Foreign exchange gains and losses resulting from the difference between the value of foreign currency operating income and expenses translated at the spot rate effective on the transaction date and at the exchange rate effective on the settlement date are recognised directly on the appropriate income and expense lines, after allowing for hedging derivatives.
Foreign exchange gains and losses break down as follows:
| € millions | 2021 | 2020 | 2019 |
|---|---|---|---|
| Time value | Time value 2021-70.5 |
Time value 2020-87.6 |
Time value 2019-126.9 |
| Other foreign exchange gains and losses | Other foreign exchange gains and losses 202117.7 |
Other foreign exchange gains and losses 202094.0 |
Other foreign exchange gains and losses 2019-63.2 |
| TOTAL | TOTAL2021-52.8 | TOTAL20206.4 | TOTAL2019-190.1 |
Foreign currency transactions are translated at the spot rate at the transaction date.
Assets and liabilities denominated in foreign currencies have been translated using the exchange rates effective at the closing date. Foreign exchange gains and losses also include the following items relating to derivative instruments:
These amounts are allocated to the appropriate operating expense items. They are broken down as follows:
| € millions | 2021 | 2020 | 2019 |
|---|---|---|---|
| Cost of sales | Cost of sales 2021-37.2 |
Cost of sales 20206.4 |
Cost of sales 2019-161.9 |
| Research and innovation expenses | Research and innovation expenses 2021-4.2 |
Research and innovation expenses 2020-2.1 |
Research and innovation expenses 201916.5 |
| Advertising and promotion expenses | Advertising and promotion expenses 2021-5.9 |
Advertising and promotion expenses 20201.2 |
Advertising and promotion expenses 2019-25.5 |
| Selling, general and administrative expenses | Selling, general and administrative expenses 2021-5.5 |
Selling, general and administrative expenses 20200.9 |
Selling, general and administrative expenses 2019-19.3 |
| FOREIGN EXCHANGE GAINS AND LOSSES | FOREIGN EXCHANGE GAINS AND LOSSES2021-52.8 | FOREIGN EXCHANGE GAINS AND LOSSES20206.4 | FOREIGN EXCHANGE GAINS AND LOSSES2019-190.1 |
The Group did not have any interest rate hedging instruments at 31 December 2021, 2020 and 2019.
An increase of 100 basis points in interest rates would have had a direct negative impact of -€18.2 million on the Group’s net finance costs at 31 December 2021, compared with a direct positive impact of €56.4 million at 31 December 2020 and a direct positive impact of €45.3 million at 31 December 2019. This calculation allows for cash, cash equivalents and derivatives, and assumes that total net debt/cash remains stable and that fixed-rate debt at maturity is replaced by floating-rate debt.
The impact of a 100 basis point rise in interest rates on the fair value of the Group’s fixed-rate financial assets and liabilities, after allowing for any interest rate derivatives, can be estimated at -€1 million at 31 December 2021 compared with -€1.0 million at 31 December 2020 and -€0.9 million 31 December 2019.
The Group has financial relations with international banks rated investment grade by specialised agencies. The Group thus considers that its exposure to counterparty risk is low.
Furthermore, the financial instruments used to manage exchange rate and interest rate risk are issued by leading international banking counterparties.
The Group’s liquidity risk can be assessed on the basis of its outstanding short-term debt under its short-term marketable instruments program. Should these bank facilities not be renewed, the Group would have confirmed undrawn credit lines of €5,000 million at 31 December 2021. These lines were not subject to any covenants.
No cash has been invested in shares.
Available cash is invested with top-ranking financial institutions in the form of non-speculative instruments which can be drawn in very short periods. At 31 December 2021, marketable securities consist exclusively of unit trusts (note 9.2).
At 31 December 2021, the Group held 118,227,307 Sanofi shares for an amount of €10,472.6 million (note 9.3.). A change of plus or minus 10% in the market price of these shares relative to the market price of €88.58 on 31 December 2021 would have an impact of plus or minus €1,047.3 million before tax on Group equity.
The initial share price for Sanofi shares was €34.12.
The shares are valued based on their fair value, and unrealised losses and gains are accounted for through equity in the Other comprehensive income item.
