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All the derivatives held by the Group at 31 December 2015 were OTC derivatives, whose
prices are not quoted on organised futures and options markets and, therefore, it is
necessary to apply generally accepted valuation techniques, based on objective market
data, used in the measurement of financial instruments of this nature.
Foreign exchange hedges
The derivative financial instruments held by the Group companies are basically cash flow
hedges arranged to mitigate the exposure of the cash flows associated with external
production rights to fluctuations in the US dollar/euro exchange rate.
Foreign currency hedging contracts are valued using the spot exchange rate and the
forward interest rate curves of the related currencies. The “market” foreign currency
hedge is calculated at year-end and is compared with the price of the foreign currency
hedge arranged.
Interest rate hedges
The Parent arranged interest rate swaps (IRSs) in order to fix the finance cost arising
from the floating rates applicable to each of the tranches of the syndicated financing that
it had arranged.
With these interest rate swaps the parties agree to swap, on predetermined dates, the
cash flows resulting from applying an interest rate to a nominal amount. The rate applied
to the payments of a portion is fixed, whereas the other portion is a floating rate (based
on market rates).
Hedging instruments are recognised in the consolidated balance sheet at fair value and
the changes therein are recognised directly in equity, for the effective portion, as
provided for in IAS 39.
With respect to foreign currency hedges, when the term of the broadcasting rights
designated as a hedged item commences, the associated gains or losses on the
derivative that had previously been recognised in equity are included in the initial
recognition of the asset and from then on any change in the fair value of the hedging
instrument is recognised directly in profit or loss for the year.
The corporate Group periodically tests the effectiveness of the outstanding hedges and
the ineffective portion is recognised immediately under financial profit or loss in the
consolidated statement of profit or loss.
If a hedged transaction is no longer expected to occur, or no longer qualifies for hedge
accounting, the net cumulative gain or loss recognised in equity is transferred to net
profit or loss for the year.
The Group has established the policy of categorising its assets and liabilities at fair value
in the different measurement hierarchy levels, on the basis of the availability of
observable market data, and only transfers items between levels when such inputs are
not available. In 2015 no transfers were made between the fair value hierarchy levels
corresponding to the Group's financial instruments.
j)
Treasury shares
All the treasury shares of the Parent at 31 December 2015 represented 0.350% of the
share capital of the Parent of the Group at that date. The transactions involving treasury
shares in 2015 and 2014 are summarised in Note 11-e. The amount relating to these
treasury shares is recognised as a reduction of equity.
Acquisitions or sales of treasury shares (see Note 11-e) are charged or credited to equity
at the amount paid or received, respectively, and, therefore, the gains or losses arising
from these transactions are not reflected in the consolidated statement of profit or loss
but are recognised as an addition to or a reduction of equity, respectively.