BMW 2011 Annual Report Download - page 50

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18 COMBINED GROUP AND COMPANY
MANAGEMENT REPORT
18 A Review of the Financial Year
20 General Economic Environment
24 Review of Operations
43 BMW Stock and Capital Market
46 Disclosures relevant for takeovers
and explanatory comments
49 Financial Analysis
49 Internal Management System
51 Earnings Performance
53 Financial Position
56 Net Assets Position
59 Subsequent Events Report
59 Value Added Statement
61 Key Performance Figures
62 Comments on BMW AG
66 Internal Control System and
explanatory comments
67 Risk Management
73 Outlook
pension provisions and the financial liabilities of the
Automotive and Motorcycles segments.
The average level of capital employed for a particular
year is measured as the average capital employed at the
beginning of the year, at quarter-ends and at the end
of the year. In line with the computation of employed
capital, earnings for RoCE purposes is defined as profit
before interest expense incurred in conjunction with
the pension provision and the financial liabilities of the
Automotive and Motorcycles segments (profit before
interest expense and taxes).
The RoCE of the Automotive and Motorcycles segments
is measured on the basis of the profit before financial re-
sult and the average level of capital employed. The latter
RoE is defined as the profit before taxes divided by the
average amount of equity capital allocated to the Finan-
Value management in the context of project
management
The Automotive and Motorcycles segments are managed
on the basis of product projects on the one hand and
process and infrastructure projects on the other, all of
which are subject to the framework set by the Group’s
forecasts by period. The project decision and related
project selection are important aspects of our value-based
cial Services segment. The target is a sustainable return
on equity of at least 18 %.
management approach. Project decisions are taken on
the basis of rates of return and net present values (NPVs),
supplemented by a standardised approach to assessing
opportunities and risks. Internal project rates of return
(model rates of return in the case of vehicle projects)
and capital values are measured on the basis of cash
flows.
Model rates of return are also compared with
competitive market values.
comprises all current and non-current operational assets
less liabilities that do not incur interest (e. g. trade pay-
ables). Based on the cost of capital as a minimum rate of
return and comparisons with competitive market values,
the target RoCE for the Automotive and Motorcycles seg-
ments has been set at a minimum of 26 %.
Capital employed by Automotive segment
in € million
2011 2010
Operational assets 29,323 27,787
less: Non-interest-bearing liabilities 19,651 16,948
Capital employed 9,672 10,839
Return on equity
Profit Equity Return
before tax on equity
in € million in € million in %
2011 2010 2011 2010 2011 2010
Financial Services 1,790 1,214 6,084 4,654 29.4 26.1
Return on capital employed
Earnings for Capital Return on
RoCE purposes employed capital employed
in € million in € million in %
2011 2010* 2011 2010* 2011 2010*
BMW Group 7,637 5,220 29,788 27,381 25.6 19.1
Automobiles 7,477 4,355 9,672 10,839 77.3 40.2
Motorcycles 45 71 442 394 10.2 18.0
* Adjusted for effect of change in accounting policy for leased products as described in note 8