BMW 2014 Annual Report Download - page 160

160
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124
Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
in € million 31. 12. 2014 31. 12. 2013
Euro* 17,535 16,495
US Dollar 12,087 11,931
British Pound 5,091 3,960
Chinese Renminbi 574 1,787
Japanese Yen 113 189
* Prior year figures amended for one additional interest-bearing exposure.
In the next stage, these exposures are compared to all
hedges that are in place. The net cash flow surplus rep-
resents an uncovered risk position. The cash-flow-at-
risk approach involves allocating the impact of potential
exchange rate fluctuations to operating cash flows on
the basis of probability distributions. Volatilities and
correlations serve as input factors to assess the relevant
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 confi-
Currency risk for the BMW Group is concentrated on
the currencies referred to above.
Interest rate risks
The BMW Group’s financial management system involves
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 descrip-
tion of the management of interest rate risks is provided
in the Combined Management Report.
As stated there, the BMW Group applies a group-wide
value-at-risk approach for internal reporting purposes
dence level of 95 % and a holding period of up to one
year. Correlations between the various currencies are
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 unfavoura-
ble changes in exchange rates. The impact for the prin-
cipal 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 in-
terest 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:
and to manage interest rate risks. This is based on a
state-of-the-art historical simulation, in which the
potential future fair value losses of the interest rate
portfolios are compared across the Group with ex-
pected amounts measured on the basis of a holding
period of 250 days and a confidence level of 99.98 %.
Aggregation of these results creates a risk reduction
effect due to correlations between the various port-
folios.
in € million 31. 12. 2014 31. 12. 2013
Euro / Chinese Renminbi 173 197
Euro / US Dollar 73 65
Euro / British Pound 66 80
Euro / Russian Rouble 160 109
Euro / Japanese Yen 6 44