Financial Statements of BMW AG Financial Year 2004 ?· Balance Sheet at 31 December 4 Income Statement…

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  • Financial Statements of BMW AGFinancial Year 2004

    Rolls-RoyceMotor Cars Limited

  • BMW AG in figures 2Balance Sheet at 31 December 4Income Statement 5Notes 6Auditors Report 19Members of the Supervisory Board 20Members of the Boardof Management 23Principal Subsidiaries BMW AG 24BMW AG 10-year Comparison 26

    2

    BMW AGin figures

    2004 2003 Changein %

    Revenues euro million 40,597 36,881 10.1

    Export ratio % 72.5 72.8

    Production

    Automobiles units 1,250,345 1,118,940 11.7

    Motorcycles units 93,836 89,745 4.6

    Sales volume

    Automobiles units 1,241,659 1,117,267 11.1

    Motorcycles units 91,797 93,625 2.0

    Capital expenditure euro million 2,321 2,293 1.2

    Depreciation and amortisation euro million 1,535 1,322 16.1

    Workforce at year-end 77,252 75,969 1.7

    of which wage-earners 41,741 41,933 0.5

    of which salary-earners 29,532 28,404 4.0

    Non-current assets euro million 10,893 11,386 4.3

    Current assets and prepayments euro million 8,910 8,096 10.1

    Subscribed capital euro million 674 674

    Reserves euro million 4,516 4,188 7.8

    Equity euro million 5,609 5,254 6.8

    as % of non-current assets % 51.5 46.1

    Long-term liabilities1] euro million 3,849 2,834 35.8

    Long-term equity and liabilities2] euro million 9,458 8,088 16.9

    as % of non-current assets % 86.8 71.0

    Balance sheet total euro million 19,803 19,482 1.6

    Cost of materials euro million 29,501 26,190 12.6

    Personnel costs euro million 5,888 5,398 9.1

    Taxes euro million 327 118

    Net profit euro million 747 392 90.6

    Dividend euro million 4193] 392 6.9

    per share of common stock with a par value of euro 1 each euro 0.623] 0.58

    per share of preferred stock with a par value of euro 1 each euro 0.643] 0.60

    1] Registered profit-sharing certificates, pension provision, liability to BMW Untersttzungsvereins e.V., liabilities falling due later than one year2] Equity, long-term liabilities3] Proposed by the Board of Management

  • 3

    The BMW AG Financial Statements and Manage-ment Report for the financial year 2004 are publishedin the German Federal Gazette and filed with theTrade Register of the Munich District Court. TheManagement Report of BMW AG is combined withthe Group Management Report and published inthe BMW Group Annual Report 2004.

    BMW AGFinancial Statements

  • BMW AG in figures 2Balance Sheet at 31 December 4Income Statement 5Notes 6Auditors Report 19Members of the Supervisory Board 20Members of the Boardof Management 23Principal Subsidiaries BMW AG 24BMW AG 10-year Comparison 26

    4

    BMW AGBalance Sheet at 31 December

    in euro million Notes 2004 2003

    ASSETS

    Intangible assets [1] 67 67

    Property, plant and equipment 6,052 5,298

    Financial assets [2] 4,774 6,021

    Non-current assets 10,893 11,386

    Inventories [3] 2,925 2,428

    Trade receivables [4] 896 1,190

    Receivables from subsidiaries [4] 1,019 969

    Other receivables and other assets [4] 1,616 1,607

    Marketable securities [5] 1,395 1,353

    Cash and cash equivalents [6] 982 439

    Current assets 8,833 7,986

    Prepayments 77 110

    19,803 19,482

    EQUITY AND LIABILITIES

    Subscribed capital [7] 674 674

    Capital reserves [8] 1,971 1,971

    Revenue reserves [9] 2,545 2,217

    Unappropriated profit available for distribution 419 392

    Equity 5,609 5,254

    Registered profit-sharing certificates [10] 35 36

    Pension provisions 3,289 2,479

    Other provisions 7,002 6,777

    Provisions [11] 10,291 9,256

    Liabilities to banks 500 299

    Trade payables 1,355 1,168

    Liabilities to subsidiaries 1,403 3,269

    Other liabilities 571 200

    Liabilities [12] 3,829 4,936

    Deferred income 39

    19,803 19,482

  • 5

    BMW AGIncome Statement

    in euro million Notes 2004 2003

    Revenues [13] 40,597 36,881

    Cost of sales 34,842 31,751

    Gross profit 5,755 5,130

    Sales costs 2,685 2,247

    Administrative costs 876 775

    Research and development costs 2,666 2,419

    Other operating income and [14]

    expenses [15] 993 873

    Result from investments [16] 636 2

    Net interest expense [17] 83 50

    Profit from ordinary activities 1,074 510

    Income taxes 326 109

    Other taxes 1 9

    Net profit 747 392

    Transfer to revenue reserves [18] 328

    Unappropriated profit available for distribution 419 392

  • BMW AG in figures 2Balance Sheet at 31 December 4Income Statement 5Notes 6Auditors Report 19Members of the Supervisory Board 20Members of the Boardof Management 23Principal Subsidiaries BMW AG 24BMW AG 10-year Comparison 26

    6

    BMW AGNotes to the Financial StatementsAnalysis of Changes in non-current Assets in 2004

    Intangible assets 518 48 345 221

    Land, titles to land, buildings,

    including buildings on third party land 2,142 177 300 15 2,604

    Plant and machinery 12,408 1,658 593 596 14,063

    Other facilities, factory and

    office equipment 1,101 158 7 125 1,141

    Advance payments made and

    construction in progress 1,039 280 900 1 418

    Property, plant and equipment 16,690 2,273 737 18,226

    Investment in subsidiaries 8,398 3,636 4,762

    Investment in other companies 16 16

    Other non-current loans receivable 1 1

    Financial assets 8,415 3,636 4,779

    Non-current assets 25,623 2,321 4,718 23,226

    in euro million Acquisition and manufacturing cost

    1.1.2004 Additions Reclassifi- Disposals 31.12.2004cations

  • 7

    451 48 345 154 67 67

    1,094 58 10 1,142 1,462 1,048

    9,388 1,302 576 10,114 3,949 3,020

    910 127 119 918 223 191

    418 1,039

    11,392 1,487 705 12,174 6,052 5,298

    2,389 2,389 4,762 6,009

    4 4 12 12

    1 1

    2,394 2,389 5 4,774 6,021

    14,237 1,535 3,439 12,333 10,893 11,386

    Depreciation and amortisation Net book values

    1.1.2004 Current year Disposals 31.12.2004 31.12.2004 31.12.2003

  • BMW AG in figures 2Balance Sheet at 31 December 4Income Statement 5Notes 6Auditors Report 19Members of the Supervisory Board 20Members of the Boardof Management 23Principal Subsidiaries BMW AG 24BMW AG 10-year Comparison 26

    8

    In order to improve clarity, individual items are aggre-gated in the balance sheet and income statementand presented separately in the notes to the financialstatements.

    Purchased intangible assets are valued at ac-quisition cost and amortised over their estimateduseful lives using the straight-line method.

    Property, plant and equipment are stated at ac-quisition or at manufacturing cost based on taxregulations, less accumulated depreciation. Depre-ciable items of property, plant and equipment witha useful life of more than five years are depreciatedas a general rule using the reducing balance methodand the highest rates permitted for tax purposes.The Company applies straight-line depreciation assoon as this gives rise to a higher depreciation ex-pense. Expenditure on low value non-current assetsis written off in full in the year of acquisition.TheCompany applies all special depreciation permittedunder German tax legislation.

    Factory and office buildings, and distributionfacilities which form an inseparable part of suchbuildings, are depreciated over 8 to 33 years, resi-dential buildings over 25 to 50 years, plant andmachinery over 5 to 10 years and other facilities,factory and office equipment mainly over 5 years.For machinery used in multiple-shift operations,depreciation rates are increased to account for theadditional utilisation.

    Investments in subsidiaries and in other com-panies are stated at cost or, if lower, at fair value.When the reasons for an impairment no longer exist,impairment losses previously recorded are reversedin accordance German accounting law, at a maxi-mum up to the level of original cost. Loans whichbear no or below market rate of interest are dis-counted to their present value.

    Inventories of raw materials, supplies and goodsfor resale are stated at the lower of cost and netrealisable value. Work in progress and finishedgoods are stated at direct material and manufactur-ing cost. Write-downs are made to cover risks aris-ing from slow-moving items or reduced saleability.Leased products are stated at direct material andmanufacturing cost plus an appropriate portion ofmaterial and production overheads, and depreciatedusing the reducing balance method and the highestrates permitted for tax purposes.

    Receivables and other assets are stated at theirnominal value or, if lower, at their net realisable value.

    Investments in marketable securities are statedat the lower of cost and net realisable value at thebalance sheet date.

    Provisions for pensions and similar obligationsare measured using the projected unit credit methodin accordance with IAS 19 (Employee Benefits) ap-plying an interest rate of 4.75%. The computationis based on assumptions set out in the biometrictables of Prof. Dr. Klaus Heubeck (RT 98).The effectof future increases in pensions and salaries and as-sumptions about fluctuation are taken into account.For reasons of consistency, the provision for long-service awards is measured using the same method.Other provisions are recognised to take account ofall identified risks. In addition, provisions are recog-nised for deferred expenditure.

    Liabilities are stated at their repayment amountat the balance sheet date.

    Foreign currency assets and liabilities are trans-lated at exchange rates prevailing on the date of thetransaction. Foreign currency balance sheet itemsare generally hedged; any unhedged losses arisingfrom changes in exchange rates are recognised byrestating the foreign currency amount in the balancesheet to the closing rate.

    The Company is exposed to risks relating tochanges in interest rates and exchange rates onunderlying and forecast transactions. These risks arehedged by derivative financial instruments. Provisionsare recognised where there is no hedge or where ahedge does not fully cover the risk. Provisions arealso recognised for negative fair values of derivativefinancial instruments unless the hedged item andhedge contract can be treated as a valuation unit.

    Revenues from the sale of vehicles to car rentalcompanies are not recognised when there is anobligation to take back the vehicles. Based on thedraft financial reporting pronouncement SpecificIssues relating to Transfer of Economic Ownershipand Profit Realisation in accordance with HGB(IDW ERS HFA 13) dated 1 July 2004 issued by theGerman Institute of Public Accountants (IDW) andapplied for the first time by BMW AG, vehicles re-main on the balance sheet, measured at amortisedcost, because, on the basis of the criteria set outin the pronouncement, economic ownership has notbeen transferred to the car rental companies.

    BMW AGNotes to the Financial StatementsAccounting Policies and Principles

  • 9

    Intangible assets comprise mainly purchased soft-ware, franchises and licenses.

    Disposals of investments in subsidiaries relate mainlyto the sale of BMW (UK) Holdings Ltd., Bracknell,to BMW Holding B.V., The Hague, and the sale ofshares in BMW de Argentina S.A., Buenos Aires,

    and BMW do Brasil Ltda., Sao Paulo, to BMW EspaaFinance S.L., Madrid.

    The list of investments of BMW AG is shown onpages 24 and 25.

    BMW AGNotes to the Financial StatementsNotes to the Balance Sheet

    [1] Intangible assets

    [2] Financial assets

    [3] Inventories in euro million 31.12.2004 31.12.2003

    Raw materials and supplies 451 408

    Work in progress, unbilled contracts 187 155

    Finished goods and goods for resale 2,114 1,707

    Leased products 173 158

    2,925 2,428

    [4] Receivables andother assets

    in euro million 31.12.2004 31.12.2003

    Trade receivables 896 1,190

    Receivables from subsidiaries 1,019 969

    Other receivables and other assets:

    Receivables from other companies in which an investment is held 251 291

    Other assets 1,365 1,316

    thereof due later than one year: euro 76 million (2003: euro 982 million)

    1,616 1,607

    3,531 3,766

    Other marketable securities include shares insecurities funds and variable and fixed interestsecurities.

    The deferred remuneration retirement schemecomprises remuneration of employees which hasbeen converted into pension entitlements and in-vested in investment funds.

  • BMW AG in figures 2Balance Sheet at 31 December 4Income Statement 5Notes 6Auditors Report 19Members of the Supervisory Board 20Members of the Boardof Management 23Principal Subsidiaries BMW AG 24BMW AG 10-year Comparison 26

    10

    Other marketable securities include shares in securi-ties funds and variable and fixed interest securities.The deferred remuneration retirement scheme

    The capital stock of BMW AG, amounting to euro674.4 million, comprises 622,227,918 shares of com-mon stock with a par value of euro1 and 52,196,162non-voting shares of preferred stock with a par value

    comprises remuneration of employees which hasbeen converted into pension entitlements and in-vested in investment funds.

    of euro 1. The preferred stock bears an advanceprofit (additional dividend) of euro 0.02 per share.All of the Companys stock is issued in the form ofbearer shares.

    [5] Marketable securities

    [6] Cash and cashequivalents

    [7] Subscribed capital

    [8] Capital reserves

    in euro million 31.12.2004 31.12.2003

    Other marketable securities 1,231 1,238

    Deferred remuneration retirement scheme 164 115

    1,395 1,353

    in euro million 31.12.2004 31.12.2003

    Capital reserves

    Balance brought forward 1,971 1,954

    Additional paid-in capital arising on capital increase 17

    1,971 1,971

    in euro million 31.12.2004 31.12.2003

    Cash on hand and at bank 982 439

    [9] Revenue reserves in euro million 31.12.2004 31.12.2003

    Statutory reserves 1 1

    Other revenue reserves

    Balance brought forward 2,216 2,216

    Transfer from net profit 328

    2,544 2,216

    2,545 2,217

  • 11

    Up to 1989, employees were entitled to subscribe toregistered profit-sharing certificates in conjunctionwith a wealth accumulation scheme for employees.This was replaced by the current scheme to sub-scribe to preferred stock.

    Pension provisions comprise euro 2,229 million forvested pension entitlements and euro 885 million forcurrent pensions. A further euro 175 million relatesto the deferred remuneration retirement scheme. Allpension obligations of BMW AG are fully covered byprovisions.

    Other provisions comprise mainly obligationsfor warranties, personnel-related expenses, dealerbonuses, outstanding invoices from suppliers, risks

    The return of registered profit-sharing certifi-cates by employees resulted in a decrease of theoutstanding amount by euro 1.0 million.

    relating to the Land Rover disengagement, collec-tion and recycling of end-of-life vehicles and manu-facturers liability.

    Provisions also relate to risks from legal disputes,guarantees and maintenance obligations. In addition,the Company also recognises provisions for main-tenance expenses deferred to within the first threemonths of the new financial year and a provision formajor overhauls.

    [10] Registered profit-sharing

    certificates

    [11] Provisions in euro million 31.12.2004 31.12.2003

    Pension provisions 3,289 2,479

    Taxes 118 127

    Other provisions 6,884 6,650

    10,291 9,256

    [12] Liabilities 31 December 2004 2004 2004 2003in euro million thereof due thereof due

    within later than one year five years

    Liabilities to banks 500 213 299

    Trade payables 1,355 1,346 1,168

    Liabilities to subsidiaries 1,403 1,403 3,269

    Other liabilities

    Advance payments received on orders 18 18 6

    Liabilities to

    BMW Untersttzungsverein e.V. 5 5 5

    Sundry other liabilities 548 537 189

    thereof euro 388 million secure...

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