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new-changes-to-ifrs
new-changes-to-ifrs
new-changes-to-ifrs
new-changes-to-ifrs
new-changes-to-ifrs
new-changes-to-ifrs
new-changes-to-ifrs
new-changes-to-ifrs
new-changes-to-ifrs
new-changes-to-ifrs
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new-changes-to-ifrs

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  • 1. Treasury Hot Topic New changes to IFRS - The legacy of IAS 39 and now IFRS9 - Are you ready?
    www.pwc.com
    Kristof De Smedt, PwC
  • 2. Agenda
    1/ Introduction
    2/ Hedge accounting
    3/ What new opportunities / challenges will this bring ?
    4/ Next steps
    February 2011
    2
  • 3. Introduction
    3
    February 2011
  • 4. Background to IFRS 9
    Replacing IAS 39
    February 2011
    4
    Overall timeline
    * Application is subject to EU endorsement
    ** This will be “re-exposed” via workshops or a partial ED or both
    Effective date should beginning on or after 1 January 2013, with earlier application permitted
  • 5. Background to IFRS 9
    IASB Objectives
    versus
    Users Preparers
    February 2011
    5
  • 6. Hedge accounting
    6
    February 2011
  • 7. Hedge accounting - overview
    February 2011
    7
    Rebalancing/ Discontinuation
    Presentation/ Accounting mechanics
    Disclosures
    Qualification
    Hedging instrument
    Hedged item
  • 8. Hedge accounting
    • 80 – 125 rule
    February 2011
    8
    • Risk components of non-financial items
  • Hedging of risk components
    9
    IAS 39 Hedgable Exposure
    Fixed element
    Variable element
    ED Hedge available
    Benchmark
    (e.g. commodity price)
    Benchmark
    (e.g. commodity price)
    Alignment of risk management with hedge accounting
  • 9. Hedge accounting
    • 80 – 125 rule
    February 2011
    10
    • Risk components of non-financial items
    • 10. Synthetic exposure
    • 11. Options
    • 12. Rebalancing
  • Rebalancing
    February 2011
    11
    One (continuing) risk management and hedge
    accounting relationship
  • 13. Hedge accounting
    • 80 – 125 rule
    February 2011
    12
    • Risk components of non-financial items
    • 14. Synthetic exposure
    • 15. Options
    • 16. Rebalancing
    • 17. De-designation
    • 18. CFH: basis adjustment
    • 19. FVH: mechanics
  • FV hedge accounting
  • 20. Hedge accounting
    • 80 – 125 rule
    February 2011
    14
  • Hedge accounting
    • Gross group
    February 2011
    15
    • Net positions
    • 28. P&L presentation
  • What next opportunities / challenges will this bring ?
    Increased risk management alignment
    versus
    increased transparency
    16
    February 2011
  • 29. Hedging of risk components
    February 2011
    17
    Metal price = LME price + (floating) natural gas surcharge + producer’s fixed premium
  • 30. Hedging with options
    February 2011
    18
    Transaction related
    vs.
    Time period related
  • 31. Net position hedging
    Foreign currency sales of 100 and expenses of 80
    Forward contract for 20 taken out at a rate of 1.33
    Margin locked in at 15
    Spot rate at settlement of 1.25 resulting in loss on the forward of 1
    19
  • 32. Disclosure
    February 2011
    20
  • 33. Disclosure
    21
  • 34. Next steps
    22
    February 2011
  • 35. Next steps
    Raise awareness of proposals
    February 2011
    23
    Perform high level impact analysis
    Comment letter period ends on 9 March 2011
    Revisit your risk management strategies
  • 36. Together we can move mountains…
    © 2011 PricewaterhouseCoopers. All rights reserved. “PricewaterhouseCoopers” refers to the network of member firms of PricewaterhouseCoopers International Limited, each of which is a separate and independent legal entity.
    Pricewaterhousecoopers
    Woluwedal 18
    1932 St-Stevens-Woluwe
    Direct Phone +32 2710 9628
    Mobile +32 478 591664
    kristof.de.smedt@pwc.be
    www.pwc.be
    Kristof De Smedt
    Senior Manager
    Treasury Consulting

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