Free cash flow before financing – cash flow from operating activities minus cash flow from investing activities – came to EUR 43.4 million in the period under review (2007/2008: EUR 125.9 million). The year-on-year picture is as follows:

Cash flow from operating activities decreased compared with the previous year by EUR 85.4 million to EUR 61.8 million in the period under review. This mainly reflected lower net income after tax, one-off payments relating to the replacement of the collective restructuring agreement and the first payments connected with restructuring expenditure. These factors were partly offset by an improvement in net working capital. Group interest received net of interest paid dropped from EUR –4.7 million in the previous year to EUR –1.8 million. This was mainly due to lower interest payments reflecting the reduced interest rates on Demag Cranes AG’s master loan agreement.

Cash flow from investing activities changed compared with the prior year from an outflow of EUR –21.3 million to an outflow of EUR –18.3 million. Two main factors are involved here: purchases of intangible assets and property, plant and equipment decreased by EUR 6.6 million from EUR 25.4 million to EUR 18.8 million in the period under review. In the opposite direction, proceeds from asset disposals were EUR 3.7 million down in the period under review compared with the previous period.

The decrease in purchases of intangible assets and property, plant and equipment was primarily an outcome of reduced investing activity due to the financial and economic crisis. Capital expenditure of EUR 18.8 million also includes EUR 5.0 million paid out in financial year 2008/2009 as a result of delays on the delivery of certain machinery ordered in financial year 2007/2008.

Major capital expenditure projects in the Industrial Cranes segment in financial year 2008/2009 include spending to upgrade the Company’s existing SAP enterprise resource planning (ERP) software plus expenditure to expand and streamline production. The latter comprises an improvement project in mechanical production started in the previous year, refurbishment work in KBK crane construction kit manufacturing, and investment expenditure in the field of motor manufacturing. Further capital spending related to building refurbishment.

Capital expenditure in the Port Technology segment was significantly down on the previous year as a result of the economic trend. Work on stripping out and refurbishment of an office building begun in previous years therefore continued to a reduced extent. Infrastructure at the Düsseldorf location was improved in line with production needs and statutory requirements pertaining to fire prevention. Additional investment spending in IT was effected to reduce the risk of data loss. EUR 0.6 million in development costs were capitalised for a new model range in financial year 2008/2009.

The Services segment is primarily apportioned a share of cross-segmental capital expenditure, for example, on IT (notably SAP).

Corporate liquidity management is principally the responsibility of the Demag Cranes Group treasury. The goal is to secure Group liquidity through central funds procurement and active management of currency and interest rate risks.

Net debt decreased relative to 30 September 2008 by EUR 12.1 million to EUR 6.3 million at 30 September 2009. The main factor here was a EUR 13.7 million increase in cash and cash equivalents to EUR 103.7 million.

Demag Cranes AG meets its funding needs from operating cash flow and a revolving syndicated credit facility for a total of EUR 325.0 million (including an ancillary facility of EUR 105.0 million). The facility runs to 27 June 2011. To partially limit interest rate risks, the Group took out an interest rate hedge on 27 September 2006.

The revolving credit facility was drawn upon as follows as at 30 September 2009:

• EUR 105.0 million on the revolving credit facility itself (due December 2009), the same amount as was drawn on the facility as at the 30 September 2008 reporting date.

• EUR 63.6 million on the ancillary credit line for guarantees (30 September 2008: EUR 67.9 million).

The credit facility is subject to certain covenants with regard to additional borrowing, purchases and disposals of assets as well as the provision of collateral. There are also financial covenants to be observed during the lifetime of the credit facility. These include stipulated ratios for consolidated net debt² to consolidated operating EBITDA³ (less than 2.75) and consolidated operating EBITDA³ to consolidated net interest payable (greater than 4.0).

The covenants were met in all respects as at 30 September 2009.

If the financial covenants are not met and their breach is not remedied within a certain period or the lenders do not waive the covenants, there may be grounds for termination under the conditions of the credit facility. Among other things, the lenders would then be entitled to call due all amounts owed with immediate effect. There are also certain other contractually agreed circumstances whose occurrence can lead to termination with all outstanding amounts becoming due for repayment with immediate effect. A further right of termination exists in certain instances where a third party acquires a controlling or majority shareholding.

Besides loans and borrowings, Demag Cranes AG requires guarantee facilities allowing bid, downpayment, performance and warranty bonds/guarantees to be issued on its behalf. Bank guarantees can be drawn both under ancillary lines within the syndicated credit facility and under bilateral guarantee facilities. The central aim of this financing portfolio is to secure suitable lines of credit for us to field the liquidity needed for industry-specific seasonal fluctuations and the ongoing development of our business.

Our financing is supplemented with off-balance-sheet operating leases, for example, for IT hardware and for the vehicle fleet in the services segment at German Group companies.

The Demag Cranes Group normally borrows centrally. Local borrowing is only taken out in individual instances if Group borrowing is unfavourable due to the legal environment. Credit facilities may also be made directly available to subsidiaries as needed under the master loan agreement. Demag Cranes AG must expressly approve such facilities. A central cash pooling arrangement allows cash surpluses at subsidiaries to be deployed cost-effectively in the Group.

Financial risks are explained in the Risk Report and in the Notes to the Financial Statements.