Selected notes to the consolidated statement of financial position
Goodwill and other intangible assets
As a result of currency effects, goodwill rose by €17.4 million to €3,442.2 million in the first six months of 2019 (31 December 2018: €3,424.8 million).
The value of the brand names, at €944.0 million, and the total carrying amount for technology and development assets, at €689.5 million, were virtually unchanged (31 December 2018: €944.3 million and €689.7 million).
At €645.7 million, other intangible assets were €17.2 million below their carrying amount as at 31 December 2018 (€662.9 million). This was mainly the result of ongoing write-downs on the customer relationships acquired as part of the Dematic acquisition.
Other property, plant and equipment
Other property, plant and equipment, which totalled €1,090.1 million (31 December 2018: €1,077.8 million), included a figure of €391.2 million (31 December 2018: €390.7 million) for right-of-use assets related to procurement leases. Of this figure, €271.9 million (31 December 2018: €276.4 million) was attributable to land and buildings and €119.2 million (31 December 2018: €114.3 million) to plant & machinery and office furniture & equipment.
Inventories
Inventories increased compared with 31 December 2018, mainly in the Industrial Trucks & Services segment. Work in progress was up by 20.2 per cent to €159.0 million (31 December 2018: €132.3 million), while finished goods rose by 26.7 per cent to €697.5 million (31 December 2018: €550.6 million). Write-downs of €10.2 million were recognised on inventories in the second quarter of 2019 (Q2 2018: €4.3 million) and of €16.2 million in the first half of 2019 (H1 2018: €8.8 million). Reversals of write-downs had to be recognised in the amount of €3.1 million in the second quarter of 2019 (Q2 2018: €0.9 million) and in the amount of €4.8 million in the first half of 2019 (H1 2018: €2.6 million) because the reasons for the write-downs no longer applied.
Trade receivables
The rise in trade receivables compared with 31 December 2018 was predominantly due to the €78.5 million increase in receivables due from third parties to €1,084.0 million (31 December 2018: €1,005.5 million). Receivables due from non-consolidated subsidiaries, equity-accounted investments and other equity investments fell from €53.2 million as at 31 December 2018 to €47.1 million, a decrease of €6.1 million. Valuation allowances of €42.6 million (31 December 2018: €37.8 million) were recognised for trade receivables.
Equity
As at 30 June 2019, the Company’s share capital amounted to €118.1 million, which was unchanged on 31 December 2018 and was fully paid up. It was divided into 118.1 million no-par-value shares.
The total number of shares outstanding as at 30 June 2019 was 117,938,116 no-par-value shares (31 December 2018: 117,924,442 no-par-value shares). At the reporting date, KION GROUP AG held 151,884 treasury shares (31 December 2018: 165,558). In February 2019, a further 13,674 no-par-value shares were issued for employees’ own investments under KEEP 2018.
The distribution of a dividend of €1.20 per share (H1 2018: €0.99 per share) to the shareholders of KION GROUP AG resulted in an outflow of funds of €141.5 million (H1 2018: €116.8 million).
Retirement benefit obligation
For the purposes of the interim report, a qualified estimate of the defined benefit obligation was made based on the change in actuarial parameters in the period under review.
The retirement benefit obligation was higher than it had been at the end of 2018 owing to actuarial losses that primarily resulted from a lower discount rate in the eurozone. The present value of the defined benefit obligation was calculated on the basis of the discount rates shown in > TABLE 26.
Discount rate |
26 |
|
|
30/06/2019 |
31/12/2018 |
Germany |
1.30% |
1.90% |
UK |
2.15% |
2.65% |
USA |
3.55% |
4.25% |
Other (weighted average) |
0.88% |
1.43% |
The change in estimates in relation to defined benefit pension entitlements resulted in a decrease of €104.4 million in equity as at 30 June 2019 (after deferred taxes). Overall, the net obligation under defined benefit pension plans rose to €1,178.4 million (31 December 2018: €1,009.7 million). This consisted of €1,214.3 million recognised under the retirement benefit obligation (31 December 2018: €1,043.0 million) less an amount of €35.9 million (31 December 2018: €33.3 million) recognised under other non-current assets.
In connection with the periodic valuation of the pension plans for the employees of the KION Group’s UK companies, the companies and the respective trustees of the pension funds agreed on a valuation in March 2019 that will ensure payments are made to the beneficiaries of the plans in accordance with the relevant requirements. On the basis of this current valuation, the KION Group will not have to make any top-up payments to the plan assets.
In addition, KION GROUP AG has given default guarantees to the trustees of four pension plans, under which, if any of the companies concerned default, KION GROUP AG will assume all obligations of these companies up to a maximum guaranteed amount. As at 30 June 2019, the guaranteed amount totalled €101.5 million.
Financial liabilities
The financial liabilities reported as at 30 June 2019 essentially comprised liabilities to banks of €983.6 million (31 December 2018: €826.4 million) and promissory notes amounting to €1,320.8 million (31 December 2018: €1,214.3 million).
During the reporting period, the KION Group reduced the floating-rate long-term tranche due to mature in October 2021 that was drawn down under the AFA by a further €200.0 million to €400.0 million (31 December 2018: €600.0 million). There were also current liabilities to banks of €580.3 million as at 30 June 2019 (31 December 2018: €221.9 million). Drawdowns from the revolving credit facility accounted for €230.1 million of this amount (31 December 2018: €101.8 million). A further €350.2 million had been drawn down from existing German and international credit facilities (31 December 2018: €120.1 million).
The early repayment of the long-term tranche drawn down under the AFA was partly financed by the issuance of a promissory note in April 2019. This has a nominal amount of €120.5 million and matures in April 2026. In connection with this corporate action, €20.5 million of the promissory note issued in 2018 was repaid ahead of schedule, leaving a remaining balance of €179.5 million as at the reporting date. The existing hedge relation (fair value hedge to hedge the risk of a change in the fair value of the fixed-rate tranche) was adjusted by a partial settlement of the interest-rate swap in an equivalent amount of €20.5 million.
The KION Group continued to comply with all covenants as at the end of the half-year period.
Liabilities from financial services
Liabilities from financial services, which totalled €1,973.8 million (31 December 2018: €1,472.4 million), comprised a sum of €1,602.6 million related to the financing of the long-term leasing business and to residual value obligations arising from the indirect leasing business (31 December 2018: €1,165.3 million) and a sum of €371.2 million related to the financing of industrial trucks for the short-term rental fleet (31 December 2018: €307.1 million).
Liabilities from financial services arising from the leasing business encompass liabilities from financing by means of sale and leaseback sub-lease transactions with leasing companies in an amount of €569.7 million (31 December 2018: €440.2 million). They also include residual value obligations of €309.6 million (31 December 2018: €319.5 million) resulting from the indirect leasing business.
Furthermore, liabilities from financial services include liabilities from lease facilities in an amount of €359.3 million (31 December 2018: €307.3 million) and liabilities from the issuance of notes (securitisation) through K-Lift S.A., Luxembourg, in an amount of €302.3 million (31 December 2018: €98.3 million).
Lease liabilities
Whereas lease liabilities stood at €561.4 million (31 December 2018: €740.6 million), lease receivables arising from sale and leaseback sub-lease transactions concluded up to 31 December 2017 amounted to €393.3 million (31 December 2018: €514.3 million) and leased assets under sale and leaseback sub-lease transactions totalled €208.1 million (31 December 2018: €268.6 million).
Contract balances
Contract assets increased by €35.1 million to €154.4 million as at 30 June 2019 (31 December 2018: €119.3 million). They mainly relate to goods and services in connection with the project business that were provided by the KION Group before the payment deadlines agreed with the customers.
As at 30 June 2019, contract liabilities amounting to €326.5 million were attributable to project business contracts with a net debit balance due to customers (31 December 2018: €498.7 million). They relate to goods and services that are still to be provided but for which prepayments from customers have been received. The decline of €172.3 million in contract liabilities from the project business compared with the figure as at 31 December 2018 is attributable to goods and services provided by the KION Group during the reporting period for which revenue was recognised accordingly.
Contract liabilities attributable to other prepayments from customers remained virtually unchanged at €67.5 million (31 December 2018: €71.4 million).
Other financial liabilities
Other financial liabilities, which totalled €778.7 million (31 December 2018: €813.2 million), include liabilities of €423.1 million from procurement leases (31 December 2018: €421.2 million). Liabilities of €230.4 million from sale and leaseback transactions used to finance the short-term rental fleet were also included in other financial liabilities (31 December 2018: €289.9 million).