Mercedes 2003 Annual Report Download - page 105
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Please find page 105 of the 2003 Mercedes annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.Refinancing at the DaimlerChrysler Group. The development of
the financial services activities was the key refinancing activity of
the DaimlerChrysler Group in 2003. In order to cover a relatively
low requirement for additional funding compared to the prior year
and to refinance debts becoming due, DaimlerChrysler once again
used a broad spectrum of financial and capital market instruments
spanning its global network of regional holding and finance
companies.
In 2003, the Group did not only issue global US dollar bonds and
benchmark euro transactions, but also intensified its financing
activities in Asian currencies. DaimlerChrysler succeeded in
attracting a new circle of investors with the first issue of a Thai
baht bond in Thailand as well as with transactions in Singapore
dollars and Japanese yen. There were also smaller international
issues of medium-term note programs in the form of public bonds
and private placements. In addition, the securitization of financial
services receivables was used by the Group as a source of funding
on an ongoing basis, particularly in the United States.
In May 2003, DaimlerChrysler restructured two of the three
tranches of the total $18 billion syndicated global credit facility.
The former five-year tranche of DaimlerChrysler North America
Holding for $6 billion with a maturity until July 2004 was converted
into a 364-day line, also for $6 billion. After expiration of the 364
days, a one-year “term-out option” allows additional drawing on
this line for another year. The original two-year tranche of Daimler-
Chrysler AG and possibly other European lenders of the Group for
$7 billion with a maturity until June 2003 was converted into a
5-year line also for $7 billion.
4. Risk Report
Integrated risk-management system. Within the framework of
their global activities and as a result of increasingly intense
competition in all markets, the divisions and business units of the
DaimlerChrysler Group are exposed to a large number of risks,
which are inextricably linked with corporate business. Effective
management and control instruments are combined into a uniform
risk management system, meeting the requirements of applicable
law and are subject to continuous improvement, which is deployed
for the early detection, evaluation and management of risks. The
risk management system is integrated into the value-based
management and planning system and complies with the Group’s
principles of corporate governance. The risk management system
is an integral part of the overall planning, control and reporting
process in all relevant legal units and central functions. Its
objective is the systematic detection, assessment, control and
documentation of risks. Taking defined risk categories into
account, risks are identified by the management of the divisions
and business units, the key associated companies and the central
departments, and assessed regarding their likelihood of
occurrence and possible extent of damage, usually in terms of their
effect on operating profit. Local accountability is particularly
important. The communication and reporting of relevant risks is
controlled by value limits set by management. The responsible
persons have also the task of developing, and initiating as required,
measures to avoid, reduce, and hedge risks. The development of
major risks and the counter measures taken are monitored within
the framework of a regular controlling process. As well as the
regular reporting, there is also a form of ad-hoc reporting within
the Group for risks arising unexpectedly. The Group’s central risk
management department regularly reports on risks to the Board of
Management and the Supervisory Board.
The Group’s risk management system enables corporate
management to identify key risks at an early stage and to initiate
suitable counter measures. Compliance with uniform Group
guidelines, as defined in the risk management manual, is
monitored by the internal audit department. In addition, auditors
test the early risk detection system integrated into the risk-
management system for its fundamental suitability for the early
detection of developments that could jeopardize the continued
existence of the company.
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