BMW 2003 Annual Report Download - page 41

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
40
Comments on financial statements of BMW AG
Whereas the Group financial statements are drawn
up in accordance with IFRSs issued by the IASB,
the financial statements of BMW AG are drawn up
in accordance with the provisions of the German
Commercial Code (HGB). Where it is permitted and
considered appropriate, the principles and policies
of IFRSs are also applied in the individual company
financial statements. The pension provision in the
individual company financial statements, for exam-
ple, is also determined in accordance with IAS 19.
In numerous other cases, however, the accounting
principles
and policies applied in the individual com-
pany financial statements of BMW AG differ from
those applied in the Group financial statements. The
main differences relate to the recognition of intangible
assets, depreciation and amortisation methods, the
measurement of inventories and provisions as well
as the treatment of financial instruments.
BMW AG develops, manufactures and sells cars
and motorcycles manufactured by itself and foreign
subsidiaries. These vehicles are sold through the
Company’s own branches, independent dealers,
subsidiaries and importers. The number of cars
manufactured at German and foreign plants in 2003
rose by 2.6% to 1,118,940 units. At 31 December
2003, BMW AG had 75,969 employees, an increase
of 2,686 compared to the previous year-end. Wage-
earners account for approximately 60% of the work-
force.
In 2003, revenues were 4.4% higher than in
the previous year. Sales to foreign group sales com-
panies accounted for euro 25.0 billion or 68% of
the total revenues of euro 36.9 billion. Cost of sales
increased by 7.2% and therefore by more than the
increase in revenues. The gross profit of euro 5.1 bil-
lion was 9.7% below the previous year’s figure.
In the financial year 2003, capital expenditure on
intangible assets and property, plant and equipment
was euro 2,293 million (2002: euro 2,140 million).
This represents an increase of 7.1%. Capital ex-
penditure related primarily to investments in new
products as well as the expansion of the production
network, such as the new Leipzig plant. Depreciation
and amortisation amounted to euro 1,322 million.
Current assets rose as a result of the increase in
cash and cash equivalents and marketable securities.
The equity ratio fell from 30.8% to 27.0% due
to the increased balance sheet total. Long-term
external capital (pension provision, registered profit-
sharing certificates, the liability to BMW Unter-
stützungsvereins e.V. and liabilities due after one
year) increased by 22.4% to euro 2.8 billion. This
was due in part to the change in the discount factor
used to compute the pension provision (reduced
from 5.75% to 5.5%).