Net financial income/expenses
The change in the balance of financial income and financial expenses reflected the much improved funding structure resulting from the IPO and the subsequent redemption of financial liabilities. Net financial expenses amounted to just €88.8 million, less than half of the net financial expenses in 2013 (€219.8 million). The net financial expenses for the year under review included significant effects from two non-recurring items. Firstly, the early redemption of two corporate bond tranches in the second quarter of 2014 gave rise to non-recurring financial expenses of €23.2 million. This amount comprised pro-rata borrowing costs of €8.4 million and early-redemption charges of €14.8 million. The second non-recurring item was financial income amounting to €43.2 million from the measurement of the put option held by Linde Material Handling GmbH and the two call options held by Weichai Power relating to shares in Linde Hydraulics. The net financial expenses in 2013 also included non-recurring expense items arising from capitalised borrowing costs (€24.5 million), the termination of interest-rate hedges (€18.3 million) and from the remeasurement of the Linde Hydraulics options (€14.7 million). Adjusted for these non-recurring items, net financial expenses in 2014 amounted to €108.8 million, a significant improvement on the adjusted net financial expenses in 2013 totalling €162.4 million.
Income taxes
Income tax expenses amounted to €80.0 million. The tax rate therefore increased to 31.0 per cent compared with the unusually low rate of 10.3 per cent in 2013. The low tax expense in 2013 was primarily attributable to the recognition of deferred tax assets related to loss carryforwards and interest carryforwards that were only able to be utilised after KION Material Handling GmbH and Linde Material Handling GmbH had entered into a profit-and-loss transfer agreement. In contrast, a deferred tax expense of €16.5 million arose in 2014 (2013: deferred tax income of €43.1 million), attributable mainly to the utilisation of loss carryforwards and interest carryforwards in Germany. The current income tax expense compared with 2013 was accounted for, in particular, by the improved net income before tax in individual foreign companies.
Net income and appropriation of profit
The KION Group generated net income of €178.2 million in 2014, a year-on-year increase of €39.8 million (2013: €138.4 million). The decline in EBIT and the higher tax expense were offset by the significant improvement in net financial expenses. Net income of €176.7 million (2013: €138.8 million) was attributable to the shareholders of KION GROUP AG. Basic and diluted earnings per share came to €1.79 (2013: €1.69) based on an average number of no-par-value shares in the year of 98.7 million (2013: 82.0 million). This did not include 163,562 no-par-value treasury shares that were repurchased by KION GROUP AG as part of a buy-back to support the KION Employee Equity Programme.
The Executive Board and Supervisory Board of KION GROUP AG will propose a dividend of €0.55 per share to the Annual General Meeting on 12 May 2015. This equates to a total dividend payout of €54.3 million based on 98,736,438 dividend-bearing shares on the reporting date of 31 December 2014. Approximately 31 per cent of the net income attributable to the shareholders in KION GROUP AG will therefore be distributed in dividends.