BMW 2005 Annual Report Download - page 46

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primarily by prior year tax reimbursements and
lower tax rates in a number of countries. In addition,
allowances on deferred tax assets were partially
reversed as a result of a renewed assessment of
recoverability in the light of the utilisation of capital
allowances in the United Kingdom.
The Automobiles segment recorded a 9.9%
increase in sales volume and a 7.8% increase in
revenues. The increase in revenues was affected by
product mix shifts. Segment profit fell by 5.9% as
a consequence of the adverse external factors de-
scribed above.
Revenues of the Motorcycles segment went
up by 18.9% on the back of volume growth. Seg-
ment profit improved by 93.5%. The R1200 RT and
K1200 S, introduced in conjunction with the seg-
ment’s product initiative, and the R1200 GS, all con-
tributed well to improved profitability.
The Financial Services segment was again able
to expand business successfully in 2005 as a result
of which segment profit advanced impressively by
17.5%.
As in 2004, reconciliations to the group profit
before tax gave rise to a net expense, which increased
in 2005 by euro 227 million. This was primarily
due to the fair value loss on the exchangeable bond
option relating to the BMW Group investment in
Rolls-Royce plc, London.
Financial position
The group cash flow statement shows the sources
and applications of cash flows for the financial
years 2005 and 2004, classified into cash flows
from operating, investing and financing activities.
Cash flows from operating activities are deter-
mined indirectly starting with the group net profit.
By contrast, cash flows from investing and financial
activities are based on actual payments and receipts.
Cash and cash equivalents in the cash flow state-
ment correspond to those disclosed in the balance
sheet.
Operating activities of the BMW Group gen-
erated a positive cash flow of euro 10,691 million in
2005, an increase of euro 1,380 million or 14.8%
compared to the previous year. Changes in net cur-
rent assets during 2005 generated a cash inflow of
euro 923 million (2004: euro 222 million). Unlike in
the previous year, the change in inventories gave rise
to a cash inflow.
The cash outflow for investing activities, at euro
11,963 million, was similar to the previous year’s
level. The cash outflow for net investments in finan-
cial services activities rose again steeply and was
euro 1,174 million higher than in the previous year.
Capital expenditure for intangible assets and prop-
erty, plant and equipment resulted in the cash out-
flow for investing activities decreasing by euro 368
million compared to the previous year. In addition,
payment of the final sales price instalment relating
to the sale of Land Rover increased cash inflow by
euro 1,000 million.
Financing activities in 2005 generated a posi-
tive cash flow of euro 699 million (2004: euro 3,137
million). The dividend payment in 2005 increased by
6.9% to euro 419 million. The share buy-back pro-
gramme involved a cash outflow in 2005 of euro
506 million.
89.4% (2004: 77.9%) of the cash outflow for
investing activities was covered by the cash inflow
from operating 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 150.7% (2004: 49.6%). 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 52.5% (2004: 59.8%).
After adjustment for the effects of exchange-
rate fluctuations and changes in the composition of
the BMW Group amounting to positive amount of
euro 66 million (2004: negative amount of euro
22 million), the various cash flows resulted in a de-
crease in group cash and cash equivalents of euro
507 million (2004: increase of euro 469 million). An
amount of euro 43 million included in cash and cash
equivalents was assigned to DeutscheTreuinvest
Stiftung as collateral in conjunction with obliga-
tions for employees’ pre-retirement part-time work
arrangements.
Net interest-bearing assets relating to industrial
operations
(including receivables from the financial
operations sub-group) amounted to euro 4,877 mil-
lion at 31 December 2005, an increase of euro
2,245 million compared to one year earlier. Net inter-
est-bearing assets relating to industrial operations
comprise cash and cash equivalents (euro 1,372 mil-
lion), marketable securities relating to industrial