The financing structure includes a corporate bond of s200
million (coupon: 3 month EURIBOR plus 1.25%, due in 2015), a convertible bond of s200 million (coupon 0.75%,
due in 2013), as well as a syndicated loan of s200 million
(due in 2012), which to date remains undrawn. From the current perspective, therefore, there are no refinancing requirements for SGL Group until 2012. In addition to these Euro financial resources, local credit lines have been set up in US dollars, as well as in local currency, to finance the project in Malaysia. Unused credit facilities amounting to approximately s243.1 million as of December 31, 2008
(December 31, 2007: s 216.6 million) were available to SGL
Group to cover working capital and investments. Cash and cash equivalents decreased slightly by s6.9 mil-
lion to s123.1 million as at December 31, 2008 (December
31, 2007: s130.0 million), of which the major portion is
invested via the cash pool or the in-house bank in SGL Carbon SE bank accounts.
This framework of cash and cash equivalents and credit lines provides SGL Group with adequate financial scope to ensure the Group’s financial flexibility in the medium term as well.
With an equity ratio of 42.5%, gearing (ratio of net debt to shareholders’ equity) of 0.44, and cash and cash equivalents of s123 million, as at December 31, 2008, preconditions
remain good to continue the embarked growth course and our investments despite the financial crisis. We continue to maintain a strategic target of around 0.5 for our gearing. Equity ratio
in % 2007
2008 42.5
41.0
Free cash flow negative due to growth-related projects
The growth strategy of SGL Group was continued during 2008 through further increases in maintenance and expan- sion investments, as well as with the strategic acquisition of SGL Rotec to supplement our value chain in the CFC Business Unit. In contrast to the balanced free cash flow of the previous year, we generated a free cash flow of -s35.9
million in 2008 (previous year: -s0.9 million).
in Fm 2008 2007
Net cash provided by operating activities 218.6 171.9 Net cash used in investing activities −254.5 −172.8
Free cash flow* −35.9 −0.9
Cash provided by financing activities 28.9 51.8
Payments in connection with antitrust proceedings − −22.5 Effect of foreign exchange rate changes 0.1 −1.4
Cash and cash equivalents as at December 31 123.1 130.0
Contractual payment obligations
The most significant contractual payment obligations comprise the repayment of debt, purchasing obligations, and obligations under operating leases. The total nominal amount of debt repayment obligations is s455.7 million.
The corporate bond of s200 million is due in 2015. The
convertible bonds, which also have a total nominal value of
s200 million, are due for repayment in 2013 in cash unless
holders exercise the conversion rights before maturity, in which case up to 5,476,451 new bearer shares will be cre- ated. Credit lines taken up locally in Malaysia are to be repaid in installments.
As at December 31, 2008, trade payables, derivative finan- cial instruments, finance leases and other financial liabilities amounted to a total of s259.9 million (December 31, 2007: s168.2 million). Of this total, liabilities of s48.3 million
had a remaining term of over a year (31.12.2007: s12.4 mil-
lion). Income tax liabilities and other liabilities amounted to an additional s42.3 million at the end of 2008 (December
31, 2007: s42.0 million) and are almost without exception
short-term in nature. Further details can be found in the notes to the Consolidated Financial Statements under note 21.
Net cash provided by operating activities
Net cash provided by operating activities was further increased by s46.7 million and attained s218.6 million in
total (previous year: s171.9 million before antitrust pay-
ments). An even greater rise was countered by growth- related increases in working capital, as well as higher tax payments.
Net cash used in investing activities
Cash used in investing activities rose to s254.5 million,
an increase of s81.7 million over the previous year. Capi-
tal expenditure on property, plant and equipment and on intangible assets rose significantly by s109.0 million to a
total figure of s239.5 million (previous year: s 130.5 mil-
lion). Continuing expansion of the Malaysia site and invest- ment in the expansion of carbon fiber sites were mainly responsible for this development. The payments for acqui- sitions and financial investments fell in 2008, amounting to
s19.6 million (previous year: s42.4 million).
Cash provided by financing activities
In the year under review cash provided by financing activi- ties amounted to s28.9 million (previous year: s51.8 million).
These cash inflows result mainly from the utilization of our additional local credit lines for setting up the new produc- tion site in Malaysia. The net drawdown of financial debt of
s80.9 million in fiscal 2007 was partially offset by payments
of s12.2 million for refinancing costs and s20.1 million for
M A N A G E M E N T R E P O R T
Capital expenditure, depreciation/amortization and impairment
In the year under review, capital expenditure on prop- erty, plant and equipment and intangible assets amounted to s237.0 million, around s187.6 million more than the
expense for depreciation, amortization and impairment losses. Approximately s2.5 million was spent on intangible
assets during the year under review. This related to inter- nally developed and purchased software, as well as capital- ized development costs. The Business Unit breakdown of capital expenditure on property, plant and equipment and intangible assets was as follows: 46% in PP, 11% in GMS, 37% in CFC, and 6% on central projects.
In 2008 SGL Group acquired a majority of shares in SGL Rotec. This acquisition increased Group property, plant and equipment and intangible assets by s42.4 million. Indi-
vidual components are subsequently itemized.
Property, plant and equipment and intangible assets
in Fm Dec. 31, 2008 Additions (acquisitions) Additions (operational) Depreciation/ amortization/ impairment Currency effects/Other Dec. 31, 2007 Intangible assets 48.5 24.9 2.5 −5.0 2.9 23.2 Goodwill 95.6 3.0 0.0 0.0 −3.5 96.1
Property, plant and equipment 632.7 14.5 237.0 −49.4 −18.9 449.5
Total 776.8 42.4 239.5 −54.4 −19.5 568.8
We continued to pursue our 2007 investment focus in 2008. In the PP Business Unit this involves the construction of production facilities in Banting, Malaysia and capacity expansion at our two Polish sites (Nowy Sacz and Ratibor) primarily for cathode manufacturing , as well as mainte- nance and expansion investment in Lachute, Canada. In the GMS Business Unit the expansion of our Asian sites (Shanghai and Shanxi, China) was increasingly pushed forward. Continued high demand for graphite specialties prompted us to undertake selective capital expenditures to support the expansion of capacity at existing facilities in Poland, the USA and Germany, where we produce iso- static graphite and graphite for lithium-ion batteries. The CFC Business Unit continued to advance the expansion of fiber capacity in Inverness, Scotland, and Evanston, USA, as well as investment in automation technology at HITCO in Gardena, USA, our composite specialist for the aviation and defense industries.
During the period under review we also eliminated deferred tax assets and liabilities at the single entity company level. The previous year was adjusted accordingly to enable com- parison. Further details can be found in the notes to the Consolidated Financial Statements under note 17. At the end of the year we utilized the option of offsetting actuarial losses under pension liabilities against equity. This resulted in a cumulative charge against equity of s43.8 mil-
lion at the end of the year under review. Pension obliga- tions were in turn increased by the same amount. Prior-year figures were adjusted accordingly. Further details can be found in the notes to the Consolidated Financial Statements under note 19.