Chrysler 2013 Annual Report Download - page 183

182 Consolidated
Financial Statements
at 31 December 2013
Notes
Cash flow hedges
The effects recognized in the Income statement mainly relate to currency risk management and, to a lesser extent, to hedges regarding
commodity price risk management and the cash flows that are exposed to an interest rate risk.
The policy of the Group for managing currency risk normally requires that future cash flows from trading activities which will occur within the
following twelve months, and from orders acquired (or contracts in progress), whatever their due dates, be hedged. It is considered reasonable
to suppose that the hedging effect arising from this and recorded in the cash flow hedge reserve will be recognized in Income statement, mainly
during the following year.
Derivatives relating to interest rate and currency risk management are treated as cash flow hedges and were entered into by treasuries for the
purpose of hedging bonds issued in foreign currencies. The amount recorded in the cash flow hedge reserve will be recognized in Income
statement according to the timing of the flows of the underlying bonds.
In respect of derivative financial instruments, in 2013 the Group reclassified gains of €190 million (losses of €105 million in 2012), net of the tax
effect, from Other comprehensive income/(losses) to Income statement. These items are reported in the following lines:
(€ million) 2013 2012
Currency risk
Increase/(Decrease) in Net revenues 126 (92)
Decrease/(Increase) in Cost of sales 44 25
Financial income/(expenses) 22 32
Result from investments 17 (12)
Interest rate risk
Decrease/(Increase) in Cost of sales (6) (6)
Result from investments (4) (5)
Financial income/(expenses) (10) (6)
Commodities price risk
Decrease/(Increase) in Cost of sales (1) (40)
Ineffectiveness - overhedges 5(6)
Taxes income/(expenses) (3) 5
Total recognized in the Income statement 190 (105)
The ineffectiveness of cash flow hedges was not material in 2013 or 2012.
In 2013 there was an overall positive economic effect of €5 million (negative effect of €6 million in 2012) which related to excess future flows
hedged (over-hedges).