Financial Statements - Solvay

16
Solvay Global Annual Report 2008
Energy situation
During the fi rst part of 2008, energy prices soared, before
falling suddenly during the second half in the wake of the
global economic crisis.
The Solvay group’s energy bill rose noticeably in 2008,
though the Group’s proactive energy policy kept the rise
well below that of market prices. The 2008 net energy bill
represents 10% of sales, compared with 8% in 2007.
The key features of the Group’s energy policy are
improving the energy effi ciency of its industrial processes,
diversifying energy sources, using cogeneration and
renewable energies, and setting up partnerships and
energy integration projects.
In 2008 this policy took concrete form in the decision
to build a cogeneration unit using secondary fuels
on the Bernburg (Germany) site in partnership with
Tönsmeier and a cogeneration unit supplied by biomass
on the Tavaux (France) site, in partnership with Dalkia.
In Argentina, Solvay Indupa has secured a supply of
competitively priced energy by partnering with a local
energy group to build an electricity generating plant on its
Bahia Blanca site.
Depending on the specifi c market conditions of each
activity, price rises are also negotiated to compensate the
rise in energy costs.
In response to the rapidly-evolving energy situation,
Solvay announced in 2008 the creation of a dedicated
subsidiary with the primary objective of supplying and
covering the main energy needs (electricity, gas, coal,
coke, etc.) of its Sectors and SBUs.
Comments on the key fi gures
Income statement
Non-recurring items amounted to EUR 20 million in
2008 compared with EUR 31 million in 2007.
These include:
– the reversal of the impairment on the trona mine
(natural soda ash) in the USA (EUR 92 million);
– the capital gain (EUR 30 million) on the sale of Solvay
Engineered Polymers in the USA;
– non-recurring restructuring charges in the
Pharmaceuticals Sector (EUR 48 million for the
“INSPIRE” project) and the Chemicals Sector
(EUR 12 million asset depreciation as part of the
restructuring of the Girindus activities in Germany).
Charges on net indebtedness (EUR 93 million) were
higher than in 2007, in line with the increase in net average
indebtedness. At the end of December 2008, 95% of the
fi nancial debt was covered at an average fi xed rate of
5.4% for a duration of 7.4 years. The fi rst signifi cant debt
maturity will not occur until 2014.
Income from investments included the extraordinary
write-down (EUR -309 million) of holdings in Fortis
(non-cash charge), posted at closing at the end of 2008
(EUR 0.929 per share). This holding was acquired by
the Group between the two world wars. More recently, it
generated capital gains close to EUR 200 million (in 1998
and 2007) and a dividend of EUR 20 million in 2007.
Income Taxes amounted to EUR -143 million.
The effective tax rate is 24% compared with 29% in 2007.
The 2008 tax rate benefi ted from the reversal of provisions
following the favorable outcome of tax inspections and the
write up of earlier tax losses, but was negatively affected
by the non-deductible write down of holdings in Fortis.
Net income of the Group (EUR 449 million) is down
46% on 2007. Minority interests are EUR 44 million
compared with EUR 47 million in 2007. Net earnings per
share is EUR 4.92 in 2008 (as against EUR 9.46 in 2007).
REBITDA
REBITDA amounted to EUR 1 436 million. Recurrent
depreciation and amortization were stable compared
with 2007. Total depreciation and amortization
(EUR 417 million) were down 30% with the reversal of
the impairment on the trona mine (natural soda ash) and
the recording in 2007 of non-recurrent write-offs linked to
the restructuring in the Fluorinated and Pharmaceuticals
activities.
(EUR million)
1750
1400
1050
700
350
0
1 146
2004
1 338
2005
1 568
2006
1 662
2007
1 436
2008