BMW 2011 Annual Report Download - page 62

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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
Comments on Financial Statements of BMW AG
The financial statements of BMW AG are drawn up in
accordance with the German Commercial Code (HGB)
and the German Stock Corporation Act (AktG).
BMW AG develops, manufactures and sells cars and
motorcycles manufactured by itself, foreign subsidiaries
and Magna Steyr. Sales activities are carried out
through the Company’s own branches, independent
dealers, subsidiaries and importers. The number of cars
manufactured at German and foreign plants in 2011
rose by 17.3 % to 1,738,160 units. At 31 December 2011,
BMW AG had 71,630 employees, 2,112 more than one
year earlier.
The dynamic performance of the world’s car markets
resulted in strong sales volume growth for BMW AG.
Thanks to this positive development, revenues rose by
20.2 %. The most significant increase was recorded in
Asia. Sales to Group sales companies accounted for
€ 40.0 billion or 72.7 % of total revenues of € 55.0 billion.
The increase in cost of sales was less pronounced than
the increase in revenues, mainly due to changes in
the sales mix and reduced material costs.
As a conse-
quence, gross profit increased by € 3.1 billion
to € 11.7
billion.
The increase in other operating income and expenses
was attributable primarily to income recorded in con-
junction with retrospective changes to transfer prices
and to a higher level of income from reversals of war-
ranty provisions. Estimates used to measure those pro-
visions were refined on the basis of current information.
These income items were partially offset by increased
expenses recognised for pending losses on commodity
and currency hedging contracts.
The financial result deteriorated by € 300 million, mainly
as a result of the impact of fair value measurement on
designated plan assets for pension and other non-current
personnel-related provisions.
The profit from ordinary activities increased from € 2,337
million to € 4,037 million.
Extraordinary items in 2011 relate to the merger gain
arising on the merger of BMW Maschinenfabrik Spandau
GmbH, Munich, into BMW AG, Munich. In 2010, ex-
traordinary items had included the impact of the
first-time application of the German Accounting Law
Modernisation Act (BilMoG).
The tax expense in 2011 comprises current year tax and
adjustments to tax provisions for prior years in con-
nection
with intra-group transfer pricing arrangements.
After deducting the expense for taxes, the Company
reports a net profit of € 1,970 million (2010: € 1,506
million).
Capital expenditure on intangible assets and property,
plant and equipment amounted to € 2,032 million (2010:
€ 1,582 million), an increase of 28.4 % over the previous
year. The main focus was on product investments for
production start-ups and infrastructure improvements.
Depreciation and amortisation amounted to € 1,578
million.
Investments went up from € 1,875 million to € 2,823 mil-
lion. The carrying amount of investments was increased
on the one hand by €625 million in conjunction with
a transfer to capital reserves made at the level of BMW
Leasing GmbH, Munich, and reduced by the derecogni-
tion of the investment in BMW Vertriebs GmbH & Co.
oHG, Dingolfing, following that entity’s automatic
merger with BMW Leasing GmbH (subsequently merged
into BMW Bank GmbH, Munich). In addition, shares
in SGL Carbon SE, Wiesbaden, were purchased during
the financial year 2011 at an acquisition cost of € 464
million.
Inventories went up from € 3,259 million to € 3,755 mil-
lion due to higher business volumes generally and to
stocking up in conjunction with the introduction of new
models.
Cash and cash equivalents rose by € 1,290 million to
€ 2,864 million, reflecting the BMW Group’s strong
operating performance in the year under report. Finan-
cial receivables from subsidiaries decreased.
Equity rose by € 1,134 million to € 8,222 million, while
the equity ratio improved from 29.1 % to 29.9 %.
In order to secure obligations resulting from pre-retire-
ment part-time work arrangements and a part of the
Company’s pension obligations, assets were transferred
to BMW Trust e.V., Munich, in conjunction with Con-
tractual Trust Arrangements (CTA), on a trustee basis.
The assets concerned comprise mainly holdings in in-
vestment fund assets and a receivable resulting from a
so-called “Capitalisation Transaction”
(Kapitalisierungs-
geschäft). Fund assets are offset against the related