19. Derivative Financial Instruments and Hedging
Delhaize Group Annual Report 2014 127
The use of free cash flow can be detailed as follows:
(in millions of 2014
Inflow:
Free cash flow 757
Settlement of derivative instruments 29
Proceeds from the exercise of share warrants and stock options 24
Sale and maturity of (investment in) term deposits, net 9
Outflow:
Repayments of long-term loans (including lease obligations), net (268)
Dividends paid (158)
Purchase of treasury shares (10)
Sale and maturity of (investment in) debt securities, net (2)
Cash movement before translation 381
Foreign currency translation (on cash portion) 72
Net increase in cash and cash equivalents 453
The Group enters into derivative financial instruments with various counterparties, principally financial institutions with investment
grade credit ratings. The valuation methods for the fair values of derivative financial instruments are disclosed in Note 10.1. The
fair values of derivative assets and liabilities are summarized below:
December 31,
(in millions of
2014
2013
2012
Assets
Liabilities
Assets
Liabilities
Assets
Liabilities
Interest rate swaps
9
27
3
60
4
Cross-currency swaps
1
26
14
8
1
10
Foreign exchange forward contracts
1
Total 11 26 41 11 61 14
Delhaize Group enters into derivative financial instrument arrangements for hedging (both economic and accounting) purposes
only (i.e. not for speculation or trading). The Group currently holds no derivatives where net settlement has been agreed (see
also Note 10.2) and consequently the following table indicates the contractually agreed (undiscounted) gross interest and
principal payments associated with derivative financial instruments (assets and liabilities) at December 31, 2014:
1 - 3 months 4 - 12 months 20162017 and beyond
(in millions of Principal Interest Principal Interest Principal Interest Principal Interest
Interest rate swaps being part of
a fair value hedge relationship
Inflows
3
16
19
41
Outflows
(3)
(10)
(13)
(25)
Cross-currency interest rate
swaps without a designated
hedging relationship
Inflows
4
6
6
220
51
Outflows
(4)
(11)
(11)
(247)
(86)
Foreign exchange forwards
without a hedge relationship
Inflows
10
Outflows
(9)
Total Cash flows
1
1
1
(27)
(19)
