BMW 2003 Annual Report Download - page 108

107
(2002: euro 314 million). During the year under
report, positive changes in fair value measurement
amounting to euro 845 million (2002: euro 1,528
million) were recognised directly in equity. Of this
amount, euro 677 million (2002: euro 1,727 million)
relate to positive effects from cash flow hedges and
euro 168 million (2002: euro 199 million negative)
relate to positive effects from available-for-sale se-
curities.
The fair values of financial instruments relating
to hedged forecasted transactions are recognised
directly in accumulated other equity. In the financial
year under report, positive fair value measurement
changes of euro 602 million (2002: euro 161 million)
were removed from accumulated other equity and
realised during the year. As a result of the situation
on the capital markets, write-downs of euro1 million
(2002: euro 22 million) on available-for-sale securi-
ties were recognised as expenses and reversals of
write-downs on current marketable securities of
euro 3 million (2002: euro – million) were recognised
as income. In 2003, losses of euro 20.6 million
(2002: euro 33.3 million) were realised on the dis-
posal of available-for-sale securities and the equiva-
lent
amount removed from accumulated other equity
and recognised in the income statement.
The cash flow statements shows how the cash and
cash equivalents of the BMW Group, industrial oper-
ations and financial operations have changed in the
course of the year as a result of cash inflows and
cash outflows. In accordance with IAS 7 (Cash Flow
Statements), cash flows are classified into cash flows
from operating, investing and financing activities.
The cash flow statements of the BMW Group are
presented on pages 58 and 59.
Cash and cash equivalents included in the cash
flow statement comprise cash on hand, cheques,
deposits at the Federal Bank and cash at bank in-
cluded in the balance sheet, to the extent that they
are available within three months from the balance
sheet date. The negative impact of changes in cash
Credit risk
Financial assets are recognised in the balance sheet
net of write-downs for the risk that counter-parties
are unable to fulfil their contractual obligations, irre-
spective of the value of collateral received. In the
case of all performance relationships which underlie
non-derivative financial instruments, collateral is
required, information on the credit-standing of the
counter-party obtained or historical data based on
the existing business relationship (i.e. payment
patterns to date) reviewed in order to minimise the
credit risk. The nature and extent depends on the
type and amount of the relevant transaction. Write-
downs are recorded as soon as credit risks are iden-
tified on individual financial assets. In the case of
derivative financial instruments, the Group is also
exposed to a credit risk which results from the non-
performance of contractual agreements on the part
of the contracting party. This credit risk is minimised
by the fact that the Group only enters into such
contracts with parties of first-class credit standing.
The general credit risk on derivative financial instru-
ments utilised by the BMW Group is therefore not
considered to be significant. A concentration of
credit risk with particular borrowers or groups of bor-
rowers has not been identified.
and cash equivalents due to the effect of exchange
rate fluctuations was, as in the previous year, euro
109 million.
The cash flows from investing and financial
activities are based on actual payments and receipts.
The cash flow from operating activities is computed
using the indirect method, starting from the net
profit of the Group. Under this method, changes in
assets and liabilities relating to operating activities
are adjusted for currency translation effects and
changes in the composition of the Group. The
changes in balance sheet positions shown in the
cash flow statement do not therefore agree directly
with the amounts shown in the Group and sub-
group balance sheets.
[38]Explanatory notes
to the cash flow
statements