BMW 2006 Annual Report Download - page 112

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Segment information
Description of business segments
In accordance with the rules contained in IAS 14
(Segment Reporting), the BMW Group presents
segment information using business segments as
its primary reporting format and geographical seg-
ments as its secondary reporting format. This
distinction is based on internal management and
financial reporting systems and reflects the risk and
earnings structure of the Group.
The activities of the BMW Group are broken
down into the segments Automobiles, Motorcycles
and Financial Services.
The Automobiles segment develops, manu-
factures, assembles and sells cars and off-road vehi-
cles, under the brands BMW, MINI and Rolls-Royce
as well as spare parts and accessories.
BMW and MINI brand products are sold in Ger-
many through branches of BMW AG and by
inde-
pendent, authorised dealers. Sales outside Germany
are handled primarily by subsidiary companies and,
in a number of markets, by independent import com-
panies. Rolls-Royce brand vehicles are sold in the
USA via a subsidiary company and elsewhere by in-
dependent, authorised dealers.
The BMW Motorcycles segment develops,
manufactures, assembles and sells BMW brand mo-
torcycles as well as spare parts and accessories.
The Financial Services segment focuses prima-
rily on car leasing, fleet business, retail customer
and dealer financing, customer deposit business
and insurance activities. The profit before financial
result of this segment includes net interest income
on retail customer and dealer financing business and
the result of lease business. Leased products are
carried at acquisition cost less straight-line deprecia-
tion down to the imputed residual value of the vehi-
cles. Leased products are written down to their fair
value where this is lower. Inter-group profits on own
products are eliminated on consolidation and in-
cluded
in the Reconciliations to the Group profit be-
fore tax.
Reconciliations to the Group profit before for the
Group include holding companies, group financing
companies and income and expenses not specifi-
cally attributable to the business segments. Recon-
ciliations also include certain operating companies
which are not allocated to segments, namely BMW
Services Ltd., Bracknell, BMW (UK) Investments Ltd.,
Bracknell, and the softlab Group.
Other explanatory comments on segment
information
Segment information is generally prepared in
conformity with the accounting policies adopted for
preparing and presenting the Group financial state-
ments. Inter-segment receivables and payables,
provisions, income, expenses and profits are elimi-
nated in Reconciliations. Inter-segment sales take
place at arm’s length prices.
Significant non-cash items comprise mainly
changes in provisions, write-downs, reversal of
write-downs and depreciation on leased products.
Capital expenditure comprises additions to
property, plant and equipment and intangible assets.
Segment assets and segment liabilities com-
prise all assets and liabilities employed by the rele-
vant business segment to generate the profit before
financial result.
The return on sales for each segment is based
on the profit before tax.
Internal financing is computed as the profit be-
fore tax activities adjusted for depreciation and signif-
icant non-cash items and less actual tax payments.
In the case of segment information by geo-
graphical region, external sales are based on the lo-
cation of the customer’s registered office. Segment
information is provided for the regions Germany,
rest of Europe, the Americas and Africa, Asia and
Oceania, in line with internal management and re-
porting procedures.
BMW Group
Notes to the Group Financial Statements
Segment Information
[45]