
Miscellaneous current liabilities 79 78 1
Other current liabilities 226 10 108 9 99
Liabilities held for sale 9 0 5 0 4
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EUR million Carrying amounts as at 31 Dec. 2013 Financial liabilities held for trading Other financial liabilities No IAS 39 category Outside the scope of IFRS 7
Liabilities due to banks 426   426  
Bonds, commercial paper and other securitised debt 1,129   1,129  
Liabilities to shareholders 100   100    
Lease liabilities 36   36  
Other financial liabilities 82   82  
Non-current financial liabilities 1,773 0 1,737 36 0
Other non-current liabilities 54 0 52 0 2
Liabilities due to banks 170 170
Bonds, commercial paper and other securitised debt 466 466
Liabilities to shareholders 55 55
Lease liabilities 4 4
Other financial liabilities 31 31
Current financial liabilities 726 0 722 4 0
Trade payables and similar liabilities 125 0 120 0 5
Liabilities for other taxes 25 25
Liabilities for payroll and social security 10 10
Accrued expenses 129 64 65
Derivative financial instruments 25 2 23
Miscellaneous current liabilities 11 9 2
Other current liabilities 200 2 73 23 102
Liabilities held for sale 5,406 9 4,230 37 1,130

FAIR VALUE MEASUREMENT

The following table shows the assets and liabilities measured at fair value in the statement of financial position as at 31 December 2014, classified by the following input levels:

Level 1: Quoted prices in active markets for the identical asset or liability
Level 2: Quoted prices in active markets for similar assets and liabilities or other valuation techniques for which all significant inputs are based on observable market data
Level 3: Valuation techniques for which significant inputs are not based on observable market data

If assets and liabilities recurrently measured at fair value must be reclassified between the various levels because, for example, an asset is no longer traded in an active market or is traded for the first time, the reclassification is made at the end of the reporting period. No such transfers between Levels 1 and 2 took place either during the financial year or the previous year.

EUR million Total
31 Dec. 2014
Level 1 Level 2 Level 3Not measured
at fair value
Assets         
        
Recurring fair value measurement  
Non-current financial assets     
Financial assets available for sale 167 142 20 5
Current financial assets  
Financial assets available for sale 160 150 10  
Derivative financial instruments 11   11  
 
Non-recurring fair value measurement    
Assets held for sale 29   6  23
   
Liabilities    
   
Recurring fair value measurement    
Other current liabilities    
Derivative financial instruments 19   19  
     
Non-recurring fair value measurement      
Liabilities held for sale 9   9

The table below shows the assets and liabilities measured at fair value in the statement of financial position as at 31 December 2013:

EUR million Total
31 Dec. 2013
Level 1 Level 2 Level 3Not measured
at fair value
Assets         
        
Recurring fair value measurement  
Non-current financial assets     
Financial assets available for sale 6 6
Current financial assets      
Financial assets available for sale 0      
Derivative financial instruments 10   10  
   
Non-recurring fair value measurement    
Assets held for sale 7,677 5 1 7,671
   
Liabilities    
   
Recurring fair value measurement    
Other current liabilities    
Derivative financial instruments 25   25  
   
Non-recurring fair value measurement    
Liabilities held for sale 5,406   35  5,371

The financial assets available for sale category includes securities and investments in the amount of EUR 5 million (previous year: EUR 6 million) that are recognised at amortised cost. These were primarily investments in non-listed companies. It is not possible to reliably measure the fair value of these investments for lack of an active market.

In the previous year, the disclosure of the assets and liabilities measured at fair value within the assets and liabilities held for sale concerns the Celesio division’s financial instruments measured at fair value.

The fair value of financial instruments traded in an active market (Level 1) is based on the quoted prices as at the reporting date. The fair values of assets and liabilities recurrently measured at fair value within Level 2 and Level 3 are determined using the DCF method. Expected future cash flows from the financial instruments are discounted using market interest rates with matching maturities. The Haniel Group takes into account the creditworthiness of the respective borrower by determining Credit Value Adjustments (CVA) or Debt Value Adjustments (DVA) based on a premium/discount method. If available, the CVA or DVA is determined using observable market prices for credit derivatives.

The table below shows a detailed reconciliation of assets and liabilities recurrently measured at fair value in Level 3, excluding contingent consideration from business combinations. In the previous year the reconciliation presented below concerns two investment funds in the Holding and other companies segment whose fair value measurement was determined using earnings multiples and which were sold.

EUR million 2014 2013
As at 1 Jan. 0 141
Foreign exchange rate adjustments
Change in the scope of consolidation
Additions
Impairments
Reversals of impairment losses
Fair value changes recognised in other comprehensive income 2
Fair value changes recognised in profit or loss
Disposals 143
Transfers into Level 3
Transfers out of Level 3
As at 31 Dec. 0 0
Unrealised gains or losses recognised in profit or loss relating to those financial instruments held at the reporting date 0 0

The following table shows the fair values of the financial instruments as at 31 December 2014 that are not recognised at fair value in the statement of financial position:

  Carrying
amounts
Fair value
EUR million Level 1Level 2Level 3
Assets   
Non-current financial assets   
Other securities 5  5
Loans 16  18
 
Liabilities  
Financial liabilities    
Liabilities due to banks 532  534  
Bonds, commercial paper and other securitised debt 633 543158 
Liabilities to shareholders 163  172 
Lease liabilities 37  47 
Other financial liabilities 103  108 
Other non-current liabilities   
Purchase price liabilities (not contingent) 0   

The following table shows the fair values of the financial instruments of the continuing operations as at 31 December 2013 that were not recognised at fair value in the statement of financial position:

  Carrying
amounts
Fair value
EUR million Level 1Level 2Level 3
Assets   
Non-current financial assets   
Other securities 0  
Loans 7  8
 
Liabilities  
Financial liabilities    
Liabilities due to banks 596  600  
Bonds, commercial paper and other securitised debt 1,595 1,479287 
Liabilities to shareholders 155  159 
Lease liabilities 40  49 
Other financial liabilities 113  127 
Other non-current liabilities   
Purchase price liabilities (not contingent) 52  53 

The fair value of financial instruments traded in an active market (Level 1) is based on the quoted prices as at the reporting date. The fair values for Levels 2 and 3 are measured analogously to the method for assets and liabilities recurrently measured at fair value using the DCF method.

OFFSETTING FINANCIAL ASSETS AND LIABILITIES

The table below provides an overview of the financial assets and liabilities that are offset in the statement of financial position. It also presents the extent to which there are netting agreements with contractual partners that do not result in a net presentation in the statement of financial position because not all conditions of IAS 32 for a net presentation are met. Global netting arrangements in the Haniel Group relate to derivative financial instruments, for which, in the event of default, the master agreements with the financial institutions stipulate offsetting mutual receivables and liabilities existing at that date. The following disclosures concerning the previous year pertain to the continuing operations.

Concerning assets the following items in the statement of financial position are affected:

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    Master netting agreements
EUR million Financial assets
(gross amounts)
Financial liabilities set off in the
statement of
financial position (gross amounts)
Financial assets
presented in the
statement of financial
position as at
31 Dec. 2014
(net amounts)
Financial liabilities
not set off in the
statement of
financial position
Received collateralNet amounts
as at 31 Dec. 2014
Derivative financial instruments      
with netting agreement 11 11 2 9
without netting agreement  0 0
11011 209
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    Master netting agreements
EUR million Financial assets
(gross amounts)
Financial liabilities set off in the statement of financial position (gross amounts)Financial assets presented in the statement of financial position as at 31 Dec. 2013 (net amounts) Financial liabilities not set off in the statement of financial positionReceived collateralNet amounts as at 31 Dec. 2013
Derivative financial instruments      
with netting agreement 10 10 5 5
without netting agreement  0 0
10010 505

Concerning liabilities the following items in the statement of financial position are affected:

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    Master netting agreements
EUR million Financial liabilities (gross amounts)Financial assets set off in the statement of financial position (gross amounts)Financial liabilities presented in the statement of financial position as at 31 Dec. 2014 (net amounts) Financial assets not set off in the statement of financial positionPledged collateralNet amounts as at 31 Dec. 2014
Derivative financial instruments      
with netting agreement 4 4 2 2
without netting agreement 15 15 15
19019 2017
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    Master netting agreements
EUR million Financial liabilities (gross amounts)Financial assets set off in the statement of financial position (gross amounts)Financial liabilities presented in the statement of financial position as at 31 Dec. 2013 (net amounts) Financial assets not set off in the statement of financial positionPledged collateralNet amounts as at 31 Dec. 2013
Derivative financial instruments      
with netting agreement 10 10 5 5
without netting agreement 15 15 15
25025 5020

NET GAINS OR LOSSES FROM IAS 39 CATEGORIES

The net gains or losses recognised in the income statement for continuing operations from the IAS 39 categories consist of the following:

EUR million 2014 2013
Financial assets and liabilities held for trading -23 36
Financial assets available for sale224
Financial assets held to maturity
Loans and receivables 1 10
Other financial liabilities -162 -167
  -182 -97

The net gain or loss on financial assets and liabilities held for trading purposes includes gains and losses from fair value changes, as well as interest income and expenses arising from these financial instruments. The net gain or loss on financial assets available for sale includes in particular income and expenses from bonds and investment funds in the Holding and other companies segment recognised in profit or loss. The net gain or loss from loans and receivables consists primarily of interest income and impairments and reversals of impairments on these financial instruments. The net gain or loss from other financial liabilities consists primarily of interest expenses and exchange differences arising from the measurement of non-operating liabilities denominated in foreign currencies.

Changes in the fair value of financial assets available for sale in the amount of EUR 1 million (previous year: EUR 3 million) were recognised in other comprehensive income during the financial year. Amounts arising from fair value changes totalling EUR 1 million were transferred from other comprehensive income to the other net financial income (previous year: EUR 24 million transferred to other investment result).

Interest and similar expenses include EUR 170 million from financial liabilities not measured at fair value during the financial year (previous year: EUR 165 million). Interest and similar income include interest income from financial assets not measured at fair value through profit or loss amounting to EUR 8 million in the financial year (previous year: EUR 16 million). Interest income of EUR 12 million was recognised in the previous year from impaired financial instruments that have since been disposed of.