SEAT Annual Report 2011 - Volkswagen AG

II. Profit and Loss Statement and equityThe net amount of valuation corrections due to impairment for financial interests in Group companies at the endof the financial year totalled -6.3 million euros (49 in 2010).III. Other informationSEAT has formalized various commercial surety contracts jointly with the Centro Técnico de SEAT, S.A. (CTS) andSEAT Sport, S.A. to a maximum total amount of 114 million euros (101.3 in 2010), for the issue of guaranteescovering the refundable advances made by the Spanish Ministry of Science and Technology to the CTS. Likewise,the company is maintaining a line for the formalization of guarantee provision, jointly with other companieswithin the Group, covering the Spanish Ministry of Science and Technology for an amount of 59 million euros (47in 2010), and covering third parties to an amount of 30.1 million euros (9.1 in 2010).b) Nature and level of riskThe company’s activities are exposed to diverse financial risks: market risks (including exchange rates, interestrates and prices), as well as credit and liquidity risks. The company’s global risk management programme centreson managing the uncertainty of financial markets and aims to minimize potential adverse effects on financialprofitability.Risk management is under the purview of company Management, which identifies, assesses and covers financialrisks in accordance with the policies approved by the Board of Directors. The Board provides guidelines forglobal risk management, as well as for more specific areas such as exchange rate risk, interest rate risk, liquidityrisk, the use of derivatives and non-derivatives as well as investment of excess liquidity.I. Market riskExchange ratesAs an operator with global reach, the company is exposed to exchange rate risk via currency operations, especiallywith the US dollar, pound sterling, Swiss franc, Japanese yen, Polish zloty, Russian rouble, as well as Czech,Danish and Swedish crowns. The exchange rate risk emerges from future commercial transactions, recognisedassets and liabilities, and net investment in operations abroad. This notwithstanding, the risk is covered by theVW Group through centralization of foreign currency operations management.PriceThe company is not exposed to the risk of the price of securities since it does not include in its Balance Sheetinvestments held for sale or at a fair value with changes in the Profit and Loss Statement. The company limits itsrisk exposure to the price of commodities by participating in covering operations applied at a VW Group level soas to ensure the price of certain metals such as aluminium, copper and lead.Interest ratesSince the company does not possess any major remunerated assets, income and cash-flow from its businessactivities are substantially unaffected by changes in market interest rates.NOTES | ANNUAL REPORT 2011 | 105