2005-2006 Financial Statements and Management Report

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44 FINANCIAL POSITION The Group’s financial position improved further in the reporting period. The cash flow statements and balance sheet structure reflect the growth in the value of the enterprise. Capital procurement and investment are optimized through a central financing system. The three big rating agencies rate ThyssenKrupp as investment grade. THE INTERCOMPANY CASH MANAGEMENT SYSTEM REDUCES EXTERNAL FINANCING REQUIREMENTS. CENTRAL FINANCING The financing of our Group is managed centrally. The parent company ThyssenKrupp ag assumes responsibility for maintaining the liquidity of the Group companies. This is achieved in particular by the making available of funds within the Group financing system, by negotiating and guaranteeing loans or by means of financing support in the form of letters of comfort. In order to cover the financial requirements of the Group companies, ThyssenKrupp ag and its financing companies make selective use of local credit and capital markets. The fact that financing is centralized strengthens the Group’s negotiating position vis-à-vis credit institutions and other market participants. Centralization is thus the basis for achieving cost-effective capital procurement and investment opportunities. Interest rate risk management and foreign currency management are likewise performed on a centralized basis. For more details, please turn to Note 14 on page 81. Our intercompany cash management system reduces external financing requirements and optimizes the Group’s financial and capital investments. The cash management system takes advantage of the surplus funds of individual Group companies to cover the financial requirements of other Group companies. Because intercompany sales are settled via intercompany financial accounts, bank account transactions are substantially reduced. Maintenance of liquidity Alongside a financial planning system with a planning horizon of several years, ThyssenKrupp operates a liquidity planning system on a rolling monthly basis with a planning period of five months. Both planning systems comprise all consolidated Group companies. The financial and liquidity planning systems in conjunction with available committed credit facilities assure that ThyssenKrupp ag always has adequate liquidity reserves. In addition to bilateral bank loans and syndicated credit facilities, financing is accomplished through money market and equity market instruments as well as other selected off-balance financing instruments such as factoring programs and operating leases. Rating Issuer ratings facilitate access to international capital markets. ThyssenKrupp has been rated by Moody’s and Standard & Poor’s (S&P) since 2001 and by Fitch since 2003. ThyssenKrupp is currently rated by the agencies as follows: Standard & Poor’s Moody’s Fitch Long-term rating BBB- Baa2 BBB+ Short-term rating A3 Prime-2 F2 Outlook stable stable “Watch negative”
ANALYSIS OF STATEMENTS OF CASH FLOWS FINANCIAL STATEMENTS AND MANAGEMENT REPORT Financial position The amounts taken into consideration in the statements of cash flows correspond to the balance sheet item “Cash and cash equivalents”. Operating activities provided €3.5 billion during fiscal year 2005/2006 compared with €2.4 billion in the previous year. The increase in operating cash flows by €1.1 billion mainly resulted from the significant improvement in net income before depreciation, amortization and impairment of non-current assets, before deferred tax expenses and before gains on disposals of assets. During fiscal year 2004/2005, operating cash flows of discontinued operations came to €(1) million. Cash flows from investing activities decreased by €2.6 billion to €(1.7) billion due to a decrease in proceeds from disposals by €2.1 billion to €0.4 billion as a result of the disposal of the Residential Real Estate business during fiscal year 2004/2005. Cash outflows for the purchase of investments accounted for using the equity method and other financial assets increased by €0.2 billion. Moreover, due to the acquisition of Howaldtswerke-Deutsche Werft (HDW) in fiscal year 2004/2005, acquired cash and cash equivalents decreased by €0.3 billion in 2005/2006. During the previous year cash flows from investing activities of discontinued operations came to €31 million. The free cash flow, i.e. the sum of operating cash flows and cash flows from investing activities, decreased by €1.5 billion to €1.8 billion during fiscal year 2005/2006. This decrease is especially due to the €2.1 billion decline in proceeds from the sale of businesses. During fiscal year 2005/2006 the free cash flow was used for dividend payments (€0.4 billion), further reduction of net financial debt (€0.9 billion) and in an amount of €0.4 billion for payments to repurchase shares (€(0.7) billion), offset by cash inflows from the sale of treasury shares issued (€0.3 billion). Change in cash and cash equivalents in million € 4,715 Cash & cash equivalents 09/30/2005 +3,467 (1,696) Operating cash flows Cash flows from investing activities (2,012) Cash flows from financing activities (27) 4,447 Exchange rate Cash & cash equivalents 09/30/2006 45 THE INTERCOMPANY CASH MANAGEMENT SYSTEM REDUCES EXTERNAL FINANCING REQUIREMENTS.
Page 1: 2005 - 2006 Financial Statements an
Page 4 and 5: 02 BUSINESS AREAS AND ORGANIZATIONA
Page 6 and 7: 04 OVERVIEW OF THE COURSE OF BUSINE
Page 8 and 9: 06 NICKEL ALLOYS AND TITANIUM MILL
Page 10 and 11: 08 THYSSENKRUPP ACHIEVED A SIGNIFIC
Page 12 and 13: 10 €489 MILLION OF UNAPPROPRIATED
Page 14 and 15: 12 INVESTMENTS IN GROWTH AREAS STRE
Page 16 and 17: 14 FUEL PRICE INCREASES PUSHED UP T
Page 18 and 19: 16 WE HAVE DEVELOPED A PLANT FOR CO
Page 20 and 21: 18 STEEL ACHIEVED A PROFIT OF €1.
Page 22 and 23: 20 A STRONG MARKET REVIVAL AND INNO
Page 24 and 25: 22 IN MEXICO, HIGH-VALUE PRODUCTS A
Page 26 and 27: 24 AUTOMOTIVE CONTINUED ITS PORTFOL
Page 28 and 29: 26 TECHNOLOGIES ENJOYS SUCCESS ON T
Page 30 and 31: 28 THE LARGEST LATHE IN NORTHERN EU
Page 32 and 33: 30 ACQUISITIONS IN THE USA, ASIA AN
Page 34 and 35: 32 SERVICES ALMOST DOUBLED ITS PROF
Page 36 and 37: 34 CORPORATE INCLUDES VARIOUS SERVI
Page 38 and 39: 36 OUR CONTROL SYSTEM FOR LASER WEL
Page 40 and 41: 38 TO DATE, ALMOST 300 PROJECTS HAV
Page 42 and 43: 40 OCCUPATIONAL SAFETY HAS IMPROVED
Page 44 and 45: 42 OUR EXECUTIVE POLICY IS BASED ON
Page 48 and 49: 46 INTANGIBLE ASSETS INCLUDE GOODWI
Page 50 and 51: 48 THE THYSSENKRUPP BRAND WAS FURTH
Page 52 and 53: 50 WE HAVE SEVERAL STRATEGIC OPTION
Page 54 and 55: 52 OUR INTEGRATED CONTROL CONCEPT S
Page 56 and 57: 54 GROWTH, EFFICIENCY AND OPTIMIZAT
Page 58 and 59: 56 OVER 60% OF BEST PROJECTS TAKE P
Page 60 and 61: 58 COMPENSATION REPORT THE BONUS AM
Page 62 and 63: 60 THE LTMI EXPIRED WITH PAYMENT OF
Page 64 and 65: 62 THE SECURITY OF THE INFORMATION
Page 66 and 67: 64 THE AREAS OF ACTIVITY OF THE SEG
Page 68 and 69: 66 THE RISKS TO THE THYSSENKRUPP GR
Page 70 and 71: 68 VEHICLE PRODUCTION REMAINS A GLO
Page 72 and 73: 70 THE NUMBER OF EMPLOYEES WILL RIS
Page 74 and 75: 72 BALANCE SHEET Assets million €
Page 76 and 77: 74 NOTES GENERAL ThyssenKrupp ag is
Page 78 and 79: 76 FIXED ASSETS SCHEDULE in million
Page 80 and 81: 78 Disclosures on the volume of tre
Page 82 and 83: 80 million € Bonds Liabilities to
Page 84 and 85: 82 Foreign currency derivatives The
Page 86 and 87: 84 22 TAXES ON INCOME Taxes on inco
Page 88 and 89: 86 AUDITORS’ REPORT We have audit
Page 90 and 91: 88 SUPERVISORY BOARD PROF. DR. H.C.
Page 92 and 93: 90 LIST OF EQUITY INTERESTS Compani
Page 94 and 95: 92 Companies (As of September 30, 2
Page 96 and 97:
94 Companies (As of September 30, 2
Page 98 and 99:
Page 100 and 101:
Page 102:
100 CONTACT/2007/2008 DATES For mor
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2005-2006 Financial Statements and Management Report

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