BMW 2004 Annual Report Download - page 101

Group Financial Statements 50
Income Statements 51
Balance Sheets 52
Cash Flow Statements 54
Group Statement of
Changes in Equity 56
Notes 57
--Accounting Principles
and Policies 57
--Notes to the Income Statement 66
--Notes to the balance sheet 74
--Other Disclosures 93
--Segment Information 100
--Disclosures pursuant to
§292a HGB 104
Auditors’ Report 107
100
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 seg-
ments 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 import com-
panies. Rolls-Royce brand vehicles are sold in the
USA via a subsidiary company and elsewhere 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 prima-
rily on leasing automobiles, providing loan finance
for retail customers and dealers, accepting customer
deposits and insurance activities. The profit before
financial result of this segment includes net interest
income on retail customer and dealer financing
business and the result of lease business. Leased
products are carried at acquisition cost less straight-
line depreciation 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 consoli-
dation 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 include
certain operating companies which are not allocated
to segments, namely BMW Services Ltd., Bracknell,
BMW (UK) Investments Ltd., Bracknell, and the
Softlab Group. Swindon Pressings Ltd., Bracknell,
which was included up to 31 December 2003 in
reconciliations to profit from ordinary activities,
has been allocated to the Automobiles segment
with effect from 1January 2004, since it now manu-
factures primarily for the Automobiles segment.
The comparative figures have not been reclassi-
fied, since changes would be immaterial by com-
parison to the relevant items in the Group financial
statements.
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.
BMW Group
Notes to the Group Financial Statements
Segment Information
[42]Segment
information