Page 96 - InterEnergo - Annual Report 2020
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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
             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
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