Page 96 - InterEnergo - Annual Report 2020

Interenergo Accounting report Interenergo Accounting report

2.5.3 Currency risk 2.5.4 Interest rate risk

Currency risk is a financial risk and indicates the risk of financial loss due to changes in the value of one Interest rate risk means the possibility of loss due to adverse interest rate movements on the market. The
currency compared to another. Within the framework of electricity trading, the Company is exposed to currency Company is financed based on non-current borrowings bearing a fixed interest rate from the parent company,
risk, particularly to the Romanian leu (RON) and the Hungarian forint (HUF). The Company actively manages and is exposed to interest rate risk when using bank overdrafts at commercial banks for the purpose of financing
and hedges foreign currency transactions and for this purpose concludes also foreign currency forward temporary liquidity gaps. Variable interest rates are based on Euribor and Euro-Libor.
contracts. As of the reporting date, the fair value of foreign currency forward contracts was recorded at EUR
22,557 (2019: EUR -560).
in EUR 31 Dec 2020 31 Dec 2019
Instruments bearing the fixed interest rate 205,991 19,616,810
31 Dec 2020
Non-current loans granted 63,133,181 43,439,876
in EUR Total EUR RON HUF CZK BAM BGN HRK
Non-current borrowings -60,427,190 -23,823,066
Trade and other
receivables 26,029,010 25,673,444 310,042 0 49 1,074 44,400 0 Current borrowings -2,500,000 0
Cash and cash Instruments bearing a variable interest rate -1,297 -1,743,154
equivalents 8,432,215 6,251,789 1,485,368 69,830 274,969 219,030 131,229 0
Current borrowings -1,297 -1,743,154
Trade and other
payables -17,697,371 -17,287,356 -356,252 0 0 -260 -53,314 -189
Statement 2.5.5 Price risk
of financial
position's Price risk is a type of market risk that arises from unfavourable movements in electricity prices on the markets
exposure 16,763,854 14,637,878 1,439,158 69,830 275,018 219,844 122,315 -189
and has a negative impact on the value of open commodity forward contracts and consequently a negative
effect on business operations. Concluded and not yet delivered electricity forward contracts and cross-border
transmission capacity contracts are exposed to price risk is exposed to. The mark-to-market (MtM) value of
31 Dec 2019
open commodity forward contracts is estimated daily on the basis of the relevant hourly price forward curves
in EUR Total EUR RON HUF CZK BAM BGN HRK (HPFCs) derived from stock prices, whereas transactions related to cross-border transmission capacities are
Trade and other based on differences between the relevant forward price curves. A risk management system based on the
receivables 26,829,824 26,463,169 315,586 0 3 4,020 0 47,046 value-at-risk model (VaR) has also been established. The latter enables that the risk measures of the concluded

Cash and cash contracts are valued by different portfolios, markets and strategies for which pre-defined maximum exposure
equivalents 6,055,013 2,978,432 2,459,353 167,148 9,591 56,561 383,928 0 limits are defined.
Trade and other A sensitivity analysis of the change in prices showed that in the event of a general price change of 10%, the
payables -15,419,149 -15,300,033 -2,078 -116,344 -55 -299 -148 -192
fair value of open commodity forward contracts and cross-border transmission capacity contracts would
Statement change by EUR 664,103.
of financial
position's
exposure 17,465,687 15,232,924 1,920,447 -7,876 8,059 38,605 226,674 46,855 2.5.6 Carrying amounts and fair values of financial instruments

Financial instruments are classified to three levels according to the verifiability of the input data for the
calculation of their fair value. Derivatives consist of:

• Standardized futures contracts, whose fair values are valued based on the market prices of the relevant
European Energy Exchange (EEX) products on the last active trading day;

• commodity forward contracts and cross-border transmission capacity contracts, whose fair values are
valued on the basis of the market prices of annual products on the European Energy Exchange (EEX) on
the last active trading day;

• foreign currency forward contracts, whose fair values are valued on the basis of market exchange rates
and differences in market interest rates.

94 Integrated Annual Report 2020 Integrated Annual Report 2020 95