BMW 2004 Annual Report Download - page 58

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The consolidated financial statements of Bayerische
Motorenwerke Aktiengesellschaft (“BMW Group
financial statements” or “Group financial statements”)
at 31 December 2004 have been drawn up in accor-
dance with International Financial Reporting Stan-
dards (IFRSs) issued by the International Accounting
Standards Board (IASB), London and valid at the
balance sheet date. The designation “IFRSs”also
includes all valid International Accounting Standards
(IASs). All interpretations of the International Financial
Reporting Interpretations Committee (IFRIC), for-
merly the Standing Interpretations Committee (SIC),
which are mandatory for the financial year 2004, were
also applied.
The Group financial statements, in the form pre-
sented, exempt BMW AG from the requirement to
prepare consolidated financial statements in accor-
dance with German accounting law. In accordance
with §292a of the German Commercial Code (HGB),
the Group financial statements are presented to-
gether with certain additional disclosures and the
Group Management Report. The necessary disclo-
sures are provided in Note [43].
The BMW Group and sub-group income state-
ments and balance sheets correspond to the classi-
fication provisions contained in §298 HGB (in con-
junction with §266 and §275 HGB), whereby the
income statements are presented using the cost of
sales format. In order to improve clarity, various items
are aggregated in the income statement and balance
sheet. These items are disclosed and analysed sep-
arately in the Notes.
In order to support the sale of BMW products,
the BMW Group provides various financial services –
mainly loan and lease financing – to its customers
and dealers. The inclusion of the financial services
activities of the Group therefore has an impact on
the Group financial statements. In order to provide
a better insight into the assets, liabilities, financial
position and performance of the Group, additional
information has been presented in the BMW Group
financial statements on the industrial and the finan-
cial operations. Financial operations include financial
services and the activities of the Group financing
companies. The operating interest income and ex-
pense
of financial operations are included in revenues
and cost of sales respectively. The holding com-
panies BMW (UK) Holdings Ltd., Bracknell, BMW
Holding B.V., The Hague, BMW Österreich Holding
GmbH, Steyr, BMW (US) Holding Corp., Wilmington,
and BMW España Finance S.L., Madrid, are allocat-
ed to industrial operations. The main business trans-
actions between the industrial and financial opera-
tions, which are eliminated in the Group financial
statements, are internal sales of products, the pro-
vision of funds for Group companies and the related
interest. These additional disclosures allow the
assets, liabilities, financial position and performance
of the industrial and financial operations to be
presented, in accordance with the recognition and
measurement principles stipulated by IFRSs, as if
they were two separate groups. This information,
which has not been audited by the Group auditors,
is provided on a voluntary basis.
In conjunction with the refinancing of financial
services business, a significant volume of receivables
arising from customer and dealer financing is sold.
Similarly rights and obligations relating to leases are
sold. The sale of receivables is a well established in-
strument used by industrial and financial companies.
These transactions are usually in the form of so-called
“asset backed financing” transactions involving the
sale of a portfolio of receivables to a trust which, in turn,
issues marketable securities to refinance the pur-
chase price. The BMW Group continues to “service”
the receivables and receives an appropriate fee for
these services. In accordance with IAS 27 (Consoli-
dated Financial Statements and Accounting for In-
vestments in Subsidiaries) and the interpretation in
SIC-12 (Consolidation – Special Purpose Entities)
such assets remain in the Group financial statements
although they have been legally sold. Gains and losses
BMW Group
Notes to the Group Financial Statements
Accounting Principles and Policies
[1]Basis of preparation
57