BMW 2006 Annual Report Download - page 46

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capitalised development costs. The research and
development expenditure ratio for 2006 was 6.5%
(2005: 6.7%).
Depreciation and amortisation of property, plant
and equipment and intangible assets included in cost
of sales, sales and administrative costs and research
and development costs totalled euro 3,272 million
(2005: euro 3,025 million).
The positive net amount from other operating
income and expenses went down by 36.1% com-
pared to the previous year. Other operating income
decreased primarily as a result of lower income from
the reversal of provisions. In the previous year, a
provision relating to the Rover disengagement had
been reversed. Other operating expenses increased
by euro 28 million or 5.7%.
The profit before financial result was up by euro
257million or 6.8% against the previous year, there-
fore reaching a new high level.
The financial result improved by euro 580 million.
This includes the one-off gain of euro 386 million
arising on the partial settlement of the exchangeable
bond on Rolls-Royce plc, London shares.This gain is
reported mostly in “Sundry other financial result” and
the remainder in “Net interest result”. A fair value loss
of euro 14 million was recognised on the remaining
exchangeable bond option obligation relating to the
BMW Group’s investment in Rolls-Royce plc, London,
and is also included in the line item “Sundry other
financial result”. In the previous year, fair value meas-
urement had resulted in a loss of euro 356 million.
Fair value losses on other derivative financial instru-
ments had anegative impact on “Sundry other
finan-
cial result”.The net result from using the equity
method decreased by euro 39 million, primarily as
a result of an impairment loss recognised on TRITEC
Motors Ltda., Campo Largo. The net positive result
from investments was up by euro 4 million. Net
interest expense decreased by euro 41 million.The
net negative amount resulting from unwinding the
discounting on pension obligations and recognising
income for the expected return on pension plan
assets decreased by 6.5% on a year-on-year basis.
In the light of the financial result performance
described above, the group profit before tax im-
proved by 25.5% compared to the previous year.
The pre-tax return on sales was 8.4% (2005: 7.0%).
Excluding the impact of the gain arising on the par-
tial settlement of the exchangeable bond on shares
in Rolls-Royce plc, London, and the fair market loss
arising on the option obligation, the profit before tax
improved by 3.0% to euro 3,752 million.
– New car and motorcycles sales volume records
– Group and segment earnings above previous year’s level
– Adverse external factors hold down reported earnings,
qualitative key performance figures nevertheless positive
– Settlement of Rolls-Royce exchangeable bond has one-off
impact on earnings
– Capital expenditure reaches new high level
in euro million 1.1. to 1.1. to
31.12.2006 31.12.2005
Group Income Statement
Revenues 48,999 46,656
Cost of sales –37,660 –35,992
Gross profit 11,339 10,664
Sales and administrative costs –4,972 –4,762
Research and development costs –2,544 –2,464
Other operating income and expenses 227 355
Profit before financial result 4,050 3,793
Result from equity accounted investments –25 14
Other financial result 99 –520
Financial result 74 –506
Profit before tax 4,124 3,287
Income taxes –1,250 –1,048
Net profit 2,874 2,239