Mercedes 2015 Annual Report Download - page 86

Cash provided by financing activities  B.24 amounted
to €9.6 billion (2014: €2.3 billion). The change resulted almost
solely from the renewed increase in financing liabilities.
There were opposing effects from increased dividend payments
to the shareholders of Daimler AG and to minority share-
holders of subsidiaries.
Cash and cash equivalents increased by €0.3 billion compared
with December 31, 2014, after taking currency translation
effects into account. Total liquidity, which also includes market-
able debt securities, increased by €1.9 billion to €18.2 billion.
The parameter used by Daimler to measure the financial
capability of the Group’s industrial business is the free cash
flow of the industrial business  B.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 deducted, 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, adjustments are made for the effects of financing
dealerships within the Group. In addition, the calculation of
the free cash flow includes those cash flows to be shown under
cash from financing activities in connection with the acquisi-
tion or sale of interests in subsidiaries without loss of control.
The free cash flow of the industrial business amounted to
€4.0 billion in 2015. The cash outflow of €1.2 billion for the
extraordinary payments in the context of pension and health
care benefits in Germany and the United States reduced
the free cash flow of the industrial business. Furthermore, the
acquisition of shares in the digital mapping business HERE
had an influence of €0.7 billion. Adjusted for these special effects,
the free cash flow of the industrial business amounted to
€5.9 billion (2014: €5.2 billion).
At the beginning of 2015, we expected a free cash flow in
a significantly higher amount than the dividend payment
of €2.6 billion, but significantly lower than in the previous year
as a result of the intensified level of investments. Due to the
positive business development in the course of the year 2015,
we successively increased our free cash flow forecast during
the reporting period. With consideration of the acquisition of
HERE and the extraordinary contribution to pension plan
assets in the fourth quarter, the free cash flow in the reporting
period was lower than in the previous year. Adjusted for
these material special items, the free cash flow of the industrial
business amounted to €5.9 billion and significantly exceeded
the amount of €5.2 billion in the previous year.
The increase of €0.7 billion to €5.9 billion in the free cash
flow adjusted for special effects reflects the positive business
development, and was primarily the result of higher profit
contributions from the automotive divisions. Opposing effects
resulted from the higher increase in working capital, defined
as the net change in inventories, trade receivables and trade pay-
ables. In addition to the higher capital increases carried out
at our financial investments, the free cash flow of the industrial
business was especially reduced by higher investments in
intangible assets and property, plant and equipment. Higher
tax payments were another factor.
B.25
Free cash flow of the industrial business
2015 2014 15/14
In millions of euros Change
Cash provided by
operating activities
11,735
7,539 +4,196
Cash used for
investing activities
-9,936
-2,887 -7,049
Change in marketable
debt securities
1,897
-195 +2,092
Other adjustments1264 1,022 -758
Free cash flow of the
industrial business
3,960
5,479 -1,519
1 The effects from the financing of the Group’s own dealerships, which
are reflected in cash provided by operating activities, are eliminated
under other adjustments.
B | COMBINED MANAGEMENT REPORT | LIQUIDITY AND CAPITAL RESOURCES 93