BMW 2009 Annual Report Download - page 61

59 Group Management Report
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 princi-
ples 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 statements of BMW AG
differ from those applied in the Group Financial State-
ments.
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 motor-
cycles
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 2009 decreased by 12.6 % to 1,258,417 units.
The workforce of BMW AG decreased by 1,373 to 70,223
employees at 31 December 2009, due primarily to natural
employee fluctuation, pre-retirement part-time working
arrangements and voluntary employment contract termina-
tion agreements.
Consumer reluctance to spend in the face of the current
finan cial crisis as well as model life-cycle factors caused
a reduction in the number of cars sold by BMW AG . As
a
consequence, revenues fell by 14.3 % in 2009. Sales to
group sales companies accounted for euro 26.6 billion
or approximately 70.0 % of the total revenues of euro 38.0
billion. The decrease in cost of sales was slightly less
pro-
nounced than the decrease in revenues. Gross profit fell by
euro 1.2 billion (– 18.2 % ) and amounted to euro 5.3 billion.
The decrease in other operating expenses had a positive
effect on the profit from ordinary activities which increased
from euro 395 million to euro 605 million.
Adverse currency factors relating to the US dollar and
Japanese yen as well as continued intense competition
on the automobile markets had a negative impact on
BMW AG’s earnings.
A tax expense was recognised in the financial year 2009 in
conjunction with a tax field audit covering prior years. The
back-taxes were primarily related to the issue of intragroup
pricing arrangements. The resulting threat of a double
taxation charge at Group level is being avoided primarily by
initiating bilateral appeal proceedings.
Capital expenditure on intangible assets and property,
plant
and equipment amounted to euro 1,667 million
(2008:
euro 2,064 million). The 19.2 % decrease was pri-
marily due to the lower level of infrastructure investments.
De preciation and amortisation amounted to euro 1,505
million.
In order to secure obligations resulting from pre-retirement
part-time work arrangements and a part of the Company’s
pension obligations, an amount of euro 3,088 million was
transferred to BMW Trust e. V., Munich, in conjunction with
a Contractual Trust Arrangement (CTA ).
Equity rose by euro 16 million to euro 5,354 million. The
existing authorisation to acquire treasury shares was not
exercised during the financial year 2009. 362,225 of the
363,130 shares of preferred stock held as treasury shares
were used for the employee share scheme; the remaining
905 shares were sold on the capital market. The equity
ratio fell from 22.9 % to 21.7 % . Long-term external capital
(registered profit-sharing certificates, pension provisions,
the liability to the BMW Unterstützungsvereins e. V. and
liabilities due after one year) decreased by 23.4 % to
euro 4,638 million, reflecting the fact that some loan lia-
bilities
fall due for payment in 2010. In view of the turmoil
on the
financial markets, funds were shifted into money
market funds in order to secure the liquidity position of
BMW AG.
The Financial Reporting Modernisation Act (BilMoG) will
be applied with effect from the beginning of the financial
year 2010.