Å kodaAuto ANNUAL REPORT 2006 - Skoda Auto

Hedging of foreign currency risks
Risk exposure, resulting from the structure of cash inflows and outflows in foreign currencies is hedged based on foreign currency cash
flow plan. Currency forwards and cross-currency swaps are used as hedge instruments. These are entered into in accordance with time
horizons available on financial markets and acceptable presumptions. In addition to the main trading currencies (EUR, USD, and GBP), the
Company hedges also the currencies of other European and non-European markets.
Hedging of interest risks
Exposure to interest rate fluctuations arises from the Company’s medium- and long-term liabilities resulting from issued bonds. In this
area, the Company hedges its cash flows using interest rate swaps.
Territorial and political risks
Export orders from countries with potential territorial and political risks are identified in advance and hedged in compliance with common
standards. Partners in that area are Czech and international banking institutions including EGAP.
Nominal amounts of derivatives
Remaining term Nominal Nominal
amount
amount
total
total
CZK million < 1 year 1–5 years > 5 years 31.12.2006 31.12.2005
Interest rate swaps 3,000 2,000 – 5,000 5,000
Currency forwards 39,284 5,908 – 45,192 70,114
Currency swaps – – – – 525
2. Segment reporting
Primary reporting format – business segments
At the end of 2006, the Company has identified only one business segment – development, production and sale of the passenger and
utility cars, engines and original parts and car accessories. Other activities do not constitute a separate reportable segment as their
financial results, sales and total assets are not material in comparison to the business segment identified.
Secondary reporting format – geographical segments
Company’s sales are generated from four basic geographical regions: the Czech Republic; Western Europe; Central and Eastern Europe;
and Overseas/Asia/Africa.
2005 Czech Western Central and Unallocated* Total
Republic Europe Eastern Europe
Sales – based on location of customers 24,973 109,097 33,752 10,000 177,822
Costs incurred to acquire segment assets 11,506 – – – 11,506
Assets – according to their location 83,979 – – – 83,979
2006 Czech Western Central and Unallocated* Total
Republic Europe Eastern Europe
Sales – based on location of customers 25,631 111,347 41,314 11,524 189,816
Costs incurred to acquire segment assets 11,279 – – – 11,279
Assets – according to their location 97,435 – – – 97,435
* Overseas/Asia/Africa region is not considered to be a region with similar factors of economic environment and therefore is reported as Unallocated.
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