Chrysler 2015 Annual Report Download - page 189

2015 | ANNUAL REPORT 189
Cash flow hedges
The effects recognized in the Consolidated 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 interest
rate risk.
The Group’s policy for managing currency risk normally requires hedging of projected future flows from trading
activities which will occur within the following twelve months, and from orders acquired (or contracts in progress),
regardless of their due dates. The hedging effect arising from this and recorded in the cash flow hedge reserve will be
recognized in the Consolidated Income Statement, mainly during the following year.
Derivatives relating to interest rate and currency risk management are treated as cash flow hedges and are entered into
for the purpose of hedging notes issued in foreign currencies. The amount recorded in the cash flow hedge reserve is
recognized in the Consolidated Income Statement according to the timing of the flows of the underlying notes.
With respect to cash flow hedges, the Group reclassified losses of €221 million during the year ended December 31,
2015 (losses of €108 million in 2014 and gains of €178 million in 2013), net of the tax effect, from Other comprehensive
income/(loss) to the Consolidated Income Statements. These items were reported in the following lines:
For the Years Ended December 31,
2015 2014 2013
(€ million)
Currency risk
Increase in Net revenues 33 33 118
Decrease in Cost of sales 101 11 44
Net financial (expenses)/income (148) (141) 13
Result from investments 1(13) 17
Interest rate risk
Increase in Cost of sales (10) (2) (6)
Result from investments (2) (3) (4)
Financial (expenses) (77) (11) (10)
Commodity price risk
Increase in Cost of sales (23) (2) (1)
Ineffectiveness and discontinued hedges 15 4
Tax (income)/expense (97) 15 3
Total recognized in Net profit from continuing operations (221) (108) 178
Recognized in Profit from discontinued operations, net of tax (116) 2 12
Total recognized in Consolidated Income Statement (337) (106) 190
Fair value hedges
The gains and losses arising from the valuation of outstanding interest rate derivatives (for managing interest rate risk)
and currency derivatives (for managing currency risk) recognized in accordance with fair value hedge accounting and
the gains and losses arising from the respective hedged items are summarized in the following table:
For the Years Ended December 31,
2015 2014 2013
(€ million)
Currency risk
Net gains/(losses) on qualifying hedges (49) (53) 19
Fair value changes in hedged items 49 53 (19)
Interest rate risk
Net (losses) on qualifying hedges (34) (20) (28)
Fair value changes in hedged items 34 20 29
Net gains —— 1