Note 26

Financial instruments

The ordinary business results in exposure to credit, interest-rate, liquidity and foreign exchange risk.
The company is not directly exposed to fluctuations in foreign exchange rates, since it does not have subsidiaries outside Norway and all sales are made in Norwegian kroner. The business is also exposed use bunkers as fuel. Financial derivatives are used to hedge against fluctuations in these markets. to fluctuations in oil prices, since the company's vessels use bunkers as fuel. Financial derivatives are used to hedge against fluctuations in these markets.

Credit risk
The company faces little credit risk in its ordinary harvesting/trading business, since virtually all sales are cleared through the Norwegian Fishermen's Sales Organisation and the Sunnmøre & Romsdal Fishermen's Sales Organisation, which have guarantee schemes for correct settlement.
No security is required for financial assets.

Exposure to Norway Seafoods
The Norway Seafoods Group is the company's largest customer and a close partner. HAVFISK owns several processing plants that are rented by Norway Seafoods Group on long-term contracts. A long-term lease agreement with Norway Seafoods regarding production equipment is recognised as a finance lease and presented as an interest-bearing non-current asset investment on the balance sheet. The lease agreement for buildings is treated as an operating lease in the accounts and the annual rent is recognised under other operating revenues in the income statement. A subordinated loan was also established in the amount of NOK 100 million in connection with the distribution of shares in Norway Seafoods Group AS. At year end, total receivables from the Norway Seafoods Group amounted to NOK 209 million, including NOK 69 million relating to finance leases for equipment in the company's production plants. The total balance with Norway Seafoods was reduced by NOK 3 million in 2015. The lease agreement with Norway Seafoods is described in note 12. The profitability of the Norway Seafoods Group has been low for a lengthy period of time. Because of Norway Seafoods' financial situation, the company has been unable to pay ongoing rents and accumulated interest. After a total assessment of the exposure in Norway Seafoods, as well as the company's equity situation and earnings, objective indications of loss of value are considered to exist. HAVFISK has therefore decided with effect from 1 January 2015 to make ongoing loss provisions for rent and interest on outstanding receivables from Norway Seafoods, so as to take into account that the estimated present value of future cash flows is lower than the originally entered book values.. The situation is being constantly reviewed in the light of Norway Seafoods' financial situation. HAVFISK sells a substantial share of its fresh volume to Norway Seafoods. Settlement takes place through the Norwegian Fishermen's Sales Organisation, which guarantees the settlements. The company thereby has no credit risk associated with this type of sale, ref. note 1 principles for revenue entry.

Maximum exposure to credit risk connected to trade receivables at the balance sheet date by customer category:
Gross trade receivables
NOK million	2015	2014
Wholesale business
Retailers, industry customers, sales organisation	52	41
End users
Total trade receivables:	52	41

Exposure to credit risk The book value of receivables represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:
2015	Note	Held for sale through profit or loss	Allocated at fair value through profit or loss	Available for sale	Receivables at amortised cost	Derivatives as hedging instrument	Held until maturity	Cash and cash equivalents	Total
Other share investments									-
Financial interest bearing non-current assets	12				209				209
Other non-current assets	13				-				-
Trade receivables, other curr. non-int-bearing receivables and share investments	15				72				72
Short-term derivatives	26				-	-			-
Interest bearing receivables					-				-
Cash and cash equivalents	16								-
Total		-		-	281	-	-	-	281
2014	Note	Held for sale through profit or loss	Allocated at fair value through profit or loss	Available for sale	Receivables at amortised cost	Derivatives as hedging instrument	Held until maturity	Cash and cash equivalents	Total
Other share investments				-					-
Financial interest bearing non-current assets	12				186				186
Other non-current assets	13				-				-
Trade receivables, other curr. non-int-bearing receivables and share investments	15				51				51
Short-term derivatives	26				-				-
Interest bearing receivables					30				30
Cash and cash equivalents	16								-
Total		-		-	268	-	-	-	268

The ageing profile of trade receivables is shown below:
NOK million	Gross 2015	Provisions	Gross 2014	Provisions
Not yet due	52	(1)	41	(1)
Due 0-30 days	-	-	-	-
Due 31-120 days
Due 121-365 days	1	(1)
Due more than 1 year	-	-	-	-
Total trade receivables	53	(1)	41	(1)
Written down		-		-

Effect of hedge accounting on equity
NOK million			2015	2014
Cumulative, non-reversed amount at start of year			-48	-23
Net change in equity as a result of hedge accounting			1	-25
Cumulative, non-reversed amount at year end			-47	-48

Liquidity risk Liquidity risk is the risk that the Group will not be able to fulfil its financial liabilities as they mature. The aim of liquidity management is to secure sufficient liquidity to fulfil liabilities at the time of maturity. Maturity profile including estimated interest payments by category of interest-bearing liability: The following table provides an overview of maturities and maturities including interest estimates by main category of loan for interest-bearing financial liabilities.
	2015 loan and interest maturity structure
NOK million	Book value	Cash flow	Up to 6 months	6-12 months	1-2 years	2-5 years	Over 5 years

Non-financial derivatives:	-
	-
Mortgaged loans	(1 212)	(1 297)	(47)	(47)	(94)	(1 109)	-
Other long-term non-interest-bearing liabilities	(139)	(139)			(12)	(20)	(107)
Other current non-interest-bearing liabilities	(193)	(193)	(156)	(37)	-	-	-
Discontinued operations	-	-	-	-	-	-	-
Financial derivatives:	-	-
Interest swaps used for hedging	(40)	(43)	(7)	(8)	(15)	(14)
Derivatives used for bunker hedging	(24)	(24)	(13)	(7)	(5)
Total	(1 608)	(1 696)	(223)	(98)	(125)	(1 143)	(107)

The following table indicates in which periods the hedged cash flows and associated hedging instruments are expected to occur:
NOK million	Book value	Cash flow	Up to 6 months	6-12 months	1-2 years	2-5 years	Over 5 years
Assets
Other current non-interest-bearing liabilities	(193)	(193)	(156)	(37)	-	-	-
Liabilities, mortgage loan	(1 212)	(1 297)	(47)	(47)	(94)	(1 109)	-
Financial derivatives
Bunker derivatives	(24)	(24)	(13)	(7)	(5)
Interest derivatives	(40)	(43)	(7)	(8)	(15)	(14)	-
Total	(1 469)	(1 557)	(223)	(98)	(113)	(1 123)	-

The following table indicates in which periods the hedged cash flows and associated hedging instruments are expected to impact the income statement:
NOK million	Book value	Cash flow	Up to 6 months	6-12 months	1-2 years	2-5 years	Over 5 years
Assets
Liabilities		(536)	(89)	(89)	(179)	(179)	-
Financial derivatives
Bunker derivatives		(24)	(13)	(7)	(5)	-	-
Interest derivatives		(43)	(7)	(8)	(15)	(14)	-
Total		(604)	(109)	(104)	(198)	(193)	-

	2014 loan and interest maturity structure
NOK million	Book value	Cash flow	Up to 6 months	6-12 months	1-2 years	2-5 years	Over 5 years

Non-financial derivatives:	-
	-
Mortgaged loans	(1 288)	(1 476)	(63)	(63)	(126)	(1 224)	-
Other long-term non-interest-bearing liabilities	(106)	(106)			(12)	-	(94)
Other current non-interest-bearing liabilities	(169)	(169)	(132)	(37)	-	-	-
Discontinued operations	-	-	-	-	-	-	-
Financial derivatives:	-	-
Interest swaps used for hedging	(49)	(51)	(6)	(7)	(13)	(25)
Derivatives used for bunker hedging	(17)	(17)	(9)	(5)	(3)		-
Total	(1 628)	(1 819)	(210)	(112)	(155)	(1 249)	(93)

The following table indicates in which periods the hedged cash flows and associated hedging instruments are expected to occur:
NOK million	Book value	Cash flow	Up to 6 months	6-12 months	1-2 years	2-5 years	Over 5 years
Assets
Other current non-interest-bearing liabilities	(169)	(169)	(132)	(37)	-	-	-
Liabilities, mortgage loan	(1 288)	(1 476)	(63)	(63)	(126)	(1 224)	-
Financial derivatives
Bunker derivatives	(17)	(17)	(9)	(5)	(3)
Interest derivatives	(49)	(51)	(6)	(7)	(13)	(25)	-
Total	(1 522)	(1 713)	(210)	(112)	(142)	(1 249)	-

The following table indicates in which periods the hedged cash flows and associated hedging instruments are expected to impact the income statement:
NOK million	Book value	Cash flow	Up to 6 months	6-12 months	1-2 years	2-5 years	Over 5 years
Assets
Liabilities		(557)	(94)	(94)	(186)	(183)	-
Financial derivatives
Bunker derivatives		(17)	(9)	(5)	(3)	-	-
Interest derivatives		(51)	(6)	(7)	(13)	(25)	-
Total		(625)	(109)	(106)	(202)	(208)	-

Interest rate risk
At the balance sheet date the interest rate profile on HAVFISK's interest-bearing instruments was as follows:
NOK million	2015	2014
Variable interest rates:
Cash and cash equivalents	233	146
Other interest-bearing assets	212	216
Interest-bearing liabilities	1 212	1 288
Net interest-bearing receivables (liabilities) subject to fixed interest rates	-766	-925

NOK million	2014	2013
Variable interest rates:
Cash and cash equivalents	146	24
Other interest-bearing assets	216	202
Interest-bearing liabilities	1 288	1 223
Net interest-bearing receivables (liabilities) subject to fixed interest rates	(925)	(997)

Cash flow analysis and fair value analysis variable interest rate instruments
2015	Income statement		Equity after tax
Amounts in NOK million	100 pt increase	100 pt decrease	100 pt increase	100 pt decrease
Variable interest rate on instruments	(8)	8	-	-
Interest rate swaps - cash flow hedging	-	-	12	(12)
Cash flow effect	(8)	8	12	(12)

Interest swap agreements
As of 31/12/2015, HAVFISK had hedged parts of the mortgaged liabilities through an interest rate swap agreement. NOK 611 million has been secured. Other loans and interest-bearing financial assets are subject to variable interest rates. The fair value of the agreement amounted to NOK -40 million as of 31 December 2015. (NOK -49 million as at 31 December 2014)

Effektiv rentesats
The following table shows the effective interest rate at the balance sheet date for interest-bearing financial assets and interest-bearing financial liabilities.
All interest-bearing financial assets and liabilities are repriced at 3 and 6-monthly intervals in line with the intervals used to fix interest margins.
All interest-bearing financial assets and interest-bearing financial liabilities are subject to variable interest rates.

NOK million	Note	2015 Effective interest rate	2014 Effective interest rate
Cash and cash equivalents	16	0,8 %	1,4 %
Non-current interest-bearing receivables	12	3,6 %	4,5 %
Non-current interest-bearing loans and credits	21	3,1 %	4,3 %
Operating facility (not used)	24	3,3 %	4,5 %

Foreign exchange risk
After the Norway Seafoods business was demerged, the company is no longer directly exposed to fluctuations in exchange rates since it no longer has subsidiaries outside Norway and all sales are made in Norwegian kroner.

Shown below are assets and obligations measured at fair value in the accounts or classified in notes in the fair value hierarchy. Level 1: Fair value based on prices quoted in an active market for identical assets and obligations. Level 2: Fair value based on input from other than quoted prices. Level 2 includes interest rate and currency derivatives. Level3: When the discounted cash flow method is used, estimated future cash flows are based on management's best estimate and the discount rate is the market rate for equivalent instruments on the date of balance. Face value is considered to reflect fair value for receivables/obligations with a duration of less than one year.

As at 31 December 2015
					Fair value 2015
NOK million	Loans and receivables, other liabilities	Available for sale - financial assets	Interest and bunkers Derivatives	Book value 2015	Level 1	Level 2	Level 3	Total
Other non-current interest-bearing receivables	0	212		212			212	212
Trade receivables	52			52				0
Other interest-free current assets	21			21				0
Interest-bearing current assets	0			0			0	0
Cash and bank deposits	233			233				0
Financial assets	305	212	0	518	0	0	212	212
Mortgaged loans	1 212			1 212		1 212		1 212
Trade payables	59			59				0
Accrued, unpaid interest	10			10				0
Other accrued costs	15			15				0
Provision for dividend	0			0				0
Other interest-free current liabilities	91			91				0
Derivatives			64	64		64		64
Financial liabilities	1 386	0	64	1 451	0	1 276	0	1 276

As at 31 December 2014
					Fair value 2015
NOK million	Loans and receivables, other liabilities	Available for sale - financial assets	Interest and bunkers Derivatives	Book value 2015	Level 1	Level 2	Level 3	Total
Other non-current interest-bearing receivables	0	186		186			186	186
Trade receivables	41			41				0
Other interest-free current assets	7			7				0
Interest-bearing current assets	30			30			30	30
Cash and bank deposits	146			146				0
Financial assets	224	186	0	410	0	0	216	216
Mortgaged loans	1 288			1 288		1 288		1 288
Trade payables	62			62				0
Accrued, unpaid interest	12			12				0
Other accrued costs	17			17				0
Provision for dividend	0			0				0
Other interest-free current liabilities	28			28				0
Derivatives			66	66		66		66
Financial liabilities	1 406	0	66	1 472	0	1 353	0	1 353

Add to my report

Print