Financial position

The KION Group’s financial position changed only marginally in comparison with the half-year report for 2017. The bridge loan taken out to fund the acquisition of Dematic (acquisition facilities agreement, AFA), which was greatly reduced in the first half of the year, still had a residual amount of €1,000.0 million (31 December 2016: €2,543.2 million). A further financing component is the promissory note issued in the first quarter of 2017 with a nominal value of €1,010.0 million. The fixed-term tranche drawn down under the senior facilities agreement (SFA), which was reduced by €80.0 million in the first half of the year, was unchanged at €270.0 million.

KION GROUP AG has issued guarantees to the banks for all of the payment obligations under the bridge loan and senior facilities agreement; it is the borrower in respect of all the payment obligations resulting from the promissory note. All covenants were again complied with as at 30 September 2017.

Analysis of capital structure

Current and non-current liabilities had fallen to €8,188.1 million as at 30 September 2017 (31 December 2016: €8,801.3 million).

The financial liabilities recognised under liabilities declined to €2,512.3 million as a result of the capital increase carried out in May 2017 (31 December 2016: €3,183.0 million). After deduction of cash and cash equivalents, net financial debt amounted to €2,324.4 million (31 December 2016: €2,903.4 million). This equated to 2.0 times the adjusted EBITDA on an annualised basis.

Non-current financial liabilities net of borrowing costs were virtually unchanged on the position as at 30 June 2017 at €2,271.1 million. The unused, unrestricted SFA loan facility stood at €965.0 million as at 30 September 2017. > TABLE 11

Due to the slightly higher discount rate, the retirement benefit obligation under defined benefit pension plans fell to €959.7 million (31 December 2016: €991.0 million).

Lease liabilities arising from sale and leaseback transactions to fund the long-term leasing business with end customers increased to €1,060.0 million (31 December 2016: €1,007.2 million). Of this amount, €742.9 million related to non-current and €317.2 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 30 September 2017, other financial liabilities included liabilities of €451.9 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 €17.4 million (31 December 2016: €16.7 million).

Consolidated equity stood at €3,019.4 million as at 30 September 2017 (31 December 2016: €2,495.7 million). The capital increase in the second quarter resulted in a rise of €599.9 million, whereas currency translation effects (minus €271.9 million) had an adverse impact on equity during the period under review. The equity ratio increased from 22.1 per cent at the end of 2016 to 26.9 per cent as at 30 September 2017. > 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 €144.0 million in the first nine months of the year, compared with €100.9 million in the first nine months of 2016. Once again, the main areas of spending in the Industrial Trucks & Services segment 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, to software, licences and the new production facility in the Czech Republic.

Analysis of liquidity

Cash and cash equivalents decreased from €279.6 million as at 31 December 2016 to €187.9 million as at 30 September 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 third quarter amounted to €1,150.4 million (31 December 2016: €1,200.8 million).

The KION Group’s net cash provided by operating activities totalled €271.4 million, which exceeded the prior-year figure of €184.2 million due to a further rise in earnings and margins. While the growth in earnings made a positive contribution, there was a negative impact from the significant increase in net working capital.

The net cash used for investing activities amounted to €151.5 million in the first nine months of 2017 (Q1 – Q3 2016: €119.0 million). Cash payments for capital expenditure on development (R&D) and for property, plant and equipment amounted to €144.0 million (Q1 – Q3 2016: €100.9 million) and during the reporting period also included capital expenditure by Dematic. In the prior-year period, the €27.4 million in cash used for acquisitions was mainly attributable to Retrotech.

Free cash flow – the sum of cash flow from operating activities and investing activities – amounted to €119.9 million (Q1 – Q3 2016: €65.2 million).

The net cash used for financing activities amounted to €200.1 million (Q1 – Q3 2016: net cash provided by financing activities of €63.9 million). In addition to the dividend payment of €86.9 million, gross financial debt of €2,734.4 million was repaid. This gross repayment amount included the repayment of the bridge loan as well as the refinancing measures that were carried out. Of the gross additional financial debt of €2,058.2 million, €1,010.0 million was attributable to the issuance in the first quarter of 2017 of the promissory note. The capital increase in May generated a further net inflow of €598.6 million.

Thanks to the optimised financing structure and the aforementioned corporate actions, regular interest payments rose only moderately – despite the overall increase in net debt in comparison with 30 September 2016 – to €39.1 million (Q1 – Q3 2016: €29.6 million excluding the early redemption charge paid of €15.2 million). > TABLE 12