Non-current assets
The change in goodwill in the first nine months of 2013 mainly resulted from the acquisition of STILL Arser, from which goodwill of € 4.9 million arose, and from countervailing currency effects. This was allocated to the STILL segment.
Impairment losses of €1.2 million were recognised on capitalised development costs in the first nine months of 2013 to reflect the lack of opportunities to use them in future as a result of the planned closure of a production site. The goodwill mentioned above relates to further impairment losses in connection with the closure of the heavy truck plant in Merthyr Tydfil (Linde Material Handling segment).
Land and buildings in the amount of € 18.3 million (31 December 2012: € 4.2 million) were largely pledged as collateral for accrued retirement benefits under partial retirement agreements.
Equity
As at 30 September 2013, the Company’s share capital amounted to € 98.9 million and was fully paid up. It was divided into 98,900,000 no-par-value shares, each with a value of € 1. The total number of shares outstanding as at 30 September 2013 was 98.7 million no-par-value shares. At the reporting date, KION GROUP AG held 0.2 million treasury shares. There were changes to the share capital in the first nine months of the year for the following reasons:
In December 2012, the Shareholders’ Meeting of KION Holding 1 GmbH had approved a resolution to increase the share capital by € 0.8 million to € 1.3 million. The capital increase was not entered in the commercial register until 14 January 2013. In addition, free capital reserves went up by € 1,131.8 million.
The Shareholders’ Meeting on 25 April 2013 approved not only the change in legal form but also a resolution to increase the share capital by € 62.7 million to € 64.0 million from company funds. KION GROUP AG’s transformation and capital increase were entered in the commercial register on 4 June 2013.
On 11 June 2013, the Shareholders’ Meeting of KION GROUP AG resolved to increase the share capital by € 4.0 million to € 68.0 million by way of a share issue. The new shares were issued in return for a non-cash capital contribution from Superlift Holding S.à r.l., Luxembourg (referred to below as Superlift Holding). The non-cash capital contribution from Superlift Holding took the form of all shares in Superlift Funding S.à r.l., Luxembourg (referred to below as Superlift Funding), and all rights and duties of Superlift Holding arising out of the agreement between Superlift Holding and Superlift Funding dated 30 September 2009 for a loan of € 100.0 million (plus accrued interest of € 17.0 million). The portion of the non-cash capital contribution that exceeded the capital increase (€ 114.0 million) was paid into the capital reserves. The aforementioned capital increase was entered in the commercial register on 19 June 2013.
In addition, the Shareholders’ Meeting on 13 June 2013 approved a further resolution to increase the share capital by € 13.7 million to € 81.7 million by way of a share issue. Weichai Power (Luxembourg) Holding S.à r.l., Luxembourg, subscribed these shares. The capital increase was entered in the commercial register on 27 June 2013, as a result of which the share capital grew by € 13.7 million and free capital reserves went up by € 314.7 million.
The share capital also increased due to the issue of shares to investors as part of the IPO. To this end, the Shareholders’ Meeting of KION GROUP AG on 13 June 2013 resolved to increase the share capital of KION GROUP AG by a further € 17.2 million to a total of € 98.9 million by issuing new shares. An amount of € 396.2 million was paid into the capital reserves.
Total transaction costs of € 29.9 million were incurred in connection with the capital increases; € 21.3 million of this total was directly attributable and was deducted directly from the capital reserves after subtraction of a tax benefit of € 6.2 million.
Following the successful IPO, the KION Group began preparations for an employee share programme to enable staff members, initially those in Germany, to derive greater benefit from the success of the Company. As authorised by the Shareholders’ Meeting on 13 June 2013, treasury shares were repurchased via the stock exchange for this purpose from 28 August 2013 onwards. By 26 September 2013, a total of 0.2 million treasury shares had been repurchased at an average price of € 27.89. The total cost was € 5.6 million.
Retirement benefit obligation
The retirement benefit obligation was lower than it had been at the end of 2012 owing, above all, to actuarial gains resulting largely from higher discount rates. The estimated present value of the defined benefit obligation was calculated on the basis of the following discount rates.
|
Discount rate |
>>TABLE 25 | |
|
|
30/09/2013 |
31/12/2012 |
|
|
|
|
|
Germany |
3.70 % |
3.50 % |
|
UK |
4.30 % |
4.35 % |
|
Other (weighted average) |
3.01 % |
2.57 % |
Other comprehensive income (loss)
The change in estimates about defined benefit pension entitlements resulted in an increase of € 18.3 million in equity as at 30 September 2013 (after deferred taxes).
Financial liabilities
Corporate bond
The KION Group issued a corporate bond for € 650.0 million through the consolidated subsidiary KION Finance S.A., Luxembourg, in February 2013. Of the bond’s total par value of € 650.0 million, € 450.0 million is repayable at a fixed interest rate of 6.75 per cent p.a., while € 200.0 million carries a floating interest rate based on three-month Euribor plus a margin of 4.5 percentage points. The payout amount for the variable portion was € 1.0 million below the par value (discount). The interest on the fixed-rate tranche is paid semi-annually, while interest on the floating-rate tranche is paid once a quarter. Excluding early repayment options, the contract stipulates repayment as a bullet payment on maturity in February 2020. Of the total proceeds of € 649.0 million, € 636.0 million was used to repay existing liabilities under the Senior Facilities Agreement (referred to below as SFA) and € 12.3 million relates to settlement of the transaction costs incurred for the issuance of the corporate bond. On repayment of the existing SFA liabilities of € 636.0 million, an amount of € 4.7 million representing the proportion of the related deferred borrowing costs was recognised as an expense.
On 2 July 2013, the KION Group received the outstanding proceeds from the IPO and the capital increase by Weichai Power. They totalled € 701.6 million after deduction of banking fees. On 5 July 2013, once all the proceeds from the IPO had been received, the KION Group used this cash, along with part of the new credit facility and existing cash reserves, to repay the long-term bank liabilities resulting from the KION Group’s acquisition finance arrangements (SFA) of € 1,078.1 million. In addition, the floating rate note, which was due to mature in 2018 and amounted to € 175.0 million, was paid back in full on 19 July 2013.
On repayment of the existing SFA liabilities and the floating rate note due in 2018, an amount of € 19.1 million representing the proportion of the related deferred borrowing costs was recognised as a financial expense. Of this total, € 15.8 million related to bank liabilities and € 3.3 million related to capital market liabilities.
In the third quarter of 2013, financial expenses of € 17.7 million arising from the unwinding of interest-rate hedges were also incurred, of which € 14.4 million impacted cash flow.
In connection with the IPO, the KION Group agreed a new revolving credit facility with a group of banks for € 995.0 million with a term to maturity of five years after the IPO. The directly attributable transaction costs of € 9.1 million have been expensed over the term of the credit facility. Combined with the lower margins, this credit facility offers more favourable credit terms in line with those typically available to comparable listed companies. The revolving credit facility and the corporate bond issued in February 2013 are secured in the same way as the SFA liabilities outstanding as at 31 December 2012 and the corporate bond issued in 2011.