BMW 2003 Annual Report Download - page 111

001 BMW Group in figures
004 Report of the Supervisory Board
008 Supervisory Board
011 Board of Management
012 Group Management Report
12 A Review of the Financial Year
29 Outlook
30 Financial Analysis
44 Risk Management
047 BMW Stock
050 Corporate Governance
054 Group Financial Statements
118 BMW AG Principal Subsidiaries
120 BMW Group10-year Comparison
122 BMW Group Locations
124 Glossary, Index
110
Description of business segments
In accordance with the rules contained in IAS 14
(Segment Reporting), the BMW Group presents
segment information using business segments
as its primary reporting format and geographical
segments as its secondary reporting format. This
distinction is based on internal management and
financial reporting systems and reflects the risk and
earnings structure of the Group.
The activities of the BMW Group are broken
down into the segments Automobiles, Motorcycles
and Financial Services.
The Automobiles segment develops, manufac-
tures,
assembles and sells cars and off-road vehicles,
under the brands BMW, MINI and Rolls-Royce as
well as spare parts and accessories.
BMW and MINI brand products are sold in Ger-
many through branches of BMW AG and by inde-
pendent, authorised dealers. Sales outside Germany
are handled primarily by subsidiary companies and,
in a number of markets, by independent importers.
Rolls-Royce brand vehicles are sold worldwide by in-
dependent, authorised dealers.
The BMW Motorcycles segment develops,
manufactures, assembles and sells BMW brand
motorcycles as well as spare parts and accessories.
The Financial Services segment focuses pri-
marily
on leasing automobiles, providing loan finance
for customers and dealers, accepting customer
deposits and insurance activities. The profit before
financial result of this segment includes net interest
income on customer and dealer financing business
and the result of lease business. Leased products
are carried at acquisition cost less straight-line de-
preciation down to the imputed residual value of
the vehicles. Leased products are written down to
their fair value where this is lower. Inter-group profits
on own products are eliminated on consolidation
and included in the Reconciliations to the Group
profit from ordinary activities.
Reconciliations to the Group profit from ordinary
activities for the Group include national holding
companies, group financing companies and income
and expenses not specifically attributable to the
business segments. Reconciliations also includes
certain operating companies which are not allocated
to segments, namely BMW Services Ltd., Bracknell,
BMW (UK) Investments Ltd., Bracknell, Swindon
Pressings Ltd., Bracknell, Rover Service Center Corp.,
Tokyo, and the Softlab Group.
Other explanatory comments on segment
information
Segment information is generally prepared in con-
formity with the accounting policies adopted for
preparing and presenting the Group financial state-
ments. Inter-segment receivables and payables,
provisions, income, expenses and profits are elimi-
nated in Reconciliations. Inter-segment sales take
place at arm’s length prices.
Significant non-cash items comprise mainly
changes in provisions, write-downs, reversal of
write-downs and depreciation on leased products.
Capital expenditure comprises additions to
property, plant and equipment and intangible assets.
Segment assets and segment liabilities com-
prise all assets and liabilities employed by the rele-
vant business segment to generate the profit before
financial result.
By contrast to the previous year, the return on
sales for each segment is based on the profit from
ordinary activities. In the previous year, the return
on sales of the segments was based on the profit
before financial result. Comparative figures have
been reclassified.
Internal financing is computed as the profit or
loss from ordinary activities adjusted for depreciation
and significant non-cash items and less actual tax
payments.
In the case of segment information by geograph-
ical
region, external sales are based on the location
of the customer’s registered office. Segment infor-
mation is provided for the regions Germany, rest
of Europe, America and Africa, Asia and Oceania, in
BMW Group
Notes to the Group Financial Statements
Segment Information
[43]Segment
information