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NOTE 27
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RISK MANAGEMENT - OPERATIONS
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Risk management relating to the investment activities of Ferd is described in note 6.
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Currency risk
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Contracted currency flows from operations are normally secured in their entirety, while projected cash flows are hedged to a certain extent. Interest payments related to the Group's foreign currency loans are mostly secured by corresponding cash flows from the Group's activities. Instruments such as currency forward contracts, currency swaps and options can be used to manage the Group's currency exposure.
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Outstanding foreign exchange forward contracts related to operations:
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Purchase of currency
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Sale of currency
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|
NOK 1 000
|
Currency
|
Amount
|
Currency
|
Amount
|
||
|
NOK
|
325 716
|
EUR
|
- 38 180
|
|||
|
NOK
|
27 175
|
EUR
|
- 3 000
|
|||
|
EUR
|
15 400
|
CAD
|
- 22 104
|
|||
|
EUR
|
200
|
CHF
|
- 240
|
|||
|
EUR
|
10
|
CZK
|
- 276
|
|||
|
EUR
|
3 000
|
DKK
|
- 22 319
|
|||
|
EUR
|
3 000
|
GBP
|
- 2 381
|
|||
|
EUR
|
2 686
|
JPY
|
- 380 000
|
|||
|
EUR
|
3 680
|
NOK
|
- 31 415
|
|||
|
EUR
|
4 700
|
RUB
|
- 367 141
|
|||
|
EUR
|
1 500
|
SEK
|
- 14 315
|
|||
|
EUR
|
600
|
USD
|
- 731
|
|||
|
JPY
|
6 506 298
|
EUR
|
- 48 518
|
|||
|
PLN
|
2 962
|
EUR
|
- 700
|
|||
|
RUB
|
26 388
|
EUR
|
- 300
|
|||
|
SEK
|
4 766
|
EUR
|
- 500
|
|||
|
USD
|
2 300
|
CAD
|
- 2 516
|
|||
|
USD
|
30 401
|
EUR
|
- 24 400
|
|||
|
Appr. 80% of the foreign exchange forward contracts with the purchase of JPY /sale of EUR mature in 2016 and 2017. All other foreign exchange forward contracs are due in the course of 2015.
|
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Interest rate risk
|
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The Group has short-term fixed interest rates on long-term funding in accordance with internal guidelines. This applies for loans in Norwegian kroner, as well as in foreign currency. The Group uses interest rate swaps to reduce interest rate exposure by switching from floating rates to fixed rates for a portion of the loans.
|
||||||
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Outstanding interest rate swaps
|
||||||
|
NOK 1 000
|
Currency
|
Amount
|
Receives
|
Pays
|
Time remaining to maturity
|
|
|
DKK
|
100 000
|
6M CIBOR
|
Fixed 2.97% - 4.15%
|
0.7 - 2.5 years
|
||
|
EUR
|
100 000
|
3M EURIBOR
|
Fixed 0.77% - 2.88%
|
1.2 - 5.0 years
|
||
|
USD
|
1 089
|
3M LIBOR
|
Fixed 1.27%
|
1.25 year
|
||
|
NOK
|
16 916
|
3M NIBOR
|
Fixedt 3.3%
|
1.25 year
|
||
|
CHF
|
2 178
|
3M LIBOR
|
Fixed 0.82%
|
1.25 year
|
||
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The table includes derivatives for hedging.
|
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Credit risk
|
||||||
|
Credit risk is the risk that a counterparty will default on his/her contractual obligations resulting in a financial loss to the Group. Ferd has adopted a policy implying that the Group shall be exposed only to credit-worthy counterparties, and independent credit analyses are obtained for all counterparties when such analyses are available. If not, the Group uses other publicly available financial information and its own trade to assess creditworthiness.
|
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