E_mg_GB_03_vorne-29_3_04

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138 Management of price risks: Price risks arise especially in the discontinued chemicals trading business in the form of fluctuating commodity prices. Traders who agree to buy or sell commodities hedge their prices by using commodity derivatives. Commodity derivatives are used solely for hedging purposes. Derivatives contracts are governed by binding rules and procedures; compliance with these procedures is monitored by the Risk Controlling unit of the chemicals business. e) Reporting of Derivatives and Hedge Accounting Management of foreign-exchange risk: The hedging of foreign-exchange risks inherent in firm commitments and forecasted transactions is accounted for as a cash flow hedge. Under this scenario, the hedge-effective part of the changes in the fair value of derivatives is reported as accumulated other comprehensive income. The accumulated other comprehensive income is reclassified as income once the firm commitments or forecasted transactions have been recognized. Hedge accounting is not generally used to hedge recognized assets and liabilities, as these constitute a natural hedge. This means that changes in the fair value of these derivatives – and those in the carrying amounts of the respective assets and liabilities – are recognized in income. Foreign-exchange gains and losses are reported as other operating income and other operating expenses respectively. Interest-rate instruments: Changes in the fair values of interest-rate swaps included in cash flow hedges to cover floating-rate bank loans are also reported as ‘Accumulated other comprehensive income’. Gains and losses on interest-rate instruments are reported under interest expense (net) as interest expense or interest income. Commodity derivatives: All changes in the fair values of commodity derivatives are recognized in income. In the following twelve months, a net gain of a11.535 million will probably be reclassified from ‘Accumulated other comprehensive income’ to the statements of income, because the cost of sales relating to underlying transactions is also likely to be recognized accordingly in income. At December 31, 2003, interest income (net) included a net loss of a25,000 resulting from components of derivatives and financial instruments excluded from calculations of the effectiveness of such hedges. At December 31, 2003, the mg Group held financial instruments mostly with maturities of no more than 12 months in its portfolio in order to hedge the foreign-exchange risk of forecasted transactions.
MANAGEMENT SHARE STRATEGY SPECIAL SECTION MANAGEMENT REPORT FINANCIAL STATEMENTS FURTHER INFORMATION Consolidated Balance Sheets • Statements of Income • Statements of Cash Flows • Statements of Changes in shareholders’ Equity • Fixed Assets Schedule • Notes • Independent Auditors’ Report 16) Other Operating Income Other operating income consisted of the following components: 1/1/2003 - 10/1/2002 - 12/31/2003 12/31/2002 u ’000 t ’000 Gain from disposal of assets 14,206 4,051 Gain from exchange rates 34,819 9,413 Income from reversal of provisions 5,964 3,948 Income from rental and lease agreements 4,744 1,264 Sundry 55,686 21,237 Total 115,419 39,913 Other operating income of a29.117 million is attributable to Dynamit Nobel (prior year: a6.546 million). Sundry other operating income in 2003 essentially consisted of payments received for valuation allowances on receivables, various cost reimbursements and credits, and income from the sale of securities. 17) Other Operating Expenses Other operating expenses consisted of the following components: 1/1/2003 - 10/1/2002 - 12/31/2003 12/31/2002 u ’000 t ’000 Research and development costs 93,600 22,315 Loss from exchange rates 36,845 13,451 Loss from disposal of assets 19,996 1,133 Sundry 112,564 6,759 Total 263,005 43,658 Other operating expenses of a58.536 million are attributable to Dynamit Nobel (prior year: a15.966 million). Sundry other operating expenses comprise the transfer of a27.007 million to provisions for environmental and clean-up costs, losses of a17.720 million on the disposal of the Stahlbau Plauen operations, and an expense of a10.636 million incurred by Lurgi Lentjes for services rendered to the Boiler Plant business unit. The corresponding income is included under ‘Loss on discontinued operations’. Eliminating such gains and losses would distort the segment reporting. Sundry other operating expenses also include losses on the disposal of securities and other assets. 139
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Consolidated Key Figures 2003 RESUL
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Creating freedom for action CONTENT
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The pharmaceutical industry will co
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Milk Last year, over 160 million co
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For a technology-driven organizatio
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mg's mission is to ensure sustainab
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