BMW 2005 Annual Report Download - page 48

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expansion of the worldwide production and sales
networks. Capital expenditure on property, plant and
equipment was euro 2,408 million or 21.8% lower
than in the previous year, mainly as a result of the
effect of special factors in 2004, such as the con-
struction of the new BMW Leipzig plant and invest-
ment
incurred in conjunction with the BMW 3 Series
model change. Total depreciation and disposals, in-
cluding currency impact, amounted to euro 2,133 mil-
lion (+3.4%). Balances brought forward for subsid-
iaries being consolidated for the first time amounted
to euro 88 million. Capital expenditure on intangible
assets and property, plant and equipment totalled
euro 3,993 million (– 8.1%), which, as in the previous
year, was financed fully out of cash flow. Capital
expenditure as a percentage of revenues was 8.6%
(2004: 9.8%).
As a result of the growth of business, the total
carrying amount of leased products increased
sharply by 51.6% to euro 11,375 million. Adjusted
for changes in exchange rates, leased products
would have risen by 38.8%.
The carrying amount of other investments in-
creased by 67.3% to euro 1,178 million, mainly as
a result of the fair value gain recognised on the in-
vestment in the engine manufacturer Rolls-Royce
plc, London. The market price of this investment
rose by euro 438 million compared to the previous
year-end. The increase in value of the investment
was recognised directly in accumulated other
equity.
Receivables from sales financing increased by
16.0% to euro 29,053 million due to higher business
volumes. Of this amount, customer and dealer fi-
nancing accounted for euro 22,301 million (+18.7%)
and finance leases accounted for euro 6,752 million
(+7.7%).
Deferred tax assets amounted to euro 772 mil-
lion at the balance sheet date, increasing by euro
257 million as a result of lower valuation allowances
and the new accounting treatment of pension obli-
gations (see Note [8] (b)).
Inventories, at euro 6,527 million, were roughly
at the previous year’s level.Trade receivables went
up by 14.3% compared to their low level at 31 De-
cember 2004.
Financial assets decreased by 42.7% to euro
3,296 million mainly as a result of lower volumes
and the lower fair values of derivative financial instru-
ments.
Liquid funds fell by 6.7% to euro 3,695 million.
The make-up of liquid funds shifted in favour of
marketable securities which were increased by
13.2% compared to one year earlier. Cash and cash
equivalents decreased mainly as a result of the
share buy-back programme.
On the equity and liabilities side of the balance
sheet, equity grew by 2.7% to euro 16,973 million.
The group net profit for the year increased equity by
euro 2,239 million, whereas value changes recog-
nised directly in equity reduced it by euro 875 mil-
lion. The latter comprise translation differences, fair
value gains and losses on financial instruments and
available-for-sale securities as well as actuarial gains
and losses. The dividend payment for the financial
year 2004 and the buy-back of shares reduced
equity by a further euro 925 million. The equity ratio
of the BMW Group therefore fell overall by 1.6 per-
centage points to 22.8%.
The equity ratio for industrial operations was
39.1% compared to 41.6% at the end of the pre-
vious year. The equity ratio for financial operations
improved by 0.7 percentage points to 10.4%.
The amount recognised in the balance sheet
for pension obligations increased by 24.4% to euro
5,255 million. As a result of the changed accounting
policy for pension obligations, the amount reported
under pension provisions now corresponds fully to
the defined benefit obligation (DBO). In the case of
pension plans with fund assets, the fair value of fund
assets is offset against the defined benefit obligation.
The increase in pension obligations was attributable
principally to lower discount factors in Germany and
in the United Kingdom and the use of new mortality
tables in Germany.
The higher level of additions to provisions related
mainly to other provisions and was attributable to
the increase in the volume of business and higher