Page 97 - 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
               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.

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