37. Explanatory notes to the Statement of Cash Flows

The Statement of cash flows sets out changes in cash and cash equivalents during the year. As required by IAS 7 - Cash Flow Statements, cash flows are separated into operating, investing and financing activities. The effects of changes in exchange rates on cash and cash equivalents are shown separately under the line item Translation exchange differences.

The Group presents supplemental discussion and disclosure regarding the statement of cash flows within this Note for the purpose of additional analysis. Certain items discussed below, are reflected within the consolidated statement of cash flows either on an aggregate or net basis, and accordingly have been discussed further as set forth below.

Operating activities

Cash flows from/(used in) operating activities derive mainly from the Group’s main revenue producing activities.

Adjustments to exclude non-cash effects related to the sale of vehicles under buy-back commitments are included under operating activities in a single line item which includes changes in working capital, capital expenditures, amortization, depreciation and impairment losses. This item also includes gains and losses arising from the sales of vehicles transferred under buy-back commitments that occur before the end of the agreement term without repossession of the vehicle.

Change in operating lease items comprises capital expenditures for assets under operating leases and reflects adjustments to exclude non-cash items such as amortization, depreciation, impairment losses and changes in inventories.

The adjustment to exclude Other non-cash items of €29 million in 2013 (€213 million in 2012) includes an amount of €-7 million (€89 million in 2012) related to result from investments net of impairment losses on assets recognized during the year.

Changes in working capital for 2013 and 2012 are summarized as follows: 

(€ million)20132012
Change in trade receivables30786
Change in inventories(924)(76)
Change in trade payables730(126)
Change in other receivables/payables(40)(98)
Change in working capital73(214)

The Cash flows for income tax payments net of refunds in 2013 amount to €392 million (€524 million in 2012).

Total interest of €763 million was paid and interest of €709 million was received in 2013 (interest of €815 million was paid in 2012, and interest of €800 million was received in 2012).

Investing activities

Cash flows from/(used in) investing activities represent the extent to which expenditures have been made for resources intended to generate future income and cash flows. Only expenditures resulting in an asset recognized in the balance sheet are classified as investing activities in the Statement of cash flows. In particular, Cash flows from/(used in) investing activities include net change in receivables from financing activities that may be analyzed as follows: 

(€ million)20132012
Change in dealer financing(824)(1,116)
Change in retail financing(1,235)(842)
Change in finance leases171302
Change in other receivables from financing activities81(93)
Net change in receivables from financing activities(1,807)(1,749)

Liquidity absorbed by the increase in receivables from financing activities in 2013 principally referred to the increase in financing provided to Agricultural and Construction Equipment segment customers in the U.S., Trucks and Commercial Vehicles segment dealers in Europe and Agricultural and Construction Equipment segment dealers in the U.S. and Brazil.

Consideration for the acquisition and disposal of subsidiaries and of other investments is discussed in Note 36.

Financing activities

The net change in other financial payables and other financial assets/liabilities mainly reflects changes in borrowings from banks and in asset-backed financing, together with changes in other financial assets and other financial liabilities (consisting of derivative financial instruments measured at fair value at the balance sheet date, as indicated in Note 21 above).

Changes in 2013 and 2012 are summarized as follows: 

(€ million)20132012
Change in asset-backed financing1,501343
Change in borrowings from banks and other financial payables436(433)
Net change in other financial payables1,937(90)
Change in other financial assets3540
Change in other financial liabilities(26)(59)
Net change in other financial payables and other financial assets/liabilities1,946(109)