We achieved several important goals during the financial year. We succeeded in perceptibly reducing debts, we are financing Heidelberg without government aid, and we have diversified our sources of financing. The new financing structure comprises a high yield bond in the nominal amount of € 304 million and a term to maturity of seven years, and a new revolving credit facility of € 500 million that is available through the end of 2014. The new financing structure has been reflected in our statement of financial position since April 2011, because although the high yield bond was placed on March 31, 2011, it was only issued on April 7, 2011, and the new credit facility, which was linked to the bond issue, only went into effect at that time as well.
The positive operating result resulted in an increase in the cash flow by approximately € 140 million over the previous year’s figure to € -41 million.
Cash generated by other operating changes was especially high, reaching € 141 million despite burdens caused by the expenses for the Heidelberg 2010 cost reduction program as well as the reorganization. This shows that our net working capital program has been successful and contributed to our ability to reduce inventories and trade receivables and increase advance payments from customers. By reducing receivables from sales financing, we were also able to generate a hight cash inflow.
cash used in investment activity of € 25 million during the financial year exceeded the low level posted in the previous year. We also largely limited investments in new capacity to our strategically important Chinese production site in Qingpu during the reporting year.
Despite the restructuring expenditures, we were able to boost free cash flow over the previous year by € 137 million to € 75 million – considerably higher than our projection.
|Figures in € millions
|Cash flow||398||290||- 238||- 179||- 41|
|Other operating changes||- 73||127||234||138||141|
|of which: net working capital||- 125||32||43||186||125|
| of which: receivables from
|of which: other||5||15||128||- 114||- 16|
|Cash used in investing activities||- 96||- 202||- 197||- 22||- 25|
|Free Cash flow||229||215||- 201||- 62||75|
|– in percent of sales||6.0||5.9||- 6.7||- 2.7||2.9|
With the help of the economic stimulus package, during the summer of 2009 Heidelberg negotiated bridge funding in the form of a line of credit totaling € 1.4 billion from the banks providing financing. The credit facilities were to be made available through
In order to repay the financial liabilities under the bridge funding, we made use of the entire net underwriting revenue of approximately € 400 million from our capital increase in the autumn of 2010. During the second quarter, we repaid the compulsory share of the syndicated line of credit and the line of credit, including guarantee, from the German Federal Government and from the German States. A line of credit of € 445 million, respectively, remained. In addition to the compulsory repayment of the loan under the special KfW program, we made a voluntary special repayment at the same time. During the third quarter, we were able to repay the remaining amount in advance and in full out of free cash flow and by restructuring our financing.
The simplified capital structure offered an optimal prerequisite for the refinancing prior to maturity, so that at the end of March 2011 Heidelberg was in a position to announce the comprehensive refinancing of our lines of credit. In March 2011, we placed a high-yield, unsecured bond in the nominal amount of € 304 million with a seven-year maturity and carrying an annual coupon of 9.25 percent. We successfully issued these bonds on
With the successful refinancing and capital increase, not only have key performance data such as the debt ratio considerably improved, but Heidelberg was also able to reduce its dependency on banks and diversify its sources of financing. The table below illustrates the timing and scope of Heidelberg’s debt reduction and refinancing. Our Company now has access to a stable liquidity framework that ensures adequate scope to take action.
In addition to the above-mentioned financing instruments, Heidelberg still has two borrower’s note loans outstanding with a nominal value of € 55 million, which mature in 2011 and 2013. Furthermore, another loan is outstanding in the amount of € 56 million, which is secured by usufructuary rights on three developed plots of land.
The funding is supplemented by operating lease contracts when economically appropriate. Other off-balance sheet financing instruments do not have any significant impact on the economic condition of the Group.