KION HOLDING 1 GmbH
Wiesbaden
Annual Report
31 December 2011
KION Holding 1 GmbH
Management report 2011
This is a translation of the German
„KION Holding 1 GmbH
Konzernabschluss 2011“
Sole authoritative and universally
valid
the German
is
version
language document.
KION Holding 1 GmbH
Management report for 2011
Page 2 of 57
Contents
Group management report
Highlights in 2011 .................................................................................................................................... 3
1. Milestones in 2011 ............................................................................................................................... 4
2. Company profile .................................................................................................................................. 6
2.1 Group structure .............................................................................................................................. 6
2.2 Business activities of the KION Group ........................................................................................... 6
3. Economic conditions .......................................................................................................................... 13
3.1 General business environment .................................................................................................... 13
3.2 Business environment in the sector ............................................................................................. 15
3.3 Market for industrial trucks ........................................................................................................... 16
3.4 Legal situation .............................................................................................................................. 18
4. Strategy ............................................................................................................................................. 19
4.1 Strategic objectives ...................................................................................................................... 19
4.2 Strategic levers ............................................................................................................................ 20
4.3 Financial Services segment ......................................................................................................... 22
4.4 Initiatives to cut costs and improve efficiency .............................................................................. 22
4.5 Financial KPIs for managing the Company's business................................................................ 23
4.6 Acquisitions and alliances ............................................................................................................ 24
5. Notes on financial position and financial performance ...................................................................... 25
5.1 Operating and financial performance ........................................................................................... 25
5.2 Financial position ......................................................................................................................... 29
5.3 Net assets .................................................................................................................................... 31
6. Research and development (R&D) ................................................................................................... 35
7. Capital expenditure ............................................................................................................................ 37
8. Purchasing ......................................................................................................................................... 38
9. Employees ......................................................................................................................................... 39
10. Management .................................................................................................................................... 41
10.1 Key management team .............................................................................................................. 41
10.2 Supervisory Board ..................................................................................................................... 42
10.3 Shareholders' meeting ............................................................................................................... 43
10.4 Corporate governance ............................................................................................................... 43
11. Sustainability ................................................................................................................................... 43
12. Opportunities and risks report ......................................................................................................... 47
12.1 Opportunities report ................................................................................................................... 47
12.2 Risk management ...................................................................................................................... 48
12.3 Types of risk ............................................................................................................................... 50
12.4 Overall risk ................................................................................................................................. 55
13. Events after the balance sheet date ................................................................................................ 55
14. Outlook ............................................................................................................................................ 55
14.1 Outlook for the global economy ................................................................................................. 55
14.2 Market outlook ........................................................................................................................... 56
14.3 Outlook for the KION Group ...................................................................................................... 56
KION Holding 1 GmbH
Management report for 2011
Page 3 of 57
Highlights in 2011
Group management report
The KION Group can look back on a successful 2011. Strong demand and rigorous cost
management led to significant year-on-year increases in revenue and earnings.
• Strong demand in Germany and the BRIC countries
• Order intake rises by 21 per cent to €4,682 millio n
• Revenue climbs by 24 per cent to €4,368 million
• Adjusted EBIT margin more than doubles to 8.3 per cent
• Negative net earnings due to one-off items
• Free cash flow before tax increases more than threefold
• Successful placement of a secured corporate bond with a volume of €500 million
• Leading position maintained in the global market: number one in Europe, number two
worldwide
KION Group key figures
€ million
Revenue
In Germany
Outside Germany
Order intake
Order backlog
EBITDA
Adjusted EBITDA¹
EBIT
Adjusted EBIT¹
Loss for the year
Cash and cash equivalents²
Financial debt after borrowing costs
Financial debt
Net financial debt
Equity
Adjusted EBITDA margin¹
Adjusted EBIT margin¹
Free cash flow before tax³
Capital expenditures
Total spending on R&D
R&D spending/revenue (%)
2011
2010
2009
Changes
2011/2010
4,368
1,175
3,194
4,682
953
569
665
213
365
-93
373
2,997
3,030
2,657
-488
15.2%
8.3%
282
133
120
2.8%
3,534
900
2,634
3,860
801
380
462
35
139
-197
253
2,872
2,894
2,641
-400
13.1%
3.9%
83
123
103
2.9%
3,084
770
2,314
3,028
533
183
311
-182
-29
-366
463
2,918
2,948
2,484
-213
10.1%
-0.9%
23.6%
30.6%
21.2%
21.3%
18.9%
49.7%
43.9%
>100%
>100%
52.8%
47.7%
4.4%
4.7%
0.6%
-21.9%
-
-
34
>100%
108
101
3.3%
7.7%
16.3%
-
9.5%
8.8%
Employees incl. apprentices and trainees
as at 31 December
R&D employees
¹ Adjusted for KION acquisition items and one-off items
² Cash and current securities
³ Internal key performance indicator
21,862
900
19,968
827
19,953
833
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Management report for 2011
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Group management report
Group management report of KION Holding 1 GmbH
for the year ended 31 December 2011
1. Milestones in 2011
2011 – growth markets continue to gain in importance
KION Group increases order intake to €4,682 million – growth markets account for almost one
in three trucks delivered
Despite the European sovereign debt crisis and uncertainties in the financial markets, the global
market for industrial trucks experienced a strong upturn in 2011. Two factors encouraged this positive
trend: the recovery of demand in Europe and the rapid pace of economic growth in the emerging
markets. The KION Group particularly benefited from the sharp rise in global demand for warehouse
trucks and for efficient counterbalance trucks with electric motors or internal combustion (IC) engines.
Aftersales business also expanded compared to 2010, and there was a year-on-year rise in revenue
from rental and used trucks. Order intake for the KION Group rose to €4,682 million, representing a
year-on-year increase of around 21 per cent (2010: €3,860 million). Revenue advanced by 24 per cent
year on year to €4,368 million (2010: €3,534 millio
tax (EBIT), adjusted for non-recurring items, rose from €139 million in 2010 to €365 million in 2011.
This represented an EBIT margin of 8.3 per cent, which was higher than the figure achieved in the
record year of 2008 and represents a significant year-on-year improvement. The 2010 adjusted EBIT
margin amounted to 3.9 per cent.
n). The KION Group's earnings before interest and
The KION Group successfully continued with its globalisation strategy in 2011. Germany, France,
China and Brazil were the most important regions in terms of sales of new industrial trucks last year.
Three in ten trucks supplied by the KION Group went to customers in emerging markets. The KION
Group intends to make even greater use of the high potential for growth in these markets over the
coming years, particularly in the BRIC countries.
On a global basis KION Group slightly lost market share to 14.8% (2010: 15.3%). By continuing to
expand in fast-growing regions, the KION Group hopes to maintain its leading positions in the
European and global markets for material-handling trucks in the long term. The KION Group is
currently number one in the European market and number two worldwide.
Consolidation of the STILL and OM brands in the STILL brand segment
Back in 2010, the KION Group had begun to more closely integrate the sales activities and product
portfolios of the STILL and OM brand companies in order to serve the markets more efficiently. OM
focuses on its home Italian market and now incorporates STILL's activities in Italy. It also began to
improve the breadth and depth of its own product range by adding products from STILL in 2011. This
focused business expansion has enabled the OM brand to remain one of market leaders in Italy, while
STILL is benefiting from stronger sales support, above all in eastern Europe and the emerging
markets. OM has been operating under the brand name 'OM STILL' in Italy since January 2012.
Further improvements to efficiency in the production facilities
Last year the KION Group drew up various plans to safeguard the long-term competitiveness of its
production facilities. The planned transfers of production within Europe, the further expansion of
production and the existing sales and service networks in fast-growing markets are enabling the Group
to become more flexible as well as strengthening its position in regional markets worldwide. A decision
was made to concentrate the STILL brand segment's production of warehouse trucks and
counterbalance trucks at individual European locations so that production facilities can focus on
particular product series and optimise their capacity utilisation.
Production processes and product quality have also continued to be steadily improved at KION's Baoli
brand production facility in Jingjiang near Shanghai. The three primary objectives were to step up
inhouse training, modernise the production methods and workflows and optimise cooperation with
suppliers. This involved providing employees with ongoing training on all aspects of quality
management as well as standardising their work by introducing defined processes and guidelines.
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Baoli has also restructured the production plant in order to make the material flows and production
processes more efficient. In addition, Baoli has familiarised its suppliers with the new production
processes. By selecting its suppliers carefully and continually developing its partnership with them, the
brand company guarantees quality, a continuous supply of materials and compliance with
technological standards. This results in better product quality, higher productivity and shorter delivery
times.
The KION Group is also strengthening its presence in Brazil by setting up a plant geared to the
manufacture of counterbalance trucks in São Paulo. Production is scheduled to start there in 2012.
The existing Brazilian plant in Rio de Janeiro manufactures warehouse technology for KION's STILL
and Linde brands. Counterbalance trucks with IC engines are the most popular form of industrial truck
in South America. KION is expanding its South American distribution and service network so that it
can continue to meet rising demand. The São Paulo site enables the KION Group's current sales
offices in the region to intensify their relations with existing STILL and Linde customers.
Voltas Material Handling opening up the Indian market
As part of its continued focus on the world's emerging markets, the KION Group and the Indian
conglomerate Voltas Ltd. founded Voltas Material Handling (VMH) in April 2011. The KION Group
acquired a majority share of this company using existing funds. VMH develops, manufactures, sells
and services forklift trucks and warehouse technology. KION will add truck and warehouse technology
to the Voltas product range and, based on market demand, will focus above all on warehouse
technology. India's material-handling market has grown rapidly in recent times, with a sharp rise in
demand for warehouse technology solutions. Voltas has built a new plant in Pune, India, in order to
fully exploit the strong future growth potential offered by the Indian market. Products from Voltas have
enjoyed an excellent reputation in the Indian market for many years. The brand's 25 branches provide
it with a strong distribution and service network even given India’s material handling market today still
being characterized by low volumes.
Successful expansion of sales and service network
The KION Group continues to enhance the position occupied by its two premium brands – Linde and
STILL – in Russia. In 2011, the Linde Material Handling subsidiary acquired the business of its
longstanding dealer partner Liftec in Russia and, on the basis of high growth forecasts for the region,
also acquired Liftec's Kazakhstan business at the start of February 2012. The purchase of Liftec's
business in Ukraine is planned for mid-2012. This provides Linde Material Handling with even better
and direct access to the growth potential of these major eastern European markets. Russia is one of
the most buoyant high-growth regions alongside Brazil, India and China. In 2011, it was the fifth
largest market in Europe. STILL has strengthened its Russian market presence by opening an
additional branch in St. Petersburg.
The KION Group is expanding and optimising its sales structures on an ongoing basis in western
Europe. As part of this process, Linde Material Handling has acquired the outstanding 51 per cent of
shares in the UK-based Linde dealer Linde Sterling Ltd. Linde Sterling is the leading provider of new
and used industrial trucks, rental trucks and aftersales service in north-west England and north Wales.
This transaction has enabled the KION Group to further strengthen the leading position of Linde and
the brand's UK distribution and service network. In December 2011, Linde Material Handling also
acquired the outstanding 25.5 per cent of shares in Linde Castle Ltd. and now holds 100 per cent of
the shares either directly or indirectly.
Stable financial footing
In spring 2011, KION successfully issued a secured corporate bond with a total volume of €500 million
in the capital markets. This has enabled the KION Group to improve the maturity profile of its debt,
with some financial liabilities being extended to 2018. It has also diversified its investor base. The
Company used some of the cash from the issuance of the bond to fund existing loans. With a maturity
date of 2018, the secured bond was issued at par in a tranche of €325 million at a fixed interest rate
and in a tranche of €175 million at a variable inte rest rate. The interest rate for the fixed-interest
tranche is 7.875 per cent per annum, while interest is charged annually on the floating-rate tranche at
three-month Euribor plus 4.25 percentage points.
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Management report for 2011
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2. Company profile
2.1 Group structure
Group management report
KION Holding 1 GmbH owns all the shares in KION Holding 2 GmbH, which in turn is the sole
shareholder of KION GROUP GmbH. KION GROUP GmbH manages the brand companies as the
strategic management holding company and operational parent company. In this report, 'the KION
Group' refers to all the companies of the KION Group collectively. The KION Group pursues a multi-
brand strategy so that it can optimally cater to the different market and customer requirements. The
Group is represented in the markets by its Linde, Fenwick, STILL, OM, Baoli and Voltas brands. They
each have different areas of focus in terms of regional presence and factors such as product range,
services and technological expertise. In addition to its industrial truck business, the KION Group
operates in the hydraulics sector through its Linde Hydraulics brand.
The KION Group's segment structure in 2011
KION GROUP GmbH acts as a strategic management holding company and is responsible for key
head office functions, for which it defines Group-wide business standards. Strategic, financial, and
market-specific objectives are agreed separately with the individual brand companies and monitored.
These companies have full operational and commercial responsibility for their activities and for
achieving the agreed objectives.
The operating segments of KION Group pursuant to IFRS 8 are Linde Material Handling (in which
Baoli, Linde Hydraulics and the French brand Fenwick are managed) and STILL (in which the OM
brand is also managed). In 2011, the KION Group integrated Voltas Material Handling Ltd. – in which it
holds a majority stake – into the 'Other' segment.
2.2 Business activities of the KION Group
2.2.1 Overview of the KION Group
KION Group is a leading provider of industrial trucks. In 2011, it generated revenue of €4,368 million
and an order intake of 144,774 units. In its home European market, the KION Group is the market
leader with a market share of more than 30 per cent. KION Group is also one of the most successful
companies of the sector in the emerging markets of China and Brazil. This market presence is
particularly important from a financial perspective because three in ten forklift trucks sold by the KION
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brand companies are now delivered to customers in the emerging markets. Measured in terms of
revenue and the number of trucks sold, the KION Group is the world's number two and the market
leader in Europe.
The KION Group's origins go back to 1904 when Carl von Linde founded Güldner-Motoren-Werke in
Aschaffenburg (Germany) with Hugo Güldner and other partners. In 1929, Güldner-Motoren-Werke
was acquired by Linde AG. Then in 1973, Linde AG acquired STILL GmbH (founded in 1920), thus
paving the way for both organic growth and growth through acquisitions. This enabled it to continually
expand its portfolio and strengthen its market position. One of the most important acquisitions in the
Group's history was the French company Fenwick in 1984. Fenwick is the local brand of the Linde
Material Handling Group in France, where it is market leader. The long-established company OM,
which was founded in 1917, was added to the brand portfolio in 1992. The material-handling division
of Linde AG, Munich, was spun off as an independent company called the KION Group in August
2006 and was sold to investment funds advised by Kohlberg Kravis Roberts and Goldman Sachs
Capital Partners in December of that year. Further acquisitions then took place to add to the existing
brand companies. The KION Group acquired the Chinese company Baoli in 2009, before assuming
complete management control the following year. The main aim with Baoli is to unlock the potential of
the growth markets more effectively. In 2011, the KION Group acquired a majority stake in the Indian
company Voltas Material Handling Ltd.
Across all its brands, the KION Group provides its customers with a complete portfolio for managing
their internal goods flows. Besides warehouse trucks and counterbalance trucks with IC engines or
electric motors, the KION Group also offers full-service solutions, for which demand is rising sharply.
The services, financing and process management available to customers represent an increasingly
significant line of business for the KION Group.
The KION Group is a global player and has around 1,200 sales outlets in 100 countries, forming one
of the most extensive distribution and service networks in the entire industrial truck sector. The
production facilities for industrial trucks, plus further component production sites and foundries, are
situated at strategically beneficial locations within this broad network.
As at the end of 2011, the KION Group had 21,862 employees.
2.2.2 Segment overview
Linde Material Handling – Engineered for your Performance
The Linde Material Handling segment is synonymous with innovative trucks and services. It provides
users of industrial trucks with product and service solutions that meet demanding technological
requirements, while always taking into account efficiency improvements and complex stipulations in
terms of functionality and design. The Linde and Fenwick brand companies supply high-quality
material-handling products, while the Baoli brand serves the economy segment in the emerging
markets. Linde Hydraulics focuses on hydraulic components that are used both in its own trucks and in
the products of third-party manufacturers. Above all, the quality and diversity of its material-handling
products and services enable the Linde brand to maintain its technology and innovation leadership as
well as a global market share of 9 per cent. Linde Material Handling's portfolio contains a broad range
of premium products for moving goods around.
The slogan of Linde Material Handling, 'Engineered for your Performance', reflects the company's
objective of enabling customers
to make sustained
improvements to their efficiency. Linde Material Handling's warehouse trucks were therefore subjected
to an efficiency test certified by TÜV Nord, a technical inspection, testing and certification organisation,
and compared with the trucks of other providers in terms of costs and performance. This test, which
looked at the overall cost of the loading cycle for a heavy-goods vehicle, found that Linde's trucks had
20 per cent lower costs than competitors' products.
its material-handling solutions
to use
In order to safeguard its technology and innovation leadership, it is essential that Linde Material
Handling constantly develops new premium solutions in a diverse range of product areas. Linde
Material Handling satisfies its customers' requirements firstly with a broad portfolio of products,
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Management report for 2011
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ranging from warehouse trucks to heavy trucks and container handlers. Secondly, every product is
based on user-friendly, ergonomic concepts and meets high standards of efficiency and sustainability.
Moreover, the company's strong service expertise and extensive aftersales services boost customer
loyalty.
In 2011, Linde Material Handling attended CeMAT, the world's leading intralogistics trade fair, which
took place in Hannover from 2 to 6 May 2011, seizing this opportunity to showcase the LMH brand and
numerous product innovations. The stars of the show were the new E 20 – E 50 series of electric
forklift trucks, which have a load capacity of between 2 and 5 tonnes. Available in 19 standard model
variants with different lengths, heights, and widths, they enable Linde Material Handling to offer trucks
geared precisely to customers' needs. The driver's workstation with its new, ergonomic design is
protected against vibration, jolts and noise as it is separated from the front axle and mast. This
enables the driver to work for longer without becoming tired, even in harsh conditions. The new model
series won MM Logistik magazine's logistics award at CeMAT. It also received two of the highest
accolades for product design in 2011: the iF design award and the red dot award.
In the H40 – H50 range of IC trucks, which have a load capacity of 4 to 5 tonnes, a new variable
displacement pump in the lift hydraulics is significantly reducing energy consumption and lowering
noise emissions. Linde Material Handling's logistics train is a new product for optimising logistics in
production. It is formed from the Linde P 50 C tow truck, which has a tractive force of 5 tonnes, and
four trailers – making it ideal for use in just-in-time and just-in-sequence manufacturing. In the area of
warehouse technology, Linde Material Handling presented solutions for the driverless transport of
materials: an automated stacker crane and an automated tow tractor.
Early on, Linde Material Handling picked up on the trend for alternative drives that, as far as possible,
produce zero emissions. At CeMAT, for example, the company featured a pallet truck with a fuel-cell
drive system and a fully functioning prototype of a pallet stacker with a lithium-ion battery, thereby also
proving its competence with alternative drives.
Besides its vast expertise in moving goods around, Linde Material Handling is also a major producer of
hydraulic components and hydrostatic drives. The hydrostatic drive provides the basis for the Linde
trucks' precise lifting and handling capabilities as well as their low fuel consumption. As a result, Linde
Material Handling regularly generates synergies between truck development and drive technology
development. Major brand manufacturers around the world install components from Linde Hydraulics
in their equipment for the construction, agricultural and forestry sectors – proof positive of their
performance and reliability.
Linde Hydraulics' growth was also stimulated by the development of new products, the market launch
of electric technologies, and the global sales and distribution alliance that it had formed with EATON
Corporation in mid-2010. This significantly improved Linde Hydraulics' access to the markets in 2011,
in particular enabling it to win new projects with big-ticket customers in Asia and North America.
Last year, Linde Hydraulics set new standards in drive technologies with the MPR 50 medium-
pressure pump and the LINC 2 electronic control unit. Both products are playing a key role in
improving the efficiency and reducing the emissions of mobile machinery. Fuel savings of up to 20 per
cent can be achieved thanks to the optimised interaction between the hydraulic and electric drive
technologies combined with intelligent electronics.
Drive and power takeoff systems powered by electric motors represent a new growth market that is a
valuable addition to Linde Hydraulics' traditional core business of high-pressure hydraulics. Concept
projects have successfully gone into series production just a year after their launch on the market. One
of these projects is the New Karabag 500 E electric car. The entirely electric drive system – including
the engine, converter, fan and electronic control – was designed and supplied by Linde Hydraulics.
As at 31 December 2011, Linde Material Handling, which is headquartered in Aschaffenburg,
employed 13,838 people worldwide. Driven by the upturn in the German market as well as in the
emerging markets of China, South America and eastern Europe, order intake rose by 22 per cent to
88,300 units, generating revenue of €2,856 million. Adjusted EBIT increased by over 100 per cent to
€283 million. Linde Material Handling has an extens ive global distribution and service network with
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more than 700 sales outlets. Depending on the country and region, products are sold by Linde
Material Handling's own sales outlets or via dealers that cover the market. The two sales channels
account for roughly equal proportions of total revenue. International production sites are located in
Châtellerault (France), where warehouse handling equipment is produced, and Merthyr Tydfil (UK),
which focuses on extra heavy-duty trucks and container handlers. To cater to local needs and
requirements, Linde Material Handling manufactures region-specific products in Summerville, South
Carolina (USA), and in Xiamen (China).
Baoli operates as an independent brand in the market, focusing on the low-cost economy segment in
China and other growth markets. The range of attractive and sturdy products, combined with the KION
Group's excellent distribution network, enables Baoli to satisfy the high demand in emerging economic
regions such as South America very effectively. As an integral part of the Linde Material Handling
(LMH) segment, Baoli generated an order intake of 3,894 units in 2011. Worldwide, it has more than
120 distribution and service outlets, the majority of which are in Baoli's home Chinese market. The
distribution network was expanded last year to include Europe, the Middle East and Africa (EMEA).
Production is located at Baoli's head office facilities in Jingjiang, China. It employed 555 people at the
end of 2011.
STILL – First in Intralogistics
The STILL brand positions itself as a leading supplier of intelligent intralogistics solutions. Besides its
core range of forklift trucks, warehouse technology and tow tractors, STILL's wide-ranging portfolio
also includes process-related value-added services for warehouse logistics, the design of internal
logistics processes, goods flow management and fleet management. STILL is known for its
sustainable and successful logistical innovations such as in the field of hybrid drives. In the electric
forklift truck sector, the company has always been one of the top providers in Europe. In 2011, STILL's
market share in the European focus markets was around 14 per cent. STILL already occupies an
outstanding position in the high-growth South American region. It also pursues a successful market
penetration strategy, above all in the Asian regions. Its global market share is approximately 5 per
cent. Integration of OM into the STILL Group was largely completed in 2011. The STILL Group's
portfolio is complemented by OM's products: the RC 40 diesel truck, the ECU and ECU-SF pallet
trucks and the Xlogo low-level order picker are offering STILL new sales opportunities around the
world, while OM is enhancing its own range of products in Italy with intralogistics solutions from STILL.
Some of the two brands' strongest products are being offered jointly from 2012; they are marketed
worldwide under the STILL brand and in Italy under the 'OM STILL' brand. This makes OM STILL one
of the leading players in Italy.
The STILL Group uses its portfolio of industrial trucks, financial services, aftersales services, hardware
and software to create customised packages of products and services tailored to customers' individual
needs. That is why the company developed the interactive PartnerPlan tool, which helps it to select
the best options for the customer from its entire range of products, technologies and services. The aim
in putting together the packages is always to find a system-based solution that optimises the
customer's logistics processes and thereby its efficiency and costs.
In 2011, STILL added innovative forklift trucks and warehouse technologies as well as services to its
portfolio and presented them to the public. For example, it showcased fully automated material flow
solutions at the LogiMAT trade fair in Stuttgart during the first quarter of last year. The broad range of
trucks with various types of navigation ensures that STILL can always offer tailored solutions for any
warehouse layout – including warehouses with challenging narrow aisles and racks at heights of up to
15 metres as well as horizontal transport systems. In the field of automated picking, STILL
demonstrated a version of the EK-X high-level order picker that can drive automatically and combines
a picking height of up to 3.90 metres with a pick-by-voice function. The innovative features of the EK-X
significantly reduce the number of pick errors and boost picking efficiency by up to 25 per cent.
Another combination of STILL trucks and intelligent software for intralogistics systems was achieved in
a benchmark project with Güldenkron, which produces fruit juice and other beverages. This involved
using MX-Q turret order pickers and EGV-S pallet stackers to automate the entire flow of materials in
fruit juice production, from putting away and retrieving goods in high-bay storage areas to planning the
dispatch of goods. The customer benefits from the vehicles' flexible dual operating modes, which
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enable automated or manual operation at any time. STILL also provided the bay systems, thereby
demonstrating that it can deliver end-to-end logistics solutions.
STILL presented its cubeXX concept truck at CeMAT, the world's leading intralogistics trade fair,
which took place in Hannover. An efficient warehouse requires many different trucks to carry out the
various logistics tasks. The cubeXX is an intralogistics solution of the future and combines six different
applications in a single truck, serving as an order picker, pallet truck, pallet stacker and double-decker
truck. It can also be converted into a tugger train or a forklift truck. Depending on how it is being used,
the cubeXX can be operated automatically or manually with a driver as it is fitted with a retractable
cab. The cubeXX therefore offers the highest degree of flexibility and compact dimensions,
impressively underlining STILL's claim to be the 'first in intralogistics'.
STILL already caters to customers' requirements with fully integrated warehouse systems and a
comprehensive range of products and services. In future it will increasingly work on solutions further
up and down the supply chain. Development and refinement of products and services is always aimed
at creating the maximum benefit for customers at all process stages. Besides being flexible and safe
to use, the products must therefore be of outstanding quality so that they can withstand the heavy
loads associated with warehouse logistics. That is why STILL regularly gathers feedback from its
customers to ensure that its products meet their requirements. However, the company has also
received objective confirmation of the high quality of its products in terms of their functionality, user-
friendliness, ergonomics and design. In November 2011, for example, STILL received the 'Best
Supplier of the Year Award' from retail chain SPAR for its special achievements in the areas of product
innovation, sustainability, customer relationship management & support, quality and flexibility.
The market upturn, particularly in Germany, eastern Europe and Brazil, was of great benefit to STILL,
which was able to boost its order intake by 15 per cent to 51,200 units. Revenue rose by 17 per cent
to €1,666 million, enabling STILL to generate EBIT – adjusted for non-recurring items – of
€102 million.
At its head office in Hamburg, Germany, STILL produces forklift trucks, reach trucks and tow tractors.
The Reutlingen plant focuses on very narrow aisle (VNA) trucks. Counterbalance trucks are
manufactured in Bari (Italy), in particular for the Italian market. Other types of warehouse technology
are produced in the French Montataire plant and in Luzzara (Italy). The aim of the planned
consolidation of the plants in Italy and France is to concentrate the production of product series at
individual locations, which will also ensure greater capacity utilisation at each plant. Under these
plans, the trucks currently produced in Montataire will be built at the Luzzara plant while the production
of forklift trucks in Bari will shift to the counterbalance truck plant in Hamburg. As at 31 December
2011, STILL including OM employed 7,328 people worldwide.
Germany remains the most important sales region for the STILL brand, followed by France and Italy.
The German and French markets are served by a direct sales organisation. In its UK and Spanish
markets, STILL uses dealers to supplement its own direct sales operations. This is also the case in
Italy, which is OM's home market. All other European markets are largely served by direct sales
organisations and, in some cases, by a highly efficient network of dealers. STILL opened new
branches in St. Petersburg (Russia) and Katowice (Poland) as part of the expansion of its sales
structure. At the same time, the successful integration of the STILL and OM dealers in Russia has
enabled STILL to strengthen its market presence in eastern Europe. It has also gained market share in
this region thanks to numerous projects with large international companies. In addition, expansion of
the dealer network improved STILL's market position in high-growth countries during 2011, especially
those in Asia. Equipwell (India), PT Power Trucks Mitra Perkasa (Indonesia) and TCJ Asia (Thailand)
all became STILL sales partners last year. The sales network in south-east Asia has been managed
by a new STILL office in Singapore since 1 November 2011.
BlackForxx GmbH, headquartered in Stuhr near Bremen (Germany), is a subsidiary of STILL which
started up in 2008. Since then BlackForxx has been leasing special forklift trucks and warehouse
trucks and selling used and reconditioned forklift trucks and warehouse trucks in Germany and abroad
through its own online marketplace. On the back of strong domestic and international demand for
industrial trucks, BlackForxx considerably expanded its customer base in the year under review and
opened two further lease centres in Stuttgart and Paris. As a subsidiary of STILL, BlackForxx
KION Holding 1 GmbH
Management report for 2011
Page 11 of 57
Group management report
cooperates closely with the STILL sales organisation if required. In spring 2011, for example, it helped
with the resale of two fleets containing 90 and 221 used STILL trucks respectively.
2.2.3 Service business improves customer retention
The scope and quality of the services offered is a key factor for many customers when they select a
technology partner. That is why the service business is more than just a good source of revenue for
the KION Group. It is also an important means of improving customer loyalty. Besides classic
aftersales business such as spare parts sales or maintenance and repairs, the services offered by the
KION Group include higher-value services, for example the complete planning and organisation of
automated logistics processes. Along with these services, customers can also request IT solutions that
enable them to manage their truck fleets and material flows reliably. This gives customers a rapid yet
detailed overview of all their major performance and consumption figures and of the running costs for
their fleets.
In 2011, service accounted for 42 per cent of revenue (2010: 46 per cent). This slight percentage
decline is due to the disproportionately strong rise in the new trucks business on the back of the
recovery in the industrial truck markets. The KION Group divides its service business into aftersales
services, rental business and the used trucks trade. The 'other' product category also includes
services such as consultancy, IT solutions and warehouse equipment systems.
Aftersales service levels tailored to customers' needs
The extensive dealer and service network enables the KION Group to offer its customers repair and
maintenance services worldwide. The KION Group employs some 7,600 service staff, of whom 6,000
are service technicians. In places where the KION Group does not have its own staff, external dealers
provide the aftersales services in accordance with the KION Group's specifications. Customers can
access the service organisation of all KION brands round the clock. In Europe, spare parts are mostly
guaranteed to be supplied within one working day.
An active fleet of currently over one million trucks plus the increasing presence of the KION brands
worldwide provides a sound basis for the future growth of the KION Group's service business. To
enable customers to budget for their service costs more accurately, the KION Group brands usually
offer service contracts. Customers can decide on the scope of the services they require to meet their
individual needs. For example, they can take out a contract that covers regular maintenance, a defined
number of ad-hoc repairs within a defined response time and the replacement of any wearing parts
KION Holding 1 GmbH
Management report for 2011
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Group management report
required during the year. The KION Group also offers a wealth of finance, leasing and rental solutions
so that it can fully cater to customers' varying needs at all times.
Used trucks open up new customer groups
Many customers opt to rent industrial trucks. As a result, used trucks come onto the market once the
leases or fleet management contracts have expired – provided they are not extended or renewed. For
customers interested in quality trucks at an affordable price, these high-quality used trucks offer an
attractive alternative to new trucks from other providers with less sophisticated technology. Selling a
used truck from the KION Group also opens up the possibility of future orders for new trucks.
The KION brands naturally offer aftersales services and financial services for the used trucks. All used
trucks are reconditioned to ensure that they will operate properly once they have been sold to
customers.
Rental trucks with variable services
In its truck rental business, the KION Group offers three variants: short-term rental, long-term rental
and fleet management. Each of these generally also incorporates financing services.
• Short-term rentals of up to twelve months
The KION Group's short-term rental business enables customers to meet short-term
requirements such as seasonal spikes in demand. The term of the rentals offered can be
anywhere between one day and twelve months. The KION Group's local subsidiaries and
dealers maintain their own rental pools to ensure optimum availability of trucks.
• Long-term rentals, including a comprehensive selection of products and services
Long-term leases run for an average term of four to five years and usually cover not just
the financing itself but also services such as maintenance, repairs, spare parts and
insurance. The package of services is tailored to meet the customer's individual
requirements. At the end of the lease, the customer returns the truck, extends the old
lease or signs a new one.
• Customised fleet management particularly attractive to big-ticket customers
Fleet management is the most flexible form of leasing and is becoming increasingly
popular with big-ticket customers. The KION Group takes on the comprehensive
management and financing of customers' truck fleets and ensures, among other things,
that trucks can always be used optimally. Fleet management includes analysing and
optimising how the trucks are used and the methods used to replace old trucks that no
longer meet requirements. The package of services is tailored to meet the customer's
individual
requirements. The KION Group has developed proprietary software
applications, which it uses to analyse and implement fleet management processes.
Increasing importance of financial services as a sales function requires separate management
structure
Around 60 per cent of the KION Group's total unit sales of new trucks are already supported by
financial services activities. This segment caters to the increasing demand for one-stop solutions that,
in addition to the trucks themselves, include finance and other services.
In 2011, the KION Group's leasing portfolio grew to a total of 230,500 trucks. This equates to a
replacement value of €4,528 million as at the end o f 2011. The core markets France, Germany, Italy,
Spain and the United Kingdom accounted for 74 per cent of the total leasing portfolio at the end of the
year under review. In the key markets, the proportion of the portfolio accounted for by long-term
leasing declined slightly compared with the proportion at the end of 2010 to around 80 per cent.
The Financial Services (FS) segment encompasses key cross-brand functions for the two brand
segments Linde and STILL. In terms of promoting sales and customer loyalty, it represents an
important vehicle which the KION Group will be exploiting even further in the future.
KION Holding 1 GmbH
Management report for 2011
Page 13 of 57
Group management report
The first separate FS companies were established in the core markets of the KION Group in 2011.
Further countries with a high proportion of finance and leasing business will be integrated gradually.
The increasing importance of the FS segment is also reflected in separate management and control of
the financial services business. (For more detailed information on the future segment structure, please
refer to section 4.3 of the management report and to the notes starting on page 72.) The cross-brand
FS segment brings together all the KION Group's services in connection with financing of short-term
rental fleets and long-term leasing business by providing innovative and tailored finance solutions.
3. Economic conditions
3.1 General business environment
Global economic recovery continues in 2011
The year under review saw a further recovery in the macroeconomic environment. Global gross
domestic product (GDP) grew by a further 2.7 per cent following the 4.1 per cent growth achieved in
2010. Emerging markets continued to be the key growth drivers and stabilising factors in the global
economy. By contrast, growth in the industrialised nations was subdued. During the course of the
year, various uncertainties in international markets resulted in a slowdown in the economic upturn
overall. This represented a normal cyclical pattern following the strong growth in the previous year,
although there were also other temporary contributory factors, such as the sovereign debt problems in
the euro zone and in the USA, the earthquake in Japan, and the sharp increase in commodity prices.
In view of the sovereign debt issues, and given the slackening pace of economic growth, most
industrialised countries had already switched to the pursuit of policies focusing on savings and
retrenchment, with expansionary monetary policies providing further stabilisation. In 2011, significant
momentum in favour of capital expenditure in the private sector also cushioned the impact from a
generally weak increase in output.
Gross Domestic Product 2011
Real change compared with the previous year
China
India
Russia
Germany
Brazil
World
USA
EU
Japan
9.2%
6.5%
4.3%
3.0%
2.7%
2.7%
1.7%
1.6%
-0.9%
Source: Eurostat, National statistics, World Bank (Status 07.03.2012)
The impetus behind the global economy's emergence from the crisis over the last two years eased off
markedly during the course of the year under review. By the end of the year, financial market data and
sentiment in the economy were pointing to a significant economic slowdown. In contrast, real
economic data remained overwhelmingly positive until recently. According to an assessment by the
International Monetary Fund, the global economic situation will continue to be fragile in 2012, the
KION Holding 1 GmbH
Management report for 2011
Page 14 of 57
Group management report
result of flagging growth in the real economy in all regions and uncertainty regarding the funding
position in public finances and financial institutions.
Sovereign debt crisis in the euro zone leaves its mark – Germany remains the economic
driving force
After starting the year strongly, the European economy cooled off noticeably during the course of
2011. Overall, GDP in the European Union grew by 1.6 per cent, although growth rates varied
considerably from country to country, as in 2010. Germany continued to be the engine of the
European economy, achieving robust growth of around 3.0 per cent for the year, during the course of
which it exceeded pre-crisis levels. Economic performance was also fairly dynamic in countries such
as Poland and Sweden, where growth rates of 4.0 per cent were achieved. In contrast, two of the
largest economies, Spain and Italy, remained static. Growth in Greece and Portugal continued to
weaken as a consequence of comprehensive austerity measures. In 2011, the uncertainty arising in
connection with sovereign debt issues had a noticeable impact on the core countries of the euro zone
for the first time, ultimately highlighting the extent to which European economies are interlinked.
A whole range of negotiations, rescue packages and austerity programmes were unable to restore
investor confidence or stimulate the growth sorely needed by individual countries. In mid-2011, the
sovereign debt crisis finally hit the Italian economy, which came under intense pressure. As a
consequence, sentiment in both industry and on global capital markets disintegrated. However,
general economic momentum was also hampered by retrenchment programmes and the tough labour
market conditions that continued to prevail in many countries. There was an appreciable
corresponding fall in government and consumer spending, as well as in domestic demand, particularly
in the second half of the year.
As in the case of GDP growth, the labour market situation also varied from country to country.
Germany recorded its lowest unemployment rate for years at 5.9 per cent; there were also sharp drops
in the unemployment rates in Belgium and Sweden. However, many other euro zone countries saw
unemployment rise: it increased threefold in Ireland in the course of the crisis; in Greece, the rate also
climbed significantly to the current level of 21 per cent. The situation was particularly precarious in
Spain, where the unemployment rate rose to nearly 22 per cent in 2011, yet another indicator of the
structural problems in the country.
Economic indicators
Gross domestic product Unemployment rate (%) Consumer Price Inflation
Industrial Production
Changes %
2011
2010
2011
2010
2011
2010
2011
2010
Advanced economies
Germany
France
Italy
Spain
United Kingdom
USA
Emerging economies
Brazil
Russia
China
3.0
1.6
0.5
0.7
0.9
1.7
2.7
4.3
9.2
3.7
1.5
1.5
-0.1
2.1
3.0
7.5
4.0
10.4
5.9
9.7
8.4
21.7
8.4
8.9
6.0
7.0
4.1
7.1
9.8
8.4
20.1
7.8
9.6
6.7
7.0
4.1
2.5
2.3
2.9
3.1
4.5
3.0
6.5
6.1
5.4
1.2
1.7
1.6
2.0
3.3
1.5
5.9
8.8
3.3
7.5
2.4
0.0
-1.5
-1.2
4.2
0.3
4.7
13.9
10.9
4.7
6.4
0.9
1.8
5.3
10.5
8.2
15.7
Source: Eurostat, Statistical Offices, World Bank (Status 07.03.2012)
KION Holding 1 GmbH
Management report for 2011
Page 15 of 57
Growth in the USA still weak
Group management report
Economic growth in the USA was inconsistent over the course of 2011: after a weak start to the year,
growth in the second half of the year was stronger and also higher than that in other industrialised
nations. The primary growth driver in the US economy was strong domestic demand but the economic
climate in the USA continued to be impacted by structural problems in terms of government debt, the
real-estate market and unemployment. The argument between policymakers regarding government
debt had a negative impact on investment in inventories, particularly at the start of the year. In contrast
to the approach in 2010, companies therefore held back from further increases in inventories. On the
other hand, capital spending on equipment continued to hold up well with growth of approximately 10
per cent. Overall year-on-year GDP growth was 1.7 per cent.
Emerging markets provide key stimulus for growth
Economic performance in the emerging markets was again excellent in 2011 and this acted as a
stabilising force for growth in the global economy owing to the impact of increased global integration.
Growth rates in emerging economies were more than double those in the industrialised countries on
average, which meant that the BRIC countries (Brazil, Russia, India and China) contributed more than
half of the growth in global output. Leading the way was the People's Republic of China, where growth
of 9.2 per cent provided an important stimulus for the global economy, although the contribution from
Brazil and India also continued to increase. Economic output in Russia saw a year-on-year rise of 4.3
per cent. However, this growth was based on the relative strength of the primary sector in Russia
(energy, commodities); when adjusted for the steep rise in price of oil, the growth was actually weaker
than in the years prior to the crisis. The general economic conditions in the large emerging markets,
with their low levels of indebtedness, low unemployment, and in some cases significant currency
reserves, proved to be particularly beneficial.
Having said all that, during the course of the year, the emerging markets were no longer able to
escape the effects of the European debt crisis or the economic uncertainty in the USA and Japan and
were thus also affected by an economic slowdown. The most obvious feature of this was a notable
loss of momentum in exports to the industrialised countries.
3.2 Business environment in the sector
Sector boosted by willingness to invest
The global economic recovery in 2011 improved the level of orders on hand in many sectors – albeit
with regional differences. According to the German Association of the Automotive Industry (VDA), the
worldwide market for new cars expanded by around 6 per cent to 65.4 million units last year.
Continued growth in world trade also benefited the logistics sector. The German Engineering
Federation (VDMA) reported a 10 per cent rise in order intake for Germany's export-oriented
engineering sector in 2011. The strong starting position and the ongoing recovery in some areas were
accompanied by spending on capital equipment. This increase in investing activities had a positive
impact on demand for industrial trucks.
Commodities price index reaches all-time high
Prices for many commodities rose sharply in 2011. Among the commodities relevant to the KION
Group that increased in price, oil and metal particularly stood out – with at times substantial increases.
Although prices declined during the last few months of 2011, having shot up at the start of the year,
the commodities price index of the Hamburg Institute of International Economics (HWWI) reached its
highest ever average for the year. Commodity prices, as measured by the HWWI index, climbed by
22.4 per cent in euros and 28.6 per cent in US dollars compared with 2010. The oil price – an indicator
of the price of plastics and of energy costs – increased to over US$ 125 per barrel on the back of
unrest in North Africa and the Middle East. Metal prices were pushed up by the improving global
economy and strong demand from China for copper, steel and aluminium.
KION Holding 1 GmbH
Management report for 2011
Page 16 of 57
Euro loses value
Group management report
Exchange rates proved highly volatile over the course of the year against the backdrop of the euro
crisis and partly due to government intervention. The relative stability of the euro over the year as a
whole was mainly due to its strong performance in the first six months. However, the euro fell against
other reserve currencies at the end of 2011. A weaker euro is generally favourable for European
exports but it also makes important input materials more expensive. Sharp fluctuations throughout the
year were the major challenge in 2011 rather than the euro's absolute exchange rate.
The KION Group sells many of its products in the European Economic Area and issues invoices in
euros even outside the European Monetary Union, depending on the sales structure. Owing to
increasing unit sales in emerging markets, some trade receivables are denominated in foreign
currencies. The most significant foreign currencies for the KION Group are the Chinese renminbi,
pound sterling and the Brazilian real.
Currencies
Average rate per Euro
Brazil (BRL)
Switzerland (CHF)
China (CNY)
United Kingdom (GBP)
Russia (RUB)
USA (USD)
Source: Reuters
2011
2010
2.33
1.23
9.00
0.87
40.89
1.39
2.33
1.38
8.99
0.86
40.32
1.33
3.3 Market for industrial trucks
Global market sees record unit sales
Worldwide demand for industrial trucks remained relatively unaffected by economic uncertainties in
2011. Global sales rose by 23 per cent year on year to reach a record 977,000 units (2010: 796,000
units). The recovery in the markets seen in 2010 continued in the first six months of 2011, with order
intake amounting to 506,500 units. There was a slowdown in the second half of the year however, and
sales declined to 470,600 units. Over half of market growth was generated by the markets in western
Europe and China. Eastern European markets also achieved high growth rates, driven above all by
Russia. The high-growth regions underpinned their importance as markets and continued to stabilise
in the global market. Order intake in the industrialised countries, above all Germany and the United
States, was buoyant and grew at a faster rate than the global market.
German market above pre-crisis level
The western European market benefited from strong demand in the first half of 2011 and generated
growth of 26 per cent over the year as a whole. Order intake in western Europe came to 278,400 units,
a significant improvement on the 222,000 units achieved in 2010. Around 12,200 units were
accounted for by the Turkish market, which has counted as part of western Europe instead of Asia
since 2011 following a restructuring for statistical purposes. Making up 38 per cent of order intake in
western Europe, sales of counterbalance trucks with electric motors or IC engines were driven by the
benign investment climate and rose more sharply than sales of warehouse technology. Although the
overall picture was positive in 2011, the situation was very mixed in the individual countries as it had
been in 2010. Germany reported an order intake of 76,400 units, thereby surpassing the market
volume seen in the record year of 2007 and remaining the biggest driver of growth in western Europe.
Following only moderate growth in 2010, unit sales in the French market went up by 20 per cent to
55,800 units but was 10 per cent below the volume generated in 2007. In contrast, demand for
industrial trucks in Spain and Italy was very subdued compared with 2010, rising by 4 per cent and 6
per cent respectively.
KION Holding 1 GmbH
Management report for 2011
Page 17 of 57
Global Industrial Truck Market (order intake)
in thousand units
Western Europe¹
thereof
Germany
France
United Kingdom
Eastern Europe
thereof
Russia
Europe
North America
thereof
USA
Central & South America
thereof
Brazil
China
Rest of World
World
¹ 2011 incl. Turkey/Cyprus
Source: WITS/FEM
Group management report
2011
278
2010
222
2009
181
76
56
27
54
23
333
170
155
55
23
238
181
977
62
47
22
40
15
262
136
124
45
23
200
153
796
45
42
17
21
3
202
98
89
21
8
118
110
549
Changes
2011/2010
26%
24%
20%
26%
36%
51%
27%
25%
25%
23%
-1%
19%
18%
23%
Continued upturn in eastern Europe
The positive trend in the eastern European markets seen in 2010 continued, with growth of 36 per
cent to 54,500 units in the year under review. Russia was the main driver of the upturn with unit sales
rising to 23,000, which equates to a year-on-year rise of 51 per cent. In Poland, the second largest
market in eastern Europe, sales advanced encouragingly from 9,700 units to 12,000 units in 2011.
While growth rates were generally high across all product segments, unit sales of counterbalance
trucks with IC engines were especially buoyant owing to continued pent-up demand.
Brazil stagnates at a high level
The Brazilian market was slightly below the record level achieved in 2010 and, despite high growth in
warehouse technology, suffered a small decline of 1 per cent to 22,600 units in 2011. However, the
other markets in Central and South America were more upbeat and contributed to the region's year-
on-year rise in demand of 23 per cent.
Encouraging growth in the USA
Against a background of increasing investment in capital equipment, the US industrial truck market
expanded by 25 per cent to 155,000 units. All product types benefited from this upturn.
Chinese market continues to drive growth
China, which is the largest single market worldwide, accounted for almost two-thirds of Asia's entire
order intake last year. While it did not grow at the same rapid pace as it had in 2010, the Chinese
market expanded by 19 per cent to 238,400 units in the year under review. Classic IC trucks remained
the dominant segment and the main source of growth in absolute terms. As far as warehouse
technology was concerned, there was greater demand for efficient trucks and intralogistics solutions,
as evidenced by extremely high growth of 41 per cent. Despite the difficult conditions in 2011, the
Japanese market also increased by 15 per cent to 67,000 units, but was about a quarter down on the
record figure reported in 2007.
KION Holding 1 GmbH
Management report for 2011
Page 18 of 57
3.4 Legal situation
Group management report
The KION Group's material-handling products are machines that have to comply with certain legal
requirements in all of the major geographical markets in which the Company operates. These
requirements serve to minimise or eliminate the risks for users of the products and for other people,
equipment and the immediate working environment. They also help to maintain the performance of the
machines.
In the European Union, for example, the products are subject to the machinery directive (2006/42/EC),
other technical regulations such as the emissions directives on noise (2000/14/EC) and exhaust gases
(2004/26/EC) and
the electromagnetic compatibility directive (2004/108/EC). Product-specific
regulations also apply, for example the directive on products for use in potentially explosive
atmospheres (94/9/EC) and the German Equipment and Product Safety Act (GPSG), which
implements the requirements of the directive on general product safety (2001/95/EC) in Germany. The
GPSG stipulates that manufacturers only put safe products on the market, i.e. those that satisfy the
requirements regarding health and safety and other criteria applicable to these products.
As a manufacturer of material-handling products that are governed by these regulations, the Company
must ensure that its products comply with the regulations and must verify and certify this compliance in
the prescribed manner. The procedures stipulated by the regulations for the mandatory declaration of
conformity vary depending on the product type. Corresponding regulations and standards apply in
other countries around the world, and the Company's products sold in those markets must comply with
them as well.
The Company has implemented processes that enable it to implement these legal requirements
efficiently, document its compliance with them and incorporate any changes in the legal framework at
an early stage of development. For example, the Company uses both self-certification (e.g.
declarations of conformity) and third-party certification (e.g. EC type-examination certificates). As a
result, when customers receive a product, they always have confirmation – in the form of the CE
marking – that the product complies with all regulations in force. Many of the aforementioned legal
requirements, especially the directives underlying the 'new approach to technical harmonisation and
standardisation', are defined in precise terms in product-specific standards and other standards (e.g.
EN, ISO and DIN). These standards provide simplified procedures for complying with the defined legal
requirements in a verifiable manner, and the Company makes extensive use of them. As a technology
leader, the KION Group endeavours to surpass the minimum standards defined for the products that it
makes.
The construction and operation of production facilities is subject to certain legal requirements in the
various jurisdictions relevant to the Company. In Germany, for example, a permit pursuant to the
Federal Emissions Control Act (BImSchG) must be obtained. Many of these requirements impose
stipulations on the operators of such facilities regarding matters such as the avoidance of air pollution,
noise reduction, waste production & disposal and health & safety. Most of the Company's buildings
also require planning permission, which governs not only their construction and conversion but also
any changes in how they are used. In Germany, the operating permit pursuant to the BImSchG covers
the relevant planning permissions, which means that separate planning permission is only required for
buildings whose construction and operation are not subject to the BImSchG. The KION Group has
also established stable processes in this regard to ensure that it complies with the regulatory
requirements applicable to its plants.
Besides these product-specific and plant-specific rules and regulations, the Company's business
activities are subject to the requirements typically placed on companies that have a strong export
business (e.g. the relevant export controls) and that work with distribution partners (e.g. EU Block
Exemption Regulation). Moreover, the Company's leasing activities in some jurisdictions are governed
by particular regulatory requirements. In Germany, for example, a licence has been required for
certain leasing activities since the introduction of relevant provisions under the German Banking Act
(KWG) on 1 January 2009. STILL Financial Services GmbH obtained the licence in 2011, the year in
which it was founded. The KION Group satisfies all the requirements for this licence, in particular
certain stipulations regarding the qualifications of senior management, the quality of risk management
KION Holding 1 GmbH
Management report for 2011
Page 19 of 57
Group management report
and corporate reporting procedures. These regulations and the corresponding legislation in sales
markets do not place any material restrictions on the Company's business activities.
Technical standards, product & plant safety regulations and environmental requirements are
constantly being updated by the authorities responsible for them. Examples include the tighter
emissions levels permitted for IC trucks and the requirements and limits placed on employers so that
they protect their employees against excessive levels of noise and vibration. As a technology leader,
the Company is well placed to more than simply fulfil these requirements. In fact, its products' existing
technical advantages create potential for KION to successfully differentiate itself further from the
competition. In addition, the KION Group is an active member of associations such as the German
Engineering Federation (VDMA) and its working groups in which it helps to continually enhance
standards and regulations. Overall, the KION Group does not expect the changing regulations to have
any material negative effects on its business model.
4. Strategy
4.1 Strategic objectives
The KION Group's top priority is to deliver a sustained increase in shareholder value. It has therefore
set itself four strategic objectives:
Increase market share in the high-growth markets
1. Become the global market leader
2.
3. Generate sustained growth above the rate of market growth
4. Achieve the best profitability in the sector
The KION Group is already the world's second largest supplier of industrial trucks. By building on its
leading competitive position in Europe and achieving continuous growth in the key markets of eastern
Europe, South America and Asia, the KION Group aims to become the provider with the largest
market share in the sector over the coming years. Market-leading technologies and strong service
expertise are creating the foundations for achieving this best-in-class position. The KION Group
intends to continue extending its range of products and services so that it is always able to optimally
satisfy the needs of the logistics markets.
At the same time, the Company is continually taking steps to further improve its efficiency and
profitability. One such measure is the standardisation of processes and structures – where practical
across all locations and brands. However, the Company ensures that, although aiming for the highest
possible degree of standardisation, it always takes account of the individual logistics markets' regional
characteristics. In the year under review, the KION Group also continued to systematically implement
its KIARA performance enhancement programme, which it launched in 2009.
To provide practical support with achieving its objectives, the KION Group has defined four points of
leverage. It applies these in strategic projects and initiatives that are always under the direct control of
the Executive Board.
KION Holding 1 GmbH
Management report for 2011
Page 20 of 57
Diagram showing the strategy of the KION Group
Group management report
4.2 Strategic levers
1. Consolidation of market-leading position in Europe and expansion of range of services
The KION Group is the technological leader in the industry with a broad range of products and
solutions across six brands and a constantly growing service offering at group level. It intends to
undertake further consolidation of its market-leading position in Europe and to build on its competitive
advantage.
The Group's range of highly efficient products enables customers to achieve significant improvements
in their logistics operations in terms of consumption, performance and ergonomics. For 50 years, the
Linde brand has enjoyed an outstanding market reputation with its hydrostatic drive and economical,
efficient, low-maintenance units. Linde also has many years of experience and expertise in electric
trucks and is continuously pressing ahead with new developments in its Linde Hydraulics business unit
and the new Electronic Systems and Drives division. STILL is strongly placed in the high-potential
market for hybrid drives with its diesel-electric drive system – a unique concept in the sector. In
addition, STILL offers a broad selection of automated logistics vehicles, including vehicles for
challenging warehouse environments.
The Linde and STILL brands are focusing a great deal of effort on separate concepts and
development projects involving alternative power sources for drives such as hybrid, fuel-cell and
lithium-ion technologies in order to ensure that they can benefit from the long-term trend towards
'green logistics'. In 2011, the KION Group's research and development expenditure amounted to 2.8
per cent of total revenue, or 4.7 per cent of revenue from new and hydraulics business. The research
and development expenditure ratio in the KION Group is therefore at the upper end for the industry,
allowing the Company to continue to consolidate its technological advantage and at all times offer its
customers innovative logistics solutions that are fit for the future.
The KION Group aligns its range of products and services directly with the requirements of its logistics
customers and thereby secures customer loyalty. The range therefore extends well beyond the
straightforward sale of trucks to encompass a comprehensive service offering that covers customer
requirements for solutions and services over their entire internal material flow. This includes the
provision of, and ongoing support for, individual and fleet solutions as well as efficient, end-to-end
material flow management including the necessary IT systems. Services worth highlighting in addition
to conventional aftersales business include the sale and leasing of used trucks and the provision of
finance and leasing services. In 2011, service business accounted for 42 per cent of total revenue.
KION Holding 1 GmbH
Management report for 2011
Page 21 of 57
Group management report
Given an active fleet numbering more than one million units over the entire market, service business is
of huge significance to the KION Group. This business represents a key driver for long-term customer
loyalty and its importance to the Group will continue to grow in the future. This is the basis for
continuous expansion of the range of support services and increasing service cover for the active fleet.
2. Developing the full potential in growth markets
The KION Group is already superbly positioned in all growth regions – eastern Europe, South America
and Asia – and is endeavouring to consolidate its position primarily in the BRIC countries so that it can
benefit from the potential for further growth in these regions. In two of these markets of the future,
China and Brazil, the KION Group has established local production facilities. Regional research and
development teams have also been set up. These teams take into account local market requirements
early in the product development phase, thereby facilitating the development of solutions that are both
customer-oriented and cost-effective. The KION Group will continue to target growth regions in terms
of capital investment, expansion of its product range and strengthening of the sales and service
network so that it is able to fully leverage the potential in the global logistics market.
3. Multi-brand strategy aimed at increasing market penetration
The KION Group has six brands. It is the market leader in Europe and the global number two in the
industrial trucks market. Different regions as well as different markets and customer requirements are
efficiently covered and supported by the brands Linde, Fenwick, STILL, OM (OM STILL from 2012),
Baoli and Voltas. The KION Group operates globally with its premium brands Linde and STILL, which
are complemented in Europe by Fenwick in France and OM STILL in Italy. The international Chinese
brand Baoli, which has been part of the KION Group since 2009, and the local Indian brand Voltas
(part of the Group since 2011) service the high-volume economy segment.
The multi-brand approach allows the KION Group to pursue a targeted sales and service strategy
adapted to each particular market. This approach also means that the Group can offer a number of
different options compared with competitors and thereby boost its market presence. In addition, the
KION Group plans to expand and achieve further improvements in its global market position through
selective acquisition of local providers.
4. Cost leadership through synergies and continuous operational excellence
Since the KION Group was hived off from the Linde Group in 2006, the Company has systematically
exploited potential efficiency improvements and thereby enhanced its performance. The organisation
is structured so that synergies can be realised across brands and a best-practice approach can be
implemented throughout the Group. Despite the moves towards standardised processes and
structures, one of the key strategic elements of marketing is a clear differentiation between the brands.
The corporate functions in the KION Group are managed centrally under the umbrella of Central
Operations (COPS) in order to ensure that standards are established and expertise is made available
throughout the Group. Efforts to improve efficiency focus both on continuous streamlining of
production processes and on platform strategies and other modular concepts. Central purchasing
generates cost benefits for the entire Group, cross-brand research and development activities pool
resources and promote efficient utilisation of capacity; in turn, standardisation of IT systems and
platforms reduces costs and facilitates maintenance. The KION Group plans to continue to improve its
cost structures and thereby its market position over the long term by exploiting further potential
synergies and enhancing operating performance on a continuous basis.
An approval process for capital expenditure projects has been implemented throughout the KION
Group. It supports appraisal and decision-making for capital expenditure projects to ensure that such
projects are efficient and economic over the long term. Capital expenditure projects in excess of
€250,000 are presented individually in detail and a re also subject to an investment appraisal using the
discounted cash flow method. The results are reviewed to ensure that the internal rate of return and
the payback period are acceptable. Capital expenditure projects aim to generate a sustained increase
in enterprise value and must therefore achieve a higher internal rate of return than the cost of capital.
KION Holding 1 GmbH
Management report for 2011
Page 22 of 57
4.3 Financial Services segment
Group management report
In the year under review, the KION Group laid the main foundations that will enable it to manage and
report the Group's financial services activities as a separate segment (Financial Services, FS).
The reasons behind managing FS separately are the rising demand for innovative, tailored finance
solutions and the resulting growth in the importance of such activities for the KION Group. Within the
Group, the FS activities constitute a key cross-brand service function that cuts across the business of
the Linde and STILL brands and acts as a valuable sales tool and means of customer retention. Other
important factors behind the spin-off of the FS organisation include the different business models and
value drivers in the industrial and finance businesses.
In future, the cross-brand FS segment will take over responsibility for the management of the following
key areas of activity in the KION Group: financing of short-term rental fleets, long-term leasing as part
of sales financing through the provision of innovative and tailored finance solutions, and risk
management for the leasing business. Short-term rentals and indirect leasing arrangements will
remain with the brand segments.
Separate financial services companies have been established in the core markets of France,
Germany, Italy, Spain and the United Kingdom. Further countries with a high proportion of finance and
leasing business will be integrated gradually.
During the course of 2011, the Group also developed a reporting model for the discrete recording and
management of financial services business. Future reporting in the KION Group will be based on this
model. Page 72 onwards in the notes to the financial statements in this annual report include voluntary
additional disclosures based on the new reporting model and the associated revised breakdown of
business activities in order to give prominence to the increasing importance of financial services
activities in the KION Group and to the future segment structure. In doing so, the aim of the KION
Group is to provide the highest possible degree of transparency for capital markets.
4.4 Initiatives to cut costs and improve efficiency
Since being spun off from Linde AG in December 2006, the KION Group has successfully initiated and
implemented various restructuring programmes. Besides
to considerable efficiency
improvements, they have enabled us to leverage synergies throughout the Group and adapt to
changing market conditions.
leading
As a consequence of the financial and economic crisis that began in late 2008, the KIARA
restructuring programme was launched in the second quarter of 2009 to make the KION Group less
dependent on the business cycle. As a first step, rapid action was taken to reduced fixed costs.
The KIARA performance enhancement programme was terminated at the end of 2011 as most of the
measures had already been implemented by that time. KIARA's main elements were the successful
implementation of long-term structural improvements and efficiency increases. The planned savings
were achieved as a result of regular and detailed reporting and ongoing evaluation of KPIs by the
relevant managers in the KION Group and its brand companies. At the same time, the impact of the
short-term measures tapered off much faster than had been estimated in the KIARA business case
owing to the unexpectedly strong recovery in 2011.
Nonetheless, the KION Group will continue to implement long-term structural and efficiency measures.
Structural changes will include the further consolidation of our European production sites by closing
the plants in Bari (Italy) and Montataire (France). The production capacity of these plants will be
shifted to other production facilities with the aim of improving the capacity utilisation of the European
plants.
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Management report for 2011
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Group management report
4.5 Financial KPIs for managing the Company's business
The management approach is based on six key performance indicators: order intake, revenue,
adjusted EBIT, adjusted EBITDA, net financial debt and free cash flow before tax. These key figures
are used for the KION Group as a whole and at segment level. They form the basis for the
performance targets for both the KION Group and its segments as well as determining a significant
proportion of senior managers' performance-related remuneration. The key performance indicators are
determined once a month and submitted to the Executive Board as part of a comprehensive reporting
package. Net financial debt is only relevant at Group level. The table below shows the key
performance indicators used in the KION Group's internal financial reporting.
Key performance indicators
Order intake
Revenue
Adjusted EBIT¹
Adjusted
EBITDA¹
Net financial debt Free cashflow
before tax
€ million
2011
2010
2009
4,682
3,860
3,028
4,368
3,534
3,084
365
139
-29
665
462
311
2,657
2,641
2,484
282
83
34
¹ Adjusted for KION acquisition items and one-off items
Order intake and revenue
Order intake and revenue are broken down by region, segment and product group in the KION
Group's management reporting so that revenue growth drivers and pertinent trends can be identified
and analysed in a timely fashion.
Adjusted EBIT
The key figure used for the operational management and analysis of the KION Group's financial
performance is adjusted earnings before interest and tax (EBIT). The EBIT figure is shown net of
depreciation for property, plant and equipment and leased assets and of amortisation for intangible
assets. Non-recurring items are not included for the purposes of performance measurement; these
items include the effect of purchase price allocation in connection with the KION acquisition, costs
incurred in connection with the KIARA performance enhancement programme, redundancy schemes
and severance pay. The EBIT margin is also used to measure the KION Group's operational
efficiency. The EBIT margin is the ratio of adjusted EBIT to revenue.
Management reporting EBIT is a performance indicator used for internal management purposes that
differed from adjusted EBIT for the last time in 2011 in that it did not take account of the share of
profit (loss) of equity-accounted investments or other net financial income/expenses. From 2012,
management reporting EBIT will correspond to adjusted EBIT.
Adjusted EBITDA
Unlike EBIT, the EBITDA figure is shown before deduction of depreciation for property, plant and
equipment and leased assets and of amortisation for intangible assets. As with adjusted EBIT, the
effects of the KION acquisition purchase price allocation and non-recurring items are not included for
the purposes of performance measurement. Adjusted EBITDA constitutes an approximation of the
cash flow KPI and provides information on the Company's long-term financial performance.
KION Holding 1 GmbH
Management report for 2011
Page 24 of 57
Net financial debt
Group management report
Net financial debt – defined as the difference between liabilities to banks and cash and cash
equivalents – is the key performance measure used in liquidity planning at Group level. Lease
liabilities and other financial liabilities are excluded from this figure.
Free cash flow before tax
Future free cash flows have a direct impact on the value of the Company. They are determined solely
by the KION Group's operating activities and investing activities. Free cash flow before tax does not
include tax payments or interest arising from financing activities, interest expense and similar charges
from leases, or interest and similar income from leases. The performance measurement of free cash
flow before tax is supported by the carefully targeted management of working capital and by detailed
planning of capital expenditure.
4.6 Acquisitions and alliances
Foundation of a company with Voltas in India
The KION Group and Voltas Ltd. agreed to establish an Indian company to develop, manufacture, sell
and service forklift trucks and warehouse trucks. It went into operation in May 2011 and is called
Voltas Material Handling. As part of the transaction, Voltas incorporated its forklift truck and
warehouse technology business into the new company, in which the KION Group holds a majority
stake.
Voltas is the sixth brand in the KION Group and focuses primarily on India's high-volume market. Its
product range includes diesel, gas and electric forklift trucks with load capacities of between 1.5 and
16 tonnes. In July 2011, Voltas commenced operations at a new plant in Pune (India) with the aim of
better meeting the strong demand in this market. Voltas Material Handling intends to use its network of
25 branches and authorised dealers to exploit the future potential of one of the world's most attractive
markets and, as part of the KION Group, to strength its market position considerably.
Acquisition of further shares in Baoli in China
In 2011, the KION Group acquired further shares in the Chinese company KION Baoli (Baoli), which is
based in Jingjiang. The KION Group had established Baoli with Jiangsu Shangqi Group (formerly
Jiangsu Baoli Group) and Jingjiang Baoli Forklift in January 2009. Baoli has been under the complete
management control of the KION Group since 2010. Having acquired a further stake in Baoli in 2011
of 5.34 per cent, the KION Group now controls 97.34 per cent of the company. The Baoli brand
occupies a global position in the economy segment and is helping drive the KION Group's rapid
expansion into the world's emerging markets. Baoli's product range encompasses IC trucks, electric
forklift trucks and warehouse trucks with loading capacities of between 1 and 10 tonnes. Its extensive
distribution and service network serves customers in all provinces of China and in 80 other countries.
Expansion of sales footprint in eastern Europe
The KION Group aims to expand its presence in the emerging markets. With this in mind, the Linde
Material Handling subsidiary acquired the business of its dealer partner Liftec in Russia in September
2011, thereby gaining well-established direct access to the fast-growing Russian market. Linde had
been working successfully with Liftec in Russia for the previous 20 years. This means that, like STILL,
Linde also now has its own distribution and service structure in Russia.
With sales of more than 23,000 new trucks in 2011, Russia is Europe's fastest-growing market and
has become the fifth largest European market for industrial trucks in a very short space of time. Linde
also wants to step up its activities in Ukraine and Kazakhstan and took over Liftec's business in
Kazakhstan in February 2012; a similar transaction in Ukraine is planned for summer 2012.
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Group management report
Boost to market position in the United Kingdom
In June 2011, Linde Material Handling acquired the outstanding 51 per cent of shares in its UK-based
dealer Linde Sterling. Linde Sterling is one of the largest exclusive dealers of Linde products in the
United Kingdom. For the past 30 years it has been successfully supplying new and used trucks, rental
trucks and related services in north-west England and north Wales. It employed around 300 people at
its four sites at the end of 2011. In December 2011, Linde Material Handling also acquired the
outstanding 25.5 per cent of shares in Linde Castle Ltd. and now holds 100 per cent of the shares
either directly or indirectly. These acquisitions have boosted Linde's market position and customer
service activities in the United Kingdom.
5. Notes on financial position and financial performance
5.1 Operating and financial performance
5.1.1 Order intake
Order intake (units)
The continued growth of the Chinese market, the larger volume of orders received from Russia and
Brazil, and equally strong demand in Europe enabled the KION Group to further improve its intake of
orders for new trucks in 2011. Global order intake rose by 19 per cent year on year to 144,800 units in
2011 (2010: 121,500 units). The KION Group therefore remained Europe's undisputed market leader
and the second largest provider worldwide.
Electric and internal-combustion engine counterbalance trucks, which constituted almost half of the
KION Group's order intake and are mainly used in industrial applications, benefited significantly from
the economic recovery in western Europe, especially in Germany, and from the robust demand from
the major emerging markets. These trucks generated much stronger growth than the Company's
warehouse technology.
Order intake in China – the third-largest market for the KION Group's sales – rose by 23 per cent year
on year to 14,500 units in 2011 on the back of the strong growth of the market as a whole and the
introduction of additional market-specific products. Consequently, the KION Group achieved growth
rates in excess of general market growth levels. China generated especially strong demand for low-
priced IC trucks, which the KION Group sells under its Baoli brand. The KION Group also expanded its
market share slightly in the technologically more sophisticated electric forklift truck segment, which is
the second most important market segment. In China, the KION Group is represented by its Linde and
Baoli brands, which cater to different market segments and customer needs. Overall, the KION Group
is by far the most important international supplier in China, which is the largest single market.
Demand also increased in Brazil, rising by 12 per cent year on year to 5,200 units. It was particularly
encouraging that the KION Group gained significant market share despite tough operating conditions.
Almost one in four of the new trucks sold in Brazil in 2011 was manufactured by the KION Group.
KION will be in an even better position to develop the South American market from 2012 once it has
completed the construction of an additional production facility for IC trucks in São Paulo.
The KION Group managed to increase its market share in eastern Europe as well. Its enlarged
footprint in Russia as a result of its acquisition of local dealer Liftec in 2011 had a particularly positive
impact on its order intake, which doubled in Russia year on year to 2,700 new trucks. The KION
Group's market share jumped to 12 per cent.
Order intake in western Europe also saw significant growth in 2011. The KION Group increased its
total volume of orders by 19 per cent year on year to 100,000 units. Growth in Germany, the largest
single market in the region, was especially impressive. Order intake here surged by 23 per cent to
36,400 units in 2011 compared with 29,600 new trucks in 2010. France remained the second-largest
market with approximately 23,000 units sold. One in three of the new forklift trucks sold in western
KION Holding 1 GmbH
Management report for 2011
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Group management report
Europe in 2011 once again bore a KION Group brand name. As market leader, the KION Group also
benefits from its efficient distribution network in the industrial-truck markets of Germany, France, Italy,
the United Kingdom and Spain.
Total order intake (€)
The total value of the orders received by the KION Group in 2011 rose by 21 per cent year on year to
€4,682 million. This order value includes not only business in new trucks but also rental business, the
sale of used trucks, and aftersales services. Order intake in all product categories rose year on year.
The benign macroeconomic trends prevailing in 2011 increased industry's willingness to invest in
capital equipment, thereby boosting KION's business in new trucks. The further rise in fleet capacity
utilisation in the market also created an additional need for services and spare parts. Stronger demand
for used and rental trucks generated further growth as well.
Order intake broken down by segment
€ million
LMH
STILL
Other & consolidation
Total
2011
2010
Change
3,107
1,752
-178
4,682
2,510
1,518
-168
3,860
23.8%
15.4%
-5.5%
21.3%
Linde Material Handling (LMH), which is the largest segment in the KION Group, saw its business in
new trucks boosted primarily by China's economic growth. Demand from Germany also continued to
strengthen, which enabled LMH to achieve the largest year-on-year increase in order intake in its
domestic market. The intake of orders for new trucks in the LMH segment grew by 22 per cent
compared with 2010 to 88,300 units. This corresponded to a total order intake value of €3,107 million
– or a year-on-year increase of 24 per cent – in 2011.
The intake of orders for new trucks in the STILL segment amounted to 51,200 units in 2011, growing
by 15 per cent year on year. This encouraging trend was largely driven by the German market, Brazil
and the emerging markets of eastern Europe. The total value of orders received by STILL grew by
more than 15 per cent from €1,518 million in 2010 t o €1,752 million in the reporting year.
5.1.2 Order backlog
The KION Group's order backlog as at 31 December 2011 totalled €953 million, which represented a
year-on-year increase of 19 per cent. The main reasons for the larger inventory of outstanding orders
at the end of the year were the stronger demand for new trucks and the generally high utilisation of
capacity at KION's production facilities.
5.1.3 Income statement
Revenue broken down by segment
€ million
LMH
STILL
Other
Consolidation
Total revenue
2011
2010
Change
2,856
1,666
223
-376
4,368
2,254
1,420
160
-300
3,534
26.7%
17.3%
39.7%
-25.6%
23.6%
The growth in order intake also boosted the KION Group's revenue, which rose by approximately 24
per cent from €3,534 million in 2010 to €4,368 mill
ion in the reporting year.
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Management report for 2011
Page 27 of 57
Group management report
The LMH segment was once again the key revenue driver, generating 65 per cent of the KION
Group's total revenue. This segment raised its revenue by almost 27 per cent year on year from
€2,254 million to an impressive €2,856 million. STI LL increased its revenue by 17 per cent from
€1,420 million to €1,666 million over the same peri od. The 'Other' segment, which comprises the
activities attributable to Voltas Material Handling – the KION Group's Indian company – as well as
cross-segment services and IT services, contributed revenue of €223 million in 2011 prior to
consolidation; in 2010 it contributed €160 million.
Revenue by customer location
€ million
Germany
EU w/o Germany
Rest of Europe
America
Asia
Rest of world
Total revenue
2011
2010
Change
1,175
2,115
204
281
435
160
4,368
900
1,820
152
233
302
128
3,534
30.6%
16.2%
34.1%
20.6%
44.0%
24.9%
23.6%
The revenue generated by the KION Group in Germany rose by more than 30 per cent year on year to
€1,175 million; it therefore grew even more strongl y than the revenue earned outside Germany, which
increased by 21 per cent year on year. Of the KION Group's total volume of business, 73 per cent was
transacted outside Germany, generating revenue of € 3,194 million. The revenue earned outside
Germany in 2010 amounted to €2,634 million and acco unted for 75 per cent of total revenue.
The KION Group achieved its highest percentage revenue growth in Asia, where revenue rose by 44
per cent – or €133 million – year on year. The stro ngest year-on-year revenue growth in absolute
terms came from the Company's European markets outside Germany, which increased their revenue
by €346 million. Germany also generated encouraging revenue growth of €275 million.
The revenue generated by the KION Group from new trucks grew by 33 per cent from €1,776 million in
2010 to €2,364 million in the reporting year. This encouraging trend was largely driven by the
significant market growth rates achieved in Germany, France, China and Brazil. The Company's
business in new trucks was boosted by the continued rise in demand for counterbalance trucks. Its
other product categories were also buoyed by the benign market environment and the generally more
pronounced global demand for industrial trucks.
Revenue by product category
€ million
New business
Hydraulics
Service offering
- After sales
- Rental business
- Used trucks
- Other
Total revenue
2011
2010
Change
2,364
173
1,831
1,066
441
219
106
4,368
1,776
120
1,639
971
402
187
79
3,534
33.1%
44.0%
11.7%
9.8%
9.6%
16.9%
34.3%
23.6%
Service business grew by a total of around 12 per cent from €1,639 million in 2010 to €1,831 million i n
the reporting year. Aftersales business accounted for the largest share of service revenue, raising its
revenue by approximately 10 per cent year on year to €1,066 million (2010: €971 million). Very similar
growth rates were achieved by the rental business, which advanced from €402 million in 2010 to €441
KION Holding 1 GmbH
Management report for 2011
Page 28 of 57
Group management report
million in the reporting year. The KION Group also earned revenue of €219 million from used trucks in
2011 compared with €187 million in the previous yea r. Revenue in the 'Other' category – which
includes advisory services, IT solutions and warehouse technology systems – jumped by 34 per cent
from €79 million in 2010 to €106 million in 2011. I
n percentage terms, the strongest growth was
achieved by the hydraulic components business, which increased its revenue by 44 per cent year on
year.
Condensed income statement of the KION Group
€ million
Revenue
Cost of sales
Gross profit
Selling expenses
Research and development costs
Administrative expenses
Other
Earnings before interest and taxes (EBIT)
Net finance cost
Loss before taxes
Income taxes
Loss of the year
2011
2010
Change
4,368
-3,256
1,112
-521
-120
-283
25
213
-272
-59
-34
-93
3,534
-2,684
850
-484
-103
-248
19
35
-266
-231
35
-197
23.6%
-21.3%
30.8%
-7.6%
-15.8%
-14.5%
29.6%
>100%
-2.3%
74.6%
<-100%
52.8%
Whereas the KION Group's revenue for 2011 rose by 24 per cent year on year, its cost of sales grew
by only 21 per cent over the same period. In absolute terms, the cost of sales increased from €2,684
million in 2010 to €3,256 million in 2011. Conseque ntly, the KION Group's gross profit for 2011 came
to €1,112 million, which constituted a year-on-year increase of 31 per cent. The gross margin in
relation to revenue improved accordingly by 1.4 percentage points year on year to 25.5 per cent. The
main reasons for this performance were further efficiency gains in production, higher overall capacity
utilisation, and improvements in gross operating revenue across all product categories.
Other functional costs also rose only modestly during the reporting year. Selling expenses grew by
only 8 per cent year on year despite the sharp rise in revenue. Research and development costs
increased by just under 16 per cent owing to the large number of new development projects and
product innovations; administrative expenses grew by 14 per cent, which was also less than the
percentage rise in revenue.
The sharp rise in revenue coupled with the only modest increases in functional costs and the cost of
sales owing to the Company's successful cost management policies once again enabled the KION
Group's earnings before interest and tax (EBIT) to improve significantly by €178 million to €213 milli
on
in the reporting year. EBIT for 2010 had amounted to only €35 million.
Adjusted EBIT
€ million
Earnings before interest and tax (EBIT)
One-off items
KION acquisition items
Adjusted EBIT¹
¹ Adjusted for KION acquisition items and one-off items
2011
2010
Change
213
115
36
365
35
76
29
139
>100%
52.6%
23.9%
>100%
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Management report for 2011
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Group management report
The KION Group's EBIT (adjusted for non-recurring items and KION acquisition items) also showed a
highly impressive year-on-year improvement in 2011, advancing from €139 million in 2010 to €365
million in 2011. This presentation of adjusted EBIT included the profit from equity-accounted
investments, other net investment income and other net financial income/expenses totalling €7 million
(2010: €4 million). These investments relate almost exclusively to investments in dealers in the
material-handling segment.
KION acquisition items and non-recurring items amounted to €151 million in the reporting year (2010:
€105 million), €115 million of which was attributab le to non-recurring items compared with €76 million
in 2010. A significant proportion of these items related to restructuring costs in connection with the
plans to relocate production facilities in France and Italy.
EBIT by segment adjusted¹
€ million
LMH
STILL
Other & consolidation
Total
2011
2010
Change
283
102
-20
365
139
20
-20
139
>100%
>100%
0.1%
>100%
¹ Adjusted for KION acquisition items and one-off items
The KION Group's adjusted EBIT for 2011 was boosted by LMH's EBIT contribution of €283 million,
which was twice as high as the figure of €139 milli on that it had reported for 2010. STILL also
delivered an impressive earnings performance, with a five-fold increase in EBIT (net of KION
acquisition items and non-recurring items) from €20 million in 2010 to €102 million in the reporting
year. These considerable earnings improvements are essentially attributable to the optimised
utilisation of capacities at the brand companies and to the KIARA performance enhancement
programme that was successfully continued in 2011.
Net finance costs rose by €6 million year on year t o €272 million in 2011. They included a net interes t
expense for the senior facilities agreement (SFA) of €117 million (2010: €129 million) and, for the fi
rst
time, a net interest expense for the corporate bond of €25 million.
Even though its business performance was encouraging, the KION Group still incurred a net loss of
€93 million owing to non-recurring items although t his was a significant improvement compared with
2010. This was achieved despite a tax expense of €3 4 million (2010: tax income of €35 million). The
KION Group had reported a net loss of €197 million for 2010.
5.2 Financial position
Principles and objectives of financial management
By pursuing an appropriate financial management strategy, KION Group GmbH ensures that sufficient
liquidity is available at all times and mitigates the financial risk to its enterprise value and profitability.
As an entity that operates worldwide, the KION Group is exposed to risks in respect of currencies,
interest rates, prices, counterparties and countries.
The KION Group provides sufficient financial resources for its day-to-day business, optimises its
financial relationships with customers and suppliers, ensures that the necessary liquidity is available to
its companies, and manages any collateral security offered. A group of international banks and
investors meets the Company's basic borrowing requirements. In addition, the Company availed itself
of the funding facilities offered by the public capital markets by issuing its first corporate bond in April
2011. The financial resources required within the KION Group are provided through internal funding.
The KION Group collects liquidity surpluses of the Group companies in central or regional cash pools
and, where possible, covers subsidiaries' funding requirements with intercompany loans. This central
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Management report for 2011
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Group management report
source of funding enables the KION Group to present a united front in the capital markets and
strengthens its hand in negotiations with banks and other market participants.
The Group occasionally arranges additional credit lines for KION Group companies with local banks or
leasing companies in order to comply with legal, tax and other regulations.
The SFA, which is the main loan agreement, and the contractual terms and conditions governing the
issuance of the corporate bond require compliance with certain undertakings and covenants among
other things. The SFA also requires compliance with specific financial covenants during the term of the
agreement. The financial covenants specify required ratios for the financial position and financial
performance of the KION Group. The covenants are expressed in the form of key figures relating to
net gearing, available liquidity, EBITDA, interest paid and capital expenditure. These loan terms and
conditions were adjusted in line with prevailing market conditions and with the broad consent of the
lenders in 2009. In return for adjusting the covenants, the lenders were granted an increase in the
interest premium. This premium is mainly payable as a bullet payment at maturity, thereby ensuring
that there is no additional adverse effect on the KION Group's liquidity in the meantime. If
undertakings or financial covenants are breached, this may, for example, give lenders the right to
terminate the SFA or permit bondholders to call the corporate bond prior to its maturity date. All the
financial covenants were complied with in the past financial year.
In addition, investment funds advised by Kohlberg Kravis Roberts & Co. L.P. and Goldman Sachs
Capital Partners loaned the KION Group a principal amount of €100 million under the terms of the SFA
in order to offer the Company greater strategic flexibility. The loan amount and the associated interest
are repayable as a bullet payment at maturity. For funding purposes, the KION Group also engages to
a small extent in factoring. The volume of non-recourse factoring business amounted to €18 million at
the end of 2011 (31 December 2010: €20 million); th e Company only uses recourse factoring in
isolated cases. KION Group disposes of a liquidity reserve through unrestricted, bindingly committed
credit lines and cash to ensure that it remains solvent and financially flexible.
Cash flow
The key performance indicator for liquidity in the KION Group is free cash flow before tax, which does
not include tax payments or interest arising from financing activities, or interest expense and similar
charges from leases, or interest and similar income from leases. For further information about free
cash flow before tax and other KPIs used to manage the KION Group, see section 4.5 'Financial KPIs
for managing the Company's business'.
Condensed cash flow statement
€ million
EBIT
Cash flow from operating activities
Cash flow from investing activities
Free cash flow
Cash flow from financing activities
Currency effects on cash
Change in cash and cash equivalents
Net financial debt¹
¹ Before borrowing costs
2011
213
387
-153
234
-115
1
121
2010
Change
35
199
-123
76
-290
4
-211
>100%
94.1%
-23.8%
>100%
60.5%
-71.1%
>100%
0.6%
2,657
2,641
Cash flow from operating activities jumped by €188 million to €387 million in 2011 (2010: €199 million ).
The underlying reason for this improvement was that earnings before interest and tax (EBIT) had
increase in working capital from €661 million in 20 10
increased to €213 million (2010: €35 million). The
the larger volume of business, was
to €668 million in 2011, which was associated with
KION Holding 1 GmbH
Management report for 2011
Page 31 of 57
Group management report
disproportionately low compared with revenue growth. This also had a positive impact on the cash flow
from operating activities.
The net cash used for investing activities in the KION Group increased by 24 per cent to €153 million
in 2011 (2010: €123 million). The reason for this w as the higher capital expenditure on non-current
assets and on property, plant and equipment (capex), for which the total cash payments amounted to
€133 million (2010: €123 million). Cash payments re lating to acquisitions rose by €25 million to €33
million in 2011. This amount essentially comprised cash payments of €16 million in connection with the
acquisition of Voltas Material Handling, India, and payments of €10 million as part of the purchase of
the remaining shares (51 per cent) in UK-based dealer Linde Sterling. In addition to a smaller
acquisition in Italy, the KION Group invested a further €5 million, primarily in Liftec's business in
Russia during the reporting year.
Cash flow from financing activities amounted to a total net cash outflow of €115 million in 2011 (2010 :
net cash outflow of €290 million). €483 million of
the cash received from issuing the corporate bond
was used to refinance the senior facility agreement (SFA). The Company also had to make cash
payments of €12 million in connection with its bond issue in the reporting year. A further €54 million
was used for the scheduled repayment of the credit line (capex facility). Interest payments rose by €1 3
million to €147 million due to higher interest rate s for financial and capital market liabilities. This was
counteracted by the €133 million drawdown of the re volving credit facility under the SFA. In 2011,
there were also payments of €14 million for currenc y hedges (2010: 0).
The cash and cash equivalents reported on the face of the balance sheet as at 31 December 2011
amounted to €373 million (31 December 2010: €253 mi
llion).
For internal management purposes, free cash flow is much more narrowly defined as the total of cash
flow from operating activities plus cash flow from investing activities.
Reconciliation to free cash flow before tax
€ million
Cash flow from operating activities
Cash flow from investing activities
Free cash flow
Taxes paid
Interest on lease receivables/liabilities
Finance receivables incl. interest income
Cash out from ownership interests (after control)
Other items
Free cash flow before tax¹
¹ Internal key performance indicator
2011
387
-153
234
43
12
-6
-1
-1
282
2010
Change
199
-123
76
13
10
-2
-10
-4
83
94.1%
-23.8%
>100%
>100%
18.2%
<-100%
90.0%
75.0%
>100%
In contrast to the free cash flow of €234 million,
management purposes) does not include any income tax payments (€43 million) or lease interest
payments (€12 million). Cash receipts from financia l receivables and interest income (€6 million) and
other individual items that are treated differently in accordance with IAS 7 were also reclassified in
2011. Allowing for these items, the free cash flow before tax amounted to €282 million, which was a
sharp year-on-year rise of €199 million.
free cash flow before tax (the figure used for
5.3 Net assets
The Company's total assets had grown by €307 millio n year on year to €6,066 million as at 31
December 2011.
KION Holding 1 GmbH
Management report for 2011
Page 32 of 57
Group management report
The structure of the KION Group's balance sheet continued to reflect its acquisition finance and the
KION purchase price allocation. The net loss of €93 million reported for 2011 considerably increased
the amount of negative equity reported on the balance sheet. The KION Group's equity came to
minus €488 million as at 31 December 2011 (31 Decem ber 2010: minus €400 million).
Assets
Condensed balance sheet, assets
€ million
Non-current assets
thereof:
Goodwill
Brand names
Deferred tax assets
Leased assets
Lease receivables
Current assets
thereof:
Inventories
Trade receivables
Lease receivables
Cash
Total assets
2011
in (%)
2010
in (%)
∆ in %
4,160
1,538
594
262
540
243
68.6%
4,105
71.3%
25.4%
9.8%
4.3%
8.9%
4.0%
1,507
591
242
501
247
26.2%
10.3%
4.2%
8.7%
4.3%
1,906
31.4%
1,654
28.7%
625
677
118
373
6,066
10.3%
11.2%
2.0%
6.2%
536
633
121
253
5,759
9.3%
11.0%
2.1%
4.4%
1.4%
2.1%
0.6%
8.4%
7.7%
-1.6%
15.2%
16.8%
6.8%
-2.1%
47.7%
5.3%
Non-current assets rose by €56 million to €4,160 mi
€1,906 million.
llion, while current assets grew by €252 million to
The increase of €31 million in goodwill, which is r eported as a non-current asset, to €1,538 million a s
at 31 December 2011 was almost exclusively attributable to the acquisition of India's Voltas Material
Handling (€15 million), the purchase of a non-contr olling interest in UK-based dealer Linde Sterling (€9
million) and the acquisition of Liftec's business in Russia (€7 million).
The €20 million rise in deferred tax assets during
recognition of provisions in connection with restructuring activities.
the year under review was due in particular to the
The carrying amount of leased assets reported on the face of the balance sheet increased by €39
million to €540 million on the back of the larger v olume of business.
Inventories, which are reported as current assets, grew sharply by €89 million to €625 million. The
larger volume of business caused a rise in inventories of materials, supplies and finished goods. At 17
per cent, the rate of increase in inventories was lower than that of revenue growth. Even as its
business in new trucks grows, the KION Group still aims to optimise its inventories by managing its
working capital rigorously.
The larger volume of business also caused trade receivables to rise by €43 million to €677 million. Th e
KION Group's optimised receivables management meant that there was no significant increase in
valuation allowances and that receivables grew by less than revenue.
The KION Group's cash and cash equivalents advanced by €120 million year on year to €373 million
ion). This significant jump was largely a result
as at 31 December 2011 (31 December 2010: €253 mill
of the €133 million drawdown of the revolving credi
t facility. This line was drawn in November 2011 as
a precautionary measure in view of the uncertain situation in economic and financial markets and, as
at 31 December 2011, was held as liquidity.
KION Holding 1 GmbH
Management report for 2011
Page 33 of 57
Equity and liabilities
Condensed balance sheet, equity and liabilities
€ million
Equity
Non-current liabilities
thereof:
Shareholder loan
Corporate bond
Financial liabilities
Deferred tax liabilities
Lease liabilities
Current liabilities
thereof:
Financial liabilities
Trade payables
Lease liabilities
Total equity and liabilities
Group management report
2011
in (%)
2010
in (%)
∆ in %
-488
4,842
643
488
2,290
339
471
-8.0%
79.8%
10.6%
8.0%
37.7%
5.6%
7.8%
-400
4,800
615
−
2,772
335
411
-6.9%
83.3%
10.7%
0.0%
48.1%
5.8%
7.1%
1,711
28.2%
1,359
23.6%
227
634
230
6,066
3.7%
10.5%
3.8%
106
508
251
5,759
1.8%
8.8%
4.4%
-21.9%
0.9%
4.5%
-
-17.4%
1.2%
14.6%
25.9%
>100%
24.8%
-8.1%
5.3%
The equity and liabilities side of the balance sheet primarily reflects the financial liabilities incurred by
the KION Group's acquisition finance (SFA). KION Finance S.A., a recently established subsidiary
based in Luxembourg, issued a corporate bond for €5 00 million in April 2011. The interest on the
fixed-rate tranche of €325 million (7.875 per cent per annum) is paid semi-annually, while interest on
the floating-rate tranche of €175 million (three-mo nth Euribor + 4.25 percentage points per annum) is
paid once a quarter. The bond's principal is redeemed as a bullet payment on maturity. €483 million
of the total proceeds of €500 million was used in 2 011 to repay existing SFA liabilities, which reduced
current and non-current financial liabilities from €2,878 million in 2010 to €2,517 million in 2011. A
capital market liability of €488 million was recogn ised in respect of the bond after borrowing costs of
€12 million had been deducted.
Although the SFA funding was originally taken out in euros, some of it was converted into US dollars.
The last dates for the repayment of amounts drawn down under the syndicated loan are between
December 2013 and December 2016. In both currencies, the interest payable is based on a variable
rate. The KION Group has entered into interest-rate and currency derivatives – primarily interest-rate
swaps, currency swaps and currency options – to hedge some of the interest-rate and exchange-rate
risk arising from the acquisition finance. About half of the currency and interest exposures were
hedged as at the reporting date.
Financial liabilities before borrowing costs advanced by €136 million in 2011. As at 31 December
2011, current and non-current liabilities to banks amounted to €2,530 million (gross), while liabiliti es
relating to the corporate bond totalled €500 millio n. The liabilities to banks alone therefore reduced by
€364 million year on year. Net inflows of €483 mill
ion from the issuance of the corporate bond were
used to repay the SFA liabilities to banks and make a scheduled repayment of €54 million under the
multi-currency capex facility. However, this was counteracted by the precautionary €133 million
drawdown of the revolving credit facility and by new SFA interest liabilities from deferred interest
(PIK) of €34 million. In addition, exchange differe nces arising from translation of the US dollar tranche
of the SFA increased liabilities to banks by €19 mi
llion.
KION Holding 1 GmbH
Management report for 2011
Page 34 of 57
Credit terms
Group management report
€ million
Typ
Currency
Interest rate
Maturity
2011
2010
Bank Loan
Bank Loan
Bank Loan
Bank Loan
Bank Loan
Bank Loan
Term Loan Facility Term B
Term Loan Facility Term B
Term Loan Facility Term C
Term Loan Facility Term C
Term Loan Facility Term D
Term Loan Facility Term G
Term Loan Facility H1a (Corporate bond - fixed rate)
Term Loan Facility H1b (Corporate bond - floating rate)
Multicurrency Revolving Credit Facility
Bank Loan
Multicurrency Capex Restructuring and
Acquisition Facility
Bank Loan
EUR
USD
EUR
USD
EUR
EUR
EUR
EURIBOR + MARGIN
LIBOR + MARGIN
EURIBOR + MARGIN
LIBOR + MARGIN
EURIBOR + MARGIN
EURIBOR + MARGIN
Fixed rate
3-M-EURIBOR+MARGIN
EURIBOR + MARGIN
2014
2014
2015
2015
2016
2016
2018
2018
2013
EUR
EURIBOR + MARGIN
2013
Other liabilities to banks
Diverse
Diverse
Diverse
Financial debt
./. Capitalized borrowing costs
Financial debt after borrowing costs
691
311
663
311
202
111
325
175
133
72
38
911
297
870
297
201
106
−
−
−
162
50
3,030
-33
2,997
2,894
-22
2,872
The total borrowing costs of €33 million incurred b y the loan negotiations conducted in 2009 and in
connection with the issuance of the corporate bond were allocated to the individual tranches on a pro-
rata basis and deducted from the carrying amounts of the liabilities in accordance with IAS 39.
The weighted average interest rate on financial liabilities was 4.96 per cent at the reporting date (31
December 2010: 4.55 per cent).
Total net financial debt – including deferred refinancing costs – rose by €16 million to €2,657 millio n.
Net financial debt
€ million
Corporate bond - fixed rate (2011/2018) - gross
Corporate bond - floating rate (2011/2018) - gross
Liabilities to banks (gross)
Financial debt
./. Cash and cash equivalents
Net financial debt
./. Capitalized borrowing costs
Net financial debt after borrowing costs
2011
2010
Change
325
175
2,530
3,030
373
2,657
33
2,624
−
−
2,894
2,894
253
2,641
22
2,619
−
−
-12.6%
4.7%
47.7%
0.6%
49.7%
0.2%
Financial debt after borrowing costs
2,997
2,872
4.4%
Non-current lease liabilities grew by 15 per cent to €471 million owing to recently signed leases. Thi s
increase reflects operating conditions in the key western European markets. The volumes of business
in all the key leasing markets in 2011 exceeded the levels achieved in the five years leading up to the
crisis.
Trade payables advanced by 25 per cent to €634 mill
higher capital expenditure. Total lease liabilities also rose, from €662 million in 2010 to €701 milli
2011, owing to the increase in revenue from new trucks.
ion in line with rising production output and
on in
KION Holding 1 GmbH
Management report for 2011
Page 35 of 57
Group management report
The net loss of €93 million gave rise to negative e quity of €488 million (31 December 2010: minus
€400 million). Exchange differences and other compr ehensive income increased equity by €7 million.
Dividends paid to non-controlling interests amounted to €2 million.
The equity calculated on the basis of these consolidated financial statements for the KION Group is of
no relevance under the covenants agreed with the financing banks or under the German Commercial
Code (HGB). The relevant figure under HGB in Germany is primarily the equity of KION Group GmbH
as reported in that company's single-entity financial statements in accordance with HGB. This equity
figure was €276 million as at 31 December 2011. The equity of KION Holding 1 GmbH reported in the
single-entity financial statements of that company in accordance with HGB as at 31 December 2011
amounted to €201 million.
6. Research and development (R&D)
The KION Group stepped up its research and development activities and pushed ahead with important
projects in the year under review. Its R&D team of 900 developers included over 70 additional
employees compared with 2010. Spending on R&D in 2011 amounted to €120 million. This equates to
2.8 per cent of total revenue or 4.7 per cent of its relevant revenue from new trucks and hydraulics,
making the KION Group an industry leader in this regard.
In 2011, the KION brands Linde, STILL and OM submitted more than 125 new patent applications,
while almost 100 patents were registered for the applications already submitted. This enabled the
brands to secure the fruits of their research for their own benefit – an important step in maintaining and
enhancing the KION Group's technology leadership, as set out in its strategy.
Total R&D spending
€ million
R&D expenses
Amortisation
Capitalised development expenses
Total R&D spending
R&D spending as percentage of revenue
2011
120
-53
53
120
2.8%
2010
Change
103
-47
48
103
2.9%
15.8%
-11.0%
12.3%
16.3%
-
Research and development is a key corporate function in the KION Group. Ongoing, structured
expansion of the product portfolio is crucial if the KION Group is to maintain its technology leadership
in the sector over the long term. The KION Group's R&D team works steadfastly on designing the
Company's material-handling solutions to be even more powerful, flexible and energy-efficient and on
responding now to the logistics requirements of tomorrow. Valuable synergies have been generated in
the KION Group thanks to its cross-brand, multi-site approach to research and development, intensive
sharing of knowledge and experience between the individual R&D teams and close consultation with
other areas of the Company such as procurement and production. For example, by developing
modular components for forklift trucks, the Company has significantly lowered the manufacturing and
product lifecycle costs of major system components. One of the main challenges of this was aligning
the individual requirements of the individual brand companies and the region-specific market and
customer needs with the common parts strategy so that the intended efficiency increases could be
achieved within the KION Group's value chain. All of this contributes to the overarching objectives of
rapid development, excellent product quality and sustained efficiency for KION trucks.
The focus of preliminary development, which the KION Group carries out in close cooperation with
various universities, in particular the universities in Munich and Hamburg, is predominantly the use of
alternative drive technologies and the continuous improvement of driver ergonomics and safety in the
workplace. Hybrid engines, new types of lithium-ion batteries and fuel cells contribute to reducing CO2
and noise emissions while lowering the costs of drive systems for industrial trucks. Intelligent energy
KION Holding 1 GmbH
Management report for 2011
Page 36 of 57
Group management report
recovery systems that make optimum use of the drive system's energy represent a key challenge for
preliminary development, as does the application of the latest findings from medical and workplace
research on improving the trucks' safety, comfort and user-friendliness.
To meet differing needs worldwide, the KION Group again expanded its international R&D sites in
2011. In October, for example, it inaugurated the newly built KION Asia development centre in
Xiamen, which has more than 130 employees. Established more than ten years ago, the research and
development unit hired new staff in 2011 to meet the growing demand for localisation and
development. The new R&D centre brings together teams that were previously located in different
places, thereby further improving the unit's efficiency. Furthermore, the larger premises enable various
projects to be worked on simultaneously. This shortens development times considerably. The Asian
market is seeing growing demand for warehouse technology solutions, which is why the KION Group
expanded its range of such trucks in China last year, adapting them to the needs of the local market.
This trend is repeated in nearly all emerging markets and is therefore an integral part of international
development projects.
The KION Group has also taken on staff for electric and electronic development in order to maintain its
pioneering role in this field. Continuous improvement of processes and the targeted application of
expertise enable the Company to remain in its market-leading position. It has been working on
implementing software standards from the automotive industry that can be flexibly deployed thanks to
their modular design. The focus of preliminary development in the electronics field has been ways to
make trucks even easier to operate and the introduction of safety systems. In addition, the KION
Group has optimised its electronics testing unit, speeding up processes so that it can run the tests
faster and at lower cost overall. The product innovations revealed at CeMAT, the world's leading
intralogistics trade fair, which took place in Hannover in May 2011, reflected the Company's
development work of recent years in the form of even more powerful, more energy-efficient and more
ergonomic material-handling solutions. These achievements encompassed nearly all areas of the
KION product portfolio.
The KION Group publicly showcased the Linde, STILL and Baoli brands' latest technological
innovations at CeMAT in Hannover. A new generation of electric forklift trucks with load capacities of 2
to 5 tonnes was the main talking point at the Linde stand. The Linde E25 Li-Ion prototype is powered
solely by rechargeable lithium-ion batteries and boasts a load capacity of 2.5 tonnes. The particularly
small batteries, whose individual cells can be installed completely flexibly, resulted in extra space that
was used to make improvements to the truck's ergonomics.
Another highlight was the presentation of the world's first series-production hybrid truck in the most
important market: IC trucks with a load capacity of 2.5 to 3.5 tonnes. Sophisticated management of the
energy flows in the truck, combined with intelligent energy storage technology, have reduced
consumption by STILL's RX 70 Hybrid truck by up to 20 per cent. Energy efficiency and the reduction
of CO2 emissions represent one of the biggest challenges of the 21st century, one that STILL is
tackling successfully with smart and resource-efficient product solutions. Besides its environmental
benefits, hybrid technology has also become attractive from a commercial perspective. The higher
investment will pay off within two years assuming that the truck is operated for 1,500 hours per year.
Work on refining hybrid technology will be a key focus due to the exclusively beneficial effects of its
use.
In 2011, KION presented a study of a tow tractor with fuel-cell technology and a new warehouse truck
concept with a lithium-ion drive system. These innovations mean the warehouse trucks produce zero
emissions and little noise, making it possible to use them in almost any area.
Besides the development of resource-efficient industrial trucks and warehouse trucks, the KION
Group's R&D activities also focus on the intelligent use of software to manage and control
intralogistics. STILL's Fleet Data Services offer various software solutions for capturing and preparing
vehicle and driver data and making it available online. This enables the optimum coordination of
maintenance and service because, for example, service-related data can be sent to the responsible
service technician ahead of an appointment. The system's day-by-day monitoring of the total cost of
KION Holding 1 GmbH
Management report for 2011
Page 37 of 57
Group management report
ownership provides customers with good cost transparency and valuable information for calculating
the profitability of their truck fleet.
7. Capital expenditure
Capital expenditure by the KION Group in the year under review amounted to €133 million, up by 7.7
per cent compared with 2010, owing to the continued market recovery in Europe and the additional
business in China and Brazil. During 2011, capital expenditure (excluding equity investments and
additions to leased assets) was focused on product development and the subsequent adjustments in
production, on the streamlining of production and on IT systems. Other major capital expenditure
projects – construction of the production facility in Brazil and the new KION Asia development centre
in Xiamen – resulted from expansion.
In São Paulo, the KION Group began to build a new production site for counterbalance trucks last
year. Significant capital was spent on the building and infrastructure in 2011. Good progress had been
made on the construction work by the end of the year, and production at the new site is therefore
expected to start up in mid-2012.
The KION Group uses an innovative and collaborative product development process for its trucks.
This process shortens the development period, optimises the cost of both development and
manufacturing and improves product quality. Duplication of work is avoided by making sure that all of
the necessary departments are involved in the product development process at a very early stage.
This forms the basis for financially viable, customer-focused products in existing markets and for the
rapid expansion of the product range, especially in South America, Asia and eastern Europe.
At Linde's Aschaffenburg plant, one of the biggest projects in terms of capacity and cost was the
refinement of the vehicle and mast concepts for reach trucks. This type of truck, which was built in
Basingstoke (United Kingdom) until 2010, was significantly improved in terms of safety, performance,
comfort, reliability and efficiency and has now moved into series development. Other capital
expenditure in 2011 went on the new generation of electric forklift trucks with a load capacity of 2 to 5
tonnes; they have now gone into full production. There were also investments in the development of
very narrow aisle trucks and in alternative drive technologies, such as hybrid technology, fuel cells and
lithium-ion batteries.
The STILL brand's investing activities at its Hamburg site focused largely on the development of new
trucks and refinement of existing ones as well on the integration of hybrid storage technology into its
products. For example, the company pushed ahead with developing an IC/electric forklift truck with a
load capacity of 6 to 8 tonnes and a STILL IC truck in the 2.2 to 3.5 tonne load capacity range with
innovative hybrid storage technology. The enhanced compact electric/IC truck with a load capacity of 6
to 8 tonnes is designed especially to meet the requirements of the paper and beverage industries.
This work is aimed at consolidating and expanding STILL's leading position in the fast-growing
segment of heavy-duty and container trucks. The hybrid truck for the 2.2 to 3.5 tonne load capacity
range is enabling STILL to steadfastly pursue its aim of minimising energy consumption and reducing
CO2 emissions. STILL also invested in a reach truck with a vastly improved lift mast incorporating a
mast damping system. The lift mast is based on the platform of the Linde model, thereby considerably
lowering development costs as approximately 50 per cent of the parts are the same.
New product developments and legal changes regularly require modifications to the manufacturing
process. In response to the amended European regulations on exhaust emissions, the KION Group
invested in a new paint shop at its site in Luzzara, Italy, which will go into operation in 2012. Capital
expenditure on a new technology for diesel engines reduced the emissions of KION trucks with diesel
engines. The centralised European distribution centre for Linde spare parts, which is located in Kahl
(Germany), began to invest in expanding and optimising its warehouse capacity in 2011 so that it can
cope better with the increase in the high-margin spare-parts business. Capital expenditure is also used
to modernise production machinery and to exploit the potential for greater efficiency offered by lean
manufacturing processes.
KION Holding 1 GmbH
Management report for 2011
Page 38 of 57
Group management report
The Group-wide IT system used in sales is being continually refined and optimised as part of the
'KION ONE Sales & Services' project. The KION ONE Infrastructure project also continued in 2011. Its
aim is to merge the European data centres and optimise the existing infrastructure hardware and
software.
8. Purchasing
The far higher volume of orders taken in 2011 compared with 2010, the accompanying rise in material
requirements and the generally high prices for commodities presented considerable challenges to the
KION Group purchasing unit in the reporting year. Bottlenecks in the supply chain that had first
emerged in mid-2010, particularly for electronic components, continued into 2011. The high level of
order intake also generated bottlenecks in the supply of industrial tyres. There were only slight delays
in engine deliveries as a result of the earthquake and tsunami in Japan, and this hardly affected the
KION Group's supplies at all. Close partnership with suppliers protected the KION Group's
procurement flow at all times.
Interdisciplinary teams in supply development had been set up in late 2010 to identify and
systematically leverage potential for improving the Company's cooperation with suppliers. The teams
offered workshops to the suppliers – particularly for small and medium-sized enterprises – as well as
concrete support on refining lean management, redesigning the layout of their factories and improving
supply sources and terms. The steps taken were very well received by the KION suppliers and proved
exceedingly successful thanks to the great flexibility of the suppliers and their exceptional willingness
to optimise processes.
The KION Group's costs for commodities in 2011 were very different to what they had been in 2011.
Whereas steel plate rose by a moderate 7 per cent on average, prices for scrap and natural rubber
rocketed by over 20 per cent and 26 per cent respectively in the middle of the year. However, the
sovereign debt crisis caused the price of certain commodities to decline from mid-2011 onwards,
although this did not compensate for the sharp year-on-year rises seen in the first half of the year.
Steel accounts for the largest share of the volume of commodities purchased by the KION Group.
Prices for steel peaked in the first half of 2011 and fell continuously after that. In contrast, prices for
scrap only stopped climbing at the end of last year. Copper prices reached a record high in March
2011 but tended to decline as the year progressed.
As the KION Group mainly uses processed materials and components in the production of industrial
trucks, increases in the market price for commodities do not impact fully and directly on the Group's
cost of materials. The KION Group also has long-term agreements with its main suppliers, under
which it obtains key components at fixed prices. As a result, sustained price increases are only felt at a
later date. In some cases, for example batteries, rises in purchase prices can be passed on directly to
end customers.
The cost of materials in the KION Group increased by 3.7 per cent overall in 2011 compared with
2010. As a result of the KIARA performance enhancement programme, the KION Group realised
potential cost savings of 1.3 per cent. To ensure an uninterrupted supply of critical components, the
KION Group secured additional capacities from some of its suppliers. However this was only possible
by paying higher prices. By the end of 2011, the cost of materials had climbed to €2,244 million (2010 :
€1,714 million) due to the far higher order intake.
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9. Employees
Group management report
Positive business performance and acquisitions increase headcount
On 31 December 2011, the KION Group employed 21,862 people (including trainees and
apprentices), roughly 62 per cent of whom worked outside Germany in 27 different countries. The
number of employees a year earlier had been 19,968.
The significant increase in headcount was a result of the KION Group's strong performance and the
acquisition of companies abroad. The United Kingdom and India saw particularly sharp rises owing to
the acquisition of the UK dealer Linde Sterling and the establishment of Voltas Material Handling.
Personnel resources were expanded in Germany and China, above all in production, to cope with
increased demand. Across the Company as a whole, the number of employees increased by 9.5 per
cent year on year.
Full-time equivalents
31/12/2011
Germany
France
Rest of Europe
China
Americas
Rest of World
Total
31/12/2010
Germany
France
Rest of Europe
China
Americas
Rest of World
Total
LMH
STILL
Other
Total
4,334
2,234
3,674
2,857
161
578
13,838
3,863
2,169
3,074
2,487
153
494
12,240
3,646
902
2,404
0
376
0
7,328
3,642
877
2,364
0
351
1
7,235
436
107
1
0
0
152
696
395
97
1
0
0
0
493
8,416
3,243
6,079
2,857
537
730
21,862
7,900
3,143
5,439
2,487
504
495
19,968
In line with the expansion in headcount during 2011, personnel expenses advanced to €1,064 million
(2010: €968 million) – an increase of 9.9 per cent. The personnel expenses ratio fell again, from 27.4
per cent in 2010 to 24.3 per cent in the reporting year, owing to the increased capacity utilisation in all
segments of the Group on the back of increased market demand.
Consolidation of locations with minimum possible social impact
The KION Group has decided to further consolidate its production operations within Europe. As part of
this, the Company plans to relocate the manufacture of warehouse trucks from Montataire (France) to
Luzzara (Italy) and to shift production of counterbalance trucks from Bari (Italy) to Hamburg
(Germany). The KION Group has been cooperating closely with the responsible employee
representatives and other partners within the company from an early stage in order to implement the
two projects. It is examining all the options to ensure that it consolidates the locations in the most
socially compatible way.
Investing in the future with training
With a total of 621 (2010: 557) trainees and apprentices at the end of 2011, the Group continued to
invest in training and development at the same high level to ensure that it can continue to recruit as
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Group management report
many as possible of the skilled workers it requires inhouse. The proportion of trainees and apprentices
in Germany remained stable at 5.1 per cent in 2011.
Securing tomorrow's potential with strategic executive development
The KION Group continued to establish talent and succession management in 2011 as a key element
of strategic staff development. It has revised its annual management review so as to enable it to fill
key positions across the Group with highly qualified executive talent. This tool is used to identify high-
potential staff and young talent in the Group and then give them targeted support, such as
participating in programmes in different brand companies and countries.
The KION Group uses 360-degree feedback for the development of its specialist workers and
executives. In this scheme, employees assess their own skills and performance and receive feedback
from colleagues. Based on the results, a personal development plan is then drawn up and put into
action.
The Management Board of Linde Material Handling has initiated 'The Linde Way', a long-term
corporate development programme for the brand that aims to bring business activities into line with the
company's vision and strategic objectives. The concept, which was completed in 2011, will define
management principles and guidelines for establishing a global performance culture and ensuring a
high level of staff loyalty. Reports on the project's progress are produced each month, and the first
results are expected as early as this year.
Partial retirement models and occupational pension scheme as voluntary employee benefits
The KION Group as an employer helps its employees to transition smoothly into retirement within the
framework of local legal requirements. In Germany, for example, a partial retirement model consisting
of two blocks is used: a working phase followed by a non-working phase. As at 31 December 2011,
412 employees of the KION Group in Germany were partially retired.
The KION Group regards offering an occupational pension scheme as an important element of the
employee/employer relationship. It arranges and offers such schemes in the various countries
depending on local legal requirements. For example, the KION Group offers its employees in Germany
attractive occupational pension scheme options, including both direct insurance and a direct pension
entitlement scheme.
Direct insurance comes in the form of a tax-privileged endowment insurance or pension insurance
policy, which the employer takes out with an insurance company on behalf of the employee as a form
of occupational pension scheme. The employee pays the insurance premiums in the form of deferred
compensation, which means that part of his or her gross remuneration is paid directly into the
insurance policy. The direct insurance policy is paid out to the employee when it matures, which will be
no sooner than the employee's 60th birthday. The benefits are paid either to the employee or to his or
her surviving dependants.
Under the direct pension entitlement scheme, which the KION Group operates in Germany in
accordance with various pension benefit conditions and the pension plan, the employer pays the
contributions into the occupational pension scheme directly. In contrast to direct insurance, the KION
Group as employer undertakes to provide the entitled employee with benefits in the form of a lump
sum or a pension when the employee retires dies or becomes unable to work.
The KION pension plan offers a further element to the occupational pension scheme for employees in
the KION Group. The advantage is that employees can defer compensation and thereby taxation on it
as well as making use of allowances for occupational pension schemes under collective pay
agreements for the German metals industry. As at 31 December 2011, 1,181 employees were in the
KION pension plan.
Outside Germany, the brand companies in the KION Group also offer occupational pension schemes,
for example in the United Kingdom, Austria, Switzerland and the Netherlands.
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Competitive advantages of diversity
Group management report
As a global company, the KION Group benefits from national, cultural and social diversity. In the year
under review, it employed people of more than 40 nationalities in Germany. Globally, employees of
around 70 nationalities work for the KION Group. Because the Company is headquartered in
Germany, people from this country make up the largest proportion of staff (36.6 per cent) – as they
have in previous years. They are followed by French staff (14.9 per cent) and Chinese staff (12.9 per
cent), which is in line with market share.
Female employees made up around 14.7 per cent of the KION Group's workforce as at the end of
2011. The proportion of female managers rose significantly year on year to 8.2 per cent.
Tackling demographic change with optimum working conditions
Demographic change is having an increasing impact on the competitiveness of many companies,
particularly in Europe and North America. The KION Group has deliberately set itself the task of
finding the best way to use the potential of older and experienced employees in the Company and to
create the optimum working conditions for older employees.
At the end of the year under review, approximately 23 per cent of the KION Group's workforce were
more than 50 years old and 57.5 per cent were aged between 30 and 50. Based on the situation at the
end of 2011, more than a third of staff will be over the age of 50 by 2015. The KION Group began
preparing itself for this predicted age structure at an early stage and has launched various age
management projects. Its overarching aim is to always be able to offer all its employees the ideal
conditions for their work.
10. Management
10.1 Key management team
The Executive Board of KION Group consists of Gordon Riske, Harald Pinger, Otmar Hauck and
Klaus Hofer.
Gordon Riske has been Chief Executive Officer (CEO) since 2008 and is responsible, among other
things, for strategy, communications, governance and compliance, market intelligence and the Group's
Asian business. The CEOs of the brand parent companies Linde Material Handling, STILL and Voltas
Material Handling report to him.
Harald Pinger has been Chief Financial Officer (CFO) since 2008 and is responsible for finance
(accounting, controlling, tax, treasury), financial services, IT activities, mergers & acquisitions, investor
relations and the Americas region. He held the post of Labour Relations Director until 30 September
2011.
Otmar Hauck has been Chief Operating Officer of KION Group GmbH since 2009. He is responsible
for quality and central operations, purchasing, logistics and product development in the Group.
Klaus Hofer joined the Executive Board on 1 October 2011 and is responsible for human resources,
legal affairs, health & safety and internal audit. He also took over as Labour Relations Director on that
date.
The Executive Board normally meets every 14 days. Apart from preparing and taking all decisions
relating to the day-to-day management of the Company, the Executive Board also uses these
meetings to discuss and approve any transactions in the brand subgroups that require its consent. A
list of the transactions requiring such consent is included in the rules of procedure for the relevant
Management Boards. Under its rules of procedure, the Executive Board must have certain
transactions approved by other decision-making bodies such as the Supervisory Board or the
shareholders' meeting.
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Diagram showing the responsibilities of the KION Group's Executive Board
Group management report
10.2 Supervisory Board
The Company's Supervisory Board comprises six shareholder representatives and six employee
representatives in accordance with the requirements of the German Commercial Code (HGB) and
those of the German Codetermination Act (MitbestG). The Supervisory Board is responsible for the
tasks specified by law, the memorandum and articles of association and the rules of procedure relating
to the supervision of the management of the business by the Executive Board. It also advises and
supports the Executive Board in its handling of significant matters and business transactions.
John Feldmann, a former member of BASF SE's Board of Executive Directors, has been the chairman
of the Supervisory Board since 28 September 2011. He took over as chairman from Johannes Huth,
the representative of Kohlberg Kravis Roberts & Co., New York, USA. Mr Huth had assumed the
chairmanship of the Supervisory Board on an interim basis from 28 June 2011 to 28 September 2011
after Manfred Wennemer had stepped down from the Company's Supervisory Board.
In addition to a human resources committee and an audit committee, the Supervisory Board has set
up an arbitration committee pursuant to section 27 (3) MitbestG. Shareholders and employees have
equal numbers of representatives on all the Supervisory Board committees.
The Supervisory Board normally meets once during each quarter. The committees hold regular
meetings (the audit committee meets four times a year, for example); although the arbitration
committee only meets if required to do so in circumstances specified by law or by the memorandum
and articles of association. If required, the committees also meet between the regular scheduled
meetings. The remit of the Supervisory Board and its committees is defined by law, the memorandum
and articles of association and the rules of procedure for the Supervisory Board and each committee.
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10.3 Shareholders' meeting
Group management report
A meeting of the Company's shareholders is held as required by the memorandum and articles of
association or if demanded by other special circumstances. Resolutions may also be adopted by
shareholders using a procedure conducted in writing.
10.4 Corporate governance
The KION Group publishes details of its corporate governance in a separate corporate governance
report on its website: www.kiongroup.com.
11. Sustainability
The KION Group is aware of its responsibility towards society, the environment and the economy. That
is why the KION Group goes above and beyond its legal duties to specifically promote sustainable
development in matters of social and environmental importance. Prevention of climate change and
conservation of resources therefore take top priority – and are an integral element of the Code of
Compliance. Innovative products support the KION Group's role as one of the pioneers in the use of
cutting-edge environmental technologies. The Linde and STILL brands have developed ground-
breaking concepts for conserving resources.
Focus on the environment and efficiency
Linde attaches particular importance to ergonomics, the environment and efficiency. For example, ever
since the first hydrostatic drive was developed in the 1950s, Linde has continually worked to improve
the technology. Modern-day hydrostatic wheel motors operate at 170 revolutions per minute, instead of
3,500 as they used to do. Trucks need less fuel and produce fewer emissions, thereby enabling
customers to operate more efficiently.
Linde also occupies a leading position when it comes to trucks powered by diesel engines. The particulate
emissions of its diesel engines (H25D 392 model) are only approximately 35 per cent of those of competitors in
the market. In addition, particulate filter systems are offered as optional extras. The H 40-50 series' energy
consumption has been reduced by fitting a variable displacement pump for the lift hydraulics. The internal gear
pump with a constant internal volume that was used previously has been replaced by an axial-piston pump
developed by Linde Hydraulics. This new pump has a variable flow that can be controlled electronically
depending on load and lift height and reduces fuel consumption by up to 18 per cent.
The electric forklift trucks developed by Linde also reflect its technology lead: energy recovery and three
different eco modes enable the E 20-50 series to use up to 35 per cent less energy yet still score top marks as far
as performance and efficiency are concerned. The Linde brand company has also succeeded in reducing the
noise levels of these trucks by 30 per cent compared to the products of other manufacturers. The rate of wear is
up to 20 per cent less for wearing parts. Moreover, the electric forklift trucks are low-maintenance, requiring a
service every 1,000 hours and a hydraulic oil change only every 6,000 hours, while the encapsulated AC motors
are entirely maintenance-free. In short, LMH generates benefits, not just for people but also for business and the
environment.
STILL has also pursued a clear strategy of greater sustainability for many years. Three of the main
elements of this strategy are the Blue-Q efficiency mode, which was launched in 2005, the drive
technologies developed by STILL and process optimisation.
In 2011, STILL continued to press ahead with the introduction of the Blue-Q energy-saving feature,
which is now available in electric and diesel trucks, the FM-X reach truck and the new MX-X order-
picker truck. Blue-Q offers energy savings of up to 20 per cent through intelligent management of the
drive and ancillary power consumption. Optimising the characteristics of the drive saves energy
without impairing operation of the truck. STILL's RX 70 series, which already boasted the lowest
energy consumption in its class, is now even more efficient thanks to the addition of the RX 70 Hybrid
(rated capacity of 3.0 and 3.5 tonnes). The RX 70 Hybrid is the first series-production hybrid forklift
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truck. Electric energy is stored during braking and can then be used by the drive. The new RX 70 has
two energy storage systems. This technology was first presented at CeMAT 2008 as ready for full
production. Besides its environmental benefits, hybrid technology has also become attractive from a
commercial perspective. The higher investment will pay off within two years assuming that the truck is
operated for 1,500 hours per year. STILL continues to focus on refining hybrid technology.
Considerable efficiency gains are possible when tugger trains are used to supply the production line.
Although still new, this concept has proven in practice to cut energy consumption by up to 90 per cent.
Trucks fitted with lithium-ion battery technology were showcased for the first time at CeMAT. The
PalletShuttle is the first STILL product with a series-production lithium-ion battery and is designed to
move pallets along a rack channel. It offers greater efficiency and saves energy.
Intelligent technology secures competitive edge
Pioneering technologies such as energy recovery in trucks, biodiesel, gas-powered trucks, the use of
diesel particulate filters and adjustable pumps for lift drives, plus fuel-cell powered trucks, have a long
tradition at the KION Group. Innovative drive concepts are the technology of the moment according to
forecasts from industry experts at the 2010 Congress of the European Federation of Materials
Handling (FEM) in Istanbul, where the future of industrial trucks was a major theme. The Industrial
Truck Association, which represents forklift truck manufacturers and their suppliers in Canada, the
United States and Mexico, expects that some 90 per cent of all trucks will be electric by 2025. A survey
by the Engineering Committee of the Japanese Industrial Vehicles Association (JIVA) comes to similar
conclusions and states that lithium-ion batteries and hybrid drives are the way forward.
LMH is taking a step in this direction by heading up the 'E-Log-Biofleet' research project in Austria.
Working with prestigious partners, LMH is conducting an extensive field test in which a fleet of Linde
industrial trucks with a fuel-cell hybrid solution and a range extender are being trialled in realistic
operating conditions. The fuel cell replaces the conventional battery so that the trucks can be used for
longer and efficiency is improved. A supply of hydrogen is integral to the system and is ensured by the
installation of a new decentralised unit for producing hydrogen from biogas, a carbon-neutral energy
source.
STILL is also responding to the trend for innovative drive concepts. Its new RX 70 Hybrid truck is
pursuing the twin aims of low energy consumption and low CO2 emissions. The concept is based on
the RX 70 model, which itself previously earned the FLTA environment award from the UK's Fork Lift
Truck Association. In 2011, Hamburg Port Authority (HPA) and Fraport AG, which operates Frankfurt
Airport, received the first series-production hybrid forklift trucks. STILL also handed over a new-
generation forklift to ALBA Nord GmbH in late 2011. ALBA Nord GmbH is a subsidiary of the ALBA
Group, a Berlin-based environmental services provider and trader in raw materials. For STILL, the key
to pioneering, innovative operations is above all sustainable business practices. The new hybrid drive
makes it possible to reduce energy consumption by up to 15 per cent and thereby lower CO2
emissions.
Responsible use of resources
The KION Group's innovative capabilities and the technological improvements it has made to its
product portfolio enable it to constantly optimise the resource consumption of customers' truck fleets.
Its responsible use of resources is also reflected in its use of recyclable materials, its energy-efficient
products and manufacturing processes and its environmentally friendly workplaces.
One such example is the powder coating equipment used at STILL, which means that trucks only
require one coat of paint. Solvents are not used in production. Any unused paint is collected and
reused. Moreover, the STILL plant in Hamburg has been using just 32 per cent of its previous natural
gas consumption since it switched to low-CO2 district heating. As a certified member of Hamburg's
environmental partnership, the plant is trialling the voluntary monitoring of CO2. Electricity consumption
has fallen considerably since 2004 due to intelligent energy management, in which electricity
consumers are switched off at regular intervals. Hydraulic optimisation of the heating system has
significantly cut the amount of water in circulation and reduced the return water temperature. The plant
saves electricity and water by connecting the heating and ventilation systems to a control station.
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A closed water circulation system, eco-friendly coating equipment, grease separators and efficient,
powerful extraction systems in the production facilities and foundry are standard at Linde. Emissions
checks, environmentally efficient production requirements and the need to comply with environmental
and health & safety standards all result in continuous improvements to products and work processes.
The recycling of a truck at the end of its lifetime is already taken into consideration when it is
developed. As a result, 99 per cent of a Linde truck can be recycled. The cast iron, which accounts for
70 per cent, is used to make a new truck. Other materials, such as steel, copper, glass and service
fluids, are almost 100 per cent recyclable.
Staff development programmes safeguard the Group's future
The KION Group's employees form the basis for its long-term success. That is why employee
orientation lies at the heart of all processes. The corporate culture of the entire Group is characterised
by mutual respect and appreciation. Managers and their staff live by these values. Their above-
average loyalty to the Company shows that they appreciate this culture – and is a crucial competitive
advantage for the KION Group. After all, the brands can only develop, manufacture and sell premium
products if they have employees who see their work as more than just a job.
Professional training activities start with support for universities, work placements and apprenticeships,
continue with professional development opportunities for the workforce and reach their apex with
carefully structured personal development programmes to support managers and talented staff.
Linde Material Handling has cooperated with high schools in Aschaffenburg, the Aschaffenburg
Chamber of Industry and Commerce, Aschaffenburg University of Applied Sciences and the Bavarian
State Government for many years and has developed a pupil/engineer academy for high schools in
which topics relevant to technological and scientific careers are incorporated into the curriculum for
older pupils.
Work placements, discussions and school projects thereby forge links between business and schools.
Support and development for the next generation of young professionals is provided by a wide range
of work placement options for students at university and a close partnership with Aschaffenburg
University of Applied Sciences.
Another example is Linde's alliance programme with the Karlsruhe Institute of Technology (KIT) in
which business, engineering and science students gain key qualifications, preparing them to tackle
future challenges in the world of work.
When it comes to vocational training, Linde Material Handling sets standards as the largest training
provider in the Lower Main region of Bavaria. Besides professional training, other essential elements
of the personal development plan for all trainees and apprentices are mutual appreciation and respect.
These values are specifically taught and developed during training sessions.
One advantage of KION's training and professional development models is their flexibility. This can be
seen in the opportunities for working and learning in other countries. The Linde expat programme, for
example, enables employees to move from headquarters in Germany to almost any partner country
and vice versa.
Last year, 27 Linde employees took part in the 'managerial driving licence' scheme. About half of them
have already completed the programme and the remainder will do so this spring. The 'managerial
driving licence' helps employees to optimally define and exercise their managerial responsibilities
within their team. A modular series of seminars teaches new managers how to improve their
leadership behaviour in practice.
Encouraging the next generation of young professionals is also a fundamental aspect of STILL's
training activities. STILL is involved in a number of projects in this area, including an alliance with the
Career Center Hamburg, the SMS programme (STILL moves students) and cooperation with Hamburg
University of Applied Sciences (HAW), Kurt Körber High School and Helmut Schmidt University on the
'e-truck' robot construction project in Hamburg. These initiatives aim to establish ties with tomorrow's
potential trainees, apprentices and employees while they are young.
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The quality of the KION brands' training models has been recognised by external experts: a trainee at
STILL was recognised by the Chamber of Crafts as 'Hamburg's best trainee 2011' for his outstanding
exam results.
In the annual talent reviews, managers at STILL systematically identify staff with strong potential, high
performers and experts in key functions and define development plans for them. Talented young
professionals take part in various programmes that will enable them to flourish. One of these is
STILL's International Junior Circle for international staff with high potential. Participants take part in
various activities that will help them to develop, such as working on challenging projects as part of
international teams and attending training courses on project and team management, change
management and presentation skills. The Young Professional Programme in Germany is a chance for
younger high performers to learn about a wide range of topics at STILL, providing them with an
excellent insight into the company and the links between finance, marketing, production and
development. This broadens their horizons and results in active STILL-wide networks.
Safety is an important topic, and the KION Group constantly provides initial and continuing training for
its employees in this area. To improve safety at its sites, the KION Group conducted more than 1,000
training courses in Germany alone during 2011, including fire protection training, courses for safety
officers and induction courses. In-depth analyses of accidents and detailed action plans are used to
reduce risks in the workplace. Training for managers heightens safety awareness at all levels.
Standardised health, safety and the environment (HSE) audits are carried out at all production sites.
The first step is to analyse the sites in detail. Local managers then work with their HSE auditor to
define strategies and measures for making continuous improvements in the area of HSE.
At their annual international meeting with Klaus Hofer, Chief Human Resources Officer of the KION
Group, the international HSE managers presented the activities they carry out regarding health, safety
and the environment. The HSE experts were able to adopt good solutions for use at other sites. KION
has also put in place an HSE policy that provides central guidelines on health, safety and the
environment for all KION Group companies.
LMH responds to demographic change
The impact of demographic change on society poses a particular challenge to companies. LMH is
developing healthy living programmes for an ageing workforce that will have to work for longer, flexible
working-time models and attractive solutions that give women more options when it comes to
combining a career and family. LMH's workplace support programme enables employees with
problems in their personal or professional life to obtain counselling from qualified experts.
Good training and career development opportunities in an employee-oriented working environment
that also meets changing expectations regarding work-life balance are key factors that help the brand
companies to position themselves as attractive employers in the job market.
Brands and employees support society
Recognising their social responsibility, both the Executive Board and employees personally support
numerous charities.
Following two earthquakes that devastated large areas of the eastern Turkish province of Van, KION
and Linde Material Handling each donated around €35 ,000 to the rebuilding of the main lecture hall at
Yüzüncü Yil University in Van. This gesture demonstrates the Group's support for education projects
in its local markets.
STILL sponsors the Mittagskinder e.V. foundation, which looks after children from deprived areas of
Hamburg, providing them with lunch and help with their homework on a regular basis as well as giving
them the chance to take part in educational activities. Other associations supported by STILL are
Kinderkrebs-Zentrum Hamburg e.V., which supports children with cancer, Switch e.V., which runs
multicultural projects, and the Nordchance training programme, which helps young people with limited
employment prospects. For more than ten years now, STILL has employed a group of workers from
Winterhuder Werkstätten, an organisation that trains and integrates people with disabilities.
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LMH established the StaplerCup hilft e.V. association in 2008 to support charities that look after
children, young people and the elderly. The association arranges charitable events and collects
donations at the final of the StaplerCup ('truck cup') tournament. In 2011, StaplerCup hilft e.V. donated
€7,500 to Deutscher Kinderhospizverein, a children' s hospice association in Germany, and the same
amount to Suppenschule, which provides childcare in Aschaffenburg. LMH trainees organised a
charity tombola at the 2011 StaplerCup, raising €15 ,000 for Initiative für Tapfere Kinder. This charity
provides financial assistance for severely ill children, supports the integration of young people with
disabilities into everyday life and helps orphans and street children.
A number of KION sites in various countries have stopped giving gifts to customers at Christmas and
use the budget instead to support the work of charitable organisations. For example, Linde Lansing
Fördertechnik AG (Dietlikon/Switzerland) donated five warehouse trucks to support the logistics
processes of Schweizer Paraplegiker-Stiftung, a unique foundation in Switzerland that helps people
with spinal paralysis.
12. Opportunities and risks report
12.1 Opportunities report
Recognising and seizing strategic and operational opportunities is an integral element of successful
corporate management. To identify these opportunities, the Company systematically monitors and
analyses its relevant markets and tracks overall and sectoral economic trends. Once it has analysed
and evaluated the opportunities, the KION Group adopts and implements strategic initiatives. These
are always aimed at profitable growth and a sustained increase in shareholder value.
The following developments open up significant potential opportunities:
Logistics trends offer good growth opportunities in industrialised nations
The market for industrial trucks is strongly correlated with industrial output – and therefore also with
macroeconomic trends. Growth of the global economy, particularly in terms of world trade, has a
corresponding positive effect on the demand for industrial trucks. Greater division of labour and rising
inventory turnover rates in the major industrialised nations continue to increase the degree of
mechanisation in logistics. These growing demands on warehouse organisation will, in turn, increase
demand for efficient warehouse equipment and comprehensive intralogistics solutions. The KION
Group is excellently placed in the industrial trucks market and will seize the opportunities presented by
market growth, drawing on its outstanding portfolio of products and services.
Strong basis for future growth in the emerging markets
The KION Group is already very well positioned in the major emerging markets. It is a leading supplier
in eastern Europe, the largest international manufacturer in China and the second largest
manufacturer in Brazil. Since 2011, it has also had a stronger foothold in India. In the fast-growing
markets of eastern Europe, South America and Asia, sales of industrial trucks will continue to benefit
from more rapid overall economic growth and associated expansion investment and will therefore rise
faster than in the more established markets. Trucks from the economy segment are predominantly
offered in the fast-growing regions, enabling the high level of demand in these markets to be met yet
also fulfilling the need for high-quality products at an affordable price. Thanks to its brand portfolio, the
KION Group is very well placed to satisfy these requirements.
Different brands and products for differing customer requirements
Customers' requirements vary significantly depending on the situation in the individual market and
other local characteristics. The KION Group is able to meet these requirements at all times with its six
brands – Linde, Fenwick, STILL, OM (from 2012 OM STILL), Baoli and Voltas. They cover the entire
spectrum of industrial trucks, from basic warehouse equipment to container handlers. Ergonomics and
intelligent intralogistics are the hallmarks of products from Linde, Fenwick, STILL and OM STILL.
These brands are industry leaders in technology and innovation thanks to their technologically
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sophisticated, solution-oriented product portfolios. Baoli und Voltas, on the other hand, cater to the
economy segment in the high-growth markets. This broad-based structure enables the KION Group to
benefit from growth in all market and product segments and thereby effectively build market share.
Service business improves revenue planning and increases customer retention
In contrast to new truck sales, the service business is largely independent of the economic cycle and
gains further support and impetus from growth in the number of active trucks in the market. An
increasingly important role is being played by services such as maintenance & repairs, spare-parts
business, short-term & long-term truck rentals, the range of finance solutions and IT-based
approaches to efficient fleet management. The KION Group's broad spectrum of services and an
active fleet of more than one million trucks worldwide provide solid foundations for continued growth of
its service volume. Service activities also improve customer loyalty and enable the Company to predict
its revenue streams over a longer period. The KION Group will apply its expertise to further expanding
its range of efficient service solutions, adapting them to local needs and thereby increasing its market
share.
Ongoing evaluation of opportunities for growth by acquisition
Despite the increasing degree of consolidation, the market for industrial trucks remains highly
fragmented and is dominated by suppliers with a regional focus. Besides potential for organic growth,
the KION Group continuously evaluates opportunities for growth by acquisition in relevant foreign
markets. The Company studies the markets on an ongoing basis, examining not only well positioned
manufacturers but also service providers and distributors.
'Green logistics' remains a megatrend in the industry
Efforts to reconcile economic and environmental requirements are an important issue when it comes
to logistics. As an innovation leader, the KION Group therefore examines eco-friendly, fuel-saving
technologies in all product classes. Customers benefit from lower product lifecycle costs, which
encompass the purchase, maintenance and repair costs as well as fuel consumption and labour costs.
Linde Material Handling regularly looks at how protecting people and the environment can be
optimised in each area of the company and is implementing projects to put this into practice. STILL
offers forklift trucks with particularly low fuel consumption, while its hybrid technology has elevated it to
a leading market position. Developing sustainable technologies and translating them into cost-effective
yet environmentally sustainable products will remain a focus for the KION Group in future as they
continue to generate further growth opportunities for the Company.
Greater competitiveness through operational excellence
The KION Group believes that its organisational structure with locations worldwide and various brand
companies offers additional potential for synergies, above all in purchasing, development, production
and logistics. The Company wishes to make the best possible use of the variety of options for boosting
operational efficiency and thus profitability. Implementation of uniform production standards,
consolidation of the product portfolio, design-to-cost initiatives and supplier management projects are
just some examples of current efforts to improve operational excellence. Opportunities for improving
efficiency and therefore the competitiveness of the entire Group are assessed and exploited on an
ongoing basis.
12.2 Risk management
The KION Group encounters business risks that may jeopardise its business objectives. Risk
management, like opportunity management, therefore forms an integral part of the Company's day-to-
day management. To ensure that the risk management systems are fully integrated into the KION
Group's overall financial planning and reporting process, they are located in the Group Accounting &
Finance function. The procedures governing the KION Group's risk management activities are laid
down in internal risk guidelines. For certain types of risk, such as financial risk or risks arising from
financial services, the relevant departments also have guidelines that are specifically geared to these
matters and describe how to deal with inherent risks.
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Risk management is organised in such a way that it directly reflects the structure of the Group itself.
Consequently, risk officers supported by risk managers have been appointed for each company and
each division. A central Group risk manager is responsible for the implementation of risk management
processes in line with procedures throughout the Group. His or her remit includes the definition and
implementation of standards to ensure that risks are uniformly captured and evaluated.
The risk management process is organised on a decentralised basis. Firstly, a Group-wide risk
catalogue is used to capture the risks attaching to each company. Each risk must be captured
individually. If the losses caused by a specific risk or the likelihood of this risk occurring exceed a
defined limit, the KION Group's Executive Board and its Accounting & Finance function are notified
immediately. A specially developed module within the internet-based reporting system used for the
entire planning and reporting process is used to document each risk.
The risks reported by the individual companies are combined to form divisional risk reports as part of a
rigorous reporting process. To this end, minuted risk management meetings are held once a quarter.
Moreover, material risks are discussed at the quarterly business review meetings. The divisional risk
reports are then used to compile an overall risk portfolio for the KION Group as a whole. To support
this, additional meetings are held each quarter with relevant departments of the holding company in
order to identify and assess risk, above all Company-wide, cross-brand risk affecting areas such as
treasury, purchasing, tax, human resources and financial services. The Executive Board and the
Supervisory Board's audit committee are informed of the KION Group's risk position at least once a
quarter.
Material features of the internal control and risk management system
pertaining to the (Group) accounting process
Principles
The main objectives of the special accounting-related internal control system are to avoid the risk of
material misstatements in financial reporting, to identify material mismeasurement and to ensure
compliance with the applicable regulations. There can, however, be no absolute certainty that these
objectives are achieved in full and at all times.
Material processes and controls in the (Group) accounting process
For its (Group) accounting process, the KION Group has defined suitable structures and processes
within its internal control and risk management system and implemented them in the organisation.
Changes to the law, accounting standards and other pronouncements are continually analysed with
regard to their relevance and effect on the consolidated financial statements; the relevant changes are
then incorporated into the Group's internal policies and systems.
Besides defined control mechanisms, this special accounting-related internal control system includes,
for example, system-based and manual reconciliation processes, separation of functions, the double-
checking principle and adherence to policies and instructions.
The employees involved in the Group's accounting process receive regular training in this field.
Throughout the accounting process, the local companies are supported by central points of contact.
The consolidated accounts are drawn up centrally using data from the consolidated subsidiaries. A
consolidation department with specially trained employees carries out the consolidation activities,
reconciliations and monitoring of the stipulated deadlines and processes. This team monitors the
system-based controls and supplements them with manual checks. The entire accounting process
contains a number of specific approval stages. Employees with the relevant expertise provide support
on specialist questions and complex issues.
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The central Internal Audit department also checks, among other things, the reliability of the accounting
work by the subsidiaries in Germany and abroad. It focuses primarily on the following aspects:
•
•
•
•
Compliance with legal requirements, directives from the Executive Board, other
policies and internal instructions
Integrity and effectiveness of the internal control systems for avoiding financial losses
Correct performance of tasks and compliance with business principles
Formal and material correctness of the accounting and of the financial reporting that is
based on the accounting.
12.3 Types of risk
12.3.1 Risks arising from the sovereign debt crisis
Even though the markets performed very well overall in 2011, risk management continued to examine
the possible impact of the financial crisis and of the performance of the real economy on the KION
Group's financial position and financial performance. In addition to ongoing screening and monitoring,
the risk reports therefore included a separate assessment of the risks arising from the sovereign debt
crisis. The economic problems in Greece, Italy, Spain, Portugal and Ireland, the EU rescue packages
and the undercapitalisation of European banks that has become apparent were all signs that the
financial crisis – and in particular the economic crisis in southern Europe – has not yet ended.
Furthermore, it may flare up again at any time and spread to other regions.
Government action to support economies and the financial system resulted in a rise in government
indebtedness worldwide. In Greece, Italy, Spain, Portugal and Ireland, debt repayments and the
consolidation of national budgets restrict future flexibility and increase the pressure on governments to
take appropriate action in terms of both income and expenditure. It is impossible to predict the
implications that this may have for the material-handling market and therefore also for the KION
Group.
12.3.2 Market risks
Cyclical fluctuations in macroeconomic activity have always affected the market for industrial trucks. A
downturn or stagnation in the industries and regions relevant to the KION Group represents a risk.
Customers' decisions on whether to invest, particularly in new trucks, depend to a large degree on the
economic situation. The KION Group mitigates this risk with its multi-brand strategy, comprehensive
product portfolio and a diverse customer base consisting of companies of different sizes in different
industries and regions. Market risk is also reduced by close monitoring of markets and competitors as
well as any resulting necessary adjustments to production capacities. The KION Group takes
measures to boost its sales and further expand less cyclical business activities such as services in
order to counteract economic downturns.
Global economic prospects have been very varied in recent times, and the markets therefore remain
fragile. The International Monetary Fund (IMF) believes the global economic situation is still at risk due
to the decline in the pace of growth in all regions of the world and owing to uncertainties regarding the
funding position of public finances and financial institutions. In addition to a high level of uncertainty in
the euro zone, there is also a continuing risk of a slowdown in growth in the United States. Current
developments, above all in Europe, are making it increasingly difficult to gauge demand patterns
reliably. The precise timing and even the extent of any change in the markets remains uncertain. The
KION Group therefore closely monitors macroeconomic and market conditions so that it is ready to
promptly step up action already implemented or initiate additional measures if required.
12.3.3 Competition risks
Manufacturers from Asia, especially those from China and Korea, have cost advantages in production
due to the currency situation and also because Asian labour costs are lower. Providers from Asia can
create additional competitive pressures in Europe, especially in this market environment. However,
customers' high quality expectations and performance needs form a barrier to growth for many of
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these manufacturers. Their lack of an established distribution and service network in Europe makes it
more difficult for them to gain a foothold in this market.
Alliances, partnerships and acquisitions are playing an increasing role in improving competitiveness in
terms of resources, market access and product range. The KION Group continually evaluates its
options for strengthening and consolidating its market position. An example of this in 2011 was the
establishment of Voltas Material Handling in India.
12.3.4 Procurement and sales risks
The KION Group is exposed to risks in its procurement and sales activities. In 2011, the Group
rigorously maintained its more intensive management of receivables and procurement as a result of
the economic crisis.
Procurement activities constitute a potential risk for the KION Group in terms of the lack of availability
of parts and components and the rising cost of raw materials, energy, base products and intermediate
products. As in 2010, the supply of components was a source of risk last year due to the surge in
demand. Whereas there had still been isolated problems in the supply of electronic components at the
start of the year, supplies of industrial tyres proved difficult as the year progressed. During the second
half of 2011, the KION Group experienced sometimes considerable delays in the supply of plastic and
electronic parts from individual suppliers. The shortage of parts had improved significantly by the end
of the year due to the intensive efforts on the part of the Company's logistics staff and the new supplier
development department, which works with suppliers on the ground to improve processes.
The earthquake and tsunami in Japan in spring 2011 did not lead to any major supply problems for the
KION Group because it obtains just a small volume of goods directly from there. Only the supply of
internal combustion engines was interrupted for a few weeks in May and June 2011. However, the
Japanese suppliers had caught up with the delivery backlog by July.
Prices had been rising quickly from the second quarter of 2010 onwards as a result of the
aforementioned increase in demand in the supplier markets. This trend continued into the first six
months of 2011, but the second half of the year saw a much calmer price situation in the commodity
markets.
As far as its sales are concerned, the KION Group is exposed to stiffer competition and therefore
downward pressure on prices as a result of increasing globalisation and greater market transparency.
Nevertheless, the KION Group was again able to maintain appropriate pricing for its customers in a
competitive environment in 2011. At the same time, it is also optimising its cost structures and
business processes. For example, the KION Group continued to systematically implement its KIARA
performance enhancement programme, thereby significantly lowering its costs. The successful
programme finished at the end of 2011. The brand companies in the KION Group are also steadily
improving their services. Key factors for success here are the expansion of the distribution network,
better logistics processes for spare parts and 24/7 availability of the service team.
The Baoli brand enables the KION Group to supply customers in low-price market segments who
were previously difficult to reach. Baoli also provides the KION Group with a line of trucks with which
to meet demand for basic products, particularly in developing markets. In addition, the KION Group
has strengthened its position in the Indian market by establishing Voltas Material Handling.
12.3.5 Production risks
The KION Group's closely integrated manufacturing network presents a potential risk to its ability to
deliver goods on time in the event of operational disruptions or lengthy periods of production downtime
at individual sites. To mitigate these risks, the KION Group carries out preventive maintenance,
implements fire protection measures, trains its staff and builds a pool of external suppliers.
The Company has taken out a commercially appropriate level of insurance cover against loss. Quality
assurance is a high priority throughout the value chain and reduces possible quality-related risks
arising from the products and services provided. The KION Group mitigates its quality-related risks
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significantly by applying rigorous quality standards to its development activities, conducting stringent
controls throughout the process chain and maintaining close contact with customers and suppliers.
12.3.6 Financial risks
The main types of financial risk managed by Group Treasury, including risks from funding
instruments, are liquidity, exchange-rate, interest-rate and counterparty risk. Credit risk consists
solely of counterparty risks attaching to financial institutions. Risk management procedures issued by
Group Treasury stipulate how to deal with the aforementioned risks. In contrast, the individual Group
companies directly manage counterparty risks involving customers.
The restructuring of the existing acquisition finance during 2009 continued to provide the Group with
the flexibility needed to meet the requirements of the lending covenants. Accordingly, the KION Group
has secured acquisition finance in the form of committed credit lines. The individual tranches have
varying maturities, the longest bank liability extending until the end of 2016. Apart from that, €483
million of the original acquisition financing have already been repaid through the corporate bond of
€500 million with maturity in 2018. The revolving c redit facility has the shortest maturity expiring end of
2013 (cf. table credit terms on page 50, section 5.2 Financial position). The Company expects that it
will be able to agree an extension with the banks before this date or that alternative refinancing
schemes can be implemented. Further measures to ensure long-term financing are actively and
continuously pursued by the company. As contractually agreed, the capex facility was reduced by
approximately €54 million over the course of 2011.
The Company generally refers to credit ratings to manage counterparty risk when depositing funds
with a financial institution. Deposits are also restricted to the limits covered by the deposit protection
fund run by the Federal Association of German Banks. On 7 November 2011, the KION Group drew
down €133 million from the revolving credit facilit y. Although sufficient liquidity was available for
operational business, capital expenditure and debt servicing, a stronger cash position is considered
sensible in view of the current volatility of the financial markets. The KION Group also established a
further diverse group of creditors that is independent of the banks by issuing a corporate bond of
€500 million in April 2011.
The KION Group only uses derivatives to hedge underlying operational transactions; they are not
used for speculative purposes. Records are kept of the type of financial instruments used, the limits
governing their use and the group of banks acting as counterparties. Group Treasury rigorously
complies with and monitors the strict separation of functions between the front, middle and back
offices.
Each Group company's liquidity planning is broken down by currency and incorporated into the KION
Group's financial planning and reporting process. Group Treasury checks the liquidity planning and
uses it to determine the funding requirements of each company. Normally, at least 50 per cent of the
exchange-rate risk related to the planned operating cash flows based on liquidity planning is hedged
by currency forwards in accordance with the relevant guideline.
The KION Group uses interest-rate and currency-related derivatives – primarily interest-rate swaps
and currency swaps, but also interest-rate and currency options – to hedge the interest-rate and
currency risks arising in connection with the acquisition finance. Approximately 50 per cent of the
currency risk arising from the US dollar tranche is hedged by currency forwards with an average €-
US$ exchange rate of around 1.38. These derivative contracts expire in November 2012. When the
currency hedges expire, there may be a material outflow of funds, depending on the US dollar
exchange rate. At the end of 2011, around 60 per cent of the interest-rate risk was hedged by interest-
rate swaps or was subject to a fixed rate of interest. The need to add new hedging instruments or
replace ones that expire is reviewed on an ongoing basis.
The funds raised for acquisitions also give rise to risks for the KION Group in terms of compliance
with certain financial covenants specified in the loan agreement. This risk continues to apply in view
of the current uncertain economic and financial market environment. However, the Company is
mitigating it by continuing steadfastly with steps to boost efficiency and by ensuring sufficient flexibility
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when defining new lending agreements. The KION Group complied with all the lending covenants in
the reporting year.
12.3.7 Accounting risks arising from goodwill and the brands
In 2011, goodwill and the brands represented 35 per cent of total assets (2010: 36 per cent).
Pursuant to IFRS, these assets are not amortised and their measurement depends, above all, on
future expectations. If these future expectations are not fulfilled, there is a risk that impairment losses
will have to be recognised on these assets.
12.3.8 Risks from financial services
The funding terms and conditions faced by the lenders themselves (manifested, for example, in the
payment of liquidity premiums on interbank lending) may result in a future shortage of lines of credit
and/or increased financing costs for companies. However, the Group currently does not expect any
further changes in its lines of credit or any excessive increases in margins.
The KION Group's leasing activities mean that it may be exposed to residual value risks from the
marketing of trucks that are returned by the lessee at the end of a long-term lease and subsequently
sold or re-leased. Residual values in the markets for used trucks are therefore constantly monitored
and forecast.
KION regularly assesses its overall risk position arising from financial services. The risks identified are
immediately taken into account by the Company in the costing of new leases by recognising
writedowns or valuation allowances and adjusting the residual values.
Risk-mitigating factors are the development and refinement of the KION Group's international used-
truck marketing, the ongoing expansion of used-truck marketing to end customers, and the increase in
demand accompanied by the optimisation of its profitability, which all stabilise the residual values of its
industrial trucks. The majority of the residual values have underlying remarketing agreements that
transfer any residual-value risk to the leasing company. This had a positive impact on the 2011
financial results. Group-wide standards to ensure that residual values are calculated conservatively,
combined with an IT system for residual-value risk management, reduce risk and provide the basis on
which to create the transparency required.
The KION Group mitigates its liquidity risk and interest-rate risk by ensuring that most of its
transactions and funding loans have matching maturities. Long-term leases are primarily based on
fixed-interest agreements. The credit facilities provided by various banks ensure that the Group has
sufficient liquidity. Moreover, the KION Group offers the majority of financial services via selected
financing partners that bear the risks of the finance transaction.
In order to exclude exchange-rate risk, KION generally funds its leasing business in the local currency
used in each market.
Because of low default rates, counterparty risk has not been significant to date in the KION Group.
The Group has not identified any material changes between 2010 and 2011. KION also mitigates any
losses from defaults by its receipt of the proceeds from the sale of repossessed trucks. It also primarily
offers financial services indirectly via selected financing partners, and KION bears the counterparty
risk in under 5 per cent of cases. The credit risk management system was updated during 2011 in
preparation for the planned transfer of financial services activities to a separate segment. In particular,
this involved revising the regulations concerning the process organisation as well as processes for risk
management and control.
12.3.9 Human resources
For KION to secure its long-term success, it is vital that managerial staff and young professionals of
sufficient quality and quantity to meet its future challenges are retained within the Company for a long
period, particularly in key functions.
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One of the critical challenges is to identify and develop young professionals with high potential who
already work for the Company and to retain them over the long term, thereby enabling succession
planning for key roles across the Group. The KION Group must also position itself in the external
market as an employer of choice so that it can identify and recruit suitable talented candidates. This
will enable it to make strategic additions to its portfolio of existing staff and, in this way, avert the risk of
possibly losing expertise and thereby becoming less competitive.
In the year under review, the KION Group introduced plans to consolidate its European production
facilities. These may have a negative impact on the Company's business and thus its financial position
and financial performance if they lead to strikes or reactions of other kinds by the workforce, employee
representatives or third parties. The planned consolidation will see the current production of
warehouse technology at the site in Montataire (France) transferred to Luzzara (Italy), while the
manufacture of STILL and OM counterbalance trucks will move from Bari (Italy) to the production site
in Hamburg.
These plans are aimed at increasing capacity utilisation and improving flexibility in order to
permanently safeguard the future of the European production sites. Even after these plans have been
implemented, the KION Group will continue to have by far the highest number of European production
facilities within the industry, with factories in all major markets in which demand is high. In 2011, the
KION Group initiated the procedures necessary for such restructuring projects in conjunction with the
employee representatives in France and Italy. The Company aims to implement the planned measures
smoothly and in a socially compatible way as quickly as possible and in accordance with legal
requirements.
12.3.10 IT
In order to process and manage its business transactions, the Group needs a reliable IT system
landscape that is expandable and flexible enough to be adjusted in line with the requirements of the
market. Complexity must be reduced so that differentiation is restricted only to those functions where it
is absolutely required. This allows the KION Group to share existing expertise between the brands (on
the basis of best practice) and strengthen its competitive position.
The rationalisation of the current brand-specific systems is being driven forward under the auspices of
the 'KION ONE' project, which has three modules: 'KION ONE Factory', 'KION ONE Sales & Service'
and 'KION ONE Infrastructure Consolidation'. Internal and external specialists with the necessary skills
are implementing these action plans without impairing the day-to-day running of the business.
For this project, the KION Group is using its internal IT service provider KION Information
Management Services (KIM), which was established in 2007 as a private limited company in Germany
(GmbH). KIM pools internal IT resources and makes them available throughout the Group. The Group
remains able to monitor risk via the Group-wide portfolio management and project planning & control
system. Independent external audits are conducted to provide additional quality assurance.
Various technical and organisational measures protect the Company's data against unauthorised
access, misuse and loss. The technical protection measures include virus scanners, firewall systems
and access controls. Access to the Group's infrastructure is also validated and recorded.
12.3.11 Legal risks
The legal risks arising from the KION Group's business are typical of those faced by any company
operating in this sector.
The Company is a party in a number of pending lawsuits in various countries. It cannot assume with
any degree of certainty that it will win any of the lawsuits or that the existing risk provision in the form
of insurance or provisions will be sufficient in each individual case. However, the Company is not
expecting any of these existing legal proceedings to have a material impact on its financial position or
financial performance. These lawsuits relate, among other things, to liability risks, especially as a
result of legal action brought by third parties because, for example, the Company's products were
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allegedly faulty or the Company allegedly failed to comply with contractual obligations. The KION
Group has taken measures to prevent it from incurring financial losses as a result of these risks.
Although legal disputes with third parties have been insignificant both currently and in the past, the
Company has a centralised reporting system to record and assist pending lawsuits.
In addition to the high quality and safety standards applicable to all users of the Company's products,
with which it complies when it develops and manufactures the products, it has also taken out the usual
types of insurance to cover any third-party claims. These issues are also tackled by teams whose
members come from a variety of functions. The aim of the teams is to identify and minimise risks, for
example the risks arising from inadequate contractual arrangements. A further objective of this
cooperation across functions is to ensure compliance with mandatory laws, regulations and
contractual arrangements at all times.
12.3.12 External risks
External risks arise as a result of constant changes in the Company's political, legal and social
environment. Because it operates in countries in which the political or legal situation is uncertain, the
KION Group is exposed to the consequent risk of government regulation, capital controls and
expropriations. Although fairly unlikely, natural disasters and terrorist attacks constitute a further risk to
the KION Group's financial position and financial performance.
12.4 Overall risk
In 2011, the KION Group continuously analysed the risks arising, in particular, from the financial crisis
and the performance of the real economy in addition to its normal quarterly risk reporting. Particular
attention was paid to the potential impact of financial instability in some economies and financial
institutions in the context of the sovereign debt crisis. As far as possible, risk prevention measures
were initiated at an early stage where risks were identified – for example by using the revolving credit
facility. Despite market growth in 2011, the situation in the global markets remains challenging due, in
particular, to the uncertainties in the euro zone but also the possible slowdown in growth in the United
States. As things stand at present, there are no indications of any risks that could jeopardise the
Company's continuation as a going concern.
13. Events after the balance sheet date
No events of any importance occurred after the balance sheet date.
14. Outlook
The forward-looking statements and information given below are based on the Company's current
expectations and assessments. Consequently, they involve a number of risks and uncertainties. Many
factors, several of which are beyond the control of the KION Group, affect the Group's business
activities and profitability. Any unexpected developments in the global economy would result in the
KION Group's performance and profits differing significantly from those forecast below. The KION
Group does not undertake to update forward-looking statements to reflect subsequently occurring
events or circumstances. Furthermore, the KION Group cannot guarantee that future performance and
actual profits generated will be consistent with the stated assumptions and estimates and can accept
no liability in this regard.
14.1 Outlook for the global economy
The economic recovery lost momentum at the end of 2011. As a result, the robustness of the global
economy will be closely scrutinised in 2012 and the risk of a downturn appears heightened in many
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countries. The prevailing uncertainty about what will happen is reflected above all in the variance
between current economic forecasts. Two main trends can be observed: firstly the astonishingly strong
data for the real economy in many countries and, secondly, significant political and economic
imponderables. These relate primarily to the outcome of the euro crisis, further developments in the
financial sector, unstable financial policy in the USA and the slackening pace of economic activity in
the world's growth regions.
The economic risks are mirrored by the lower growth forecasts published in recent months and by the
volatility of the financial markets. It is still not known how effective the additional consolidation
measures taken by many industrialised countries will prove to be. Overall, there are signs that
domestic demand will weaken in the advanced economies. The economic slowdown that has become
apparent in recent months in the emerging markets, combined with declining momentum in the export
sector, also point to a cooling off of the global economy. Commodity prices are also exhibiting a
downward trend in line with general economic uncertainties and the falling level of global trade.
Whereas prices for utilities that are not dependent on oil seem to be decreasing further, expectations
regarding oil prices are less favourable due to the geopolitical situation.
On the basis of the aforementioned challenges and provided that no other uncertainties hold back the
economy, the general assumption is that the global economy will grow at a slower pace in 2012 than it
did last year. As long as economic conditions stabilise soon, experts anticipate that the European
economy will stagnate this year, with France, Germany and the United Kingdom likely to have the
better economic prospects among the western Europe countries. Based on the same assumptions, as
well as recent developments, the outlook is more positive for the USA than for other large
industrialised countries as US growth is forecast to stay at the same level. Demand in the emerging
markets is likely to continue to normalise within a cyclical pattern, but at a high level, and will help
bring relative stability to the world economy. In 2013, the economy is expected to pick up again.
14.2 Market outlook
The market for industrial trucks is closely correlated with macroeconomic conditions. The statements
below should therefore be read in the context of the conditions described above. If the performance of
the global economy is adversely impacted by unforeseen exogenous factors, the consequences will
also affect the industrial trucks market. From the current perspective, it is not possible to determine the
extent, the timing or the likelihood of these exogenous factors.
Based on the assumption that the global economy will cool off in 2012 and in view of the high market
volume in 2011, growth prospects for industrial trucks will be lower this year in all regions. On the one
hand, the market situation looks likely to adapt to the economic cycle while, on the other, investing
activities are expected to be more subdued in a macroeconomic context. The KION Group therefore
anticipates moderate growth of around 2 per cent in the global market for industrial trucks in 2012. As
far as 2013 is concerned, the KION Group expects the sector's prospects to improve in line with
economic forecasts.
The KION Group predicts that truck capacity utilisation and usage in 2012 will remain roughly the
same in the western European market, although the situation will vary between the individual
countries. In eastern Europe, the markets are expected to recover further and will therefore
significantly stronger growth than western Europe. The US market points to continued stabilisation
with moderate growth. The KION Group expects growth in the emerging markets to continue to
normalise but to remain far higher overall than in the advanced markets.
14.3 Outlook for the KION Group
In 2012, the KION Group is likely to benefit from the further cost-structure improvements already
begun as well as from last year's capital expenditure on developing new and additional products and
on expanding the sales and service network – as long as market conditions remain broadly stable.
Provided that they do, the planned restructuring of the production sites is expected to bring significant,
lasting improvements to capacity utilisation at the Luzzara and Hamburg plants, thereby boosting the
necessary long-term competitiveness of the Group as a whole.
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The KION Group began 2012 with a large order backlog and is currently cautiously optimistic that it
will again generate a slight year-on-year increase in revenue. This assumes that no external events
have a direct negative impact on either the global industrial truck markets or the Company. Moreover,
demand for the Company's products must remain at the same high level as in 2011. In these
circumstances, growth would be driven by all segments and business activities. Along with rigorous
management of fixed costs, the improvements initiated – especially those designed to improve
capacity utilisation at the production sites – would lead to a further increase in profitability from 2013.
The brand companies in the KION Group responded to the increase in staff costs and commodity
prices by raising their gross list prices in December 2011 and early 2012. Against this background, the
KION Group believes another slight rise in its adjusted EBIT margin is possible. This positive trend
would also be reflected in net income, although this figure will be affected by non-recurring items in
2012. These will mainly be related to expenses for consolidating the production of warehouse
equipment and counterbalance trucks of the STILL brand at one European site. The KION Group
therefore expects to achieve a significantly better financial performance this year, although falling just
short of breaking even.
Provided that the global economy maintains its positive trajectory, the KION Group believes further
slight growth in its revenue and margin and a continued gradual improvement in net income are
possible for 2013.
Wiesbaden, 15 March 2012
Gordon Riske
Klaus Hofer
Harald Pinger
KION HOLDING 1 GmbH
Wiesbaden
Consolidated
Financial Statements
31 December 2011
KION Holding 1 GmbH
Consolidated statement of comprehensive income for the year ended 31 December 2011
Consolidated income statement
€ thousand
Revenue
Cost of sales
Gross profit
Selling expenses
Research and development costs
Administrative expenses
Other income
Other expenses
Profit from equity investments
Other financial result
Earnings before interest and taxes
Financial income
Financial expense
Earnings before taxes
Income taxes
Current taxes
Deferred taxes
Net loss
Attributable to shareholders of KION Holding 1 GmbH
Attributable to non-controlling interests
Consolidated statement of comprehensive income
€ thousand
Net loss
Impact of exchange differences
thereof changes in unrealised gains and losses
thereof realised gains and losses
Gains/losses on employee benefits
thereof changes in unrealised gains and losses
thereof tax effect
Gains/losses on cash flow hedges
thereof changes in unrealised gains and losses
thereof realised gains and losses
thereof tax effect
Gains/losses from equity investments
thereof changes in unrealised gains and losses
Other comprehensive income (loss)
Total comprehensive income (loss)
Comprehensive loss
Attributable to shareholders of KION Holding 1 GmbH
Attributable to non-controlling interests
Note
[8]
[9]
[10]
[11]
[12]
[13]
[14]
2011
2010
4,368,395
-3,256,378
3,534,474
-2,684,353
1,112,017
850,121
-520,547
-119,526
-283,322
81,503
-70,043
11,192
1,886
-483,639
-103,255
-247,526
59,585
-45,879
3,569
1,660
213,160
34,636
73,664
-345,709
88,349
-354,405
-58,885
-231,420
-34,041
-49,349
15,308
34,722
-14,997
49,719
-92,926
-95,093
2,167
-196,698
-198,655
1,957
2011
2010
-92,926
-196,698
6,476
6,476
0
8,394
13,995
-5,601
-8,149
7,071
-18,452
3,232
532
532
37,260
37,260
0
-28,658
-39,462
10,804
10,022
52,818
-37,897
-5,369
-125
-125
7,253
18,499
-85,673
-178,199
-87,840
2,167
-180,155
1,956
KION Holding 1 GmbH
Consolidated statement of financial position at 31 December 2011
ASSETS
€ thousand
Goodwill
Other intangible assets
Leased assets
Other property, plant and equipment
Equity investments
Lease receivables
Other non-current financial assets
Deferred taxes
Non-current assets
Inventories
Trade receivables
Lease receivables
Current income tax receivables
Other current financial assets
Cash and cash equivalents
Current assets
Total assets
EQUITY AND LIABILITIES
Note
2011
2010
[16]
[16]
[17]
[18]
[19]
[20]
[21]
[14]
[22]
[23]
[20]
[14]
[21]
[24]
1,537,996
977,555
539,731
538,121
36,545
242,840
25,732
261,963
1,507,010
986,410
501,164
566,492
37,841
246,808
17,474
241,772
4,160,483
4,104,971
625,369
676,553
118,381
4,953
107,096
373,451
535,529
633,265
120,950
4,550
106,790
252,884
1,905,803
1,653,968
6,066,286
5,758,939
€ thousand
Notes No.
2011
2010
Subscribed capital
Capital reserve
Retained earnings
Accumulated other comprehensive income (loss)
Non-controlling interests
Equity
Shareholder loan
Retirement benefit obligation
Non-current financial liabilities
Lease liabilities
Other non-current provisions
Other non-current financial liabilities
Deferred taxes
Non-current liabilities
Current financial liabilities
Trade payables
Lease liabilities
Current income tax liabilities
Other current provisions
Other current financial liabilities
Current liabilities
Total equity and liabilities
500
348,483
-806,429
-37,218
7,077
500
348,483
-711,504
-44,471
7,070
-487,587
-399,922
643,132
382,914
2,777,354
471,131
96,168
132,719
339,054
615,250
374,063
2,772,417
411,097
164,299
127,870
334,930
4,842,472
4,799,926
227,376
634,092
230,381
15,439
183,678
420,435
106,470
508,108
250,552
6,661
95,902
391,242
1,711,401
1,358,935
6,066,286
5,758,939
[25]
[27]
[26]
[27]
[28]
[29]
[30]
[14]
[27]
[28]
[14]
[29]
[30]
KION Holding 1 GmbH
Consolidated statement of cash flows for the year ended 31 December 2011
Consolidated statement of cash flows
€ thousand
2011
2010
Net loss
+ income taxes
+ net financial income/expenses
= Earnings before interest and taxes
Depreciation/Impairment of non-current assets (excl. leased assets)
Depreciation/Impairment of leased assets
Other non-cash income and expenses
Gain (-) / loss (+) on disposal of non-current assets
Change in leased assets
Change in lease receivables and lease liabilities
Change in inventories
Change in trade receivables
Change in trade payables
Cash payments for defined benefit obligations
Change in other provisions
Change in other operating assets
Change in other operating liabilities
Taxes paid
= Cash flow from operating activities
Cash receipts from disposal of non-current assets
Cash payments for purchase of non-current assets
Deposits from other loan claims
Dividends received
Interest income received
Acquisitions of subsidiaries, net of cash acquired
Cash receipts (+) / cash payments (-) for sundry assets
= Cash flow from investing activities
Dividends paid to non-controlling interests
Cash paid for increased ownership interests (after control)
Cash receipts from decreased ownership interests (after control)
Proceeds from borrowings
Loan financing costs paid
Repayment of borrowings
Repayment of other capital borrowings
Cash payments for forward foreign exchange hedging contracts
Interest paid
= Cash flow from financing activities
-92,926
34,041
272,045
213,160
186,569
169,452
9,943
6,428
-208,691
26,056
-75,242
-36,829
114,886
-21,038
13,989
334
30,346
-42,553
-196,698
-34,722
266,056
34,636
169,013
176,558
12,295
4,987
-129,572
-57,440
-45,685
-103,890
145,491
-29,420
-14,994
7,195
43,072
-12,957
386,810
199,289
3,408
-133,005
2,879
6,599
3,397
-32,916
-2,942
4,177
-123,462
-1,799
2,854
3,623
-7,638
-1,003
-152,580
-123,248
-2,209
-1,461
82
632,691
-24,579
-537,018
-21,052
-13,714
-147,455
-2,143
-9,535
0
56,742
-5,978
-152,447
-42,133
0
-134,716
-114,715
-290,210
Effect of foreign exchange rate changes on cash and cash equivalents
1,052
3,645
= Change in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
120,567
-210,524
252,884
373,451
463,408
252,884
KION Holding 1 GmbH
Consolidated statement of changes in equity for the year ended 31 December 2011
Consolidated statement of changes in equity
€ thousand
Subscribed
capital
Capital
reserves
Retained
earnings
Accumulated other comprehensive income (loss)
Cumulative
translation
adjustment
Gains/losses
on defined
benefit
obligation
Gains/losses
on Cash Flow
Hedges
Gains/losses
from equity
investments
Total equity
attributable to
shareholders
Non-controlling
interests
Total
Balance as at 1/1/2010
500
348,483
-516,199
-79,286
41,156
-24,841
0
-230,187
17,144
-213,043
Net loss
Other comprehensive income (loss)
Comprehensive loss
Dividends
Effects on the acquisition of
non-controlling interests
Other Changes
−
−
-198,655
−
-198,655
-1,496
4,846
37,261
37,261
-28,658
-28,658
10,022
10,022
-198,655
18,500
-180,155
-125
-125
1,957
-1
1,956
-196,698
18,499
-178,199
-2,143
-2,143
-1,496
4,846
-10,419
532
-11,915
5,378
Balance as at 31/12/2010
500
348,483
-711,504
-42,025
12,498
-14,819
-125
-406,992
7,070
-399,922
Balance as at 1/1/2011
500
348,483
-711,504
-42,025
12,498
-14,819
-125
-406,992
7,070
-399,922
Net loss
Other comprehensive income (loss)
Comprehensive loss
Dividends
Other changes
−
−
-95,093
−
-95,093
168
6,476
6,476
8,394
8,394
-8,149
-8,149
532
532
-95,093
7,253
-87,840
168
2,167
−
2,167
-2,209
49
-92,926
7,253
-85,673
-2,209
217
Balance as at 31/12/2011
500
348,483
-806,429
-35,549
20,892
-22,968
407
-494,664
7,077
-487,587
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 1 of 81
Notes to the consolidated financial statements of KION Holding 1 GmbH for the
year ended 31 December 2011
Basis of presentation
[ 1 ]
General information on the Company
KION Holding 1 GmbH, whose registered office is at Abraham-Lincoln-Strasse 21, 65189 Wiesbaden, is the
parent company of the KION Group in Germany. KION Holding 1 GmbH was formed with articles of association
dated 24 October 2006, and entered in the commercial register at the Wiesbaden Local Court under reference
HRB 22785 on 21 February 2007. The parent company of KION Holding 1 GmbH is Superlift Holding S.à r.l.,
Luxembourg.
The KION Group is a leading global supplier of industrial trucks (forklift trucks and warehouse trucks). It generat-
ed revenue of €4,368,395 thousand in the 2011 finan cial year from its Linde, Fenwick, STILL, OM, Baoli and
Voltas brands (2010: €3,534,474 thousand).
The consolidated financial statements and the group management report were prepared by the Executive Board
of KION Holding 1 GmbH on 15 March 2012.
[ 2 ]
Basis of preparation
The consolidated financial statements of the KION Group for the financial year ended 31 December 2011 have
been prepared in accordance with section 315a of the German Commercial Code (HGB) which requires the
application of International Financial Reporting Standards (IFRSs) of the International Accounting Standards
Board (IASB) applicable as at the reporting date as well as the associated interpretations (IFRICs) of the IFRS
Interpretations Committee (IFRS IC) as adopted by the European Union in accordance with Regulation (EC) No.
1606/2002 of the European Parliament and of the Council concerning the application of international accounting
standards. All of the IFRSs and IFRICs that were issued by the reporting date and that were required to be ap-
plied in the 2011 financial year have been applied in preparing the consolidated financial statements.
Financial reporting standards to be adopted for the first time in the financial year under review:
The following financial reporting standards and interpretations were adopted for the first time in 2011:
• Amendments to IFRS 1 'First-time Adoption of International Financial Reporting Standards': amendments
relating to the limited exemption from comparative IFRS 7 disclosures
• Revised version of IAS 24 'Related Party Disclosures'
• Amendments to IAS 32 'Financial Instruments: Presentation', classification of rights issues (rights, options
and warrants)
• Amendments to IFRIC 14 'The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their
Interaction', prepayment of minimum funding requirements
IFRIC 19 'Extinguishing Financial Liabilities with Equity Instruments'
Improvements to IFRSs in 2010
•
•
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 2 of 81
The first-time adoption of these standards and interpretations had no significant effect on the presentation of the
financial position and financial performance of the KION Group.
Financial reporting standards released but not yet adopted
In its consolidated financial statements for the year ended 31 December 2011 the KION Group has not applied
the following standards and interpretations, which have been issued by the IASB but are not yet required to be
adopted in 2011:
• Amendments to IFRS 1 'First-time Adoption of International Financial Reporting Standards', amendments
relating to fixed transition dates and severe hyperinflation
• Amendments to IFRS 7 'Financial Instruments: Disclosures', disclosures relating to transfers of financial
assets
• Amendments to IFRS 7 'Financial Instruments: Disclosures', offsetting of financial assets and financial liabili-
ties
IFRS 9 'Financial Instruments'
IFRS 10 'Consolidated Financial Statements'
IFRS 11 'Joint Arrangements'
IFRS 12 'Disclosure of Interests in Other Entities'
IFRS 13 'Fair Value Measurement'
•
•
•
•
•
• Amendments to IAS 1 'Presentation of Financial Statements', amendments relating to the presentation of
items of other comprehensive income
• Amendments to IAS 12 'Income Taxes', limited amendment to IAS 12 relating to the recovery of underlying
assets
• Amendments to IAS 19 'Employee Benefits', elimination of the use of the 'corridor' approach and amend-
ments relating to the presentation of items of pension expense
IAS 27R 'Separate Financial Statements'
IAS 28R 'Investments in Associates and Joint Ventures'
•
•
• Amendments to IAS 32 'Financial Instruments: Presentation', offsetting of financial assets and financial
liabilities
IFRIC 20 'Stripping Costs in the Production Phase of a Surface Mine'
•
These standards and interpretations will only be applied by the companies included in the KION Group from the
date at which they must be adopted for the first time. Their effects on the financial position and financial perfor-
mance of the KION Group are expected to be insignificant.
The various amendments issued in May 2011 as part of the annual improvement project mainly relate to terminol-
ogy and editorial aspects. They are not expected to have any significant effect on the presentation of the financial
position and financial performance.
In order to improve the clarity of presentation, certain items are aggregated on the face of the statement of finan-
cial position and income statement. The items concerned are disclosed and explained separately in the notes. In
accordance with IAS 1.60, assets and liabilities are classified into current and non-current items. The consolidated
income statement is prepared in accordance with the cost of sales (function-of-expense) method.
The reporting currency is the euro. All amounts are disclosed in thousands of euros (€ thousand) unles s stated
otherwise. The addition of the totals presented may result in rounding differences of +/- €1 thousand.
The sepa-
rate financial statements included in the consolidation were prepared on the same reporting date as the annual
financial statements of KION Holding 1 GmbH.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 3 of 81
[ 3 ]
Principles of consolidation
Acquisitions are accounted for using the acquisition method. In accordance with IFRS 3R, the identifiable assets
acquired and the liabilities assumed on the acquisition date are recognised separately from goodwill, irrespective
of the extent of any non-controlling interests. The identifiable assets acquired and the liabilities assumed are
measured at their fair value.
The amount recognised as goodwill is calculated as the amount by which the sum of the consideration trans-
ferred, the amount of non-controlling interests in the acquiree and the fair value of all previously held equity inter-
est at the acquisition date exceeds the fair value of the group's interest in the acquiree's net assets. If the cost of
acquisition is lower than the fair value of the acquiree's net assets, the difference is recognised in income.
For each acquisition, the group decides on a case-by-case basis whether the non-controlling interest in the ac-
quiree is recognised at fair value or as a proportion of the net assets of the acquiree. The option to recognise non-
controlling interests at fair value is not currently exercised. Consequently, non-controlling interests are recognised
at the proportionate share of the fair value of the net assets attributable to them excluding goodwill.
For acquisitions achieved in stages, previously held equity interests are recognised at their fair value on the date
they were acquired. The difference between their carrying amount and fair value is recognised in the consolidated
income statement.
For the purpose of impairment testing, goodwill is allocated to cash-generating units.
Transaction costs are immediately recognised in the income statement. Contingent consideration elements are
included at fair value at the date of acquisition when determining the purchase consideration. Contingent consid-
eration elements may consist of equity instruments or financial liabilities. Depending on the classification, changes
in their fair value are reflected in subsequent measurements.
The consolidated financial statements include all of the parent company's subsidiaries. Intragroup balances,
transactions, income and expenses, and gains and losses on intercompany transactions are eliminated in full.
Deferred taxes are recognised on temporary differences resulting from consolidation entries.
Transactions with non-controlling interests are treated as transactions with the Group's equity providers. Differ-
ences between the consideration paid for the acquisition of a non-controlling interest and the relevant proportion
of the carrying amount of the subsidiary's net assets are recognised in other comprehensive income. Gains and
losses arising from the sale of non-controlling interests are also recognised in other comprehensive income,
provided there is no change in control.
Associates and joint ventures that are material to the financial position and financial performance of the KION
Group are accounted for using the equity method.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 4 of 81
[ 4 ]
Basis of consolidation
KION Holding 1 GmbH's equity investments include subsidiaries, joint ventures, associates and financial invest-
ments.
In addition to KION Holding 1 GmbH, the consolidated financial statements of the KION Group include all material
subsidiaries in which KION Holding 1 GmbH holds a majority of the voting rights, either directly or indirectly, or in
which it exercises control i.e. has the power to govern the financial and operating policies of the entity so as to
obtain benefits from its activities. Subsidiaries acquired in the course of the financial year are consolidated from
the date at which control is transferred, i.e. the date from which it is possible to determine their financial and
operating policies such that benefit is obtained. Companies sold in the course of the financial year are deconsoli-
dated from the date on which control is lost.
A joint venture is an equity interest in which the entity is jointly managed by companies in the KION Group and
one or more partners. Joint control differs from significant influence insofar as it is governed by a contractual
agreement.
Associates are entities in which companies in the KION Group are able to exercise significant influence, either
directly or indirectly, over the financial and operating policies of the entity concerned. Significant influence is
assumed when KION Holding 1 GmbH holds between 20 per cent and 50 per cent of the voting rights.
All other equity interests over which KION Holding 1 GmbH is unable to exercise control or significant influence,
or that are not jointly controlled by KION Holding 1 GmbH are classified as financial investments and are not
consolidated.
The following table shows the number of equity investments broken down by category:
Shareholdings by categories
Full consolidated subsidiaries
Domestic
Foreign
Equity investments in Joint Ventures and Associates
Domestic
Foreign
Subsidiaries and financial investments
recorded at cost
Domestic
Foreign
1/1/2011
Addtions
Disposals
31/12/2011
88
16
72
12
7
5
68
15
53
6
1
5
−
−
−
12
2
10
1
−
1
1
−
1
10
1
9
93
17
76
11
7
4
70
16
54
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 5 of 81
A total of 17 German and 76 foreign subsidiaries were fully consolidated in addition to KION Holding 1 GmbH as
at 31 December 2011. KION Finance S.A., Luxembourg, has been included in the KION Group’s consolidated
financial statements for the first time since April 2011 as required by IAS 27 in conjunction with SIC-12 (‘Consoli-
dation - special-purpose entities’). In addition, Eisenwerk Weilbach GmbH, Wiesbaden, Germany, has been
included in the consolidation for the first time since December 2011 because it had become more financially
significant.
IBERCARRETILLAS, S.A., El Prat de Llobregat, Spain, was deconsolidated in April 2011 when it merged with
STILL, S.A., Barcelona, Spain.
Eleven joint ventures and associates were accounted for under the equity method as at 31 December 2011
(31 December 2010: twelve). In each case, valuation was based on the lastest available annual financial state-
ments.
70 (2010: 68) subsidiaries with minimal business volume or no business operations were not included in the
consolidation. The unconsolidated subsidiaries and the associates not accounted for using the equity method are
not material to the financial position and financial performance of the KION Group, both individually and in the
aggregate.
Due to certain circumstances, the following fully consolidated companies are exempt from the requirement to
prepare annual financial statements and management reports in accordance with sections 264 (3) and 264b HGB
on account of their inclusion in the consolidated financial statements:
German entities exempted from disclosure requirements
Entities exempted
KION Holding 2 GmbH
Klaus Pahlke GmbH & Co. Fördertechnik KG
Schrader Industriefahrzeuge GmbH & Co. KG
LMH Immobilien GmbH & Co. KG
LMH Immobilien Holding GmbH & Co. KG
Head office
Wiesbaden
Haan
Essen
Aschaffenburg
Aschaffenburg
A detailed overview of all the direct and indirect shareholdings of KION Holding 1 GmbH is presented in the list of
shareholdings in the annex to these notes.
[ 5 ]
Acquisitions
Voltas Material Handling Private Limited
In April 2011, the KION Group and Voltas Limited, Mumbai, India, together established a company to develop,
manufacture, sell and service forklift trucks and warehouse trucks. This company, which trades under the name of
Voltas Material Handling Private Limited, Mumbai, India ('VMH'), acquired the forklift truck and warehouse tech-
nology business of Voltas Limited on 1 May 2011. KION Holding 1 GmbH indirectly holds 66 per cent of the share
capital and voting rights in VMH via Linde Material Handling Asia Pacific Pte. Ltd., Singapore.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 6 of 81
As a KION Group brand that manufactures in India, Voltas will focus most of its efforts on this market. Its product
range includes warehouse trucks, diesel trucks and electric forklift trucks with load capacities of between 1.5
tonnes and 16 tonnes. VMH has a network of 25 branches and authorised dealers throughout India. Since be-
coming part of the KION Group, VMH has in eight months generated revenue of €22,027 thousand and earned
net income of roughly €19 thousand. It is not possi ble to calculate the revenue and net income that would have
been earned if VMH had been acquired at the beginning of the reporting period because no reliable IFRS figures
are available for the period prior to April 2011.
A total of 131 Voltas Limited employees were taken on.
The incidental acquisition costs incurred by this business combination amounted to €780 thousand and h ave
been recognised as an expense for the current period and reported as administrative expenses on the face of the
consolidated income statement.
Owing to further contractual arrangements, the newly established company has been fully consolidated and,
consequently, a liability of €8,920 thousand was re cognised at the acquisition date. This estimated fair value also
represents the upper limit for the purchase price. This purchase price obligation may decrease consistent with
defined key figures. The table below shows the provisional impact of the acquisition of Voltas Limited's forklift
truck and warehouse technology business on the consolidated financial statements of KION Holding 1 GmbH.
Impact of the acquisition of VMH on the financial position of the KION Group
€ thousand
Goodwill
Other intangible assets
Property, plant and equipment
Deferred taxes (net)
Inventories
Trade receivables
Other assets
Total assets
Provisions
Liabilities
Total liabilities
Total net assets
Consideration transferred
thereof: paid in cash
Fair value at the
acquisition date
14,700
5,102
974
2,306
4,312
3,040
32
30,465
1,199
4,205
5,404
25,061
25,061
16,141
The gross amounts of the receivables acquired as part of this transaction, which largely constitute trade receiva-
bles, totalled €3,164 thousand. At the acquisition d ate it was estimated that €70 thousand of these tra de receiva-
bles was irrecoverable. The goodwill arising from the acquisition of VMH is expected to be tax deductible.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 7 of 81
Other acquisitions
The dealer Cailotto Carrelli S.p.A., Verona, Italy (100 per cent of the company's share capital and voting rights)
was acquired on 4 April 2011.
In addition, by acquiring 100 per cent of the share capital and voting rights in Sterling Mechanical Handling Ltd.,
Heswall, United Kingdom, the remaining share capital and voting rights (51 per cent) in the dealer Linde Sterling
Ltd., Basingstoke, United Kingdom, were acquired effective 15 June 2011.
The carrying amount of the equity investment in Linde Sterling Ltd. immediately prior to the acquisition date was
€3,238 thousand. As a result of the remeasurement of
the equity investment (49 per cent) on the date of acquisi-
tion, €4,102 thousand was recognised in the income statement and reported as profit from equity investments.
Furthermore, the newly established company OOO '’Linde Material Handling Rus'’, Moscow, Russian Federation,
acquired the business of the dealer Liftec in Russia on 2 December 2011. The consideration paid included trade
receivables in the amount of €5,039 thousand that w ere offset, a cash payment of €4,903 thousand and c ontin-
gent consideration with a fair value of €2,879 thou sand. This estimated fair value at the acquisition date also
represents the upper limit for the purchase price. The contingent consideration may be reduced in line with de-
fined revenue targets for 2012 and 2013 and is payable in 2014 if targets are met.
The incidental acquisition costs incurred by these business combinations total €1,720 thousand and hav e been
recognised as an expense for the current period and reported as administrative expenses in the consolidated
income statement.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 8 of 81
The table below shows the overall impact of these acquisitions on the consolidated financial statements of KION
Holding 1 GmbH based on the provisional figures available at the respective acquisition date.
Impact of the other acquisitions on the financial position of the KION Group
€ thousand
Goodwill
Other intangible assets
Property, plant and equipment
Deferred taxes (net)
Inventories
Trade receivables
Cash and cash equivalents
Other assets
Total assets
Provisions
Liabilities
Deferred taxes (net)
Total liabilities
Total net assets
Consideration transferred
thereof: paid in cash
Fair value at the
acquisition date
16,710
8,556
15,704
290
5,967
8,079
23
1,702
57,030
1,449
25,360
525
27,334
29,696
29,696
16,798
Revenue increased by €35,720 thousand as a result o f the remaining acquisitions. The net loss reported for 2011
contains a loss of approximately €70 thousand for t he entities acquired. If these business combinations had been
completed by 1 January 2011, this would have had no material impact on either the revenue or the net loss re-
ported by the KION Group.
The purchase price allocations for the acquisitions described above were only provisional as at 31 December
2011 because some details had not yet been fully evaluated. Goodwill represents the strategic, technological and
geographical synergies that the KION Group is able to derive from the business combinations. None of the good-
will arising from the other acquisitions is currently tax deductible.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 9 of 81
[ 6 ]
Currency translation
The financial statements in foreign currencies are translated in accordance with the functional currency concept
(IAS 21 'The Effects of Changes in Foreign Exchange Rates'). The functional currency is the currency of the
primary economic environment in which a company operates. The closing-rate method is used for currency trans-
lation.
The assets and liabilities of foreign subsidiaries, including goodwill, are translated at the middle spot exchange
rate, i.e. at the average of the bid or offer rates on the reporting date. Income and expenses are translated at the
average rate for the year. With the exception of income and expenses recognised as other comprehensive in-
come (loss), equity is recognised at historical rates. The resulting translation differences are not recorded in
income but are recognised in other comprehensive income (loss) until subsidiaries are disposed of.
Transactions of the consolidated companies in foreign currencies are translated into the relevant company's
functional currency at the rate prevailing on the transaction date. On the reporting date, monetary items are
translated at the closing rate, and non-monetary items are translated at the rate prevailing on the transaction date.
Currency translation differences are recorded in income and included in other income/expenses.
The following translation rates were used for currencies that are material to the financial statements:
Major foreign currency rates in €
Australian dollar (AUD)
Brazilian real (BRL)
Chinese yuan (CNY)
Pound sterling (GBP)
Polish zloty (PLN)
Swiss franc (CHF)
Czech koruna (CZK)
Hungarian forint (HUF)
US dollar (USD)
Average rate
Closing rate
2011
2010
2011
2010
1.3480
2.3273
9.0018
0.8680
4.1210
1.2327
24.5807
279.3808
1.3929
1.4440
2.3348
8.9863
0.8584
3.9941
1.3815
25.2775
275.3971
1.3275
1.2683
2.4142
8.1551
0.8343
4.4675
1.2154
25.5990
315.5400
1.2957
1.3075
2.2203
8.8173
0.8575
3.9666
1.2496
25.0415
278.3900
1.3380
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 10 of 81
[ 7 ]
Accounting policies
The consolidated financial statements are prepared based on the financial statements of the parent and the
consolidated subsidiaries, which are prepared in accordance with uniform KION Group accounting policies.
Revenue recognition
Revenue is the fair value received for the sale of products and services and lease income (excluding VAT) after
deduction of trade discounts and rebates. In accordance with IAS 18, revenue is recognised when it is sufficiently
probable that a future economic benefit will flow to the company and that benefit can be reliably measured. Addi-
tional criteria also apply, depending on each individual transaction, such as:
Sale of goods
With the exception of items classified as 'sale with risk', revenue from the sale of goods is recognised when the
KION Group delivers goods to a customer, the goods are accepted by the customer and the flow of benefits to the
Group is considered to be probable. If a customer is expected to accept goods but has yet to do so, the corre-
sponding revenue is only recognised when the goods are accepted. Appropriate provisions are recognised for
risks relating to the sale of goods. In the case of revenue from agreements classified as 'sale with risk', the reve-
nue is deferred over the term of the agreement if the risks and rewards remain substantially with the KION Group.
The term 'sale with risk' is discussed in the following section and under 'Leases' below.
Rendering of services
Revenue from services is recognised in the year in which the services are rendered. For services provided over
several periods, revenue is recognised in accordance with the proportion of the total services rendered in each
period (stage of completion). Unrealised revenue from long-term service agreements is therefore deferred over
the average term of the agreements concerned and recognised in line with progressive cost trends.
Revenue from financial service transactions is recognised in the amount of the sales value of the leased asset if
classified as a finance lease and in the amount of the lease payments if classified as an operating lease. As part
of the financial services business, industrial trucks are also sold to finance partners who then enter into leases
directly with the end customer (sale with risk). If significant risks and rewards remain with the KION Group as a
result of an agreed residual value guarantee that accounts for more than 10 per cent of the asset's value or as a
result of an agreed default guarantee, the proceeds from the sale are deferred and recognised as revenue on a
straight-line basis over the term until the residual value guarantee or the default guarantee expires.
Interest income and royalties
Interest income is recognised proportionately in accordance with the effective interest method. Income from
royalties is deferred in accordance with the substance of the relevant agreements and recognised pro rata.
Information on the deferral of lease income is contained in the disclosures on the accounting treatment of leases.
Cost of sales
The cost of sales comprises the cost of goods and services sold and includes directly attributable material and
labour costs as well as directly attributable overhead, including depreciation of production equipment and amorti-
sation of certain intangible assets, as well as write-downs of inventories. Cost of sales also includes additions to
warranty provisions, which are recognised in the amount of the estimated cost at the date on which the related
product is sold.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 11 of 81
Government grants
Government grants are recognised at fair value provided that the Group has satisfied the necessary conditions for
receiving the grant. Grants not related to capital expenditures are recognised in the income statement, under
other income, in the period in which the expense intended to be covered by the grant is incurred. Grants for
capital expenditures are deducted from the cost of the asset concerned and result in a corresponding reduction in
depreciation over the subsequent periods.
Financial income and expenses
Net financial income mainly consists of interest expense on financial liabilities, interest income from financial
receivables, gains and losses on financial instruments recognised through profit or loss, exchange rate gains and
losses on financial activities and the interest expense on pension provisions. The expected return on plan assets
relating to pension provisions is also included in financial income.
Interest income and expense are recognised in profit and loss in accordance with the effective interest method.
The effective interest method is used for calculating the amortised cost of a financial asset or financial liability and
the allocation of interest income and interest expense over the relevant periods. The effective interest rate is the
interest rate at which the estimated future payments (including all fees that are part of the effective interest rate,
transaction costs and other premiums and discounts) are discounted to the net carrying amount of the financial
asset or liability over the expected term of the financial instrument.
Dividends are recognised in income when a resolution on distribution has been passed. They are reported in the
income statement under other financial income/expenses.
Goodwill
Goodwill has an indefinite useful life and is not amortised. Instead, it is tested for impairment in accordance with
IAS 36 ('Impairment of Assets') at least once a year, and more frequently if there are indications that the asset
might be impaired.
Impairment testing is performed at the level of the individual cash-generating units (CGUs) or groups of CGUs. A
CGU is defined as the smallest identifiable group of assets that generates cash inflows from continuing use that
are largely independent of the cash inflows from other assets or groups of assets. CGUs are generally based on
the lowest level of an entity at which – for internal management purposes – the management systematically
monitors and controls the contribution to earnings made by the assets concerned, including goodwill. However, a
CGU may not be larger than an operating segment as defined in IFRS 8 'Operating Segments'. In particular,
CGUs are considered to be clearly defined and independent if the entity's management has prepared independ-
ent forecasts relevant to decision-making for the individual CGUs.
For the purposes of internal and external reporting, the activities of the KION Group are broken down into the
LMH, STILL and Other segments on the basis of their characteristics and risk profile.
The relevant CGUs for the purpose of goodwill impairment testing are the LMH and STILL segments and the
VMH CGU, which is assigned to the Other segment, as the structure of the internal reporting and management
system, including the decision-relevant forecasts by the KION Group, is based on these CGUs.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 12 of 81
The recoverable amount of a CGU is determined by calculating its value in use on the basis of the discounted
cash flow method. The cash flows used in the calculation are the operating cash flows taken from financial fore-
casts approved by KION's management and also used for internal management purposes. The cash flows fore-
cast for the next five years are included in the calculation for the impairment test in accordance with IAS 36.33 (b).
The financial forecasts are based on assumptions relating to the development of the global economy, commodity
prices and exchange rates. The budget for 2012, the medium-term planning for 2013 to 2014 and the market
forecasts for 2015 to 2016 were used to determine the cash flows. Cash flows beyond the five-year planning
horizon were extrapolated for the LMH and STILL CGUs using a growth rate of 1 per cent (2010: 1 per cent). A
growth rate of 2 per cent for VMH was used for determining cash flows into perpetuity to reflect forecasted trends
for the high-growth market of India.
CGU cash flows are discounted using a weighted average cost of capital (WACC) that reflects current market
assessments of the specific risks to individual CGUs. The underlying capital structure for the LMH and STILL
CGUs is determined by comparing peer group companies in the same sector. The beta factor derived from the
peer group was 1.03 (2010: 1.09). Yield curve data from the European Central Bank as at 31 December 2011
was used to determine a risk-free interest rate; this interest rate was 3.40 per cent (2010: 3.45 per cent). The
market risk premium taken from empirical studies of the capital markets by the Institute of Public Auditors in
Germany (IDW) was set at 5.5 per cent, which was unchanged in 2010 and reflects the increased uncertainty
currently to be observed in the capital markets. A country risk premium was not taken into consideration for the
LMH and STILL CGUs because the KION Group mainly operates in the European market. The risk-adjusted cost
of borrowing before tax was based on an interest rate of 5.3 per cent (2010: 5.5 per cent). A leverage ratio of 25.4
per cent (2010: 32.2 per cent) was calculated based on the capital structure determined for the peer group.
The pre-tax interest rate determined on the basis of these parameters and used to discount the estimated cash
flows was 10.5 per cent for LMH and 10.4 per cent for STILL (7.7 per cent after tax for both LMH and STILL). The
interest rates determined in 2010 for LMH and STILL were 10.3 per cent before tax and 7.6 per cent after tax. A
country-specific discount rate was determined for the VMH CGU of 14.6 per cent before tax and 11.0 per cent
after tax.
Goodwill as at 31 December 2011 had been allocated as follows: €971,873 thousand to the LMH CGU (31 De -
cember 2010: €954,802 thousand), €552,208 thousand
sand) and €13,915 thousand to the VMH CGU. The impai rment test carried out as of 31 December 2011 did not
reveal any need to recognise impairment losses for the existing goodwill of the LMH, STILL and VMH CGUs.
Sensitivity analysis has enabled us to determine that no impairment losses need to be recognised for goodwill,
even if key assumptions vary within realistic limits.
to the STILL CGU (31 December 2010: €552,208 thou-
Other intangible assets
Other purchased intangible assets with a finite useful life are carried at cost less all cumulative amortisation and
all cumulative impairment losses. If events or market developments suggest impairment has occurred, impairment
tests are carried out on the carrying amount of items classified as other intangible assets with a finite useful life.
The carrying amount of an asset is compared with its recoverable amount, which is defined as the higher of its
value in use and its fair value net of costs to sell. If the reasons for recognising impairment losses in the past no
longer apply, impairment losses not exceeding the amortised cost of the assets are reversed.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 13 of 81
Other intangible assets with an indefinite useful life are carried at cost and are mainly capitalised brand names.
As of 31 December 2011, the brand names had been allocated as follows: €477,182 thousand to the LMH CGU
(31 December 2010: €468,400 thousand) and €115,700
thousand to the STILL CGU (31 December 2010:
€115,700 thousand). Brand names are not amortised pr ovided they have been established in the market for a
number of years and there is no foreseeable end to their useful life. In accordance with IAS 36, they are tested for
impairment at least once a year or whenever there are indications that the asset might be impaired. The impair-
ment test is performed in the same way as the impairment test for goodwill. Assessments of indefinite useful life
are carried out in each year.
The brand name obtained from the acquisition of VMH amounted to €1,497 thousand as of 31 December 2011
and is reported in the Other segment. The VMH brand name has a limited useful life of five years and is therefore
not subject to IAS 36.
Development costs are capitalised if the following can be demonstrated:
•
•
•
•
•
•
the technical feasibility of the intangible asset;
the intention to complete the intangible asset and use or sell it;
the ability to use or sell the intangible asset;
the extent to which the intangible asset is expected to generate future economic benefits;
the availability of adequate technical, financial and other resources to complete the development and to use
or sell the intangible asset; and
the ability to reliably measure the expenditure attributable to the intangible asset during its development.
Capitalised development costs include all costs and overhead directly attributable to the development process.
Once they have been initially capitalised, these costs and internally generated intangible assets – particularly
internally generated software – are carried at cost less cumulative amortisation and cumulative impairment loss-
es. Internally generated intangible assets are not qualifying assets so finance costs are not capitalised. All non-
qualifying research and development costs are expensed as incurred and reported on the income statement
under research and development costs together with the amortisation on capitalised development costs.
The following useful lives are applied in determining the carrying amounts of other intangible assets:
Useful life of other intangible assets
Customer relationships/client base
Technology
Development costs
Patents and licences
Software
Leases
Years
10
10
5-7
3-15
3-8
As part of the financial services business, companies in the KION Group enter into leases as lessors and as
lessees. In line with IAS 17, leases are classified as finance leases if substantially all of the risks and rewards
incidental to ownership of the leased asset are transferred to the lessee. All other leases are classified as operat-
ing leases, again in accordance with IAS 17.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 14 of 81
Sales leases
KION Group companies lease equipment, mainly various industrial trucks, to their customers in order to promote
sales. The leases may be of a short-term or long-term nature.
For long-term leases, industrial trucks are generally sold to leasing companies. The assets are then either leased
back by KION Group companies and sub-leased to customers (described below as 'sale and leaseback sub-
leases') or the leasing company itself enters into the lease with the customer (described below as 'sales with
risk'). Long-term leases generally have a term of four to five years.
Short-term leases are entered into directly with customers, with economic ownership of the leased assets remain-
ing with the KION Group companies. The assets are reported as leased assets as a separate item on the face of
the statement of financial position. Short-term leases usually have a term of one day to one year.
If a KION Group company enters into a finance lease as the lessor, the future lease payments to be paid by the
lessee are recognised as lease receivables at an amount equal to the net investment in the lease. Interest income
is allocated to each reporting period in order to ensure a constant return on the outstanding net investment in the
lease.
If the economic ownership of leased assets remains with a KION Group company as the lessor under an operat-
ing lease, the assets are reported as leased assets in a separate item on the face of the statement of financial
position. The leased assets are carried at cost and depreciated in accordance with the accounting policies for
property, plant and equipment. Lease-related income is recognised on a straight-line basis over the terms of the
lease.
If the risks and rewards incidental to sale and leaseback sub-leases are substantially borne by KION Group
companies, the corresponding assets are reported as non-current leased assets and are depreciated over the
term of the underlying leases. If substantially all of the risks and rewards are transferred to the end customer, a
corresponding lease receivable is recognised. Long-term customer leases are funded for terms that match those
of the leases; funding items are recognised as lease liabilities.
As part of the financial services provided by the Group, industrial trucks are also sold to finance partners who then
enter into leases directly with end customers.
If KION Group entities provide material residual value guarantees or a customer default guarantee, these transac-
tions, which are classified as sale agreements under civil law, are recognised in accordance with the provisions
on lessors with operating leases in conjunction with the IFRS principles for revenue recognition ('sale with risk').
Accordingly, the vehicles are recognised as assets in the statement of financial position at their cost on the date
of the sale and depreciated to their guaranteed residual value, or zero, over the term of the lease between the
finance partner and end customer. If the KION Group provides a residual value guarantee, a lease liability equiva-
lent to the residual value obligation is recognised.
Procurement leases
In addition to entering into leases for sales purposes, KION Group companies also lease buildings, machinery,
office furniture and operating equipment for their own use, primarily using operating leases. The corresponding
lease payments are recognised in the income statement on a straight-line basis over the term of the lease.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 15 of 81
KION Group companies also lease assets for their own use using finance leases. In this case, the lesser of the
fair value of the leased asset or the present value of future lease payments is recognised at the inception of the
lease under leased assets. A corresponding liability to the lessor is recognised as a lease liability in the statement
of financial position.
Leased assets are depreciated over the shorter of their useful life or the term of the lease, unless title to the
leased assets passes to the lessee when the lease expires, in which case the leased assets are depreciated and
the lease liabilities are reversed over the useful life of the leased assets.
The difference between total lease liabilities and the fair value of leased assets represents the finance charge
which is recognised in the income statement over the term of the leases at a constant rate of interest on the
outstanding balance in each period.
At the end of the lease term, the leased assets are either returned or purchased, or the contract is extended.
Other property, plant and equipment
Property, plant and equipment are carried at cost less straight-line depreciation and impairment losses. The cost
of internally generated machinery and equipment includes all costs directly attributable to the production process
and an appropriate portion of production overhead. This includes production-related depreciation and proportion-
ate costs for administration and social insurance / employee benefits.
The cost of property, plant and equipment is reduced by the amount of any government grants received. Expens-
es for maintenance and repairs are recognised in income to the extent that they are not required to be capitalised.
Borrowing costs are capitalised for certain items of property, plant and equipment whose acquisition or production
exceeds one year and the definition of a qualifying asset is met. As was the case in the previous year, there were
no qualifying assets in 2011.
Depreciation of property, plant and equipment is recognised on a straight-line basis and reported in functional
costs. The useful lives and depreciation methods are reviewed annually and adjusted to reflect changes in condi-
tions.
The following useful lives are applied in determining the carrying amounts of items of property, plant and equip-
ment:
Useful life of other property, plant and equipment
Buildings
Plant and machinery
Office furniture and equipment
Years
10-25
6-15
3-15
If there are certain indications of impairment, property, plant and equipment assets are tested for impairment by
comparing the residual carrying amount of the assets with their recoverable amount, which is defined as the
higher of value in use and fair value less costs to sell. If the residual carrying amount is greater than the recover-
able amount, an impairment loss is recognised for the asset.
The KION Group calculates the recoverable amount primarily on the basis of value in use. In determining value in
use, the expected future cash flows are discounted using a risk-adjusted discount rate, taking into account the
current and future level of earnings and segment-specific, technological, economic and general trends.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 16 of 81
If an impairment test for an item of property, plant and equipment is performed at the level of a cash-generating
unit to which goodwill is allocated and results in the recognition of an impairment loss, first the goodwill and,
subsequently, the assets must be written down in proportion to their relative carrying amounts. If the reason for an
impairment loss recognised in prior years no longer applies, impairment losses not exceeding the amortised cost
of the asset concerned are reversed. This does not apply to goodwill.
Equity investments
In accordance with the equity method, associates and joint ventures are measured as the proportion of the inter-
est in the equity of the investee. They are initially carried at cost. In subsequent periods, the KION Group's inter-
est in the profit or loss generated after acquisition is recognised in income. Other changes in the equity of associ-
ates and joint ventures are recognised in other comprehensive income (loss) in the consolidated financial state-
ments in proportion to the Group's interest in the associate or joint venture.
If the Group's interest in the losses made by an associate or joint venture exceeds the carrying amount of the
proportionate equity attributable to the Group, no additional losses are recognised. Any goodwill arising from the
acquisition of an associate or joint venture is included in the carrying amount of the investment in the associate or
joint venture. When an associate or joint venture is sold, the Group's interest in its goodwill is taken into account
in determining the gain or loss on disposal.
If there is evidence that an associate or joint venture may be impaired, the carrying amount of the investment in
question is tested for impairment.
Other financial assets
The investments in non-consolidated affiliated companies and (long-term) equity investments that are reported in
other non-current financial assets are carried at cost less impairment losses, as observable fair values are not
available and reliable results cannot be obtained using other permitted measurement techniques. At present there
is no intention to sell these financial instruments. At each reporting date, financial assets or groups of financial
assets are tested for impairment. Impairment losses are recognised in income as appropriate.
Primary financial assets are initially recognised and derecognised in the financial statements on their settlement
dates.
Under IAS 39 ('Financial Instruments: Recognition and Measurement'), securities allocated to current or non-
current financial assets are classified according to those carried at fair value through profit and loss (FAHfT),
available for sale (AfS) and held to maturity (HtM).
The KION Group did not designate any securities as carried at fair value through profit and loss (FAHfT) in the
reporting year. The FAHfT category therefore only includes financial derivatives that do not form part of a formally
documented hedge.
Available-for-sale financial instruments (AfS) are carried at fair value. Equity investments for which no market
price is available, are recorded at cost. Unrealised gains and losses, including deferred taxes, are reported in
other comprehensive income (loss) until they are realised.
Carrying amounts are tested for impairment on every reporting date and whenever indications of impairment
arise. If there is an objective indication of impairment (such as a borrower being in significant financial difficulties),
an impairment loss must be recognised directly in the income statement.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 17 of 81
If objective facts in favour of reversing impairment losses are present on the reporting date, reversals are recog-
nised in an appropriate amount. Reversals may not exceed the amortised cost that would have been recorded if
the impairment loss had not been recognised. In the case of debt instruments, reversals of impairment losses are
recognised in the income statement.
Held-to-maturity financial assets are carried at amortised cost less impairment losses in accordance with the
effective interest method.
Income taxes
In the consolidated financial statements, current and deferred taxes are recognised on the basis of the tax laws of
the jurisdictions involved. Deferred taxes are recognised in other comprehensive income (loss) if they relate to
transactions also recognised in other comprehensive income (loss).
Deferred tax assets and liabilities are recognised in accordance with the liability method for all temporary differ-
ences between the IFRS carrying amounts and the tax base, as well as for temporary consolidation measures.
Deferred tax assets also include tax refund claims that arise from the expected utilisation of existing tax loss
carryforwards and interest carryforwards in subsequent years and whose utilisation is reasonably certain accord-
ing to current forecasts. On the basis of this estimate, deferred tax assets were recognised on certain interest
carryforwards for the first time in 2010.
Deferred taxes are determined on the basis of the tax rates that will apply or are expected to apply at the realisa-
tion date in accordance with the current legal situation in each country concerned. In accordance with the provi-
sions in IAS 12, deferred tax assets and liabilities are not discounted.
Deferred tax assets are offset against deferred tax liabilities to the extent that they have the same maturity and
relate to the same taxation authority.
Inventories
Inventories are carried at the lower of cost and net realisable value.
The acquisition costs of raw materials and merchandise are calculated on the basis of an average.
The cost of finished goods and work in progress includes direct costs and an appropriate portion of the material
and production overhead and production-related depreciation directly attributable to the production process.
Administrative costs and social insurance / employee benefits are included to the extent that they are attributable
to the production process. Borrowing costs as defined by IAS 23 are not a component of cost as inventories are
not qualifying assets as defined by IAS 23.4. The amount recognised is an average value or a value determined
in accordance with the FIFO method.
Net realisable value is the selling price that can be realised less the estimated costs of completion and the esti-
mated costs necessary to make the sale.
Write-downs are recognised for inventory risks resulting from duration of storage, impaired recoverability, etc.
Write-downs are reversed up to a maximum of cost if the reasons for their recognition no longer apply.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 18 of 81
Receivables
In the first period they are recognised, receivables and other assets are carried at fair value including directly
attributable transaction costs. In subsequent periods they are measured at amortised cost using the effective
interest method. Appropriate valuation allowances are recognised for identifiable individual risks. Low-interest or
non-interest-bearing receivables due in more than one year are carried at their present value.
Derivative financial instruments
Derivative financial instruments comprise currency forwards and interest-rate swaps and are used for hedging
purposes to mitigate exchange-rate and interest-rate risks.
In accordance with IAS 39 (Financial Instruments: Recognition and Measurement), all derivative financial instru-
ments are measured at their fair value irrespective of an entity's purpose or intention in entering into the derivative
contract. Changes in the fair value of derivative financial instruments in a formally documented hedge are report-
ed in the income statement (for fair value hedges) or in other comprehensive income (loss) (for cash flow hedg-
es).
The KION Group currently only uses cash flow hedges for exchange-rate and interest-rate risks.
In the case of cash flow hedges, derivatives are employed to hedge future cash flow risks from existing underlying
transactions or planned transactions. The effective portion of changes in the fair value of derivatives is initially
recognised in other comprehensive income (loss), and is subsequently reclassified to the income statement when
the revenue from the corresponding underlying transaction is realised. The ineffective portion of the changes in
fair value is recognised immediately in net financial income/expenses.
If the criteria for hedge accounting are not satisfied, changes in the fair value of derivative financial instruments
are recognised in the income statement.
In the case of hedges of net investments in foreign subsidiaries, the translation risks resulting from investments
with a different functional currency are hedged. Unrealised gains and losses on hedging instruments are reported
in other comprehensive income (loss) until the company is sold. In the past financial year, KION Group compa-
nies have not entered into any hedges for net investments in foreign subsidiaries.
Further information on risk management and accounting for derivative financial instruments can be found under
note [ 33 ].
Retirement benefit obligation
The retirement benefit obligation is calculated in accordance with the projected unit credit method. Future pension
obligations are measured on the basis of the pro rata vested benefit entitlements as at the reporting date and
discounted to their present value. The calculations include assumptions about future changes in certain parame-
ters, such as expected salary and pension increases and biometric factors affecting the amount of future benefits.
Pension provisions are reduced by the fair value of the plan assets used to cover the Group's benefit obligations.
Plan assets are measured at fair value.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 19 of 81
Actuarial gains and losses, including deferred taxes, are recognised in other comprehensive income (loss). The
cost of additions to pension provisions is allocated to functional costs. The interest cost on pension obligations
and the expected return on plan assets are reported in net financial income/expenses. Further details can be
found in note [ 26 ].
Other provisions
Other provisions are recognised when the Group has a legal or constructive obligation to a third party as the
result of a past event that is probable to lead to a future outflow of resources and that can be reliably estimated. A
provision is recognised in the amount of the mean of the range of probabilities. Measurement includes indirect
and direct costs.
Provisions for identifiable risks and contingent liabilities are recognised in the amount that represents the best
estimate of the cost required to settle the obligations existing on the reporting date. Recourse claims are not taken
into account. The settlement amount also includes estimated future cost increases as of the reporting date. Provi-
sions with a maturity of more than twelve months are discounted using the standard market interest rate. The
discount rate is a before-tax rate that reflects current market expectations for the time value of money and the
specific risks inherent in the liability. Accrued interest is recognised in interest expense.
Warranty provisions are recognised on the basis of past or estimated future claim statistics. Individual provisions
are recognised for claims that are known to the Group. The corresponding expense is recognised in cost of sales
at the date on which the revenue is recognised.
Provisions for expected losses from onerous contracts and other business obligations are measured on the basis
of the work yet to be performed.
A restructuring provision is recognised when a KION Group company has prepared a detailed, formal restructur-
ing plan and this plan has raised a valid expectation in those affected that the company will carry out the restruc-
turing by starting to implement that plan or announcing its main features to those affected by it. The measurement
of a restructuring provision only includes the direct expenditures arising from the restructuring and not associated
with the ongoing activities of the company concerned.
Shareholder loan, financial liabilities, other financial liabilities, trade payables
These liabilities are initially recognised at fair value at the time they are entered into. Directly attributable transac-
tion costs are deducted for all financial liabilities that are not subsequently designated as at fair value through
profit or loss.
The shareholder loan, non-current financial liabilities and other financial liabilities are then carried at amortised
cost. Any differences between historical cost and the settlement amount are recognised in accordance with the
effective interest method.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 20 of 81
Assumptions and estimates
The preparation of the IFRS consolidated financial statements requires the use of assumptions and estimates for
certain line items that affect recognition and measurement in the statement of financial position and the income
statement. The actual amounts recognised may differ from these estimates. Estimates are applied in particular
when:
•
•
•
•
•
in assessing the need for and the amount of impairment losses on intangible assets, property, plant and
equipment and inventories;
in determining the useful life of non-current assets;
in classifying leases;
recognising and measuring defined benefit pension obligations, provisions for tax and other provisions; and
in assessing the recoverability of deferred tax assets.
Goodwill is tested for impairment annually at the level of the cash-generating unit to which goodwill is allocated,
by considering the Group's three-year planning combined with the growth forecasts for 2015 to 2016 and assum-
ing division-specific growth rates for the period thereafter. Any material changes to these factors might result in
the recognition of impairment losses. Further information on goodwill can be found in note [ 16 ].
Information on leases can be found in the sections on sales leases and procurement leases in this note.
Defined benefit pension obligations are calculated on the basis of actuarial parameters. As differences due to
actuarial gains and losses are recorded in other comprehensive income (loss), any change in these parameters
would not affect the net profit for the current period. For further details about sensitivity analysis of the impact of
certain assumptions, please refer to the information about provisions in note [ 26 ].
Significant estimates are involved in calculating provisions for tax. These estimates may change on the basis of
new information and experience. Where necessary, the KION Group's accounting departments receive assistance
from external legal advisers and tax consultants when making the estimates required.
The recognition and measurement of other provisions is based on an estimate of the probability of the future
outflow of resources, supplemented by past experience and the circumstances known to the Group at the report-
ing date. Accordingly, the actual outflow of resources for a given event may be different from the amount recog-
nised in other provisions. Further details can be found in note [ 29 ].
Deferred tax assets on tax loss carryforwards and interest carryforwards are recognised on the basis of an esti-
mate of the future recoverability of the tax benefit, i.e. an assumption as to whether sufficient taxable income or
tax relief will be available against which the carryforwards can be utilised. The actual amount of taxable income in
future periods, and hence the actual utilisation of tax loss carryforwards and interest carryforwards, may be differ-
ent from the estimates made when the corresponding deferred tax assets were recognised.
Changes are recognised in profit or loss when they become known and assumptions are adjusted accordingly.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 21 of 81
Notes to the consolidated income statement
[ 8 ]
Revenue
The revenue earned by the KION Group in the year under review broken down by product category is as follows:
Revenue by product category
€ thousand
New business
Hydraulics
Service offering
- After sales
- Rental business
- Used trucks
- Other
Total revenue
Further information on revenue can be found in note [ 36 ] Segment report.
[ 9 ]
Other income
The breakdown of other income is as follows:
Other income
€ thousand
Foreign currency exchange rate gains
Remeasurement of purchase price obligations
Profit from release of deferred lease profits
Income from reversal of provisions
Rental income
Gains on disposal of non-current assets
Gains from revaluation of non-current assets
Sundry income
Total other income
2011
2010
2,364,235
172,662
1,831,498
1,065,731
441,152
218,982
105,633
1,775,628
119,901
1,638,945
970,668
402,361
187,246
78,670
4,368,395
3,534,474
2011
2010
22,600
11,971
6,886
6,638
2,155
1,381
0
29,872
81,503
18,554
0
6,952
5,038
2,231
1,077
1,546
24,187
59,585
The foreign currency exchange rate gains and losses result from the measurement of financial receivables and
liabilities denominated in foreign currency and the measurement of the related derivatives. The year-over-year
increase in foreign currency exchange rate gains and losses (see also note [ 10 ] Other expenses) is primarily
attributable to more volatile exchange rates compared with 2010.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 22 of 81
The remeasurement of purchase price obligations relates to shares held for two UK dealers. The gains on the
remeasurement of purchase price obligations result from the significantly improved market environment and the
resulting increase in the value of the shareholdings.
[ 10 ] Other expenses
The breakdown of other expenses is as follows:
Other expenses
€ thousand
Impairment of non-current assets
Foreign currency exchange rate losses
Losses on disposal of property, plant and equipment
Sundry other expenses
Total other expenses
2011
2010
27,032
19,467
7,963
15,581
70,043
8,522
16,949
5,966
14,442
45,879
The impairment recognised on non-current assets in the reporting year comprised impairment losses of € 10,261
thousand on intangible assets (2010: €8,464 thousan d) and impairment of €16,771 thousand on other prop erty,
plant and equipment (2010: €58 thousand). The loss was largely caused by the planned transfer of production.
Gains and losses on foreign currency exchange rate differences (gains are presented in Other income) include
losses of €188 thousand on derivative financial ins truments used to hedge exchange-rate risk resulting from our
operations (2010: €3,947 thousand). These losses on derivatives are offset by gains on the currency translation of
the corresponding underlying transactions.
[ 11 ] Share of profit (loss) of equity investments
The share of profit of equity investments amounted to €11,192 thousand in the reporting year (2010:
€3,569 thousand). This amount includes income of €4
,102 thousand from the remeasurement of an existing
equity investment of 49 per cent held in Linde Sterling Ltd., Basingstoke, United Kingdom, for which a controlling
influence was obtained following the acquisition of the remaining shares. Further details can be found in note [ 19
].
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 23 of 81
[ 12 ] Financial income
Financial income is comprised of the following:
Financial income
€ thousand
Interest income from leases
Foreign currency exchange rate gains (financing)
Return on pension plan assets
Other interest and similar income
Total financial income
2011
2010
24,414
23,149
22,732
3,369
73,664
25,528
36,141
23,247
3,433
88,349
The interest income from leases relates to the interest portion of lease payments in financial services transactions
in which KION Group companies operate as the lessor (finance leases).
The foreign currency exchange rate gains include gains on hedging transactions amounting to €22,883 th ousand
(2010: €36,048 thousand).
The return on pension plan assets item shows the expected return on plan assets used to fund pension obliga-
tions.
[ 13 ] Financial expense
The financial expense is comprised of the following:
Financial expense
€ thousand
Interest expense from loans
Foreign currency exchange rate losses (financing)
Interest cost of defined benefit obligation
Interest cost of leases
Interest cost of shareholder loan
Interest expense from corporate bond
Amortisation of finance costs
Interest cost of non-current financial liabilities
Other interest expense and similar charges
Total financial expense
2011
2010
135,737
52,264
42,436
37,738
27,882
25,395
11,359
2,574
10,324
345,709
167,347
53,877
41,434
35,951
27,882
−
8,333
3,263
16,318
354,405
Interest expense include interest cost of €117,273 thousand arising from variable-rate loan liabilities under the
senior facilities agreement (2010: €129,260 thousan d) and losses of €18,464 thousand on interest-rate swaps
(2010: €38,087 thousand).
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 24 of 81
The foreign currency exchange rate losses include a loss of €19,022 thousand on the translation of a f oreign-
currency loan denominated in US dollars (2010: €38,2 19 thousand) and losses of €31,843 thousand on deri vative
financial instruments (2010: €15,641 thousand).
The interest cost of the defined benefit obligation is the annual interest expense in connection with the change in
the non-current pension obligations.
The interest cost of leases relates to the interest portion of lease payments in financial services transactions in
which risks and rewards are borne by KION Group companies as the lessee (finance leases). Sale-finance lease-
back-operating sub-leases
(2010:
€16,615 thousand). This interest expense was not di rectly offset by any interest income. The interest income is a
component of the lease payments reported within revenue.
interest expense of
€19,587 thousand
(SALB-FL-OL)
incurred
[ 14 ]
Income taxes
income
tax expense of
The
€49,349 thousand
€49,719 thousand) in deferred tax income. The curre nt tax expense includes expenses of €2,602 thousand (2010:
income of €11,868 thousand) relating to previous fi nancial years.
€34,722 thousand) consisted of
(2010:
€15,308 thousand
i ncome of
tax expense and
(2010:
in curren t
€14,997 thousand)
€34,041 thousand
(2010:
At the reporting date there were income tax assets of €4,953 thousand receivable from tax authorities ( 2010:
€4,550 thousand) and income tax liabilities of €15, 439 thousand (2010: €6,661 thousand).
Deferred taxes are recognised for temporary differences between the tax base and IFRS carrying amounts.
Deferred taxes are determined on the basis of the tax rates that will apply or are expected to apply at the realisa-
tion date in accordance with the current legal situation in each country concerned. The current corporate income
tax rate in Germany is 15.0 per cent. Taking into account the average trade tax rate of 13.9 per cent and the
solidarity surcharge (5.5 per cent of corporate income tax), the combined tax rate for companies in Germany was
unchanged on 2010 at 29.8 per cent. The income tax rates for foreign companies used in the calculation of de-
ferred taxes are between 10.0 per cent and 38.5 per cent (2010: 10.0 per cent and 37.8 per cent).
No deferred taxes have been recognised on differences of €100,146 thousand between the IFRS carrying
amounts and the tax base for equity investments (outside basis differences) because the KION Group is in a
position to manage the timing of the reversal of temporary differences and there are no plans to dispose of in-
vestments in the foreseeable future.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 25 of 81
Deferred tax assets include the following items in the statement of financial position:
Deferred tax assets
€ thousand
Intangible assets and property, plant and equipment
Financial assets
Current assets
Deferred charges and prepaid expenses
Provisions
Liabilities
Deferred income
Tax loss carryforwards and interest carryforwards
Offsetting
Total deferred tax assets
Deferred tax liabilities include the following items in the statement of financial position:
Deferred tax liabilities
€ thousand
Intangible assets and property, plant and equipment
Financial assets
Current assets
Deferred charges and prepaid expenses
Provisions
Liabilities
Deferred income
Offsetting
Total deferred tax liabilities
2011
2010
86,789
1
34,697
6,065
101,669
200,678
46,386
70,230
-284,552
65,130
705
26,485
2,922
88,501
163,136
47,953
95,341
-248,401
261,963
241,772
2011
2010
456,138
3,139
113,340
8,588
29,838
9,749
2,814
-284,552
444,580
3,097
97,701
15
28,837
8,003
1,098
-248,401
339,054
334,930
The deferred tax liabilities essentially relate to the purchase price allocation in the acquisition of the KION Group,
particularly for intangible assets and property, plant and equipment.
Deferred tax assets amounting to €211,398 thousand
because it is unlikely that the corresponding benefit can be utilised. Unrecognised deferred tax assets relate to tax
loss carryforwards of €91,636 thousand (2010: €74,2 63 thousand), interest carryforwards of €116,060 th ousand
(2010: €81,844 thousand) and other temporary differ ences of €3,702 thousand (2010: €5,012 thousand).
(2010: €161,119 thousand) have not been recognised
Deferred taxes are recognised on tax loss carryforwards and interest carryforwards to the extent that sufficient
future taxable income is expected to be generated against which the losses can be utilised. Of the deferred tax
assets amounting to €9,198 thousand recognised on i nterest carryforwards for the first time in 2010,
€2,243 thousand was written down in 2011 because, b ased on the information available at the reporting date, a
lower amount was expected to be used in future. The total amount of unrecognised deferred tax assets relating to
loss carryforwards of €91,636 thousand (2010: €74,2 63 thousand) concerns tax losses that can be carried for-
ward indefinitely.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 26 of 81
As of 31 December 2011, the KION Group's tax loss carryforwards in Germany amounted to €381,941 thousand
(31 December 2010: €400,286 thousand) for corporate income tax and €263,525 thousand (31 December 2010 :
€288,910 thousand) for trade tax. There were also f oreign tax loss carryforwards totalling €187,438 th ousand
(31 December 2010: €183,353 thousand).
As of 31 December 2011, the interest carryforwards in Germany that can be carried forward indefinitely amounted
to €464,939 thousand (31 December 2010: €342,252 th
ousand).
The table below shows the reconciliation of expected income tax expense to effective income tax expense. The
Group reconciliation is an aggregation of the individual company-specific reconciliations prepared in accordance
with relevant local tax rates, taking into account consolidation effects recognised in income. The expected tax rate
applied in the reconciliation is unchanged on 2010 at 29.8 per cent.
Income taxes
€ thousand
Earnings before taxes
Anticipated income taxes
Deviations due to the trade tax base
Deviations from the anticipated tax rate
Change in valuation allowance on deferred taxes
Losses for which deferred taxes have not been recognised
Change in tax rates and tax legislation
Interest carryforwards without the recognition of deferred taxes
Non-deductible expenses
Tax-exempt income
Tax relating to other periods
Deferred taxes prior periods
Other
Effective income taxes (current and deferred taxes)
2011
2010
-58,885
-231,420
17,548
-3,087
13,560
-9,765
-17,372
-1,404
-31,786
-8,556
1,903
-2,602
5,001
2,519
-34,041
68,894
-2,026
3,289
-1,999
-11,108
-311
-34,073
-14,608
34
11,868
16,055
-1,293
34,722
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 27 of 81
[ 15 ]
Other income statement disclosures
The cost of materials rose by €530,162 thousand in
€1,713,907 thousand).
the reporting year to €2,244,069 thousand (2010:
Personnel expenses increased by €95,516 thousand in 2011 to €1,063,726 thousand (2010: €968,210 thousan
d).
Personnel expenses include wages and salaries of €83 3,585 thousand (2010: €755,923 thousand) as well as
social security contributions and expenses for pensions and other benefits of €230,141 thousand (2010:
€212,287 thousand). The accretion of interest cost related to the discount on estimated pension obligations is not
recognised under personnel expenses but is instead reported under financial expense as a component of interest
cost of the defined benefit obligation. The pension expenses of €29,741 thousand (2010: €25,774 thousa
nd) is
essentially comprised of the pension entitlements of €16,242 thousand vested in 2011 (2010: €14,315 th ousand)
and the unrecognised past service cost of €177 thou sand (2010: €79 thousand).
Impairment losses and depreciation expenses on property, plant and equipment together with impairment losses
and amortisation expense of intangible assets amounted to €356,021 thousand in the reporting year (201 0:
€347,117 thousand). Inventories were written down b y €6,179 thousand (2010: €6,311 thousand).
The breakdown of lease payments expensed in the period and related to operating leases where KION Group
companies are the lessee is as follows:
Lessee: Expenses recognised for operating lease payments
€ thousand
Procurement lease contracts
Sublease contracts
Total recognised expenses for lease payments
2011
2010
67,043
38,181
57,913
43,015
105,224
100,928
The expenses in connection with sub-leases relate to leases in which KION Group companies are both the lessor
and lessee. These expenses were offset by income of €51,072 thousand in 2011 (2010: €52,806 thousand).
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 28 of 81
Notes to the consolidated statement of financial position
[ 16 ] Goodwill and other intangible assets
Goodwill is allocated to the segments as follows:
Goodwill broken down by segment
€ thousand
LMH
STILL
Other
Total goodwill
2011
2010
971,873
552,208
13,915
954,802
552,208
−
1,537,996
1,507,010
The change in goodwill resulted mainly from business combinations amounting to €31,535 thousand in 201 1. The
goodwill of €13,915 thousand arising from the acqui sition of the forklift truck and warehouse technology business
of Voltas Limited, Mumbai, India, has been allocated to the 'Other' segment.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 29 of 81
Intangible assets
€ thousand
Goodwill Brand names
Technology &
development
Sundry
intangible
assets
Total
Balance as at 1/1/2010
1,504,796
590,340
263,463
142,655
2,501,254
Group changes
Currency translation adjustments
Additions
Disposals
Amortisation
Impairment
Appreciation
Reclassification
0
778
1,511
-75
0
0
0
0
0
678
0
0
0
0
0
0
0
304
47,538
0
-47,328
-3,044
0
261
234
2,744
21,582
3
-27,360
-5,420
21
-261
234
4,504
70,631
-72
-74,688
-8,464
21
0
Balance as at 31/12/2010
1,507,010
591,018
261,194
134,198
2,493,420
Gross carrying amount as at 31/12/2010
Accumulated amortisation
1,507,010
0
591,018
0
406,879
-145,685
214,386
-80,188
2,719,293
-225,873
Balance as at 1/1/2011
1,507,010
591,018
261,194
134,198
2,493,420
Group changes
Currency translation adjustments
Additions
Disposals
Amortisation
Impairment
Reclassification
31,535
150
0
-699
0
0
0
2,982
524
99
0
-244
0
0
0
-14
53,363
-1
-52,544
-10,236
-39
7,634
225
16,755
-163
-27,359
-25
188
42,151
885
70,217
-863
-80,147
-10,261
149
Balance as at 31/12/2011
1,537,996
594,379
251,723
131,453
2,515,551
Gross carrying amount as at 31/12/2011
Accumulated amortisation
1,537,996
0
594,609
-230
449,864
-198,141
236,275
-104,822
2,818,744
-303,193
The Group intends to retain and further strengthen the Linde, STILL, OM and KION brand names on a long-term
basis. Brand names worth €473,782 thousand (31 Decem ber 2010: €471,918 thousand) are assigned to the LM H
segment. The value of brand names allocated to the STILL segment was unchanged year over year at €114,0 00
thousand. These assets are not amortised as they have an indefinite useful life. A value of €1,830 thou sand was
attributed to the Voltas brand name in 2011 as part of the purchase price allocation. Unlike the other brand
names, the Voltas brand is amortised over its useful life. Brand names worth €6,597 thousand (31 Decemb er
2010: €5,100 thousand) have been allocated to the ' Other' segment.
for
total carrying amount
technology and development assets as of 31 December 2011 was
The
€251,723 thousand (31 December 2010: €261,194 thous and). Development costs of €53,363 thousand were
capitalised in the reporting year (31 December 2010: €47,538 thousand). Total research and development
of
€62,780 thousand (31 December 2010: €50,372 thousan d) related to amortisation and impairment losses.
costs
this amount,
ousand) were expensed. Of
(31 December 2010:
€119,526 thousand
€103,255 th
Impairment losses of €10,261 thousand were recognis ed on these assets in 2011 to reflect the lack of opportuni-
ties to use them in future as a result of the planned transfers of production. €10,236 thousand of thi s amount was
attributable to technology and development assets. The impairment losses related to the STILL segment.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 30 of 81
Other intangible assets relate primarily to the intangible assets identified through the purchase price allocation for
the acquisition of the KION Group, such as the customer base.
The amortisation expense and impairment losses on intangible assets are reported under functional costs.
[ 17 ] Leased assets
The changes in leased assets in 2011 and 2010 were as follows:
Leased assets
€ thousand
Balance as at 1/1/
Group changes
Currency translation adjustments
Additions
Disposals
Depreciation
Reclassification
Balance as at 31/12/
Gross carrying amount as at 31/12/
Accumulated depreciation
2011
2010
501,164
536,224
10,690
-1,449
287,722
-86,623
-169,452
-2,321
0
16,830
188,832
-65,140
-176,558
976
539,731
501,164
1,436,849
-897,118
1,443,182
-942,018
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 31 of 81
The segment breakdown of leased assets is as follows:
Leased assets broken down by segment
€ thousand
LMH
STILL
Other
Total
Balance as at 1/1/2010
Currency translation adjustments
Additions
Disposals
Depreciation
Reclassification
312,271
14,230
103,549
-39,660
-103,939
-157
220,035
2,600
84,240
-25,480
-70,261
1,133
3,918
0
1,043
0
-2,358
0
536,224
16,830
188,832
-65,140
-176,558
976
Balance as at 31/12/2010
286,294
212,267
2,603
501,164
Gross carrying amount as at 31/12/2010
Accumulated depreciation
871,633
-585,339
562,603
-350,336
8,946
-6,343
1,443,182
-942,018
Balance as at 1/1/2011
Group changes
Currency translation adjustments
Additions
Disposals
Depreciation
Reclassification
286,294
10,690
387
152,280
-51,931
-102,152
199
212,267
0
-1,836
133,689
-34,371
-65,802
-2,520
2,603
0
0
1,753
-321
-1,498
0
501,164
10,690
-1,449
287,722
-86,623
-169,452
-2,321
Balance as at 31/12/2011
295,767
241,427
2,537
539,731
Gross carrying amount as at 31/12/2011
Accumulated depreciation
841,619
-545,852
586,699
-345,272
8,532
-5,995
1,436,850
-897,119
The breakdown of leased assets by contract type is shown in the following table:
Leased assets broken down by contract types
Operating leases
as lessor
Sale with risk
Finance leases
as lessee
Total
€ thousand
2011
2010
2011
2010
2011
2010
2011
2010
Land and buildings
Industrial trucks
Plant and machinery
Office furniture and equipment
−
−
−
−
6,798
12,426
6,798
12,426
455,075
386,971
66,464
86,322
−
−
2,261
3,375
−
237
−
641
33
301
8,562
25
521,572
473,318
2,671
8,733
301
11,060
2,671
12,749
Total leased assets
457,336
390,346
66,701
86,963
15,694
23,855
539,731
501,164
Assets held under operating leases include leased assets with a residual value of €333,153 thousand (31 De-
cember 2010: €274,877 thousand) that are funded by means of sale and leaseback transactions with leasing
companies and leased assets with a residual value of €124,183 thousand (31 December 2010: €115,469 tho
u-
sand) that are largely funded internally or by means of bank loans.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 32 of 81
Total operating
€162,140 thousand (31 December 2010: €129,946 thous
in non-cancellable
resulted
leases
and).
lease obligations
from customers amounting
to
The following table shows the maturity structure of the minimum lease payments:
Minimum lease payments
€ thousand
Cash receipts from minimum lease payments
due within one year
due in one to five years
due in more than five years
2011
2010
162,140
66,613
94,768
759
129,946
53,965
75,510
471
The buildings, plant and machinery, and office furniture and equipment leased under finance leases are reported
in leased assets with a residual value of €15,694 t housand (31 December 2010: €23,855 thousand). The c orre-
sponding liabilities are reported as lease liabilities.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 33 of 81
[ 18 ] Other property, plant and equipment
The changes in the carrying amounts of other property, plant and equipment were as follows:
Other property, plant and equipment
€ thousand
Balance as at 1/1/2010
Group changes
Exchange rate adjustments
Additions
Disposals
Depreciation
Impairment
Reversal of impairment
Reclassification
Balance as at 31/12/2010
Plant,
machinery,
and office
furniture and
equipment
Advances
paid and
assets
under
construction
Land and
buildings
348,277
0
9,353
7,892
-57
-16,193
0
203
4,709
233,000
1,019
3,176
34,045
-816
-71,156
-58
1,322
431
354,184
200,963
9,227
0
212
10,835
-2,813
0
0
0
-6,116
11,345
Total
590,504
1,019
12,741
52,772
-3,686
-87,349
-58
1,525
-976
566,492
Gross carrying amount as at 31/12/2010
Accumulated depreciation
619,066
-264,882
923,997
-723,034
11,345
0
1,554,408
-987,916
Balance as at 1/1/2011
Group changes
Exchange rate adjustments
Additions
Disposals
Depreciation
Impairment
Reclassification
354,184
4,404
3,722
4,148
-6,595
-15,908
-8,796
3,280
200,963
1,061
1,198
46,132
-1,957
-63,482
-7,975
3,666
11,345
779
-291
13,627
-609
0
0
-4,775
566,492
6,244
4,629
63,907
-9,161
-79,390
-16,771
2,171
Balance as at 31/12/2011
Gross carrying amount as at 31/12/2011
Accumulated depreciation
338,439
625,996
-287,557
179,606
983,898
-804,292
20,076
20,076
0
538,121
1,629,970
-1,091,849
Land and buildings in the amount of €12,168 thousan d (31 December 2010: €12,293 thousand) were largely
pledged as collateral for accrued retirement benefits under partial retirement agreements.
The KION Group recognised impairment losses of €16,7 71 thousand in accordance with IAS 36 in 2011, predom-
inantly in connection with the planned transfers of production. Of this amount, €8,796 thousand relate d to land
and buildings, and €7,975 thousand to plant and mac hinery as well as office furniture and equipment. The im-
pairment losses related to the STILL segment.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 34 of 81
[ 19 ] Equity investments
As of 31 December 2011, the Group reported equity investments with a total carrying amount of
€36,545 thousand (31 December 2010: €37,841 thousan
d). These associates and joint ventures can be seen in
the list of shareholdings in the annex to these notes. Their key figures are as follows:
Equity investments
€ thousand
Associates (100 percent)
Revenue
Net income
Assets
Liabilities
Joint ventures (100 percent)
Revenue
Net income
Assets
non-current assets
current assets
Liabilities
non-current liabilities
current liabilities
The figures presented in the table are based on a 100 per cent investment.
2011
2010
540,068
10,960
576,103
494,021
107,874
5,612
51,546
25,115
26,431
26,223
2,699
23,524
562,596
9,214
611,561
529,526
77,086
1,321
46,410
28,070
18,340
26,419
2,053
24,366
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 35 of 81
[ 20 ]
Lease receivables
For leases where KION Group companies lease assets directly to customers as part of the Group's financing
activities, the Group's net investment in the lease is reported as a lease receivable.
The amounts recognised as lease receivables are based on the following data:
Lease receivables
€ thousand
Gross investments
due within one year
due in one to five years
due in more than five years
Present value of outstanding minimum lease payments
due within one year
due in one to five years
due in more than five years
2011
2010
399,726
135,897
254,724
9,105
361,221
118,381
234,043
8,797
411,116
140,737
260,835
9,544
367,758
120,950
237,571
9,237
Unrealised financial income
38,505
43,358
investments
Gross
€326,930 thousand (31 December 2010: €336,585 thous
include minimum
lease payments
and).
from non-cancellable sub-leases amounting
to
Lease receivables include the unguaranteed residual values accruing to the benefit of the KION Group in the
amount of €38,714 thousand (31 December 2010: €39,6
40 thousand).
Lease receivables also
€3,013 thousand) that have been sold but whose sign ificant risks and rewards remain with the KION Group due to
default and residual-value guarantees. Corresponding liabilities in the same amounts have been recognised.
€1,684 thousand (31 December 2010:
include receivables
the amount of
in
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 36 of 81
[ 21 ] Other financial assets
Other financial assets of €132,828 thousand (31 Dec ember 2010: €124,264 thousand) comprise the followi ng:
Other financial assets
€ thousand
Pension assets
Investments in affiliated companies
Other investments
Loans receivable
Non-current securities
Other non-current financial assets
Derivative financial instruments
Financial receivables from affiliated companies and related companies
Financial receivables from third parties
Deferred charges and prepaid expenses
Sundry financial assets
Other current financial assets
Total other financial assets
2011
2010
19,958
1,956
2,253
795
770
25,732
23,277
4,277
1,074
14,030
64,438
10,263
2,224
2,253
1,907
827
17,474
23,706
7,459
658
16,647
58,320
107,096
106,790
132,828
124,264
Pension assets relate to asset surpluses from defined benefit plans. As at the reporting date, the present values
of defined benefit obligations are netted against the fair value of plan assets. If the plan assets exceed the obliga-
tion, this results in an asset.
The sundry financial assets essentially include receivables from value added tax amounting to €21,782 thousand
(2001: €20,864 thousand).
Other financial assets include non-derivative financial receivables amounting to €36,237 thousand (31 December
2010: €35,416 thousand) that fall within the scope of IFRS 7.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 37 of 81
[ 22 ]
Inventories
The reported inventories are categorised as follows:
Inventories
€ thousand
Materials and supplies
Work in progress
Finished goods and merchandise
Advances paid
Total inventories
2011
2010
150,949
98,387
370,714
5,319
625,369
120,019
72,294
337,249
5,967
535,529
The increase in inventories compared with 2010 largely results from the higher volume of business in 2011.
The KION Group recognised impairment losses of €6,17 9 thousand in 2011, predominantly in connection with the
planned transfers of production. The impairment losses related to the STILL segment.
[ 23 ] Trade receivables
The trade receivables consist of the following:
Trade receivables
€ thousand
Receivables from third parties
thereof receivables from third parties before valuation allowances
thereof valuation allowances for overdue receivables > 90 days ≤ 180 days
thereof valuation allowances for overdue receivables > 180 days
thereof other valuation allowances for receivables
Trade receivables from affiliated companies
Trade receivables from investments in associated companies and joint ventures
Total trade receivables
2011
2010
651,560
701,125
-9,242
-27,988
-12,335
3,150
21,843
601,214
648,339
-9,213
-28,836
-9,076
4,011
28,040
676,553
633,265
Valuation allowances of €49,565 thousand (31 Decembe r 2010: €47,125 thousand) were recognised for trade
receivables.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 38 of 81
[ 24 ] Cash and cash equivalents
Cash and cash equivalents
€ thousand
Cash held by banks, on hand and cheque
Pledged cash
Current securities
Total cash and cash equivalents
2011
2010
372,957
494
−
252,572
−
312
373,451
252,884
The change in cash and cash equivalents is shown in the consolidated statement of cash flows. For more detailed
information, please also refer to note [ 32 ].
[ 25 ] Equity
Subscribed capital and capital reserve
As at the reporting date, the Company's subscribed capital was fully contributed and amounted to €500 t housand
and was unchanged
to
in
€348,483 thousand as at the reporting date. The cap ital reserve resulted from a capital contribution by a share-
holder.
the previous year, capital reserve amounted
from prior year. Also, as
Retained earnings
The development of retained earnings is shown in the consolidated statement of changes in equity. The retained
earnings comprise the net loss for the financial year and past contributions to earnings by the consolidated com-
panies, provided they have not been distributed.
Accumulated other comprehensive income (loss)
Accumulated other comprehensive income (loss) includes the currency translation differences arising from the
translation of the financial statements of foreign subsidiaries, the effects of the fair value measurement of deriva-
tive financial instruments designated in cash flow hedge relationships, the company´s proportionate share of other
comprehensive income adjustments related to equity investments, and the actuarial gains and losses in connec-
tion with defined benefit pension obligations.
Non-controlling interests
Non-controlling interests in companies in the KION Group amounted to €7,077 thousand (31 December 2010:
€7,070 thousand).
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 39 of 81
[ 26 ] Retirement benefit obligation
The retirement benefit obligation is recognised for obligations to provide current and future post-employment
benefits. Post-employment benefit plans are classified as either defined benefit plans or defined contribution
plans, depending on the substance of the plan as derived from its principal terms and conditions.
Defined contribution plans
In the case of defined-contribution pension plans, the Group pays contributions to government or private pension
insurance providers based on statutory or contractual provisions, or on a voluntary basis. The Group does not
enter into any obligations above and beyond the payment of contributions to an external pension fund. The
amount of future benefits is based solely on the amount of the contributions paid by the employer (and in some
cases the beneficiaries themselves) to the external pension fund, including income from the investment of these
in 2011
contributions. The total expense arising from defined contribution plans amounted to €56,118 thousand
(2010: €48,867 thousand). Of this total, contributi ons paid by employers into government-run plans amounted to
€53,337 thousand (2010: €46,480 thousand). The defi
ned contribution plan expense is reported within the func-
tional costs.
Defined benefit plans
The KION Group currently grants pensions to almost all employees in Germany and a number of foreign employ-
ees. These pensions consist of fixed benefit entitlements and are therefore reported as defined benefit plans in
accordance with IFRS. For all of the significant defined benefit plans within the Group, the benefits granted to
employees are determined on the basis of their individual income, i.e. either directly or by way of intermediate
benefit arrangements.
In accordance with IAS 19 ('Employee Benefits'), pension provisions are recognised to cover obligations arising
from the current and future pension entitlements of active and former employees of the KION Group and their
surviving dependants.
Some of KION Group's pension obligations in Germany are financed by way of contractual trust arrangements
(CTAs), which qualify as plan assets within the meaning of IAS 19. In the United Kingdom, Switzerland and the
Netherlands, significant plan assets are invested in external pension funds with restricted access.
In the case of defined benefit plans, the beneficiaries are granted a specific benefit by the Group or an external
pension fund. Due to future salary increases, the benefit entitlement at the retirement age of the beneficiary is
likely to be higher than the amount granted at the reporting date. Pensions are often adjusted after an employee
reaches retirement age. The amount of the Group's obligation, which is defined as the actuarial present value of
the obligation to provide the level of benefits currently earned by each beneficiary, is expressed as the present
value of the defined benefit obligation, which includes adjustments for future salary and pension increases.
Measurement assumptions
The discount rate used to calculate the defined benefit obligation at each reporting date is determined on the
basis of current capital market data and long-term assumptions about future salary and pension increases in
accordance with the best estimate principle. These assumptions vary depending on the economic conditions
affecting the currency in which benefit obligations are denominated and in which fund assets are invested, as well
as capital market expectations.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 40 of 81
Benefit obligations are calculated on the basis of current mortality probabilities as determined in accordance with
actuarial principles. The calculations also include assumptions about future employee turnover based on employ-
ee age and years of service and about the probability of retirement. The defined benefit obligation is calculated on
the basis of the following weighted-average assumptions as at the reporting date:
Assumptions underlying provisions for pensions and other postemployment benefits
Discount rate
Expected return on plan assets
Rate of remuneration increase
Rate of pension increase
Germany
UK
Other
2011
2010
2011
2010
2011
2010
5.65%
5.71%
2.75%
1.75%
5.45%
5.54%
2.75%
1.75%
4.85%
4.43%
4.18%
3.18%
5.45%
5.21%
4.17%
3.65%
4.01%
4.51%
2.31%
0.38%
4.15%
4.26%
2.28%
0.76%
The assumed discount rate is determined on the basis of the yield as at the reporting date on investment-grade,
fixed-interest corporate bonds with maturities that match the expected maturities of the pension obligations.
Pension obligations in foreign companies are calculated on a comparable basis taking into account any country-
specific requirements.
The expected return on plan assets is determined on the basis of the plan's policy regarding the asset classes in
which it invests. Expected returns are based on the current yields on government bonds with corresponding
maturities, adjusted for specific credit spreads for the different asset classes. The expected return on plan assets
is recognised as income in the relevant period. The differences between expected and actual income on plan
assets represent experience adjustments and are recognised in other comprehensive income in the year in which
they arise.
The rate of remuneration increase relates to expected future increases in salaries, which are estimated on an
annual basis taking into account factors such as inflation and the overall economic situation.
The mortality rates used in the calculation are based on published country-specific statistics and empirical values.
Since 31 December 2009, the modified Heubeck 2005 G mortality tables have been used in Germany as the
basis; the modified tables include a somewhat higher life expectancy for males than the unmodified tables.
The actuarial assumptions not listed in the table above, such as employee turnover, invalidity, etc., are deter-
mined in accordance with recognised forecasts in each country, taking into account the circumstances and fore-
casts of the companies concerned.
The assumptions applied in calculating the defined benefit obligation as at 31 December 2010 also apply to the
calculation of the interest cost and the current service cost in 2011.
Differences between the forecast and actual change in the defined benefit obligation and changes in related
assets (actuarial gains and losses) are recognised immediately in other comprehensive income in accordance
with IAS 19. This serves to ensure that the pension liability on the face of the statement of financial position is
always the actuarial present value of obligations not funded by plan assets.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 41 of 81
In the case of external pension funds, the actuarial present value of the pension obligations, as calculated in
accordance with the projected unit credit method, is reduced by the fair value of the assets of the external pension
funds. If the assets of the external pension funds exceed the pension obligations, a corresponding asset is recog-
nised in accordance with IAS 19. IAS 19.58 in conjunction with supplementary explanatory guidance in IFRIC 14
states that the recognition of an asset for this excess of pension plan assets over pension obligations is only
permitted if the company concerned is entitled to receive a refund of this excess or a reduction in future contribu-
tions in its function as the employer responsible for the benefits under the plan. If pension obligations are not
covered by the assets of an external pension fund, the net obligation is reported in pension provisions.
Plan assets for the defined benefit plans in the UK exceed the pension obligations. The requirements which limit
the asset to be recognised on the statement of financial position do not apply.
Statement of financial position
The change in the present value of the defined benefit obligation is as follows:
Changes in defined benefit obligation
Germany
UK
Other
Total
€ thousand
2011
2010
2011
2010
2011
2010
2011
2010
Present value of defined benefit
as at January 1
Group changes
Exchange differences
Current service cost
Interest cost
Employee contributions
Actuarial gains (-) and losses (+)
Acquisitions/Divestments
Pension benefits paid by the Company
Pension benefits paid from plan assets
Liability transfer out to third parties
Past service cost (+) and income (-)
Gains (-) / losses (+)
on the curtailment of a plan
Present value of defined benefit
as at Decem ber 31
381,913
−
−
11,894
20,526
−
-14,150
-10,697
−
-215
−
331,745
1,890
−
10,411
19,733
−
28,081
-9,947
−
−
−
362,716
−
10,769
1,245
19,132
135
12,665
−
−
-16,312
−
46
328,057
−
11,005
1,514
18,801
174
22,471
−
−
-19,306
−
−
75,681
284
973
3,103
2,778
781
103
−
-1,946
-1,584
−
−
62,977
−
5,135
2,390
2,900
708
4,617
−
-1,693
-2,361
−
1,442
820,310
284
11,742
16,242
42,436
916
-1,382
−
-12,643
-17,896
-215
46
722,779
1,890
16,140
14,315
41,434
882
55,169
−
-11,640
-21,667
−
1,442
−
−
−
−
-811
-434
-811
-434
389,271
381,913
390,396
362,716
79,362
75,681
859,029
820,310
thereof unfunded
thereof funded
177,739
211,532
173,889
208,024
−
390,396
−
362,716
22,148
57,214
22,245
53,436
199,887
659,142
196,134
624,176
The reduction in the present value of defined benefit obligations arising from actuarial gains relate to the year-
over-year increase in the discount rates applicable to pension plans in Germany (€14,150 thousand) and is al-
most totally offset by the increase in the present value of defined benefit obligations arising from actuarial losses
relating to the year-over-year decrease in the discount rates applicable to pension plans in the United Kingdom
(€12,665 thousand).
The effects of the restructuring programme on the defined benefit obligation are reported in the relevant financial
year as gains on the curtailment of a plan in accordance with IAS 19.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 42 of 81
The following table shows the change in the fair value of plan assets:
Changes in plan assets
€ thousand
2011
2010
2011
2010
2011
2010
2011
2010
Germany
UK
Other
Total
Fair value of plan assets
as at 1 January
Exchange differences
Expected return on plan assets
Actuarial gains (+) and losses (-)
Employer contributions
Employee contributions
Pension benefits paid by funds
Fair value of plan assets
as at 31 Decem ber
34,956
−
1,936
1,325
−
−
−
25,322 369,270 336,095
11,272
11,309
19,868
18,736
14,766
17,364
6,401
5,902
135
174
-19,306
-16,312
−
1,443
-809
9,000
−
−
50,907
842
2,060
-4,975
2,278
781
-1,584
40,093 455,133 401,510
16,031
12,151
23,247
22,732
17,350
13,714
17,780
8,180
916
882
-21,667
-17,896
4,759
1,936
3,393
2,379
708
-2,361
38,217
34,956 406,404 369,270
50,309
50,907 494,930 455,133
In 2010, employer contributions included a non-recurring payment of €9,000 thousand into a German CTA. Deci-
sions on additions to plan assets take into account the change in plan assets and pension obligations. For com-
panies outside Germany, decisions also take into account the statutory minimum coverage requirements and the
amounts deductible under local tax rules.
h
The payments expected for the following year amount to €21,845 thousand (2011: €20,571 thousand), whic
include expected employer contributions of €8,831 t housand to plan assets (2011: €8,156 thousand) and ex-
pected direct payments of pension benefits amounting to €13,014 thousand (2011: €12,415 thousand) that
are
not covered by corresponding reimbursements from plan assets.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 43 of 81
The reconciliation of funded status and net defined benefit obligation to the amounts reported on the face of the
consolidated statement of financial position as at 31 December is shown in the following table:
Funded status and net defined benefit obligation
Germany
UK
Other
Total
€ thousand
2011
2010
2011
2010
2011
2010
2011
2010
Present value of the partially or
fully funded defined benefit obligation
Fair value of plan assets
211,532 208,024 390,396 362,716
34,956 406,404 369,270
38,217
57,214
50,309
53,436 659,142 624,176
50,907 494,930 455,133
Surplus (-) / deficit (+)
173,315 173,068
-16,008
-6,554
6,905
2,529 164,212 169,043
Present value of the unfunded defined
benefit obligation
Surplus (-) / deficit (+) total
Unrecognised past
service cost (+) and income (-)
Net defined benefit obligation
as at 31 Decem ber
Reported as
“retirement benefit obligation“
Reported as
“Other non-current financial assets“
177,739 173,889
−
−
22,148
22,245 199,887 196,134
351,054 346,957
-16,008
-6,554
29,053
24,774 364,099 365,177
−
−
−
−
-1,143
-1,377
-1,143
-1,377
351,054 346,957
-16,008
-6,554
27,910
23,397 362,956 363,800
351,054 346,957
3,950
3,709
27,910
23,397 382,914 374,063
−
−
-19,958
-10,263
−
−
-19,958
-10,263
In addition, the KION pension plan for employees of the KION Group in Germany holds plan assets of
€18,474 thousand (2010: €16,840 thousand) which are
wholly offset by corresponding liabilities relating to the
direct pension entitlement plan.
Statement of cash flows
In the case of obligations not covered by external assets, payments to beneficiaries are made directly by the
Company and therefore have an impact on cash flows from operating activities. If the benefit obligations are
backed by external assets, the payments are made from existing plan assets and have no effect on the Compa-
ny's cash flow. Instead, any contributions made to the external pension fund by the Company result in net cash
used for operating activities.
During the reporting year, pension benefits of €30, 539 thousand (2010: €33,307 thousand) were paid in connec-
tion with the main pension entitlements in the Group, of which €12,643 thousand (2010: €11,640 thousan
d) was
paid directly by the Company and €17,896 thousand ( 2010: €21,667 thousand) was paid from plan assets. Cash
contributions to plan assets in 2011 amounted to €8 ,180 thousand (2010: €17,780 thousand). Furthermor e,
pension benefit payments totalling €215 thousand (2 010: €0) were transferred to external pension funds .
Income statement
In accordance with IAS 19, actuarial computations are performed for benefit obligations in order to determine the
amount to be expensed in each period in a systematic way. The expenses recognised in the income statement for
pensions and similar obligations consist of a number of components that are calculated and disclosed separately.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 44 of 81
The service cost is the new pension entitlement arising in the financial year and is recognised in the income
statement. It is calculated as the actuarial present value of that proportion of the expected defined benefit obliga-
tion when the pension is paid attributable to the year under review on the basis of the maximum length of service
achievable by each employee.
The interest cost (i.e. the expense arising from increase in the defined benefit obligation since the end of the
previous year because the benefits are one period closer to settlement using the discount rate assumed for the
year under review) is recognised in the income statement, as is the expected return on plan assets in the case of
benefits covered by external plan assets.
An unrecognised past service cost arises if there is a change to the pension entitlement.
The breakdown of the net cost of the defined benefit obligation (expenses less income) recognised in the income
statement for 2011 is as follows:
Cost of defined benefit obligation
Germany
UK
Other
Total
€ thousand
2011
2010
2011
2010
2011
2010
2011
2010
Current service cost
Interest cost
Expected return on plan assets
Past service cost (+) and income (-)
11,894
20,526
-1,936
−
10,411
19,733
-1,443
−
1,245
19,132
-18,736
46
1,514
18,801
-19,868
−
3,103
2,778
-2,060
131
2,390
2,900
-1,936
79
16,242
42,436
-22,732
177
14,315
41,434
-23,247
79
Gains (-) or losses (+)
on the curtailment of a plan
Total cost of
defined benefit obligation
−
−
−
−
-708
-434
-708
-434
30,484
28,701
1,687
447
3,244
2,999
35,415
32,147
Overall, the KION Group reported an expense of €19,7 04 thousand (2010: €18,187 thousand) under net fina ncial
income/expenses. This amount comprised the interest cost and the expected return on plan assets. All other
components of pension expenses are recognised under functional costs.
The actual total return on plan assets in 2011 was €36,446 thousand (2010: €40,597 thousand).
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 45 of 81
Other comprehensive income (loss)
The breakdown of actuarial gains and losses on the defined benefit obligation recognised in the statement of
comprehensive income in 2011 are as follows:
Accumulated other comprehensive income (loss)
Germany
UK
Other
Total
€ thousand
2011
2010
2011
2010
2011
2010
2011
2010
Accum ulated other com prehensive
incom e/loss as at 1 January
Gains (+) and losses (-) on the
measurement of defined benefit obligation
Gains (+) and losses (-) on plan assets
Exchange differences
Accum ulated other com prehensive
incom e/loss as at 31 Decem ber
thereof actuarial gains and losses
thereof effect of reduction in
future contributions (IFRIC 14)
65,983
94,873
-40,769
-31,985
-4,925
-3,137
20,289
59,751
14,150
1,325
−
-28,081
-809
−
-12,665
17,364
-944
-22,471
14,766
-1,079
-103
-4,975
-157
-4,617
3,393
-564
1,382
13,714
-1,101
-55,169
17,350
-1,643
81,458
81,458
65,983
65,983
-37,014
-37,014
-40,769
-40,769
-10,160
-10,160
-4,925
-6,830
34,284
34,284
20,289
18,384
−
−
−
−
−
1,904
−
1,904
Primarily experience adjustments to plan assets had increased other comprehensive income by a total of
€8,394 thousand as at 31 December 2011 (after defer red taxes).
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 46 of 81
Additional disclosures
The plan assets of the main pension plans consist of the following components:
Fair value of plan assets
Germany
UK
Other
Total
€ thousand
2011
2010
2011
2010
2011
2010
2011
2010
Securities
Fixed-income securities
Real estate
Insurance policies
Other
Total plan assets
6,862
12,580
2,859
−
15,916
6,123
12,754
2,552
−
13,527
73,583
267,739
331
−
64,751
78,395
258,959
282
−
31,634
7,187
11,499
3,593
26,353
1,677
7,020
11,233
3,510
27,506
1,638
87,632
291,818
6,783
26,353
82,344
91,538
282,946
6,344
27,506
46,799
38,217
34,956
406,404
369,270
50,309
50,907
494,930
455,133
The plan assets do not include any real estate or other assets used by the KION Group itself. The increase in the
Other category is largely attributable to the change in the portfolio structure of the four large plans in the United
Kingdom and concerns inflation-linked UK government bonds.
The expected return in 2012 for the main investment categories of plan assets are as follows:
Expected return on plan assets
Securities
Fixed-income securities
Real estate
Insurance policies
Other
Germany
UK
Other
2012
7.35%
3.74%
5.10%
−
6.68%
2011
7.45%
3.50%
5.20%
−
6.68%
2012
5.77%
4.31%
6.50%
−
3.19%
2011
6.73%
4.81%
6.50%
−
4.17%
2012
6.80%
2.40%
4.60%
4.69%
6.00%
2011
7.10%
2.90%
4.60%
3.88%
6.40%
Weighted average expected return
5.71%
5.54%
4.43%
5.21%
4.51%
4.26%
The total expected return is calculated from the weighted average expected returns from the investment catego-
ries in the plan assets.
The present value of the defined benefit obligation is based on the assumptions detailed above. If the discount
rate were to increase or decrease by a quarter of one percentage point (rising to 5.9 per cent or falling to 5.4 per
cent in the case of Germany as at 31 December 2011), pension entitlements would be €35,632 thousand (2 010:
€34,559 thousand) higher, respectively. Other compr ehen-
€32,312 thousand) lower or €35,747 thousand (2010:
(2010:
sive income, after tax, would be €25,999 thousand ( 2010: €23,147 thousand) higher or €26,036 thousand
€24,757 thousand) lower.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 47 of 81
Five-year overview
The following table shows a five-year overview of experience adjustments arising from the differences between
actuarial assumptions and actual circumstances:
History of experience adjustments
€ thousand
2011
2010
2009
2008
2007
Present value of defined benefit obligation
as at 31 December
859,029
820,310
722,779
629,198
750,713
Experience adjustments arising
on the plan liabilities
Fair value of plan assets
as at 31 December
Experience adjustments arising
on the plan assets
Surplus (-) / deficit (+) in total
Unrecognised past service cost (+)
and income (-)
Cumulative effect of the asset ceiling
Net defined benefit obligation
as at 31 December
144
-76
4,858
39
4,747
494,930
455,133
401,510
320,248
495,639
13,714
17,350
51,763
-107,388
-4,641
364,099
365,177
321,269
308,950
255,074
-1,143
-1,377
−
−
40
−
−
−
−
3,258
362,956
363,800
321,309
308,950
258,332
While the actuarial gains and losses on the present value of the obligation only result in part from experience
adjustments, the actuarial gains or losses on the fair value of the plan assets are entirely attributable to experi-
ence adjustments.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 48 of 81
[ 27 ] Financial liabilities and shareholder loan
The financial liabilities reported by the KION Group essentially comprise interest-bearing liabilities to banks and
capital market liabilities in connection with the corporate bond that was issued. The liabilities to banks stem large-
ly from a loan agreement. Interest is also payable on the shareholder loan, which is reported as a separate line
item.
The table below shows the contractual maturity structure of the financial liabilities and the shareholder loan.
Maturity structure of financial liabilities and shareholder loan
€ thousand
Liabilities to banks
due within one year
due in one to five years
due in more than five years
Capital market liability
due within one year
due in one to five years
due in more than five years
Other financial liabilities
due within one year
due in one to five years
due in more than five years
Total current financial liabilities
Total non-current financial liabilities
Liabilities from shareholder loan
due within one year
due in one to five years
due in more than five years
2011
2010
2,509,889
223,979
2,285,910
0
2,871,887
103,282
2,464,124
304,481
487,508
0
0
487,508
7,333
3,397
0
3,936
0
0
0
0
7,000
3,188
0
3,812
227,376
106,470
2,777,354
2,772,417
643,132
0
0
643,132
615,250
0
0
615,250
Loan agreement
In connection with its acquisition of Linde AG's material-handling business the KION Group signed a loan agree-
ment (a senior facilities agreement and a subordinated facility agreement, referred to below as 'SFA') for a total
original amount of €3,300,000 thousand with the lea d banks Barclays Bank Plc, Bayerische Hypo- und Vereins-
bank AG, Credit Suisse (London branch), Goldman Sachs International Bank, Lehman Commercial Paper Inc.
(UK branch) and Mizuho Corporate Bank Ltd. on 23 December 2006. The loans provided under the SFA carry
variable interest rates. Transaction costs of €20,1 75 thousand reduced the carrying amount of the loans as at the
reporting date. These costs have been allocated pro rata to each of the tranches and expensed over their respec-
tive terms.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 49 of 81
The following material amendments were made to the SFA in subsequent years:
• Under amendments made to the SFA on 8 March 2007 the subordinated facility agreement was totally re-
placed by a senior facilities agreement and unused credit lines totalling €200,000 thousand were retur ned,
thereby reducing the total amount of the SFA to €3,1 00,000 thousand.
• Under amendments made to the SFA on 23 September 2009 the financial covenants applicable during the
term of the loan were modified. At the same time, an additional credit line of €100,000 thousand and an in-
crease in the collateral security provided for this facility were agreed. Furthermore, the interest rates payable
on existing credit lines were raised by between 0.25 and 1.50 percentage points. The amounts of these inter-
est-rate increases primarily fall due in the form of bullet payments at maturity (payments in kind, or PIKs). All
the interest payable on the new credit line of €100 ,000 thousand falls due in the form of a bullet payment at
maturity. The company making this credit line available is Superlift Funding S.à r.l., Luxembourg, which is a
related party to the KION Group.
Corporate bond
thousand through the consolidated subsidiary KION
The KION Group issued a corporate bond for €500,000
Finance S.A., Luxembourg, in April 2011. Of the bond's total par value of €500,000 thousand, €325,000 tho
usand
is repayable at a fixed interest rate of 7.875 per cent p.a., while €175,000 thousand carries a floati ng interest rate
based on three-month EURIBOR plus a margin of 4.25 percentage points. The interest on the fixed-rate tranche
is paid semi-annually, while interest on the floating-rate tranche is paid once a quarter. The bond's principal is
redeemed as a bullet payment on maturity. Borrowing costs of €12,492 thousand reduced the carrying amou nt of
the bond as at the reporting date. These costs have been allocated pro rata to each of the tranches and expensed
over their respective terms. The corresponding liability is reported as a capital market liability.
Shareholder loan
KION Holding 1 GmbH and Superlift Holding S.à r.l., Luxembourg, signed an agreement on a shareholder loan for
the amount of €500,000 thousand on 27 December 2006 . The last maturity date for repayment of the loan was
most recently (in April 2011) stipulated as 31 December 2021. The loan principal and the associated interest are
both unsecured and are repayable on the due date. The interest rate was fixed at 5.5 per cent p.a. effective
1 September 2007 and is payable on the outstanding loan principal.
Changes in net financial debt
The KION Group uses its financial debt as a key internal figure for analysing the changes in its financial liabilities.
Financial liabilities take into account the gross carrying amounts of the liabilities to banks and the capital market
liability before borrowing costs. The key figure 'net financial debt' is calculated by deducting cash and cash equiv-
alents.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 50 of 81
The table below gives a breakdown of the KION Group's net financial debt as at 31 December 2011:
Net financial debt
€ thousand
Corporate bond - fixed rate (2011/2018) - gross
Corporate bond - floating rate (2011/2018) - gross
Liabilities to banks (gross)
Financial debt
./. Cash and cash equivalents
Net financial debt
./. Capitalized borrowing costs
Net financial debt after borrowing costs
Financial debt after borrowing costs
2011
2010
325,000
175,000
2,530,064
3,030,064
373,451
2,656,613
32,667
2,623,946
−
−
2,893,713
2,893,713
252,884
2,640,829
21,826
2,619,003
2,997,397
2,871,887
€483,000 thousand of the total corporate bond issue proceeds of €500,000 thousand was used to repay ex isting
SFA liabilities. In addition, loans made available under a SFA credit line (the capex line) were reduced by an
additional €54,018 thousand to €71,596 thousand in
2011 in accordance with the contractual repayment
agreement. On 7 November 2011, the KION Group reacted to the uncertainty prevailing in financial and banking
markets by drawing down €132,691 thousand under a r evolving SFA credit line and holding it as cash.
The table below gives details of the changes in financial debt and lists the applicable terms and conditions:
Credit terms
Interest rate
Notional amount
Maturity
Term Loan Facility Term B (EUR)
Term Loan Facility Term B (USD)
Term Loan Facility Term C (EUR)
Term Loan Facility Term C (USD)
Term Loan Facility Term D
Term Loan Facility Term G
Term Loan Facility H1a (Corporate bond - fixed rate)
Term Loan Facility H1b (Corporate bond - floating rate)
Multicurrency Revolving Credit Facility
Multicurrency Capex Restructuring and Acquisition Facility
Other liabilities to banks
Total financial debt
./. Capitalized borrowing costs
Total financial debt after borrowing costs
EURIBOR + MARGIN
LIBOR + MARGIN
EURIBOR + MARGIN
LIBOR + MARGIN
EURIBOR + MARGIN
EURIBOR + MARGIN
Fixed rate
3-M-EURIBOR+MARGIN
EURIBOR + MARGIN
EURIBOR + MARGIN
Various currencies and
interest terms
2011
2010
690,881
310,560
663,033
310,560
201,742
111,210
325,000
175,000
132,691
71,596
911,162
296,873
869,985
296,873
201,167
105,779
−
−
−
162,131
2014
2014
2015
2015
2016
2016
2018
2018
2013
2013
37,791
49,743
3,030,064
-32,667
2,997,397
2,893,713
-21,826
2,871,887
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 51 of 81
Financial covenants
The SFA and the contractual terms and conditions governing the issuance of the corporate bond require compli-
ance with certain requirements, or undertakings and certain covenants among other things. The SFA also re-
quires compliance with specific financial covenants during the term of the agreement. The financial covenants
specify required ratios for the financial position and financial performance of the KION Group. The covenants are
expressed in the form of key figures relating to leverage, available liquidity, EBITDA, interest paid and capital
expenditures. If these requirements or financial covenants are breached, this may, for example, give lenders the
right to terminate the SFA or permit bondholders to call the corporate bond prior to its maturity date.
All the financial covenants were met in the past financial year.
Loan collateral
Under the SFA, the KION Group is under an obligation to provide collateral for its obligations and liabilities. This
obligation also includes to the corporate bond (newly added SFA tranches H1a und H1b), under which the funds
from the corporate bond accrued to the KION Group. By the reporting date a total of 26 (31 December 2010: 21)
KION Group companies (guarantors) in five countries – Germany, the UK, France, Spain and Italy – had provided
the necessary collateral. The year-over-year change in the companies participating in the SFAS was largely
attributable to the fact that the financial services companies established in 2011 had become a party to the SFA.
The collateral includes guarantees, the assignment of shares in the guarantors (with the exception of shares in
KION GROUP GmbH), the assignment of bank accounts and guarantor receivables, the assignment of claims
arising from and in connection with the share purchase agreement between Linde Material Handling GmbH and
Linde AG dated November 5, 2006, relating to the shares in the former KION GROUP GmbH, the assignment of
shares in KION Information Management Services GmbH and assignments and transfers of title to intellectual
property rights by guarantors in Germany. The statutory provisions in the United Kingdom and the agreements
entered into require that all the assets of the UK guarantor are pledged as security.
The carrying amounts of the financial assets pledged as collateral amounted to €791,985 thousand as at
reporting date (31 December 2010: €709,051 thousand ).
the
No liabilities to banks were secured by pledges of real property at the end of 2011 (31 December 2010: €125
thousand).
[ 28 ] Lease liabilities
Lease liabilities primarily relate to finance lease obligations of €669,035 thousand (31 December 2010 :
€617,547 thousand) arising from sale and leaseback
transactions for funding leases with customers.
Lease liabilities also include obligations of €15,7 65 thousand (31 December 2010: €17,814 thousand) ar ising from
residual-value guarantees that were provided when leased assets were sold to leasing companies.
The KION Group has recognised lease liabilities amounting to €16,712 thousand (31 December 2010: €26,28
8
thousand) arising from procurement leases, which are classified as finance leases due to their terms and condi-
tions.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 52 of 81
The amounts recognised as lease liabilities are based on the following data:
Minimum lease payments
€ thousand
Total minimum lease payments (gross)
due within one year
due in one to five years
due in more than five years
Present value of minimum lease payments
due within one year
due in one to five years
due in more than five years
2011
2010
769,603
260,230
490,680
18,693
701,512
230,381
452,988
18,143
724,220
278,967
427,041
18,212
661,649
250,552
393,335
17,762
Interest included in minimum lease payments
68,091
62,571
[ 29 ] Other provisions
Other provisions relate to the following items:
Other provisions
€ thousand
Balance as at 1/1/2011
thereof non-current
thereof current
Changes in group of consolidated entities
Additions
Utilisations
Reversals
Additions to accrued interest
Exchange differences
Other adjustments
Balance as at 31/12/2011
thereof non-current
thereof current
Provisions
for product
warranties
Provisions for
personnel
Other
obligations
Total other
provisions
60,455
60,455
0
150
34,864
-18,964
-2,454
136
419
343
74,949
69,729
5,220
133,893
94,750
39,143
134
75,844
-61,592
-2,816
2,630
10
0
148,103
16,935
131,168
65,853
9,094
56,759
811
24,297
-23,405
-11,255
39
274
180
56,794
9,504
47,290
260,201
164,299
95,902
1,095
135,005
-103,961
-16,525
2,805
703
523
279,846
96,168
183,678
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 53 of 81
The provisions for product warranties include contractual and statutory obligations arising from the sale of indus-
trial trucks and spare parts. It is expected that the bulk of the costs will be incurred within the next two years after
the reporting date.
The provisions for personnel comprise provisions for partial retirement obligations, long-service awards, annual
bonuses and severance pay. The provision for partial retirement obligations is recognised on the basis of individ-
ual contractual arrangements. The KION Group recognised restructuring provisions of €74,465 thousand in 2011,
predominantly in connection with the planned transfers of production.
Other obligations largely comprise provisions for guarantees and litigation.
[ 30 ] Other financial liabilities
Other financial liabilities include the following items:
Other financial liabilities
€ thousand
Deferred income
Sundry other liabilities
Other non-current financial liabilities
Deferred income
Personnel liabilities
Derivative financial instruments
Social security liabilities
Tax liabilities
Advances received from third parties
Liabilities on bills of exchange
Liabilities from accrued interest
Sundry current financial liabilities
Other current financial liabilities
2011
2010
118,455
14,264
132,719
86,551
128,349
17,742
38,894
50,269
41,981
3,799
10,360
42,490
420,435
124,948
2,922
127,870
81,274
94,573
30,030
35,460
35,683
40,682
2,303
2,049
69,188
391,242
Total other financial liabilities
553,154
519,112
Other financial liabilities include non-derivative liabilities of €180,226 thousand (31 December 2010:
thousand) that fall within the scope of IFRS 7.
€156,053
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 54 of 81
[ 31 ] Contingent liabilities and other financial obligations
Contingent liabilities
Contingent liabilities
€ thousand
Liabilities on bills of exchange
Liabilities on guarantees
Collateral security for third-party liabilities
Total contingent liabilities
2011
2010
3,516
2,129
69
5,714
2,303
1,098
−
3,401
Litigation
The legal risks arising from the KION Group's business are typical of those faced by any company operating in
this sector. The Company is a party in a number of pending lawsuits in various countries. It cannot assume with
any degree of certainty that it will win any of the lawsuits or that the existing risk provision in the form of insurance
or provisions will be sufficient in each individual case. However, the Company believes it is remote that these
ongoing lawsuits will result in additional provisions.
Other financial commitments
Other financial commitments
€ thousand
Liabilities under non-cancellable operating leases
Capital expenditure commitments in property, plant and equipment
Capital expenditure commitments in intangible assets
Other financial commitments
Total other financial commitments
2011
2010
205,394
6,109
1,630
16,958
230,091
208,874
5,660
1,205
17,290
233,029
The maturity structure of the total future minimum lease payments under non-cancellable operating leases is as
follows:
Minimum lease payments
€ thousand
Nominal minimum lease payments (gross)
due within one year
due in one to five years
due in more than five years
2011
2010
205,394
58,856
104,634
41,904
208,874
63,621
96,175
49,078
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 55 of 81
The minimum lease payments relate to payments for leased buildings, machinery, office furniture and equipment
(procurement leases) as well as payments for industrial trucks refinanced with a sale and leaseback and sub-
leased to end customers (sale and leaseback sub-leases).
Minimum lease payments broken down into procurement leases & sale-and-leaseback subleases
Procurement leases
Sale-and-leaseback
subleases
€ thousand
2011
2010
2011
2010
Minimum lease payments (cash out)
due within one year
due in one to five years
due in more than five years
Minimum lease payments (cash in)
due within one year
due in one to five years
due in more than five years
151,486
38,134
71,452
41,900
158,406
39,844
69,484
49,078
−
−
−
−
−
−
−
−
53,908
20,722
33,182
4
11,257
5,813
5,440
4
50,468
23,777
26,691
−
16,795
8,358
8,437
−
The future minimum lease payments for sale and leaseback transactions not recognised on the statement of
financial position amounting to €53,908 thousand ar e partially offset by payments received under non-cancellable
sub-leases amounting to €11,257 thousand. The futur e payments also include obligations arising from the refi-
nancing of industrial trucks for which there are no offsetting receipts under short-term sub-leases.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 56 of 81
Other disclosures
[ 32 ] Consolidated statement of cash flows
The consolidated statement of cash flows shows the changes in cash in the KION Group resulting from cash
inflows and outflows in the year under review, broken down into cash flow from operating, investing and financing
activities. The effects on cash from changes in exchange rates are shown separately. Cash flow from operating
activities is presented using the indirect method in which the profit or loss for the year is adjusted for non-cash
operating items.
Cash flow from operating activities increased by 94 per cent to €386,810 thousand in 2011 (2010: €199, 289
thousand). The underlying reason for this improvement was that earnings before interest and tax (EBIT) in-
creased to €213,160 thousand in the reporting year (2010: €34,636 thousand).
The net cash used for investing activities in the KION Group increased by 24 per cent to €152,580 thous and in
2011 (2010: €123,248 thousand). Cash payments for c apital expenditures on non-current assets and property,
plant and equipment came to a total of €133,005 tho usand (2010: €123,462 thousand). The net cash used
for
8 thousand) and essentially related to the acquisition of the
acquisitions totalled €32,916 thousand (2010: €7,63
the pur-
forklift truck and warehouse technology business of Voltas Limited, Mumbai, India (€16,141 thousand),
chase of
in Linde Sterling Ltd., Basingstoke, United Kingdom
(€9,795 thousand), the investment in Liftec's busin ess in Russia (€4,903 thousand) and a smaller acqui sition in
Italy. The proceeds from the disposal of assets primarily related to disposals of assets no longer required for the
Group's operating activities.
the remaining shares (51 per cent)
The net cash used for financing activities amounted to €114,715 thousand (2010: €290,210 thousand). Wh ereas
the main factors affecting this cash flow in 2010 were the net repayment of loans (€95,705 thousand) a nd the
repayment of other funding by individual Group companies (€42,133 thousand), the net outflow of cash i n 2011
was largely attributable to the net inflows resulting from the issuance of a corporate bond (inflow of €500,000
thousand), the funds drawn down under a revolving SFA credit line (inflow of €132,691 thousand) and the repay-
ment of SFA liabilities (outflow of €537,018 thousand ). Interest payments increased by €12,739 thousand
to
€147,455 thousand as a result of higher interest ar ising from financial liabilities and capital market liabilities. In
2011, there were also payments of €13,714 thousand
for currency hedges (2010: €0).
The KION Group acquired an additional 5.34 per cent of the shares in KION Baoli (Jiangsu) Forklift Co. Ltd.,
China, for a total of €1,461 thousand in 2011. The cash used for this transaction is reported in cash flow from
financing activities as required by IAS 7.
Cash and cash equivalents increased by a total of € 120,567 thousand, €1,052 thousand of which was attr ibutable
to exchange-rate movements for the year ended 31 December 2011. This sharp increase stemmed largely from
the funds drawn down under the revolving SFA credit line. Cash and cash equivalents totalled at
€373,451 thousand as at the reporting date.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 57 of 81
[ 33 ]
Information on financial instruments
The KION Group uses both primary and derivative financial instruments.
The following section summarises the relevance of these financial instruments for the KION Group.
The following table shows the measurement categories defined by IAS 39. In line with IFRS 7, the table shows
the carrying amounts and fair values of financial assets and liabilities:
Carrying amounts broken down by class and category
Classes
€ thousand
Financial assets
Categories
FAHfT
AfS
LaR
HtM
FLaC
FLHfT
Carrying
amount
2011
Loans receivable
Financial receivables
Available-for-sale investments
Lease receivables*
Trade receivables
Other receivables
795
5,351
768
361,221
676,553
59,514
thereof non-derivative receivables
thereof derivative financial instruments 23,277 21,500
36,237
Cash and cash equivalents
373,451
768
795
5,351
676,553
36,237
Financial liabilities
Liabilities to banks
Capital market liability
Other financial liabilities
Shareholder loan
Lease liabilities*
Trade payables
Other liabilities
2,509,889
487,508
7,333
643,132
701,512
634,092
197,968
180,226
thereof non-derivative liabilities
thereof derivative financial instruments 17,742
* as defined by IAS 17
2,509,889
487,508
7,333
643,132
634,092
180,226
2,471
Fair value
795
5,351
768
362,319
676,553
59,514
36,237
23,277
373,451
2,509,889
388,750
7,333
530,045
700,785
634,092
197,968
180,226
17,742
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 58 of 81
Carrying amounts broken down by class and category
Classes
€ thousand
Financial assets
Carrying
amount
2010
Categories
FAHfT
AfS
LaR
HtM
FLaC
FLHfT
Fair Value
Loan receivable
Financial receivables
Available-for-sale investments
Lease receivables*
Trade receivables
Other receivables
1,907
8,117
825
367,758
633,265
59,122
thereof non-derivative receivables
thereof derivative financial instruments 23,706 19,900
35,416
Cash and cash equivalents
252,884
825
1,907
8,117
633,265
35,416
Financial liabilities
Liabilities to banks
Capital market liability
Other financial liabilities
Shareholder loan
Lease liabilities*
Trade payables
Other liabilities
thereof non-derivative liabilities
instruments
* as defined by IAS 17
2,871,887
0
7,000
615,250
661,649
508,108
186,083
156,053
30,030
1,907
8,117
825
374,358
633,265
59,122
35,416
23,706
252,884
2,871,887
0
7,000
554,358
666,622
508,108
186,083
156,053
30,030
2,871,887
0
7,000
615,250
508,108
156,053
5,029
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 59 of 81
The change in valuation allowances for lease receivables and trade receivables was as follows:
Change in valuation allowances
€ thousand
Valuation allowances as at 1 January
Group changes
Additions (cost of valuation allowances)
Reversals
Utilisations
Currency translation adjustments
Valuation allowances as at 31 December
The net gains and losses on financial instruments by IAS 39 category are as follows:
Net gains and losses on financial instruments broken down by category
€ thousand
Loans and receivables (LaR)
Available-for-sale investments (AfS)
Financial assets held for trading (FAHfT)
Financial liabilities held for trading (FLHfT)
Financial liabilities carried at amortised cost (FLaC)
2011
2010
47,125
626
10,547
-3,092
-5,425
-216
49,565
48,614
−
13,912
-9,466
-4,212
-1,723
47,125
2011
2,062
13
2010
9,223
15
14,360
39,381
-10,109
-27,063
-225,277
-220,979
The above gains and
include
€18,464 thousand (2010: €38,087 thousand) because t hese losses relate to a documented hedge.
losses arising on hedging
losses do not
transactions amounting
to
Fair value measurement
The majority of the funding, loans, investments, other non-derivative receivables and liabilities, trade receivables
and trade payables held by the Group have short remaining terms to maturity. The carrying amounts of these
financial instruments approximate their fair values.
The fair value of derivative financial instruments is determined using appropriate valuation methods on the basis
of observable market information at the reporting date. The fair value of interest rate swaps is calculated as the
present value of the estimated future cash flows. The fair value of currency forwards is calculated on the basis of
the forward rates at the reporting date. In the KION Group, all derivative financial instruments are classified as
level 2 measurements as defined by IFRS 7.
In order to minimise default risk to the greatest possible extent, the KION Group only enters into derivatives with
counterparties holding a high credit rating.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 60 of 81
With the exception of derivative financial instruments and available-for-sale assets, all financial assets and liabili-
ties are measured at amortised cost.
Financial assets measured at fair value
€ thousand
Financial assets
thereof available-for-sale
thereof derivative instruments
Financial liabilities measured at fair value
€ thousand
Financial liabilities
thereof derivative instruments
2011
2010
24,045
768
23,277
24,531
825
23,706
2011
2010
17,742
17,742
30,030
30,030
The fair value of available-for-sale assets is determined on the basis of quoted prices in an active market. These
assets are classified as level 1 as defined by IFRS 7.
[ 34 ] Financial risk reporting
Capital management
One of the prime objectives of capital management is to ensure liquidity at all times. Measures aimed at achieving
these objectives include the optimisation of the capital structure, the reduction of liabilities and ongoing Group
cash flow planning and management. Besides the supplementary agreement to the SFA in 2009, long-term
financing requirements were also covered by the issuance of the corporate bond (see 'Credit terms' table).
Close cooperation between local units and the Group head office ensures that the local legal and regulatory
requirements faced by foreign group companies are considered in the capital management process.
Net financial debt before borrowing costs – defined as the difference between financial liabilities and cash and
cash equivalents – is the key performance measure used in liquidity planning at Group level. Lease liabilities and
other financial liabilities are excluded from this figure, which were €2,656,613 thousand in 2011 (201 0: €2,640,829
thousand).
Credit risk
In certain finance and operating activities, the KION Group is subject to credit risk, i.e. the risk that partners will
fail to meet their contractual obligations. This risk is limited by diversifying business partners based on certain
credit ratings. The Group only enters into transactions with business partners and banks holding a good credit
rating and subject to fixed limits. Counterparty risks involving our customers are managed by the individual Group
companies.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 61 of 81
The following table shows the age structure of receivables as at the reporting date.
Age structure analysis of receivables
Carrying
amount
Thereof:
Neither
overdue nor
impaired at
the reporting
date
Thereof:
Overdue and
impaired at
the reporting
date
Thereof:
Not impaired at the reporting
date, but
up to and
including
90 days
overdue
more than
90 days
overdue
€ thousand
2011
Financial receivables
Lease receivables
Trade receivables
Other non-derivative receivables
5,351
361,221
676,553
36,237
5,351
361,221
539,560
35,189
−
4,286
643
−
117,666
−
−
10,727
41
€ thousand
2010
Financial receivables
Lease receivables
Trade receivables
Other non-derivative receivables
8,117
367,758
633,265
35,416
8,117
367,758
493,781
35,060
−
10,101
21
−
114,472
−
−
13,896
83
Impairment losses are based on the credit risk associated with the receivables and are assessed primarily using
factors such as a customer’s credit rating and historical pattern of meeting payment terms.
Some of the receivables that were overdue as at the reporting date, but for which no impairment losses had been
reported, were offset by corresponding trade payables or collateral. Apart from this item, the Group did not hold
any significant collateral.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 62 of 81
Liquidity risk
Based on IFRS 7, a liquidity risk arises if a company is unable to meet its financial liabilities. The KION Group
maintains a liquidity reserve in the form of lines of credit and cash in order to ensure financial flexibility and sol-
vency. The age structure of financial liabilities is reviewed continuously and was improved by issuing the corpo-
rate bond.
The following table shows all of the contractually agreed payments under recognised financial liabilities as at 31
December 2011, including derivative financial instruments with negative fair values.
Liquidity analysis of financial liabilities and derivatives
€ thousand
Primary financial liabilities
Gross liabilities to banks
Borrowing costs
Net liabilities to banks
Capital market liability
Borrowing costs
Other financial liabilities
Shareholder loan
Trade payables
Lease liabilities
Other financial liabilities
Derivative financial liabilities
Derivatives with negative fair value
+ Cash in
- Cash out
2011
Carrying
amount
2011
2,530,064
-20,175
2,509,889
500,000
-12,492
487,508
7,333
643,132
634,092
701,512
180,225
17,742
Cash flow
2012
Cash flow
2013 - 2016
Cash flow
from 2017
-307,224
-2,643,650
−
-34,864
-143,062
-556,723
-3,397
−
-634,092
-260,230
-180,225
0
−
0
-490,680
−
-6,090
-928,194
−
-18,693
−
295,698
-291,278
32,127
-36,919
−
−
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 63 of 81
Liquidity analysis of financial liabilities and derivatives
€ thousand
Primary financial liabilities
Gross liabilities to banks
Borrowing costs
Net liabilities to banks
Other financial liabilities
Shareholder loan
Trade payables
Lease liabilities
Other financial liabilities
Derivative financial liabilities
Derivatives with negative fair value
+ Cash in
- Cash out
2010
Carrying
amount
2010
2,893,713
-21,826
2,871,887
7,000
615,250
508,108
661,649
156,053
30,033
Cash flow
2011
Cash flow
2012 - 2015
Cash flow
from 2016
-192,543
-3,132,989
-370,561
-3,188
−
-508,108
-278,967
-156,053
−
−
−
-427,041
−
-6,059
-782,618
−
-18,212
−
175,364
-203,057
40,867
-41,809
−
−
The calculation of future cash flows for derivative financial liabilities includes all currency forwards and interest-
rate swaps that have negative fair values as at the reporting date.
Bank guarantee lines (e.g. sureties, performance bonds) had been issued under the ancillary facility agreements
for a total amount in the low double-digit millions as at 31 December 2011. They included guarantees payable 'on
first demand'. No guarantees were utilised in 2011.
The volume of business for which factoring was used in 2011 was €17,844 thousand (2010: €19,853 thousa nd).
Because all material risks and rewards are assigned to the purchaser, these assets are derecognised in full.
Default risk
For financial assets, default risk is defined as the risk that a counterparty will default, and therefore is limited to a
maximum of the carrying amount of the assets relating to the counterparty involved. The potential default risk
attaching to financial assets is mitigated by secured forms of lending such as reservation of title, credit insurance
and guarantees.
Specific valuation allowances for defaults are recognised to reflect the risk arising from primary financial instru-
ments. Financial transactions are only entered into with selected partners holding good credit ratings. Investments
in interest-bearing securities are limited to investment-grade securities.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 64 of 81
Risks from financial services
The KION Group's leasing activities mean that it may be exposed to residual value risks from the marketing of
machinery and equipment that is returned by the lessee at the end of a long-term lease and subsequently sold or
re-leased. Residual values in the markets for used trucks are therefore constantly monitored and forecasted.
KION regularly assesses its overall risk position arising from financial services, recognising write-downs, valuation
allowances or provisions to cover the risks it identifies. It immediately takes into account any changes in residual
values when calculating new leases.
The increased marketing activities for used trucks and the overall increase in demand help to stabilise the residu-
al values of the KION Group's industrial trucks and therefore serve to mitigate risk.
In addition, residual values are mainly based on remarketing agreements that continued to achieve positive
outcomes in 2011. Under these agreements, any residual-value risk is transferred to the leasing company con-
cerned. Group-wide standards to ensure that residual values are calculated conservatively reduce risk and pro-
vide the basis on which to create the transparency required. KION also has an IT system for residual-value risk
management.
The KION Group mitigates its liquidity risk and interest-rate risk by ensuring that most of its transactions and
funding loans have comparable maturities. Long-term leases are primarily based on fixed-interest agreements.
The credit facilities provided by various banks ensure that the Group has sufficient liquidity.
In order to eliminate exchange-rate risk, KION generally funds its leasing business in the local currency used in
each market.
Because of low default rates, counterparty risk has not been significant to date in the KION Group. The Company
did not identify any material year-over-year changes in 2011. KION's losses from defaults are also mitigated by its
receipt of the proceeds from the sale of repossessed trucks. In addition, it primarily offers financial services indi-
rectly via selected funding partners, and KION bears the counterparty risk in less than 5 per cent of cases. The
credit risk management system was refined as part of the work involved in transferring financial services activities
to a separate segment. In particular, this involved revising procedures on operational and organisational structure
as well as processes for risk management and control.
Exchange-rate risk
In accordance with its treasury risk policy, the KION Group hedges exchange rate risks both locally at the level of
the individual companies and centrally via KION GROUP GmbH in order to meet the prescribed minimum hedging
ratios.
The main hedging instruments employed are foreign-currency forwards, provided that there are no country-
specific restrictions on their use.
At an entity level, hedges are entered into for highly probable future transactions on the basis of rolling 15-month
forecasts, as well as for firm obligations not reported in the statement of financial position. In accordance with
IAS 39, these hedges are generally classified as cash flow hedges for accounting purposes (see note [ 35 ]).
Foreign-currency forwards are also employed to hedge the exchange rate risks resulting from internal financing.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 65 of 81
The following table shows an overview of the foreign-currency forwards entered into by the KION Group.
Foreign-currency forwards
Fair value
Notional amount
€ thousand
2011
2010
2011
2010
Foreign-currency forwards (assets)
Foreign-currency forwards (liabilities)
Hedge
Trading
Hedge
Trading
1,765
21,500
8,650
2,471
3,762
19,824
73,758
363,277
109,653
639,473
4,236
3,595
189,351
103,018
89,900
79,335
The currency options bought and sold in 2008, each with a notional value of US$ 780,000 thousand, were closed
in 2011. The income generated by the sale totalled €1,649 thousand. No new options have been entered i nto.
Significant exchange rate risks from financial instruments are measured on the basis of value at risk (VaR) as part
of internal Group management. VaR figures are calculated using historical variance-covariance analyses. Correla-
tions and volatilities are calculated on the basis of the 250 working days prior to the reporting date (unweighted).
Exchange rate risks from financial instruments as defined by IFRS 7, are only included in calculating value at risk
if the financial instruments are denominated in a currency other than the functional currency of the reporting entity
concerned. This means that exchange rate risks resulting from the translation of the separate financial statements
of subsidiaries into the Group reporting currency, i.e. currency translation risk, are not included.
Value-at-Risk
€ thousand
Currency risk
2011
2010
54,676
19,968
The value at risk in respect of currency risk as at 31 December 2011 was €54,676 thousand (31 December 2010:
€19,968 thousand). Value at risk is the loss that i s not expected to be exceeded over a holding period of one year
with a confidence level of 97.7 per cent (2010: 97.7 per cent).
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 66 of 81
Interest-rate risk
Interest-rate risk within the KION Group is managed centrally. The basis for decision-making includes sensitivity
analyses of interest-rate risk positions in key currencies.
The table below shows the cumulative effect of an increase or decrease of 100 basis points (bps) in the relevant
interest-rate curves, with a rate of 0 per cent constituting the lower limit of the calculation.
Interest-rate sensitivity
€ thousand
2011
2011
2010
2010
+100 bps
-100 bps
+100 bps
-100 bps
Other comprehensive income (loss)
Net income
28,702
-9,358
-18,031
9,358
34,714
-17,226
-32,600
18,454
The Group essentially funds itself by drawing down loans under its agreed credit facilities. Interest-rate derivatives
- mainly interest-rate swaps - are used to hedge the resulting interest-rate risk.
Interest-rate swaps
€ thousand
Interest-rate swaps (assets)
Interest-rate swaps (liabilities)
Fair value
Notional amount
2011
2010
2011
2010
−
−
46
−
−
−
70,000
−
6,621
−
20,769
−
2,070,000
−
2,493,706
−
Hedge
Trading
Hedge
Trading
The interest-rate caps purchased in 2009 and with a notional value of €1,250,000 thousand expired in 2 011 as
planned. No new interest-rate options have been entered into.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 67 of 81
[ 35 ] Hedge accounting
Hedging currency risk
In accordance with its treasury risk policy, the KION Group applies hedge accounting in hedging the exchange
rate risks arising from highly probable future revenues in various currencies. Foreign-currency derivatives with
settlement dates in the same month as the expected cash flows from the Group's operating activities are used as
hedges.
The effectiveness of the Group's hedging transactions is assessed on the basis of forward rates using the hypo-
thetical derivative approach under the cumulative dollar-offset method. The effective portion of the changes in the
fair value of foreign-currency derivatives is recognised in accumulated other comprehensive income (loss) and
only reversed when the corresponding hedged item is recognised in income.
Because of the short-term nature of the Group's payment terms, reclassifications to the income statement and the
recognition of the corresponding cash flows generally take place in the same reporting period. A foreign-currency
receivable or liability is recognised when goods are dispatched or received. Hedge accounting continues until the
corresponding payment is received, with the changes in the fair value of the derivative being recognised in the
income statement, thereby largely offsetting the effect of the measurement of the receivable at the reporting date.
The changes in fair value recognised and reclassified in other comprehensive income in 2011 are shown in the
consolidated statement of comprehensive income. The ineffective portion of the changes in the fair value of the
hedging transactions is recognised directly in the income statement. There were no significant ineffective portions
in 2011.
In total, foreign-currency cash flows of €263,109 t housand (2010: €199,554 thousand) were hedged and d esig-
nated as hedged items, of which €187,298 thousand i s expected to be settled by 30 September 2012 (2010:
€161,820 thousand expected by 30 September 2011). T he remaining cash flows designated as hedged items fall
due in the period up to 19 December 2013.
Hedging of interest-rate risk
The KION Group uses hedge accounting in connection with the hedging of interest-rate risk.
The KION Group is essentially financed by the utilisation of loans with variable interest rates and in different
currencies. Interest-rate derivatives denominated in various currencies were used to hedge the resulting interest-
rate risk in 2011. Because the KION Group used interest-rate swaps to transform 51 per cent of its variable-rate
exposure into fixed-rate obligations as at the reporting date, it is not fully benefiting from the low level of market
interest rates. The individual hedges were designated at the time the swaps were entered into.
The effective portion of the hedges was recognised in other comprehensive income (loss). As in the previous
year, the cumulative effectiveness of the hedging transactions was almost 100 per cent. Again, as in 2010, there
were no ineffective portions.
In total, variable portions of future interest payments amounting to €27,196 thousand (2010: €54,999 t
housand)
were designated as hedged items, of which €8,126 th ousand is expected to be paid by 30 September 2012
(2010: €14,196 thousand fell due by 30 September 20 11). The remaining cash flows designated as hedged items
fall due by 31 December 2014.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 68 of 81
[ 36 ]
Segment report
IFRS 8 specifies the 'management approach' for defining operating segments. Under this approach, the internal
reports that are regularly used by the chief operating decision-maker to make decisions on the allocation of re-
sources to a segment and to assess the performance of a segment are used as the basis for determing the oper-
ating segments. The chief operating decision-maker in the KION Group is its Executive Board comprising Gordon
Riske (CEO), Otmar Hauck (COO), Klaus Hofer (CHRO) and Harald Pinger (CFO).
Since the 2011 financial year, the chief operating decision-makers have divided the KION Group into the Linde
Material Handling (LMH) and STILL brands for management purposes. Segment reporting follows the same
breakdown, taking into account the relevant organisational structures and corporate strategy of the KION Group.
Linde Material Handling (LMH)
Linde Material Handling manufactures material-handling products under the Linde, Fenwick and Baoli brands and
also produces hydraulic components that are used both in its own trucks and in the products of external manufac-
turers.
Baoli operates in the market as an independent brand focusing on the economy segment in China and other
growth markets.
STILL
The STILL brand has positioned itself as a leading provider of intelligent intralogistics management tools. In
addition to core products (forklifts, warehouse handling equipment and tow tractors), the product range includes
pioneering material flow services.
As a leading Italian manufacturer, OM provides customers in the value segment with reliable, technologically
advanced electric and diesel trucks as well as warehouse handling equipment.
In 2010, the STILL and OM brands began to bundle their activities, enabling them to boost their competitiveness
by benefiting from each other's product range and distribution capability. OM focuses on its home Italian market
and is integrating the STILL Group's activities in Italy into its operations. In the medium-term, STILL will integrate
the OM Group's activities outside Italy into its network. STILL is also using attractive products from OM to sup-
plement its own product range. It is therefore significantly expanding its coverage of the market for these products
and greatly improving their market penetration via its excellent distribution network. The STILL and OM brands
have been merged and managed jointly under the STILL segment since the 2011 financial year.
Other
The 'Other' segment comprises the companies operating under the Voltas brand as well as holding and service
companies in the KION Group. Voltas is a KION Group brand company whose manufacturing is based in India
and whose business activities focus primarily on this market. The service companies perform cross-segment
services for the KION Group. The bulk of the revenue in this segment is generated by internal IT and logistics
services rendered by the service companies.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 69 of 81
The basis for internal reporting is a presentation of the financial position and financial performance based on data
from continuing operations, excluding items relating to the KION Group in December 2006 and excluding non-
recurring items. In addition to the above items, other net financial income/expenses and the share of profit (loss)
of equity investments are also excluded from the performance indicator known as 'management reporting EBIT'.
Segment reporting therefore includes a reconciliation of externally reported consolidated earnings before interest
and tax (EBIT) including KION acquisition items and non-recurring items with the adjusted EBIT for the segments
('management reporting EBIT').
Segment reports are prepared in accordance with the same accounting policies as the consolidated financial
statements, as described in note [ 7 ]. Intra-group transactions are generally conducted on an arm's length basis.
The following tables show information for the KION Group's operating segments for 2011 and 2010:
Segment report
LMH
STILL
Other
Consolidation/
Reconciliation
Total
€ thousand
2011
Revenue from external customers
Intersegment revenue
Total revenue
2,778,835
76,761
2,855,596
1,549,616
116,313
1,665,929
39,944
183,365
223,309
− 4,368,395
−
-376,439
-376,439 4,368,395
Earnings before taxes
250,444
-29,629
-192,493
-87,207
-58,885
Financial income
Financial expense
= Financial result
EBIT
+ Non-recurring items
+ KION acquisition items
= Adjusted EBIT
./. Other financial result
./. Equity result*
46,351
-57,142
-10,791
13,249
-39,345
-26,096
32,371
-267,529
-235,158
261,235
-3,533
-4,830
26,468
97,308
7,960
282,873
101,735
1,027
5,533
375
1,557
42,665
23,005
1,537
67,207
83,885
−
-18,307
18,307
−
73,664
-345,709
-272,045
-87,207
213,160
−
−
115,483
35,965
-87,207
364,608
-83,401
−
1,886
7,090
Management Reported EBIT
276,313
99,803
-16,678
-3,806
355,632
Carrying amount of
equity investments
Capital expenditures**
Depreciation**
Order intake
Number of employees***
31,898
75,952
98,400
3,107,037
13,838
4,647
43,270
46,315
1,752,394
7,328
−
13,783
14,822
223,153
696
* Already adjusted by non-recurring items
** Excluding leased assets
***Number of employees in full-time equivalents as at 31 December
−
−
−
36,545
133,005
159,537
-400,728 4,681,856
21,862
−
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 70 of 81
Segment report
LMH
STILL
Other
Consolidation/
Reconciliation
Total
€ thousand
2010
Revenue from external customers
Intersegment revenue
Total revenue
2,191,490
62,399
2,253,889
1,333,489
86,899
1,420,388
9,495
150,373
159,868
− 3,534,474
-299,671
−
-299,671 3,534,474
Earnings before taxes
69,831
-44,664
-230,230
-26,357
-231,420
Financial income
Financial expense
= Financial result
EBIT
+ Non-recurring items
+ KION acquisition items
= Adjusted EBIT
./. Other financial result
./. Equity result
42,572
-59,227
-16,655
86,486
26,922
25,712
139,120
1,197
3,838
13,045
-38,424
-25,379
47,378
-243,518
-196,140
-14,646
-13,236
-27,882
88,349
-354,405
-266,056
-19,285
-34,090
1,525
34,636
36,794
2,763
20,272
558
-269
11,979
556
-21,555
-3,305
−
−
−
75,695
29,031
1,525
139,362
3,210
−
1,660
3,569
Management Reported EBIT
134,085
19,983
-18,250
-1,685
134,133
Carrying amount of
equity investments
Capital expenditures*
Depreciation*
Order intake
Number of employees**
33,433
70,477
103,596
2,509,672
12,240
4,408
34,150
43,844
1,518,378
7,235
−
18,835
14,597
159,868
493
* Excluding leased assets
**Number of employees in full-time equivalents as at 31 December
The breakdown of segment revenue by region is as follows
Segment revenue broken down by customer location
−
−
−
37,841
123,462
162,037
-328,238 3,859,680
19,968
−
€ thousand
Germany
EU excl. Germany
Rest of Europe
America
Asia
Rest of world
Total segment revenue
2011
2010
1,174,777
2,114,588
203,530
280,611
434,814
160,075
899,817
1,820,151
151,807
232,673
301,879
128,147
4,368,395
3,534,474
There are no relationships with individual customers that generate revenue deemed to be significant as a propor-
tion of total consolidated revenue.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 71 of 81
Financial income and expenses including all interest income and expenses are described in notes
[ 12 ] and [ 13 ].
The non-recurring items mainly comprise severance payments, social plan costs, costs relating to the planned
transfers of production and consultancy costs. Also included for 2011 are the remeasurement of purchase price
obligations and the remeasurement of an existing equity investment in an entity, over which a controlling influence
can be exerted following the acquisition of additional shares. The KION acquisition items comprise a net write-
down on the fair value adjustments identified as part of the purchase price allocation (PPA).
Segment capital expenditures include additions to intangible assets and property, plant and equipment, but not
additions to leased assets. A separate segment report for leased assets is presented in note [ 17 ].
Depreciation/amortisation relates to intangible assets with finite useful lives and property, plant and equipment.
Capital expenditures broken down by company location (excl. leased assets)
€ thousand
Germany
EU excl. Germany
Rest of Europe
America
Asia
Rest of world
Total capital expenditures
2011
2010
92,340
27,796
233
5,849
5,378
1,409
88,875
25,688
187
4,364
3,870
478
133,005
123,462
The regional breakdown of non-current assets excluding financial assets, financial instruments, deferred tax
assets and post-employment benefits is as follows:
Non-current assets broken down by company location
€ thousand
Germany
EU excl. Germany
Rest of Europe
America
Asia
Rest of world
Total non-current assets
2011
2010
2,703,550
665,590
24,492
34,672
116,428
48,671
2,711,755
661,375
19,992
30,609
88,213
49,132
3,593,403
3,561,076
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 72 of 81
Supplementary disclosures based on future segment structure
In 2011 the KION Group put in place the organisational structures to manage and report the Group's financial
services (FS) activities separately in 2012.
To this end, separate financial services companies have been established in the key markets of France, Germa-
ny, Italy, Spain and the United Kingdom. Further companies will be gradually introduced in countries with a high
proportion of finance and leasing business. In countries with lower levels of FS activity, sales and service compa-
nies will continue to engage in financial services operations as well.
During the course of 2011 the Group also developed a reporting model for the discrete reporting and manage-
ment of financial services business. Future reporting in the KION Group will be based on this model. The sections
below include voluntary additional disclosures based on the new reporting model and the associated revised
breakdown of business activities in order to give prominence to the greater importance of financial services activi-
ties in the KION Group and to the future segment structure. These voluntary supplementary disclosures for the
reporting year follow the principles required by IFRS 8.
Financial services activities will form a separate Financial Services segment alongside the LMH, STILL and Other
brand segments described above:
Financial Services (FS)
The purpose of the FS segment is to act as an internal partner for the brand segments, providing finance solu-
tions that promote sales. The FS activities include internal financing of short-term rental fleets, the financing of
long-term leasing business for KION Group customers, and risk management. When long-term leasing business
is being conducted, FS operates as a contractual partner to external customers and provides the necessary
funding in conjunction with external financial partners. When short-term business is being transacted, FS's con-
tractual relationship is with the LMH and STILL brand segments or with the external financial partners. Besides
management of residual-value risk, risk management also includes the credit risk management system, which
was refined as part of the work involved in transferring financial services activities to a separate segment. The key
performance indicator used to manage the FS segment is earnings before tax (EBT).
The underlying business management model into which FS has been integrated views FS as an internal finance
partner that operates as the interface between the brand segments and external finance providers or the capital
markets. LMH, STILL and FS are therefore reported as independent operating subgroups, and transactions
between these segments are presented in the same way as business conducted on an arm's-length basis. The
regular (interest) margin income that FS generates from its business activities reflects prevailing market condi-
tions. Surpluses from leasing that exceed this interest rate are reflected in the producer margin within the operat-
ing profit generated by the LMH and STILL brand segments.
Segment reports are generally prepared in accordance with the same accounting policies as the consolidated
financial statements, as described in note [ 7 ]. Contrary to these policies, however, the LMH and STILL brands'
intersegment sales to FS are always treated as revenue for the brand segments.
Assets and/or liabilities associated with the long-term leasing business are assigned to the FS segment. The
expenses in the FS segment's income statement therefore reflect, in particular, depreciation/amortisation on the
assets, interest expense relating to the funding of these assets as well as operating expenses. These expenses
are offset under income by the finance instalments paid by the customer (lease payments excluding service
portion).
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 73 of 81
Whereas the main feature of long-term leasing business is the provision of a financial service for the external
lessee, the focus in short-term leasing is on the service function. External customers are offered flexible arrange-
ments involving rental trucks from a rental pool – including associated services – for short-term use. Unlike the
situation in long-term leasing, financial performance in the short-term business is largely dependent on the
achieved level of utilisation of the rental fleet, management of which lies entirely within the responsibility of the
brand segments. Given this structure, the assets associated with the short-term business remain on the balance
sheets of the brand segments and the related income and expenses remain on the brand segments' income
statements.
In an indirect leasing arrangement ('sale with risk'), which forms part of the long-term leasing business, the other-
wise typical financing function of the FS segment as a lender for the leasing transaction no longer applies. As a
result of the sale of the leased asset to the external finance provider in such transactions, the brand segments
view the transactions in the same way as a sale to an end-user. Consequently, these transactions and all the
revenue that they generate are recognised in the LMH and STILL brand segments.
The breakdown of segment information for 2011 and 2010 is as follows:
Segment Report - Voluntary Additional Information
LMH
STILL
FS
Other
Consolidation/
Reconciliation
Total
€ thousand
2011
Revenue from external customers
Intersegment revenue
Total revenue
2,601,587 1,461,968
204,836
2,853,514 1,666,804
251,927
264,896
214,864
479,760
39,944
183,365
223,309
Earnings before taxes
246,450
-30,586
6,160
-191,729
Financial income
Financial expense
= Financial result
EBIT
+ Non-recurring items
+ KION acquisition items
29,380
-40,651
-11,271
5,804
-31,302
-25,498
45,360
-41,901
3,459
32,371
-267,529
-235,158
257,721
-5,088
2,701
-4,830
26,468
97,308
7,960
−
−
43,429
23,005
1,537
= Adjusted EBIT
279,359
100,180
2,701
67,971
./. Other financial result
./. Equity result
1,027
5,533
375
1,557
−
−
83,885
−
Management Reported EBIT
272,799
98,248
2,701
-15,914
4,425,263 1,983,278
1,495,301 1,064,798
840,005
708,616
798,845 5,043,405
-89,180
-85,603
-39,251
35,674
-3,577
− 4,368,395
−
-854,992
-854,992 4,368,3950
-58,885 0
73,664
-345,709
-272,045 0
213,1600
115,483
35,9650
364,6080
1,886
7,0900
355,6320
-1,890,876 6,066,286
-1,848,476 6,553,873
-83,401
−
-85,603
-2,202
−
−
31,898
75,952
167,602
4,647
43,270
95,111
−
−
71,020
−
13,783
16,319
−
−
-21,060
36,545
133,005
328,992
Segment assets
Segment liabilities
Carrying amount of
equity investments
Capital expenditures*
Depreciation**
* Excluding leased assets
** Including leased assets
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 74 of 81
Segment Report - Voluntary Additional Information
LMH
STILL
FS
Other
Consolidation/
Reconciliation
Total
€ thousand
2010
Revenue from external customers
Intersegment revenue
Total revenue
2,042,427 1,256,836
151,742
2,247,295 1,408,578
204,868
225,716
127,874
353,590
9,495
150,373
159,868
Earnings before taxes
66,886
-46,823
6,230
-258,567
Financial income
Financial expense
= Financial result
EBIT
+ Non-recurring items
+ KION acquisition items
26,209
-43,485
-17,276
3,878
-29,483
-25,605
43,657
-39,588
4,069
47,378
-271,400
-224,022
84,162
-21,218
2,161
-34,545
26,922
25,712
36,794
2,763
−
−
11,979
556
= Adjusted EBIT
136,796
18,339
2,161
-22,010
./. Other financial result
./. Equity result
1,197
3,838
558
-269
−
−
-3,305
−
Management Reported EBIT
131,761
18,050
2,161
-18,705
4,086,051 1,951,953
968,884
1,404,059
774,824
632,090
733,594 4,700,799
854
4,076
-32,773
29,551
-3,222
− 3,534,474
-634,857
−
-634,857 3,534,4740
-231,420 0
88,349
-354,405
-266,056 0
34,6360
75,695
29,0310
139,3620
1,660
3,5690
134,1330
-1,685,979 5,758,939
-1,648,475 6,158,861
3,210
−
4,076
−
−
866
33,433
70,477
176,363
4,408
34,150
99,196
−
−
64,175
−
18,835
16,956
−
−
-18,096
37,841
123,462
338,594
Segment assets
Segment liabilities
Carrying amount of
equity investments
Capital expenditures*
Depreciation**
* Excluding leased assets
** Including leased assets
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 75 of 81
[ 37 ] Employees
The KION Group employed an average of 20,797 people in the reporting year (2010: 19,764). The number of
employees (including part-time employees expressed as a proportion of full-time equivalents) is broken down by
region as follows:
Employees (average)
Germany
France
UK
Italy
Rest of Europe
Asia
Rest of world
Total employees
2011
2010
8,145
3,196
1,423
1,030
3,194
2,816
993
7,785
3,172
1,467
1,044
3,073
2,319
904
20,797
19,764
The first-time consolidations of Cailotto Carrelli S.p.A., Verona, Italy, and Linde Sterling Ltd., Basingstoke, United
Kingdom, increased the number of employees by 46 and 282, respectively. In addition, a total of 131 employees
were taken on from Voltas Limited in India and 147 members of staff were acquired from Russia-based dealer
Liftec.
[ 38 ] Related party disclosures
In addition to the subsidiaries included in the consolidated financial statements, the KION Group has direct or
indirect business relationships with a number of unconsolidated subsidiaries, joint ventures and associates in the
course of its ordinary business activities. Transactions with these companies are conducted on an arm's length
basis. The related companies that are controlled by the KION Group or that are able to exercise significant influ-
ence over the KION Group are included in the list of shareholdings in the annex to these notes and in the follow-
ing table:
Related parties
Superlift Holding S.à r.l., Luxembourg
Kohlberg Kravis Roberts & Co. L.P., New York, USA
Goldman, Sachs & Co., New York, USA
Superlift Funding S.à r.l., Luxembourg
Parent company
Entity with significant influence
Entity with significant influence
Affiliated company
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 76 of 81
Superlift Funding S.à r.l., Luxembourg
Under a supplementary loan agreement dated 23 September 2009, investment funds advised by Kohlberg Kravis
Roberts & Co. L.P. ('KKR') and Goldman Sachs Capital Partners extended the SFA to include an additional loan
of €100,000 thousand to be paid via Superlift Fundi ng S.à r.l., Luxembourg. The purpose of the supplementary
loan was to further strengthen the operational and strategic options for the KION Group. Both the loan amount
and the associated interest are repayable as a bullet payment on maturity (payment in kind, 'PIK').
Shareholder loan agreement
On 27 December 2006, KION Holding 1 GmbH (then Neggio Holding 1 GmbH) entered into a shareholder loan
agreement with Superlift Holding S.à r.l., Luxembourg, for €500,000 thousand of principal. The maturit y date for
the loan is 31 December 2021. Both the unsecured loan principal and the associated interest are repayable as a
bullet payment on maturity (payment in kind, 'PIK'). Since 1 September 2007, the loan has been subject to inter-
est at a rate of 5.5 per cent per annum. The carrying amount of the loan including accrued interest was
€643,132 thousand as at 31 December 2011 (31 Decemb er 2010: €615,250 thousand).
Advisory agreement
On 8 May 2007, KION Group GmbH, Kohlberg, Kravis Roberts & Co. L.P. ('KKR') and Goldman, Sachs & Co.
entered into an advisory agreement under the terms of which KKR and Goldman Sachs are to perform advisory
services for the KION Group. These advisory services relate, in particular, to financial and strategic issues. The
and
annual advisory fee payable to KKR and Goldman, Sachs & Co. is €4,624 thousand (2010: €4,609 thousand)
it has been recognised as an expense.
As at the reporting date, the receivables due from related parties were as follows:
Receivables from related parties
€ thousand
Non-consolidated subsidiaries
Associates
Joint ventures
Other related parties
Total receivables from related parties
As at the reporting date, liabilities to related parties were as follows:
Liabilities to related parties
€ thousand
Non-consolidated subsidiaries
Associates
Joint ventures
Other related parties
Total liabilities to related parties
2011
2010
4,403
17,262
2,964
4,825
29,454
7,059
22,249
2,880
7,545
39,733
2011
2010
4,188
39,955
4,719
769,255
818,117
3,771
41,537
3,490
730,686
779,484
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 77 of 81
[ 39 ] KION management partnership plan ('MPP')
Arrangements for managers to invest in the Company have been in place since 2007. These arrangements are
governed by the 'Shareholders' and co-investment agreement on the implementation of the management partner-
ship plan for the KION Group' (the co-invest agreement) dated 14 June 2007, entered into by Superlift Holding
S.à r.l., KION Holding 1 GmbH and KION Management Beteiligungs GmbH & Co. KG. The managers who have
joined the management partnership plan are also parties to the co-invest agreement.
KION Management Beteiligungs GmbH & Co. KG holds an equity interest of 14.61 per cent in KION Holding 1
GmbH. In total, the Executive Board holds an interest of €3,400 thousand in the limited partner capita l of KION
Management Beteiligungs GmbH & Co. KG, which equates to an indirect interest of 3.31 per cent in the share
capital of KION Holding 1 GmbH. In addition to the KION Group's Executive Board, around 300 executives around
the world have purchased shares in KION Management Beteiligungs GmbH & Co. KG. The shares are sold at
their fair value and shareholdings are divided into virtual 'A', 'B', and 'C' shares. Different terms and conditions
concerning payment of the purchase price and rights to purchase attach to these virtual shares. The purchase
price for 'A' shares became payable when participants joined the programme, while KION Management Be-
teiligungs GmbH granted participants interest-bearing loans for the purchase price of the 'B' and 'C' shares. The
vesting conditions and resulting purchase rights for 'B' shares accrue to participants in equal, annual tranches
over a period of five years. By contrast, managers become eligible to purchase 'C' shares if the targets for reve-
nue, EBITA and operating cash flow set in the business plan are achieved over a five-year period or predefined
target returns are achieved if the Group is sold or there is a change of control.
In 2010, the performance-related vesting conditions for the 'C' shares relating to the 2009–2012 bonus period
were adjusted to take into account the revised long-term KION business plan, which is in turn based on the
amended loan terms in the supplementary agreement to the SFA dated 23 September 2009. The change in
vesting conditions affects a total of 1,034 shares with an expected exercise price of €16 thousand eac h. The
agreement had one year remaining as at 31 December 2011. The total fair value of this adjustment was € 1,044
thousand. The fair value of the individual purchase rights amounted to €1 thousand. The number of purc hase
options outstanding as at the reporting date remained unchanged at 1,034, of which 584 (31 December 2010:
292) were exercisable.
The fair value of the new vesting conditions was calculated using the Black-Scholes model based on a share
price of €11 thousand. The risk-free interest rate on the reference date for the calculation was 1.6 per cent. The
expected holding period for the options is three years. The expected volatility is 32 per cent and it was calculated
by taking the implied volatility of a peer group. Expected dividends were not taken into account.
Expenses of €295 thousand were incurred by the mana gement partnership plan in 2011 (2010: €590 thousan d).
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 78 of 81
[ 40 ] Remuneration of key management
Executive Board
Gordon Riske, Chief Executive Officer (CEO), is responsible, among other things, for the strategic management
of the Group, communications, governance and compliance, and the Group's Asian business.
Harald Pinger, Chief Financial Officer (CFO), is responsible, among other things, for finance including financial
services, IT activities, business development, mergers & acquisitions, and the Americas region.
Otmar Hauck (member of the Executive Board of KION GROUP GmbH, Wiesbaden), Chief Operating Officer
(COO), is responsible for quality and central operations (operational excellence/production control), purchasing,
logistics, health & safety and environmental issues in the Group.
Klaus Hofer has been a member of the Executive Board since 1 October 2011 and, as Chief Human Resources
Officer (CHRO), is responsible for human resources, legal affairs and internal audit, which previously formed part
of the CFO's responsibilities.
The remuneration paid to the Executive Board comprises a fixed salary and non-cash benefits, pension entitle-
ments and performance-related components. The variable performance-related components are paid each year
on the basis of the Group's performance. The pension entitlements consist of retirement, invalidity and surviving
dependants' benefits.
The total remuneration paid to the members of the Executive Board in 2011 amounted to €5,209 thousand (2010:
thou-
€5,049 thousand). This consisted of short-term remu neration amounting to €4,755 thousand (2010: €4,550
sand), post-employment benefits totalling €386 thou sand (2010: €366 thousand) and share-based payments of
€68 thousand (2010: €133 thousand). The current ser
vice cost resulting from pension provisions for the Executive
Board is reported under the retirement benefit obligation. No loans or advances were made to members of the
Executive Board in 2011 (2010: loans and advances totalling €151 thousand).
The total remuneration paid to former members of the Executive Board in 2011 amounted to €162 thousand
(2010: €0). Provisions for pension obligations to f ormer members of the Executive Board or their surviving de-
pendants amounting to €2,819 thousand (2010: €2,953
thousand) were recognised in accordance with IAS 19.
Supervisory Board
The total remuneration paid to the members of the Supervisory Board for the performance of their duties at the
).
parent company and subsidiaries in 2011 amounted to €1,071 thousand including VAT (2010: €822 thousand
There were no loans or advances to members of the Supervisory Board in 2011. Furthermore, the members of
the Supervisory Board did not receive any remuneration or benefits for services provided as individuals, such as
consulting or brokerage activities.
In addition to their remuneration as members of the Supervisory Board, the employee representatives also re-
ceive remuneration as employees of the KION Group that is unrelated to their work on the Supervisory Board.
Remuneration paid to employee representatives for their work as employees totalled €514 thousand in 20 11
(2010: €539 thousand).
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 79 of 81
[ 41 ] Members of the Executive Board and Supervisory Board
Executive Board
Gordon Riske
CEO
Klaus Hofer
(since 1 October 2011)
CHRO
Harald Pinger
CFO
Supervisory Board
Dr John Feldmann
(Chairman of the Supervisory Board since 28 September 2011)
Member of the Supervisory Board and member of the Presiding Committee of the Supervisory Board of Bilfinger
Berger SE, Mannheim
Manfred Wennemer
(Chairman of the Supervisory Board until 28 June 2011)
Former Chief Executive Officer, Continental AG, Hannover
Joachim Hartig1
Deputy Chairman of the Supervisory Board
Chairman of the Plant I & II Works Council, Linde Material Handling GmbH, Aschaffenburg
Dr Alexander Dibelius
Chief Executive Officer of Goldman Sachs AG, Frankfurt am Main
Denis Heljic1
Deputy Chairman of the Works Council of STILL GmbH, Dortmund plant
Service Technician at STILL, Dortmund plant
Dr Martin Hintze
Managing Director of Goldman Sachs Capital Partners, London
Johannes P. Huth
(Chairman of the Supervisory Board from 29 June to 28 September 2011)
Member of Kohlberg Kravis Roberts & Co. L.P., New York
Thilo Kämmerer1
Trade Union Secretary on the Executive Board of IG Metall, Frankfurt am Main
Dr Roland Köstler1
Head of Business Law at Hans-Böckler-Stiftung, Düsseldorf
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 80 of 81
Peter Kolb1
Head of Facility Management, Linde Material Handling GmbH, Aschaffenburg
Kay Pietsch1
Chairman of the KION Group Works Council and Chairman of the Works Council of STILL GmbH, Hamburg
Silke Scheiber
Director of Kohlberg Kravis Roberts & Co. L.P., New York
Dr Michael Süß
Member of the Managing Board and CEO of the Energy Sector of Siemens AG, Munich
Philip Wack
(from 29 June to 27 September 2011)
Associate of Kohlberg Kravis Roberts & Co. L.P., New York
1 Employee representatives
[ 42 ] Auditors' fees
The fees recognised as an expense and paid to the auditors of the consolidated financial statements in 2011
the audit of the financial statements, €892 thousa nd
amounted to €970 thousand (2010: €800 thousand) for
ncy
(2010: €88 thousand) for other assurance services,
services and €63 thousand (2010: €20 thousand) for other services.
€206 thousand (2010: €32 thousand) for tax consulta
[ 43 ] Events after the reporting date
In the period after the end of the 2011 financial year up to 15 March 2012 there were no events or developments
that would have led to a material change in the recognition or measurement of the individual assets and liabilities
as at 31 December 2011 or that it would be necessary to disclose.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2011
Page 81 of 81
[ 44 ]
Information on preparation and approval
The Executive Board of KION Holding 1 GmbH prepared the consolidated financial statements on 15 March 2012
and approved them for forwarding to the Supervisory Board. The Supervisory Board has the task of examining
and deciding whether to approve the consolidated financial statements.
Wiesbaden, 15 March 2012
The Executive Board
Gordon Riske
Klaus Hofer
Harald Pinger
KION Holding 1 GmbH
List of shareholdings for the year ended 31 December 2011
List of shareholdings as of 31 December 2011
according to section 313 para. 2 No. 1-4 Commercial Code (HGB)
No.
Name
Registered office
Country
Parent
company
Holding
in (%)
Equity,
Local
GAAP,
TEUR
Earnings,
Local GAAP,
TEUR Note
1 KION Holding 1 GmbH
Wiesbaden
Germany
200,816
-29,174
Annex to the notes
Consolidated affiliated companies
Domestic
2 BlackForxx GmbH
3 Eisenwerk Weilbach GmbH
4
Fahrzeugbau GmbH Geisa
5 KION GROUP GmbH
6 KION Holding 2 GmbH
7 KION Information Management Services GmbH
8 KION Warehouse Systems GmbH
9 Klaus Pahlke GmbH & Co. Fördertechnik KG
10
11
12
13
14
Linde Material Handling GmbH
LMH Immobilien GmbH & Co. KG
LMH Immobilien Holding GmbH & Co. KG
LMH Immobilien Holding Verwaltungs-GmbH
LMH Immobilien Verwaltungs-GmbH
Stuhr
Wiesbaden
Geisa
Wiesbaden
Wiesbaden
Wiesbaden
Reutlingen
Haan
Aschaffenburg
Aschaffenburg
Aschaffenburg
Aschaffenburg
Aschaffenburg
Germany
Germany
Germany
Germany
Germany
Germany
Germany
Germany
Germany
Germany
Germany
Germany
Germany
15 OM Deutschland GmbH
Neuhausen a.d. Fildern Germany
16 Schrader Industriefahrzeuge GmbH & Co. KG
17 STILL GmbH
18 URBAN-TRANSPORTE GmbH
Foreign
19
Linde Material Handling Pty. Ltd.
20 STILL N.V.
21 KION South America Fabricação de Equipamentos para
Armazenagem Ltda.
22
Linde (China) Forklift Truck Corporation Ltd.
23 KION Baoli (Jiangsu) Forklift Co., Ltd.
24 STILL DANMARK A/S
25 BARTHELEMY MANUTENTION SAS
26 Bastide Manutention SAS
27 Bretagne Manutention S.A.
28
29
FENWICK-LINDE S.A.R.L.
LOIRE OCEAN MANUTENTION SAS
30 Manuchar S.A.
31 OM PIMESPO FRANCE S.A.S.
32 SAS Société Angoumoisine de Manutention - SAMA
33 MANUSOM SAS
34 SM Rental SAS
35 STILL SAS
36 KION France SERVICES SAS
37
38
39
40
41
42
43
44
45
46
47
48
Lansing Linde Severnside Ltd.
Linde Castle Ltd.
Linde Heavy Truck Division Ltd.
Linde Holdings Ltd.
Linde Hydraulics Ltd.
Linde Jewsbury’s Ltd.
Linde Sterling Ltd.
Linde Material Handling (UK) Ltd.
Linde Material Handling East Ltd.
Linde Material Handling Scotland Ltd.
Linde Material Handling South East Ltd.
Linde Severnside Ltd.
49 OM PIMESPO (UK) Ltd.
50 STILL Materials Handling Ltd.
51 Superlift UK Ltd.
52
53
Trifik Services Ltd.
Linde Material Handling Hong Kong Ltd.
54 KION ASIA (HONG KONG) Ltd.
55 Voltas Material Handling Private Limited
56
Linde Material Handling (Ireland) Ltd.
57 COMMERCIALE CARRELLI S.r.l.
58
Linde Material Handling Italia S.p.A.
59 Cailotto Carrelli S.p.A.
60 OM Carrelli Elevatori S.p.A.
61 STILL ITALIA S.p.A.
62 KION Rental Services S.p.A. (formerly: STILL NOLO S.r.l.)
63
Linde Vilicari Hrvatska d.o.o.
Essen
Hamburg
Unterschleißheim
Huntingwood
Wijnegem
Rio de Janeiro
Xiamen
Jiangjiang
Kolding
Vitrolles
Toulouse
Pacé
Elancourt
St. Herblain
Gond Pontouvre
Mitry Mory
Champniers
Rivery
Germany
Germany
Germany
Australia
Belgium
Brazil
China
China
Denmark
France
France
France
France
France
France
France
France
France
Roissy Charles de Gaulle France
Marne la Vallée
Elancourt
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Abingdon
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Leyland
Basingstoke
Basingstoke
Kwai Chung
Kwai Chung
Mumbai
Walkinstown
Lainate
Buguggiate
Verona
Lainate
Lainate
Milan
Samobor
France
France
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
Hong-Kong
Hong-Kong
India
Ireland
Italy
Italy
Italy
Italy
Italy
Italy
Croatia
17
10
17
6
1
5
17
10
5
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
10 & 12
99.64%
10
10
10
60
10
10
10
94.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
10
100.00%
17 & 65
17
100.00%
100.00%
10
54
17
28
28
28
100.00%
97.34%
100.00%
90.41%
100.00%
54.27%
757
288
7,329
276,413
848,331
129
22,670
9,675
281,522
29,982
180
27
28
-1,165
2,322
206,250
3,181
39,380
7,262
22,790
110,241
26,932
4,470
3,186
2,097
7,389
36 & 10
100.00%
181,470
28
28
60
35
35
28
36
10
48
88.98%
80.00%
100.00%
100.00%
50.13%
100.00%
100.00%
100.00%
100.00%
40 & 108
100.00%
44
51
44
40
100.00%
100.00%
100.00%
100.00%
40 & 129
100.00%
40
100.00%
40 & 52
100.00%
44
44
44
60
51
10
40
10
10
78
40
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
66.00%
100.00%
61 & 62
100.00%
10
58
100.00%
100.00%
10 & 61
100.00%
17
61
10
100.00%
100.00%
100.00%
4,305
3,576
-257
13,688
482
1,129
-7,573
110,417
4,687
6,191
57,216
237,053
6,071
6,864
7,307
58,646
-1,410
6,608
2,703
7,073
-198
9,441
53,936
0
2,426
28,571
1,900
5,836
531
16,537
1,647
67,408
8,895
1,127
168
0 [B]
0 [A]
0 [B]
-56,235
0 [F]
0 [E]
0 [B]
1,715
-61,438
1,013
67
1
1
-211
1,700
0 [A]
0 [A]
3,076
1,848
5,328
35,163
-2,114
38
1,150
429
3,821
29,405
1,361
1,774
31
925
195
516
-29,396
88
0 [R]
1,470
-19,866
2,225
-21
2,649
651
8,931
2,345
1,348
1,159
1,143
1,120
-1,033
-14,036
0
457
-313
1,048 [3]
-140
-119
-271
-541 [3]
-23,481 [1]
-150
79
20
KION Holding 1 GmbH
List of shareholdings for the year ended 31 December 2011
No.
Name
Registered office
Country
Annex to the notes
Parent
company
Holding
in (%)
Equity,
Local
GAAP,
TEUR
Earnings,
Local GAAP,
TEUR Note
Luxembourg
Luxembourg
Hendrik Ido Ambacht
Netherlands
Consolidated affiliated companies
Foreign
64 KION Finance S.A.
65 STILL Intern Transport B.V.
66
Linde Fördertechnik GmbH
67 STILL Ges.m.b.H.
68 AUSTRO OM PIMESPO Fördertechnik GmbH
69
Linde Material Handling Polska Sp. z o.o.
70 STILL POLSKA Spólka z o.o.
71 OOO "STILL Forklifttrucks"
72 OOO "Linde Material Handling Rus"
73 STILL MOTOSTIVUITOARE S.R.L.
74
Linde Material Handling AB
75 STILL Sverige AB
76
Linde Lansing Fördertechnik AG
77 STILL AG
78
79
Linde Material Handling Asia Pacific Pte. Ltd.
Linde Material Handling Slovenska republika s.r.o.
80 STILL SR, spol. s r.o.
81
82
83
84
85
Linde Vilicar d.o.o.
IBER-MICAR S.L.
Islavista Spain S.A.U.
Linde Holding de Inversiones, SRL
Linde Material Handling Ibérica, S.A.U.
86 STILL, S.A.
87
88
89
Linde Material Handling (Pty) Ltd.
Linde Material Handling Ceská republika s r.o.
Linde Pohony s r.o.
90 STILL CR spol. s r.o.
91
Linde Magyarország Anyagmozgatási Kft. (formerly: Linde
Fördertechnik Ungarn GmbH)
92 STILL Kft.
93
94
Linde Hydraulics Corporation
Linde Material Handling North America Corporation
Non-consolidated affiliated companies
Domestic
95 KION Financial Services GmbH
96 Klaus Pahlke Betriebsführungs-GmbH
97 PAGEMA Miet- und Gebrauchtstapler GmbH
98
proplan Transport- und Lagersysteme GmbH
99 Schrader Industriefahrzeuge Verwaltung GmbH
100 STILL Financial Services GmbH
Foreign
101
Lansing Bagnall (Aust.) Pty. Ltd.
102 Urban Transporte spol. s.r.o.
103 Baoli Material Handling Ceská republika s r.o.
104 SCI Champ Lagarde
Linz
Wiener Neudorf
Linz
Warschau
Gadki
Moskau
Moskau
Giurgiu County
Örebro
Stockamöllan
Dietlikon
Otelfingen
Singapore
Trencin
Nitra
Celje
Gava
Barcelona
Pallejá
Pallejá
Barcelona
Linbro Park
Prag
Ceský Krumlov
Prag
Dunaharaszti
Környe
Canfield
Summerville
Wiesbaden
Haan
Haan
Aschaffenburg
Essen
Hamburg
Huntingwood
Moravany / Brna
Teplice
Elancourt
105
FENWICK FINANCIAL SERVICES SAS (formerly: OTHEA SAS)
Elancourt
106 STILL Location Services SAS
107 URBAN LOGISTIQUE SAS
108 Castle Lift Trucks Ltd.
109 Claymore Fork Truck Services Ltd.
110
111
Fork Truck Rentals Ltd.
Fork Truck Training Ltd.
112 HFT Lift Trucks (South West) Ltd.
113
114
115
116
117
118
119
120
121
122
123
Lansing Bagnall Ltd.
Lansing Linde Castle Ltd.
Lansing Linde Creighton Ltd.
Lansing Linde Jewsbury’s Ltd.
Lansing Linde Ltd.
Lansing Linde Scotland Ltd.
Lansing Linde South East Ltd.
Lansing Linde Sterling Ltd.
Lansing Linde Trifik Ltd.
Leader Lift Trucks Ltd.
Linde Trifik Limited
124 M.D.A. (GB) Ltd.
125 Regentruck Ltd.
126 Severnside Mechanical Handling Group Ltd.
Marne la Vallée
Elancourt
Newton Aycliffe
East Kilbride
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Basingstoke
East Kilbride
Basingstoke
Liverpool
Basingstoke
Basingstoke
127 Stephensons Lift Trucks Ltd.
Newton Aycliffe
Austria
Austria
Austria
Poland
Poland
Russia
Russia
Romania
Sweden
Sweden
Switzerland
Switzerland
Singapore
Slovakia
Slovakia
Slovenia
Spain
Spain
Spain
Spain
Spain
South Africa
Czech Republic
Czech Republic
Czech Republic
Hungary
Hungary
United States
United States
Germany
Germany
Germany
Germany
Germany
Germany
Australia
Czech Republic
Czech Republic
France
France
France
France
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
-
-
17
100.00%
10 & 68
100.00%
17
60
10
17
100.00%
100.00%
100.00%
100.00%
10 & 17
100.00%
10 & 3
100.00%
10 & 17
100.00%
10
17
10
17
10
100.00%
100.00%
100.00%
100.00%
100.00%
10 & 88
100.00%
17 & 90
100.00%
10
10
10
83
84
100.00%
100.00%
100.00%
100.00%
100.00%
83 & 60
100.00%
10
100.00%
10 & 17
100.00%
10
100.00%
10 & 17
10
100.00%
100.00%
17
10
10
100.00%
100.00%
100.00%
10
10
9
1
10
95
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
44 & 10
100.00%
18
88
28
36
36
18
40
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
122
100.00%
44
44
48
44
44
44
44
44
44
44
44
44
40
45
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
44 et al.
94.33%
44
48
38
100.00%
100.00%
100.00%
29
12,479
9,211
4,553
9,875
12,511
9,554
1,224
-
-549
30,350
2,015
12,030
7,189
20,571
2,052
1,775
1,353
2,559
19,877
30,999
1,462
12,322
18,845
8,407
31,956
4,726
1,300
1,310
8,047
-4,554
50
46
62
573
68
24
-2,143
1,353
-
103
0
-
1,018
1,210
0
347
0
-5
0
0
1
0
117
155
0
0
0
62
0
198
1
2,032
68
-2 [3], [4]
3,168
775
849
-383
3,769
1,202
90
- [3]
-42
6,542
-414
3,711
2,907
593
225
441
3 [1]
-21 [1]
-2,961
40 [1]
3,054
-4,003
865
2,167
7,216
401
429
36
1,388
-1,838
0 [3], [A]
1 [1]
0 [1], [L]
0 [F]
4 [1]
0 [3], [C]
0 [1]
369 [1]
- [3]
0 [1]
-3 [1]
- [3]
273 [1]
481 [2]
0 [1], [R]
0 [1], [R]
0 [1], [R]
0 [1], [R]
0 [1], [R]
0 [1], [R]
0 [1], [R]
0 [1], [R]
0 [1], [R]
0 [1], [R]
0 [1], [R]
0 [1], [R]
0 [1], [R]
0 [1], [R]
0 [1]
32 [1]
0 [1], [R]
0 [1], [R]
3 [1]
KION Holding 1 GmbH
List of shareholdings for the year ended 31 December 2011
No.
Name
Registered office
Country
Non-consolidated affiliated companies
Foreign
128 Urban Logistics (UK) Ltd.
129 Sterling Mechanical Handling Ltd.
130
Lancashire (Fork Truck) Services Ltd.
131 KION FINANCIAL SERVICES Ltd.
132 D.B.S. Brand Factors Ltd.
Basingstoke
Heswall
Basingstoke
Basingstoke
Basingstoke
U.K.
U.K.
U.K.
U.K.
U.K.
133 Stephensons Enterprise Fork Trucks Ltd.
134 Handling & Storage Equipment (Ireland) Ltd.
St. Helens, Merseyside U.K.
Walkinstown
Ireland
Lainate
Monza
Lainate
Almaty
Belgrad - Zemun
Belgrad
Ljubljana
Barcelona
Kyiv
Hagelstadt
Hamburg
Wiesbaden
Blankenhain
Kerpen-Sindorf
Bremen
Italy
Italy
Italy
Serbia
Serbia
Slovenia
Spain
Ukraine
Germany
Germany
Germany
Germany
Germany
Germany
Santiago de Chile
Basingstoke
Lima
Chile
U.K.
Peru
135 Carest SRL
136 Milano Carrelli Elevatori S.r.l.
137 URBAN LOGISTIKA S.R.L.
138
139
TOO "Linde Material Handling Kazakhstan"
Linde Viljuskari d.o.o.
140 STILL viljuškari d.o.o.
141 STILL VILICAR d.o.o.
142 KION Rental Services S.A.U.
143
TOV "Linde Material Handling Ukraine"
Associates (equity investments)
Domestic
144 Beutlhauser-Bassewitz GmbH & Co. KG
145 Hans Joachim Jetschke Industriefahrzeuge (GmbH & Co.) KG
146
Linde Leasing GmbH
147 MV Fördertechnik GmbH
148 Pelzer Fördertechnik GmbH
149 Willenbrock Fördertechnik Holding GmbH
Foreign
150
151
152
Linde High Lift Chile S.A.
Linde Creighton Ltd.
Linde High Lift Peru S.A.C.
Joint Ventures (equity investments)
Domestic
153 Eisengießerei Dinklage GmbH
Foreign
154
JULI Motorenwerk s.r.o.
Associates (accounted at cost)
Domestic
155 Carl Beutlhauser Verwaltungs GmbH
156
JETSCHKE GmbH
Annex to the notes
Parent
company
Holding
in (%)
Equity,
Local
GAAP,
TEUR
Earnings,
Local GAAP,
TEUR Note
18
40
43
51
43
43
56
60
60
18
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
66
100.00%
141
100.00%
17
83
100.00%
100.00%
10 & 3
100.00%
10
10
10
10
10
10
10
40
25.00%
21.00%
45.00%
25.00%
24.96%
23.00%
45.00%
49.00%
150
45.00%
95
-
0
-
0
0
0
11
21
42
-
86
99
-1,087
-
-
5,894
4,940
29,118
1,026
15,654
10,138
12,653
5,117
200
180 [2]
- [3]
0 [1], [R]
- [3]
0 [2], [R]
0 [2], [R]
0 [1], [R]
-1 [1], [R]
-9 [1], [R]
-1 [1], [R]
- [3]
15
-173 [1]
-91
- [3]
- [3]
1,527 [1]
2,840 [1]
2,021 [1]
115 [1]
-375 [1]
2,138 [1]
1,353
1,311 [1]
77
Kazakhstan
10 & 3
100.00%
Dinklage
Germany
17
50.00%
3,986
496 [1]
Moravany
Czech Republic
10 & 17
50.00%
21,812
4,975 [1]
Hagelstadt
Hamburg
157 Supralift Beteiligungs- und Kommunikationsgesellschaft mbH
Hofheim am Taunus
158 Supralift GmbH & Co. KG
Hofheim am Taunus
159
Trainingscenter für Sicherheit und Transport GmbH
160 Willenbrock Arbeitsbühnen GmbH & Co. KG
161 Willenbrock Fördertechnik Beteiligungs-GmbH
162 Willenbrock Fördertechnik Beteiligungs-GmbH
163 Willenbrock Fördertechnik GmbH & Co. KG
164 Willenbrock Fördertechnik GmbH & Co. KG
Foreign
165 WHO Real Estate OÜ
166
Labrosse Equipement S.A.
167 Normandie Manutention S.A.
168 Chadwick Materials Handling Ltd.
169 McLEMAN FORK LIFT SERVICES LTD.
170 EUROPA CARRELLI S.R.L.
171 WHO Real Estate UAB
172 Nordtruck AB
173 Carretillas Elevadoras Sudeste S.A.
174 CAYSA MANUTENCION S.L.
175 Motorové závody JULI CZ s r.o.
[1] Financial figures as of 31 December 2010
[2] Last provided financial statement
[3] New during 2011
Bremen
Bremen
Bremen
Hannover
Hannover
Bremen
Tallinn
Saint Peray
Le Grand Quevilly
Corsham
Basingstoke
Bastia Umbra
Vilnius
Örnsköldsvik
Murcia
Valladolid
Moravany
Germany
Germany
Germany
Germany
Germany
Germany
Germany
Germany
Germany
Germany
Estonia
France
France
U.K.
U.K.
Italy
Lithuania
Sweden
Spain
Spain
Czech Republic
144
25.00%
10
10
10
149
149
149
149
149
149
22.00%
50.00%
50.00%
23.00%
23.00%
23.00%
23.00%
23.00%
23.00%
149
23.00%
28
28
44
151
61
149
74
85
34.00%
34.00%
48.00%
49.00%
40.00%
23.00%
25.00%
38.53%
85 & 173
46.71%
10
50.00%
33
67
19
797
25
18
29
37
3,600
2,400
2
4,548
13,614
1,257
1,355
562
-6
632
3,626
162
7
2 [2]
5 [2]
1
39
0 [1], [D]
-252 [1]
-4 [1]
2 [1]
1,250 [1]
1,011 [1]
0 [1]
1,105 [2]
3,148 [2]
15 [1]
115 [1]
-14 [2]
-3 [1]
291 [2]
392 [1]
50 [1]
0 [2]
[4] Consolidated as required by IAS 27 in conjunction with SIC-12 (''Consolidation - special purpose entities'')
[A] Profit and loss transfer agreement with Linde Material Handling GmbH
[B] Profit and loss transfer agreement with STILL GmbH
[L] In liquidation
[R] Dormant company
[C] Profit and loss transfer agreement with KION Financial Services GmbH
[D] Profit and loss transfer agreement with Willenbrock Fördertechnik Holding GmbH
[E] Profit and loss transfer agreement with KION GROUP GmbH
[F] Profit and loss transfer agreement with KION Holding 1 GmbH
The following auditor’s report (Bestätigungsvermerk) has been issued in accordance with § 322 German
Commercial Code (Handelsgesetzbuch) in German language on the German version of the consolidated
financial statements of KION Holding 1 GmbH as of and for the fiscal year ended December 31, 2011 and the
group management report. The group management report is not included in this Offering Circular.
Independent Auditors’ Report
We have audited the consolidated financial statements prepared by the KION Holding 1 GmbH,
Wiesbaden, – comprising the consolidated income statement, the consolidated statement of
comprehensive income, the consolidated statement of financial position, the consolidated statement of
cash flows, the consolidated statement of changes in equity and the notes to the consolidated financial
statements – and the group management report for the business year from January 1 to December 31,
2011. The preparation of the consolidated financial statements and the group management report in
accordance with IFRS, as adopted by the European Union (EU), and the additional requirements of
German commercial law pursuant to § 315a Abs. 1 HGB („German Commercial Code“) are the
responsibility of the parent Company’s management. Our responsibility is to express an opinion on the
consolidated financial statements and on the group management report based on our audit.
We conducted our audit of the consolidated financial statements in accordance with § 317 HGB and
German generally accepted standards for the audit of financial statements promulgated by the Institut
der Wirtschaftsprüfer. Those standards require that we plan and perform the audit such that
misstatements materially affecting the presentation of the net assets, financial position and results of
operations in the consolidated financial statements in accordance with the applicable financial
reporting framework and in the group management report are detected with reasonable assurance.
Knowledge of the business activities and the economic and legal environment of the group and
expectations as to possible misstatements are taken into account in the determination of audit
procedures. The effectiveness of the accounting-related internal control system and the evidence
supporting the disclosures in the consolidated financial statements and the group management report
are examined primarily on a test basis within the framework of the audit. The audit includes assessing
the annual financial statements of those entities included in consolidation, the determination of entities
to be included in consolidation, the accounting and consolidation principles used and significant
estimates made by management, as well as evaluating the overall presentation of the consolidated
financial statements and the group management report. We believe that our audit provides a
reasonable basis for our opinion.
Our audit has not led to any reservations.
In our opinion, based on the findings of our audit, the consolidated financial statements of the KION
Holding 1 GmbH, Wiesbaden, comply with IFRS, as adopted by the EU, the additional requirements
of German commercial law pursuant to § 315a Abs. 1 HGB and give a true and fair view of the net
assets, financial position and results of operations of the group in accordance with these requirements.
The group management report is consistent with the consolidated financial statements and as a whole
provides a suitable view of the group’s position and suitably presents the opportunities and risks of
future development.
Frankfurt am Main, March 15, 2012
Deloitte & Touche GmbH
Wirtschaftsprüfungsgesellschaft
Signed: (Kompenhans)
Wirtschaftsprüfer
[German Public Auditor] [German Public Auditor]
Signed: (J. Löffler)
Wirtschaftsprüfer