Investor Presentaiton
93
A.P. Moller-Maersk Annual Report 2020
Note 16 Financial instruments and risks
Table 16.1
Derivatives recognised at fair value in the balance sheet
Non-current receivables
Current receivables
Non-current liabilities
Current liabilities
Assets, net
Table 16.2
Financials
Consolidated financial statements
Notes index
2020
2019
269
161
307
43
289
328
228
87
59
-211
The gain/losses of the derivatives are recognised as follows:
2020
2019
Hedging foreign exchange risk on revenue
5
-5
Hedging foreign exchange risk on operating costs
16
-78
Hedging interest rate risk
-40
-28
Hedging foreign exchange risk on the cost of non-current assets
15
-2
Hedging foreign exchange risk on discontinued operations
-
-1
Ineffectiveness recognised in financial expenses
Total effective hedging
Total reclassified from equity reserve for hedges
Derivatives accounted for as held for trading:
-4
-114
-9
-4
-13
-118
Currency derivatives recognised directly in financial income/expenses
Interest rate derivatives recognised directly in financial income/expenses
198
56
107
45
Oil prices and freight rate derivatives recognised directly in other income/costs
Net gains/losses recognised directly in the income statement
213
-64
518
37
Amounts in USD million =
Table 16.1
The Group derivatives are presented at fair value in
the balance sheet.
The Group's activities are exposed to a variety of
financial risks:
Market risks, i.e. currency risk, interest rate risk
and oil price risk
Credit risk
Liquidity risk.
The Group's overall risk management programme focuses
on the unpredictability of financial markets and seeks
to minimise the potential adverse effects on the Group's
financial performance. The Group uses derivative financial
instruments to hedge certain risk exposures.
Risk management is carried out by a central finance
department under policies approved by the Board of
Directors. The finance department identifies, evaluates
and hedges financial risks in close cooperation with the
Group's entities.
Market risk
Market risk is the risk that changes in market prices, such
as foreign exchange rates and interest rates, will affect
the Group's profit or the value of its holdings of financial
instruments. The sensitivity analyses in the currency risk
and interest rate risk sections relate to the position of
financial instruments at 31 December 2020.
Table 16.2
Hedges comprise primarily currency derivatives, interest
rate derivatives and oil price hedges, which are further
described in the following sections.
The sensitivity analyses for currency risk and interest rate
risk have been prepared on the basis that the amount of
net debt, the ratio of fixed to floating interest rates of the
debt, and the proportion of financial instruments in foreign
currencies remain unchanged from hedge designations in
place at 31 December 2020. Furthermore, it is assumed
that the exchange rate and interest rate sensitivities have
a symmetric impact, i.e. an increase in rates results in the
same absolute movement as a decrease in rates.
The sensitivity analyses in table 16.5 show the effect on
profit and equity of a reasonably possible change in ex-
change rates and interest rates.View entire presentation