Audi 2006 Annual Report Download - page 200
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1 9 8
1.3 Raw material risk
Raw material risks are excluded or limited by the conclusion of commodity futures or long-
term supply agreements. Hedging measures relate principally to the supply of the raw mate-
rials aluminium, copper, palladium, platinum and rhodium.
1.4 Interest rate risk
An interest rate risk, in other words potential fluctuations in the value of financial instru-
ments as a result of changes to market rates, can occur above all in the case of medium and
long-term, fixed-interest receivables or liabilities.
Fixed-interest loans advanced totalled EUR 15 (17) million at December 31, 2006. In view
of the low volume of these financial instruments, no interest-rate hedging contracts were
taken out.
1.5 Liquidity risk
High net liquidity and credit facilities of Volkswagen AG assure the adequate liquidity of the
Audi Group at all times.
1.6 Credit risk
The credit risk from financial assets consists in the risk of default by a counterparty and
therefore does not exceed the positive fair values of these assets.
We work on the assumption that the actual risk from primary financial instruments is
covered by reductions for impairment or uncollectability.
The credit risk from derivative financial instruments does not exceed the balance of posi-
tive market values in the event of default by a counterparty of Volkswagen AG or the Audi
Group companies. The actual credit risk is negligible, as Volkswagen AG and AUDI AG only
conclude contracts with top-class business partners and trading limits are defined for each
business partner as a risk management measure.
Contingencies are unrecognised contingent liabilities, the amount of which corresponds to
the maximum possible claim at the balance sheet date.
The liabilities from guarantees amounted to EUR 8 (4) million.
Neither AUDI AG nor any of its group companies are involved in ongoing or prospective
legal or arbitration proceedings which could have a significant influence on their economic
position. Appropriate provisions have been created within each group company, or ade-
quate insurance benefits are anticipated, for possible financial charges resulting from other
legal or arbitrational proceedings.
2 Contingencies
3 Litigation settlements