BMW 2005 Annual Report Download - page 53

52
Comments on the 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 Com-
mercial Code (HGB). Where it is permitted and con-
sidered 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 example, is also
determined in accordance with IAS 19 and the full
defined benefit obligation recognised. In numerous
other cases, however, the accounting principles and
policies in the individual company financial state-
ments of BMW AG differ from those applied in the
Group financial statements. The main differences
relate to the recognition of intangible assets, depre-
ciation and amortisation methods, the measurement
of inventories and provisions as well as the treatment
of financial assets.
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 2005
rose by 5.8 % to 1,323,119 units. At 31 December
2005, BMW AG had 76,536 employees, 716 fewer
than one year earlier. Wage earners account for ap-
proximately 54% of the workforce.
In 2005, revenues were 3.0% higher than in
the previous year. Sales to foreign group sales com-
panies accounted for euro 29.5 billion, or approxi-
mately 70% of the total revenues of euro 41.8 bil-
lion. Cost of sales increased by 4.4% and therefore
at a slightly faster rate than the increase in revenues.
The gross profit, at euro 5.4 billion, was 5.8% lower
than in the previous year.
Adverse currency factors, continued intense
competition on the automobile markets and signifi-
cantly increased raw material prices, have all had
a negative impact on BMW AG’s earnings. By con-
trast, income from the reversal of provisions and tax
reimbursements were higher than in the previous
year. In the financial year 2005, capital expenditure
on intangible assets and property, plant and equip-
ment was euro 1,472 million (2004: euro 2,321 mil-
lion). This represents an increase of 36.6%. In the
previous year, a considerable volume of capital
expenditure was incurred for the Leipzig plant and
for equipment and tooling for various model series.
Depreciation and amortisation amounted to euro
1,770 million.
As a result of the buy-back of 13,488,480 shares
of common stock at an acquisition cost of euro 506
million, the equity ratio fell from 28.3% to 25.8%.
Long-term external capital (registered profit-sharing
certificates, pension provisions, the liability to the
BMW Unterstützungsverein e.V. and liabilities due
after one year) increased by 22.7% to euro 4.7 bil-
lion. This was attributable to, amongst other factors,
the change in the discount factor (from 4.75% to
4.25%) used to measure the pension provision
and
the use of the new mortality tables (Richttafeln
2005 G) issued by Prof. Dr. Klaus Heubeck.
Group Management Report 8
A Review of the Financial Year 8
The General Economic Environment 11
Review of operations 15
BMW Stock in 2005 38
Financial Analysis 41
--Internal Management System 41
--Earnings performance 42
--Financial position 45
--Net assets position 46
--Subsequent events report 49
--Value added statement 49
--Key performance figures 51
--Comments on BMW AG 52
Risk Management 56
Outlook 60