BMW 2005 Annual Report Download - page 119

118
euro1,072 million) on cash flow hedges and of euro
562 million (2004: euro 62 million) on available-for-
sale securities.
During the year under report, net fair value losses
of euro 543 million (2004: euro 420 million) were
recognised directly in equity, comprising fair value
losses of euro1,043 million on cash flow hedges
(2004: euro 628 million) and fair value gains of euro
500 million (2004: euro 208 million) on available-
for-sale securities.
In the financial year under report, fair value gains
of euro 661 million (2004: euro 942 million) were
removed from other accumulated equity and re-
alised during the year. Write-downs of euro10 million
(2004: euro11 million) on available-for-sale securi-
ties, for which fair value changes were previously
recognised directly in equity, were recognised as
expenses in 2004. Reversals of write-downs on cur-
rent marketable securities of euro 3 million were
recognised directly in equity (2004: euro 6 million
recognised as income). In 2005, gains of euro 33 mil-
lion (2004: euro 4 million) were realised on the dis-
posal of available-for-sale securities and the equiva-
lent amount removed from other accumulated
equity and recognised in the income statement.
The cash flow statements show 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 activi-
ties. The cash flow statements of the BMW Group
are presented on pages 66 and 67.
Cash and cash equivalents included in the cash
flow statement comprise cash in hand, cheques
and
cash at bank, to the extent that they are available
within three months from the balance sheet date
and are subject to an insignificant risk of changes in
value. The negative impact of changes in cash and
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. Depend-
ing on the nature and amount of exposure entered
into, collateral will be required, information on the
credit-standing of the counter-party obtained or his-
torical data based on the existing business relation-
ship (i.e. payment patterns to date) reviewed in order
to minimise the credit risk relating to performance
relationships underlying non-derivative financial in-
struments. Write-downs are recorded as soon as
credit risks are identified on individual financial assets.
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 instruments utilised by the
BMW Group is therefore not considered to be sig-
nificant. A concentration of credit risk with particular
borrowers or groups of borrowers has not been
identified.
cash equivalents due to the effect of exchange rate
fluctuations in 2005 was euro 60 million (2004: euro
23 million).
The cash flows from investing and financial ac-
tivities 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 balance
sheet.
[40]Explanatory
notes to the
cash flow statements
Group Financial Statements 62
Income Statements 63
Balance Sheets 64
Cash Flow Statements 66
Group Statement of
Changes in Equity 68
Statement of Income and Expenses
recognised directly in Equity 69
Notes 70
--Accounting Principles
and Policies 70
--Notes to the Income Statement 81
--Notes to the balance sheet 90
--Other Disclosures 114
--Segment Information 121
Auditors’ Report 125