As at December 31, 2008, total assets increased by s322.3
million to s1,795.9 million (December 31, 2007: s1,473.6
million). Balance sheet ratios continued to improve based on the higher net profit for 2008. As a capital-intensive production company, SGL Group has a high proportion of non-current assets financed almost entirely by equity. The return on capital employed (ROCE), the ratio of operating profit to average capital employed, was at 25.4% (previous year: 27.0%) once again above our medium-term target corridor of 17 to 22%, despite the substantial rise in capital employed due to capital expenditure and acquisitions. The equity ratio rose to 42.5% despite the elimination of actu- arial losses in pension liabilities and negative exchange rate effects. The Group was able to achieve a further reduction in gearing, the ratio of net debt to equity attributable to shareholders of the parent company, to 0.44 (previous year: 0.47). Accordingly in 2008 we are still below our strategic target of around 0.5.
1 Net current assets: Inventories plus trade receivables minus trade payables.
2 Capital employed at the end of the year: Total of property, plant and equipment, other intangible assets, goodwill, inventories, trade receivables minus trade payables 3 Ratio of income from operating activities to average capital employed
M A N A G E M E N T R E P O R T
The accounting policy options for determining individual balance sheet items were applied with consistency. Potential accounting discretion was also used based on procedures consistent with those of the previous year. The application of new standards did not have any material impact on the financial statements.
Balance sheet structure in 3m Assets 2007 Liabilities 2007 Aktiva Assets 2008 Liabilities 2008 1,473.6 1,795.9 1,795.9 1,473.6
Equity Non-current liabilities Current liabilities Non-current assets Current assets
660.1 607.4 897.8 767.8 813.5 599.2 267.0 340.4 898.1 687.7 Assets
The balance sheet structure has barely changed from that of the previous year. The ratio of non-current assets to current assets at 50:50 can be described as very balanced. SGL Group has a relatively high proportion of non-current assets due to being a capital-intensive production company.
Assets in Fm Dec. 31, 2008 Dec. 31, 2007 Δ Non-current assets Intangible assets 144.1 119.3 20.8%
Property, plant and equipment 632.7 449.5 40.8%
Other non-current assets 49.0 13.2 271.2%
Deferred taxes 72.0 78.1 −7.8%
897.8 660.1 36.0% Current assets
Inventories 439.6 385.6 14.0%
Trade receivables 282.9 242.9 16.5%
Other receivables and other
current assets 52.5 55.0 −4.5%
Cash 123.1 130.0 −5.3%
898.1 813.5 10.4%
Liabilities Liabilities in Fm Dec. 31, 2008 Dec. 31, 2007 Δ
Shareholders’ equity (adjusted) 763.3 603.9 26.4%
Minority interests 4.5 3.5 28.6%
Total equity 767.8 607.4 26.4% Non-current liabilities
Borrowing 403.5 358.8 12.5%
Provisions for pensions and other
employee benefits 223.3 214.0 4.3%
Deferred taxes 2.9 2.1 38.1%
Miscellaneous non-current debt and
other provisions 58.0 24.3 138.7%
687.7 599.2 14.8% Current liabilities
Current portion of borrowings 5.4 0.8 −
Other provisions 81.1 68.4 18.6%
Trade payables 165.3 143.4 15.3%
Miscellaneous liabilities and income
tax liabilities 88.6 54.4 62.9%
340.4 267.0 27.5%
Total Liabilities 1,795.9 1,473.6 21.9%
On the liability side equity was up s160.4 million (+26%)
to s767.8 million (previous year: s607.4 million). Despite
the considerably higher total assets figure the equity ratio (minus minority interests) rose to 42.5% (previous year: 41.0%).
Total assets of SGL Group rose from s1,473.6 million to s1,795.9 million as at December 31, 2008. This increase
includes an exchange rate related reduction s of s35.1 mil-
lion. Non-current assets rose by s237.7 million. Decreases
due to currency translation of s19.2 million were coun-
teracted by substantial increases, particularly in property, plant and equipment. Compared to the previous year SGL Group’s capital expenditure rose by 87% to s239.5 million.
The rise in intangible assets related primarily to customer relationships and brand names purchased with the acquisi- tion of SGL Rotec. The first-time consolidation of a joint venture acquired with SGL Rotec resulted in an increase of
s6.0 million in holdings of companies accounted for using
the equity method reported under other non-current assets. This item also includes the carrying amount for long-term, multi-year production contracts valued at s20.8 million at
the end of the reporting period. Deferred taxes were down, reflecting the use of tax losses carried forward in the USA and Germany.
Current assets were up by s84.6 million to s898.1 mil-
lion (previous year: s813.5 million). This is mainly due to
growth-related increases in inventories and trade receiv- ables. Taking into account a decline of s3.5 million related
to exchange rates, inventories rose by a total of s54.0 mil-
lion to s439.6 million. Trade receivables, at s282.9 million,
were s40.0 million over the figure recorded as at December
31, 2007, including a s0.5 million rise due to exchange rate
changes. Individual indicators related to inventory turn- over rates and average days receivables outstanding were maintained at 2007 levels throughout 2008 and in some instances even improved.
M A N A G E M E N T R E P O R T
Non-current liabilities were up by s88.5 million to s687.7
million (previous year: s599.2 million) mainly due to rais-
ing interest-bearing loans for financing the construction of the plant in Malaysia. Other non-current liabilities and other provisions were also higher than the previous year, by s33.7 million to s58.0 million; the reason for this was
primarily the acquisition and first-time consolidation of SGL Rotec. Since SGL Rotec is legally a partnership and SGL Group holds only 51% of the shares, these minority interests with put options are required to be accounted for as non current liabilities.
Including cash and cash equivalents (s123.1 million), cur-
rent and non-current financial debt (s408.9 million), the
remaining imputed interest component of the convert- ible bond (s38.0 million), as well as the refinancing costs
included (s8.8 million), net debt for SGL Group at the
end of the year amounts to s332.6 million (previous year: s285.2 million).
Net financial debt
in Fm
Dec. 31, 2008
Dec. 31, 2007 Current and non-current financial debt 408.9 359.6 Remaining interest cost component for the convertible
bond 38.0 45.5
Refinancing costs included 8.8 10.1
Cash −123.1 −130.0
Net financial debt 332.6 285.2
Current liabilities were up by s73.4 million to s340.4
million (previous year: s267.0 million); primarily due to
the s21.9 million higher trade payables resulting from the
growth in operations, as well as s38.7 million higher liabili-
ties from the accounting of derivatives on account of higher negative market values, essentially the result of currency shifts at the end of the fiscal year. The rise in other provi- sions of s12.7 million to s81.1 million relates to a great
Consolidated Statement of Changes in Equity
2007
in Fm
Equity attributable to the shareholders of
the parent company Minority interest Total equity
Balance as at January 1 (as originally reported) 445.0 2.2 447.2
IFRIC 11 adjustments (share-based payment) 10.9 10.9
Adjustments from pension obligations −57.7 −57.7
Balance as at January 1 adjusted 398.2 2.2 400.4
Net profit for the year 133.5 0.3 133.8
Capital increase 27.9 1.0 28.9
Equity share in convertible bond 49.0 49.0
Exchange rate translation differences −16.3 −16.3
Total earnings from cash flow hedges recognized directly in equity 1.1 1.1
Actuarial gains/losses from pension commitments 10.5 10.5
Balance as at December 31 603.9 3.5 607.4
2008
in Fm
Equity attributable to the shareholders of
the parent company Minority interest Total equity
Balance as at January 1 603.9 3.5 607.4
Net profit for the year 189.6 0.8 190.4
Capital increase 17.7 17.7
Exchange rate translation differences −20.7 −20.7
Total earnings from cash flow hedges recognized directly in equity −30.6 −30.6
Actuarial gains/losses from pension commitments 3.4 3.4
Miscellaneous changes without impact on profit or loss 0.0 0.2 0.2
M A N A G E M E N T R E P O R T
Equity was retroactively adjusted as a consequence of applying IFRIC 11. Share-based remuneration related to bonus shares and the Matching Share Plan, previously recorded in provisions, was reclassified as equity in accor- dance with IFRIC 11. As a result of this adjustment, share- holders’ equity rose as at January 1, 2007, by s10.9 million.
Other current provisions were correspondingly reduced by the same amount.
At the end of the period under review, we recorded actu- arial losses from pension liabilities directly against equity as specified in IAS 19. In order to ensure comparable pre- sentation, the application of IAS 19.93A must be retroac- tive, as well, according to IFRS. As a result of this adjust- ment, shareholders’ equity decreased as at January 1, 2007, by s57.7 million, with retroactive effect. The continued
recognition of actuarial gains and losses directly in equity resulted in adjustments of +s10.5 million and +s3.4 million
respectively in 2007 and 2008 without effect on income. A cumulative charge against equity of s43.8 million as at
December 31, 2008, has resulted. The equity ratio would have been 2.4% points higher without this effect.
Total shareholders’ equity in 2008 increased by s159.4 mil-
lion to s763.3 million as at December 31, 2008. This rise
comes largely from the profit for the period of s189.6 mil-
lion. Effects of foreign exchange rate changes had a nega- tive impact of s20.7 million. In addition, results recorded
directly in equity primarily relate to operating currency hedges qualified as cash flow hedges. Due to the significant depreciation of the Euro against our hedged currencies, negative market values of s30.6 million were recognized in
equity as at the balance sheet date for existing hedging trans- actions. Whether these negative market values, together with the corresponding price appreciations of operating hedges will impact income in the future depends on further developments in exchange rates. Shareholders’ equity as at December 31, 2008, reflects an equity ratio of 42.5% in comparison to 41.0% as at December 31, 2007.
Shareholders can exercise their conversion rights regarding the convertible bond issued in 2007 at a price of s36.52 per
share. If all options are exercised, up to 5.5 million new shares of SGL Carbon SE could be issued.
SGL Group brand is among the especially important intan- gible assets. Its development continued in the year under review.
Our long-term and strong supplier and customer relation- ships also have considerable value. On the one hand they stabilize the course of our business and shield us from short-term market fluctuations. This trusting cooperation with our partners, often spanning many years, provides us with a tangible competitive advantage. On the other hand this intense cooperation also facilitates joint research and development projects in which know-how and development capacities of the companies involved can be consolidated.
Details on company acquisitions
As at September 19, 2008, five companies were initially con- solidated in connection with the acquisition of Rotec KG; as of this date they have been included in the consolidated income statement. Further details are presented in the notes to the Financial Statement under note 2. No company sales took place in fiscal 2008.
As at December 31, 2008, issued capital increased to s165.6
million (December 31, 2007: s163.6 million) and is divided
into 64,706,991 bearer shares with no par value (common shares) with a proportional share in issued capital of s2.56
per share. In 2008, 806,586 new shares were created. Of these 298,447 shares with an allocation price of s34.65 per
share were used for the bonus plan for employees in Ger- many and 70,787 shares with an allocation price of s37.65
per share were used for the Matching Share Plan. A total of 425,799 shares were created by exercising options under the existing stock option plan and stock appreciation rights under the stock rights appreciation (SAR) plan. The level of treasury shares at SGL Carbon SE rose by 11,553 shares as at December 31, 2008, to 46,004 treasury shares.
Assets not recorded and off-balance sheet financial instruments
Various important SGL Group assets are not included in the balance sheet. Primarily they concern leased and rented goods (operating leases for land, buildings, EDP equipment, vehicles and other property, plant and equipment). SGL Group also utilizes receivables forfeiting to a limited extent as part of its off-balance sheet financing instru- ments.
The total value of these off-balance sheet items and financing instruments has had no material effect on the presentation of the financial performance and financial position of the Group. Further details can be found in the notes to the Consolidated Financial Statements under note 23.
M A N A G E M E N T R E P O R T