Mercedes 2012 Annual Report Download - page 239

248
Total interest income and total interest expense
Total interest income and total interest expense for financial
assets or financial liabilities that are not measured at fair value
through profit or loss are presented in table  7.75.
Please refer to Note 1 for qualitative descriptions of accounting
for financial instruments (including derivative financial instru-
ments).
Information on derivative financial instruments
Use of derivatives. The Group uses derivative financial
instruments exclusively for hedging financial risks that arise
from its commercial business or refinancing activities.
These are mainly interest rate risks, currency risks and com-
modity price risks. For these hedging purposes, the Group
mainly uses currency forward transactions, cross currency
interest rate swaps, interest rate swaps, options and commodity
forwards.
Fair values of hedging instruments. Table  7.76 shows
the fair values of hedging instruments at the end of the reporting
period.
Fair value hedges. The Group uses fair value hedges primarily
for hedging interest rate risks.
Net gains and losses from these hedging instruments
and the changes in the value of the underlying transactions
are presented in table  7.77.
Cash flow hedges. The Group uses cash flow hedges
for hedging currency risks, interest rate risks and commodity
price risks.
Unrealized pre-tax gains and losses on the measurement
of derivatives, which are recognized during the period in other
comprehensive income, are shown in table  7.78 .
Table  7.79 gives an overview of the reclassifications
of pre-tax gains/losses from equity to the statement of income
for the period.
The unrealized pre-tax gains and losses on the measurement
of derivatives as well as reclassifications of pre-tax gains
and losses from equity to the statement of income do not
include gains and losses from derivatives entered into
by our equity-method investments (see Note 20 for further
information).
The consolidated net profit for 2012 includes net losses
(before income taxes) of €17million (2011: net losses
of €42 million) attributable to the ineffectiveness of derivative
financial instruments entered into for hedging purposes.
In 2012, the discontinuation of cash flow hedges as a result
of non-realizable hedged items resulted in losses of €11 million
(2011: gains of €3 million).
Total interest income and total interest expense
2012 2011
In millions of euros
Total interest income 3,235 2,969
Total interest expense -2,244 -2,150
7. 75
Fair values of hedging instruments
At December 31,
2012 2011
In millions of euros
Fair value hedges 648 321
Cash flow hedges 96 -1,047
7. 76
Net gains/losses from fair value hedges
2012 2011
In millions of euros
Net gains/losses from hedging instruments 285 317
Net gains/losses from underlying transactions -344 -398
7. 7 7
Unrealized gains/losses from cash flow hedges
2012 2011
In millions of euros
Unrealized gains/losses 151 -547
7. 7 8
Reclassifications of pre-tax gains/losses from equity
to the statement of income
2012 2011
In millions of euros
Revenue -824 6
Cost of sales -16 69
Interest income 2–
Interest expense .-14
-838 61
7. 7 9