NWG // FINANCIAL INFORMATION //
THE GROUP
means, for example, that customers place orders in the spring for delivery in the autumn. In order to limit the currency risk in these pre-orders, derivatives are purchased to guarantee that the value of incoming deliveries to the warehouses match the prices towards the customers. In these cases hedge accounting according to IFRS 9 is applied, which means that changes in the value of the derivatives that are part of an effective cash flow hedge are recognized in other comprehensive income.
In the Corporate operating segment, 99 %( 99) of the sales occur in the promo sales channel and adjustments for changes in purchase prices are made continuously. In Sports & Leisure about 67 %( 69) of sales are made through the retail sales channel which means that a part of purchases in the operating segment are hedged against fluctuations in exchange rates. For Gifts & Home Furnishings, 75 %( 77) of the sales are to retail and most of the production takes place in Sweden. Even if sales mainly take place in the retail sales channel, pre-orders do not occur to any great extent. There is thus no large order backlog for future deliveries, but deliveries take place immediately. Consequently, no major currency hedging occurs in this segment and price adjustments to customers are made continuously in the event of changes in the purchase price. In cases where there is a pre-order, the currency-exposed purchases are hedged.
The Group’ s principal commercial flows of foreign currencies mainly pertain to imports from Asia to Europe and intra-group flows within Europe. Currency rates and payment conditions to be applied to the internal trade between the Group companies are set centrally. Currency exposure and risk is primarily, and to a large extent, reduced by netting internal transactions. Therefore, through netting, the Group ' s main transaction exposure can be reduced and, together with the use of currency hedges and financing in each company ' s functional currency the exposure is further reduced.
The actual currency exposure amounted to SEK 75 million( 113) on the balance sheet date. The corresponding average currency exposure for the year amounted to SEK 41 million( 69).
ANNUAL REPORT // 131