[41] Segment report

The segment structure in the KION Group was modified with effect from 1 December 2016. The strategic profile of the KION Group has undergone a fundamental change as a consequence of the acquisition of Dematic. The Executive Board, as the chief operating decision-maker (CODM), has managed the KION Group since December 2016 on the basis of the following segments: Industrial Trucks & Services, Supply Chain Solutions and Corporate Services. Segment reporting therefore takes into account the new organisational and strategic focus of the KION Group. As a result of the change in segment structure, the brands and financing activities previously reported under the Linde Material Handling (LMH), STILL and Financial Services (FS) segments have now been transferred to the new Industrial Trucks & Services segment. Henceforward, the Supply Chain Solutions segment will encompass not only Dematic but also the activities of Egemin and Retrotech, which were previously reported under the Other segment. This segment will therefore bring together the activities related to planning, implementing and optimising supply chains. The segment disclosures for the prior period have been restated using the new segment structure.

Description of the segments

Industrial Trucks & Services

So that it can fully cater to the needs of material handling customers worldwide, the business model of the Industrial Trucks & Services segment covers key steps of the value chain: product development, manufacturing, sales and logistics, spare parts business, truck rental and used trucks, fleet management and financial services that support the core industrial truck business. The segment operates a multi-brand strategy involving the three international brands Linde, STILL and Baoli plus the national brands Fenwick, OM STILL and Voltas.

Supply Chain Solutions

The Supply Chain Solutions segment, with its Dematic operating unit, is a strategic partner to customers in a variety of industries, supplying them with integrated technology and software solutions with which to optimise their supply chains. Manual and automated solutions are provided for all functions along customers’ supply chains, from goods inward and multishuttle warehouse systems to picking and value-added packing. Through its Dematic, Egemin Automation and Retrotech brand companies, this segment is primarily involved in customer-specific, longer-term project business. With global resources, ten production facilities worldwide and regional teams of experts, Dematic is able to plan and deliver logistics solutions with varying degrees of complexity anywhere in the world.

Corporate Services

The Corporate Services segment comprises the other activities of the holding and service companies in the KION Group. The service companies provide services for all segments in the KION Group. The bulk of the total revenue in this segment is generated by internal IT and logistics services.

Segment management

The KPIs used to manage the segments are order intake, revenue and adjusted EBIT. Segment reporting therefore includes a reconciliation of externally reported consolidated earnings before interest and tax (EBIT) – including effects from purchase price allocations and non-recurring items – to the adjusted EBIT for the segments (‘adjusted EBIT’). Intra-group transactions are generally conducted on an arm’s-length basis. Segment reports are prepared in accordance with the same accounting policies as the consolidated financial statements, as described in note [7].

> TABLES 117 – 118 show information on the KION Group’s operating segments for 2016 and 2015.

External revenue by region is presented in > TABLE 119.

Revenue in Germany came to €1,321.1 million in 2016 (2015: €1,276.3 million). There are no relationships with individual customers that generate revenue deemed to be significant as a proportion of total consolidated revenue.

Financial income and expenses including all interest income and expenses are described in notes [12] and [13].

The non-recurring items mainly comprised consultancy costs – in particular, costs relating to the acquisition of Dematic – as well as costs incurred in connection with severance payments. They totalled €42.2 million in 2016 (2015: €33.0 million).

The effects from purchase price allocations comprised net write-downs and other expenses in relation to the hidden reserves and charges identified as part of the acquisition processes.

Capital expenditure includes additions to intangible assets and property, plant and equipment. Leased assets are described in note [18]. > TABLE 120

Capital expenditure in Germany came to €100.9 million in 2016 (2015: €88.2 million).

Depreciation / amortisation relates to intangible assets with finite useful lives and property, plant and equipment.

The regional breakdown of non-current assets excluding financial assets, financial instruments, deferred tax assets and post-employment benefits is shown in > TABLE 121.

Non-current assets attributable to Germany amounted to €2,537.2 million as at 31 December 2016 (31 December 2015: €2,606.0 million).