Annual report 2016

NOTE 27
RISK MANAGEMENT - OPERATIONS
       
           
Risk management relating to the investment activities of Ferd is described in note 6.
           
Currency risk
         
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.
           
Outstanding foreign exchange forward contracts related to operations:
 
   
Purchase of currency
Sale of currentcy
NOK 1 000
 
Currency
Amount
Currency
Amount
   
USD
13 250
NOK
-106 746
   
EUR
1 000
NOK
-9 016
   
EUR
750
USD
- 837
   
NOK
1 813 880
EUR
-200 000
   
NOK
3 476 600
USD
-400 000
   
CAD
28 033
USD
-20 920
   
EUR
8 686
MXN
-187 726
   
EUR
5 210
CAD
-7 248
   
EUR
380
CHF
- 406
   
EUR
4 160
DKK
-30 924
   
EUR
3 937
JPY
-455 998
   
EUR
2 330
SEK
-22 645
   
ILS
1 160
EUR
- 290
   
JPY
2 782 598
EUR
-23 605
   
MXN
2 780
EUR
- 124
   
NOK
287 629
EUR
-31 530
   
PLN
10 827
EUR
-2 450
   
RUB
340 755
EUR
-5 300
   
USD
4 264
EUR
-4 100
           
All foreign exchange contracts mature during 2017.
           
Interest rate risk
         
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.
           
Outstanding interest rate swaps
         
NOK 1 000
Currency
Amount
Receives
Pays
Time remaining
to maturity
 
DKK
50 000
6M CIBOR
Fixed 2.97%
0.5 years
 
EUR
95 000
3M EURIBOR
Fixed 0.13% - 2.39%
0.5 - 4.0 years
           
The table inclued derviatives for hedging.
 
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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1324 Lysaker

Postbox 34
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Fax 67 10 80 01

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