Balance as at 31 December 2013 Volume of hedged cash flows
Within 1 year 1 – 5 years Total
Currency risk exposure
Hedging of future cash flows – future receivables 47,819 61,184 109,003 Hedging of future cash flows – future liabilities (8,456) (1,945) (10,401)
Other price risks (combination of commodity and currency risks)
Hedging of future cash flows – future liabilities (732) (1,198) (1,930)
Total 38,631 58,041 96,672
Balance as at 31 December 2012 Volume of hedged cash flows
Within 1 year 1 – 5 years Total
Currency risk exposure
Hedging of future cash flows – future receivables 52,659 72,647 125,306 Hedging of future cash flows – future liabilities (12,831) (6,275) (19,106)
Other price risks (combination of commodity and currency risks)
Hedging of future cash flows – future liabilities (785) (1,173) (1,958)
Total 39,043 65,199 104,242
3.4
Sensitivity analysis
3.4.1 Sensitivity to exchange rates
The Group is exposed to the foreign currency risk arising mainly from transactions performed with EU coun- tries (EUR, GBP) and with countries using USD as transaction currency. The foreign currency risk is measured against the functional currency (CZK) as at the balance sheet date, when the financial assets and liabilities denominated in foreign currencies are recalculated to CZK by applying the Czech National Bank exchange rate.
The sensitivity analysis includes analysis of exposure arising from derivative financial assets and liabilities and unpaid financial assets and liabilities denominated in foreign currencies, and measures the impact from recalculation of these items as at balance sheet date by using adjusted exchange rates compared to those published by Czech National Bank. In 2013 (2012) the Group considers (considered) as reasonably possible the movements of exchange rates EUR, USD, CHF GBP and RUB against CZK in the following period of +10% (appreciation of CZK) and -10% (depreciation of CZK).
The sensitivity analysis to exchange rate changes is based on the assumption of expected reasonably pos- sible exchange rate movements.
Notes to the consolidated financial statements 2013
The following tables present impact on profit or loss and other comprehensive income before tax of expected possible appreciation or depreciation of CZK to foreign currencies:
CZK appreciation by 10%
2013 (CZK million) EUR USD CHF GBP RUB currenciesOther
Profit before tax
Non-derivative financial instruments 1,209 (68) (1) 6 (327) 2 Derivative financial instruments – (20) – – – 2
Other comprehensive income before tax
Derivative financial instruments (582) 2,509 1,717 3,743 397 1,771
CZK depreciation by 10%
2013 (CZK million) EUR USD CHF GBP RUB currenciesOther
Profit before tax
Non-derivative financial instruments (1,209) 68 1 (6) 327 (2) Derivative financial instruments – 20 – – – (2)
Other comprehensive income before tax
Derivative financial instruments 582 (2,509) (1,717) (3,743) (397) (1,771)
CZK appreciation by 10%
2012 (CZK million) EUR USD CHF GBP RUB currenciesOther
Profit before tax
Non-derivative financial instruments 881 (67) (1) 3 (254) 33 Derivative financial instruments – (46) 2 (41) (33) (43)
Other comprehensive income before tax
Derivative financial instruments (1,685) 2,906 1,978 3,706 1,102 2,401
CZK depreciation by 10%
2012 (CZK million) EUR USD CHF GBP RUB currenciesOther
Profit before tax
Non-derivative financial instruments (881) 67 1 (3) 254 (33) Derivative financial instruments – 46 (2) 41 33 43
Other comprehensive income before tax
Notes to the consolidated financial statements 2013
78 Annual Report 2013
3.4.2 Sensitivity to interest rates
The Group is exposed to interest risk mainly in relation to short-term deposits provided to Volkswagen Group companies.
The analysis of sensitivity to changes in interest rates was based on exposure to derivative financial as- sets and liabilities as at balance sheet date in the same way as for the non-derivative financial assets and liabilities.
In 2013 (2012) the Group assumes (assumed) reasonably possible movements of the yield curve in the fol- lowing period for short-term deposits provided to Volkswagen Group companies, bank deposits and cur- rency forwards and swaps by +100/ -25 basis points. The Group is most sensitive to movements of the CZK yield curve.
In the case of derivative financial instruments, the Group measures the impact on the change in fair value of these derivatives that results from the change in the yield curve. For non-derivative financial instruments the impact on profit or loss is determined on the basis of defined change in the interest rate, which would arise at the beginning of the next accounting period and based on the assumption that no other changes in the interest rate would occur during the entire accounting period.
The following tables present impact on profit or loss before tax of expected increase or decrease of inter- est rates: 2013 (CZK million) Interest rate increased by 100 basis points Interest rate decreased by 25 basis points
Profit before tax
Non-derivative financial instruments 350 (87) Derivative financial instruments 72 (18)
Total 422 (105) 2012 (CZK million) Interest rate increased by 100 basis points Interest rate decreased by 25 basis points
Profit before tax
Non-derivative financial instruments 341 (85) Derivative financial instruments 33 (8)
Total 374 (93)
3.4.3 Sensitivity to changes in other price risks
The Group is exposed to a combination of commodity and currency risks due to volatility in prices of particular commodities traded in foreign currencies. This risk of change in cash flows is hedged by a combination of com- modity swaps and currency forwards. The sensitivity analysis to changes in commodity prices was determined based on the exposure to derivative financial assets and liabilities as at the balance sheet date.
In 2013 (2012), the Group assumes (assumed) reasonably possible movements in copper prices in the following period of +/- 20%. In 2013 the Group assumes (assumed) reasonably possible movements in aluminium prices in the following period of +/- 20% (in 2012: +/-10%). In 2013 the Group assumes reasonably possible move- ments in lead prices in the following period of +/- 20% (in 2012: +/-10%).
The Group considers changes in the fair values of derivative financial instruments due to changes in spot com- modity prices. Other non-derivative financial assets and liabilities are deemed not to be sensitive to changes in commodity prices since the prices are fixed at the time of recognition of the financial liability or asset.
Notes to the consolidated financial statements 2013
The following tables represent impact on profit or loss and other comprehensive income before tax of ex- pected increase or decrease of copper, aluminium and lead prices:
2013 (CZK million) Increase of copper prices +20% Decrease of copper prices (20)% Increase of aluminium prices +20% Decrease of aluminium
prices (20)% Increase of lead prices +20% Decrease of lead prices (20)% Profit before tax
Derivative financial
instruments – – – – 45 (45)
Other comprehensive income before tax
Derivative financial instruments 179 (179) 192 (192) – – 2012 (CZK million) Increase of copper prices +20% Decrease of copper prices (20)% Increase of aluminium prices +10% Decrease of aluminium
prices (10)% Increase of lead prices +10% Decrease of lead prices (10)% Profit before tax
Derivative financial
instruments – – – – 17 (17)
Other comprehensive income before tax
Derivative financial
instruments 252 (252) 76 (76) – –
3.5
Capital management
The optimal capitalisation of the Group is the result of a compromise between two interests: return on capital and the Group’s capacity to meet all of its liabilities due for payment.
The Group’s capital is controlled on the Volkswagen Group level. It is the objective of the capital manage- ment function to maintain an adequate owned to borrowed capital ratio to guarantee due payments of all financial liabilities while promoting continued growth of the Group’s value for the shareholder.
The ratios of equity and of borrowed capital on total capital are shown in the following table:
CZK million 2013 2012
Equity 93,359 90,906
Equity ratio 53.8% 56.8% Non-current financial liabilities – 3,000 Current financial liabilities 3,107 107
Total financial liabilities 3,107 3,107
Ratio of financial liabilities to total equity and liabilities 1.8% 1.9%
Notes to the consolidated financial statements 2013
80 Annual Report 2013
4. Geographical information
The Company’s head office and main production facilities of the Group are situated in the Czech Republic. The Group’s sales are generated from five basic geographical regions: the Czech Republic; Germany, West- ern Europe-Other; Central and Eastern Europe; and Overseas/Asia/Africa/Australia. Overseas/Asia/Africa/ Australia region is due to its immateriality reported as Other.
2013 (CZK million) RepublicCzech Germany
Western Europe - Other
Central and Eastern
Europe Other Total
Sales – based on location of customers 22,983 69,268 86,390 52,952 36,907 268,500
2012 (CZK million) RepublicCzech Germany
Western Europe - Other
Central and Eastern
Europe Other Total
Sales – based on location of customers 21,927 61,155 78,837 56,192 44,538 262,649
5. Intangible assets (CZK million)
Capitalised development costs for products currently in use Capitalised development costsfor products under
development Other intangible assets Total Costs
Balance as at 1 January 2013 30,973 2,226 10,189 43,388
Additions 16 4,310 1,842 6,168
Disposals – – (201) (201)
Transfers 449 (449) – –
Foreign exchange differences – – 30 30
Balance as at 31 December 2013 31,438 6,087 11,860 49,385 Cumulative amortisation and
impairment losses
Balance as at 1 January 2013 (18,866) – (5,740) (24,606)
Amortisation (2,410) – (893) (3,303) Impairment losses (51) – (7) (58)
Disposals 41 – 160 201
Foreign exchange differences – – (21) (21)
Balance as at 31 December 2013 (21,286) – (6,501) (27,787) Carrying amount as at 31 December 2013 10,152 6,087 5,359 21,598
Notes to the consolidated financial statements 2013 Capitalised development costs for products currently in use Capitalised development costs
for products under
development Other intangible assets Total Costs
Balance as at 1 January 2012 21,710 5,385 8,570 35,665
Additions 4,012 2,092 2,024 8,128
Disposals – – (396) (396)
Transfers 5,251 (5,251) – –
Foreign exchange differences – – (9) (9)
Balance as at 31 December 2012 30,973 2,226 10,189 43,388 Cumulative amortisation and
impairment losses
Balance as at 1 January 2012 (16,369) – (5,642) (22,011)
Amortisation (2,093) – (479) (2,572) Impairment losses (404) – – (404)
Disposals – – 375 375
Foreign exchange differences – – 6 6
Balance as at 31 December 2012 (18,866) – (5,740) (24,606) Carrying amount as at 31 December 2012 12,107 2,226 4,449 18,782
Other intangible assets include mainly tooling rights, software and software licences.
Amortisation and impairment losses of intangible assets of CZK 3,216 million (2012: CZK 2,837 million) are included in the cost of sales, CZK 15 million (2012: CZK 20 million) in distribution expenses, and CZK 130 mil- lion (2012: CZK 119 million) in administrative expenses.