Volvo 2007 Annual Report Download - page 134
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130 Financial information 2007
Notes to consolidated fi nancial statements
Outstanding forward contracts and options contracts for hedging
of currency risk and interest risk of commercial receivables and
liabilities
Dec 31, 2006 Dec 31, 2007
Notional Carrying Notional Carrying
amount value amount value
Foreign exchange derivative contracts
– receivable position 28,930 1,034 28,826 3,065
– payable position 18,494 (304) 31,146 (2,819)
Options purchased
– receivable position 5,423 54 1,726 35
– payable position – – – –
Options written
– receivable position – – – –
– payable position 4,394 (20) 1,382 (15)
Subtotal 764 266
Raw materials derivative contracts
– receivable position 94 25 208 113
– payable position (510) (47) (530) (19)
Total 742 360
Derecognition of fi nancial assets
Financial assets that have been transferred in such a way that part or
all of the fi nancial assets do not qualify for derecognition, are included
in reported assets of the Volvo Group. In accordance with IAS 39
Financial Instruments, Recognition and Measurement, an evaluation
is made whether substantially all the risks and rewards have been
transferred to an external part. When Volvo has concluded that it is
not the case, the part of the fi nancial assets that refl ect Volvo’s con-
tinuous involvement are being recognized. On December 31, 2007,
Volvo recognizes SEK 3.4 billion corresponding to Volvo’s continuous
involvement, mostly within the customer fi nancing operations. Of this
balance, SEK 3.0 billion derives from credit guarantees for customer
fi nance receivables that Nissan Diesel has entered into. The amount
is equivalent to slightly more than 50% of the outstanding customer
fi nance receivables pertaining to Nissan Diesel products in the exter-
nal fi nancing company. A corresponding amount is reported as a
fi nancial liability.
Pledged assets
Pledged assets for loans and contingent liabilities amount to 1,556
(1,960). See note 28 Pledged assets, for the different classes of
assets.
Hedge accounting
Cash-fl ow hedging
Derivative fi nancial instruments used for hedging of forecasted com-
mercial cash-fl ows and electricity consumption have, in accordance
with IAS 39, been reported at fair value, which is debited or credited
to a separate component of equity to the extent the requirements for
cash-fl ow hedge accounting are fulfi lled. To the extent that the
requirements for hedge accounting are not met, any changes in value
attributable to derivatives are immediately charged to the income
statement. Gains and losses related to hedges are reported at the
same time as the gains and losses on the items that are hedged effect
the Group’s consolidated shareholders’ equity. The table in Note 23,
Shareholders’ equity shows how the currency risk reserve has changed
during the year.