BMW 2013 Annual Report Download - page 156

156
88 GROUP FINANCIAL STATEMENTS
88 Income Statements
88 Statement of
Comprehensive Income
90 Balance Sheets
92 Cash Flow Statements
94 Group Statement of Changes in
Equity
96 Notes
96 Accounting Principles and
Policies
114 Notes to the Income Statement
121 Notes to the Statement
of Comprehensive Income
122
Notes to the Balance Sheet
145 Other Disclosures
161 Segment Information
in € million 31. 12. 2013 31. 12. 2012
Euro 14,265 12,736
US Dollar 11,931 10,489
British Pound 3,960 3,814
Chinese Renminbi 1,787 1,179
Japanese Yen 189 435
in € million 31. 12. 2013 31. 12. 2012
Euro / Chinese Renminbi 197 246
Euro / US Dollar 65 163
Euro / British Pound 80 65
Euro / Russian Rouble 109 69
Euro / Japanese Yen 15
44 15
exchange rate fluctuations to operating cash flows on
the basis of probability distributions. Volatilities and
correlations serve as input factors to assess the rele-
vant
probability distributions.
The potential negative impact on earnings is computed
for each currency for the following financial year on the
basis of current market prices and exposures to a
con-
fidence level of 95 % and a holding period of up to one
year. Correlations between the various currencies are
Currency risk for the BMW Group is concentrated on
the currencies referred to above.
Interest rate risk
The BMW Group’s financial management system in-
volves the use of standard financial instruments such
as short-term deposits, investments in variable and
fixed-income securities as well as securities funds. The
BMW Group is therefore exposed to risks resulting
from changes in interest rates.
Interest rate risks can be managed by the use of interest
rate derivatives. The interest rate contracts used for
hedging purposes comprise mainly swaps which are ac-
counted for on the basis of whether they are designated
as a fair value hedge or as a cash flow hedge. A description
of the management of interest rate risks is provided in
the Combined Management Report.
As stated there, the BMW Group applies a group-wide
taken into account when the risks are aggregated, thus
reducing the overall risk.
The following table shows the potential negative impact
for the BMW Group – measured on the basis of the
cash-flow-at-risk approach – attributable to unfavourable
changes in exchange rates. The impact for the principal
currencies, in each case for the following financial year,
is as follows:
These risks arise when funds with differing fixed-rate
periods or differing terms are borrowed and invested.
All items subject to, or bearing, interest are exposed
to interest rate risk. Interest rate risks can affect either
side of the balance sheet.
The fair values of the Group’s interest rate portfolios for
the five main currencies were as follows at the end of
the reporting period:
value-at-risk approach for internal reporting purposes
and to manage interest rate risks. This is based on a
state-of-the-art historical simulation, in which the po-
tential future fair value losses of the interest rate port-
folios are compared across the Group with expected
amounts measured on the basis of a holding period of
250 days and a confidence level of 99.98 %. Aggrega-
tion
of these results creates a risk reduction effect due
to correlations between the various port folios.