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 fl ows are separated into operating, investing and fi nancing 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 fl ows within this Note for the purpose of additional analysis. Certain items discussed below, are refl ected within the consolidated statement of cash fl ows 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 lease and refl ects 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 $157 million in 2014 ($38 million in 2013) includes an amount of $108 million ($-9 million in 2013) related to result from investments net of impairment losses on assets recognized during the year.

Changes in working capital for 2014 and 2013 are summarized as follows:

($ million)20142013
Change in trade receivables 281 408
Change in inventories (167) (1,227)
Change in trade payables (862) 969
Change in other receivables/payables 43 (53)
Change in working capital (705) 97

The Cash flows for income tax payments net of refunds in 2014 amount to $744 million ($521 million in 2013).

Total interest of $944 million was paid and interest of $1,000 million was received in 2014 (interest of $1,013 million was paid in 2013, and interest of $942 million was received in 2013).

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)20142013
Change in dealer financing (1,089) (1,094)
Change in retail financing (300) (1,640)
Change in finance leases 405 227
Change in other receivables from financing activities 61 108
Net change in receivables from financing activities (923) (2,399)

Liquidity absorbed by the increase in receivables from fi nancing activities in 2014 principally referred to higher levels of fi nancing provided to both dealers and customers in NAFTA and dealers in LATAM.

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

Financing activities 

The net change in other fi nancial payables and other fi nancial assets/liabilities mainly refl ects changes in borrowings from banks and in assetbacked fi nancing, together with changes in other fi nancial assets and other fi nancial liabilities (consisting of derivative fi nancial instruments measured at fair value at the balance sheet date, as indicated in Note 21 above).

Changes in 2014 and 2013 are summarized as follows:

($ million)20142013
Change in asset-backed financing (507) 1,993
Change in borrowings from banks and other financial payables (286) 579
Net change in other financial payables (793) 2,572
Net change in other financial assets and other financial liabilities (15) 11
Net change in other financial payables and other financial assets/liabilities (808) 2,583