Tasks to be completed when documenting an operation (from creation to publication)

 1. Enter the Title of the operation / page

2. Add the following Labels : 

    • Scope of applicability: ww, country_accounting 

    • Country or group of countries (if applicable): belux, china, france, italy, lam, nam, uk_ie, bulgaria, dach, netherlands, iberia, poland, latvia, australia, india, japan, south_korea, thailand, singapore, new_zealand, emea_transversal, apac_transversal

    • Unit and Domain according to the List of labels to be used in the Finance Service Line space

      • E.g. 1: WW Operation in Financial Accounting under domain "Central Finance Processes & Compliance":
        • Labels to be used: ww, financial_accounting, central_fin_proc_compliance

      • E.g. 2: France Operation in Financial Accounting:
        • Labels to be used: country_accounting, france, financial_accounting
          (for country operations, the Domain is always country_accounting)


3. Fill in all fields as described above

4. Name the title of each section using OPD methodology naming convention - Infinitive verb without the “to”, mainly action verb...something) - " I do something..."

5. Once the description of the operation is completed, ensure it is approved and published by launching the SBS-Finance approval workflow 


Domain: Treasury Reporting

Responsibility area: Perform Cash Flow Hedge documentation 2232 quarterly closure.

Table of contents 

By default the table of contents displays Heading 1 & Heading 2 (other levels can be added)


Scope

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ERP

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Frequency

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References

6. Add the link to SAP transaction(s) (when it exists)



Forms

7. Insert the links accordingly and change the link text with the Form name



Attachments

8. Add the link to attachments or external links

Files Location Example: \\lucapfs01sco.oxo.priv\LUCAP-USERS\Financial Controlling & Cash Accounting process\7 - Financial Controlling\8 - Hedge documentation\2025\Hedge Documentation Q22025

 

 

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. Objective and Scope

1.1. Objective of this Operation

WHY - Describe the objective of the operation

To create the hedge documentation for Cash Flow Hedge, for external audit in line with IFRS9 standard. To be prepared on a quarterly basis (~ D+6 / 7).

1.2. Scope

Detail the scope (legal entities, etc.)

Legal Entities

2232 Syensqo SA - Treasury Dpt

7774 Thailand

7728 China

3383 Korea

2. Definitions

Definitions should be added in the Finance Glossary - Add definition and link it to respective Letter in Finance Glossary 

See Finance Glossary:

  • ...


3. Tasks description

WHAT and HOW - Main content of the operation

The content should be mainly organized in 2 levels of Headings to ensure a proper link with the Table of Contents.

Select the level of heading in the "Paragraph" option.

IFRS9 requires preparation of the Hedge documentation in order to document the relationship between the hedged item and the hedging instrument.

IFRS 9 requires simultaneously:

  • an economic hedge relationship to exist between hedging instrument and hedged item,
  • the credit risk not to dominate the value change,
  • the hedge ratio to reflect the actual quantities of hedging instrument and hedged item

The documentation is shared with the external audit quarterly.

Syensqo FX Committee defines the group FX policy 3 times a year: February, July and November.

Two year budget of highly probable sale in foreign currency is forecasted.

The Hedge strategy is established and approved.

The Cash Flow hedge is performed by Group Treasury for the future 9 months.

The risk being hedged is the exposure to variability in cash flows of a highly probable sales forecast which could have been affected P&L if no hedge accounting is applied.

There are two types of hedge documentation:

  1. Hedge documentation related to the FX currency exposure (done by TSU Treasury Reporting)
  2. Hedge documentation related to Energy (done by Front Office team). It is not part of the procedure

That is why we need to prepare the hedge documentation for the external audit to apply hedge accounting and reduce the volatility to P&L.

Provided the hedge is effective, changes in the fair value of the hedging instrument are initially recognized in OCI. (B/S Other Comprehensive Income)

Location of the files: \\lucapfs01sco.oxo.priv\LUCAP-USERS\Financial Controlling & Cash Accounting process\7 - Financial Controlling\8 - Hedge documentation\YYYY\Hedge Documentation QXYYYY

The files "GROUP FX Hedging Documentation - Currency Pair QX YYYY" which needs to be updated. 


The excel file for preparation of data used to update the Hedge Documentation files and the instructions are in the file "SCO - Forecast QX YYYY Used for Hedge Documentation Global File", tab "Input".

We use the following GL accounts in 2232 to book CFH spot and forward points: 7540010020 (profit) or 65400100020 (loss) to record CFH FX impact.

3.1. I update the file "SCO - Forecast QX YYYY Used for Hedge Documentation_Global File.xls" with information of actual FX sales realized by currency couple from Controlling team on D+8.

3.1.1. I receive the file "Simulation FX transaction Act QX YYYY.xls"

Purpose:

The actual FX sales split by GBU is managed by the controlling team.

The controlling team receives the CFH split by GBU from treasury when the hedges are final for the reporting month.

The controlling team distributes the file with the percentage split to GBUs who are responsible to complete the FX sales data.

When the file is complete by D+7 by each GBU, the controlling team is sharing it with us by D+8.

The quarterly file is sent to us by controlling on D+8. 

Example: 

Simulation FX Transaction Act Q2 2025 and the file attached. 

Steps to execute:

Save the file to the following location:

Example:

\\lucapfs01sco.oxo.priv\LUCAP-USERS\Financial Controlling & Cash Accounting process\7 - Financial Controlling\8 - Hedge documentation\YYYY\Hedge Documentation QXYYYY


3.1.2. I update the file "SCO - Forecast QX YYYY Used for Hedge Documentation_Global File"

 I copy the information of the Net Exposure and Exposure - Double Leg from sheet "SCO" in file "Simulation FX transaction Act Q2 2025".


And past it in the work file "SCO - Forecast QX YYYY Used for Hedge Documentation_Global File" , in sheet "Input", in the respective Quarter.


3.2. I update the file "SCO - Forecast QX YYYY Used for Hedge Documentation_Global File.xls" File by currency couples with information of forecast from file "FX committee presentation" received by treasury on February, July and November. 

3.2.1. I update the forecast of highly probable sales in the tab "Input"

Purpose:

We need to record the latest figures for the FX sales forecast.

Based on the forecasted FX sales figures, treasury will perform its hedges to mitigate FX risk.

Here is the general guidance:

  • For Q1 use Best Forecast data of Y-1
  • For Q2 use BFR06 data
  • For Q3 use BFR06 data
  • For Q4 use BFR12 data
  • For next year, use Best forecast data of Y+1

We can already start updating the forecast figures of the closing period.

Steps to execute:

Check the latest file available for FX Commitee (if necessary contact Treasury Front Office Team- treasury.fo@syensqo.com).

Go to the tab "Input" → Forecast to update the figures for all currency pairs:

Example:


The individual currency pair tabs will be updated automatically.

You need to update the tab of individual currency pairs with the print screen of the relevant page from FX Committee presentation.


You need to also attach later the presentation to the Hedge documentation .doc files by currency pair to the point 4. the Entity's business plan.

Example:


3.3. I update the files "GROUP FX Hedging Documentation - Currency Pair QX YYYY"  in .doc files by currency pair with the new Forecast Figures

Purpose:

We can now use the forecast tables from the excel file "SCO - Forecast QX YYYY Used for Hedge Documentation_Global File" to copy/paste in the hedge documentation file in the Word document.

Steps to execute:

Open the Hedge documentation Word files per currency pair. Example "GROUP FX Hedging Documentation - QX YYYY Korea"

Replace the print screen of the old forecast with the new Forecast Figures.

Example: Go to the tab "USDKRW" → Copy the forecast and Past it to the word document in the point 10 Appendices 1. Hedged Item schedule


The Result looks like this:


3.4. I update the files "GROUP FX Hedging Documentation - Currency Pair QX YYYY" by currency couples with information of actual hedges from Quantum

3.4.1. I extract the actual hedges performed by Treasury from TMS Quantum

Purpose:

Treasury normally does the settlement and renewal of hedges during the third week of the month.

Treasury would inform that the deals are done (email subject "CFH Controlling Overview - Month YYYY")


Steps to execute:

Go to Quantum. 

Run Query  Transactions by Deal-DTT Lists - Creation of settlement.

Reporting → Transaction by Deal

Strategy → CFH HP Sales

Counterparty - > External (with Banks) e.g. Only external deals are included. No Interco.

Instruments → All FX ones

Deal Date → From Y-1 to closing period

Maturity - > Current year to the end

To check if any new financial instruments for cash hedge and update if needed.

Example for Q2 2025.

The Deal date Between field, put the closing period date.

03/31/YYYY for Q1

06/30/YYYY for Q2

09/30/YYYY for Q3

12/31/YYYY for Q4


Select View "Creation of settlement" by pressing the drop down menu.

Download to excel by pressing the button highlighted in yellow.


Copy the information extracted to tab "Deal List" of the work file "SCO - Forecast QX YYYY Used for Hedge Documentation_Global File".



Do check that the old data is fully erased at the end of the report.

Column AD: Quarter calculated automatically: Q1,Q2,Q3 and Q4.

It is needed due to formatting month/year does not show some months in the right consecutive order and this column is not available in Quantum for this particular report.


Refresh Pivots by going to one of the pivot tab of any currency pair and Refresh All.


Or one by one in each sheet "Deal Pivot 2232 CCCCCC".


Settings of Filters in pivots:

Entity → To filter by Currency Couple for 2232

Currency Couple → Will be relevant for 2232

Instrument Name → Relevant for filter of Brazil ZCC


Create the separate file by copying the currency pair tabs to the new excel file.

It is needed due to we need to attach an individual deal list to the relevant hedge documentation.

Copy/Paste the print screen and attach the newly created separate for each currency pair file to the hedge documentation word file related "GROUP FX Hedging Documentation - QX YYYY" to the relevant currency pair.


Example:



3.5. I update the files "GROUP FX Hedging Documentation - Currency Pair QX YYYY.doc" by currency couples with information with the information of actual FX turnover received from Controlling team quarterly.

3.5.1. I update "Group FX Hedging documentation - currency Pair QX YYYY.doc 

Purpose:

There are IFRS9 requirements to comply with the application of hedge accounting if we want to smooth P/L fluctuations resulted with FX valuations.

The economic hedge relationship exists between hedging instrument and hedged item.

The hedge ratio is to reflect the actual quantities of hedging instrument and the hedged item.

For each currency pair, we should check if the hedge ratio is according to the policy defined by the Group and there is no overhedge.


One of the hedge effectiveness test from IFRS 9 would require to compare if the hedges done by treasury are in line with the actual FX sales figures realized and there is no over hedged positions.

We can use the tables updated in the excel file to copy / paste in the hedge documentation word documents.

The files which needs to be updated are:

The files are located here: \\lucapfs01sco.oxo.priv\LUCAP-USERS\Financial Controlling & Cash Accounting process\7 - Financial Controlling\8 - Hedge documentation\YYYY\Hedge Documentation QXYYYY


Steps to execute:

Copy / Past the table from the work file "SCO - Forecast QX YYYY Used for Hedge Documentation_Global File" into 10.3 of the above Word files, as show below, for each currency pair.


3.6. I update the files "GROUP FX Hedging Documentation - Currency Pair QX YYYY" by currency couples with information on Credit Rating of Syensqo and counterparties

3.6.1. I access the credit rating of Syensqo and Counterparties

Purpose:

One of the hedge effectiveness tests required by IFRS 9  is that the credit risk not to dominate the value change.

We use leading credit rating agencies to get the ratings of Syensqo and our counterparties including banks: Moody's and Standard & Poors.

Credit rating of Syensqo is available in the company website.

Credit ratings of counterparties are available on Treasury Online. However, always contact Treasury Front Office Team to receive the most updated credit ratings.

Ensure you are using the rating as of the reporting period.

To remind that the table is up to date on D+1 to treasury.tools.bam@syensqo.com.

If not, ask by email to Treasury Tools & BAM Team to upload the Rating in treasury Online.

Steps to execute:

If the rating is changed, update the rates in the table located in the tab  .

3.6.2. I update the addendum 5. List of its accepted counterparties.

Purpose:

If the rating changed, we update the addendum 5. List of its accepted counterparties in the hedge documentation word document using the updated rating of table in the excel document.

Steps to execute:

Copy/Paste the excel table to the word document in the addendum 5. List of its accepted counterparties.


3.7. I share the files for audit purposes

Purpose: 

The external auditors are checking the hedge documentation to be compliant with IFRS9 standard.

Steps to execute:

Go to AODOCS.

Select the relevant Audit Folder.


And uploaded the Word files, as below.


If new instruments are in use, there is the need to create specific hedge documentation.


End of document.