THE NATURE OF OUR BUSINESS – STABLE GROWTH - Symrise

6. FINANCIAL POSITION
Main Financial Management Characteristics
and Objectives
The guiding principle of the Symrise group’s financial management
is adequately to secure and optimize funding requirements while
at the same time limiting financial risks. This is achieved by means
of consistent central control and continuous monitoring of borrowing
requirements.
With a capital ratio of 34% on December 31, 2008, Symrise has a
solid basis for future financial performance and for driving future
business sustainably.
Financing Structure
The core of the group’s funding is a solid, long-term financing
structure established parallel to Symrise’s flotation at the end of
2006. The financing banking syndicate, under the lead management
of Barclays Capital and Commerzbank AG, provided the
Group with long-term loans of € 380 million and $ 150 million and
a credit facility of more than € 300 million, of which € 158 million
and $ 165 million had been drawn as of December 31, 2008.
In December 2008, Symrise made initial scheduled payments of
€ 38 million and $ 15 million to redeem the long-term loans. Further
payments of € 72 million each are planned in December 2009
and December 2010. The long-term funding for the remaining €
300 million expires in December 2011. The credit facility also has
to be refinanced by this time.
The financing arrangement includes generally accepted market
agreements on compliance with certain key ratios (so-called
covenants). Despite taking out additional loans, the Group still has
sufficient hedroom in the leverage covenant and interest covenant
to be able to implement its corporate strategy. Symrise fulfilled all
its contractual obligations resulting from the loans in 2008.
In addition to the credit facility, the Company has a € 20 million
bilateral credit line with Commerzbank. The purpose of this credit
line was to cover short-term cash requirements.
The Symrise Group conducts cash pooling, whereby surplus liquidity
is concentrated in one account. Liquidity surpluses in the
cash pool are used to cover necessary internal Group financing.
If required, Symrise employs derivative instruments to limit interest
and currency risks.
Annual Report 2008 Symrise AG 77
The global financial crisis in 2008 caused the financial markets to
become increasingly jittery as the year progressed and seriously
impaired international cash flows. As a consequence of the stilldifficult
situation in 2009 and the unpredictability of developments
on the financial markets going forward, we are investigating alternative
financing possibilities. Building on our solid financing structure
and our stable cash flow, we are confident that Symrise will
remain in a position to tap the capital and credit markets. Potential
funding requirements further down the line could be met by
note loans, bonds, and similar instruments.
Cash Flow/Liquidity
Operating cash flow was € 153.1 million in 2008, slightly higher
than the previous year’s € 152.6 million. Details are to be found in
the Consolidated Cash Flow Statement.
Investments in intangible assets, property, plant and equipment,
and acquisitions in 2008 increased from € 42.9 million in 2007 to
a total of € 181.6 million. Particularly noteworthy are the Hansen,
Manheimer and ICF (€ 138.1 million) business acquisitions.
The cash outflow from financing activities totaled € 10.4 million
(2007: € 102.7 million), resulting primarily from bank loans taken
out to finance acquisitions. Adjusted for the dividend payment to
shareholders, the cash flow was € 69.5 million. Interest payments
to banks remained virtually unchanged at € 28.8 million (2007:
€ 28.7 million).
Operating cash flow decreased in comparison to the previous year.
Against € 145.5 million in 2007, the cash available to the Group
before acquisitions and dividends in 2008 dropped by € 22.1 million
to € 123.4 million. However, at 9.3% of sales, operating cash
flow was still within our target range of 9% -10%.
For further details of operating free cash flow, kindly refer to the
following table on the next page.
Group Management
Report