Demag Cranes AG has applied the new International Financial Reporting Standard IFRS 8, Business Segments, since 1 October 2009. IFRS 8 is based on the management approach, under which segment reporting for financial reporting purposes reflects internal reporting. For internal control of Demag Cranes AG, the Management Board uses operating earnings before interest and tax (EBIT) adjusted to eliminate the effects of acquisitions, restructuring and severance payments. Segment earnings and the management adjustments are not defined in IFRS. They may differ from the definitions used by other companies; this limits the usefulness of intercompany comparisons.

The Demag Cranes Group consists of three reportable segments based on type of product and service: Industrial Cranes, Port Technology and Services. The Industrial Cranes segment integrates the development, production, sale, assembly and delivery of Industrial Cranes, including components and material handling solutions. Activities of the Port Technology segment consist of developing, manufacturing, selling, assembling, delivering and maintaining Mobile Harbour Cranes and automated container handling systems, including the provision of storage and integrated software solutions. The Services segment comprises Industrial Cranes field service activities such as inspection, maintenance, repairs and the refurbishment of used cranes, as well as the sale of spare parts. The Unallocated item relates to holding company costs.

The segment information provides in summary form the disclosures without management adjustments for each segment (revenue, earnings before interest and tax (EBIT), depreciation, amortisation and impairments, segment assets, and segment capital expenditure). The reported amounts represent the portion of (IFRS-basis) Group figures that can be directly attributed to segments or can be allocated to them on a reasonable basis. Disclosures on individual segments with management adjustments are prefixed “operating” (operating depreciation, amortisation and impairments; operating earnings before interest and tax (EBIT)).

The table below presents the control parameters used to measure segment performance.

The revenue shown mainly consists of revenue with outside customers. There was no material inter-segment revenue in financial year 2009/2010 or 2008/2009.

The adjustments to derive segment operating earnings mainly relate in financial year 2009/2010 to integration costs and purchase accounting depreciation and amortisation. Further operating adjustments comprise a EUR 8,130,000 decrease in restructuring provisions and, in the opposite direction, a EUR 7,508,000 eliminated one-off effect from the recognition of inventory write-downs. The operating adjustments in the previous year were made for severance packages, costs of interim employment companies, impairments of non-current assets, consulting costs and onerous contracts.

Material non-cash expenses other than depreciation, amortisation and impairments in the financial year amounted to EUR 9,151,000 (2008/2009: EUR 33,270,000). The non-cash expenses in the previous year related to restructuring. Restructuring costs in the financial year came to EUR 17,960,000.

Reconciliation to IFRS-basis Group EBIT:

The table below reconciles segment EBIT to Demag Cranes Group earnings before tax (EBT):

The interest and similar income and interest and similar expenses mainly relate to non-reportable segments.

The table below shows segment assets, segment liabilities and segment capital expenditure together with their reconciliation to the Group figures.

The segment assets and segment liabilities do not include any effects relating to financing or to current or deferred tax. The effects of pensions are only included to the extent they are directly attributable to segments.

Geographical Reporting

The table below provides supplementary information on the geographical distribution of revenue and non-current assets.

Revenue is allocated by region based on the destination country of goods sold.