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90 ENAV – 2014 Financial Statements
following conditions are met:
l at the inception of the hedge there is formal designation and docu-
mentation of the hedging relationship, the Group’s risk management
objective and the strategy for undertaking the hedge;
l the hedge is expected to be highly effective;
l the effectiveness of the hedge can be reliably measured;
l the hedge is highly effective throughout the various periods for which
it was designated.
If all the above conditions are met for the transaction arranged by the
Group, the hedge is accounted for as a cash flow hedge and accordingly
the portion of the gain or loss on the hedging instrument that is determined
to be an effective hedge is classified as a change in other comprehensive
income and recognized in the cash flow hedge reserve in equity, while
the ineffective portion of the gain or loss on the hedging instrument is
recognized in profit or loss.
The amounts recognized as part of other comprehensive income are
reclassified to profit or loss in the period in which the hedged transaction
affects profit or loss, for example if a sale occurs or if there is a write-down.
If a hedging instrument expires or is sold, terminated or exercised without
replacement, or if it is no longer designated as a hedging instrument, or
if the hedge no longer meets the criteria for hedge accounting, any gain
or loss previously recognized in other comprehensive income remains
separately recognized in equity until the forecast transaction occurs.
The Group does not enter derivative contracts for speculative purposes.
The Group complies with the requirements of IFRS 13 whenever IFRSs require
fair value measurement to be used for recognition and/or measurement
purposes or in providing disclosures with respect to a specific asset or
liability. Fair value is the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market participants
at the measurement date. The fair value of instruments listed on public
markets is determined by reference to the bid price at the reporting date.
The fair value of unlisted instruments is measured by reference to financial
valuation techniques.
Financial assets and liabilities measured at fair value are categorized in the
three levels of the fair value hierarchy described in the following on the
basis of the relevance of the inputs used in determining the fair value.
More specifically:
Level 1: financial assets and liabilities whose fair value is determined
on the basis of quoted prices (unadjusted) in active markets for
identical assets and liabilities;
financial assets and liabilities whose fair value is determined on
Level 2: the basis of inputs other than quoted prices included in Level 1
