Mercedes 2013 Annual Report Download - page 90

94
Cash flows from financing activities  C.24 resulted in a
net cash inflow of €3.9 billion (2012: €11.5 billion). The decrease
mainly reflects the development of long-term borrowing (net).
The main factor was that repayments of existing long-term loans
increased while new borrowing was slightly higher than in the
previous year. An additional factor was that dividend payments
to non-controlling interests of subsidiaries decreased.
Including negative currency effects, cash and cash equivalents
of €11.1 billion as of December 31, 2013 were at the level
of the previous year. Total liquidity, which also includes market-
able debt securities, rose by €1.5 billion to €18.1 billion.
The parameter used by Daimler to measure the financing
capability of the Group’s industrial activities is the free cash
flow of the industrial business  C.25, which is derived
from the reported cash flows from operating and investing activ-
ities. The cash flows from the acquisition and sale of market-
able debt securities included in cash flows from investing activi-
ties are excluded, as those securities are allocated to liquidity
and changes in them are thus not a part of the free cash flow.
Other adjustments relate to additions to property, plant and
equipment that are allocated to the Group as their beneficial
owner due to the form of their underlying lease contracts.
Furthermore, effects from the financing of dealerships within
the Group are adjusted. In addition, the cash flows to be
shown under cash provided by financing activities in connection
with the acquisition or sale of interests in subsidiaries
without the loss of control are included in the calculation
of the free cash flow.
The free cash flow of the industrial business amounted to
€4.8 billion in 2013. The positive profit contributions of the auto-
motive divisions were offset by the increase in working capi-
tal, defined as the net change in inventories, trade receivables
and trade payables, with a total amount of €0.6 billion.
Furthermore, the free cash flow was influenced by the positive
net change of other operating assets and liabilities which
were connected with the expansion of business and partially
related to invoicing. Positive effects resulted from the sale
of trade receivables of companies by the industrial business
to Daimler Financial Services. The free cash flow of the indus-
trial business was also positively influenced by the cash inflow
from the sale of the remaining EADS shares. There were
negative effects from high investments in property, plant and
equipment and intangible assets, the acquisition for €0.6
billion of a 12% interest in BAIC Motor and the capital increase
at Beijing Benz Automotive Co., Ltd. (BBAC). In addition,
income tax and interest payments reduced the free cash flow
of the industrial business.
The net liquidity of the industrial business  C.26 is
calculated as the total amount as shown in the statement
of financial position of cash, cash equivalents and marketable
debt securities included in liquidity management, less
the currency-hedged nominal amounts of financing liabilities.
To the extent that the Group’s internal refinancing of the finan-
cial services business is provided by the companies of the
industrial business, this amount is deducted in the calculation
of the net debt of the industrial business.
Compared with December 31, 2012, the net liquidity
of the industrial business rose by €2.3 billion to €13.8 billion
The increase was mainly caused by the positive free cash
flow of the industrial business; there were opposing effects from
the dividend payment to the shareholders of Daimler AG
for the year 2012 (minus €2.3 billion) and the dividend payment
to minority shareholders of subsidiaries (minus €0.3 billion).
Net debt at Group level, which primarily results from refinancing
the leasing and sales financing business, increased compared
with December 31, 2012 by €0.6 billion to €59.6 billion.  C.27
C.25
Free cash flow of the industrial business
2013 2012 13/12
In millions of euros Change
Net cash provided by operating
activities
10,313
7,527 +2,786
Net cash used for investing
activities
-6,767
-8,166 +1,399
Changes in marketable debt
securities
1,548
2,699 -1,151
Other changes -252 -608 +356
Free cash flow of the
industrial business
4,842
1,452 +3,390
C.26
Net liquidity of the industrial business
Dec. 31,
2013
Dec. 31,
2012 13/12
In millions of euros Change
Cash and cash equivalents 9,845 9,887 -42
Marketable debt securities 5,303 3,841 +1,462
Liquidity 15,148 13,728 +1,420
Financing liabilities -1,324 -2,883 +1,559
Market valuation and currency
hedges for financing liabilities
10
663 -653
Financing liabilities (nominal) -1,314 -2,220 +906
Net liquidity 13,834 11,508 +2,326