BMW 2014 Annual Report Download - page 54

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18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
26 Overall Assessment by Management
26
Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
61 Comments on Financial Statements
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
65 Outlook
70 Report on Risks and Opportunities
82 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87
BMW Stock and Capital Markets
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
market-based and consistent loan conditions. Funds are
acquired with a view to achieving a desired structure
for the composition 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 mainte-
nance of a sufficiently high liquidity reserve serves to
avoid the liquidity risk intrinsic to any large portfolio
of
contracts. This prudent 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 opportunities”.
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
leasing
rights and obligations on the other are securi-
tised in the form of asset-backed securities (ABS) financ-
ing 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 supple-
mentary source of financing. Owing to the increased
use of international money and capital markets to raise
funds, the scale of funds raised in the form of loans
from international banks is relatively small.
Thanks to its good ratings and the high level of accept-
ance it has on capital markets, the BMW Group was
again able to refinance operations during the financial
year 2014 at attractive conditions. In addition to the
issue of bonds and loan notes on the one hand and pri-
vate placements on the other, commercial paper was
also issued on good conditions. Additional funds were
raised via new securitised instruments and the prolon-
gation of existing instruments. As in previous years,
all issues were highly sought after by private and insti-
tutional investors.
During 2014, the BMW Group issued five euro bench-
mark bonds with a total issue volume of € 4.25 billion
on European capital markets. Bonds were also issued
in Canadian dollars, British pounds, US dollars, Aus-
tralian dollars and other currencies for a total amount
of € 6.9 billion.
Nine ABS transactions were executed in 2014, including
two public transactions in the USA and one each in
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
37,482 37,974 5,193
BMW Group – financial liabilities
in € million
Bonds 35,489
Liabilities from customer deposits (banking) 12,466
Liabilities to banks 11,554
Asset backed financing transactions 10,884
Commercial paper 5,599
Derivative instruments 3,143
Other 1,514
Bonds
Liabilities from customer
deposits (banking)
Derivative instruments
Other
Asset backed financing
transactions
Liabilities to banks
Commercial paper