Annual Report 2005

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Annual Report 2005 Annual Report 2005 Driving performance. Rolls-Royce Motor Cars Limited Facts and figures 2005 BMW Group in figures 2 Report of the Supervisory Board 4 Group Management Report 8 A Review of the Financial Year 8 The General Economic Environment 11 Review of operations 15 BMW Stock in 2005 38 Financial Analysis 41 --Group Internal Management System 41 --Earnings performance 42 --Financial position 45 --Net assets position 46 --Subsequent events report 49 --Value added statement 49 --Key performance figures 51 --Comments on Financial Statements of BMW AG 52 Risk Management 56 Outlook 60 Group Financial Statements 62 Group and sub-group Income Statements 63 Group and sub-group Balance Sheets 64 Group and sub-group Cash Flow Statements 66 Group Statement of Changes in Equity 68 Statement of Income and Expenses recognised directly in Equity 69 Notes to the Group Financial Statements 70 --Accounting Principles and Policies 70 --Notes to the Income Statement 81 --Notes to the Balance Sheet 90 --Other Disclosures 114 --Segment Information 121 Auditors’ Report 125 Corporate Governance 126 Members of the Supervisory Board 126 Members of the Board of Management 129 Corporate Governance in the BMW Group 130 Principles for the compensation of the Board of Management and Supervisory Board 131 Declaration of the Board of Management and of the Supervisory Board pursuant to §161 AktG 133 Other Information 134 BMW AG Principal Subsidiaries 134 BMW Group 10-year Comparison 136 BMW Group Locations 138 Glossary 140 Index 144 Contacts 146 Financial Calendar 147 BMW Group Revenues BMW Group Capital expenditure in euro billion in euro million 46.7 50 44.3 5,000 42.4 4,245 4,347 45 41.5 4,500 4,042 38.5 3,993 40 4,000 3,516 35 3,500 30 3,000 25 2,500 20 2,000 15 1,500 01 02* 03 04 05 01 02 03 04 05 * reclassified after harmonisation of internal and external reporting systems BMW Group Deliveries of automobiles BMW Group Profit before tax in thousand in euro million 1,400 1,328.0 4,000 3,583 3,242 3,297 3,205 3,287 1,300 1,208.7 3,500 1,200 1,104.9 3,000 1,057.3 1,100 2,500 1,000 905.7 2,000 900 1,500 800 1,000 700 500 01 02 03 04 05 01 02 03 04* 05 * adjusted for new accounting treatment of pension obligations A portrait of the Company Bayerische Motoren Werke G.m.b.H. came into The BMW Group aims to generate profitable being in 1917, having been founded in 1916 as growth and above-average returns by focusing on Bayerische Flugzeugwerke AG (BFW); it became the premium segments of the international auto- a stock corporation (Aktiengesellschaft) in 1918. mobile markets. With this in mind, a wide-ranging Today, the BMW Group is one of the ten largest product and market initiative was launched back in car manufacturers in the world and possesses, with 2001, which has resulted, over the past years, in its BMW, MINI and Rolls-Royce brands, three of the the BMW Group expanding its product range con- strongest premium brands in the car industry. The siderably and strengthening its worldwide market BMW Group also has a strong market position in the position. The BMW Group will continue in this vein motorcycle sector and operates successfully in the in the coming years. area of financial services. BMW Group in figures 2001 2002 2003 2004 2005 Change in % Vehicle production BMW 904,335 930,221 944,072 1,059,978 1,122,308 5.9 MINI 42,395 160,037 174,366 189,492 200,119 5.6 Rolls-Royce – – 502 875 692 – 20.9 Motorcycles1] 90,478 93,010 89,745 93,836 92,012 –1.9 Deliveries to customers BMW 880,677 913,225 928,151 1,023,583 1,126,768 10.1 MINI 24,980 144,119 176,465 184,357 200,428 8.7 Rolls-Royce – – 300 792 796 0.5 Motorcycles 2] 84,713 92,599 92,962 92,266 97,474 5.6 Workforce at end of year 3] 97,275 101,395 104,342 105,9724] 105,798 – 0.2 in euro million 2001 2002 2003 2004 2005 Change in % Revenues 38,463 42,4115] 41,525 44,335 46,656 5.2 Capital expenditure 3,516 4,042 4,245 4,347 3,993 – 8.1 Depreciation and amortisation 2,159 2,143 2,370 2,672 3,025 13.2 Cash flow 7] 4,202 4,374 4,490 5,1876] 5,602 8.0 Operating cash flow 7] 4,304 4,553 4,970 6,157 6,184 0.4 Profit before tax 3,242 3,297 3,205 3,5836] 3,287 – 8.3 Net profit 1,866 2,020 1,947 2,2426] 2,239 – 0.1 1] excluding C1, total production of the C1 to 2002: 33,489 units 2] excluding C1, sales volume to 2003: 32,859 units 3] Figures exclude suspended contracts of employment, employees in the work and non-work phases of pre-retirement part-time arrangements and low income earners. 4] Including acquired entities, the comparable number of employees was 106,322 employees at 31 December 2004. 5] reclassified after harmonisation of internal and external reporting systems 6] adjusted for new accounting treatment of pension obligations 7] In its financial statements for 2005, the BMW Group has brought the computation of cash flow into line with standards normally applied on the financial markets. In future, the Group will disclose both the figure for the simplified definition of cash flow used to date and operating cash flow; the latter corresponds to the cash flow from industrial operations reported in the cash flow statement. A definition of the two cash flow terms is also provided in the glossary on page 140. 3 Report of the Supervisory Board Ladies and Gentlemen, financial position, personnel situation, corporate strategies, risk profile and management and selected Throughout the financial year 2005, the Supervisory strategic projects. Decisions of particular importance Board, with the aid of written and oral reports pro- to the enterprise were discussed in-depth with the vided by the Board of Management and in ensuing Board of Management and, where required by law, joint discussions, closely followed the progress of company statutes or Supervisory Board resolution, the BMW Group, continuously assessing the gover- approved appropriately. Outside the framework of nance of the Board of Management, both in terms formal meetings, and ahead of forthcoming meet- of efficiency and compliance with legal requirements. ings, the Board of Management kept the Super- visory Board informed on a regular and timely basis The Supervisory Board was almost complete at each of current developments and significant transac- of its five meetings. Using the detailed and compre- tions. The Chairman of the Board of Management hensive reports prepared by the Board of Manage- also kept the Chairman of the Supervisory Board up ment, it discussed and provided advice on a range to date personally with all significant developments of issues relating to the BMW Group’s business and and projects. Joachim Milberg, Chairman of the Supervisory Board 4 Once again, the Supervisory Board focused its The two boards also debated the further expansion attention in 2005 on the Board of Management’s of the BMW Group’s market presence, including, activities aimed at the premium segments of the for example, the establishment of a production and automobile markets. Thanks to upfront investments sales company in India. made in previous years and the current sales volume performance, the BMW Group has further strength- Written and oral reports provided by the Board of ened its financial position and market presence.The Management also enabled the Supervisory Board Supervisory Board fully supports the decision taken to keep abreast of competitors’ activities in the main by the Board of Management to press on with the markets, the development of raw material prices, product offensive by introducing two new and stand- the exchange rate of the euro against the US dollar alone model series, thus enhancing the Group’s and other major currencies, the currency manage- market position and enabling it to exploit further ment strategies applied by the BMW Group and the growth and earnings potential and to increase the impact of all of these factors on business develop- value of the business. ment. The Supervisory Board also followed the introduc- The Supervisory Board fully endorsed the proposal tion of the new BMW 3 Series in 2005 with great put forward to the shareholders at the Annual interest and concluded that the model change of the General Meeting 2005 to authorise the Board of bestselling BMW model series had been executed Management to buy back treasury shares and with- successfully. The Supervisory Board took apprecia- draw them from circulation, thus underlining the tive note of sales volume figures achieved in 2005 fact that the enterprise is also geared to shareholder by the new model series introduced in 2004, namely interests. the BMW X3, BMW 1 Series, BMW 6 Series and MINI Cabrio, all of which were available on the mar- The Supervisory Board obtained information about kets for their first full year. The success enjoyed by the impact of global demographic changes on the these new models and the sharp increase in unit BMW Group, in particular in Germany and, together sales overall by the BMW Group are, in the eyes of with the Board of Management, deliberated on ways the Supervisory Board, clear evidence of the future of moving forward with its employee and product- viability of the strategy pursued by the Board of related policies.
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