BMW 2009 Annual Report Download - page 83

81 Group Financial Statements
BMW Group
Notes to the Group Financial Statements
Accounting Principles and Policies
Basis of preparation
The consolidated financial statements of Bayerische
Motoren Werke Aktiengesellschaft (“BMW Group Financial
Statements” or “Group Financial Statements”) at 31 De-
cember 2009 have been drawn up in accordance with In-
ternational Financial Reporting Standards (IFRSs) as en-
dorsed by the EU. The designation “IFRSs” also includes
all valid International Accounting Standards (IASs). All In-
terpretations of the International Financial Reporting Inter-
pretations Committee (IFRIC) mandatory for the financial
year 2009 are also applied.
The Group Financial Statements comply with § 315 a of
the German Commercial Code (HGB). This provision, in
conjunction with the Regulation (EC) No. 1606 / 2002 of
the European Parliament and Council of 19 July 2002,
re-
lating to the application of International Financial Reporting
Standards, provides the legal basis for preparing consoli-
dated financial statements in accordance with international
standards in Germany and applies to financial years be-
ginning on or after 1 January 2005.
The BMW Group and segment income statements are
presented using the cost of sales method. The Group and
segment balance sheets correspond to the classification
provisions contained in IAS 1 (Presentation of Financial
Statements).
In order to improve clarity, various items are aggregated in
the income statement and balance sheet. These items are
disclosed and analysed separately in the notes.
Following adoption of the revised version of IAS 1 (Presen-
tation of Financial Statements), a Statement of
Compre-
hensive Income has been presented at Group level with
effect from the first quarter 2009, replacing the previously
presented Statement of Income and Expenses Recognised
in Equity.
Furthermore, in order to improve comparability, research
and development costs have been reported with effect
from the beginning of the first quarter 2009 as cost of
sales and not, as in the previous year, as a separate item
in the income statement. Research and development
costs in 2009 totalled euro 2,587 million (2008: euro
2,825 million).
In order to support the sale of its products, the BMW
Group provides various financial services – mainly loan
and lease financing – to retail customers and to dealers.
The inclusion of the financial services activities of the
Group therefore has an impact on the Group Financial
Statements.
In order to provide a better insight into the net assets, finan-
cial
position and performance of the BMW Group and
going beyond the requirements of IFRS 8 (Operating Seg-
ments), the Group Financial Statements also include bal-
ance sheets and income statements for the Automobiles,
Motorcycles, Financial Services and Other Entities seg-
ments. The Group Cash Flow Statement is supplemented
by statements of cash flows for the Automobiles and Finan-
cial Services segments.
Inter-segment transactions – relating primarily to internal
sales of products, the provision of funds and the related in-
terest – are eliminated in the “Eliminations” column. Fur-
ther information regarding the allocation of activities of the
BMW Group to segments and a description of the seg-
ments is provided in the explanatory notes to segment in-
formation on page 133 et seq.
In conjunction with the refinancing of financial services
business, a significant volume of receivables arising from
retail customer and dealer financing is sold. Similarly, rights
and obligations relating to leases are sold. The sale of
re-
ceivables is a well established instrument used by industrial
companies. These transactions usually take the form of
asset-backed financing transactions involving the sale of a
portfolio of receivables to a trust which, in turn, issues
mar-
ketable securities to refinance the purchase price. The
BMW Group continues to “service” the receivables and re-
ceives an appropriate fee for these services. In accordance
with IAS 27 (Consolidated and Separate Financial State-
ments) and the interpretation contained in SIC-12 (Con-
solidation – Special Purpose Entities) such assets remain
in the Group Financial Statements although they have
been legally sold. Gains and losses relating to the sale of
such assets are not recognised until the assets are re-
moved from the Group balance sheet on transfer of the
related significant risks and rewards. The balance sheet
value of the assets sold at 31 December 2009 totalled
euro 7.8 billion (2008: euro 8.7 billion).
In addition to credit financing and leasing contracts, the
Finan cial Services segment also brokers insurance busi-
ness via cooperation arrangements entered into with local
insurance companies. These activities are not material to
the BMW Group as a whole.
The Group currency is the euro. All amounts are disclosed
in millions of euros (euro million) unless stated otherwise.
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