Derivative financial instruments

12 Months Ended

Dec. 31, 2019

29	Derivative financial instruments

A significant portion of the Group’s net sales and costs are denominated in currencies other than the euro. Consequently, a significant portion of the Group’s revenue is exposed to fluctuations in the exchange rates between the euro and other currencies. The Group uses forward exchange contracts (known in Italy as domestic currency swaps) to reduce its exposure to the risks of short-term declines in the value of its foreign currency denominated revenue. The Group uses such derivative instruments to protect the value of its foreign currency denominated revenue, and not for speculative or trading purposes. Despite being entered into such domestic currency swaps with the intent to reduce the foreign currency exposure risk for trade receivables and expected sales, the Group’s derivative financial instruments do not qualify for being accounted for as hedging instruments according to IAS 39 and, also, to former applicable Italian GAAP. Therefore, the Company reflects the positive or negative changes in the fair value of those derivatives through profit or loss in the captions “Net exchange rate gains/(losses)”.

The tables below summarise in euro equivalent the contractual amounts of forward exchange contracts used to hedge principally future cash flows from trade receivables and sale orders as at December 31, 2019 and 2018.


	31/12/19		31/12/18
British pounds		16,947		10,612
Euro		11,347		11,407
U.S. dollars		6,347		14,528
Canadian dollars		1,937		1,300
Japanese yen		1,549		2,318
Australian dollars		1,280		2,129
Danish kroner		751		1,086
Swedish kroner		208		265

Total		40,366		43,645

The following tables present information regarding the contract amount in euro equivalent amount and the estimated fair value of all of the Group’s forward exchange contracts. Contracts with net unrealized gains are presented as “assets” and contracts with net unrealized losses are presented as “liabilities”.


	2019					2018
	Contract amount		Unrealised gains/(losses)			Contract amount		Unrealised gains/(losses)
Assets		10,419		145			27,459		218
Liabilities		29,947		(772	)		16,186		(320	)

Total		40,366		(627	)		43,645		(102	)

As at December 31, 2019 and 2018, the forward exchange contracts have a net unrealized expense of 627 and 102, respectively. These amounts are recorded in net exchange rate gains/(losses), in the consolidated statements of profit or loss (see note 37).