BMW 2010 Annual Report Download - page 83

81 GROUP FINANCIAL STATEMENTS
BMW Group
Notes to the Group Financial Statements
Accounting Principles and Policies
Basis of preparation
The consolidated financial statements of Bayerische
Motoren Werke Aktiengesellschaft (BMW Group Financial
Statements or Group Financial Statements) at 31 De-
cember 2010 have been drawn up in accordance with
International Financial Reporting Standards (IFRSs) as
endorsed by the EU. The designation “IFRSs” also includes
all valid International Accounting Standards (IASs). All
Interpretations of the IFRS Interpretations Committee
(IFRICs) mandatory for the financial year 2010 are also
applied.
The Group Financial Statements comply with § 315 a of
the German Commercial Code (HGB). This provision, in
conjunction with the Regulation (EC) No. 1606 / 2002
ofthe European Parliament and Council of 19 July 2002,
relating to the application of International Financial Re-
porting Standards, provides the legal basis for preparing
consolidated financial statements in accordance with
international standards in Germany and applies to finan-
cial years beginning on or after 1 January 2005.
The BMW Group and segment income statements are
presented using the cost of sales method. The Group and
segment balance sheets correspond to the classification
provisions contained in IAS 1 (Presentation of Financial
Statements).
In order to improve clarity, various items are aggregated
in the income statement and balance sheet. These items
are disclosed and analysed separately in the notes.
A Statement of Comprehensive Income is presented at
Group level reconciling the net profit to comprehensive
income for the year.
In order to facilitate the sale of its products, the BMW
Group provides various financial services – mainly loan
and lease financing – to both retail 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 net assets,
financial position and performance of the BMW Group
and going beyond the requirements of IFRS 8 (Operating
Segments), the Group Financial Statements also include
balance sheets and income statements for the Automo-
biles, Motorcycles, Financial Services and Other Entities
segments. The Group Cash Flow Statement is supple-
mented by statements of cash flows for the Automobiles
and Financial Services segments.
Inter-segment transactions – relating primarily to inter-
nal sales of products, the provision of funds and the
re-
lated interest – are eliminated in the “Eliminations”
column. Further information regarding the allocation of
activities of the BMW Group to segments and a descrip-
tion of the segments is provided in the explanatory notes
to segment information on pages 133 et seq.
In conjunction with the refinancing of financial services
business, a significant volume of receivables arising from
retail customer and dealer financing is sold. Similarly,
rights and obligations relating to leases are sold. The sale
of receivables is a well established instrument used by
industrial companies. These transactions usually take the
form of asset-backed financing transactions involving
the sale of a portfolio of receivables to a trust which, in
turn, issues marketable securities to refinance the purchase
price. The BMW Group continues to “service” the receiv-
ables and receives an appropriate fee for these services.
In accordance with IAS27 (Consolidated and Separate Fi-
nancial Statements) and Interpretation SIC-12 (Consoli-
dation – Special Purpose Entities) such assets remain in
the Group Financial Statements although they have been
legally sold. Gains and losses relating to the sale of such
assets are not recognised until the assets are removed
from the Group balance sheet on transfer of the related
significant risks and rewards. The balance sheet value of
the assets sold at 31December 2010 totalled euro 7.5 bil-
lion (2009: euro 7.8 billion).
In addition to credit financing and leasing contracts, the
Financial Services segment also brokers insurance busi-
ness via cooperation arrangements entered into with
local insurance companies. These activities are not mate-
rial to the BMW Group as a whole.
The Group currency is the euro. All amounts are dis-
closed in millions of euros (euro million) unless stated
otherwise.
Bayerische Motoren Werke Aktiengesellschaft has its
seat in Munich, Petuelring 130, and is registered in the
Commercial Register of the District Court of Munich
under the number HRB 42243.
All consolidated subsidiaries have the same year-end
asBMW AG with the exception of BMW India Private
Limited, New Delhi (year-end: 31 March).
The Group Financial Statements, drawn up in accordance
with § 315 a HGB, and the Management Report for the
financial year 2010 will be submitted to the operator of
1