Note 15 - Derivative Financial Instruments – Assets (Liabilities)

PARENT COMPANY

     

CONSOLIDATED

         

12/31/2015

 

12/31/2014

12/31/2015

12/31/2014

 

(Amounts in USD 1,000)

Assets

Liabilities

Assets

Liabilities

-

-

 

Forward currency contracts - cash flow hedges

1,286

4,170

-

2,325

-

-

 

Currency options

-

-

-

10,292

-

-

 

Interest rate swaps

106

2,021

-

4,115

-

-

 

Cross currency swaps

59

6,705

1,041

-

-

-

 

Total derivative financial instruments

1,451

12,896

1,041

16,732

Forward currency contracts
The nominal principal amount of the outstanding forward currency contracts on 31 December 2015 were USD 162.9 million (2014: USD 122.5 million) of which USD 151.1 million refers to EUR/USD contracts, USD 7.0 million refers to USD/NOK contracts, USD 1.5 million refers to EUR/NOK contracts and USD 3.3 million refers to GBP/NOK contracts.

Of the USD 54.0 million under the USD/NOK contracts, two USD 20.0 million positions are offsetting, such that the net position is USD 14.0 million.

The forward currency contracts have been entered into in order to hedge primarily operating expenses in foreign currencies and committments related to vessels under construction.

Currency options
Currency options have been entered into in order to hedge operational currency exposure.These options are typically path-dependent options which include features related to situations where the underlying reaches or fluctuates within specific barrier levels.

This enables the Company to hedge a range in the underlying currency rather than simply a level. Gains and losses are recognised in the profit and loss. For further information regarding profit and loss effect on forward currency contracts and currency options, please see Note 28.

Interest rate swaps
The nominal amounts of the outstanding interest rate swaps contracts on 31 December 2015 were USD 270.0 million (2014: USD 270.0 million).

At 31 December 2015, the fixed rates vary from 1.13% to 2.29%. The floating rate leg of the interest rate swaps are LIBOR. Gains and losses are recognised in the profit and loss under financial expenses.

Cross currency swaps
Cross currency swaps have been entered into in order to hedge both interest and principal payments on long term debt financings denominated in other currencies than USD.