BMW 2012 Annual Report Download - page 52

18 COMBINED GROUP AND COMPANY
MANAGEMENT REPORT
18 A Review of the Financial Year
21 General Economic Environment
24 Review of Operations
44 BMW Stock and Capital Market
47 Disclosures relevant for takeovers
and explanatory comments
50 Financial Analysis
50 Internal Management System
52 Earnings Performance
54 Financial Position
57 Net Assets Position
59 Subsequent Events Report
59 Value Added Statement
61 Key Performance Figures
62 Comments on BMW AG
65 Internal Control System and
explanatory comments
66 Risk Management
74 Outlook
52
Group Income Statement
in € million
2012 2011
Revenues 76,848 68,821
Cost of sales – 61,354 – 54,276
Gross profit 15,494 14,545
Selling and administrative expenses – 7,007 – 6,177
Other operating income 829 782
Other operating expenses – 1,016 – 1,132
Profit before financial result 8,300 8,018
Result from equity accounted investments 271 162
Interest and similar income 753 763
Interest and similar expenses – 913 – 943
Other financial result – 592 – 617
Financial result – 481 – 635
Profit before tax 7,819 7,383
Income taxes – 2,697 – 2,476
Net profit 5,122 4,907
Value management used to control projects
Operations of the Automotive and Motorcycles seg-
ments
are shaped to a large extent by project work,
which have a substantial influence on future performance.
Project decisions are therefore a crucial component of
value-based management for the BMW Group.
Decisions are taken on the basis of project calculations
measured in terms of the cash flows a project is ex-
pected to generate. Calculations are made for the full
term of a project, i.e. for all years in which cash flows
are expected to arise. Project decisions are taken on
the basis of the capital value and internal rate of return
calculated for the project. These two measures are con-
sistent with the performance indicators employed in
the Group’s financial target system.
The capital value of a project indicates the extent to
which a project will be able to generate a positive con-
tribution to earnings over and above the cost of capital.
A project with a positive capital value enhances value
added and therefore results in an increase in the value
of the business. The internal rate of return corresponds
to the average RoCE of a project over its entire term.
It therefore provides a basis for assessing the extent to
which a project will be able to help the segment achieve
its targeted RoCE.
Project calculations are supplemented by a standardised
assessment of opportunities and risks. The criteria used
for taking decisions as well as the long-term impact of
periodic earnings is documented for all project decisions
and incorporated in the long-term Group forecast. This
system enables an analysis of the periodic reporting
impact of project decisions on earnings and rates of re-
turn over the term of each project. The overall result is a
self-contained controlling model.
Earnings performance
The BMW Group continued on its successful course in
2012 and posted another record year. The number
of BMW, MINI and Rolls-Royce brand cars sold rose by
10.6 % to 1,845,186 units, enabling the BMW Group
to retain pole position at the head of the premium
segment.
The BMW Group recorded a net profit of € 5,122 mil-
lion
(2011: € 4,907 million) for the financial year 2012.
The post-tax return on sales was 6.7 % (2011: 7.1 %).
Earnings per share of common and preferred stock
were € 7.77 and € 7.79 respectively (2011: € 7.45 and € 7.47
respectively).
Group revenues rose by 11.7 % to € 76,848 million (2011:
€ 68,821 million), reflecting in particular the expan-