47153 AG Barr Annual Report 2025 AW4 SQ WEB - Flipbook - Page 168
A.G. BARR p.l.c. Annual Report and Accounts 2025
N OTE S TO TH E
ACCO U NT S
CO N TI N U ED
13. Financial instruments
Group and Company
2025
£m
2024
£m
Derivative financial assets – current
Derivatives that are designated and effective as hedging instruments carried at fair value:
Foreign currency forward contracts
0.2
–
Derivative financial liabilities – current
Derivatives that are designated and effective as hedging instruments carried at fair value:
Foreign currency forward contracts
(0.3)
(0.3)
Derivative financial liabilities – non-current
Derivatives that are designated and effective as hedging instruments carried at fair value:
Foreign currency forward contracts
(0.1)
–
It is the policy of the Group to enter into foreign exchange forward contracts to manage the foreign currency risk associated with anticipated purchase transactions out to
18 months. This is hedged on a sliding scale basis where the nearer the time of the purchase, the greater the amount hedged will be.
For the hedges of highly probable forecast purchases, as the critical terms (i.e. the notional amount, life and underlying contracts) of the foreign exchange forward contracts
and their corresponding hedged items are the same, the Group performs a qualitative assessment of effectiveness and it is expected that the value of the forward contracts
and the value of the corresponding hedged items will systematically change in opposite direction in response to movements in the underlying exchange rates. The Group
assesses the ineffectiveness by comparing past changes in the fair value of the foreign exchange forward contracts with changes in the fair value of a hypothetical derivative.
The main sources of hedge ineffectiveness in these hedging relationships are foreign currency basis spread and the effect of the counterparty and the Group’s own credit risk
on the fair value of the forward contracts, which is not reflected in the fair value of the hedged item attributable to changes in foreign exchange rates. Both items are not
material to the Group. No other sources of ineffectiveness emerged from these hedge relationships.
The cumulative amount of gains and losses on effective hedging instruments are held within the cash flow reserve in “Other reserves”.
The following table details the foreign currency forward contracts outstanding at the end of the reporting period, as well as information regarding their related hedged items.
Foreign currency forward contract assets and liabilities are presented in the line “Derivative financial instruments” (either as assets or as liabilities) within the statement of
financial position. All of the currency forward contracts are designated as cash flow hedges.
Notional value:
Foreign currency
Average exchange rate
Buy EUR
Less than 3 months
3 to 6 months
6 to 12 months
over 12 months
Buy USD
Less than 3 months
3 to 6 months
6 to 12 months
166
Notional value:
Local currency
Carrying amount of the hedging
instruments liabilities
2025
2024
2025
€m
2024
€m
2025
£m
2024
£m
2025
£m
2024
£m
1.17
1.17
1.15
1.13
1.15
1.15
1.14
1.13
12.5
5.8
7.1
5.2
7.2
6.6
8.0
2.8
10.7
5.0
6.2
4.6
6.2
5.7
7.0
2.4
(0.1)
–
(0.1)
(0.1)
(0.1)
(0.1)
(0.1)
–
2025
2024
2025
$m
2024
$m
2025
£m
2024
£m
2025
£m
2024
£m
1.27
1.29
1.26
1.27
–
–
1.2
3.6
2.4
1.7
–
–
0.9
2.8
1.9
1.3
–
–
–
0.1
–
–
–
–
(0.2)
(0.3)
