Review of 2010 – USD version - Skanska

Note
06 Continued
Information on the changes recognized in the consolidated income statement and
in “Other comprehensive income” during the period can be found in the table “Impact
of financial instruments on the consolidated income statement, other comprehensive
income and equity” below.
Translation exposure
Net investments in Commercial Property and Infrastructure Development operations
are currency-hedged, because the intention is to sell these assets over time.
To a certain extent, Skanska also currency hedges equity in those markets/currencies
where a relatively large share of the Group’s equity is invested. Decisions on currency
hedging in these cases are made by Skanska’s Board of Directors from time to time. At the
end of 2010, about 28 percent of equity in North American, Norwegian, Polish and Czech
companies in the Skanska Group was currency hedged.
These hedges consist of forward currency contracts and foreign currency loans. The
positive fair value of the forward currency contracts amounts to USD 14.1 M (18.4) and
their negative fair value amounts to USD 12.8 M (22.3) . The fair value of foreign currency
loans amounts to USD 92.2 M (96.5).
An exchange rate shift where the USD falls/rises by 10 percent against other currencies
would have an effect of USD 0.24 billion on “Other comprehensive income” after taking
hedges into account.
Hedging of net investments outside Sweden
Currency
2010 2009
Net
Hedged
investment Hedge 1 portion
Net
Hedged
investment Hedge 1 portion
USD 651.8 201.2 31% 608.2 183.2 30%
EUR 587.4 217.1 37% 607.4 145.3 24%
CZK 455.8 115.8 25% 451.3 120.2 27%
NOK 512.0 163.3 32% 574.4 163.7 29%
PLN 297.5 63.2 21% 234.3 52.3 22%
CLP 199.8 156.8 79% 100.3 100.2 100%
BRL 85.0 0.0 0% 54.1 0.0 0%
GBP 92.3 10.4 11% 30.2 9.7 32%
Other currencies
144.6 0.0 0% 180.3 0.0 0%
Total 3,026.2 928.0 31% 2,840.6 774.7 27%
1 After subtracting tax portion
Hedge accounting is applied when hedging net investments outside Sweden. The hedges
fulfill efficiency requirements, which means that all changes due to shifts in exchange
rates are recognized under “Other comprehensive income” and in the translation reserve
in equity.
See also Note 34, “Effect of changes in foreign exchange rates.”
112 Notes, including accounting and valuation principles Skanska Review of 2010 – USD version