Annual report - HSE

In March 2013, the company TEŠ drew the long-term EIB and EBRD loans for financing
the construction of replacement Unit 6; consequently, the company’s and Group’s credit
crunch lessened and the Group’s liquidity improved.
On the basis of the above mentioned, we estimate the 2012 liquidity management as
adequate.
4.5.8.8.3 Currency risk
Currency risk is a risk associated with transactions involving foreign currencies and is subject
to changes in exchange rates. Currency risk in operations is smaller, since the majority
of inflows and outflows are in domestic currency - euro. Currency risk occurs mostly in
relation with exercising our primary activity, i.e. electricity trading in Hungary (purchases
in HUF). The risk is managed through appropriate hedging strategy with the use of
derivatives, namely with currency FX Forward concluded with commercial banks, by which
the exchange rate of a foreign currency against the domestic currency is fixed. By fixation
of the foreign exchange rate the company ensures the requested and known electricity
price in EUR and at the same time the already known cash flow from payments in foreign
currency. Currency swap transactions are concluded on the basis of standard contracts
ISDA with commercial banks and it is estimated that the possibility of non-realisation of
these transactions is minimal. The discussed transactions are concluded exclusively with
the intention to hedge against risks and not for speculation purposes, while from the hedge
accounting perspective they are considered as highly efficient, as the concluded currency
hedging corresponds to all features of the hedged item.
Other currencies are present in minimum amount and therefore the company does not
perform sensitivity analysis for the change in foreign exchange rates, since the change in
exchange rate would not significantly affect the profit or loss.
In 2012, the following exchange rates were used to convert assets and liabilities:
in €
Country Currency designation Closing exchange rate in EUR for 2012 Closing exchange rate in EUR for 2011
Czech Republic CZK 25.1510 25.7870
Bulgaria BGN 1.9558 1.9558
Bosnia and Herzegovina BAM 1.9558 1.9558
Croatia HRK 7.5575 7.5370
Hungary HUF 292.3000 314.5800
Macedonia MKD 61.4870 62.0600
Romania RON 4.4445 4.3233
Serbia RSD 113.3900 103.6300
Switzerland CHF 1.2072 1.2156
USA USD 1.3194 1.2939
Annual Report HSE 2012
4 Financial Report of the company HSE
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