Volvo 2005 Annual Report Download - page 56

52 Volvo Group 2005
Cash fl ow statement
Cash flow
Operating cash flow, excluding Financial
Services, amounted to SEK 6.8 billion. The
positi ve development during 2005 was related
to an increase in earnings. Working capital
increased by SEK 1.2 billion due to strong
sales growth. During the year transfers were
made to pension foundations, which is reported
in the item "Change in working capital", in the
amount of SEK 4.4 billion.
Cash flow after net investments within
Financial Services was negative SEK 4.4
billion in 2005 (neg. 5.5) as a result of con-
tinued growth in the credit portfolio.
Investments
Investments in fixed assets in 2005, excluding
Financial Services, amounted to SEK 9.9 bil-
lion (7.2). Capital expenditures in Trucks, which
amounted to SEK 6.8 billion (4.7), were made
to improve efficiency in the European indus-
trial system, increase the number of service
workshops for the dealer network in Europe,
continued modification of the Hagerstown
plant in North America for manufacturing of
engines and transmissions and for a changeo-
ver for production of a new 13-litres engine in
Skövde, Sweden, and a new 11-liter engine in
Vénissieux. Capital expenditures increased in
Construction Equipment from SEK 0.7 billion
to SEK 0.9 billion, mainly for development of
production plants and in tools and equipment
for new products. In Volvo Aero the level of
capital expenditures increased from 0.5 billion
to SEK 0.8 billion. A major part of the invest-
ments relate to entrance fees to become a
partner in the new GEnx engine and in the
LM2500 industrial gas turbines, according to
agreements with General Electric. Investments
remained at the same level as last year in
Buses at SEK 0.2 billion and decreased in
Volvo Penta from SEK 0.3 billion to SEK 0.2
billion.
Approved future capital expenditures
amounting to SE K 7.8 billi on (8 .2) rel ate m ainly
to investments for the next generation of
trucks and engines.
Investments in leasing assets amounted to
SEK 0.3 billion (0.3).
Acquisitions and divestments
Net divestments in shares during 2005 had
a positive effect on cash flow amounting to
SEK 0.3 billion (15.1). The divestment in 2004
of the Scania B shares amounted to SEK 14.9
billion and had a significant effect on the
cash flow.
Acquired and divested companies had a
positive effect on cash flow SEK 0.7 billion
(neg 0.1). The amount includes among others
the sale of properties in Danafjord and the sale
of the service company Celero Support.
Financing and dividend
Net borrowings increased during 2005 by
SEK 3.6 billion. The new borrowing during the
year, mainly through the issue of bonds, con-
tributed SEK 42 billion. In 2004, net borrow-
ings decreased by SEK 8.8 billion.
An ordinary dividend amounting to SEK 5.1
billion, corresponding to SEK 12.50 per share,
was paid to AB Volvo’s shareholders during the
year. During 2005 AB Volvo repurchased own
shares to the amount of SEK 1.8 billion.
Change in liquid funds
The Group’s liquid funds decreased by SEK 0.7
billion during the year amounting to SEK 8.1
billion at December 31, 2005.
Capital expenditures1, excluding
Financial Services
Capital expenditures,
SEK bn
Capital expenditures,
% of net sales
1 Years 2004 and 2005 are reported in accordance with
IFRS and 2001, 2002 and 2003 in accordance with
prevailing Swedish GAAP. See Note 1 and 3.
Self-financing ratio1, excluding
Financial Services, %
Cash flow from operating
activities divided by net
investments in fixed and
leasing assets.
148 196 243 268 173
01 02 03 04 05
8.2 6.4 5.9
4.5 3.6 3.4
7.5
3.7
10.2
4.4
01 02 03 04 05