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
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
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
