Investor Presentaiton
128
A.P. Møller-Mærsk A/S Annual Report 2020
Financials
Parent company financial statements
Notes index
Note 12 Financial instruments and risks - continued
Table 12.5
2020
Fair value,
asset
Fair value,
liability
Nominal
amount of
derivative
0-1 years
Maturity
2-4 years
5-years
Gain/loss
on hedged
item
Gain/loss
on hedging
instrument
Average
hedge
rate
Amounts in USD million ==
Table 12.5
Sensitivity table
The sensitivities are based only on the impact of financial
instruments that are outstanding at the balance sheet
date and are thus not an expression of the company's
total currency risk.
Combined fair value hedge, hedge of borrowings
EUR
45
559
559
-61
GBP
7
95
95
JPY
17
121
121
NOK
11
256
256
7835
44
-8
-3
-5
1522
1.8%
2.5%
-2
-2
1.8%
2.5%
Fair value hedge, hedge of borrowings
USD
80
Cash flow hedge, hedge of borrowings
EUR
GBP
NOK
Total
2019
Combined fair value hedge, hedge of borrowings
900
500
400
-79
80
80
3.1%
35
461
461
-34
4.2%
49
313
313
-11
4.6%
4
81
51
30
-1
2.4%
142
106
2,786
51
1,059
1,676
-156
79
17
35
733
14
92
10
11
206
92
34
250
EUR
GBP
JPY
NOK
Fair value hedge, hedge of borrowings
USD
14
900
3.5%
224
509
-47
92
-5
114
-3
250
10
-18
12300
4.2%
-3
3.6%
4.2%
900
-9
14
4.0%
Cash flow hedge, hedge of borrowings
EUR
23
60
867
447
420
-17
3.9%
GBP
52
302
302
-1
4.6%
NOK
27
341
341
-4
3.5%
Total
64
233
3,691
92
1,012
2,587
-54
-4
Interest rate risk
The company has most of its debt denominated in USD,
but part of the debt (e.g. issued bonds) is in other curren-
cies such as EUR, NOK, GBP and JPY. The company strives
to maintain a combination of fixed and floating interest
rates on its net debt, reflecting expectations and risks.
The hedging of the interest rate risk is governed by a du-
ration range and is primarily obtained using interest rate
swaps. The duration of the company's debt portfolio is 2.1
years (2.2 years) excluding IFRS 16 leases.
A general increase in interest rates by one percentage
point is estimated, all else being equal, to affect profit
before tax and equity, excluding tax effect, positively by
approx. USD 151m and positively by approx. USD 96m, re-
spectively (positively by approx. USD 192m and positively
by approx. USD 127m, respectively).
This analysis assumes that all other variables, in particu-
lar foreign currency rates, remain constant.
The hedging of the interest rate risk is done by cross-
currency swaps and interest rate swaps. The hedging is
a mix of fair value hedging, combined fair value hedging
and cash flow hedging.
Due to buy-back of issued bonds in 2020, ineffectiveness
from cash flow hedges is recognised in the income state-
ment with a loss of USD 12m (loss of USD 4m).
The hedges are expected to be highly effective due to the
nature of the economic relationship between the expo-
sure and the hedge. The source of ineffectiveness is the
credit risk of the hedging instruments. For hedges where
the cost of hedging is applied, the change in basis spread
is recognised in other comprehensive income and is a time
effect during the lifetime of the swap and at maturity
amounts to 0.View entire presentation