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Distribution NV towards Dutch Filmworks BV and to a
limited degree the purchases of materials by the Group in
US dollar. At 31 December 2014 the Group had outstanding
foreign exchange forward contracts for a nominal amount
of $ 1.2 million (2013: $ 1.8 million) for the purposes of
hedging this risk.
Loans between Kinepolis Financial Services NV and other
Group companies are expressed in the currency of the
latter. Foreign exchange results regarding the non-current
loans in Swiss franc and Polish złoty of Kinepolis Financial
Services NV to Kinepolis Schweiz AG and Kinepolis Poznań
Sp.z o.o. are recognized in other comprehensive income,
because these loans are considered to be part of the
Group’s net investment in these foreign entities. The
following foreign exchange rate results were recognized
directly in equity:
IN ’000 €
2013
2014
Polish zloty
-1 070
-1 285
Swiss franc
152
361
TOTAL
-918
-924
The Group also incurs a foreign currency risk from consoli-
dating foreign companies not having the euro as their
functional currency (Switzerland and Poland). This transla-
tion risk is not hedged.
1 EURO
CORRESPONDSTO:
CLOSING RATE
31/12/2014
AVERAGE
RATE 2014
THEORETICAL
VOLATILITY
POSSIBLE CLOSING RATE
31/12/2014
POSSIBLEAVERAGE
RATE 2014
Polish zloty
4.2623
4.1841
20%
3.41 - 5.11
3.35 - 5.02
Swiss franc
1.2024
1.2147
20%
0.96 - 1.44
0.97 - 1.46
Applying the possible increase or decrease in the market
interest rate as provided above to the variable rate
borrowings at 31 December 2014, and all other variables
being constant, the profit in 2014 would be € 0.9 million
lower or € 0.1 million higher (2013: € 0.5 million lower or
€ 0.1 million higher). As there were no interest rate
derivatives, this effect would not be partially neutralized
in 2014 by higher or lower interest income from interest
rate derivatives (2013: € 0.1 million higher or € 0.0 million
lower). The fair value of the financial instruments included
in equity in 2013 would not be significantly impacted.
Foreign currency risk
The Group has a foreign currency risk on positions
deriving from sales or purchases and from outstanding
borrowings with Group companies in currencies other
than the functional currency (euro) (transaction risk).
Group policy is focused on minimizing the impact of
exchange rate fluctuations on profit or loss.
Derivatives can be used at any time to hedge this risk.
The Group’s sales denominated in currencies other than
the functional currency are limited. The purchases of the
Group’s subsidiaries primarily concern the guarantee
obligations in US dollar entered into by Kinepolis Film
Foreign currency risk sensitivity analysis
The above table states the possible changes in the exchange
rate for the Polish zloty and the Swiss franc against the
euro, estimated on the basis of the theoretical volatility.
If, at the balance sheet date, the Polish złoty and the Swiss
franc had strengthened/weakened as indicated above,
and all other variables being constant, the profit would
have been € 0.2 million higher (2013: € 0.0 million higher)
or € 0.3 million lower (2013: € 0.0 million lower) and
equity at the end of 2014 would have been € 3.0 million
lower or € 4.5 million higher (2013: € 4.5 million higher or
€ 3.0 million lower).
96
05 / FINANCIAL REPORT
KINEPOLIS GROUP
ANNUAL REPORT 2014