BMW 2015 Annual Report Download - page 60

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18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
27 Overall Assessment by Management
27
Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
59 Comments on Financial Statements
of BMW AG
62 Events after the End of the
Reporting Period
63 Report on Outlook, Risks and
Opportunities
63 Outlook
68 Report on Risks and Opportunities
81 Internal Control System and Risk
Management System Relevant for the
Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87
BMW Stock and Capital Markets
At € 3,427 million, selling expenses were slightly lower
than one year earlier (2014: € 3,533 million).
Administrative expenses went up by 15.5 % to € 2,610 mil-
lion, mainly as a result of new IT projects and the higher
workforce size.
Research and development expenses related mainly to
new vehicle models (including relevant expenses relat-
ing to the start-up of the new 7 Series), the development
of drive systems and work on other innovations. Over-
all, research and development expenses increased by
14.6 % year-on-year.
The net positive amount of other operating income and
expenses improved by € 156 million to € 184 million,
and included primarily realised exchange rate gains and
losses as well as reversals of and allocations to provisions.
The financial result deteriorated by € 594 million, mainly
as a result of lower gains on the fair value measurement
of designated plan assets and the reduction in the dis-
count
interest rate used in conjunction with pension and
other non-current personnel provisions. Lower write-
downs on investments worked in the opposite direction.
The profit from ordinary activities decreased from
€ 5,163 million to € 4,572 million.
The expense for income taxes relates primarily to cur-
rent
tax for the financial year 2015.
After deducting the expense for taxes, the Company
reports a net profit of € 2,741 million, compared to
€ 3,229 million in the previous year.
Financial and net assets position
Capital expenditure on intangible assets and property,
plant and equipment in the year under report amounted
to € 2,748 million (2014: € 3,150 million), down by 12.8 %
compared to the previous year. Depreciation and amor-
tisation amounted to € 2,072 million (2014: € 1,890 mil-
lion).
At € 3,250 million, the carrying amount of investments
was similar to one year earlier (2014: € 3,236 million).
Inventories increased to € 4,267 million (2014: € 3,859 mil-
lion) due to higher business volumes generally and
stocking up in conjunction with the introduction of new
models.
Receivables from subsidiaries climbed by € 1,029 million
to € 6,229 million, largely in conjunction with intragroup
financing receivables.
The decrease in other receivables and other assets to
€ 1,820 million (2014: € 2,502 million) was mainly at-
tributable to a lower volume of genuine repurchase
(repo) transactions in place at the end of the reporting
period and lower tax receivables.
Liquidity within the BMW Group is managed centrally by
BMW AG on the basis of a group-wide liquidity concept,
which revolves around the strategy of concentrating a
significant part of the Group’s liquidity at the level of
BMW AG. An important instrument used to achieve this
aim is the cash pool headed by BMW AG. The liquidity
position reported by BMW AG therefore reflects the
global activities of BMW AG and other Group companies.
Cash and cash equivalents went down by € 595 million
to € 2,478 million. This decrease over the twelve-month
period was mainly due to the increase in funds invested
in marketable securities as a strategic liquidity reserve.
At the same time, intragroup refinancing volumes at the
level of BMW AG were also reduced.
Equity rose by € 861 million to € 12,927 million, while the
equity ratio improved from 35.2 % to 37.0 %.
In order to secure obligations resulting from pre-
retire-
ment part-time working arrangements and pension obli-
gations, investments in fund assets totalling € 496 million
were transferred to BMW Trust e.V., Munich, in con-
junction with a Contractual Trust Arrangement (CTA).
Fund assets are offset against the related guaranteed ob-
ligations. The resulting surplus of assets over liabilities
is reported in the BMW AG balance sheet on the line “Sur-
plus
of pension and similar plan assets over liabilities”.
Pension provisions, net of designated plan assets, in-
creased from € 12 million to € 82 million.
The increase in other provisions related mainly to sales-
related obligations, pending losses on commodity and
currency contracts, warranties and personnel-related
obligations.