UNBOUNCE - EXAMPLE PAGE-REPORT-ENTERPRISE DOCUMENT-KINGSPAN - Flipbook - Page 159
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 December 2021 (continued)
19 Financial Risk Management and Financial Instruments (continued)
As at 31 December 2020
Non derivative financial instruments
Bank loans
Private placement loan notes
Lease obligations per banking covenants
Lease liabilities
Trade and other payables
Deferred contingent consideration
Derivative financial liabilities / (assets)
Interest rate swaps used for hedging:
Carrying values
Net inflows
Cross currency interest rate swaps used for hedging:
Carrying value
- outflow
- inflow
Foreign exchange forwards used for hedging:
Carrying value assets
Carrying value liabilities
- outflow
- inflow
Carrying
amount
2020
€m
Contractual
cash flow
€m
Within 1
year
€m
Between 1
and 2 years
€m
Between 2
Greater
and 5 years than 5 years
€m
€m
55.2
1,528.1
2.4
114.8
820.8
127.6
56.7
1,721.5
2.4
134.5
820.8
137.6
2.4
253.6
0.1
30.4
820.8
-
1.3
88.9
0.3
23.6
26.0
52.8
338.0
43.7
108.1
0.2
1,041.0
2.0
36.8
3.5
(0.6)
-
(0.9)
(0.9)
-
-
-
(19.2)
-
103.6
(128.5)
103.6
(128.5)
-
-
-
6.5
(6.3)
6.5
(6.3)
-
-
-
0.2
-
For provisions, the carrying amount represents the Group’s best estimate of the expected future outflows. As it does not represent a
contractual liability at the year end, no amount has been included as a contractual cash flow.
Deferred contingent consideration, which includes any put option liabilities, is valued using the relevant agreed multiple of the expected
future EBITDA in each acquired business which is appropriately discounted using a risk-adjusted discount rate. The estimated fair value of
contingent consideration would decrease if EBITDA was lower or if the risk adjusted discount rate was higher. The range of outcomes are
set out in Note 18.
The actual future cash flows could be different from the amounts included in the tables above, if the associated obligations were to
become repayable on demand as a result of non-compliance with covenants or other contractual terms. No such non-compliance
is envisaged.
Market Risks
Foreign exchange risk
There are two types of foreign currency risk to which the Group is exposed, namely transaction risk and translation risk. The objective of
the Group’s foreign currency risk management strategy is to manage and control market risk exposures within acceptable parameters.
As set out below the Group uses derivatives to manage foreign exchange risk. Transactions involving derivatives are carried out in
accordance with the Treasury policy. The Group seeks to apply hedge accounting, where practicable, to manage volatility in profit or loss.
Transaction risk
Apart from transaction risk on debt, this arises where operating units have input costs or sales in currencies other than their functional
currencies. These exposures are internally hedged as far as possible. Group policy is to hedge up to a maximum of 75% of a forecast
exposure. Material exposures are hedged on a rolling 12 months basis. The Group’s principal exposure relates to GBP and USD, with less
significant exposures to certain central European currencies.
In addition, where operating entities carry monetary assets and liabilities at year end denominated other than in their functional
currency, their translation at the year-end rates of exchange into their functional currency will give rise to foreign currency gains and
losses. The Group seeks to manage these gains and losses to net to nil.
Based on current cash flow projections for the businesses to 31 December 2022, it is estimated that the Group is long GBP67m (2020:
long GBP32m) and long US$8m (2020: short US$25m). At 31 December 2021 these amounts were unhedged.
Kingspan Group plc Annual Report & Financial Statements 2021
Financial Statements
