Financial position

The principles and objectives applicable to financial management as at 31 March 2015 were the same as those described in the 2014 group management report. There were no significant financing activities in the reporting period.

Analysis of capital structure

Long-term borrowing totalled €648.0 million as at 31 March 2015 and, as had been the case at the end of 2014, comprised a corporate bond due to mature in 2020 and the drawdowns under the revolving credit facility classified as long term.

The total financial debt recognised came to €930.1 million, which was slightly higher than the figure at the end of 2014 of €909.6 million. After deduction of cash and cash equivalents of €83.4 million, net financial debt amounted to €846.7 million, compared with €810.7 million at the end of last year. Net debt as at 31 March 2015 was roughly 1.1 times adjusted EBITDA for the past twelve months. > TABLE 12

At €938.4 million, pension provisions had risen by €150.9 million compared with the end of last year (31 December 2014: €787.5 million), owing to a further fall in interest rates during the period under review.

The lease liabilities resulting from sale and leaseback transactions used to fund long-term leases with end customers at Group level rose to €734.7 million (31 December 2014: €707.7 million) due to an increase in financial services activities. Of this total, €532.9 million related to non-current lease liabilities and €201.8 million to current lease liabilities. Other financial liabilities also included liabilities of €355.3 million from sale and leaseback transactions used to finance the short-term rental fleet (31 December 2014: €339.1 million). The Group’s equity was slightly less than at the end of 2014, falling from €1,647.1 million to €1,631.5 million as at 31 March 2015. Positive currency effects and the level of net income largely offset the negative effects resulting from defined benefit obligations (€111.5 million). The equity ratio was 25.4 per cent (31 December 2014: 26.9 per cent). > TABLE 13

Analysis of capital expenditure

The KION Group’s total capital expenditure came to €27.4 million, compared with €27.2 million in the first quarter of 2014. As was the case last year, this spending mainly constituted capitalised development costs in the LMH and STILL brand segments. In addition, the Group continued to modernise its production and technology sites, especially in Germany and Asia. It also optimised its IT infrastructure, one of the aims being to standardise the sales systems. Another reason for the increase in the volume of capital expenditure was the construction of the new plant in the Czech Republic.

Analysis of liquidity

The KION Group’s net cash provided by operating activities totalled €57.1 million, which was significantly higher than the comparable prior-year figure of €41.0 million. This was due not only to the KION Group’s good operating performance but also to the fact that there were some payments in transit at the end of 2014, thereby leading to an increase in cash and cash equivalents at the start of the first quarter of 2015.

The net cash used for investing activities amounted to €76.7 million (Q1 2014: €63.3 million). Cash payments for capital expenditure on property, plant and equipment and on intangible assets and the rental business totalled €66.2 million in the first quarter of 2015, representing a small year-on-year increase (Q1 2014: €64.6 million). The remaining €10.4 million of the net cash used for investing activities was predominantly accounted for by the granting of a loan to Linde Hydraulics and by the acquisition of a 10 per cent stake in French robotics specialist Balyo SA.

Free cash flow – the sum of cash flow from operating activities and investing activities – improved by €2.7 million to minus €19.6 million in the reporting period (Q1 2014: minus €22.3 million).

Cash flow from financing activities improved substantially year on year to minus €0.3 million (Q1 2014: minus €64.9 million). The financial debt taken up during the first quarter of this year, which came to €214.8 million, was offset by repayments totalling €206.9 million. The cash payments for costs incurred in connection with debt transactions totalled €1.8 million (Q1 2014: €2.0 million). Net cash of €20.2 million was used for regular interest payments (Q1 2014: €22.4 million). > TABLE 14