Scania annual report 2004

totalled SEK 89 m. (166), equivalent to
0.34 (0.66) percent of the average portfolio,
of which SEK 44 m. (100) consisted
of actual credit losses.
At year-end, the total reserve for
probable but not actual credit losses in
Customer Finance totalled SEK 500 m.
(458), equivalent to 1.9 (1.8) percent of
the portfolio at the close of 2004.
Per year-end the portfolio amounted
to SEK 26,596 m. (25,926), divided
among about 20,500 customers, of whom
99.0 percent were small customers with
lower credit exposure per customer than
SEK 15 m.
The management of the credit risks
that arise in Scania’s treasury operations,
among other things in liquidity investment
and derivatives trading, is regulated in
Scania’s financial policy document.
Transactions occur only within established
limits and with selected creditworthy
counterparties.
OTHER CONTRACTUAL RISKS
Residual value exposure
Some of Scania’s sales occur with repurchase
obligations or guaranteed
residual value. The value of all obligations
at year-end was SEK 5,615 m. (5,925).
Obligations outstanding declined somewhat,
mainly due to the stronger Swedish
krona. During 2004, the volume of such
transactions was about 4,600 (6,500) new
contracts.
Service contracts
A large portion of Scania’s sales of parts
and workshop hours occur through repair
and maintenance contracts. Under such
contract, customers pay a fixed charge
for a given period of time during which
they receive, among other things, maintenance
and repairs of their Scania vehicles.
A fixed charge sets a ceiling on the cost
of maintenance and repairs.
Through the service network, Scania
signs multi-year repair and service contracts
with customers. In 2004 the number
of contracted vehicles totalled 40,148
(38,719).
THE PARENT COMPANY
The Parent Company, Scania AB, owns
the shares in Scania CV AB and sold its
shares in other Group companies to
Scania CV AB at book value during 2004.
After that, Scania AB owns only the
shares in Scania CV AB and otherwise
runs no operations.
Scania CV AB is a public company
and parent company of the Scania CV
Group, which includes all production,
sales and service and finance companies
in the Scania AB Group. The company is
a subsidiary of Scania AB, whose shares
are listed on Stockholmsbörsen.
FINANCIAL REVIEW • SCANIA ANNUAL REPORT 2004 48