6.3.20Derivative Financial Instruments

Further information about the financial risk management objectives and policies, the fair value measurement and hedge accounting of financial derivative instruments is included in Note 6.3.29 ‘Financial Instruments – Fair values and risk management’.

In the ordinary course of business and in accordance with its hedging policies as of 31 December 2015, the Company held multiple forward exchange contracts designated as hedges of expected future transactions for which the Company has firm commitments or forecasts. Furthermore, the Company held several interest rate swap contracts designated as hedges of interest rate financing exposure.

The fair value of the derivative financial instruments included in the statement of financial position is summarized as follows:

Derivative financial instruments

31 December 2015

31 December 2014

Assets

Liabilities

Net

Assets

Liabilities

Net

Interest rate swaps cash flow hedge

0

205

(205)

2

186

(184)

Forward currency contracts cash flow hedge

2

86

(84)

1

125

(124)

Forward currency contracts fair value through profit and loss

18

41

(23)

23

23

-

Forward currency contracts net foreign investment

-

-

-

-

-

-

Commodity contracts cash flow hedge

-

-

-

-

3

(3)

Total

21

332

(311)

26

337

(311)

Non-current portion

0

167

(167)

1

156

(155)

Current portion

21

164

(144)

25

181

(156)

The ineffective portion recognized in the income statement (Note 6.3.7 ‘Net financing costs’) arises from cash flow hedges totalling a US$ 5 million loss (2014: US$ 5 million loss). The maximum exposure to credit risk at the reporting date is the fair value of the derivative assets in the statement of financial position.

Forward Currency Contracts

The gross notional amount of the outstanding forward currency contracts at 31 December 2015 were US$ 2 billion (2014: US$ 3 billion) of which US$ 2 billion will mature in the next twelve months.

The net notional amount of the outstanding forward currency contracts at 31 December 2015 was US$ 1 billion (2014: US$ 2 billion) of which US$ 1 billion will mature in the next twelve months.

Interest Rate Swaps

The gross notional amount of the outstanding interest rate swap contracts at 31 December 2015 were US$ 4 billion (2014: US$ 3 billion) and US$ 7 billion (2014: US$ 7 billion) including forward-start contracts.

The net notional amount of the outstanding interest rate swap contracts at 31 December 2015 were US$ 3 billion (2014: US$ 2 billion) and US$ 6 billion (2014: US$ 6 billion) including forward-start contracts.

The most important floating rate is the US$ 3-month LIBOR. Details of interest percentages of the long term debt are included in the Note 6.3.24 ‘Loans and borrowings’.