Audi 2012 Annual Report Download - page 247

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Reconciliation statement for financial instruments measured according to level 3
EUR million 2012 2011
Positive fair values of level 3 derivative financial instruments as of January 1 102 71
Income and expense (–) recognized in the operating profit 9 34
Income and expense (–) recognized in the financial result 3 3
Income and expense (–) recognized in equity 0 27
Reclassification from level 3 to level 2 – 12 – 33
Positive fair values of level 3 derivative financial instruments as of December 31 103 102
Income and expense (–) recognized in the operating profit from level 3
derivative financial instruments still held at December 31 13 34
Income and expense (–) recognized in the financial result from level 3
derivative financial instruments still held at December 31 – 1 –
EUR million 2012 2011
Negative fair values of level 3 derivative financial instruments as of January 1 – 49 – 127
Income and expense (–) recognized in the operating profit – 3 11
Income and expense (–) recognized in the financial result – 2 – 17
Income and expense (–) recognized in equity 1 – 6
Realizations 19 83
Reclassification from level 3 to level 2 15 6
Negative fair values of level 3 derivative financial instruments as of
December 31 – 20 – 49
Income and expense (–) recognized in the operating profit from level 3
derivative financial instruments still held at December 31 – 24 14
Income and expense (–) recognized in the financial result from level 3
derivative financial instruments still held at December 31 0 11
The residual value hedging model is categorically allocated to level 3. The reclassifications from
level 3 to level 2 contain commodity futures for whose measurement it is no longer necessary to
extrapolate the exchange rates because these can now be observed again on the active market.
The effects of changes in the market price of used cars resulting from hedging arrangements are
shown in detail under Note 37.4, “Market risks.”
Risks resulting from fair value fluctuations in the derivative financial instruments measured
according to level 3 are calculated within the Audi Group by means of sensitivity analyses. In this
way, effects of changes in commodity price listings on profit and equity are shown. A 10 percent
rise or fall in the commodity prices of commodity futures measured according to level 3 at De-
cember 31, 2012 would impact on equity in the amount of EUR 5 (12) million. The effect on
profit of this rise or fall would be EUR 1 (11) million.
37 Management of financial risks
37.1 Hedging guidelines and principles of financial risk management
The principles and responsibilities involved in managing and controlling risks associated with
financial instruments are stipulated by the Board of Management in accordance with the
Volkswagen Group guidelines and statutory parameters, and monitored by the Supervisory Board.
Operational risk management is carried out by the Group Treasury, as well as by AUDI AG and
Volkswagen AG, Wolfsburg. The Board of Management and Supervisory Board of AUDI AG are
regularly briefed on the current risk situation. Additionally, the Volkswagen Executive Committee
for Liquidity and Foreign Currency is regularly updated on the current financial risks.
Further details are provided in the Management Report on page 196.