BMW 2012 Annual Report Download - page 145

145 GROUP FINANCIAL STATEMENTS
Explanatory notes to segment information
Information on reportable segments
For the purposes of presenting segment information, the
activities of the BMW Group are divided into operating
segments in accordance with IFRS 8 (Operating Seg-
ments). Operating segments are identified on the same
basis that is used internally to manage and report on per-
formance
and takes account of the organisational struc-
ture of the BMW Group based on the various products
and services of the reportable segments.
The activities of the BMW Group are broken down into
the operating segments Automotive, Motorcycles, Finan-
cial Services and Other Entities.
The Automotive segment develops, manufactures, as-
sembles and sells cars and off-road vehicles, under the
brands BMW, MINI and Rolls-Royce as well as spare
parts and accessories. BMW and MINI brand products
are sold in Germany through branches of BMW AG
and by independent, authorised dealers. Sales outside
Germany are handled primarily by subsidiary com-
panies and, in a number of markets, by independent
import companies. Rolls-Royce brand vehicles are sold
in the USA via a subsidiary company and elsewhere
by independent, authorised dealers.
The BMW Motorcycles segment develops, manufac-
tures, assembles and sells BMW and Husqvarna brand
motorcycles as well as spare parts and accessories.
The principal lines of business of the Financial Services
segment are car leasing, fleet business, retail customer
and dealer financing, customer deposit business and in-
surance activities.
Holding and Group financing companies are included
in the Other Entities segment. This segment also
includes operating companies – BMW Services Ltd.,
Bracknell, BMW (UK) Investments Ltd., Bracknell,
Bavaria Lloyd Reisebüro GmbH, Munich, and MITEC
Mikroelektronik Mikrotechnik Informatik GmbH,
Dingolfing – which are not allocated to one of the other
segments.
Eliminations comprise the effects of eliminating
business relationships between the operating seg-
ments.
Internal management and reporting
Segment information is prepared in conformity with
the accounting policies adopted for preparing and pre-
senting the Group Financial Statements. The only ex-
ception to this general principle is the treatment of in-
ter-segment warranties, the earnings impact of which
is allocated to the Automotive and Financial Services seg-
ments on the basis used internally to manage the busi-
ness. Inter-segment receivables and payables, provi-
sions, income, expenses and profits are eliminated in
the column “Eliminations”. Inter-segment sales take
place at arm’s length prices.
The role of “chief operating decision maker” with re-
spect to resource allocation and performance assess-
ment of the reportable segment is embodied in the full
Board of Management. In order to assist the decision-
taking process, various measures of segment profit or
loss and of segment assets have been set for the various
operating segments.
The Automotive and Motorcycles segments are managed
on the basis of the profit before financial result. Capital
employed is the corresponding measure of segment
assets used to determine how to allocate resources. Cap-
ital employed comprises all current and non-current
operational assets of the segment, after deduction of lia-
bilities used operationally which are not subject to inter-
est (e. g. trade payables).
The performance of the Financial Services segment is
measured on the basis of profit or loss before tax. Net
assets, defined as all assets less all liabilities, are used as
the basis for assessing the allocation of resources.
The performance of the Other Entities segment is as-
sessed on the basis of profit or loss before tax. The
corresponding measure of segment assets used to
manage the Other Entities segment is total assets less
tax assets and investments.
BMW Group
Notes to the Group Financial Statements
Segment Information
48