Financial position

The principles and objectives applicable to financial management as at 31 March 2014 were the same as those described in the 2013 group management report. There were no significant financing activities in the reporting period. However, tranches of the corporate bonds were repaid ahead of schedule in the second quarter, as reported under Events after the reporting date.

Analysis of capital structure

Long-term borrowing consisted of two secured corporate bonds with a total volume of €975.0 million as at 31 March 2014 – as had been the case at 31 December 2013. As at the reporting date, €132.2 million (31 December 2013: €184.4 million) had been drawn down under the revolving credit facility, which includes other loan liabilities of individual Group companies outside Germany and contingent liabilities. Taking account of borrowing costs of €15.9 million, the financial debt recognised in the statement of financial position stood at €1,158.2 million (31 December 2013: €1,198.6 million). Because a proportion of cash and cash equivalents was used for repayments in the first quarter of 2014, net financial debt increased slightly during that period from €979.3 million to €1,026.7 million. As at 31 March 2014, net debt was roughly 1.4 times adjusted EBITDA for the past twelve months. >> TABLE 12

At €609.7 million, pension provisions were higher than they had been at the end of last year (31 December 2013: €560.1 million) owing to interest rate changes. The net obligation increased to €586.9 million (31 December 2013: €537.7 million).

The lease liabilities resulting from sale and leaseback transactions used to fund long-term leases with end customers rose to €632.7 million (31 December 2013: €617.1 million) due to further growth in the volume of financial services activities. Of this total, €401.9 million related to non-current lease liabilities and €230.8 million to current lease liabilities. Other financial liabilities also included liabilities of €324.5 million from sale and leaseback transactions used to finance the short-term rental fleet (31 December 2013: €327.5 million).

There was a small decrease in equity, which went down by 0.5 per cent to €1,602.1 million (31 December 2013: €1,610.0 million). This primarily resulted from the change in the interest rate for pensions. The equity ratio was therefore 26.4 per cent (31 December 2013: 26.7 per cent). >> TABLE 13

Analysis of capital expenditure

The KION Group’s total capital expenditure came to €27.2 million, compared with €25.2 million in the first quarter of 2013. As was the case last year, this spending mainly constituted capitalised development costs in the LMH and STILL brand segments. In addition, the KION Group expanded its production sites, especially in Germany, and updated its IT infrastructure as part of ongoing projects.

Analysis of liquidity

Net cash provided by the KION Group’s operating activities totalled €41.0 million (Q1 2013: €44.8 million). The increase in net cash as a result of higher earnings was more than offset by the increase in working capital. Depreciation, amortisation and impairment increased in comparison with the same period of last year, primarily as a result of the acquisition of Willenbrock. Higher prepayments of trade tax led to a year-on-year rise in income taxes.

The net cash used for investing activities came to €63.3 million (Q1 2013: €50.7 million; adjusted for rental business, which was previously reported under cash flow from operating activities). Whereas the change in cash payments for capital expenditure was insignificant, net investment in relation to disposals and acquisitions in the rental business rose from €25.5 million to €37.4 million in the reporting period. This primarily took the form of replacement investment, which meant that the level of rental assets on the balance sheet remained virtually unchanged compared with the end of the first quarter of 2013. As had been the case in the first three months of last year, there were no outflows of capital in connection with acquisitions.

Free cash flow declined to minus €22.3 million year on year (Q1 2013: minus €5.9 million).

Cash flow from financing activities amounted to minus €64.9 million (Q1 2013: minus €25.7 million) and reflected, above all, the higher volume of repayments under the revolving credit facility. Gross repayments of €558.9 million were partly offset by a gross drawdown of €506.6 million. The cash payments for costs incurred in connection with equity and debt transactions totalled €2.0 million (Q1 2013: €11.1 million). Current interest payments resulted in an outflow of funds of €22.4 million. Interest payments in the first quarter of 2014 included interest of €17.7 million arising on the corporate bond (2013/2020) issued in February 2013, which was not included in the interest payments of 20.1 million for the corresponding period of 2013. >> TABLE 14