Financial position

The principles and objectives applicable to financial management as at 30 June 2015 were the same as those described in the 2014 group management report. There were no significant financing activities in the first half of the year.

Analysis of capital structure

Long-term borrowing totalled €648.0 million as at 30 June 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 €938.4 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 €61.9 million, net financial debt amounted to €876.5 million, compared with €810.7 million at the end of last year. Net debt as at 30 June 2015 was 1.1 times adjusted EBITDA for the past twelve months. It had therefore changed only insignificantly relative to earnings. > TABLE 12

As a result of increased interest rates in the second quarter, pension provisions decreased to €763.5 million and were thus significantly lower than at the end of the previous quarter (31 March 2015: €938.4 million) and slightly lower than at the end of last year (31 December 2014: €787.5 million).

The lease liabilities resulting from sale and leaseback transactions used to fund long-term leases with end customers rose to €766.0 million (31 December 2014: €707.7 million) due to an increase in financial services activities. Of this total, €556.8 million related to non-current lease liabilities and €209.2 million to current lease liabilities. Other financial liabilities also included liabilities of €380.6 million from sale and leaseback transactions used to finance the short-term rental fleet (31 December 2014: €339.1 million).

Equity was substantially higher than at the end of 2014, rising from €1,647.1 million to €1,753.2 million as at 30 June 2015. This was primarily due to net income of €94.3 million. The dividend paid to the KION Group’s shareholders in the second quarter was almost entirely offset by positive currency effects in equity. Overall, the equity ratio was 27.2 per cent (31 December 2014: 26.9 per cent). > TABLE 13

Analysis of capital expenditure

The KION Group’s total capital expenditure came to €59.8 million, compared with €58.0 million in the first half 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. There was also capital expenditure on the construction of a new plant in the Czech Republic.

Analysis of liquidity

The KION Group’s net cash provided by operating activities totalled €171.2 million, which was higher than the comparable prior-year figure of €151.3 million. This was predominantly attributable to the good operational performance. There were also one-off incoming payments in the first quarter of 2015 that had not yet been added to the KION Group’s cash on hand at the end of 2014.

The net cash used for investing activities increased to €161.9 million (H1 2014: €131.5 million). Cash payments, particularly for capital expenditure on development (R&D) and property, plant and equipment, totalled €59.8 million in the first six months of 2015 (H1 2014: €58.0 million). Owing to the increase in demand for rental trucks, the KION Group further expanded its short-term rental fleet business (net) with a volume of spending of €101.1 million (H1 2014: €83.6 million). Cash payments for other assets, which came to a total of €14.5 million (H1 2014: €1.3 million), primarily related to the granting of a loan to Linde Hydraulics.

Free cash flow – the sum of cash flow from operating activities and investing activities – was down year on year at €9.2 million (H1 2014: €19.8 million).

Cash flow from financing activities amounted to minus €49.6 million in the reporting period (H1 2014: minus €103.5 million). The distribution of a dividend of €0.55 per share resulted in an outflow of funds of €54.3 million (H1 2014: €34.5 million). The financial debt taken up during the first half of this year, which came to €509.9 million and was mainly used for the ongoing funding of working capital, was offset by repayments totalling €485.3 million. Net cash of €26.0 million was used for regular interest payments (H1 2014: €58.5 million). > TABLE 14