346 BMW Group Report 2024 To Our Stakeholders Combined Management Report Group Financial Statements Responsibility Statement and Auditor’s Report Remuneration Report Other Information Notes to the Group Financial Statements SEGMENT INFORMATION 46 Explanatory notes to segment information Information on reportable segments For the purposes of presenting segment information, the activi- ties of the BMW Group are divided into operating segments in ac- cordance with IFRS 8. The segmentation follows the internal management and reporting system and takes account of the or- ganisational structure of the BMW Group based on the various products and services of the reportable segments. The activities of the BMW Group are broken down into the oper- ating segments Automotive, Motorcycles, Financial Services and Other Entities. Within the Automotive segment, the BMW Group develops, man- ufactures, assembles and sells automobiles powered with all- electric drive systems, plug-in hybrid systems and highly efficient combustion engines, as well as spare parts, accessories and mo- bility services under the BMW, MINI and Rolls-Royce brands. BMW brand products are sold via the brand’s network of branches as well as through independent authorised dealerships and independent import companies. MINI brand products are sold via the direct sales model operated by BMW AG and its sub- sidiaries as well as through dealerships, branches and import companies. Rolls-Royce brand products are sold via authorised dealerships, import companies and subsidiary companies. Activities relating to the development, manufacture, assembly and sale of motorcycles as well as spare parts and accessories are reported in the Motorcycles segment. Automobile and motorcycle leasing, retail and dealership financ- ing, multi-brand fleet business, customer deposit business and insurance activities are the main activities allocated to the Finan- cial Services segment. Holding and Group financing companies are reported in the Other Entities segment. This segment also includes the operating com- pany BAVARIA-LLOYD Reisebüro GmbH, Munich, which is not allocated to the other segments. Internal management and reporting Segment information is prepared as a general rule in conformity with the accounting policies adopted for preparing and presenting the Group Financial Statements. Exceptions to this general prin- ciple include the treatment of inter-segment warranties, the earn- ings impact of which is allocated to the respective segments on the basis used internally to manage the business. In addition, in- tragroup repurchase agreements between the Automotive and Financial Services segments pursuant to IFRS 15, impairment al- lowances on intragroup receivables and changes in the value of consolidated other investments pursuant to IFRS 9 are also ex- cluded. Intragroup leasing arrangements are not reflected in the internal management and reporting system on an IFRS 16 basis and therefore, in accordance with IFRS 8, do not give rise to any changes in the presentation of segment information. Inter-seg- ment receivables and payables, provisions, income, expenses and profits are eliminated upon consolidation. Inter-segment rev- enues are based on market prices. Centralised cost components are included in the respective segments, without resulting in cash flows. The role of “chief operating decision maker” with respect to re- source allocation and performance assessment of the reportable segment is embodied in the full Board of Management. For this purpose, different measures of segment performance as well as segment assets are taken into account in the operating seg- ments. The Automotive and Motorcycles segments are managed on the basis of return on capital employed (RoCE). The relevant meas- ure of segment results used is therefore profit before financial re- sult. Capital employed is the corresponding measure of segment assets used to determine how to allocate resources. Capital em- ployed is calculated as the sum of intangible assets, property, plant and equipment and net working capital, the latter compris- ing inventories as well as trade receivables less trade payables. Further information is provided in the section “Managing opera- tional performance at segment level” within the Combined Man- agement Report. The success of the Financial Services segment is measured on the basis of return on equity (RoE). Profit before tax therefore rep- resents the relevant measure of segment earnings. The measure of segment assets in the Financial Services segment corresponds to net assets, defined as total assets less total liabilities. The success of the Other Entities segment is assessed on the ba- sis of profit or loss before tax. The corresponding measure of seg- ment assets used to manage the Other Entities segment is total assets less asset-side income tax items and intragroup invest- ments.