Financial position

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

Analysis of capital structure

Long-term borrowing totalled €648.0 million as at 30 September 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 €970.3 million, which was higher than the figure at the end of 2014 of €909.6 million owing to drawdowns used to fund acquisitions. After deduction of cash and cash equivalents of €102.1 million, net financial debt amounted to €868.2 million, compared with €810.7 million at the end of last year. Net debt as at 30 September 2015 was 1.1 times adjusted EBITDA for the past twelve months. Overall, net debt was therefore unchanged relative to earnings as at the reporting date. > TABLE 12

At €783.3 million, pension provisions at the end of September were at the same level as 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 €802.5 million (31 December 2014: €707.7 million) on the back of the expansion of financial services activities. Of this total, €586.1 million related to non-current lease liabilities and €216.3 million to current lease liabilities. Other financial liabilities also included liabilities of €377.7 million from sale and leaseback transactions used to finance the short-term rental fleet (31 December 2014: €339.1 million). As a result of the net income for the reporting period, equity was appreciably higher than at the end of 2014, rising from €1,647.1 million to €1,766.2 million as at 30 September 2015. Positive currency effects on other comprehensive income played a part here, too. However, this increase was partly offset by the dividend distribution in the second quarter. The equity ratio was 27.0 per cent (31 December 2014: 26.9 per cent). > TABLE 13

Analysis of capital expenditure

Capital expenditure was up slightly year on year at €90.5 million (Q1 – Q3 2014: €87.4 million). Whereas capitalised development costs in the LMH and STILL brand segments were a little lower, there was an increase in capital expenditure at the Group’s production and technology sites, the bulk of which was attributable to the LMH segment. The main activities in this regard were the modernisation of production facilities in Germany and Asia, the construction of a new factory in the Czech Republic and the ongoing optimisation of the IT infrastructure.

Analysis of liquidity

The KION Group’s net cash provided by operating activities totalled €341.9 million (Q1 – Q3 2014: €293.7 million). The higher contribution to earnings and 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 were partly offset by a stronger increase in working capital and in leased assets.

There was a substantial increase in net cash used for investing activities, which amounted to €302.6 million (Q1 – Q3 2014: €196.2 million). The primary reason for this rise was the outflow of cash for the acquisition of Egemin Automation in the third quarter. Cash payments, particularly for capital expenditure on development (R&D) and property, plant and equipment, totalled €90.5 million in the first nine months of 2015 (Q1 – Q3 2014: €87.4 million). Owing to the increase in demand for rental trucks, the KION Group also continued to expand its short-term rental fleet business (net) with a volume of spending of €145.9 million (Q1 – Q3 2014: €122.9 million). Cash payments for other assets, which came to a total of €15.0 million (Q1 – Q3 2014: €0.0 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 €39.4 million (Q1 – Q3 2014: €97.5 million). Excluding acquisitions, there would have been a year-on-year increase in free cash flow.

Cash flow from financing activities amounted to minus €36.7 million in the reporting period (Q1 – Q3 2014: minus €187.8 million). The distribution of a dividend of €0.55 per share resulted in an outflow of funds of €54.3 million (Q1 – Q3 2014: €34.5 million). The acquisition of treasury shares caused a cash outflow of €1.0 million in the period under review (Q1 – Q3 2014: €1.5 million). The financial debt taken up during the first nine months of this year, which came to €752.3 million and was mainly used for the funding of acquisitions and the ongoing funding of working capital, was partly offset by repayments totalling €686.8 million. Net cash of €48.1 million was used for regular interest payments (Q1 – Q3 2014: €79.9 million). > TABLE 14