BMW 2013 Annual Report Download - page 52

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18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Research and Development
24 Report on Economic Position
24 Overall Assessment by Management
24 General and Sector-specific
Environment
27
Financial and Non-financial
Performance Indicators
29 Review of Operations
47 Results of Operations, Financial
Position and Net Assets
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
63 Outlook
68 Risks Report
77 Report on Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
82 Disclosures Relevant for Takeovers
and Explanatory Comments
85
BMW Stock and Capital Markets
Refinancing
Operating cash flow provides a stable financial basis for
the BMW Group. A broadly based range of instruments
transacted on international money and capital markets
is used to refinance worldwide operations. Almost all of
the funds raised are used to finance the BMW Group’s
Financial Services business.
The overall objective of Group financing is to ensure the
solvency of the BMW Group at all times. Achieving this
objective is tackled in three strategic areas:
1. the ability to act at all times by assuring permanent
access to strategically important capital markets,
2. autonomy through the diversification of refinancing
instruments and investors, and
3. focus on value by optimising financing costs.
Financing measures undertaken centrally ensure access
to liquidity for the Group’s operating subsidiaries on
attractive and consistent conditions. Funds are acquired
with a view to achieving a desired structure for the com-
position of liabilities, comprising a finely tuned mix of
various financing instruments. The use of longer-term
financing instruments to finance the Group’s Financial
Services business and the maintenance of a sufficiently
high liquidity reserve serves to avoid the liquidity risk
intrinsic to any large portfolio of contracts. This pru-
dent approach to financing also supports BMW AG’s
ratings. Further information is provided in the “Liquidity
risks” section of the Report on outlook, risks and op-
portunities.
Apart from issuing commercial paper on the money
market, the BMW Group’s financing companies also
issue
bearer bonds. In addition, retail customer and
dealer financing receivables on the one hand and leas-
ing rights and obligations on the other are securitised
in the form of asset-backed securities (ABS) financing
arrangements. Financing instruments employed by the
Group’s in-house banks in Germany and the USA (e. g.
customer deposits) are also used as a supplementary
source of financing. Owing to the increased use of inter-
national money and capital markets to raise funds, the
scale of funds raised in the form of loans from interna-
tional banks is relatively small.
As in previous years, operations were refinanced in the
year under report at an attractive level. Thanks to the
best rating in the European automobile industry and
the high level of acceptance it has on capital markets,
the BMW Group’s refinancing activities were not
negatively affected despite – in some cases – quite high
volatility on financial markets. In addition to the issue
of bonds and loan notes on the one hand and private
placements on the other, commercial paper was also is-
sued on good conditions. Additional funds were raised
via new securitised instruments and the prolongation
of
existing instruments. As in previous years, all issues
BMW Group – financial liabilities
in € million
35,000
30,000
25,000
20,000
15,000
10,000
5,000
Maturity (years) within 1
between 1 and 5 later than 5
30,854 36,046 3,404
BMW Group – financial liabilities
in € million
Bonds 30,370
Liabilities from customer deposits (banking) 12,457
Asset backed financing transactions 10,128
Liabilities to banks 8,590
Commercial paper 6,292
Derivative instruments 1,103
Other 1,364
Bonds
Liabilities from customer
deposits (banking)
Derivative instruments
Other
Liabilities to banks
Asset backed financing
transactions
Commercial paper