BMW 2009 Annual Report Download - page 128

126
74 Group Financial Statements
74 Income Statements
74 Statement of
Comprehensive Income
76 Balance Sheets
78 Cash Flow Statements
80 Group Statement of Changes
in Equity
81 Notes
81 Accounting Principles
and Policies
90 Notes to the Income
Statement
97
Notes to the Statement
of Comprehensive Income
98 Notes to the Balance Sheet
119 Other Disclosures
133 Segment Information
in equity at the end of the reporting period, will be recog-
nised in the income statement in 2010.
At 31 December 2009 the BMW Group held derivative
in-
struments with terms of up to 84 months (2008: 96 months)
to hedge interest-rate risks attached to future transactions.
It is expected that euro 45 million of net losses, recog-
nised in equity at the end of the reporting period, will be
recognised in the income statement in 2010.
The difference between the gains / losses on hedging
instruments and the result recognised on hedged items
represents the ineffective portion of fair value hedges.
Fair value hedges are mainly used to hedge the market
prices of bonds and other financial liabilities.
Credit risk
Notwithstanding the existence of collateral accepted, the
carrying amounts of financial assets generally take account
of the maximum credit risk arising from the possibility that
the counterparties will not be able to fulfil their contractual
obligations. The maximum credit risk for irrevocable credit
commitments relating to credit card business amounts to
euro 1,513 million (2008: euro 1,570 million). The equiva-
lent figure for dealer financing is euro 12,634 million (2008:
euro 12,490 million).
In the case of performance relationships underlying non-
derivative financial instruments, collateral will be required,
information on the credit-standing of the counterparty
obtained or historical data based on the existing business
relationship (i.e. payment patterns to date) reviewed in
order to minimise the credit risk, all depending on the na-
ture and amount of the exposure that the BMW Group is
proposing to enter into.
Within the financial services business, the financed items
(e. g. vehicles, equipment and property) in the retail
cus-
tomer and dealer lines of business serve as first-ranking
collateral with a recoverable value. Security is also put up
by customers in the form of collateral asset pledges, asset
assignment and first-ranking mortgages, supplemented
where appropriate by warranties and guarantees. If an item
Cash flow hedges are generally used to hedge cash flows
arising in conjunction with the supply of vehicles to sub-
sidiaries.
Fair value hedges
The following table shows gains and losses on hedging
instruments and hedged items which are deemed to be
part of a fair value hedge relationship:
previously accepted as collateral is acquired, it undergoes
a multi-stage process of repossession and disposal in
accordance with the legal situation prevailing in each rele-
vant market. The assets involved are generally vehicles
which can be converted into cash at any time via the dealer
organisation.
Impairment losses are recorded as soon as credit risks
are
identified on individual financial assets, using a meth-
odology specifically designed by the BMW Group. More
detailed information regarding this methodology is provided
in the section on accounting policies.
The use of comprehensive rating and scoring techniques
and credit monitoring procedures ensures the recovera-
bility
of the value of receivables from sales financing which
are neither overdue nor impaired.
The credit risk relating to derivative financial instruments is
minimised by the fact that the Group only enters into such
contracts with parties of first-class credit standing. The
general credit risk on derivative financial instruments utilised
by the BMW Group is therefore not considered to be sig-
nificant.
A concentration of credit risk with particular
borrowers or
groups of borrowers has not been identified. In
the context
of the current climate for financing, it must be
reckoned
with that assessments of individual contractual partners’
creditworthiness may need to be amended.
Further disclosures relating to credit risk, in particular impair-
ment losses recognised, are provided in the notes to the rel-
evant category of receivables on pages 102 et seq. and 106.
in euro million 31. 12. 2009 31. 12. 2008
Gains / losses on hedging instruments designated as part of a fair value hedge relationship – 398 386
Gains / loss from hedged items 446 – 405
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