(41) Notes to the Cash Flow Statement

In accordance with IAS 7, the cash flow statement depicts the development in cash flows for the financial years 2005 and 2004, broken down into inflows and outflows of funds from current business, investment and financing activities. The statement is derived from the consolidated financial statements of Salzgitter AG using the indirect method.

The cash and cash equivalents used comprise cash in hand, checks, receivables from securities lending transactions, securities and cash at banks. The cash and cash equivalents include cash equivalents of € 291 million reported in the balance sheet under “Cash and Cash Equivalents”. The cash and cash equivalents increased by € 0.6 million due to changes in the values of near-money funds.

Within the inflow of funds from current business activities, income from the disposal of assets has been eliminated. During the financial year under review, income taxes amounting to € 114.0 million were paid. In the same period, refunds totaling € 3.0 million were paid to Salzgitter AG. The income taxes paid and refunded have been assigned to current business operations. For the financial year 2004, Salzgitter AG paid € 7.1 million in income taxes and in the same period received refunds amounting to € 1.5 million. These sums were also assigned to current business operations. Interest receipts amounted to € 19.7 million (2004: € 11.7 million).

The investments reported under the outflow of funds for investment activities comprise the additions to intangible assets, tangible fixed assets and financial investments. In addition to numerous investments in rationalization and replacements aimed primarily at improving, renewing and safeguarding production plant and data processing systems, various large-scale investments were made, principally for the purpose of enhancing product quality and extending the value chain. The payments made on investments in financial assets relate particularly to the previous year's acquisition of the remaining 50% of the shares in Röhrenwerk Gebr. Fuchs GmbH, the acquisition of further shares in Hüttenwerke Krupp Mannesmann GmbH and the participation in the capital increase at Vallourec S.A.

The inflow of funds from the disposal of financial assets relates primarily to the sale of the 45% stake in the joint venture Vallourec & Mannesmann Tubes S.A. and the reduction of the shareholding in Vallourec S.A.

Interest expenses are assigned solely to financing activities.

The payments for current loans against borrower's notes/bonds result from the investment of cash in the form of securities lending transactions, mutual fund shares and loans against borrower's notes from the proceeds of the sale of the shares in Vallourec & Mannesmann Tubes S.A.

Receipts from shareholdings during the financial year amounted to € 21.7 million (2004: € 32.0 million).

During the reporting period the Group made no acquisitions that have increased the size of the consolidated group. Only shares in associated companies were acquired in the reporting year.