Electrolux 2004 Annual Report Download - page 62

58 Electrolux Annual Report 2004
Notes
Amounts in SEKm, unless otherwise stated
GBP CAD AUD NOK CZK CHF HUF SEK EUR USD Other Total
Inflow of currency (long position) 3,700 2,570 1,350 1,140 860 860 960 1,970 5,480 1,910 4,470 25,270
Outflow of currency (short position) –170 –190 –270 –200 — –60 –2,480 –4,880 –9,570 –6,510 –940 –25,270
Gross transaction flow 3,530 2,380 1,080 940 860 800 –1,520 –2,910 –4,090 –4,600 3,530 —
Hedge –1,580 –1,840 –710 –560 –590 –580 870 2,390 1,240 2,850 –1,490 —
Net transaction flow 1,950 540 370 380 270 220 –650 –520 –2,850 –1,750 2,040 —
Commercial flows
The table below shows the forecasted transaction flows (imports and
exports) for the 12-month period of 2005 and hedges at year-end 2004.
The hedged amounts during 2005 are dependent on the hedging
policy for each flow considering the existing risk exposure. Gross hedging
of flows above 12 months and up to 18 months, not shown in the table,
amounts to SEK 474m and this hedging refers mainly to USD/SEK and
EUR/SEK.
The effect of hedging on operating income during 2004 amounted to
SEK –76m (69). At year-end 2004, unrealized exchange-rate losses on
forward contracts amounted to SEK –20m (47), all of which will mature
in 2005.
Derivative financial instruments
The tables below present the fair value and nominal amounts of the
Group’s derivative financial instruments for managing of financial risks
and proprietary trading. The fair value of financial instruments used for
proprietary trading at the end of 2004 was SEK 4m (6).
Valuation of derivative financial instruments at market value (MV), pre-
sented in the table above, is done at the most accurate market prices
available. This means that instruments, which are quoted on the market,
such as for instance the major bond and interest-rate future markets,
are all marked-to-market with the current spot mid-price. The foreign-
exchange spot mid-rate is then used to convert the market value into
Swedish kronor, before it is discounted back to the valuation date. For
instruments where no reliable price is available on the market, cash flows
are discounted using the deposit/swap curve of the cash-flow currency.
In the event that no proper cash flow schedule is available, for instance
as in the case with forward-rate agreements, the underlying schedule is
used for valuation purposes. To the extent option instruments are used,
the valuation is based on the Black-Scholes formula. All valuations are
done at mid-prices, e.g., the average of bid and ask prices are used.
Note 18 continued
The sharp reduction of pledged assets in 2003 was mainly due to that
the company in India ceased pledging assets, the divestment of the
compressor unit in China and renegotiations of bank loans in Germany.
Nominal amounts
2004 2003
Interest-rate swaps
Maturity shorter than 1 year 5,600 8,219
Maturity 2–5 years 4,760 9,188
Maturity 6–10 years — —
Total interest-swaps 10,360 17,407
Cross currency interest-rate swaps 75 245
Forward-rate agreements 15,751 35,625
Foreign-exchange derivatives
(Forwards and Options) 18,104 12,603
Commodity derivatives — 21
Total 44,290 65,901
Note 19 Assets pledged for liabilities to credit institutions
Group Parent Company
2004 2003 2002 2004 2003 2002
Real-estate mortgages 126 418 1,090 — — —
Corporate mortgages — — 9 — — —
Receivables ——124 ———
Inventories ——238 ———
Other 11 5 447 5 5 5
Total 137 423 1,908 5 5 5
Fair value
2004 2003
Positive MV Negative MV Net MV Positive MV Negative MV Net MV
Interest-rate swaps 290 –66 224 364 –145 219
Cross currency interest-rate swaps 21 –10 11 15 –16 –1
Forward-rate agreements and futures 9 –9 — 10 –10 —
Foreign exchange derivatives (Forwards and Options) 828 –534 294 759 –319 440
Commodity derivatives — — — 9 –4 5
Total 1,148 –619 529 1,157 –494 663