BMW 2007 Annual Report Download - page 133

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Segment information
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
segments 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, manu-
factures, assembles and sells cars and off-road vehi-
cles 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 pri-
marily on car leasing, fleet business, retail customer
and dealer financing, customer deposit business and
insurance activities. The profit before financial result
of this segment includes net interest income on retail
customer and dealer financing business and the re-
sult 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. Intra-group profits on own products
are eliminated on consolidation and included in the
Reconciliations to the Group profit before tax.
Reconciliations to the Group profit before tax
for the Group include holding companies, Group
financing companies and income and expenses not
specifically attributable to the business segments.
Reconciliations also include certain operating com-
panies which are not allocated to segments, namely
BMW Services Ltd., Bracknell, BMW (UK) Investments
Ltd., Bracknell, and the Cirquent Group.
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, impairment losses, reversal
of impairment losses and depreciation on leased
products.
Capital expenditure comprises additions to prop-
erty, plant and equipment and intangible assets.
Segment assets and segment liabilities comprise
all assets and liabilities employed by the relevant busi-
ness
segment to generate the profit before financial
result.
The return on sales for each segment is based
on the profit before tax.
Internal financing is computed as the profit
before tax adjusted for depreciation and significant
non-cash items and less actual tax payments.
In the case of segment information by geograph-
ical region, external sales are based on the location
of the customer’s registered office. Segment infor-
mation is provided for the regions Germany, rest of
Europe, the Americas and Africa, Asia and Oceania,
in line with internal management and reporting pro-
cedures.
BMW Group
Notes to the Group Financial Statements
Segment Information
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