Financial position

The principles and objectives applicable to financial management as at 30 September 2016 were the same as those described in the 2015 group management report. The KION Group pursues a conservative financial policy of maintaining a strong cross-over credit profile with reliable access to debt capital markets.

To partly fund the acquisition of Dematic, the KION Group increased its share capital by 10.0 per cent against cash contributions. Including the share premium, the gross issue proceeds came to €459.3 million. The costs relating to the capital increase of €2.7 million were recognised in equity after subtraction of a tax benefit of €0.8 million. An agreement was reached for a firmly committed bridge loan of originally €3.0 billion as funding for the acquisition of Dematic. The agreed funding volume was reduced by the amount of the proceeds from the issue of shares and now stands at just over €2.5 billion.

In the first quarter of 2016, the KION Group had successfully ended the financing dating back to the time before the IPO and updated its financing structure with much better terms. The current senior facilities agreement comprises a revolving credit facility of €1,150.0 million (maturing in February 2021) and a fixed-term tranche of €350.0 million (maturing in February 2019). KION GROUP AG has issued guarantees to the banks for all of the payment obligations under the new senior facilities agreement and for compliance with the related covenants. All covenants were complied with as at 30 September 2016.

Analysis of capital structure

The total financial debt recognised came to €427.7 million as at 30 September 2016, which was considerably below the figure at the end of 2015 of €676.5 million. The proceeds from the capital increase have temporarily been used to repay current financial liabilities under the revolving credit facility until they can be put towards the funding of the Dematic acquisition in the fourth quarter. The bridge loan had still not been drawn down as at 30 September 2016.

After deduction of cash and cash equivalents of €230.2 million, net financial debt amounted to just €197.5 million, compared with €573.5 million at the end of last year. Net financial leverage as at 30 September 2016 had therefore fallen to 0.2 times adjusted EBITDA for the past twelve months. > TABLE 12

Net financial debt

 

 

12

in € million

30/09/2016

31/12/2015

Change

Corporate bond (2013/2020) – fixed rate (gross)

450.0

–100.0%

Liabilities to banks (gross)

422.5

225.9

87.0%

Liabilities to non-banks (gross)

6.4

6.2

2.6%

./. Capitalised borrowing costs

–1.1

–5.5

79.4%

Financial debt

427.7

676.5

–36.8%

./. Cash and cash equivalents

–230.2

–103.1

<–100%

Net financial debt

197.5

573.5

–65.6%

Pension provisions increased from €798.0 million as at 31 December 2015 to €1,053.2 million as at 30 September 2016 due to a lower level of interest rates. The lease liabilities resulting from sale and leaseback transactions used to fund long-term leases with end customers rose to €945.6 million (31 December 2015: €855.6 million) on the back of the expansion of financial services activities. Of this total, €680.6 million related to non-current lease liabilities and €265.0 million to current lease liabilities. Other financial liabilities also included liabilities of €419.8 million from sale and leaseback transactions used to finance the short-term rental fleet (31 December 2015: €403.2 million).

Equity was higher than at the end of 2015, advancing by €305.3 million to €2,154.0 million as at 30 September 2016 (31 December 2015: €1,848.7 million). This rise was predominantly attributable to the capital increase implemented in July 2016 (€457.4 million). However, the continuing low level of interest rates resulted in a €175.1 million reduction in equity in connection with pensions. Overall, items recognised directly in equity and the dividend payment decreased equity by a total of €316.6 million, which was partially offset by the good level of net income of €164.4 million. The equity ratio was 31.1 per cent (31 December 2015: 28.7 per cent). > TABLE 13

(Condensed) statement of financial position – equity and liabilities

13

in € million

30/09/2016

in %

31/12/2015

in %

Change

Equity

2,154.0

31.1%

1,848.7

28.7%

16.5%

 

 

 

 

 

 

Non-current liabilities

3,006.8

43.5%

2,860.0

44.4%

5.1%

thereof:

 

 

 

 

 

Retirement benefit obligation

1,053.2

15.2%

798.0

12.4%

32.0%

Financial liabilities

379.3

5.5%

557.2

8.7%

–31.9%

Deferred tax liabilities

292.0

4.2%

302.7

4.7%

–3.5%

Lease liabilities

680.6

9.8%

617.7

9.6%

10.2%

 

 

 

 

 

 

Current liabilities

1,756.5

25.4%

1,731.5

26.9%

1.4%

thereof:

 

 

 

 

 

Financial liabilities

48.4

0.7%

119.3

1.9%

–59.4%

Trade payables

615.4

8.9%

574.6

8.9%

7.1%

Lease liabilities

265.0

3.8%

237.9

3.7%

11.4%

 

 

 

 

 

 

Total equity and liabilities

6,917.2

 

6,440.2

 

7.4%

Analysis of capital expenditure

Analysis of liquidity