Selected notes to the consolidated statement of financial position

Goodwill and other intangible assets

Goodwill declined by €45.8 million to €3,573.6 million as at June 30, 2023, mainly as a result of currency effects (December 31, 2022: €3,619.4 million).

Indications that the goodwill of €2,070.6 million (December 31, 2022: €2,106.2 million) allocated to the KION SCS Operating Unit (CGU) might be impaired were examined at the end of the first half of 2023 in connection with the business performance of the Supply Chain Solutions segment and the latest data supplied by the internal reporting and planning functions. This analysis showed that the recoverable amount of the CGU does not differ substantially from the value determined as part of the annual impairment test that was last conducted in 2022. At the end of 2022, the recoverable amount included sufficient headroom relative to the carrying amount of the CGU. Based on sensitivity analyses concerning potential changes to material measurement parameters within a realistic range, there is still considered to be sufficient headroom for the goodwill allocated to the KION SCS Operating Unit as at the reporting date.

The material measurement parameters used to estimate the recoverable amounts of the CGUs and groups of CGUs are essentially the same as those used in 2022. They include projections for adjusted EBIT over the five-year planning period as well as the cost of capital (WACC) and the long-term growth rate. Assumptions made in this context about the expected increase in adjusted EBIT are primarily based on industry-specific market research and the management team’s internal assessments of market growth and revenue growth as well as on anticipated efficiency gains in production and project execution.

As at June 30, 2023, the carrying amounts for brand names and for technology and development assets stood at €938.9 million and €688.7 million respectively (December 31, 2022: €939.4 million and €706.3 million respectively).

At €491.8 million, sundry other intangible assets were €24.7 million lower than their carrying amount as at December 31, 2022 (€516.5 million). Of this total, €405.5 million related to customer relationships (December 31, 2022: €436.9 million).

Other property, plant, and equipment

Other property, plant, and equipment totaled €1,605.3 million (December 31, 2022: €1,585.2 million) and included a figure of €552.6 million for right-of-use assets related to procurement leases (December 31, 2022: €543.5 million). Of this figure, €453.2 million was attributable to land and buildings (December 31, 2022: €445.7 million) and €99.5 million to plant & machinery and office furniture & equipment (December 31, 2022: €97.9 million).

Inventories

The reported inventories break down as follows:

Impairment losses of €11.6 million were recognized on inventories in the second quarter of 2023 (Q2 2022: €4.9 million) and impairment losses of €27.6 million in the first six months of 2023 (H1 2022: €20.3 million). Impairment losses totaling €7.1 million had been recognized on inventories of the Russian subsidiaries in the Industrial Trucks & Services segment in the first quarter of 2022. Reversals of impairment losses were recognized in an amount of €2.5 million in the second quarter of 2023 (Q2 2022: €2.4 million) and in an amount of €5.1 million in the first six months of 2023 (H1 2022: 5.7 million) because the reasons for the impairment no longer applied.

Trade receivables

Trade receivables break down as follows:

Equity

As at June 30, 2023, the Company’s share capital amounted to €131.2 million, which was unchanged on December 31, 2022 and was fully paid up. It was divided into 131,198,647 no-par-value shares.

The total number of shares outstanding as at June 30, 2023 was 131,124,771 no-par-value shares (December 31, 2022: 131,124,771 no-par-value shares). KION GROUP AG had 73,876 treasury shares as at the reporting date (December 31, 2022: 73,876).

The distribution of a dividend of €0.19 per share (H1 2022: €1.50 per share) to the shareholders of KION GROUP AG resulted in an outflow of funds of €24.9 million in May 2023 (H1 2022: €196.7 million).

Retirement benefit obligation and similar obligations

Overall, the net obligation under defined benefit pension plans rose to €642.8 million (December 31, 2022: €618.9 million). This increase compared with the end of 2022 was primarily attributable to a lower discount rate in the eurozone of 4.04 percent (December 31, 2022: 4.20 percent). This consisted of €737.8 million recognized under the retirement benefit obligation and similar obligations (December 31, 2022: €712.8 million) less an amount of €95.0 million (December 31, 2022: €94.0 million) recognized under other non-current assets. Changes to discount rates resulted in a decrease in equity of €14.1 million (after deferred taxes) in the reporting period.

Financial liabilities

The non-current and current financial liabilities totaling €1,809.7 million (December 31, 2022: €1,988.6 million) included promissory notes with a carrying amount of €319.4 million as at June 30, 2023 (December 31, 2022: €319.2 million). A corporate bond with a carrying amount of €497.4 million (December 31, 2022: €496.8 million) and liabilities to banks of €512.5 million (December 31, 2022: €819.3 million) were also included under financial liabilities. The fall in liabilities to banks in the first half of 2023 was a result of early and scheduled repayments of bank loans in an amount of €225.0 million and a decline of €102.5 million in drawdowns from the syndicated revolving credit facility (RCF). Other financial liabilities rose to €480.4 million (December 31, 2022: €353.3 million). Of this total, €445.0 million related to paper issued under the commercial paper program (December 31, 2022: €305.0 million).

Liabilities from lease business

Non-current and current liabilities from the lease business totaled €3,406.3 million (December 31, 2022: €3,214.6 million) and could be broken down into a sum of €3,258.4 million (December 31, 2022: €3,048.4 million) that related to the financing of the direct lease business and a sum of €148.0 million (December 31, 2022: €166.3 million) that related to repurchase obligations resulting from the indirect lease business.

Liabilities arising from sale and leaseback sub-lease transactions still included liabilities of €15.7 million (December 31, 2022: €33.5 million) related to sale and leaseback sub-lease transactions entered into up to December 31, 2017.

Liabilities from short-term rental business

Non-current and current liabilities from the short-term rental business totaled €600.8 million (December 31, 2022: €544.2 million) and related to the financing of industrial trucks for the short-term rental fleet.

This amount still included liabilities of €7.2 million (December 31, 2022: €12.8 million) that related to sale and leaseback sub-lease transactions entered into up to December 31, 2017.

Contract balances

Contract assets decreased by €48.7 million to €480.1 million as at June 30, 2023 (December 31, 2022: €528.8 million). They mainly related to work under project business contracts that had not yet been invoiced.

Of the contract liabilities, €640.2 million was attributable to project business contracts with a net debit balance due to customers as at the reporting date (December 31, 2022: €640.3 million) and €192.5 million to prepayments received from customers (December 31, 2022: €185.8 million).

Other financial liabilities

Non-current and current other financial liabilities totaled €728.9 million (December 31, 2022: €693.7 million) and included an amount of €596.4 million for liabilities from procurement leases (December 31, 2022: €584.9 million).