Note 29 - Derivative instruments

The above table, with the exception of energy derivatives, applies also to the Parent Company.

Duni uses interest rate swaps, currency forward contracts and energy derivatives to manage its cash flow risks in borrowing, production, purchases and sales. Currency forward contracts are used in order to reduce the currency exposure in both internal and external lending and borrowing. All derivative instruments are valued at market value and changes in value are reported in the income statement, whereas changes in the value of interest rate swaps are reported in other comprehensive income. Following a decision by the Board, Rexcell Tissue & Airlaid AB ceased to hedge its electricity consumption as from January 2011. It was decided that existing contracts would remain in force until the expiration date of each contract; the last one expires in June 2012.

The maximum exposure to credit risks on the balance sheet date is the fair value of the derivative instruments reported as assets in the balance sheet.

Interest rate swaps

The finance policy prescribes that the average interest term shall be six months for the total loan portfolio, with the possibility of a variation of +/- 6 months.

Duni has chosen to hedge part of outstanding loans through interest rate swaps, variable against fixed interest rates. Reporting of interest rate swaps is classified as cash flow hedging and handled as hedge accounting in accordance with IAS 39.

Outstanding nominal amounts on December 31, 2011 are EUR 30 m. Profits and losses on interest rate swaps as per December 31, 2011, which are reported in the hedging reserve in shareholders' equity, "Consolidated Statement of Changes in Equity ", will be regularly transferred to financial expenses in the income statement until such time as the swap has expired.

Currency forward contracts

Currency forward contracts are entered into with the aim of protecting the Group against changes in exchange rates through the contract determining the rate at which an asset or liability in foreign currency will be realized. An increase or decrease in the amount required to settle the asset/liability is offset by a corresponding change in value of the currency forward contract.

Weighted average terms to expiration for the Group's currency forward contracts broken down by purpose are shown in the table below:

At the end of the period, the market value of these forward contracts amounts to SEK 0 m (2010: SEK 0 m).

Energy derivatives

Energy derivatives contracts are entered into with the aim of protecting the Group against changes in electricity prices. These derivatives are valued at market value at the end of each accounting period. Outstanding energy derivatives are presented in the table below.