ANNUAL REPORT 2011 - DONG Energy

Hedging of net investments in foreign subsidiaries
DKK million Net investment
including equitylike
loans
Hedged amount
in currency
2011 2010
net position
Foreign exchangeadjustmentsrecognised
in equity
Net investment
including equitylike
loans
Hedged amount
in currency
net position
Foreign exchangeadjustmentsrecognised
in equity
GBP 25,771 (22,400) 3,371 236 21,678 (15,886) 5,792 147
NOK 10,932 (3,361) 7,571 349 10,437 (3,962) 6,475 399
SEK 2,776 (1,407) 1,369 (254) 2,714 (1,782) 932 (261)
EUR 5,974 - 5,974 (9) 5,143 0 5,143 7
PLN 1,243 (1,183) 60 (38) 1,457 (1,265) 192 (17)
total 46,696 (28,351) 18,345 284 41,429 (22,895) 18,534 275
Ineffectiveness relating to hedging of net investments in foreign
subsidiaries was DKK 28 million (2010: DKK 3 million).
fair value hierarchy of fi nancial instruments
DKK million
Quoted
prices
(Level 1)
Observable
inputs
(Level 2)
2011 2010
Non-observable
inputs
(Level 3) total
Quoted
prices
(Level 1)
Observable
inputs
(Level 2)
Non-observable
inputs
(Level 3) total
Derivative fi nancial
instruments - 13,967 2,093 16,060 - 12,819 1,642 14,461
Securities 9,914 - - 9,914 7,620 - - 7,620
assets 9,914 13,967 2,093 25,974 7,620 12,819 1,642 22,081
Derivative fi nancial
instruments - (12,135) (960) (13,095) - (13,312) (38) (13,350)
liabilities 0 (12,135) (960) (13,095) 0 (13,312) (38) (13,350)
Level 1 comprises quoted securities that are traded in active
markets.
Level 2 comprises derivative fi nancial instruments, where valuation
models with observable inputs are used to measure fair
value, but with discounting to present value applying one of
the discount rates set by the Group. Level 2 also comprises
quoted securities that have not been traded in the market suffi
ciently for a reliable fair value to be obtained.
Level 3 comprises primarily long-term contracts on purchase/
sale of, in particular, electricity and gas, and oil options. The
fair values are based on assumptions concerning the longterm
prices of, in particular, electricity, gas, coal, USD, EUR,
volatilities as well as risk premiums in respect of liquidity and
market risks and are determined by discounting of expected
cash fl ows. Level 3 also includes other fi nancial instruments in
which primarily electricity, oil and gas prices have been estimated,
and where the sum of these estimated, non-observable
inputs may affect fair value.
DONG ENERGY DONG ENERGY GROUP ANNUAL REPORT 2011 – COnsOliDatED finanCial statEmEnts
121 117
notes