BMW 2012 Annual Report Download - page 141

141 GROUP FINANCIAL STATEMENTS
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Other risks
A further exposure relates to the residual value risk on
vehicles returned to the BMW Group at the end of lease
contracts. The risk from financial instruments used in
this context was not material to the Group in the past
and /or at the end of the reporting period. A description
Explanatory notes to the cash flow statements
The cash flow statements show how the cash and cash
equivalents of the BMW Group and of the Automotive
and Financial Services segments have changed in the
course of the year as a result of cash inflows and cash
outflows. In accordance with IAS 7 (Statement of Cash
Flows), cash flows are classified into cash flows from
operating, investing and financing activities.
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 end of the reporting period and are sub-
ject to an insignificant risk of changes in value.
The cash flows from investing and financing activities are
based on actual payments and receipts. By contrast, the
cash flow from operating activities is derived indirectly
from the net profit for the year. Under this method,
changes in assets and liabilities relating to operating ac-
tivities 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 state-
ment do not therefore agree directly with the amounts
shown in the Group and segment balance sheets.
Cash inflows and outflows relating to operating leases,
where the BMW Group is either lessee or lessor, are
aggregated and shown on the line “Change in leased
products” within cash flows from operating activities.
The net change in receivables from sales financing (in-
cluding finance leases, where the BMW Group is either
Related party relationships
In accordance with IAS 24 (Related Party Disclosures),
related individuals or entities which have the ability to
control the BMW Group or which are controlled by
the BMW Group, must be disclosed unless such parties
are not already included in the Group Financial State-
ments as consolidated companies. Control is defined as
ownership of more than one half of the voting power
of BMW AG or the power to direct, by statute or agree-
of the management of this risk is provided in the Com-
bined Group and Company Management Report. Infor-
mation regarding the residual value risk from operating
leases is provided in the section on accounting policies
in note 5.
lessee or lessor) is also reported within cash flows from
operating activities.
Income taxes paid and interest received are classified
as cash flows from operating activities in accordance
with IAS 7.31 and IAS 7.35. Interest paid is presented
on a separate line within cash flows from financing
activities. Dividends received in the financial year 2012
amounted to € 4 million (2011: € 1 million).
The BMW Group used various sources of funds for
internal financing purposes. In addition to the issue of
interest-bearing debt, cash funds are also allocated
internally in line with business requirements, including
the use of dividends and similar transactions. In this
context, it is possible that cash funds may be trans-
ferred from one segment to another. Up to the first
quarter 2012, these cash inflows and outflows were
reported in the Cash Flow Statements of the Automo-
tive and Financial Services segments as part of cash
flows from operating activities. Due to the increasing
importance of inter-segment transactions, the method
of presentation was changed with effect from the sec-
ond quarter 2012. Intragroup inter-segment dividends
and similar transactions are now reported as part
of cash flows from financing activities. The reclassifi-
cation from operating activities to financing activities
resulted in an increase in the operating cash flow.
The previous year’s figures were restated accordingly
(impact in 2011: € 1,033 million for the Automotive
segment, € 411 million for the Financial Services seg-
ment).
ment, the financial and operating policies of the man-
agement of the Group.
In addition, the disclosure requirements of IAS 24 also
cover transactions with associated companies, joint
ventures and individuals that have the ability to exercise
significant influence over the financial and operating
policies of the BMW Group. This also includes close rela-
tives and intermediary entities. Significant influence