Review of 2012 – EUR - Skanska

06NoteContinuedContracted net flows in currencies that are foreign to the respective Group companyare distributed among currencies and maturities as follows.The Group’s contracted net foreign currency flow 1 2013 20142015 andlaterPLN –127.8 –30.3EUR –82.3 2.6 4.8GBP –9.0 –1.7CZK –7.1 –2.9 –0.3HUF –5.1USD 27.1 3.4 –1.6Other currencies –2.9Total equivalent value –207.1 –29.0 2.81 Flows in PLN, CZK and HUF were mainly related to property development project expenses.Flows in EUR were mainly attributable to the New Karolinska Hospital (NKS) project and theHallandsås rail tunnel, as well as construction operations in Norway and the U.K. The flow inGBP is attributable to NKS and the flow in USD originates from Construction in Latin America.Hedging of net investments outside Sweden2012 2011CurrencyNetinvestment Hedge 1 Hedgedportion %Netinvestment Hedge 1 Hedgedportion, %USD 614.0 201.9 33 554.6 157.8 28EUR 476.0 203.4 43 460.0 197.0 43CZK 340.9 97.1 28 323.4 94.2 29NOK 419.6 123.7 29 375.9 97.6 26PLN 256.2 59.6 23 243.4 53.7 22BRL 23.1 0.0 0 62.1 0.0 0GBP 125.9 7.6 6 19.6 8.3 42Other areas 122.2 16.5 14 121.5 17.4 14Total 2,377.7 709.9 30 2,160.5 626.0 291 After subtracting tax portion.Skanska applies hedge accounting mainly in its Polish operations for hedging ofcontracted flows in EUR and for hedging of expenses in currencies other than theEUR in its European property development operations. The fair value of these hedgestotaled EUR 0.1 M (–1.1) on December 31, 2012.The hedges fulfill effectiveness requirements, which means that unrealized profitor loss is recognized under “Other comprehensive income.” The fair value of currencyhedges for which hedge accounting is not applied totaled EUR –1.4 M (–1.3) onDecember 31, 2012, including the fair value of embedded derivatives. Changes in fairvalue are recognized in the income statement.Information on the changes recognized in the consolidated income statementand in “Other comprehensive income” during the period can be found in the table,“Impact of financial instruments on the consolidated income statement, other comprehensiveincome and equity” below.Hedge accounting is applied when hedging net investments outside Sweden.The hedges fulfill efficiency requirements, which means that all changes due toshifts in exchange rates are recognized under “Other comprehensive income” and inthe translation reserve in equity.Refer to Note 34, “Effect of changes in foreign-exchange rates.”Translation exposureNet investments in Commercial Property and Infrastructure Development operationsare currency-hedged, because the intention is to sell these assets over time.To a certain extent, Skanska also currency hedges equity in those markets/currencieswhere a relatively large share of the Group’s equity is invested. Decisions on currencyhedging in these cases are made by Skanska’s Board of Directors from time to time.At year-end 2012, about 30 percent of equity was currency hedged.These hedges consist of forward currency contracts and foreign currency loans.The positive fair value of the forward currency contracts amounted to EUR 11.9 M(14.0) and their negative fair value amounted to EUR 2.7 M (3.8). The fair value offoreign currency loans amounted to EUR 194.6 M (92.2).An exchange rate shift where the EUR falls/rises by 10 percent against othercurrencies would have an effect of +/–EUR 0.20 billion on “Other comprehensiveincome” after taking hedges into account.120 Notes, including accounting and valuation principles Skanska Review of 2012 – EUR version