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Notes to the consolidated financial
statements, REC Group
REC Annual Report 2011
A change in interest rates will affect the interest payments on
variable interest rate liabilities and cash and cash equivalents.
The net effect of a one percentage point increase (decrease) in
interest rates is estimated to affect profit or loss for the year by
NOK -23 (23) million calculated on outstanding amounts at
December 31, 2011. The same calculation at December 31, 2010
was NOK -46 (46) million. These calculations are not adjusted for
capitalization of borrowing costs.
A one percentage point increase (decrease) in market interest rates
is estimated to change the net estimated fair values of the bonds
and derivatives with an effect to profit or loss by NOK 48 (-48)
million at December 31, 2011. The same calculation at December
31, 2010 was NOK 72 (-72) million.
Exchange rate sensitivity
The REC Group has estimated the effect on financial assets and
financial liabilities of a 10 percent change in currencies other than
the entities’ functional currencies at December 31, 2011 and 2010.
The REC Group has no single functional currency, and the effects are
calculated for each entity in its functional currency, converted to
NOK using the exchange rates at December 31, 2011 and 2010,
respectively. The calculations include intercompany receivables and
payables. It excludes net investments in subsidiaries, joint ventures
and associates but includes a receivable that is regarded as a part
of net investments in a foreign entity.
“Of which to equity” is an estimate of the effect that could affect
equity through other comprehensive income. It excludes translation
differences on net investments in foreign currencies, except
receivables regarded as a part of the net investments (a loan to
REC Silicon in the USA of approximately USD 130million).
The calculation should not be viewed as an estimate of what the
effects could be for the financial year for changes in currency rates.
This is, among other things, due to the fact that the amounts of
financial instruments in foreign currenciesmay change during the
year at the same time as changes in currency ratesmay occur
unevenly throughout the year. If there is a change in the amounts of
derivatives that are designated and qualify for hedge accounting
compared to December 31, more or less effects would be recognized
to equity through other comprehensive income versus profit or loss.
The tables below show an estimate of the effects of a 10 percent
change in foreign currencies compared to functional currencies for
each entity and totaled to arrive at the estimated effects for the
RECGroup.
Subsequent to December 31, 2011 all entities in the integrated
plant in Singaporewill have EUR as functional currency, and EUR is
consequently used in the calculation of exchange rate sensitivity at
December 31, 2011 for these. In the calculation at December 31,
2010 it was amix between EUR and SGD. The exchange rate
sensitivity at December 31, 2011 for financial assets in USD relates
primarily to RECASA’s total loans to RECSilicon in the USA. Themain
part of the remaining sensitivity on financial assets relates to group
internal receivables. Sensitivity on financial liabilities relates
primarily to interest bearing liabilities (see note 17) and Group
internal payables. For information on derivatives (see note 11).
The exchange rate sensitivity at December 31, 2010 for financial
assets in USD relates primarily to RECASA’s total loans to
RECSilicon in the USA. Themain part of the remaining sensitivity on
financial assets relates to the Group account system, with the largest
amounts being group internal receivables (see note 14). Sensitivity
on financial liabilities relates primarily to interest bearing liabilities
(see note 17) and group internal payables (mainly in the Group
account system). For information on derivatives (see note 11).
Exchange rate sensitivity on financial instruments at December 31, 2011
CHANGE + 10%COMPARED TO FUNCTIONAL CURRENCIES
(NOK INMILLION)
EUR
USD
SGD
OTHER
TOTAL
Financial assets and liabilities
Financial assets
41
659
160
2
862
Financial liabilities
-294
-190
-264
2
-745
Net excluding derivatives
-253
470
-104
4
116
Derivatives
Other derivatives
-535
-309
263
0
-581
Embedded derivatives
0
127
0
0
127
Net derivatives
-535
-182
263
0
-454
Total
-788
288
159
4
-338
Of which to equity
USD receivables as part of net investment
0
79
0
0
79
Rest is to profit or loss
-788
209
159
4
-417