Louis Vuitton 2006 Annual Report Download - page 74

COMMENTS ON THE CONSOLIDATED BALANCE SHEET
70 LVM H 2 0 0 6 CONSOLIDATED FINANCIAL STATEMENTS
LVMH’s consolidated balance sheet total amounted to 28.8 billion
euros as of December 31, 2006, which represents a year-on-year increase
of 2.6%.
Non-current assets totaled 19.6 billion euros, compared with 19.5 billion
euros at year-end 2005, representing 68% of total assets compared to
70% one year earlier.
Tangible and intangible fixed assets remained stable at 17.9 billion euros
at year-end, against 18.0 billion euros at year-end 2005. Brands and
other intangible assets amounted to 8.2 billion euros compared with
8.5 billion euros as of December 31, 2005, mainly due to exchange rate
fluctuations on brands and other intangible fixed assets recognized in US
dollars, such as the Donna Karan brand and the DFS trade name.
Goodwill remained unchanged at 4.5 billion euros. This results from
exchange rate fluctuations on goodwill recognized in US dollars, parti-
cularly that of Donna Karan and Miami Cruiseline, offset by the increase
in goodwill on purchase commitments for minority interests.
Property, plant and equipment amounted to 5.2 billion euros, up from
5.0 billion euros at year-end 2005, mainly due to the revaluation of
vineyard land, which has recurred since the transition to IFRS, and
operating investments – notably at Louis Vuitton – which exceeded
the depreciation expense in 2006.
Investments in associates, non-current available for sale financial assets,
other non-current assets and deferred tax increased slightly from 1.5
billion euros at year-end 2005 to 1.7 billion euros at year-end, primarily
as a result of the increase in deferred tax assets and the rise in value of
non-current available for sale financial assets.
Inventories amounted to 4.4 billion euros compared with 4.1 billion
euros at year-end 2005 due to the continued replenishment of invento-
ries of distilled alcohol for cognac and of champagne wines.
Cash and cash equivalents, excluding current available for sale finan-
cial assets, decreased from 1.5 billion euros at year-end 2005 to 1.2
billion euros.
The Group share of equity before appropriation of profit increased
significantly to 10.6 billion euros thanks to the 30% rise in net profit
attributable to the Group and despite the negative change in the cumu-
lative translation adjustment resulting from the depreciation of the US
dollar in relation to the euro.
Minority interests remained stable at 1.0 billion euros as a result of the
share of minority interests in the net profit after the distribution of divi-
dends, offset by the opposite impact of the depreciation of the US
dollar on minority interests in DFS, which constitutes the bulk of this
item.
Total equity thus amounted to 11.6 billion euros and represented 40%
of the balance sheet total against 37% in the previous year.
Non-current liabilities amounted to 10.8 billion euros, including 3.2
billion euros in long term borrowings, compared to 11.0 billion and 3.7
billion at year-end 2005, respectively. Non-current liabilities as a propor-
tion of the total balance sheet fell slightly to 38% from 39% one year
earlier.
Long term resources thus amounted to 22.4 billion euros, and exceeded
total non-current assets.
Current liabilities amounted to 6.4 billion euros as of December 31,
2006, compared to 6.6 billion euros at year-end 2005, due notably to the
decrease in short term borrowings. Their relative weight in the balance
sheet decreased to 22%.
Net financial debt, including the market value of interest rate deriva-
tives, and net of cash, cash equivalents and current available for sale
financial assets, amounted to 3.4 billion euros as of December 31, 2006
compared to 4.3 billion euros one year earlier, representing a gearing
of 29% compared with 41% at year-end 2005.
Long term borrowings exceed 80% of total net debt.
As of December 31, 2006 confirmed credit lines amounted to 4.3 billion
euros, of which only 0.3 billion euros were drawn, which means that
the undrawn amount available was 4.0 billion euros. The Group’s
undrawn confirmed credit lines substantially exceeded the outstanding
portion of its commercial paper program, which amounted to 0.5 billion
euros as of December 31, 2006.