[39] Financial risk reporting

Capital management

One of the prime objectives of capital management is to ensure liquidity at all times. Measures aimed at achieving these objectives include the optimisation of the capital structure, the reduction of liabilities and ongoing Group cash flow planning and management. Close cooperation between local units and the Group head office ensures that the local legal and regulatory requirements faced by foreign group companies are taken into account in capital management.

Net financial debt – defined as the difference between financial liabilities (excluding lease liabilities) and cash and cash equivalents – is the key performance measure used in liquidity planning at Group level (see note [30]) and amounted to €573.5 million at 31 December 2015 (31 December 2014: €810.7 million).

The KION Group had made further improvements to its funding structure and funding conditions in 2014 by repaying two corporate bonds ahead of schedule. The funds used for the repayment mainly originated from a revolving credit facility, which has far lower interest rates than the two corporate bonds.

On 15 February 2016, the KION Group redeemed the corporate bond of €450.0 million that was still outstanding and all other remaining liabilities under the existing syndicated loan of 23 December 2006. The restructuring of the KION Group’s funding was decided upon in a resolution of the Executive Board of KION GROUP AG on 25 January 2016. The repayment resulting from this restructuring of the funding was made from funds drawn down under a new senior facilities agreement concluded on 28 October 2015 (see note [50]).

Credit risk

Liquidity risk

Default risk

Risks arising from financial services

Currency risk

Interest-rate risk