Asset Position

The total assets of the Group of € 5,414 million grew significantly (+€ 1,178 million; +28%) compared with the year-end 2004 (€ 4,236 million).

Higher cash and cash equivalents were key contributors to this development. These were not only due to operations, but also to the disposal of the stake in V&M and the shares in Vallourec, as well as to higher inventory values that resulted, among other things, from the relining of Blast Furnace A, the discontinuation of the Lifo method and higher inventory levels in the large-diameter pipes segment due to invoicing still to be carried out.

Asset and Capital Structure

in € mil.	31/12/2005	%	31/12/2004	%
Noncurrent assets	1,900	35.1	1,918	45.3
Current assets	3,514	64.9	2,318	54.7
Assets	5,414	100.0	4,236	100.0
Equity	2,012	37.2	1,121	26.5
Noncurrent debts	2,079	38.4	1,902	44.9
Current debts	1,323	24.4	1,213	28.6
Equity and liabilities	5,414	100.0	4,236	100.0

In the case of long-term (noncurrent) assets, increases, resulting from the netting off of badwill against retained earnings without affecting income, additions to fixed assets, the capitalization of deferred income tax claims from unutilized tax loss carryforwards, as well as the proportionate income from Vallourec recorded at equity were offset by the decrease resulting from the disposal of the V&M shares consolidated at equity to date.

Tangible fixed assets rose as a result of investments of € 262 million which exceeded write-downs of € 206 million.

Current tied-up net worth (working capital: inventories + trade receivables − trade payables) climbed markedly to € 1,809 million, up € 330 million (+22%) from € 1,479 million in 2004. Taking account of a slight decline in trade receivables, this was primarily attributable to the increase in inventories.

The development of other receivables results from the capitalization of securities lending transactions as part of cash investments.

On the liabilities side, despite the repurchase of the company's own shares, shareholders' equity advanced € 891 million (+79%) to € 2,012 million, owing to the excellent business development, the reclassification of badwill and the abolition of the Lifo method. Also in connection with the higher balance sheet total, the equity ratio increased notably to 37.2% (2004: 26.5%). Actuarial losses of € 117 million resulting from the adjusting of the actuarial interest rate (from 5% to 4.25%) in the calculation of pension provisions were, as in the year before, reposted from equity (retained earnings) to pension provisions net of deferred tax without the concurrent effect on income. Accordingly, obligations arising from pension commitments were fully included in the balance sheet, as in the previous year.

Five-Year Summary of the Assets Position

	FY 2005	FY 2004	FY 2003	FY 2002	FY 2001
Asset utilization ratio (%)1)	35.1	45.3	51.3	52.1	48.4
Inventory ratio (%)2)	26.6	25.5	25.0	22.8	23.1
Depreciation/amortization ratio (%)3)	14.5	22.6	16.8	14.3	14.3
Debtor days4)	44.9	55.4	47.4	53.3	54.9