BMW 2012 Annual Report Download - page 138

138
78 GROUP FINANCIAL STATEMENTS
78 Income Statements
78 Statement of
Comprehensive Income
80 Balance Sheets
82 Cash Flow Statements
84 Group Statement of Changes
in Equity
86 Notes
86 Accounting Principles
and Policies
100 Notes to the Income
Statement
107 Notes to the Statement
of Comprehensive Income
108 Notes to the Balance Sheet
129 Other Disclosures
145 Segment Information
The cash flows shown comprise principal repayments
and the related interest. The amounts disclosed for de-
rivatives comprise only cash flows relating to derivatives
that have a negative fair value at the balance sheet date.
Irrevocable credit commitments to dealers which had
not been called upon at the end of the reporting period
amounted to € 6,044 million (2011: € 5,764 million).
Solvency is assured at all times by managing and moni-
toring the liquidity situation on the basis of a rolling
cash flow forecast. The resulting funding requirements
are secured by a variety of instruments placed on the
world’s financial markets. The objective is to minimise
risk by matching maturities for the Group’s financing
requirements within the framework of the target debt
ratio. The BMW Group has good access to capital mar-
kets
as a result of its solid financial position and a diver-
sified
refinancing strategy. This is underpinned by the
longstanding long- and short-term ratings issued by
Moody’s and S & P.
Short-term liquidity is managed primarily by issuing
money market instruments (commercial paper). In this
area too, competitive refinancing conditions can be
achieved thanks to Moody’s and S & P short-term rat-
ings of P-1 and A-1 respectively.
Also reducing liquidity risk, additional secured and
unsecured lines of credit are in place with first-class in-
ternational banks. Intragroup cash flow fluctuations
are evened out by the use of daily cash pooling arrange-
ments.
Market risks
The principal market risks to which the BMW Group is
exposed are currency risk, interest rate risk and raw
materials price risk.
Protection against such risks is provided in the first in-
stance through natural hedging which arises when the
values of non-derivative financial instruments have
matching maturities and amounts (netting). Derivative
financial instruments are used to reduce the risk re-
maining after netting. Financial instruments are only
used to hedge underlying positions or forecast trans-
actions.
The scope of permitted transactions, responsibilities,
financial reporting procedures and control mechanisms
used for financial instruments are set out in internal
guidelines. This includes, above all, a clear separation
of duties between trading and processing. Currency,
interest rate and raw material price risks of the BMW
Group are managed at a corporate level.
Further information is provided in the Combined Group
and Company Management Report (“Risk management”
section).
Currency risk
As an enterprise with worldwide operations, business
is conducted in a variety of currencies, from which cur-
rency risks arise. Since a significant portion of Group
revenues are generated outside the euro currency region
and the procurement of production material and
fund-
ing is also organised on a worldwide basis, the cur-
rency risk is an extremely important factor for Group
earnings.
At 31 December 2012 derivative financial instruments
were in place to hedge exchange rate risks, in particular
for the currencies Chinese renminbi, US dollar, British
pound, Japanese yen and Russian rouble. The currency
hedging contracts comprise mainly option and forward
currency contracts.
A description of the management of this risk is provided
in the Combined Group and Company Management
Report. The BMW Group measures currency risk using
a cash-flow-at-risk model.
31 December 2011 Maturity Maturity Maturity Total
in € million within between one later than
one year and five years five years
Bonds – 9,100 – 17,430 – 4,509 – 31,039
Liabilities to banks – 3,197 – 5,449 – 268 – 8,914
Liabilities from customer deposits (banking) – 8,968 – 3,254 – 24 – 12,246
Commercial paper – 5,486 – – – 5,486
Asset backed financing transactions – 3,191 – 6,474 – – 9,665
Derivative instruments – 1,410 – 2,218 – 7 – 3,635
Trade payables – 5,295 – 43 – 2 – 5,340
Other financial liabilities – 847 – 483 – 488 – 1,818
Total – 37,494 – 35,351 – 5,298 –78,143