BMW 2006 Annual Report Download - page 51

50 Group Management Report
10 Group Management Report
10 A Review of the Financial Year
12 General EconomicEnvironment
15 Review of operations
38 BMW Stock and Bonds
41 Disclosures pursuant to §289 (4)
and §315 (4) HGB
43 Financial Analysis
43 – Internal Management System
44 – Earnings performance
46 – Financial position
48 – Net assets position
50 – Subsequent events report
50 – Value added statement
53 – Key performance figures
54 – Comments on BMW AG
58 Risk Management
62 Outlook
Financial assets increased by19.8% to euro
3,950 million, mainly as a result of higher fair values
of derivative financial instruments.
Liquid funds fell by 8.8 % to euro 3,370 million.
Whereas marketable securities were roughly at
the previous year’s level, cash and cash equivalents
decreased by euro 285 million compared to one
year earlier.
On the equity and liabilities side of the balance
sheet, equity grew by12.7% to euro 19,130 million.
The profit for the year attributable to shareholders
of BMW AG increased equity by euro 2,868 million.
Fair value changes recognised directly in other accu-
mulated equity reduced equity by euro 43 million
(2005: reduction of euro 875 million). This was the
result of translation differences and the fair value
measurement of financial instruments and available-
for-sale securities. In addition, the increase in dis-
count factors applied in Germany and the United
Kingdom in 2006 gave rise to actuarial gains totalling
euro 515 million. In the previous year, actuarial losses
of euro 736 million had been recognised as a result
of lower interest rates. The dividend payment for
the financial year 2005 and the buy-back of shares
in the first quarter 2006 reduced equity by a further
euro 672 million. Minority interest amounted to
euro 4 million. Overall, the equity ratio of the BMW
Group improved by 1.4 percentage points to
24.2%.
The equity ratio for Industrial operations was
40.6% compared to 39.1% at the end of the pre-
vious year. The equity ratio for Financial operations
remained at 10.4 %.
The amount recognised in the balance sheet
for pension obligations decreased by 4.5% to euro
5,017 million. Following the change in accounting
policy for pension obligations in the previous year,
the amount reported under pension provisions cor-
responds to the full defined benefit obligation (DBO).
In the case of pension plans with fund assets, the
fair value of fund assets is offset against the defined
benefit obligation. The decrease in pension obliga-
tions was attributable principally to the fact that
higher discount factors were applied in Germany
and the United Kingdom.
Other provisions decreased by 6.3% to euro
5,536 million, mainly due to lower obligations for
on-going operational expenses. The main factor
here was the reduction in warranty provisions. Pro-
visions for other obligations were also lower. By con-
trast, personnel-related obligations increased by
euro 138 million.
Deferred tax liabilities increased by 9.4% to
euro 2,758 million, primarily as a result of the higher
level of capitalised development costs.
Financial liabilities increased by 5.2% to euro
36,456 million. Within financial liabilities, bonds in-
creased by 8.3% to euro 16,420 million, mainly as
a result of the higher volume of the medium term
note programme. Liabilities to banks and obligations
under asset-backed financing transactions were
also up, whereas liabilities from customer deposits
(banking) were down by 9.6%.
Trade payables amounted to euro 3,737 million
and were thus 5.4% higher than one year earlier.
Other liabilities totalling euro 5,856 million were
up by 11.8 %.This was mainly attributable to the in-
crease in other taxes and in deferred income relating
to service and repair agreements.
Compensation Report
The compensation of the Board of Management
comprises fixed and variable remuneration compo-
nents. In addition, benefits are also payable at the
end of members’ mandates, primarily in the form of
pension benefits. Further details, including an analy-
sis of remuneration by individual, are disclosed in
the Compensation Report which can be found in
the “Corporate Governance” section of the Annual
Report on pages121 to 124. The Compensation
Report is a sub-section of the Management Report.
Subsequent events report
No events have occurred after the balance sheet date
which could have a major impact on the earnings
performance, financial position and nets assets of
the BMW Group.