The consolidated statement of cash flows shows how the Group’s cash and cash equivalents changed through inflows and outflows during the reporting year. In accordance with IAS 7 (Statement of Cash Flows), a distinc- tion is made between cash flows from operating, investing, and financing activities. The changes in the relevant balance sheet items cannot be directly derived from the consolidated balance sheet, as non-cash transactions – such as effects arising from currency translation and changes in the consolidation scope – are adjusted. The cash flow is calculated as net income from continuing operations adjusted for income taxes, net interest, depreciation, amortisation, impairment losses, and other non-cash items. Cash flows from dividends received from non-consolidated companies, from interest received and paid, and from taxes paid are also recognised. Changes in working capital and utilisation of provisions are taken into account when determining the cash flow from operating activities.
Cash flows from the acquisition or sale of intangible assets as well as property, plant, and equipment and financial assets are recognised in the cash flow from investment activities. If these relate to the acquisition or disposal of subsidiaries or other business units (gain or loss of control), the effects on the statement of cash flows are shown in separate items.
The cash outflow from financing activities mainly results from changes in capital and dividend payments as well as proceeds from and repayments of bonds and loans. In addition, cash flows from changes in ownership interests in subsidiaries that do not result in a loss of control are classified as financing activities.
The cash flows from foreign Group companies shown in the statement are generally translated into euro using the average annual exchange rates. In contrast, cash and cash equivalents are translated using the exchange rate at year end, as in the consolidated balance sheet. The effects of exchange rate changes on cash and cash equivalents are shown separately.
The significant individual items in the statement of cash flows are explained below.
14 Interest received
The cash inflow from interest received fell by €25.8 million to €103.9 million (previous year: 129.7).
15 Interest paid
Despite increased net debt compared with the previous year, interest payments could be lowered by €126.5 million to €638.4 million (previous year: 764.9) due to significantly reduced interest rates for refinancing instruments.
16 Income taxes paid
This item includes payments relating to income taxes amounting to €405.8 million (previous year: 328.4).
17 Elimination of other non-cash items
Other non-cash items include, as the largest individual item, the elimination of non-cash gains from the disposal of subsidiaries and other business units, which are primarily related to the repayment of capital and the subsequent deconsolidation of a foreign finance company. In addition, other non-cash expenses and income are included, such as additions to and releases of provisions as well as impairment losses and reversals of write-downs of current assets. Furthermore, the results were adjusted for the book profits and losses from fixed asset disposals. The total amount earned from these fixed asset disposals is shown under divestments in investment activities.
18 Changes in operating assets
Operating assets consist of inventories, trade receivables, and other assets used in operating activities.
19 Changes in operating liabilities
Operating liabilities include trade payables and other liabilities from operating activities.
20 Decrease in provisions through cash payments
This item shows the cash outflow of pension provisions and other provisions. The one-off payment of €161.4 million for the penalty notice that was legally confirmed by the Federal Supreme Court in the second quarter of 2013 for antitrust violations in the years from 1990 to 2002 is included as a significant individual item in the financial year.
21 Investments (cash outflow)
The payments for investments differ from additions in the fixed-asset movement schedule, which shows, for in- stance, non-cash items as additions, e.g. additions in connection with barter transactions or contributions in kind. Of the total investments (cash outflow) of €1,313.7 million (previous year: 865.9), €508.2 million (previous year: 490.3) related to investments to sustain and optimise capacity and €805.5 million (previous year: 375.6) to capacity expansions.
Investments in intangible assets and property, plant and equipment amounted to €936.4 million (previous year: 831.4) and concerned maintenance, optimisation, and environmental protection measures at our production sites, as well as expansion projects in growth markets.
Investments in other financial assets, associated companies, and joint ventures totalled €304.9 million (previous year: 23.1) and related primarily to the acquisition of an additional 25 % in the shares of the Australian cement manufacturer Cement Australia.
Expenditure for the acquisition of subsidiaries and other business units came to €72.3 million (previous year: 11.4) and related mainly to the acquisition of the remaining 50 % of shares in the joint venture Midland Quar- ry Products Limited (MQP), United Kingdom, for €39.4 million. HeidelbergCement also has effected several business combinations for a total of €14.0 million to strengthen its market position in the field of ready-mixed concrete in Germany. In addition, the repayment of a purchase price liability from the acquisition of 51 % of the shares in CJSC “Construction Materials”, Russia, in 2010 led to a cash outflow of €14.2 million in the reporting year. Cash and cash equivalents amounting to €4.6 million were acquired in connection with the investments in subsidiaries and other business units.
22 Divestments (cash inflow)
The cash inflow from the disposal of subsidiaries and other business units amounted to €2.5 million (previous year: 60.1). In the previous year, this item essentially included the sale of business operations in North America for €57.3 million. No cash and cash equivalents were transferred in connection with the disposal of subsidiaries and other business units.
Proceeds from the disposal of other fixed assets amounting to €207.8 million (previous year: 219.9) include proceeds from the disposal of intangible assets and property, plant and equipment totalling €125.3 million (previous year: 211.4). This decrease was primarily due to lower net proceeds from the sale of excess emission rights, which decreased by €72.7 million to €0.9 million compared with the previous year. Payments received from the disposal of financial assets to the amount of €70.0 million included as a significant item the proceeds from the sale of a non-controlling interest in a precast concrete manufacturer in Saudi Arabia.
23 Cash from changes in consolidation scope
This line shows the change in cash and cash equivalents in connection with a gain or loss of control over sub- sidiaries and other business units and with other changes in the consolidation scope.
24 Dividend payments to non-controlling shareholders
25 Increase in ownership interests in subsidiaries
This item shows cash flows from the increase of ownership interests in subsidiaries. The transactions in the reporting year essentially comprise the increase in the participation in the Russian cement company CJSC “Construction Materials” from 51 % to 100 %.
26 Proceeds from bond issuance and loans
This item primarily includes the issue of three new bonds payable. The issue proceeds were used to refinance existing bank debts and the bond of US$750 million maturing in March. The 2013 debut issue was launched on 17 May with a short-term bond of €75 million ending on 17 October 2013. The second bond issue followed on 24 October with an issue volume of €300 million and a seven-year term ending on 21 October 2020. The final issue of the year took place on 12 December with a volume of €500 million and a term of eight years ending on 21 October 2021. Drawings on the syndicated facility agreement are also included.
In the previous year, this item included the proceeds from the syndicated facility agreement of €3 billion. In addition, a new bond was issued, with the issue proceeds being used to refinance existing bank debts. The bond was issued in March and has a term of four years (€300 million).
27 Repayment of bonds and loans
This item includes the scheduled repayments of financial liabilities. Primarily, the US$750 million bond was repaid on schedule in March, as were various drawings under the EMTN programme and debt certificates. On 22 February 2013, HeidelbergCement invoked its right to terminate the debt certificate issued on 20 December 2011, and repaid at par the tranche of €115.5 million with floating interest rates and an original term ending on 31 October 2016 ahead of schedule on 30 April 2013.
During the previous year, the €1 billion bond was repaid on schedule in January, as were various drawings under the EMTN programme and debt certificates.
28 Changes in short-term financial liabilities
This line shows the balance from proceeds and payments for items with a high turnover rate, large amounts, and short terms from financing activities. For the financial year it primarily included proceeds and repayments from the Euro Commercial Paper Programme as well as changes to other current financial liabilities.
29 Cash and cash equivalents
Cash and cash equivalents with a remaining term of less than three months are included. Of this item, €18.8 million (previous year: 32.2) is not available for use by HeidelbergCement. This relates to short-term cash de- posits at banks that were placed as security for various business transactions – such as outstanding recultivation payments – or in connection with energy trading.