Audi 2015 Annual Report Download - page 272

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
ADDITIONAL DISCLOSURES
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Hedging relates principally to significant quantities of the
commodities aluminum and copper. Contracts are concluded
exclusively with first-rate national and international banks
whose creditworthiness is regularly examined by leading rating
agencies and by Central Risk Management at Volkswagen AG.
Commodity price risks are also calculated using sensitivity
analyses. Hypothetical changes in listed prices are used to
quantify the impact of changes in value of the hedging trans-
actions on equity and on profit after income tax.
/// INTEREST RATE RISKS
Interest rate risks stem from changes in market rates, above
all for medium and long-term variable interest rate assets and
liabilities.
The Audi Group limits interest rate risks, particularly with
regard to the granting of loans and credit, by agreeing fixed
interest rates and also through interest rate hedging instru-
ments.
The risks associated with changing interest rates are presented
pursuant to IFRS 7 using sensitivity analyses. These involve
presenting the effects of hypothetical changes in market inter-
est rates as of the balance sheet date on interest payments,
interest income and expenses, and, where applicable, equity
and profit after tax.
/// RESIDUAL VALUE RISKS
Residual value risks arise from hedging arrangements with the
retail trade or partner companies according to which, in the
context of buy-back obligations resulting from concluded lease
agreements, effects on profit caused by market-related fluctu-
ations in residual values are partly borne by the Audi Group.
The hedging arrangements are based on residual value recom-
mendations, as published by the residual value committee at
the time of the contract being concluded, and on current dealer
purchase values on the market at the time of the residual value
hedging being settled. The residual value recommendations
are based on the forecasts provided by various independent
institutions using transaction prices.
Residual value risks are also calculated using sensitivity analyses.
Hypothetical changes in the market prices of used cars as of
the balance sheet date are used to quantify the impact on
profit after tax.
// QUANTIFYING MARKET RISKS BY MEANS OF
SENSITIVITY ANALYSES
/// CURRENCY RISKS
If the functional currencies had in each case increased or
decreased in value by 10 percent compared with the other
currencies as of the balance sheet date, the following major
effects on the hedging provision in equity and on profit after
tax would have resulted with regard to the currency relations
referred to below.
EUR million Dec. 31, 2015 Dec. 31, 2014
+10% – 10% +10% – 10%
EUR/CNY
Hedging reserve 320 – 320 381 – 381
Profit after tax – 31 31 – 48 48
EUR/GBP
Hedging reserve 831 – 831 526 – 526
Profit after tax 2 –2 –1 1
EUR/JPY
Hedging reserve 170 – 170 80 – 80
Profit after tax –3 3 –1 1
EUR/KRW
Hedging reserve 88 – 88 50 – 50
Profit after tax – 17 17 –9 9
EUR/USD
Hedging reserve 955 – 965 786 – 783
Profit after tax – 35 45 – 57 61