Å kodaAuto ANNUAL REPORT 2006 - Skoda Auto

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1.8 Financial derivates The Company uses derivatives to hedge interest rate and currency risks. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument or instrument held for trading. The Company designates as hedging instruments only those which fulfil the requirement of a hedge accounting. The Company uses derivatives to hedge future cash flows. The hedged items are as follows: – Highly probable future transactions; and – Cash flow from selected liabilities. The Company is hedging against changes in cash flows from selected liabilities caused by changes in interest rates and against changes in cash flows from highly probable future transactions caused by changes in forward rates for expected maturity of transactions. The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recognised in equity. Amounts accumulated in equity are recycled in the income statement in the periods when the hedged item will affect profit or loss. When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity from effective part of hedging instrument at that time remains in equity and is recognised when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement. Certain derivative instruments do not qualify for hedge accounting according to IAS 39. Changes in the fair value of any derivative instruments that do not qualify for hedge accounting are recognised immediately in the income statement. The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques, such as by discounting the future cash flows at the market interest rates. The fair value of forward foreign exchange contracts is determined as present value of future cash flows based on forward exchange market rates at the balance sheet date. 106
1.9 Deferred income tax Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, if the deferred income tax arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit nor loss, it is not accounted for. Deferred income tax is determined using tax rates and tax laws, that have been enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilised. In accordance with IAS 12, deferred tax assets and liabilities are offset if the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority, and where the Company has the enforceable right to offset the current tax assets and liabilities. Deferred tax relating to items recognised directly in equity (for example the effective portion of changes in the fair value of financial derivates that are designated and qualify as cash flow hedges) is also recognised directly in equity. The Company recognizes deferred income tax assets on unused investment tax credits against deferred tax income in the income statement to the extent that it is probable that future taxable profits will be available against which the unused tax credits can be utilized. 1.10 Inventories Purchased inventories (raw materials, consumables, supplies and materials used in production, goods) are stated at the lower of cost and net realisable value. Costs include purchase costs and other acquisition costs (e.g. transport, customs duty, and packaging). Inventories generated from own production, i.e. work in progress and finished goods, are stated at lower of own production costs or net realisable value. Own production costs include direct material, direct wages and production overheads. The administration overhead expenses are not included in the valuation of work in progress and finished goods. Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion less applicable variable selling expenses. Net realisable value reflects all risks of obsolete and redundant raw materials and excessive spare parts. A weighted-average calculation is used to account for the consumption of materials and for all sales. 107
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SIMPLY CLEVER MORE ROOM... ŠkodaAu
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Even in the dynamic life of an auto
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SELECTED DATA AND FINANCIAL FIGURES
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Another major step was made in May
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ŠKODA AUTO GROUP PROFILE Who We Ar
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Where We Stand Since being acquired
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From left: Martin Jahn, Harald Luda
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Dipl.-Ökonom Fred Kappler (*1958)
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REPORT OF THE SUPERVISORY BOARD Dur
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FOR GROWTH Our road leads literally
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The Czech National Bank increased i
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Risk Management System The Škoda A
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Non-current liabilities were down 4
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Consolidated Balance Sheet (CZK mil
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Škoda Auto Deutschland 2006 was a
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The New Škoda Fabia Successor The
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Purchasing The key criterion of Šk
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FOR CHALLENGES To make cars that ar
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Vehicle Production For the first ti
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Quality Measuring vehicle body part
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Czech Republic The overall passenge
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Vehicle Customer Deliveries by Mode
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FOR LIFE Human beings are always at
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Personal Development and Continuing
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Sponsorship and Corporate Citizensh
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The Environment Škoda Auto has a l
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Water consumed and wastewater disch
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FOR THE FUTURE Life around us is in
Page 57 and 58: Production and Logistics Human Reso
Page 59 and 60: AUDITOR’S REPORT ON THE ANNUAL RE
Page 61 and 62: CONSOLIDATED INCOME STATEMENT FOR T
Page 63 and 64: CONSOLIDATED STATEMENT OF CHANGES I
Page 65 and 66: NOTES TO THE CONSOLIDATED FINANCIAL
Page 67 and 68: 1.3 Details of the Group In additio
Page 69 and 70: 1.6 Intangible assets Purchased int
Page 71 and 72: (d) Available-for-sale financial as
Page 73 and 74: 1.11 Deferred income tax Deferred i
Page 75 and 76: 1.16 Revenue and expense recognitio
Page 77 and 78: 1.21 Financial risk management The
Page 79 and 80: Goodwill Capitalised Capitalised Ot
Page 81 and 82: 5. Investments in associates The Co
Page 83 and 84: 10. Share capital The subscribed ca
Page 85 and 86: Interests and principal of bonds ar
Page 87 and 88: 15. Deferred tax liabilities and as
Page 89 and 90: 17. Cash flow statement The cash an
Page 91 and 92: Reconciliation of expected to effec
Page 93 and 94: 27. Related party transactions Rela
Page 95 and 96: Receivables from related parties (C
Page 97 and 98: 28. Other information (CZK million)
Page 99 and 100: INCOME STATEMENT FOR THE YEAR ENDED
Page 101 and 102: STATEMENT OF CHANGES IN EQUITY FOR
Page 103 and 104: NOTES TO THE FINANCIAL STATEMENTS 2
Page 105 and 106: 1.3 Foreign currency translation Fu
Page 107: (c) Held-to-maturity investments He
Page 111 and 112: 1.14 Revenue and expense recognitio
Page 113 and 114: Hedging of foreign currency risks R
Page 115 and 116: 4. Property, plant and equipment (C
Page 117 and 118: Derivative financial instruments Th
Page 119 and 120: 13. Non-current and current financi
Page 121 and 122: 15. Other non-current and current l
Page 123 and 124: Non-current and current provisions
Page 125 and 126: 23. Income tax (CZK million) 2006 2
Page 127 and 128: 28. Related party transactions Rela
Page 129 and 130: Receivables from related parties (C
Page 131 and 132: 29. Other information (CZK million)
Page 133 and 134: 2. Purchase of goods and services a
Page 135 and 136: Other legal acts In the accounting
Page 137 and 138: GLOSSARY OF TERMS AND ABBREVIATIONS
Page 139 and 140: PERSONS RESPONSIBLE FOR THE ANNUAL
Page 141 and 142: Financial Figures At a Glance, Acco
Page 143 and 144: EVENTS ANTICIPATED IN 2007 January
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Å kodaAuto ANNUAL REPORT 2006 - Skoda Auto

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