BMW 2007 Annual Report Download - page 129

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Other risks
The BMW Group is exposed to raw material price
risks. A description of how the raw material price risk
is managed is provided in the Group Management
Report on page 63. Derivative financial instruments
are used on a relatively small scale to reduce these
risks, primarily for the purchase of precious metals.
The risk from these derivatives was not material to
the Group in 2007 and 2006 and remains small at
Explanatory notes to the cash flow statements
The cash flow statements show how the cash and
cash equivalents of the BMW Group, Industrial
Operations 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 76 and 77.
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
cash equivalents due to the effect of exchange rate
fluctuations in 2007 was euro 47 million (2006:
negative impact of euro 42 million).
The cash flows from investing and financing 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
the balance sheet date. For this reason, a sensitivity
analysis for these derivatives is not provided.
A further exposure relates to the residual value
risk on vehicles returned to the Group at the end of
lease contracts. The risks from financial instruments
used in this context were not material to the Group in
the past or at the balance sheet date. A description
of how these risks are managed is provided in the
Group Management Report on pages 64 and 65.
and liabilities relating to operating activities are ad-
justed 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.
If the BMW Group acts as the lessor in a finance
lease, the relevant cash flows are reported in the
cash flow statement as part of the cash flow from
investing activities. If the BMW Group acts as the
lessee in a finance lease, the cash flows are reported
as part of the cash flows from operating and invest-
ing activities.
If the BMW Group acts as the lessor in an oper-
ating lease, cash flows are reported as part of the
cash flow from investing activities. In the final case,
where the BMW Group acts as the lessee in an
operating lease, cash flows are reported as part of
the cash flow from operating activities.
The payment for the acquisition of DEKRA
SüdLeasing Services GmbH, Stuttgart, and that en-
tity’s subsidiaries (euro 121 million) is included for
the most part in investing activities.
In the following table the potential volume of fair
value fluctuations – measured on the basis of the
value-at-risk approach – are compared with the ex-
pected value for the interest rate relevant positions
of the BMW Group for the three principal curren-
cies:
in euro million 31.12. 2007 31.12. 2006
Euro 76 62
US dollar 109 85
British pound 10 7