Financial position

In the first quarter of 2017, the KION Group used the promissory note to partly refinance the bridge loan of €2,543.2 million that it had taken out to finance the Dematic acquisition (acquisition facilities agreement, AFA). Tranche A2 of the AFA of €343.2 million, which was due to mature in February 2018, was repaid in full, while tranche B of the AFA of €1,200.0 million, due to mature in November 2018, has now been reduced to a residual amount of €536.2 million. The third tranche of the bridge loan, which has a volume of €1,000.0 million, is still due to mature in November 2021.

The promissory note, which was issued with a nominal value totalling €1,010.0 million up to 31 March 2017, are divided into several tranches maturing in May 2022, April 2024 and April 2027 and have floating-rate or fixed coupons. In the first quarter of 2017, the KION Group entered into a number of interest-rate derivatives in order to hedge the interest-rate risk resulting from the floating-rate tranches (cash flow hedge). The bridge loan, which originally had an agreed financing volume of €3,000.0 million, had already been reduced as a result of a capital increase in July 2016 that generated gross proceeds of around €459.3 million.

KION GROUP AG has issued guarantees to the banks for all of the payment obligations under the senior facilities agreement (SFA) and the AFA; it is the borrower in respect of all the payment obligations resulting from the promissory note. All covenants were complied with as at the end of the quarter.

Analysis of capital structure

Overall, current and non-current liabilities had risen to €8,993.2 million as at 31 March 2017 (31 December 2016: €8,824.2 million).

The financial liabilities recognised in the statement of financial position under liabilities rose slightly to reach €3,193.9 million (31 December 2016: €3,183.0 million). After deduction of cash and cash equivalents, net financial debt amounted to €2,857.1 million compared with €2,903.4 million at the end of 2016. This equated to 2.8 times the adjusted EBITDA on an annualised basis.

Long-term borrowing net of borrowing costs was virtually unchanged on the end of last year at €2,890.0 million (31 December 2016: €2,889.1 million). This includes the promissory note issued with a volume of €1,010.0 million in the first quarter of 2017. As at 31 March 2017, the residual amount owed under the bridge loan (AFA) was €1,536.2 million, while €350.0 million of the senior facilities agreement was drawn down on a long-term basis. The unused, unrestricted SFA loan facility stood at €892.3 million as at 31 March 2017. > TABLE 11

The retirement benefit obligation under defined benefit pension plans had fallen only slightly to a total of €987.3 million end of March 2017 (31 December 2016: €991.0 million) because the discount rates had barely changed.

Lease liabilities arising from sale and leaseback transactions to fund the long-term leasing business with end customers amounted to €1,014.1 million (31 December 2016: €1,007.2 million). Of this total, €722.7 million related to non-current and €291.4 million to current lease liabilities.

The liabilities from the short-term rental fleet and from procurement leases are reported under other financial liabilities. As at 31 March 2017, other financial liabilities included liabilities of €434.3 million (31 December 2016: €440.0 million) arising from sale-and-leaseback transactions used to finance the short-term rental fleet. The other financial liabilities also included liabilities from residual value guarantees amounting to €16.6 million (31 December 2016: €16.7 million).

At €2,560.0 million, consolidated equity was close to the equivalent figure at the end of last year (31 December 2016: €2,535.1 million). Net income was partly offset by a very slight other comprehensive loss. The equity ratio was 22.2 percent as at 31 March 2017 (31 December 2016: 22.3 percent). > TABLE 10


Analysis of capital expenditure

The KION Group’s total capital expenditure on property, plant and equipment and on intangible assets (excluding leased and rental assets) came to €42.7 million in the first quarter, compared with €27.8 million in the first three months of 2016. Once again, the main areas of spending in the Industrial Trucks & Services segment, which came to €28.8 million, were capitalised development costs in the LMH EMEA and STILL EMEA operating units and the expansion and modernisation of production and technology sites. Capital expenditure in the Supply Chain Solutions segment related to capitalised development costs and, above all, software and licences.

Analysis of liquidity

Cash and cash equivalents increased from €279.6 million at the end of 2016 to €336.8 million as at 31 March 2017. Taking into account the credit facility that was still freely available, the unrestricted cash and cash equivalents available to the KION Group at the end of the quarter amounted to €1,226.2 million (31 December 2016: €1,200.8 million).

The KION Group’s net cash provided by operating activities totalled €106.1 million, which was above the comparable prior-year figure of €32.8 million. Overall, both EBIT and the change in net working capital, which at €11.1 million was relatively stable compared with the end of 2016 (31 March 2016: minus €92.4 million), contributed to the net cash provided.

The net cash used for investing activities totalled €41.6 million in the first quarter (Q1 2016: €53.2 million). Cash payments for development (R&D) and for property, plant and equipment amounted to €42.7 million (Q1 2016: €27.8 million) and now also include capital expenditure by the Dematic Group.

Free cash flow – the sum of cash flow from operating activities and investing activities – amounted to €64.5 million (Q1 2016: minus €20.4 million).

Cash flow from financing activities amounted to minus €6.5 million (Q1 2016: plus €15.2 million). The financial debt of €1,297.6 million taken up was largely attributable to the issuance of the promissory note in an amount of €1,010.0 million. This amount was more than offset by repayments totalling €1,285.3 million, mainly of the bridge loan (AFA).

Overall, there was a year-on-year reduction in interest payments in the first quarter as a result of the optimised financing structure (including the financing for the Dematic acquisition). The net cash used for current interest payments totalled €16.0 million (Q1 2016: €19.9 million excluding the early redemption charge paid). > TABLE 12