Audi 2007 Annual Report Download - page 222

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Methods of monitoring the effectiveness of hedging relationships
Within the Audi Group, the effectiveness of hedging relationships is evaluated prospectively
using the critical terms match method. Retrospective evaluation of the effectiveness of
hedges involves an effectiveness test in the form of the dollar offset method.
In the case of the dollar offset method, the changes in value of the underlying transac-
tion, expressed in monetary units, are compared with the changes in value of the hedge
expressed in monetary units. All hedge relationships were effective within the range speci-
fied in IAS 39 (80 to 125 percent).
Nominal volume of derivative financial instruments
The nominal volumes of the hedges presented represent the total of all buying and selling
prices on which the transactions are based.
EUR million Nominal volumes Market values
Dec. 31, 2007
Time to
maturity
up to 1 year Dec. 31, 2006
Time to
maturity
up to 1 year Dec. 31, 2007 Dec. 31, 2006
Cash flow hedges
Foreign exchange contracts 6,807 4,463 6,667 4,569 625 205
Currency option transactions 2,414 – 3,186 3,158 175 235
Currency swaps 1 1 1 1 0 0
Commodity futures 451 177 635 191 50 14
Total portfolio 9,673 4,641 10,489 7,919 850 454
The derivative financial instruments used exhibit a maximum hedging term of five years.
36 Cash Flow Statement
The Cash Flow Statement details the payment streams for both the 2007 fiscal year and the
previous year, categorized according to cash used and received for operating, investing and
financing activities. The effects of changes in the consolidated companies and to foreign
exchange rates on cash flows are presented separately.
Cash flow from operating activities includes all payment streams in connection with or-
dinary activities. Under the indirect calculation method, all expenditures not affecting cash
(comprising substantially depreciation and amortization) are eliminated, starting with the
profit before profit transfer and taxation.
In 2007, cash flow from operating activities included payments for interest received
amounting to EUR 278 (175) million and for interest paid amounting to EUR 91 (71) million.
The Audi Group received dividends and profit transfers totaling EUR 84 (37) million in 2007.
The income tax payments item substantially comprises payments made to Volkswagen
AG on the basis of the single-entity relationship for tax purposes in Germany, as well as
payments to foreign tax authorities.
Cash flow from investing activities includes additions to development expenditure rec-
ognized as an intangible asset as well as additions to other intangible assets, property,
plant and equipment, and long-term investments and non-current loans advanced. The
change in investment property, the proceeds arising from asset disposals and the change in
securities effective as payment are similarly reported in cash flow from investing activities.