Scania Annual Report 2011

130
notes to the consolidated financial statements
NOTE 30 Financial risk management, continued
Timing analysis of portfolio assets
Past due but not
recognised as
impairment losses
Past-due
payments
2011 2010 2009
Total
exposure 1
Estimated
fair value of
collateral
Past-due
payments
Total
exposure 1
Estimated
fair value of
collateral
Past-due
payments
Total
exposure 1
Estimated
fair value of
collateral
< 30 days 90 2,796 2,758 87 3,489 3,277 104 3,814 3,484
30–90 days 107 1,649 1,550 111 1,704 1,608 157 2,603 2,360
Past due and
recognised as
impairment losses
91–180 days 77 559 501 84 751 649 197 1,592 1,355
> 180 days 124 480 372 245 1,029 764 396 2,108 1,652
Completed
contracts 159 593 402 256 1,064 733 345 1,343 985
Total 557 6,077 5,583 783 8,037 7,031 1,199 11,460 9,836
1 Exposure is defined as maximum potential loss, without regard to the value of any collateral.
Provisions for bad debts amounted to SEK 745 m. (817 and 924,
respectively), equivalent to 1.7 (2.2 and 2.2, respectively) percent of
the total Financial Services gross portfolio. Provisions for bad debts
changed as follows:
Provisions for bad debts 2011 2010 2009
Provisions, 1 January 817 924 635
Provisions for potential losses 260 371 604
Withdrawals due to
actual credit losses –317 –378 –303
Currency rate effects –15 –100 –12
Provisions, 31 December 745 817 924
The year’s expenses for actual and potential credit losses amounted to
SEK 298 m. (493 and 833, respectively).
Other credit risks at Scania
The administration of the financial credit risks that arise primarily in corporate
treasury operations, among other things when investing liquidit y
and in derivatives trading, is regulated in Scania’s Financial Policy.
Transactions occur only within established limits and with selected,
credit worthy counterparties. “Creditworthy counterparty” means that
the counterparty has received an approved credit rating (at least A or
the equivalent) from the credit institutes Standard and Poor’s and/or
Moody’s. To reduce credit risk, the volume of exposure allowed per
counterparty is limited, depending on the counterparty’s credit rating.
To further limit credit risk, Scania has entered into International Swaps
and Derivatives Associatio n (ISDA) netting contracts with most of its
counterparties. The corporate treasury unit is responsible for ensuring
compliance with the rules of Scania’s Financial Policy.
Net exposure to counter party risk related to derivatives trading
amounted to SEK 545 m. (1,106 and –259, respectively) at the end of
2011. Estimated gross exposure to counterparty risks related to derivatives
trading totalled SEK 1,436 m. (1,899 and 1,316, respectively).
Estimated gross exposure to cash and cash equivalents and shortterm
investments amounted to SEK 11,796 m. (9,868 and 7,147,
respectively). Short-term investments are deposited with various
banks. These banks normally have at least an A rating with Standard
and Poor’s and/or the equivalent with Moody’s.
Scania had short-term investments worth SEK 10,301 m. (8,152
and 6,111, respectively), of which SEK 10,153 m. (8,091 and 6,064,
respectivel y) consists of investments with a maturity of less than 90 days
and SEK 148 m. (61 and 47, respectively) consisted of investments
with a maturity of 91–365 days. In addition to short-term investments,
Scania had bank balances worth SEK 1,495 m. (1,716 and 1,036,
respectively).
Refinancing risk
Refinancing risk is the risk of not being able to meet the need for
future funding. Scania applies a conservative policy concerning
refinancing risk. For Vehicles and Services, there shall be a liquidity
reserve consisting of available cash and cash equivalents as well as
unutilised credit facilities which exceeds the funding needs for the next
two years.
For Financial Services, there shall be dedicated funding that cover s
the estimated demand for funding during the next year. There shall also
always be borrowings that safeguard the refinancing of the existing
portfolio.
At the end of 2011, Scania’s liquidity reserve, consisting of unutilised
credit facilities, cash and cash equivalents and short-term investments,
amounted to SEK 39,685 m. (36,872 and 32,853 respectively).
financial reports Scania 2011