BMW 2013 Annual Report Download - page 133

133 GROUP FINANCIAL STATEMENTS
Company rating Moody’s Standard & Poor’s
Non-current financial liabilities A2 A +
Current financial liabilities P-1 A-1
Outlook stable stable
With their current long-term ratings of A+ (Standard &
Poor’s) and A2 (Moody’s), the agencies continue to
confirm BMW AG’s robust creditworthiness for debt
with a term of more than one year. BMW AG’s credit-
Equity attributable to shareholders of BMW AG in-
creased
during the financial year by 3.0 percentage
points, mainly owing to the high net profit recorded
for
the year.
In December 2013 the rating agency Standard & Poor’s
raised BMW AG’s long-term rating by one notch from
worthiness for short-term debt is also classified by the
rating agencies as very good, thus enabling it to obtain
refinancing funds on competitive conditions.
A to A+ with stable outlook. This means that BMW AG
continues to enjoy the best ratings of all European car
manufacturers.
The improved rating and outlook reflects the financial
strength of the BMW Group.
Pension provisions
Pension provisions are recognised as a result of com-
mitments
to pay future vested pension benefits and
current pensions to present and former employees of
the BMW Group and their dependants. Depending on
the legal, economic and tax circumstances prevailing
in each country, various pension plans are used, based
generally on the length of service, salary and remu-
neration structure of the employees involved. Due to
similarity of nature, the obligations of BMW Group
companies in the USA and of BMW (South Africa)
(Pty) Ltd., Pretoria, for post-retirement medical care
are also accounted for as pension provisions in ac-
cordance
with IAS 19.
Post-retirement benefit plans are classified as either
defined contribution or defined benefit plans. Under
defined contribution plans an enterprise pays fixed con-
tributions into a separate entity or fund and does not
assume any other obligations. The total pension expense
for defined contribution plans of the BMW Group
amounted to € 51 million (2012: € 47 million). Employer
contributions paid to state pension insurance schemes
totalled € 470 million (2012: € 444 million).
Under defined benefit plans the enterprise is required to
pay the benefits granted to present and past employees.
Defined benefit plans may be funded or unfunded, the
latter sometimes covered by accounting provisions. Pen-
sion commitments in Germany are mostly covered by
assets contributed to BMW Trust e. V. (CTA). The main
other countries with funded plans were the UK, the USA,
Switzerland, the Netherlands, Belgium, South Africa,
Japan and Norway.
In the case of externally funded plans, the defined bene-
fit obligation is offset against plan assets measured at
their fair value. Where the plan assets exceed the pension
obligations and the BMW Group has a right of reim-
bursement or a right to reduce future contributions, it
reports an asset (within “Other financial assets”) at
an amount equivalent to the present value of the future
economic benefits attached to the plan assets. If the
plan is externally funded, a liability is recognised under
pension provisions where the benefit obligation ex-
ceeds fund assets.
Remeasurements of the net liability arise from changes
in the present value of the defined benefit obligation,
the fair value of the plan assets or the asset ceiling. Rea-
sons for remeasurements include changes in financial
and demographic assumptions as well as changes in the
detailed composition of beneficiaries. Remeasurements
are recognised immediately in “Other comprehensive
income” and hence directly in equity (within revenue
reserves).
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