Å kodaAuto ANNUAL REPORT 2006 - Skoda Auto

Financial Situation
Manufacturing plant in India
Financial Situation
of the Škoda Auto Group
The consolidated financial results of
Škoda Auto Group are reported according
to International Financial Reporting
Standards. The consolidated financial
results include the results of the parent
company, Škoda Auto, those of its
subsidiaries Škoda Auto Deutschland
(SAD), Škoda Auto Slovensko (SAS), Skoda
Auto Polska (SAP) and Skoda Auto India
(SAIPL) and a share in the profit of the
associate Volkswagen Russia. The
subsidiaries account for slightly under
10% of the overall Group financial results.
The success of the Group’s expansive
policy led, among other things, to growth
in all significant financial indicators. Sales
revenues increased year-on-year by 8.7%
to reach CZK 203.7 billion, passing the
CZK 200 billion mark for the first time.
The Group’s operating profit grew 34.5%
to CZK 14.6 billion and profit before tax
was at a record level – CZK 14.2 billion
(+41.0% year-on-year). The increase in
profit before tax boosted the profit
before income tax-to-sales ratio (+5.4%
year-on-year) to 7.0%.
The Group’s asset structure expressed in
terms of the distribution between fixed
and current assets did not change
significantly compared to 2005. Likewise,
the capital structure remained essentially
unchanged. The Group has no debt
exposure that could have an impact on its
financial stability in the near future.
Operating cash flow increased 16.4%
year-on-year to reach CZK 27.4 billion.
The net liquidity indicator grew by
CZK 16.3 billion compared to the previous
period. For all existing and potential
business partners, the favourable
development in cash flow and net
liquidity are a good demonstration of
the Group’s current financial stability
and solvency.
Balance Sheet and Financing
Compared to their level at 31 December
2005 (CZK 89.8 billion), total assets
increased by CZK 15.5 billion, primarily as
a result of higher current lendings to the
Volkswagen Group.
Compared to 2005, there was a slight
year-on-year decline in fixed assets
(-2.4%). The cause is the delay between
when assets are put into service and when
depreciation/amortisation begins. As part
of the preparations for series production
of the new Škoda Roomster, the parent
company acquired substantial fixed
assets in late 2005. However,
depreciation/amortisation of these assets
did not begin until the next year (2006).
Current assets were up 49% year-on-year
on an increase in cash and cash equivalents
in the item “Other receivables and financial
assets”. Despite a major increase in
production volume and the launch of
a fourth model line, inventories at year end
2006 remained at essentially the same level
as in the previous year (-0.2%). This was
achieved by ongoing optimising of logistical
processes and sales policies (vehicles are
manufactured to fill orders, and not
warehouses). Despite growth in revenues
from the sale of vehicles and genuine parts,
trade receivables were down for the year
(-11.7%). This was thanks to more extensive
use of factoring services as an instrument
for cash flow management and to eliminate
financial risk.
Equity without minority interests grew in
line with the Group’s overall performance.
Compared to the previous year, Group
equity was up over CZK 11.6 billion
(+24.8%). The growth was driven by the
increase in profit.
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