Note 9 Financial items - balance sheet
Financial assets and liabilities
The fair value of forward exchange contracts is determined by applying the forward exchange rate on the balance sheet date.
The fair value of currency swaps and interest rate swap is calculated as the present value of future cash flows.
Fair value is mainly confirmed by the financial institution with which Statnett has entered into such contracts.
The fair value of financial assets and long-term liabilities accounted for at amortised cost has been calculated:
- using quoted market prices,
- using interest rate terms for liabilities with a corresponding maturity and credit risk, or
- using the present value of estimated cash flows discounted by the interest rate that applies to corresponding liabilities and assets on the balance sheet date.
In the case of financial instruments such as financial assets available for sale, trade account receivables and other short-term receivables, liquid assets, trade accounts payable and other current liabilities, it is assumed that the book value is a good estimate of fair value, due to the short-term nature of the items.
Included in liquid assets as at 31 December 2013 are reserved tax withholdings of NOK 47 million and securities to Nord Pool Spot AS of NOK 33 million in the parent company. Corresponding figures of the group are NOK 48 million and NOK 56 million respectively.
Fair value hierarchy
Level 1: Fair value is used for quoted prices from active markets for identical financial instruments. No adjustments are made with regard to these prices.
Level 2: Fair value is measured using other observable input than for Level 1, either direct (prices) or indirect (derived from prices).
Level 3: Fair value is measured using input based on non observable market data.
Financial assets and liabilities are measured at fair value according to the following valuation method:
There has been no transactions between level 1 og 2 during the periode.
Reconciliation of level 3 in fair value measurements.
Interest-bearing assets and liabilities
Repayment profile for interest-bearing debt for the parent company.
The loans are measured at amortised cost adjusted for the effect of fair value hedging.
* Statnett SF intra-group loans of NOK 693 million, payable on demand.
Loans by currency as at 31 Dec. 2013
* Amounts in EUR are linked to collateral under CSA (Credit Support Annex) agreements, which reflect higher/lower value of derivatives.
** EONIA overnight - daily interest rates announced by the European Banking Federation (EBF)
1) All loans in foreign currency are converted into NOK using cross currency interest swap agreements.
The average interest rate for the loans includes interest swap agreements. The average interest rate is the average rate as at 31 Dec. 2012.
All market based securitres are terminated in Norwegian kroner (NOK).
Unrealised interest gain/losses changed from NOK 3 million to NOK 0 during the period.
Which resulted in a loss of NOK -3 million, recognised in Other financial income.
Age distribution trade receivable
Interest rate and currency swaps
These are agreements where the contracting parties exchange currency and/or interest rate terms for an agreed amount over a defined future period.
All interest rate and currency swaps are related to underlying loans. Any loss/gain on the swap will therefore correspond to the gain/loss on the loan.
* Accrued interest is not included in the market value. In the case of combined interest rate and currency swaps, the unrealised currency effect is included in the market value.
** Free-standing derivatives of NOK 1.100 million are related to underlying loans, but hedge accounting is not used.
*** Changes in market value includes cash flow for 2013.
**** Changes in value in fair value hedges have no effect on the result.
Interest rate options:
Statnett had no interest rate options as at 31 December 2013.
Forward exchange options:
Statnett makes use of forward exchange contracts in order to the currency risk on transactions in currencies other than NOK.
*Average forward rate.
All contracts are related to capital expenditure on plants in foreign currency. Unrealised gains/losses on forward exchange contracts reduce/increase the cost price of the investments upon disposal.
Statnett had no commodity contracts at 31 December 2013.
Statnett has no financial instruments that are set off and presented net in the balance sheet statement.
Statnett has entered into CSA (Credit Support Annex) agreements with most major banks. This entails that the market value of derivaties entered into between Statnett and a counterparty is settled on a weekly basis, and that monetary security is received or given for any outstanding amounts. Master netting agreements allow set-offs of other outstanding accounts with customers if certain conditions arise. The amounts have not been set off in the balance sheet as the transactions will not normally be settled on a net basis.