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27 Additional disclosures on financial instruments

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

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  31 Dec. 2015 31 Dec. 2014
EUR million Fair value of which
cash flow hedges
Fair value of which
cash flow hedges
Assets        
Interest rate instruments        
Currency instruments 3   1
Other derivative financial instruments 5   10
8 0 11 0
Liabilities
Interest rate instruments 11 7 13 9
Currency instruments 5 5
Other derivative financial instruments 36 1
  52 7 19 9

The other derivative financial instruments are nickel derivatives held by the ELG division and the obligation from the exchangeable bond to deliver ordinary shares of METRO AG.

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 2015:

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EUR million Cash flows 2016 Cash flows
2017
Cash flows
from 2018
to 2020
Cash flows
from 2021
to 2025
Cash flows
from 2026
onwards
Non-derivative financial liabilities and financial guarantee contracts
Liabilities due to banks -84 -60 -101 -77
Bonds, commercial paper and other securitised debt -539 -343 -314  
Liabilities to shareholders -60 -71 -33  
Lease liabilities -4 -4 -15 -14 -12
Other financial liabilities -39 -12 -34 -31 -1
Liabilities from business combinations -19
Trade payables -131
Financial guarantee contracts -1 -1 -2 -5 -8
-858 -491 -518 -127 -21
Derivative liabilities
Hedge accounting
Derivatives (net settled) -2 -2 -5
Derivatives (gross settled) inflows 15
Derivatives (gross settled) outflows -15
-2 -2 -5 0 0
Without hedge accounting
Derivatives (net settled) -2 -2 -2
Derivatives (gross settled) inflows 194 20
Derivatives (gross settled) outflows -197 -22
  -5 -4 -2 0 0
  -7 -6 -7 0 0

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

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.

For purposes of the cash flow analysis, in accordance with IFRS 7.B11A the exchangeable bond linked to ordinary shares of METRO AG is considered to be a single financial instrument and is presented in total in the line bonds, commercial paper and other securitised debt. The obligation to deliver ordinary shares of METRO AG is not separated.

The contractually agreed, undiscounted payments of interest and principal over time of the non-derivative financial liabilities and derivative liabilities and financial guarantee contracts that existed as at 31 December 2014 were as follows:

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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

IAS 39 categorisation of financial instruments

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ASSETS
EUR million Carrying
amounts
as at
31 Dec. 2015
Financial
assets held
for trading
Loans and
receivables
Financial
assets availa-
ble for sale
No IAS 39
category
Outside the
scope of
IFRS 7
Financial assets available for sale 641     641    
Other securities 5 5    
Loans 13 6 7  
Non-current financial assets 659 0 11 641 7 0
Trade receivables 401 0 401 0 0 0
Financial assets available for sale 212 212
Other securities and fixed-term deposits 19 19
Current financial assets 231 0 19 212 0 0
Cash and cash equivalents 342 0 123 219 0 0
Receivables from investments 1 1
Derivative financial instruments 8 8  
Value added tax receivables and other tax assets 20 20
Prepaid expenses 14 14
Bonuses and discount claims against suppliers 16 16
Miscellaneous current assets 59 59
Other current assets 118 8 76 0 0 34
Assets held for sale 2 0 0 0 0 2
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EUR million Carrying
amounts
as at
31 Dec. 2014
Financial
assets held
for trading
Loans and
receivables
Financial
assets availa-
ble 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
Financial assets available for sale 160 160
Other securities and fixed-term deposits 237 237
Current financial assets 397 0 237 160 0 0
Cash and cash equivalents 111 0 111 0 0 0
Receivables from investments 8 8
Derivative financial instruments 11 11  
Value added tax receivables and other tax assets 13 13
Prepaid expenses 14 14
Bonuses and discount claims against suppliers 13 13
Miscellaneous current assets 32 32
Other current assets 91 11 53 0 0 27
Assets held for sale 29 0 8 0 0 21
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LIABILITIES
EUR million Carrying
amounts
as at
31 Dec. 2015
Financial
liabilities held
for trading
Other
financial
liabilities
No IAS 39
category
Outside the
scope of
IFRS 7
Liabilities due to banks 229   229  
Bonds, commercial paper and other securitised debt 614   614  
Liabilities to shareholders 95   95    
Lease liabilities 32   32  
Other financial liabilities 67   67  
Non-current financial liabilities 1,037 0 1,005 32 0
Other non-current liabilities 17 0 3 12 2
Liabilities due to banks 81 81
Bonds, commercial paper and other securitised debt 477 477
Liabilities to shareholders 53 53
Lease liabilities 2 2
Other financial liabilities 30 30
Current financial liabilities 643 0 641 2 0
Trade payables and similar liabilities 137 0 131 0 6
Liabilities for other taxes 27 27
Liabilities for payroll and social security 14 14
Accrued expenses 96 28 68
Derivative financial instruments 52 45 7
Miscellaneous current liabilities 19 17 2
Other current liabilities 208 45 45 7 111
Liabilities held for sale 0 0 0 0 0
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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

Fair value measurement
The table below shows the assets and liabilities measured at fair value in the statement of financial position as at 31 December 2015, 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.

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EUR million Total
31 Dec. 2015
Level 1 Level 2 Level 3Not measured
at fair value
Assets         
        
Recurring fair value measurement  
Non-current financial assets     
Financial assets available for sale 641 617 20 4
Current financial assets  
Financial assets available for sale 212 212  
Cash and cash equivalents   
Money market funds 219 219   
Other current assets     
Derivative financial instruments 8   8  
 
Non-recurring fair value measurement    
Assets held for sale 2   2   
   
Liabilities    
   
Recurring fair value measurement    
Other non-current liabilities    
Contingent consideration from business combinations 12   12 
Other current liabilities    
Derivative financial instruments 52   52  
     
Non-recurring fair value measurement      
Liabilities held for sale 0    

The table below shows the assets and liabilities measured at fair value in the statement of financial position as at 31 December 2014:

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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  
Cash and cash equivalents     
Money market funds 0     
Other current assets       
Derivative financial instruments 11   11  
   
Non-recurring fair value measurement    
Assets held for sale 29   6  23
   
Liabilities    
   
Recurring fair value measurement    
Other non-current liabilities    
Contingent consideration from business combinations 0     
Other current liabilities    
Derivative financial instruments 19   19  
     
Non-recurring fair value measurement      
Liabilities held for sale 9   9

The financial assets available for sale category includes securities and investments in the amount of EUR 4 million (previous year: EUR 5 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.

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 the fair values of the financial instruments as at 31 December 2015 that are not recognised at fair value in the statement of financial position:

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  Carrying
amounts
Fair value
EUR million Level 1Level 2Level 3
Assets   
Non-current financial assets   
Other securities 5  5
Loans 13  15
 
Liabilities  
Financial liabilities    
Liabilities due to banks 310  311  
Bonds, commercial paper and other securitised debt 1,091 503655 
Liabilities to shareholders 148  155 
Lease liabilities 34  45 
Other financial liabilities 97  102 
Other non-current liabilities   
Purchase price liabilities (not contingent) 3  3 

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

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  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 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 tables below provide 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.

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. 2015
(net amounts)
Financial
liabilities not
set off in the
statement
of financial
position
Received
collateral
Net amounts as
at 31 Dec. 2015
Cash and cash equivalents      
with netting agreement 44422   2
without netting agreement 340340 340
38442342 00342
Derivative financial instruments  
with netting agreement 88 2 6
without netting agreement 0  0
  808 206

The cash and cash equivalents presented on a net basis in the statement of financial position relate to a cash pooling arrangement between the Bekaert Textiles division and an external bank.

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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
collateral
Net amounts as
at 31 Dec. 2014
Cash and cash equivalents      
    with netting agreement   0   0
    without netting agreement 111 111 111
1110111 00111
Derivative financial instruments  
    with netting agreement 1111 2 9
    without netting agreement 0  0
  11011 209

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
liabilities set off
in the statement
of financial
position (gross
amounts)
Financial
liabilities
presented in
the statement
of financial
position as at
31 Dec. 2015
(net amounts)
Financial assets
not set off in the
statement of
financial position
Pledged
collateral
Net amounts as
at 31 Dec. 2015
Derivative financial instruments      
with netting agreement 8 8 2 6
without netting agreement 44 44 44
52052 2050
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    Master netting agreements
EUR million Financial
liabilities
(gross amounts)
Financial
liabilities 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 position
Pledged
collateral
Net amounts as
at 31 Dec. 2014
Derivative financial instruments      
with netting agreement 4 4 2 2
without netting agreement 15 15 15
19019 2017

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:

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EUR million 20152014
Financial assets and liabilities held for trading 72-23
Financial assets available for sale32
Financial assets held to maturity
Loans and receivables -11
Other financial liabilities -77-162
  -3-182

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 -2 million (previous year: EUR 1 million) were recognised in other comprehensive income during the financial year. Amounts arising from fair value changes totalling EUR 0 million were transferred from other comprehensive income to the other net financial income (previous year: EUR 1 million).

Interest and similar expenses include EUR 75 million from financial liabilities not measured at fair value during the financial year (previous year: EUR 170 million). Interest and similar income include interest income from financial assets not measured at fair value through profit or loss amounting to EUR 9 million in the financial year (previous year: EUR 8 million).