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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 currentcy
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NOK 1 000
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Currency
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Amount
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Currency
|
Amount
|
|
|
USD
|
13 250
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NOK
|
-106 746
|
||
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EUR
|
1 000
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NOK
|
-9 016
|
||
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EUR
|
750
|
USD
|
- 837
|
||
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NOK
|
1 813 880
|
EUR
|
-200 000
|
||
|
NOK
|
3 476 600
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USD
|
-400 000
|
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CAD
|
28 033
|
USD
|
-20 920
|
||
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EUR
|
8 686
|
MXN
|
-187 726
|
||
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EUR
|
5 210
|
CAD
|
-7 248
|
||
|
EUR
|
380
|
CHF
|
- 406
|
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EUR
|
4 160
|
DKK
|
-30 924
|
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EUR
|
3 937
|
JPY
|
-455 998
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EUR
|
2 330
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SEK
|
-22 645
|
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ILS
|
1 160
|
EUR
|
- 290
|
||
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JPY
|
2 782 598
|
EUR
|
-23 605
|
||
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MXN
|
2 780
|
EUR
|
- 124
|
||
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NOK
|
287 629
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EUR
|
-31 530
|
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PLN
|
10 827
|
EUR
|
-2 450
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RUB
|
340 755
|
EUR
|
-5 300
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USD
|
4 264
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EUR
|
-4 100
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All foreign exchange contracts mature during 2017.
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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
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NOK 1 000
|
Currency
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Amount
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Receives
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Pays
|
Time remaining
to maturity
|
|
DKK
|
50 000
|
6M CIBOR
|
Fixed 2.97%
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0.5 years
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|
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EUR
|
95 000
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3M EURIBOR
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Fixed 0.13% - 2.39%
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0.5 - 4.0 years
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| The table inclued derviatives 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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