ANNUAL REPORT 2011 - DONG Energy

notes
18 Financial risks
At 31 December 2011, unrealised value adjustments of derivative
financial instruments for currency hedging of recognised
assets and liabilities totalled DKK -775 million (31 December
2010: DKK -100 million).
sensitivity analysis
DONG Energy A/S’s principal currency risks relate to USD,
GBP, SEK and NOK. The company also calculates and manages
the currency risk vis-à-vis EUR. However, as price fluctuations
between DKK and EUR are small, the risk is considered
to be insignificant.
All other conditions being equal, a 10% increase in the USD
exchange rate in relation to the exchange rate at the balance
sheet date would have had a negative effect of DKK 180 million
on profit and equity (2010: positive effect of DKK 236 million).
All other conditions being equal, a decrease in the exchange
rate would have had a corresponding opposite impact.
All other conditions being equal, a 10% increase in the GBP
exchange rate in relation to the exchange rate at the balance
sheet date would have had a negative effect of DKK 379 million
on profit and equity (2010: negative effect of DKK 369
million). All other conditions being equal, a decrease in the exchange
rate would have had a corresponding opposite impact.
All other conditions being equal, a 10% increase in the SEK
exchange rate in relation to the exchange rate at the balance
sheet date would have had a negative effect of DKK 140 million
on profit and equity (2010: negative effect of DKK 155 million).
All other conditions being equal, a decrease in the exchange
rate would have had a corresponding opposite impact.
All other conditions being equal, a 10% increase in the NOK
exchange rate in relation to the exchange rate at the balance
sheet date would have had a positive effect of DKK 461 million
on profit and equity (2010: positive effect of DKK 393 million).
All other conditions being equal, a decrease in the exchange
rate would have had a corresponding opposite impact.
Interest rate risks
Interest rate risks are the risk that externally introduced
changes in agreed interest rates lead to increased interest
expense or reduced interest income for DONG Energy A/S. For
an analysis of the company’s interest rate sensitivity, reference
is made to note 32 to the consolidated financial statements.
ineffectiveness
Ineffectiveness of interest rate hedging was DKK 0 million in
2011 (2010: DKK 0 million).
interest rate hedges
As part of its financial management, DONG Energy A/S swaps
the interest basis on loans from a floating rate to a fixed rate or
vice versa using interest rate swaps. For interest rate swaps
converting floating-rate loans to fixed-rate loans (hedging of
cash flows), value adjustments recognised directly in equity at
31 December 2011 amounted to a net loss of DKK 848 million
(31 December 2010: loss of DKK 265 million). Reference is
made to note 33 to the consolidated financial statements.
Counterparty risks
178 parEnt COmpany finanCial statEmEnts – DONG ENERGY ANNUAL REPORT 2011
Counterparty risks are the risk that a financial loss will be
realised in the event of a counterparty to an agreement being
unable to discharge its obligations under the agreement.
DONG Energy A/S’s counterparty risk comprises primarily
receivables from financial counterparties. Credit rating of business
partners is carried out on a regular basis to generally
minimise this risk.
The amounts with which the items in question are recognised
in the balance sheet correspond to the company’s maximum
counterparty risk. Losses on receivables from individual business
partners have historically been low. In the company’s
opinion, there are no special concentrations of counterparty
risks. The company’s counterparty risk in connection with
derivative financial instruments entered into is limited as such
instruments have primarily been entered into with major international
banks or other counterparties with a high credit rating.
Reference is made to note 32 to the consolidated financial
statements.