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Derivative Instruments and Risk Management
 12 Months Ended
Dec. 31, 2013
Derivative Instruments And Hedging Activities Disclosure [Abstract]  
Derivative Instruments and Risk Management

Note 16.    Derivative Instruments and Risk Management

 

The Company has limited involvement with derivative instruments and does not trade them. The Company does use derivatives to manage certain interest rate, foreign currency exchange rate and raw material cost exposures.

 

As at December 31, 2013 and 2012 the Company had no interest rate instruments designated as effective hedges. The interest rate swaps which expired on February 6, 2012 were ineffective at December 31, 2011 because the Company’s previous finance facility, which carried the corresponding floating rate debt obligations, had been repaid. Accordingly, a loss of $0.1 million was recognized in earnings in 2011.

 

The Company has hedged the cost of certain raw materials with commodity swaps which are summarized as follows:

 

     December 31,
2013		      December 31,
2012		  

(in millions)

    Carrying
Amount		      Fair
Value		      Carrying
Amount		      Fair
Value		  

Notional quantity – 275 tonnes

          $ 0.1       $ 0.1   

Notional quantity – 0 tonnes

    $ 0.0       $ 0.0         

 

We enter into various foreign currency forward exchange contracts which are intended to minimize currency exchange rate exposure from expected future cash flows. The contracts have maturity dates of up to four years at the date of inception. These foreign currency forward exchange contracts have not been designated as hedging instruments, and their impact on the income statement in 2013, 2012 and 2011 is summarized below:

 

    

Location of Gain/(Loss)
Recognized in Income

    Amount of Gain/(Loss)
Recognized in Income		  

(in millions)

         2013         2012          2011    

Foreign currency forward exchange contracts

    Other income/(expense)    $ (1.5 )    $ 1.2       $ 1.3   
     

 

 

    

 

 

     

 

 

  

 

The Company sells a range of Fuel Specialties, Performance Chemicals and Octane Additives to major oil refineries and chemical companies throughout the world. Credit limits, ongoing credit evaluation and account monitoring procedures are intended to minimize bad debt risk. Collateral is not generally required.