BMW 2004 Annual Report Download - page 41

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Group Management Report 8
A review of the Financial Year 8
Outlook 29
Financial Analysis 30
--Earnings performance 30
--Financial position 33
--Net assets position 34
--Events after the
Balance Sheet date 37
--Value added statement 37
--Key performance figures 39
--Comments on the financial
statements of BMW AG 40
Risk Management 44
BMW Stock in 2004 48
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 sensible, 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 in the individual company
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 2004
rose by 11.7% to 1,250,345 units. At 31 December
2004, BMW AG had 77,252 employees, an increase
of 1,283 compared to one year earlier. Wage-earners
account for approximately 59% of the workforce.
In 2004, revenues were 10.1% higher than in
the previous year. Sales to foreign group sales com-
panies accounted for euro 28.5 billion or approxi-
mately 70% of the total revenues of euro 40.6 billion.
Cost of sales increased by 9.7% and therefore by
slightly less than the increase in revenues. The gross
profit of euro 5.8 billion was 12.2% above the pre-
vious year’s figure.
In the financial year 2004, capital expenditure on
intangible assets and property, plant and equipment
was euro 2,321 million (2003: euro 2,293 million).
This represents an increase of 1.2%. Capital
expen-
diture 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 1,535 million.
The equity ratio rose from 27.0% to 28.3%.
Long-term external capital (pension provision, regis-
tered profit-sharing certificates, the liability to BMW
Unterstützungsvereins e.V. and liabilities due after
one year) increased by 35.8% to euro 3.8 billion.
This was due, amongst other factors, to the change
in the discount factor used to compute the pension
provision (reduced from 5.5% to 4.75%) and to an
increase in pension benefits granted to BMW AG
employees.