Financial Position
PRINCIPLES AND GOALS OF FINANCIAL MANAGEMENT
Financial management at the Volkswagen Group covers liquidity management, currency, interest rate and commodity risk management, as well as credit and country risk management. It is performed centrally for all Group companies by Group Treasury, based on internal directives and risk parameters. The Scania subgroup is not coordinated centrally due to legal restrictions related to stock exchange law. The integration process for MAN has not yet been fully completed.
With regard to liquidity, the goals of financial management are to ensure that the Volkswagen Group remains solvent at all times and to achieve an adequate return from the investment of surplus funds. The Group’s material companies in Europe also use cash pooling to optimize the use of existing liquidity. This enables Group companies to pool the balances accumulating on cash pooling accounts on a daily basis by closing out these accounts and transferring both the positive and negative balances to a target account at Group Treasury. Currency, interest rate and commodity risk management is designed to hedge the prices on which investment, production and sales plans are based using derivative financial instruments. Credit and country risk management aims to use diversification to avoid exposing the Volkswagen Group to the risk of loss or default. To achieve this, internal limits are defined for the volume of business per counterparty when entering into financial transactions. Various rating criteria are taken into account when setting these limits, including the ratings awarded by independent agencies and the capital resources of potential counterparties. The relevant risk limits and the authorized financial instruments, hedging methods and hedging horizons are approved by the Executive Committee for Liquidity and Foreign Currency.
For additional information on the principles and goals of financial management, please refer to chapter Financial risks and and to the notes to the 2013 consolidated financial statements.
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CASH FLOW STATEMENT BY DIVISION |
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VOLKSWAGEN GROUP |
AUTOMOTIVE1 |
FINANCIAL SERVICES |
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€ million |
2013 |
20122 |
2013 |
20122 |
2013 |
20122 | ||||||||||||||||||
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Cash and cash equivalents at beginning of period |
17,794 |
16,495 |
14,788 |
12,668 |
3,005 |
3,827 |
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Profit before tax |
12,428 |
25,487 |
10,462 |
23,897 |
1,966 |
1,590 |
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Income taxes paid |
–3,107 |
–5,056 |
–2,622 |
–4,514 |
–486 |
–542 |
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Depreciation and amortization expense |
14,686 |
13,135 |
10,786 |
9,982 |
3,900 |
3,152 |
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Change in pension provisions |
179 |
95 |
168 |
87 |
11 |
7 |
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Other noncash income/expense and reclassifications3 |
218 |
–13,575 |
–107 |
–13,678 |
325 |
103 |
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Gross cash flow |
24,404 |
20,085 |
18,688 |
15,774 |
5,716 |
4,311 |
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Change in working capital |
–11,809 |
–12,876 |
1,925 |
458 |
–13,733 |
–13,334 |
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Change in inventories |
–1,021 |
460 |
–729 |
1,044 |
–292 |
–584 |
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Change in receivables |
–1,651 |
–56 |
–1,163 |
114 |
–489 |
–171 |
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Change in liabilities |
2,363 |
–236 |
2,118 |
–627 |
245 |
391 |
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Change in other provisions |
2,300 |
375 |
2,241 |
61 |
59 |
314 |
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Change in leasing and rental assets (excluding depreciation) |
–7,112 |
–5,606 |
–465 |
–232 |
–6,647 |
–5,374 |
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Change in financial services receivables |
–6,688 |
–7,814 |
–77 |
96 |
–6,611 |
–7,910 |
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Cash flows from operating activities |
12,595 |
7,209 |
20,6124 |
16,2324 |
–8,017 |
–9,023 |
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Cash flows from investing activities attributable to operating activities |
–14,936 |
–16,840 |
–16,199 |
–16,455 |
1,263 |
–385 |
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of which: acquisition of property, plant and equipment |
–11,385 |
–10,493 |
–11,040 |
–10,271 |
–345 |
–222 |
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capitalized development costs |
–4,021 |
–2,615 |
–4,021 |
–2,615 |
– |
– |
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acquisition and disposal of equity investments |
–151 |
–4,105 |
–1,702 |
–3,927 |
1,551 |
–179 |
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Net cash flow5 |
–2,341 |
–9,631 |
4,413 |
–223 |
–6,754 |
–9,408 |
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Change in investments in securities and loans |
–1,954 |
–2,643 |
–1,298 |
–111 |
–656 |
–2,532 |
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Cash flows from investing activities |
–16,890 |
–19,482 |
–17,497 |
–16,565 |
607 |
–2,917 |
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Cash flows from financing activities |
8,973 |
13,712 |
1,734 |
2,551 |
7,239 |
11,161 |
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of which: capital transactions with noncontrolling interests |
0 |
–2,101 |
0 |
–2,101 |
– |
– |
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Capital contributions/capital redemptions |
3,067 |
2,046 |
3,015 |
1,351 |
52 |
696 |
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Effect to exchange rate changes on cash and cash equivalents |
–462 |
–141 |
–353 |
–98 |
–110 |
–43 |
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Net change in cash and cash equivalents |
4,216 |
1,298 |
4,497 |
2,120 |
–281 |
–822 |
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Cash and cash equivalents at Dec. 316 |
22,009 |
17,794 |
19,285 |
14,788 |
2,724 |
3,005 |
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Securities, loans and time deposits |
17,177 |
14,352 |
9,515 |
8,110 |
7,661 |
6,242 |
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Gross liquidity |
39,186 |
32,146 |
28,800 |
22,898 |
10,386 |
9,248 |
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Total third-party borrowings |
–121,504 |
–117,663 |
–11,932 |
–12,324 |
–109,572 |
–105,338 |
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Net liquidity |
–82,318 |
–85,517 |
16,869 |
10,573 |
–99,186 |
–96,090 |
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