ANNUAL REPORT
2014
innovative
successful
sustainable
profi table
forward-looking
s
t
n
e
t
n
o
C
3
BMW GROUP IN FIGURES
6
REPORT OF THE SUPERVISORY BOARD
14
18
18
23
65
82
83
87
90
90
90
92
94
96
98
STATEMENT OF THE CHAIRMAN OF THE
BOARD OF MANAGEMENT
Business Model
Management System
COMBINED MANAGEMENT REPORT
General Information on the BMW Group
18
20
Report on Economic Position
23
26
26
29
49
General and Sector-specific Environment
Overall Assessment by Management
Financial and Non-financial Performance Indicators
Review of Operations
Results of Operations, Financial Position and
Net Assets
Comments on Financial Statements of BMW AG
Events after the End of the Reporting Period
Outlook
Report on Risks and Opportunities
61
64
Report on Outlook, Risks and Opportunities
65
70
Internal Control System and Risk Management System
Relevant for the Consolidated Financial Reporting
Process
Disclosures Relevant for Takeovers
BMW Stock and Capital Markets in 2014
GROUP FINANCIAL STATEMENTS
Income Statements for Group and Segments
Statement of Comprehensive Income for Group
Balance Sheets for Group and Segments
Cash Flow Statements for Group and Segments
Group Statement of Changes in Equity
Notes to the Group Financial Statements
98
116
123
124
149
165
Accounting Principles and Policies
Notes to the Income Statement
Notes to the Statement of
Comprehensive Income
Notes to the Balance Sheet
Other Disclosures
Segment Information
170
170
171
172
173
176
178
183
184
189
STATEMENT ON CORPORATE GOVERNANCE (§ 289 a HGB)
(Part of the Combined Management Report)
Information on the Company’s Governing Constitution
Declaration of the Board of Management
and of the Supervisory Board pursuant to § 161 AktG
Members of the Board of Management
Members of the Supervisory Board
Composition and Work Procedures of the Board of
Management of BMW AG and its Committees
Composition and Work Procedures of the Supervisory Board
of BMW AG and its Committees
Information on Corporate Governance Practices
Applied beyond Mandatory Requirements
Compliance in the BMW Group
Compensation Report
198
Responsibility Statement by the
Company’s Legal Representatives
199
Auditor’s Report
200
200
202
204
206
208
209
OTHER INFORMATION
BMW Group Ten-year Comparison
BMW Group Locations
Glossary
Index
Financial Calendar
Contacts
3
BMW Group in figures
2010
2011
2012
2013
2014
Change in %
Principal non-financial performance indicators
BMW Group
Workforce at end of year 1
Automotive segment
Sales volume2
Fleet emissions in g CO2 / km3
Motorcycles segment
Sales volume 4
95,453
100,306
105,876
110,351
116,324
5.4
1,461,166
1,668,982
1,845,186
1,963,798
2,117,965
148
145
143
133
130
7.9
– 2.3
98,047
104,286
106,358
115,215
123,495
7.2
Further non-financial key performance figures
Automotive segment
Sales volume
BMW 2
MINI
Rolls-Royce
Total 2
Production volume
BMW 5
MINI
Rolls-Royce
Total 5
Motorcycles segment
Production volume6
BMW
Financial Services segment
1,224,280
1,380,384
1,540,085
1,655,138
1,811,719
234,175
2,711
285,060
3,538
301,526
3,575
305,030
3,630
302,183
4,063
1,461,166
1,668,982
1,845,186
1,963,798
2,117,965
1,236,989
1,440,315
1,547,057
1,699,835
1,838,268
241,043
3,221
294,120
3,725
311,490
3,279
303,177
3,354
322,803
4,495
1,481,253
1,738,160
1,861,826
2,006,366
2,165,566
9.5
– 0.9
11.9
7.9
8.1
6.5
34.0
7.9
99,236
110,360
113,811
110,127
133,615
21.3
New contracts with retail customers
1,083,154
1,196,610
1,341,296
1,471,385
1,509,113
2.6
1 Figures exclude suspended contracts of employment, employees in the non-work phases of pre-retirement part-time arrangements and low income earners.
2 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2010: 53,701 units, 2011: 94,400 units, 2012: 141,165 units, 2013: 198,542 units, 2014: 275,891 units).
3 EU-28.
4 Excluding Husqvarna, sales volume up to 2013: 59,776 units.
5 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2010: 55,588 units, 2011: 98,241 units, 2012: 150,052 units, 2013: 214,920 units, 2014: 287,466 units).
6 Excluding Husqvarna, production up to 2013: 59,426 units.
4
BMW Group in figures
Principal financial performance indicators
2010
2011
2012
2013
2014
Change in %
BMW Group
Profit before tax
Automotive segment
Revenues
EBIT margin
RoCE
Motorcycles segment
€ million
4,853
7,383
7,803
7,8931
8,707
10.3
€ million
54,137
63,229
70,208
% (change in %pts)
% (change in %pts)
8.0
40.2
11.8
77.3
10.8
73.7
70,6301
75,173
9.4
63.01
9.6
61.7
6.4
0.2
– 1.3
RoCE
% (change in %pts)
18.0
10.2
1.8
16.4
21.8
5.4
Financial Services segment
RoE
% (change in %pts)
26.1
29.4
21.2
20.01
19.4
– 0.6
Further financial key performance figures
in € million
Capital expenditure
Depreciation and amortisation
Operating cash flow Automotive segment
3,263
3,682
8,149
3,692
3,646
8,110
Revenues
60,477
68,821
5,240
3,541
9,167
76,848
70,208
1,490
19,550
5
6,7111
3,7411
9,9641
76,0591
70,6301
1,504
19,874
6
6,100
4,170
9,423
80,401
75,173
1,679
20,599
7
54,137
1,304
16,617
4
63,229
1,436
17,510
5
– 11,585
– 13,359
– 14,405
– 15,955
– 17,057
5,111
4,355
71
1,201
– 41
– 475
4,853
3,887
65
1,214
45
– 358
8,018
7,477
45
1,763
– 19
– 1,248
7,383
6,823
41
1,790
– 168
– 1,103
8,275
7,599
9
1,558
58
– 949
7,803
7,170
6
1,561
3
– 937
7,9781
6,6491
79
1,643
44
– 4371
7,8931
6,561
76
1,6191
164
– 527
9,118
7,244
112
1,756
71
– 65
8,707
6,886
107
1,723
154
– 163
– 9.1
11.5
– 5.4
5.7
6.4
11.6
3.6
16.7
6.9
14.3
8.9
41.8
6.9
61.4
85.1
10.3
5.0
40.8
6.4
– 6.1
69.1
– 1,610
– 2,476
– 2,692
3,243
4,907
5,111
4.93 / 4.95
7.45 / 7.47
7.75 / 7.77
– 2,5641
5,3291
8.081/ 8.101
– 2,890
5,817
– 12.7
9.2
8.83 / 8.85
9.3 / 9.3
Automotive
Motorcycles
Financial Services
Other Entities
Eliminations
Profit before financial result (EBIT)
Automotive
Motorcycles
Financial Services
Other Entities
Eliminations
Profit before tax
Automotive
Motorcycles
Financial Services
Other Entities
Eliminations
Income taxes
Net profit
Earnings per share2 in €
1 Prior year figures have been adjusted in accordance with IAS 8, see note 9.
2 Common / preferred stock. In computing earnings per share of preferred stock, earnings to cover the additional dividend of € 0.02 per share of preferred stock are spread over the
quarters of the corresponding financial year.
5
BMW Group in figures
Sales volume of automobiles*
in thousand units
2,100
1,800
1,500
1,200
900
600
300
Revenues
in € billion
84
72
60
48
36
24
12
10
11
12
13
14
10
11
12
13
14
1,461.2 1,669.0 1,845.2 1,963.8 2,118.0
60.5
68.8
76.8
76.1*
80.4
* Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2010:
53,701 units, 2011: 94,400 units, 2012: 141,165 units, 2013: 198,542 units, 2014:
275,891 units).
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
Profit before financial result
in € million
Profit before tax
in € million
8,400
7,200
6,000
4,800
3,600
2,400
1,200
8,400
7,200
6,000
4,800
3,600
2,400
1,200
10
11
12
13
14
10
11
12
13
14
5,111
8,018
8,275
7,978* 9,118
4,853
7,383
7,803
7,893* 8,707
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
6
Joachim Milberg
Chairman of the Supervisory Board
7 REPORT OF THE SUPERVISORY BOARD
Dear Shareholders and Shareholder Representatives,
Back in 2007, the BMW Group set a new strategic course with the adoption of its strategy “Number ONE”.
Today, we can look back on the fifth successive year in which we have achieved record figures. Responsible
management involves anticipating new developments and initiating the next moves in good time to ensure
the future success of the business. This forward-looking approach applies equally to the Supervisory Board.
By taking the step of announcing Harald Krüger’s future appointment to the position of Chairman of the
Board of Management at an early stage and implementing other decisions with respect to the board’s com-
position, the resolutions adopted by the Supervisory Board in 2014 have set a clear-cut course for the future
leadership of the BMW Group. At the same stage, we also announced our plan to ring in a change at the
head of the Supervisory Board in 2015 by declaring our unanimous support in favour of the appointment of
Dr Norbert Reithofer as its new Chairman. With the backing of major shareholders, we intend to propose
his election to the Supervisory Board at the Annual General Meeting. These proposed changes in leadership
have been initiated in order to strengthen the position of the BMW Group by ensuring a long-term manage-
ment perspective.
Main emphases of the Supervisory Board’s monitoring and advisory activities The Supervisory Board
again advised the Board of Management during the past financial year and carefully monitored its governance
of the business. Our work, both within the Supervisory Board and together with the Board of Management,
was constructive and characterised by open, trustful interaction.
In a total of five Supervisory Board meetings, we deliberated on the current situation of the BMW Group
as well as on macroeconomic developments in its most important sales markets. Additional key points of
debate at our meetings were Group corporate strategy and planning. Furthermore, we developed concepts
for a generational change at the chair level of both the Board of Management and the Supervisory Board, took
decisions regarding the composition and compensation of the Board of Management and passed resolutions
with respect to corporate governance.
We carefully monitored the performance of the BMW Group, both at scheduled meetings and at other times
as the need arose. In particular, the Board of Management kept us well informed of all key sales and workforce
figures. The Chairman of the Board of Management, Dr Norbert Reithofer, informed me promptly and di-
rectly about major business transactions and projects. In addition to scheduled meetings, Dr Karl-Ludwig Kley,
the Chairman of the Supervisory Board’s Audit Committee, and Dr Friedrich Eichiner, member of the Board
of Management responsible for Finance, consulted with each other directly at other times as the need arose.
At the beginning of the year, the Board of Management presented us with a summary of new and revised
models scheduled for market launch over the course of 2014.
In its regular reports on the financial condition of the Group, the Board of Management informed us of
sales volume developments and market competition issues relevant for the Automotive and Motorcycles
segments and highlighted fluctuations in the size of the workforce. Equally, we were kept up to date with
respect to the market developments and economic prospects of the world’s key regions. On the Financial
Services side of the business, the Board of Management provided us with regular updates on new business
with retail customers, changes in the portfolio of contracts with dealerships and retail customers as well as
the total volume of business.
The Board of Management also reported to us on its intention to increase the size of the Group’s produc-
tion network, with particular regard to the planned expansion of the Spartanburg plant in South Carolina,
USA, and the search for a new plant location in the NAFTA region, which is now due to be built in San Luis
Potosí, Mexico. As part of this process, we also discussed with the Board of Management the general sig-
nificance and scope of the “production follows the market” principle in the context of the global distribution
of value added along the production chain.
8
Furthermore, both in business status reports and subsequent discussions with the Board of Management,
numerous important current events and projects were addressed, such as the extension of the cooperation
agreement with the Chinese joint venture partner Brilliance, the cooperation with Toyota and the current
state of plans for the long-term development of production facilities in Russia. Other topics reported on and
discussed at Supervisory Board meetings included the start-up of the new MINI at the Oxford plant, the
current situation with recalls and the economic impact of the Ukraine conflict.
One Supervisory Board meeting was held in Shenyang, one of the locations operated by the BMW Brilliance
Automotive Ltd. (BBA) joint venture in China. Representatives of the managements of BBA and the BMW
sales company reported to us on sales volume trends and the car market in China in general as well as plans
for additionally increasing production capacity in the plants located at Tiexi and Dadong in Shenyang. We
also visited the production facilities of the Tiexi plant. Moreover, in the course of our on-site visits we gathered
useful facts regarding cooperation with suppliers and dealerships in China. Reports from, and discussions
with, local management representatives provided us with a useful overview of local developments in China
and individual development projects, and helped provide a good insight into the specific needs of Chinese
customers.
One two-day meeting of the Supervisory Board dealt with the BMW Group’s corporate and product
strategies as well as the Long-term Business Forecast. The format of the two-day meeting was designed to
provide the opportunity for an in-depth discussion with the Board of Management on forward-looking
topics and technical innovations.
In the first part of the meeting, together with the Board of Management we discussed the results of the
corporate strategy Number ONE review, which is performed by the Board of Management once a year. Our
discussions primarily focused on challenges involving further reductions in carbon emissions and also the
electrification, digitisation and, in particular, the increasing connectedness of vehicle data. As part of its strategy
review report, the Board of Management also looked at the importance of the “Future Retail” programme,
which is designed to improve sales and after-sales services by consistently seeing things from the point of view
of customers and intensifying their product and brand experience.
In the course of various vehicle presentations, we were given the opportunity to test selected BMW, MINI
and Rolls-Royce brand cars on a test track. In addition, the current state of progress of selected vehicle de-
velopment projects was presented and explained to us.
In the second part of the meeting we deliberated at length on the Long-term Business Forecast pre-
sented by the Board of Management for the years 2015 – 2020. After diligent examination, we approved
the forecast.
We also gave in-depth consideration to the business development, strategic direction and role of the Finan-
cial Services segment going into the future. The Board of Management also reported on the latest develop-
ments on used car markets and explained individual measures designed to further improve the stability of
the segment in times of crisis.
The two boards jointly discussed the annual budget put forward by the Board of Management towards the
end of the year under report for the financial year 2015, and considered pertinent external factors.
The structure and amount of compensation of Board of Management members was examined once again in
2014 by both the Personnel Committee and the full Supervisory Board. In addition to comparing performance
trends and board compensation on a multi-year basis, we also reviewed he development of the remuneration
of senior management and employees of BMW AG within Germany over the course of time. An external
9 REPORT OF THE SUPERVISORY BOARD
compensation consultant, independent of both the Board of Management and BMW AG, was called upon to
provide expert advice and assist us in evaluating DAX compensation studies. After a careful review, we con-
cluded that the compensation of board members is appropriate and that the current compensation system
is functioning well. Further information on the compensation of Board of Management members is provided
in the Compensation Report (see chapter Statement on Corporate Governance).
Corporate governance The Supervisory Board and the Board of Management again jointly addressed the
topic of corporate governance within the BMW Group in 2014. In the most recent Declaration of Compliance,
issued in December 2014, the Board of Management and the Supervisory Board declared that the BMW
Group has and will continue to comply with all of the recommendations of the German Government Cor-
porate Governance Code Commission published on 30 September 2014 (Code version; 24 June 2014), with
one exception, which relates to the presentation of information concerning Board of Management compensa-
tion using stipulated model tables. We remain committed to providing information on board compensation
that is both as comprehensive and comprehensible as possible, taking into account all relevant financial
reporting requirements. After careful consideration, we came to the conclusion that the additional use of the
tables recommended in the Code would not improve the desired level of transparency and readability of
the Compensation Report.
As part of the joint examination of corporate governance within the BMW Group, the Board of Manage-
ment informed both the Personnel Committee and the full Supervisory Board on the status of implementa-
tion of the BMW Group’s diversity concept. This programme does not only focus on gender, it is also aimed
at promoting diversity in other areas, particularly in terms of cultural diversity and age mix within the work-
force. We were also informed with respect to the proportion and number of women occupying positions
at various levels of management and deliberated with the Board of Management on the planned measures to
continue the process of raising that proportion, specifically at a senior level. Consideration was also given to
draft legislation relating to equal participation of women and men in management positions in Germany and
the potential impact of this legislation on the BMW Group.
With regard to its own composition, based on a detailed composition profile, the Supervisory Board has
decided upon specific appointment targets, which are discussed in detail in the Corporate Governance Report.
Based on a self-assessment, the Supervisory Board concluded that its composition at 31 December 2014
meets the targets set.
BMW AG has entered into contracts for personnel-related services with an external entity, in which mem-
bers of the Supervisory Board have an indirect participation. During the year under report, the Personnel
Committee approved an amendment to these contracts as a precautionary measure. None of the members of
the Supervisory Board with an interest in the relevant entity participated in this vote. Apart from this one
matter, there were no indications of potential conflicts of interest involving Supervisory Board members during
the financial year 2014.
Supervisory Board members are required to provide information on a quarterly basis of any significant
transactions they or other related parties (as defined by IAS 24), including close relatives and intermediary
entities, have with BMW Group entities.
We are fully committed to assessing and continuously improving the efficiency of the work of the Super-
visory Board and its committees. The Chairman of the Audit Committee and myself are therefore always
glad to receive comments and suggestions for improvement from Supervisory Board members. The formal
examination of the Supervisory Board’s efficiency is also treated each year as a separate agenda point
for discussion, without the members of the Board of Management being present. The efficiency examination
10
in 2014, again prepared with the aid of a questionnaire, resulted in a number of suggestions being accepted
for additional consideration.
Each of the five Supervisory Board meetings in 2014 was attended, on average, by over 95 % of its mem-
bers, a fact that can be tied in to the analysis of attendance fees for individual members, as disclosed in the
Compensation Report. No member of the Supervisory Board was absent at more than two meetings during
the period under report. Presiding Board and committee meetings were fully attended in the vast majority of
cases (see chapter Statement on Corporate Governance).
Description of Presiding Board activities and committee work In order to work more efficiently and
prepare complex issues and decisions with greater thoroughness, the Supervisory Board has established
a Presiding Board and several committees. A description of the duties, composition and work procedures of
these committees is provided in the Corporate Governance Report.
The relevant chairmen reported in depth on the status of Presiding Board and committee work at the
subsequent Supervisory Board meeting.
In a total of four meetings, the Presiding Board focused mainly on preparing topics for the meetings of
the full Supervisory Board, unless this responsibility fell under the remit of one of the committees. Complex
issues, such as the Long-term Business Forecast and the Annual Strategic Review, were dealt with on the
basis of written and oral reports provided by Board of Management members and senior department heads.
The Presiding Board selected further topics of discussion for Supervisory Board meetings and made sugges-
tions to the Board of Management regarding items to be included in its reports to the full Supervisory Board.
The Audit Committee held four meetings and three telephone conference calls during 2014. Prior to their
publication, the Interim Financial Reports were discussed with the Board of Management in those telephone
conference calls. Representatives of the external auditors took part in the telephone conference call held to
present the Interim Financial Report for the six-month period ended 30 June 2014. The report had been sub-
jected to review by the external auditors.
The Audit Committee meeting held in spring 2014 was primarily dedicated to preparing the Supervisory
Board meeting at which the financial statements were examined. Prior to proposing KPMG AG Wirtschafts-
prüfungsgesellschaft for election as Company and Group auditor at the 2014 Audit Committee Meeting, we
obtained a Declaration of Independence from KPMG. The Audit Committee also considered the scope and
composition of non-audit-related services, including tax advisory services provided by KPMG entities to the
BMW Group. There were no indications of conflicts of interest, grounds for exclusion or lack of independence
on the part of the auditor.
The fee proposals for the audit of the year-end Company and Group Financial Statements 2014 and
the review of the six-month Interim Financial Report were deemed appropriate by the Audit Committee.
Subsequent to the Annual General Meeting 2014, the Audit Committee therefore appointed KPMG AG
Wirtschafts prüfungsgesellschaft for the relevant engagements and, with due consideration to the sugges-
tions made by the full Supervisory Board, specified a number of audit focus areas.
The Head of Group Controlling reported to the Audit Committee on risk management processes within
the BMW Group, provided information with respect to new developments and elucidated a number of risks
which are required to be reported on in accordance with internal rules.
The Head of Group Financial Reporting provided the Audit Committee with an up-to-date overview of
developments concerning the internal control system (ICS), which serves as the basis for financial reporting.
11 REPORT OF THE SUPERVISORY BOARD
Testing performed during the year under report did not highlight any material ICS weaknesses which could
jeopardise the system’s effectiveness.
The Chairman of the BMW Group Compliance Committee reported to the Audit Committee on the con-
cept that has been developed to strengthen local compliance functions as well as on the current compliance
situation, which, as in the previous year, was deemed satisfactory overall. None of the information received
relating to potential non-compliance or actual incidences of non-compliance identified in specific cases gave
any indication of serious or systemic non-compliance with applicable requirements.
The Head of Group Internal Audit reported to us in the Audit Committee on the organisation of the Group
Internal Audit as the BMW Group’s “Third Line of Defence”, informed us of the significant findings of audits
conducted by Group Internal Audit, on both the industrial and financial services sides of the business, and
explained the main points of emphasis for planned audits.
We concurred in the Audit Committee with the decision of the Board of Management to raise the Com-
pany’s share capital in accordance with § 4 (5) of the Articles of Incorporation (Authorised Capital 2014) by
€ 239,757 and to issue a corresponding number of new non-voting bearer shares of preferred stock, each with
a par value of € 1, at favourable conditions to employees.
The Personnel Committee convened six times during the financial year 2014. One major area of deliberation
was the future composition of the Board of Management, with particular regard to preparing for successor
decisions, including consideration of possible scenarios for the future change in the chair of the Board of
Management.
In preparation for the full Supervisory Board’s meetings, the Personnel Committee reviewed the structure
and appropriateness of Board of Management compensation and prepared the Supervisory Board’s decision
with respect to board members’ bonuses. In two cases we also gave our approval for one member of the
Board of Management to accept the mandate for membership of the supervisory board of a non-BMW Group
entity.
The Nomination Committee convened twice during the financial year 2014. At these meetings, we deliber-
ated on successor planning for mandates of the shareholders’ representatives on the Supervisory Board and
considered proposals for candidates for the Supervisory Board elections at the Annual General Meeting 2015,
taking the composition objectives stipulated for the Supervisory Board into due account.
The statutory Mediation Committee was not required to convene during the financial year 2014.
Generational change at head of Board of Management and Supervisory Board initiated The Supervisory
Board worked through a number of scenarios with respect to succession planning at the head of the Super-
visory Board and – together with the Chairman of the Board of Management, Dr Norbert Reithofer – assessed
the range of options available for selecting a new Chairman of the Board of Management. Various constella-
tions were examined, including the important issue of timing. We wanted to bring about a farsighted, timely
change in leadership in order to strengthen the position of the BMW Group with a long-term perspective
for management. We shared the opinion of major shareholders that Dr Reithofer’s wealth of knowledge and
experience should be retained within the BMW Group and that the Supervisory Board would benefit greatly
from his playing a key role in its work.
The Supervisory Board therefore supports the proposal that Dr Norbert Reithofer be appointed to the
position of Chairman of the Supervisory Board – subject to his election to that board. After carefully con
sidering various scenarios, the conclusion was reached that a direct move by Dr Reithofer to the position of
12
Chairman of the Supervisory Board – without an interim phase – will strengthen the role of the Supervisory
Board and is thus in the best interests of the BMW Group.
In order to ensure that this generational change can also take place in good time at the head of the Super-
visory Board, in agreement with its other members, I have resigned my mandate as Supervisory Board
member with effect from the end of the Annual General Meeting 2015.
In due consideration of these developments, the Supervisory Board has reached agreement with
Dr Reithofer concerning the early termination of his Board of Management mandate and his service con-
tract with effect from the end of the Annual General Meeting 2015.
Harald Krüger has been appointed Chairman of the Board of Management with effect from the end of the
Annual General Meeting 2015, to coincide with Dr Reithofer’s planned exit from the Board of Management.
Harald Krüger brings a great deal of experience to this position from his previous board responsibilities. Since
2013, he has been in charge of Production, before which, from 2008 to 2012, he was first responsible for Human
Resources and then for the MINI, BMW Motorrad, Rolls-Royce and BMW Group Aftersales division.
Other changes in the composition and organisational structure of the Board of Management Klaus
Fröhlich, previously Head of Small and Mid-size Series BMW Group, was appointed as member of the Board
of Management with effect from 9 December 2014, with responsibility for Development. His predecessor,
Dr Herbert Diess, resigned from the Board of Management on 9 December 2014.
With effect from the end of the Annual General Meeting 2015, the Supervisory Board appointed
Oliver Zipse, most recently Head of Corporate Planning and Product Strategy, as a member of the Board of
Management. He will take over responsibility for Production from Harald Krüger.
The Supervisory Board also renewed the appointment of three Board of Management members in 2014.
Other personnel changes in the Supervisory Board In accordance with the regulations of the Co-Deter-
mination Act, the ten employee representatives were re-elected with effect from the end of the Annual
General Meeting on 15 May 2014.
After 10 years of valuable and highly appreciated work in the Supervisory Board, Bertin Eichler did not
stand for re-election. In his place, Christiane Benner (Executive Board member of IG Metall) was newly
elected to the Supervisory Board as union representative. As a result, the Supervisory Board now has five
female members (25%). Ulrich Kranz, Head of the BMW i product line, was newly elected to the Super visory
Board to succeed Dr Markus Schramm as executive staff representative. The Supervisory Board thanked
the members leaving office for their constructive work and trusting cooperation within the Super visory
Board. The composition of the Presiding Board and the committees remained unchanged in 2014, with all
previous members confirmed in their respective functions. The Corporate Governance Report includes an
overview of the composition of the Supervisory Board and its committees (see chapter Statement on Corpo-
rate Governance).
Wolfgang Mayrhuber has resigned his mandate as member of the Supervisory Board with effect from
the end of the Annual General Meeting 2015. We also wish to extend our thanks to him for more than
ten years of valuable and highly appreciated service in the Supervisory Board, always working in the best
interest of the Group.
Examination of financial statements and the profit distribution proposal KPMG AG Wirtschafts-
prüfungsgesellschaft conducted a review of the abridged Interim Group Financial Statements and Interim
Group Management Report for the six-month period ended 30 June 2014. The results of the review were
presented to the Audit Committee by KPMG representatives. No issues were identified that might indicate
13 REPORT OF THE SUPERVISORY BOARD
that the abridged Interim Group Financial Statements and Interim Group Management Report had not been
prepared, in all material respects, in accordance with the applicable provisions.
The Group and Company Financial Statements of Bayerische Motoren Werke Aktiengesellschaft for the
year ended 31 December 2014 and the Combined Management Report – as authorised for issue by the Board
of Management on 19 February 2015 – were audited by KPMG AG Wirtschaftsprüfungsgesellschaft and
given an unqualified audit opinion.
The Financial Statements and the Combined Management Report, the long-form audit reports of the
external auditors and the Board of Management’s profit distribution proposal were made available to all
members of the Supervisory Board in a timely manner.
These documents were examined and discussed thoroughly by the Audit Committee at the meeting held
on 5 March 2015. The Supervisory Board subsequently examined these documents at its meeting on 12 March
2015, after receiving the committee chairman’s report on the meeting of the Audit Committee. In both
meetings, the Board of Management gave a detailed explanation of the financial reports it had prepared.
Representatives of the external auditors attended both meetings, reported on significant findings and an-
swered any additional questions raised by the members of the Supervisory Board. They also confirmed that
the risk management system put in place by the Board of Management is capable of identifying any events
or developments that might impair the going-concern status of the Company and that no material weak-
nesses in either the internal control system or the risk management system were found with regard to the
financial reporting process. Similarly, they confirmed that they had not identified any facts in the course of
their audit work that were inconsistent with the contents of the Declaration of Compliance issued jointly by
the two boards.
Based on thorough examination by the Audit Committee and the full Supervisory Board, we concurred
with the results of the external audit. In accordance with the conclusion reached after the examination by
the Audit Committee and Supervisory Board, no objections were raised. The Group and Company Financial
Statements of Bayerische Motoren Werke Aktiengesellschaft for the financial year 2014 prepared by the Board
of Management were approved at the Supervisory Board meeting held on 12 March 2015. The separate finan-
cial statements have therefore been adopted.
The Supervisory Board also examined the proposal of the Board of Management to use the unappropriat-
ed profit to pay an increased dividend of € 2.90 per share of common stock and € 2.92 per share of non-voting
preferred stock. We consider the proposal appropriate and therefore concur with it.
Expression of appreciation by the Supervisory Board We wish to express our appreciation to the mem-
bers of the Board of Management and the entire workforce of the BMW Group worldwide for their concerted
efforts and outstanding contribution to the record result we are able to post for the financial year 2014.
Munich, 12 March 2015
On behalf of the Supervisory Board
Joachim Milberg
Chairman of the Supervisory Board
14
Norbert Reithofer
Chairman of the Board of Management
15 STATEMENT OF THE CHAIRMAN OF THE BOARD OF MANAGEMENT
Dear Shareholders,
The successes a company has achieved in the past belong to its history. All that matters today is a com-
pany’s future. Forward-looking companies renew themselves of their own initiative. It is crucial for a company
to question its own actions, explore new directions and consistently implement innovations to benefit its
customers. Financial strength allows companies to invest in the future – thereby securing longterm success
and fulfilling responsibilities towards shareholders, associates and other stakeholders.
BMW will reach its 100th year in 2016. We naturally plan to celebrate this important milestone in our
history. It is a testament to our value-based corporate philosophy, geared towards the long term and shaped
by independent-minded decisions. But above all else, this centenary compels us to look to the future.
Investors in the BMW Group can look forward to long-term value enhancement, on the basis of healthy,
organic growth. Our shareholders can rely on us to sustain our profitability. Strong competition, market
volatility, political uncertainty, new trends in our environment – all of this is part of our daily business.
We firmly believe that mobility will remain a fundamental human need and a cornerstone of dynamic
economies. We aim to lead the industry with our ideas in all areas of individual mobility, transporting sheer
driving pleasure to a new age of sustainable mobility. This is an exciting direction for us – and a profitable
one for our shareholders who accompany us along this path.
2014 financial year – fifth successive record year for the BMW Group In the 2014 financial year, the
company’s successful development since the global financial and economic crisis of 2008 / 2009 continued.
We had set ourselves ambitious goals in a difficult environment: record sales of over two million vehicles;
our highest-ever Group profit before tax, with a significant increase year-on-year; and an EBIT margin in our
target range of eight to ten per cent for the Automotive Segment.
Today, we can say: we delivered on our promises. Group profit before tax climbed 10.3 per cent to
8.7 billion euros. Net profit increased by 9.2 per cent to more than 5.8 billion euros. The EBIT margin in the
Automotive Segment stands at 9.6 per cent and therefore at the upper end of our target range.
Strong demand for our premium vehicles is the main factor contributing to record revenues of 80.4 billion
euros. For the first time, we sold more than two million vehicles worldwide in a single year – 2.118 million
BMW, MINI and RollsRoyce vehicles, to be exact – fulfilling a wish for many customers. This represents an
increase of 7.9 per cent over the previous year and a new sales high for the BMW Group.
With regard to our individual brands, there were new records for BMW, Rolls-Royce and BMW Motorrad.
More than 1.8 million customers purchased a BMW in 2014. Our MINI brand maintained roughly the same
high level as the previous year, with a total of 302,000 vehicles sold, despite the model changeover. Our
MINI plant in Oxford in the UK produced its three-millionth MINI last year. With exactly 4,063 vehicles sold,
Rolls-Royce remains in strong demand and continues to set the standard for the ultra-luxury class. BMW
Motorrad also reported growth, with more than 123,000 deliveries, and once again outperformed the overall
market. The anniversary model BMW R nineT and the fully electric C evolution proved popular with both
customers and the automotive press.
The Financial Services segment once again made a solid contribution to the success of the BMW Group.
Impact of Strategy Number ONE reflected in key performance indicators We laid the foundation for
this successful development back in 2007 with our Strategy Number ONE. This strategy guides all our busi-
ness activities into 2020 and has already taken the company to a new dimension. We operate at an entirely
different level of performance today than in 2007.
16
Customer deliveries climbed more than 40 per cent between the end of 2007 and the end of 2014. Group
revenues increased by 44 per cent over the same period while pre-tax earnings more than doubled. During
this time, BMW common shares performed much better than the DAX. Our associates, as well as our share-
holders, benefit from this positive development through our preferred shares programme.
We owe our achievements to our associates worldwide Our successful business development is driven
by our 116,324 associates worldwide. Their skills, their performance and their dedication – each in his or her
own area of responsibility – contribute to the overall success of the company.
Our associates at all 30 BMW Group production sites in 14 countries are our most important success factor.
We are investing extensively in vocational and professional training to qualify them for new demands and
technologies, such as digitalisation. Between 2007 and the end of 2014 alone, we channelled around 1.8 billion
euros into vocational and professional training – more than in our Efficient Dynamics technology package.
People and technology have the same importance for us.
The younger generation ensures our future success: more than 1,500 apprentices worldwide embarked
on a career with us in September 2014; 1,200 of them in Germany. A total of 4,595 young people are currently
in vocational training with the BMW Group. This represents an increase of 150 over the previous year.
I would therefore like to thank all our associates on behalf of the Board of Management. I would also like
to thank all our business partners, and especially our suppliers, who play such a key part in our success.
And, of course, our thanks also extend to our entire retail organisation and the dealers who are our link to
the customer.
Customers have the choice: sheer driving pleasure also available with electric and hybrid drivetrains
The new BMW i family has further strengthened our image as the industry’s leading innovator. 2014 was the
first year of availability for the pure electric BMW i3. More than 16,000 customers chose this model, which
was specially designed for urban areas. The BMW i8 has been available to customers since summer. Orders for
the BMW i8 plug-in hybrid continue to well exceed the planned number of units for production. A total of
1,741 BMW i8 vehicles were delivered to customers from June to December.
We also use our know-how and experience with BMW i in series production of our other models. In autumn
2015, we will release our first plug-in hybrid BMW X model, the BMW X5 xDrive40e, which incorporates the
technological expertise gained from BMW i. The new BMW 7 Series is also set to become the benchmark for
lightweight design in its segment through the use of carbon fibre. Over time, all model series will be available
with electric drive technology. Climate protection policies worldwide will remain challenging and growing
urbanisation demands new mobility solutions.
We will continue to chart our own course with Efficient Dynamics, hybridisation and electromobility.
There is no way back. Average emissions for our European fleet currently stand at 130 grams of CO2 per
kilometre. At the same time, we are focusing on sustainable production and efficient use of resources. Since
2006, we have reduced average resource consumption per vehicle produced by 45 per cent. Sustainability
pays dividends – in every respect.
Targeted expansion of our global production network We continue to aim for a balanced distribution
of sales between the three main economic regions of the world. This allows us to offset fluctuations in indi-
vidual markets and avoid overdependence on any single region. In 2014, Europe accounted for around 43 per
cent of sales, Asia 31 per cent and the Americas just under 23 per cent.
The global automobile market continues to expand: from around 62 million new vehicle registrations in
2007 to more than 80 million in 2014. We see no contradiction between participating in this growth and
maintaining the desirability of our premium brands. In 2014, we continued to create the conditions necessary
for strategic expansion of our global production network. In October, the first car rolled off the assembly
line at our new plant in Araquari, Brazil. This gives us a permanent presence in an important growth region.
17 STATEMENT OF THE CHAIRMAN OF THE BOARD OF MANAGEMENT
In Mexico, preparations are underway for the opening of a new plant with a capacity of up to 150,000 units
in 2019. During celebrations to mark the 20th anniversary of our Spartanburg plant, we announced an in-
crease in capacity there to 450,000 units. We are also stepping up local production at our facility in Shenyang,
China, which is set to build six BMW models specifically for the Chinese market. We have already extended
our joint venture with Brilliance to 2028, thereby paving the way for further growth in China.
The innovation of our engineers and developers ensures the company’s continued success. In 2014, we
invested more than 4.5 billion euros in research and development. Between now and 2018, we will expand
and modify our FIZ Research and Innovation Centre in Munich. Once the final stage of expansion is com-
plete, the investment will be equivalent to building a completely new plant.
Connectivity defines our times and will dominate the future The digital, connected world is a particularly
important area for premium manufacturers when it comes to differentiation and growth. It affects both the
vehicle itself and the way that vehicle is produced. Last year, at our Spartanburg and Dingolfing plants, we
took a major step towards intensive human-robot collaboration. We use this form of cooperation selectively in
areas where it adds value and relieves associates of heavy physical work, enabling them to stay healthy for a
long time.
The car as a part of the Internet will change our industry even more than the shift to alternative drivetrains.
As in-car connectivity increases, new competitors will seek access to customers in their vehicles. We are
committed to shaping the age of in-car connectivity responsibly, in the interests of our customers. We already
offer advanced driver assistance systems in our vehicles today. Moreover, we also have the capacity for highly
autonomous driving.
Mobility services mainly used by young people We are selectively expanding our range of mobility
services: car-sharing is one option that is particularly appealing to young people. London and Vienna are
two further European cities outside of Germany that have now been added to our DriveNow offering. By the
end of 2014, around 390,000 customers had already registered with DriveNow. Additional cities in Europe
and in the US will follow in 2015.
The course is set for the future To mark our centenary on 7 March 2016, we deliberately choose to look
to the future. Every age has its challenges and must find its own solutions. That is why we give younger
generations the chance to shape the further development of the company according to their own ideas.
In December 2014, the Supervisory Board decided to make a change at the head of the company’s Board
of Management. Our Board of Management Member for Production Harald Krüger will take over as Chairman
of the Board of Management after the 2015 Annual General Meeting. This generational change will enable
the company to move forward with new ideas and impulses.
As you can see, much still remains to be done. New trends and challenges also bring new business opportu-
nities and possibilities. I strongly believe that the BMW Group will grow dynamically, by innovatively shaping
the individual mobility of the future in all its forms and continuing to be a responsible partner for society.
The course is set for the future.
Norbert Reithofer
Chairman of the Board of Management
18
COMBINED MANAGEMENT REPORT
General Information on the BMW Group
Business Model
This Combined Management Report combines the
management reports of BMW AG and the BMW Group.
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
General information on the BMW Group
General information on the BMW Group is provided be-
low. There have been no significant changes compared
to the previous year.
23 General and Sector-specific
Environment
26 Overall Assessment by Management
26 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
61 Comments on Financial Statements
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
65 Outlook
70 Report on Risks and Opportunities
82 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
Business model
Bayerische Motoren Werke Aktiengesellschaft (BMW AG),
which is based in Munich, Germany, is the parent com-
pany of the BMW Group. The primary business objective
of the BMW Group is the development, manufacture and
sale of engines as well as of all vehicles equipped with
those engines. The BMW Group is subdivided into the
Automotive, Motorcycles, Financial Services and Other
Entities segments (the latter primarily comprising hold-
ing companies and Group financing companies).
Bayerische Motoren Werke G. m. b. H. came into
being in 1917. Having been originally founded in
1916 as Bayerische Flugzeugwerke AG (BFW), it be-
came Bayerische Motoren Werke Aktiengesellschaft
(BMW AG) in 1918. The BMW Group comprises
BMW AG and all subsidiaries, which BMW AG – either
directly or indirectly – has the power to control.
BMW AG is also responsible for managing the BMW
Group. General conditions on the world’s automobile
and motorcycle markets (such as the competitive situa-
tion, government policies, statutory regulations),
underlying trends within society as well as changes
in raw materials prices, exchange rates and interest
rates are some of the major external factors that exert
an influence over our business.
The BMW Group is one of the most successful makers
of cars and motorcycles worldwide and among the
largest industrial companies in Germany. With BMW,
MINI and Rolls-Royce, the BMW Group owns three of
the strongest premium brands in the automotive in-
dustry. The vehicles it manufactures set the highest
standards in terms of aesthetics, dynamics, technology
and quality, a fact borne out by the BMW Group’s
leading position in engineering and innovation. In addi-
tion to its strong position in the motorcycles market,
the BMW Group also offers its customers a successful
range of financial services. In recent years, the Group
has also established itself as a leading provider of pre-
mium services for individual mobility. At the end of the
reporting period, the BMW Group had a workforce of
116,324 employees worldwide.
Long-term thinking and responsible action have always
been the cornerstones of our success. Striving for eco-
logical and social sustainability along the entire value-
added chain, taking full responsibility for our products
and giving an unequivocal commitment to preserving
resources are prime objectives firmly embedded in our
corporate strategy. As a result of these endeavours, we
have ranked among the most sustainable companies in
the automobile industry for many years.
The BMW Group operates on a global scale and is repre-
sented in more than 140 countries worldwide. Its re-
search and innovation network is spread over twelve
locations in five countries. At 31 December 2014 the
Group’s production network comprised a total of 30 lo-
cations in 14 countries.
BMW 3 Series and 4 Series models as well as petrol and
diesel engines are manufactured at the BMW Group
plant in Munich, next to the BMW Group’s headquarters.
Models of the BMW 1, 3 and 4 Series as well as the Z4
Roadster roll off the production lines at the Regensburg
plant. The currently largest BMW Group plant is located
in Dingolfing, where we build the BMW 3 Series Gran
Turismo, the BMW 4 Series Gran Coupé, models of
the BMW 5, 6 and 7 Series as well as hybrid BMW 5 and
7 Series vehicles. Chassis and drive components are also
manufactured at this plant. The BMW Group Leipzig
plant’s production range covers models of the BMW 1
and 2 Series, the BMW X1 and the electrically powered
BMW i3 as well as the BMW i8 hybrid sports car. The
BMW 3 Series Sedan is assembled at the plant in
Rosslyn (South Africa). The BMW Group plant in
Spartanburg (USA) is responsible for producing the
BMW X3, X4, X5 and X6 models. BMW X1 and models
of the BMW 3 and 5 Series are built exclusively for
the Chinese market at the two plants operated by
the BMW Brilliance Automotive Ltd. joint venture in
Shenyang (China).
Components for the worldwide production network are
manufactured at the BMW Group plants in Landshut
and Wackersdorf. The Eisenach plant is responsible for
toolmaking. The two production sites in Moses Lake
(USA) and Wackersdorf are operated by the SGL Auto-
motive Carbon Fibers (ACF) joint venture and supply
carbon fibre and carbon fibre fabrics for the production
of BMW i models. The BMW Group’s largest engine
manufacturing plant in Steyr (Austria) makes petrol and
diesel engines for the various BMW plants and diesel
engines for the MINI. In 2012 the BMW Brilliance Auto-
19 COMBINED MANAGEMENT REPORT
motive Ltd. joint venture opened an engine plant in
Shenyang (China), which supplies petrol engines to its
neighbouring plants.
The primary function of the BMW Group’s assembly
plants is to serve nearby regional markets. BMW cars are
currently being assembled in Chennai (India), Jakarta
(Indonesia), Cairo (Egypt), Kaliningrad (Russia), Kulim
(Malaysia) and Rayong (Thailand). Production at the
BMW Group’s newest plant in Araquari (Brazil) cur-
rently covers the BMW 3 Series and the X1, and will be
extended to include the BMW 1 Series, the X3 and the
MINI Countryman over the course of 2015.
The MINI models – Hatch (3- and 5-door), Convertible,
Coupé and Roadster – are manufactured at the Oxford
plant (United Kingdom). The UK production triangle
also includes the components plant in Swindon as well
as the engine plant at Hams Hall, where petrol engines
are manufactured for MINI and BMW. In Graz (Austria),
Magna Steyr Fahrzeugtechnik manufactures the MINI
Countryman and, since 2012, the MINI Paceman for
the BMW Group. In 2014 the Dutch car manufacturer,
VDL Nedcar bv (Born) began producing the MINI Hatch
on behalf of the BMW Group.
The Rolls-Royce Phantom, Ghost and Wraith models
are manufactured exclusively at the Goodwood plant
(United Kingdom).
BMW motorcycle models roll off the production lines at
the BMW Group plant in Berlin. Car brake discs are
also produced at this location. Two further motorcycle
assembly plants are located in Manaus (Brazil) and
Rayong (Thailand).
The worldwide distribution network currently consists
of around 3,250 BMW, 1,550 MINI and 130 Rolls-Royce
dealerships. In China alone, more than 40 BMW dealer-
ships and 30 MINI dealerships were opened in 2014.
Products and services are sold in Germany through
BMW Group branches and by independent authorised
dealers. Sales outside Germany are handled primarily
by subsidiary companies and, in a number of markets,
by independent import companies. The dealership
and agency network for BMW i currently covers some
650 locations. The sales network for BMW motorcycles
is organised in a similar way to the automobile business.
Currently, there are around 1,000 BMW Motorrad dealer-
ships worldwide.
Our premium brands – BMW, MINI and RollsRoyce –
are well known and highly admired around the globe
for their innovative technologies and state-of-the-art
design. The BMW Group provides the full spectrum of
individual mobility, ranging from premium-segment
small vehicles through to ultra-luxurious and powerful
vehicles. Our entire product range is linked by one
characteristic: efficiency. The MINI brand is a veritable
icon in the premium small car segment, offering unri-
valled driving pleasure in its class. Rolls-Royce has a
long and distinguished tradition in the ultra-luxury seg-
ment stretching back over more than 100 years. Our
core BMW brand satisfies a broad spectrum of customer
wishes, ranging from fuel-efficient, innovative models
equipped with Efficient Dynamics through to high-per-
formance, extremely efficient BMW M sub-brand vehi-
cles, which bring the flair of motor sport onto the roads.
All BMW vehicles share one thing in common: their im-
pressive driving dynamics.
Our understanding of the term “premium” is now being
taken to a new level with the BMW i brand. Inspired
through and through by the desire for even greater sus-
tainability, the BMW i epitomises the vehicle of the
future – with its electric drivetrain, revolutionary light-
weight construction, exceptional design and an entirely
newly designed range of mobility services.
BMW Motorrad also focuses on the premium segment
and offers a range of motorcycles for the Tourer, Enduro,
Sport and Roadster segments as well as Maxi-Scooter
for urban mobility. A wide range of accessories and
equipment is also available, providing additional safety
and comfort to customers.
The Financial Services segment, which works in tandem
with the sales organisation, is represented in more than
50 countries around the world. Credit financing and
the lease of BMW Group brand cars and motorcycles to
retail customers is its largest line of business. The BMW
Group’s international multi-brand fleet business, oper-
ating under the brand name “Alphabet”, provides fleet
financing products and comprehensive management
services for corporate car fleets in 19 countries. Within
the multi-brand financing line of business, credit financ-
ing, leasing and other services are marketed to retail
customers under the brand name “Alphera”. The seg-
ment’s range of products is rounded off by providing
support to the dealer organisation and offering insurance
and banking services.
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
26 Overall Assessment by Management
26 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
61 Comments on Financial Statements
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
65 Outlook
70 Report on Risks and Opportunities
82 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
20
General Information on the BMW Group
Management System
The business management system applied by the BMW
Group follows a value-based approach, with a clear focus
on achieving profitable growth, increasing the value of
the business for capital providers and safeguarding jobs.
Corporate autonomy can only be ensured in the long
term if the profit generated by the business sustainably
exceeds the cost of equity and debt capital available to it,
thus reflecting the profitable employment of capital.
The BMW Group’s internal management system is
multilayered. Operating performance is managed first
and foremost at segment level. In order to manage long-
Value added
−
Return on capital
(RoCE / RoE )
×
Return on sales
÷
Capital turnover
÷
Cost of capital
×
term performance and assess strategic issues, additional
key performance figures are measured at Group level for
controlling purposes. The contribution made to busi-
ness value growth during the financial year is measured
in terms of “value added”. This approach is translated
for operational purposes at both Group and segment
level by identifying the main financial and non-financial
factors (“value drivers”) which affect the value of the
business. The link between value added and the relevant
value drivers is shown in simplified form in the following
diagram.
Profit
–
Expenses
Revenues
Capital employed
Average weighted cost
of capital rate
Due to the high aggregate impact of various factors, it is
difficult to manage a business proactively simply by
focusing on value added. This key figure therefore only
serves for intermediate reporting purposes.
Value drivers which could have a significant impact on
profitability and the value of the business are defined
for each controlling level. The financial and non-finan-
cial value drivers referred to above are reflected in the
principal key performance indicators used to manage the
business.
In the case of project decisions, the system is supple-
mented by the application of project-relevant control
logic, also utilising value-based and return-based per-
formance indicators.
Management of operating performance at segment level
Operating performance is managed at segment level on
the basis of capital rates of return. Depending on the
business model, the segments are managed on the basis
of total return or the return on equity capital. The per-
formance of the Automotive and Motorcycles segments
is measured on the basis of the return on capital em-
ployed (RoCE) and that of the Financial Services seg-
ment using the return on equity (RoE). Profitability (re-
turn on sales) and capital efficiency (capital turnover)
are aggregated in the capital rate of return, together with
a whole host of business-relevant information that has
an impact on segment performance and changes in the
value of the business.
Automotive segment
The principal key performance indicator for the Auto-
motive segment is return on capital employed (RoCE),
measured on the basis of segment profit before financial
result and the average level of capital employed in oper-
ations. The strategic target for the Automotive segment’s
RoCE is 26 %.
RoCE Automotive =
Profit before financial result
Capital employed
21 COMBINED MANAGEMENT REPORT
Capital employed corresponds to the sum of all current
and non-current operational assets, less liabilities that
do not incur interest (e. g. trade payables).
Due to the key importance of the Automotive segment
for the Group as a whole, consideration is also given to
additional key value drivers which have a significant
impact on RoCE and hence on segment performance.
The most important of these additional value drivers are
deliveries to customers, segment revenues and – as the
key performance indicator for profitability – the operat-
ing return on sales (i.e. EBIT margin). Average carbon
emissions for the fleet are also taken into account, re-
flecting their potential impact on earnings in the short
term in the form of ongoing development expenses –
and in the long term due to regulatory requirements.
For these purposes “carbon emissions for the fleet” cor-
responds to average emissions of CO2 for new car sales
in the EU-28 countries.
The use of additional key value drivers makes it easier
to identify the reasons for changes in the RoCE and
to define measures capable of influencing its develop-
ment.
Motorcycles segment
As with the Automotive segment, operating perfor-
mance for the Motorcycles segment is managed on the
basis of RoCE. Capital employed is measured using
the same procedures as in the Automotive segment.
The strategic target for the Motorcycles segment’s
RoCE is 26 %.
RoCE Motorcycles =
Profit before financial result
Capital employed
Financial Services segment is defined as segment profit
before taxes, divided by the average amount of equity
capital attributable to the segment. The target is a sus-
tainable return on equity of at least 18 %.
RoE Financial
Services
=
Profit before tax
Equity capital
Strategic management at Group level
Strategic management of the Group is performed pri-
marily at Group level, including quantification of the
financial impact of strategic issues on long-term fore-
casting. The most significant performance indicators at
Group level are Group profit before tax and the size
of the Group’s workforce at the year end. Group profit
before tax is a good overall measure of the Group’s per-
formance after consolidation procedures, and provides
a transparent basis for comparing performance, par-
ticularly over time. The size of the Group’s workforce is
monitored as an additional key non-financial perfor-
mance indicator.
The two key performance indicators – Group profit be-
fore tax and size of the workforce – are supplemented
by a measurement of value added. This highly aggregated
performance indicator provides an insight into capital
efficiency and the (opportunity) cost of capital required
to generate Group profit. Value added corresponds to
the amount of earnings over and above the cost of
capital and gives an indication of whether the Group is
meeting the minimum requirements for the rate of
return expected by capital providers. A positive value
added means that a company is creating more additional
value than the cost of capital.
The number of vehicles delivered to customers is also
taken into account as a non-financial value driver.
Value added Group = earnings amount – cost of capital
= earnings amount – (cost of capital rate ×
capital employed)
Financial Services segment
As is common practice in the banking sector, the per-
formance of the Financial Services segment is measured
on the basis of return on equity (RoE). RoE for the
Capital employed comprises the average amount of
Group equity employed during the year as a whole, the
financial liabilities of the Automotive and Motorcycles
segments and pension provisions. “Earnings amount”
in € million
Earnings amount*
Cost of capital* (EC + DC)
2014
2013
2014
2013
Value added Group*
2014
2013
BMW Group
9,051
8,300
5,212
4,661
3,839
3,639
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
Group forecast. This system enables an analysis of the
periodic reporting impact of project decisions on earn-
ings and rates of return over the term of each project.
The overall result is a self-contained controlling model.
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
26 Overall Assessment by Management
26 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
61 Comments on Financial Statements
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
65 Outlook
70 Report on Risks and Opportunities
82 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
22
for these purposes corresponds to Group profit before
tax and adjusted for interest expense incurred in con-
junction with the pension provision and on the finan-
cial lia bilities of the Automotive and Motorcycles
segments (earnings before interest expense and taxes).
The cost of capital is the minimum rate of return ex-
pected by capital providers in return for the capital em-
ployed by the Group. Since capital employed comprises
an equity capital element (e. g. share capital) and a debt
capital element (e. g. bonds), the overall cost of capital
rate is determined on the basis of the weighted average
rates for equity and debt capital, measured using stand-
ard market procedures. The pre-tax average weighted
cost of capital for the BMW Group in 2014 was 12 %, un-
changed from the previous year.
Value management used to control projects
Operations in the Automotive and Motorcycles segments
are influenced, to a large extent, by project work. Pro-
jects have a substantial impact on future performance.
Project decisions are therefore a crucial component of
financial management for the BMW Group.
Decisions are taken on the basis of project calculations
measured in terms of the cash flows a project is expected
to generate. Calculations are made for the full term of
a project, i.e. for all future years in which the project
generates cash flows. Project decisions are taken on the
basis of the capital value and internal rate of return cal-
culated for the project.
The capital value of a project indicates the extent to
which a project will be able to generate a positive con-
tribution to earnings over and above the cost of capital.
A project with a positive capital value enhances value
added and therefore results in an increase in the value
of the business. The internal rate of return of the project
corresponds to the average return on capital employed
in the project and, in terms of scope, is equivalent to the
multi-year average RoCE for an individual project. It is
therefore entirely consistent with the principal key per-
formance indicator used for the Automotive and Motor-
cycles segments.
The criteria used for taking decisions as well as the long-
term impact on periodic earnings is documented for
all project decisions and incorporated in the long-term
23 COMBINED MANAGEMENT REPORT
Report on Economic Position
General and Sector-specific Environment
General economic environment in 2014
Overall, the global economy grew by 3.3 % in 2014, with
significant differences in growth rates recorded from
region to region. After a weak start, the USA performed
strongly over the year as a whole. The growth rate in
China remained at a relatively high level, despite a
moderate slowdown in economic momentum. As a result
of the value added tax hike, Japan recorded a steeper
drop in growth than had been expected. Even though
recession was overcome in Europe as a whole, the re-
covery could hardly be described as dynamic, especially
in the major economies. The ongoing weak performance
of some major emerging markets, in particular Brazil
and Russia, also held down the global growth rate. Al-
though the Indian economy regained some momentum,
the growth rate was still lower than in recent years.
In line with its previous announcements, the US Reserve
Bank brought its bond-buying programme to an end
during the year under report, resulting – in spring 2014
– in considerable turmoil for the currencies of some of
the world’s emerging market countries. However, so far,
this first step to scale back its highly expansionary
monetary policy has not had a major adverse impact,
either in the USA or in other countries.
After a two-year lull, the eurozone returned to growth
in 2014, albeit at a modest rate of 0.8 %. The German
economy grew overall by 1.5 %. France was once again
only able to report a very low growth rate of 0.4 %. Italy’s
economy contracted for the third year in succession,
this time at a less pronounced rate than in previous years
(– 0.4 %). By contrast, most of the other southern Euro-
pean economies recovered well and recorded positive
growth again after years of recession.
As the largest European economy outside the eurozone,
the United Kingdom saw a continuation of its run of
good quarterly figures and recorded a growth rate of
2.6 % for the year as a whole. Although bolstered by
monetary and fiscal policies implemented on a massive
scale, it appears that the UK economy has now found
a stronger footing to enable it to grow at a decent pace
over a sustained period of time.
The cyclical upturn in the USA gained further momen-
tum in 2014. Although the reported growth rate of 2.4 %
was similarly high compared to the previous year, it was
only the impact of the severe winter that prevented an
even better performance for the year as a whole. The
upturn was driven once again primarily by the private
sector, with the strongest stimulus coming from the
employment and property markets. At the same time,
the downward pressure on public-sector budgets and
the gradual scaling back of expansionary monetary
policies held down growth in the US economy slightly.
The Japanese economy was influenced by a mixture of
positive and negative factors in 2014, including a con-
tinuation of highly expansionary monetary policies on
the one hand, and a hike in the value added tax rate in
April on the other. The overall outcome was that growth
slipped to 0.3 % in Japan in 2014.
With a slightly reduced growth rate of 7.4 %, China re-
mained by far the most dynamic of the world’s major
economies. By contrast, the performance of other major
emerging economies was generally disappointing. India,
for instance, managed a slightly improved growth rate
of 5.4 % in 2014, still trailing against growth rates re-
ported in previous years. Brazil and Russia grew by 0.2 %
and 0.6 % respectively, not far short of recession.
Currency markets
The US dollar averaged an exchange rate of 1.33 to the
euro in 2014, similar to the previous year’s level. How-
ever, the range of fluctuation was much greater, with
the US dollar initially losing value only then to surge
during the second half of the year to finish at US dollar
1.21 to the euro. The British pound also appreciated in
value, which is reflected in an annual average exchange
rate of 0.81 to the euro. These exchange rates were af-
fected by the expectation of reference interest rate in-
creases in these two currency blocks in 2015, a develop-
ment exacerbated by the European Central Bank’s
decision to reduce interest rates again in 2014 and its
announcement to loosen its monetary policies further.
With its value coupled to that of the US dollar, the an-
nual average exchange rate of the Chinese renminbi
(8.19 to the euro) remained at a similar level to the pre-
vious year. With fluctuations in exchange rates following
the same pattern as the US dollar, the Chinese renminbi
also gained noticeably in value towards the end of the
year. In sharp contrast, the Japanese yen fell to an annual
average rate of 140 yen to the euro in the wake of Japan’s
monetary policy. Despite showing some signs of stabilising
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
26 Overall Assessment by Management
26 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
61 Comments on Financial Statements
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
65 Outlook
70 Report on Risks and Opportunities
82 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
24
Exchange rates compared to the euro
(Index: December 2009 = 100)
160
150
140
130
120
110
100
90
80
Russian Rouble
Japanese Yen
British Pound
US Dollar
Chinese
Renminbi
10
11
12
13
14
Russian Rouble
Japanese Yen
British Pound
US Dollar
Chinese Renminbi
Source: Reuters.
over the course of the year, many emerging market
currencies – such as those of India, Brazil and South
Africa – lost further ground in 2014. The depreciation
of the Russian rouble was particularly pronounced at
the beginning of the Ukraine crisis and then again
towards the end of the year, when it fell to a value of
70.98 roubles to the euro.
Energy and commodity prices
Oil prices plummeted during the second half of 2014.
Although the average price of Brent Crude oil during
the twelve-month period was only slightly down at
US dollar 100 per barrel, its price tumbled from over
US dollar 110 to around US dollar 55 per barrel within
a period of six months. The story was similar for WTI
Crude oil with an annual average price of approxi-
mately US dollar 93 per barrel. Generally speaking,
metal prices fell slightly during the course of the year.
Automobile markets
The worldwide market for passenger cars and light com-
mercial vehicles grew once again in 2014, surpassing
the threshold of 80 million vehicles for the first time
Steel price trend
(Index: January 2010 = 100)
170
160
150
140
130
120
110
100
10
11
12
13
14
Source: Working Group for the Iron and Metal Processing Industry.
Oil price trend
Price per barrel of Brent Crude
120
110
100
90
80
70
60
50
Source: Reuters.
10
11
12
13
14
Price in US Dollar
Price in €
25 COMBINED MANAGEMENT REPORT
Precious metals price trend
(Index: December 2009 = 100)
250
225
200
175
150
125
100
75
Source: Reuters.
Palladium
Gold
Platinum
10
11
12
13
14
(+ 4.1 %). The two largest automobile markets, the
USA and China, again contributed strongly to this
growth. New registrations in China were up by 13.0 %
to 18.4 million units, while the US market saw an in-
crease of 6.0 % to 16.5 million units.
Registration figures in Germany showed a 2.9 % increase
to 3.0 million units. The European car market (exclud-
ing Germany) grew by 6.6 % to a total of 10.0 million
registrations in 2014, the first increase posted since the
financial crisis. France (1.8 million units; + 0.5 %) and
Italy (1.4 million units; + 4.6 %) both returned to robust
growth after a number of years of contraction. However,
among the major European markets, it was Spain that
recorded the fastest growth rate (0.86 million units;
+ 18.4 %). The UK market also saw above-average growth
(+ 9.3 %) in 2014 with a total of 2.5 million new vehicles
registered.
Despite the value added tax hike in April, the Japanese
car market expanded by 3.2 % to 5.4 million units.
Car markets in the world’s major emerging economies
also suffered from the effects of generally weak economic
performance in these regions in 2014. The Russian mar-
ket contracted by 10.2 % to 2.3 million units, while the
number of registrations in Brazil fell by 7.1 % to 3.3 mil-
lion units.
while France and Italy both saw increases of 2.7 %. The
US market also developed positively (+ 1.8 %).
Financial Services
The global economy continued to recover in 2014, despite
the existence of uncertainties which held down growth,
particularly in the first half of the year. A strong eco-
nomic rally in the USA in the second half of the year
heralded a further tightening of monetary policies. The
US Reserve Bank’s bond-buying programme, which
had already been reduced in scale over the course of the
year, was temporarily brought to a halt in October. The
Bank of Japan purchased government bonds in 2014,
with the aim of keeping inflation above 2 % and stimu-
lating the domestic economy. Within the eurozone, the
European Central Bank (ECB) also endeavoured to
combat the risk of deflation by loosening its monetary
policies further and reducing its reference interest rate
yet again. At the end of the year, the ECB’s reference
interest rate stood at a historical low of 0.05 %.
Bad debt levels either remained stable or improved
slightly. The negative impact of some slight increases in
risk, such as in Ukraine, have so far remained localised.
Price levels on the world’s used car markets in 2014
remained more or less stable across all regions, with
selling prices fluctuating within normal ranges.
Motorcycle markets
The worldwide market for 500 cc plus class motorcycles
grew in 2014 for the first time in several years (+ 4.9 %).
Despite ongoing economic uncertainties, motorcycle
registrations in Europe rose by 8.0 %. The motorcycles
market in Germany was 9.0 % up on the previous year,
26
Report on Economic Position
Overall Assessment by Management
Financial and Non-financial Performance Indicators
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
26 Overall Assessment by Management
26 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
61 Comments on Financial Statements
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
65 Outlook
70 Report on Risks and Opportunities
82 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
Overall assessment by management
The 2014 financial year was a pleasing one for the BMW
Group in overall terms and in line with our expectations.
The picture was also extremely positive in terms of
results of operations, financial position and net assets.
This statement also takes into account events after the
end of the reporting period.
Financial and non-financial performance indicators
In the following section, we report on the principal finan-
cial and non-financial performance indicators used as
the basis for managing the BMW Group and its segments.
As part of the review of operations and the financial
condition of the BMW Group, forecasts made in the pre-
vious year are compared with actual outcomes.
BMW Group
Profit before tax
The BMW Group continued to perform extremely well
in 2014 and achieved a new record Group profit before
tax of € 8,707 million (2013: € 7,8931 million; + 10.3 %).
This result reflects the steep rise in the number of vehi-
cles sold. New models (such as the BMW X4) and new
series (such as the BMW 2 and 4 Series), combined with
a high-value model mix, ensured that the pre-tax profit
continued to develop positively despite ongoing intense
competition on international car markets and consider-
able levels of investment in new technologies.
As forecast for the financial year 2014, the Group’s profit
before tax rose significantly and was therefore in line
with our expectations.
Workforce at year-end
The BMW Group’s workforce increased to 116,324 em-
ployees during the year under report (2013: 110,351 em-
ployees; + 5.4 %). This solid increase mainly reflects
strong demand for the Group’s cars and motorcycles, the
greater range of mobility services now offered and the
need for additional qualified staff in conjunction with
the development of electromobility.
As forecast for the financial year 2014, there was a solid
increase in the Group’s workforce, which was therefore
in line with our expectations.
Automotive segment
Sales volume
The BMW Group sold more cars in the year under report
than ever before. Despite a certain degree of volatility
on various markets, sales of BMW, MINI and Rolls-Royce
brand cars as a whole rose by a solid 7.9 % to 2,117,9652
units (2013: 1,963,7982 units). This growth was achieved
on the back of numerous new model launches on
international markets in 2014, thus ensuring that the
BMW Group remained the world’s market leader in the
premium segment.
All three car brands made an important contribution to
this record sales volume performance. Sales of BMW
and Rolls-Royce brand cars increased to 1,811,7192 units
(2013: 1,655,1382 units; + 9.5 %) and 4,063 units (2013:
3,630 units; + 11.9 %) respectively, in both cases setting
new records. With a sales volume of 302,183 units, the
MINI brand was in line with previous year’s high level
(2013: 305,030 units; – 0.9 %) despite the model change
in 2014.
In line with the forecast provided for the full year in the
quarterly report to 30 September 2014, the total number
of vehicles sold by the BMW Group rose by a solid
7.9 %. In the Annual Report 2013 a “significant rise” in
deliveries to customers was predicted. The main reasons
for the difference were ongoing difficult political and
business conditions prevailing on some markets (such
as Russia) and shifts in the timing of production starts.
Moreover, market developments in China did not quite
live up to expectations.
1 Prior year figures have been adjusted in accordance with IAS 8, see note 9.
2 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2013:
198,542 units, 2014: 275,891 units).
27 COMBINED MANAGEMENT REPORT
Fleet carbon emissions1
The BMW Group is continually reducing the carbon
emissions of its fleet of vehicles by equipping them with
highly efficient engines and electrified drivetrain sys-
tems. Thanks to the rigorous deployment of Efficient
Dynamics technologies, our vehicles also set standards
in terms of dynamism and driving pleasure.
In 2014, the volume of carbon emissions produced by
our vehicle fleet sold in Europe1 decreased slightly to
130 grams CO2 / km (2013: 133 grams CO2 / km; – 2.3 %).
The scale of the decrease in fleet emissions in 2014
was therefore not as pronounced as originally forecast,
mainly reflecting the impact of a higher-value model
mix on the one hand and the later-than-planned avail-
ability of the new MINI on the other. In the Annual
Report 2013, we had forecast a “moderate decrease” for
the financial year 2014.
Revenues
Revenues from the sale of BMW, MINI and Rolls-Royce
brand cars grew by 6.4 % to € 75,173 million (2013:
€ 70,6302 million) in line with the solid sales volume
rise. The increase was primarily attributable to the nu-
merous new models launched and the positive con-
sumer climate in major markets.
As forecast for the full year in the Quarterly Report to
30 June 2014, automobile business revenues had a solid
increase despite the dampening effect of exchange
rates which had been mentioned in the previous year’s
annual outlook as a potentially negative factor. In the
Annual Report 2013 a “significant increase” in revenues
was predicted.
EBIT margin and return on capital employed
The EBIT margin for the Automotive segment (profit
before financial result divided by revenues) came in at
9.6 % (2013: 9.4 %) as a result of the high-value model
mix. As forecast for the financial year 2014, the EBIT
margin from automobile business was within the target
range of between 8 and 10 % and thus in line with our
expectations.
The return on capital employed (RoCE) amounted to
61.7 % (2013: 63.02 %). Contrary to our original ex-
pectations, the RoCE decreased only slightly due to
improved management of capital employed and the
increase in service contract volumes. In the Annual
Report 2013 a “significant drop” in RoCE was pre-
dicted. The rate achieved was well above the minimum
target of 26 % referred to in the forecast for 2014.
Motorcycles segment
Sales volume
In a friendlier-than-expected market environment, BMW
Motorrad achieved a solid increase of 7.2 % with a sales
volume of 123,495 units (2013: 115,2153 units). This per-
formance was therefore better than the “slight increase”
forecast in the Annual Report 2013. The forecast was
raised to “solid” in the quarterly report to 30 September
2014.
Return on capital employed
The return on capital employed (RoCE) in the Motor-
cycles segment stood at 21.8 % (2013: 16.4 %). The solid
increase in RoCE from motorcycles business reflects
higher-than-expected sales volume, the high-value
model mix and the first fruits of the segment’s strategic
realignment. In the Annual Report 2013, it was pre-
dicted that the RoCE would be on par with the previous
year.
Financial Services segment
Return on equity
The Financial Services segment generated a return on
equity (RoE) of 19.4 % in 2014 (2013: 20.02 %), reflecting
continued favourable business conditions. The RoE was
therefore at a similar level to the previous year and re-
mained above the target level of 18 %, in line with our
forecast for 2014. In the Annual Report 2013, a “slight
decrease” in RoE was predicted. The main reason for
1 EU-28.
2 Prior year figures have been adjusted in accordance with IAS 8, see note 9.
3 Plus an additional 1,110 Husqvarna motorcycles (until 5 March 2013).
28
the better-than-expected RoE performance was the
stable risk situation, particularly in the area of residual
values.
The following overall picture arises for the principal
performance indicators utilised by the BMW Group and
its segments:
Comparison of 2014 forecasts with actual outcomes 2014
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
23 Report on Economic Position
23 General and Sector-specific
Environment
26 Overall Assessment by Management
26 Financial and Non-financial
Performance Indicators
29 Review of Operations
29 Automotive Segment
35 Motorcycles Segment
36 Financial Services Segment
38 Research and Development
40 Purchasing
41 Sales and Marketing
44 Workforce
45 Sustainability
49 Results of Operations, Financial
Position and Net Assets
61 Comments on Financial Statements
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
82 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
BMW Group
Profit before tax
Workforce at year end
Automotive segment
Sales volume1
Fleet emissions2
Revenues
EBIT margin
Forecast for 2014
in 2013 Annual Report
Forecast revision
during the year
Actual outcome
in 2014
significant increase
solid increase
€ million
8,707 (+ 10.3 %)
116,324 (+ 5.4 %)
significant increase
Q3: solid increase
units
2,117,965 (+ 7.9 %)
moderate decrease
Q3: slight decrease
g CO2 / km
significant increase
Q2: solid increase
€ million
130 (– 2.3%)
75,173 (+ 6.4 %)
9.6 (+ 0.2 %pts)
61.7 (– 1.3 %pts)
123,495 (+ 7.2 %)
21.8 (+ 5.4 %pts)
%
%
units
%
target range between 8 and 10 %
Return on capital employed
significant decrease
Motorcycles segment
83 Disclosures Relevant for Takeovers
Sales volume
slight increase
Q3: solid increase
and Explanatory Comments
87 BMW Stock and Capital Markets
Return on capital employed
in line with last year’s level
Financial Services segment
Return on equity
slight decrease
%
19.4 (– 0.6 %pts)
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2014: 275,891 units).
2 EU-28.
29 COMBINED MANAGEMENT REPORT
Report on Economic Position
Review of Operations
AUTOMOTIVE SEGMENT
More than 2 million vehicles sold for the first time
The BMW Group sold a total of 2,117,965* BMW, MINI
and Rolls-Royce brand vehicles in 2014, thus surpassing
the two-million mark for the first time in its history
(2013: 1,963,798* units; + 7.9 %). All three brands con-
tributed to these excellent figures and helped the BMW
Group to retain its pole position in the premium seg-
ment worldwide. Sales of BMW brand cars were 9.5 %
up on the previous year (2014: 1,811,719* units; 2013:
1,655,138* units). Despite the model change of its
best-selling model, the MINI Hatch, the MINI brand
achieved a sales volume of 302,183 units, almost match-
ing the previous year’s high level (2013: 305,030 units;
– 0.9 %). Rolls-Royce Motor Cars sold 4,063 ultra-luxury
sedans, surpassing the previous year’s strong sales per-
formance by 11.9 % (2013: 3,630 units).
Double-digit sales volume growth in Asia
Markets in Asia continued to develop dynamically in
2014. Sales of BMW, MINI and Rolls-Royce brand
vehicles in this region rose significantly (+ 13.8 %) to
658,384* units (2013: 578,678* units). China again
accounted for the lion’s share with a sales volume of
456,732* units (2013: 391,713* units; + 16.6 %). The
number of vehicles sold in the Americas region climbed
by 4.0 % to 482,257 units (2013: 463,822 units), of
BMW Group sales volume of vehicles by region and market
in 1,000 units
2,200
2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
BMW Group – key automobile markets 2014
as a percentage of sales volume
Other
China*
Japan
Italy
France
USA
Great Britain
Germany
China*
USA
Germany
Great Britain
21.6
18.7
12.9
9.7
France
Italy
Japan
Other
3.2
3.0
3.0
27.9
which the USA accounted for 396,961 units, 5.4 % up on
the previous year (2013: 376,636 units). Thanks to the
more stable market en vironment in Europe, sales of the
Group’s three brands grew by 6.4 % to 914,587 units (2013:
859,546 units). The number of vehicles sold in Germany
Europe
thereof Germany
Asia*
thereof China*
Americas
thereof USA
Other markets
10
11
12
13
14
Europe
thereof Germany
Asia*
thereof China*
Americas
thereof USA
Other markets
Total
791.2
267.2
286.3
169.6
329.7
266.6
54.0
858.4
285.3
375.5
233.6
380.3
306.3
54.8
865.4
287.4
493.4
327.3
425.3
348.5
61.1
859.5
259.2
578.7
391.7
463.8
376.6
61.8
914.6
272.3
658.4
456.7
482.3
397.0
62.7
1,461.2
1,669.0
1,845.2
1,963.8
2,118.0
* Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2010: 53,701 units, 2011: 94,400 units, 2012: 141,165 units, 2013: 198,542 units, 2014: 275,891 units).
30
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
23 Report on Economic Position
23 General and Sector-specific
Environment
26 Overall Assessment by Management
26 Financial and Non-financial
Performance Indicators
29 Review of Operations
29 Automotive Segment
35 Motorcycles Segment
36 Financial Services Segment
38 Research and Development
40 Purchasing
41 Sales and Marketing
44 Workforce
45 Sustainability
49 Results of Operations, Financial
Position and Net Assets
61 Comments on Financial Statements
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
82 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
rose by 5.1 % to 272,345 units (2013: 259,219 units). The
BMW Group also performed extremely well in Great
Britain, with sales rising to a total of 205,071 units (2013:
189,121 units; + 8.4 %).
BMW* retains pole position in the premium segment
The BMW brand maintained its pole position in the
premium segment during the year under report. Signifi-
cant contributions to this achievement were made by
the highly successful BMW X5 as well as the BMW 3, 4
and 5 Series, each of which was market leader in its
relevant segment.
At 190,033 units, sales of the BMW 1 Series were down
on the previous year’s level (2013: 213,611 units; – 11.0 %),
reflecting the fact that the Coupé and Convertible
body variants are now reported as part of the 2 Series.
Similarly, the Convertible and Coupé models previously
included in the BMW 3 Series have been reported as
part of the BMW 4 Series since the end of 2013. For this
reason, reported sales of the 3 Series in 2014 went
down by 4.0 % to 480,214 units (2013: 500,332 units).
The BMW 4 Series has been highly successful since its
launch, with 119,580 units sold in the year under re-
port (2013: 14,763 units). A total of 373,053 customers
opted for the BMW 5 Series (2013: 366,992 units; + 1.7 %).
The BMW X family also continued to perform well in
2014. Following the launch of the third generation in
November 2013, sales of the BMW X5 rose by more than
a third to 147,381 units (2013: 107,231 units; + 37.4 %).
The BMW X3 recorded a sales volume of 150,915 units,
therefore not quite matching the previous year’s high
level (2013: 157,303 units; – 4.1 %). Similarly, the BMW X1
sales volume figure of 156,471 units was slightly lower
than one year earlier (2013: 161,353 units; – 3.0 %). The
new X4 became available in July 2014 and achieved a
sales volume of 21,688 units by the end of the year.
Sales volume of BMW vehicles by model variant*
in units
BMW 1 Series
BMW 2 Series
BMW 3 Series
BMW 4 Series
BMW 5 Series
BMW 6 Series
BMW 7 Series
BMW X1
BMW X3
BMW X4
BMW X5
BMW X6
BMW Z4
BMW i
BMW total
2014
2013
Change
in %
Proportion of
BMW sales volume
2014 in %
190,033
41,038
480,214
119,580
373,053
23,988
48,519
156,471
150,915
21,688
147,381
30,244
10,802
17,793
213,611
–
500,332
14,763
366,992
27,687
56,001
161,353
157,303
–
107,231
36,688
12,866
311
1,811,719
1,655,138
– 11.0
–
– 4.0
–
1.7
– 13.4
– 13.4
– 3.0
– 4.1
–
37.4
– 17.6
– 16.0
–
9.5
10.5
2.3
26.5
6.6
20.6
1.3
2.7
8.6
8.3
1.2
8.1
1.7
0.6
1.0
100.0
* Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2013: 198,542 units, 2014: 275,891 units).
MINI at previous year’s level
The sales performance of the MINI brand in 2014 was
influenced by the market launch of the third-genera-
tion Hatch. The BMW Group delivered 302,183 MINI
brand cars to customers worldwide in the period under
report (2013: 305,030 units; – 0.9 %), with sales of the
new MINI Hatch up by 9.0 % at 140,051 units (2013:
128,498 units) and sales of the MINI Countryman up by
5.0 % at 106,995 units (2013: 101,897 units).
31 COMBINED MANAGEMENT REPORT
Sales volume of MINI vehicles by model variant
in units
MINI Hatch
MINI Convertible
MINI Clubman
MINI Countryman
MINI Coupé
MINI Roadster
MINI Paceman
MINI total
2014
2013
Change
in %
Proportion of
MINI sales volume
2014 in %
140,051
17,327
13,326
106,995
3,816
5,101
15,567
302,183
128,498
21,167
21,030
101,897
8,436
9,315
14,687
305,030
9.0
– 18.1
– 36.6
5.0
– 54.8
– 45.2
6.0
– 0.9
46.3
5.7
4.4
35.4
1.3
1.7
5.2
100.0
More than 4,000 Rolls-Royce sold for the first time
Rolls-Royce Motor Cars remained market leader in the
ultra-luxury segment in 2014. With 4,063 units sold,
the brand surpassed the 4,000-unit sales volume thresh-
old for the first time (2013: 3,630 units; + 11.9 %). The
Rolls-Royce Wraith, which became available in autumn
2013, achieved sales volume of 1,906 units (2013:
492 units). 1,555 units of the Rolls-Royce Ghost were
sold worldwide (2013: 2,284 units; – 31.9 %).
Sales volume of Rolls-Royce vehicles by model variant
in units
Phantom
Ghost
Wraith
Rolls-Royce total
2014
602
1,555
1,906
4,063
2013
Change in %
854
2,284
492
3,630
– 29.5
– 31.9
–
11.9
Production network running at full pace
The most important events in the BMW Group’s pro-
duction network during the year under report were the
numerous model start-ups, the beginning of series pro-
duction for the BMW i8 and the further expansion of
our international manufacturing network, which grew
to a total of 30 sites in 14 countries and set new records
in terms of production volumes.
Due to the brisk demand on international car markets,
in 2014 production volume rose to 2,165,566* units (2013:
2,006,366* units; + 7.9 %), comprising 1,838,268* BMW
(2013: 1,699,835*; + 8.1 %), 322,803 MINI (2013: 303,177;
+ 6.5 %) and 4,495 Rolls-Royce (2013: 3,354; + 34.0 %)
brand cars.
More than one million vehicles produced in Germany
for fourth consecutive year
For the fourth year in a row, the BMW Group manu-
factured over one million vehicles at its German plants.
Around 950 vehicles rolled off production lines per
working day at the Group’s main plant in Munich, in-
cluding the BMW 3 Series Sedan, the BMW 3 Series
Touring, the BMW 4 Series Coupé and, since February,
the BMW M4 Coupé.
In Dingolfing, production reached all-time high levels,
with an average of around 1,600 units manufactured per
* Including the joint venture BMW Brilliance Automotive Ltd., Shenyang
(2013: 214,920 units, 2014: 287,466 units).
32
Vehicle production of the BMW Group by plant
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
23 Report on Economic Position
23 General and Sector-specific
Environment
26 Overall Assessment by Management
26 Financial and Non-financial
Performance Indicators
29 Review of Operations
29 Automotive Segment
35 Motorcycles Segment
36 Financial Services Segment
38 Research and Development
40 Purchasing
41 Sales and Marketing
44 Workforce
45 Sustainability
49 Results of Operations, Financial
Position and Net Assets
61 Comments on Financial Statements
of BMW AG
in units
Munich
Dingolfing
Regensburg
Leipzig
Rosslyn
Spartanburg
Dadong1
Tiexi 1
Oxford
Graz (Magna Steyr) 2
Born (VDL Nedcar) 2
Goodwood
64 Events after the End of the
Assembly plants
Reporting Period
65 Report on Outlook, Risks and
Opportunities
82 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
BMW Group
2,165,566
2,006,366
1 Joint venture BMW Brilliance Automotive Ltd., Shenyang.
2 Contract production.
2014
2013
Change
in %
Proportion of
production in %
228,126
369,027
272,015
211,434
68,771
349,949
143,390
144,076
179,318
113,401
29,196
4,495
52,368
247,330
342,629
295,417
186,695
65,646
297,326
126,888
88,032
175,986
125,559
–
3,354
51,504
– 7.8
7.7
– 7.9
13.3
4.8
17.7
13.0
63.7
1.9
– 9.7
–
34.0
1.7
7.9
10.5
17.0
12.6
9.8
3.2
16.2
6.6
6.7
8.3
5.2
1.3
0.2
2.4
100.0
day and almost 370,000 over the full year under report.
Production of the BMW 4 Series Gran Coupé began in
February. Assembly lines at the Dingolfing plant are
therefore now making a total of 17 models, belonging to
five different BMW series. In February the plant cele-
brated a production record following construction of
the nine-millionth BMW car at that location. As part of
the plant’s modernisation, measures in 2014 included
further work on new bodymaking facilities at the site. A
new supply centre for vehicle assembly, a high-speed
servo press and a production facility for axle brackets
were all put into operation. Two new production lines
were added in October to manufacture high-voltage
power storage systems and electric motors for the BMW
Group’s future plug-in hybrids.
The Leipzig plant continued to recruit new personnel
in order to keep pace with the increased expertise and
manpower capacity needed, both for BMW i models
and for conventional production. In July, the four-thou-
sandth employee was welcomed to the plant. In May,
series production of the BMW i8 commenced, followed
by the BMW 2 Series Active Tourer in July. In October,
the 1.5-millionth BMW was manufactured at the plant
since production first began in 2005. Production of the
BMW 2 Series Convertible began in November.
At the Regensburg plant, production of the BMW M3
Sedan began in February and the first BMW M4
Convertible models were manufactured there in July.
The enlargement of the pressing plant was completed
and the bodymaking facility expanded to include a
second production line. At the same time, a new supply
centre went into operation.
The BMW Group plant in Wackersdorf celebrated its
25th anniversary in 2014. In July, a new building and a
new production facility for processing CFRP matting
was taken into service.
Expansion work at the Eisenach plant also began in
July. The existing buildings and production floor space
are due to be enlarged to accommodate future vehicle
projects and new technologies. Moreover, a state-of-the-
art servo press is being installed.
The components plant in Landshut is making the electric
motor, the complete plastic outer skin, CFRP structural
body parts and lightweight metal die-cast parts for the
BMW i8 hybrid sports car. The plant’s lightweight die-
cast metal facilities celebrated their 25th anniversary in
2014 and remain the only unit within the BMW Group
producing such parts. The components plant has adopted
33 COMBINED MANAGEMENT REPORT
a new, energy-saving strategy to optimise energy manage-
ment. Since 2014, the waste heat from the melting
plant has been fed into the site’s own in-house hot water
system, which means it can be used for heating in win-
ter and cooling in summer.
third production building. It should be ready to begin
operations by the beginning of 2015 and offers additional
capacity for two production lines capable of handling a
total volume of 3,000 tonnes per year.
Global presence strengthened
During the year under report, 48.5 % of the BMW Group’s
vehicles were manufactured abroad. The BMW 5 Series
long-wheelbase Sedan is manufactured at the Dadong1
plant in China. The 500,000th vehicle was produced at
the plant in March 2014, while at the engine manufac-
turing plant in Shenyang, the 400,000th 4-cylinder petrol
engine was being produced for the Chinese market. At
the same time, preparations were initiated at the Tiexi1
plant for a new engine manufacturing facility, including
a foundry, to supply local production capacities. It is
due to begin production in 2016. The first BMW 316Li
was manufactured at the Tiexi1 plant in October.
At the Rosslyn manufacturing plant in South Africa,
the BMW Group concluded a contract with the energy
company Bio2Watt (Pty) Ltd. Under its terms, from
2015 onwards some 25 to 30 % of the plant’s electricity
requirements will be generated by a combined heat and
power plant that runs on landfill gas. The biogas used
will be recovered from the treatment of waste.
Almost 350,000 vehicles were manufactured at the
US plant in Spartanburg in 2014 – a new record for the
location. To coincide with the production plant’s 20th
anniversary, in March the BMW Group announced ex-
pansion plans. Its manufacturing capacity is scheduled
to be raised to 450,000 vehicles per year. To date, the
BMW X3, X5, X5 M, X6 and X6 M models have been
manufactured at the competence centre for X vehicles.
Furthermore, production of the BMW X4 commenced
at the site in April. In October, a second painting facility
was also commissioned at the plant.
In July 2014 the construction of a new plant in San Luis
Potosí, Mexico, was announced. The scheduled annual
capacity of this plant is approximately 150,000 units.
This move underpins the BMW Group’s strategic com-
mitment to maintaining a well-balanced global value-
added chain.
In a parallel development, the BMW Group has built an
assembly plant in Araquari, Brazil. The first vehicles
were produced at the location in October 2014. The new
production facility will be fully completed in the course
of 2015. The manufacturing infrastructure will then
comprise bodymaking, painting and assembly. Manu-
facturing capacity is scheduled to reach up to 30,000 vehi-
cles per year. The production portfolio currently com-
prises the BMW 3 Series and the X1. The BMW 1 Series,
the X3 and the MINI Countryman are scheduled to fol-
low in the course of 2015.
At the Group’s various assembly plants, which mostly
serve their regional markets, 52,368 vehicles were
produced overall during the period under report. The
plants are located in Araquari (Brazil), Rayong (Thailand),
Chennai (India), Kaliningrad (Russia), Cairo (Egypt),
Jakarta (Indonesia) and Kulim (Malaysia).
Thirteen years after the relaunching of the MINI brand in
2001, the three-millionth vehicle has meanwhile rolled
off the assembly lines at the Oxford plant. During this
period, two million of the MINI brand cars manufac-
tured in the UK have been exported to over 110 coun-
tries around the world. The British production triangle
comprising the MINI plant in Oxford, the components
plant in Swindon and the engine production facility
in Hams Hall is a key part of the BMW Group’s produc-
tion network. More than 900 units of the MINI are pro-
duced at the Oxford plant per day during peak times.
In order to secure greater capacity for planned growth,
since July the MINI Hatch is also being produced at
the Dutch carmaker VDL Nedcar bv in Born, the
Netherlands, under the terms of a contract with the
BMW Group. These new arrangements enable even
greater flexibility for the BMW Group’s production net-
work worldwide. The MINI models Countryman and
Paceman are already being produced under contract by
Magna Steyr Fahrzeugtechnik (MSF) in Graz, Austria. In
At Moses Lake2, Washington (USA), the carbon fibre
manufacturing facility has been enlarged to include a
1 Joint venture BMW Brilliance Automotive Ltd., Shenyang.
2 Joint operation SGL Automotive Carbon Fibers.
upstream preparation staff with the best possible
support. One good example is the innovative coopera-
tion between staff and robots in the Spartanburg and
Dingolfing plants, by which people and robots work
together effectively side by side.
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
23 Report on Economic Position
23 General and Sector-specific
Environment
26 Overall Assessment by Management
26 Financial and Non-financial
Performance Indicators
29 Review of Operations
29 Automotive Segment
35 Motorcycles Segment
36 Financial Services Segment
38 Research and Development
40 Purchasing
41 Sales and Marketing
44 Workforce
45 Sustainability
49 Results of Operations, Financial
Position and Net Assets
61 Comments on Financial Statements
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
82 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
34
May 2014, MSF manufactured its one-millionth vehicle
for the BMW Group.
The pressing plant in Swindon produces bodywork
components and assemblies for the Oxford plant. Since
July the plant has also supplied the MINI contract pro-
duction facilities at VDL Nedcar with body parts and
the Leipzig plant with pressed parts for the BMW 2 Se-
ries Active Tourer.
During the third quarter, series production of the
Rolls-Royce Ghost Series II commenced at the Rolls-Royce
plant in Goodwood (UK). Construction of a technology
and logistics centre for the plant was also announced.
The Goodwood plant meanwhile provides jobs for more
than 1,500 people, 100 of whom took up their posts
during the period under report.
The engine plants in Munich, Hams Hall (UK) and Steyr
(Austria) have continued to introduce a highly flexible,
demand-oriented production system. In June, the engine
production plant in Munich officially gave the green
light for a production line for modular engines. In future,
the Group’s main plant will therefore act internationally
as the leading plant for the production of the 3- and
4-cylinder petrol engines that form part of the Efficient
Dynamics family. The Munich plant produces up to
3,200 engines each day, 1,000 of which are modular. The
range comprises BMW 3-, 4-, 8- and 12-cylinder petrol
engines, BMW 6-cylinder diesel engines, and 8-cylinder
high-performance engines for the BMW M models. In
October, the engine plant in Steyr also launched a pro-
duction line for low-fuel-consumption 3- and 4-cylinder
modular engines. In what is currently the largest engine
plant operated by the BMW Group, up to 4,700 engines
are completed each day. The diesel engine development
centre, which is connected to the plant, is currently being
enlarged. The Hams Hall engine plant makes 3- and
4-cylinder petrol engines for BMW and MINI and is also
the exclusive manufacturer of 3-cylinder petrol engines
for the BMW i8.
Pilot projects for “Industrie 4.0” launched
During the year under report, the BMW Group initiated
new projects within its production network which will
ultimately pave the way towards the first intelligent plant.
The objective is to deploy new technologies as sensibly
as possible with the aim of providing production and
35 COMBINED MANAGEMENT REPORT
MOTORCYCLES SEGMENT
Solid sales volume growth for BMW Motorrad
The Motorcycles segment profited from a positive market
environment during the period under report. In total,
we sold 123,495 BMW motorcycles worldwide (2013:
115,2151; + 7.2 %) and therefore outperformed the market
as a whole.
Motorcycle sales up in all markets
The number of motorcycles sold in Europe rose to 73,611
units (2013: 68,961 units), a solid growth rate of 6.7 %.
With a sales volume of 21,714 units, business in Germany
edged up slightly on the previous year (2013: 21,473 units;
+ 1.1 %). Motorcycle sales were also slightly higher (+ 2.5 %)
in Italy, with 10,487 units handed over to customers
(2013: 10,230 units). Significant growth was achieved in
France, however, where we recorded a sales volume of
11,600 units (2013: 10,400 units; + 11.5 %). Motorcycle
sales in the USA, at 15,301 units, grew solidly compared
to the previous year (2013: 14,100 units; + 8.5 %).
BMW Motorrad enters world of electromobility
In May 2014, the arrival of the new C evolution marked
the beginning of a new chapter in the urban mobility
segment for BMW Motorrad. The new electrically pow-
ered scooter fuses riding fun and dynamism with the
benefits of zero-emissions performance to create a whole
new experience on two wheels.
The new R nineT, S 1000 R, R 1200 RT, R 1200 GS Adven-
ture and K 1600 GTL Exclusive models presented in au-
tumn 2013 were all launched in time for the start of
the season in March 2014. Important contributions to
BMW Motorrad’s success were made in particular by the
R 1200 GS Adventure and R 1200 RT models. The new
R nineT generated a highly positive response among cus-
tomers and media alike.
Three BMW motorcycles celebrated their world premieres
at the INTERMOT in Cologne: the S 1000 RR, the R 1200 R
and the R 1200 RS. The latest version of the S 1000 RR
Supersports bike has an even better weight-to-power ra-
tio and a whole host of integrated technical innovations.
BMW sales volume of motorcycles2
in 1,000 units
120
100
80
60
40
20
10
11
12
13
14
98.0
104.3
106.4
115.2 123.5
BMW Group – key motorcycle markets 2014
as a percentage of sales volume
Other
Germany
USA
France
Spain
Great Britain
Brazil
Italy
Germany
USA
France
Italy
17.6
12.4
9.4
8.5
Brazil
Great Britain
Spain
Other
6.1
5.5
5.0
35.5
The new R 1200 RS succeeds in combining the qualities
of a touring bike with the dynamic performance of a
sports machine. The new R 1200 R continues in the tra-
dition of a “purist” BMW roadster combined with a tried-
and-tested boxer engine. The new models will become
available in spring 2015, in good time for the start of the
motorcycle season. BMW Motorrad also presented two
more new models at the EICMA Motorcycles Exhibition
in Milan – the S 1000 XR and the F 800 R. The S 1000 XR
unites dynamic touring qualities, sporty performance
and high levels of comfort with outstanding everyday
usability. The new F 800 R Roadster offers sporty perfor-
mance, agile handling and even greater versatility.
BMW Motorrad’s new brand strategy
The BMW Group launched its new brand strategy for BMW
Motorrad at the INTERMOT international motorcycle
show. The brand’s new motto – MAKE LIFE A RIDE –
equates motorcycle riding with the joy of living. People
tell their (life) stories in a documentary style and, by air-
ing their emotions regarding all aspects of the motor-
cycle, raise enthusiasm worldwide for motorcycle riding.
Motorcycle production volume significantly up
on previous year
In total, 133,615 BMW motorcycles were manufactured
during the period under report (2013: 110,1273 units;
+ 21.3 %), with the sharp increase primarily reflecting
the production starts of a number of new models. Up to
600 motorcycles (from various series) and maxi-scooters
are manufactured each day at the motorcycles plant in
Berlin. BMW Motorrad also continued to expand the in-
ternational reach of its production activities. Local motor-
cycle assembly facilities, such as those in Brazil and
Thailand, are becoming increasingly important.
1 Plus an additional 1,110 Husqvarna motorcycles (until 5 March 2013).
2 Excluding Husqvarna, sales volume up to 2013: 59,776 units.
3 Plus an additional 1,569 Husqvarna motorcycles (until 5 March 2013).
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
23 Report on Economic Position
23 General and Sector-specific
Environment
26 Overall Assessment by Management
26 Financial and Non-financial
Performance Indicators
29 Review of Operations
29 Automotive Segment
35 Motorcycles Segment
36 Financial Services Segment
38 Research and Development
40 Purchasing
41 Sales and Marketing
44 Workforce
45 Sustainability
49 Results of Operations, Financial
Position and Net Assets
61 Comments on Financial Statements
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
82 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
36
FINANCIAL SERVICES SEGMENT
Financial Services segment remains on growth course
The Financial Services segment achieved its best figures
to date in 2014, despite a difficult market environment.
4,359,572 lease and credit financing contracts were in
place with dealers and retail customers at the end of the
reporting period (2013: 4,130,002 contracts; + 5.6 %).
Business volume in balance sheet terms grew by 14.3 %
to stand at € 96,390 million (2013: € 84,347 million).
The Financial Services segment is represented in more
than 50 countries, serving the dealer organisation as a
strong and reliable partner. Credit financing and the
lease of cars and motorcycles to retail and business cus-
tomers is the segment’s largest line of business. Multi-
brand business, operated under the brand name
“Alphera”, also covers the financing of vehicles of other
manufacturers. The Financial Services segment offers
fleet business services under the brand name “Alphabet”.
It also supports the Group’s dealer organisation by
providing financing for dealership vehicle inventories,
real estate and equipment. Supplementing its lease
and credit financing business, the segment also offers
its customers selected insurance and banking services.
New business up again on previous year
Credit financing and leasing business with retail cus-
tomers once again made a significant contribution
to the segment’s success in 2014. In total, 1,509,113
new contracts were signed during the reporting period,
slightly more (+ 2.6 %) than one year earlier (2013:
1,471,385 contracts).
Leasing business grew year-on-year by 5.2 %, credit
financing by 1.2 %. As a proportion of new business,
leasing accounted for 34.7 % and credit financing for
65.3 %. The proportion of new BMW Group cars leased
or financed by the Financial Services segment was
41.7 %, 2.3 percentage points lower than in the pre-
vious year (2013: 44.0 %).
Contract portfolio of Financial Services segment
in 1,000 units
4,400
4,200
4,000
3,800
3,600
3,400
3,200
In the used car financing line of business, 334,289 new
contracts for BMW and MINI brand cars were signed
in 2014, 5.8 % more than in the previous year (2013:
315,919 contracts).
The total volume of all new credit and leasing contracts
concluded with retail customers during the twelve-
month period under report amounted to € 41,318 mil-
lion, an increase of 5.3 % (2013: € 39,241 million).
The increase in new retail customer business is reflected
in the overall contract portfolio. In total, 4,005,428 con-
tracts were in place with retail customers at 31 December
2014 (2013: 3,793,768 contracts; + 5.6 %). As in pre vious
years, growth was recorded across all regions, with in-
creases in the Europe / Middle East / Africa region (+ 6.5 %),
the Americas region (+ 4.0 %) and for the EU Bank (+ 0.4 %).
The most significant rise was again recorded in the
Asia / Pacific region, where the contract portfolio grew
by 20.1 %.
Further growth of fleet business
Alphabet, with its wide range of multi-brand products,
is one of the top four fleet service providers in Europe.
Alongside fleet management and financing, the broad
product range also includes full service leasing. In total,
a portfolio of 555,349 fleet vehicle contracts was being
managed at the end of the reporting period, up slightly by
3.7 % compared to one year earlier (2013: 535,528 con-
tracts).
Decrease in multi-brand financing
The volume of multi-brand financing decreased mod-
erately in 2014. Against the background of continued
profitable portfolio growth and greater competition,
the number of new contracts fell by 8.7 % to stand at
165,776 contracts (2013: 181,605 contracts). A portfolio
of 465,702 contracts (2013: 452,009 contracts; + 3.0 %)
was in place at 31 December 2014.
BMW Group new vehicles financed by
Financial Services segment
in %
50
40
30
20
10
10
11
12
13
14
3,190
3,592
3,846
4,130 4,360
Financing
Leasing
24.1
24.1
20.0
21.1
20.7
19.7
22.5
21.5
20.8
20.9
10
11
12
13
14
37 COMBINED MANAGEMENT REPORT
Contract portfolio retail customer financing of
Financial Services segment 2014
as a percentage by region
period under report (2013: 1,041,530 contracts; + 4.2 %).
Overall, the portfolio increased to 2,874,158 contracts
(2013: 2,567,168 contracts; + 12.0 %).
Risk profile
The positive trend in the global economy and a some-
what quieter period in the euro crisis enabled the risk
profile relevant for the Financial Services segment’s
total portfolio to improve again in 2014. Moreover, the
segment’s well-established procedures for managing
credit risks continued to prove their worth. At 0.50 %, the
overall credit loss ratio remained at a stable, low level
(2013: 0.46 %). Reflecting the generally stable conditions
prevailing on international used car markets, sales prices
for our pre-owned cars developed robustly. Average re-
sidual value losses incurred on the resale of our vehicles
remained stable at the previous year’s level.
Further information with respect to risks and opportu-
nities related to Financial Services can be found in the
section “Report on risks and opportunities”.
Asia / Pacific
Americas
Europe / Middle
East / Africa
EU Bank
Americas
EU Bank
30.4
29.8
Europe / Middle East / Africa
25.1
Asia / Pacific
14.7
Dealer financing significantly up on previous year
The total volume of dealer financing amounted to
€ 14,710 million at the end of the reporting period, 12.2 %
higher than one year earlier (2013: € 13,110 million).
Deposit business volume at previous year’s level
Deposit-taking represents an important element in the
BMW Group’s refinancing strategy. The volume of cus-
tomer deposits worldwide at the end of the reporting
period stood at € 12,466 million and thus on par with
the previous year (2013: € 12,457 million; + 0.1 %).
Insurance business continues to grow
The Financial Services segment also operates an insur-
ance line of business. In addition to its financing and
leasing products, we also offer a wide range of insurance
coverage, addressing all aspects of individual mobility.
Demand for our insurance products remained high in
2014, with 1,085,781 new contracts signed during the
Development of credit loss ratio
in %
0.7
0.6
0.5
0.4
0.3
0.2
0.1
10
11
12
13
14
0.67
0.49
0.48
0.46
0.50
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
23 Report on Economic Position
23 General and Sector-specific
Environment
26 Overall Assessment by Management
26 Financial and Non-financial
Performance Indicators
29 Review of Operations
29 Automotive Segment
35 Motorcycles Segment
36 Financial Services Segment
38 Research and Development
40 Purchasing
41 Sales and Marketing
44 Workforce
45 Sustainability
49 Results of Operations, Financial
Position and Net Assets
61 Comments on Financial Statements
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
82 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
38
RESEARCH AND DEVELOPMENT
Research and development play a vital role for the BMW
Group, given its broad range of products and the high
number of new models. Our vehicles and services also
set standards in terms of connecting car occupants
with the outside world. During 2014, a total of 11,779
employees were engaged throughout the BMW Group’s
global research and innovation network at twelve loca-
tions spread over five countries, to deliver the best
product quality possible and develop innovative tech-
nologies for customers.
Research and development expenditure for the year de-
creased by 4.7 % to € 4,566 million (2013: € 4,793* mil-
lion). The research and development ratio was 5.7 %,
0.6 percentage points lower than in the previous year
(2013: 6.3 %). The ratio of capitalised development costs
to total research and development costs for the period
(capitalisation ratio) was 32.8 % (2013: 36.4 %). Amortisa-
tion of capitalised development costs totalled € 1,068 mil-
lion (2013: € 1,069 million). Further information on re-
search and development expenditure is provided in the
section “Results of Operations, Financial Position and
Net Assets” and in note 11 to the Group Financial State-
ments.
Drive concepts: setting the course for the future
In line with our commitment to Efficient Dynamics, we
are working continuously to optimise both our range
of combustion engines featuring TwinPower turbo tech-
nology on the one hand and the various electric motors,
energy storage and energy management systems for
electric and plug-in hybrid vehicles developed for BMW
eDrive on the other. In the long term, the BMW Group
is also promoting the development of hydrogen-powered
fuel cell technology as a source of energy.
The new Efficient Dynamics family of engines, com-
prising 3-, 4- and 6-cylinder power units, reflects the
output of a rigorous and consistently applied develop-
ment process. Higher aluminium content plus the use
of magnesium (which is even lighter) has enabled the
BMW Group to significantly reduce the average weight
of its latest range of engines. The first of this new gen-
eration of engines is a 1.5-litre, 3-cylinder petrol engine,
which has found its first home in the BMW i8. The BMW
Group also presented the first 4-cylinder versions of
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
the new engine family during the first half of 2014. Due
to commonalities in the design of our petrol and diesel
engines, the percentage of identical parts used can be as
high as 60 %, while the structural similarities between
petrol and diesel engines are around 40 %.
The BMW i8 combines the driving performance of a
sports car with the fuel consumption of a compact-class
model. The plug-in hybrid system developed for the
BMW i8 meets the very highest specifications in terms
of driving dynamics, efficiency, practical usefulness
and quality, thus underlining the BMW Group’s techno-
logical leadership in the field of drive system develop-
ment. In the long term, the BMW Group also plans to
transfer eDrive technology to other core brand models.
The BMW 3 Series plug-in hybrid prototype unveiled in
2014 provides a preview of how extreme efficiency can
be combined with ultimate driving pleasure in the world’s
most successful premium-class sedan. The prototype
features a 4-cylinder petrol engine from the new Efficient
Dynamics family with TwinPower turbo technology
combined with an electric drive system. The outcome is
a car that delivers sporty driving dynamics similar to
being behind the wheel of a conventionally powered
6-cylinder BMW 3 Series model, but with far lower fuel
consumption. The possible integration of a plug-in
hybrid system is already a firm part of our thinking when
new BMW and MINI models are being developed, thus
ensuring, among other things, that future model variants
equipped with hybrid drive technology will be just as
suitable for everyday use as their standard counterparts.
The BMW Group took a further step forward in the field
of powertrain electrification with its presentation in
2014 of the newly developed range of hybrid drive sys-
tems intended for high-performance electric drives
based on Power eDrive technology. In future-generation
plug-in hybrid vehicles, around two-thirds of the drive
system’s output should come from the Power eDrive
electric system and around one-third from the TwinPower
turbo technology combustion engine. The BMW Group
is pressing ahead with the development of battery-
powered drive systems (as in the BMW i3) and plug-in
hybrids, as well as in other areas such as fuel-cell electric
technology and high-voltage electrified systems (Power
eDrive). With its wide range of drive systems, the BMW
Group can and will continue to be able to react flexibly
39 COMBINED MANAGEMENT REPORT
to the needs of customers and new regulations stipulated
by legislators.
Intelligently designed lightweight construction
Lightweight construction is an essential component of
the BMW Group’s Efficient Dynamics strategy and
firmly embedded in its basic understanding of modern
manufacturing. The consistent use of lightweight mate-
rials in vehicle design is particularly important with
electrically powered cars, as not only the battery capacity,
but also the total weight of the vehicle restrict their
range. In order to compensate for the added weight of
the electrical components, the BMW Group has devel-
oped its LifeDrive concept for BMW i series vehicles,
which is firmly committed to the use of lightweight de-
sign. In this context, the BMW Group has, for the first
time, achieved an innovative combination comprising
an aluminium chassis and a CFRP passenger compart-
ment. Specifically deployed, the material used helps re-
duce total vehicle weight, optimises its point of gravity
and increases the stability of the car’s body. The BMW
Group is currently working on further possible applica-
tions, such as hybrid wheel rims comprising a mixture
of aluminium and CFRP. In the case of the BMW M3
and M4 models, the high rigidity and low weight of CFRP
allows the cardan shaft to be manufactured as a single
piece, without a centre bearing. In addition to achieving
a 40 % weight-saving compared to the previous model,
a further benefit is that the rotating mass is reduced,
thus resulting in a further improvement in response be-
haviour. After more than ten years of intensive research
work and the continual optimisation of the processes,
materials, systems and tools involved, the BMW Group
is currently the only automotive manufacturer with
the required know-how to utilise CFRP on a large-scale
production basis.
Highly automated driving at the limit
Precise, reliable control of a vehicle when driven at its
dynamic limit is a key aspect of highly automated driving.
Only a system that can safely master all dynamic situa-
tions, including those encountered when a vehicle is
driven at its technical limit, will be able to instil trust and
provide sustained and secure relief for the driver in tiring
situations.
The BMW Group has built an innovative, highly auto-
mated research prototype, which in 2014 demonstrated
the utmost safety at the vehicle’s dynamic limit, thanks
to perfected control technology. On a closed-off race-
track, the BMW test vehicle additionally underlined the
efficiency of a new generation of control systems, which
can actively intervene in key driving decisions and
at the same time coordinate the electrically controlled
steering with the brake and accelerator. The system
therefore goes one decisive step further than any of its
predecessors. With BMW ActiveAssist, the BMW Group
is playing a pioneering role in implementing safety-re-
lated, highly automated systems. Back in October 2009,
in conjunction with the predecessor research project,
BMW Track Trainer, the BMW Group drove a highly au-
tomated vehicle through the racing line of the “Nord-
schleife” at the Nürburgring racetrack, one of the most
demanding circuits in the world. The BMW emergency
stop assistant research project has delivered further
valuable findings. If the driver fails to react, for example
due to a medical emergency such as a heart attack,
this feature can switch to the highly automated mode,
steer the vehicle safely to the roadside and automatically
send an emergency call. Back in 2011, the first BMW
test vehicle was already driven on a multi-lane motor-
way using the highly automated mode. Meanwhile, with
some 20,000 kilometres of testing behind them, the
development engineers have gathered valuable insights
into the behaviour and handling strategies of their highly
automated vehicles.
Research project “Virtual marketplace of the future”
Location Based Services enable users to receive infor-
mation on places of interest, services and events in the
surrounding area – anytime and anywhere. Even while
driving, location-based services and other information
can be a useful supplement, either en route or at your
destination. For that reason, BMW ConnectedDrive al-
ready offers users a whole range of location-based infor-
mation. In future, the vehicle will be able to present the
customer with information and items of interest along
the route, tailored to suit the situation and the user’s
individual preferences. The premiere of the latest gen-
eration of the optional navigation system “Professional”
in the BMW 2 Series Convertible achieved an even
higher level of convenience and reliability in terms of
route guidance. The system, which was first presented
in 2014, updates its navigation data on a regular basis,
several times per year, assuming a new version of map
data is available. The user is required to pay neither
40
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
23 Report on Economic Position
23 General and Sector-specific
Environment
26 Overall Assessment by Management
26 Financial and Non-financial
Performance Indicators
29 Review of Operations
29 Automotive Segment
35 Motorcycles Segment
36 Financial Services Segment
38 Research and Development
40 Purchasing
41 Sales and Marketing
44 Workforce
45 Sustainability
49 Results of Operations, Financial
Position and Net Assets
61 Comments on Financial Statements
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
82 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
licensing fees nor transmission costs. Via the SIM card
built into the car, the new map data are sent to the
vehicle via the mobile network (LTE), without having
to take the longer route via an external data carrier and
manual installation.
Outstanding technology and design
In the most recent competition for the prestigious “In-
ternational Engine of the Year Award”, the BMW Group
was awarded prizes in two different categories. For the
fourth time now, the 3.0-litre in-line 6-cylinder petrol
engine featuring BMW TwinPower turbo technology was
among the main prizewinners. The engine powers
numerous current BMW models. The 1.6-litre 4-cylinder
turbo engine, which is fitted in models such as the MINI
Cooper S Countryman and the MINI Cooper S Paceman,
was winner in its class for the eighth consecutive time.
The BMW Group won as many as eight prizes at last
year’s “Red Dot Award for Product Design”. The “Red
Dot” went to seven BMW models. Apart from the
BMW i3, which took the “Red Dot: Best of the Best”
award and thus the highest accolade for trendsetting
design, the BMW i8, the 2 Series Coupé, the 3 Series
Gran Turismo, the 4 Series Coupé and Convertible and
the BMW R nineT all received prizes. Furthermore,
the new MINI received an “Honourable Mention”. With
the “iF product design award”, the BMW i8 was pre-
sented with a prize by Industrie Forum Design e. V. for
its innovative design. The greatest appreciation, how-
ever, was accorded to the BMW i3, which won the “iF
product design award Gold”. Further awards went to
the X5, the 2 Series Coupé, the 4 Series Coupé, the 3 Se-
ries Gran Turismo and the BMW R nineT in the cate-
gory “Product, transportation design / special vehicles”.
PURCHASING AND SUPPLIER NETWORK
The primary focus of the BMW Group’s purchasing and
logistics activities is to achieve an optimal balance of
quality, innovation, flexible supply structures and com-
petitive cost. In this context, we therefore go to great
lengths to design the supply chain with our business
partners, thus ensuring that we can react rapidly and
flexibly at all times to fluctuations in order volumes, even
within a volatile environment.
Numerous model start-ups
2014 saw the start-up of 13 new BMW and MINI brand
models. Most of the BMW start-ups were concentrated
on Europe and the NAFTA region. The production start
of the new X4 at the Spartanburg plant resulted in a
broader supplier base within the NAFTA region. Close
collaboration with external business partners and the
BMW Group’s own in-house component production
team resulted in the introduction of numerous innova-
tions, many of them relating to the BMW i8.
Increasing importance of NAFTA region
During the year under report, the construction of a new
plant in San Luis Potosí (Mexico) with a planned annual
manufacturing capacity of 150,000 units was announced.
This move is in line with the strategy of ensuring glob-
ally balanced growth. For the BMW Group, it will also
entail a further increase in NAFTA-based purchases in
the coming years, whilst at the same time contributing
to currency hedging. In view of these developments,
the BMW Group’s decentralised organisational struc-
tures in the NAFTA region have been strengthened and
newly aligned.
Regional mix of BMW Group purchase volumes 2014
in %, basis: production material
Africa
Asia / Australia
NAFTA
Germany
Rest of
Western Europe
Eastern Europe
Germany
Eastern Europe
Rest of Western Europe
47.2
NAFTA
17.2
15.9
Asia / Australia
Africa
14.5
3.7
1.5
41 COMBINED MANAGEMENT REPORT
High level of investment safeguards productivity
and technology lead
The Purchasing and Supplier Network is also responsible
for component production throughout the BMW Group.
The importance of the Landshut plant as a competence
centre for lightweight construction was underlined by
the expansion of CFRP production facilities at the site.
The Landshut plant also serves as a centre for electro-
mobility-related components, including, for instance,
production of the electric motors and engine transmission
units for the BMW i3 and i8. Important chassis and
drive components for the BMW i models are produced
at the Dingolfing plant.
SALES AND MARKETING
The worldwide sales network currently consists of some
3,250 BMW, 1,550 MINI and 130 Rolls-Royce dealer-
ships. In China alone, more than 40 BMW and 30 MINI
dealerships were opened in 2014. The BMW i dealership
and agency network currently covers some 650 loca-
tions.
BMW extends its model range
For the BMW Group, the year 2014 was dominated by
the introduction of a number of new models and model
updates. The new BMW 4 Series Convertible and the
model revision of the BMW X1 were both launched in
March. The BMW 4 Series Convertible excels with its
enhanced sports performance and quintessential ele-
gance. Since March 2014 customers have also been able
to enjoy the impressive driving dynamics of the new
BMW 2 Series Coupé. The BMW M3 Sedan and the
BMW M4 Coupé were first seen in the showrooms in
June. Our M models are a unique blend of genuine
sporting performance and perfect suitability for every-
day use. The BMW 4 Series Gran Coupé, the third body
variant of this series, came onto the market the same
month. It combines the attractive design of a two-door
coupé with the functionality of four doors and space
to spare. A particularly important event for the BMW
Group took place in June, namely the market launch of
the BMW i8 plug-in hybrid sports car, which offers the
dynamics of a high-performance sports model with low
fuel consumption and emissions levels.
July saw the sales launch of the new BMW X4, a vehicle
that possesses the sporty elegance of a classic coupé,
superbly crossed with the typical characteristics of the
BMW X series. The model update of the BMW X3 fol-
lowed the same month. The new BMW 2 Series Active
Tourer and the BMW M4 Convertible have been on
display in dealership showrooms since September. The
new BMW 2 Series Active Tourer opens up completely
new customer groups, meeting their needs for versa-
tility, functionality and ample spaciousness in the com-
pact segment. The BMW M4 Convertible’s design lan-
guage conveys an unmistakeably stylish and at the same
time muscular profile. The second-generation BMW X6,
which boasts a luxurious interior design and new fea-
tures with a wider range of standard equipment, has been
in the showrooms since December 2014.
New MINI also available in five-door version
The third generation of the three-door MINI entered the
showrooms in March. The new MINI has been received
enthusiastically, with its new possibilities for connectivity
42
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
23 Report on Economic Position
23 General and Sector-specific
Environment
26 Overall Assessment by Management
26 Financial and Non-financial
Performance Indicators
29 Review of Operations
29 Automotive Segment
35 Motorcycles Segment
36 Financial Services Segment
38 Research and Development
40 Purchasing
41 Sales and Marketing
44 Workforce
45 Sustainability
49 Results of Operations, Financial
Position and Net Assets
61 Comments on Financial Statements
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
82 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
and efficient 3- and 4-cylinder TwinPower turbo engines.
For the first time in its 55-year history, a five-door ver-
sion of the MINI has been available since October. The
two MINI models have received the highest acclaim
both in the media and from customers. The model up-
dates of the MINI Countryman and MINI Paceman were
both launched in July. In December, the BMW Group
announced the new John Cooper Works MINI, which will
be available on markets worldwide from spring 2015.
Start-up of Rolls-Royce Ghost Series II
The Rolls-Royce Ghost Series II has been in the show-
rooms since the autumn with a moderately revised
design and continues to combine smooth, understated
performance with contemporary luxury.
In 2014, Rolls-Royce Motor Cars added ten dealerships
to its sales network, an important step in its aspiration
to strengthen its position in the ultra-luxury segment.
New approach to communications with #BMWstories
BMW is breaking new ground in communications
with #BMWstories. The online platform www.bmw.
com / BMWstories offers a broad spectrum of commu-
nication channels. These include films and photo gal-
leries depicting the special features of BMW models.
Since #BMWstories started in May 2014, the online
platform has received more than 3.5 million hits. Over
200 million interactions have already taken place in
social media. The published videos have been viewed
over 36 million times.
Successful launch of BMW i 360°ELECTRIC
With BMW i 360°ELECTRIC, BMW currently offers a
comprehensive package of products and services for
purely battery-powered and plug-in hybrid vehicles in
38 countries worldwide. The package is based on four
features: comfortable, rapid, emissions-free charging at
home; simple comprehensive access to public charging
stations; flexible mobility for long-distance journeys
and an Assistance Service for maintenance and repairs.
BMW offers two types of product for charging at home:
in addition to the Wallbox Pure for simple, safe charging,
the Wallbox Pro has been available since 2014 for more
rapid availability.
worldwide. In the meantime, 95 % of all new vehicles in
the BMW fleet are equipped with an integrated SIM
card.
In addition to its intelligent emergency call feature,
which already offers a broader range of functions than
the E-call required by EU legislation as from 2016, the
customer can benefit from a large number of innova-
tive services. These include the Concierge Call, which
is available around the clock and – if required – looks
up addresses and feeds them directly into the naviga-
tion system or makes reservations directly. In addi-
tion, the real-time traffic information (RTTI) or the re-
mote functions, for example, offer useful support for
the driver.
In addition, further distribution channels have been
established for mobility services. During the year under
report, the ConnectedDrive Store opened not only in
the pilot markets of Belgium and Luxembourg, but also
in Germany. For the first time in the premium segment,
services can therefore be ordered quickly and easily via
a PC or even directly from the vehicle, and used straight
away. The ConnectedDrive Store therefore grants ac-
cess not only to new vehicles but also to used vehicles
equipped with ConnectedDrive.
BMW i sales model
To coincide with the market launch of the BMW i3 in
Europe and Japan, a direct sales model was successfully
introduced in these markets. Over 200 selected BMW i
partners offer BMW i brand vehicles. In addition, the
BMW i models are available in selected direct sales mar-
kets via new distribution channels – including via the
Customer Interaction Centre (CIC), which has been suc-
cessfully introduced in nine markets. In four markets
to start with, the Mobile Sales Advisor (MSA) has also
become a fixed component of the BMW i sales model.
The integrated BMW i online sales platform enables cus-
tomers to order their BMW i3 via the Internet, too. The
new sales channels provide customer-friendly access to
the BMW i range of products and services. In the show-
rooms, the Product Genius in operation at all BMW i
partners also contributes to comprehensive product
advice.
Development of connected mobility
The BMW Group further extended its connected mobil-
ity services in 2014. In total, BMW ConnectedDrive ser-
vices were introduced in a further eleven markets, as a
result of which they are now available in 36 countries
Premium services for individual mobility
Beyond its innovative electric and hybrid cars, BMW i
also stands for sustainable mobility concepts. The aim
of the mobility services is to promote urban mobility,
irrespective of the means of transport used.
Future Retail comprises:
– new and additional opportunities to make contact
with our brands (for example, the BMW and MINI
Driving Center in South Korea and BMW Brandstore
Brussels),
– comprehensively improved dealerships, which offer
a premium experience, and
– targeted support for dealerships, enabling customer
needs to be met even more effectively.
The use of some 1,900 Product Geniuses worldwide in
more than 1,000 dealerships has proved to be particu-
larly successful.
43 COMBINED MANAGEMENT REPORT
DriveNow, the car-sharing service offered by BMW i,
MINI and Sixt, enables users to rent BMW and MINI
vehicles according to their needs. Via an app, the web-
site or directly on the road, it is a simple matter for users
to find, book and park the cars again in another part
of the city. The DriveNow service is currently available
in Munich, Berlin, Düsseldorf, Hamburg, Cologne, San
Francisco, Vienna and, since December 2014, in London,
too. The fleet currently consists of about 2,800 cars. At
the end of 2014, over 390,000 customers had benefited
from the premium car-sharing service. Under the brand
name AlphaCity, we also offer a car-sharing scheme
for businesses. Up to November 2014, 10,000 registered
employees had used the AlphaCity service.
ParkNow is an app- and Web-based service, which helps
resolve parking problems for users. On the one hand,
parking spaces are available to customers in partner car
parks which can be booked online. On the other hand,
the service makes it easier to find roadside parking spots.
ChargeNow is the BMW i mobility service that sim-
plifies finding and using public charging stations run by
various suppliers belonging to an international net-
work. In 2014, a large proportion of BMW i customers
opted for this service. ChargeNow currently has over
24,000 charging points at its disposal in 19 markets.
BMW i Ventures was founded back in 2011 to ensure
optimum conditions for the use and promotion of inno-
vative mobility services. Based in New York, BMW i
Ventures facilitates access to new technologies and opens
up new customer groups, thereby reinforcing the strate-
gic approach adopted by BMW i. Life360, MyCityWay,
JustPark, ChargePoint and ChargeMaster are examples
of some of BMW i Ventures’ strategic investments.
Customer services remain on track in 2014
In 2014, sales of BMW and MINI spare parts, accessories
and services were well up on the previous year’s level,
with the major markets in the USA, Germany and China
making a decisive contribution to this performance.
Growth was also registered in many other markets, such
as Russia, Korea and South Africa. The dynamic growth
in business goes hand in hand with investments in the
future logistics network and with many other measures
aimed at boosting customer satisfaction.
New premium experience in showrooms
By 2017, the Future Retail programme will be imple-
mented worldwide with a view to enhancing the pre-
mium experience of our brands and products.
44
WORKFORCE
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
23 Report on Economic Position
23 General and Sector-specific
Environment
26 Overall Assessment by Management
26 Financial and Non-financial
Performance Indicators
29 Review of Operations
29 Automotive Segment
35 Motorcycles Segment
36 Financial Services Segment
38 Research and Development
40 Purchasing
41 Sales and Marketing
44 Workforce
45 Sustainability
49 Results of Operations, Financial
Position and Net Assets
61 Comments on Financial Statements
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
82 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
Workforce further increased
The BMW Group’s worldwide workforce had grown to a
total of 116,324 employees at 31 December 2014 (2013:
110,351 employees; + 5.4 %). The increase was attribut-
able mainly to the expansion of our international produc-
tion network and the increased scale of development
activities to generate innovations and new technologies
for the future. Engineers and skilled staff were recruited
specifically for this purpose.
More apprentices worldwide
Some 1,500 young people, including 1,200 in Germany,
began their vocational training with the BMW Group in
2014, representing a significant expansion in worldwide
training activities (2013: 1,363 apprentices). At the end
of the reporting period, 4,595 young people worldwide
were in vocational training and training programmes for
young talent with the BMW Group.
Steep rise in investment in employee training
Expenditure on basic and further training rose signifi-
cantly during the period under review to €335 million
(2013: €288 million; + 16.3 %), with the main focus of
training on electromobility, modern production tech-
niques and healthcare programmes.
Further progress made as attractive employer
In 2014, the BMW Group further strengthened its posi-
tion as one of the most attractive employers in the world.
In “The World’s Most Attractive Employers”, published
by the agency “Universum”, the BMW Group was once
again ranked as the best German employer across all
sectors and the most attractive automotive company in
the world. It is now classified in the top 3 in the engineer-
ing category worldwide.
In Trendence’s “European Graduate Barometer”, too, the
BMW Group’s ranking improved. In Trendence’s “Young
Professional Barometer”, the BMW Group occupied first
place for the third year in a row and even managed to
increase the gap to its competitors. Furthermore, in the
BMW Group apprentices at 31 December
4,500
3,750
3,000
2,250
1,500
750
10
11
12
13
14
3,798
3,899
4,266
4,445 4,595
Trendence “Graduate Barometer Germany”, with first
place in the Business category, second place in Engineer-
ing and third place in IT students, the BMW Group
achieved its best results since 2007.
Diversity ensures competitiveness
Diversity in our workforce makes a major contribution
to improving our competitiveness, by equipping us to
respond even better to our customers’ specific needs
and requirements worldwide. We focus on three criteria
in this respect: gender, cultural background and age /
experience.
A number of steps were taken to promote diversity in
the BMW Group during 2014. The proportion of women
in the workforce as a whole, in management positions
and in training programmes for young talent, again rose
during the year under report. The proportion of women
in the BMW Group’s workforce, which stood at 17.8 %
(BMW AG: 14.8 %) currently exceeds the target range of
15 to 17 %. The proportion of women in BMW Group
management positions rose to 14.2 % (BMW AG: 11.4 %).
In the young talent groups, too, the proportion of women
rose in 2014. Female representation in trainee pro-
grammes is already above 50 %, and over 27 % of partici-
pants in student training programmes are women.
BMW Group employees
Automotive
Motorcycles
Financial Services
Other
BMW Group
31.12. 2014
31.12. 2013
106,064
100,682
2,894
7,245
121
2,726
6,823
120
116,324
110,351
Change
in %
5.3
6.2
6.2
0.8
5.4
45 COMBINED MANAGEMENT REPORT
Proportion of non-tariff female employees at
BMW AG / BMW Group
in %
14
13
12
11
10
9
10
11
12
13
14
BMW AG
BMW Group
8.8
11.1
9.1
11.8
10.0
12.7 *
10.9
11.4
13.8
14.2
* Figure adjusted.
At the same time, the workforce in Germany is also
becoming more international. In Munich alone, em-
ployees from 98 different countries work together
successfully. We also attach importance to a balanced
age structure in the workforce, with a view to promot-
ing exchanges between the generations and mitigating
the loss of know-how when older employees retire.
Employee attrition rate at BMW AG*
as a percentage of workforce
7.0
6.0
5.0
4.0
3.0
2.0
1.0
10
11
12
13
14
2.74
2.16
3.87
3.47
1.41
* Number of employees on unlimited employment contracts leaving the Company.
SUSTAINABILITY
Sustainable management
Sustainability for the BMW Group means making a
lasting positive contribution to economic success, thus
creating added value for the business. Manufacturing
with efficient and resource-friendly production pro-
cesses and offering customers state-of-the-art solutions
for sustainable individual mobility gives the BMW
Group a competitive advantage. Our employees play a
vital role in this context with their personal commit-
ment and ideas, a fact borne out, for example, by the
€ 31 million saved in 2014 alone in conjunction with
the ideas management system in place throughout the
BMW Group. Our commitment to sustainable manage-
ment and our aspiration for social responsibility along
the entire value chain are firmly embedded within the
BMW Group.
As well as requiring social and ecological aspects to be
taken into account in internal decision-making pro-
cesses, the BMW Group’s sustainability management
system involves the systematic analysis of external fac-
tors and a continual dialogue with our stakeholders.
Materiality process
Global megatrends such as urbanisation or climate
change have an impact on both regulatory conditions
and customer requirements, causing new fields of
business to arise. In order to recognise any such
changes in good time, we regularly perform a review
using our materiality process. In this context, we ana-
lyse the importance of challenges on society, both from
the point of view of different stakeholder groups and
from an internal BMW Group perspective. The results
of the materiality analysis – shown in the materiality
matrix – form the basis for our regular verification of
the direction our sustainability strategy is taking.
Sustainability ratings
In 2014 the BMW Group was able to maintain its posi-
tion as most sustainable premium manufacturer in the
automotive industry and again secured excellent plac-
ings in widely regarded ratings. In the Dow Jones Sus-
tainability Indices (DJSI), for instance, the BMW Group
took first place in the Automobiles sector. The BMW
Group is therefore the only enterprise in this sector to
have been listed in the index without interruption since
its inception. In the Global 500 rating of the Carbon
Disclosure Project (CDP), we again achieved 100 out of
a possible 100 points for transparent reporting and the
best mark for climate protection measures, thus retaining
our leading position again in 2014. Based on this result,
the BMW Group is listed with the highest performance
score “A” in the global Climate Performance Leadership
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
23 Report on Economic Position
23 General and Sector-specific
Environment
26 Overall Assessment by Management
26 Financial and Non-financial
Performance Indicators
29 Review of Operations
29 Automotive Segment
35 Motorcycles Segment
36 Financial Services Segment
38 Research and Development
40 Purchasing
41 Sales and Marketing
44 Workforce
45 Sustainability
49 Results of Operations, Financial
Position and Net Assets
61 Comments on Financial Statements
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
82 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
46
Materiality matrix
Importance for stakeholders
Product
safety
Environmental and social standards in the supply chain
Anti-corruption / compliance
Future mobility / mobility services
Efficient use
of resources
and recycling
management
Energy supply
CO2 emissions
and climate change
Alternative drivetrain
technologies
Water
Corporate Citizenship
Further education and training
Human rights / Occupational health and safety
Demographic change
Biodiversity
Diversity
Work-life balance
Donations / sponsoring
Corporate volunteering
Importance for BMW Group
Index (CPLI) – as the only automotive producer for five
consecutive years. The BMW Group was also included in
the British FTSE4Good Index again in 2014.
Clean production
The BMW Group improves resource efficiency by inte-
grating environmental management in all of its produc-
tion processes. Since 2006 we have reduced both the
volume of resources utilised and the emissions per vehi-
cle produced by an average of 45.0 %.*
The individual figures are as follows:
The BMW Group again reduced the energy consump-
tion per vehicle produced by 4.7 % to 2.25 MWh during
the period under report. One of the measures that con-
tributed towards the efficiency improvement was the
utilisation of intelligent energy data management. It is a
component of the BMW Group’s “Industrie 4.0” pro-
duction concept and based on intelligent electricity me-
ters that continually measure the energy consumption
levels of production facilities and robots and compare
them with a centralised corporate network for the pur-
pose of detecting and avoiding, at the earliest possible
stage, any deviations that lead to excessive electricity
consumption.
Energy consumption
Water consumption
Process wastewater
Non-recyclable waste
Solvent emissions
CO2 emissions
– 34.2 %
– 33.1 %
– 42.7 %
– 74.0 %
– 48.6 %
– 37.1 %
The utilisation of highly efficient, ecologically sustain-
able combined heat and power plants (CHPs) and the
use of electricity generated from renewable sources at
our production sites, as well as improved energy effi-
ciency measures, enabled us to reduce CO2 emissions
per vehicle produced by a further 2.9 % year-on-year to
0.66 tonnes during the period under report.
In 2014 we reduced both the volume of resources utilised
and the emissions per vehicle produced by an average
of 6.7 % compared with the previous year, giving rise to
savings of € 15.8 million.
* Including joint venture BMW Brilliance Automotive Ltd., Shenyang, excluding
contract production.
At 2.18 m³ per vehicle produced, water consumption
was maintained at a stable low level. At 0.47 m³ the same
applies to the volume of process wastewater generated
per vehicle produced.
The volume of non-recyclable production waste was
further reduced to 4.93 kg per vehicle produced in 2014,
an improvement of 14.0 %. A number of measures con-
tributed towards this development, one of which was
an additional improvement in the treatment of washing
47 COMBINED MANAGEMENT REPORT
Energy consumed* per vehicle produced
in MWh / vehicle
Water consumption* per vehicle produced
in m3 / vehicle
3.00
2.80
2.60
2.40
2.20
2.00
2.80
2.60
2.40
2.20
2.00
1.80
10
11
12
13
14
10
11
12
13
14
2.72
2.43
2.41
2.36
2.25
2.40
2.25
2.22
2.18
2.18
* Excluding contract production, adjusted for CHP losses.
* Excluding contract production.
water used in the production of passenger car brake
discs at the Berlin plant.
Solvent emissions were sharply curtailed by 18.9 %
to 1.29 kg per vehicle produced during 2014, which is
mainly due to the fact that in the Chinese plant in
Dadong* the retrofitting of the paint shop with an ex-
haust air cleaning system was reflected in full-year
statistics for the first time.
* Joint venture BMW Brilliance Automotive Ltd., Shenyang.
Sustainability along the entire value chain
Sustainability criteria also play a major role in the selec-
tion and assessment of our suppliers as well as in the
field of transport logistics. The active management of
sustainability risks along the supplier chain reduces com-
pliance and image risks. With this in mind, the BMW
Group has integrated a comprehensive system of sustain-
ability management in its purchasing processes.
The amount of energy needed for transportation world-
wide has risen considerably in recent years. In order to
keep CO2 emissions to an absolute minimum, we adhere
to the principle “production follows the market”. More-
over, we are continually increasing the percentage of
low-carbon modes of transport we use. In total, 63.3 %
of all new vehicles left our plants by rail during the twelve-
month period under report (2013: 60.7 %).
Fleet CO2 emissions again reduced
For many years now, the use of our Efficient Dynamics
technologies in series production has enabled us to
continually reduce the CO2 emissions generated by our
vehicles. Again in 2014, further progress was made in
the electrification of our fleet with the introduction of
the BMW i8 plug-in hybrid sports car and the launching
of the BMW i3 in additional key markets. These meas-
ures form the basis for complying with legally stipulated
CO2 and fuel consumption limits going into the future.
CO2 emissions* per vehicle produced
in t / vehicle
Process wastewater* per vehicle produced
in m3 / vehicle
0.90
0.85
0.80
0.75
0.70
0.65
0.70
0.60
0.50
0.40
0.30
0.20
10
11
12
13
14
10
11
12
13
14
0.89
0.75
0.72
0.68
0.66
0.60
0.57
0.51
0.47
0.47
* Excluding contract production, adjusted for CHP losses.
* Excluding contract production.
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
23 Report on Economic Position
23 General and Sector-specific
Environment
26 Overall Assessment by Management
26 Financial and Non-financial
Performance Indicators
29 Review of Operations
29 Automotive Segment
35 Motorcycles Segment
36 Financial Services Segment
38 Research and Development
40 Purchasing
41 Sales and Marketing
44 Workforce
45 Sustainability
49 Results of Operations, Financial
Position and Net Assets
61 Comments on Financial Statements
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
82 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
48
Waste for disposal* per vehicle produced
in kg / vehicle
15.0
12.5
10.0
7.5
5.0
2.5
Volatile organic compounds (VOC)*
per vehicle produced
in kg / vehicle
2.00
1.75
1.50
1.25
1.00
10
11
12
13
14
10
11
12
13
14
10.49
8.49
6.47
5.73
4.93
1.66
1.75
1.78
1.59
1.29
* Excluding contract production.
* Excluding contract production.
Between 1995 and 2014, the average CO2 emissions of
the vehicles we sold in Europe fell by 38 %. In 2014,
the BMW Group’s fleet of new vehicles sold in Europe
(EU-28) consumed an average of 4.9 litres of diesel per
100 km and 6.0 litres of petrol respectively. CO2 emis-
sions averaged 130 grams per km. In Germany, too,
we led the field among premium-segment manufac-
turers with average CO2 emissions of 136 grams per
km. In 2014 the BMW Group’s fleet included as many
as 53 models emitting less than 120 grams of CO2 per
km. Our efficient technologies have given us a com-
petitive edge, particularly in markets where a CO2-
based vehicle tax is levied.
Further information on the subject of sustainability in
the BMW Group is available in our online sustainability
report at: www.bmwgroup.com / sustainability. The
Sustainable Value Report 2014 was prepared in accord-
ance with the Global Reporting Initiative (GRI G3.1)
guideline and, at Level A+ (GRI-tested), fulfils the
highest application level of the GRI guideline. It will be
published in conjunction with the Annual Report 2014.
49 COMBINED MANAGEMENT REPORT
Report on Economic Position
Results of Operations, Financial Position and Net Assets
Earnings performance1
The BMW Group is again able to report on an exceed-
ingly successful financial year. Business performance
remained on track, with sales volume, revenues and
earnings all coming in at record levels. The number of
BMW, MINI and Rolls-Royce brand vehicles sold rose
by 7.9 % to 2,117,9652 units. The BMW brand was again
able to maintain its pole position at the head of the
premium segment.
The BMW Group recorded a net profit of € 5,817 mil-
lion (2013: € 5,329 million) for the financial year ended
31 December 2014. The post-tax return on sales was
7.2 % (2013: 7.0 %). Earnings per share of common and
preferred stock were € 8.83 and € 8.85 respectively (2013:
€ 8.08 and € 8.10 respectively).
Revenues of the BMW Group increased year-on-year by
5.7 % to a new record figure of € 80,401 million (2013:
€ 76,059 million), driven primarily by the continued up-
ward trend in sales volume. The scale of the increase
was held down partly by higher inter-segment revenue
eliminations due to the growth of new lease business
and partly by the change in the average exchange rates
of a number of currencies, including the Japanese yen,
Russian rouble and South African rand. Adjusted for
exchange rate factors, revenues increased by 6.8 %.
Revenues comprise mainly the sale of vehicles and related
products (2014: € 60,280 million; 2013: € 56,812 million),
lease instalments (2014: € 7,748 million; 2013: € 7,296 mil-
lion), the sale of vehicles previously leased to customers
(2014: € 6,716 million; 2013: € 6,412 million) and interest
income on loan financing (2014: € 2,881 million; 2013:
€ 2,868 million).
All segments contributed to the increase in revenues.
External revenues from the sale of BMW, MINI and
Rolls-Royce brand cars grew by 6.0 % on the back of
higher sales volumes. Adjusted for exchange rate fac-
tors, revenues went up by 7.3 %. Compared to the
pre vious year, the BMW Group recorded a significant
rise (11.8 %) in external revenues from its Motorcycles
business. External revenues generated with Financial
Services business was 4.4 % up on the previous year.
Adjusted for exchange rate factors, revenues of the Motor-
cycles and Financial Services segments increased by
14.1 % and 4.5 % respectively.
Group Income Statement
in € million
Revenues
Cost of sales
Gross profit
Selling and administrative expenses
Other operating income
Other operating expenses
Profit before financial result
Result from equity accounted investments
Interest and similar income
Interest and similar expenses
Other financial result
Financial result
Profit before tax
Income taxes
Net profit
1 Prior year figures have been adjusted in accordance with IAS 8, see note 9.
2 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2013: 198,542 units, 2014: 275,891 units).
2014
20131
80,401
– 63,396
17,005
76,059
– 60,791
15,268
– 7,892
– 7,257
877
– 872
9,118
655
200
– 519
– 747
– 411
8,707
842
– 875
7,978
407
183
– 469
– 206
– 85
7,893
– 2,890
5,817
– 2,564
5,329
50
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
26 Overall Assessment by Management
26 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
61 Comments on Financial Statements
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
65 Outlook
70 Report on Risks and Opportunities
82 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
As in the previous year, Group revenues are spread
across all regions, with the Europe region (including
Germany) accounting for 46.8 % (2013: 45.2 %), the
Americas region for 20.7 % (2013: 20.7 %) and the Africa,
Asia and Oceania region for 32.5 % (2013: 34.1 %) of
business.
Revenues in the Africa, Asia and Oceania region to-
talled € 26,147 million (2013: € 25,916 million), roughly
at the previous year’s level (+ 0.9 %). In China, the
higher proportion of sales generated by the joint ven-
ture, BMW Brilliance Ltd., Shenyang, resulted in a slight
decrease in revenues reported for this market. By con-
trast, revenues generated in South Korea were up sig-
nificantly on the back of higher sales volume figures.
External revenue in Germany grew by 10.1 %. In the
Rest of Europe region and in the Americas region, ex-
ternal revenues increased by 9.2 % and 5.3 % respec-
tively.
Group cost of sales were 4.3 % higher than in the pre-
vious year and comprise mainly manufacturing costs
(2014: € 38,253 million; 2013: € 36,578 million), cost of
sales directly attributable to financial services (2014:
€ 14,716 million; 2013: € 14,044 million) and research
and development expenses (2014: € 4,135 million; 2013:
€ 4,118 million). Changes in the average exchange rates
of some currencies as well as inter-segment elimina-
tions worked in the opposite direction.
Gross profit improved by 11.4 % to € 17,005 million, re-
sulting in a gross profit margin of 21.2 % (2013: 20.1 %).
The gross profit margin recorded by the Automotive
segment was 18.6 % (2013: 18.2 %), while that of the
Motorcycles segment was 18.7 % (2013: 16.7 %). In the
Financial Services segment, the gross profit margin
improved from 13.1 % to 13.7 %.
Compared to the previous year, research and develop-
ment expenses increased by € 17 million to € 4,135 mil-
lion. As a percentage of revenues, the research and
development ratio fell by 0.3 percentage points to 5.1 %.
Research and development expenses include amorti-
sation of capitalised development costs amounting to
€ 1,068 million (2013: € 1,069 million). Total research
and development expenditure amounted to € 4,566 mil-
lion (2013: € 4,793 million). This figure comprises re-
search costs, non-capitalised development costs and
capitalised development costs (excluding scheduled
amortisation). The research and development expend-
iture ratio was therefore 5.7 % (2013: 6.3 %). The pro-
portion of development costs recognised as assets was
32.8 % (2013: 36.4 %).
Compared to the previous year, selling and administra-
tive expenses increased by € 635 million to € 7,892 mil-
lion. Overall, selling and administrative expenses were
equivalent to 9.8 % (2013: 9.5 %) of revenues. Adminis-
trative expenses increased due to a number of factors,
including the higher workforce size and higher expenses
for centralised IT activities and new IT projects. Depre-
ciation and amortisation on property, plant and equip-
ment and intangible assets recorded in cost of sales and
in selling and administrative expenses amounted to
€ 4,170 million (2013: € 3,741 million).
Other operating income and expenses improved from
a net expense of € 33 million to a net income of € 5 mil-
lion. The improvement was mainly attributable to gains
on the sale of assets, including those arising on the
deconsolidation of Noord Lease B.V., Groningen, and
the sale of marketable securities.
The profit before financial result (EBIT) came in at
€ 9,118 million (2013: € 7,978 million).
The financial result for the twelve-month period was a
net negative amount of € 411 million, a deterioration
of € 326 million compared to the previous year. The net
expense for other financial result increased by € 541 mil-
lion to € 747 million, mostly reflecting the negative
impact of currency and commodity derivatives. Impair-
ment losses recognised on other investments, most
notably on the investment in SGL Carbon SE, Wiesbaden,
also contributed to the deterioration in other financial
result. By contrast, the result from equity accounted in-
vestments – which includes the Group’s share of the
results of the joint ventures BMW Brilliance Automotive
Ltd., Shenyang, DriveNow GmbH & Co. KG, Munich,
and DriveNow Verwaltungs GmbH, Munich – improved
by € 248 million.
Profit before tax increased to € 8,707 million (2013:
€ 7,893 million). The pre-tax return on sales was 10.8 %
(2013: 10.4 %).
Income tax expense amounted to € 2,890 million (2013:
€ 2,564 million), resulting in an effective tax rate of
33.2 % (2013: 32.5 %). The changed regional earnings
51 COMBINED MANAGEMENT REPORT
Revenues by segment
in € million
Profit / loss before tax by segment
in € million
2014
2013*
Automotive
Motorcycles
Financial Services
Other Entities
Eliminations
Group
75,173
1,679
20,599
7
– 17,057
80,401
70,630
1,504
19,874
Automotive
Motorcycles
Financial Services
6
Other Entities
– 15,955
76,059
Eliminations
Group
2014
6,886
107
1,723
154
– 163
8,707
2013*
6,561
76
1,619
164
– 527
7,893
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
mix as well as intergroup pricing issues contributed to
the increase in the income tax expense for the year.
Earnings performance by segment
Revenues of the Automotive segment grew by 6.4 % to
€ 75,173 million on the back of higher sales volume.
Adjusted for exchange rate factors, segment revenues
rose by 7.5 %. The gross profit margin improved year-
on-year from 18.2 % to 18.6 %.
Compared to the previous year, selling and administra-
tive expenses increased by € 531 million to € 6,645 mil-
lion. Administrative expenses increased due to a num-
ber of factors, including the higher workforce size and
higher expenses for centralised IT activities and new
IT projects. Overall, selling and administrative expenses
were equivalent to 8.8 % (2013: 8.7 %) of revenues.
The net expense from other operating income and ex-
penses improved by € 26 million (2013: net expense of
€ 89 million), mainly reflecting gains on the sale of mar-
ketable securities.
The profit before financial result (EBIT) amounted to
€ 7,244 million (2013: € 6,649 million), giving an EBIT
margin of 9.6 % (2013: 9.4 %).
The financial result of the Automotive segment was a
net negative amount of € 358 million, a deterioration
of € 270 million compared to the previous year. Other
financial result was adversely affected by currency
and commodity derivatives and fell to a net negative
amount of € 724 million. This figure also includes im-
pairment losses recognised on other investments,
most notably on the investment in SGL Carbon SE,
Wiesbaden. By contrast, the result from equity ac-
counted investments – which includes the segment’s
share of the results of BMW Brilliance Automotive
Ltd., Shenyang, and the two DriveNow entities – im-
proved by € 248 million.
Overall, profit before tax amounted to € 6,886 million
(2013: € 6,561 million), resulting in an effective tax rate
of 34.3 % (2013: 32.8 %).
Revenues of the Motorcycles segment climbed by 11.6 %
compared to the previous year (by 14.0 % adjusted for
exchange rate factors).
Segment profit before tax improved by € 31 million to
€ 107 million.
Financial Services segment revenues grew by 3.6 % to
€ 20,599 million (by 3.8 % adjusted for exchange rate
factors). The segment’s performance reflects the growth
in the contract portfolio. The gross profit margin im-
proved year-on-year to 13.7 % (2013: 13.1 %). Selling and
administrative expenses were € 82 million higher at
€ 1,035 million. The net negative amount from other oper-
ating income and expenses deteriorated by € 17 million.
Overall the Financial Services segment reports profit
before tax of € 1,723 million, 6.4 % up on the previous
year (2013: € 1,619 million).
Profit before tax in the Other Entities segment, at
€ 154 million, was € 10 million lower than one year
earlier.
The negative impact on earnings at the level of profit
before tax reported in the Eliminations column de-
creased from € 527 million in 2013 to € 163 million in
2014, partly reflecting product mix improvements
52
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
26 Overall Assessment by Management
26 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
61 Comments on Financial Statements
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
65 Outlook
70 Report on Risks and Opportunities
82 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
within the leased products portfolio and partly due to
elimination reversal effects.
Financial position*
The consolidated cash flow statements for the Group
and the Automotive and Financial Services segments
show the sources and applications of cash flows for the
financial years 2014 and 2013, classified into cash flows
from operating, investing and financing activities.
Cash and cash equivalents in the cash flow statements
correspond to the amount disclosed in the balance
sheet.
Cash flows from operating activities are determined in-
directly, starting with Group and segment net profit.
By contrast, cash flows from investing and financing
activities are based on actual payments and receipts.
The cash inflow from operating activities in 2014 de-
creased by € 1,215 million to € 2,912 million. This dete-
rioration was mainly due to higher cash outflows for
taxes (up by € 1,465 million) and included, among other
items, a tax payment in the USA.
The cash outflow for investing activities amounted to
€ 6,116 million (2013: € 7,491 million) and was therefore
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
18.4 % down on the previous year, primarily reflecting a
€ 594 million reduction in investments in property, plant
and equipment and intangible assets (2014: € 6,099 mil-
lion) and a € 737 million reduction in the net outflow for
investments in marketable securities and term deposits
(2014: net outflow of € 144 million).
Further information on investments is provided in the
section on the net assets position.
Cash inflow from financing activities totalled € 3,133 mil-
lion (2013: € 2,703 million). Proceeds from the issue of
bonds amounted to € 10,892 million (2013: € 8,982 mil-
lion), compared with an outflow of € 7,249 million (2013:
€ 7,242 million) for the repayment of bonds. Non-cur-
rent other financial liabilities resulted in a cash inflow
of € 5,900 million (2013: € 6,626 million) and a cash
outflow of € 5,697 million (2013: € 4,996 million). The
net cash inflow for current other financial liabilities
was € 2,132 million (2013: net cash outflow of € 721 mil-
lion). The change in commercial paper gave rise to
a net cash outflow of € 1,012 million (2013: net cash
inflow of € 1,812 million). The payment of dividends
resulted in a cash outflow of € 1,715 million (2013:
€ 1,653 million).
The cash outflow from investing activities exceeded
the cash inflow from operating activities in 2014 by
Change in cash and cash equivalents
in € million
11,000
10,000
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
Cash and cash
equivalents
31.12. 2013*
Cash inflow
from operating
activities
Cash outflow
from investing
activities
Cash inflow
from financing
activities
Currency trans-
lation, changes in
Group composition
Cash and cash
equivalents
31.12. 2014
7,671
+ 2,912
– 6,116
+ 3,133
+ 88
7,688
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
53 COMBINED MANAGEMENT REPORT
€ 3,204 million. A similar constellation arose in the
same period last year, when the cash outflow from
investing activities had exceeded the cash inflow from
operating activities by € 3,364.
After adjusting for the effects of exchange-rate fluctua-
tions and changes in the composition of the BMW Group
with a total positive amount of € 88 million (2013:
negative amount of € 42 million), the various cash flows
resulted in an increase of cash and cash equivalents of
€ 17 million (2013: decrease of € 703 million).
The cash flow statement for the Automotive segment
shows that the cash inflow from operating activities
exceeded the cash outflow from investing activities by
€ 3,587 million (2013: € 1,966 million). Adjusted for net
proceeds from marketable securities and term deposits
amounting to € 106 million (2013: net investments of
€ 1,037 million) – mainly in conjunction with securities
held for strategic liquidity purposes – the excess amount
was € 3,481 million (2013: € 3,003 million).
Free cash flow of the Automotive segment can be ana-
lysed as follows:
in € million
Cash inflow from operating activities
Cash outflow from investing activities
Net investment in marketable securities and term deposits
Free cash flow Automotive segment
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
Cash outflows from operating activities of the Financial
Services segment are driven primarily by cash flows
relating to leased products and receivables from sales
financing and totalled € 4,715 million (2013: € 5,358 mil-
lion). Investing activities resulted in a cash outflow of
€ 297 million (2013: cash inflow of € 324 million).
2014
2013*
9,423
– 5,836
– 106
3,481
9,964
– 7,998
1,037
3,003
Net financial assets of the Automotive segment com-
prise the following:
in € million
31.12. 2014
31.12. 20131
Cash and cash equivalents
Marketable securities and investment funds
Intragroup net financial receivables
Financial assets
Less: external financial liabilities2
Net financial assets
1 Prior year figures have been adjusted in accordance with IAS 8, see note 9.
2 Excluding derivative financial instruments.
5,752
3,366
8,583
17,701
– 3,478
14,223
6,775
2,758
4,411
13,944
– 1,859
12,085
Refinancing
Operating cash flow provides a stable financial basis for
the BMW Group. A broadly based range of instruments
transacted on international money and capital markets
is used to refinance worldwide operations. Almost all of
the funds raised are used to finance the BMW Group’s
Financial Services business.
54
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
26 Overall Assessment by Management
26 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
61 Comments on Financial Statements
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
65 Outlook
70 Report on Risks and Opportunities
82 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
The overall objective of Group financing is to ensure the
solvency of the BMW Group at all times. Achieving this
objective is tackled in three strategic areas:
1. the ability to act at all times by assuring permanent
access to strategically important capital markets,
2. autonomy through the diversification of refinancing
instruments and investors, and
3. focus on value by optimising financing costs.
Financing measures undertaken centrally ensure access
to liquidity for the Group’s operating subsidiaries on
market-based and consistent loan conditions. Funds are
acquired with a view to achieving a desired structure
for the composition of liabilities, comprising a finely
tuned mix of various financing instruments. The use
of longer-term financing instruments to finance the
Group’s financial services business and the mainte-
nance of a sufficiently high liquidity reserve serves to
avoid the liquidity risk intrinsic to any large portfolio
of contracts. This prudent approach to financing also
supports BMW AG’s ratings. Further information is
provided in the “Liquidity risks” section of the “Report
on outlook, risks and opportunities”.
Apart from issuing commercial paper on the money
market, the BMW Group’s financing companies also
issue bearer bonds. In addition, retail customer and
dealer financing receivables on the one hand and
leasing rights and obligations on the other are securi-
tised in the form of asset-backed securities (ABS) financ-
ing arrangements. Financing instruments employed
by the Group’s in-house banks in Germany and the
USA (e. g. customer deposits) are also used as a supple-
mentary source of financing. Owing to the increased
use of international money and capital markets to raise
funds, the scale of funds raised in the form of loans
from international banks is relatively small.
Thanks to its good ratings and the high level of accept-
ance it has on capital markets, the BMW Group was
again able to refinance operations during the financial
year 2014 at attractive conditions. In addition to the
issue of bonds and loan notes on the one hand and pri-
vate placements on the other, commercial paper was
also issued on good conditions. Additional funds were
raised via new securitised instruments and the prolon-
gation of existing instruments. As in previous years,
all issues were highly sought after by private and insti-
tutional investors.
BMW Group – financial liabilities
in € million
35,000
30,000
25,000
20,000
15,000
10,000
5,000
Maturity (years)
within 1
between 1 and 5
later than 5
37,482
37,974
5,193
During 2014, the BMW Group issued five euro bench-
mark bonds with a total issue volume of € 4.25 billion
on European capital markets. Bonds were also issued
in Canadian dollars, British pounds, US dollars, Aus-
tralian dollars and other currencies for a total amount
of € 6.9 billion.
Nine ABS transactions were executed in 2014, including
two public transactions in the USA and one each in
BMW Group – financial liabilities
in € million
Other
Derivative instruments
Commercial paper
Asset backed financing
transactions
Liabilities to banks
Liabilities from customer
deposits (banking)
Bonds
Liabilities from customer deposits (banking)
Liabilities to banks
Asset backed financing transactions
Commercial paper
Derivative instruments
Other
Bonds
35,489
12,466
11,554
10,884
5,599
3,143
1,514
55 COMBINED MANAGEMENT REPORT
Germany, China and South Africa with a total volume
equivalent to € 2.7 billion. Further funds were also raised
via new ABS conduit transactions in Brazil, Canada,
and Japan totalling € 0.8 billion. Other existing trans-
actions remained in place in Switzerland, the UK, Korea
and Australia.
The regular issue of commercial paper also strengthens
the BMW Group’s financial basis. The following table
provides an overview of amounts utilised at 31 Decem-
ber 2014 in connection with the BMW Group’s money
and capital market programmes:
Programme
in € billion
Euro Medium Term Notes
Australian Medium Term Notes
Commercial paper
Amount utilised
30.9
–
6.1
The BMW Group’s liquidity position is extremely robust,
with liquid funds totalling € 11.7 billion on hand at 31 De-
cember 2014. The BMW Group also has access to a
syndicated credit line of € 6 billion, with a term up to
October 2018. This credit line, which is provided on
attractive conditions by a consortium of 38 international
banks, had not been utilised at the end of the reporting
period.
Further information with respect to financial liabilities
is provided in notes 35, 39 and 43 to the Group Finan-
cial Statements.
Net assets position*
The Group balance sheet total increased by € 16,426 mil-
lion (11.9 %) compared to the end of the previous finan-
cial year to stand at € 154,803 million at 31 December
2014. Adjusted for exchange rate factors, the balance
sheet total increased by 7.5 %.
On the assets side of the balance sheet, the increase in
non-current assets related primarily to receivables
from sales financing (14.8 %), leased products (16.4 %),
property, plant and equipment (13.3 %), investments
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
accounted for using the equity method (70.5 %), deferred
tax assets (27.2 %) and intangible assets (5.2 %). At the
same time, financial assets decreased by 21.9 %.
Within current assets, increases were registered in par-
ticular for receivables from sales financing (9.7 %), in-
ventories (15.6 %), other assets (18.3 %) and current tax
(65.6 %). Trade receivables went down by 12.1 %.
The growth in business reported by the Financial Ser-
vices segment is reflected in increases of € 2,085 million
and € 4,822 million in current and non-current receiv-
ables from sales financing respectively and in the higher
level of leased products (up by € 4,251 million).
Non-current receivables from sales financing accounted
for 24.2 % (2013: 23.6 %) of total assets, current receiv-
ables from sales financing for 15.2 % (2013: 15.5 %). Total
receivables from sales financing relate to retail customer
and dealer financing (€ 45,849 million) and finance leases
(€ 15,175 million). Adjusted for exchange rate factors,
non-current receivables from sales financing grew by
9.1 %, while current receivables from sales financing
went up by 4.8 %. The currency impact was mainly at-
tributable to the appreciation in the value of a number
of currencies against the euro, most notably the US dol-
lar, the British pound and the Chinese renminbi.
At the end of the reporting period, leased products
accounted for 19.5 % of total assets, above their level
one year earlier (18.7 %). Adjusted for exchange rate
factors, leased products went up by 10.2 %.
Property, plant and equipment increased by € 2,014 mil-
lion compared to the previous year. The main focus in
2014 was on product investments for production start-
ups (including the BMW 2 Series Active Tourer, the
7 Series Sedan and the 2 Series Gran Tourer) and infra-
structure improvements. In total, € 4,539 million (2013:
€ 4,494 million) was invested, most of which related
to the Automotive segment. Depreciation on property,
plant and equipment totalled € 2,924 million (2013:
€ 2,494 million). At 31 December 2014, property, plant
and equipment accounted for 11.1 % of total assets (2013:
11.0 %). Adjusted for exchange rate factors, property,
plant and equipment increased by 10.8 %. Capital com-
mitments for the acquisition of items of property, plant
56
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
26 Overall Assessment by Management
26 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
61 Comments on Financial Statements
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
65 Outlook
70 Report on Risks and Opportunities
82 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
Balance sheet structure – Group
Total equity and liabilities in € billion
Non-current assets
63 %
24 %
38 %
62 %
26 %
37 %
Equity
Non-current provisions and liabilities
Current assets
37 %
38 %
37 %
38 %
Current provisions and liabilities
thereof cash and cash equivalents
5 %
6 %
2014
2013 *
2013 *
2014
155
138
138
155
Balance sheet structure – Automotive segment
Total equity and liabilities in € billion
Non-current assets
46 %
46 %
42 %
Current assets
54 %
54 %
16 %
42 %
39 %
18 %
43 %
Equity
Non-current provisions and liabilities
Current provisions and liabilities
thereof cash and cash equivalents
7 %
9 %
2014
2013 *
2013 *
2014
79
73
73
79
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
and equipment totalled € 2,247 million at the end of the
reporting period.
of the joint venture BMW Brilliance Automotive Ltd.,
Shenyang.
Investments accounted for using the equity method, at
€ 1,088 million, were € 450 million higher than one year
earlier, mainly reflecting the strong earnings performance
Deferred tax assets increased by € 441 million to € 2,061 mil-
lion, primarily reflecting lower fair values of derivative
financial instruments recognised directly in equity,
57 COMBINED MANAGEMENT REPORT
remeasurements of the net defined benefit liability for
pension plans and currency factors (in particular relating
to the US dollar).
Trade receivables – which accounted for 1.4 % of total
assets (2013: 1.8 %) – went down over the twelvemonth
period by € 296 million. Adjusted for exchange rate fac-
tors, they decreased by 15.8 %.
At € 6,499 million, the carrying amount of intangible as-
sets was € 320 million higher than at 31 December 2013.
Within intangible assets, capitalised development costs
rose by € 431 million. Investments in capitalised develop-
ment costs totalled € 1,499 million in the year under re-
port and were thus significantly lower than in the pre-
vious year (2013: € 1,744 million). In the previous year,
additions to intangible assets included licenses acquired
for € 379 million which are being amortised on a straight-
line basis over a period of six years. The proportion of
development costs recognised as assets was 32.8 % (2013:
36.4 %). Adjusted for exchange rate factors, intangible
assets increased by 5.1 %. In total, € 1,561 million was in-
vested in intangible assets, most of which related to the
Automotive segment.
Total capital expenditure on intangible assets and prop-
erty, plant and equipment as a percentage of revenues
decreased to 7.6 % (2013: 8.8 %). Capital commitments
for intangible assets totalled € 750 million at the end of
the reporting period.
Noncurrent financial assets decreased by € 569 million
to € 2,024 million, mainly due to lower fair values of cur-
rency derivatives.
Within current assets, receivables from sales financing
grew from € 21,501 million to € 23,586 million, mostly
reflecting the general growth of Financial Services busi-
ness on the one hand and currency factors on the other.
Compared to the end of the previous year, inventories
increased by € 1,494 million (15.6 %) to € 11,089 million
and accounted for 7.2 % (2013: 6.9 %) of total assets. Most
of the increase related to finished goods, including the
impact of stocking up in conjunction with the introduc-
tion of new models. Adjusted for exchange rate factors,
the increase was 11.6 %.
Current other assets were € 780 million higher than one
year earlier, mainly due to increases in prepayments,
receivables from other companies in which an invest-
ment is held and other taxes as well as the reclassifica-
tion described in note 31. These increases were partly
offset by the decrease in collateral receivables included
in this line item.
At € 7,688 million, cash and cash equivalents were
almost identical to their level one year earlier (2013:
€ 7,671 million).
The main increase on the equity and liabilities side of
the balance sheet in percentage terms related to pen-
sion provisions (99.9 %). Increases were also recorded
for non-current and current financial liabilities (9.4 %
and 21.5 % respectively), equity (5.2 %), current and
non-current other provisions (32.5 % and 11.5 % respec-
tively) and current and non-current other liabilities
(10.1 % and 18.7 % respectively). By contrast, current
tax and deferred tax liabilities went down by 31.4 % and
19.7 % respectively.
Pension provisions jumped by € 2,301 million to
€ 4,604 million, mainly as a result of the lower discount
factors used in Germany, the UK and the USA.
Current and non-current financial liabilities increased
from € 70,304 to € 80,649 million over the twelve-month
period. Within financial liabilities, derivative instru-
ments went up from € 1,103 million to € 3,143 million,
mostly reflecting the negative impact of currency and
commodity derivatives. Additional increases within
financial liabilities included ABS transactions (7.5 %),
bonds (16.9 %) and liabilities to banks (34.5 %). By con-
trast, commercial paper decreased by 11.0 %. Adjusted
for exchange rate factors, non-current and current
financial liabilities increased by 5.0 % and 17.1 % respec-
tively.
Group equity rose by € 1,837 million to € 37,437 million,
increased primarily by the profit attributable to share-
holders of BMW AG (€ 5,798 million) and currency
translation differences (€ 764 million) and decreased
mainly by remeasurements of the net defined benefit
liability for pension plans (€ 2,298 million) mainly due
to the lower discount rates used in Germany, the United
Kingdom and the USA. Fair value measurement had a
negative impact in the case of derivative financial in-
struments (€ 2,194 million) and a positive impact in the
case of marketable securities (€ 40 million). Deferred
taxes on items recognised directly in equity increased
equity by € 1,438 million.
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
26 Overall Assessment by Management
26 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
61 Comments on Financial Statements
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
65 Outlook
70 Report on Risks and Opportunities
82 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
58
Income and expenses relating to equity accounted in-
vestments and recognised directly in equity (before tax)
reduced equity by € 48 million.
The dividend payment decreased equity by € 1,707 mil-
lion. Minority interests increased by € 29 million. A
portion of the Authorised Capital 2014 created at the
Annual General Meeting held on 14 May 2009 in con-
junction with the Employee Share Programme was used
during the financial year under report to issue shares
of preferred stock to employees. An amount of € 15 mil-
lion was transferred to capital reserves in conjunction
with this share capital increase.
The equity ratio of the BMW Group fell overall by 1.5 per-
centage points to 24.2 %. The equity ratio of the Auto-
motive segment was 39.2 % (2013: 42.4 %) and that of the
Financial Services segment was 8.8 % (2013: 9.1 %).
Other provisions increased from € 7,240 million to
€ 8,790 million during the year under report, mainly re-
flecting allocations to provisions for personnel-related
expenses and ongoing operational expenses as well as
the reclassification described in note 31.
The € 711 million increase in current other liabilities was
attributable to the expansion of service and leasing busi-
ness and the related impact on amounts recognised as
deferred income. In addition, value added tax payables
were higher than at the end of the previous financial
year as a result of the higher volume of vehicles sold.
Deferred tax liabilities fell by € 485 million to € 1,974 mil-
lion as a result of lower fair values of derivative financial
instruments recognised directly in equity, remeasure-
ments of the net defined benefit liability for pension
plans and currency factors. The € 729 million decrease
in current tax liabilities to € 1,590 million was mainly at-
tributable to a tax payment in the USA.
Overall, the results of operations, financial position and
net assets position of the BMW Group continued to de-
velop positively during the financial year under report.
Compensation Report
The compensation of the Board of Management com-
prises both a fixed and a variable component. Benefits
are also payable – primarily in the form of pension
benefits – at the end of members’ mandates. Further
details, including an analysis of remuneration by each
individual, are disclosed in the Compensation Report,
which can be found in the section “Statement on Corpo-
rate Governance”. The Compensation Report is a sub-
section of the Combined Management Report.
Value added statement*
The value added statement shows the value of work per-
formed less the value of work bought in by the BMW
Group during the financial year. Depreciation and amor-
tisation, cost of materials and other expenses are treated
as bought-in costs in the value added calculation. The
allocation statement applies value added to each of the
participants involved in the value added process. It
should be noted that the gross value added amount treats
depreciation as a component of value added which, in
the allocation statement, is treated as internal financing.
Net value added by the BMW Group in 2014 increased
by 7.3 % to € 20,620 million and was once again at a high
level.
The bulk of the net value added (47.4 %) is again applied
to employees. The proportion applied to providers of
finance fell to 8.4 %, mainly due to the lower refinancing
costs on international capital markets for the financial
services side of the business. The government / public
sector (including deferred tax expense) accounted for
16.0 %. The proportion of net value added applied to
shareholders, at 9.2 %, was higher than in the previous
year. Minority interests take a 0.1 % share of net value
added. The remaining proportion of net value added
(18.9 %) will be retained in the Group to finance future
operations.
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
59 COMBINED MANAGEMENT REPORT
BMW Group value added statement
Work performed
Revenues
Financial income
Other income
Total output
Cost of materials2
Other expenses
Bought-in costs
Gross value added
Depreciation and amortisation
Net value added
Applied to
Employees
Providers of finance
Government / public sector
Shareholders
Group
Minority interest
Net value added
2014
in € million
2014
in %
20131
in € million
20131
in %
Change
in %
80,401
156
877
81,434
44,078
9,012
53,090
28,344
7,724
20,620
9,764
1,733
3,306
1,904
3,894
19
98.7
0.2
1.1
100.0
54.1
11.1
65.2
34.8
9.5
25.3
47.4
8.4
16.0
9.2
18.9
0.1
76,059
464
842
77,365
42,681
8,420
51,101
26,264
7,047
19,217
8,992
1,813
3,083
1,707
3,596
26
98.3
0.6
1.1
100.0
55.2
10.9
66.1
33.9
9.1
24.8
46.9
9.4
16.0
8.9
18.7
0.1
20,620
100.0
19,217
100.0
5.3
3.9
7.9
7.3
8.6
– 4.4
7.2
11.5
8.3
– 26.9
7.3
1 Prior year figures have been adjusted in accordance with IAS 8, see note 9.
2 Cost of materials comprises all primary material costs incurred for vehicle production plus ancillary material costs (such as customs duties, insurance premiums and freight).
BMW Group value added 2014
in %
Depreciation and amortisation
Other expenses
47.4 %
Employees
Net value added
Cost of materials
Net value added
Cost of materials
25.3
54.1
Depreciation and amortisation
9.5
Other expenses
11.1
8.4 %
Providers of finance
16.0 %
Government / public sector
9.2 %
18.9 %
Shareholders
Group
0.1 %
Minority interest
60
Key performance figures
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
26 Overall Assessment by Management
26 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Group gross margin
Group EBITDA margin
Group EBIT margin
Group pre-tax return on sales
Group post-tax return on sales
Group pre-tax return on equity
Group post-tax return on equity
Position and Net Assets
Group equity ratio
61 Comments on Financial Statements
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
65 Outlook
70 Report on Risks and Opportunities
82 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
Automotive equity ratio
Financial Services equity ratio
Coverage of intangible assets, property, plant and equipment by equity (Group)
Return on capital employed
Group
Automotive
Motorcycles
Return on equity
Financial Services
Cash inflow from operating activities (Group)
Cash outflow from investing activities (Group)
Coverage of cash outflow from investing activities by cash inflow from operating activities (Group)
Free cash flow of Automotive segment
Net financial assets Automotive segment
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
2014
2013*
21.2
16.5
11.3
10.8
7.2
24.5
16.3
24.2
39.2
8.8
20.1
15.4
10.5
10.4
7.0
25.8
17.4
25.7
42.4
9.1
158.1
166.8
20.8
61.7
21.8
19.4
2,912
– 6,116
47.6
3,481
14,223
21.4
63.0
16.4
20.0
4,127
– 7,491
55.1
3,003
12,085
%
%
%
%
%
%
%
%
%
%
%
%
%
%
%
€ million
€ million
%
€ million
€ million
61 COMBINED MANAGEMENT REPORT
Report on Economic Position
Comments on Financial Statements of BMW AG
Bayerische Motoren Werke Aktiengesellschaft (BMW AG),
which is based in Munich, Germany, is the parent com-
pany of the BMW Group. The comments on the BMW
Group and Automotive segment provided in earlier sec-
tions are also relevant for BMW AG, unless presented
differently in the following section. The Financial State-
ments of BMW AG are drawn up in accordance with
the provisions of the German Commercial Code (HGB)
and the relevant supplementary pro visions contained
in the German Stock Corporation Act (AktG).
The main financial and non-financial performance in-
dicators relevant for BMW AG are largely identical and
synchronous with those of the Automotive segment
of the BMW Group and are described in detail in the
“Report on Economic Position” section of the Combined
Management Report.
Differences between the accounting policies used in the
BMW AG financial statements (prepared in accordance
with HGB) and the BMW Group Financial Statements
(prepared in accordance with IFRSs) arise primarily in
connection with the accounting treatment of intangible
assets, financial instruments, provisions and deferred
taxes.
Business environment and review of operations
The general and sector-specific environment in which
the BMW AG operates is the same as that for the BMW
Group and is described in the “Report on Economic
Position” section of the Combined Management Report.
BMW AG develops, manufactures and sells cars and
motorcycles as well as spare parts and accessories manu-
factured by itself, foreign subsidiaries and external sup-
pliers. Sales activities are carried out through branches,
subsidiaries, independent dealers and importers. In
2014, BMW AG was able to increase its sales volume by
170,869 units to 2,166,772 units. This figure includes
287,466 units relating to series sets supplied to the joint
venture BMW Brilliance Automotive Ltd., Shenyang,
an increase of 72,517 units over the previous year. At
31 December 2014, BMW AG had 80,675 employees,
3,565 more than one year earlier.
related to Europe and North America. Sales to Group
entities accounted for € 50.7 billion or 76.1 % of total
revenues of € 66.6 billion. Cost of sales developed roughly
in line with revenues, as a result of which gross profit
increased by € 1,380 million to € 14,787 million.
At € 3,533 million, selling expenses were at a similar level
to the previous year (2013: € 3,528 million).
Administrative expenses were 5.5 % up on the previous
year, mainly as a result of higher expenses for centralised
IT activities and new IT projects.
Research and development expenses fell by 4.8 %, mainly
reflecting the production start of various development-
intensive vehicle projects in the previous year. Most of
the expense incurred for research and development ac-
tivities related to new vehicle models, drive systems and
innovative technologies.
The decrease in net other operating income and ex-
penses was attributable mainly to the higher net nega-
tive impact of realised exchange rate factors on the
one hand and to higher allocations to provisions for
commodity and currency hedging contracts on the
other.
The financial result deteriorated yearonyear by € 121 mil-
lion, mainly due to the impairment loss (€ 196 million)
recognised on the investment in SGL Carbon SE,
Wiesbaden, which was written down to its lower mar-
ket value at the end of the reporting period. Higher
interest income and lower interest expenses had a posi-
tive impact.
The profit from ordinary activities increased from
€ 3,963 million to € 5,163 million.
The expense for income taxes relates primarily to cur-
rent tax for the financial year 2014.
After deducting the expense for taxes, the Company
reports a net profit of € 3,229 million compared to
€ 2,289 million in the previous year.
Results of operations, financial position and net assets
Revenues increased by 10.1 % compared to the previous
year, driven principally by higher sales volume on the
one hand and the positive impact of the model mix on
the other. In geographical terms, most of the increase
Capital expenditure on intangible assets and property,
plant and equipment in the year under report amounted
to € 3,150 million (2013: € 3,203 million). The main
reason for this 1.7 % decrease was the acquisition of
licences in the previous year. Product investments for
62
production start-ups of new models increased year-on-
year. Depreciation and amortisation amounted to
€ 1,890 million (2013: € 1,732 million).
The carrying amount of investments decreased from
€ 3,377 million to € 3,236 million, mainly as a result of an
impairment loss recognised in 2014.
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
26 Overall Assessment by Management
26 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
BMW AG Balance Sheet at 31 December
in € million
Assets
Intangible assets
Property, plant and equipment
61 Comments on Financial Statements
Investments
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
65 Outlook
70 Report on Risks and Opportunities
82 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
Tangible, intangible and investment assets
Inventories
Trade receivables
Receivables from subsidiaries
Other receivables and other assets
Marketable securities
Cash and cash equivalents
Current assets
Prepayments
Surplus of pension and similar plan assets over liabilities
Total assets
Equity and liabilities
Subscribed capital
Capital reserves
Revenue reserves
Unappropriated profit available for distribution
Equity
Registered profit-sharing certificates
Pension provisions
Other provisions
Provisions
Liabilities to banks
Trade payables
Liabilities to subsidiaries
Other liabilities
Liabilities
Deferred income
Total equity and liabilities
2014
2013
405
10,304
3,236
13,945
3,859
697
5,200
2,502
3,572
3,073
474
8,982
3,377
12,833
3,863
659
4,871
3,194
3,429
3,757
18,903
19,773
265
1,123
34,236
169
990
33,765
656
2,084
7,422
1,904
656
2,069
6,097
1,707
12,066
10,529
31
12
7,308
7,320
1,864
4,784
6,872
216
32
43
7,299
7,342
1,463
4,818
8,795
285
13,736
15,361
1,083
34,236
501
33,765
63 COMBINED MANAGEMENT REPORT
BMW AG Income Statement
in € million
Revenues
Cost of sales
Gross profit
Selling expenses
Administrative expenses
Research and development expenses
Other operating income and expenses
Result on investments
Financial result
Profit from ordinary activities
Income taxes
Other taxes
Net profit
Transfer to revenue reserves
Unappropriated profit available for distribution
2014
2013
66,599
– 51,812
14,787
– 3,533
– 2,259
– 4,152
28
741
– 449
5,163
60,474
– 47,067
13,407
– 3,528
– 2,141
– 4,362
542
373
– 328
3,963
– 1,884
– 1,629
– 50
3,229
– 1,325
1,904
– 45
2,289
– 582
1,707
At € 3,859 million, inventories were practically identical
to the end of the previous year (2013: € 3,863 million).
The decrease in other receivables and other assets to
€ 2,502 million (2013: € 3,194 million) was mainly attribut-
able to the lower volume of genuine repurchase (repo)
transactions in place at the end of the reporting period.
Liquidity within the BMW Group is managed centrally by
BMW AG on the basis of a group-wide liquidity concept,
which revolves around the strategy of concentrating a
significant part of the Group’s liquidity at the level of
BMW AG. An important instrument used to achieve this
aim is the cash pool headed by BMW AG. The liquidity
position reported by BMW AG therefore reflects the
global activities of BMW AG and other Group companies.
Cash and cash equivalents went down by € 684 million
to € 3,073 million. This decrease mainly reflected the
repayment of intragroup borrowings, as a result of
which intragroup refinancing volumes also reduced
significantly.
In order to secure obligations resulting from pre-retire-
ment part-time work arrangements and the Company’s
pension obligations, assets have been transferred to
BMW Trust e.V., Munich, in conjunction with Contrac-
tual Trust Arrangements (CTA), on a trustee basis. The
assets concerned comprise mainly holdings in investment
fund assets and a receivable resulting from a so-called
“Capitalisation Transaction” (Kapitalisierungsgeschäft).
Fund assets are offset against the related guaranteed
obligations. The resulting surplus of assets over liabilities
is reported in the BMW AG balance sheet on the line
“Surplus of pension and similar plan assets over liabili-
ties”.
Pension provisions, net of designated plan assets, de-
creased from € 43 million to € 12 million.
At € 4,784 million, trade payables were at a similar level
to the previous year (2013: € 4,818 million).
Liabilities to banks increased in conjunction with a
number of project-related loans.
Equity rose by € 1,537 million to € 12,066 million, while
the equity ratio improved from 31.2 % to 35.2 %.
Other liabilities fell from € 285 million to € 216 million,
mainly as a result of the expiry of option contracts.
Events after the end of the reporting period
No events have occurred since the end of the reporting
period which could have a major impact on the results
of operations, financial position and net assets of
BMW AG or the BMW Group.
64
Report on Economic Position
Events after the End of the Reporting Period
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
26 Overall Assessment by Management
26 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
61 Comments on Financial Statements
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
65 Outlook
70 Report on Risks and Opportunities
82 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
Deferred income went up by € 582 million to € 1,083 mil-
lion, mainly reflecting the increased volume of services
still to be performed for service and maintenance con-
tracts in conjunction with multi-component business.
Risks and opportunities
BMW AG’s performance is highly dependent on the
same set of risks and opportunities that affect the BMW
Group and which are described in detail in the “Report
on Outlook, Risks and Opportunities” section of the Com-
bined Management Report. As a general rule, BMW AG
participates in the risks entered into by Group entities
on the basis of the relevant shareholding percentage.
BMW AG is integrated in the group-wide risk manage-
ment system and internal control system of the BMW
Group. Further information is provided in the “Internal
Control System and Risk Management System Relevant
for the Consolidated Financial Reporting Process” sec-
tion of the Combined Management Report.
Outlook
Due to its dominant role in the Group and its close ties
with Group entities, expectations for the BMW AG with
respect to the Company’s financial and non-financial
performance indicators correspond largely to the BMW
Group’s outlook for the Automotive segment, which is
described in detail in the “Report on Outlook, Risks
and Opportunities” section of the Combined Manage-
ment Report.
KPMG AG Wirtschaftsprüfungsgesellschaft, Munich,
has issued an unqualified audit opinion on the financial
statements of BMW AG, of which the balance sheet and
the income statement are presented here. The BMW AG
financial statements for the financial year 2014 will be
submitted to the operator of the electronic version of the
German Federal Gazette and can be obtained via the
Company Register website. These financial statements
are available from BMW AG, 80788 Munich, Germany.
65 COMBINED MANAGEMENT REPORT
Report on Outlook, Risks and Opportunities
Outlook
The report on outlook, risks and opportunities describes
the expected development of the BMW Group, together
with associated material risks and opportunities, from
the perspective of Group management. The outlook
covers a period of one year, in line with the Group’s in-
ternal management system. By contrast, risks and oppor-
tunities are managed on the basis of a two-year assess-
ment. The report on risks and opportunities therefore
covers a period of two years.
The report on outlook, risks and opportunities contains
forward-looking assertions based on the BMW Group’s
expectations and assessments, which are, by their nature,
subject to uncertainty. As a result, actual outcomes, in-
cluding those attributable to political and economic de-
velopments, could differ substantially – either positively
or negatively – from the expectations described below.
Further information can be found in the section “Report
on risks and opportunities”.
Outlook
Assumptions used in the outlook
The following outlook relates to a forward-looking
period of one year and is based on the composition of
the BMW Group during that period. The outlook takes
account of all information known up to the date on
which the financial statements are authorised for issue
and which could have a material impact on the course
of business of the BMW Group. The expectations con-
tained in the outlook are based on the BMW Group’s
forecasts for 2015 and reflect the most recent status.
The basis for the preparation of and the principal as-
sumptions used in our forecasts, which take account
of consensual opinions of leading organisations, such
as economic research institutes and banks, are set out
below. The BMW Group’s forecast is drawn up on the
basis of these assumptions.
Our continuous forecasting process ensures that the
BMW Group is always ready to take advantage of oppor-
tunities as they arise and to react appropriately to un-
expected risks. The principal risks and opportunities
are described in detail in the section “Report on risks
and opportunities”. The risks and opportunities dis-
cussed in that section are relevant for all of the BMW
Group’s key performance indicators and could result
in variances between the outlook and actual outcomes.
Economic outlook for 2015
For the purposes of the outlook, we assume that the
global economy will continue its moderate upswing in
2015 and grow by 3.5 %. Over-capacities and price
bubbles on the Chinese property market remain signifi-
cant risk factors. Various uncertainties prevail in Europe,
in particular with respect to future developments in
Greece as well as in Russia and neighbouring countries.
In addition, an interest rate turnaround is likely to take
place in the USA. The global economy could also be
negatively impacted by high public debt levels in Europe,
the USA and Japan, as well as political developments in
the Middle East and East Asia. More detailed informa-
tion on these matters can be found in the section “Politi-
cal and global economic risks” in the risk report.
It seems likely that the upswing in the eurozone will
continue in 2015, albeit at a low level, based on an ex-
pected growth rate of 1.1 %. Europe’s largest economy,
Germany, is forecast to grow by approximately 1.4 %.
France is likely to see an increase of around 0.9 %. Italy
should come out of recession in 2015 with a positive
growth rate of 0.4 %. The upswing in Spain seems set
to continue with growth edging up to 2.0 %. The United
Kingdom’s economy is likely to remain strong and grow
by a further 2.7 % in 2015.
Despite the anticipated interest rate turnaround in the
USA, we expect growth to remain at its current high
level. A growth rate of 3.2 % is forecast for 2015, reflect-
ing the expectation that the boom on the employment
and property markets will remain intact.
In view of the negative impact on Japan’s economy
caused by the value added tax hike in 2014, the Japanese
government has decided to postpone the second step –
originally envisaged for 2015 – until 2017. Under these
circumstances, we forecast a growth rate of 1.0 % for the
year 2015.
Economic growth in China is likely to slow down again
slightly in 2015 to a rate of 7.0 %. The prerequisite for
this forecast is that price falls on the property market do
not have any lasting adverse impact on the macroeco-
nomic trend.
The Indian economy seems to be recovering now that
the presidential elections are over and should grow by
6.2 % in 2015. The recovery in Brazil is only likely to be
a very modest 0.5 %. Russia is being negatively impacted
in particular by lower oil prices and economic sanctions
imposed in the wake of the unresolved Ukraine con-
flict. Forecasts, which are currently being adjusted fur-
ther downwards, indicate a 4.1 % drop in Russian GDP.
Currency markets
Currencies which have the greatest impact on the BMW
Group’s international business, such as the US dollar,
66
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
26 Overall Assessment by Management
26 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
61 Comments on Financial Statements
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
65 Outlook
70 Report on Risks and Opportunities
82 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
but also the Chinese renminbi, the British pound and
the Japanese yen, could well be subject to a significant
degree of fluctuation again in 2015.
The expected interest rate turnaround in the USA, low
inflation in Europe and the fragile state of Europe’s
economy, suggest that the US dollar will again tend to
perform strongly against the euro in 2015.
is forecast to rise by 2.1 % to 3.1 million. The French
market is expected to grow by 6.7 % to 1.9 million units,
the Italian market by 2.1 % to 1.4 million units. The
economic upturn in Spain should maintain momentum
and result in a further steep rise in car sales in the cur-
rent year (0.95 million units; + 11.3 %). The UK car market
is likely to remain flat in 2015, with registrations down
marginally by 0.5 % to approximately 2.5 million units.
The Chinese renminbi is likely to remain relatively closely
coupled with the US dollar over the coming year. In the
long term, however, it seems likely that volatility will
increase, following the announcement that capital mar-
kets in China are to be liberalised.
The Japanese yen, which has lost significant ground
against the euro since mid-2012, is not expected to see a
rapid recovery, given that the Japanese central bank is
unlikely to change its monetary and exchange rate poli-
cies in the near future.
Car registrations in Japan are forecast to be in the region
of 4.8 million units and hence about 10.0 % lower than
in the previous year.
In the case of car markets in major emerging econo-
mies, we predict some highly divergent developments.
Due to the prevailing economic and political situation,
Russia is expected to see a further 21.8 % drop to 1.8 mil-
lion units. The Brazilian car market is also likely to con-
tract slightly again in 2015 by approximately 2.0 % to
3.3 million units.
The current healthy state of the UK economy and the
expected turnaround in interest rates that the Bank of
England is likely to set in motion could well strengthen
the British pound somewhat in the short and medium
term.
The currencies of many emerging economies are expected
to remain under pressure against the US dollar in the
foreseeable future, due to the normalisation of US mon-
etary policies, which is likely to get under way in 2015.
Countries with current account and fiscal deficits are
most likely to be affected. Due to the expansionary mon-
etary policies of the ECB, emerging market currencies
will tend to gain in value against the euro. The rouble
will remain on the weak side until political tensions have
eased.
Car markets
We expect global car markets to grow in the current year
by approximately 3.0 % to 83.1 million units. The US
market is forecast to grow by around 2.9 % to 17.0 mil-
lion units. Our prediction for passenger car registra-
tions in China is a rise of around 10.0 % to 20.3 million
units.
The majority of Europe’s car markets should continue
to recover in 2015. The region’s core markets, however,
are only likely to see growth on a modest scale. The
number of new registrations in Germany, for instance,
Motorcycle markets in 2015
The markets for 500 cc plus motorcycles are again likely
to continue their upward trend in 2015, albeit on a
modest scale. Registrations are expected to rise slightly
across Europe, including increases on a similar scale
for the major motorcycle markets in Germany, Italy and
France. The USA is also likely to see a continuation of
the positive trend.
Financial Services sector in 2015
The normalisation of monetary policies in the USA is
expected to continue throughout the coming year. The
first steps in the direction of a slight rise in interest
rates might be taken in summer 2015. The current debt
situation, however, precludes any rapid interest rate
increases in the USA. In Europe, by contrast, the ECB
will proceed with the plans it has already announced
for a large scale bond-buying programme as inflation
remains low in the first half of 2015. A weakly perform-
ing economy and a low inflation rate will maintain the
pressure on the Bank of Japan to intervene. We there-
fore expect it to retain its expansionary monetary poli-
cies and continue to buy government bonds. Reference
interest rates in the eurozone and Japan are therefore
set to remain at historically low levels at least until the
end of 2015.
We expect the pattern of credit risks worldwide to re-
main more or less stable during the current year.
67 COMBINED MANAGEMENT REPORT
Stable conditions are also predicted for used car mar-
kets in Asia and Europe in 2015, while price levels in
North America are, at the most, only likely to fall
slightly.
Expected impact on the BMW Group in 2015
Future developments on international automobile mar-
kets also have a direct impact on the BMW Group.
While competition is likely to intensify in contracting
markets, new opportunities are opening in growth
regions. In some countries, sales volumes will be influ-
enced to a great extent by the way we tackle new com-
petitive challenges. After the uncertainties that have
dominated recent years, we expect Europe to generate
some positive momentum again, albeit on a slight scale.
North America and China are likely to see a continua-
tion of the positive trend in 2015. In contrast, the situa-
tion on the Russian car market can be expected to re-
main tense over the forecast period.
As an enterprise with global operations, the BMW
Group is ideally placed to exploit opportunities that
arise and thus compensate for unfavourable develop-
ments in other regions. Thanks to its strong brands, we
forecast continued profitable growth for the BMW
Group in the current year. We will push ahead with in-
vestments in innovation, future technologies and the
further internationalisation of our production network
in 2015. As a manufacturer of premium vehicles, we will
continue to profit from strong worldwide demand in
this segment. Given all these factors, we forecast that
the BMW Group will remain the world’s leading pre-
mium manufacturer in 2015.
Our highly flexible international production network
enables us to compensate for even substantial fluctua-
tions in demand. Investing in major growth markets
provides the basis for the continued success of the BMW
Group. We attach great importance to ensuring that
the global distribution of our sales remains balanced,
while simultaneously expanding the global presence of
the BMW Group.
Outlook for the BMW Group in 2015
The BMW Group in 2015
Profit before tax: solid increase expected
The BMW Group will remain on course in 2015 and
forecasts a solid increase in Group profit before tax
compared to the preceding year (2014: € 8,707 million).
However, the scale of the increase during the forecast
period is likely to be held down by intense competition
on car markets, rising personnel costs, continued high
levels of upfront expenditure to safeguard business
viability going forward and future challenges arising in
the wake of the normalisation of the Chinese market.
A number of risks will also have to be faced, including
the precarious state of the Russian market and macro-
economic uncertainties in Europe (see the section “Po-
litical and global economic risks” in the risk report).
We expect our attractive model range to generate positive
momentum, which will help us achieve our target of
balanced growth on all major markets.
Workforce at year-end: solid increase expected
The BMW Group will continue to recruit staff in 2015
and, based on our latest forecasts, we expect a solid in-
crease in the size of the workforce (2014: 116,324 em-
ployees), driven by car and motorcycle sales growth and
the rapid pace of innovation.
Automotive segment in 2015
Deliveries to customers: solid increase expected
We expect the pace of growth in the Automotive seg-
ment to remain high in 2015. Assuming economic
conditions continue to be stable, we predict a solid rise
in deliveries to customers (2014: 2,117,965 units) to
achieve a new high level, which will, in all probability,
enable the BMW Group to maintain its position as the
world’s foremost premium car manufacturer in 2015.
Attractive new models and dynamic market conditions,
particularly in North America, should have a positive
impact on car sales. After some negative developments
in recent years, the European car markets are expected
to recover slightly overall. Nevertheless, the market en-
vironment is likely to remain challenging.
The new 2 Series Convertible was added to the BMW 2 Se-
ries with effect from the end of February. Its predeces-
sor, the 1 Series Convertible, achieved worldwide sales
of more than 130,000 units and was therefore the un-
disputed leader in its class.
In April, the four-wheel drive BMW X5 M and X6 M will
come onto the market. These high-performance models
combine the characteristic features of the successful
BMW X family – exclusivity, robustness, agility and every
day usability – with the commitment to high perfor-
mance that defines an M car.
The new facelift of the BMW 1 Series, unveiled at the
Geneva Motor Show, will provide additional sales
momentum. With a fully revamped engine range and
additional features that reduce fuel consumption and
68
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
26 Overall Assessment by Management
26 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
61 Comments on Financial Statements
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
65 Outlook
70 Report on Risks and Opportunities
82 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
emissions, the new BMW 1 Series will again be playing
a pioneering role in the introduction of newly devel-
oped BMW EfficientDynamics technologies. The seven-
seater BMW 2 Series Gran Tourer also made its world
debut in Geneva, heralding the BMW Group’s entry
into a new vehicle segment. With its generous interior
spaciousness, versatility and flexibility, the BMW 2 Se-
ries Gran Tourer is the first BMW to be launched in the
multi-purpose vehicle segment.
The BMW 6 Series Coupé, Gran Coupé and Convertible
model upgrades were presented in January and will
come onto the market in spring 2015. The new 6 Series
satisfies the most exacting requirements for luxury-
segment sporting vehicles in terms of dynamic driving
performance, comfort, technology and elegance.
The highly efficient BMW X5 xDrive40e comes onto the
market in 2015. It is the first BMW brand Sports Activity
Vehicle to combine the intelligent BMW xDrive all-wheel
drive system with a more advanced plug-in hybrid
system, and represents a further important step in the
transfer of innovative drivetrain systems from BMW i
models to the BMW Group’s core brand.
Preparations for the new BMW 7 Series are already
under way at the Dingolfing plant. Intelligent composite
construction in the new BMW 7 Series and the imple-
mentation of carbon fibre (CFRP) technology will set new
standards in the market.
We also expect the MINI brand to generate new sales
momentum in 2015, driven, among other factors, by the
low average age of its model range (2.5 years). The new
MINI Clubman will be presented in 2015 and will excel
with a wide range of high-value details, plenty of room
for functionality and outstanding materials.
The Araquari plant in Brazil commenced production of
BMW brand vehicles in autumn 2014. The completion
of the new production site is scheduled for 2015. The
plant will have a planned annual capacity of up to
30,000 units. The BMW Group is also increasing pro-
duction capacities in the USA. After the expansion
of the Spartanburg plant has been completed, up to
450,000 vehicles per year will roll off the production
lines as from the end of 2016.
Carbon fleet emissions*: slight decrease expected
Regulations for vehicle carbon emissions are becoming
continually stricter worldwide. The BMW Group com-
mitted itself at an early stage to meeting future legal
requirements with the aid of its innovative Efficient
Dynamics technology package. The increasing scope of
electrification in our vehicle fleet is enabling us to play
a pioneering role in reducing both carbon emissions
and fuel consumption. At the same time, our vehicles
also set standards in terms of sporting flair and dynamic
driving pleasure.
We will continue to work hard in the current year to re-
duce carbon emissions across the entire fleet. Overall,
we expect fleet emissions to decrease slightly in 2015
(2014: 130 grams CO2 / km).
Revenues: solid increase expected
The generally positive business trend predicted for the
BMW Group is also expected to have a positive impact
on Automotive segment revenues. Accordingly, we fore-
cast solid revenue growth for the forecast period (2014:
€ 75,173 million).
EBIT margin in target range between 8 and 10 % expected
An EBIT margin within a range of between 8 and 10 %
(2014: 9.6 %) remains the target for the Automotive
segment.
We expect to see a moderate drop in segment RoCE
(2014: 61.7 %). However, the long-term target RoCE of at
least 26 % for the Automotive segment will be clearly
surpassed.
Motorcycles segment in 2015
Deliveries to customers: solid increase expected
We expect the Motorcycles segment’s upward trend to
continue, helped by a positive contribution from the
new models – R 1200 R, R 1200 RS, S 1000 RR, S 1000 XR
and F 800 R – presented at the autumn trade fairs. Within
a positive market environment, we forecast a solid in-
crease in BMW motorcycle sales in the forecast period
(2014: 123,495 units).
* EU-28.
69 COMBINED MANAGEMENT REPORT
Return on capital employed in line with last year’s level
expected
We expect the impetus provided by the new models
will help keep segment RoCE in line with last year’s
level (2014: 21.8 %).
Financial Services segment in 2015
Return on equity in line with last year’s level expected
Based on our assessment, the Financial Services segment
will continue to perform well in 2015. Despite rising
equity capital requirements worldwide, we forecast RoE
in line with last year’s level (2014: 19.4 %), thus remain-
ing ahead of the target of at least 18 %.
Overall assessment by Group management for 2015
We forecast a continuation of the upward trend in 2015
and expect to achieve profitable growth on the back
of a range of factors, including the introduction of new
models. Despite the aforementioned challenges, Group
profit before tax is forecast to achieve a solid increase,
thus reflecting the solid growth in sales volume and
revenues anticipated by the Automotive segment. At
the same time, we expect a slight decrease in carbon
emissions from our fleet of vehicles. We aim to achieve
profitable growth through a solid increase in the size
of the workforce across the Group. The Automotive seg-
ment’s EBIT margin will remain within the target range
of between 8 and 10 %. Based on the planned level of
capital expenditure, we expect a moderate decrease in
the Automobile segment’s RoCE. The Financial Services
segment’s RoE should remain in line with last year’s
level. Both performance indicators will be nevertheless
higher than their long-term targets of 26 % and 18 %
respectively. For the Motorcycles segment, we forecast
a solid increase in sales volume and RoCE in line
with last year’s level. Depending on the political and
economic situation and the outcome of the risks and
opportunities described below, actual business per-
formance could, however, differ from our current ex-
pectations.
Principal performance indicators
BMW Group
Workforce at end of year
Profit before tax
Automotive segment
Sales volume1
Fleet emissions2
Revenues
EBIT margin
Return on capital employed
Motorcycles segment
Sales volume
Return on capital employed
Financial Services segment
Return on equity
2014
116,324
8,707
2015
Outlook
solid increase
solid increase
€ million
units
2,117,965
solid increase
g CO2 / km
€ million
%
%
130
75,173
slight decrease
solid increase
9.6
unchanged between 8 and 10
61.7
moderate decrease
units
123,495
solid increase
%
%
21.8
in line with last year’s level
19.4
in line with last year’s level
1 Including the joint venture BMW Brilliance Automotive Ltd., Shenyang (2014: 275,891 units).
2 EU-28.
70
Report on Outlook, Risks and Opportunities
Report on Risks and Opportunities
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
26 Overall Assessment by Management
26 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
61 Comments on Financial Statements
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
65 Outlook
70 Report on Risks and Opportunities
82 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
As a world-leading manufacturer of premium cars and
motorcycles and provider of premium financing and
mobility services, the BMW Group is exposed to numer-
ous uncertainties and changes. Making full use of the
opportunities that present themselves is the basis for its
corporate success. In order to achieve growth, profita-
bility, efficiency and sustainable levels of business in the
future, the BMW Group consciously takes certain risks.
The prudent management of opportunities and risks is
a fundamental prerequisite for the ability to react appro-
priately to changes in political, legal, technical or eco-
nomic conditions. Identified opportunities and risks are
addressed in the Outlook Report if they are likely to
materialise. The following sections focus on potential
future developments or events, which could result in a
positive variance (opportunities) or a negative variance
(risks) in the BMW Group’s outlook. The potential im-
pact of risks and opportunities is always presented sepa-
rately and without offset.
The scope of entities covered by the report on risks
and opportunities corresponds to the scope of consoli-
dated entities included in the BMW Group Financial
Statements.
Risk management system
The objective of the risk management system and one of
the key functions of risk reporting is to identify, record
and actively manage internal and external risks which
pose a threat to the attainment of corporate targets. The
risk management system covers all significant risks to
the Group, or those which could pose a threat to its going-
concern status. With regard to the structure of the risk
management system, the responsibility for risk reporting
lies with each individual member of staff and manager –
in their various roles – and not with that of any central-
ised unit in particular. Each and every employee and
manager is required to report risks via the available re-
porting channels. This requirement is set out in guide-
lines that apply throughout the Group.
Risks and opportunities are assessed as a general rule
over a medium-term period of two years. All potential
risks of losses (individual and accumulated risks) are
monitored and managed from a risk management per-
spective. As a matter of principle, risks that pose a going-
concern threat are avoided. If there is no specific
reference to a segment, opportunities and risks relate
to the Automotive segment.
The Group risk management system comprises a de-
centralised network covering all parts of the business,
which is steered by a centralised risk management func-
tion. Each of the BMW Group’s areas of responsibility
is represented within the risk management network by
so-called network representatives. The network’s for-
mal organisational structure helps to strengthen its
visibility and underline the importance attached to risk
Risk management in the BMW Group
Group-wide risk management
Identification
Effectiveness
Reporting
Analysis and
Measurement
Supervisory Board
Usefulness
Compliance
Committee
Risk management
Completeness
Monitoring
Controlling
Risk Management
Steering Committee
Board of Management
Group Audit
Internal Control System
71 COMBINED MANAGEMENT REPORT
management within the BMW Group. The duties, re-
sponsibilities, and tasks of the centralised risk manage-
ment unit and network representatives are clearly
described, documented and acted on. Group risk manage-
ment is geared towards meeting the following three
criteria: effectiveness, usefulness and completeness. In
view of the dynamic growth of business in recent years,
in-house thresholds and rules in place for risk reporting
purposes were reviewed in 2014 for effectiveness and
usefulness and modified as seen appropriate. In addition,
the design of the BMW Group’s risk management net-
work was reviewed on the basis of the framework of the
internationally recognised Committee of Sponsoring
Organizations of the Treadway Commission (COSO). This
review was carried out in conjunction with the Com-
pliance Committee, Group Internal Audit, Internal
Control System and overall Group risk management
functions. Appropriate measures are in place to ensure
that these functions are coordinated seamlessly.
Risk management process
The risk management process is applied throughout
the Group and comprises the early identification and
penetration of risks, comprehensive analysis and risk
measurement, the coordinated use of suitable manage-
ment tools and also the monitoring and evaluation of
measures taken.
Risks reported to the centralised risk management team
from within the network are firstly presented for review
to the Risk Management Steering Committee, for which
Group Controlling is responsible. After review, the risks
are reported to the Board of Management and to the
Supervisory Board. Significant and going-concern-
related risks are classified on the basis of the potential
scale of impact on the Group’s results of operations,
finan cial position and net assets. The level of risk is quan-
tified, taking into account the probability of occurrence
and risk mitigation measures.
The risk management system is tested regularly by
Internal Audit. By sharing experiences with other com-
panies on an ongoing basis, the BMW Group ensures
that new insights are incorporated in the risk manage-
ment system, thus ensuring continual improvement.
Regular basic and further training as well as information
events held throughout the BMW Group, and in par-
ticular within the risk management network, are invalu-
able ways of preparing people for new or additional
challenges with regard to the processes in which they
are involved.
As a supplement to comprehensive risk management,
managing the business on a sustainable basis also repre-
sents one of the Group’s core corporate principles. Any
risks or opportunities related to sustainability issues
are discussed by the Sustainability Committee. Strategic
options and measures open to the BMW Group are put
forward to the Sustainability Board, to which all mem-
bers of the Board of Management belong. Risk aspects
discussed at this level are integrated in the work of the
group-wide risk network. The composition of the Risk
Management Steering Committee on the one hand and
the Sustainability Committee on the other ensures that
risk and sustainability management are closely coordi-
nated.
Risk measurement
In order to determine which risks can be considered
significant in relation to results of operations, financial
position and net assets and to identify changes in key
performance indicators used by the BMW Group, risks
are classified as high, medium or low.
The overall impact on results of operations based on the
assumption that the risk will materialise is measured
for the two-year assessment period and allocated to the
following categories:
Class
Low
Medium
High
Earnings impact
> €0 – 500 million
> €500 – 2,000 million
> €2,000 million
The significance of risks for the BMW Group is deter-
mined on the basis of risk amounts. The measure-
ment of the amount of a risk takes account of both its
impact (net of appropriate countermeasures) and the
likelihood of occurrence in each case. The amount of
a risk is approximated in the case of risks measured on
the basis of valueatrisk / cashflowatrisk models. In
this situation, the following assessment criteria are ap-
plied:
Class
Low
Medium
High
Risk amount
> €0 – 50 million
> €50 – 400 million
> €400 million
72
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
26 Overall Assessment by Management
26 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
61 Comments on Financial Statements
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
65 Outlook
70 Report on Risks and Opportunities
82 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
Opportunities management system and identification
of opportunities
New opportunities regularly present themselves in the
dynamic business environment in which the BMW Group
operates. General economic trends and sector-specific
factors – including external regulations, suppliers, cus-
tomers and competitors – are monitored continuously.
Identifying opportunities is an integral part of the pro-
cess of developing strategies and drawing up forecasts for
the BMW Group.
Market, competition and scenario analyses are conducted
and evaluated and forecasts are drawn up as part of
the process of identifying opportunities. The Group’s
product and service portfolio is permanently reviewed
in the light of these analyses and, as appropriate, new
product projects are presented to the Board of Manage-
ment for consideration.
The continuous optimisation of important business
processes and strict cost control are essential to ensure
good profitability and a high return on capital em-
ployed. The forecast is drawn up on the assumption that
profitability improvement measures will be imple-
mented. One example is the implementation of modu-
lar-based production and common architectures, which
enable a greater commonality of features between
different models and product lines. This, in turn, con-
tributes to improved profitability by reducing develop-
ment costs and investment on the series development
of new vehicles. The new approach has a positive im-
pact on production costs and helps increase production
flexibility. A more competitive cost basis opens up oppor-
tunities to engage in new market segments.
The implementation of identified opportunities is un-
dertaken on a decentralised basis. The significance of
opportunities for the BMW Group is classified in the
categories “material” or “not material”.
Risks and opportunities
Political and global economic risks
and opportunities
Strategic and sector risks and
opportunities
Risks and opportunities relating
to operations
Risk
amount
Change
compared to
prior year
High
Stable
Medium
Increased
Production and technology
Medium
Purchasing
Sales and marketing
Pension obligations
High
High
High
Information, data protection and IT
Medium
Financial risks and opportunities
Foreign currencies
Raw materials
Liquidity
Risks and opportunities relating
to the provision of financial services
Credit risk
Residual value
Interest rate changes
Liquidity / operational risks
Legal risks
High
High
Low
High
High
Medium
Medium
Low
Stable
Stable
Stable
Stable
Stable
Stable
Stable
Stable
Stable
Stable
Stable
Stable
Stable
Risks and opportunities which could, from today’s per-
spective, have a significant impact on the results of
operations, financial position and / or net assets of the
BMW Group are described in the following sections.
Political and global economic risks and
opportunities
As one of the world’s leading providers of premium
products and services, the BMW Group faces a variety
of major challenges. The world is changing at great
speed. Resulting situations can give rise to risks on the
one hand and opportunities on the other.
Risks and opportunities
The following table provides an overview of all risks and
opportunities and shows their significance for the BMW
Group.
Neither at the balance sheet date nor at the date on which
the Group Financial Statements were authorised for
issue were any risks identified which could pose a
threat to the going-concern status of the BMW Group.
Political and global economic risks
Individual mobility remains a key issue in a great many
countries, in terms of political regulation and national
industrial policymaking. Changing values in society are
constantly calling for new solutions in the field of mo-
bility. Unpredictable disturbances in economic interde-
pendencies, together with ever-greater competition,
may give rise to knock-on reactions that are practically
impossible to measure.
73 COMBINED MANAGEMENT REPORT
The current high level of volatility prevailing in many
economies continues to have an unsettling impact on
markets and consumers. Many emerging economies are
currently performing below their full potential. The
euro zone is still having to cope with a range of structural
problems, such as those evident in Greece.
result in an improved quality of earnings. Changes in
the legal environment are monitored continuously at a
centralised level. At present, however, the BMW Group
does not see any significant political and / or global eco-
nomic opportunities, which could have a positive sus-
tainable impact on its earnings performance.
The slowing of economic growth in China, one of the
BMW Group’s principal markets, also continues to pose
a major risk. Upheavals in the property or banking sector
in this region could result in reduced demand for our
products and services.
Any escalation of political conflicts (such as in Russia),
terrorist activities, natural disasters or possible pan-
demics could have a negative impact on the world econ-
omy and international capital markets. The BMW Group
counters these risks primarily by internationalising its
sales and production structures, in order to reduce the
potential impact of risk exposures in individual coun-
tries. Political and global economic risks are determined
by analysing historical data and applying a cash-flow-at-
risk approach.
If risks from this category were to materialise, they
could – due to sales volume fluctuations – have a high
impact on results of operations over the two-year as-
sessment period. Overall, the risk amounts attached
to political and global economic risks are classified as
high.
Political and global economic opportunities
Despite the high level of risk involved, the BMW Group
sees an opportunity for above-average growth in the
Chinese market. In addition to the impact from eco-
nomic developments, the BMW Group’s earnings can
also be positively affected in the short to medium term
by changes in the legal environment. A possible reduc-
tion in tariff barriers, import restrictions or direct ex-
cise duties could lower the cost of materials for the
BMW Group, also enabling products and services to be
offered to customers at lower prices. Another factor to
consider is that regulatory support for forward-looking
technologies, such as electromobility, help to make
the total cost of ownership more attractive for customers
in the form of incentives. Developments of this kind
open up opportunities to achieve faster market penetra-
tion for these technologies, which could, in turn, lead
to higher sales volumes and, all other things being equal,
Strategic and sector risks and opportunities
New regulations and the development of fuel and energy
prices also influence various aspects of our business,
including customer behaviour. Medium- and long-term
targets have already been put in place in Europe, North
America, Japan, China and other countries to minimise
fuel consumption and CO2 emissions.
Strategic and sector risks
One of the main risks for the automobile industry is
the possible threat of short-term tightening of laws and
regulations, including local registration restrictions. In
some cases, changes in customer behaviour are not only
brought on by new regulations, but also through changes
of opinion, values and environmental issues. Among
other factors, global climate change is having an effect
on legislation, regulations and consumer behaviour. In
order to meet structural changes in the demand for
individual mobility that no longer necessarily entail
actually owning a vehicle, the BMW Group is offering
corresponding mobility services, such as the DriveNow
car-sharing model.
With its Efficient Dynamics concept, the BMW Group
is playing a pioneering role in the premium segment in
reducing both fuel consumption and emissions. With
effect from 2013, our range of products was expanded
to include electric powertrains in BMW i series vehicles.
These innovations also make an important contribution
in our endeavours to fulfil statutory rules and require-
ments in terms of CO2 emissions. The BMW Group is
investing in the development of sustainable drive tech-
nologies and materials, with the aim of providing highly
efficient vehicles for individual mobility in the premium
segment, both now and in the future.
Employees make a vital contribution to sustainable
growth and improved profitability through their inno-
vative skills. One prerequisite for this is a consistent
strategic approach to the management of human re-
sources, even in the event of changes in the legal frame-
work. The BMW Group has appropriate measures in
74
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
26 Overall Assessment by Management
26 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
61 Comments on Financial Statements
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
65 Outlook
70 Report on Risks and Opportunities
82 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
place for such eventualities. Risk amounts and earnings
impact are measured on the basis of extensive scenario
analyses.
If risks from the strategic and sector category were to
materialise, they could have a medium impact on results
of operations over the two-year assessment period. The
amounts of risk attached to strategic and sector-specific
risks are classified as medium.
Strategic and sector opportunities
Additions to the product and mobility portfolio and
expansion in growth regions are seen as the most im-
portant opportunities for growth in the medium to
long term for the BMW Group.
Remaining on growth course depends above all else on
the ability to develop innovative products and bring
them to market. The launching of the BMW i brand opens
up new customer target groups for the BMW Group and
consolidates the position of BMW as a sustainable and
forward-looking brand. BMW i products can be seen as
“empowerment projects” for new technologies and pro-
cesses, which will also benefit other vehicle concepts.
The existing product portfolio has been expanded by the
addition of mobility services such as DriveNow, Charge-
Now and ParkNow. The general acceptance of, and
sales volumes generated with, planned future product
innovations could be better than predicted in the out-
look. In the short term, however, any potential positive
impact is classified as not material.
The long-term trend towards greater sustainability pro-
vides opportunities to boost sales of sustainable prod-
ucts and, under the right circumstances, achieve better
selling prices. Innovations – such as the BMW i3 and i8
in the field of electromobility or Efficient Dynamics
across the entire BMW Group product portfolio – pro-
vide excellent platforms for future growth. Potential
is also seen by engaging in new product and market
categories and by developing new customer target
groups. New business models and cooperation arrange-
ments with the BMW Group’s growing network of
business partners often provide the best means to take
advantage of these opportunities. Good examples of
this are the implementation of the 360°ELECTRIC port-
folio in the field of electromobility, the partnership with
SIXT in the field of mobility services and collaboration
with Toyota on a hydrogen fuel cell system.
The BMW Group is constantly refining the tools it uses
to recruit employees, encourage career development and
bind employees to the enterprise. Within this environ-
ment, employees find the optimal situation in which to
develop their skills. If these measures generate greater
benefits than currently expected, the BMW Group’s rev-
enues, results of operations and cash flows could be
positively impacted and forecasted figures surpassed.
Creating a successful performance culture and the devel-
opment of the expertise and skill sets of both staff and
managers alike throughout the organisation could also
have a positive impact on revenue and profitability.
Given the long lead times involved, the BMW Group’s
earnings performance is unlikely to benefit over the as-
sessment period from efficiency improvements or from
the implementation of product and process developments
to a significantly greater extent than that already incor-
porated in the outlook.
Risks and opportunities relating to operations
Production and technology-related risks
Production stoppages and downtimes – in particular
due to fire, but also those attributable to manufacturing
equipment breakdowns, logistical disruptions or new
vehicle production line startups – represent risks which
the BMW Group counters with a broad range of appro-
priate measures. Production structures and processes
are designed from the outset with a view to reducing
potential damage and the probability of occurrence. In
addition to technical fire protection measures, the BMW
Group has implemented an array of strategies, including
preventative maintenance, land development measures
including contingencies against flooding, spare parts
management on a multi-site basis and backup plans
for alternative transportation. The level of risk is also
reduced by the deployment of flexible work-schedule
models and employee time accounts, but also by the
ability to build specific models at additional sites if
necessary. Moreover, risks arising from business inter-
ruption and loss of production as a consequence of fire
are also insured up to economically reason able levels
with insurance companies of good credit standing.
If risks from the production and technology-related risks
category were to materialise, they could have a high im-
pact on the results of operations over the two-year as-
sessment period. The level of risk attached to pro uction
and technology-related issues is classified as medium.
75 COMBINED MANAGEMENT REPORT
Production and technology-related opportunities
In addition to the risks involved, we firmly believe that
the choice of sites for new production facilities also
creates a wealth of opportunities. Selecting a new loca-
tion goes hand in glove with the opportunity to shape
the local environment in a positive way (e. g. job crea-
tion, training, corporate social responsibility (CSR) pro-
jects). Our aim is to continue our commitment to sus-
tainability whenever a new site is selected. We therefore
endeavour to incorporate flagship projects at our pro-
duction sites that have a clear focus on sustainability
(e. g. wind turbines in Leipzig). The option of offsetting
capacities between BMW Group sites is always kept in
mind if production technologies can be employed to
achieve greater efficiency in the use of resources.
Compared to the outlook, efficiency improvements are
unlikely to have a significantly greater impact over
the two-year assessment period than that already incor-
porated in the outlook.
Purchasing risks
Close cooperation between carmakers and automotive
suppliers creates economic benefits on the one hand,
but also raises levels of dependency on the other. The
increasing trend towards modular-based production
with a set of common architectures covering various
models and product lines exacerbates the consequences
of the loss of a supplier or failure to supply on time.
As part of the supplier preselection process, the BMW
Group is careful to ensure that its future business part-
ners meet the same high ecological, social and corpo-
rate governance standards by which the BMW Group is
generally measured. Suppliers are assessed on the basis
of the BMW Group Sustainability Standard, which is
applied throughout our supplier network worldwide.
This set of fundamental principles and standards covers
both production and non-production aspects relevant
for the goods and services provided by suppliers, which
also includes compliance with internationally recognised
human rights and applicable labour and social stand-
ards. The principal tool for ensuring compliance with
the BMW Group Sustainability Standard is a three-
stage sustainability and risk management approach com-
prising a BMW Group-specific sustainability risk filter,
a sustainability questionnaire and a sustainability audit.
In addition, the technical and financial capabilities of
suppliers – especially those supplying for modularbased
production – are continuously monitored during both
the development and production phases of the Group’s
vehicles. Particular attention is paid to the quality of the
parts. In order to attain the level of quality required, it
may become necessary to invest in new technological
concepts or discontinue planned innovations, with the
consequence that the cost of materials could exceed
levels incorporated in the outlook. Supplier sites are as-
sessed for exposure to natural hazards, such as floods
or earthquakes, in order to identify supply risks at an
early stage and implement appropriate countermeasures.
Production problems incurred by suppliers could have
adverse consequences for the BMW Group, ranging
from increased expenditure through to production in-
terruptions and a corresponding reduction in sales
volume.
Raw materials management procedures are in place to
mitigate the risk of a production interruption due to
shortages of supplies of critical raw materials. In order
to reduce supply risks, the BMW Group works hard
to reduce the input of raw materials or to use alternative
raw materials as a substitute.
If purchasing risks were to materialise, they could have
a high impact on the BMW Group’s results of opera-
tions over the two-year assessment period. The level
of risk attached to supply risks is classified as high,
mainly due to the insufficient availability of raw materials
in Asia.
Risks relating to sales and marketing
Changes in global economic conditions and increasingly
protectionist trends are among the factors that could
result in lower demand as well as fluctuations in the re-
gional spread and composition of sales in terms of vehi-
cles and mobility services. Risks relating to these
developments can be reduced with the aid of flexible
selling and production processes. At the same time, in-
creased pressure on selling prices and margins caused
by intense competition on the world’s markets, particu-
larly in Western Europe, the USA and China, requires
constant analysis, including keeping an eye on develop-
ments in grey market volumes from the USA to China.
Selling price and margin risks are determined on the
basis of past experience and changing global economic
conditions, with risk exposures measured using a cash-
flow-at-risk model.
If sales and marketing risks were to materialise, they
could have a high impact on the BMW Group’s results
of operations over the two-year assessment period. The
level of risk attached to sales and marketing risks is
classified as high.
76
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
26 Overall Assessment by Management
26 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
61 Comments on Financial Statements
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
65 Outlook
70 Report on Risks and Opportunities
82 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
Opportunities relating to sales and marketing
Opportunities may arise due to other technical innova-
tions relating to products and processes and as a result
of organisational changes. In the field of lightweight
construction, for example, carbon was being put to use
in high volumes for the first time in the automobile in-
dustry in the construction of the BMW i3.
Since carbon could also be used in other vehicle projects,
we see further competitive advantages in terms of fuel
consumption and driving dynamics, which could, in
turn, have a positive impact on sales volume growth. The
opportunities will not have a material impact over the
assessment period on the results of operations of the
BMW Group.
The BMW Group focuses its selling capacities primarily
on markets with the greatest sales volume and revenue
potential and fastest growth rates. Investment in existing
and new marketing concepts is firmly aimed at inten-
sifying relationships with customers. A good example is
the new marketing concept for BMW i products and
services, which will be offered in selected markets in the
future via an innovative multi-channel model. There
will be no relaxing of efforts in the active search for new
opportunities to create even greater added value for
customers than currently expected, whilst at the same
time looking for ways to boost sales volumes and achieve
better selling prices. Developments in the field of digi-
tal communication and networking are also opening
up opportunities for marketing the BMW Group’s
various brands. Consumers can meanwhile be reached
on a more targeted and individual basis, thus helping to
strengthen long-term relationships and brand loyalty.
The BMW Group keeps track of the latest developments
and trends in communication technology, including
the use of social media and networks, in order to extend
customer reach for its brands. Automotive-related busi-
ness activities of technology companies are also closely
followed (autonomous driving). The BMW Group’s
brands are present on numerous platforms, such as
Face book, YouTube and Twitter. Thanks to its intensive
efforts in this area, the BMW Group is registering faster
growth rates on the various platforms than its com-
petitors, measured in terms of the number of fans and
visits. The decisive advantage of digital communication
is that the brands are able to engage in a direct dia-
logue with customers and thus create a more intense
product and brand experience.
The BMW Group considers that these opportunities will
not have a material impact on the results of operations
over the two-year assessment period compared to the
assumptions made in the outlook.
Risks relating to pension obligations
The BMW Group’s pension obligations to its employees
resulting from defined benefit plans are measured on
the basis of actuarial reports. Future pension payments
are discounted by reference to market yields on high-
quality corporate bonds. These yields are subject to mar-
ket fluctuation and therefore influence the level of pen-
sion obligations. Changes in other parameters, such as
rises in inflation and longer life expectancy, also impact
pension obligations and payments. Opportunities and
risks arise depending on the nature and scale of changes
in these parameters.
Most of the BMW Group’s pension obligations are ad-
ministered in external pension funds or trust arrange-
ments and the related assets are kept separate from Com-
pany assets. The amount of funds required to finance
pension payments out of operations in the future is
therefore substantially reduced, since most of the Group’s
pension obligations are settled out of pension fund as-
sets. The pension assets of the BMW Group comprise
interest-bearing securities, equities, real estate and other
investment classes. Pension fund assets are monitored
continuously and managed on a risk-and-yield basis.
A broad spread of investments also helps to reduce risk.
In order to reduce fluctuations in pension funding
shortfalls, investments are structured to coincide with
the timing of pension payments and the expected pat-
tern of pension obligations. Remeasurements on the
obligations and fund asset sides are recognised, net of
deferred taxes, in “Other comprehensive income” and
hence directly in equity (within revenue reserves).
If risks relating to pension obligations were to mate-
rialise, they could have a high impact on the BMW
Group’s results of operations over the two-year assess-
ment period. The level of risk attached to risks relating
to pension obligations is classified as high.
Opportunities relating to pension obligations
Within a favourable capital market environment, the
return generated by pension assets may exceed expec-
tations and reduce the deficit of the relevant pension
plans. This, in turn, could have a materially favourable
77 COMBINED MANAGEMENT REPORT
impact on the net assets position and earnings perfor-
mance of the BMW Group.
Further information on risks in conjunction with pen-
sion provisions is provided in note 36 to the Group
Financial Statements.
Information, data protection and IT risks
The importance of electronically processed data con-
tinues to rise, with information technology (IT) playing
an increasingly crucial role in every aspect of the
business. These developments create opportunities on
the one hand, whilst also posing a source of risk on the
other.
The BMW Group could incur damage if the confiden-
tiality, integrity and / or availability of sensitive informa-
tion and data are not maintained. Great importance is
attached to the protection of business information and
of employee and customer data against unauthorised
access and / or misuse. Data security, based on Interna-
tional Security Standard ISO / IEC 27001, is an integral
component of all business processes. Personal data is
protected in accordance with the stringent requirements
of the EU Data Protection Directive and the Federal
Data Protection Act (Bundesdatenschutzgesetz – BDSG).
All employees are required to treat confidential infor-
mation (such as customer and employee data) in an ap-
propriate manner, ensure that information systems are
properly used and that risks are handled with the ut-
most transparency. Uniform requirements, documented
in a coordinated and comprehensive set of principles,
guidelines and work instructions, are applicable group-
wide. Regular communication and sensitisation-rais-
ing activities create a high degree of security and risk
awareness among the employees involved. Employees
receive training to ensure compliance with applicable
requirements and in-house rules.
Risk management procedures include systematic docu-
mentation of all information / data protection and IT
risks, regular monitoring and the implementation of
appropriate measures by the departments responsible.
Technical data protection procedures include virus scan-
ners, firewall systems, access controls at both operating
system and application level, regular data backups and
data encryption. Regular analyses and controls (in-
cluding the testing of data protection requirements) and
rigorous security management ensure a high level of
security.
Responsibility for data protection in each Group entity
lies with the Board of Management (of BMW AG) or
the relevant company management team. Local Data
Privacy Protection Officers are embedded in each of the
Group’s entities. In the case of cooperation arrange-
ments and business partner relationships, the BMW
Group protects its intellectual property as well as cus-
tomer and employee data by stipulating clear instruc-
tions with regard to data protection and the use of
information technology. Information pertaining to key
areas of expertise as well as sensitive personal data
are subject to particularly stringent security measures.
In a clear signal to employees, customers and Europe’s
data protection authorities that data protection is taken
very seriously, the Board of Management of BMW AG
resolved a set of Binding Corporate Rules (BCR) that
ensure the secure transfer of personal data throughout
the BMW Group’s global organisation. The BMW Group
has become the first car manufacturer worldwide to
successfully complete the relevant BCR recognition pro-
cedures.
The requirements placed on IT facilities – both externally
and internally – are changing at a breathtaking pace in
the face of technological developments. Potential risks
are therefore investigated continuously and appropriate
measures put in place to prevent or minimise their im-
pact. Despite regular testing and the whole gamut of
preventative security measures employed, it is neverthe-
less impossible to rule out risks completely in this area.
If information, data protection and IT risks were to ma-
terialise, they are only likely to result in a minor impact
on the results of operations over the two-year assess-
ment period. The levels of risk attached to information,
data protection and IT risks are classified as medium.
Information, data protection and IT opportunities
Conversely, the deployment of information technology
also opens up many opportunities. New approaches
to production and energy supply systems that are cur-
rently being investigated in the context of “Industrie
4.0” are generating significant efficiency improvements
and resulting in greater sustainability. The range of
78
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
26 Overall Assessment by Management
26 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
61 Comments on Financial Statements
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
65 Outlook
70 Report on Risks and Opportunities
82 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
s ervices and apps on offer to customers through BMW
ConnectedDrive is constantly being expanded and up-
dated.
The opportunities arising from the deployment of infor-
mation technology are not expected to have a material
positive impact during the two-year assessment period
compared to the assumptions made in the outlook.
Financial risks and opportunities
Currency risks and opportunities
As an internationally operating enterprise, the BMW
Group conducts business in a variety of currencies, thus
giving rise to currency risks and opportunities. Since a
substantial portion of Group revenues is generated out-
side the eurozone (particularly in China and the USA)
and the procurement of production material and funding
is also organised on a worldwide basis, fluctuations in
exchange rates can play a significant role for Group
earnings. Cash-flow-at-risk models and scenario analyses
are used to measure currency risks and opportunities.
Operational currency management is based on the results
provided by these tools. In 2014 the Chinese renminbi,
the US dollar, the British pound, the Russian rouble and
the Japanese yen constituted approximately 75 % of the
total foreign currency exposure of the BMW Group, with
the Chinese renminbi and the US dollar accounting for
the lion’s share of foreign currency transactions. The
BMW Group manages currency risks at both strategic
(medium and long term) and operating level (short
and medium term). Medium- and long-term measures
include increasing production volumes in non-euro-
region countries (natural hedging) and increasing pur-
chase volumes denominated in foreign currencies.
Constructing new plants in countries such as the USA,
China or Brazil have also helped reduce foreign cur-
rency exposures. Currency risks are managed in the
short to medium term and for operational purposes by
means of hedging. Hedging transactions are entered
into only with financial partners of good credit standing.
Opportunities are also secured through the deployment
of options. A description of the methods applied for
risk measurement and hedging is provided in note 43
to the Group Financial Statements. Counterparty risk
management procedures are carried out continuously
in order to monitor the creditworthiness of business
partners.
If currency risks were to materialise, they could have a
high impact on the BMW Group’s results of operations
over the two-year assessment period. A high level of
risk is attached to currency risks. Significant opportuni-
ties can arise if currency developments are favourable
for the BMW Group.
If the relevant recognition criteria are fulfilled, deriva-
tives used by the BMW Group are accounted for as
hedging relationships. Further information on risks in
conjunction with financial instruments is provided in
note 43 to the Group Financial Statements.
Risks and opportunities relating to raw materials
Changes in prices of raw materials are monitored on the
basis of a set of well-defined management procedures.
The principal objective of these management processes
is to increase planning reliability for the BMW Group.
Price risks and opportunities relating to precious metals
(platinum, palladium, rhodium) and non-ferrous metals
(aluminium, copper, lead), and, to some extent, to steel
and steel ingredients (iron ore, coking coal) and energy
(gas, electricity) are hedged using financial derivatives
and / or supply contracts with fixed pricing arrangements.
A description of the methods applied for risk measure-
ment and hedging is provided in note 43 to the Group
Financial Statements.
If risks relating to raw materials were to materialise,
they could have a medium impact on the BMW Group’s
results of operations over the two-year assessment
period. A high level of risk is attached to risks relating
to raw materials.
Conversely, significant opportunities can arise if prices
of raw materials develop favourably for the BMW Group.
If the relevant recognition criteria are fulfilled, deriva-
tives used by the BMW Group are accounted for as
hedging relationships. Further information on risks in
conjunction with financial instruments is provided in
note 43 to the Group Financial Statements.
Liquidity risks
Based on experience gained during the financial crisis,
a minimum liquidity concept has been developed and
is rigorously adhered to. Solvency is assured at all times
throughout the BMW Group by maintaining a liquidity
reserve and by the broad diversification of refinancing
sources. The liquidity position is monitored continu-
ously at a separate entity level and managed by means
79 COMBINED MANAGEMENT REPORT
of cash flow requirements and sourcing forecast sys-
tem in place throughout the Group. Liquidity risks may
be reflected in rising refinancing costs. They may also
manifest themselves in restricted access to funds as a
consequence of the general market situation or the de-
fault of individual banks. The major part of the Finan-
cial Services segment’s credit financing and lease busi-
ness is refinanced on capital markets. Thanks to its
excellent creditworthiness, the BMW Group has good
access to financial markets and, as in previous years,
was able to raise funds at good conditions in 2014, re-
flecting a diversified refinancing strategy and the solid
liquidity and earnings base of the BMW Group. Inter-
nationally recognised rating agencies have additionally
confirmed the BMW Group’s solid creditworthiness.
If liquidity risks were to materialise, they are only likely
to result in a low impact on the BMW Group’s results
of operations over the two-year assessment period.
The risk of incurring liquidity risk is classified as low –
including the risk of the BMW Group’s rating being
downgraded and any ensuing deterioration in financing
conditions.
If the relevant recognition criteria are fulfilled, deriva-
tives used by the BMW Group are accounted for as
hedging relationships. Further information on risks in
conjunction with financial instruments is provided in
note 43 to the Group Financial Statements.
Risks and opportunities relating to Financial Services
The categories of risk relating to the provision of finan-
cial services are credit and counterparty risk, residual
value risk, interest rate risk, liquidity risk and opera-
tional risk. In order to evaluate and manage these risks,
a variety of internal methods has been developed
based on regulatory environment requirements (such
as Basel III) and which comply with both national and
international standards. A set of strategic principles
and rules derived from regulatory requirements serves
as the basis for risk management within the Financial
Services segment. At the heart of the risk management
process is a clear division between front- and back-of-
fice activities and a comprehensive internal control sys-
tem. The key risk management tool employed within
the Financial Services segment is aimed at ensuring
that the Group’s risk-bearing capacity is not exceeded.
In this context, all risks (defined as “unexpected losses”)
must be covered at all times by an appropriate asset
cushion in the form of equity capital. Unexpected losses
are measured using a variety of value-at-risk techniques,
adapted to each relevant risk category. Risks are aggre-
gated after taking account of correlation effects. The
total amount of risks calculated in this way is then com-
pared with the resources available to cover risks (asset
cushion). The segment’s risk-bearing capacity is moni-
tored continuously with the aid of an integrated limit
system which also differentiates between the various risk
categories. The segment’s total risk exposure was
covered at all times during the past year by the available
risk-coverage volumes.
Credit and counterparty risks and opportunities
Credit and counterparty default risk arises within the
Financial Services segment if a contractual partner (i. e.
a customer or dealer) either becomes unable or is only
partially able to fulfil its contractual obligations, such
that lower income is generated or losses incurred. The
Financial Services segment uses a variety of rating
systems in order to assess the creditworthiness of its
contractual partners. Credit risks are managed at the
time of the initial credit decision on the basis of a calcu-
lation of the present value of standard risk costs and
subsequently, during the term of the credit, by using a
range of risk provisioning techniques to cover risks
emanating from changes in customer creditworthiness.
In this context, individual customers are classified by
category each month on the basis of their current con-
tractual status, and appropriate levels of allowance
recognised in accordance with that classification. If
economies develop more favourably than assumed in
the outlook, there is a chance that credit losses may be
reduced and earnings improved accordingly.
If credit and counterparty risks were to materialise, they
could have a medium impact on the BMW Group’s
results of operations over the two-year assessment pe-
riod. The level of risk attached to credit and counter-
party risks is classified as high. The BMW Group classi-
fies potential opportunities in this area as material.
Residual value risks and opportunities
Risks and opportunities arise at the end of the contrac-
tual term of a lease if the market value of the leased vehi-
cle differs from the residual value calculated at the in-
ception of the lease and factored into the lease payments.
80
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
26 Overall Assessment by Management
26 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
61 Comments on Financial Statements
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
65 Outlook
70 Report on Risks and Opportunities
82 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
A residual value risk exists if the expected market value
of the vehicle at the end of the contractual term is lower
than its residual value at the date the contract is entered
into. Each vehicle’s market value is forecast on the basis
of historical external and internal data and used to pre-
dict the expected market value of the vehicle at the end
of the contractual period. As part of the process of
managing residual value risks, a calculation is performed
at the inception of each contract to determine the pre-
sent value of risk costs. Market developments are ob-
served throughout the contractual period and the risk
assessment updated appropriately.
If residual value risks were to materialise, they could have
a high impact on Group earnings over the two-year
assessment period. The impact on the segments affected
would be on a medium scale. The level of risk is classi-
fied as high for the Group as a whole. The BMW Group
classifies potential residual value opportunities as
material.
Interest rate risks and opportunities
Interest rate risks in the Financial Services segment relate
to potential losses caused by changes in market interest
rates and can arise when fixed interest rate periods for
assets and liabilities recognised in the balance sheet do
not match. Interest rate risks in the Financial Services
line of business are managed by raising refinancing funds
with matching maturities and by employing interest rate
derivatives.
If interest rate risks were to materialise, they are only
likely to result in a low impact on the BMW Group’s
results of operations over the two-year assessment
period. The level of risk attached to interest rate risks
is classified as medium.
The BMW Group classifies potential interest rate oppor-
tunities as material.
Liquidity and operational risks
Use of the “matched funding principle” to finance the
Financial Services segment’s operations eliminates
liquidity risks to a large extent. Regular measurement
and monitoring ensure that cash inflows and outflows
from transactions in varying maturity cycles and curren-
cies offset each other. The relevant procedures are in-
corporated in the BMW Group’s target liquidity concept.
Operational risks are defined in the Financial Services
segment as the risk of losses arising as a consequence of
the inappropriateness or failure of internal procedures
(process risks), people (personnel-related risks), systems
(infrastructure and IT risks) and external events (exter-
nal risks). These four categories of risk also include re-
lated legal and reputation risks. The comprehensive re-
cording and measurement of risk scenarios, loss events
and countermeasures in the Operational Risk Manage-
ment Suite (OpRisk-Suite) provides the basis for a system-
atic analysis and management of potential and / or actual
operational risks. Annual self-assessments are also car-
ried out.
If operational risks were to materialise, they are only
likely to result in a low impact on the BMW Group’s
results of operations over the two-year assessment
period. The level of risk attached to operational risks
is classified as medium.
Legal risks
Compliance with the law is a basic prerequisite for the
success of the BMW Group. Current law provides the
binding framework for the BMW Group’s various busi-
ness activities around the world. The growing interna-
tional scale of operations of the BMW Group, the com-
plexity of the business world and the whole gamut of
complex legal regulations increase the risk of laws not
being adhered to, simply because they are not known or
fully understood.
The BMW Group has established a Compliance Organi-
sation aimed at ensuring that its representative bodies,
managers and staff act in a lawful manner at all times.
Further information on the BMW Group’s Compliance
Organisation can be found in the section “Corporate
Governance”.
Like all internationally operating enterprises, the BMW
Group is confronted with legal disputes relating, in par-
ticular, to warranty claims, product liability, infringe-
ments of protected rights, and proceedings initiated
by government agencies. Any of these matters could,
among other outcomes, have an adverse impact on the
Group’s reputation. Such proceedings are typical for
the sector and can arise as a consequence of realigning
product or purchasing strategies to suit changed market
conditions. Particularly in the US market, class action
lawsuits and product liability risks can have substantial
financial consequences and cause damage to the Group’s
public image. The BMW Group recognises appropriate
levels of provision for lawsuits. A part of these risks,
81 COMBINED MANAGEMENT REPORT
particularly regarding the US market, is insured where
this makes business sense. Some risks, however, cannot
be assessed in full or completely defy assessment. It
cannot be ruled out that losses from damages could
arise which are either not covered or not fully covered
by insurance policies or provisions.
The high quality of the Group’s products, which is en-
sured by regular quality audits and ongoing improvement
measures, helps to reduce this risk. In comparison with
competitors, this can give rise to benefits and opportu-
nities for the BMW Group.
If legal risks were to materialise, they are only likely to
have a low impact on the BMW Group’s results of opera-
tions over the two-year assessment period. The level of
risk attached to legal risks is classified as low. This assess-
ment also includes consideration of risks arising from
ongoing court and arbitration proceedings. However, it
cannot be ruled out that new legal risks, as yet uniden-
tified, could materialise which could have a high impact
on the BMW Group’s results of operations and financial
condition.
Overall assessment of the risk and
opportunities situation
The overall risk assessment is based on a consolidated
view of all significant individual risks and opportunities.
In view of the growing level of strategic and sector-spe-
cific risks, the overall risk situation for the BMW Group
has increased marginally compared to the previous year.
In addition to the risk categories described above, it is
possible that unforeseeable events could have an ad-
verse impact on the BMW Group’s results of operations,
financial position and net assets as well as its reputation.
We have created a comprehensive risk management
system that ensures we can master risks. In addition,
the opportunities described above could potentially
help the BMW Group to achieve its targets and fore-
casts.
From today’s perspective, management does not see any
threat to the BMW Group’s going-concern status. As
in the previous year, identified risks are considered to
be manageable, but could – just like opportunities –
have an impact on the BMW Group’s forecasts if they were
to materialise. The BMW Group’s liquidity is stable and
all cash requirements are currently covered by available
funds and accessible credit lines.
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
26 Overall Assessment by Management
26 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
61 Comments on Financial Statements
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
65 Outlook
70 Report on Risks and Opportunities
82 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
82
Internal Control System* and Risk Management System Relevant for the
Consolidated Financial Reporting Process
The internal control system in place throughout the
BMW Group is aimed at ensuring the effectiveness of
operations. It makes an important contribution towards
ensuring compliance with the laws that apply to the
BMW Group as well as providing assurance on the pro-
priety and reliability of internal and external financial
reporting. The internal control system is therefore a sig-
nificant factor in the management of process risks. The
principal features of the internal control system and the
risk management system, as far as they relate to individ-
ual entity and Group financial reporting processes, are
described below.
Information and communication
One component of the internal control system is that of
“Information and Communication”. It ensures that all
the information needed to achieve the objectives set for
the internal control system is made available to those
responsible in an appropriate and timely manner. The
requirements relating to the provision of information
relevant for financial reporting at the level of BMW AG,
other consolidated Group entities and the BMW Group
are primarily set out in organisational manuals, in guide-
lines covering internal and external financial reporting
issues, in accounting manuals and through training.
These instructions, which can be accessed at all levels
via the BMW Group’s intranet system, provide the frame-
work for ensuring that the relevant rules are applied
consistently throughout the Group. The quality and
relevance of these instructions are ensured by regular
review as well as by continuous communication between
the relevant departments.
Organisational measures
All financial reporting processes (including Group finan-
cial reporting processes) are structured in organisational
terms in accordance with the principle of segregation
of duties. These structures allow errors to be identified at
an early stage and prevent potential wrongdoing. Regu-
lar comparison of internal forecasts and external financial
reports improves the quality of financial reporting. The
internal audit department serves as a process-inde-
pendent function, testing and assessing the effectiveness
of the internal control system and proposing improve-
ments when appropriate.
Controls
Extensive controls are carried out by management in all
financial reporting processes at an individual entity and
Group level, thus ensuring that legal requirements and
internal guidelines are complied with and that all busi-
ness transactions are properly executed. Controls are
also carried out with the aid of IT applications, thus re-
ducing the incidence of process risks.
IT authorisations
All IT applications used in financial reporting processes
throughout the BMW Group are subject to access restric-
tions, allowing only authorised persons to gain access
to systems and data in a controlled environment. Access
authorisations are allocated on the basis of the nature
of the duties to be performed. In addition, IT processes
are designed and authorisations allocated using the dual
control principle, as a result of which, for instance, re-
quests cannot be submitted and approved by the same
person.
Internal control training for employees
All employees are appropriately trained to carry out
their duties and kept informed of any changes in regu-
lations or processes that affect them. Managers and
staff also have access to detailed best-practice descrip-
tions relating to risks and controls in the various pro-
cesses, thus increasing risk awareness at all levels.
As a consequence, the internal control system can be
evaluated regularly and further improved as necessary.
Employees can, at any time and independently, deepen
their understanding of control methods and design
using an information platform that is accessible through-
out the entire Group.
Evaluating the effectiveness of the internal
control system
Responsibilities for ensuring the effectiveness of the
internal control system in relation to individual entity
and Group financial reporting processes are clearly de-
fined and allocated to the relevant managers and pro-
cess owners. The BMW Group assesses the design and
effectiveness of the internal control system on the basis
of internal review procedures (e. g. management self
audits, internal audit findings). Continuous revision
and further development of the internal control system
ensure its continued effectiveness. Group entities are
required to confirm regularly as part of their reporting
duties that the internal control system is functioning
properly. Effective measures are implemented when-
ever weaknesses are identified and reported.
* Disclosures pursuant to § 289 (5) HGB and § 315 (2) no. 5 HGB.
83 COMBINED MANAGEMENT REPORT
Disclosures Relevant for Takeovers1 and Explanatory Comments
Composition of subscribed capital
The subscribed capital (share capital) of BMW AG
amounted to € 656,494,740 at 31 December 2014 (2013:
€ 656,254,983) and, in accordance with Article 4 no. 1
of the Articles of Incorporation, is sub-divided into
601,995,196 shares of common stock (91.70 %) (2013:
601,995,196; 91.73 %) and 54,499,544 shares of non-
voting preferred stock (8.30 %) (2013: 54,259,787; 8.27 %),
each with a par value of € 1. The Company’s shares
are issued to bearer. The rights and duties of share-
holders derive from the German Stock Corporation
Act (AktG) in conjunction with the Company’s Articles
of Incorporation, the full text of which is available at
www.bmwgroup.com. The right of shareholders to have
their shares evidenced is excluded in accordance with
the Articles of Incorporation. The voting power at-
tached to each share corresponds to its par value. Each
€ 1 of par value of share capital represented in a vote
entitles the holder to one vote (Article 18 no. 1 of the
Articles of Incorporation). The Company’s shares of pre-
ferred stock are shares within the meaning of § 139 et
seq. AktG, which carry a cumulative preferential right
in terms of the allocation of profit and for which voting
rights are normally excluded. These shares only confer
voting rights in exceptional cases stipulated by law, in
particular when the preference amount has not been
paid or has not been fully paid in one year and the ar-
rears are not paid in the subsequent year alongside the
full preference amount due for that year. With the ex-
ception of voting rights, holders of shares of preferred
stock are entitled to the same rights as holders of shares
of common stock. Article 24 of the Articles of Incorpo-
ration confers preferential treatment to the non-voting
shares of preferred stock with regard to the appropria-
tion of the Company’s unappropriated profit. Accord-
ingly, the unappropriated profit is required to be appro-
priated in the following order:
1 Disclosures pursuant to § 289 (4) HGB and § 315 (4) HGB.
(a) subsequent payment of any arrears on dividends on
non-voting preferred shares in the order of accrue-
ment,
(b) payment of an additional dividend of € 0.02 per € 1
par value on non-voting preferred shares and
(c) uniform payment of any other dividends on shares
on common and preferred stock, provided the
shareholders do not resolve otherwise at the Annual
General Meeting.
Restrictions on voting rights or the transfer of shares
As well as shares of common stock, the Company has
also issued non-voting shares of preferred stock. Fur-
ther information relating to this can be found above in
the section “Composition of subscribed capital”.
When the Company issues non-voting shares of pre-
ferred stock to employees in conjunction with its
Employee Share Programme, these shares are subject
as a general rule to a Company-imposed vesting period
of four years, measured from the beginning of the
calendar year in which the shares are issued.
Contractual holding period arrangements also apply to
shares of common stock required to be acquired by
Board of Management members and certain senior de-
partment heads in conjunction with the share-based
remuneration programmes (Compensation Report of
the Corporate Governance section; note 20 to the Group
Financial Statements).
Direct or indirect investments in capital exceeding
10 % of voting rights
Based on the information available to the Company, the
following direct or indirect holdings exceeding 10 % of
the voting rights at the end of the reporting period were
held at the date stated2:
AQTON SE, Bad Homburg v. d. Höhe, Germany
Stefan Quandt, Germany
Johanna Quandt, Germany
Johanna Quandt GmbH, Bad Homburg v. d. Höhe, Germany
Johanna Quandt GmbH & Co. KG für Automobilwerte, Bad Homburg v. d. Höhe, Germany
Susanne Klatten, Germany
Susanne Klatten Beteiligungs GmbH, Bad Homburg v. d. Höhe, Germany
2 Based on voluntary balance notifications provided by the listed shareholders at 31 December 2014.
Direct share of
voting rights (%)
Indirect share of
voting rights (%)
17.4
0.4
16.4
12.6
17.4
16.4
16.4
12.6
84
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
26 Overall Assessment by Management
26 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
61 Comments on Financial Statements
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
65 Outlook
70 Report on Risks and Opportunities
82 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
The voting power percentages disclosed above may have
changed subsequent to the stated date if these changes
were not required to be reported to the Company. Due to
the fact that the Company’s shares are issued to bearer,
the Company is generally only aware of changes in
shareholdings if such changes are subject to mandatory
notification rules.
Shares with special rights which confer control rights
There are no shares with special rights which confer
control rights.
System of control over voting rights when employees
participate in capital and do not exercise their control
rights directly
Like all other shareholders, employees exercise their
control rights pertaining to shares they have acquired
in conjunction with the Employee Share Programme
and / or the sharebased remuneration programme
directly on the basis of relevant legal provisions and the
Company’s Articles of Incorporation.
Statutory regulations and Articles of Incorporation
provisions with regard to the appointment and removal
of members of the Board of Management and changes
to the Articles of Incorporation
The appointment or removal of members of the Board
of Management is based on the rules contained in
§ 84 et seq. AktG in conjunction with § 31 of the German
Co-Determination Act (MitbestG).
Amendments to the Articles of Incorporation must
comply with § 179 et seq. AktG. All amendments must
be decided upon by the shareholders at the Annual
General Meeting (§ 119 (1) no. 5, § 179 (1) AktG). The
Supervisory Board is authorised to approve amend-
ments to the Articles of Incorporation which only affect
its wording (Article 14 no. 3 of the Articles of Incorpora-
tion). Resolutions are passed at the Annual General
Meeting by simple majority of shares unless otherwise
explicitly required by binding provisions of law or,
when a majority of share capital is required, by simple
majority of shares represented in the vote (Article 20
no. 1 of the Articles of Incorporation).
Authorisations given to the Board of Management in
particular with respect to the issuing or buying back of
shares
The Board of Management is authorised to buy back
shares and sell repurchased shares in situations specified
in § 71 AktG, e. g. to avert serious and imminent damage
to the Company and / or to offer shares to persons em-
ployed or previously employed by BMW AG or one of its
affiliated companies.
In accordance with the resolution passed at the Annual
General Meeting on 15 May 2014, the Board of Manage-
ment is also authorised – up to 14 May 2019 – to acquire
shares of non-voting preferred stock of the Company
via the stock exchange, up to a maximum of 1 % of the
share capital existing at the date of the resolution. The
consideration paid by the Company per share of non-
voting preferred stock (excluding transaction costs) may
not be more than 10 % above or below the market price
determined by the opening auction on the date of trad-
ing of the stock in the XETRA trading system (or a suc-
cessor system having a comparable function). Moreover,
the Board of Management is authorised to use the ac-
quired Company’s own shares of non-voting preferred
stock for all legally admissible purposes, specifically in-
cluding the right to offer and transfer shares to persons
employed by the Company or one of its affiliated com-
panies up to a proportionate amount of € 5 million of
share capital. The subscription rights of existing share-
holders to the new shares of preferred stock used for
the purpose stated above are excluded. The authorisa-
tions may also be exercised in parts on more than one
occasion.
In accordance with Article 4 no. 5 of the Articles of
Incorporation, the Board of Management is authorised –
with the approval of the Supervisory Board – to in-
crease BMW AG’s share capital during the period until
14 May 2019 by up to € 4,760,243 for the purposes of an
Employee Share Programme by issuing new non-voting
shares of preferred stock, which carry the same rights
as existing non-voting preferred stock, in return for
cash contributions (Authorised Capital 2014). Existing
shareholders may not subscribe to the new shares. No
conditional capital is in place at the reporting date.
85 COMBINED MANAGEMENT REPORT
Significant agreements entered into by the Company
subject to control change clauses in the event of
a takeover bid
The BMW AG is party to the following major agreements
which contain provisions for the event of a change in
control or the acquisition of control as a result of a take-
over bid:
– An agreement concluded with an international con-
sortium of banks relating to a syndicated credit line
(which was not being utilised at the balance sheet
date) entitles the lending banks to give extraordinary
notice to terminate the credit line (such that all out-
standing amounts, including interest, would fall due
immediately) if one or more parties jointly acquire
direct or indirect control of BMW AG. The term “con-
trol” is defined as the acquisition of more than 50 %
of the share capital of BMW AG, the right to receive
more than 50 % of the dividend or the right to direct
the affairs of the Company or appoint the majority of
members of the Supervisory Board.
– A cooperation agreement concluded with Peugeot SA
relating to the joint development and production of
a new family of small (1 to 1.6 litre) petrol-driven en-
gines entitles each of the cooperation partners to give
extraordinary notification of termination in the event
of a competitor acquiring control over the other con-
tractual party and if any concerns of the other con-
tractual party concerning the impact of the change
of control on the cooperation arrangements are not
allayed during the subsequent discussion process.
– BMW AG acts as guarantor for all obligations arising
from the joint venture agreement relating to BMW
Brilliance Automotive Ltd. in China. This agreement
grants an extraordinary right of termination to either
joint venture partner in the event that, either directly
or indirectly, more than 25 % of the shares of the
other party are acquired by a third party or the other
party is merged with another legal entity. The termi-
nation of the joint venture agreement may result in
the sale of the shares to the other joint venture part-
ner or in the liquidation of the joint venture entity.
– Framework agreements are in place with financial in-
stitutions and banks (ISDA Master Agreements) with
respect to trading activities with derivative financial
instruments. Each of these agreements includes an
extraordinary right of termination which triggers the
immediate settlement of all current transactions in
the event that the creditworthiness of the party in-
volved is materially weaker following a direct or indi-
rect acquisition of beneficially owned equity capital
which confers the power to elect a majority of the
Supervisory Board of a contractual party or any other
ownership interest that enables the acquirer to exer-
cise control over a contractual party or which consti-
tutes a merger or a transfer of net assets.
– Financing agreements in place with the European
Investment Bank (EIB) entitle the EIB to request early
repayment of the loan in the event of an imminent
or actual change in control at the level of BMW AG
(partially in the capacity of guarantor and partially in
the capacity of borrower), if the EIB has reason to as-
sume – after the change of control has taken place or
30 days after it has requested to discuss the situation –
that the change in control could have a significant
adverse impact, or, in all but one case, as an additional
alternative, if the borrower refuses to hold such dis-
cussions. A change in control of BMW AG arises if
one or more individuals take over or lose control of
BMW AG, with control being defined in the above-
mentioned financing agreements as (i) holding or
having control over more than 50 % of the voting
rights, (ii) the right to stipulate the majority of the
members of the Board of Management or Supervisory
Board, (iii) the right to receive more than 50 % of
dividends payable, and, in all but one case, as an ad-
ditional alternative (iv) other comparable controlling
influence over BMW AG.
– BMW AG is party to an agreement with SGL Carbon
SE, Wiesbaden, relating to the joint operations SGL
Automotive Carbon Fibers LLC, Delaware, USA and
SGL Automotive Carbon Fibers GmbH & Co. KG,
Munich. The agreement includes call and put rights
in case – either directly or indirectly – 50 % or more of
the voting rights relating to the relevant other share-
holder of the joint operations are acquired by a third
party, or if 25 % of such voting rights have been ac-
quired by a third party if that third party is a com-
petitor of the party that has not been affected by the
acquisition of the voting rights. In the event of such
acquisitions of voting rights by a third party, the non-
86
affected shareholder has the right to purchase the
shares of the joint operations from the affected share-
holder or to require the affected party to acquire the
other shareholder’s shares.
– An engine supply agreement between BMW AG and
Toyota Motor Europe SA relating to the sale of diesel
engine entitles each of the contractual parties to give
extraordinary notification of termination in the event
that one of the contractual parties merges with an-
other company or is taken over by another company.
Compensation agreements with members of the
Board of Management or with employees in the event
of a takeover bid
The BMW Group has not concluded any compensation
agreements with members of the Board of Management
or with employees for situations involving a takeover
offer.
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
26 Overall Assessment by Management
26 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
61 Comments on Financial Statements
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
65 Outlook
70 Report on Risks and Opportunities
82 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
87 COMBINED MANAGEMENT REPORT
BMW Stock and Capital Markets in 2014
BMW stocks rose to a new alltime high of € 95.51 per
share of common stock in 2014. The BMW Group
continues to have the best ratings in the European
automobile sector, enabling it to continue benefiting
from excellent access to international capital markets.
Turbulent year for stock markets
International stock markets experienced broad fluctua-
tions in 2014, attributable primarily to the expansionary
monetary policies of the ECB and to political instability
in a number of countries.
At the beginning of the year, stock markets were bur-
dened by uncertainties surrounding the Ukraine crisis
and its likely negative economic impact. At the same
time, favourable economic data from Europe, the USA’s
improved employment market and the US Reserve
Bank’s continued policy of monetary expansion pro-
vided some positive momentum. Over the course of
the second and third quarters, the ECB’s expansionary
monetary policies provided an additional boost. The in-
terest rate for the Eurosystem’s main refinancing opera-
tions was reduced by 10 basis points in June to 0.15 %
and by a further 10 basis points to 0.05 % in September
and has remained at its new historical low since that
time. A state of nervousness prevailed on the world’s
finan cial centres during the third quarter 2014. The
sharp loss in value of the rouble and the threat of state
bankruptcy in Ukraine caused the mood of investors
to deteriorate. In October the DAX fell to its low for the
year of 8,572 points. By the end of the year, however,
the more stable situation in the Ukraine crisis brought
about by agreement in the gas dispute with Russia,
combined with the fall in oil prices, helped markets to
steady and gather momentum. The DAX recorded a
Development of BMW stock compared to stock exchange indices
(Index: December 2009 = 100)
Development of BMW stock compared to stock exchange
indices since 30 December 2009
in %
300
250
200
150
100
50
BMW
preferred stock
BMW
common stock
Prime
Automobile
DAX
295.0
282.3
274.4
164.6
new all-time high of 10,087 points on 5 December,
before closing on the last day of trading below its high
level for the year at 9,806 points, thus achieving a gain of
254 points (+ 2.7 %) over the volatile twelve-month period.
The EURO STOXX 50 recorded a gain of 1.2 % in 2014
and closed on 31 December at 3,146 points.
The Prime Automobile Index performed even better,
gaining 7.0 % over the year under report to reach
1,490 points.
After a weak start to the year, BMW common stock sub-
sequently climbed to a new high of € 95.51 in June. After
falling back to a low for the year of € 77.41 in October,
it returned to an upward trend in the fourth quarter and
finished the year at € 89.77, 5.3 % higher than one year
earlier. BMW preferred stock gained 9.3 % in value com-
325
300
275
250
225
200
175
150
125
100
BMW preferred stock
BMW common stock
Prime Automobile
DAX
10
11
12
13
14
BMW preferred stock
BMW common stock
Prime Automobile
DAX
88
pared to its closing price at the end of the previous year.
Its price at the end of the stock market year was € 67.84.
A new alltime high of € 74.60 was recorded in July. At
the end of 2014, the BMW Group had a market capitali-
sation of approximately € 58 billion, making it one of the
Top 10 of the most valuable stock corporations listed in
Germany.
Employee Share Programme
BMW AG has enabled its employees to participate in its
success for more than 40 years. Since 1989, this participa-
tion has taken the form of an Employee Share Programme.
In total, 239,777 shares of preferred stock were issued to
employees in 2014 as part of this Programme.
In this context, and with the approval of the Supervisory
Board, BMW AG’s share capital was increased by the
Board of Management by € 239,757 from € 656,254,983
to € 656,494,740 by the issue of 239,757 new non-voting
shares of preferred stock. This increase was executed on
the basis of Authorised Capital 2014 in Article 4 (5) of
the Articles of Incorporation. The new shares of pre-
ferred stock carry the same rights as existing shares of
preferred stock and were issued to enable employees
to obtain an equity participation in the company. In ad-
dition, 20 shares of preferred stock were bought back
via the stock market in order to service the Employee
Share Programme.
Dividend increase
In view of the strong earnings performance for the year,
the Board of Management and the Supervisory Board
will propose to the Annual General Meeting to use
BMW AG’s unappropriated profit of € 1,904 million to
pay a dividend of € 2.90 for each share of common stock
(2013: € 2.60) and a dividend of € 2.92 for each share of
preferred stock (2013: € 2.62), giving a distribution rate
of 32.7 % for 2014 (2013: 32.0 %).
18 COMBINED MANAGEMENT REPORT
18 General Information on the BMW Group
18 Business Model
20 Management System
23 Report on Economic Position
23 General and Sector-specific
Environment
26 Overall Assessment by Management
26 Financial and Non-financial
Performance Indicators
29 Review of Operations
49 Results of Operations, Financial
Position and Net Assets
61 Comments on Financial Statements
of BMW AG
64 Events after the End of the
Reporting Period
65 Report on Outlook, Risks and
Opportunities
65 Outlook
70 Report on Risks and Opportunities
82 Internal Control System and Risk
Management System Relevant for the
Consolidated Financial Reporting Process
83 Disclosures Relevant for Takeovers
and Explanatory Comments
87 BMW Stock and Capital Markets
BMW stock
Common stock
Number of shares in 1,000
Stock exchange price in €1
Year-end closing price
High
Low
Preferred stock
Number of shares in 1,000
Stock exchange price in €1
Year-end closing price
High
Low
Key data per share in €
Dividend
Common stock
Preferred stock
Earnings per share of common stock 3
Earnings per share of preferred stock 4
Cash flow 5
Equity
2014
2013
2012
2011
2010
601,995
601,995
601,995
601,995
601,995
89.77
95.51
77.41
85.22
85.42
63.93
72.93
73.76
53.16
51.76
73.52
45.04
58.85
64.80
28.65
54,500
54,260
53,994
53,571
53,163
67.84
74.60
59.08
2.90 2
2.92 2
8.83
8.85
14.36
57.03
62.09
64.65
48.69
2.60
2.62
8.08 6
8.10 6
15.19 6
54.25 6
48.76
49.23
35.70
2.50
2.52
7.77
7.79
13.98
46.35
36.55
45.98
32.01
2.30
2.32
7.45
7.47
12.38
41.34
38.50
41.90
21.45
1.30
1.32
4.91
4.93
12.45
36.53
1 Xetra closing prices.
2 Proposed by management.
3 Annual average weighted amount.
4 Stock weighted according to dividend entitlements.
5 Cash inflow from operating activities of the Automotive segment.
6 Prior year figures have been adjusted in accordance with IAS 8, see note 9.
89 COMBINED MANAGEMENT REPORT
Ratings remain at top level
The BMW Group continues to have the best ratings in
the European automobile sector. Since December 2013,
BMW AG has a long-term rating of A+ (stable outlook)
and a short-term rating of A-1 from the rating agency
Standard & Poor’s. The equivalent ratings from the
rating agency Moody’s were A2 (stable outlook) and P-1.
These rating assessments underline the BMW Group’s
robust financial profile and solid creditworthiness.
Thanks to these attributes, the company not only has
good access to international capital markets, it also bene-
fits from attractive refinancing conditions, which are
particularly helpful for the BMW Group’s financial ser-
vices business.
Intensive communication with capital markets
The BMW Group continued to keep analysts, private
and institutional investors, and rating agencies up to
date throughout 2014 by means of its regular quarterly
and year-end financial reports. In addition, numerous
one-to-one discussions, group discussions and road-
shows addressed a broad range of capital market partici-
pants. These activities also included roadshows for in-
vestors interested in socially responsible investment
(SRI) and wishing to incorporate sustainability criteria
in their investment decisions as well as a series of events
for debt capital investors and credit analysts. Communi-
cation focused primarily on the launch of numerous
new models, BMW i and alternative drive systems, and
developments on the Chinese market. In addition to
presenting new models (including the BMW i8 and the
2 Series Active Tourer) and arranging various events
and test drives in the USA and Europe, we also organised
a Capital Markets Day in China for analysts and investors.
90
GROUP FINANCIAL STATEMENTS
BMW Group
Income Statements for Group and Segments
Statement of Comprehensive Income for Group
Income Statements for Group and Segments
in € million
Revenues
Cost of sales
Gross profit
Selling and administrative expenses
Other operating income
Other operating expenses
Profit / loss before financial result
Result from equity accounted investments
Interest and similar income
Interest and similar expenses
Other financial result
Financial result
Profit / loss before tax
Income taxes
Net profit / loss
Attributable to minority interest
Attributable to shareholders of BMW AG
Basic earnings per share of common stock in €
Basic earnings per share of preferred stock in €
Dilutive effects
Diluted earnings per share of common stock in €
Diluted earnings per share of preferred stock in €
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
Statement of Comprehensive Income for Group
in € million
Net profit
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
Note
Group
Automotive
Motorcycles
Financial Services
Other Entities
Eliminations
2014
2013*
(unaudited supplementary information)
2013*
2014
(unaudited supplementary information)
(unaudited supplementary information)
(unaudited supplementary information)
(unaudited supplementary information)
2014
2013
2014
2013*
2014
2013
2014
2013*
10
11
12
13
13
14
15
15
16
80,401
76,059
75,173
70,630
1,679
1,504
20,599
19,874
– 63,396
– 60,791
– 61,221
– 57,778
– 1,365
– 1,253
– 17,783
– 17,270
17,005
15,268
13,952
12,852
314
251
2,816
– 17,057
– 15,955
Revenues
16,973
15,510
Cost of sales
– 445
Gross profit
– 7,892
– 7,257
– 6,645
– 6,114
– 201
– 177
– 1,035
877
– 872
9,118
655
200
– 519
– 747
– 411
8,707
842
– 875
7,978
407
183
– 469
– 206
– 85
7,893
749
– 812
7,244
655
331
– 620
– 724
– 358
6,886
742
– 831
6,649
407
303
– 535
– 263
– 88
6,561
17
– 2,890
– 2,564
– 2,365
– 2,153
35
35
18
18
18
18
5,817
19
5,798
8.83
8.85
–
8.83
8.85
5,329
26
5,303
8.08
8.10
–
8.08
8.10
Note
4,521
7
4,514
4,408
17
4,391
2014
2013*
5,817
5,329
7
–
7
– 28
136
– 44
71
–
1,295
– 15
83
154
– 49
105
1
104
6
–
6
– 23
115
– 54
44
–
1,340
59
120
164
– 68
96
1
95
2,604
– 953
57
– 65
1,643
–
5
– 27
– 2
– 24
1,619
– 518
1,101
8
1,093
– 84
17
– 81
83
– 65
–
–
– 98
83
– 80
–
– 80
–
– 1
112
–
–
– 5
–
– 5
107
– 34
73
–
73
7
– 2
79
–
–
– 3
–
– 3
76
– 25
51
–
51
73
– 98
1,756
–
4
– 29
– 8
– 33
1,723
– 525
1,198
11
1,187
10
Selling and administrative expenses
– 79
Other operating income
77
Other operating expenses
– 437
Profit / loss before financial result
–
Result from equity accounted investments
– 1,430
– 1,465
Interest and similar income
– 1,197
– 1,279
1,332
1,375
Interest and similar expenses
–
Other financial result
– 90
Financial result
– 163
– 527
Profit / loss before tax
200
Income taxes
– 327
Net profit / loss
–
Attributable to minority interest
– 327
Attributable to shareholders of BMW AG
Basic earnings per share of common stock in €
Basic earnings per share of preferred stock in €
Dilutive effects
Diluted earnings per share of common stock in €
Diluted earnings per share of preferred stock in €
Remeasurement of the net defined benefit liability for pension plans
36
– 2,298
Deferred taxes
Items not expected to be reclassified to the income statement in the future
Available-for-sale securities
Financial instruments used for hedging purposes
Other comprehensive income from equity accounted investments
Deferred taxes
Currency translation foreign operations
Items expected to be reclassified to the income statement in the future
706
– 1,592
40
– 2,194
– 48
732
764
– 706
Other comprehensive income for the period after tax
21
– 2,298
Total comprehensive income
Total comprehensive income attributable to minority interests
Total comprehensive income attributable to shareholders of BMW AG
35
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
3,519
19
3,500
1,308
– 372
936
8
1,357
– 7
– 407
– 633
318
1,254
6,583
26
6,557
91 Group Financial StatementS
Income Statements for Group and Segments
in € million
Revenues
Cost of sales
Gross profit
Selling and administrative expenses
Other operating income
Other operating expenses
Profit / loss before financial result
Result from equity accounted investments
Interest and similar income
Interest and similar expenses
Other financial result
Financial result
Profit / loss before tax
Income taxes
Net profit / loss
Attributable to minority interest
Attributable to shareholders of BMW AG
Basic earnings per share of common stock in €
Basic earnings per share of preferred stock in €
Dilutive effects
Diluted earnings per share of common stock in €
Diluted earnings per share of preferred stock in €
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
10
11
12
13
13
14
15
15
16
35
35
18
18
18
18
17
– 2,890
– 2,564
– 2,365
– 2,153
749
– 812
7,244
655
331
– 620
– 724
– 358
6,886
4,521
7
4,514
742
– 831
6,649
407
303
– 535
– 263
– 88
6,561
4,408
17
4,391
877
– 872
9,118
655
200
– 519
– 747
– 411
8,707
5,817
19
5,798
8.83
8.85
–
8.83
8.85
842
– 875
7,978
407
183
– 469
– 206
– 85
7,893
5,329
26
5,303
8.08
8.10
–
8.08
8.10
Note
Group
Automotive
Motorcycles
Financial Services
Other Entities
Eliminations
2014
2013*
2014
2013*
2014
2013
(unaudited supplementary information)
(unaudited supplementary information)
(unaudited supplementary information)
2013*
2014
(unaudited supplementary information)
(unaudited supplementary information)
2014
2013
2014
2013*
80,401
76,059
75,173
70,630
1,679
1,504
20,599
19,874
– 63,396
– 60,791
– 61,221
– 57,778
– 1,365
– 1,253
– 17,783
– 17,270
17,005
15,268
13,952
12,852
314
251
2,816
– 7,892
– 7,257
– 6,645
– 6,114
– 201
– 177
– 1,035
–
– 1
112
–
–
– 5
–
– 5
107
– 34
73
–
73
7
– 2
79
–
–
– 3
–
– 3
76
– 25
51
–
51
73
– 98
1,756
–
4
– 29
– 8
– 33
1,723
– 525
1,198
11
1,187
2,604
– 953
57
– 65
1,643
–
5
– 27
– 2
– 24
1,619
– 518
1,101
8
1,093
7
–
7
– 28
136
– 44
71
–
1,295
6
–
6
– 23
115
– 54
44
–
1,340
– 17,057
– 15,955
Revenues
16,973
15,510
Cost of sales
– 84
17
– 81
83
– 65
–
– 445
Gross profit
10
Selling and administrative expenses
– 79
Other operating income
77
Other operating expenses
– 437
Profit / loss before financial result
–
Result from equity accounted investments
– 1,430
– 1,465
Interest and similar income
– 1,197
– 1,279
1,332
1,375
Interest and similar expenses
– 15
83
154
– 49
105
1
104
59
120
164
– 68
96
1
95
–
– 98
–
Other financial result
– 90
Financial result
– 163
– 527
Profit / loss before tax
83
– 80
–
– 80
200
Income taxes
– 327
Net profit / loss
–
Attributable to minority interest
– 327
Attributable to shareholders of BMW AG
Basic earnings per share of common stock in €
Basic earnings per share of preferred stock in €
Dilutive effects
Diluted earnings per share of common stock in €
Diluted earnings per share of preferred stock in €
92
BMW Group
Balance Sheets for Group and Segments at 31 December
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
Assets
in € million
Intangible assets
Property, plant and equipment
Leased products
Investments accounted for using the equity method
Other investments
Receivables from sales financing
Financial assets
Deferred tax
Other assets
Non-current assets
Inventories
Trade receivables
Receivables from sales financing
Financial assets
Current tax
Other assets
Cash and cash equivalents
Assets held for sale
Current assets
Total assets
Equity and liabilities
in € million
Subscribed capital
Capital reserves
Revenue reserves
Accumulated other equity
Equity attributable to shareholders of BMW AG
Minority interest
Equity
Pension provisions
Other provisions
Deferred tax
Financial liabilities
Other liabilities
Non-current provisions and liabilities
Other provisions
Current tax
Financial liabilities
Trade payables
Other liabilities
Liabilities in conjunction with assets held for sale
Current provisions and liabilities
Note
Group
23
24
25
26
27
28
29
17
31
32
33
28
29
30
31
34
2014
31.12. 2013*
1.1. 2013*
6,499
17,182
30,165
1,088
408
6,179
15,168
25,914
638
553
5,207
13,376
24,468
505
548
37,438
32,616
32,309
2,024
2,061
1,094
2,593
1,620
912
2,148
1,967
770
97,959
86,193
81,298
11,089
2,153
23,586
5,384
1,906
5,038
7,688
–
9,595
2,449
21,501
5,559
1,151
4,258
7,671
–
9,732
2,543
20,605
4,612
966
3,664
8,374
45
Automotive
(unaudited supplementary information)
2013*
2014
Motorcycles
Financial Services
Other Entities
Eliminations
(unaudited supplementary information)
(unaudited supplementary information)
(unaudited supplementary information)
(unaudited supplementary information)
2014
2013
2014
2013
2014
2013*
2014
2013*
Assets
5,999
16,863
3
1,088
5,110
–
447
3,253
3,662
36,425
10,698
1,887
–
3,952
1,186
19,231
5,752
–
5,646
14,863
19
638
5,253
–
1,183
2,226
3,847
33,675
9,269
2,184
–
4,479
1,002
15,480
6,775
–
35,366
30,230
– 5,204
– 4,335
Leased products
37,438
32,616
–
Receivables from sales financing
5,808
5,754
– 10,516
– 10,460
Other investments
–
Intangible assets
–
Property, plant and equipment
–
Investments accounted for using the equity method
1
–
–
–
–
–
1
–
898
618
153
–
1
–
–
–
–
–
–
–
936
60
17
–
1,751
367
21,895
29,822
1,779
290
19,677
27,501
– 384
– 1,846
– 645
Financial assets
– 1,181
Deferred tax
– 26,396
– 24,048
Other assets
– 44,346
– 40,669
Non-current assets
36,682
32,775
– 54,828
– 47,527
Other assets
– 514
– 682
Financial assets
–
Current tax
–
Inventories
–
Trade receivables
–
Receivables from sales financing
–
Cash and cash equivalents
–
Assets held for sale
445
34
–
6
210
287
1,913
75,699
8
137
1,048
102
3,953
1,783
–
469
34
–
6
276
285
1,436
65,352
8
145
826
89
3,530
879
–
23,586
21,501
56,844
52,184
50,541
42,706
39,189
30,617
26,978
38,352
33,788
– 55,342
– 48,209
Current assets
154,803
138,377
131,839
79,131
72,864
106,316
92,330
68,174
61,289
– 99,688
– 88,878
Total assets
Note
Group
2014
31.12. 2013*
1.1. 2013*
Automotive
(unaudited supplementary information)
2013*
2014
Motorcycles
Financial Services
Other Entities
Eliminations
(unaudited supplementary information)
(unaudited supplementary information)
(unaudited supplementary information)
(unaudited supplementary information)
2014
2013
2014
2013*
2014
2013*
2014
2013*
35
35
35
35
35
35
36
37
17
39
40
37
38
39
41
40
656
2,005
35,621
– 1,062
37,220
217
37,437
4,604
4,268
1,974
43,167
4,275
58,288
4,522
1,590
37,482
7,709
7,775
–
656
1,990
33,122
– 356
35,412
188
35,600
2,303
3,828
2,459
39,450
3,603
51,643
3,412
2,319
30,854
7,485
7,064
–
656
1,973
28,510
– 674
30,465
107
30,572
3,813
3,481
2,094
39,095
3,404
51,887
3,246
2,463
30,412
6,437
6,792
30
31,045
30,909
9,357
8,388
12,031
10,781
– 14,996
– 14,478
Equity
2,741
3,777
421
1,933
5,445
938
3,075
1,072
1,604
4,677
14,317
11,366
3,746
1,050
3,250
6,929
18,794
–
3,040
1,021
725
6,774
19,029
–
75
273
5,078
14,695
23,680
43,801
432
162
19,122
571
32,871
–
40
289
4,171
14,376
21,134
40,010
309
155
16,006
502
26,960
–
1,710
58
13
51
282
378
15,624
17
–
1,296
323
6
1,143
14,805
3
5
–
26,923
24,115
– 3,538
– 384
– 2,790
Deferred tax
– 645
Financial liabilities
68
– 25,258
– 22,594
Other liabilities
28,755
25,808
– 29,180
– 26,029
Non-current provisions and liabilities
3
Other provisions
–
Current tax
– 514
– 682
Financial liabilities
–
Trade payables
11,087
8,744
– 54,998
– 47,692
Other liabilities
–
Liabilities in conjunction with assets held for sale
59,078
51,134
49,380
33,769
30,589
53,158
43,932
27,388
24,700
– 55,512
– 48,371
Current provisions and liabilities
Equity and liabilities
Subscribed capital
Capital reserves
Revenue reserves
Accumulated other equity
Minority interest
–
Pension provisions
–
Other provisions
Equity attributable to shareholders of BMW AG
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Total equity and liabilities
154,803
138,377
131,839
79,131
72,864
106,316
92,330
68,174
61,289
– 99,688
– 88,878
Total equity and liabilities
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
54
285
20
359
383
128
–
–
–
–
–
–
–
–
–
–
–
–
511
870
–
78
160
–
–
357
595
62
–
–
192
21
–
275
870
63
271
–
–
–
–
–
–
–
–
–
–
–
–
–
334
318
120
438
772
–
29
141
–
–
318
488
57
–
–
204
23
–
284
772
93 Group Financial StatementS
Note
Group
Automotive
Motorcycles
Financial Services
Other Entities
Eliminations
2014
31.12. 2013*
1.1. 2013*
2014
2013*
2014
2013
2014
2013
(unaudited supplementary information)
(unaudited supplementary information)
(unaudited supplementary information)
(unaudited supplementary information)
2013*
2014
(unaudited supplementary information)
2014
2013*
Assets
54
285
–
–
–
–
–
–
20
359
383
128
–
–
–
–
–
–
511
870
63
271
–
–
–
–
–
–
–
334
318
120
–
–
–
–
–
–
438
772
445
34
469
34
35,366
30,230
–
6
–
6
37,438
32,616
210
287
1,913
75,699
8
137
276
285
1,436
65,352
8
145
23,586
21,501
1,048
102
3,953
1,783
–
826
89
3,530
879
–
1
–
–
–
5,808
–
1,751
367
21,895
29,822
–
1
–
898
618
1
–
–
–
5,754
–
1,779
290
19,677
27,501
–
–
–
936
60
–
–
–
Intangible assets
–
Property, plant and equipment
– 5,204
– 4,335
Leased products
–
–
Investments accounted for using the equity method
– 10,516
– 10,460
Other investments
–
– 384
– 1,846
–
Receivables from sales financing
– 645
Financial assets
– 1,181
Deferred tax
– 26,396
– 24,048
Other assets
– 44,346
– 40,669
Non-current assets
–
–
–
– 514
–
–
Inventories
–
Trade receivables
–
Receivables from sales financing
– 682
Financial assets
–
Current tax
36,682
32,775
– 54,828
– 47,527
Other assets
153
–
17
–
–
–
–
Cash and cash equivalents
–
Assets held for sale
30,617
26,978
38,352
33,788
– 55,342
– 48,209
Current assets
106,316
92,330
68,174
61,289
– 99,688
– 88,878
Total assets
Note
Group
Automotive
Motorcycles
Financial Services
Other Entities
Eliminations
2014
31.12. 2013*
1.1. 2013*
2014
2013*
2014
2013
(unaudited supplementary information)
(unaudited supplementary information)
(unaudited supplementary information)
2013*
2014
(unaudited supplementary information)
2013*
2014
(unaudited supplementary information)
2014
2013*
Equity and liabilities
Subscribed capital
Capital reserves
Revenue reserves
Accumulated other equity
Equity attributable to shareholders of BMW AG
Minority interest
–
78
160
–
–
357
595
62
–
–
192
21
–
275
870
–
29
141
–
–
318
488
57
–
–
204
23
–
284
772
9,357
8,388
12,031
10,781
– 14,996
– 14,478
Equity
75
273
5,078
14,695
23,680
43,801
432
162
19,122
571
32,871
–
40
289
4,171
14,376
21,134
40,010
309
155
16,006
502
26,960
–
1,710
58
13
1,296
323
6
26,923
24,115
–
–
– 3,538
– 384
–
Pension provisions
–
Other provisions
– 2,790
Deferred tax
– 645
Financial liabilities
51
68
– 25,258
– 22,594
Other liabilities
28,755
25,808
– 29,180
– 26,029
Non-current provisions and liabilities
282
378
15,624
17
11,087
–
3
1,143
14,805
5
–
–
– 514
–
3
Other provisions
–
Current tax
– 682
Financial liabilities
–
Trade payables
8,744
– 54,998
– 47,692
Other liabilities
–
–
–
Liabilities in conjunction with assets held for sale
53,158
43,932
27,388
24,700
– 55,512
– 48,371
Current provisions and liabilities
106,316
92,330
68,174
61,289
– 99,688
– 88,878
Total equity and liabilities
Assets
in € million
Intangible assets
Property, plant and equipment
Leased products
Investments accounted for using the equity method
Other investments
Receivables from sales financing
Financial assets
Deferred tax
Other assets
Non-current assets
Inventories
Trade receivables
Receivables from sales financing
Financial assets
Current tax
Other assets
Cash and cash equivalents
Assets held for sale
Current assets
Total assets
Equity and liabilities
in € million
Subscribed capital
Capital reserves
Revenue reserves
Minority interest
Equity
Pension provisions
Other provisions
Deferred tax
Financial liabilities
Other liabilities
Other provisions
Current tax
Financial liabilities
Trade payables
Other liabilities
Accumulated other equity
Equity attributable to shareholders of BMW AG
23
24
25
26
27
28
29
17
31
32
33
28
29
30
31
34
35
35
35
35
35
35
36
37
17
39
40
37
38
39
41
40
56,844
52,184
50,541
42,706
39,189
154,803
138,377
131,839
79,131
72,864
37,438
32,616
32,309
97,959
86,193
81,298
6,499
17,182
30,165
1,088
408
2,024
2,061
1,094
11,089
2,153
23,586
5,384
1,906
5,038
7,688
–
656
2,005
35,621
– 1,062
37,220
217
37,437
4,604
4,268
1,974
43,167
4,275
58,288
4,522
1,590
37,482
7,709
7,775
–
6,179
15,168
25,914
638
553
2,593
1,620
912
9,595
2,449
21,501
5,559
1,151
4,258
7,671
–
656
1,990
33,122
– 356
35,412
188
35,600
2,303
3,828
2,459
39,450
3,603
51,643
3,412
2,319
30,854
7,485
7,064
–
5,207
13,376
24,468
505
548
2,148
1,967
770
9,732
2,543
20,605
4,612
966
3,664
8,374
45
656
1,973
28,510
– 674
30,465
107
30,572
3,813
3,481
2,094
39,095
3,404
51,887
3,246
2,463
30,412
6,437
6,792
30
5,999
16,863
3
1,088
5,110
–
447
3,253
3,662
36,425
10,698
1,887
–
3,952
1,186
19,231
5,752
–
5,646
14,863
19
638
5,253
–
1,183
2,226
3,847
33,675
9,269
2,184
–
4,479
1,002
15,480
6,775
–
31,045
30,909
2,741
3,777
421
1,933
5,445
3,746
1,050
3,250
6,929
18,794
–
938
3,075
1,072
1,604
4,677
3,040
1,021
725
6,774
19,029
–
Non-current provisions and liabilities
14,317
11,366
Liabilities in conjunction with assets held for sale
Current provisions and liabilities
59,078
51,134
49,380
33,769
30,589
Total equity and liabilities
154,803
138,377
131,839
79,131
72,864
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
94
BMW Group
Cash Flow Statements for Group and Segments
in € million
Net profit
Reconciliation between net profit and cash inflow / outflow from operating activities
Current tax
Other interest and similar income / expenses
Depreciation and amortisation of other tangible, intangible and investment assets
Change in provisions
Change in leased products
Change in receivables from sales financing
Change in deferred taxes
Other non-cash income and expense items
Gain / loss on disposal of tangible and intangible assets and marketable securities
Result from equity accounted investments
Changes in working capital
Change in inventories
Change in trade receivables
Change in trade payables
Change in other operating assets and liabilities
Income taxes paid
Interest received
Cash inflow / outflow from operating activities
Investment in intangible assets and property, plant and equipment
Proceeds from the disposal of intangible assets and property, plant and equipment
Expenditure for investments
Proceeds from the disposal of investments
Investments in marketable securities and term deposits
Proceeds from the sale of marketable securities and from matured term deposits
Cash inflow / outflow from investing activities
Issue / buy-back of treasury shares
Payments into equity
Payment of dividend for the previous year
Intragroup financing and equity transactions
Interest paid
Proceeds from the issue of bonds
Repayment of bonds
Proceeds from new non-current other financial liabilities
Repayment of non-current other financial liabilities
Change in current other financial liabilities
Change in commercial paper
Cash inflow / outflow from financing activities
Effect of exchange rate on cash and cash equivalents
Effect of changes in composition of Group on cash and cash equivalents
Change in cash and cash equivalents
Cash and cash equivalents as at 1 January
Cash and cash equivalents as at 31 December
1 Prior year figures have been adjusted in accordance with IAS 8, see note 9.
2 Interest relating to financial services business is classified as revenues / cost of sales.
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
Note
Group
Automotive
Financial Services
(unaudited supplementary information)
(unaudited supplementary information)
2014
20131
2014
20131
2014
20131
5,817
5,329
4,521
4,408
1,198
1,101
Net profit
2,774
127
4,323
1,103
– 2,720
– 3,898
116
331
– 63
– 655
– 551
– 971
379
41
323
2,581
147
3,832
480
– 2,048
– 4,501
– 17
– 552
– 21
– 407
986
– 195
22
1,159
969
– 4,252
– 2,787
137
2,912
136
4,127
– 6,099
– 6,693
– 6,021
– 6,599
– 9
Investment in intangible assets and property, plant and equipment
36
– 99
190
– 4,216
4,072
– 6,116
–
15
22
– 76
137
– 4,131
3,250
– 7,491
–
17
– 1,715
– 1,653
–
– 133
10,892
– 7,249
5,900
– 5,697
2,132
– 1,012
3,133
86
2
17
7,671
7,688
–
– 122
8,982
– 7,242
6,626
– 4,996
– 721
1,812
2,703
– 89
47
– 703
8,374
7,671
– 2,531
– 2,487
269
Change in other operating assets and liabilities
– 132
Income taxes paid
–2
Interest received
– 4,715
– 5,358
Cash inflow / outflow from operating activities
Reconciliation between net profit and cash inflow / outflow from operating activities
Current tax
Other interest and similar income / expenses
Depreciation and amortisation of other tangible, intangible and investment assets
153
Change in provisions
– 2,895
Change in leased products
– 4,501
Change in receivables from sales financing
523
Change in deferred taxes
54
Other non-cash income and expense items
Result from equity accounted investments
Changes in working capital
Change in inventories
Change in trade receivables
Change in trade payables
Gain / loss on disposal of tangible and intangible assets and marketable securities
9
172
20
–
–
24
4
– 25
45
7
–
–
–
–
–2
2,786
159
4,230
1,034
15
–
– 124
– 5
– 54
– 655
– 552
– 907
371
– 16
419
180
9,423
36
– 134
177
– 3,775
3,881
– 5,836
– 1,715
– 4,299
– 136
–
15
–
–
452
– 41
1,042
–
– 4,682
70
2
2,516
154
3,747
374
109
–
– 239
– 56
– 21
– 407
1,018
– 229
53
1,194
657
191
9,964
15
– 514
137
– 3,945
2,908
– 7,998
– 1,653
– 582
– 150
–
17
–
–
85
– 26
125
– 489
– 2,673
– 53
47
– 40
242
29
109
– 3,309
– 3,898
383
14
8
–
70
–
14
56
858
– 161
–2
– 9
–
–
–
– 458
170
– 297
–
–
–
4,094
–2
1,009
– 733
5,298
1,073
–
5,927
– 11
–
904
879
1,783
Proceeds from the disposal of intangible assets and property, plant and equipment
Expenditure for investments
163
Proceeds from the disposal of investments
– 179
Investments in marketable securities and term deposits
342
Proceeds from the sale of marketable securities and from matured term deposits
324
Cash inflow / outflow from investing activities
Issue / buy-back of treasury shares
Payments into equity
Payment of dividend for the previous year
3,844
Intragroup financing and equity transactions
Interest paid
1,099
Proceeds from the issue of bonds
– 1,383
Repayment of bonds
6,015
Proceeds from new non-current other financial liabilities
– 4,814
– 4,940
Repayment of non-current other financial liabilities
517
Change in current other financial liabilities
–
Change in commercial paper
5,152
Cash inflow / outflow from financing activities
– 36
Effect of exchange rate on cash and cash equivalents
–
Effect of changes in composition of Group on cash and cash equivalents
– 1,023
– 713
82
Change in cash and cash equivalents
6,775
5,752
7,488
6,775
797
Cash and cash equivalents as at 1 January
879
Cash and cash equivalents as at 31 December
44
44
44
44
95 Group Financial StatementS
Note
Group
Automotive
Financial Services
(unaudited supplementary information)
(unaudited supplementary information)
2014
20131
2014
20131
2014
20131
5,817
5,329
4,521
4,408
1,198
1,101
Net profit
2,786
159
4,230
1,034
15
–
– 124
– 5
– 54
– 655
– 552
– 907
371
– 16
419
2,516
154
3,747
374
109
–
– 239
– 56
– 21
– 407
1,018
– 229
53
1,194
657
Investment in intangible assets and property, plant and equipment
– 6,099
– 6,693
– 6,021
– 6,599
– 4,252
– 2,787
– 2,531
– 2,487
180
9,423
191
9,964
36
– 134
177
– 3,775
3,881
– 5,836
–
15
– 1,715
– 4,299
– 136
–
–
452
– 41
1,042
–
– 4,682
70
2
15
– 514
137
– 3,945
2,908
– 7,998
–
17
– 1,653
– 582
– 150
–
–
85
– 26
125
– 489
– 2,673
– 53
47
– 1,023
– 713
6,775
5,752
7,488
6,775
– 40
242
29
109
– 3,309
– 3,898
383
14
8
–
70
–
14
56
858
– 161
–2
Reconciliation between net profit and cash inflow / outflow from operating activities
9
172
20
Current tax
Other interest and similar income / expenses
Depreciation and amortisation of other tangible, intangible and investment assets
153
Change in provisions
– 2,895
Change in leased products
– 4,501
Change in receivables from sales financing
523
Change in deferred taxes
54
Other non-cash income and expense items
–
–
24
4
– 25
45
Gain / loss on disposal of tangible and intangible assets and marketable securities
Result from equity accounted investments
Changes in working capital
Change in inventories
Change in trade receivables
Change in trade payables
269
Change in other operating assets and liabilities
– 132
–2
Income taxes paid
Interest received
– 4,715
– 5,358
Cash inflow / outflow from operating activities
– 9
–
–
–
– 458
170
– 297
–
–
–
4,094
–2
1,009
– 733
5,298
– 9
Investment in intangible assets and property, plant and equipment
7
–
Proceeds from the disposal of intangible assets and property, plant and equipment
Expenditure for investments
163
Proceeds from the disposal of investments
– 179
Investments in marketable securities and term deposits
342
Proceeds from the sale of marketable securities and from matured term deposits
324
Cash inflow / outflow from investing activities
–
–
–
3,844
–2
Issue / buy-back of treasury shares
Payments into equity
Payment of dividend for the previous year
Intragroup financing and equity transactions
Interest paid
1,099
Proceeds from the issue of bonds
– 1,383
Repayment of bonds
6,015
Proceeds from new non-current other financial liabilities
– 4,814
– 4,940
Repayment of non-current other financial liabilities
1,073
–
5,927
– 11
–
904
879
1,783
517
Change in current other financial liabilities
–
Change in commercial paper
5,152
Cash inflow / outflow from financing activities
– 36
Effect of exchange rate on cash and cash equivalents
–
Effect of changes in composition of Group on cash and cash equivalents
82
Change in cash and cash equivalents
797
Cash and cash equivalents as at 1 January
879
Cash and cash equivalents as at 31 December
in € million
Net profit
Current tax
Reconciliation between net profit and cash inflow / outflow from operating activities
Other interest and similar income / expenses
Depreciation and amortisation of other tangible, intangible and investment assets
Gain / loss on disposal of tangible and intangible assets and marketable securities
Change in provisions
Change in leased products
Change in receivables from sales financing
Change in deferred taxes
Other non-cash income and expense items
Result from equity accounted investments
Changes in working capital
Change in inventories
Change in trade receivables
Change in trade payables
Change in other operating assets and liabilities
Income taxes paid
Interest received
Cash inflow / outflow from operating activities
Proceeds from the disposal of intangible assets and property, plant and equipment
Expenditure for investments
Proceeds from the disposal of investments
Investments in marketable securities and term deposits
Proceeds from the sale of marketable securities and from matured term deposits
Cash inflow / outflow from investing activities
Issue / buy-back of treasury shares
Payments into equity
Payment of dividend for the previous year
Intragroup financing and equity transactions
Interest paid
Proceeds from the issue of bonds
Repayment of bonds
Proceeds from new non-current other financial liabilities
Repayment of non-current other financial liabilities
Change in current other financial liabilities
Change in commercial paper
Cash inflow / outflow from financing activities
Effect of exchange rate on cash and cash equivalents
Effect of changes in composition of Group on cash and cash equivalents
Change in cash and cash equivalents
Cash and cash equivalents as at 1 January
Cash and cash equivalents as at 31 December
1 Prior year figures have been adjusted in accordance with IAS 8, see note 9.
2 Interest relating to financial services business is classified as revenues / cost of sales.
2,774
127
4,323
1,103
– 2,720
– 3,898
116
331
– 63
– 655
– 551
– 971
379
41
323
137
2,912
36
– 99
190
– 4,216
4,072
– 6,116
–
15
–
– 133
10,892
– 7,249
5,900
– 5,697
2,132
– 1,012
3,133
86
2
17
7,671
7,688
2,581
147
3,832
480
– 2,048
– 4,501
– 17
– 552
– 21
– 407
986
– 195
22
1,159
969
136
4,127
22
– 76
137
– 4,131
3,250
– 7,491
–
17
–
– 122
8,982
– 7,242
6,626
– 4,996
– 721
1,812
2,703
– 89
47
– 703
8,374
7,671
– 1,715
– 1,653
44
44
44
44
96
BMW Group
Group Statement of Changes in Equity
in € million
Note
Subscribed
capital
Capital
reserves
Revenue reserves*
Accumulated other equity
Equity
attributable to
shareholders
of BMW AG
Minority
interest
Total
Translation
differences*
Securities
Derivative
financial
instruments
1 January 2013, as originally reported
Adjustment IAS 8*
1 January 2013 (adjusted)
Dividends paid
Net profit
Other comprehensive income for the period after tax
Comprehensive income 31 December 2013
Subscribed share capital increase out of Authorised Capital
Premium arising on capital increase relating to preferred stock
Other changes
31 December 2013
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
35
35
35
656
–
656
–
–
–
–
–
–
–
656
1,973
–
1,973
–
–
–
–
–
17
–
28,544
– 34
28,510
– 1,640
5,303
936
6,239
–
–
13
1,990
33,122
– 1,627
1,136
35,412
35,600
31 December 2013
in € million
Note
Subscribed
capital
Capital
reserves
Revenue reserves
Accumulated other equity
Minority
interest
Total
1 January 2014
Dividends paid
Net profit
Other comprehensive income for the period after tax
Comprehensive income 31 December 2014
Subscribed share capital increase out of Authorised Capital
Premium arising on capital increase relating to preferred stock
Other changes
31 December 2014
35
35
656
–
–
–
–
–
–
–
656
1,990
–
–
–
–
–
15
–
33,122
– 1,707
5,798
– 1,592
4,206
–
–
–
2,005
35,621
– 723
141
– 480
37,220
37,437
31 December 2014
– 984
–
– 984
– 643
– 643
–
–
–
–
–
–
–
904
904
–
–
–
108
–
108
–
–
27
27
–
–
–
135
–
–
6
–
–
–
6
202
–
202
–
–
934
934
–
–
–
30,499
– 34
30,465
– 1,640
5,303
1,254
6,557
–
17
13
Equity
attributable to
shareholders
of BMW AG
– 1,616
– 1,616
–
–
–
–
–
– 1,707
5,798
– 2,298
3,500
–
15
–
107
–
107
–
26
–
26
–
–
55
188
188
–
19
–
19
–
–
10
217
30,606
1 January 2013, as originally reported
– 34
Adjustment IAS 8*
30,572
1 January 2013 (adjusted)
–1,640
Dividends paid
5,329
Net profit
1,254
Other comprehensive income for the period after tax
6,583
Comprehensive income 31 December 2013
–
Subscribed share capital increase out of Authorised Capital
Premium arising on capital increase relating to preferred stock
17
68
Other changes
– 1,707
Dividends paid
5,817
Net profit
– 2,298
Other comprehensive income for the period after tax
3,519
Comprehensive income 31 December 2014
Subscribed share capital increase out of Authorised Capital
Premium arising on capital increase relating to preferred stock
–
15
10
Other changes
Translation
differences
Securities
Derivative
financial
instruments
– 1,627
135
1,136
35,412
35,600
1 January 2014
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
97 Group Financial StatementS
in € million
Note
Subscribed
capital
Capital
reserves
Revenue reserves*
Accumulated other equity
Equity
attributable to
shareholders
of BMW AG
Minority
interest
Total
Translation
differences*
Securities
Derivative
financial
instruments
– 984
–
– 984
–
–
– 643
– 643
–
–
–
– 1,627
108
–
108
–
–
27
27
–
–
–
135
202
–
202
–
–
934
934
–
–
–
30,499
– 34
30,465
– 1,640
5,303
1,254
6,557
–
17
13
1,136
35,412
107
–
107
–
26
–
26
–
–
55
188
30,606
1 January 2013, as originally reported
– 34
Adjustment IAS 8*
30,572
1 January 2013 (adjusted)
–1,640
Dividends paid
5,329
Net profit
1,254
Other comprehensive income for the period after tax
6,583
Comprehensive income 31 December 2013
–
Subscribed share capital increase out of Authorised Capital
17
68
Premium arising on capital increase relating to preferred stock
Other changes
35,600
31 December 2013
in € million
Note
Subscribed
capital
Capital
reserves
Revenue reserves
Accumulated other equity
Equity
attributable to
shareholders
of BMW AG
Minority
interest
Total
35
656
1,990
– 1,627
135
1,136
35,412
Translation
differences
Securities
Derivative
financial
instruments
–
–
904
904
–
–
–
– 723
–
–
6
6
–
–
–
141
–
–
– 1,616
– 1,616
–
–
–
– 1,707
5,798
– 2,298
3,500
–
15
–
– 480
37,220
188
–
19
–
19
–
–
10
217
35,600
1 January 2014
– 1,707
Dividends paid
5,817
Net profit
– 2,298
Other comprehensive income for the period after tax
3,519
Comprehensive income 31 December 2014
–
15
10
Subscribed share capital increase out of Authorised Capital
Premium arising on capital increase relating to preferred stock
Other changes
37,437
31 December 2014
35
35
1 January 2013, as originally reported
Adjustment IAS 8*
1 January 2013 (adjusted)
Dividends paid
Net profit
Other comprehensive income for the period after tax
Comprehensive income 31 December 2013
Subscribed share capital increase out of Authorised Capital
Premium arising on capital increase relating to preferred stock
Other changes
31 December 2013
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
1 January 2014
Dividends paid
Net profit
Other comprehensive income for the period after tax
Comprehensive income 31 December 2014
Subscribed share capital increase out of Authorised Capital
Premium arising on capital increase relating to preferred stock
Other changes
31 December 2014
35
656
1,990
33,122
656
–
656
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,973
–
1,973
–
–
–
–
–
17
–
–
–
–
–
–
15
–
28,544
– 34
28,510
– 1,640
5,303
936
6,239
–
–
13
33,122
– 1,707
5,798
– 1,592
4,206
–
–
–
35
656
2,005
35,621
98
BMW Group
Notes to the Group Financial Statements
Accounting Principles and Policies
1
Basis of preparation
The consolidated financial statements of Bayerische
Motoren Werke Aktiengesellschaft (BMW Group Finan
cial Statements or Group Financial Statements) at 31 De
cember 2014 have been drawn up in accordance with
International Financial Reporting Standards (IFRSs) as
endorsed by the EU. The designation “IFRSs” also in
cludes all valid International Accounting Standards (IASs).
All Interpretations of the IFRS Interpretations Commit
tee (IFRICs) mandatory for the financial year 2014 are
also applied.
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
The Group Financial Statements comply with § 315 a of
the German Commercial Code (HGB). This provision,
in conjunction with the Regulation (EC) No. 1606 / 2002
of the European Parliament and Council of 19 July
2002, relating to the application of International Finan
cial Reporting Standards, provides the legal basis for
preparing consolidated financial statements in accord
ance with international standards in Germany and
applies to financial years beginning on or after 1 January
2005.
The BMW Group and segment income statements are
presented using the cost of sales method. The Group
and segment balance sheets correspond to the classi
fication provisions contained in IAS 1 (Presentation of
Financial Statements).
In order to improve clarity, various items are aggregated
in the income statements and balance sheets presented.
These items are disclosed and analysed separately in the
notes.
A Statement of Comprehensive Income is presented at
Group level reconciling the net profit to comprehensive
income for the year.
In order to provide a better insight into the net assets,
financial position and performance of the BMW Group
and going beyond the requirements of IFRS 8 (Operat
ing Segments), the Group Financial Statements also
include balance sheets and income statements for the
Automotive, Motorcycles, Financial Services and Other
Entities segments. The Group Cash Flow Statement is
supplemented by statements of cash flows for the Auto
motive and Financial Services segments. This supple
mentary information is unaudited.
In order to facilitate the sale of its products, the BMW
Group provides various financial services – mainly loan
and lease financing – to both retail customers and dealers.
The inclusion of the financial services activities of the
Group therefore has an impact on the Group Financial
Statements.
Intersegment transactions – relating primarily to inter
nal sales of products, the provision of funds and the
related interest – are eliminated in the “Eliminations”
column. Further information regarding the allocation
of activities of the BMW Group to segments and a
description of the segments is provided in note 50.
In conjunction with the refinancing of financial services
business, a significant volume of receivables arising
from retail customer and dealer financing is sold. Simi
larly, rights and obligations relating to leases are sold.
The sale of receivables is a wellestablished instrument
used by industrial companies. These transactions usu
ally take the form of assetbacked financing transac
tions involving the sale of a portfolio of receivables to a
trust which, in turn, issues marketable securities to re
finance the purchase price. The BMW Group continues
to “service” the receivables and receives an appropriate
fee for these services. In accordance with IFRS 10 (Con
solidated Financial Statements) such assets remain in
the Group Financial Statements although they have been
legally sold, since all the conditions relevant for control
are met. Gains and losses relating to the sale of such
assets are not recognised until the assets are removed
from the Group balance sheet. The balance sheet value of
the assets sold at 31 December 2014 totalled € 10.9 bil
lion (31 December 2013: € 10.1 billion).
In addition to credit financing and leasing contracts, the
Financial Services segment also brokers insurance busi
ness via cooperation arrangements entered into with
local insurance companies. These activities are not ma
terial to the BMW Group as a whole.
The Group currency is the euro. All amounts are dis
closed in millions of euros (€ million) unless stated
otherwise.
Bayerische Motoren Werke Aktiengesellschaft has its
seat in Munich, Petuelring 130, and is registered in the
Commercial Register of the District Court of Munich
under the number HRB 42243.
All consolidated subsidiaries have the same year end as
BMW AG with the exception of BMW India Private
Ltd., Gurgaon, and BMW India Financial Services Private
Ltd., Gurgaon, both of whose yearends are 31 March in
accordance with local legal requirements.
99 Group Financial StatementS
The Group Financial Statements, drawn up in accord
ance with § 315a HGB, and the Combined Management
Report for the financial year ended 31 December 2014
will be submitted to the operator of the electronic version
of the German Federal Gazette and can be obtained via
the Company Register website. Printed copies will also
be made available on request. In addition the Group
Financial Statements and the Combined Management
Report can be downloaded from the BMW Group web
site at www.bmwgroup.com / ir.
The Board of Management authorised the Group Finan
cial Statements for issue on 19 February 2015.
2
Consolidated companies
The scope of the consolidated financial statements is
based on the application of IFRS 10 (Consolidated
Financial Statements) and IFRS 11 (Joint Arrangements).
The BMW Group Financial Statements include, besides
BMW AG, all material subsidiaries, including one
special purpose securities fund and 30 special purpose
trusts, almost all of which are used for assetbacked
financing transactions.
The number of subsidiaries, including the special pur
pose securities fund and the special purpose trusts,
consolidated in the Group Financial Statements
changed in 2014 as follows:
Germany
Foreign
Total
Included at 31 December 2013
Included for the first time in 2014
No longer included in 2014
Included at 31 December 2014
20
2
–
22
167
13
13
167
187
15
13
189
43 subsidiaries (2013: 48), either dormant or generating
a negligible volume of business, and four joint opera
tions (2013: 1) are not consolidated on the grounds
that their inclusion would not influence the economic
decisions of users of the Group Financial Statements.
Noninclusion of operating subsidiaries and joint oper
ations reduces total Group revenues by 0.3 % (2013:
1.0 %).
The joint operations – SGL Automotive Carbon Fibers
GmbH & Co. KG, Munich, SGL Automotive Carbon
Fibers Verwaltungs GmbH, Munich, and SGL Automo
tive Carbon Fibers LLC, Dover, DE – are consolidated
proportionately for the first time in the financial year
2014 on the basis of the BMW Group’s 49 % sharehold
ing. These entities supply carbon fibre and carbon fibre
fabrics for vehicle production. Further information is
provided in note 9.
The joint ventures – BMW Brilliance Automotive Ltd.,
Shenyang, DriveNow GmbH & Co. KG, Munich, and
DriveNow Verwaltungs GmbH, Munich – are accounted
for using the equity method. As in the previous year,
five participations are not consolidated using the equity
method on the grounds of immateriality. They are in
cluded in the Group balance sheet in the line “Other in
vestments”, measured at cost less – where applicable –
accumulated impairment losses.
A “List of Group Investments” pursuant to § 313 (2)
HGB will be submitted to the operator of the electronic
version of the German Federal Gazette. This list, along
with the “List of Third Party Companies which are not
of Minor Importance for the Group”, will also be posted
on the BMW Group website at www.bmwgroup.com / ir.
The List of Group Investments, the List of Third Party
Companies which are not of Minor Importance for the
Group and the full list of consolidated companies are
also posted as appendices on the BMW Group website.
BMW Madrid S. L., Madrid, BMW Amsterdam B. V.,
Amsterdam, BMW Den Haag B. V., The Hague, BMW
Retail Nederland B. V., The Hague, BMW Milano
S. r. l., Milan, BMW Distribution S. A. S., Montignyle
Bretonneux, BMW Vermögensverwaltungs GmbH,
Munich, BMW Beteiligungs GmbH & Co. KG, Munich,
and BMW International Holding B. V., The Hague, were
consolidated for the first time in the financial year 2014.
BMW Österreich Finanzierungs GmbH, Steyr, was
merged with BMW Motoren GmbH, Steyr, and there
fore ceased to be a consolidated company. Noord Lease
100
B. V., Groningen, was sold and therefore ceased to be a
consolidated company. In addition, Alphabet Belgium
N. V., Bornem, and Bavaria NTTBL Company Ltd.,
Dublin, were liquidated and ceased to be consolidated
companies. The British Motor Corporation Ltd.,
Bracknell, was wound up and ceased to be a consolidated
company.
The Group reporting entity also changed by comparison
to the previous year as a result of the firsttime consoli
dation of six special purpose trusts and the deconsolida
tion of eight special purpose entities.
The changes to the composition of the Group do not have
a material impact on the results of operations, financial
position or net assets of the Group.
3
Sale of business
With the purchase of the ING Car Lease Group in
2011, the BMW Group also acquired Noord Lease B. V.,
Groningen. This entity was managed alongside Alphabet
Nederland B. V., Breda, as a second fleet leasing com
pany in the Netherlands, with a strong regional focus
and a high proportion of private leasing. As part of an
evaluation of the strategic direction of fleet business
in the Netherlands, it was decided to focus on only one
company in this region. Accordingly, BMW AG’s Board
of Management put up Noord Lease B. V., Groningen
for sale during the financial year 2014. At the end of
a bidding process, Noord Lease B. V., Groningen, was
sold to Noordlease Midco B. V., Groningen. The pur
chase agreement was signed in June 2014 and the
shares transferred in August 2014. The deconsolidation
of Noord Lease B. V., Groningen, gave rise in the third
quarter to a gain of € 7.4 million, which is included in
other operating income and expenses of the Financial
Services segment.
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
4
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
Consolidation principles
The equity of subsidiaries is consolidated in accordance
with IFRS 3 (Business Combinations). IFRS 3 requires
that all business combinations are accounted for using
the acquisition method, whereby identifiable assets and
liabilities acquired are measured at their fair value at
acquisition date. An excess of acquisition cost over the
Group’s share of the net fair value of identifiable assets,
liabilities and contingent liabilities is recognised as good
will as a separate balance sheet line item and allocated
to the relevant cashgenerating unit (CGU). Goodwill of
€ 91 million which arose prior to 1 January 1995 remains
netted against reserves.
Receivables, payables, provisions, income and expenses
and profits between consolidated companies (intragroup
profits) are eliminated on consolidation.
Joint operations and joint ventures are forms of joint
arrangements. Such an arrangement exists when the
BMW Group jointly carries out activities on the basis of
a contractual agreement with a third party that requires
the unanimous consent of both parties with respect to
all significant activities of the joint arrangement.
In the case of a joint operation, the parties that have joint
control of the arrangement have rights to the assets,
and obligations for the liabilities, relating to the arrange
ment. Assets, liabilities, revenues and expenses of a
joint operation are recognised proportionately in the
Group Financial Statements on the basis of the BMW
Group’s rights and obligations.
Investments accounted for using the equity method
(joint ventures and associated companies) are measured
at the BMW Group’s share of equity taking account of
fair value adjustments. Any difference between the cost
of investment and the Group’s share of equity is ac
counted for in accordance with the acquisition method.
Investments in other companies are accounted for as
a general rule using the equity method when significant
influence can be exercised (IAS 28 Investments in Asso
ciates and Joint Ventures). As a general rule, there is a
rebuttable assumption that the Group has significant in
fluence if it holds between 20 % and 50 % of the associated
company’s or joint venture’s voting power.
101 Group Financial StatementS
5
Foreign currency translation
The financial statements of consolidated companies
which are drawn up in a foreign currency are translated
using the functional currency concept (IAS 21 The
Effects of Changes in Foreign Exchange Rates) and the
modified closing rate method. The functional currency
of a subsidiary is determined as a general rule on the
basis of the primary economic environment in which it
operates and corresponds therefore usually to the rele
vant local currency. Income and expenses of foreign
subsidiaries are translated in the Group Financial State
ments at the average exchange rate for the year and
assets and liabilities are translated at the closing rate.
Exchange differences arising from the translation of
shareholders’ equity are recognised directly in accumu
lated other equity. Exchange differences arising from
the use of different exchange rates to translate the in
US Dollar
British Pound
Chinese Renminbi
Japanese Yen
Russian Rouble
come statement are also recognised directly in accumu
lated other equity.
Foreign currency receivables and payables in the single
entity accounts of BMW AG and subsidiaries are re
corded, at the date of the transaction, at cost. At the end
of the reporting period, foreign currency receivables
and payables are translated at the closing exchange rate.
The resulting unrealised gains and losses as well as the
subsequent realised gains and losses arising on settle
ment are recognised in the income statement in accord
ance with the underlying substance of the relevant
transactions.
The exchange rates of those currencies which have a ma
terial impact on the Group Financial Statements were as
follows:
Closing rate
Average rate
31.12. 2014
31.12. 2013
2014
2013
1.21
0.78
7.53
144.95
70.98
1.38
0.83
8.34
144.55
45.29
1.33
0.81
8.19
140.38
51.03
1.33
0.85
8.16
129.70
42.34
6
Accounting policies
The financial statements of BMW AG and of its subsidi
aries in Germany and elsewhere have been prepared for
consolidation purposes using uniform accounting poli
cies in accordance with IFRS 10 (Consolidated Financial
Statements).
Revenues from the sale of products are recognised when
the risks and rewards of ownership of the goods are
transferred to the dealer or customer, provided that the
amount of revenue can be measured reliably, it is
probable that the economic benefits associated with the
transaction will flow to the entity and costs incurred
or to be incurred in respect of the sale can be measured
reliably. Revenues are stated net of settlement discount,
bonuses and rebates. Revenues also include lease rentals
and interest income earned in conjunction with finan
cial services. Revenues from leasing instalments relate to
operating leases and are recognised in the income state
ment on a straight line basis over the relevant term of
the lease. Interest income from finance leases and from
customer and dealer financing are recognised using
the effective interest method and reported as revenues
within the line item “Interest income on loan financing”.
If the sale of products includes a determinable amount
for subsequent services (multiplecomponent contracts),
the related revenues are deferred and recognised as
income over the relevant service period. Amounts are
normally recognised as income by reference to the pat
tern of related expenditure. Profits arising on the sale
of vehicles for which a Group company retains a repur
chase commitment (buyback contracts) are not recog
nised until such profits have been realised. The differ
ence between the sales and buyback price is accounted
for as deferred income and recognised in instalments as
revenue over the contract term.
Cost of sales comprises the cost of products sold and the
acquisition cost of purchased goods sold. In addition
to directly attributable material and production costs, it
also includes research costs and development costs not
recognised as assets, the amortisation of capitalised
development costs as well as overheads (including depre
ciation of property, plant and equipment and amortisation
102
of other intangible assets relating to production), write
downs on inventories, freight and insurance costs re
lating to deliveries to dealers and agency fees on direct
sales. Expenses which are directly attributable to finan
cial services business (including depreciation on leased
products), the interest expense from refinancing the
entire financial services business as well as the expense
of risk provisions and writedowns relating to such busi
ness are also reported in cost of sales.
In accordance with IAS 20 (Accounting for Government
Grants and Disclosure of Government Assistance), pub-
lic sector grants are not recognised until there is reason
able assurance that the conditions attaching to them
have been complied with and the grants will be received.
They are recognised as income over the periods neces
sary to match them with the related costs which they are
intended to compensate.
Basic earnings per share are computed in accordance with
IAS 33 (Earnings per Share). Basic earnings per share
are calculated for common and preferred stock by di
viding the Group net profit after minority interests, as
attributable to each category of stock, by the average
number of outstanding shares. The net profit is accord
ingly allocated to the different categories of stock. The
portion of the Group net profit for the year which is not
being distributed is allocated to each category of stock
based on the number of outstanding shares. Profits
available for distribution are determined directly on the
basis of the dividend resolutions passed for common
and preferred stock. Diluted earnings per share are dis
closed separately.
Share-based remuneration programmes which are ex
pected to be settled in shares are, in accordance with
IFRS 2 (Sharebased Payments), measured at their fair
value at grant date. The related expense is recognised
in the income statement (as personnel expense) over
the vesting period, with a contra (credit) entry recorded
against capital reserves.
Sharebased remuneration programmes expected to be
settled in cash are revalued to their fair value at each
balance sheet date between the grant date and the settle
ment date and on the settlement date itself. The ex
pense for such programmes is recognised in the income
statement (as personnel expense) over the vesting period
of the programmes and recognised in the balance sheet
as a provision.
The sharebased remuneration programme for Board
of Management members and senior heads of depart
ment entitles BMW AG to elect whether to settle its
commitments in cash or with shares of BMW AG com
mon stock. Following the decision to settle in cash,
this programme is accounted for as a cashsettled
sharebased transaction. Further information on
sharebased remuneration programmes is provided
in note 20.
Purchased and internallygenerated intangible assets are
recognised as assets in accordance with IAS 38 (Intan
gible Assets), where it is probable that the use of the asset
will generate future economic benefits and where the
costs of the asset can be determined reliably. Such assets
are measured at acquisition and / or manufacturing cost
and, to the extent that they have a finite useful life,
amortised over their estimated useful lives. With the ex
ception of capitalised development costs, intangible
assets are generally amortised over their estimated use
ful lives of between three and ten years.
Development costs for vehicle and engine projects are
capitalised at manufacturing cost, to the extent that
attributable costs can be measured reliably and both
technical feasibility and successful marketing are as
sured. It must also be probable that the development
expenditure will generate future economic benefits.
Capitalised development costs comprise all expenditure
that can be attributed directly to the development pro
cess, including developmentrelated overheads. Capi
talised development costs are amortised systematically
over the estimated product life (usually four to eleven
years) following start of production.
Goodwill arises on firsttime consolidation of an acquired
business when the cost of acquisition exceeds the
Group’s share of the fair value of the individually iden
tifiable assets acquired and liabilities and contingent
liabilities assumed.
All items of property, plant and equipment are considered
to have finite useful lives. They are recognised at acqui
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
103 Group Financial StatementS
sition or manufacturing cost less scheduled depreciation
based on the estimated useful lives of the assets. De
preciation on property, plant and equipment reflects
the pattern of their usage and is generally computed us
ing the straightline method. Components of items of
property, plant and equipment with different useful
lives are depreciated separately.
Systematic depreciation is based on the following useful
lives, applied throughout the BMW Group:
in years
Factory and office buildings, residential buildings, fixed installations in buildings and outside facilities
Plant and machinery
Other equipment, factory and office equipment
8 to 50
3 to 21
2 to 25
For machinery used in multipleshift operations, depre
ciation rates are increased to account for the additional
utilisation.
The cost of internally constructed plant and equipment
comprises all costs which are directly attributable to
the manufacturing process as well as an appropriate
proportion of productionrelated overheads. This in
cludes productionrelated depreciation and an appro
priate proportion of administrative and social costs.
As a general rule, borrowing costs are not included in
acquisition or manufacturing cost. Borrowing costs that
are directly attributable to the acquisition, construction
or production of a qualifying asset are recognised as a
part of the cost of that asset in accordance with IAS 23
(Borrowing Costs).
Noncurrent assets also include assets relating to leases.
The BMW Group uses property, plant and equipment as
lessee on the one hand and leases out vehicles produced
by the Group and other brands as lessor on the other.
IAS 17 (Leases) contains rules for determining, on the
basis of risks and rewards, the economic owner of the
assets. In the case of finance leases, the assets are at
tributed to the lessee and in the case of operating leases
the assets are attributed to the lessor.
In accordance with IAS 17, assets leased under finance
leases are measured at their fair value at the inception
of the lease or at the present value of the lease payments,
if lower. The assets are depreciated using the straight
line method over their estimated useful lives or over the
lease period, if shorter. The obligations for future lease
instalments are recognised as other financial liabilities.
Where Group products are recognised by BMW Group
entities as leased products under operating leases, they
are measured at manufacturing cost. All other leased
products are measured at acquisition cost. All leased
products are depreciated over the period of the lease
using the straightline method down to their expected
residual value. Changes in residual value expectations
are recognised – in situations where the recoverable
amount of the lease exceeds the carrying amount of the
asset – by adjusting scheduled depreciation prospec
tively over the remaining term of the lease contract. If
the recoverable amount is lower than the expected
residual value, an impairment loss is recognised for the
shortfall. A test is carried out at each balance sheet
date to determine whether an impairment loss recog
nised in prior years no longer exists or has decreased.
In these cases, the carrying amount of the asset is in
creased to the recoverable amount. The higher carrying
amount resulting from the reversal may not, however,
exceed the rolledforward amortised cost of the asset.
If there is any evidence of impairment of non-financial
assets (except inventories and deferred taxes), or if an
annual impairment test is required to be carried out –
i. e. for intangible assets not yet available for use, intan
gible assets with an indefinite useful life and goodwill
acquired as part of a business combination – an impair
ment test pursuant to IAS 36 (Impairment of Assets) is
performed. Each individual asset is tested separately
unless the asset generates cash flows that are largely in
dependent of the cash flows from other assets or groups
of assets (cashgenerating units / CGUs). For the purposes
of the impairment test, the asset’s carrying amount is
compared with its recoverable amount, the latter defined
as the higher of the asset’s fair value less costs to sell and
its value in use. An impairment loss is recognised when
the recoverable amount is lower than the asset’s carrying
amount. Fair value is the price that would be received
to sell an asset in an orderly transaction between mar
ket participants at the measurement date. The value in
104
use corresponds to the present value of future cash
flows expected to be derived from an asset or group of
assets.
The first step of the impairment test is to determine the
value in use of an asset. If the calculated value in use is
lower than the carrying amount of the asset, then its fair
value less costs to sell are also determined. If the latter
is also lower than the carrying amount of the asset, then
an impairment loss is recorded, reducing the carrying
amount to the higher of the asset’s value in use or fair
value less costs to sell. The value in use is determined
on the basis of a present value computation. Cash flows
used for the purposes of this calculation are derived
from longterm forecasts approved by management. The
longterm forecasts themselves are based on detailed
forecasts drawn up at an operational level and, based on
a planning period of six years, correspond roughly to
a typical product’s lifecycle. For the purposes of calcu
lating cash flows beyond the planning period, the as
set’s assumed residual value does not take growth into
account. Forecasting assumptions are continually
brought up to date and regularly compared with exter
nal sources of information. The assumptions used take
account in particular of expectations of the profitability
of the product portfolio, future market share develop
ments, macroeconomic developments (such as currency,
interest rate and raw materials prices) as well as the le
gal environment and past experience. Cash flows of the
Automotive and Motorcycles CGUs are discounted us
ing a riskadjusted pretax weighted average cost of cap
ital (WACC) of 12.0 % (2013: 12.0 %). In the case of the
Financial Services CGU, a sectorcompatible pretax cost
of equity capital of 13.4 % (2013: 13.4 %) is applied. In
conjunction with the impairment tests for CGUs, sensi
tivity analyses are performed for the main assumptions.
Analyses performed in the year under report confirmed,
as in the previous year, that no impairment loss was re
quired to be recognised.
If the reason for a previously recognised impairment loss
no longer exists, the impairment loss is reversed up to
the level of the recoverable amount, capped at the level
of rolledforward amortised cost. This does not apply
to goodwill: previously recognised impairment losses on
goodwill are not reversed.
Investments accounted for using the equity method are
(except when the investment is impaired) measured at
the Group’s share of equity taking account of fair value
adjustments on acquisition. Investments accounted for
using the equity method comprise joint ventures and
significant associated companies.
Investments in nonconsolidated Group companies and
interests in associated companies not accounted for using
the equity method are reported as Other investments and
measured at cost or, if lower, at their fair value.
Participations are measured at their fair value. If this
value is not available or cannot be determined reliably,
participations are measured at cost.
Noncurrent marketable securities are measured ac
cording to the category of financial asset to which they
are classified. No heldfortrading financial assets are
included under this heading.
A financial instrument is a contract that gives rise to a
finan cial asset of one entity and a financial liability
or equity instrument of another entity. Once a BMW
Group entity becomes party to such to a contract, the
financial instrument is recognised either as a financial
asset or as a financial liability.
Financial assets are accounted for on the basis of the
settlement date. On initial recognition, they are meas
ured at their fair value. Transaction costs are included
in the fair value unless the financial assets are allocated
to the category “financial assets measured at fair value
through profit or loss”.
Subsequent to initial recognition, availableforsale and
heldfortrading financial assets are measured at their
fair value. When market prices are not available, the fair
value of availableforsale financial assets is measured
using appropriate valuation techniques e. g. discounted
cash flow analysis based on market information available
at the balance sheet date.
Availableforsale assets include noncurrent investments,
securities and investment fund shares. This category
includes all nonderivative financial assets which are
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
105 Group Financial StatementS
not classified as “loans and receivables” or “heldto
maturity investments” or as items measured “at fair
value through profit and loss”.
Loans and receivables which are not held for trading
and heldtomaturity financial investments with a fixed
term are measured at amortised cost using the effec
tive interest method. All financial assets for which pub
lished price quotations in an active market are not avail
able and whose fair value cannot be determined reliably
are required to be measured at cost.
In accordance with IAS 39 (Financial Instruments: Recog
nition and Measurement), assessments are made regu
larly as to whether there is any objective evidence that a
financial asset or group of assets may be impaired. Im
pairment losses identified after carrying out an impair
ment test are recognised as an expense. Gains and losses
on availableforsale financial assets are recognised di
rectly in accumulated other equity until the financial as
set is disposed of or is determined to be impaired, at
which time the cumulative loss previously recognised in
other comprehensive income is reclassified to profit or
loss for the period.
With the exception of derivative financial instruments,
all receivables and other current assets relate to loans
and receivables which are not held for trading. All such
items are measured at amortised cost. Receivables with
maturities of over one year which bear no or a lower
thanmarket interest rate are discounted. Appropriate
impairment losses are recognised to take account of all
identifiable risks.
Receivables from sales financing comprise receivables
from retail customer, dealer and lease financing.
balances or the incidence of similar events in the past
are examples of such objective evidence. In the event of
overdue receivables, impairment losses are always recog
nised individually based on the length of period of the
arrears. In the case of dealer financing receivables, the
allocation of the dealer to a corresponding rating cate
gory is also deemed to represent objective evidence of
impairment. If there is no objective evidence of impair
ment, impairment losses are recognised on financial as
sets using a portfolio approach based on similar groups
of assets. Companyspecific loss probabilities and loss
ratios, derived from historical data, are used to measure
impairment losses on similar groups of assets.
The recognition of impairment losses on receivables
relating to industrial business is also, as far as possible,
based on the same procedures applied to financial ser
vices business. Impairment losses (writedowns and
allowances) on receivables are always recorded on sepa
rate accounts and derecognised at the same time the
corresponding receivables are derecognised.
Items are presented as financial assets to the extent that
they relate to financing transactions.
Derivative financial instruments are only used within the
BMW Group for hedging purposes in order to reduce cur
rency, interest rate, fair value and market price risks from
operating activities and related financing requirements.
All derivative financial instruments (such as interest, cur
rency and combined interest / currency swaps, forward
currency and forward commodity contracts) are meas
ured in accordance with IAS 39 at their fair value, irre
spective of their purpose or the intention for which they
are held.
Impairment losses on receivables relating to financial ser
vices business are recognised using a uniform method
ology that is applied throughout the Group and meets
the requirements of IAS 39. This methodology results in
the recognition of impairment losses both on individual
assets and on groups of assets. If there is objective evi
dence of impairment, the BMW Group recognises im
pairment losses on the basis of individual assets. Within
the retail customer business, the existence of overdue
If there are no quoted prices on active markets for de
rivative financial instruments, credit risk is taken into
account as an adjustment to the fair value of the finan
cial instrument. The BMW Group applies the option of
measuring the credit risk for a group of financial assets
and financial liabilities on the basis of its net exposure.
Portfoliobased value adjustments to the individual
finan cial assets and financial liabilities are allocated using
the relative fair value approach (net method).
106
Derivative financial instruments are measured using
market information and recognised valuation tech
niques. In those cases where hedge accounting is ap
plied, changes in fair value are recognised either in
profit or loss or in other comprehensive income as a
component of accumulated other equity, depending
on whether the transactions are classified as fair value
hedges or cash flow hedges. In the case of fair value
hedges, the results of the fair value measurement of
the derivative financial instruments and the related
hedged items are recognised in the income statement.
In the case of fair value changes in cash flow hedges
which are used to mitigate the future cash flow risk
on a recognised asset or liability or on forecast trans
actions, unrealised gains and losses on the hedging
instrument are recognised initially directly in accumu
lated other equity. Any such gains or losses are recog
nised subsequently in the income statement when the
hedged item (usually external revenue) is recognised
in the income statement. The portion of the gains or
losses from fair value measurement not relating to the
hedged item is recognised immediately in the income
statement. If, contrary to the normal case within the
BMW Group, hedge accounting cannot be applied, the
gains or losses from the fair value measurement of
derivative financial instruments are recognised imme
diately in the income statement.
In accordance with IAS 12 (Income Taxes), deferred taxes
are recognised on all temporary differences between
the tax and accounting bases of assets and liabilities and
on consolidation procedures. Deferred tax assets also
include claims to future tax reductions which arise from
the expected usage of existing tax losses available for
carryforward to the extent that future usage is probable.
Deferred taxes are computed using enacted or planned
tax rates which are expected to apply in the relevant
national jurisdictions when the amounts are recovered.
Inventories of raw materials, supplies and goods for re
sale are stated at the lower of average acquisition cost
and net realisable value.
Work in progress and finished goods are stated at the
lower of average manufacturing cost and net realisable
value. Manufacturing cost comprises all costs which
are directly attributable to the manufacturing process
and an appropriate proportion of productionrelated
overheads. This includes productionrelated deprecia
tion and an appropriate proportion of administrative and
social costs.
Borrowing costs are not included in the acquisition or
manufacturing cost of inventories.
Cash and cash equivalents comprise mainly cash on hand
and cash at bank with an original term of up to three
months.
Assets held for sale and disposal groups held for sale
are presented separately in the balance sheet in ac
cordance with IFRS 5, if the carrying amount of the
relevant assets will be recovered principally through a
sale transaction rather than through continuing use.
This situation only arises if the assets can be sold imme
diately in their present condition, the sale is expected
to be completed within one year from the date of classi
fication and the sale is highly probable. At the date of
classification, property, plant and equipment, intangible
assets and disposal groups which are being held for
sale are measured at the lower of their carrying amount
and their fair value less costs to sell and scheduled de
preciation / amortisation ceases. This does not apply,
however, to items within the disposal group which are
not covered by the measurement rules contained in
IFRS 5. Simultaneously, liabilities directly related to the
sale are presented separately on the equity and liabili
ties side of the balance sheet as “Liabilities in conjunction
with assets held for sale”.
Provisions for pensions are recognised using the pro
jected unit credit method in accordance with IAS 19
(Employee Benefits). Under this method, not only obli
gations relating to known vested benefits at the re
porting date are recognised, but also the effect of future
increases in pensions and salaries. This involves taking
account of various input factors which are evaluated
on a prudent basis. The calculation is based on an inde
pendent actuarial valuation which takes into account
all relevant biometric factors.
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
107 Group Financial StatementS
Remeasurements of the net defined benefit liability
for pension plans are recognised, net of deferred tax,
directly in equity (revenue reserves).
period. Noncurrent provisions with a remaining period
of more than one year are discounted to the present
value of the expenditures expected to settle the obligation
at the end of the reporting period.
Net interest expense on the net defined benefit liability
and / or net interest income on the net defined benefit
asset are presented separately within the financial result.
All other costs relating to allocations to pension pro
visions are allocated to costs by function in the income
statement.
Other provisions are recognised when the BMW Group
has a present obligation (legal or constructive) arising
from past events, the settlement of which is probable
and when a reliable estimate can be made of the amount
of the obligation. Measurement of provisions is based
on the best estimate of the expenditure required to
settle the present obligation at the end of the reporting
Financial liabilities are measured on firsttime recogni
tion at cost which corresponds to the fair value of the
consideration given. Transaction costs are also taken
into account except for financial liabilities allocated to
the category “financial liabilities measured at fair value
through profit or loss”. Subsequent to initial recogni
tion, liabilities are – with the exception of derivative
finan cial instruments – measured at amortised cost
using the effective interest method. The BMW Group
has no liabilities which are held for trading. Liabilities
from finance leases are stated at the present value of
the future lease payments and disclosed under other
finan cial liabilities.
7
Assumptions, judgements and estimations
The preparation of the Group Financial Statements in
accordance with IFRSs requires management to make
certain assumptions and judgements and to use estima-
tions that can affect the reported amounts of assets and
liabilities, revenues and expenses and contingent lia
bilities. Major items requiring assumptions and estima
tions are described below. The assumptions used are
continuously checked for their validity. Actual amounts
could differ from the assumptions and estimations used
if business conditions develop differently to the Group’s
expectations.
Estimations are required to assess the recoverability of
a cash-generating unit (CGU). If the recoverability of an
asset is being tested at the level of a CGU, assumptions
must be made with regard to future cash inflows and out
flows, involving in particular an assessment of the fore
casting period to be used and of developments after that
period. For the purposes of determining future cash
inflows and outflows, management applies forecasting
assumptions which are continually brought up to date
and regularly compared with external sources of in
formation. The assumptions used take account in par
ticular of expectations of the profitability of the product
portfolio, future market share developments, macro
economic developments (such as currency, interest rate
and raw materials) as well as the legal environment and
past experience.
The BMW Group regularly checks the recoverability of
its leased products. One of the main assumptions re
quired for leased products relates to their residual value
since this represents a significant portion of future cash
inflows. In order to estimate the level of prices likely
to be achieved in the future, the BMW Group incorpo
rates internally available historical data, current market
data and forecasts of external institutions into its cal
culations. Internal backtesting is applied to validate the
estimations made. Further information is provided in
note 25.
The bad debt risk relating to receivables from sales financ-
ing is assessed regularly by the BMW Group. For these
purposes, the main factors taken into consideration are
past experience, current market data (such as the level
of financing business arrears), rating classes and
scoring information. Further information is provided
in note 28.
108
The calculation of deferred tax assets requires assump
tions to be made with regard to the level of future tax
able income and the timing of recovery of deferred tax
assets. These assumptions take account of forecast oper
ating results and the impact on earnings of the reversal
of taxable temporary differences. Since future business
developments cannot be predicted with certainty and to
some extent cannot be influenced by the BMW Group,
the measurement of deferred tax assets is subject to un
certainty. Further information is provided in note 17.
Current income taxes are computed throughout the
BMW Group in accordance with tax legislation appli
cable in each relevant country. In situations where a
permissible element of discretion has been applied in
determining the amount of a tax exposure to be recog
nised in the financial statements, there is always a pos
sibility that local tax authorities may reach a different
conclusion.
The calculation of pension provisions requires assump
tions to be made with regard to discount factors, salary
trends, employee fluctuation and the life expectancy
of employees. As in previous years, discount factors are
determined by reference to market yields at the end of
the reporting period on high quality corporate bonds.
The salary level trend refers to the expected rate of
salary increase which is estimated annually depending
on inflation and the career development of employees
within the Group. Further information is provided in
note 36.
Estimations are required for the purposes of recognis
ing and measuring provisions for warranty obligations
(statutory, contractual and voluntary). In addition to
statutorily prescribed manufacturer warranties, the
BMW Group also offers various categories of warranty
depending on the product and sales market concerned.
Warranty provisions are recognised when the risks
and rewards of ownership of the goods are transferred
to the dealer or retail customer or when a new category
of warranty is introduced. In order to determine the
level of the provision, various factors are taken into
consideration, including estimations based on past ex
perience with the nature and amount of claims. These
estimations also involve assessing the future level of
potential repair costs and price increases per product
and market. Provisions for warranties are adjusted
regularly to take account of new circumstances and the
impact of any changes recognised in the income state
ment. Further information is provided in note 37.
Similar estimates are also made in conjunction with the
measurement of expected reimbursement claims.
In the event of involvement in legal proceedings or
when claims are brought against a Group entity, provi-
sions for litigation and liability risks are recognised
when an outflow of resources is probable and a reliable
estimate can be made of the amount of the obligation.
Management is required to make assumptions with re
spect to the probability of occurrence, the amount in
volved and the duration of the legal dispute. For these
reasons, the recognition and measurement of provi
sions for litigation and liability risks are subject to un
certainty. Further information is provided in note 37.
In addition, judgement is required in particular when
assessing whether the risks and rewards incidental to
ownership of a leased asset have been transferred for
the purposes of determining the classification of leasing
arrangements.
Determining the scope of consolidated companies to
be included in the Group Financial Statements may
involve the use of judgement. In particular when the
BMW Group holds 50 % or less of the voting rights, a
detailed assessment must be made as to whether sole
control, joint control or significant influence applies.
For instance, other contractual rights and / or other mat
ters and circumstances could result in the conclusion
that the BMW entity concerned controls or jointly con
trols an entity in which it has a participation. In the
latter case, it must then be decided whether the joint
arrangement is a joint operation or a joint venture. In
making its judgement, the BMW Group must take all
contractual arrangements and other circumstances into
account, and not just the structure and legal form of
the entity. A new assessment is made in the event of
any indication of changes in the previous assessment of
(joint) control. Further information is provided in note 2.
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
109 Group Financial StatementS
8
New financial reporting rules
(a) Financial reporting rules applied for the first time in the financial year 2014
The following Standards, Revised Standards, Amendments and Interpretations were applied for the first time in
the financial year 2014:
Standard / Interpretation
Date of
issue by IASB
Date of
mandatory
application
IASB
Date of
mandatory
application
EU
Impact
on BMW Group
IFRS 10
Consolidated Financial Statements
12. 5. 2011
1. 1. 2013
1. 1. 2014
Significant in principle
IFRS 11
Joint Arrangements
12. 5. 2011
1. 1. 2013
1. 1. 2014
Significant in principle
IFRS 12
Disclosure of Interest in Other Entities
12. 5. 2011
1. 1. 2013
1. 1. 2014
Significant in principle
Changes in Transitional Regulations
28. 6. 2012
1. 1. 2013
1. 1. 2014
Significant in principle
(IFRS 10, IFRS 11 and IFRS 12)
Investment Entities (Amendments to
31. 10. 2012
1. 1. 2014
1. 1. 2014
Insignificant
IFRS 10, IFRS 12 and IAS 27)
IAS 27
IAS 28
Separate Financial Statements
12. 5. 2011
1. 1. 2013
1. 1. 2014
Investments in Associates and
12. 5. 2011
1. 1. 2013
1. 1. 2014
None
None
Joint Ventures
IAS 32
Presentation – Offsetting of Financial Assets
16. 12. 2011
1. 1. 2014
1. 1. 2014
Insignificant
and Financial Liabilities
IAS 39
Novation of Derivatives and Continuation
27. 6. 2013
1. 1. 2014
1. 1. 2014
Insignificant
of Hedge Accounting
(Amendments to IAS 39)
Information regarding the introduction and impact of the consolidationrelated Standards IFRS 10, IFRS 11 and
IFRS 12 is provided note 9.
(b) Financial reporting pronouncements issued by the IASB, but not yet applied
Standard / Interpretation
Date of
issue by IASB
Date of
mandatory
application
IASB
Date of
mandatory
application
EU
Expected impact
on BMW Group
IFRS 9
Financial Instruments
12. 11. 2009
/
1. 1. 2018
No
Significant in principle
28. 10. 2010
/
16. 12. 2011
/
19. 11. 2013
/
24. 7. 2014
IFRS 10 /
Sale or Contribution of Assets between an
11. 9. 2014
1. 1. 2016
IAS 28
Investor and an Associate or Joint Venture
(Amendments to IFRS 10 and IAS 28)
IFRS 10 /
IFRS 12 /
IAS 28
Investment Entities: Applying the
18. 12. 2014
1. 1. 2016
Consolidation Exception (Amendments to
IFRS 10, IFRS 12 and IAS 28)
IFRS 11
Acquisition of an Interest in a Joint Operation
6. 5. 2014
1. 1. 2016
(Amendments to IFRS 11)
IFRS 14
Regulatory Deferral Accounts
30. 1. 2014
1. 1. 2016
IFRS 15
Revenue from Contracts with Customers
28. 5. 2014
1. 1. 2017
No
No
No
No
No
Insignificant
Insignificant
Insignificant
Insignificant
Significant in principle
110
Standard / Interpretation
Date of
issue by IASB
Date of
mandatory
application
IASB
Date of
mandatory
application
EU
Expected impact
on BMW Group
IAS 1
Presentation of Financial Statements
18. 12. 2014
1. 1. 2016
No
Significant in principle
(Initiative to Improve Disclosure Require-
ments – Amendments to IAS 1)
IAS 16 /
IAS 38
IAS 16 /
IAS 41
Clarification of Acceptable Methods of
12. 5. 2014
1. 1. 2016
No
Insignificant
Depreciation and Amortisation
(Amendments to IAS 16 and IAS 38)
Agriculture: Bearer Plants
(Amendments to IAS 16 and IAS 41)
30. 6. 2014
1. 1. 2016
No
None
IAS 19
Employment Benefits:
21. 11. 2013
1. 7. 2014
1. 2. 20151
Insignificant
Employee Contributions (Amendments to
IAS 19)
IAS 27
Equity Method in Separate Financial
12. 8. 2014
1. 1. 2016
No
None
Statements (Amendments to IAS 27)
IFRIC 21
Levies
Annual Improvements to IFRS 2010 – 2012
Annual Improvements to IFRS 2011 – 2013
20. 5. 2013
12. 12. 2013
12. 12. 2013
1. 1. 2014
1. 7. 2014
1. 7. 2014
17. 6. 20142
1. 2. 20151
1. 1. 2015
Insignificant
Insignificant
Insignificant
Annual Improvements to IFRS 2012 – 2014
25. 9. 2014
1. 1. 2016
No
Insignificant
1 Mandatory application in annual periods beginning on or after 1 February 2015.
2 Mandatory application in annual periods beginning on or after 17 June 2014.
In November 2009 the IASB issued IFRS 9 (Financial
Instruments) as part of a project to revise the accounting
for financial instruments. This Standard marks the
first of three phases of the IASB project to replace the
existing IAS 39 (Financial Instruments: Recognition and
Measurement). The first phase deals initially only with
financial assets. IFRS 9 amends the recognition and
measurement requirements for financial assets, includ
ing various hybrid contracts.
Financial assets are measured at either amortised cost
or fair value. IFRS 9 harmonises the various rules con
tained in IAS 39 and reduces the number of valuation
categories for financial instruments on the assets side
of the balance sheet.
The new categorisation is based partly on the entity’s
business model and partly on the contractual cash flow
characteristics.
In October 2010, additional rules for financial liabilities
were added to IFRS 9. The requirements for financial
liabilities contained in IAS 39 remain unchanged with
the exception of new requirements relating to the
measurement of an entity’s own credit risk at fair value.
A package of amendments to IFRS 9 was announced
on 19 November 2013. On the one hand, the amend
ments overhaul the requirements for hedge accounting
by introducing a new hedge accounting model. They
also enable entities to change the accounting for lia
bilities they have elected to measure at fair value, before
applying any other requirement in IFRS 9, such that fair
value changes due to changes in “own credit risk” would
not require to be recognised in profit or loss. The man
datory effective date of 1 January 2015 was removed and
a new application date of 1 January 2018 set. The impact
of adoption of the Standard on the Group Financial
Statements is currently being assessed.
In May 2014 the IASB issued IFRS 15 (Revenue from
Contracts with Customers) together with the Financial
Accounting Standards Board. The objective of the new
Standard is to assimilate all the various existing require
ments and Interpretations relating to revenue recogni
tion (IAS 11 Construction Contracts, IAS 18 Revenue,
IFRIC 13 Customer Loyalty Programmes, IFRIC 15 Agree
ments for the Construction of Real Estate, IFRIC 18
Transfers of Assets from Customers, SIC31 Revenue –
Barter Transactions involving Advertising Services) in a
single Standard. The new Standard also stipulates uni
form revenue recognition principles for all sectors and
all categories.
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
111 Group Financial StatementS
The new Standard is based on a fivestep model, which
sets out the rules for revenue from contracts with cus
tomers, with the exception – among other things – of
lease arrangements, insurance contracts, financial in
struments and specified contractual rights and obliga
tions relating to nonmonetary transactions between
entities within the same sector. Revenue can be recog
nised either over time or at a specific point in time. The
fivestep model describes the five steps necessary to
recognise revenue on the basis of the transfer of control:
1. Identify the contract with the customer
2. Identify the performance obligations in the contract
3. Determine the transaction price
4. Allocate the transaction price to separate performance
obligations
5. Recognise revenue when a performance obligation is
satisfied.
In the case of multicomponent transactions or trans
actions with variable consideration, it is possible that
revenue may have to be recognised earlier or later un
der IFRS 15 compared with the previous Standard.
A major difference to the previous Standard is the in
creased scope of discretion for estimates and the intro
duction of thresholds that could influence the amount
and timing of revenue recognition.
The Standard is mandatory for the first time for annual
periods beginning on or after 1 January 2017. Early
adoption is permitted under IFRS. The impact of adoption
of the new requirements on the Group Financial State
ments is currently being assessed.
In December 2014, the IASB issued Amendments to
IAS 1 as part of its disclosure initiative. The amend
ments relate primarily to clarifications relating to the
presentation of financial reports.
Firstly, disclosures are only required to be made in the
notes if their inclusion is material for users of the
finan cial statements. This also applies when an IFRS
Standard explicitly specifies a minimum list of disclo
sures. Secondly, items to be presented in the balance
sheet, income statement and comprehensive income
can be aggregated or disaggregated by using subtotals.
Thirdly, it clarifies that an entity’s share of other com
prehensive income of equityaccounted entities is re
quired to be analysed – within the Statement of Com
prehensive Income – to show “components, which
will be subsequently reclassified to profit and loss” and
“components, which will be not subsequently reclassi
fied to profit and loss”. Fourthly, it is stressed that there
is no standard template for the notes and that the em
phasis should be on structuring the notes based on the
relevance for the specific reporting entity.
The Standard is mandatory for the first time for annual
periods beginning on or after 1 January 2016. Early
adoption is permitted. The potential impact of adoption
of the new requirements on the Group Financial State
ments is currently being assessed.
9
Adjustments in accordance with IAS 8
Adjustments as a result of consolidation-related Standards
In May 2011, the IASB issued three new Standards –
IFRS 10 (Consolidated Financial Statements), IFRS 11
(Joint Arrangements), IFRS 12 (Disclosure of Interests
in Other Entities) – as well as amendments to IAS 27
(Separate Financial Statements) and to IAS 28 (Invest
ments in Associates and Joint Ventures), all relating
to accounting for business combinations. The three new
Standards, which were endorsed by the EU in Decem
ber 2012, are mandatory for the first time for annual
periods beginning on or after 1 January 2014 and are re
quired to be applied retrospectively.
IFRS 10 replaces the consolidation guidelines contained
in IAS 27 and SIC12 (Consolidation – Special Purpose
Entities). The requirements for separate financial state
ments remain unchanged in the revised version of
IAS 27.
IFRS 10 introduces a uniform consolidation model which
establishes control as the basis for consolidation – con
trol of a subsidiary entity by a parent entity – and which
can be applied to all entities. The control concept must
therefore be applied both to parentsubsidiary relation
ships based on voting rights as well as to parentsub
sidiary relationships arising from other contractual ar
rangements. Under the control concept established in
IFRS 10, an investor controls another entity when it is
exposed to or has rights to variable returns from its in
volvement with the investee and has the ability to affect
those returns through its power over the investee.
IFRS 11 supersedes IAS 31 (Interests in Joint Ventures)
and SIC13 (Jointly Controlled Entities – NonMonetary
Contributions by Venturers). This Standard sets out the
requirements for accounting for joint arrangements and
places the emphasis on the rights and obligations that
arise from such arrangements. IFRS 11 distinguishes
112
between two types of joint arrangements, namely joint
operations and joint ventures, and therefore results in
a change in the classification of joint arrangements. A
joint operation is a joint arrangement whereby the par
ties that have joint control of the arrangement have
rights to the assets, and obligations for the liabilities, re
lating to the arrangement. A joint venture is a joint ar
rangement whereby the parties that have joint control
of the arrangement have rights to the net assets result
ing from the arrangement. IFRS 11 requires joint opera
tors to account for their share of assets and liabilities in
the joint operation (and their share of income and ex
penses). Joint venturers are required to account for their
investment using the equity method. The withdrawal
of IAS 31 means the removal of the option to account
for joint ventures using either the proportionate consoli
dation or the equity method. The equity method must
be applied in accordance with amended IAS 28.
IFRS 12 sets out the requirements for disclosures relating
to all types of interests in other entities, including joint
arrangements, associated companies, structured entities
and unconsolidated entities.
Application of IFRS 10 has no impact on the scope of
entities included in the Group Financial Statements.
The removal of the option for accounting for joint ven
tures (as stipulated by IFRS 11) does not have any im
pact since the BMW Group already accounted for joint
ventures using the equity method. By contrast, the
classification of joint arrangements in accordance with
IFRS 11 has changed. The investments in SGL Automo
tive Carbon Fibers GmbH & Co. KG, Munich, SGL
Automotive Carbon Fibers Verwaltungs GmbH, Munich,
and SGL Automotive Carbon Fibers LLC, Dover, DE –
previously accounted for at equity – have been classi
fied with effect from the first quarter of the financial
year 2014 as joint operations and consolidated propor
tionately on the basis of the BMW Group’s 49 % share
holding. This change in classification reflects the fact
that the arrangement is primarily designed to provide
the joint operators with an output (i. e. production) as
well as the fact that settlement of the liabilities relating
to the activities conducted through the arrangement
depends on both parties on a continuous basis. Appli
cation of IFRS 12 impacts the scope of disclosures
required to be made in the notes to the BMW Group
Financial Statements, in particular the requirement to
disclose more detailed financial information with re
spect to significant joint ventures. Further details can be
found in note 26.
The new requirements pertaining to IFRS 10, IFRS 11
and IFRS 12 are required to be applied retrospectively.
In accordance with IAS 8.14, the resulting adjustments
relating to the financial year 2013 are presented in the
tables at the end of this section. The transition require
ments contained in these new Standards were com
plied with and, accordingly, the impact on the Group’s
Balance Sheet, Income Statement and Cash Flow State
ment is not presented separately for the financial year
2014.
Restatement of income taxes in conjunction with leased
products in the USA
In previous years, there had been a misallocation between
current and deferred income taxes for leased products
in the USA. The figures have been restated in accordance
with IAS 8.41 et seq., involving a reclassification from
deferred tax liabilities to current tax payables. The re
lated interest and penalty charges up to 31 December
2012 were recorded directly in equity (in revenue re
serves). Interest relating to the financial year 2013 is
reported as an expense for that period (in financial
result).
Prior year figures in the Balance Sheet, Income State
ment, Statement of Comprehensive Income, Statement
of Changes in Equity, Cash Flow Statement and Notes
to the Group Financial Statements have been restated
retrospectively. The restatements also impacted the
figures reported for the Financial Services and Other
Entities segments. The Financial Service’s segment re
sult for 2013 was reduced by € 20 million and amounted
to € 1,619 million after restatement, while segment as
sets were reduced by € 19 million to € 8,388 million. Seg
ment assets reported for the Other Entities segment
amounted to € 55,300 million at the end of the financial
year 2013, correcting the previously reported amount
by € 1,050 million. The tables at the end of this section
show the impact for the Group.
Change in presentation of term deposits within the Cash
Flow Statement
The BMW Group uses a broad range of instruments on
international capital markets to manage its liquidity.
Due to the situation on the financial markets, the BMW
Group is increasingly investing in term deposits with
longer terms (i. e. money deposits that mature after more
than three months). Term deposits were previously re
ported in the Cash Flow Statement on the line “Change
in other operating assets and liabilities” within operating
cash flows. Since the payments related to these money
deposits qualify as instruments pursuant to IAS 7.16 c – d,
they are required to be presented as cash flows from
investing activities. In accordance with IAS 8.41 et seq.,
these amounts have been reclassified to the line items
“Investments in marketable securities and term deposits”
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
113 Group Financial StatementS
and “Proceeds from the sale of marketable securities and
from matured term deposits”. As a result of the reclassi
fication, the net cash inflow from operating activities
in the previous year increased by € 500 million, whereas
the net cash outflow for investing activities was in
creased by the same amount.
Changes in Group Balance Sheet presentation
1 January 2013
in € million
Total assets
Total non-current assets
thereof property, plant and equipment
thereof investments accounted for using the equity method
thereof non-current other assets
Total current assets
thereof inventories
thereof cash and cash equivalents
Total equity
thereof equity attributable to shareholders of BMW AG
thereof revenue reserves
Total non-current provisions and liabilities
thereof other provisions
thereof deferred tax
Total current provisions and liabilities
thereof current tax
thereof trade payables
31 December 2013
in € million
Total assets
Total non-current assets
thereof property, plant and equipment
thereof investments accounted for using the equity method
thereof non-current other assets
Total current assets
thereof inventories
thereof current other assets
thereof cash and cash equivalents
Total equity
thereof equity attributable to shareholders of BMW AG
thereof revenue reserves
thereof accumulated other equity
Total non-current provisions and liabilities
thereof other provisions
thereof deferred tax
Total current provisions and liabilities
thereof other provisions
thereof current tax
thereof trade payables
thereof other liabilities
As originally
reported
Adjustments in
accordance with
IAS 8.14
Restatements in
accordance with
IAS 8.41 et seq.
As reported
131,835
81,305
13,341
514
803
50,530
9,725
8,370
30,606
30,499
28,544
52,834
3,441
3,081
48,395
1,482
6,433
4
– 7
35
– 9
– 33
11
7
4
–
–
–
–
–
–
4
–
4
–
–
–
–
–
–
–
–
– 34
– 34
– 34
– 947
40
– 987
981
981
–
131,839
81,298
13,376
505
770
50,541
9,732
8,374
30,572
30,465
28,510
51,887
3,481
2,094
49,380
2,463
6,437
As originally
reported
Adjustments in
accordance with
IAS 8.14
Restatements in
accordance with
IAS 8.41 et seq.
As reported
138,368
86,194
15,113
652
954
52,174
9,585
4,265
7,664
35,643
35,455
33,167
– 358
52,682
3,772
3,554
50,043
3,411
1,237
7,475
7,066
9
– 1
55
– 14
– 42
10
10
– 7
7
–
–
–
–
–
–
–
9
1
–
10
– 2
–
–
–
–
–
–
–
–
–
– 43
– 43
– 45
2
– 1,039
56
– 1,095
1,082
–
1,082
–
–
138,377
86,193
15,168
638
912
52,184
9,595
4,258
7,671
35,600
35,412
33,122
– 356
51,643
3,828
2,459
51,134
3,412
2,319
7,485
7,064
114
Changes in Group Income Statement presentation
2013
in € million
Revenues
Cost of sales
Gross profit
Selling and administrative expenses
Other operating income
Other operating expenses
Profit / loss before financial result
Result from equity accounted investments
Interest and similar income
Interest and similar expenses
Financial result
Profit / loss before tax
Income taxes
Net profit
Attributable to shareholders of BMW AG
Basic earnings per share of common stock in €
Basic earnings per share of preferred stock in €
Diluted earnings per share of common stock in €
Diluted earnings per share of preferred stock in €
As originally
reported
Adjustments in
accordance with
IAS 8.14
Restatements in
accordance with
IAS 8.41 et seq.
As reported
76,058
– 60,784
15,274
– 7,255
841
– 874
7,986
398
184
– 449
– 73
7,913
– 2,573
5,340
5,314
8.10
8.12
8.10
8.12
1
– 7
– 6
– 2
1
– 1
– 8
9
– 1
–
8
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
– 20
– 20
– 20
9
– 11
– 11
– 0.02
– 0.02
– 0.02
– 0.02
76,059
– 60,791
15,268
– 7,257
842
– 875
7,978
407
183
– 469
– 85
7,893
– 2,564
5,329
5,303
8.08
8.10
8.08
8.10
Changes in presentation of the Statement of Comprehensive Income
2013
in € million
Net profit
Currency translation foreign operations
Items expected to be reclassified to the income statement
in the future
Other comprehensive income for the period after tax
Total comprehensive income
Total comprehensive income attributable to shareholders of BMW AG
As originally
reported
Restatements in
accordance with
IAS 8.41 et seq.
As reported
5,340
– 635
316
1,252
6,592
6,566
– 11
2
2
2
– 9
– 9
5,329
– 633
318
1,254
6,583
6,557
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
115 Group Financial StatementS
Changes in Group Cash Flow Statement presentation
2013
in € million
As originally
reported
Adjustments in
accordance with
IAS 8.14
Restatements in
accordance
with IAS 8.41 et seq.
As reported
USA
Term
deposits
Cash inflow from operating activities
Net profit
Current tax
Other interest and similar income / expenses
Depreciation and amortisation of other tangible, intangible
and investment assets
Change in provisions
Change in deferred taxes
Other non-cash income and expense items
Gain / loss on disposal of tangible and intangible assets
and marketable securities
Result from equity accounted investments
Changes in working capital
Change in inventories
Change in trade payables
Change in other operating assets and liabilities
Interest received
Cash outflow from investing activities
Investment in intangible assets and property, plant and equipment
Expenditure for investments
Investments in marketable securities and time deposits
Change in cash and cash equivalents
Cash and cash equivalents as at 1 January
Cash and cash equivalents as at 31 December
3,614
5,340
2,435
126
3,830
479
138
– 551
– 22
– 398
983
– 192
1,153
453
137
– 6,981
– 6,669
– 90
– 3,631
– 706
8,370
7,664
13
–
–
1
2
1
–
– 1
1
– 9
3
– 3
6
16
– 1
– 10
– 24
14
–
3
4
7
–
– 11
146
20
–
–
– 155
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
500
–
–
–
–
–
–
–
–
–
–
–
–
500
–
– 500
–
–
– 500
–
–
–
4,127
5,329
2,581
147
3,832
480
– 17
– 552
– 21
– 407
986
– 195
1,159
969
136
– 7,491
– 6,693
– 76
– 4,131
– 703
8,374
7,671
116
BMW Group
Notes to the Group Financial Statements
Notes to the Income Statement
10
Revenues
Revenues by activity comprise the following:
in € million
Sales of products and related goods
Income from lease instalments
Sale of products previously leased to customers
Interest income on loan financing
Other income
Revenues
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
2014
2013*
60,280
56,812
7,748
6,716
2,881
2,776
7,296
6,412
2,868
2,671
80,401
76,059
An analysis of revenues by business segment and geographical region is shown in the segment information in
note 50.
11
Cost of sales
Cost of sales comprises:
in € million
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
Manufacturing costs
Research and development expenses
Warranty expenditure
Cost of sales directly attributable to financial services
Interest expense relating to financial services business
Expense for risk provisions and write-downs for financial services business
Other cost of sales
Cost of sales
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
2014
2013*
38,253
4,135
1,451
14,716
1,407
362
3,072
63,396
36,578
4,118
1,243
14,044
1,483
435
2,890
60,791
Group cost of sales include € 16,485 million (2013:
€ 15,962 million) relating to Financial Services business.
on assets and reduced consumptionbased taxes amount
ing to € 54 million (2013: € 45 million).
As in the previous year, manufacturing costs do not con
tain any impairment losses on intangible assets and
property, plant and equipment. Cost of sales is reduced
by publicsector subsidies in the form of reduced taxes
Total research and development expenditure comprises
research costs, noncapitalised development costs and
capitalised development costs (excluding scheduled
amortisation). Total research and development expendi
ture was as follows:
in € million
Research and development expenses
Amortisation
New expenditure for capitalised development costs
Total research and development expenditure
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
2014
2013*
4,135
– 1,068
1,499
4,566
4,118
– 1,069
1,744
4,793
12
Selling and administrative expenses
Selling expenses amounted to € 5,344 million (2013*:
€ 4,886 million) and comprise mainly marketing, adver
tising and sales personnel costs.
Administrative expenses amounted to € 2,548 million
(2013*: € 2,371 million) and comprise expenses for ad
ministration not attributable to development, produc
tion or sales functions.
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
117 Group Financial StatementS
13
Other operating income and expenses
in € million
Exchange gains
Income from the reversal of provisions
Income from the reversal of impairment losses and write-downs
Gains on the disposal of assets
Sundry operating income
Other operating income
Exchange losses
Expense for additions to provisions
Expense for impairment losses and write-downs
Losses on the disposal of assets
Sundry operating expenses
Other operating expenses
2014
2013*
311
184
30
101
251
877
– 334
– 225
– 86
– 25
– 202
– 872
346
183
13
53
247
842
– 324
– 265
– 37
– 27
– 222
– 875
Other operating income and expenses
5
– 33
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
14
Result from equity accounted investments
The profit from equity accounted investments amounted
to € 655 million (2013*: € 407 million) and includes pri
marily the Group’s share of the result of the joint
venture, BMW Brilliance Automotive Ltd., Shenyang.
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
15
Net interest result
in € million
Other interest and similar income
thereof from subsidiaries: € 18 million (2013*: € 17 million)
Interest and similar income
Net interest expense on the net defined benefit liability for pension plans
Expense relating to interest impact on other long-term provisions
Write-downs on current marketable securities
Other interest and similar expenses
thereof to subsidiaries: € – 6 million (2013: € – 6 million)
Interest and similar expenses
Net interest result
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
2014
2013*
200
200
– 88
– 105
–
– 326
183
183
– 127
– 5
– 7
– 330
– 519
– 469
– 319
– 286
118
16 Other financial result
in € million
Income from investments in subsidiaries and participations
thereof from subsidiaries: € 2 million (2013: € 8 million)
Impairment losses on investments in subsidiaries and participations
Expenses from investments in subsidiaries
Result on investments
Losses and gains relating to financial instruments
Sundry other financial result
2014
2013
3
– 153
–
– 150
– 597
– 597
12
– 91
– 2
– 81
– 125
– 125
Other financial result
– 747
– 206
The result from investments in 2014 was negatively
impacted by an impairment loss on other investments
amounting to € 152 million (2013: € 73 million).
The deterioration in other financial result was primarily
due to the negative impact of currency and commodity
derivatives.
17
Income taxes
Taxes on income comprise the following:
in € million
Current tax expense
Deferred tax expense / income
Income taxes
2014
2,774
116
2,890
2013*
2,581
– 17
2,564
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
Current tax expense includes € 275 million (2013: € 222 mil
lion) relating to prior periods.
A deferred tax expense of € 83 million (2013*: income of
€ 42 million) is attributable to new temporary differences
and the reversal of temporary differences brought for
ward.
The tax expense was reduced by € 27 million (2013: € 5 mil
lion) as a result of utilising tax losses / tax credits brought
forward, for which deferred assets had not previously
been recognised.
The change in the valuation allowance on deferred tax
assets relating to tax losses available for carryforward
and temporary differences resulted in a tax expense of
€ 49 million (2013: € 7 million).
Deferred taxes are computed using enacted or planned
tax rates which are expected to apply in the relevant
national jurisdictions when the amounts are recovered.
A uniform corporation tax rate of 15.0 % plus solidarity
surcharge of 5.5 % applies in Germany, giving a tax rate
of 15.8 %, unchanged from the previous year. After taking
account of an average municipal trade tax multiplier
rate (Hebesatz) of 425.0 % (2013: 420.0 %), the municipal
trade tax rate for German entities is 14.9 % (2013: 14.7 %).
The overall income tax rate in Germany is therefore
30.7 % (2013: 30.5 %). Deferred taxes for nonGerman
entities are calculated on the basis of the relevant country
specific tax rates and remained in a range of between
12.5 % and 46.9 % once again in the financial year 2014.
Changes in tax rates resulted in a deferred tax expense
of € 22 million (2013: € 2 million).
The actual tax expense for the financial year 2014 of
€ 2,890 million (2013*: € 2,564 million) is € 217 million
(2013*: € 157 million) higher than the expected tax ex
pense of € 2,673 million (2013*: € 2,407 million) which
would theoretically arise if the tax rate of 30.7 % (2013:
30.5 %), applicable for German companies, was applied
across the Group.
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
119 Group Financial StatementS
The difference between the expected and actual tax expense is explained in the following reconciliation:
in € million
Profit before tax
Tax rate applicable in Germany
Expected tax expense
Variances due to different tax rates
Tax increases (+) / tax reductions (–) as a result of non-deductible expenses and tax-exempt income
2014
2013*
8,707
30.7 %
2,673
– 55
150
275
– 153
2,890
33.2 %
7,893
30.5 %
2,407
– 134
164
222
– 95
2,564
32.5 %
Tax expense (+) / benefits (–) for prior years
Other variances
Actual tax expense
Effective tax rate
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
Tax increases as a result of nondeductible expenses
and tax reductions due to taxexempt income remained
more or less at a similar level to the previous year. As
in the previous year, tax increases as a result of nontax
deductible expenses were attributable primarily to the
impact of nonrecoverable withholding taxes and trans
fer price issues.
in € million
Intangible assets
Property, plant and equipment
Leased products
Investments
Other assets
Tax loss carryforwards
Provisions
Liabilities
Eliminations
Valuation allowance
Netting
Deferred taxes
Net
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
Deferred tax assets on tax loss carryforwards and capi
tal losses before allowances totalled € 566 million (2013*:
€ 512 million). After valuation allowances of € 496 mil
lion (2013: € 409 million), their carrying amount stood at
€ 70 million (2013*: € 103 million).
The line “Other variances” comprises primarily recon
ciling items relating to the Group’s share of results of
equity accounted investments.
The allocation of deferred tax assets and liabilities to
balance sheet line items at 31 December is shown in the
following table:
Deferred tax assets
Deferred tax liabilities
2014
11
50
393
5
1,289
566
4,175
2,827
2,945
2013*
2014
2013*
9
26
436
6
1,078
512
3,220
2,955
2,570
1,706
400
5,486
12
2,687
–
95
602
690
1,571
264
4,498
5
3,747
–
47
449
661
12,261
10,812
11,678
11,242
– 496
– 9,704
2,061
87
– 409
– 8,783
1,620
–
– 9,704
1,974
–
– 8,783
2,459
839
(2013*: € 402 million). This includes an amount of € 228 mil
lion (2013: € 42 million), for which a valuation allowance
of € 74 million (2013: € 14 million) was recognised on
the related deferred tax asset. For entities with tax losses
available for carryforward, a net surplus of deferred
tax assets over deferred tax liabilities is reported at
Tax losses available for carryforward – for the most part
usable without restriction – amounted to € 469 million
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
120
31 December 2014 amounting to € 140 million (2013:
€ 192 million). Deferred tax assets are recognised on
the basis of management’s assessment of whether it is
probable that the relevant entities will generate suffi
cient future taxable profits, against which deductible
temporary differences can be offset.
Capital losses available for carryforward in the United
Kingdom which do not relate to ongoing operations in
creased to € 2,112 million due to exchange rate factors
(2013: € 1,975 million). As in previous years, deferred
tax assets recognised on these tax losses – amounting to
€ 422 million at the end of the reporting period (2013:
€ 395 million) – were fully written down since they can
only be utilised against future capital gains.
in € million
Deferred taxes at 1 January (assets (–) / liabilities (+))
Deferred tax expense (+) / income (–) recognised through income statement
Change in deferred taxes recognised directly in equity
Exchange rate impact and other changes
Deferred taxes at 31 December (assets (–) / liabilities (+))
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
Changes in deferred taxes include changes relating to
items recognised either through the income statement
or directly in equity as well as the impact of exchange
rate fluctuations, firsttime consolidations and decon
solidations. Deferred taxes recognised directly in equity
increased in total by € 1,429 million (2013: decrease of
€ 770 million). Of this amount, € 759 million (2013:
€ 421 million) related to the fair value measurement of
derivative financial instruments and marketable securi
ties (recognised directly in equity), shown in the sum
mary above in the line items “Other assets” and “Liabili
ties”. A further € 670 million (2013: decrease of € 349 mil
lion) related to the remeasurements of the net defined
benefit liability for pension plans, shown in the sum
mary above in the line item “Provisions”.
Netting relates to the offset of deferred tax assets and
liabilities within individual separate entities or tax
groups to the extent that they relate to the same tax
authorities.
Deferred taxes recognised directly in equity amounted
to € 1,889 million (2013: € 451 million), an increase of
€ 1,438 million (2013: decrease of € 771 million) com
pared to the previous year. The change includes an
increase in deferred taxes recognised in conjunction
with currency translation amounting to € 9 million
(2013: reduction of € 1 million).
Changes in deferred tax assets and liabilities during the
reporting period can be summarised as follows:
2014
2013*
839
116
– 1,429
387
– 87
128
– 17
770
– 42
839
Deferred taxes are not recognised on retained profits
of € 30.7 billion (2013: € 28.0 billion) of foreign subsidi
aries, as it is intended to invest these profits to maintain
and expand the business volume of the relevant com
panies. A computation was not made of the potential im
pact of income taxes on the grounds of disproportionate
expense.
The tax returns of BMW Group entities are checked reg
ularly by German and foreign tax authorities. Taking ac
count of a variety of factors – including existing interpre
tations, commentaries and legal decisions taken relating
to the various tax jurisdictions and the BMW Group’s
past experience – adequate provision has, as far as identi
fiable, been made for potential future tax obligations.
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
121 Group Financial StatementS
18
Earnings per share
2014
2013*
Net profit for the year after minority interest
€ million
5,798.1
5,302.8
Profit attributable to common stock
Profit attributable to preferred stock
Average number of common stock shares in circulation
Average number of preferred stock shares in circulation
Basic earnings per share of common stock
Basic earnings per share of preferred stock
Dividend per share of common stock
Dividend per share of preferred stock
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
€ million
€ million
5,317.7
480.4
4,865.3
437.5
number
601,995,196
601,995,196
number
54,259,767
53,993,635
€
€
€
€
8.83
8.85
2.90
2.92
8.08
8.10
2.60
2.62
Basic earnings per share of preferred stock are com
puted on the basis of the number of preferred stock
shares entitled to receive a dividend in each of the rele
vant financial years. As in the previous year, diluted
earnings per share correspond to basic earnings per
share.
19
Other disclosures relating to the income statement
Personnel expenses
The income statement includes personnel expenses as follows:
in € million
Wages and salaries
Social security, retirement and welfare costs
thereof pension costs: € 991 million (2013: € 958 million)
Personnel expenses
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
2014
8,094
1,670
2013*
7,401
1,591
9,764
8,992
Personnel expenses include € 42 million (2013: € 48 mil
lion) of expenditure incurred to adjust the workforce size.
The average number of employees during the year
was:
Employees
thereof 186 (2013: 96) at proportionately-consolidated entities
Apprentices and students gaining work experience
thereof 2 (2013: 3) at proportionately-consolidated entities
Average number of employees
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
2014
2013*
105,743
100,057
7,560
7,165
113,303
107,222
The number of employees at the end of the reporting period is disclosed in the Combined Management Report.
122
Fee expense
The fee expense pursuant to § 314 (1) no. 9 HGB recog
nised in the financial year 2014 for the Group auditors
amounted to € 23 million (2013: € 26 million) and consists
of the following:
in € million
2014
2013
Audit of financial statements
thereof KPMG AG Wirtschaftsprüfungsgesellschaft
Other attestation services
thereof KPMG AG Wirtschaftsprüfungsgesellschaft
Tax advisory services
thereof KPMG AG Wirtschaftsprüfungsgesellschaft
Other services
thereof KPMG AG Wirtschaftsprüfungsgesellschaft
Fee expense
thereof KPMG AG Wirtschaftsprüfungsgesellschaft
15
3
2
1
4
1
2
1
23
6
14
3
3
2
7
3
2
1
26
9
The total fee comprises expenses recorded by BMW AG,
Munich, and all consolidated subsidiaries.
The fee expense shown for KPMG AG Wirtschaftsprü
fungsgesellschaft, Berlin, relates only to services pro
vided on behalf of BMW AG, Munich, and its German
subsidiaries.
Government grants and government assistance
Income from assetrelated and performancerelated
grants, amounting to € 30 million (2013*: € 25 million)
and € 73 million (2013: € 73 million) respectively, were
recognised in the income statement in 2014.
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
20 Share-based remuneration
The BMW Group operates three sharebased remunera
tion schemes, namely the Employee Share Programme
(for entitled employees), sharebased commitments to
members of the Board of Management and sharebased
commitments to senior heads of department.
In the case of the Employee Share Programme, nonvot
ing shares of preferred stock in BMW AG were granted
to qualifying employees during the financial year 2014
at favourable conditions (see note 35 for the number
and price of issued shares). The holding period for these
shares is up to 31 December 2017. The BMW Group re
corded a personnel expense of € 6 million (2013: € 5 mil
lion) for the Employee Share Programme in 2014, cor
responding to the difference between the market price
and the reduced price of the shares of preferred stock
purchased by employees. The Board of Management re
serves the right to decide anew each year with respect
to an Employee Share Programme.
For financial years beginning after 1 January 2011,
BMW AG has added a sharebased remuneration com
ponent to the existing compensation system for Board
of Management members.
Each Board of Management member is required to
invest 20 % of his / her total bonus (after tax) in shares
of BMW AG common stock, which are recorded in a
separate custodian account for each member concerned
(annual tranche). Each annual tranche is subject to a
holding period of four years (vesting period). Once the
holding period is fulfilled, BMW AG grants one addi
tional share of BMW AG common stock for each three
held or, at its discretion, pays the equivalent amount in
cash (sharebased remuneration component) provided
that the term of office has not been terminated before
the end of the agreed contract period (except in the case
of death or invalidity).
With effect from the financial year 2012, qualifying de
partment heads are also entitled to opt for a sharebased
remuneration component, which, in most respects, is
comparable to the sharebased remuneration arrange
ments for Board of Management members.
The sharebased remuneration component is measured
at its fair value at each balance sheet date between grant
and settlement date, and on the settlement date itself.
The appropriate amounts are recognised as personnel
expense on a straightline basis over the vesting period
and reported in the balance sheet as a provision.
The cashsettlement obligation for the sharebased re
muneration component is measured at its fair value at
the balance sheet date (based on the closing price of
BMW AG common stock in Xetra trading at 31 Decem
ber 2014).
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
123 Group Financial StatementS
BMW Group
Notes to the Group Financial Statements
Notes to the Statement of Comprehensive Income
The total carrying amount of the provision for the share
based remuneration component of eligible current and
former Board of Management members and depart
ment heads at 31 December 2014 was € 3,096,674 (2013:
€ 1,647,188).
The total expense recognised in 2014 for the sharebased
remuneration component of eligible current and former
Board of Management members and department heads
was € 1,449,486 (2013: € 989,912).
The fair value of the programmes for Board of Manage
ment members and department heads at the date of
grant of the sharebased remuneration components
was € 1,479,939 (2013: € 1,453,500), based on a total of
17,712 shares (2013: 19,196 shares) of BMW AG com
mon stock or a corresponding cashbased settlement
measured at the relevant market share price prevailing
on the grant date.
Further details on the remuneration of the Board of
Management are provided in the 2014 Compensation
Report, which is part of the Combined Management
Report.
21 Disclosures relating to total comprehensive income
Other comprehensive income for the period after tax comprises the following:
in € million
2014
2013*
Remeasurement of the net defined benefit liability for pension plans
Deferred taxes
Items not expected to be reclassified to the income statement in the future
Available-for-sale securities
thereof gains / losses arising in the period under report
thereof reclassifications to the income statement
Financial instruments used for hedging purposes
thereof gains / losses arising in the period under report
thereof reclassifications to the income statement
Other comprehensive income from equity accounted investments
Deferred taxes
Currency translation foreign operations
Items expected to be reclassified to the income statement in the future
Other comprehensive income for the period after tax
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
– 2,298
706
– 1,592
40
109
– 69
– 2,194
– 1,939
– 255
– 48
732
764
– 706
– 2,298
1,308
– 372
936
8
48
– 40
1,357
1,536
– 179
– 7
– 407
– 633
318
1,254
Deferred taxes on components of other comprehensive income are as follows:
in € million
2014
2013*
Before
tax
Deferred
taxes
After
tax
Before
tax
Deferred
taxes
After
tax
Remeasurement of the net defined benefit liability for pension plans
– 2,298
706
– 1,592
1,308
– 372
Available-for-sale securities
40
– 34
6
8
19
Financial instruments used for hedging purposes
– 2,194
719
– 1,475
1,357
– 425
Other comprehensive income from equity accounted investments
Currency translation foreign operations
Other comprehensive income
– 48
764
47
–
– 1
764
– 3,736
1,438
– 2,298
– 7
– 633
2,033
– 1
–
– 779
936
27
932
– 8
– 633
1,254
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
Other comprehensive income arising at the level of
equity accounted investments is reported in the
Statement of Changes in Equity within “Translation
differences” with a positive amount of € 140 million
(2013: negative amount of € 10 million) and within
“Derivative financial instruments” with a negative
amount of € 141 million (2013: positive amount of
€ 2 million).
124
BMW Group
Notes to the Group Financial Statements
Notes to the Balance Sheet
22 Analysis of changes in Group tangible, intangible and investment assets 2014
in € million
Development costs
Goodwill
Other intangible assets
Intangible assets
Acquisition and manufacturing cost
1. 1. 20141
Translation
differences
Additions
Reclassi-
fications
Disposals
31. 12.
2014
9,667
374
1,459
–
–
15
1,499
–
62
–
–
–
1,825
5
93
9,341
369
1,443
1. 1. 20141
Depreciation and amortisation
Trans-
lation
differ-
ences
Current
year
Changes
not effect-
ing net
income
Dis-
posals
31. 12.
2014
Carrying amount
31. 12.
2014
31. 12.
2
2013
11,500
15
1,561
–
1,923
11,153
5,315
10
1,246
–
1,917
4,654
6,499
6,179
Intangible assets
Land, titles to land, buildings, including buildings on
third party land
Plant and machinery
Other facilities, factory and office equipment
Advance payments made and construction in progress
Property, plant and equipment
8,812
28,843
2,355
2,972
42,982
207
607
65
37
916
407
2,436
207
1,489
4,539
Leased products
32,486
1,954
14,576
Investments accounted for using the equity method
Investments in non-consolidated subsidiaries
Participations
Non-current marketable securities
Other investments
638
240
575
–
815
–
2
–
–
2
600
41
66
–
107
428
2,023
32
– 2,483
–
–
–
–
–
–
–
1 Including first-time consolidations.
2 Prior year figures have been adjusted in accordance with IAS 8, see note 9.
3 Including assets under construction of € 1,679 million.
51
9,803
1,145
32,764
149
1
2,510
2,014
1,346
47,091
12,047
36,969
6,572
293
3,401
3,462
6,804
30,165
25,914
Leased products
150
57
–
–
57
1,088
226
641
–
867
Analysis of changes in Group tangible, intangible and investment assets 20131
Acquisition and manufacturing cost
in € million
1. 1. 20132
Adjust-
ment
3
Translation
differences
Additions
Reclassi-
fications
Disposals
31. 12.
2013
1. 1. 20132
Adjust-
3
ment
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
1,825
3,888
5,453
5,022
Development costs
–
92
5
761
364
682
369
Goodwill
788
Other intangible assets
38
4,178
1,129
23,834
145
–
1,897
–
1,312
29,909
–
16
–
–
16
–
62
397
–
459
Land, titles to land, buildings, including buildings on
4,890
third party land
6,771
Plant and machinery
536
Other facilities, factory and office equipment
2,971
Advance payments made and construction in progress
17,182
15,168
Property, plant and equipment
1,088
638
Investments accounted for using the equity method
166
Investments in non-consolidated subsidiaries
387
Participations
–
Non-current marketable securities
553
Other investments
Development costs
Goodwill
Other intangible assets
Intangible assets
Land, titles to land, buildings, including buildings on
third party land
Plant and machinery
Other facilities, factory and office equipment
Advance payments made and construction in progress
Property, plant and equipment
Leased products4
8,488
374
1,008
9,870
8,182
26,823
2,314
2,617
39,936
31,412
Investments accounted for using the equity method
514
Investments in non-consolidated subsidiaries
Participations
Non-current marketable securities
Other investments
205
571
–
776
–
–
–
–
–
–
–
–
–
– 46
–
–
–
–
–
–
–
– 6
– 6
– 125
– 212
– 55
– 37
– 429
1,744
–
473
2,217
489
2,210
178
1,617
4,494
– 734
13,192
–
– 1
–
–
– 1
361
66
6
–
72
–
–
–
–
226
982
15
– 1,223
–
–
–
–
–
–
–
1 Prior year figures have been adjusted in accordance with IAS 8, see note 9.
2 Including mergers.
3 Amended for the effect of refining the accounting policy for leased products as described in note 6 to the Group Financial Statements 2013.
4 This line includes the adjustments described in note 24 to the Group Financial Statements 2013.
5 Including assets under construction of € 2,570 million.
565
–
22
587
51
961
121
3
9,667
374
1,453
11,494
8,721
28,842
2,331
2,971
1,136
42,865
26,551
–
– 259
2,494
1,089
27,697
15,168
13,341
Property, plant and equipment
11,338
32,486
6,944
– 175
– 132
3,215
3,280
6,572
25,914
24,468
Leased products4
237
30
2
–
32
638
240
575
–
815
–
–
–
16
75
–
–
–
91
–
–
10
85
431
52
–
568
–
1
–
–
1
Trans-
lation
differ-
ences
–
–
– 11
– 11
– 53
– 166
– 40
–
1,068
–
178
282
2,461
181
–
2,924
–
1
152
–
153
1,069
–
178
1,247
251
2,084
159
–
4,645
5
665
3,849
22,071
1,809
–
27,729
–
76
188
–
264
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
57
–
57
–
–
–
–
–
–
–
–
–
–
–
– 57
–
– 57
4,141
5
516
3,667
21,099
1,785
–
–
58
170
–
228
Depreciation and amortisation
Current
year
Changes
not effect-
ing net
income
Dis-
posals
31. 12.
2013
Carrying amount
31. 12.
2013
31. 12.
2012
4,662
–
–
583
5,315
6,179
5,207
Intangible assets
565
4,645
5,022
4,347
Development costs
–
18
5
665
369
788
369
Goodwill
491
Other intangible assets
–
–
–
638
514
Investments accounted for using the equity method
34
946
109
–
3,831
22,071
1,795
–
–
–
–
–
–
–
74
188
–
262
Land, titles to land, buildings, including buildings on
4,502
third party land
5,705
Plant and machinery
530
Other facilities, factory and office equipment
2,604
Advance payments made and construction in progress
147
Investments in non-consolidated subsidiaries
401
Participations
–
Non-current marketable securities
548
Other investments
5,625
8,930
613
2,0143
164
244
–
408
4,890
6,771
536
2,9715
166
387
–
553
125 Group Financial StatementS
11,500
15
1,561
–
1,923
11,153
5,315
10
1,246
–
1,917
4,654
6,499
6,179
Intangible assets
1. 1. 20141
4,645
5
665
Depreciation and amortisation
Trans-
lation
differ-
ences
–
–
10
Current
year
Changes
not effect-
ing net
income
1,068
–
178
–
–
–
Dis-
posals
31. 12.
2014
Carrying amount
31. 12.
2014
31. 12.
2
2013
1,825
3,888
5,453
5,022
Development costs
–
92
5
761
364
682
369
Goodwill
788
Other intangible assets
Leased products
32,486
1,954
14,576
12,047
36,969
6,572
293
3,401
3,849
22,071
1,809
–
27,729
85
431
52
–
568
282
2,461
181
–
2,924
–
76
188
–
264
–
1
–
–
1
–
1
152
–
153
–
–
–
–
–
–
–
–
57
–
57
38
4,178
1,129
23,834
145
–
1,897
–
1,312
29,909
5,625
8,930
613
2,0143
4,890
Land, titles to land, buildings, including buildings on
third party land
6,771
Plant and machinery
536
Other facilities, factory and office equipment
2,971
Advance payments made and construction in progress
17,182
15,168
Property, plant and equipment
3,462
6,804
30,165
25,914
Leased products
–
16
–
–
16
–
62
397
–
459
1,088
638
Investments accounted for using the equity method
164
244
–
408
166
Investments in non-consolidated subsidiaries
387
Participations
–
Non-current marketable securities
553
Other investments
Acquisition and manufacturing cost
Depreciation and amortisation
in € million
1. 1. 20132
Adjust-
3
ment
Translation
differences
Additions
Disposals
Reclassi-
fications
31. 12.
2013
1. 1. 20132
Adjust-
ment
3
4,141
5
516
–
–
–
4,662
–
3,667
21,099
1,785
–
–
–
–
–
Trans-
lation
differ-
ences
–
–
– 11
– 11
– 53
– 166
– 40
–
1,069
–
178
1,247
251
2,084
159
–
Current
year
Changes
not effect-
ing net
income
Dis-
posals
31. 12.
2013
Carrying amount
31. 12.
2013
31. 12.
2012
– 734
13,192
11,338
32,486
6,944
– 175
– 132
3,215
1,136
42,865
26,551
–
– 259
2,494
–
58
170
–
228
–
–
–
–
–
–
–
–
–
16
75
–
–
–
91
–
–
–
565
4,645
5,022
4,347
Development costs
–
18
5
665
369
788
369
Goodwill
491
Other intangible assets
–
583
5,315
6,179
5,207
Intangible assets
–
–
–
–
–
–
–
–
– 57
–
– 57
34
946
109
–
3,831
22,071
1,795
–
4,890
6,771
536
2,9715
4,502
Land, titles to land, buildings, including buildings on
third party land
5,705
Plant and machinery
530
Other facilities, factory and office equipment
2,604
Advance payments made and construction in progress
1,089
27,697
15,168
13,341
Property, plant and equipment
3,280
6,572
25,914
24,468
Leased products4
–
–
–
–
–
–
74
188
–
262
638
514
Investments accounted for using the equity method
166
387
–
553
147
Investments in non-consolidated subsidiaries
401
Participations
–
Non-current marketable securities
548
Other investments
Acquisition and manufacturing cost
1. 1. 20141
Translation
differences
Additions
Disposals
Reclassi-
fications
31. 12.
2014
in € million
Development costs
Goodwill
Other intangible assets
Intangible assets
third party land
Plant and machinery
Land, titles to land, buildings, including buildings on
Other facilities, factory and office equipment
Advance payments made and construction in progress
Property, plant and equipment
Investments accounted for using the equity method
Investments in non-consolidated subsidiaries
Participations
Non-current marketable securities
Other investments
1 Including first-time consolidations.
2 Prior year figures have been adjusted in accordance with IAS 8, see note 9.
3 Including assets under construction of € 1,679 million.
Development costs
Goodwill
Other intangible assets
Intangible assets
third party land
Plant and machinery
Land, titles to land, buildings, including buildings on
Other facilities, factory and office equipment
Advance payments made and construction in progress
Property, plant and equipment
Leased products4
Investments accounted for using the equity method
514
Investments in non-consolidated subsidiaries
Participations
Non-current marketable securities
Other investments
8,488
374
1,008
9,870
8,182
26,823
2,314
2,617
39,936
31,412
205
571
–
776
9,667
374
1,459
8,812
28,843
2,355
2,972
42,982
638
240
575
–
815
–
–
–
–
–
–
–
–
–
– 46
–
–
–
–
–
–
–
15
207
607
65
37
916
–
2
–
–
2
–
–
– 6
– 6
– 125
– 212
– 55
– 37
– 429
–
– 1
–
–
– 1
1,499
–
62
407
2,436
207
1,489
4,539
600
41
66
–
107
1,744
–
473
2,217
489
2,210
178
1,617
4,494
361
66
6
–
72
428
2,023
32
– 2,483
–
–
–
–
–
–
–
– 1,223
–
–
–
–
226
982
15
–
–
–
–
–
–
–
1 Prior year figures have been adjusted in accordance with IAS 8, see note 9.
2 Including mergers.
3 Amended for the effect of refining the accounting policy for leased products as described in note 6 to the Group Financial Statements 2013.
4 This line includes the adjustments described in note 24 to the Group Financial Statements 2013.
5 Including assets under construction of € 2,570 million.
–
–
–
1,825
5
93
9,341
369
1,443
51
9,803
1,145
32,764
149
1
2,510
2,014
1,346
47,091
150
57
–
–
57
1,088
226
641
–
867
565
–
22
587
51
961
121
3
237
30
2
–
32
9,667
374
1,453
11,494
8,721
28,842
2,331
2,971
638
240
575
–
815
126
23
Intangible assets
Intangible assets mainly comprise capitalised develop
ment costs on vehicle and engine projects as well as
subsidies for tool costs, licences, purchased development
projects, software and purchased customer bases.
Amortisation on intangible assets is presented in cost of
sales, selling expenses and administrative expenses.
Intangible assets amounting to € 46 million (2013:
€ 43 million) are subject to restrictions on title.
As in the previous year, there was no requirement to
recognise impairment losses or reversals of impair
ment losses on intangible assets in 2014.
Other intangible assets include a brandname right
amounting to € 46 million (2013: € 43 million). This
line item also includes goodwill of € 33 million (2013:
€ 33 million) allocated to the Automotive cashgener
ating unit (CGU) and goodwill of € 331 million (2013:
€ 336 million) allocated to the Financial Services CGU,
whereby the decrease compared to 31 December 2013
related to the sale of Noord Lease B. V., Groningen.
As in the previous year no borrowing costs were recog
nised as a cost component of intangible assets during
the year under report.
An analysis of changes in intangible assets is provided
in note 22.
24
Property, plant and equipment
A breakdown of the different classes of property, plant
and equipment disclosed in the balance sheet and
changes during the year are shown in the analysis of
changes in Group tangible, intangible and investment
assets in note 22.
As in the previous year, there was no requirement to
recognise impairment losses in 2014.
No borrowing costs were recognised as a cost compo
nent of property, plant and equipment during the year
under report.
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
buildings, for which economic ownership is attributable
to the BMW Group due to the nature of the lease ar
rangements (finance leases). Leases to which BMW AG
is party, with a carrying amount of € 64 million (2013:
€ 37 million), run for periods up to 2028 at the latest and
contain price adjustment clauses as well as extension
and purchase options. The asset leased by BMW Tokyo
Corp., Tokyo, has a carrying amount of € 2 million (2013:
€ 2 million) under a lease with a remaining term of
17 years. BMW Osaka Corp., Osaka, is party to finance
leases running until 2022 for operational buildings with
a carrying amount of € 1 million at 31 December 2014
(2013: € 2 million).
Property, plant and equipment include a total of € 67 mil
lion (2013: € 42 million) relating to land and operational
Minimum lease payments of the relevant leases are as
follows:
in € million
31. 12. 2014
31. 12. 2013
Total of future minimum lease payments
due within one year
due between one and five years
due later than five years
Interest portion of the future minimum lease payments
due within one year
due between one and five years
due later than five years
Present value of future minimum lease payments
due within one year
due between one and five years
due later than five years
13
53
53
119
8
25
12
45
5
28
41
74
14
13
44
71
3
7
13
23
11
6
31
48
127 Group Financial StatementS
25
Leased products
The BMW Group, as lessor, leases out its own products
and those of other manufacturers as part of its finan
cial services business. Minimum lease payments of
€ 14,712 million (2013: € 12,906 million) from noncan
cellable operating leases fall due as follows:
in € million
within one year
between one and five years
later than five years
Minimum lease payments
Contingent rents of € 56 million (2013: € 171 million),
based principally on the distance driven, were recog
nised in income. Some of the agreements contain price
adjustment clauses as well as extension and purchase
options.
Impairment losses recognised on leased products
totalled € 137 million (2013: € 139 million), while rever
26
Investments accounted for using the equity method
Investments accounted for using the equity method re
late to the joint ventures BMW Brilliance Automotive
Ltd., Shenyang (BMW Brilliance) on the one hand and
DriveNow GmbH & Co. KG, Munich, and DriveNow
Verwaltungs GmbH, Munich, (DriveNow) on the other.
The BMW Brilliance Automotive Ltd., Shenyang, joint
venture (in which BMW has a 50 % shareholding)
produces various BMW brand models for the Chinese
market and also has engine manufacturing facilities,
which supply the joint venture’s two plants with petrol
engines.
in € million
Disclosures relating to the income statement
Revenues
Scheduled depreciation
Profit / loss before financial result
Interest income
Interest expenses
Income taxes
Other comprehensive income
Total comprehensive income
Dividends received by the Group
31. 12. 2014
31. 12. 2013
7,267
7,442
3
14,712
6,314
6,587
5
12,906
sals of impairment losses totalled € 44 million (2013:
€ 104 million).
An analysis of changes in leased products is provided in
note 22.
The DriveNow joint venture – comprising DriveNow
GmbH & Co. KG, Munich, and DriveNow Verwaltungs
GmbH, Munich, (both 50 % shareholdings) – is a car
sharing provider which currently offers individual mo
bility services in major German cities and, going for
ward, increasingly outside Germany.
The accounting treatment applied to investments
accounted for using the equity method is described in
note 6. Financial information relating to equity ac
counted investments is aggregated in the following
table:
BMW Brilliance
DriveNow
2014
2013
2014
2013
11,550
247
1,702
24
–
449
–
1,339
147
8,963
157
1,096
16
–
285
–
834
127
32
–
– 5
–
–
–
–
– 5
–
18
–
– 6
–
–
–
–
– 7
–
128
in € million
Disclosures relating to the balance sheet
Non-current assets
Cash and cash equivalents
Current assets
Equity
Non-current financial liabilities
Non-current provisions and liabilities
Current financial liabilities
Current provisions and liabilities
Reconciliation of aggregated financial information
Assets
Equity and liabilities
Net assets
Group’s interest in net assets (50 %)
Eliminations
Carrying amount
BMW Brilliance
DriveNow
2014
2013
2014
2013
4,171
976
3,404
2,910
–
450
236
4,215
7,575
4,665
2,910
1,455
– 373
1,082
2,741
593
2,727
1,868
–
237
–
3,363
5,468
3,600
1,868
934
– 299
635
1
13
19
12
–
–
–
8
20
8
12
6
–
6
1
4
10
6
–
–
–
5
11
5
6
3
–
3
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
27
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
If the Group’s share of the atequity result of BMW
Brilliance Automotive Ltd., Shenyang, were reported
as part of the Automotive segment’s EBIT, the EBIT
margin would increase by 0.9 percentage points (2013:
0.6 percentage points) to 10.5 % (2013: 10.0 %).
Other investments
Other investments relate to investments in noncon
solidated subsidiaries, interests in associated com
panies not accounted for using the equity method
and joint operations, par ticipations and noncurrent
marketable securities.
The additions to investments in subsidiaries relate
primarily to a share capital increase at the level of
BMW iVentures B. V., Rijswijk.
Additions to participations mainly reflect the purchase
of availableforsale marketable securities.
Disposals of investments in subsidiaries result from the
firsttime consolidation of six European branches.
Impairment losses on participations – recognised with
income statement effect – related mainly to the invest
ment in SGL Carbon SE, Wiesbaden, which was written
down on the basis of objective criteria.
A breakdown of the different classes of other invest
ments disclosed in the balance sheet and changes
during the year are shown in the analysis of changes in
Group tangible, intangible and investment assets in
note 22.
129 Group Financial StatementS
28 Receivables from sales financing
Receivables from sales financing, totalling € 61,024 mil
lion (2013: € 54,117 million), comprise € 45,849 million
(2013: € 40,841 million) for credit financing for retail
customers and dealers and € 15,175 million (2013:
€ 13,276 million) for finance leases. Finance leases are
analysed as follows:
in € million
31. 12. 2014
31. 12. 2013
Gross investment in finance leases
due within one year
due between one and five years
due later than five years
Present value of future minimum lease payments
due within one year
due between one and five years
due later than five years
5,366
11,231
109
16,706
4,898
10,175
102
15,175
4,816
9,748
98
14,662
4,378
8,813
85
13,276
Unrealised interest income
1,531
1,386
Contingent rents recognised as income (generally re
lating to the distance driven) amounted to € 2 million
(2013: € 3 million). Writedowns on finance leases
amounting to € 183 million (2013: € 159 million) were
measured and recognised on the basis of specific credit
risks. Nonguaranteed residual values that fall to the
benefit of the lessor amounted to € 140 million (2013:
€ 120 million).
Receivables from sales financing include € 37,438 mil
lion (2013: € 32,616 million) with a remaining term of
more than one year.
Allowances for impairment and credit risk
in € million
Gross carrying amount
Allowance for impairment
Net carrying amount
31. 12. 2014
31. 12. 2013
62,539
– 1,515
61,024
55,697
– 1,580
54,117
Allowances on receivables from sales financing – which only arise within the Financial Services segment – developed
as follows:
2014
in € million
Balance at 1 January*
Allocated / reversed
Utilised
Exchange rate impact and other changes
Balance at 31 December
* Balance at 1 January adjusted due to deconsolidation of entities.
Allowance for impairment recognised on a
group basis
specific item basis
1,098
239
– 371
34
1,000
482
41
– 20
12
515
Total
1,580
280
– 391
46
1,515
130
2013
in € million
Balance at 1 January
Allocated / reversed
Utilised
Exchange rate impact and other changes
Balance at 31 December
Allowance for impairment recognised on a
group basis
specific item basis
1,268
194
– 302
– 61
1,099
411
104
– 15
– 19
481
Total
1,679
298
– 317
– 80
1,580
At the end of the reporting period, impairment allow
ances of € 515 million (2013: € 481 million) were recog
nised on a group basis on gross receivables from sales
financing totalling € 38,780 million (2013*: € 33,740 mil
lion). Impairment allowances of € 1,000 million (2013:
€ 1,099 million) were recognised at 31 December 2014
on a specific item basis on gross receivables from sales
financing totalling € 12,951 million (2013: € 12,211 mil
lion).
€ 10,808 million (2013*: € 9,746 million). No impairment
losses were recognised for these balances.
The estimated fair value of collateral received for receiv
ables on which impairment losses were recognised to
talled € 25,443 million (2013: € 23,689 million) at the end
of the reporting period. This collateral related primarily
to vehicles. The carrying amount of assets held as col
lateral and taken back as a result of payment default
amounted to € 41 million (2013: € 30 million).
Receivables from sales financing which were not over
due at the end of the reporting period amounted to
* Prior year figures amended.
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
29 Financial assets
Financial assets comprise:
in € million
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
Derivative instruments
Marketable securities and investment funds
Loans to third parties
Credit card receivables
Other
Financial assets
thereof non-current
thereof current
31. 12. 2014
31. 12. 2013
2,888
3,972
12
239
297
7,408
2,024
5,384
4,013
3,060
32
222
825
8,152
2,593
5,559
The decrease in derivative instruments was primarily
attributable to negative market price developments of
currency derivatives.
The rise in marketable securities and investment funds
mainly reflects an increase in the BMW Group’s strate
gic liquidity reserve.
(€ 48 million; 2013: € 44 million) is reported under “Other
financial assets”. Investment funds are held to secure
these obligations. These funds are managed by BMW
Trust e. V., Munich, as part of a Contractual Trust
Arrange ment (CTA) and are therefore netted against
the corresponding settlement arrears for preretirement
parttime work arrangements.
The amount by which the value of the investment funds
exceeds obligations for parttime working arrangements
131 Group Financial StatementS
Marketable securities and investment funds relate to availableforsale financial assets and comprise:
in € million
Stocks
Fixed income securities
Other debt securities
Marketable securities and investment funds
The contracted maturities of debt securities are as follows:
in € million
Fixed income securities
due within three months
due later than three months
Other debt securities
due within three months
due later than three months
Debt securities
Allowances for impairment and credit risk
Receivables relating to credit card business comprise the following:
in € million
Gross carrying amount
Allowance for impairment
Net carrying amount
31. 12. 2014
31. 12. 2013
100
3,340
532
3,972
87
2,551
422
3,060
31. 12. 2014
31. 12. 2013
595
2,745
532
–
3,872
73
2,478
422
–
2,973
31. 12. 2014
31. 12. 2013
247
– 8
239
231
– 9
222
Allowances for impairment losses on receivables relating to credit card business developed as follows during the
year under report:
2014
in € million
Balance at 1 January
Allocated / reversed
Utilised
Exchange rate impact and other changes
Balance at 31 December
2013
in € million
Balance at 1 January
Allocated / reversed
Utilised
Exchange rate impact and other changes
Balance at 31 December
Allowance for impairment recognised on a
group basis
specific item basis
9
6
– 8
1
8
–
–
–
–
–
Allowance for impairment recognised on a
group basis
specific item basis
13
6
– 10
–
9
–
–
–
–
–
Total
9
6
– 8
1
8
Total
13
6
– 10
–
9
132
30
Income tax assets
Income tax assets totalling € 1,906 million (2013:
€ 1,151 million) include claims amounting to € 653 mil
lion (2013: € 530 million) which are expected to be
settled after more than twelve months. Some of the
claims may be settled earlier than this depending on
the timing of proceedings.
31 Other assets
Other assets comprise:
in € million
Other taxes
Receivables from subsidiaries
Receivables from other companies in which an investment is held
Prepayments
Collateral receivables
Sundry other assets
Other assets
thereof non-current
thereof current
31. 12. 2014
31. 12. 2013*
1,078
721
1,055
1,323
412
1,543
6,132
1,094
5,038
867
779
950
1,074
706
794
5,170
912
4,258
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
Receivables from subsidiaries include trade receivables
of € 41 million (2013: € 102 million) and financial receiva
bles of € 680 million (2013: € 677 million). They include
€ 293 million (2013: € 253 million) with a remaining term
of more than one year.
Receivables from other companies in which an invest
ment is held include € 1,054 million (2013*: € 905 mil
lion) due within one year.
Prepayments of € 1,323 million (2013*: € 1,074 million)
relate mainly to prepaid interest, insurance premiums
and commission paid to dealers. Prepayments of
€ 674 million (2013: € 565 million) have a maturity of less
than one year.
Collateral receivables comprise mainly customary
collateral (banking deposits) arising on the sale of re
ceivables.
In the financial year 2014, expected reimbursement
claims totalling € 641 million arising in connection with
warranty arrangements with suppliers were reclassified
from other provisions to sundry other assets.
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
32
Inventories
Inventories comprise the following:
in € million
Raw materials and supplies
Work in progress, unbilled contracts
Finished goods and goods for resale
Inventories
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
31. 12. 2014
31. 12. 2013*
918
944
9,227
11,089
851
851
7,893
9,595
133 Group Financial StatementS
At 31 December 2014, inventories measured at their
net realisable value amounted to € 723 million (2013:
€ 592 million) and are included in total inventories of
€ 11,089 million (2013*: € 9,595 million). Writedowns
to net realisable value amounting to € 29 million (2013:
€ 28 million) were recognised in 2014. Reversals of
writedowns amounted to € 3 million (2013: € 4 million).
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
33 Trade receivables
Trade receivables totalling € 2,153 million (2013: € 2,449 million) include an unchanged amount of € 47 million which
is due later than one year.
Allowances for impairment and credit risk
in € million
Gross carrying amount
Allowance for impairment
Net carrying amount
31. 12. 2014
31. 12. 2013
2,236
– 83
2,153
2,555
– 106
2,449
Allowances on trade receivables developed as following during the year under report:
2014
in € million
Balance at 1 January*
Allocated / reversed
Utilised
Exchange rate impact and other changes
Balance at 31 December
* Including entities consolidated for the first time during the financial year.
2013
in € million
Balance at 1 January
Allocated / reversed
Utilised
Exchange rate impact and other changes
Balance at 31 December
Allowance for impairment recognised on a
group basis
specific item basis
98
– 6
– 15
– 1
76
9
– 2
–
–
7
Allowance for impairment recognised on a
group basis
specific item basis
105
2
– 8
– 2
97
6
4
–
– 1
9
Total
107
– 8
– 15
– 1
83
Total
111
6
– 8
– 3
106
Some trade receivables were overdue for which an impairment loss was not recognised. Overdue balances are
analysed into the following time windows:
in € million
1 – 30 days overdue
31 – 60 days overdue
61 – 90 days overdue
91 – 120 days overdue
More than 120 days overdue
31. 12. 2014
31. 12. 2013
100
73
26
30
52
281
80
30
8
13
17
148
134
Receivables that are overdue by between one and
30 days do not normally result in bad debt losses since
the overdue nature of the receivables is primarily at
tributable to the timing of receipts around the month
end. In the case of trade receivables, collateral is gen
erally held in the form of vehicle documents and
bank guarantees so that the risk of bad debt loss is ex
tremely low.
34
Cash and cash equivalents
Cash and cash equivalents of € 7,688 million (2013*:
€ 7,671 million) comprise cash on hand and at bank, all
with an original term of up to three months.
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
35 Equity
Number of shares issued
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
Preferred stock
Common stock
2014
2013
2014
2013
Shares issued / in circulation at 1 January
54,259,787
53,994,217
601,995,196
601,995,196
Shares issued in conjunction with Employee Share Scheme
239,777
266,152
Less: shares repurchased and re-issued
20
582
–
–
–
–
Shares issued / in circulation at 31 December
54,499,544
54,259,787
601,995,196
601,995,196
At 31 December 2014 common stock issued by BMW AG
was divided, as at the end of the previous year, into
601,995,196 shares of common stock with a parvalue of
€ 1. Preferred stock issued by BMW AG was divided into
54,499,544 shares (2013: 54,259,787 shares) with a par
value of € 1. Unlike the common stock, no voting rights
are attached to the preferred stock. All of the Company’s
stock is issued to bearer. Preferred stock bears an addi
tional dividend of € 0.02 per share.
In 2014, a total of 239,777 shares of preferred stock was
sold to employees at a reduced price of € 37.08 per share
in conjunction with the Company’s Employee Share
Programme. These shares are entitled to receive divi
dends with effect from the financial year 2015. 20 shares
of preferred stock were bought back via the stock ex
change in conjunction with the Company’s Employee
Share Programme.
Further information on sharebased remuneration is
provided in note 20.
4.8 million shares and € 4.8 million respectively at the
end of the reporting period. The Company is authorised
to issue 5 million shares of nonvoting preferred stock
amounting to nominal € 5.0 million prior to 14 May 2019.
The share premium of € 14.6 million arising on the share
capital increase was transferred to capital reserves.
Capital reserves
Capital reserves include premiums arising from the issue
of shares and totalled € 2,005 million (2013: € 1,990 mil
lion). The change related to the share capital increase in
conjunction with the issue of shares of preferred stock
to employees.
Revenue reserves
Revenue reserves comprise the postacquisition and non
distributed earnings of consolidated companies. In
addition, remeasurements of the net defined benefit lia
bility for pension plans are also presented in revenue
reserves along with positive and negative goodwill aris
ing on the consolidation of Group companies prior to
31 December 1994.
Issued share capital increased by € 0.2 million as a re
sult of the issue to employees of 239,757 shares of non
voting preferred stock. The number of authorised shares
and the Authorised Capital of BMW AG amounted to
Revenue reserves increased during the financial year
2014 to € 35,621 million. They were increased by the
amount of the net profit attributable to shareholders of
135 Group Financial StatementS
BMW AG amounting to € 5,798 million (2013*: € 5,303
million) and reduced by the payment of the dividend for
2013 amounting to € 1,707 million (for 2012: € 1,640 mil
lion). Revenue reserves decreased by € 1,592 million
(2013: increased by € 936 million) as a result of remeasure
ments of the net defined benefit liability for pension
plans (net of deferred tax recognised directly in equity).
The unappropriated profit of BMW AG at 31 December
2014 amounts to € 1,904 million and will be proposed
to the Annual General Meeting for distribution. This
amount includes € 158 million relating to preferred stock.
The amount proposed for distribution represents an
amount of € 2.92 per share of preferred stock and € 2.90
per share of common stock. The proposed distribution
must be authorised by the shareholders at the Annual
General Meeting of BMW AG. It is therefore not recog
nised as a liability in the Group Financial Statements.
Accumulated other equity
Accumulated other equity comprises all amounts recog
nised directly in equity resulting from the translation
of the financial statements of foreign subsidiaries, the
effects of recognising changes in the fair value of deriva
tive financial instruments and marketable securities
directly in equity and the related deferred taxes recog
nised directly in equity.
Minority interests
Equity attributable to minority interests amounted to
€ 217 million (2013: € 188 million). This includes a mi
nority interest of € 19 million in the results for the year
(2013: € 26 million).
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
Capital management disclosures
The BMW Group’s objectives when managing capital
are to safeguard the Group’s ability to continue as
a going concern in the longterm and to provide an
adequate return to shareholders.
The BMW Group manages the capital structure and
makes adjustments to it in the light of changes in eco
nomic conditions and the risk profile of the underlying
assets.
The BMW Group is not subject to any external minimum
equity capital requirements. Within the Financial Ser
vices segment, however, there are a number of indi
vidual entities which are subject to equity capital require
ments set by regulatory banking agencies.
In order to manage its capital structure, the BMW Group
uses various instruments including the amount of divi
dends paid to shareholders and share buybacks.
Moreover, the BMW Group proactively manages debt
capital, determining levels of debt capital transactions
with a target debt structure in mind. An important
aspect of the selection of financial instruments is the
objective to achieve matching maturities for the Group’s
financing requirements. In order to reduce nonsys
tematic risk, the BMW Group uses a variety of financial
instruments available on the world’s capital markets to
achieve optimal diversification.
The capital structure at the end of the reporting period
was as follows:
in € million
31. 12. 2014
31. 12. 2013*
Equity attributable to shareholders of BMW AG
Proportion of total capital
Non-current financial liabilities
Current financial liabilities
Total financial liabilities
Proportion of total capital
Total capital
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
37,220
31.6 %
43,167
37,482
80,649
68.4 %
35,412
33.5 %
39,450
30,854
70,304
66.5 %
117,869
105,716
136
Equity attributable to shareholders of BMW AG decreased
during the financial year by 1.9 percentage points,
primarily reflecting the increase in financial liabilities.
Since December 2013, the BMW AG has a longterm
rating of A+ (with stable outlook) and a shortterm rating
of A1 from the rating agency Standard & Poor’s, cur
rently the highest rating given by Standard & Poor’s to
a European car manufacturer. Since July 2011, the
BMW AG has a longterm rating of A2 (with stable out
look) and a shortterm rating of P1 from the rating
agency Moody’s. This means that BMW AG continues
to enjoy the best ratings of all European car manufac
turers, clearly reflecting the financial strength of the
BMW Group.
Company rating
Non-current financial liabilities
Current financial liabilities
Outlook
Moody’s
Standard & Poor’s
A2
P-1
stable
A +
A-1
stable
With their current longterm ratings of A+ (Standard &
Poor’s) and A2 (Moody’s), the agencies continue to con
firm BMW AG’s robust creditworthiness for debt with a
term of more than one year. BMW AG’s creditworthiness
for shortterm debt is also classified by the rating agen
cies as very good, thus enabling it to obtain refinancing
funds on competitive conditions.
Pension provisions
Pension provisions are recognised as a result of commit
ments to pay future vested pension benefits and cur
rent pensions to present and former employees of the
BMW Group and their dependants. Depending on the
legal, economic and tax circumstances prevailing in each
country, various pension plans are used, based generally
on the length of service, salary and remuneration struc
ture of the employees involved. Due to similarity of na
ture, the obligations of BMW Group companies in the
USA and of BMW (South Africa) (Pty) Ltd., Pretoria, for
postretirement medical care are also accounted for as
pension provisions in accordance with IAS 19.
Postemployment benefit plans are classified as either
defined contribution or defined benefit plans. Under
defined contribution plans an enterprise pays fixed con
tributions into a separate entity or fund and does not
assume any other obligations. The total pension expense
for defined contribution plans of the BMW Group
amounted to € 60 million (2013: € 51 million). Employer
contributions paid to state pension insurance plans to
talled € 517 million (2013: € 470 million).
Under defined benefit plans the enterprise is required to
pay the benefits granted to present and past employees.
Defined benefit plans may be funded or unfunded,
the latter sometimes covered by accounting provisions.
Pension commitments in Germany are mostly covered
by assets contributed to BMW Trust e. V. , Munich,
in conjunction with a contractual trust arrangement
(CTA). The main other countries with funded plans
are the UK, the USA, Switzerland, the Netherlands,
Belgium and Japan.
In the case of externally funded plans, the defined bene
fit obligation is offset against plan assets measured at
their fair value. Where the plan assets exceed the pen
sion obligations and the BMW Group has a right of re
imbursement or a right to reduce future contributions,
it reports an asset (within “Other financial assets”) at
an amount equivalent to the present value of the future
economic benefits attached to the plan assets. If the
plan is externally funded, a liability is recognised under
pension provisions where the benefit obligation exceeds
fund assets.
Remeasurements of the net liability arise from changes
in the present value of the defined benefit obligation,
the fair value of the plan assets or the asset ceiling. Rea
sons for remeasurements include changes in financial
and demographic assumptions as well as changes in the
detailed composition of beneficiaries. Remeasurements
are recognised immediately in “Other comprehensive
income” and hence directly in equity (within revenue
reserves).
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
36
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
137 Group Financial StatementS
Past service cost arises where a BMW Group entity in
troduces a defined benefit plan or changes the benefits
payable under an existing plan. These costs are recog
nised immediately in the income statement. Similarly,
gains and losses arising on the settlement of a defined
benefit plan are recognised immediately in the income
statement.
The defined benefit obligation is calculated on an actu
arial basis. The actuarial computation requires the use
of estimates and assumptions, which depend on the
economic situation in each particular country. The most
important assumptions applied by the BMW Group are
shown below. The following weighted average values
have been used for Germany, the United Kingdom and
other countries:
31 December
in %
Discount rate
Pension level trend
Germany
2014
2013
United Kingdom
2014
2013
Other
2014
2013
2.10
1.60
3.50
2.00
3.40
2.43
4.40
3.32
3.48
0.03
4.46
0.05
The following mortality tables are applied in countries, in which the BMW Group has significant defined benefit plans:
Germany
Mortality Table 2005 G issued by Prof. K. Heubeck (with invalidity rates reduced by 50 %)
United Kingdom S1PA tables weighted accordingly, and S1NA tables minus 2 years, both with a minimum long term annual improvement allowance
USA
RP2014 Mortality Table with collar adjustments projected with MP2014
In Germany, the socalled “pension entitlement trend”
(Festbetragstrend) also represents a significant actuarial
assumption for the purposes of determining benefits
payable at retirement and was left unchanged at 2.0 %.
By contrast, the salary level trend assumption is subject
to a comparatively low level of sensitivity within the
BMW Group. The calculation of the salary level trend in
the UK also takes account of restrictions due to caps
and floors.
Based on the measurement principles contained in
IAS 19, the following balance sheet carrying amounts
apply to the Group’s pension plans:
31 December
in € million
Germany
United Kingdom
Other
Total
2014
2013
2014
2013
2014
2013
2014
2013
Present value of defined benefit obligations
9,636
7,400
9,499
7,409
1,327
949 20,462
15,758
Fair value of plan assets
7,323
6,749
7,734
6,076
Effect of limiting net defined benefit asset to asset ceiling
–
–
–
–
Carrying amounts at 31 December
2,313
651
1,765
1,333
thereof pension provision
thereof assets
2,313
652
1,765
1,333
–
– 1
–
–
804
2
525
526
– 1
636 15,861
13,461
4
2
4
317
4,603
2,301
318
4,604
2,303
– 1
– 1
– 2
138
The increase in defined benefit obligations results mainly
from the change in the discount rate used for the ac
tuarial computation in Germany, the UK and the USA.
The provision for pensionlike obligations for postem
ployment medical care in the USA and South Africa
amounts to € 57 million (2013: € 45 million) and is deter
mined on a similar basis to the measurement of pension
obligations in accordance with IAS 19. Increased costs
do not have a direct impact on medical care obligations
relating to pensioners in the USA. In the case of South
Africa, however, it was assumed that costs would in
crease in the long term by 8.3 % (2013: 8.1 %) p. a. The
expense recognised for obligations relating to postem
ployment medical care amounted to € 8 million (2013:
income of € 40 million).
Numerous defined benefit plans are in place through
out the BMW Group, the most significant of which are
described below.
Germany
Both employer and employeefunded benefit plans are
in place in Germany. Benefits paid in conjunction with
these plans comprise oldage retirement pensions as
well as invalidity and surviving dependents’ benefits.
The Deferred Remuneration Retirement Plan is an em
ployeefinanced defined contribution plan with a mini
mum rate of return. The fact that the plan involves a
minimum rate of return means that it is classified as a
defined benefit plan. Employees have the option to
waive payment of certain remuneration components in
return for a future benefit. Any employer social security
contributions saved are credited in the following year
to the individual’s benefits account. The converted re
muneration components and the social security contri
butions saved are invested on capital markets. When
the benefit falls due, it is paid on the basis of the higher
of the value of the depot account or a guaranteed mini
mum amount.
Defined benefit obligations also remain in Germany, for
which benefits are determined either by multiplying
a fixed amount by the number of years of service or on
the basis of an employee’s final salary. The defined bene
fit plans have been closed to new entrants. With effect
from 1 January 2014, new employees receive a defined
contribution entitlement with minimum rate of return.
The assets of the German pension plans are administered
by BMW Trust e. V. , Munich, (German registered asso
ciation) in accordance with a CTA. The representative
bodies of this entity are the Board of Directors and the
Members’ General Meeting. BMW Trust e.V., Munich,
currently has seven members and three Board of Direc
tors members elected by the Members’ General Meeting.
The Board of Directors is responsible for investments,
drawing up and deciding on investment guidelines as
well as monitoring compliance with those guidelines.
The members of the association can be employees, senior
executives and members of the Board of Directors. An
ordinary Members’ General Meeting takes place once
every calendar year and deals with a range of matters,
including receiving and approving the association’s an
nual report, ratifying the activities of the Board of Direc
tors and adopting changes to the association’s statutes.
United Kingdom
In the United Kingdom, the BMW Group has defined
benefit plans, which are primarily employerfunded
combined with employeefunded components based
on the conversion of employee remuneration. These
plans are subject to statutory minimum recovery require
ments. Benefits paid in conjunction with these plans
comprise oldage retirement pensions as well as inva
lidity and surviving dependants’ benefits. These de
fined benefit plans have been closed to new entrants,
who, since 1 January 2014, are covered by a defined
contribution plan.
The pension plans are administered by BMW Pension
Trustees Limited, Hams Hall, and BMW (UK) Trustees
Limited, Hams Hall, both trustee companies which act
independently of the BMW Group. BMW (UK) Trustees
Limited, Hams Hall, is represented by 14 trustees and
BMW Pension Trustees Limited, Hams Hall, by five
trustees. A minimum of one third of the trustees must
be elected by plan participants. The trustees represent
the interests of plan participants and decide on invest
ment strategies and plan amendments. Recovery con
tributions to the funds are determined in agreement
with the BMW Group.
USA
The BMW Group’s defined benefit plans in the USA are
primarily employerfunded and include final salary
pension plans and a postretirement medical care plan.
Benefits paid in conjunction with these plans comprise
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
139 Group Financial StatementS
oldage retirement pensions, early retirement benefits,
surviving dependants’ benefits as well as postretire
ment medical care benefits.
Statutory minimum funding requirements apply to the
final salary pension plans. Plan participants are repre
sented by a committee consisting of six members, which
is authorised to take all decisions pertaining to the rele
vant pension plan, including plan structure, investments
and selection of investment managers as well as regular
allocations and retrospective allocations to the plan.
The committee members are nominated by the manage
ment of the relevant participating US entities. Plan
committees act in a fiduciary capacity and are subject to
statutory framework conditions.
The change in the net defined benefit liability for pen-
sion plans can be derived as follows:
in € million
Defined benefit
obligation
Plan assets
Total
Limitation of
the net defined
benefit asset to
the asset ceiling
Net defined
benefit liability
1 January 2014
15,758
– 13,461
2,297
Expense / income
Current service cost
Interest expense (+) / income (–)
Past service cost
Gains (–) or losses (+) arising from settlements
Remeasurements
Gains (–) or losses (+) on plan assets, excluding
amounts included in interest income
Gains (–) or losses (+) arising from changes in
demographic assumptions
Gains (–) or losses (+) arising from changes in
financial assumptions
Changes in the limitation of the net defined benefit
asset to the asset ceiling
Gains (–) or losses (+) arising from
experience adjustments
Transfers to fund
Employee contributions
Pensions and other benefits paid
Translation differences and other changes
31 December 2014
thereof pension provision
thereof assets
337
628
– 3
– 8
–
53
3,490
–
– 24
–
71
– 519
679
20,462
–
– 540
–
–
337
88
– 3
– 8
– 1,394
– 1,394
–
–
–
–
– 383
– 71
522
– 534
– 15,861
53
3,490
–
– 24
– 383
–
3
145
4,601
4
–
–
–
–
–
–
–
– 1
–
–
–
–
– 1
2
2,301
337
88
– 3
– 8
– 1,394
53
3,490
– 1
– 24
– 383
–
3
144
4,603
4,604
– 1
140
in € million
Defined benefit
obligation
Plan assets
Total
Limitation of
the net defined
benefit asset to
the asset ceiling
Net defined
benefit liability
1 January 2013
16,255
– 12,447
3,808
Expense / income
Current service cost
Interest expense (+) / income (–)
Past service cost
Gains (–) or losses (+) arising from settlements
Remeasurements
Gains (–) or losses (+) on plan assets, excluding
amounts included in interest income
Gains (–) or losses (+) arising from changes in
demographic assumptions
Gains (–) or losses (+) arising from changes in
financial assumptions
Changes in the limitation of the net defined benefit
asset to the asset ceiling
Gains (–) or losses (+) arising from
experience adjustments
Transfers to fund
Employee contributions
Pensions and other benefits paid
Translation differences and other changes
31 December 2013
thereof pension provision
thereof assets
362
565
– 53
2
–
4
– 818
–
34
–
64
– 460
– 197
15,758
–
– 438
–
–
362
127
– 53
2
– 481
– 481
–
–
–
–
– 509
– 64
324
154
– 13,461
4
– 818
–
34
– 509
–
– 136
– 43
2,297
4
–
–
–
–
–
–
–
1
–
–
–
–
– 1
4
3,812
362
127
– 53
2
– 481
4
– 818
1
34
– 509
–
– 136
– 44
2,301
2,303
– 2
Net interest expense on the net defined benefit liability
is presented within the financial result. All other com
ponents of pension expense are presented in the income
statement under cost of sales, selling and administrative
expenses.
Remeasurements on the obligations side gave rise
to a positive amount of € 3,519 million (2013: negative
amount of € 780 million) and related mainly to the
lower discount rates used in Germany, the UK and
the USA.
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
141 Group Financial StatementS
The net defined benefit liability for pension plans in Germany, the UK and other countries changed as follows:
Germany
in € million
1 January
Expense(+) / income (–)
Remeasurements
Payments to external funds
Employee contributions
Payments on account and pension payments
Other changes
31 December
United Kingdom
in € million
1 January
Expense(+) / income (–)
Remeasurements
Payments to external funds
Employee contributions
Payments on account and pension payments
Translation differences and other changes
31 December
Other
in € million
1 January
Effect of first-time consolidation
Expense(+) / income (–)
Remeasurements
Payments to external funds
Employee contributions
Payments on account and pension payments
Translation differences and other changes
31 December
Defined benefit obligation
Plan assets
Net liability
2014
2013
2014
2013
2014
2013
7,400
7,974
– 6,749
– 6,064
475
483
1,872
– 946
–
48
–
42
– 159
– 154
–
1
– 237
– 351
– 97
– 48
159
–
– 183
– 174
– 301
– 42
15
–
651
238
1,910
300
1,521
– 1,120
– 97
– 301
–
–
–
–
– 139
1
651
9,636
7,400
– 7,323
– 6,749
2,313
Defined benefit obligation
Plan assets
Net liability
2014
2013
2014
2013
2014
2013
7,409
7,137
– 6,076
– 5,782
1,333
1,355
405
1,390
–
20
345
330
–
18
– 294
– 261
569
9,499
– 160
7,409
– 275
– 990
– 212
– 20
302
– 463
– 233
– 305
– 135
– 18
269
128
– 7,734
– 6,076
130
400
112
25
– 212
– 135
–
8
–
8
106
– 32
1,765
1,333
Defined benefit
obligation
Plan assets
Effect of limiting the
net defined benefit
asset to the asset ceiling
Net liability
2014
2013
2014
2013
2014
2013
2014
2013
949
1,144
– 636
– 601
–
74
–
48
257
– 164
–
3
– 66
110
1,327
–
4
– 45
– 38
949
–
– 28
– 53
– 74
– 3
61
– 71
– 804
–
– 22
– 2
– 73
– 4
40
26
– 636
4
–
–
– 1
–
–
–
– 1
2
4
–
–
1
–
–
–
– 1
4
317
547
–
46
203
– 74
–
– 5
38
525
–
26
– 165
– 73
–
– 5
– 13
317
Depending on the cash flow profile and risk structure of the pension obligations involved, pension plan assets are
invested in various investment classes.
142
Plan assets in Germany, the UK and other countries comprised the following:
Components of plan assets
in € million
2014
2013
2014
2013
2014
2013
2014
2013
Germany
United Kingdom
Other
Total
Equity instruments
Debt instruments
thereof investment grade
thereof non-investment grade
Real estate
Money market funds
Absolute return funds
Other
1,865
4,509
3,271
1,238
–
–
–
–
1,718
4,143
2,987
1,156
–
89
–
–
1,230
4,562
4,331
231
3
100
26
5
1,030
3,333
3,160
173
3
113
21
26
203
379
334
45
–
12
–
–
133
263
243
20
19
43
–
1
3,298
9,450
7,936
1,514
3
112
26
5
2,881
7,739
6,390
1,349
22
245
21
27
Total with quoted market price
6,374
5,950
5,926
4,526
594
459
12,894
10,935
Debt instruments
thereof investment grade
thereof non-investment grade
Real estate
Cash and cash equivalents
Absolute return funds
Other
Total without quoted market price
183
183
–
107
11
424
224
949
177
177
–
99
1
361
161
799
298
111
187
683
9
557
261
310
136
174
570
–
454
216
1,808
1,550
31 December
7,323
6,749
7,734
6,076
12
12
–
105
–
–
93
210
804
12
9
3
64
1
–
100
177
636
493
306
187
895
20
981
578
499
322
177
733
2
815
477
2,967
2,526
15,861
13,461
Employer contributions to plan assets are expected to
amount to € 652 million in the coming year. Plan assets
of the BMW Group include own transferable financial
instruments amounting to € 5 million (2013: € 4 million).
account in the actuarial assumptions applied. The finan
cial risk of longerthanassumed life expectancy is hedged
for the BMW Group’s largest pension plan in the UK by
means of a socalled “longevity hedge”.
The BMW Group is exposed to risks arising from de
fined benefit plans on the one hand and defined contri
bution plans with a minimum return guarantee on the
other. Pension obligations to employees under such plans
are measured on the basis of actuarial reports. Future
pension payments are discounted by reference to mar
ket yields on high quality corporate bonds. These yields
are subject to market fluctuation and influence the level
of pension obligations. Furthermore, changes in other
actuarial parameters, such as expected rates of inflation,
also have an impact on pension obligations.
In order to reduce currency exposures, a substantial
portion of plan assets are either invested in the same
currency as the underlying plan or hedged by means of
currency derivatives.
Pension fund assets are monitored continuously and
managed from a riskandyield perspective. Risk is
reduced by ensuring a broad spread of investments. In
this context, the BMW Group continuously monitors
the degree of coverage of pension plans as well as adher
ence to the stipulated investment strategy.
A substantial portion of plan assets is invested in debt
instruments in order to minimise the effect of capital
market fluctuations on the net liability. The asset port
folio also includes equity instruments, property and
alternative investments – asset classes capable of gener
ating the higher rates of return necessary to cover risks
(such as changes in mortality tables) not taken into
As part of the internal reporting procedures and for in
ternal management purposes, financial risks relating
to the pension plans are reported on using a deficit
valueatrisk approach. The investment strategy is also
subjected to regular review together with external con
sultants, with the aim of ensuring that investments
are structured to coincide with the timing of pension
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
143 Group Financial StatementS
payments and the expected pattern of pension obliga
tions. In their own way, each of these measures helps to
reduce fluctuations in pension funding shortfalls.
payments out of operations will be substantially re
duced in the future, since most of the Group’s pension
obligations are settled out of the assets of pension
funds / trust fund arrangements.
Most of the BMW Group’s pension assets are adminis
tered separately and kept legally segregated from com
pany assets using trust fund arrangements. As a conse
quence, the level of funds required to finance pension
The defined benefit obligation relates to current em
ployees, former employees with vested benefits and
pensioners as follows:
31 December
in € million
Current employees
Pensioners
Former employees with vested benefits
Defined benefit obligation
Germany
2014
2013
United Kingdom
2014
2013
Other
2014
2013
6,495
2,650
491
4,715
2,297
388
9,636
7,400
2,295
4,208
2,996
9,499
1,604
3,651
2,154
7,409
1,003
212
112
1,327
723
141
85
949
The sensitivity analysis provided below shows the ex
tent to which – based on an appropriate review – the
defined benefit obligation would have been affected by
changes in the relevant assumptions that were possible
at the end of the reporting period, if the other assump
tions used in the calculation were kept constant. The
defined benefit obligation amounted to € 20,462 million
at 31 December 2014.
31 December
Change in defined benefit obligation
2014
2013
in € million
in %
in € million
in %
Discount rate
increase of 0.75 %
– 2,888
– 14.1
– 2,028
– 12.9
Pension level trend
Average life expectancy
Pension entitlement trend
decrease of 0.75 %
increase of 0.25 %
decrease of 0.25 %
increase of 1 year
decrease of 1 year
increase of 0.25 %
decrease of 0.25 %
3,675
727
– 679
703
– 700
152
– 146
18.0
3.6
– 3.3
3.4
– 3.4
0.7
– 0.7
2,528
506
– 479
510
– 514
101
– 97
16.0
3.2
– 3.0
3.2
– 3.3
0.6
– 0.6
In the UK, the sensitivity analysis for the pension level
trend also takes account of restrictions due to caps and
floors.
The weighted duration of all pension obligations in
Germany, the UK and other countries (based on present
values of the defined benefit obligation) developed as
follows:
31 December
in years
Germany
2014
2013
United Kingdom
2014
2013
Other
2014
2013
Weighted duration of all pension obligations
21.4
19.6
19.9
18.3
19.2
14.9
144
Statutory minimum funding and recovery requirements
apply in the UK and the USA which may have an effect
on future amounts. Valuations are performed regularly
to measure the level of funding. In conjunction with
these valuations, funding plans are drawn up and the
amount of any special allocations determined.
37 Other provisions
Other provisions comprise the following items:
in € million
31. 12. 2014
31. 12. 2013*
Obligations for personnel and social expenses
Obligations for ongoing operational expenses
Other obligations
Other provisions
Total
1,871
4,887
2,032
8,790
thereof
due within
one year
1,442
1,786
1,294
4,522
Total
1,698
3,468
2,074
7,240
thereof
due within
one year
1,300
1,076
1,036
3,412
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
Provisions for obligations for personnel and social ex
penses comprise mainly performancerelated remunera
tion components, early retirement parttime working
arrangements and employee longservice awards. Obli
gations for performancerelated remuneration compo
nents are normally settled in the following financial year.
Provisions for obligations for ongoing operational ex
penses relate primarily to warranty obligations and com
prise both statutorily prescribed manufacturer warranties
and other guaranties offered by the BMW Group. De
pending on when claims are made, it is possible that
the BMW Group may be called upon to fulfil obligations
over the whole period of the warranty or guarantee.
Provisions for other obligations cover numerous specific
risks and obligations of uncertain timing and amount,
in particular for litigation and liability risks.
Other provisions changed during the year as follows:
in € million
1.1. 2014
Translation
differences
Additions
Reversal of
discounting
Utilised
Reversed
31. 12. 2014
Obligations for personnel and social expenses
Obligations for ongoing operational expenses
Other obligations
Other provisions
1,698
3,468
2,074
7,240
13
304
62
379
1,438
2,435*
602
4,475
9
70
23
– 1,271
– 1,304
– 449
102
– 3,024
– 16
– 86
– 280
– 382
1,871
4,887
2,032
8,790
* Including the reclassification described in note 31 amounting to € 641 million.
Income from the reversal of other provisions amounting to € 198 million (2013: € 134 million) is recorded in cost of
sales and in selling and administrative expenses.
145 Group Financial StatementS
38
Income tax liabilities
Current income tax liabilities totalling € 1,590 million
(2013*: € 2,319 million) include obligations amounting to
€ 956 million (2013: € 823 million) which are expected to
be settled after more than twelve months. Some of the
liabilities may be settled earlier than this depending on
the timing of proceedings.
Current tax liabilities of € 1,590 million (2013*: € 2,319 mil
lion) comprise € 151 million (2013: € 197 million) for
taxes payable and € 1,439 million (2013*: € 2,122 million)
for tax provisions. Tax provisions totalling € 1 million were
reversed in the year under report (2013: € 44 million).
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
39 Financial liabilities
Financial liabilities include all liabilities of the BMW
Group at the relevant balance sheet dates relating to
financing activities. Financial liabilities comprise the
following:
31 December 2014
in € million
Bonds
Liabilities to banks
Liabilities from customer deposits (banking)
Commercial paper
Asset backed financing transactions
Derivative instruments
Other
Financial liabilities
31 December 2013
in € million
Bonds
Liabilities to banks
Liabilities from customer deposits (banking)
Commercial paper
Asset backed financing transactions
Derivative instruments
Other
Financial liabilities
Maturity
within
one year
Maturity
between one
and five years
Maturity
later than
five years
8,561
7,784
9,157
5,599
3,825
1,930
626
22,817
3,281
3,309
–
6,990
1,190
387
37,482
37,974
4,111
489
–
–
69
23
501
5,193
Maturity
within
one year
Maturity
between one
and five years
Maturity
later than
five years
7,166
4,326
9,342
6,292
2,579
426
723
20,329
4,146
3,115
–
7,517
632
307
30,854
36,046
2,875
118
–
–
32
45
334
3,404
Total
35,489
11,554
12,466
5,599
10,884
3,143
1,514
80,649
Total
30,370
8,590
12,457
6,292
10,128
1,103
1,364
70,304
The increase in liabilities relating to derivatives results
from the fair value measurement of currency and com
modity derivative instruments.
The main instruments used are corporate bonds, asset
backed financing transactions, liabilities to banks and
liabilities from customer deposits (banking).
The BMW Group uses various shortterm and longterm
refinancing instruments on money and capital markets
to finance its operations. This diversification enables it to
obtain attractive market conditions.
Customer deposit liabilities arise in the BMW Group’s
banks in Germany and the USA, both of which offer a
range of investment products.
146
Bonds comprise:
Issuer
BMW Finance N. V., The Hague
BMW (UK) Capital plc, Farnborough
BMW US Capital, LLC, Wilmington, DE
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
BMW Australia Finance Ltd., Melbourne, Victoria
Other
Issue volume
in relevant currency
(ISO-Code)
Weighted
average maturity
period (in years)
Weighted
average nominal
interest rate (in %)
Interest
variable
variable
variable
variable
fixed
fixed
fixed
fixed
fixed
fixed
fixed
fixed
variable
variable
variable
fixed
fixed
fixed
fixed
fixed
fixed
fixed
fixed
fixed
variable
variable
variable
fixed
EUR 4,835 million
GBP 380 million
SEK 6,500 million
USD 540 million
AUD 700 million
CHF 300 million
EUR 13,564 million
GBP 1,050 million
JPY 31,000 million
NOK 3,500 million
CHF 500 million
GBP 300 million
EUR 100 million
SEK 1,000 million
USD 1,710 million
AUD 200 million
CHF 325 million
EUR 3,590 million
GBP 300 million
HKD 500 million
JPY 6,000 million
NOK 1,500 million
NZD 100 million
USD 2,245 million
AUD 200 million
EUR 150 million
USD 330 million
JPY 6,500 million
variable
JPY 10,000 million
fixed
fixed
fixed
fixed
INR 6,000 million
CAD 2,275 million
JPY 53,000 million
KRW 370,000 million
2.3
1.2
2.3
1.8
3.9
6.0
6.6
6.1
2.8
3.7
5.0
8.0
3.0
2.7
2.8
3.2
7.0
5.5
5.0
3.0
2.0
3.0
3.0
8.0
3.0
2.3
2.3
2.0
3.0
4.2
3.9
3.8
3.2
0.3
0.2
0.3
0.3
4.6
1.8
3.0
3.0
0.3
3.2
2.1
5.0
0.1
0.3
0.3
4.0
3.6
3.0
2.0
1.4
0.3
2.4
4.4
3.5
3.3
0.3
0.7
0.3
0.3
10.2
2.3
0.5
3.2
147 Group Financial StatementS
The following details apply to the commercial paper:
Issuer
Issue volume
in relevant currency
(ISO-Code)
Weighted
average maturity
period (in days)
Weighted
average nominal
interest rate (in %)
BMW Finance N. V., The Hague
BMW Malta Finance Ltd., Floriana
BMW US Capital, LLC, Wilmington, DE
EUR 1,007 million
GBP 825 million
USD 725 million
EUR 250 million
USD 3,260 million
30
56
73
12
33
40
Other liabilities
Other liabilities comprise the following items:
31 December 2014
in € million
Other taxes
Social security
Advance payments from customers
Deposits received
Payables to subsidiaries
Payables to other companies in which an investment is held
Deferred income
Other
Other liabilities
31 December 2013*
in € million
Other taxes
Social security
Advance payments from customers
Deposits received
Payables to subsidiaries
Payables to other companies in which an investment is held
Deferred income
Other
Other liabilities
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
Maturity
within
one year
Maturity
between one
and five years
Maturity
later than
five years
929
69
460
415
162
5
1,894
3,841
7,775
–
7
105
348
–
–
3,373
193
4,026
14
2
–
5
–
–
221
7
249
Maturity
within
one year
Maturity
between one
and five years
Maturity
later than
five years
729
60
528
274
157
70
1,666
3,580
7,064
1
11
77
93
–
–
3,069
121
3,372
15
3
–
14
–
–
191
8
231
0.03
0.5
0.2
0.03
0.1
Total
943
78
565
768
162
5
5,488
4,041
12,050
Total
745
74
605
381
157
70
4,926
3,709
10,667
148
Deferred income comprises the following items:
in € million
31. 12. 2014
31. 12. 2013
Deferred income from lease financing
Deferred income relating to service contracts
Grants
Other deferred income
Deferred income
Total
1,685
3,370
306
127
5,488
thereof
due within
one year
780
1,027
31
56
1,894
Total
1,774
2,855
193
104
4,926
thereof
due within
one year
761
837
20
48
1,666
Deferred income relating to service contracts relates to
service and repair work to be provided under commit
ments given at the time of the sale of a vehicle (multi
component arrangements). Grants comprise primarily
public sector funds to promote regional structures and
which have been invested in the production plants in
Brazil, Leipzig and Berlin. The grants in Leipzig and
Berlin are subject to holding periods for the assets con
cerned of up to five years and minimum employment
figures. All conditions attached to the grants were com
plied with at 31 December 2014. In accordance with
IAS 20, grant income is recognised over the useful lives
of the assets to which they relate.
41 Trade payables
31 December 2014
in € million
Maturity
within
one year
Maturity
between one
and five years
Maturity
later than
five years
Total
Trade payables
7,580
129
–
7,709
31 December 2013*
in € million
Maturity
within
one year
Maturity
between one
and five years
Maturity
later than
five years
Total
Trade payables
7,293
192
–
7,485
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
The total amount of financial liabilities, other liabilities and trade payables with a maturity later than five years
amounts to € 5,442 million (2013: € 3,635 million).
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
149 Group Financial StatementS
BMW Group
Notes to the Group Financial Statements
Other Disclosures
42 Contingent liabilities and other financial commitments
Contingent liabilities
No provisions were recognised for the following contingent liabilities (stated at estimated amounts), since an out
flow of resources is not considered to be probable:
in € million
Guarantees
Performance guarantees
Other
Contingent liabilities
31. 12. 2014
31. 12. 2013
33
4
84
121
33
4
39
76
Contingent liabilities relate entirely to nongroup
entities.
Other financial commitments
In addition to liabilities, provisions and contingent lia
bilities, the BMW Group also has other financial com
mitments, primarily under lease contracts for land,
buildings, plant and machinery, tools, office and other
facilities. The leases run for periods of one to 50 years
and in some cases contain extension and / or purchase
options (also including compensation for inflation). In
2014 an amount of € 350 million (2013: € 320 million)
was recognised as expense in conjunction with operating
leases. All of these amounts relate to minimum lease
payments.
The total of future minimum lease payments under non
cancellable and other operating leases can be analysed
by maturity as follows:
in € million
31. 12. 2014
31. 12. 2013
due within one year
due between one and five years
due later than five years
Other financial obligations
299
888
603
1,790
335
852
587
1,774
Other financial commitments include € 7 million (2013:
€ 10 million) in respect of obligations to nonconsoli
dated subsidiaries and, as in the previous year, € 1 mil
lion for backtoback operating leases.
Purchase commitments amounted to € 2,247 million
(2013: € 2,661 million) for property, plant and equipment
and € 750 million (2013: € 446 million) for intangible
assets.
150
43 Financial instruments
The carrying amounts and fair values of financial instruments are assigned to IAS 39 categories and cash funds as
follows:1, 2
31 December 2014
in € million
Cash funds
Loans
and receivables
Held-to-maturity
investments
Fair value
Carrying
amount
Fair value
Carrying
amount
Fair value
Carrying
amount
Assets
Other investments
Receivables from sales financing
Financial assets
Derivative instruments
Cash flow hedges
Fair value hedges
Other derivative instruments
Marketable securities and investment funds
Loans to third parties
Credit card receivables
Other
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Cash and cash equivalents
7,688
7,688
–
–
62,642
61,024
–
–
–
200
12
239
297
–
–
–
–
200
12
239
297
–
–
–
–
412
–
–
–
–
412
–
2,153
2,153
721
721
1,055
–
971
1,055
–
971
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
Trade receivables
Other assets
Receivables from subsidiaries
Receivables from companies in which
an investment is held
Collateral receivables
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
Other
Total
31 December 2014
in € million
8,100
8,100
68,290
66,672
–
–
–
–
4,180
–
2,888
Total
Cash funds
Loans
and receivables
Held-to-maturity
investments
Fair value
Carrying
amount
Fair value
Carrying
amount
Fair value
Carrying
amount
Other liabilities
Fair value
Carrying
amount
Available-
for-sale
Carrying
amount 3
Fair value
option
Carrying
amount 3
Held for
trading
Carrying
amount1, 3
Liabilities
Financial liabilities
Bonds
Liabilities to banks
Liabilities from customer deposits (banking)
Commercial paper
Asset backed financing transactions
Derivative instruments
Cash flow hedges
Fair value hedges
Other derivative instruments
Other
Trade payables
Other liabilities
Payables to subsidiaries
Payables to other companies in which
an investment is held
Other
Total
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1 The carrying amounts of cash flow and fair value hedges are allocated to the category “Held for trading” for the sake of clarity.
2 Based on the fact that maturities are generally short, it is assumed for some items that fair value corresponds to the carrying amount.
3 Carrying amount corresponds to market value.
Other liabilities
Fair value
Carrying
amount
Available-
for-sale
Carrying
amount 3
Fair value
option
Carrying
amount 3
Held for
trading
Carrying
amount 3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
36,083
11,636
12,487
5,599
10,886
–
–
–
1,514
7,709
162
5
4,281
90,362
35,489
11,554
12,466
5,599
10,884
–
–
–
1,514
7,709
162
5
4,281
89,663
3,772
408
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
708
1,294
886
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,302
721
1,120
–
–
–
–
–
Assets
Other investments
Receivables from sales financing
Financial assets
Derivative instruments
Cash flow hedges
Fair value hedges
Loans to third parties
Credit card receivables
Other
Cash and cash equivalents
Trade receivables
Other assets
Other derivative instruments
Marketable securities and investment funds
Receivables from subsidiaries
Receivables from companies in which
an investment is held
Collateral receivables
Other
Liabilities
Financial liabilities
Bonds
Liabilities to banks
Liabilities from customer deposits (banking)
Commercial paper
Asset backed financing transactions
Derivative instruments
Cash flow hedges
Fair value hedges
Other derivative instruments
Other
Trade payables
Other liabilities
Payables to subsidiaries
Payables to other companies in which
an investment is held
Other
3,143
Total
151 Group Financial StatementS
31 December 2014
in € million
Cash funds
Loans
and receivables
Held-to-maturity
investments
Fair value
Fair value
Fair value
Carrying
amount
Carrying
amount
Carrying
amount
Other liabilities
Fair value
Carrying
amount
Available-
for-sale
Carrying
amount 3
Fair value
option
Carrying
amount 3
Held for
trading
Carrying
amount 3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
408
–
–
–
–
3,772
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
708
1,294
886
–
–
–
–
–
–
–
–
–
–
Assets
Other investments
Receivables from sales financing
Financial assets
Derivative instruments
Cash flow hedges
Fair value hedges
Other derivative instruments
Marketable securities and investment funds
Loans to third parties
Credit card receivables
Other
Cash and cash equivalents
Trade receivables
Other assets
Receivables from subsidiaries
Receivables from companies in which
an investment is held
Collateral receivables
Other
8,100
8,100
68,290
66,672
–
–
–
–
4,180
–
2,888
Total
Cash funds
Loans
and receivables
Held-to-maturity
investments
Fair value
Fair value
Fair value
Carrying
amount
Carrying
amount
Carrying
amount
Other liabilities
Fair value
Carrying
amount
Available-
for-sale
Carrying
amount 3
Fair value
option
Carrying
amount 3
Held for
trading
Carrying
amount1, 3
36,083
11,636
12,487
5,599
10,886
–
–
–
1,514
7,709
162
5
4,281
90,362
35,489
11,554
12,466
5,599
10,884
–
–
–
1,514
7,709
162
5
4,281
89,663
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Liabilities
Financial liabilities
Bonds
Liabilities to banks
Liabilities from customer deposits (banking)
Commercial paper
Asset backed financing transactions
Derivative instruments
Cash flow hedges
Fair value hedges
Other derivative instruments
Other
Trade payables
Other liabilities
Payables to subsidiaries
Payables to other companies in which
an investment is held
Other
–
–
–
–
–
1,302
721
1,120
–
–
–
–
–
3,143
Total
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Cash and cash equivalents
7,688
7,688
Assets
Other investments
Receivables from sales financing
Financial assets
Derivative instruments
Cash flow hedges
Fair value hedges
Loans to third parties
Credit card receivables
Other
Trade receivables
Other assets
Other derivative instruments
Marketable securities and investment funds
Receivables from subsidiaries
Receivables from companies in which
an investment is held
Collateral receivables
Other
Total
31 December 2014
in € million
Liabilities
Financial liabilities
Bonds
Liabilities to banks
Liabilities from customer deposits (banking)
Commercial paper
Asset backed financing transactions
Derivative instruments
Cash flow hedges
Fair value hedges
Other derivative instruments
Other
Trade payables
Other liabilities
Other
Total
Payables to subsidiaries
Payables to other companies in which
an investment is held
–
–
–
–
–
–
–
–
–
–
–
–
412
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
412
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
62,642
61,024
2,153
2,153
721
721
1,055
–
971
1,055
–
971
–
–
–
200
12
239
297
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
200
12
239
297
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1 The carrying amounts of cash flow and fair value hedges are allocated to the category “Held for trading” for the sake of clarity.
2 Based on the fact that maturities are generally short, it is assumed for some items that fair value corresponds to the carrying amount.
3 Carrying amount corresponds to market value.
152
31 December 20131, 2
in € million
Cash funds
Loans
and receivables
Held-to-maturity
investments
Fair value
Carrying
amount
Fair value
Carrying
amount
Fair value
Carrying
amount
Other liabilities
Fair value
Carrying
amount
Available-
for-sale
Carrying
amount 3
Fair value
option
Carrying
amount 3
Held for
trading
Carrying
amount 3 , 4
Assets
Other investments
Receivables from sales financing
Financial assets
Derivative instruments
Cash flow hedges
Fair value hedges
Other derivative instruments
Marketable securities and investment funds
Loans to third parties
Credit card receivables
Other
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Cash and cash equivalents
7,671
7,671
–
–
55,536
54,117
–
–
–
250
32
222
825
–
–
–
–
250
32
222
825
–
–
–
–
382
–
8,053
–
–
–
382
–
2,449
2,449
779
950
–
172
779
950
–
172
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
30,860
8,671
12,471
6,292
10,173
–
–
–
1,364
7,485
157
70
4,126
81,669
30,370
8,590
12,457
6,292
10,128
–
–
–
1,364
7,485
157
70
4,126
81,039
2,810
553
–
–
–
–
–
–
–
–
–
–
–
324
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,914
1,050
1,049
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
317
321
465
–
–
–
–
–
Assets
Other investments
Receivables from sales financing
Financial assets
Derivative instruments
Cash flow hedges
Fair value hedges
Loans to third parties
Credit card receivables
Other
Cash and cash equivalents
Trade receivables
Other assets
Other derivative instruments
Marketable securities and investment funds
Receivables from subsidiaries
Receivables from companies in which
an investment is held
Collateral receivables
Other
Liabilities
Financial liabilities
Bonds
Liabilities to banks
Liabilities from customer deposits (banking)
Commercial paper
Asset backed financing transactions
Derivative instruments
Cash flow hedges
Fair value hedges
Other derivative instruments
Other
Trade payables
Other liabilities
Payables to subsidiaries
Payables to other companies in which
an investment is held
Other
1,103
Total
8,053
61,215
59,796
–
–
–
–
3,687
–
4,013
Total
Cash funds
Loans
and receivables
Held-to-maturity
investments
Fair value
Carrying
amount
Fair value
Carrying
amount
Fair value
Carrying
amount
Other liabilities
Fair value 2
Carrying
amount
Available-
for-sale
Carrying
amount 3
Fair value
option
Carrying
amount 3
Held for
trading
Carrying
amount 3 , 4
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
Trade receivables
Other assets
Receivables from subsidiaries
Receivables from companies in which
an investment is held
Collateral receivables
Other
Total
31 December 2013
in € million
Liabilities
Financial liabilities
Bonds
Liabilities to banks
Liabilities from customer deposits (banking)
Commercial paper
Asset backed financing transactions
Derivative instruments
Cash flow hedges
Fair value hedges
Other derivative instruments
Other
Trade payables
Other liabilities
Payables to subsidiaries
Payables to other companies in which
an investment is held
Other
Total
1 Prior year figures have been adjusted in accordance with IAS 8, see note 9.
2 Based on the fact that maturities are generally short, it is assumed for some items that fair value corresponds to the carrying amount.
3 Carrying amount corresponds to market value.
4 The carrying amounts of cash flow and fair value hedges are allocated to the category “Held for trading” for the sake of clarity.
153 Group Financial StatementS
31 December 20131, 2
in € million
Cash funds
Loans
and receivables
Held-to-maturity
investments
Fair value
Fair value
Fair value
Carrying
amount
Carrying
amount
Carrying
amount
Other liabilities
Available-
for-sale
Fair value
option
Held for
trading
Fair value
Carrying
amount
Carrying
amount 3
Carrying
amount 3
Carrying
amount 3 , 4
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
553
–
–
–
–
2,810
–
–
–
–
–
–
–
324
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,914
1,050
1,049
–
–
–
–
–
–
–
–
–
–
Assets
Other investments
Receivables from sales financing
Financial assets
Derivative instruments
Cash flow hedges
Fair value hedges
Other derivative instruments
Marketable securities and investment funds
Loans to third parties
Credit card receivables
Other
Cash and cash equivalents
Trade receivables
Other assets
Receivables from subsidiaries
Receivables from companies in which
an investment is held
Collateral receivables
Other
8,053
61,215
59,796
–
–
–
–
3,687
–
4,013
Total
Cash funds
Loans
and receivables
Held-to-maturity
investments
Fair value
Fair value
Fair value
Carrying
amount
Carrying
amount
Carrying
amount
Other liabilities
Available-
for-sale
Fair value
option
Held for
trading
Fair value 2
Carrying
amount
Carrying
amount 3
Carrying
amount 3
Carrying
amount 3 , 4
30,860
8,671
12,471
6,292
10,173
–
–
–
1,364
7,485
157
70
4,126
81,669
30,370
8,590
12,457
6,292
10,128
–
–
–
1,364
7,485
157
70
4,126
81,039
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Liabilities
Financial liabilities
Bonds
Liabilities to banks
Liabilities from customer deposits (banking)
Commercial paper
Asset backed financing transactions
Derivative instruments
Cash flow hedges
Fair value hedges
Other derivative instruments
Other
Trade payables
Other liabilities
Payables to subsidiaries
Payables to other companies in which
an investment is held
Other
–
–
–
–
–
317
321
465
–
–
–
–
–
1,103
Total
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Cash and cash equivalents
7,671
7,671
2,449
2,449
Assets
Other investments
Receivables from sales financing
Financial assets
Derivative instruments
Cash flow hedges
Fair value hedges
Loans to third parties
Credit card receivables
Other
Trade receivables
Other assets
Other derivative instruments
Marketable securities and investment funds
Receivables from subsidiaries
Receivables from companies in which
an investment is held
Collateral receivables
Other
Total
31 December 2013
in € million
Liabilities
Financial liabilities
Bonds
Liabilities to banks
Liabilities from customer deposits (banking)
Commercial paper
Asset backed financing transactions
Derivative instruments
Cash flow hedges
Fair value hedges
Other derivative instruments
Other
Trade payables
Other liabilities
Other
Total
Payables to subsidiaries
Payables to other companies in which
an investment is held
–
–
–
–
–
–
–
–
–
–
–
–
382
–
8,053
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
382
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
55,536
54,117
–
–
–
250
32
222
825
–
779
950
–
172
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
250
32
222
825
–
779
950
–
172
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1 Prior year figures have been adjusted in accordance with IAS 8, see note 9.
2 Based on the fact that maturities are generally short, it is assumed for some items that fair value corresponds to the carrying amount.
3 Carrying amount corresponds to market value.
4 The carrying amounts of cash flow and fair value hedges are allocated to the category “Held for trading” for the sake of clarity.
154
Fair value measurement of financial instruments
The fair values shown are computed using market in
formation available at the balance sheet date, on the
basis of prices quoted by the contract partners or using
appropriate measurement methods, e. g. discounted cash
flow models. In the latter case, amounts were discounted
at 31 December 2014 on the basis of the following inter
est rates:
ISO Code
in %
Interest rate for six months
Interest rate for one year
Interest rate for five years
Interest rate for ten years
EUR
USD
GBP
JPY
CNY
0.13
0.16
0.36
0.82
0.31
0.43
1.78
2.31
0.68
0.74
1.45
1.87
0.07
0.14
0.22
0.52
4.91
4.44
4.16
4.22
Interest rates taken from interest rate curves were ad
justed, where necessary, to take account of the credit
quality and risk of the underlying financial instrument.
tracts which have matching terms and which can be ob
served on the market.
Derivative financial instruments are measured at their
fair value. The fair values of derivative financial instru
ments are determined using measurement models, as a
consequence of which there is a risk that the amounts
calculated could differ from realisable market prices on
disposal. Observable financial market price spreads are
taken into account in the measurement of derivative
financial instruments. The supply of data to the model
used to calculate fair values also takes account of tenor
and currency basis spreads, thus helping to minimise
differences between the carrying amounts of the instru
ments and the amounts that can be realised on the finan
cial markets on their disposal. In addition, the Group’s
own default risk and that of counterparties is taken into
account in the form of credit default swap (CDS) con
Financial instruments measured at fair value are allo
cated to different measurement levels in accordance
with IFRS 13. This includes financial instruments that
are
1. measured at their fair values in an active market for
identical financial instruments (Level 1),
2. measured at their fair values in an active market for
comparable financial instruments or using measure
ment models whose main input factors are based on
observable market data (Level 2), or
3. using input factors not based on observable market
data (Level 3).
The following table shows the amounts allocated to
each measurement level at the end of the reporting
period:
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
31 December 2014
in € million
Marketable securities, investment fund shares and collateral assets – available-for-sale
Other investments – available-for-sale
Derivative instruments (assets)
Cash flow hedges
Fair value hedges
Other derivative instruments
Derivative instruments (liabilities)
Cash flow hedges
Fair value hedges
Other derivative instruments
Level hierarchy in accordance with IFRS 13
Level 2
Level 3
Level 1
3,772
231
–
–
–
–
–
–
–
–
708
1,294
886
1,302
721
1,120
–
–
–
–
–
–
–
–
155 Group Financial StatementS
31 December 2013
in € million
Marketable securities, investment fund shares and collateral assets – available-for-sale
Other investments – available-for-sale
Derivative instruments (assets)
Cash flow hedges
Fair value hedges
Other derivative instruments
Derivative instruments (liabilities)
Cash flow hedges
Fair value hedges
Other derivative instruments
Level hierarchy in accordance with IFRS 13
Level 2
Level 3
Level 1
3,134
379
–
–
–
–
–
–
–
–
1,914
1,050
1,049
317
321
465
–
–
–
–
–
–
–
–
Other investments (availableforsale) amounting to
€ 177 million (2013: € 174 million) are measured at amor
tised cost since quoted market prices are not available
or cannot be determined reliably. These are therefore
not included in the level hierarchy shown above. In
addition, other investments amounting to € 231 million
(2013: € 379 million) are measured at fair value since
quoted market prices are available. These items are in
cluded in Level 1.
As in the previous year, there were no reclassifications
within the level hierarchy during the financial year 2014.
In situations where a fair value was required to be meas
ured for a financial instrument only for disclosure pur
in € million
poses, this was achieved using the discounted cash flow
method and taking account of the BMW Group’s own
default risk; for this reason, the fair values calculated can
be allocated to Level 2.
Offsetting of financial instruments
In the BMW Group, financial assets and liabilities relat
ing to derivative financial instruments would normally
be required to be offset. No offsetting takes place for ac
counting purposes, however, since the necessary crite
ria are not met. Since legally enforceable master netting
agreements or similar contracts are in place, actual off
setting would be possible in principle, for instance in
the case of insolvency. Offsetting would have the follow
ing impact on the carrying amounts of derivatives:
31. 12. 2014
31. 12. 2013
Reported on
assets side
Reported on
equity and
liabilities side
Reported on
assets side
Reported on
equity and
liabilities side
Balance sheet amounts as reported
Gross amount of derivatives which can be offset in case of insolvency
Net amount after offsetting
2,888
– 1,228
1,660
3,143
– 1,228
1,915
4,013
– 710
3,303
1,103
– 710
393
156
Gains and losses on financial instruments
The following table shows the net gains and losses arising for each of the categories of financial instrument defined
by IAS 39:
in € million
Held for trading
2014
2013
Gains / losses from the use of derivative instruments
– 971
571
Available-for-sale
Gains and losses on sale and fair value measurement of marketable securities held for sale
(including investments in subsidiaries and participations measured at cost)
Net income from participations and investments
Accumulated other equity
Balance at 1 January
Total change during the year
thereof recognised in the income statement during the period under report
Balance at 31 December
Loans and receivables
Impairment losses / reversals of impairment losses
Other income / expenses
Other liabilities
Income / expenses
– 65
3
135
6
– 69
141
– 278
– 506
– 57
10
108
27
– 40
135
– 310
126
238
– 235
Gains / losses from the use of derivatives relate pri
marily to fair value gains or losses arising on standalone
derivatives.
Net interest income from interest rate and interest
rate / currency swaps amounted to € 101 million (2013:
€ 126 million).
Impairment losses of € 152 million (2013: € 73 million)
were recognised in the income statement in 2014 on
availableforsale securities accounted for as participa
tions, for which fair value changes had previously been
recognised directly in equity. Reversals of impairment
losses on marketable securities amounting to € 7 million
(2013: € 70 million) were recognised directly in equity.
The disclosure of interest income resulting from the un
winding of interest on future expected receipts would
normally only be relevant for the BMW Group where as
sets have been discounted as part of the process of de
termining impairment losses. However, as a result of the
assumption that most of the income that is subsequently
recovered is received within one year and the fact that
the impact is not material, the BMW Group does not dis
count assets for the purposes of determining impairment
losses.
Cash flow hedges
The effect of cash flow hedges on accumulated other
equity was as follows:
in € million
Balance at 1 January
Total changes during the year
thereof reclassified to the income statement
Balance at 31 December
2014
2013
1,136
– 1,616
– 255
– 480
202
934
– 179
1,136
Fair value gains and losses recognised on derivatives and
recorded initially in accumulated other equity are re
classified to cost of sales when the derivatives mature.
As in the previous year, no gains / losses were recognised
in “Financial Result” in 2014 in connection with fore
casting errors and the resulting overhedging of currency
exposures. Losses attributable to the ineffective portion
of cash flow hedges amounting to € 27 million were rec
ognised in “Financial Result” (2013: gains of € 8 million).
Losses of € 6 million (2013: € – million) arising in con
nection with forecasting errors relating to cash flow
hedges for commodities and gains of € 6 million (2013:
loss of € 8 million) attributable to the ineffective portion
of commodity hedges were recognised in “Financial
Result” in 2014.
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
157 Group Financial StatementS
At 31 December 2014 the BMW Group held derivative
financial instruments (mainly forward currency and op
tion contracts) with terms of up to 60 months (2013:
60 months) in order to hedge currency risks attached to
future transactions. These derivative instruments are
intended to hedge forecast sales denominated in a for
eign currency over the coming 60 months. The income
statement impact of the hedged cash flows will be rec
ognised as a general rule in the same periods in which
external revenues are recognised. It is expected that
€ 278 million of net losses, recognised in equity at the
end of the reporting period, will be reclassified to profit
and loss in the new financial year (2013: net gains of
€ 162 million).
At 31 December 2014 the BMW Group held derivative
financial instruments (mostly interest rate swaps) with
terms of up to one month (2013: 13 months) to hedge
interest rate risks. These derivative instruments are in
tended to hedge interestrate risks arising on financial
instruments with variable interest payments within
the coming month. The income statement impact of the
hedged cash flows will be recognised as a general rule
in the same periods over which the relevant interest
rates are fixed. It is expected that € 1 million of net
losses, recognised in equity at the end of the reporting
period, will be reclassified to profit and loss in the new
financial year (2013: € – million).
At 31 December 2014 the BMW Group held derivative
financial instruments (mostly commodity swaps) with
terms of up to 59 months (2013: 60 months) to hedge
raw materials price risks attached to future transactions
over the coming 59 months. The income statement im
pact of the hedged cash flows will be recognised as a
general rule in the same period in which the derivative
instruments mature. It is expected that € 54 million of
net losses, recognised in equity at the end of the report
ing period, will be reclassified to profit and loss in the
new financial year (2013: € 60 million).
Fair value hedges
The following table shows gains and losses on hedging
instruments and hedged items which are deemed to be
part of a fair value hedge relationship:
in € million
31. 12. 2014
31. 12. 2013
Gains / losses on hedging instruments designated as part of a fair value hedge relationship
Gains / losses from hedged items
Ineffectiveness of fair value hedges
369
– 359
10
– 525
503
– 22
The difference between the gains / losses on hedging
instruments (mostly interest rate swaps) and the results
recognised on hedged items represents the ineffective
portion of fair value hedges.
Fair value hedges are mainly used to hedge the market
prices of bonds, other financial liabilities and receivables
from sales financing.
Bad debt risk
Notwithstanding the existence of collateral accepted,
the carrying amounts of financial assets generally take
account of the maximum credit risk arising from the
possibility that the counterparties will not be able to ful
fil their contractual obligations. The maximum credit risk
for irrevocable credit commitments relating to credit
card business amounts to € 1,181 million (2013: € 943 mil
lion). The equivalent figure for dealer financing is
€ 22,025 million (2013: € 19,856 million).
counterparty obtained or historical data based on the
existing business relationship (i. e. payment patterns to
date) reviewed in order to minimise the credit risk, all
depending on the nature and amount of the exposure
that the BMW Group is proposing to enter into.
Within the financial services business, the financed
items (e. g. vehicles, equipment and property) in the re
tail customer and dealer lines of business serve as first
ranking collateral with a recoverable value. Security is
also put up by customers in the form of collateral asset
pledges, asset assignment and firstranking mortgages,
supplemented where appropriate by warranties and
guarantees. If an item previously accepted as collateral
is acquired, it undergoes a multistage process of repos
session and disposal in accordance with the legal situa
tion prevailing in the relevant market. The assets in
volved are generally vehicles which can be converted
into cash at any time via the dealer organisation.
In the case of performance relationships underlying
nonderivative financial instruments, collateral will be
required, information on the creditstanding of the
Impairment losses are recorded as soon as credit risks
are identified on individual financial assets, using a
methodology specifically designed by the BMW Group.
158
More detailed information regarding this methodology
is provided in the section on accounting policies (note 6).
Creditworthiness testing is an important aspect of the
BMW Group’s credit risk management. Every borrower’s
creditworthiness is tested for all credit financing and
lease contracts entered into by the BMW Group. In the
case of retail customers, creditworthiness is assessed
using validated scoring systems integrated into the pur
chasing process. In the area of dealer financing, credit
worthiness is assessed by means of ongoing credit
monitoring and an internal rating system that takes ac
count not only of the tangible situation of the borrower
but also of qualitative factors such as past reliability in
business relations.
The credit risk relating to derivative financial instru
ments is minimised by the fact that the Group only
enters into such contracts with parties of firstclass
credit standing. The general credit risk on derivative
financial instruments utilised by the BMW Group is
therefore not considered to be significant.
A concentration of credit risk with particular borrowers
or groups of borrowers has not been identified in con
junction with financial instruments.
Further disclosures relating to credit risk – in particular
with regard to the amounts of impairment losses recog
nised – are provided in the explanatory notes to the
relevant categories of receivables in notes 28, 29 and 33.
Liquidity risk
The following table shows the maturity structure of ex
pected contractual cash flows (undiscounted) for finan
cial liabilities:
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
31 December 2014
in € million
Bonds
Liabilities to banks
Liabilities from customer deposits (banking)
Commercial paper
Asset backed financing transactions
Derivative instruments
Trade payables
Other financial liabilities
Total
31 December 2013
in € million
Bonds
Liabilities to banks
Liabilities from customer deposits (banking)
Commercial paper
Asset backed financing transactions
Derivative instruments
Trade payables
Other financial liabilities
Total
Maturity
within
one year
Maturity
between one
and five years
9,266
8,110
9,225
5,601
3,882
2,100
7,581
177
23,786
3,432
3,461
–
7,226
1,317
129
434
45,942
39,785
Maturity
later than
five years
4,232
489
–
–
77
1
–
500
5,299
Maturity
within
one year
Maturity
between one
and five years
Maturity
later than
five years
7,933
4,686
9,405
6,294
2,814
426
7,283
210
21,434
4,328
3,243
–
7,614
659
195
361
39,051
37,834
3,043
126
–
–
32
80
–
367
3,648
Total
37,284
12,031
12,686
5,601
11,185
3,418
7,710
1,111
91,026
Total
32,410
9,140
12,648
6,294
10,460
1,165
7,478
938
80,533
The cash flows shown comprise principal repayments
and the related interest. The amounts disclosed for de
rivatives comprise only cash flows relating to derivatives
that have a negative fair value at the balance sheet date.
At 31 December 2014 irrevocable credit commitments
to dealers which had not been called upon at the end of
159 Group Financial StatementS
the reporting period amounted to € 7,247 million (2013:
€ 6,760 million).
maining after netting. Financial instruments are only
used to hedge underlying positions or forecast trans
actions.
Solvency is assured at all times by managing and moni
toring the liquidity situation on the basis of a rolling
cash flow forecast. The resulting funding requirements
are secured by a variety of instruments placed on the
world’s financial markets. The objective is to minimise
risk by matching maturities for the Group’s financing
requirements within the framework of the target debt
structure. The BMW Group has good access to capital
markets as a result of its solid financial position and a
diversified refinancing strategy. This is underpinned by
the longstanding long and shortterm ratings issued
by Moody’s and Standard & Poor’s.
The scope of permitted transactions, responsibilities,
financial reporting procedures and control mechanisms
used for financial instruments are set out in internal
guidelines. This includes, above all, a clear separation of
duties between trading and processing. Currency, inter
est rate and raw materials price risks of the BMW Group
are managed at a corporate level.
Further information is provided in the “Report on out
look, risks and opportunities” section of the Combined
Management Report.
Shortterm liquidity is managed primarily by issuing
money market instruments (commercial paper). In this
area too, competitive refinancing conditions can be
achieved thanks to Moody’s and Standard & Poor’s short
term ratings of P1 and A1 respectively.
Also reducing liquidity risk, additional secured and
unsecured lines of credit are in place with firstclass in
ternational banks, including a syndicated credit line
totalling € 6 billion (2013: € 6 billion). Intragroup cash
flow fluctuations are evened out by the use of daily cash
pooling arrangements.
Currency risks
As an enterprise with worldwide operations, business
is conducted in a variety of currencies, from which cur
rency risks arise. Since a significant portion of Group
revenues is generated outside the euro currency region
and the procurement of production material and fund
ing is also organised on a worldwide basis, the currency
risk is an extremely important factor for Group earnings.
At 31 December 2014 derivative financial instruments,
mostly in the form of forward currency and option con
tracts, were in place to hedge the main currencies.
Market risks
The principal market risks to which the BMW Group
is exposed are currency risk, interest rate risk and raw
materials price risk.
A description of the management of this risk is pro
vided in the Combined Management Report. The BMW
Group measures currency risk using a cashflowatrisk
model.
Protection against such risks is provided in the first in
stance through natural hedging which arises when
the values of nonderivative financial instruments have
matching maturities and amounts (netting). Derivative
financial instruments are used to reduce the risk re
The starting point for analysing currency risk with this
model is the identification of forecast foreign currency
transactions or “exposures”. At the end of the reporting
period, the principal exposures for the relevant coming
year were as follows:
in € million
Euro / Chinese Renminbi
Euro / US Dollar
Euro / British Pound
Euro / Russian Rouble
Euro / Japanese Yen
31. 12. 2014
31. 12. 2013
10,937
10,691
4,743
4,818
758
1,004
4,401
3,852
1,738
1,469
160
In the next stage, these exposures are compared to all
hedges that are in place. The net cash flow surplus rep
resents an uncovered risk position. The cashflowat
risk approach involves allocating the impact of potential
exchange rate fluctuations to operating cash flows on
the basis of probability distributions. Volatilities and
correlations serve as input factors to assess the relevant
probability distributions.
The potential negative impact on earnings is computed
for each currency for the following financial year on the
basis of current market prices and exposures to a confi
dence level of 95 % and a holding period of up to one
year. Correlations between the various currencies are
taken into account when the risks are aggregated, thus
reducing the overall risk.
The following table shows the potential negative impact
for the BMW Group – measured on the basis of the
cashflowatrisk approach – attributable to unfavoura
ble changes in exchange rates. The impact for the prin
cipal currencies, in each case for the following financial
year, is as follows:
in € million
Euro / Chinese Renminbi
Euro / US Dollar
Euro / British Pound
Euro / Russian Rouble
Euro / Japanese Yen
31. 12. 2014
31. 12. 2013
173
73
66
160
6
197
65
80
109
44
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
Currency risk for the BMW Group is concentrated on
the currencies referred to above.
Interest rate risks
The BMW Group’s financial management system involves
the use of standard financial instruments such as short
term deposits, investments in variable and fixedincome
securities as well as securities funds. The BMW Group
is therefore exposed to risks resulting from changes in
interest rates.
These risks arise when funds with differing fixedrate
periods or differing terms are borrowed and invested. All
items subject to, or bearing, interest are exposed to in
terest rate risk. Interest rate risks can affect either side
of the balance sheet.
The fair values of the Group’s interest rate portfolios for
the five main currencies were as follows at the end of the
reporting period:
in € million
Euro*
US Dollar
British Pound
Chinese Renminbi
Japanese Yen
31. 12. 2014
31. 12. 2013
17,535
12,087
5,091
574
113
16,495
11,931
3,960
1,787
189
* Prior year figures amended for one additional interest-bearing exposure.
Interest rate risks can be managed by the use of interest
rate derivatives. The interest rate contracts used for
hedging purposes comprise mainly swaps which are ac
counted for on the basis of whether they are designated
as a fair value hedge or as a cash flow hedge. A descrip
tion of the management of interest rate risks is provided
in the Combined Management Report.
As stated there, the BMW Group applies a groupwide
valueatrisk approach for internal reporting purposes
and to manage interest rate risks. This is based on a
stateoftheart historical simulation, in which the
potential future fair value losses of the interest rate
portfolios are compared across the Group with ex
pected amounts measured on the basis of a holding
period of 250 days and a confidence level of 99.98 %.
Aggregation of these results creates a risk reduction
effect due to correlations between the various port
folios.
161 Group Financial StatementS
In the following table the potential volumes of fair value
fluctuations – measured on the basis of the valueatrisk
approach – are compared with the expected value for
the interestratesensitive exposures of the BMW Group:
in € million
Euro*
US Dollar
British Pound
Chinese Renminbi
Japanese Yen
31. 12. 2014
31. 12. 2013
398
347
108
44
11
363
246
62
11
6
* Prior year figures amended for the value-at-risk of one additional interest-bearing exposure.
Raw materials price risk
The BMW Group is exposed to the risk of price fluctua
tions for raw materials. A description of the management
of these risks is provided in the Combined Management
Report.
The first step in the analysis of the raw materials price
risk is to determine the volume of planned purchases
of raw materials (and components containing those raw
materials). These amounts, which represent the gross
exposure, were as follows at each reporting date for the
following financial year:
in € million
Raw materials price exposures
31. 12. 2014
31. 12. 2013
3,770
4,550
In the next stage, these exposures are compared to all
hedges that are in place. The net cash flow surplus
represents an uncovered risk position. The cashflowat
risk approach involves allocating the impact of potential
raw materials fluctuations to operating cash flows on
the basis of probability distributions. Volatilities and cor
relations serve as input factors to assess the relevant
probability distributions.
The potential negative impact on earnings is com
puted for each raw material category for the following
financial year on the basis of current market prices
and exposure to a confidence level of 95 % and a hold
ing period of up to one year. Correlations between the
various categories of raw materials are taken into ac
count when the risks are aggregated, thus reducing the
overall risk.
The following table shows the potential negative impact
for the BMW Group – measured on the basis of the cash
flowatrisk approach – attributable to fluctuations in
prices across all categories of raw materials. The risk at
each reporting date for the following financial year was
as follows:
in € million
Cash flow at risk
31. 12. 2014
31. 12. 2013
230
405
44
Explanatory notes to the cash flow statements
The cash flow statements show how the cash and cash
equivalents of the BMW Group and of the Automotive
and Financial Services segments have changed in the
course of the year as a result of cash inflows and cash
outflows. In accordance with IAS 7 (Statement of Cash
Flows), cash flows are classified into cash flows from
operating, investing and financing activities.
Cash and cash equivalents included in the cash flow
statement comprise cash in hand, cheques, and cash at
bank, to the extent that they are available within three
months from the end of the reporting period and are
subject to an insignificant risk of changes in value.
The cash flows from investing and financing activities
are based on actual payments and receipts. By con
trast, the cash flow from operating activities is derived
indirectly from the net profit for the year. Under this
method, changes in assets and liabilities relating to
operating activities are adjusted for currency translation
effects and changes in the composition of the Group.
162
The changes in balance sheet positions shown in the
cash flow statement do not therefore agree directly with
the amounts shown in the Group and segment balance
sheets.
Cash inflows and outflows relating to operating leases,
where the BMW Group is the lessor, are aggregated and
shown on the line “Change in leased products” within
cash flows from operating activities.
The net change in receivables from sales financing (in
cluding finance leases, where the BMW Group is the
lessor) is also reported within cash flows from operating
activities.
Income taxes paid and interest received are classified
as cash flows from operating activities in accordance
with IAS 7.31 and IAS 7.35. Interest paid is presented
on a separate line within cash flows from financing ac
tivities. Dividends received in the financial year 2014
amounted to € 1 million (2013: € 4 million).
45 Related party relationships
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
In accordance with IAS 24 (Related Party Disclosures),
related individuals or entities which have the ability to
control the BMW Group or which are controlled by the
BMW Group, must be disclosed unless such parties are
already included in the Group Financial Statements of
BMW AG as consolidated companies. Under the con
trol concept established in IFRS 10, an investor controls
another entity when it is exposed to or has rights to
variable returns from its involvement with the investee
and has the ability to affect those returns through its
power over the investee.
In addition, the disclosure requirements of IAS 24 also
cover transactions with associated companies, joint
ventures, joint operations and individuals that have the
ability to exercise significant influence over the finan
cial and operating policies of the BMW Group. This also
includes close relatives and intermediary entities. Sig
nificant influence over the financial and operating poli
cies of the BMW Group is presumed when a party holds
20 % or more of the voting power of BMW AG. In addi
tion, the requirements contained in IAS 24 relating to
key management personnel and close members of their
families or intermediary entities are also applied. In the
case of the BMW Group, this applies to members of the
Board of Management and Supervisory Board.
with these companies are small in scale, arise in the
normal course of business and are conducted on the
basis of arm’s length principles.
Transactions of BMW Group companies with the joint
venture BMW Brilliance Automotive Ltd., Shenyang,
all arise in the normal course of business and are con
ducted on the basis of arm’s length principles. Group
companies sold goods and services to BMW Brilliance
Automotive Ltd., Shenyang, during the financial year
under report for an amount of € 4,417 million (2013:
€ 3,588 million). At 31 December 2014, receivables of
Group companies from BMW Brilliance Automotive
Ltd., Shenyang, totalled € 943 million (2013: € 898 mil
lion). Group companies had no payables to BMW
Brilliance Automotive Ltd., Shenyang, at the end of
the reporting period (2013: € 66 million). Group compa
nies received goods and services from BMW Brilliance
Automotive Ltd., Shenyang, in 2014 for an amount of
€ 34 million (2013: € 31 million).
All relationships of BMW Group entities with the joint
ventures DriveNow GmbH & Co. KG, Munich, and
DriveNow Verwaltungs GmbH, Munich, are conducted
on the basis of arm’s length principles. Transactions
with these entities arise in the normal course of business
and are small in scale.
In the financial year 2014, the disclosure requirements
contained in IAS 24 affect the BMW Group with re
gard to business relationships with nonconsolidated
subsidiaries, joint ventures, joint operations and asso
ciated companies as well as with members of the Board
of Management and Supervisory Board of BMW AG.
The BMW Group maintains normal business relation
ships with non-consolidated subsidiaries. Transactions
Transactions of Group companies with SGL Automotive
Carbon Fibers GmbH & Co. KG, Munich, SGL Auto
motive Carbon Fibers Verwaltungs GmbH, Munich, and
SGL Automotive Carbon Fibers LLC, Dover, DE, were
reported in their entirety in the Group Financial State
ments until 1 January 2014. As a result of the firsttime
application of IFRS 11 (Joint Arrangements) in the finan
cial year 2014, these entities are now consolidated, as
joint operations, on a proportionate basis (49 %) and
163 Group Financial StatementS
the appropriate portion of transactions eliminated on
consolidation. The remaining 51 % of the transactions
continue to be reported in the Group Financial State
ments (nonconsolidated portion) and are described be
low. Prior year figures have been adjusted accordingly.
All relationships with the joint operations are attributa
ble to the ordinary activities of the entities concerned.
All transactions were conducted on the basis of arm’s
length principles. At 31 December 2014, loans receiva
ble from the joint operations amounted to € 111 million
(2013*: € 52 million). Interest income recognised on
these loans amounted to € 2.4 million (2013*: € 1.4 mil
lion) in the financial year 2014. Goods and services re
ceived by Group companies from the joint operations
during the twelvemonth period totalled € 62 million
(2013*: € 18 million). Amounts payable to the joint oper
ations at the end of the reporting period totalled € 5 mil
lion (2013*: € 4 million).
The BMW Group maintains normal business relation
ships with associated companies. Transactions with
these companies are small in scale, arise in the normal
course of business and are conducted on the basis of
arm’s length principles.
Stefan Quandt is a shareholder and Deputy Chairman
of the Supervisory Board of BMW AG. He is also the
sole shareholder and Chairman of the Supervisory
Board of DELTON AG, Bad Homburg v. d. H., which, via
its subsidiaries, performed logisticrelated services for
the BMW Group during the financial year 2014. In addi
tion, companies of the DELTON Group used vehicles
provided by the BMW Group, mostly in the form of
leasing contracts. Stefan Quandt is also the indirect ma
jority shareholder of Solarwatt GmbH, Dresden. Co
operation arrangements are in place between BMW AG
and Solarwatt GmbH, Dresden, within the field of
electromobility. The focus of this collaboration is on
providing complete photovoltaic solutions for rooftop
systems and carports to BMW i customers. Solarwatt
GmbH, Dresden, leased vehicles from the BMW Group
in 2014. The service, cooperation and lease contracts
referred to above are not material for the BMW Group.
They all arise in the normal course of business and are
conducted on the basis of arm’s length principles.
Susanne Klatten is a shareholder and member of the
Supervisory Board of BMW AG and also a shareholder
and Deputy Chairman of the Supervisory Board of
Altana AG, Wesel. Altana AG, Wesel, acquired vehicles
from the BMW Group during the financial year 2014,
mostly in the form of lease contracts. These contracts
are not material for the BMW Group, arise in the course
of ordinary activities and are made, without exception,
on the basis of arm’s length principles.
Apart from vehicle lease contracts concluded on an
arm’s length basis, companies of the BMW Group have
not entered into any contracts with members of the
Board of Management or Supervisory Board of BMW
AG. The same applies to close members of the families
of those persons.
BMW Trust e.V., Munich, administers assets on a trustee
basis to secure obligations relating to pensions and
preretirement parttime work arrangements in Germany
and is therefore a related party of the BMW Group in
accordance with IAS 24. This entity, which is a registered
association (eingetragener Verein) under German law,
does not have any assets of its own. It did not have any
income or expenses during the period under report.
BMW AG bears expenses on a minor scale and renders
services on behalf of BMW Trust e. V., Munich.
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
46 Declaration with respect to the Corporate
Governance Code
The Board of Management and the Supervisory Board
of Bayerische Motoren Werke Aktiengesellschaft
have issued the prescribed Declaration of Compliance
pursuant to § 161 of the German Stock Corporation
Act. It is reproduced in the Annual Report 2014 of the
BMW Group and is also available to shareholders on
the BMW Group website at www.bmwgroup.com / ir.
47 Shareholdings of members of the Board of Management
and Supervisory Board
The members of the Supervisory Board of BMW AG hold
in total 27.61 % (2013: 27.62 %) of the issued common
and preferred stock shares, of which 16.06 % (2013:
16.07 %) relates to Stefan Quandt, Germany, and 11.54 %
(2013: 11.55 %) to Susanne Klatten, Germany. As at
the end of the previous financial year, shareholdings of
members of the BMW AG Board of Management account,
in total, for less than 1 % of issued shares.
164
48 Compensation of members of the Board of
Management and Supervisory Board
The total compensation of the current members of the
Board of Management and the Supervisory Board of
BMW AG for the financial year 2014 amounted to € 46.1
million (2013: € 43.4 million) and comprised the following:
in € million
Short-term employment benefits
Share-based remuneration component
Post-employment benefits
Benefits in conjunction with the termination of an employment relationship
Compensation
2014
2013
39.5
1.0
2.1
3.5
46.1
38.4
0.7
2.2
2.1
43.4
The total compensation of the current Board of Manage
ment members for 2014 amounted to € 35.7 million (2013:
€ 34.5 million). This comprised fixed components of
€ 7.7 million (2013: € 7.9 million), variable components of
€ 27.0 million (2013: € 25.9 million) and a sharebased
compensation component totalling € 1.0 million (2013:
€ 0.7 million). Pension obligations to current members of
the Board of Management are covered by provisions
amounting to € 31.3 million (2013: € 24.8 million), com
puted in accordance with IAS 19 (Employee Benefits).
The compensation of the members of the Supervisory
Board for the financial year 2014 amounted to € 4.8 mil
lion (2013: € 4.6 million). This comprised fixed compo
nents of € 2.0 million (2013: € 2.0 million) and variable
components of € 2.8 million (2013: € 2.6 million).
The remuneration of former members of the Board
of Management and their dependants amounted to
€ 5.8 million (2013: € 4.7 million).
Pension obligations to former members of the Board
of Management and their surviving dependants are
covered by pension provisions amounting to € 68.4 mil
lion (2013: € 58.0 million), computed in accordance with
IAS 19.
The compensation systems for members of the Super
visory Board do not include any stock options, value
appreciation rights comparable to stock options or any
other stockbased compensation components. Apart
from vehicle lease contracts entered into on customary
market conditions, no advances or loans were granted to
members of the Board of Management and the Super
visory Board, nor were any contingent liabilities entered
into on their behalf.
Further details about the remuneration of current mem
bers of the Board of Management and the Supervisory
Board can be found in the Compensation Report, which
is part of the Combined Management Report.
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
49
Application of exemption provisions
A number of companies and incorporated partnerships
(as defined by § 264 a HGB) which are consolidated sub
sidiaries of BMW AG and for which the Group Financial
Statements of BMW AG represent exempting consoli
dated financial statements, apply the exemptions available
in § 264 (3) and § 264b HGB with regard to the drawing
up of a management report. The exemptions have been
applied by:
– Bavaria Wirtschaftsagentur GmbH, Munich
– BMW Fahrzeugtechnik GmbH, Eisenach
– BMW Hams Hall Motoren GmbH, Munich
– BMW M GmbH Gesellschaft für individuelle
Automobile, Munich
– RollsRoyce Motor Cars GmbH, Munich
The following German entities apply the exemption
available in § 264 (3) and § 264 b HGB with regard to
publication:
– Bavaria Wirtschaftsagentur GmbH, Munich
– Alphabet International GmbH, Munich
– BMW Hams Hall Motoren GmbH, Munich
– BMW M GmbH Gesellschaft für individuelle
Automobile, Munich
– BMW INTEC Beteiligungs GmbH, Munich
– BMW Verwaltungs GmbH, Munich
– RollsRoyce Motor Cars GmbH, Munich
– BMW Beteiligungs GmbH & Co. KG, Munich
In addition, the Dutch entity, BMW International
Holding B. V., The Hague, applies the exemption pro
vision contained in Article 2:403 of the Civil Code
of the Netherlands.
165 Group Financial StatementS
BMW Group
Notes to the Group Financial Statements
Segment Information
50
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 oper
ating segments in accordance with IFRS 8 (Operating
Segments). Operating segments are identified on the
same basis that is used internally to manage and report
on performance and takes account of the organisational
structure of the BMW Group based on the various prod
ucts 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 offroad vehicles, under the
brands BMW, MINI and RollsRoyce 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. RollsRoyce brand vehicles are sold
in the USA, China and Russia via subsidiary companies
and elsewhere by independent, authorised dealers.
The BMW Motorcycles segment develops, manufac
tures, assembles and sells motorcycles as well as spare
parts and accessories.
The principal lines of business of the Financial Services
segment are car leasing, fleet business, multibrand busi
ness, retail customer and dealer financing, customer de
posit business and insurance activities.
Holding and Group financing companies are included in
the Other Entities segment. This segment also includes
operating companies – BMW Services Ltd., Farnborough,
BMW (UK) Investments Ltd., Farnborough, Bavaria Lloyd
Reisebüro GmbH, Munich, and MITEC Mikroelektronik
Mikrotechnik Informatik GmbH, Munich, – which are
not allocated to one of the other segments.
Internal management and reporting
Segment information is prepared in conformity with
the accounting policies adopted for preparing and
presenting the Group Financial Statements. Excep
tions to this general principle is the treatment of inter
segment warranties (the earnings impact of which
is allocated to the Automotive and Financial Services
segments on the basis used internally to manage the
business) and crosssegment impairment losses on
investments in subsidiaries. Intersegment receivables
and payables, provisions, 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 respect
to resource allocation and performance assessment of
the reportable segment is embodied in the full Board of
Management. In order to assist the decisiontaking pro
cess, various measures of segment performance as well
as segment assets have been set for the various operat
ing segments.
The performance of the Automotive and Motorcycles
segments is managed on the basis of return on capital
employed (RoCE). The relevant measure of segment
results used is therefore profit before financial result.
Capital employed is the corresponding measure of seg
ment assets used to determine how to allocate resources
and comprises all current and noncurrent operational
assets after deduction of liabilities used operationally
which are not subject to interest (e. g. trade payables).
The performance of the Financial Services segment is
measured on the basis of return on equity (RoE), with
profit before tax therefore representing the measure of
segment result used. For this reason, the measure of
segment assets in the Financial Services segment corre
sponds to net assets, defined as total assets less total
liabilities.
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 intragroup investments.
166
Segment information by operating segment is as follows:
Segment information by operating segment
in € million
External revenues
Inter-segment revenues
Total revenues
Segment result
Income from equity accounted investments
Capital expenditure on non-current assets
Depreciation and amortisation on non-current assets
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
in € million
Segment assets
Investments accounted for using the equity method
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
Automotive
Motorcycles
Financial
Services
Other Entities
Reconciliation to
Group figures
Group
2014
2013*
2014
2013
2014
2013*
2014
2013
2014
2013*
2014
2013*
59,654
15,519
75,173
7,244
655
6,022
4,080
56,286
14,344
70,630
6,649
407
6,659
3,657
1,671
8
1,679
112
–
69
64
1,495
9
1,504
79
–
85
65
19,073
1,526
20,599
1,723
–
19,206
7,539
18,276
1,598
19,874
1,619
–
17,484
7,021
3
4
7
154
–
–
–
2
4
164
–
–
–
–
–
80,401
76,059
External revenues
– 17,057
– 15,955
–
–
Inter-segment revenues
6
– 17,057
– 15,955
80,401
76,059
Total revenues
– 526
–
– 4,621
– 4,112
– 618
–
– 4,325
– 3,787
8,707
655
20,676
7,571
7,893
Segment result
407
Income from equity accounted investments
19,903
Capital expenditure on non-current assets
6,956
Depreciation and amortisation on non-current assets
Automotive
Motorcycles
Financial
Services
Other Entities
Reconciliation to
Group figures
Group
31. 12. 2014
31. 12. 2013*
31. 12. 2014
31. 12. 2013
31. 12. 2014
31. 12. 2013*
31. 12. 2014
31. 12. 2013*
31. 12. 2014
31. 12. 2013*
31. 12. 2014
31. 12. 2013*
11,489
1,088
10,318
638
575
–
488
–
9,357
–
8,388
–
61,516
55,300
71,866
63,883
154,803
138,377
Segment assets
–
–
–
–
1,088
638
Investments accounted for using the equity method
167 Group Financial StatementS
Segment information by operating segment
in € million
External revenues
Inter-segment revenues
Total revenues
Segment result
Income from equity accounted investments
Capital expenditure on non-current assets
Depreciation and amortisation on non-current assets
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
in € million
Segment assets
Investments accounted for using the equity method
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
Automotive
Motorcycles
Financial
Services
Other Entities
Reconciliation to
Group figures
Group
2014
2013*
2014
2013
2014
2013*
2014
2013
2014
2013*
2014
2013*
59,654
15,519
75,173
7,244
655
6,022
4,080
56,286
14,344
70,630
6,649
407
6,659
3,657
1,671
8
1,679
112
–
69
64
1,495
9
1,504
79
–
85
65
19,073
1,526
20,599
1,723
–
19,206
7,539
18,276
1,598
19,874
1,619
–
17,484
7,021
3
4
7
154
–
–
–
2
4
–
–
80,401
76,059
External revenues
– 17,057
– 15,955
–
–
Inter-segment revenues
6
– 17,057
– 15,955
80,401
76,059
Total revenues
164
–
–
–
– 526
–
– 4,621
– 4,112
– 618
–
– 4,325
– 3,787
8,707
655
20,676
7,571
7,893
Segment result
407
19,903
Income from equity accounted investments
Capital expenditure on non-current assets
6,956
Depreciation and amortisation on non-current assets
Automotive
Motorcycles
Financial
Services
Other Entities
Reconciliation to
Group figures
Group
31. 12. 2014
31. 12. 2013*
31. 12. 2014
31. 12. 2013
31. 12. 2014
31. 12. 2013*
31. 12. 2014
31. 12. 2013*
31. 12. 2014
31. 12. 2013*
31. 12. 2014
31. 12. 2013*
11,489
1,088
10,318
638
575
–
488
–
9,357
–
8,388
–
61,516
55,300
71,866
63,883
154,803
138,377
Segment assets
–
–
–
–
1,088
638
Investments accounted for using the equity method
168
Writedowns on inventories to their net realisable value
amounting to € 29 million (2013: € 28 million) were recog
nised by the Automotive segment in the financial year
2014. Reversals of writedowns during the same period
amounted to € 3 million (2013: € 4 million).
Impairment losses on other investments amounting to
€ 153 million (2013: € 84 million) relating to the Automo
tive segment were recognised as part of the financial
result and are therefore not included in segment result.
Interest and similar income of the Financial Services
segment is a component of segment result and totalled
€ 4 million (2013: € 5 million). Interest and similar ex
penses of the Financial Services segment amounted to
€ 29 million (2013*: € 27 million).
Financial Services segment result was negatively im
pacted by impairment losses totalling € 268 million
in € million
Reconciliation of segment result
Total for reportable segments
Financial result of Automotive segment and Motorcycles segment
Elimination of inter-segment items
Group profit before tax
Reconciliation of capital expenditure on non-current assets
Total for reportable segments
Elimination of inter-segment items
Total Group capital expenditure on non-current assets
Reconciliation of depreciation and amortisation on non-current assets
Total for reportable segments
Elimination of inter-segment items
Total Group depreciation and amortisation on non-current assets
recognised on leased products. Reversals of impair
ment losses amounted to € 169 million.
The Other Entities segment result includes interest
and similar income amounting to € 1,295 million (2013:
€ 1,340 million) and interest and similar expenses
amounting to € 1,197 million (2013: € 1,279 million). The
segment result was not impacted by any impairment
losses in the financial year 2014 (2013: € 7 million).
The information disclosed for capital expenditure and
depreciation and amortisation relates to noncurrent
property, plant and equipment, intangible assets and
leased products.
Segment figures can be reconciled to the corresponding
Group figures as follows:
2014
2013*
9,233
– 363
– 163
8,707
25,297
– 4,621
20,676
11,683
– 4,112
7,571
8,511
– 91
– 527
7,893
24,228
– 4,325
19,903
10,743
– 3,787
6,956
in € million
31. 12. 2014
31. 12. 2013*
Reconciliation of segment assets
Total for reportable segments
Non-operating assets – Other Entities segment
Operating liabilities – Financial Services segment
Interest-bearing assets – Automotive and Motorcycles segments
Liabilities of Automotive and Motorcycles segments not subject to interest
Elimination of inter-segment items
Total Group assets
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
82,937
6,658
96,959
39,449
28,488
– 99,688
154,803
74,494
5,989
83,942
37,357
25,473
– 88,878
138,377
90 GROUP FINANCIAL STATEMENTS
90 Income Statements
90 Statement of
Comprehensive Income
92 Balance Sheets
94 Cash Flow Statements
96 Group Statement of Changes in
Equity
98 Notes
98 Accounting Principles and
Policies
116 Notes to the Income Statement
123 Notes to the Statement
of Comprehensive Income
124 Notes to the Balance Sheet
149 Other Disclosures
165 Segment Information
169 Group Financial StatementS
In the case of information by geographical region, exter
nal sales are based on the location of the customer’s
registered office. Revenues with major customers were
not material overall. The information disclosed for non
current assets relates to property, plant and equip
ment, intangible assets and leased products. Elimina
tions disclosed for noncurrent assets relate to leased
products.
External
revenues
Non-current
assets
2014
2013*
2014
2013*
12,992
13,666
15,002
24,635
2,961
11,145
–
11,797
12,691
15,348
22,552
3,103
10,568
–
80,401
76,059
27,137
17,093
25
11,643
2,050
1,102
– 5,204
53,846
25,320
12,911
21
10,651
1,668
1,025
– 4,335
47,261
Information by region
in € million
Germany
USA
China
Rest of Europe
Rest of the Americas
Other
Eliminations
Group
* Prior year figures have been adjusted in accordance with IAS 8, see note 9.
Munich, 19 February 2015
Bayerische Motoren Werke
Aktiengesellschaft
The Board of Management
Dr.Ing. Dr.Ing. E. h. Norbert Reithofer
Milagros Caiña CarreiroAndree
Dr.Ing. Klaus Draeger
Dr. Friedrich Eichiner
Klaus Fröhlich
Harald Krüger
Dr. Ian Robertson (HonDSc)
Peter Schwarzenbauer
170
STATEMENT ON CORPORATE GOVERNANCE
Good corporate governance – acting in accordance with
the principles of responsible management aimed at in
creasing the value of the business on a sustainable basis –
is an essential requirement for the BMW Group em
bracing all areas of the business. Corporate culture within
the BMW Group is founded on transparent reporting
and internal communication, a policy of corporate
governance aimed at the interests of stakeholders, fair
and open dealings between the Board of Management
and the Supervisory Board as well as among employees
and compliance with the law. The Board of Management
and Supervisory Board report in this statement on
important aspects of corporate governance pursuant to
§ 289 a HGB and section 3.10 of the German Corporate
Governance Code (GCGC).
Information on the Company’s Governing Constitution
The designation “BMW Group” comprises Bayerische
Motoren Werke Aktiengesellschaft (BMW AG) and its
group entities. BMW AG is a stock corporation (Aktien
gesellschaft) based on the German Stock Corporation
Act (Aktiengesetz) and has its registered office in
Munich, Germany. It has three representative bodies:
the Annual General Meeting, the Supervisory Board
and the Board of Management. The duties and authori
ties of those bodies derive from the Stock Corporation
Act and the Articles of Incorporation of BMW AG.
Shareholders, as the owners of the business, exercise
their rights at the Annual General Meeting. The Annual
General Meeting decides in particular on the utilisation
of unappropriated profit, the ratification of the acts
of the members of the Board of Management and of the
Supervisory Board, the appointment of the external
auditor, changes to the Articles of Incorporation, speci
fied capital measures and elects the shareholders’
representatives to the Supervisory Board. The Board of
Management manages the enterprise under its own
responsibility. Within this framework, it is monitored
and advised by the Supervisory Board. The Supervisory
Board appoints the members of the Board of Manage
ment and can, at any time, revoke an appointment if
there is an important reason. The Board of Manage
ment keeps the Supervisory Board informed of all sig
nificant matters regularly, promptly and comprehen
sively, following the principles of conscientious and
faithful accountability and in accordance with prevailing
law and the reporting duties allocated to it by the Super
visory Board. The Board of Management requires
the approval of the Supervisory Board for certain major
transactions. The Supervisory Board is not, however,
authorised to undertake management measures itself.
In accordance with the requirements of the German
Codetermination Act for companies that generally em
ploy more than 20,000 people, the Supervisory Board
of BMW AG is required to comprise ten shareholder
representatives elected at the Annual General Meeting
(Supervisory Board members representing equity or
shareholders) and ten employees elected in accordance
with the provisions of the Codetermination Act (Super
visory Board members representing employees). The
ten Supervisory Board members representing employees
comprise seven Company employees, including one
executive staff representative, and three members elected
following nomination by unions.
The close interaction between Board of Management
and Supervisory Board in the interests of the enterprise
as described above is also known as a “twotier board
structure”.
Declaration of Compliance and the BMW Group
Corporate Governance Code
Management and supervisory boards of companies listed
in Germany are required by law (§ 161 German Stock
Corporation Act) to report once a year whether the offi
cially published and relevant recommendations issued
by the “German Government Corporate Governance
Code Commission”, as valid at the date of the declara
tion, have been, and are being, complied with. Com
panies affected are also required to state which of the
recommendations of the Code have not been or are not
being applied, stating the reason or reasons. The full
text of the declaration, together with explanatory com
ments, is shown on the following page of this Annual
Report.
The Board of Management and the Supervisory Board
approved the Group’s own Corporate Governance Code
based on the GCGC in previous years in order to pro
vide interested parties with a comprehensive and stand
alone document covering the corporate governance
practices applied by the BMW Group. A coordinator
responsible for all corporate governance issues reports
directly and on a regular basis to the Board of Manage
ment and Supervisory Board.
The Corporate Governance Code for the BMW Group,
together with the Declaration of Compliance, Articles
of Incorporation and other information, can be viewed
and / or downloaded from the BMW Group’s website at
www.bmwgroup.com/ir under the menu items “Corpo
rate Facts” and “Corporate Governance”.
170 STATEMENT ON
CORPORATE GOVERNANCE
(Part of Management Report)
170 Information on the Company’s
Governing Constitution
171 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§ 161 AktG
172 Members of the Board of
Management
173 Members of the Supervisory
Board
176 Work Procedures of the
Board of Management
178 Work Procedures of the
Supervisory Board
183 Information on Corporate
Governance Practices
184 Compliance in the BMW Group
189 Compensation Report
171 Statement on corporate Governance
Declaration by the Board of Management and the
Supervisory Board of Bayerische Motoren Werke
Aktiengesellschaft with respect to the recommen dations
of the “Government Commission on the German
Corporate Governance Code” pursuant to § 161 German
Stock Corporation Act
The Board of Management and Supervisory Board
of Bayerische Motoren Werke Aktiengesellschaft
(“BMW AG”) declare the following regarding the recom
mendations of the “Government Commission on the
German Corporate Governance Code”:
1. Since issuance of the last Declaration in December
2013, BMW AG has complied with all of the recommen
dations published officially on 10 June 2013 (Code
version dated 13 May 2013), to the extent that they were
already applicable.
2. BMW AG will in future comply with all of the recom
mendations published on 30 September 2014 in the
electronic Federal Gazette (Code version dated 24 June
2014), with the following exception:
It is recommended in section 4.2.5 sentences 5 and 6
of the Code that specified information pertaining to
management board compensation be disclosed in the
Compensation Report. These recommendations will
not be complied with, due to uncertainties with respect
to their interpretation and doubts as to whether the
supplementary use of model tables would be instru
mental in making the BMW Group’s Compensation
Report transparent and generally understandable in ac
cordance with generally applicable financial reporting
requirements (see section 4.2.5 sentence 3 of the Code).
Munich, December 2014
Bayerische Motoren Werke
Aktiengesellschaft
On behalf of the
Supervisory Board
On behalf of the
Board of Management
Prof. Dr.Ing. Dr. h. c.
Dr.Ing. E. h. Joachim Milberg
Chairman
Dr.Ing. Dr.Ing. E. h.
Norbert Reithofer
Chairman
172
Members of the Board of Management
Dr.-Ing. Dr.-Ing. E. h. Norbert Reithofer (born 1956)
Chairman
Dr. Friedrich Eichiner (born 1955)
Finance
Mandates
Mandates
Siemens Aktiengesellschaft
(since 27. 01. 2015)
Henkel AG & Co. KGaA (Shareholders’ Committee)
Allianz Deutschland AG
FESTO Aktiengesellschaft
BMW Brilliance Automotive Ltd. (Deputy Chairman)
FESTO Management Aktiengesellschaft
Milagros Caiña Carreiro-Andree (born 1962)
Human Resources, Industrial Relations Director
Dr.-Ing. Herbert Diess (born 1958)
Development
(until 09. 12. 2014)
Klaus Fröhlich (born 1960)
Development
(since 09. 12. 2014)
Harald Krüger (born 1965)
Production
Mandates
Dr.-Ing. Klaus Draeger (born 1956)
Purchasing and Supplier Network
BMW (South Africa) (Pty) Ltd. (Chairman)
BMW Motoren GmbH (Chairman)
Dr. Ian Robertson (HonDSc) (born 1958)
Sales and Marketing BMW,
Sales Channels BMW Group
Mandates
Dyson James Group Limited
Peter Schwarzenbauer (born 1959)
MINI, Motorcycles, RollsRoyce,
Aftersales BMW Group
Mandates
RollsRoyce Motor Cars Limited (Chairman)
General Counsel:
Dr. Jürgen Reul
170 STATEMENT ON
CORPORATE GOVERNANCE
(Part of Management Report)
170 Information on the Company’s
Governing Constitution
171 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§ 161 AktG
172 Members of the Board of
Management
173 Members of the Supervisory
Board
176 Work Procedures of the
Board of Management
178 Work Procedures of the
Supervisory Board
183 Information on Corporate
Governance Practices
184 Compliance in the BMW Group
189 Compensation Report
Membership of other statutory supervisory boards.
Membership of equivalent national or foreign boards of business enterprises.
173 Statement on corporate Governance
Members of the Supervisory Board
Prof. Dr.-Ing. Dr. h. c. Dr.-Ing. E. h.
Joachim Milberg (born 1943)
Chairman
Former Chairman of the Board of
Management of BMW AG
Chairman of the Presiding Board, Personnel Committee
and Nomination Committee; member of Audit Committee
and the Mediation Committee
Mandates
Bertelsmann Management SE (Deputy Chairman)
Bertelsmann SE & Co. KGaA (Deputy Chairman)
FESTO Aktiengesellschaft (Deputy Chairman)
(until 25. 04. 2014)
Deere & Company
FESTO Management Aktiengesellschaft (Deputy Chairman)
(until 25. 04. 2014)
Manfred Schoch1 (born 1955)
Deputy Chairman
Chairman of the European and
General Works Council
Industrial Engineer
Member of the Presiding Board, Personnel Committee,
Audit Committee and Mediation Committee
Stefan Quandt (born 1966)
Deputy Chairman
Entrepreneur
Member of the Presiding Board, Personnel Committee,
Audit Committee, Nomination Committee and Mediation
Committee
Mandates
DELTON AG (Chairman)
AQTON SE (Chairman)
DataCard Corp. (until 11. 11. 2014)
Entrust Datacard Corp. (since 12. 11. 2014)
Stefan Schmid1 (born 1965)
Deputy Chairman
Chairman of the Works Council, Dingolfing
Member of the Presiding Board, Personnel Committee,
Audit Committee and Mediation Committee
Dr. jur. Karl-Ludwig Kley (born 1951)
Deputy Chairman
Chairman of the Executive Management of
Merck KGaA
Chairman of the Audit Committee and Independent
Finance Expert; member of the Presiding Board,
Personnel Committee and Nomination Committee
Mandates
Bertelsmann Management SE
Bertelsmann SE & Co. KGaA
Deutsche Lufthansa Aktiengesellschaft
Christiane Benner 2 (born 1968)
(since 15. 05. 2014)
Executive Member of the
Executive Board of IG Metall
Mandates
Robert Bosch GmbH
TSystems International GmbH (until 31. 07. 2014)
Bertin Eichler 2 (born 1952)
(until 15. 05. 2014)
Former Executive Member of the
Executive Board of IG Metall
Mandates
C. + H. Winter GmbH (since 01. 05. 2014)
Luitpoldhütte AG
ThyssenKrupp AG (Deputy Chairman)
(until 17. 01. 2014)
BGAG Beteiligungsgesellschaft der
Gewerkschaften GmbH (Chairman Advisory Board)
1 Employee representatives (company employees).
2 Employee representatives (union representatives).
3 Employee representatives (members of senior management).
Membership of other statutory supervisory boards.
Membership of equivalent national or foreign boards of business enterprises.
174
Franz Haniel (born 1955)
Engineer, MBA
Mandates
DELTON AG (Deputy Chairman)
Franz Haniel & Cie. GmbH (Chairman)
Heraeus Holding GmbH
Metro AG (Chairman)
secunet Security Networks AG (until 14. 05. 2014)
Giesecke & Devrient GmbH (until 08. 04. 2014)
TBG Limited
Prof. Dr. rer. nat. Dr. h. c. Reinhard Hüttl (born 1957)
Chairman of the Executive Board of
HelmholtzZentrum Potsdam Deutsches
GeoForschungsZentrum – GFZ
University Professor
Prof. Dr. rer. pol. Renate Köcher (born 1952)
Director of Institut für Demoskopie Allensbach
Gesellschaft zum Studium der öffentlichen
Meinung mbH
Mandates
Allianz SE
Infineon Technologies AG
Nestlé Deutschland AG
Robert Bosch GmbH
Ulrich Kranz3 (born 1958)
(since 15. 05. 2014)
Head of Product Line BMW i
Dr. h. c. Robert W. Lane (born 1949)
Former Chairman and Chief Executive Officer of
Deere & Company
Prof. Dr. rer. nat. Dr.-Ing. E. h.
Henning Kagermann (born 1947)
President of acatech – Deutsche Akademie der
Technikwissenschaften e. V.
Mandates
General Electric Company
Northern Trust Corporation
Verizon Communications Inc.
Mandates
Deutsche Bank AG
Deutsche Post AG
Franz Haniel & Cie GmbH
Münchener RückversicherungsGesellschaft
Aktiengesellschaft in München
Nokia Corporation (until 17. 06. 2014)
Wipro Limited (until 30. 06. 2014)
Horst Lischka2 (born 1963)
General Representative of IG Metall Munich
Mandates
KraussMaffei Group GmbH
KraussMaffei Technologies GmbH
MAN Truck & Bus AG
Susanne Klatten (born 1962)
Entrepreneur
Willibald Löw1 (born 1956)
Chairman of the Works Council, Landshut
Member of the Nomination Committee
Mandates
ALTANA AG (Deputy Chairman)
SGL Carbon SE (Chairman)
UnternehmerTUM GmbH (Chairman)
Wolfgang Mayrhuber (born 1947)
Chairman of the Supervisory Board of
Deutsche Lufthansa Aktiengesellschaft
Mandates
Deutsche Lufthansa Aktiengesellschaft (Chairman)
Infineon Technologies AG (Chairman)
Münchener RückversicherungsGesellschaft
Aktiengesellschaft in München
HEICO Corporation
1 Employee representatives (company employees).
2 Employee representatives (union representatives).
3 Employee representatives (members of senior management).
Membership of other statutory supervisory boards.
Membership of equivalent national or foreign boards of business enterprises.
170 STATEMENT ON
CORPORATE GOVERNANCE
(Part of Management Report)
170 Information on the Company’s
Governing Constitution
171 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§ 161 AktG
172 Members of the Board of
Management
173 Members of the Supervisory
Board
176 Work Procedures of the
Board of Management
178 Work Procedures of the
Supervisory Board
183 Information on Corporate
Governance Practices
184 Compliance in the BMW Group
189 Compensation Report
175 Statement on corporate Governance
Dr. Dominique Mohabeer1 (born 1963)
Member of the Works Council, Munich
Brigitte Rödig1 (born 1963)
Member of the Works Council, Dingolfing
Dr. Markus Schramm3 (born 1963)
(until 15. 05. 2014)
Head of Development Aftersales
Business Management and
Mobility Services BMW Group
Jürgen Wechsler 2 (born 1955)
Regional Head of IG Metall Bavaria
Mandates
Schaeffler AG (Deputy Chairman)
Werner Zierer1 (born 1959)
Chairman of the Works Council, Regensburg
176
Composition and work procedures of the Board of
Management of BMW AG and its committees
The Board of Management governs the enterprise under
its own responsibility, acting in the interests of the BMW
Group with the aim of achieving sustainable growth
in value. The interests of shareholders, employees and
other stakeholders are also taken into account in the
pursuit of this aim.
The Board of Management determines the strategic
orientation of the enterprise, agrees upon it with the
Supervisory Board and ensures its implementation.
The Board of Management is responsible for ensuring
that all provisions of law and internal regulations are
complied with. Further details about compliance within
the BMW Group can be found in the “Corporate
Governance” section of the Annual Report. The Board
of Management is also responsible for ensuring that
appropriate risk management and risk controlling sys
tems are in place throughout the Group.
During their period of employment for BMW AG, mem
bers of the Board of Management are bound by a com
prehensive noncompetition clause. They are required
to act in the enterprise’s best interests and may not
pursue personal interests in their decisions or take ad
vantage of business opportunities intended for the
enterprise. They may only undertake ancillary activities,
in particular supervisory board mandates outside
the BMW Group, with the approval of the Supervisory
Board’s Personnel Committee. Each member of the
Board of Management of BMW AG is obliged to disclose
conflicts of interest to the Supervisory Board without
delay and inform the other members of the Board of
Management accordingly.
Following the appointment of a new member to the
Board of Management, the BMW Corporate Governance
Officer informs the new member of the framework
conditions under which the board member’s duties are
to be carried out – in particular those enshrined in the
BMW Group’s Corporate Governance Code – as well
as the duty to cooperate when a transaction or event
triggers reporting requirements or requires the approval
of the Supervisory Board.
The Board of Management consults and takes decisions
as a collegiate body in meetings of the Board of Manage
ment, the Sustainability Board, the Operations Com
mittee and the Committee for Executive Management
Matters. At its meetings, the Board of Management
defines the overall framework for business strategies
and the use of resources, takes decisions regarding the
implementation of strategies and deals with issues of
particular importance to the BMW Group. The full board
also takes decisions at a basic policy level relating to
the Group’s automobile product strategies and product
projects inasmuch as these are relevant for all brands.
The Board of Management and its committees may, as
required and depending on the subject matters being
discussed, invite nonvoting advisers to participate at
meetings.
Terms of reference approved by the Board of Manage
ment contain a planned allocation of divisional respon
sibilities between the individual board members. These
terms of reference also incorporate the principle that
the full Board of Management bears joint responsibility
for all matters of particular importance and scope. In
addition, members of the Board of Management man
age the relevant portfolio of duties under their responsi
bility, whereby casebycase rules can be put in place
for crossdivisional projects. Board members continually
provide the Chairman of the Board of Management
with all information regarding major transactions and
developments within their area of responsibility. The
Chairman of the Board of Management coordinates
crossdivisional matters with the overall targets and plans
of the BMW Group, involving other board members to
the extent that divisions within their area of responsi
bility are affected.
The Board of Management takes its decisions at meetings
generally held on a weekly basis which are convened,
coordinated and headed by the Chairman of the Board
of Management. At the request of the Chairman, de
cisions can also be taken outside of board meetings if
none of the board members object to this procedure. A
meeting is quorate if all Board of Management members
are invited to the meeting in good time. Members unable
to attend any meeting are entitled to vote in writing,
by fax or by telephone. Votes cast by phone must be sub
sequently confirmed in writing. Except in urgent cases,
matters relating to a division for which the responsible
board member is not present will only be discussed and
decided upon with that member’s consent.
Unless stipulated otherwise by law or in BMW AG’s
statutes, the Board of Management makes decisions on
the basis of a simple majority of votes cast at meetings.
Outside of board meetings, decisions are taken on
the basis of a simple majority of board members. In the
event of a tied vote, the Chairman of the Board of
Management has the casting vote. Any changes to the
board’s terms of reference must be passed unanimously.
A board meeting may only be held if more than half of
the board members are present.
In the event that the Chairman of the Board of Manage
ment is not present or is unable to attend a meeting, the
170 STATEMENT ON
CORPORATE GOVERNANCE
(Part of Management Report)
170 Information on the Company’s
Governing Constitution
171 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§ 161 AktG
172 Members of the Board of
Management
173 Members of the Supervisory
Board
176 Work Procedures of the
Board of Management
178 Work Procedures of the
Supervisory Board
183 Information on Corporate
Governance Practices
184 Compliance in the BMW Group
189 Compensation Report
177 Statement on corporate Governance
Member of the Board responsible for Finance will
represent him.
Minutes are taken of all meetings and the Board of
Management’s resolutions and signed by the Chairman.
Decisions taken by the Board of Management are
binding for all employees.
The rules relating to meetings and resolutions taken
by the full Board of Management are also applicable for
its committees.
Members of the Board of Management not represented
in a committee are provided with the agendas and
minutes of committee meetings. Committee matters are
dealt with in full board meetings if the committee con
siders it necessary or at the request of a member of the
Board of Management.
A secretariat for Board of Management matters has been
established to assist the Chairman and other board
members with the preparation and followup work con
nected with board meetings.
At meetings of the Operations Committee (generally held
three times a month), decisions are reached in connec
tion with automobile product projects, based on the
strategic orientation and decision framework stipulated
at Board of Management meetings. The Operations
Committee comprises the Board of Management mem
ber responsible for Development (who also chairs the
meetings), together with the board members responsible
for the following areas: Purchasing and Supplier Network;
Production; Sales and Marketing BMW, Sales Channels
BMW Group; and MINI, Motorcycles, RollsRoyce,
Aftersales BMW Group. If the committee chairman is
not present or unable to attend a meeting, the Member
of the Board responsible for Production represents
him. Resolutions taken at meetings of the Operations
Committee are made online.
The full board usually convenes twice a year in its func
tion as Sustainability Board in order to define strategy
with regard to sustainability and decide upon measures
to implement that strategy. The Head of Corporate
Affairs and the Representative for Sustainability and
Environmental Protection participate in these meetings
in an advisory capacity.
The Board’s Committee for Executive Management
Matters deals with enterprisewide issues affecting ex
ecutive managers of the BMW Group, either in their
entirety or individually (such as the executive manage
ment structure, potential candidates for executive
management, nominations for or promotions to senior
management positions). This committee has, on the
one hand, an advisory and preparatory role (e. g.
making suggestions for promotions to the two remu
neration groups below board level and preparing
decisions to be taken at board meetings with regard
to human resources principles with the emphasis on
executive management issues) and a decisiontaking
function on the other (e. g. deciding on appointments
to senior management positions and promotions to
higher remuneration groups or the wording of human
resources principles decided on by the full board).
The Committee has two members who are entitled to
vote at meetings, namely the Chairman of the Board
of Management (who also chairs the meetings) and
the board member responsible for Human Resources
and Social Affairs. The Head of Human Resources,
Personnel Network and Human Resources Interna
tional and the Head of Human Resources Executive
Management also participate in an advisory function.
At the request of the Chairman, resolutions may also
be passed outside of committee meetings by casting
votes in writing, by fax or by telephone if the other
member entitled to vote does not object immediately.
As a general rule, between five and ten meetings are
held each year.
The Board of Management is represented by its Chair
man in its dealings with the Supervisory Board. The
Chairman of the Board of Management maintains
regular contact with the Chairman of the Supervisory
Board and keeps him informed of all important mat
ters. The Supervisory Board has passed a resolution
specifying the information and reporting duties of the
Board of Management. As a general rule, in the case
of reports required by dint of law, the Board of Manage
ment submits its reports to the Supervisory Board in
writing. To the extent possible, documents required as
a basis for taking decisions are sent to the members of
the Supervisory Board in good time before the relevant
meeting. Regarding transactions of fundamental im
portance, the Supervisory Board has stipulated specific
transactions which require the approval of the Super
visory Board. Whenever necessary, the Chairman of
the Board of Management obtains the approval of the
Supervisory Board and ensures that reporting duties
to the Supervisory Board are complied with. In order
to fulfil these tasks, the Chairman is supported by all
members of the Board of Management. The fundamen
tal principle followed when reporting to the Supervi
sory Board is that the latter should be kept informed
regularly, without delay and comprehensively of all
significant matters relating to planning, business per
formance, risk exposures, risk management and com
pliance, as well as any major variances between actual
and budgeted figures.
178
Composition and work procedures of the Supervisory
Board of BMW AG and its committees
BMW AG’s Supervisory Board, comprising ten share
holder representatives (elected by the Annual General
Meeting) and ten employee representatives (elected
by employees in accordance with the German Codeter
mination Act), has the task of advising and supervising
the Board of Management in its governance of the
BMW Group. It is involved in all decisions of fundamen
tal importance for the BMW Group. The Supervisory
Board appoints the members of the Board of Manage
ment and decides upon the level of compensation
they are to receive. The Supervisory Board can revoke
appointments for important reasons.
Together with the Personnel Committee and the Board
of Management, the Supervisory Board ensures that
longterm successor planning is in place. In their assess
ment of candidates for a post on the Board of Manage
ment, the underlying criteria applied by the Supervisory
Board for determining the suitability of candidates are
their expertise in the relevant area of board responsi
bility, outstanding leadership qualities, a proven track
record and an understanding of the BMW Group’s busi
ness. The Supervisory Board takes diversity into ac
count when assessing, on balance, which individual will
best complement the Board of Management as a repre
sentative body of the Company. “Diversity” in the con
text of the decision process is understood by the Super
visory Board to encompass different, complementary
individual profiles, work and life experiences, at both a
national and international level, as well as appropriate
representation of both genders. The Supervisory Board
strives to ensure appropriate female representation
on the Board of Management. The Board of Manage
ment reports accordingly to the Personnel Committee
and the Supervisory Board at regular intervals on the
proportion of, and changes in, management positions
held by women, in particular below senior executive
level and at uppermost management level. When actu
ally selecting an individual for a post on the Board of
Management, the Supervisory Board decides in the
best interests of the Company and after taking account
of all relevant circumstances.
The Supervisory Board holds a minimum of two meet
ings in each of the first and second sixmonth periods of
the calendar year. Normally, five plenary meetings are
held per calendar year. One meeting each year is planned
to cover a number of days and is used, amongst other
things, to enable an indepth exchange on stra tegic and
technological matters. The main emphases of meetings in
the period under report are described in the Report of
the Supervisory Board. As a general rule, the shareholder
representatives and employee representatives prepare the
Supervisory Board meetings separately and, if necessary,
together with members of the Board of Management.
Members of the Supervisory Board are in particular le
gally bound to maintain confidentiality with respect to
any confidential reports they receive and any confiden
tial discussions in which they partake.
The Chairman of the Supervisory Board coordinates
work within the Supervisory Board, chairs its meet
ings, handles the external affairs of the Supervisory
Board and represents it in its dealings with the Board
of Management.
The Supervisory Board is quorate if all members have
been invited to the meeting and at least half of its
members participate in the vote on a particular resolu
tion. A resolution relating to an agenda item not in
cluded in the invitation is only valid if none of the mem
bers of the Supervisory Board who were not present
at the meeting object to the resolution and a minimum
of twothirds of the members are present.
As a basic rule, resolutions are passed by the Super
visory Board by simple majority. The German Code
termination Act contains specific requirements with
regard to majority voting and technical procedures,
particularly with regard to the appointment and revoca
tion of appointment of management board members
and the election of a supervisory board chairman or
deputy chairman. In the event of a tied vote in the
Supervisory Board, the Chairman of the Supervisory
Board has two votes in a renewed vote, if it also results
in a tie.
In practice, resolutions are taken by the Supervisory
Board and its committees at the relevant meetings. A
Supervisory Board member who is not present at a
meeting can have his / her vote cast by another Super
visory Board member if an appropriate request has
been made in writing, by fax or in electronic form. This
rule also applies to the casting of the second vote by
the Chairman of the Supervisory Board. The Chairman
of the Supervisory Board can also accept the retrospec
tive casting of votes by any members not present at a
meeting if this is done within the time limit previously
set. In special cases, resolutions may also be taken
outside of meetings, i. e. in writing, by fax or by elec
tronic means. Minutes are taken of all resolutions and
meetings.
After its meetings, the Supervisory Board is generally
provided information on new vehicle models in the
form of a short presentation.
170 STATEMENT ON
CORPORATE GOVERNANCE
(Part of Management Report)
170 Information on the Company’s
Governing Constitution
171 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§ 161 AktG
172 Members of the Board of
Management
173 Members of the Supervisory
Board
176 Work Procedures of the
Board of Management
178 Work Procedures of the
Supervisory Board
183 Information on Corporate
Governance Practices
184 Compliance in the BMW Group
189 Compensation Report
179 Statement on corporate Governance
Following the election of a new Supervisory Board mem
ber, the BMW Corporate Governance Officer informs
the new member of the principal issues affecting his or
her duties – in particular those enshrined in the BMW
Group Corporate Governance Code – including the
duty to cooperate when a transaction or event triggers
reporting requirements or is subject to the approval of
the Supervisory Board.
All members of the Supervisory Board of BMW AG are
required to ensure that they have sufficient time to
perform their mandate. If members of the Supervisory
Board of BMW AG are also members of the management
board of a listed company, they may not accept more
than a total of three mandates on nonBMW Group super
visory boards of listed companies or in other bodies
with comparable requirements.
The Supervisory Board examines the efficiency of its
activities on a regular basis. Joint discussions are also
held at plenum meetings, prepared on the basis of a
questionnaire previously devised by and distributed to
the members of the Supervisory Board. The Chairman
of the Supervisory Board is open to suggestions for
improvement at all times.
Each member of the Supervisory Board of BMW AG is
bound to act in the enterprise’s best interests. Members
of the Supervisory Board may not pursue personal in
terests in their decisions or take advantage of business
opportunities intended for the benefit of the enterprise.
Members of the Supervisory Board are obliged to in
form the full Supervisory Board of any conflicts of inter
est which may result from a consultant or directorship
function with clients, suppliers, lenders or other busi
ness partners, enabling the Supervisory Board to report
to the shareholders at the Annual General Meeting on
how it has dealt with such issues. Material conflicts of
interest and those which are not merely temporary in
nature result in the termination of the mandate of the
relevant Supervisory Board member.
With regard to nominations for the election of members
of the Supervisory Board, care is taken that the Super
visory Board in its entirety has the required knowledge,
skills and expert experience to perform its tasks in a
proper manner.
The Supervisory Board has set out specific targets for its
own composition (see section “Composition targets for
the Supervisory Board”).
The members of the Supervisory Board are responsible
for undertaking appropriate basic and further training
measures such as that may be necessary to carry out
the tasks assigned to them. The Company provides
appropriate assistance to members of the Supervisory
Board in this respect.
The ability of the Supervisory Board to supervise and
advise the Board of Management independently is also
assisted by the fact that the Supervisory Board is required,
based on its own assessment, to have an appropriate
number of independent members. Prof. Dr.Ing. Dr. h. c.
Dr.Ing. E. h. Joachim Milberg is the only person on the
Supervisory Board to have previously served on the
Board of Management, of which he ceased to be a mem
ber in 2002. Supervisory Board members do not exercise
directorships or similar positions or undertake advisory
tasks for important competitors of the BMW Group.
Taking into account the specific circumstances of the
BMW Group and the number of board members, the
Supervisory Board has set up a Presiding Board and
four committees, namely the Personnel Committee, the
Audit Committee, the Nomination Committee and
the Mediation Committee (see “Overview of Supervisory
Board Committees, Meetings”). Such committees serve
to raise the efficiency of the Supervisory Board’s work
and facilitate the handling of complex issues. The estab
lishment and function of a mediation committee is pre
scribed by law. The person chairing a committee reports
in detail on its work at each plenum meeting.
The composition of the Presiding Board and the various
committees is based on legal requirements, BMW AG’s
Articles of Incorporation, terms of reference and corpo
rate governance principles. The expertise and technical
skills of its members are also taken into account.
According to the relevant terms of reference, the Chair
man of the Supervisory Board is, in this capacity, auto
matically a member of the Presiding Board, the Personnel
Committee and the Nomination Committee, and also
chairs these committees.
The number of meetings held by the Presiding Board
and the committees depends on current requirements.
The Presiding Board, the Personnel Committee and
the Audit Committee normally hold several meetings in
the course of the year (see “Overview of Supervisory
Board Committees, Meetings” for details of the number
of meetings held in 2014).
In line with the terms of reference for the activities of
the plenum, the Supervisory Board has also set terms of
reference for the Presiding Board and the various com
mittees. The committees are only quorate if all members
are present. Resolutions taken by the committees are
180
passed by simple majority unless stipulated otherwise
by law. Minutes are also taken at the meetings and for
the resolutions of the committees and the Presiding
Board, and signed by the person chairing the particular
meeting. This person also represents the committee in
any dealings it may have with the Board of Management
or third parties.
Members of the Supervisory Board may not delegate their
duties. The Supervisory Board, the Presiding Board
and committees may call on experts and other suitably
informed persons to attend meetings to give advice on
specific matters.
The Supervisory Board, the Presiding Board and the
committees also meet without the Board of Management
if necessary.
BMW AG ensures that the Supervisory Board and its
committees are sufficiently equipped to carry out their
duties. This includes the services provided by a cen
tralised secretariat to support the chairmen in coordi
nating the work of the Supervisory Board.
In accordance with the relevant terms of reference, the
Presiding Board comprises the Chairman of the Super
visory Board and board deputies. The Presiding Board
prepares Supervisory Board meetings to the extent that
the subject matter to be discussed does not fall within
the remit of a committee. This includes, for example,
preparing the annual Declaration of Compliance with
the German Corporate Governance Code and the Super
visory Board’s efficiency examination.
The Personnel Committee prepares the decisions of the
Supervisory Board with regard to the appointment and
revocation of appointment of members of the Board
of Management and, together with the full Supervisory
Board and the Board of Management, ensures that long
term successor planning is in place. The Personnel
Committee also prepares the decisions of the Super
visory Board with regard to the Board of Management’s
compensation and the Supervisory Board’s regular
review of the Board of Management’s compensation
system. In conjunction with the resolutions taken by
the Supervisory Board regarding the compensation of
the Board of Management, the Personnel Committee
is responsible for drawing up, amending and revoking
service / employment contracts or, when necessary,
other relevant contracts with members of the Board of
Management. In specified cases, the Personnel Com
mittee also has the authority to give the necessary ap
proval for a particular transaction (instead of the Super
visory Board). This includes loans to members of the
Board of Management or Supervisory Board, specified
contracts with members of the Supervisory Board (in
each case taking account of the consequences of related
parties), as well as other activities of members of the Board
of Management, including the acceptance of nonBMW
Group supervisory board mandates.
The Audit Committee deals in particular with issues
relating to the supervision of the financial reporting
process, the effectiveness of the internal control system,
the risk management system, internal audit arrange
ments and compliance. It also monitors the external
audit, auditor independence and any additional work
performed by the external auditor. It prepares the pro
posal for the election of the external auditor at the An
nual General Meeting, makes a recommendation re
garding the election of the external auditor, issues the
audit engagement letter and agrees on points of audit
focus as well as the auditor’s fee. The Audit Committee
prepares the Supervisory Board’s resolution relating
to the Company and Group Financial Statements and
discusses interim reports with the Board of Manage
ment before publication. The Audit Committee also
decides on the Supervisory Board’s agreement to use
the Authorised Capital 2014 (Article 4 no. 5 of the
Articles of Incorporation) and on amendments to the
Articles of Incorporation which only affect its wording.
In line with the recommendations of the German Cor
porate Governance Code, the Chairman of the Audit
Committee is independent and not a former Chairman
of the Board of Management and has specific knowhow
and experience in applying financial reporting stand
ards and internal control procedures. He also fulfils the
requirements of being an independent financial expert
as defined by § 100 (5) and § 107 (4) AktG.
The Nomination Committee is charged with the task
of finding suitable candidates for election to the Super
visory Board (as shareholder representatives) and for
inclusion in the Supervisory Board’s proposals for elec
tion at the Annual General Meeting. In line with the
recommendations of the German Corporate Governance
Code, the Nomination Committee comprises only share
holder representatives.
The establishment and composition of a mediation
committee are required by the German Codetermina
tion Act. The Mediation Committee has the task of
making proposals to the Supervisory Board if a resolu
tion for the appointment of a member of the Board of
Management has not been carried by the necessary
twothirds majority of members’ votes. In accordance
with statutory requirements, the Mediation Commit
tee comprises the Chairman and the Deputy Chairman
of the Supervisory Board and one member each se
lected by shareholder representatives and employee
representatives.
170 STATEMENT ON
CORPORATE GOVERNANCE
(Part of Management Report)
170 Information on the Company’s
Governing Constitution
171 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§ 161 AktG
172 Members of the Board of
Management
173 Members of the Supervisory
Board
176 Work Procedures of the
Board of Management
178 Work Procedures of the
Supervisory Board
183 Information on Corporate
Governance Practices
184 Compliance in the BMW Group
189 Compensation Report
181 Statement on corporate Governance
Overview of Supervisory Board Committees, Meetings
Principal duties,
basis for activities
Presiding Board
– preparation of Supervisory Board meetings to the extent that the subject
matter to be discussed does not fall within the remit of a committee
– activities based on terms of reference
Personnel Committee
– preparation of decisions relating to the appointment and revocation of appoint-
ment of members of the Board of Management, the compen sation and the
regular review of the Board of Management’s compensation system
– conclusion, amendment and revocation of employment contracts (in conjunc-
tion with the resolutions taken by the Supervisory Board regarding the com-
pensation of the Board of Management) and other contracts with members of
the Board of Management
– decisions relating to the approval of ancillary activities of Board of Manage ment
members, including acceptance of non-BMW Group supervisory mandates as
well as the approval of transactions requiring Supervisory Board approval by dint
of law (e. g. loans to Board of Management or Supervisory Board members)
– set up in accordance with the recommendation contained in the German
Corporate Governance Code, activities based on terms of reference
Audit Committee
– supervision of the financial reporting process, effectiveness of the internal
control system, risk management system, internal audit arrangements and
compliance
– supervision of external audit, in particular auditor independence and addi-
tional work performed by external auditor
– preparation of proposals for election of external auditor at Annual General Meet-
ing, engagement of external auditor and compliance of audit engagement, de-
termination of areas of audit emphasis and fee agreements with external auditor
– preparation of Supervisory Board’s resolution on Company and Group Finan-
cial Statements
– discussion of interim reports with Board of Management prior to publication
– decision on approval for utilisation of Authorised Capital 2014
– amendments to Articles of Incorporation only affecting wording
– establishment in accordance with the recommendation contained in the
German Corporate Governance Code, activities based on terms of reference
Nomination Committee
– identification of suitable candidates (male / female) as shareholder representa-
tives on the Supervisory Board to be put forward for inclusion in the Super-
visory Board’s proposals for election at the Annual General Meeting
– establishment in accordance with the recommendation contained in the
German Corporate Governance Code, activities based on terms of reference
Members
Joachim Milberg1
Manfred Schoch
Stefan Quandt
Stefan Schmid
Karl-Ludwig Kley
Joachim Milberg1
Manfred Schoch
Stefan Quandt
Stefan Schmid
Karl-Ludwig Kley
Number
of meetings
2014
Average
attendance
4
6
95 %
97 %
Karl-Ludwig Kley 1, 2
Joachim Milberg
Manfred Schoch
Stefan Quandt
Stefan Schmid
94 %
4
plus
3 telephone
conferences
2
88 %
Joachim Milberg1
Susanne Klatten
Karl-Ludwig Kley
Stefan Quandt
(In line with the recommendations of the
German Corporate Governance Code,
the Nomination Committee comprises
only shareholder representatives.)
Mediation Committee
– proposal to Supervisory Board if resolution for appointment of Board of
Management member has not been carried by the necessary two-thirds
majority of Supervisory Board members’ votes
– committee required by law
Joachim Milberg
Manfred Schoch
Stefan Quandt
Stefan Schmid
–
–
(In accordance with statutory require-
ments, the Mediation Committee
comprises the Chairman and Deputy
Chairman of the Supervisory Board and
one member each selected by share-
holder representatives and employee
representatives.)
1 Chair.
2 Independent financial expert within the meaning of § 100 (5) AktG and § 107 (4) AktG.
182
Composition objectives of the Supervisory Board
The Supervisory Board must be composed in such a way
that its members as a group possess the knowledge, skills
and experience required to properly complete its tasks.
To this end, the Supervisory Board has formally speci
fied the following concrete objectives regarding its com
position, taking into account the recommendations
contained in the German Corporate Governance Code:
– If possible four of the members of the Supervisory
Board should have international experience or spe
cialist knowledge with regard to one or more of
the nonGerman markets important to the Company.
– If possible, the Supervisory Board should include seven
members who have acquired indepth knowledge and
experience from within the enterprise. The Super
visory Board should not, however, include more than
two former members of the Board of Management.
– If possible three of the shareholder representatives in
the Supervisory Board should be entrepreneurs or
persons who have already gained experience in the
management or supervision of another medium or
largesized company.
– Ideally, three members of the Supervisory Board
should be figures from the worlds of business, science
or research who have gained experience in areas rele
vant to the BMW Group – e. g. chemistry, energy sup
ply, information technology, or who have acquired
specialist knowledge in subjects relevant for the future
of the BMW Group e. g. customer requirements, mo
bility, resources or sustainability.
– When seeking suitably qualified individuals for the
Supervisory Board whose specialist skills and leader
ship qualities are most likely to strengthen the Board
as a whole, consideration should also be given to di
versity. When preparing nominations, the extent to
which the work of the Supervisory Board would bene
fit from diversified professional and personal back
grounds (including international aspects) and from
an appropriate representation of both genders should
also be taken into account. In view of the proportion
of women in the workforce (BMW AG: 14.8 %; BMW
Group 17.8 %) and in management positions (BMW AG:
11.4 %; BMW Group: 14.2 %) at 31 December 2014,
the Supervisory Board is of the opinion that a propor
tion of three female members out of a total of 20 mem
bers (15 %) is satisfactory as far as gender mix is con
cerned, but that an increase to at least four female
members (20 %) would be desirable. The Supervisory
Board therefore considers it appropriate that oppor
tunities available in conjunction with selection proce
dures through to the end of the ordinary Annual
General Meeting in 2016 should be used to maintain
the current proportion of 25 % female representation.
The Supervisory Board believes it is the joint respon
sibility of all persons and groupings participating in
the nomination and election process to ensure that
the Supervisory Board includes an appropriate num
ber of qualified women.
– At least twelve of the 20 members of the Super visory
Board should be independent members within the
meaning of section 5.4.2 of the German Corporate
Governance Code, including at least six members
representing the Company’s shareholders. Two inde
pendent members of the Supervisory Board should
have expert knowledge of accounting or auditing.
– No persons carrying out directorship functions or ad
visory tasks for important competitors of the BMW
Group may belong to the Supervisory Board. In com
pliance with prevailing legislation, the members of
the Supervisory Board will strive to ensure that no
persons will be nominated for election with whom a
serious conflict of interests could arise (other than
temporarily) due to other activities and functions car
ried out by them outside the BMW Group; this in
cludes in particular advisory activities or directorships
with customers, suppliers, creditors or other business
partners.
– As a general rule, the age limit for membership of the
Supervisory Board should be set at 70 years. In ex
ceptional cases, members may be allowed to remain
on the Board up until the end of the Annual General
Meeting following their 73rd birthday, in order to ful
fil legal requirements or to facilitate smooth succes
sion in the case of persons with key roles or specialist
qualifications.
The time schedule set by the Supervisory Board for
achieving the abovementioned composition targets is
the Annual General Meeting in 2016. Future pro
posals for nomination made by the Supervisory Board
at the Annual General Meeting – insofar as they apply
to shareholder Supervisory Board members – should
take account of these objectives in such a way that they
can be achieved with the support of the appropriate
resolutions at the Annual General Meeting. The Annual
General Meeting is not bound by nominations for elec
tion proposed by the Supervisory Board. The freedom
of employees to vote for the employee members of the
Supervisory Board is also protected. Under the proce
dural rules stipulated by the German CoDetermination
Act, the Supervisory Board does not have the right to
nominate employee representatives for election. The ob
jectives which the Supervisory Board has set itself with
regard to its composition are therefore not intended to
be instructions to those entitled to vote or restrictions
on their freedom to vote. More to the point, they reflect
170 STATEMENT ON
CORPORATE GOVERNANCE
(Part of Management Report)
170 Information on the Company’s
Governing Constitution
171 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§ 161 AktG
172 Members of the Board of
Management
173 Members of the Supervisory
Board
176 Work Procedures of the
Board of Management
178 Work Procedures of the
Supervisory Board
183 Information on Corporate
Governance Practices
184 Compliance in the BMW Group
189 Compensation Report
183 Statement on corporate Governance
the composition which the current Supervisory Board
believes should be striven for in future by those entitled
to nominate and elect board members, in view of the
advisory and supervisory needs of BMW AG’s Supervisory
Board.
Adaptability
In order to ensure our longterm success we must adapt
to new challenges with speed and flexibility. We there
fore see change as an opportunity – adaptability is essen
tial to be able to capitalise on it.
In the Supervisory Board’s opinion, its composition as
at 31 December 2014 fulfilled the composition objec
tives detailed above.
In order to provide shareholders with a profile of the
individual members of the Supervisory Board and
to make it easier to assess composition targets, brief
curricula vitae of the current members of the Super
visory Board are available on the Company’s website
at www.bmwgroup.com.
Information on corporate governance practices
applied beyond mandatory requirements
Core principles
Within the BMW Group, the Board of Management, the
Supervisory Board and the employees base their actions
on twelve core principles which are the cornerstone of
the success of the BMW Group:
Frankness
As we strive to find the best solution, it is each em
ployee’s duty to express any opposing opinions they
may have. The solutions we agree upon will then be
consistently implemented by all those involved.
Respect, trust, fairness
We treat each other with respect. Leadership is based on
mutual trust. Trust is rooted in fairness and reliability.
Employees
People make companies. Our employees are the strong
est factor in our success, which means our personnel
decisions will be among the most important we ever
make.
Leading by example
Every manager must lead by example.
Customer focus
The success of our Company is determined by our cus
tomers. They are at the heart of everything we do.
The results of all our activities must be valued in terms
of the benefits they will generate for our customers.
Sustainability
In our view, sustainability constitutes a lasting contribu
tion to the success of the Company. This is the basis upon
which we assume ecological and social responsibility.
Peak performance
We aim to be the best – a challenge to which all of us
must rise. Each and every employee must be prepared
to deliver peak performance. We strive to be among
the elite, but without being arrogant. It is the Company
and its products that count – and nothing else.
Responsibility
Every BMW Group employee has the personal responsi
bility for the Company’s success. When working in a
team, each employee must assume personal responsibility
for his or her actions. We are fully aware that we are
working to achieve the Company’s goals. For this reason,
we work together in the best interests of the Company.
Effectiveness
The only results that count for the Company are those
which have a sustainable impact. In assessing leader
ship, we must consider the effectiveness of performance
on results.
Society
Social responsibility is an integral part of our corporate
selfimage.
Independence
We secure the corporate independence of the BMW
Group through sustained profitable growth.
The core principles are also available at www.bmwgroup.
com under the menu items “Responsibility” and “Em
ployees”.
Social responsibility towards employees and along
the supplier chain
The BMW Group stands by its social responsibilities. Our
corporate culture combines the drive for success with a
willingness to be open, trustworthy and transparent.
We are well aware of our responsibility towards society.
Our models for sustainable social responsibility towards
employees and for ensuring compliance with interna
tional social standards are based on various internationally
184
recognised guidelines. The BMW Group is committed to
adhering to the OECD’s guidelines for multinational
companies and the contents of the ICC Business Charter
for Sustainable Development. Details of the contents
of these guidelines and other relevant information can
be found at www.oecd.org and www.iccwbo.org. The
Board of Management signed the United Nations Global
Compact in 2001 and, in 2005, together with employee
representatives, issued a “Joint Declaration on Human
Rights and Working Conditions in the BMW Group”.
This Joint Declaration was reconfirmed in 2010. With
the signature of these documents, we have given our
commitment to abide worldwide by internationally rec
ognised human rights and with the fundamental work
ing standards of the International Labour Organization
(ILO). The most important of these are freedom of em
ployment, the prohibition of discrimination, the freedom
of association and the right to collective bargaining,
the prohibition of child labour, the right to appropriate
remuneration, regulated working times and compliance
with work and safety regulations. The complete text of
the UN Global Compact and the recommendations of
the ILO and other relevant information can be found at
www.unglobalcompact.org and www.ilo.org. The Joint
Declaration on Human Rights and Working Conditions
in the BMW Group can be found at www.bmwgroup.
com under the menu item “Responsibility” (Services /
downloads / topics: “Employees and Society”).
It goes without saying that the BMW Group abides by
these fundamental principles and rights worldwide.
Employees have therefore been sensitised to this issue
since 2005 by means of regular internal communica
tions and further training on recent developments in
this area. Two dedicated helplines – the “Human Rights
Contact” and the BMW Group SpeakUP Line – are
available to employees wishing to raise queries or com
plaints relating to human rights issues. The UN Guiding
Principles for Business and Human Rights provide a
framework for critical reflection and continuous improve
ment in our endeavours to ensure that human rights are
respected throughout the organisation.
BMW Group not only makes high demands of itself but
also expects its suppliers and partners to meet the eco
logical and social standards it sets and strives continu
ally to improve the efficiency of processes, measures
and activities. For instance, we are successively requir
ing our dealers and importers to comply with ecolog
ical and social standards on a contractual basis. Simi
larly, corresponding criteria are embedded in our
purchasing terms and our evaluation of suppliers with
a view to ensuring the inclusion of sustainability as
pects throughout the purchasing system. The BMW
Group Sustainability Standard is an integral compo
nent of our enquiry documents and of the automotive
supplier selfassessment questionnaire on sustainabil
ity required to be completed sectorwide by new sup
pliers. The BMW Group expects suppliers to ensure
that the BMW Group’s sustainability criteria are also
adhered to by subsuppliers. Purchasing terms and
conditions and other information relating to purchasing
can be found in the publicly available section of the
BMW Group Partner Portal at https: / / b2b.bmw.com.
We also work in close partnership with our suppliers
and promote their commitment to sustainability.
Compliance in the BMW Group
Responsible and lawful conduct is fundamental to the
success of the BMW Group. It is an integral part of
our corporate culture and the reason why customers,
shareholders, business partners and the general public
place their trust in us. The Board of Management and
the employees of the BMW Group are obliged to act
responsibly and in compliance with applicable laws and
regulations.
This principle has been embedded in BMW’s internal
rules of conduct for many years. In order to protect
itself systematically against compliancerelated and
reputational risks, the Board of Management created
a Compliance Committee several years ago, mandated
to establish a worldwide Compliance Management
System throughout the BMW Group.
Further information on social responsibility to employees
can be found in the section “Workforce”.
Activities can only be sustainable, however, if they en
compass the entire valueadded chain. That is why the
The BMW Group Compliance Committee comprises
the heads of the following divisions: Legal Affairs and
Patents, Corporate and Governmental Affairs, Corpo
rate Audit, Group Reporting, Organisational Develop
ment and Corporate Human Resources. It manages and
170 STATEMENT ON
CORPORATE GOVERNANCE
(Part of Management Report)
170 Information on the Company’s
Governing Constitution
171 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§ 161 AktG
172 Members of the Board of
Management
173 Members of the Supervisory
Board
176 Work Procedures of the
Board of Management
178 Work Procedures of the
Supervisory Board
183 Information on Corporate
Governance Practices
184 Compliance in the BMW Group
189 Compensation Report
185 Statement on corporate Governance
monitors activities necessary to avoid noncompliance
with the law (Legal Compliance). These activities include
training, information and communication measures,
compliance controls and following up cases of noncom
pliance.
The BMW Group Compliance Committee reports regu
larly to the Board of Management on all compliance
related issues, including the progress made in refining
the BMW Group Compliance Management System, de
tails of investigations performed, known infringements
of the law, sanctions imposed and corrective / preventa
tive measures implemented. This ensures that the Board
of Management is immediately notified of any cases of
particular significance. The decisions taken by the BMW
Group Compliance Committee are drafted in concept,
and implemented operationally, by the BMW Group
Compliance Committee Office. The BMW Group Com
BMW Group Compliance Management System
Supervisory Board BMW AG
Board of Management BMW AG
BMW Group Compliance Committee
BMW Group Compliance Committee Office
Compliance Operations Network
of all BMW Group
Compliance Responsibles
Annual
Report
Annual
Report
Annual
Compliance
Reporting
Compliance Risk
Analysis
Legal Compliance
Code and Regulations
Compliance
Investigations
and Controls
Compliance
Reporting
Compliance
Instruments and
Measures of
the BMW Group
Compliance
Communication
Compliance
Training
Compliance
Contact and
SpeakUP Line
Compliance
Governance and
Processes
pliance Committee Office comprises ten employees and
is allocated in organisational terms to the Chairman of
the Board of Management.
The Chairman of the BMW Group Compliance Com
mittee keeps the Audit Committee (which is part of the
Supervisory Board) informed on the current status of
compliance activities within the BMW Group, both on a
regular and a casebycase basis as the need arises.
The Board of Management keeps track of and analyses
compliancerelated developments and trends on the
basis of the Group’s compliance reporting and input
from the BMW Group Compliance Committee. Measures
to improve the Compliance Management System are
initiated on the basis of identified requirements.
A coordinated set of instruments and measures is em
ployed to ensure that the BMW Group, its representative
bodies, its managers and staff act in a lawful manner.
Particular emphasis is placed on compliance with anti
trust legislation and the avoidance of corruption risks.
Compliance measures are supplemented by a whole
range of internal policies, guidelines and instructions,
which in part reflect applicable legislation. The BMW
Group Policy “Corruption Prevention” and the BMW
Group Instruction “Corporate Hospitality and Gifts”,
which were revised in 2014, deserve particular mention.
These documents deal with lawful handling of gifts
and benefits and define appropriate assessment criteria
and approval procedures for specified actions.
Compliance measures are determined and prioritised
on the basis of a groupwide compliance risk assess
ment covering all 331 business units and functions
worldwide within the BMW Group. The assessment of
compliance risks is updated annually. Measures are
realised with the aid of a regionally structured com
pliance management team covering all parts of the
BMW Group, which oversees a network of more than
180 Compliance Responsibles.
The various elements of the BMW Group Compliance
Management System are shown in the diagram on the
left and are applicable for all BMW Group entities world
wide. To the extent that additional compliance require
ments apply to individual countries or specific lines
of business, these are covered by supplementary com
pliance measures.
186
The BMW Group Legal Compliance Code is the corner
stone of the Group’s Compliance Management System,
spelling out the Board of Management’s commitment
to compliance as a joint responsibility (“tone from the
top”). This document, which was revised and expanded
in 2014, explains the significance of legal compliance
and provides an overview of the various areas relevant
for the BMW Group. It is available both as a printed
brochure and for download in German and English. In
addition, translations into eleven other languages are
available in the BMW Group intranet.
Managers in particular bear a high degree of responsi
bility and must set a good example with regard to pre
venting infringements. Managers throughout the BMW
Group acknowledge this principle by signing a written
declaration, in which they also undertake to inform
staff working for them of the content and significance
of the Legal Compliance Code and make them aware
of legal risks. Managers must, at regular intervals and
on their own initiative, verify compliance with the law
and communicate regularly with staff on this issue.
Any indication of noncompliance with the law must
be rigorously investigated.
More than 25,400 managers and staff worldwide have re
ceived training in essential compliance matters since the
introduction of the BMW Group Compliance Manage
ment System. The training material is available on an In
ternetbased training platform in German and English
and includes a final test. Successful completion of the
training programme, which is documented by a certificate,
is mandatory for all BMW Group managers. Appropriate
processes are in place to ensure that all newly recruited
managers and promoted staff undergo compliance train
ing. In this way, the BMW Group ensures full training
coverage for its managers in compliance matters.
In addition to this basic training, more indepth training
is also provided to certain groups of staff on specific
compliance issues. In 2014, a total of 1,900 employees at
BMW AG branches received further training as anti
money laundering measures were upgraded. Antitrust
law training was also expanded in 2013, targeting em
ployees who come into contact with antitrustrelated
issues as a result of their functions within sales and
marketing, purchasing, production or development. A
total of 3,900 employees have already completed this
training. The relevant divisions also implemented further
measures and processes to make employees who par
ticipate in meetings with competitors sufficiently aware
of antitrust risks.
Additional compliance coaching has also been imple
mented for international sales and financial service lo
cations in local markets. These multiday classroom
seminars strengthen the understanding of compliance
in selected units and enhance cooperation between
the central BMW Group Compliance Committee Office
and decentralised compliance offices. In 2014, market
coaching was conducted in Canada, China and the UK.
In order to avoid legal risks, all members of staff are
expected to discuss compliance matters with their
managers and with the relevant departments within
the BMW Group, in particular Legal Affairs, Corporate
Audit and Corporate Security. The BMW Group Com
pliance Contact serves as a further point of contact for
both employees and nonemployees for any questions
regarding compliance.
Employees also have the opportunity to submit informa
tion – anonymously and confidentially – via the BMW
Group SpeakUP Line about possible breaches of the law
within the company. The BMW Group SpeakUP Line
is available in a total of 34 languages and can be reached
via local tollfree numbers in all countries in which BMW
Group employees are engaged in activities.
Compliancerelated queries and concerns are docu
mented and followed up by the BMW Group Compliance
Committee Office using an electronic Case Management
System. If necessary, Corporate Audit, Corporate
Security, the Works Council and legal departments may
be called upon to assist in the investigation process.
Through the groupwide reporting system, Compliance
Responsibles throughout the BMW Group report on
compliancerelevant issues to the Compliance Commit
tee on a regular basis, and, if necessary, on an ad hoc
basis. This includes reporting on the compliance status
of the relevant entities, on identified legal risks and
incidences of noncompliance, as well as on corrective /
preventative measures implemented.
170 STATEMENT ON
CORPORATE GOVERNANCE
(Part of Management Report)
170 Information on the Company’s
Governing Constitution
171 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§ 161 AktG
172 Members of the Board of
Management
173 Members of the Supervisory
Board
176 Work Procedures of the
Board of Management
178 Work Procedures of the
Supervisory Board
183 Information on Corporate
Governance Practices
184 Compliance in the BMW Group
189 Compensation Report
187 Statement on corporate Governance
Compliance with and implementation of the Legal Com
pliance Code are audited regularly by Corporate Audit
and subjected to control checks by Corporate Security
and the BMW Group Compliance Committee Office. As
part of its regular activities, Corporate Audit carries out
onsite audits. The BMW Group Compliance Committee
also engages Corporate Audit to perform compliance
specific checks. In addition, a BMW Group Compliance
Spot Check, a sample test specifically designed to identify
potential corruption risks, was carried out in 2014. Com
pliance control activities are coordinated by the BMW
Group Panel Compliance Controls. Any necessary follow
up measures are organised by the BMW Group Com
pliance Committee Office.
evaluated with a view to identifying potential compliance
risks. These procedures are particularly relevant for
relations with sales partners and service providers, such
as agencies and consultants. Depending on the results
of the evaluation, appropriate measures – such as com
munication measures, training and possible monitoring –
are implemented to manage compliance risks. The
Business Relations Compliance programme has already
been introduced in 32 units since its launch and, over
the coming years, will be rolled out successively through
out the BMW Group’s worldwide sales organisation.
In 2014, the company also continued integrating com
pliance clauses to protect contractual relationships into
dealer and importer contracts.
Compliance is also an important factor in safeguarding
the future of the BMW Group workforce. With this in
mind, the Board of Management and the national and
international employee representative bodies of the
BMW Group have agreed on a binding set of Joint Prin
ciples for Lawful Conduct. In doing so, all parties in
volved made a commitment to the principles contained
in the BMW Group Legal Compliance Code and to
trustful cooperation in all matters relating to compliance.
Employee representatives are therefore regularly in
volved in the process of refining compliance measures
within the BMW Group.
In the interest of investor protection and to ensure that
the BMW Group complies with regulations relating
to potential insider information, the Board of Manage
ment appointed an Ad Hoc Committee back in 1994,
consisting of representatives of various specialist de
partments, whose members examine the relevance of
issues for ad hoc disclosure purposes. All persons
working on behalf of the company who have access to
insider information in accordance with existing rules
have been, and continue to be, included in a corre
sponding, regularly updated list and informed of the
duties arising from insider rules.
It is essential that employees are aware of and comply
with applicable legal regulations. The BMW Group
does not tolerate violations of the law by its employees.
Culpable violations of the law result in employment
contract sanctions and may involve personal liability con
sequences for the employee involved.
To avoid this, BMW Group employees are kept fully up
todate with the instruments and measures used by the
Compliance Management System via various internal
channels. As of 2014, all new staff receive a welcome
email underscoring the BMW Group’s special commit
ment to compliance when they join the company. The
central means of communication is the Compliance
website within the BMW Group’s intranet, where em
ployees can find compliancerelated information and
access training materials in both German and English.
The website contains a special service area where various
practical tools are made available to employees to help
them deal with typical compliancerelated matters. BMW
Group employees also have access on the website to an
electronically supported approval process for invitations
in connection with business partners and an evaluation
tool for independent assessment of the admissibility of
incentive schemes to promote sales.
In the same way that the BMW Group is committed to
lawful and responsible conduct, it expects no less
from its business partners. In 2012, the BMW Group
developed a new Business Relations Compliance pro
gramme aimed at ensuring the reliability of its business
relations. Relevant business partners are checked and
188
Reportable securities transactions
(“Directors Dealings”)
Pursuant to § 15 a of the German Securities Trading Act
(WpHG), members of the Board of Management and
the Supervisory Board and any persons related to those
members are required to give notice to BMW AG and
the Federal Agency for the Supervision of Financial Ser
vices of transactions with BMW stock or related finan
cial instruments if the total sum of such transactions
equals or exceeds an amount of € 5,000 during any given
calendar year. No securities transactions pursuant to
§ 15 a WpHG were notified to the Company during the
financial year 2014.
Shareholdings of members of the Board of Management
and the Supervisory Board
The members of the Supervisory Board of BMW AG
hold in total 27.61 % of the Company’s shares of com
mon and preferred stock (2013: 27.62 %), of which
16.06 % (2013: 16.07 %) relates to Stefan Quandt, Ger
many, and 11.54 % (2013: 11.55 %) to Susanne Klatten,
Germany. The shareholdings of the members of the
Board of Management total less than 1 % of the issued
shares.
Share-based remuneration schemes for employees
and Management Board members
Three sharebased remuneration schemes were in place
at BMW AG during the year under report, namely the
Employee Share Programme (under which entitled
employees of BMW AG have been able to participate in
the enterprise’s success since 1989 in the form of non
voting shares of preferred stock), a sharebased remu
neration scheme for Board of Management members
and a sharebased remuneration scheme for department
heads (relating in both cases to shares of common
stock). The sharebased remuneration scheme for Board
of Management members is described in detail in the
Compensation Report (see also the “Sharebased re
muneration” section in the Compensation Report and
note 20 to the Group Financial Statements).
The sharebased remuneration scheme for qualifying
department heads, introduced with effect for financial
years beginning after 1 January 2012, is closely based
on the scheme for Board of Management members and
is aimed at rewarding a longterm, entrepreneurial ap
proach to running the business on a sustainable basis.
Under the terms of this scheme, participants give a
commitment to invest an amount equivalent to 20 % of
their performancebased bonus in BMW common stock
170 STATEMENT ON
CORPORATE GOVERNANCE
(Part of Management Report)
170 Information on the Company’s
Governing Constitution
171 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§ 161 AktG
172 Members of the Board of
Management
173 Members of the Supervisory
Board
176 Work Procedures of the
Board of Management
178 Work Procedures of the
Supervisory Board
183 Information on Corporate
Governance Practices
184 Compliance in the BMW Group
189 Compensation Report
and to hold the shares so acquired for four years. In re
turn for this commitment, BMW AG pays 100 % of the
investment amount as a net subsidy. Once the fouryear
holding period requirement has been fulfilled, the par
ticipants receive – for each three common stock shares
held and at the Company’s option – one further share
of common stock or the equivalent amount in cash.
Under the terms of the Employee Share Programme, em
ployees were able in 2014 to acquire packages of be
tween four and ten shares of nonvoting preferred stock
with a discount in each case of € 25 (2013: € 19.23) per
share compared to the market price (average closing
price in Xetra trading during the period from 6 Novem
ber to 12 November 2014: € 62.08). All employees of
BMW AG and its – directly or indirectly – wholly owned
German subsidiaries (if agreed to by the directors of
those entities) were entitled to participate in the scheme.
Employees were required to have been in an uninter
rupted employment relationship with BMW AG or the
relevant subsidiary for at least one year at the date on
which the allocation for the year was announced. Shares
of preferred stock acquired in conjunction with the Em
ployee Share Scheme are subject to a vesting period of
four years, starting from 1 January of the year in which
the employees acquired the shares. A total of 239,777
(2013: 266,152) shares of preferred stock were acquired
by employees under the scheme in 2014; 239,757 (2013:
265,570) of these shares were drawn from the Author
ised Capital 2014, the remainder were bought back via
the stock exchange. Every year the Board of Manage
ment of BMW AG decides whether the scheme is to be
continued. Further information is provided in notes 20
and 35 to the Group Financial Statements.
189 Statement on corporate Governance
Compensation Report
The following section describes the principles relating
to the compensation of the Board of Management and
the stipulations set out in the statutes relating to the
compensation of the Supervisory Board. In addition to
discussing the compensation system, the components
of compensation are also disclosed in absolute figures.
Furthermore, the compensation of each member of the
Board of Management and the Supervisory Board for
the financial year 2014 is disclosed by individual and
analysed in its component parts.
1. Board of Management compensation
Responsibilities
The Supervisory Board is responsible for determining
and regularly reviewing the Board of Management’s
compensation. The Personnel Committee plays a pre
paratory role in this process.
Principles of compensation
The compensation system for the Board of Management
at BMW AG is designed to encourage a management
approach focused on sustainable development of the
BMW Group. One further principle applied when de
signing remuneration systems at BMW is that of consist
ency at different levels. In other words, compensation
systems for the Board of Management, senior manage
ment and employees of BMW AG should all have a simi
lar structure and contain similar components. The Super
visory Board carries out regular checks to ensure that
all Board of Management compensation components are
appropriate, both individually and in total, and do not
encourage the Board of Management to take inappro
priate risks on behalf of the BMW Group. At the same
time, the compensation model used for the Board of
Management should be attractive in the context of the
competitive environment for highly qualified executives.
The compensation of members of the Board of Manage
ment is determined by the full Supervisory Board on
the basis of performance criteria and after taking into
account any remuneration received from Group com
panies. The principal performance criteria are the nature
of the tasks allocated to each member of the Board of
Management, the economic situation and the perfor
mance and future prospects of the BMW Group. The
Supervisory Board sets demanding and relevant parame
ters as the basis for variable compensation. It also takes
care to ensure that variable components based on
multiyear assessment criteria take account of both posi
tive and negative developments and that the package
as a whole encourages a longterm approach to business
performance. Targets and other parameters may not be
changed retrospectively.
The Supervisory Board reviews the appropriateness of
the compensation system annually. The Personnel
Committee also makes use of remuneration studies. The
Supervisory Board reviews the appropriateness of the
compensation system in horizontal terms by comparing
compensation paid by DAX companies and in vertical
terms by comparing board compensation with the sala
ries of executive managers and with the average salaries
of employees of BMW AG in Germany, in both cases in
terms of level and of changes over time. Recommenda
tions made by an independent external remuneration
expert and suggestions made by investors and analysts
are also considered in the consultative process.
Compensation system, compensation components
The compensation of the Board of Management com
prises both fixed and variable remuneration as well as
a sharebased component. Retirement and surviving
dependants’ benefit entitlements are also in place.
Fixed compensation
Fixed remuneration consists of a base salary (paid
monthly) and other remuneration elements. Other re
muneration elements comprise mainly the use of com
pany and lease cars as well as the payment of insurance
premiums, contributions towards security systems and
an annual medical checkup. Members of the Board of
Management are also entitled to purchase vehicles and
other services of the BMW Group at conditions that also
apply in each relevant case for employees.
The basic remuneration of members of the Board of
Management is unchanged from the previous year,
namely € 0.75 million p. a. for a board member during
the first period of office, € 0.9 million p. a. for a board
member from the second term of appointment or fourth
year of office onwards and € 1.5 million p. a. for the
Chairman of the Board of Management.
Variable remuneration
The variable remuneration of Board of Management
members comprises variable cash remuneration on the
one hand and a sharebased remuneration component
on the other.
Variable cash remuneration, in particular bonuses
Variable cash remuneration consists of a cash bonus
and sharebased remuneration component equivalent to
20 % of a board member’s total bonus after taxes, which
190
the board member is required to invest in BMW AG
common stock. Taxes and social insurance relating to
the sharebased remuneration are also borne by the
Company. In substantiated cases, the Supervisory
Board also has the option of paying an additional spe
cial bonus.
The bonus is made up of two components, each equally
weighted, namely a corporate earningsrelated bonus
and a personal performancerelated bonus. The target
bonus (100 %) for a Board of Management member,
for both components of variable compensation, totals
€ 1.5 million p. a., rising to € 1.75 million p. a. from the
second term of appointment or fourth year of office on
wards. The equivalent figure for the Chairman of the
Board of Management is € 3 million p. a. The amount of
bonus is capped for all Board of Management members.
With effect from financial years beginning on or after
1 January 2014, the upper limits are 200 % of the relevant
target bonus (2013: 250 %).
The corporate earningsrelated bonus is based on the
BMW Group’s net profit and posttax return on sales
(which are combined in a single earnings factor) and the
level of the dividend (common stock). The corporate
earningsrelated bonus is derived by multiplying the tar
get amount fixed for each member of the Board of
Management by the earnings factor and by the dividend
factor. In exceptional circumstances, for instance when
there have been major acquisitions or disposals, the
Super visory Board may adjust the level of the corporate
earningsrelated bonus.
The personal performancerelated bonus is derived by
multiplying the target amount set for each member of
the Board of Management by a performance factor. The
Supervisory Board sets the performance factor on the
basis of its assessment of the contribution of the relevant
Board of Management member to sustainable and long
term oriented business development. In setting the
factor, consideration is given equally to personal perfor
mance and decisions taken in previous forecasting pe
riods, key decisions affecting the future development
of the business and the effectiveness of measures taken
in response to changing external conditions as well as
other activities aimed at safeguarding the future viability
of the business to the extent not included directly in
the basis of measurement. Performance factor criteria
include innovation (economic and ecological, e. g. re
duction of carbon emissions), customer focus, ability to
adapt, leadership accomplishments, contributions to
the Company’s attractiveness as an employer, progress
in implementing the diversity concept and activities that
foster corporate social responsibility. The target bonus
and the key figures used to determine the corporate
earningsrelated bonus are fixed in advance for a period
of three financial years, during which time they may not
be amended retrospectively.
Share-based remuneration programme
The compensation system includes a sharebased remu
neration programme, in which the level of sharebased
remuneration is based on the amount of the bonus paid.
The system is aimed at creating further longterm incen
tives to encourage sustainable governance.
An earnings and dividend factor of 1.00 would give rise
to an earningsbased bonus of € 0.75 million for the finan
cial year 2014 for a member of the Board of Management
during the first period of office and one of € 0.875 mil
lion during the second term of appointment or from the
fourth year in office. The equivalent bonus for the Chair
man of the Board of Management is € 1.5 million. The
earnings factor is 1.00 in the event of a Group net profit
of € 3.1 billion and a posttax return on sales of 5.6 %.
The dividend factor is 1.00 in the event that the dividend
paid on the shares of common stock is between 101 and
110 cents. If the Group net profit is below € 1 billion or
if the posttax return on sales is less than 2 %, the earn
ings factor for the financial year 2014 would be zero. In
this case, no corporate earningsrelated bonus would be
paid. Based on the principle of consistency at all levels,
this rule is also applicable in determining the corporate
earningsrelated variable compensation components of
all managers and staff of BMW AG.
This programme envisages a sharebased remuneration
component equivalent to 20 % of the board member’s
total bonus after taxes, which the board member is re
quired to invest in BMW AG common stock. Taxes and
social insurance relating to the sharebased remunera
tion component are also borne by the Company. As a
general rule, the shares must be held for a minimum of
four years. As part of a matching plan, the Board of
Management members will, at the end of the holding
period, receive from the Company either one additional
share of common stock or an equivalent cash amount
for three shares of common stock held, to be decided at
the discretion of the Company (sharebased remunera
tion component / matching component), unless the em
ployment relationship was ended before expiry of the
agreed contractual period (except if caused by death or
invalidity). Special rules apply in the case of death or
invalidity of a Board of Management member before ful
filment of the holding period.
170 STATEMENT ON
CORPORATE GOVERNANCE
(Part of Management Report)
170 Information on the Company’s
Governing Constitution
171 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§ 161 AktG
172 Members of the Board of
Management
173 Members of the Supervisory
Board
176 Work Procedures of the
Board of Management
178 Work Procedures of the
Supervisory Board
183 Information on Corporate
Governance Practices
184 Compliance in the BMW Group
189 Compensation Report
191 Statement on corporate Governance
Retirement and surviving dependants’ benefits
The provision of retirement and surviving dependants’
benefits for Board of Management members was changed
to a defined contribution system with a guaranteed
minimum return with effect from 1 January 2010. How
ever, given the fact that board members appointed for
the first time prior to 1 January 2010 had a legal right to
receive the benefits already promised to them, these
board members were given the option to choose between
the previous system and the new one.
In the event of the termination of mandate, Board of
Management members appointed for the first time prior
to 1 January 2010 are entitled to receive certain defined
benefits in accordance with the old pension scheme
rules. Pensions are paid to former members of the Board
of Management who have either reached the age of 65
or, if their mandate was terminated earlier and not ex
tended, to members who have either reached the age of
60 or who are unable to work due to ill health or accident,
or who have entered into early retirement in accordance
with a special arrangement. The amount of the pension
is unchanged from the previous year and comprises a
basic monthly amount of € 10,000 or € 15,000 (Chairman
of the Board of Management) plus a fixed amount. The
fixed amount is made up of approximately € 75 for each
year of service in the Company before becoming a mem
ber of the Board of Management and between € 400 and
€ 600 for each full year of service on the board (up to a
maximum of 15 years). Pension payments are adjusted
by analogy to the rules applicable for the adjustment of
civil servants’ pensions: the pensions of members of
the Board of Management are adjusted when the civil
servants remuneration level B6 (excluding allowances)
is increased by more than 5 % or in accordance with the
Company Pension Act.
When a mandate is terminated, the new defined contri
bution system provides entitlements which can be paid
either (a) in the case of death or invalidity as a oneoff
amount or over a maximum of ten years or (b) upon re
tirement – depending on the wish of the exboard mem
ber concerned – in the form of a lifelong monthly pen
sion, as a oneoff amount, in a maximum of ten annual
instalments, or in a combined form (e. g. a combination
of a oneoff payment and a proportionately reduced
lifelong monthly pension). Pensions are paid to former
members of the Board of Management who have either
reached the statutory retirement age for the state pen
sion scheme in Germany or, if their mandate had termi
nated earlier and had not been extended, to members
who have either reached the age of 60 or are perma
nently unable to work, or who have entered into early
retirement in accordance with a special arrangement.
In addition, following the death of a retired board
member who has elected to receive a lifelong pension,
60 % of that amount is paid as a lifelong widow’s pen
sion. Pensions are increased annually by an amount of
at least 1 %.
The amount of the retirement pension to be paid is
determined on the basis of the amount accrued in each
board member’s individual pension savings account.
The amount on this account arises from annual contri
butions paid in, plus interest earned depending on the
type of investment.
Depending on the length of membership in the Board
of Management and previous activities, the annual con
tribution to be paid amounts to between € 350,000 and
€ 400,000 for each member of the Board of Management
and € 700,000 for the Chairman of the Board of Manage
ment. The contributions are credited, along with inter
est earned, to the personal savings accounts of board
members in monthly amounts. The guaranteed minimum
rate of return p. a. corresponds to the maximum inter
est rate used to calculate insurance reserves for life in
surance policies (guaranteed interest on life insurance
policies). A Board of Management member entering of
fice at 50 years of age and serving as member of the
Board of Management to the age of 60 can expect a re
tirement savings capital of € 4.2 million.
In the case of invalidity or death, a minimum contribu
tion of the potential annual contributions will be paid
until the person concerned would have reached the age
of 60.
Contributions falling due under the defined contribution
scheme are paid into an external fund in conjunction
with a trust model that is also used to fund pension ob
ligations to employees.
Income earned on an employed or a selfemployed ba
sis up to the age of 63 is offset against the pension entitle
ment. In addition, certain circumstances have been
specified, in the event of which the Company no longer
has any obligation to pay benefits. In such cases, no
transitional payments will be made.
Board of Management members who retire immediately
after their service on the board and who draw a retire
ment pension are entitled to purchase vehicles and
other services of the BMW Group at conditions that also
apply in each relevant case for pensioners and to lease
BMW Group vehicles in accordance with the guidelines
192
Overview of compensation system and compensation components
Component
Parameter / measurement base
Basic compensation p. a.
Variable compensation
Bonus
a) Corporate earnings-related bonus
(corresponds to 50 % of target bonus if target is 100 %
achieved)
Member of the Board of Management:
– € 0.75 million (first term of appointment)
– € 0.90 million (from second term of appointment onwards or fourth year in office)
Chairman of the Board of Management:
– € 1.50 million
Target bonuses p. a. (if target is 100 % achieved):
– € 1.50 million (first term of appointment)
– € 1.75 million (from second term of appointment onwards or fourth year in office)
– € 3.00 million (Chairman of the Board of Management)
– Quantitative criteria fixed in advance for a period of three financial years
– Formula: 50 % of target bonus x earnings factor x dividend factor (common stock)
– The earnings factor is derived from the Group net profit and the Group post-tax return
on sales
b) Performance-related bonus
– Primarily qualitative criteria, expressed in terms of a performance factor aimed at
(corresponds to 50 % of target bonus if target is 100 %
achieved)
measuring the board members’ contribution to sustainable and long-term performance
and the future viability of the business
Special bonus payments
– Formula: 50 % of target bonus x performance factor
– Criteria for the performance factor also include: innovation (economic and ecological,
e. g. reduction of CO2 emissions), customer orientation, ability to adapt, leadership ac-
complishments and attractiveness as employer, progress in implementing the diversity
concept and activities that foster corporate social responsibility
May be paid in justified circumstances on an appropriate basis, contractual basis, no
entitlement
Share-based remuneration programme
– Requirement for Board of Management members to each invest an amount equivalent
a) Cash compensation component
– Earmarked cash remuneration equivalent to the amount required to be invested in
b) Share-based remuneration component
– Once the four-year holding period requirement is fulfilled, Board of Management
BMW AG shares, plus taxes and social insurance contributions
to 20 % of their total bonus (after tax) in BMW AG common stock
(matching component)
Other compensation
Retirement and surviving dependants’ benefits
Model
a) Defined benefits
(only applies to board members appointed for the first
time before 1 January 2010; based on legal right to
receive the benefits already promised to them, this group
of persons is entitled to opt between (a) and (b))
members receive for each three common stock shares held either – at the Company’s
option – one further share of common stock or the equivalent amount in cash, unless
the employment relationship was ended before expiry of the agreed contractual period
(except where caused by death or invalidity).
Contractual agreement, main points: use of company cars, insurance premiums,
contributions towards security systems, medical check-up
Principal features
Pension of € 120,000 (Chairman: € 180,000) p. a. plus fixed amounts based on length of
Company and board service
b) Defined contribution system with guaranteed minimum
rate of return
Pension based on amounts credited to individual savings accounts for contributions paid
and interest earned, various forms of disbursement
Pension contributions p. a.:
Member of the Board of Management: € 350,000 – € 400,000
Chairman of the Board of Management: €700,000
Remuneration caps (maximum remuneration)
in € p. a.
Bonus
Cash compensation
for share acquisition
Share-based compensation programme
Monetary value
of matching
component
Possible
special bonus
Total *
Member of the Board of Management
in the first term of appointment
Member of the Board of Management
in the second term of appointment
or from fourth year in office
Chairman of the Board of Management
3,000,000
700,000
700,000
1,000,000
4,925,000
3,500,000
6,000,000
800,000
1,400,000
800,000
1,400,000
1,200,000
1,500,000
5,500,000
9,850,000
* Including basic remuneration, other fixed remuneration elements and pension contribution. The overall cap is lower than the sum of the maximum amounts for each of the
individual components.
170 STATEMENT ON
CORPORATE GOVERNANCE
(Part of Management Report)
170 Information on the Company’s
Governing Constitution
171 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§ 161 AktG
172 Members of the Board of
Management
173 Members of the Supervisory
Board
176 Work Procedures of the
Board of Management
178 Work Procedures of the
Supervisory Board
183 Information on Corporate
Governance Practices
184 Compliance in the BMW Group
189 Compensation Report
193 Statement on corporate Governance
applicable to senior heads of departments. Retired Chair
men of the Board of Management are entitled, like senior
heads of departments, to use a BMW Group vehicle as a
company car and, depending on availability and as part
of an offset arrangement, use the BMW chauffeur services.
Termination benefits on premature termination of board
activities, benefits paid by third parties
In conjunction with the amicable early termination of
Dr Reithofer’s Board of Management mandate with
effect from the end of the Annual General Meeting 2015,
the Company also reached agreement with Dr Reithofer
concerning the early termination of his service contract
with effect from the end of the Annual General Meeting
2015. The contract termination agreement envisages
calculation of variable cash remuneration for prorated
activities in the financial year 2015 on the basis of the
target attainment for the financial year 2013, entitling
Dr Reithofer to an amount of € 1.9 million, payable in
2015, i. e. in the period after he has left the Board of
Management. This arrangement ensures that – in the
event that Dr Reithofer is elected to the Supervisory
Board – he will not be involved in deciding on the level
of his own performancerelated remuneration. As
settlement of the remuneration to which he is entitled
on the basis of the original term of his service con
tract (i. e. up to 2016), the Company agreed to pay an
amount of € 2.5 million to Dr Reithofer in 2015. The
Company will make a final pension contribution of
€ 0.7 million on behalf of Dr Reithofer for the financial
year 2015.
After leaving the Board of Management on 9 December
2014, an agreement was reached with Dr Diess for the
early termination of his service contract with effect from
30 June 2015. The agreement envisages the continued
payment of fixed remuneration amounting to € 0.5 mil
lion for the period from the termination of Dr Diess’
mandate to the expiry of the service contract. As settle
ment of the variable cash remuneration relating to
the remainder of the contractual period, a payment of
€ 0.6 million, payable in 2015, was also agreed. A per
formancerelated bonus is no longer payable for this
period. The Company will make a final pension contri
bution of € 0.4 million on behalf of Dr Diess for the finan
cial year 2014.
Apart from these, there are no contractual commitments
to pay compensation if a board member’s mandate is
terminated early. Similarly, there are no commitments
to pay compensation for early termination in the event
of a change of control or a takeover offer. No members
of the Board of Management received any payments or
benefits from third parties in 2014 on account of their
activities as members of the Board of Management of
BMW AG.
Remuneration caps
The Supervisory Board has stipulated caps for all variable
remuneration components and for the remuneration of
Board of Management members in total. The caps are
shown in the overview of the compensation system and
compensation components.
Compensation of the Board of Management for the
financial year 2014 (2013) (total)
The total compensation of the current members of the
Board of Management of BMW AG for the financial year
2014 amounted to € 35.4 million (2013: € 34.5 million),
of which € 7.7 million (2013: € 7.9 million) relates to
fixed components (including other remuneration).
Variable components amounted to € 27.0 million (2013:
€ 25.9 million) and sharebased remuneration compo
nents to € 0.7 million (2013: € 0.7 million).
in € million
2014
2013
Amount Proportion
in %
Amount Proportion
in %
Fixed compensation
7.7
21.8
7.9
22.9
Variable cash
compensation
Share-based compen-
sation component*
Total compensation
27.0
76.3
25.9
75.1
0.7
35.4
1.9
100.0
0.7
34.5
2.0
100.0
* Matching component; provisional number or provisional monetary value calculated at
grant date (date on which the entitlement became binding in law). The final number
of matching shares is determined in each case when the requirement to invest in
BMW AG common stock has been fulfilled.
In addition, an expense of € 2.1 million (2013: € 2.2 mil
lion) was recognised in the financial year 2014 for current
members of the Board of Management for the period af
ter the end of their service relationship, which relates to
the expense for allocations to pension provisions.
The amount paid to former members of the Board of
Management and their dependants for the financial year
2014 was € 5.8 million (2013: € 4.7 million). The figure for
2014 includes continued payment of the fixed remunera
tion of Dr Diess after leaving the Board of Management
amounting to € 0.1 million. Pension obligations to former
members of the Board of Management, including Dr
Diess, and their surviving dependants are fully covered
by pension provisions amounting to € 68.4 million (2013:
€ 58.0 million), computed in accordance with IAS 19.
194
Compensation of the individual members of the Board of Management for the financial year 2014 (2013)
in € or
number of
matching shares
Fixed compensation
Basic
compen-
sation
Other
compen-
sation
Total
Variable
cash com-
pensation
Share-based
compensation
component
(matching
component)1
Com-
pensation
Total
Number Monetary
value
5,563,800
(5,270,400)
2,781,900
(2,635,200)
2,749,360
(3,074,400)
3,245,550
(3,074,400)
3,245,550
(3,074,400)
172,000
(–)
3,245,550
(3,074,400)
3,245,550
(3,074,400)
2,781,900
(1,976,400)
1,810
(1,886)
971
(1,012)
–
(1,181)
1,133
(1,181)
1,133
(1,181)
52
(–)
1,055
(1,100)
1,133
(1,181)
971
(812)
151,207
(143,204)
7,245,159
(7,032,836)
81,117
(76,841)
3,681,572
(3,560,254)
–
(89,673)
94,651
(89,673)
94,651
(89,673)
4,623
(–)
88,135
(83,523)
94,651
(89,673)
81,117
(57,603)
3,614,295
(4,083,283)
4,264,991
(4,090,447)
4,262,153
(4,088,298)
223,388
(–)
4,251,756
(4,076,511)
4,254,362
(4,078,474)
3,639,498
(2,609,927)
Expense for
share-based
compensation
component
in year under
report in
accordance with
HGB and IFRS
Provision at
31.12. 2014 for
share-based
compensation
component in
accordance
with HGB
and IFRS2
191,845
(122,700)
103,493
(49,469)
92,633
(91,437)
191,814
(125,097)
181,389
(104,017)
130
(–)
94,542
(60,843)
125,621
(79,152)
31,055
(10,380)
411,815
(219,970)
159,210
(55,717)
254,686
(162,052)
407,415
(215,602)
363,844
(182,455)
130
(–)
202,917
(108,375)
266,831
(141,210)
41,435
(10,380)
Norbert Reithofer
1,500,000
(1,500,000)
30,152
(119,232)
1,530,152
(1,619,232)
Milagros Caiña
Carreiro-Andree
Herbert Diess3
Klaus Draeger
Friedrich Eichiner
Klaus Fröhlich4
Harald Krüger
Ian Robertson
Peter
Schwarzenbauer
Total 5
750,000
(750,000)
844,355
(900,000)
900,000
(900,000)
900,000
(900,000)
46,371
(–)
900,000
(900,000)
900,000
(900,000)
750,000
(562,500)
68,555
(98,213)
20,580
(19,210)
24,790
(26,374)
21,952
(24,225)
394
(–)
18,071
(18,588)
14,161
(14,401)
26,481
(13,424)
818,555
(848,213)
864,935
(919,210)
924,790
(926,374)
921,952
(924,225)
46,765
(–)
918,071
(918,588)
914,161
(914,401)
776,481
(575,924)
7,490,726
225,136
7,715,862
27,031,160
8,258
690,152 35,437,174
1,012,523
2,108,284
(7,537,500)
(344,101)
(7,881,601)
(25,894,500)
(9,534)
(719,863)
(34,495,964)
(712,103)
(1,253,625)
1 Provisional number or provisional monetary value calculated at grant date (date on which the entitlement became binding in law). The final number of matching shares is
determined in each case when the requirement to invest in BMW AG common stock has been fulfilled. See note 20 to the Group Financial Statements for a description of the
accounting treatment of the share-based compensation component.
2 Monetary value calculated on the basis of the closing price of BMW common stock in the XETRA trading system on 30 December 2014 (€ 89.77) (fair value at reporting date).
3 Member of the Board of Management until 9 December 2014.
4 Member of the Board of Management since 9 December 2014.
5 Figures for the previous year include the remuneration of the member of the Board of Management who left office during the financial year 2013.
170 STATEMENT ON
CORPORATE GOVERNANCE
(Part of Management Report)
170 Information on the Company’s
Governing Constitution
171 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§ 161 AktG
172 Members of the Board of
Management
173 Members of the Supervisory
Board
176 Work Procedures of the
Board of Management
178 Work Procedures of the
Supervisory Board
183 Information on Corporate
Governance Practices
184 Compliance in the BMW Group
189 Compensation Report
195 Statement on corporate Governance
Pension benefits of the individual members of the Board of Management
in €
Service cost
in accordance with IFRS
for the financial year 20141
Service cost
in accordance with HGB
for the financial year 20141
Present value of
pension obligations
(defined benefit plans),
in accordance
with IFRS 2
Present value of
pension obligations
(defined benefit plans),
in accordance
with HGB 2
Norbert Reithofer
Milagros Caiña Carreiro-Andree
Klaus Draeger
Friedrich Eichiner
Klaus Fröhlich3
Harald Krüger
Ian Robertson
Peter Schwarzenbauer
Total4
Herbert Diess5
281,278
(313,038)
366,848
(369,827)
147,483
(162,426)
177,335
(174,279)
3,643
(–)
220,609
(143,734)
356,067
(395,507)
369,234
(262,500)
1,922,497
(2,033,085)
178,809
(211,774)
717,656
(233,100)
368,968
(372,277)
409,663
(407,482)
409,663
(407,482)
2,747
(–)
359,256
(358,325)
414,827
(274,357)
371,398
(262,500)
3,054,178
(2,723,228)
383,900
(407,705)
9,600,845
(7,234,887)
990,507
(555,874)
5,359,750
(4,086,628)
5,599,794
(4,683,637)
2,138,633
(–)
3,927,671
(2,648,384)
3,029,448
(2,025,994)
688,271
(289,681)
31,334,919
(24,819,665)
4,256,732
(3,294,607)
7,346,081
(6,036,606)
989,277
(555,190)
4,485,792
(3,694,976)
4,633,694
(3,827,095)
1,286,247
(–)
3,204,346
(2,516,021)
2,395,377
(1,771,848)
687,570
(289,308)
25,028,384
(21,753,227)
3,858,064
(3,062,183)
1 Service cost differs due to the different valuation bases used to measure pension obligations for HGB purposes (expected settlement amount) and for IFRS purposes
(present value of the defined benefit obligation).
2 Based on legal right to receive the benefits already promised to them, Board of Management members appointed for the first time prior to 1 January 2010 were given
the option of choosing between the old and new models at the time the Company changed from a defined benefit to a defined contribution system.
3 Member of the Board of Management since 9 December 2014.
4 The previous year’s figures include amounts relating to Dr Diess.
5 Member of the Board of Management until 9 December 2014.
2. Supervisory Board compensation
Responsibilities, regulation pursuant to Articles
of Incorporation
The compensation of the Supervisory Board is specified
by resolution of the shareholders at the Annual General
Meeting or in the Articles of Incorporation. The com
pensation regulation valid for the financial year under
report was resolved by shareholders at the Annual Gen
eral Meeting on 14 May 2013 and is set out in Article 15
of BMW AG’s Articles of Incorporation, which can be
viewed and / or downloaded at www.bmwgroup.com / ir
under the menu items “Corporate Facts” and “Corporate
Governance”.
Compensation principles, compensation components
The Supervisory Board of BMW AG receives a fixed
compensation component as well as a corporate per
formancerelated compensation component which is
oriented toward sustainable growth, based on a multi
year assessment. The corporate performancerelated
component is based on average earnings per share of
common stock for the remuneration year and the two
preceding financial years.
These two interacting components are intended to
ensure that the compensation of Supervisory Board
members is commensurate overall in relation to the
196
tasks performed and the Company’s financial condition
and also takes account of business performance over
several years.
In accordance with the Articles of Incorporation, each
member of BMW AG’s Supervisory Board receives, in
addition to the reimbursement of reasonable expenses,
a fixed amount of € 70,000 (payable at the end of the
year) as well as a corporate performancerelated compen
sation of € 170 for each full € 0.01 by which the average
amount of (undiluted) earnings per share (EPS) of
common stock reported in the Group Financial State
ments for the remuneration year and the two preceding
financial years exceeds a minimum amount of € 2.00
(payable after the Annual General Meeting held in
the following year). An upper limit corresponding to
twice the amount of the fixed compensation (€ 140,000)
is in place for the corporate performancerelated com
pensation.
With this combination of fixed compensation elements
and a corporate performancerelated compensation
component oriented toward sustainable growth, the
compensation structure in place for BMW AG’s Super
visory Board complies with the recommendation on
super visory board compensation contained in section
5.4.6 paragraph 2 sentence 2 of the German Corporate
Governance Code (version dated 24 June 2014).
The German Corporate Governance Code also recom
mends in section 5.4.6 paragraph 1 sentence 2 that the
exercising of chair and deputy chair positions in the
Super visory Board as well as the chair and membership
of committees should also be considered when deter
mining the level of compensation.
Accordingly, the Articles of Incorporation of BMW AG
stipulate that the Chairman of the Supervisory Board
shall receive three times the amount and each Deputy
Chairman shall receive twice the amount of the remu
neration of a Supervisory Board member. Provided the
relevant committee convened for meetings on at least
three days during the financial year, each chairman of
the Supervisory Board’s committees receives twice the
170 STATEMENT ON
CORPORATE GOVERNANCE
(Part of Management Report)
170 Information on the Company’s
Governing Constitution
171 Declaration of the Board of
Management and of the
Supervisory Board pursuant to
§ 161 AktG
172 Members of the Board of
Management
173 Members of the Supervisory
Board
176 Work Procedures of the
Board of Management
178 Work Procedures of the
Supervisory Board
183 Information on Corporate
Governance Practices
184 Compliance in the BMW Group
189 Compensation Report
amount and each member of a committee receives one
and a half times the amount of the remuneration of a
Supervisory Board member. If a member of the Super
visory Board exercises more than one of the functions
referred to above, the compensation is measured only
on the basis of the function which is remunerated with
the highest amount.
In addition, each member of the Supervisory Board re
ceives an attendance fee of € 2,000 for each full meeting
of the Supervisory Board (Plenum) which the member
has attended (payable at the end of the financial year).
Attendance at more than one meeting on the same day
is not remunerated separately.
The Company also reimburses to each member of the
Supervisory Board reasonable expenses and any value
added tax arising on the member’s remuneration. The
amounts disclosed below are net amounts.
In order to be able to perform his duties, the Chairman
of the Supervisory Board is provided with secretariat
and chauffeur services.
Compensation of the Supervisory Board for the
financial year 2014 (total)
In accordance with § 15 of the Articles of Incorporation,
the compensation of the Supervisory Board for activities
during the financial year 2014 amounted to € 4.8 million
(2013: € 4.6 million). This includes fixed compensation
of € 2.0 million (2013: € 2.0 million) and variable compen
sation of € 2.8 million (2013: € 2.6 million).
in € million
2014
2013
Amount Proportion
in %
Amount Proportion
Fixed compensation
Variable compensation
Total compensation
2.0
2.8
4.8
41.7
58.3
100.0
2.0
2.6
4.6
in %
43.5
56.5
100.0
Supervisory Board members did not receive any further
compensation or benefits from the BMW Group for
advisory and agency services personally rendered.
197 Statement on corporate Governance
Compensation of the individual members of the Supervisory Board for the financial year 2014 (2013)
in €
Fixed compensation
Attendance fee
Variable
Total
Joachim Milberg (Chairman)
Manfred Schoch (Deputy Chairman)1
Stefan Quandt (Deputy Chairman)
Stefan Schmid (Deputy Chairman)1
Karl-Ludwig Kley (Deputy Chairman)
Christiane Benner1, 2
Bertin Eichler1,3
Franz Haniel
Reinhard Hüttl
Henning Kagermann
Susanne Klatten
Renate Köcher
Ulrich Kranz 2
Robert W. Lane
Horst Lischka1
Willibald Löw1
Wolfgang Mayrhuber
Dominique Mohabeer1
Brigitte Rödig1
Markus Schramm3
Jürgen Wechsler1
Werner Zierer1
Total4
210,000
(210,000)
140,000
(140,000)
140,000
(140,000)
140,000
(140,000)
140,000
(140,000)
44,301
(–)
25,890
(70,000)
70,000
(70,000)
70,000
(70,000)
70,000
(70,000)
70,000
(70,000)
70,000
(70,000)
44,301
(–)
70,000
(70,000)
70,000
(70,000)
70,000
(70,000)
70,000
(70,000)
70,000
(70,000)
70,000
(33,370)
25,890
(52,740)
70,000
(70,000)
70,000
(70,000)
1,820,382
(1,818,082)
10,000
(10,000)
10,000
(10,000)
10,000
(10,000)
10,000
(10,000)
6,000
(8,000)
8,000
(–)
2,000
(10,000)
10,000
(10,000)
8,000
(10,000)
10,000
(10,000)
10,000
(10,000)
10,000
(10,000)
8,000
(–)
8,000
(10,000)
10,000
(10,000)
10,000
(10,000)
8,000
(8,000)
10,000
(10,000)
10,000
(6,000)
2,000
(8,000)
10,000
(6,000)
10,000
(10,000)
190,000
(192,000)
317,730
(294,270)
211,820
(196,180)
211,820
(196,180)
211,820
(196,180)
211,820
(196,180)
67,028
(–)
39,172
(98,090)
105,910
(98,090)
105,910
(98,090)
105,910
(98,090)
105,910
(98,090)
105,910
(98,090)
67,028
(–)
105,910
(98,090)
105,910
(98,090)
105,910
(98,090)
105,910
(98,090)
105,910
(98,090)
105,910
(46,761)
39,172
(73,903)
105,910
(98,090)
105,910
(98,090)
537,730
(514,270)
361,820
(346,180)
361,820
(346,180)
361,820
(346,180)
357,820
(344,180)
119,329
(–)
67,062
(178,090)
185,910
(178,090)
183,910
(178,090)
185,910
(178,090)
185,910
(178,090)
185,910
(178,090)
119,329
(–)
183,910
(178,090)
185,910
(178,090)
185,910
(178,090)
183,910
(176,090)
185,910
(178,090)
185,910
(86,131)
67,062
(134,643)
185,910
(174,090)
185,910
(178,090)
2,754,240
(2,547,653)
4,764,622
(4,557,735)
1 These employee representatives have – in line with the guidelines of the Deutsche Gewerkschaftsbund – requested that their remuneration be paid into the
Hans Böckler Foundation.
2 Member of the Supervisory Board since 15. 05. 2014.
3 Member of the Supervisory Board until 15. 05. 2014.
4 Figures for the previous year include the remuneration of members of the Supervisory Board who left office during the financial year 2013.
3. Other
Apart from vehicle lease contracts entered into on cus
tomary market conditions, no advances and loans were
granted by the Company to members of the Board of
Management and the Supervisory Board, nor were any
contingent liabilities entered into on their behalf.
198
Responsibility Statement by the Company’s Legal Representatives
Statement pursuant to § 37y No. 1 of the Securities
Trading Act (WpHG) in conjunction with § 297 (2)
sentence 4 and § 315 (1) sentence 6 of the German
Commercial Code (HGB)
“To the best of our knowledge, and in accordance with
the applicable reporting principles, the Consolidated
Financial Statements give a true and fair view of the
assets, liabilities, financial position and profit of the
Group, and the Group Management Report includes
a fair review of the development and performance of
the business and the position of the Group, together
with a description of the principal opportunities and
risks associated with the expected development of the
Group.”
Munich, 19 February 2015
Bayerische Motoren Werke
Aktiengesellschaft
The Board of Management
Dr.Ing. Dr.Ing. E. h. Norbert Reithofer
Milagros Caiña CarreiroAndree
Dr.Ing. Klaus Draeger
Dr. Friedrich Eichiner
Klaus Fröhlich
Harald Krüger
Dr. Ian Robertson (HonDSc)
Peter Schwarzenbauer
170 STATEMENT ON CORPORATE GOVERNANCE (Part of Management Report)170 Information on the Company’s Governing Constitution171 Declaration of the Board of Management and of the Supervisory Board pursuant to § 161 AktG172 Members of the Board of Management173 Members of the Supervisory Board176 Work Procedures of the Board of Management178 Work Procedures of the Supervisory Board183 Information on Corporate Governance Practices184 Compliance in the BMW Group189 Compensation Report 199 Statement on corporate Governance
BMW Group
Auditor’s Report
We have audited the consolidated financial statements
prepared by Bayerische Motoren Werke Aktiengesell
schaft, comprising the income statement for group and
statement of comprehensive income for group, the
balance sheet for group, cash flow statement for group,
group statement of changes in equity and the notes to
the group financial statements and its report on the
position of the Company and the Group for the business
year from 1 January to 31 December 2014. The prepara
tion of the consolidated finan cial statements and group
management report in accordance with IFRSs, as
adopted by the EU, and the additional requirements of
German commercial law pur suant to § 315 a (1) HGB
(Handelsgesetzbuch “German Commercial Code”) are
the responsibility of the parent company’s management.
Our responsibility is to express an opinion on the con
solidated financial statements and on the group manage
ment report based on our audit.
We conducted our audit of the consolidated financial
statements in accordance with § 317 HGB and German
generally accepted standards for the audit of financial
statements promulgated by the Institut der Wirtschafts
prüfer (Institute of Public Auditors in Germany) (IDW).
Those standards require that we plan and perform the
audit such that misstatements materially affecting the
presentation of the net assets, financial position and
results of operations in the consolidated financial state
ments in accordance with the applicable financial report
ing framework and in the group management report
are detected with reasonable assurance. Knowledge of
the business activities and the economic and legal
environment of the Group and expectations as to possi
ble misstatements are taken into account in the deter
mination of audit procedures. The effectiveness of the
accountingrelated internal control system and the evi
dence supporting the disclosures in the consolidated
financial statements and in the group management
report are examined primarily on a test basis with in the
framework of the audit. The audit also includes assess
ing the annual financial statements of those entities
included in consolidation, the determination of entities
to be included in consolidation, the accounting and
consolidation principles used and significant estimates
made by the management, as well as evaluating the
overall presentation of the con solidated finan cial state
ments and group management report. We believe that
our audit provides a reasonable basis for our opinion.
Our audit has not led to any reservations.
In our opinion, based on the findings of our audit, the
consolidated financial statements comply with IFRSs,
as adopted by the EU, the additional requirements of
German commercial law pursuant to § 315 a (1) HGB and
give a true and fair view of the net assets, financial
position and results of operations of the Group in ac
cordance with these requirements. The group manage
ment report is consistent with the consolidated finan
cial statements and as a whole provides a suitable
view of the Group’s position and suitably presents the
opportunities and risks of future development.
Munich, 5 March 2015
KPMG AG
Wirtschaftsprüfungsgesellschaft
Pastor
Wirtschaftsprüfer
Feege
Wirtschaftsprüfer
200
OTHER INFORMATION
BMW Group Ten-year Comparison
Sales volume
Automobiles
Motorcycles1
Production volume
Automobiles
Motorcycles1
Financial Services
units
units
units
units
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2,117,965
1,963,798
1,845,186
1,668,982
1,461,166
1,286,310
1,435,876
1,500,678
1,373,970
1,327,992
Automobiles
123,495
115,215
106,358
104,286
98,047
87,306
101,685
102,467
100,064
97,474
Motorcycles1
2,165,566
2,006,366
1,861,826
1,738,160
1,481,253
1,258,417
1,439,918
1,541,503
1,366,838
1,323,119
133,615
110,127
113,811
110,360
99,236
82,631
104,220
104,396
103,759
92,012
Sales volume
Production volume
Automobiles
Motorcycles1
Financial Services
Contract portfolio
Business volume (based on balance sheet carrying amounts) 2
contracts
4,359,572
4,130,002
3,846,364
3,592,093
3,190,353
3,085,946
3,031,935
2,629,949
2,270,528
2,087,368
Contract portfolio
€ million
96,390
84,347
80,974
75,245
66,233
61,202
60,653
51,257
44,010
40,428
Business volume (based on balance sheet carrying amounts) 2
Income Statement
Revenues
Gross profit margin Group4
Profit before financial result
Profit before tax
Return on sales (earnings before tax / revenues)
Income taxes
Effective tax rate
Net profit for the year
Balance Sheet
Non-current assets
Current assets
Equity
Equity ratio Group
Non-current provisions and liabilities
Current provisions and liabilities
Balance sheet total
Cash Flow Statement
Cash and cash equivalents at balance sheet date
Operating cash flow 5
Capital expenditure
Capital expenditure ratio (capital expenditure / revenues)
Personnel
Workforce at the end of year 6
Personnel cost per employee
Dividend
Dividend total
€ million
80,401
%
€ million
€ million
%
€ million
%
€ million
€ million
€ million
€ million
%
€ million
€ million
€ million
€ million
€ million
€ million
%
21.2
9,118
8,707
10.8
2,890
33.2
5,817
97,959
56,844
37,437
24.2
58,288
59,078
154,803
7,688
9,423
6,100
7.6
76,059 3
20.1
7,978 3
7,893 3
10.4
2,564 3
32.5
5,329 3
86,193 3
52,184 3
35,600 3
25.7 3
51,643 3
51,134 3
138,377 3
7,671 3
9,964 3
6,711 3
8.8
76,848
68,821
60,477
50,681
53,197
56,018
48,999
46,656
Revenues
20.2
8,275
7,803
10.2
2,692
34.5
5,111
81,305
50,530
30,606
23.2
52,834
48,395
21.1
8,018
7,383
10.7
2,476
33.5
4,907
74,425
49,004
27,103
22.0
49,113
47,213
131,835
123,429
110,164
101,953
101,086
74,566
Balance sheet total
8,370
9,167
5,240
6.8
7,776
8,110
3,692
5.4
116,324
92,337
110,351
89,869 3
105,876
89,161
100,306
84,887
€
95,453
83,141
96,230
72,349
100,041
75,612
107,539
76,704
106,575
76,621
105,798
Workforce at the end of year 6
75,238
Personnel cost per employee
€ million
1,904
1,707
1,640
1,508
852
197
197
694
458
419
Dividend total
18.1
5,111
4,853
8.0
1,610
33.1
3,243
67,013
43,151
23,930
21.7
46,100
40,134
7,432
8,149
3,263
5.4
10.5
289
413
0.8
203
49.2
210
62,009
39,944
19,915
19.5
45,119
36,919
7,767
4,921
3,471
6.8
11.4
921
351
0.7
21
6.0
330
62,416
38,670
20,273
20.1
41,526
39,287
7,454
4,471
4,204
7.9
21.8
4,212
3,873
6.9
739
19.1
3,134
56,619
32,378
21,744
24.4
33,469
33,784
88,997
2,393
6,246
4,267
7.6
23.1
4,050
4,124
8.4
1,250
30.3
2,874
50,514
28,543
19,130
24.2
31,372
28,555
79,057
1,336
5,373
4,313
8.8
Income Statement
22.9
Gross profit margin Group4
3,793
Profit before financial result
3,287
Profit before tax
7.0
Return on sales (earnings before tax / revenues)
1,048
Income taxes
31.9
Effective tax rate
2,239
Net profit for the year
Balance Sheet
47,556
Non-current assets
27,010
Current assets
16,973
Equity
22.8
Equity ratio Group
29,509
Non-current provisions and liabilities
28,084
Current provisions and liabilities
Cash Flow Statement
1,621
Cash and cash equivalents at balance sheet date
6,184
Operating cash flow 5
3,993
Capital expenditure
8.6
Capital expenditure ratio (capital expenditure / revenues)
Personnel
Dividend
Dividend per share of common stock / preferred stock
€
2.90 / 2.92
2.60 / 2.62
2.50 /2.52
2.30 / 2.32
1.30 /1.32
0.30 / 0.32
0.30 / 0.32
1.06 / 1.08
0.70 / 0.72
0.64 / 0.66
Dividend per share of common stock / preferred stock
1 Excluding Husqvarna, sales volume up to 2013: 59,776 units; production up to 2013: 59,426 units.
2 Amount computed on the basis of balance sheet figures: until 2007 from the Group balance sheet, from 2008 onwards from the Financial Services segment balance sheet.
3 Prior year figures have been adjusted in accordance with IAS 8, see note 9.
4 Research and development expenses included in cost of sales with the effect from 2008.
5 Figures are reported in the cash flow statement up to 2006 as cash inflow from operating activities of Industrial Operations and from 2007 as cash inflow from
operating activities of the Automotive segment.
6 Figures exclude dormant employment contracts, employees in the non-work phases of pre-retirement part-time arrangements and low wage earners.
200 OTHER INFORMATION
200 BMW Group Ten-year Comparison
202 BMW Group Locations
204 Glossary
206 Index
207 Index of Graphs
208 Financial Calendar
209 Contacts
€ million
80,401
76,848
68,821
60,477
50,681
53,197
56,018
48,999
46,656
201 other inF ormation
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2,117,965
1,963,798
1,845,186
1,668,982
1,461,166
1,286,310
1,435,876
1,500,678
1,373,970
1,327,992
123,495
115,215
106,358
104,286
98,047
87,306
101,685
102,467
100,064
97,474
2,165,566
2,006,366
1,861,826
1,738,160
1,481,253
1,258,417
1,439,918
1,541,503
1,366,838
1,323,119
133,615
110,127
113,811
110,360
99,236
82,631
104,220
104,396
103,759
92,012
Sales volume
Automobiles
Motorcycles1
Production volume
Automobiles
Motorcycles1
Financial Services
Business volume (based on balance sheet carrying amounts) 2
€ million
96,390
84,347
80,974
75,245
66,233
61,202
60,653
51,257
44,010
40,428
contracts
4,359,572
4,130,002
3,846,364
3,592,093
3,190,353
3,085,946
3,031,935
2,629,949
2,270,528
2,087,368
Contract portfolio
Business volume (based on balance sheet carrying amounts) 2
Return on sales (earnings before tax / revenues)
€ million
– 2,890
Sales volume
Automobiles
Motorcycles1
Production volume
Automobiles
Motorcycles1
Financial Services
Contract portfolio
Income Statement
Revenues
Gross profit margin Group4
Profit before financial result
Profit before tax
Income taxes
Effective tax rate
Net profit for the year
Balance Sheet
Non-current assets
Current assets
Equity
Equity ratio Group
Non-current provisions and liabilities
Current provisions and liabilities
Balance sheet total
Cash Flow Statement
Cash and cash equivalents at balance sheet date
Operating cash flow 5
Capital expenditure
Capital expenditure ratio (capital expenditure / revenues)
Personnel
Workforce at the end of year 6
Personnel cost per employee
Dividend
Dividend total
units
units
units
units
€ million
€ million
%
%
%
€ million
€ million
€ million
€ million
%
€ million
€ million
€ million
€ million
€ million
€ million
%
21.2
9,118
8,707
10.8
33.2
5,817
97,969
57,740
37,438
24.0
58,155
60,116
7,688
9,423
6,100
7.6
76,059 3
20.1
7,978 3
7,893 3
10.4
2,564 3
32.5
5,329 3
86,193 3
52,184 3
35,600 3
25.7 3
51,620 3
51,157 3
7,671 3
9,964 3
6,711 3
8.8
20.2
8,275
7,803
10.2
2,692
34.5
5,111
81,305
50,530
30,606
23.2
52,834
48,395
8,370
9,167
5,240
6.8
21.1
8,018
7,383
10.7
2,476
33.5
4,907
74,425
49,004
27,103
22.0
49,113
47,213
7,776
8,110
3,692
5.4
18.1
5,111
4,853
8.0
1,610
33.1
3,243
67,013
43,151
23,930
21.7
46,100
40,134
10.5
289
413
0.8
203
49.2
210
62,009
39,944
19,915
19.5
45,119
36,919
11.4
921
351
0.7
21
6.0
330
62,416
38,670
20,273
20.1
41,526
39,287
155,709
138,377 3
131,835
123,429
110,164
101,953
101,086
7,432
8,149
3,263
5.4
7,767
4,921
3,471
6.8
7,454
4,471
4,204
7.9
21.8
4,212
3,873
6.9
739
19.1
3,134
56,619
32,378
21,744
24.4
33,469
33,784
88,997
2,393
6,246
4,267
7.6
23.1
4,050
4,124
8.4
1,250
30.3
2,874
50,514
28,543
19,130
24.2
31,372
28,555
79,057
1,336
5,373
4,313
8.8
116,324
92,337
110,351
89,869 3
105,876
89,161
100,306
84,887
€
95,453
83,141
96,230
72,349
100,041
75,612
107,539
76,704
106,575
76,621
Income Statement
Revenues
Gross profit margin Group4
22.9
3,793
Profit before financial result
3,287
Profit before tax
7.0
Return on sales (earnings before tax / revenues)
1,048
Income taxes
31.9
Effective tax rate
2,239
Net profit for the year
Balance Sheet
47,556
Non-current assets
27,010
Current assets
16,973
Equity
22.8
Equity ratio Group
29,509
Non-current provisions and liabilities
28,084
Current provisions and liabilities
74,566
Balance sheet total
Cash Flow Statement
1,621
6,184
Cash and cash equivalents at balance sheet date
Operating cash flow 5
3,993
Capital expenditure
8.6
Capital expenditure ratio (capital expenditure / revenues)
105,798
Personnel
Workforce at the end of year 6
75,238
Personnel cost per employee
Dividend
Dividend per share of common stock / preferred stock
€
2.90 / 2.92
2.60 / 2.62
2.50 /2.52
2.30 / 2.32
1.30 /1.32
0.30 / 0.32
0.30 / 0.32
1.06 / 1.08
0.70 / 0.72
0.64 / 0.66
Dividend per share of common stock / preferred stock
€ million
1,904
1,707
1,640
1,508
852
197
197
694
458
419
Dividend total
1 Excluding Husqvarna, sales volume up to 2013: 59,776 units; production up to 2013: 59,426 units.
2 Amount computed on the basis of balance sheet figures: until 2007 from the Group balance sheet, from 2008 onwards from the Financial Services segment balance sheet.
3 Prior year figures have been adjusted in accordance with IAS 8, see note 9.
4 Research and development expenses included in cost of sales with the effect from 2008.
5 Figures are reported in the cash flow statement up to 2006 as cash inflow from operating activities of Industrial Operations and from 2007 as cash inflow from
operating activities of the Automotive segment.
6 Figures exclude dormant employment contracts, employees in the non-work phases of pre-retirement part-time arrangements and low wage earners.
202
BMW Group
Locations
The BMW Group is present in the world markets with
30 production and assembly plants, 42 sales subsidiaries
and a research and development network.
— H Headquarters
— R Research and Development
BMW Group Research and Innovation Centre (FIZ),
Munich, Germany
BMW Group Research and Technology, Munich,
Germany
BMW Car IT, Munich, Germany
BMW Innovation and Technology Centre, Landshut,
Germany
BMW Diesel Competence Centre, Steyr, Austria
BMW Group Designworks, Newbury Park, USA
BMW Group Technology Office USA, Mountain View,
USA
BMW Group Engineering and Emission Test Center,
Oxnard, USA
BMW Group ConnectedDrive Lab China, Shanghai,
and BMW Group Designworks Studio Shanghai, China
BMW Group Engineering China, Beijing, China
BMW Group Engineering Japan, Tokyo, Japan
BMW Group Engineering USA, Woodcliff Lake, USA
200 OTHER INFORMATION
200 BMW Group Ten-year Comparison
202 BMW Group Locations
204 Glossary
206 Index
207 Index of Graphs
208 Financial Calendar
209 Contacts
203 other inF ormation
— P Production
— C Contract production
— S Sales subsidiary markets / Locations Financial Services
Berlin plant
Dingolfing plant
Eisenach plant
Goodwood plant, GB (headquarters of
Rolls-Royce Motor Cars Limited)
Hams Hall plant, GB
Landshut plant
Leipzig plant
Munich plant
Oxford plant, GB
Regensburg plant
Rosslyn plant, South Africa
BMW Brilliance Automotive Ltd., Shenyang,
China (joint venture with Brilliance China
Automotive Holdings – 3 plants)
Spartanburg plant, USA
Steyr plant, Austria
Swindon plant, GB
Wackersdorf plant
BMW – SGL joint venture (2 plants)
Magna Steyr Fahrzeugtechnik, Austria
VDL Nedcar, Netherlands
— A Assembly plants
CKD production Araquari, Brazil
CKD production Cairo, Egypt
CKD production Chennai, India
CKD production Jakarta, Indonesia
CKD production Kaliningrad, Russia
CKD production Kulim, Malaysia
CKD production Manaus, Brazil
CKD production Rayong, Thailand
Argentina
Australia
Austria
Belgium
Brazil
Bulgaria*
China
Canada
Czech Republic*
Denmark
Finland
France
Germany
Great Britain
Greece
Hungary*
India
Indonesia*
Ireland
Italy
Japan
Luxembourg
Malaysia
Malta*
Mexico
Netherlands
New Zealand
Norway
Poland
Portugal
Romania*
Russia
Singapore
Slovakia*
Slovenia*
South Africa
South Korea
Spain
Sweden
Switzerland
Thailand
USA
* Sales locations only.
204
Glossary
CFRP
Abbreviation for carbonfibre reinforced polymer. CFRP
is a composite material, consisting of carbonfibres sur
rounded by a plastic matrix (resin). On a comparative
basis, CFRP is approximately 50 % lighter than steel and
30 % lighter than aluminium.
DJSI World
Abbreviation for “Dow Jones Sustainability Index World”.
A family of indexes created by Dow Jones and the Swiss
investment agency SAM Sustainability Group for com
panies with strategies based on a sustainability concept.
The BMW Group has been one of the leading companies
in the DJSI since 1999.
Combined heat and power
Combined heat and power (CHP) or cogeneration is
the simultaneous conversion of energy sources into
electricity and useful heating. In comparison to separate
generation of electricity in conventional power plants,
energy is converted more efficiently and with greater
flexibility. As a result, this technology helps to reduce
CO2 emissions.
Common stock
Stock with voting rights (cf. preferred stock).
EBIT
Abbreviation for “Earnings Before Interest and Taxes”.
The profit before income taxes, minority interest and
financial result.
EBITDA
Abbreviation for “Earnings Before Interest, Taxes, Depre
ciation and Amortisation”. The profit before income
taxes, minority interest, financial result and depreciation /
amortisation.
Connected Drive
Under the term Connected Drive, the BMW Group
already unites a unique portfolio of innovative features
that enhance comfort, raise infotainment to new levels
and significantly boost safety in BMW Group vehicles.
Effectiveness
The degree to which offsetting changes in fair value or
cash flows attributable to a hedged risk are achieved by
the hedging instrument.
Cost of materials
Comprises all expenditure to purchase raw materials
and supplies.
DAX
Abbreviation for “Deutscher Aktienindex”, the German
Stock Index. The index is based on the weighted market
prices of the 30 largest German stock corporations (by stock
market capitalisation).
Deferred taxes
Accounting for deferred taxes is a method of allocating
tax expense to the appropriate accounting period.
Efficient Dynamics
The aim of Efficient Dynamics is to reduce consumption
and emissions whilst simultaneously increasing dynamics
and performance. This involves a holistic approach to
achieving optimum automobile potential, ranging from
efficient engine technologies and lightweight construc
tion to comprehensive energy and heat management
inside the vehicle.
Equity ratio
The proportion of equity (= subscribed capital, reserves,
accumulated other equity and minority interest) to the
balance sheet total.
Derivatives
Financial products, whose measurement is derived
principally from market price, market price fluctuations
and expected market price changes of the underlying
instrument (e. g. indices, stocks or bonds).
Free cash flow
Free cash flow corresponds to the cash inflow from oper
ating activities of the Automotive segment less the cash
outflow for investing activities of the Automotive seg
ment adjusted for net investments in marketable securities
and term deposits.
Gross margin
Gross profit as a percentage of revenues.
200 OTHER INFORMATION
200 BMW Group Ten-year Comparison
202 BMW Group Locations
204 Glossary
206 Index
207 Index of Graphs
208 Financial Calendar
209 Contacts
Subsidiaries
Subsidiaries are those enterprises which, either directly
or indirectly, are under the uniform control of the
management of BMW AG or in which BMW AG, either
directly or indirectly
– holds the majority of the voting rights
– has the right to appoint or remove the majority of the
members of the Board of Management or equivalent
governing body, and in which BMW AG is at the same
time (directly or indirectly) a shareholder
– has control (directly or indirectly) over another enter
prise on the basis of a control agreement or a provision
in the statutes of that enterprise.
Supplier relationship management
Supplier relationship management (SRM) uses focused
procurement strategies to organise networked supplier
relationships, optimise processes for supplier qualifica
tion and selection, ensure the application of uniform
standards throughout the Group and create efficient
sourcing and procurement processes along the whole value
added chain.
Sustainability
Sustainability, or sustainable development, gives equal
consideration to ecological, social and economic develop
ment. In 1987 the United Nations “World Commission
on Environment and Development” defined sustainable
development as development that meets the needs of
the present without compromising the ability of future
generations to meet their own needs. The economic
relevance of corporate sustainability to the BMW Group
is evident in three areas: resources, reputation and risk.
205 other inF ormation
IFRSs
International Financial Reporting Standards, intended
to ensure global comparability of financial reporting
and consistent presentation of financial statements.
The IFRSs are issued by the International Accounting
Standards Board and include the International
Accounting Standards (IASs), which are still valid.
Indicator for water consumption
The indicators for water consumption refer to the pro
duction sites of the BMW Group. The water consumption
includes the process water input for the production
as well as the general water consumption, e. g. for sani
tation facilities.
Operating cash flow
Cash inflow from the operating activities of the Auto
motive segment.
Preferred stock
Stock which receives a higher dividend than common
stock, but without voting rights.
Rating
Standardised evaluation of a company’s credit standing
which is widely accepted on the global capital markets.
Ratings are published by independent rating agencies,
e. g. Standard & Poor’s or Moody’s, based on their analysis
of a company.
Return on sales
Pretax: Profit before tax as a percentage of revenues.
Posttax: Profit as a percentage of revenues.
Risk management
An integral component of all business processes. Following
enactment of the German Law on Control and Trans
parency within Businesses (KonTraG), all companies
listed on a stock exchange in Germany are required to
set up a risk management system. The purpose of this
system is to identify risks at an early stage which could
have a significant adverse effect on the assets, liabilities,
financial position and results of operations, and which
could endanger the continued existence of the Company.
This applies in particular to transactions involving risk,
errors in accounting or financial reporting and violations
of legal requirements. The Board of Management is
required to set up an appropriate system, to document
that system and monitor it regularly with the aid of the
internal audit department.
206
Index
A
Accounting policies
Apprentices
Automotive segment
44
101 et seq.
29 et seq.
G
Group tangible, intangible and investment
assets
124 et seq.
4, 50 et seq.
52 et seq., 106, 134
4, 52 et seq., 94 et seq., 112 et seq., 115,
52 et seq., 94 et seq., 161 et seq.
3, 27 et seq., 46 et seq., 68 et seq.
189 et seq.
B
Balance sheet structure
Bonds
53 et seq., 145 et seq.
56
32, 39, 41
C
Capital expenditure
Cash and cash equivalents
Cash flow
161 et seq.
Cash flow statement
CFRP
CO2 emissions
Compensation Report
184 et seq.
Compliance
39, 42
Connected Drive
Consolidated companies
Consolidation principles
Contingent liabilities
Corporate Governance
Cost of materials
Cost of sales
149
99 et seq.
100
170 et seq.
58 et seq.
49, 101 et seq., 116
D
Dealer organisation /dealerships
Declaration with respect to the Corporate Governance
Code
Dividend
Dow Jones Sustainability Index World
45 et seq.
88, 121
19, 41
171
E
Earnings per share
Efficient Dynamics
Employees
Equity
Exchange rates
44 et seq.
57 et seq., 143 et seq.
49, 102, 121
38
23 et seq., 66, 78, 101, 159 et seq.
53, 55, 57, 105, 130 et seq.
104, 150 et seq.
55, 57, 107, 145 et seq.
F
Financial assets
Financial instruments
Financial liabilities
Financial result
Financial Services segment
Fleet emissions
50 et seq., 61
36 et seq.
3, 27 et seq., 47 et seq., 68 et seq.
200 OTHER INFORMATION
200 BMW Group Ten-year Comparison
202 BMW Group Locations
204 Glossary
206 Index
207 Index of Graphs
208 Financial Calendar
209 Contacts
49, 90 et seq., 116 et seq.
I
Income statement
Income taxes
Intangible assets
Inventories
Investments accounted for using the equity method
and other investments
50, 63, 106, 118 et seq., 145
55 et seq., 102, 126
104, 127 et seq.
106, 132
K
Key data per share
88
L
Lease business
Leased products
Locations
127
202 et seq.
36 et seq.
M
Mandates of members of the Board of
172
Management
Mandates of members of the Supervisory
Board
Marketable securities
Motorcycles segment
104 et seq., 130 et seq.
35
173 et seq.
N
Net profit
New financial reporting rules
4, 49 et seq.
109 et seq.
118
O
Other financial result
Other investments
Other operating income and expenses
Other provisions
Outlook
65 et seq.
128
144
117
57, 63, 108, 136 et seq.
20 et seq., 26 et seq.,
121
P
Pension provisions
Performance indicators
67 et seq.
Personnel costs
Production
Production network
Profit before financial result
Profit before tax
Property, plant and equipment
Purchasing
40 et seq.
31 et seq.
31 et seq.
4, 49 et seq.
4, 26 et seq., 49 et seq., 67, 69
102 et seq., 126
207 other inF ormation
Index of Graphs
55, 105, 129 et seq.
189 et seq.
162 et seq.
79, 88 et seq., 136
R
Rating
Receivables from sales financing
Related party relationships
Remuneration system
Report of the Supervisory Board
Research and development
Result from equity accounted investments
Return on sales
Revenue reserves
Revenues
Risks report
20 et seq., 49 et seq.
134 et seq.
38 et seq.
70 et seq.
6 et seq.
117
4, 27 et seq., 49, 59, 61, 68 et seq., 101, 116
116
3, 26 et seq., 29, 67 et seq.
165 et seq.
S
Selling and administrative expenses
Sales volume
Segment information
Shareholdings of members of the Board of
Management and the Supervisory Board
Statement of Comprehensive Income
Stock
Sustainability
45 et seq.
87 et seq.
163
90, 123
T
Tangible, intangible and investment
assets
Trade payables
Trade receivables
102 et seq., 124 et seq.
148
57, 133 et seq.
5
24
24
25
20
Finances
BMW Group in figures
Value drivers
Exchange rates compared to the euro
Oil price trend
24
Steel price trend
Precious metals price trend
BMW Group new vehicles financed by
Financial Services segment
Contract portfolio of Financial Services segment
Contract portfolio retail customer financing of
Financial Services segment
37
Development of credit loss ratio
Regional mix of purchase volumes
Change in cash and cash equivalents
Financial liabilities
54
Balance sheet structure – Automotive segment
Balance sheet structure – Group
BMW Group value added
Risk management in the BMW Group
40
59
52
37
56
36
70
36
56
Production and sales volume
BMW Group – key automobile markets
BMW Group sales volume by region
BMW Group – key motorcycle markets
35
BMW sales volume of motorcycles
29
29
35
Workforce
BMW Group apprentices at 31 December
Employee attrition rate at BMW AG
Proportion of nontariff female employees
45
44
45
46
Environment
Materiality matrix
CO2 emissions per vehicle produced
47
Energy consumed per vehicle produced
Process wastewater per vehicle produced
Water consumption per vehicle produced
Volatile organic compounds per vehicle produced
Waste for disposal per vehicle produced
47
47
48
47
48
Stock
Development of BMW stock
87
Compliance
BMW Group Compliance Management System
185
This version of the Annual Report is a translation
from the German version. Only the original German
version is binding.
208
Financial Calendar
Annual Accounts Press Conference
Analyst and Investor Conference
Quarterly Report to 31 March 2015
Annual General Meeting
Quarterly Report to 30 June 2015
Quarterly Report to 30 September 2015
Annual Report 2015
Annual Accounts Press Conference
Analyst and Investor Conference
Quarterly Report to 31 March 2016
Annual General Meeting
Quarterly Report to 30 June 2016
Quarterly Report to 30 September 2016
18 March 2015
19 March 2015
6 May 2015
13 May 2015
4 August 2015
3 November 2015
16 March 2016
16 March 2016
17 March 2016
3 May 2016
12 May 2016
2 August 2016
4 November 2016
200 OTHER INFORMATION
200 BMW Group Ten-year Comparison
202 BMW Group Locations
204 Glossary
206 Index
207 Index of Graphs
208 Financial Calendar
209 Contacts
209 other inF ormation
Contacts
Business and Finance Press
Telephone
Fax
Email
Investor Relations
Telephone
Fax
Email
+49 89 3822 45 44
+49 89 3822 41 18
+49 89 3822 44 18
presse@bmwgroup.com
+49 89 3822 42 72
+49 89 3822 53 87
+49 89 3821 46 61
ir@bmwgroup.com
The BMW Group on the Internet
Further information about the BMW Group is available online at www.bmwgroup.com.
Investor Relations information is available directly at www.bmwgroup.com/ir. Information
about the various BMW Group brands is available at www.bmw.com, www.mini.com
and www.rollsroycemotorcars.com.
A FURTHER CONTRIBUTION TOWARDS PRESERVING RESOURCES
The BMW Group Annual Report was printed on paper with the Blue Angel eco-label. The paper used was produced, climate-
neutrally and without optical brighteners and chlorine bleach, from recycled waste paper.
The CO2 emissions generated through print and production were neutralised by the BMW Group. To this end, the corresponding
amount of emissions allowances was erased, with the transaction identification EU241734 on 6 February 2015.
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