Louis Vuitton 2007 Annual Report Download - page 77

2007 LVMH
75
Comments
on the consolidated cash flow statements
The consolidated cash flow statement, as shown on the oppo-
site page, details the main cash flows for the 2007 fiscal year.
Cash from operations before changes in working capital rose
15% to 4,039 million euros from 3,504 million euros a year
earlier.
Net cash from operations before changes in working capital
(i.e. after interest and income tax) amounted to 2,932 million
euros, an increase of 15% compared to the 2,546 million euros
recorded in 2006.
Interest paid in 2007 amounted to 191 million euros, up from
174 million euros in 2006, an increase due mainly to higher
euro interest rates, despite the drop in the average amounts
outstanding on financial debt.
Income tax paid in 2007 amounted to 916 million euros, as
against 784 million euros in 2006, due to the increase in profit
before tax.
Working capital requirements increased by 474 million euros.
Changes in inventories increased cash requirements by 565
million euros, mainly due to the replenishment of distilled
alcohol inventories for cognac and wine inventories for cham-
pagne and continued business growth. The year-on-year
increase in trade accounts receivable generated a cash requi-
rement of 197 million euros, mainly at Hennessy and Parfums
Christian Dior, while the decrease in trade accounts payable
provided additional cash in the amount of 222 million euros,
notably at Hennessy, Louis Vuitton, the French perfume houses
and Sephora.
Overall, net cash from operating activities posted a surplus of
2,458 million euros.
Net cash used in investing activities—both operating and
financial—amounted to 1,293 million euros.
Group operating capital expenditures for the year, net of disposals,
resulted in net cash outflows of 952 million euros. The increase
in their gross amount reflects the Group’s dynamic growth policy
and that of its flagship brands such as Louis Vuitton, Sephora
and Parfums Christian Dior, as well as the acquisition of the
Belvedere brand in the United States.
Purchases of non-current available for sale financial assets, net of
disposals, represented a net outflow of 12 million euros. The
net impact of the purchase and sale of consolidated investments
resulted in an outflow of 329 million euros, relating mainly to the
acquisitions of the Les Echos group, the 6% stake in Fendi not
yet owned by LVMH and a 55% stake in the Chinese group
Wen Jun Spirits.
Transactions relating to equity generated a net outflow of 827
million euros over the period.
Disposals of LVMH shares and related derivatives by the
Group, net of acquisitions, generated a cash inflow of
14 million euros. As was the case in 2006, LVMH call options
were acquired in order to hedge stock option plans granted
to employees.
In the year ended December 31, 2007, LVMH S.A. paid a
total of 686 million euros in dividends, excluding the amount
attributable to treasury shares, of which 520 million euros
were distributed in May in respect of the final dividend on
2006 profit and 166 million euros in December in respect of
the interim dividend for the 2007 fiscal year. Furthermore,
minority interests in consolidated subsidiaries received
156 million euros in dividends, mainly corresponding to divi-
dends paid to Diageo’s shareholders with respect to its 34%
stake in Moët Hennessy as well as minority interests in DFS.
Net cash provided by these operating, investment and equity-
related activities, including the dividend payment, amounted
to 338 million euros.
Borrowings and financial debt were amortized in 2007 for an
amount of 1,700 million euros, and 278 million euros were
invested in current available for sale financial assets.
Conversely, additional financial resources were realized by way
of bond issues and new borrowings, which provided a cash
inflow of 2,006 million euros. In November 2007, the Group
carried out a 6-year public bond issue in a nominal amount
of 300 million Swiss francs. Furthermore, the Group increa-
sed its recourse to its French commercial paper program and
LVMH K.K. developed a commercial paper program in Japan
as a replacement for the private placements issued under its
Euro Medium Term Notes program.
As of December 31, 2007, cash and cash equivalents net of
bank overdrafts amounted to 1,087 million euros, representing
a significant increase compared to the 765 million euros held
as of year-end 2006.