Investor Presentaiton
129
A.P. Møller-Mærsk A/S Annual Report 2020
Financials
Parent company financial statements
Notes index
Note 12 Financial instruments and risks - continued
Table 12.6
Carrying
amount
Next interest rate fixing
Borrowings and interest-bearing debt to subsidiaries
by interest rate levels inclusive of interest rate swaps
0-1 year
2-4 years
5-years
2020
0-3%
3-6%
Total
Of which:
12,942
2,378
15,320
13,172
-330
-366
1,853
100
891
12,806
1,523
991
Bearing fixed interest
2,668
Bearing floating interest
12,652
2019
0-3%
3-6%
Total
Of which:
Bearing fixed interest
Bearing floating interest
Table 12.7
Maturity analysis of trade receivables incl. subsidiaries, etc.
Receivables not due
Less than 90 days overdue
Receivables, gross
Provision for bad debt
Carrying amount
6,081
6,181
-300
6,647
3,696
1,987
200
964
12,728
9,877
1,687
1,164
2,862
9,866
2020
2019
2
1
1
7
3
8
-
3
8
Amounts in USD million ==
If the hedged transaction is prepaid, the change in basis
spread will be recognised in profit or loss as ineffective-
ness. The cost of hedging reserve amounts to a gain of
USD 6m (gain of USD 6m).
The borrowing interest levels is specified in table 12.6
Table 12.6
Credit risk
The company has substantial exposure to financial and
commercial counterparties but has no particular con-
centration of customers or suppliers. To minimise the
credit risk, financial vetting is undertaken for all major
customers and financial institutions, adequate security
is required for commercial counterparties, and credit
limits are set for financial institutions and key commercial
counterparties.
Financial assets at amortised cost comprise loans receiv-
able, lease receivables, and other receivables. These are
all considered to have low credit risk and thus the im-
pairment provision calculated based on 12 months of ex-
pected losses is considered immaterial. The financial as-
sets are considered to be low risk when they have low risk
of default and the issuer has a strong capacity to meet its
contractual cash flow obligations in the near term.
A.P. Møller-Mærsk A/S applies the simple approach to
providing the expected credit losses prescribed by IFRS 9,
which permits the use of the lifetime expected loss pro-
vision for all trade receivables. To measure the expected
credit losses, trade receivables have been grouped based
on shared credit risk characteristics and the days past
due. In accordance with IFRS 9, also non-due trade receiv-
ables have been impaired.
Other financial assets at amortised cost include loans to
subsidiaries. As of 31 December 2020, the loans amount
to USD 17.2bn (USD 20.7bn) and are considered to have
a low credit risk, thus the impairment provision to be
recognised during the period is limited to 12 months of
expected losses. The credit risk has not increased sig-
nificantly since the initial recognition and is considered
low based on the investment grade credit rating for the
Group and consequently the financial strength of the
major subsidiaries within the Group. Prior years' loan
write-down balance on Maersk Supply Service A/S loan
receivables remains recognised in 2020, while Maersk
Container Industry A/S loan is settled.
Table 12.7
Liquidity risk
It is of great importance for the company to maintain a
financial reserve to cover the company's obligations and
investment opportunities and to provide the capital
necessary to offset changes in the company's liquidity
due to changes in the cash flow from operating activities.
The flexibility of the financial reserve is subject to on-
going prioritisation and optimisation, among other things
by focusing on the release of capital and following up on
the development in working capital.View entire presentation