BMW 2004 Annual Report Download - page 34

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Revenues of the Motorcycles segment fell by
2.5% as a result of volume and currency factors.
The segment profit from ordinary activities was
down by 38.0% as a result of one-time expenditure
relating to the start of new model series and delays
in the production start of the K1200 S.
The Financial Services segment was again
able to expand business successfully in 2004.
The segment profit from ordinary activities im-
proved by 13.9% compared to the previous year.
This very positive performance was attributable
once again to higher business volumes and lower
costs.
As in the previous year, reconciliations to the
Group profit from ordinary activities were negative
overall; the net expense increased by euro 93 million
in 2004. This was due partly to the higher level of
eliminations of inter-segment profit on leased as-
sets relating to financial services and partly to the
change in the fair value of the exchangeable bond
option relating to the BMW Group investment in
Rolls-Royce plc.
Financial Position
The cash flow statements of the BMW Group and
its sub-groups show the sources and applications
of cash flows for the financial years 2004 and 2003,
classified into cash flows from operating, investing
and financing activities.
Beginning with the net profit for the year, the
cash flows from operating activities are computed
using the indirect method. Cash flows from investing
and financing activities are based on actual cash
payments and receipts. Cash and cash equivalents
in the cash flow statement correspond to those dis-
closed in the balance sheet.
Operating activities of the BMW Group during
the financial year 2004 generated a positive cash
flow of euro 9,311 million, an increase of euro 1,440
million or 18.3% over the previous year. Changes in
net current assets gave rise to a net cash inflow of
euro 222 million in 2004, compared to a net cash
outflow of euro 899 million in 2003. Inventories
resulted in a net cash outflow, whereas receivables
generated a net cash inflow due to the reduction in
trade receivables, as did liabilities, mainly as a result
of the increase in trade payables.
The cash outflow from investing activities
amounted to euro 11,957 million, an increase of
euro 726 million or 6.5% compared to the previous
year. The higher cash outflow was attributable once
again largely to the sharp increase in the net invest-
ment in financial services business. On a net basis,
this was euro 1,396 million higher than in the pre-
vious year.
Capital expenditure on intangible assets
and property, plant and equipment resulted in an
additional cash outflow of euro128 million. 77.9%
(2003: 70.1%) of the cash outflow from investing
activities was covered by the cash inflow from oper-
ating activities.
The cash flow statement for industrial opera-
tions shows that the cash inflow from operating
activities exceeded the cash outflow from investing
activities by 49.6% (2003: 2.6%). By contrast, the
cash flow statement for financial operations shows
that the cash inflow from operating activities fell
short of the cash outflow from investing activities by
59.8 % (2003: 54.6%).
The cash flow from financing activities of the
BMW Group gave rise to a cash inflow of euro
3,137 million which was earmarked to refinance
sales financing activities. The dividend payment in
2004 increased by 11.7% to euro 392 million.
After adjustment for the effects of exchange-
rate fluctuations and changes in the composition of
the BMW Group amounting in total to a net negative
amount of euro 22 million (2003: euro – 82 million)
the various cash flows resulted in an increase in cash
and cash equivalents of euro 469 million (2003: de-
crease of euro 674 million).