BMW 2014 Annual Report Download - page 61

61 COMBINED MANAGEMENT REPORT
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 pro visions 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, provisions and deferred
taxes.
Business environment and review of operations
The general and sector-specific environment in which
the 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 branches,
subsidiaries, independent dealers and importers. In
2014, BMW AG was able to increase its sales volume by
170,869 units to 2,166,772 units. This figure includes
287,466 units relating to series sets supplied to the joint
venture BMW Brilliance Automotive Ltd., Shenyang,
an increase of 72,517 units over the previous year. At
31 December 2014, BMW AG had 80,675 employees,
3,565 more than one year earlier.
Results of operations, financial position and net assets
Revenues increased by 10.1 % compared to the previous
year, driven principally by higher sales volume on the
one hand and the positive impact of the model mix on
the other. In geographical terms, most of the increase
related to Europe and North America. Sales to Group
entities accounted for € 50.7 billion or 76.1 % of total
revenues of € 66.6 billion. Cost of sales developed roughly
in line with revenues, as a result of which gross profit
increased by € 1,380 million to € 14,787 million.
At € 3,533 million, selling expenses were at a similar level
to the previous year (2013: € 3,528 million).
Administrative expenses were 5.5 % up on the previous
year, mainly as a result of higher expenses for centralised
IT activities and new IT projects.
Research and development expenses fell by 4.8 %, mainly
reflecting the production start of various development-
intensive vehicle projects in the previous year. Most of
the expense incurred for research and development ac-
tivities related to new vehicle models, drive systems and
innovative technologies.
The decrease in net other operating income and ex-
penses was attributable mainly to the higher net nega-
tive impact of realised exchange rate factors on the
one hand and to higher allocations to provisions for
commodity and currency hedging contracts on the
other.
The financial result deteriorated yearonyear by € 121 mil-
lion, mainly due to the impairment loss (€ 196 million)
recognised on the investment in SGL Carbon SE,
Wiesbaden, which was written down to its lower mar-
ket value at the end of the reporting period. Higher
interest income and lower interest expenses had a posi-
tive impact.
The profit from ordinary activities increased from
€ 3,963 million to € 5,163 million.
The expense for income taxes relates primarily to cur-
rent tax for the financial year 2014.
After deducting the expense for taxes, the Company
reports a net profit of € 3,229 million compared to
€ 2,289 million in the previous year.
Capital expenditure on intangible assets and property,
plant and equipment in the year under report amounted
to € 3,150 million (2013: € 3,203 million). The main
reason for this 1.7 % decrease was the acquisition of
licences in the previous year. Product investments for
Report on Economic Position
Comments on Financial Statements of BMW AG