BMW 2013 Annual Report Download - page 59

59 COMBINED MANAGEMENT REPORT
Comments on Financial Statements of BMW AG
Bayerische Motoren Werke Aktiengesellschaft (BMW AG),
which is based in Munich, Germany, is the parent com-
pany of the BMW Group. The comments on the BMW
Group and Automotive segment provided in earlier sec-
tions are also relevant for BMW AG, unless presented
differently in the following section. The Financial
State-
ments of BMW AG are drawn up in accordance with
the provisions of the German Commercial Code (HGB)
and the relevant supplementary provisions contained
in the German Stock Corporation Act (AktG).
The main financial and non-financial performance
in-
dicators relevant for BMW AG are largely identical and
synchronous with those of the Automotive segment
of the BMW Group and are described in detail in the
“Report on Economic Position” section of the Combined
Management Report.
Differences between the accounting policies used in the
BMW AG Financial Statements (prepared in accordance
with HGB) and the BMW Group Financial Statements
(prepared in accordance with IFRSs) arise primarily in
connection with the accounting treatment of intangible
assets, financial instruments and provisions.
Business environment and review of operations
The general and sector-specific environment in which
BMW AG operates is the same as that for the BMW Group
and is described in the “Report on economic position”
section of the Combined Management Report.
BMW AG develops, manufactures and sells cars and
motorcycles as well as spare parts and accessories manu-
factured by itself, foreign subsidiaries and external sup-
pliers. Sales activities are carried out through the Com-
pany’s own branches, subsidiaries, independent dealers
and importers. In 2013, BMW AG was able to increase
its sales volume by 127,745 units to 1,995,903 units. This
figure includes 214,949 units relating to series sets
sup-
plied to the joint venture BMW Brilliance Automotive Ltd.,
Shenyang, an increase of 64,985 units over the previous
year. At 31 December 2013, BMW AG had 77,110 em-
ployees,
2,539 more than one year earlier.
Results of operations, financial position and net assets
Revenues increased by 2.8 % compared to the previous
year. The most significant increase was recorded in Asia.
Sales to Group sales companies accounted for € 46.1 bil-
lion or 76.2 % of total revenues of € 60.5 billion. The
in-
crease in cost of sales was less pronounced than the
increase in revenues, mainly reflecting the lower cost of
materials per unit. As a consequence, gross profit in-
creased
by € 854 million to € 13.4 billion.
Administrative expenses were 25.9 % up on the previous
year due to the restructuring of IT activities at corporate
level and higher expenses for new IT projects.
Research and development expenses were 22.1 % higher
than in the previous year, driven for the main part by
expenses arising in connection with production start-ups
for new models as well as expenditure on alternative
drive technologies and lightweight construction.
The decrease in net other operating income and expenses
was attributable mainly to the fact that taxes arising in
conjunction with profit and loss transfer agreements
were not allocated to the Group entities involved. Work-
ing in the opposite direction within other operating
income and expenses, fine-tuning of the methodology
used to measure warranties resulted in a higher level of
income from reversals of provisions.
The financial result deteriorated by € 229 million, mainly
as a result of the negative impact of the fair value meas-
urement of designated plan assets for pension and other
non-current personnel-related obligations.
The profit from ordinary activities decreased from
€ 4,797 million to € 3,963 million.
The expense for income taxes relates primarily to current
tax for the financial year 2013. In addition, the first-time
application of IDW Position Statement RS HFA 34 means
that income-tax-related expenses are also now included
in the expense for income taxes.
After deducting the expense for taxes, the Company
reports a net profit of € 2,289 million compared to
€ 3,131 million
in the previous year.
Capital expenditure on intangible assets and property,
plant and equipment in the year under report amounted
to € 3,203 million (2012: € 2,776 million), an increase
of 15.4 %. The main focus of capital expenditure was on
product and infrastructure investments in conjunction
with the production start-up of new models as well as
the acquisition of licences. Depreciation and amortisation
amounted to € 1,732 million (2012: € 1,613 million).
Investments went up from € 3,094 million to € 3,377 mil-
lion, mainly as a result of a capital increase at the level
of BMW Automotive Finance (China) Co., Ltd., Beijing,