Louis Vuitton 2005 Annual Report Download - page 72

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PASSIONATE ABOUT CREATIVITY
70
LVMH 2005 CONSOLIDATED FINANCIAL STATEMENTS
COMMENTS ON THE BALANCE SHEET
LVMH’s consolidated balance sheet total measured in accordance with
IFRS amounted to 28.1 billion euros as of December 31, 2005, an
increase of 10% compared to December 31, 2004.
Non-current assets amounted to 19.5 billion euros compared to
18.1 billion as of December 31, 2004, thus representing 70% of total
assets compared to 71% one year previously.
Tangible and intangible fixed assets rose to 18.0 billion euros from
16.4 billion euros at year-end 2004. Brands and other intangible assets
rose to 8.5 billion euros, compared to 7.8 billion euros at year-end 2004,
due mainly to exchange rate fluctuations and the acquisition and full
consolidation of Glenmorangie in 2005.
Goodwill amounted to 4.5 billion euros, compared to 4.0 billion euros
at year-end 2004. This change is attributable primarily to the acquisition
of Glenmorangie and the impact of exchange rate fluctuations.
Property, plant and equipment rose to 5.0 billion euros, compared to
4.5 billion euros at year-end 2004, as a result of the appreciation of
foreign currencies against the euro, the impact of the acquisition of
Glenmorangie, the reevaluation of vineyard and the amount of operating
investments which exceeded depreciation in 2005.
Investments in associates, non-current available for sale financial assets
and other non-current assets fell to 1.2 billion euros, compared to
1.5 billion at year-end 2004, as a result of various divestments and reclas-
sifications as current assets.
Inventories and work in progress rose to 4.1 billion euros from 3.6 billion
euros at year-end 2004, reflecting the integration of Glenmorangie, a
stronger dollar against the euro, business growth and the replenish-
ment of inventories by Hennessy, Moët et Chandon and Veuve Clicquot.
Cash and cash equivalents, excluding current available for sale finan-
cial assets, amounted to 1.5 billion euros, compared to 1.0 billion at
December 31, 2004, thanks to net cash generated during the year.
The Group share of equity before appropriation of profit increased
significantly to 9.5 billion euros, compared to 7.8 billion euros at year-end
2004, thanks to the level of the Group share of net profit generated,
which rose by 21%, and the positive change in the cumulative translation
adjustment.
Minority interests rose slightly from 0.9 billion euros to 1.0 billion
euros, reflecting the impact of the stronger US dollar on the minority
interests in DFS and the minority interests’ share in profit net of divi-
dends paid to them.
Total equity thus amounted to 10.5 billion euros, representing 37% of
the balance sheet total, compared to 34% one year earlier.
Non-current liabilities amounted to 11.0 billion euros at December 31,
2005, including 3.7 billion euros of borrowings, compared to 10.8 billion
euros one year earlier, which included 4.2 billion euros of borrowings.
Their proportion of the balance sheet total decreased slightly to 39%.
Equity and non-current liabilities totaled 21.5 billion euros, thus excee-
ding the amount of non-current assets.
Current liabilities amounted to 6.6 billion euros at December 31, 2005,
compared to 6.1 billion euros at year-end 2004, reflecting the mode-
rate increase in short term borrowings and the increase in trade accounts
payable as a result of business growth and the integration of Glenmo-
rangie. The proportion of the balance sheet total remains stable at 24%.
Long and short term borrowings, including the market value of inte-
rest rate derivatives, and net of cash and cash equivalents and current
available for sale financial assets, amounted to 4.3 billion euros at
December 31, 2005 compared to 5.3 billion euros one year earlier.
It represents 41% of total equity.
Long term borrowings continue to account for over 80% of the Group’s
total net financial debt.
Other non-current liabilities mainly comprise commitments to purchase
minority interests, including the commitment to purchase Diageo’s
34% share in Moët Hennessy with a 20% discount.
As of December 31, 2005, the Group’s confirmed credit facilities excee-
ded 4.0 billion euros, of which only approximately 0.1 billion euros had
been drawn down. The confirmed unused facilities therefore largely
exceeded the commercial paper program which had an amount outs-
tanding of 0.3 billion euros as of December 31, 2005.