KION HOLDING 1 GmbH
Wiesbaden
Group management report and
consolidated financial statements
as at
31 December 2012
This is a translation of the German
“KION Holding 1 GmbH
Konzernlagebericht und
Konzernabschluss zum 31.12.2012”
Sole authoritative and universally valid
version
language
document.
the German
is
KION HOLDING 1 GmbH
Wiesbaden
Group management report
as at
31 December 2012
KION Holding 1 GmbH
Group management report 2012
Page 3 of 69
CONTENTS
Highlights in 2012 .................................................................................................................................... 6
Company profile and strategy ................................................................................................................. 7
Group structure, organisation, management ....................................................................................... 7
Shareholders ................................................................................................................................... 7
Segment structure ........................................................................................................................... 9
Management and control ............................................................................................................... 10
Business model and market positioning ............................................................................................. 11
Business model .............................................................................................................................. 11
Market and influencing factors....................................................................................................... 13
Market position .............................................................................................................................. 14
Strategy of the KION Group .............................................................................................................. 15
Key strategic measures in 2012 .................................................................................................... 16
The segments and their products and services................................................................................. 18
Linde Material Handling (LMH) segment ....................................................................................... 18
STILL segment .............................................................................................................................. 19
Financial Services (FS) segment................................................................................................... 19
Other segment ............................................................................................................................... 20
Value-based management ................................................................................................................. 20
Economic environment .......................................................................................................................... 22
Macroeconomic conditions ................................................................................................................ 22
Sectoral conditions ............................................................................................................................ 22
Sales markets ................................................................................................................................ 22
Procurement markets .................................................................................................................... 24
Financial markets .............................................................................................................................. 24
Regulatory situation ........................................................................................................................... 25
Financial position and financial performance ........................................................................................ 26
Overall assessment of the economic situation .................................................................................. 26
Business situation and financial performance of the KION Group .................................................... 26
Key influencing factors .................................................................................................................. 26
Order intake ................................................................................................................................... 27
Revenue ........................................................................................................................................ 27
Earnings ......................................................................................................................................... 30
Business situation and financial performance of the LMH segment ................................................. 33
Revenue ........................................................................................................................................ 33
Earnings ......................................................................................................................................... 33
Business situation and financial performance of the STILL segment ............................................... 34
Revenue ........................................................................................................................................ 34
3
KION Holding 1 GmbH
Group management report 2012
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Earnings ......................................................................................................................................... 34
Business situation and financial performance of the Financial Services (FS) segment ................... 35
Business situation .......................................................................................................................... 35
Financial performance ................................................................................................................... 35
Business situation and financial performance of the Other segment ................................................ 35
Business situation .......................................................................................................................... 35
Financial performance ................................................................................................................... 35
Financial position ............................................................................................................................... 36
Principles and objectives of financial management ...................................................................... 36
Main financing activities in 2012 .................................................................................................... 36
Analysis of capital structure ........................................................................................................... 37
Analysis of capital expenditure ...................................................................................................... 40
Analysis of liquidity ........................................................................................................................ 41
Net assets .......................................................................................................................................... 43
Investor relations ............................................................................................................................... 44
Non-financial performance indicators .................................................................................................... 46
Human resources .............................................................................................................................. 46
HR strategy .................................................................................................................................... 46
Headcount ..................................................................................................................................... 47
Diversity ......................................................................................................................................... 48
Development of specialist workers and executives ....................................................................... 48
Training and professional development ......................................................................................... 48
Health and safety in the workplace ............................................................................................... 49
Research and development............................................................................................................... 50
Strategic focus of research and development ............................................................................... 50
Key R&D figures ............................................................................................................................ 50
Focus of R&D in 2012 ................................................................................................................... 51
Customers ......................................................................................................................................... 54
Customer focus at KION ................................................................................................................ 54
Customer-related performance indicators ..................................................................................... 54
Marketing and sales activities........................................................................................................ 55
Sustainability ..................................................................................................................................... 56
Events after the balance sheet date ...................................................................................................... 57
Expected developments ........................................................................................................................ 58
Opportunities report ........................................................................................................................... 58
Risk report ......................................................................................................................................... 59
Principles of risk management ...................................................................................................... 59
Material features of the internal control and risk management system pertaining to the (Group)
accounting process ........................................................................................................................ 59
KION Holding 1 GmbH
Group management report 2012
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Market risks ................................................................................................................................... 60
Competition risks ........................................................................................................................... 61
Research and development risks .................................................................................................. 61
Strategic risks ................................................................................................................................ 62
Procurement and sales risks ......................................................................................................... 62
Production risks ............................................................................................................................. 63
IT risks ........................................................................................................................................... 63
Financial risks ................................................................................................................................ 63
Accounting risks arising from goodwill and the brands ................................................................. 64
Risks from financial services ......................................................................................................... 65
Human resources risks .................................................................................................................. 65
Legal risks ...................................................................................................................................... 66
External risks ................................................................................................................................. 66
Aggregate risk................................................................................................................................ 66
Outlook .............................................................................................................................................. 67
Expected macroeconomic conditions ............................................................................................ 67
Expected sectoral conditions ......................................................................................................... 67
Expected business situation and financial performance ............................................................... 67
Expected financial position ............................................................................................................ 68
KION Holding 1 GmbH
Group management report 2012
Page 6 of 69
Highlights in 2012
The KION Group can look back on a successful financial year 2012: a record result through
strategic measures, stable demand and a further increase in profitability
• Order intake (€4,700 million) was up from last yea r despite the downturn in the global market
• Consolidated revenue increased by 8.2 per cent to €4,727 million
• The adjusted EBIT margin reached a new high of 9.3 per cent as a result of structural
improvements
• The Group’s capital structure was significantly improved following transactions with
Weichai Power
• The foundation was laid for further growth in emerging markets
KION Group key figures
in € million
Revenue
In Germany
Outside Germany
Order intake
Order backlog
EBITDA
Adjusted EBITDA¹
EBIT
Adjusted EBIT¹
Net income (loss)
Cash and cash equivalents²
Financial debt³
Net financial debt
Equity
Adjusted EBITDA Margin¹
Adjusted EBIT Margin¹
Free cash flow4
Capital expenditures 5
Total spending on R&D
R&D spending/revenue (%)
Employees incl. apprentices and
trainees as at 31 December6
R&D employees
2012
2011
2010
Changes
2012/2011
4,727
1,225
3,501
4,700
808
915
747
550
438
161
562
2,352
1,790
660
15.8%
9.3%
518
155
120
2.5%
4,368
1,175
3,194
4,682
953
569
665
213
365
-93
373
3,005
2,631
-488
15.2%
8.3%
234
133
120
2.8%
3,534
900
2,634
3,860
801
380
462
35
139
-197
253
2,879
2,626
-400
13.1%
3.9%
8.2%
4.3%
9.6%
0.4%
-15.2%
60.8%
12.3%
>100%
20.2%
>100%
50.6%
-21.7%
-32.0%
>100%
-
-
76
>100%
123
103
2.9%
16.6%
-0.1%
-
-3.0%
-5.9%
21,215
847
21,862
900
19,968
827
1 Adjusted for KION acquisition items and one-off items
2 Cash and cash equivalents
3 Financial liabilities are defined as non-current and current financial liabilities
4 Free cash flow is defined as Cash flow from operating activities plus Cash flow used in investing activities
5 Excluding leased assets and rental assets
6 Number of employees in full-time equivalents as at 31 December
KION Holding 1 GmbH
Group management report 2012
Page 7 of 69
COMPANY PROFILE AND STRATEGY
The KION Group is a leading provider of industrial trucks and logistics solutions. By offering a broad
product range, tailored service and system solutions and financing options, KION helps its customers
to efficiently manage their internal production processes and global supply chains. KION has six
brands – Linde, STILL, Fenwick, OM-STILL, Baoli and Voltas MH – and is the second largest
manufacturer of forklift trucks, warehouse trucks and other industrial trucks in the world. It operates 15
production facilities and eleven research and development centres – and has more than 1,100 sales
and service outlets in 111 countries.
Group structure, organisation, and management
Shareholders
The consolidated financial statements cover the group of consolidated companies belonging to KION
Holding 1 GmbH. As at the reporting date of 31 December 2012, KION Holding 1 GmbH indirectly held
all shares in KION GROUP GmbH, which acts as the strategic management holding company and
operational parent company of the KION Group (also referred to below as simply 'KION').
The number of shareholders increased in the year under review. In December 2012, the shareholders’
meeting of KION Holding 1 GmbH passed a resolution to increase the Company’s share capital. After
the capital increase, Weichai Power Co., Ltd. (referred to below as 'Weichai Power') holds a 25 per
cent share in KION Holding 1 GmbH through its subsidiary Weichai Power (Luxembourg) Holding
S.à r.l. The contribution amount was paid by Weichai Power on 27 December 2012. The capital
increase was entered in the commercial register in January 2013 (see ‘Events after the balance sheet
date’ on page 57). The remaining 75 per cent of the shares will be held on the one hand indirectly
through investment vehicles and subsidiaries of former shareholders Goldman Sachs Capital Partners
and KKR & Co. L.P., and on the other hand by an management participation company. The latter
company manages about 5.7 per cent of the management holdings in KION Holding 1 GmbH.
Chart 2: Shareholders of the KION Group
1) Management participation of around 5.7 per cent included in 75 per cent share in KION Holding 1 GmbH
2) Weichai Power with further options to acquire additional shares
3) Under certain conditions Weichai Power’s share in Linde Hydraulics can be increased further.
KION Holding 1 GmbH
Group management report 2012
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The acquisition of shares by way of capital contributions made by Weichai Power further strengthened
KION's capital structure. A detailed explanation can be found in the presentation of the financial
position (see pages 36 to 42). Weichai Power has a call option vis-à-vis Superlift Holding S.à r.l. to
acquire a further 3.3 per cent of the shares, which it can exercise before mid-2013 or, should KION be
floated on the stock market in future, during the three months after flotation. Moreover, in the event of
flotation on the stock market, Weichai Power can increase its equity investment (with full recognition of
the resulting dilutive effects) to 33.3 per cent by means of a capital increase, if it previously held at
least 28.3 per cent of the shares, or to 30.0 per cent, if it previously held less than 28.3 per cent of the
shares.
The acquisition of shares is part of a long-term strategic partnership between the individual companies
of KION and Weichai Power, at the core of which is close cooperation in the field of industrial trucks
and hydraulic drive technology (further details can be found in the section on strategy, page 16). Under
the agreement, Weichai Power also acquired a 70 per cent controlling interest in Linde Hydraulics
GmbH & Co. KG (referred to below as 'Linde Hydraulics') with effect from 27 December 2012. The
majority of the former hydraulics business of Linde Material Handling GmbH (referred to below as
'LMH GmbH') was transferred into this company. LMH GmbH continues to hold the remaining 30 per
cent as a strategic investment. Weichai Power’s share in Linde Hydraulics can be increased further
under certain conditions (see note 6 on page 8).
KION Holding 1 GmbH
Group management report 2012
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Segment structure
KION is represented in the market by two global brands – Linde and STILL – and four regional brands:
Fenwick (France), OM-STILL (Italy), Baoli (China and other emerging markets) and Voltas MH (India).
While the brand companies have full operational and commercial responsibility within their particular
markets, KION GROUP GmbH acts as a strategic management holding company and is responsible
for the cross-brand Group strategy as well as for key Group functions, for which it defines group-wide
business standards.
For internal management purposes, KION has divided its business into operating segments that
correspond to the reportable segments required by international financial reporting standards (IFRS
8). KION changed this segment structure in 2012, after having already put in place the structures
required from an organisational and company law perspective to manage and show the financial
services activities of the Group separately in 2012. These are now aggregated in the Financial
Services segment. The figures for 2012 and 2011 have been reported in accordance with the revised
segment structure as shown below.
The Linde Material Handling (LMH) segment encompasses the Linde, Fenwick and Baoli brands.
The hydraulics business was also part of the LMH segment until KION sold its majority stake in Linde
Hydraulics on 27 December 2012. Linde Hydraulics is recognised as an affiliated company in the
consolidated financial statements (using the equity method).
The STILL segment comprises the STILL and OM-STILL brands.
Spare parts business and service form an integral part of the LMH and STILL segments and
complement their product portfolios. However, financing business, which promotes sales, is assigned
to the new Financial Services (FS) segment.
The Other segment essentially consists of internal activities relating to IT and logistics as well as the
group holding activities of the KION Group. The Voltas MH brand is also assigned to the Other
segment.
Chart 3: Segments
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Group management report 2012
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Management and control
KION follows generally accepted standards of sound, responsible corporate governance. The German
Corporate Governance Code (DCGK) provides the framework for management and control structures
and procedures. Further information about corporate governance at KION is available on the
Company's website (www.kiongroup.com).
The Executive Board of KION GROUP GmbH is responsible for the operational management of the
KION Group, the details of which are set out in the rules of procedure. As at 31 December 2012 the
responsibilities of the Executive Board members were as follows:
Gordon Riske, Chief Executive Officer (CEO), is responsible for strategy, communications,
governance and compliance, market intelligence and the Group's Asian business.
Dr Thomas Toepfer was appointed to the Executive Board in the role of Chief Financial Officer (CFO)
with effect from 1 September 2012. He is in charge of finance, the FS segment, IT activities, mergers
& acquisitions and investor relations. He replaced Harald Pinger, who left at his own request on
31 August 2012.
Until his departure at the end of 2012, Otmar Hauck was Chief Operating Officer (COO) and was
responsible for quality, central operations, purchasing, logistics and product development in the Group.
No new COO was appointed for KION GROUP GmbH. After Mr Hauck left, responsibility for
purchasing passed to Dr Thomas Toepfer, while CEO Gordon Riske took charge of KION Warehouse
Systems.
Until his retirement on 11 January 2013, Klaus Hofer was responsible for human resources, legal
affairs, health & safety and internal audit, and was also KION's Labour Relations Director. His
responsibilities have been transferred to Gordon Riske and Dr Thomas Toepfer.
The Executive Board was expanded in January 2013 in response to the growing significance of
business in Asia and to make the management of the Linde and STILL brands more involved in
running the Group as a whole (see 'Events after the balance sheet date', page 57).
The Executive Board maintains a relationship of trust with, and is monitored by, the Company's
Supervisory Board. The Supervisory Board consists of six shareholder representatives, who are
chosen by the shareholders' meeting, and six employee representatives. It advises the Executive
Board in its handling of significant matters and business transactions. The Supervisory Board has
created a Human Resources Committee and an Audit Committee to increase the efficiency of its work.
It also has an Arbitration Committee pursuant to section 27 (3) German Codetermination Act
(MitbestG), which meets if required to do so in circumstances specified by law or by the memorandum
and articles of association. The composition of the Supervisory Board is described in note 44 on pages
86 and 87.
In the year under review the remuneration paid to the Executive Board comprised a fixed salary and
non-cash benefits (including pension entitlements) and performance-related components. The basic
principles of the remuneration structure and the total amounts paid to the members of the Executive
Board and Supervisory Board are set out in the notes to the consolidated financial statements (note
43, pages 84 and 85).
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Group management report 2012
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Business model and market positioning
Business model
KION earns most of its consolidated revenue from the sale of industrial trucks. In the reporting year,
new products accounted for 56 per cent of the Group's revenue, while service business (including
spare parts) generated 40 per cent. Four per cent related to hydraulics components, which were sold
to Weichai Power to the furthest extent possible with effect from 27 December 2012.
So that it can offer comprehensive support to customers worldwide, KION covers every step of the
value chain: product development, manufacturing, sales and logistics, spare parts business, financial
services and system and software solutions.
The purpose of research and development activities (R&D) is to consolidate and extend KION's
technology leadership. 847 developers are employed across the KION brand companies. The focus of
the Group's R&D activities is described on page 50.
The different industrial trucks are manufactured at production facilities situated at strategically
beneficial locations within the global network. Owing to the particular requirements of its business and
to ensure security of supply, KION manufactures most of the major components itself – notably lift
masts, axles, counterweights and safety equipment. Other components – such as electronic
components, rechargeable batteries, engine components and industrial tyres – are purchased through
KION's global procurement organisation. There are also long-term supply agreements for hydraulics
components with Weichai Power (see p. 16 for further information about the strategic partnership with
Weichai Power). KION operates a total of 15 production facilities in eight countries.
The product portfolio includes counterbalance trucks powered by an internal combustion engine or
electric drive, warehouse technology (ride-on and hand-operated industrial trucks) and towing vehicles
for industrial applications. It covers all load capacities, from 1 tonne to significantly in excess of 40
tonnes.
KION Holding 1 GmbH
Group management report 2012
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Table 1: KION’s production and major logistics sites
Location
Products/use
Linde Material Handling
Germany
Aschaffenburg
Weilbach
Kahl
France
Châtellerault
UK
Merthyr Tydfil1)
Basingstoke
Czech Republic
Český Krumlov
USA
Summerville
China
Xiamen
Jingjiang
STILL
Germany
Hamburg
Reutlingen
Geisa
Italy
Lainate
Luzzara
Brazil
Indaiatuba / São Paulo
Other (Voltas MH)
India
Pune
IC trucks, E trucks, warehouse trucks
Components production
Spare part warehousing, Components production
Components production
Heavy IC trucks1), container trucks
Spare part warehousing
Components production
IC trucks, E trucks, warehouse trucks
IC trucks, E trucks, container and heavy IC trucks, warehouse trucks
IC trucks, E trucks, warehouse trucks
IC trucks, E trucks, warehouse trucks
VNA warehouse trucks
Components production
Spare part warehousing
Warehouse trucks
IC trucks, warehouse trucks
IC trucks, E trucks, warehouse trucks
1) Consultations ongoing concerning restructuring the container handler and heavy forklift truck business and Konecranes taking over certain
assets of the container division (see ‘Events after the balance sheet date’, page 57)
Revenue from the high-margin service business stabilises consolidated revenue and reduces
dependency on market cycles. KION's sales and service network encompasses more than 1,100
outlets in over 100 countries. Of the total sales and service workforce – which is predominantly made
up of service technicians – about two thirds are employed in the KION companies. In various markets,
KION relies on external dealers.
KION Holding 1 GmbH
Group management report 2012
Page 13 of 69
The service business caters to an active fleet of over 1 million industrial trucks. Europe has the
greatest concentration of service outlets. In established markets, a significant proportion of services is
covered by leasing arrangements and is offered for the entire term of the lease. Service business also
includes individual orders for repairs and maintenance, spare parts, used trucks and rental trucks.
Financial services (see page 19 and 20) support product sales in all brand companies. They largely
consist of long and short-term rental, and customised fleet management.
Market and influencing factors
Industrial trucks are used for a wide variety of applications. Material handling products are used for
tasks such as loading and unloading, linking production steps, moving pallets in logistics centres and
transferring containers in ports. They therefore form part of the production processes and supply
chains in different industries around the world. Measured in terms of unit sales of new trucks, the
growth of the industrial truck market has exceeded global economic growth over the past ten years
(2002 to 2012), rising at an average of around 5 per cent per year.
In KION's view, the significant influencing factors with a sustained impact are the following:
• Mature markets are generating strong demand for trucks to replace old ones as customers
have not made replacement investments when required in recent years, as a result of the
financial and economic crisis. KION estimates that around 90 per cent of sales in western
Europe are currently accounted for by replacement investments.
•
In China and other emerging markets, economic growth and the increasing need for
infrastructure solutions are creating disproportionately strong demand for inexpensive
industrial trucks.
• As a result of globalisation, individual steps in the value chain are increasingly being moved to
different regions, causing greater demand for transport services and logistics solutions.
• As the technology in industrial trucks becomes more complex, their users are more likely to
outsource service functions. The demand for efficient fleet management is also rising.
• The market as a whole will continue to depend heavily on economic conditions in key sales
markets, with the level of capital investment and the growth in global trade being particularly
crucial. During an economic downturn customers tend to delay purchasing any new trucks
they need, whereas they buy more new trucks during an upturn. The service business, which
is generally less cyclical, is affected by truck utilisation, which itself depends partly on
macroeconomic activity. In addition, the overall market is subject to regulatory intervention, in
particular in relation to emission levels, production standards and workplace safety standards
(see page 25).
Measured in terms of units ordered, almost half of the volume of new business (46 per cent) was
accounted for by counterbalance trucks with an internal combustion engine – with higher proportions
in China and other emerging markets. Counterbalance trucks with an electric drive accounted for
around 16 per cent and warehouse technology for 38 per cent.
The products in the premium price segment are characterised by an above-average useful life, driver
productivity, comfort and high performance, combined with lower running and energy costs. This price
segment accounted for 27 per cent of the new trucks ordered according to a study conducted in 2012,
although the proportions were lower in China and other emerging markets. The middle price segment
(value) generated 48 per cent of orders. The low price segment accounted for 25 per cent of the global
market; it is the main segment in China.
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Group management report 2012
Page 14 of 69
Broken down by region, Europe generated 33 per cent of total new trucks sales, followed by China
with 23 per cent and North America with 19 per cent.
Market position
KION is one of the world's leading manufacturers of industrial trucks owing to its global presence and
volume of revenue. Measured in terms of units sold, KION consolidated its position as the number one
in Europe and the number two worldwide in the year under review. Based on the sales figures for
2012, KION's market share was 15 per cent worldwide and 34 per cent in Europe. KION is ranked
third in the Chinese market behind two domestic manufacturers, making it the largest foreign producer.
It is one of the leading manufacturers in Brazil – the largest individual market in South America – and
is the market leader for electric forklift trucks and warehouse trucks.
Besides its strong market position in established markets and growth regions, KION has a number of
other competitive advantages:
As a result of its multi-brand strategy and broad range of products and services, KION is
represented in all the major sales regions, product segments and price segments that make up the
industrial truck market. The multi-brand strategy has helped KION to systematically expand its
presence in the emerging markets in recent years.
KION's position as a leading technology provider secures the status of LMH and STILL as
premium brands: customers can contain the total cost of ownership (TCO) owing to the trucks' cost
efficiency, high productivity and relatively low maintenance and to the high residual values of used
trucks. This technology leadership position is based, among other factors, on KION's pioneering role in
hydrostatic and diesel-electric drive systems and on its product innovations in the field of energy-
efficient and low-emission drive technologies (electric drives, hybrid drives, fuel cells). KION is also
one of the leading companies with regard to workplace safety and ergonomics (see the section on
research and development, pages 50 to 53). Compared with other companies in the industry, KION
spends a high proportion of its revenue on research and development. By operating eleven local
development centres, KION ensures that it can fully cater to the specific needs of customers in the
different markets. There are two development centres in China, one in Brazil and one in India.
KION has an integrated business model, which is based on its presence in all major product
categories and the fact that the service business is intrinsically tied into the new truck business. The
service business generates above-average margins for KION and is less affected by economic
fluctuations. In addition, the growing number of new trucks fitted with customer-specific equipment is
also stabilising the service business. The associated production, service and sales processes present
a significant barrier to market entry for competitors, as does the extensive network of service outlets.
KION's attractive profit margins are derived from the premium positioning of its brands and the
significant proportion of revenue contributed by its high-margin service business. Economies of scale,
diversification advantages and synergies resulting from its global position also benefit KION.
Moreover, profitability has been improved by implementing effective measures to boost efficiency and
lower costs, for example during the financial and economic crisis in 2008 and 2009. Consolidation of
production facilities (see page 17) has also increased capacity utilisation. The lower level of fixed costs
and the resulting more flexible cost structure have enabled KION to improve its profitability and put it
in a better position to absorb the impact of economic downturns than in the past. Modular and platform
strategies in product development and production also help to increase cost efficiency.
KION Holding 1 GmbH
Group management report 2012
Page 15 of 69
Strategy of the KION Group
KION's strategy, which is centred on value and growth, is based on the Group's aforementioned
strengths. The strategic objectives are:
1. Strengthen KION’s leading position in western European core markets
KION is consolidating its position as the number one in Europe's industrial truck market with customer-
focused technological innovations and a high proportion of trucks with bespoke fittings. In recent
years, the proportion of revenue spent on research and development has been above the market
average and stood at 2.5 per cent in the year under review. KION aims to increase customer benefits
in all price segments by introducing innovative drive systems, advanced ergonomics, intelligent
intralogistics solutions and other developments.
2. Expand the range of services in European markets and in growth regions
KION is continually extending its portfolio of services and improving their quality at every stage of the
product lifecycle. This includes servicing, maintenance and spare parts as well as fleet management
solutions, intralogistics processes, efficient supply chains and IT systems. Financial services are also
a key component of the service portfolio. KION has an installed base of more than 1 million trucks
from which to expand its service business. The Company also intends to increase its market share by,
for example, opening additional service outlets in attractive growth markets and stepping up the short-
term rental business.
3. Tap the full market potential of growth regions
KION wants to take full advantage of buoyant demand in the BRIC countries (Brazil, Russia, India,
China) and other emerging markets. That is why it is launching region-specific products in fast-growing
price segments and strengthening its local production and sales network. To do so, KION is making
targeted investments in production capacity, product development and the sales and service network.
It is also weighing up whether to acquire manufacturing companies and dealers in growth regions. The
strategic partnership entered into with Weichai Power in 2012 will play a key role in strengthening
KION's position in the Chinese and other Asian growth markets, while KION gains access to the lower
price segment in India through Voltas MH.
The range of products and services is tailored to region-specific requirements. To this end, KION
operates a multi-brand strategy in the different regions. Region-specific products based on low-cost
production platforms are the preferred option in the fast-growing emerging markets of Asia, Central
America and South America. For this reason, LMH and STILL are positioned accordingly in those
markets, with the Baoli and Voltas MH brand companies also playing a key role. Other external
opportunities for growth are examined on an ongoing basis, including in relation to the sales and
service network. Fast-growing emerging markets accounted for 30 per cent of consolidated revenue in
2012, compared with 22 per cent in 2011.
4. Optimise production, leverage group-wide synergies and thereby reduce costs
Over the past few years KION has streamlined its production capacity in developed markets, bringing
about improvements to capacity utilisation and cost efficiency. At the same time it has created new
capacity in Brazil, India and China. This transfer of some aspects of production to emerging markets is
expected to continue.
Another way in which KION improves efficiency and increases margins is by operating a cross-brand
purchasing organisation. Over the next few years it plans to increase its purchasing volume from
emerging markets from 28 per cent in 2012 to as much as 40 per cent.
KION Holding 1 GmbH
Group management report 2012
Page 16 of 69
Although the brand companies in the KION Group are largely responsible for their own market
activities, KION harnesses group-wide synergies and ensures that resources are used efficiently by
centralising certain functions. Central departments are responsible for quality and production control,
logistics and IT. This makes it possible to establish best practice across the Group. There are also a
number of research and development initiatives aimed at cutting costs, improving quality and speeding
up the development process. For example, KION intends to increase the proportion of standard
modules used by multiple brand companies without compromising the brands' independence.
Key strategic measures in 2012
Tap full market potential in growth regions
The primary objective of the strategic partnership that KION entered into with Weichai Power at the
end of 2012 is strategic collaboration on hydraulic pumps, engines, valves and drive technologies.
Weichai Power and KION have also agreed to cooperate in a number of strategic areas, such as the
supply of engines, parts and components. The aim for both companies here is to foster growth and
competitiveness in the respective product segments.
Under an agreement reached between the KION Group and Weichai Power, the partnership also
extends to the sharing of best practice and the development by Weichai Power of engines for
installation in certain industrial trucks. Additional possibilities are also being considered, such as
consolidating the forklift truck business in China. An agreement for the joint use of sales and
purchasing structures has already been reached. Weichai Power has more than 500 service outlets in
China, which KION can use to extend its own sales and service network. Other advantages include
the strengthening of the industrial base in Europe and access to Weichai Power's suppliers in China
and Europe.
The partnership generates substantial economies of scale for Linde Hydraulics and enables it to
improve its international competitive position. On 27 December 2012 Linde Hydraulics entered into a
ten-year purchase and supply agreement with LMH GmbH, which includes an exclusivity rule for the
first five years. There is also a licence agreement that ensures Linde Material Handling GmbH (LMH
GmbH) has access to all the patents necessary for its industrial truck business.
Weichai Power paid a cash contribution (including premium) of €467 million into KION Holding 1
GmbH to take over a 25 per cent of the Company’s share capital as part of a capital increase. The
price to acquire 70 per cent of the shares (including options) in Linde Hydraulics GmbH & Co. KG was
€271 million.
The partnership with Weichai Power improves KION’s market presence in China via KION Baoli
(Jiangsu) Forklift Co., Ltd. (referred to below as 'KION Baoli') – the regional brand for industrial trucks
– following LMH GmbH's acquisition of the outstanding 2.7 per cent of the shares. The transaction was
completed at the end of August 2012. In addition, Baoli also has a presence in additional emerging
markets, particularly in the Near and Middle East, India and Southeast Asia, but also in Australia. By
collaborating with Weichai Power, Baoli will be able to expand its product range in the short term, and
consequently be an even more attractive business partner for distributors.
A second major milestone was reached in the Indian market. KION acquired the outstanding 34 per
cent of shares in Voltas Material Handling Private Limited (referred to below as 'Voltas MH') with effect
from 2 November 2012. Founded in 2011 as a means of strategic cooperation between KION and the
Indian conglomerate Voltas Limited, Voltas MH develops, manufactures, sells and maintains forklift
trucks and warehouse trucks, focusing on India's high-volume market. The acquisition of the
outstanding shares in Voltas MH enables KION to tap into the potential of the Indian market more
efficiently. Voltas MH's sales and service network encompasses 59 dealers. In the second quarter of
2012 Voltas MH opened a new production facility in Pune, where it builds smaller counterbalance
trucks powered by an internal combustion engine or electric drive as well as warehouse trucks.
KION Holding 1 GmbH
Group management report 2012
Page 17 of 69
By setting up a new legal entity, KION South Asia Pte. Ltd., in Singapore in April 2012, KION put in
place the necessary organisational structure to fully unlock the market potential in other countries of
South and Southeast Asia. KION South Asia is enabling the steady expansion of the local sales and
service networks of the Linde, STILL and Baoli brands.
On 1 September 2012, KION South America launched production operations at its new plant in
Indaiatuba/São Paulo, Brazil, thereby doubling its capacity. By pooling production in São Paulo and
stepping up cross-brand cooperation, KION can leverage synergies and respond faster to customer
requirements. KION's strategic competitive position has improved significantly because it can now
manufacture counterbalance trucks (with an internal combustion engine) locally in addition to
warehouse trucks. Imports of trucks, which are subject to high customs duties, can therefore be
reduced significantly. The new facility also has better transport connections. The warehouse
technology factory in Rio de Janeiro has closed, and the building and site have been sold. Some
employees have transferred to the new plant. KION helped those unwilling to move to find new
employment.
Consolidation of market position in Europe and expansion of service network
The sales and service network was strengthened through acquisitions and partnerships in 2012. One
of KION's sales channels in the large Russian market is the sales company Liftec, which has been
part of LMH since November 2011. In the reporting year LMH also acquired Liftec's business in
Kazakhstan (February 2012) and Ukraine (July 2012). This has given LMH direct access to these
markets and will enable it to expand its sales and service structures in Eastern Europe and Central
Asia. STILL continued to consistently expand its service and distribution organisations in growth
regions, by opening new branches in Russia and Poland, and its own Asian representative office in
Singapore. In February 2012 LMH acquired the outstanding 51 per cent of shares in the sales
company Linde Creighton Ltd., West Bromwich, United Kingdom. This was another measure aimed at
strengthening LMH's presence in the United Kingdom following the acquisition of the outstanding
shares in Linde Castle Ltd. and Linde Sterling Ltd. in 2011. Between them, the three companies
employ over 650 people. LMH has also restructured its sales operations in Croatia by entering into a
joint venture with a local dealer.
Increase in cost efficiency through optimisation of production and leverage of group-wide synergies
In 2012 KION continued to rigorously implement the extensive restructuring and consolidation
programme that it had begun in 2009 in light of the financial and economic crisis. The long-term
optimisation of production capacity has already begun to pay off and was a considerable factor in
improving profitability in 2012. By making its cost structure more flexible, KION can take faster and
more extensive action in an economic downturn. The relocation of individual warehouse technology
production plants within Europe was completed in the year under review. Production operations in
Montataire, France, were transferred to Luzzara in Italy, while forklift truck production in Bari, Italy, was
moved to Hamburg, Germany. Furthermore, at the end of 2012 the decision was made to carry out the
process of restructuring the container handler and heavy forklift truck business at the Merthyr Tydfil
site (Wales, UK), which should improve the competitiveness of both segments in the long term, as well
as increase the efficiency of KION’s European production network. Steps were also taken to increase
efficiency in purchasing and product development.
KION expects that the strategic partnership with Weichai Power will also help to boost cost efficiency,
notably through the joint use of sales structures and improved access to low-cost sources of supply for
components.
In addition, KION has initiated measures to improve cost efficiency in research and development by
using module and platform strategies (see page 50). The aim here is to reduce the complexity and
diversity of products and accelerate the development process.
KION Holding 1 GmbH
Group management report 2012
Page 18 of 69
The segments and their products and services
Table 2: Segment overview
Segments 2012
in € million
LMH
STILL
Financial Services
Other
Consolidation/reconciliation
Total
Revenue Year-on-year
change
Adjusted
EBIT¹
Year-on-year
change
EBIT
Year-on-year
change
Em-
ployees²
Year-on-year
change
3,132
1,677
509
251
-842
4,727
9.8%
0.6%
6.2%
12.4%
0.0%
8.2%
330
123
1
44
-61
438
18.3%
22.4%
-48.1%
-34.6%
0.0%
20.2%
523
98
1
-12
-61
550
>100% 13,148
7,253
>100%
112
-48.1%
702
<-100%
−
0.0%
>100% 21,215
-4.6%
-0.5%
16.7%
2.0%
-
-3.0%
¹ Adjusted for KION acquisition items and one-off items
² Number of employees in full-time equivalents as at 31 December
Linde Material Handling (LMH) segment
The LMH segment encompasses the products and services of the Linde, Fenwick and Baoli brands.
Linde is a global premium brand and a technology leader. Its USP is its hydrostatic drive technology,
which gives it a significant competitive edge worldwide and enables it to meet customer’s high
standards of technology, efficiency, functionality and design. The product portfolio ranges from
warehouse trucks to heavy trucks and container handlers and caters to all of the major application
areas. Linde has been developing and manufacturing electric drive systems for decades and makes
the resulting expertise available to external customers for use in a variety of applications.
In France, Linde products are sold under the Fenwick brand. The Baoli brand covers the lower price
segment in China and other growth markets in Asia, eastern Europe, the Middle East and Africa as
well as Central and South America.
LMH's strategic investment in Linde Hydraulics means it continues to hold a stake in one of the major
producers of hydraulic components. An exclusive contract ensures the supply of these components
over the long term, which provide the basis for the Linde trucks' precise lifting and handling capabilities
as well as their low fuel consumption. LMH will continue to exploit the synergies between the
technologies of the trucks and drive systems despite selling its majority stake in the hydraulics
business.
In terms of unit sales of industrial trucks, Linde is the second largest brand worldwide and the market
leader in Europe, while Fenwick occupies the number-one spot in France.
Around the globe, LMH can rely on a network of around 700 sales outlets (including Fenwick). Its
sales are split roughly equally between its own sales companies and external dealers. Baoli has about
150 sales outlets.
KION Holding 1 GmbH
Group management report 2012
Page 19 of 69
STILL segment
The STILL and OM-STILL brands are grouped in the STILL segment. STILL is a global premium
provider of trucks with diesel-electric drives. It focuses, above all, on the European and Latin American
markets. In Brazil, STILL is ranked second in terms of product sales. OM-STILL is the market leader in
Italy. By opening its own representative office in Singapore, an essential prerequisite to creating
further growth in Southeast Asia has also been established.
The segment's portfolio consists of forklift trucks and warehouse trucks plus associated services.
STILL is a market leader throughout Europe in electric forklift trucks and has also established
innovative drive technologies on the market such as hybrid drive in particular. STILL has also
positioned itself as a leading provider of intelligent intralogistics solutions. In this manner, STILL
realizes the intelligent interplay of forklift trucks, warehousing technology and towing tractors, as well
as process-oriented, value-added services concerning internal operations logistics processes,
shelving systems and fleet management and services.
The STILL segment operates around 240 sales outlets in its markets, most of which it owns itself.
Financial Services (FS) segment
In view of the increased importance of financial services, KION laid the foundations for combining its
activities in the FS segment in 2011 and completed the new segmentation in the year under review.
Legally independent FS companies were set up in the main sales markets with a high volume of
financing and leasing (France, Germany, Italy, Spain and the United Kingdom) so that financing and
leasing business can be managed separately.
The purpose of the FS segment is to act as an internal funding partner for the LMH and STILL brand
segments, providing finance solutions that promote sales. FS activities include the internal financing of
the short-term rental fleet on the one hand, and the financing of long-term leasing business for KION
Group customers on the other hand, as well as the accompanying risk management.
The key performance indicator for the FS segment is earnings before taxes (EBT).
When long-term leasing business is being conducted, FS itself acts as the contractual partner to
customers and offers financing. Various financing models are available and give customers the
greatest possible flexibility. In long-term business, FS is also responsible for risk management, which
includes credit risk management as well as management of residual-value risk. Leases have an
average term of four to five years.
In short-term leasing, FS is the internal financing partner of the brand segments: customers are
offered rental trucks from a brand segment rental pool for short-term use. Financial performance
largely depends on the rental fleet's capacity utilisation, which is controlled by the brand segments.
Operational responsibility for the short-term rental business lies with the brand segments. FS acts as
the contractual partner to the brand segments, providing the financing primarily in conjunction with
external financial partners. The brand segments pay FS for its work in the form of an interest margin at
a rate appropriate to the market.
FS works on refinancing with over 40 financing partners worldwide. Leasing is largely refinanced via
sale and leaseback agreements, whilst the refinancing of single-step leases via financial liabilities still
plays a subordinate role.
KION Holding 1 GmbH
Group management report 2012
Page 20 of 69
Chart 5: Business model of Financial Services
End customer
long-term
leasing
Financing of long-
term leasing
(external)
Financing
(single steps)
Financial debt
Financial
Services
LMH / STILL
short-term
rental
Financing of short-
term rental fleet
(internal)
Financing
(SALB leases)
Leasing
partner
In addition to KION’s direct leasing to end clients via FS, lease financing is also procured through
independent leasing providers. In such cases, the lessor is not KION, but rather an external leasing
company.
Other segment
The Other segment primarily comprises KION GROUP GmbH with its holding activities, the KION
Group's service companies, which provide cross-segment services. These include, in particular, IT
services from KION Information Management Services GmbH and logistics services.
The subsidiaries of the Voltas MH brand company, which manufacture and sell counterbalance trucks
and warehouse technology for the Indian market, also belong to this segment.
Value-based management
The KION Group's strategy, which centres on value and growth, is reflected in how the Company is
managed. KION uses six key performance indicators (KPIs) to continuously monitor the market
success, profitability, financial strength and liquidity of both the Group and the individual segments.
The performance targets of the Group and the segments are based on selected financial KPIs, as is
the performance-based remuneration paid to managers (see note 43 on page 84). Each month, the
KPIs are measured and made available to the Executive Board as part of a comprehensive report.
This enables the management team to take prompt corrective action in the event of discrepancies.
KION Holding 1 GmbH
Group management report 2012
Page 21 of 69
Table 3
Key performance indicators
Order intake
Revenue
Adjusted
EBIT¹
Adjusted
EBITDA¹
Net financial
debt
Free cashflow
in € million
2012
2011
2010
4,700
4,682
3,860
4,727
4,368
3,534
438
365
139
747
665
462
1,790
2,631
2,626
518
234
76
¹ Adjusted for KION acquisition items and one-off items
KPIs related to business volume
Order intake and revenue are broken down by region, segment and product group in the KION
Group's management reporting so that growth drivers and pertinent revenue trends can be identified
and analysed in a timely fashion. Order intake is a leading indicator for revenue. The length of time
between receipt and invoicing of an order varies between business units and product groups.
KPIs related to earnings
Adjusted EBIT: The key figure used for the operational management and analysis of financial
performance is adjusted earnings before interest and taxes (EBIT). It is calculated in the same way as
EBIT, except that it does not take account of the KION purchase price allocation (see note 18, page
34) or any non-recurring items. Adjusted EBIT corresponds to the KPI used in internal management
reporting called EBIT. Another important indicator used to measure the KION Group's operational
efficiency is the adjusted EBIT margin, which is the ratio of adjusted EBIT to revenue.
Adjusted EBITDA: Unlike EBIT, the EBITDA figure is shown before deduction of depreciation,
amortisation, impairments and reversals to non-current assets. Adjusted EBITDA also excludes effects
from the KION purchase price allocation (see note 18, page 33) and non-recurring items. Adjusted
EBITDA constitutes an approximation of the cash flow KPI and provides information on the Company's
long-term financial performance.
KPIs related to liquidity
Net financial debt: Net financial debt is defined as the difference between the financial liabilities and
cash and cash equivalents shown on the balance sheet. It serves as a measure of performance and is
only used at Group level.
Free cash flow: Free cash flow is another relevant KPI for managing leverage and liquidity. It is
determined solely by the KION Group's operating and investing activities. Free cash flow does not
include interest arising from financing activities. The performance measurement of free cash flow is
supported by the carefully targeted management of working capital and by detailed planning of capital
expenditure.
KION also analyses non-financial key performance indicators. These essentially relate to
customers, employees, sustainability and technology. Some of them are used operationally as leading
indicators for the financial KPIs. The non-financial KPIs are described in detail on pages 46 to 56.
KION Holding 1 GmbH
Group management report 2012
Page 22 of 69
ECONOMIC ENVIRONMENT
Macroeconomic conditions
Global economic growth slowed down in 2012. One of the reasons for this was that the euro zone –
still going through a sovereign debt crisis – slid into recession, taking major trading partners with it.
The markets were also weighed down by uncertainty regarding fiscal problems in the United States
and China's economic prospects. According to a projection by the International Monetary Fund (IMF),
global economic output only increased by 3.2 per cent, compared to 3.9 per cent in 2011, whilst
advanced industrial nations achieved growth of just 1.3 per cent (2011: 1.6 per cent).
The pace of growth also tailed off in the emerging markets. All four BRIC countries registered lower
rates of growth than in 2011 owing to declining demand from Europe and, in particular, dwindling
domestic demand and economic policy aimed at stemming inflation in Asia and Latin America.
Chart 6: Economic growth in relevant markets
Gross domestic product 2012
Real change compared with the previous year
China
India
Russia
World
USA
Japan
Brazil
Germany
EU
7.8%
5.4%
3.4%
2.3%
2.2%
2.0%
1.0%
0.8%
-0.3%
Source: Oxford Economics (Status 12 February 2013)
Demand for machinery and equipment weakened globally, but especially in the euro zone. A declining
willingness to invest was accompanied by a slowdown in the growth of global trade, which more than
halved according to the IMF’s projection. This brought it down to just 2.8 per cent in 2012 (2011:
5.8 per cent). Imports and exports decreased in equal measure. Unlike in the previous year, demand
for industrial trucks therefore received little stimulus from the markets in 2012.
Sectoral conditions
Sales markets
The slowdown of the global economy also filtered through to the market for industrial trucks. Whereas
unit sales of new trucks during the early months of 2012 were still influenced by the high level of order
intake in the previous year, the subsequent months saw a fall in demand.
KION Holding 1 GmbH
Group management report 2012
Page 23 of 69
The number of trucks ordered globally decreased by 3.1 per cent. In western Europe – KION's largest
market by far – the number of orders decreased by 7.1 per cent. Germany, which remains KION's
largest individual market, proved somewhat more stable than Europe as a whole and contracted by
5.5 per cent. The United Kingdom bucked the trend with a rise of 4.4 per cent in orders for new trucks,
whereas France and Italy both registered sharp falls of 8.0 per cent and 21.5 per cent, respectively.
Order intake in eastern Europe was stable thanks to growth in the Russian market. Decreasing unit
sales in Asia were primarily the result of a decline in the Chinese market. A sharp contraction of
business in Brazil had a significant adverse impact on unit sales in Central and South America.
There was only a slight shift in the market shares of the individual regions compared with 2011.
Western Europe remained in first place with a share of 27 per cent of total unit sales, with as much as
45 per cent of global orders for warehouse trucks coming from western Europe. China accounted for
23 per cent of orders for new trucks in 2012 and was also the largest market for counterbalance trucks
with a global market share of 33 per cent.
Order intake broken down by product group shows that the market for warehouse trucks was much
more stable than the market as a whole, with orders decreasing by just 1.9 per cent. Within this group,
there was a sharp rise in order intake for rider trucks. The decrease of 3.8 per cent in the number of
orders for counterbalance trucks was predominantly attributable to declining figures for combustion
engine industrial trucks.
Table 4
Global Industrial Truck Market (order intake)
in thousand units
Western Europe
thereof
Germany
France
United Kingdom
Eastern Europe
thereof
Russia
Europe
North America
thereof
U.S.A.
Central & South America
thereof
Brazil
China
Rest of World
World
Source: WITS/FEM
2012
2011
Changes
259
278
-7.1%
72
51
28
54
24
312
181
165
49
19
217
187
947
76
56
27
54
23
333
170
155
55
23
238
181
977
-5.5%
-8.0%
4.4%
-1.3%
4.7%
-6.1%
6.8%
6.7%
-12.0%
-16.7%
-9.0%
3.6%
-3.1%
KION Holding 1 GmbH
Group management report 2012
Page 24 of 69
Procurement markets
Commodity prices have a direct impact on around 26 per cent of the cost of materials for
manufacturing an industrial truck at KION. Owing to the gloomier economic data, the price of steel
plate was 9.6 per cent lower on average than it had been in 2012, while the price of steel bars was
down by 12.8 per cent. The price of steel scrap, an important commodity used in counterweights, fell
by an average of 4.7 per cent. Copper prices decreased by 2.4 per cent year on year. Like rubber (fall
of 23.4 per cent) and plastic, copper has a lesser impact on manufacturing costs. The price of lead-
acid batteries, which make up a significant proportion of the total price of electric trucks, is particularly
dependent on lead prices on the metal exchanges. However, these price fluctuations are borne by
customers owing to the way in which contracts are formulated.
Energy prices were higher in 2012 than they had been the previous year. Natural gas prices rose in
Europe and Asia. Although KION's production facilities predominantly use electricity and gas, the oil
price is used as an indicator because it affects other energy sources as well as the price of plastic.
The price of Brent crude oil (listed in US dollars) was 8.6 per cent higher on average than in 2011.
Financial markets
KION bills the bulk of its revenue in euros; the proportion was 63 per cent in 2012 (2011: 66 per cent).
The remainder is billed in foreign currencies, notably the Chinese renminbi, pound sterling and the
Brazilian real. The renminbi appreciated against the euro by around 10 per cent on average over the
year. Pound sterling also increased on average over the year, whereas the Brazilian real depreciated
significantly. Exchange-rate fluctuations had a positive, albeit insignificant, impact on KION overall.
Table 5
Currencies
Average rate per Euro
Australia (AUD)
Brazil (BRL)
Switzerland (CHF)
China (CNY)
United Kingdom (GBP)
Russia (RUB)
U.S.A. (USD)
Source: Reuters
2012
2011
1.24
2.51
1.21
8.11
0.81
39.92
1.29
1.35
2.33
1.23
9.00
0.87
40.89
1.39
KION Holding 1 GmbH
Group management report 2012
Page 25 of 69
Regulatory situation
The companies in the KION Group have to comply with specific legal requirements in their markets
with respect to their products and services. These requirements serve to minimise or eliminate the
risks for users of the products and for other people, equipment and the immediate working
environment. Moreover, they can also help to maintain the performance of the machines. The
compliance of products and services with the different requirements has to be verified or certified.
KION has established processes aimed at
legal requirements efficiently,
documenting its compliance with them and incorporating any changes in the legal framework at an
early stage of development. Many of the legal requirements are enshrined in product-specific and
other standards (e.g. EN, ISO and DIN). KION endeavours to comfortably comply with the minimum
standards defined for its products and services and, in some cases, surpass them.
implementing
the
KION responds to updates to the standards promptly. For example, as a result of the tighter emissions
standards for forklift trucks fitted with an internal combustion engine, KION revised a number of
product series last year so that they now comfortably meet the new requirements and their emissions
are well below the maximum levels permitted (see page 51). This allows KION to differentiate itself
from the competition and position itself as a technology leader. 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.
The construction and operation of production facilities are also subject to certain legal requirements,
including in relation to avoidance of air pollution, noise reduction, waste production & disposal and
health & safety. The KION Group has also established stable processes in this regard to ensure that it
complies with the regulatory requirements. KION also fulfils all of the legal requirements pertaining to
exports and financing business.
KION Holding 1 GmbH
Group management report 2012
Page 26 of 69
FINANCIAL POSITION AND FINANCIAL PERFORMANCE
Overall assessment of the economic situation
The KION Group can look back on a successful financial year 2012. Despite the slight market
downturn, the Group increased its market share in all of its major sales regions and expanded its
service business. KION therefore proved that its business model is stable, even in a difficult economic
climate. The targeted increase in revenue was exceeded, with revenue rising by 8.2 per cent on the
back of higher volumes and price increases. About half of the growth in revenue was generated by the
emerging markets, which are KION's strategic focus region – although the volume of business
generated by the mature markets also surpassed the prior-year figure. In western Europe, KION
consolidated its premium position and gained market share owing to the close cooperation between its
new truck business and service business.
The target of achieving a year-on-year increase for the adjusted EBIT margin was also achieved. The
increase from 8.3 per cent in 2011 to 9.3 per cent in 2012 can be attributed, above all, to the extensive
restructuring and consolidation programme, which was largely completed in the year under review. As
planned, capacity utilisation in the plants was higher than in 2011. The more flexible cost structure now
in place gives KION a significant competitive edge.
The net income generated of €161 million was very e ncouraging and exceeded the anticipated figure.
It was partly boosted by a net gain from the transactions conducted with Weichai Power, but also by
an improvement in the financial result resulting from the success of the steps taken to reduce debt
levels.
KION invested in its continued growth in the reporting year. Spending on research and development
equated to 2.5 per cent of revenue, which was once again higher than the industry average. Moreover,
KION expanded its production capacity in China and Brazil in line with its strategic objective of
increasing the volume of production in emerging markets.
The considerable improvement to the financial position resulting from a capital increase, the
conversion of a shareholder loan into equity and the extension of the terms of the loans all give KION
greater flexibility with which to generate profitable growth in future. Besides optimising its funding
structure, the Group also improved its liquidity position. Another contributing factor was the increase in
free cash flow on the back of the sale of significant portions of the hydraulics business, strong
earnings performance, and efficient management of working capital.
Business situation and financial performance of the KION Group
Key influencing factors
Faltering growth in the economy and global trade impacted on the market for industrial trucks in
KION's major sales regions. Against a backdrop of economic uncertainty, customers acted
increasingly cautiously and, overall, placed fewer orders for new trucks than in 2011. The decline in
volume was offset by price increases that resulted, among other reasons, from the higher proportion of
trucks with customer-specific fittings. Postponement of necessary replacement investments in
previous years, combined with the high degree of capacity utilisation by customers, also led to greater
demand for maintenance services.
Exchange-rate differences – in particular the appreciation of the renminbi and pound sterling against
the euro – only had a minor impact on KION's financial performance. Commodity prices, which
declined on average over the year, had a slightly positive effect on the cost of sales.
KION Holding 1 GmbH
Group management report 2012
Page 27 of 69
Order intake
Despite the more subdued market conditions, the KION Group continued along its growth trajectory in
2012 and consolidated its market position as the second largest provider worldwide and as number
one in the European market.
Bucking the negative market trend, the number of new industrial trucks ordered remained relatively
stable. In western Europe, LMH and STILL benefited from their premium position and strong sales
network. The KION companies in Italy and France both performed better than the declining market,
while in the UK, KION even surpassed market growth. In Germany, KION's unit sales declined largely
in line with the market trend.
KION outperformed the largely flat market in eastern Europe and registered a year-on-year increase in
unit sales in the emerging Russian market. Unit sales rose in the Asia-Pacific region too, with KION
gaining market share in China, Vietnam, Thailand and Australia. In Central and South America, KION
significantly expanded its market share. Moreover, it was able to maintain the number of new trucks
ordered at a high level in its largest individual market, Brazil, despite the decline in demand there.
the level of the previous year (2011: €4,682 millio n).
At €4,700 million, order intake was slightly above
With unit sales of new trucks declining slightly, this small increase was due, above all, to a higher
proportion of trucks with bespoke fittings and a different product mix. Price rises on the back of the
implementation of new environmental and safety standards also had an impact, as did exchange rate
differences. As the year progressed, the economic situation dampened the market for new trucks.
Table 6
Order intake broken down by segment
in € million
LMH
STILL
Financial Services
Other & consolidation/reconciliation
Total
2012
2011
Change
2,978
1,577
509
-364
4,700
3,107
1,752
−
-178
4,682
-4.2%
-10.0%
-
<-100%
0.4%
Measured in terms of the number of new trucks ordered, KION saw a moderate increase in its global
market share, which expanded from 14.8 per cent in 2011 to 15.0 per cent in 2012. The Group's share
of the market for counterbalance trucks was 11.6 per cent and for warehouse trucks 20.5 per cent.
Slightly higher percentages were registered for global market share measured in terms of value
because the KION companies have a particularly strong presence in the premium price segment.
The order book for new trucks totalled a high level of €808 million.
Revenue
Consolidated revenue increased at a markedly higher rate than order intake, advancing by 8.2 per
cent year on year to €4,727 million (2011: €4,368 m illion). Both the sale of new trucks and the service
business contributed to this rise. KION also benefited from the high degree of capacity utilisation of the
industrial trucks in use in its key markets, which had a positive impact on the volume of replacement
investments and on demand for service.
KION Holding 1 GmbH
Group management report 2012
Page 28 of 69
Table 7
Revenue broken down by segment
in € million
LMH
STILL
Financial Services
Other
Consolidation/reconciliation
Total revenue
Revenue by product category
2012
2011
Change
3,132
1,677
509
251
-842
4,727
2,854
1,667
480
223
-855
4,368
9.8%
0.6%
6.2%
12.4%
1.5%
8.2%
Revenue from new trucks went up by 12.1 per cent to €2,651 million (2011: €2,364 million), one of the
main reasons being the strong order book from 2011. Targets were exceeded both in the LMH
segment and the STILL segment. A significant factor here was the substantial demand for electric
forklift trucks and warehouse trucks, which was fulfilled by increasing the utilisation of production
capacities.
Table 8
Revenue by product category
in € million
New business
Hydraulics
Service offering
- After sales
- Rental business
- Used trucks
- Other
Total revenue
2012
2011
Change
2,651
168
1,907
1,150
428
213
117
4,727
2,364
173
1,831
1,066
441
219
106
4,368
12.1%
-2.8%
4.1%
7.9%
-3.1%
-2.7%
10.8%
8.2%
Service business contributed €1,907 million (2011:
thereby accounted for 40.4 per cent of revenue (2011: 41.9 per cent). The growing number of truck
fleets covered by service agreements and the high level of truck utilisation pushed up demand for
maintenance services. Muted demand from southern Europe decreased revenue to a moderate
degree. Both short-term and long-term truck rentals declined slightly compared with the previous year.
Revenue from the sale of used trucks was also slightly lower than it had been in 2011. Among other
reasons, this was because demand from southern and eastern Europe was lower than anticipated.
€1,831 million) to consolidated revenue and
KION sold the majority of its hydraulics business on 27 December 2012. The amount of revenue
contributed by the hydraulics business amounted to €168 million in 2012 – a marginal change
compared to the previous year (2011: €173 million).
KION Holding 1 GmbH
Group management report 2012
Page 29 of 69
Revenue by region
KION's revenue went up in all of its sales regions, with revenue growth exceeding market growth in
many countries. Around half of the €358 million inc rease in revenue was attributable to emerging
markets in Asia, South America and eastern Europe.
Germany and its neighbouring western European countries also accounted for a considerable
proportion (44 per cent) of the absolute rise in consolidated revenue. Here the KION companies
benefited from a higher proportion of trucks with customer-specific fittings and the intrinsic link
between new truck business and service business. Expansion of the sales network, which continued
in countries such as the United Kingdom in 2012, also helped to improve KION's market position.
The above-average rise in revenue from eastern Europe was largely due to the revenue increases in
Russia resulting, among other reasons, from an intensification of sales and service activities. Revenue
also went up in Poland and the Czech Republic.
Table 9
Revenue by customer location
in € million
Germany
EU excl. Germany
Rest of Europe
America
Asia
Rest of world
Total revenue
2012
2011
Change
1,225
2,253
248
324
486
191
4,727
1,175
2,115
204
281
435
160
4,368
4.3%
6.6%
21.7%
15.5%
11.7%
19.2%
8.2%
As in 2011, KION maintained a high level of growth in Asia. The strategy pursued in this region is to
offer specific products that are based on tried-and-tested platforms but tailored to local requirements.
This was a significant factor in the 11.7 per cent rise in revenue compared with the previous year. For
the first time, the Asia-Pacific markets generated more than 10 per cent of consolidated revenue,
above all as a result of strong growth in China, to which the local Baoli brand made a significant
contribution.
In the Americas, KION achieved moderate revenue growth despite the challenging economic situation
in South America, primarily due to the volume of new orders in the Brazilian market. It should also be
noted that the full effects of the considerable expansion of production capacity during the year have
not yet been felt.
Overall, the volume of foreign revenue increased disproportionately by 9.6 per cent to €3,501 million
(2011: €3,194 million), causing the share in Group sales to climb from 73.1 per cent to 74.1 per cent.
The fast-growing emerging markets contributed 30 per cent of consolidated revenue, compared with
22 per cent in 2011.
KION Holding 1 GmbH
Group management report 2012
Page 30 of 69
Earnings
Table 10
Condensed income statement of the KION Group
in € million
Revenue
Cost of sales
Gross profit
Selling expenses
Research and development costs
Administrative expenses
Other
Earnings before interest and taxes (EBIT)
Financial result
Earnings before taxes
Income taxes
Net income (loss)
EBIT and EBITDA
2012
2011
Change
4,727
-3,430
1,297
-562
-124
-313
253
550
-239
311
-150
161
4,368
-3,256
1,112
-521
-120
-283
25
213
-272
-59
-34
-93
8.2%
-5.3%
16.6%
-8.0%
-4.1%
-10.5%
>100%
>100%
12.0%
>100%
<-100%
>100%
Earnings before interest and tax (EBIT) more than doubled year on year to €550 million (2011:
llion include one-off items, sustained growth of unit
€213 million). The reasons for this rise of €337 mi
sales in established regional markets, and stable demand from China and eastern Europe. Another
factor in the increase in EBIT was improved capacity utilisation in the new truck business.
The non-recurring items included in EBIT totalled € 153 million (2011: €-115 million). The capital
increase and the sale of significant portions of the hydraulics business resulted in a net gain before
taxes of €212 million after deduction of consultanc y costs and contractual obligations. In addition to
the net gain of €103 million from the sale of the h ydraulics business, this includes a gain of
€109 million from the remeasurement of the remainin g 30 per cent of shares held at fair value. There
was also a one-off gain of €13 million resulting fr om remeasurement of the shareholding in Linde
Creighton. Non-recurring losses were largely the result of follow-up costs in connection with the
closure of production facilities and the restructuring of the container handler and heavy forklift truck
business, including necessary impairment of assets. These, combined with consultancy costs,
amounted to losses of €71 million.
The effects of the purchase price allocation in connection with the KION acquisition equated to a loss
of €41 million in 2012, compared to the loss report ed in 2011 of €36 million. They essentially consist of
depreciation and impairment, as well as administrative expenses for KION Holding 1 GmbH.
Adjusted EBIT, which excludes non-recurring items and KION acquisition items, advanced by
€74 million to €438 million (2011: €365 million). T
his equates to an adjusted EBIT margin of
9.3 per cent (2011: 8.3 per cent).
KION Holding 1 GmbH
Group management report 2012
Page 31 of 69
Table 11
Adjusted EBIT
in € 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
2012
2011
Change
550
-153
41
438
213
115
36
365
>100%
<-100%
15.3%
20.2%
EBITDA grew from €569 million in 2011 to €915 milli on in 2012, while adjusted EBITDA rose by
€82 million year on year to €747 million. According ly, the adjusted EBITDA margin improved from
15.2 per cent to 15.8 per cent.
Financial result
The financial result – financial income offset against financial expense – improved from €-272 million
in 2011 to €-239 million in 2012. Interest expenses arising from loan liabilities fell significantly owing to
a change in interest rates. By contrast, interest expenses arising from capital market liabilities were
higher than in 2011 because the bond had only existed for eight months of that year. The balance of
finance costs arising from translation differences increased €33 million year on year. The reasons for
this include other income from the translation of loans denominated in US dollars, which were
contrasted by an expense in the previous year.
Table 12
Financial result
in € million
Financial income
Financial expense
Financial result
Income taxes
2012
2011
Change
62
-302
-239
74
-346
-272
-15.7%
12.8%
12.0%
Income taxes amounted to an expense of €150 million (2011: €34 million). Within this amount, current
2 million, largely owing to the improvement in
income tax expenses increased by €73 million to €12
operating performance and the net tax effects of €6 2 million resulting from the sale of the hydraulics
business. As in the previous year, additional deferred tax assets were not recognised because it is
unlikely that the corresponding benefit can be utilised.
KION Holding 1 GmbH
Group management report 2012
Page 32 of 69
Net income (loss)
Following the net loss of €93 million reported for 2011, KION generated net income of €161 million in
the year under review. This difference of €254 mill
ion largely resulted from an increase in adjusted
EBIT and a net gain from the sale of the hydraulics business. These positive effects were partly offset
by the rise in income taxes.
Key influencing factors for earnings
The disproportionately low rise in the cost of sales, which went up by 5.3 per cent to €3,430 million
(2011: €3,256 million), was the result of more effi cient production operations, greater capacity
utilisation and an overall fall in commodity prices. Compared with revenue, selling expenses remained
virtually unchanged. Research and development costs advanced by 4.1 per cent to €124 million (2011:
€120 million) on the back of larger-scale projects
particular in preliminary development and series development.
that made it necessary to increase headcount, in
Higher consultancy costs for strategic projects primarily contributed to the 10.5 per cent increase in
administrative expenses, which totalled €313 millio n.
Table 13
Other income and expenses
in € million
Other income
Other expenses
Other income and expenses
2012
2011
Change
294
-60
235
82
-70
11
>100%
15.0%
>100%
The balance of other expenses and income (see notes 10 and 11, pages 23 and 24) was €235 million
(2011: €11 million). Other income of €294 million (
2011: €82 million) was mainly attributable to one-o ff
income generated from the sale of the hydraulics business. The decline in other expenses to
€60 million (2011: €70 million) primarily resulted
from the decrease in impairment losses on non-
current assets and the decrease in book losses from the sale of non-current assets.
Table 14
EBIT by segment adjusted¹
in € million
LMH
STILL
Financial Services
Other & consolidation/reconciliation
Total
¹ Adjusted for KION acquisition items and one-off items
2012
2011
Change
330
123
1
-16
438
279
100
3
-18
365
18.3%
22.5%
-48.1%
8.1%
20.2%
KION Holding 1 GmbH
Group management report 2012
Page 33 of 69
Table 15
EBIT by segment
in € million
LMH
STILL
Financial Services
Other & consolidation/reconciliation
Total
2012
2011
Change
523
98
1
-73
550
258
-5
3
-42
213
>100%
>100%
-48.1%
-72.6%
>100%
Business situation and financial performance of the LMH segment
Revenue
The LMH segment's revenue went up by 9.8 per cent to €3,132 million in 2012 (2011: €2,854 million).
This equates to 66.3 per cent of consolidated revenue (2011: 65.3 per cent).
The new truck business grew at a particularly strong rate, rising by 16.0 per cent year on year and
thereby exceeding the budgeted figure. All product groups contributed to this increase, with electric
forklift trucks proving to be the main growth driver. The number of trucks ordered of this type rose by
2.3 per cent, thereby bucking the global market trend. Strong growth in Asia and the Americas resulted
in a rise of 3.4 per cent for diesel trucks despite the market's overall weakness, while warehouse
technology also outperformed the market with a decline of just 0.5 per cent.
Service revenue rose on the back of maintenance carried out in response to individual orders as well
as under service agreements. LMH's rental business performed better than in 2011 owing to growth in
short-term rentals. Sales of used trucks generated less revenue than in the previous year, although
the prior-year figure had been boosted by a significant one-off transaction.
LMH saw particularly strong revenue growth in Germany and the United Kingdom. Revenue was also
up in Russia and other eastern European countries thanks to more intensive marketing activities. In
China, the Linde and Baoli brands bucked the negative market trend and increased their revenue. In
fact, revenue in Asia as a whole increased from what had already been a high level the previous year.
Earnings
EBIT more than doubled, from €258 million in 2011 t o €523 million in 2012. The crucial factor here was
a one-off gain – the sale of the majority stake of the hydraulics business – which totalled €247 milli on
in the LMH segment. EBIT also included an additional one-off gain amounting to €13 million, resulting
from the remeasurement made in connection with the acquisition of the remaining 51 per cent of the
shares in Linde Creighton. A gain of €3 million gen erated by the sale of the plot of land in Basingstoke,
United Kingdom, was largely offset by follow-up costs caused by the closure of the plant there. Total
one-off and non-recurring items amounted to a gain of €226 million. One-off items had amounted to an
expense of €5 million in 2011. The KION acquisition items attributable to the LMH segment amounted
to an expense of €33 million in 2012, compared with an expense of €26 million in 2011. Adjusted EBIT
increased by €51 million to €330 million (2011: €27
9 million). Apart from the growth in earnings, the
reason for this rise was the programme of measures designed to cut costs and boost efficiency. As a
result, the adjusted EBIT margin improved from 9.8 per cent in 2011 to 10.5 per cent in 2012. Adjusted
EBITDA in the LMH segment came to €478 million (201 1: €423 million), corresponding to an adjusted
EBITDA margin of 15.3 per cent (2011: 14.8 per cent).
KION Holding 1 GmbH
Group management report 2012
Page 34 of 69
Business situation and financial performance of the STILL segment
Revenue
The STILL segment's revenue increased slightly by 0.6 per cent to €1,677 million (2011:
€1,667 million). The reduction in revenue in wester n Europe was offset by substantial growth in central
and eastern Europe and Asia, where significant new orders were secured. STILL’s market presence in
eastern Europe has been strengthened even further by integrating of the STILL and OM dealers in
Russia. In Yekaterinburg in the Ural region, STILL has already founded its third branch in Russia after
Moscow and Saint Petersburg. In Poland, STILL’s service and distribution structure has been
expanded via a new branch in Gdansk.
Also going significantly against the market trend, STILL generated revenue growth in South America,
where the core market is Brazil. STILL took a further step towards becoming market leader there by
relocating and expanding production (see page 17) and launching the production of diesel trucks.
Revenue rose slightly in Asia, where STILL expanded its footprint by opening a new office in
Singapore. In Italy, integration of OM into the STILL Group was completed, helping to consolidate
STILL's market leadership.
Overall, revenue from new trucks was moderately lower than in 2011 despite the increase in revenue
from diesel trucks. The relocation of production led to a decrease in the numbers of units
manufactured during the transition period. This one-off effect was in line with expectations.
The small decrease in the new truck business was more than offset by higher revenue from service
activities, with especially strong gains in revenue from short-term rental business.
Earnings
EBIT in the STILL segment stood at €98 million in t he year under review. This very substantial
increase of €103 million was the result of the incr ease in sales, cost savings, and the use of efficiency
gains. The EBIT figure reported for 2011, which had amounted to a net loss of €5 million, had been
negatively affected by expenses in connection with the consolidation of production facilities in Europe
and closure of the plants in Montataire and Bari, including provisions for the related severance
payments. Accordingly, non-recurring items produced an expense of €97 million in 2011, compared
with a net expense of just €17 million in 2012.
The KION acquisition items attributable to the STILL segment amounted to an expense of €7 million in
2012, compared with an expense of €8 million in 201 1. Adjusted EBIT climbed to €123 million (2011:
€100 million). This caused the adjusted EBIT margin to rise from 6.0 per cent in 2011 to 7.3 per cent in
2012. Adjusted EBITDA improved to €218 million (201 1: €191 million), while the adjusted EBITDA
margin climbed from 11.5 per cent to 13.0 per cent.
KION Holding 1 GmbH
Group management report 2012
Page 35 of 69
Business situation and financial performance of the Financial Services (FS)
segment
Business situation
Revenue generated by the Financial Services segment increased from €480 million to €509 million
and includes intra-group revenue with the LMH and STILL segments. The revenue that the FS
segment generated outside the Group rose by 12.0 per cent to €297 million (2011: €265 million).
The volume (residual value) of leasing in the FS segment amounted to €997 million as at
31 December 2012 (31 December 2011: €906 million). Of this total, 45 per cent was attributable to FS
companies. The volume, which was refinanced via sale and leaseback agreements, amounts to 80 per
cent of the total value. The refinancing of the remaining 20 per cent takes place via Group treasury as
part of KION’s financial liabilities. If one includes the indirect leasing business, which is handled via
external lease providers and is not a part of the FS segment, 73 per cent of the leasing business
concentrates on the core European markets of Germany, France, the UK, Italy and Spain.
Financial performance
The FS segment registered earnings before taxes (EBT) of €5 million in 2012 (2011: €6 million). The
adjusted EBT margin, expressed as a percentage of total revenue, decreased from 1.28 per cent to
0.94 per cent.
Business situation and financial performance of the Other segment
Business situation
Total revenue in the Other segment rose significantly year on year to €251 million (2011: €223 million ).
As in 2011, the main revenue drivers were internal IT and logistics services. Revenue generated from
external companies amounted to €43 million (2011: € 40 million), most of which was contributed by
Voltas MH, which had only been consolidated for nine months in 2011. Voltas MH benefited from the
increased production capacity at the plant built in Pune in 2011 and from the further strengthened
sales and service network.
Financial performance
EBIT in the Other segment decreased to €-12 million (2011: €43 million), while adjusted EBIT fell from
n part to decreased investment income. The
€68 million in 2011 to €44 million in 2012, owing i
markedly positive result of the Other segment includes significant investment income from subsidiaries
that were eliminated at Group level. Operationally, Voltas MH in particular made a positive contribution
to segment earnings.
KION Holding 1 GmbH
Group management report 2012
Page 36 of 69
Financial position
Principles and objectives of financial management
By pursuing an appropriate financial management strategy, KION GROUP GmbH ensures that
sufficient cash and cash equivalents are available at all times to meet the Group companies'
operational and strategic funding requirements. In addition, KION GROUP GmbH optimises its
financial relationships with customers and suppliers, manages any collateral security offered and
mitigates the financial risk to its enterprise value and profitability, notably currency risk, interest-rate
risk, price risk, counterparty risk and country risk.
A syndicated credit facility with a group of international banks and investors meets KION's basic
borrowing requirements. In addition, KION avails itself of the funding facilities offered by the public
capital markets, having issued a corporate bond of 2011.
The financial resources within the Group are provided based on an internal funding approach.
According to this approach, KION 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 source of funding enables KION 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.
For funding purposes, KION also engages to a small extent in factoring. The volume of non-recourse
factoring business amounted to €20 million at the e nd of 2012 (31 December 2011: €18 million); the
Company only uses recourse factoring in isolated cases. The KION Group maintains a liquidity
reserve in the form of unrestricted, bindingly committed credit lines and cash in order to ensure
financial flexibility and solvency.
The senior facility agreement (SFA), which is the main loan agreement, and the contractual terms and
conditions governing the issuance of the corporate bond require, among other things, compliance with
covenants. 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. 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.
KION only uses derivatives to hedge underlying operational transactions; in particular, they comprise
currency forwards and interest-rate swaps and are used for hedging purposes to mitigate currency
and interest-rate risks. In the year under review only cash flow hedges were used for currency and
interest-rate risks.
Main financing activities in 2012
KION's financial position improved substantially in 2012 owing to a number of measures put in place.
The steps taken to reduce debt levels will have a positive impact on financial result in future years.
The shareholder loan from Superlift Holding S.à r.l., which had a principal amount of €500 million plu s
accrued interest of €171 million, was converted int o equity on 27 December 2012. On the same date,
a contribution of €467 million (including premium) was paid by Weichai Power for the takeover of
25 per cent of the share capital of KION Holding 1 GmbH (see note 28, page 41). These two steps,
less credit procurement costs, increased the KION Group's equity by €1,133 million, which had been
negative as at 31 December 2011. Another positive impact came from Weichai Power's acquisition of
70 per cent of the shares in Linde Hydraulics. This resulted in earnings of €212 million before taxes,
KION Holding 1 GmbH
Group management report 2012
Page 37 of 69
which, together with the favourable operating result, boosted net income in 2012 and thereby also
helped to increase equity.
Conversion of the shareholder loan improved the borrowing situation. Furthermore, KION GROUP
GmbH successfully negotiated with its creditors to extend the maturities of existing loan facilities with a
volume of more than €1 billion (see note 30 on page 53). This also creates greater flexibility with
regard to paying back senior facilities agreements (SFAs). The maturity of the existing revolving credit
line was also extended from December 2013 to December 2016. Additional commercial and technical
changes included a moderate increase in the funds available for acquisitions (acquisition basket).
Shareholder loan G, which has a volume of €114 mill
ion, was extended from December 2016 to June
2018. By issuing a new corporate bond at the beginning of the new financial year, KION achieved a
further extension on its debt maturity profile (see ‘Events after the balance sheet date’, page 57).
Analysis of capital structure
Table 16
Condensed balance sheet, equity and liabilities
in € 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
Financial debt
2012
in %
2011
in %
Change
660
3,929
−
489
1,811
309
329
10.6%
63.2%
0.0%
7.9%
29.2%
5.0%
5.3%
-488
4,842
643
488
2,290
339
300
-8.0%
79.8%
10.6%
8.0%
37.7%
5.6%
4.9%
1,624
26.1%
1,711
28.2%
52
646
146
6,213
0.8%
10.4%
2.3%
227
634
147
6,066
3.7%
10.5%
2.4%
>100%
-18.9%
-100.0%
0.4%
-20.9%
-8.9%
9.7%
-5.1%
-77.2%
1.9%
-0.6%
2.4%
KION's total financial liabilities – including the bond issued in 2011 – amounted to €2,352 million as at
31 December 2012, down by €652 million compared wit h the same date a year earlier. The crucial
factor here was the reduction of financial liabilities resulting from cash inflows from the Weichai
transaction of €471 million, the repayment of a dra wdown of €138 million taken on the revolving credit
facility in November 2011, as well as the repayment of the multicurrency capex facility in the amount of
€56 million and a decrease in the financial liabili ties of local Group companies. This was counteracted
by the increase in accrued and unpaid interest (payment in kind, PIK).
As at 31 December 2012, the equity and liabilities side of the consolidated statement of financial
position continued to be significantly affected by the financial liabilities incurred through KION Group's
acquisition financing (SFA).
KION Holding 1 GmbH
Group management report 2012
Page 38 of 69
Non-current financial liabilities stood at €2,301 m illion as at 31 December 2012 (31 December 2011:
€2,777 million), which was primarily due to cash in flows resulting from the Weichai transaction of €47 1
million, and currency fluctuations. Also included were capital market liabilities of €489 million. The se
were the liabilities arising from the corporate bond issued in 2011 with a total volume of €500 millio n.
Of this amount, €325 million carried a fixed intere st rate and €175 million a floating interest rate. The
carrying amount of the bond was reduced by associated borrowing costs of €11 million.
Current financial liabilities, which came to €52 mi
the remaining multi-currency capex facility (€18 mi
companies (€33 million). The year-on-year decrease (31 December 2011: €176 million) is attributable
to the payment of the amount of the revolving credit facility, the partial reduction of the capex facility,
and the reclassification of €18 million of non-curr ent financial liabilities to current financial liabilities
within the multi-currency capex facility, which were carried out in 2012. The weighted average interest
rate on current financial liabilities arising from the multi-currency capex facility was 3.4 per cent as at
31 December 2012 (31 December 2011: 4.4 per cent).
llion as at 31 December 2012, largely consisted of
llion) and the financial liabilities of local Group
Table 17
Credit terms
in € million
Type
Currency
Interest rate
Maturity
2012
20 11
Bank Loan
Term Loan Facility Term B1
Bank Loan
Term Loan Facility Term B2
Bank Loan
Term Loan Facility Term B1
Bank Loan
Term Loan Facility Term B2
Bank Loan
Term Loan Facility Term C1
Bank Loan
Term Loan Facility Term C2
Bank Loan
Term Loan Facility Term C1
Bank Loan
Term Loan Facility Term C2
Bank Loan
Term Loan Facility Term D
Term Loan Facility Term G
Bank Loan
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
EUR
USD
USD
EUR
EUR
USD
USD
EUR
EUR
EUR
EUR
Other liabilities to banks
Diverse
Diverse
EURIBOR + MARGIN 2014
EURIBOR + MARGIN 2017
LIBOR + MARGIN 2014
LIBOR + MARGIN 2017
EURIBOR + MARGIN 2015
EURIBOR + MARGIN 2017
LIBOR + MARGIN 2015
LIBOR + MARGIN 2017
EURIBOR + MARGIN 2012
EURIBOR + MARGIN 2018
2018
3-M-EURIBOR+MARGIN 2018
EURIBOR + MARGIN 2012
Fixed rate
EURIBOR + MARGIN 2013
Various currencies and interest
terms
Other financial liabilities to non-banks
./. Capitalized borrowing costs
Financial debt
Net financial debt
139
411
108
79
287
383
227
81
−
116
325
175
−
18
33
4
-34
691
−
311
−
663
−
311
−
202
111
325
175
133
72
38
7
-33
2,352
3,005
After deduction of cash and cash equivalents, the remaining net financial debt came to €1,790 million
as at 31 December 2012 (31 December 2011: €2,631 mi
llion). At €34 million, the borrowing costs
included within this were close to the level of the previous year (31 December 2011: €33 million). The
sharp decline in net financial debt of 32.0 per cent is due to repayments and the net cash provided by
the contributions made as part of the resolution to carry out a capital increase.
KION Holding 1 GmbH
Group management report 2012
Page 39 of 69
Table 18
Net financial debt
in € million
Corporate bond - fixed rate (2011/2018) - gross
Corporate bond - floating rate (2011/2018) - gross
Liabilities to banks (gross)
Liabilities to non-banks (gross)
./. Capitalized borrowing costs
Financial debt
./. Cash and cash equivalents
Net financial debt
Shareholder loan
2012
2011
Change
325
175
1,882
4
-34
2,352
562
1,790
325
175
2,530
7
-33
3,005
373
2,631
−
−
-25.6%
-38.8%
-4.5%
-21.7%
50.6%
-32.0%
The shareholder loan from Superlift Holding S.à r.l., which totalled €671 million (principal amount pl us
accrued interest), was converted into equity in 2012 in connection with the strategic partnership with
Weichai. This item had totalled €643 million at the end of 2011.
Retirement benefit obligation
KION supports pension plans in many countries. These plans comply with legal requirements, local
practice and the situation in the country in question. They are either defined benefit pension plans,
defined contribution pension plans, or multi-employer benefit plans. Provisions for retirement benefit
obligations in connection with defined benefit pension plans amounted to €547 million as at
31 December 2012. The net obligation after deduction of assets arising from pensions worth €23
n at the end of 2011. The rise was caused by the
million was €524 million, compared with €363 millio
marked reduction in discount rates as a result of the change in market interest rates. This effect was
partly offset by the removal of net pension obligations of €65 million as part of the sale of signific ant
portions of the hydraulics business.
Contributions to pension plans that are funded in whole or in part via a pension fund are paid in as
necessary to ensure sufficient assets are available and to be able to make future pension payments to
pension plan participants. These contributions are determined by various factors, such as the funded
status, legal and tax considerations, and local practice. In 2012, payments to pensioners made by
KION under pension plans totalled €23 million, whic h can be broken down into €9 million for employer
contributions to plan assets and €14 million for di rect pension payments.
Further details about retirement benefit and similar obligations are provided in note 29 on pages 43 to
45.
Lease liabilities
As at 31 December 2012, lease liabilities arising from financial services activities amounted to
€475 million (31 December 2011: €447 million), and were exclusively the result of sale and leaseback
transactions used to finance leases with customers. Of this total, €329 million was accounted for by
non-current lease liabilities (31 December 2011: €3 00 million) and €146 million by current lease
liabilities (31 December 2011: €147 million). The r ise in non-current lease liabilities is attributable,
above all, to new leases, reflecting the growing demand for this type of financing. In addition, short-
term rental, indirect leasing and procurement leasing were assigned to the brands in 2012 in the
KION Holding 1 GmbH
Group management report 2012
Page 40 of 69
context of the new segmentation. The corresponding liabilities were reclassified accordingly under
other financial liabilities (see note 33, pages 58 and 59). Other financial liabilities also include liabilities
arising from residual-value guarantees amounting to €21 million. These relate to residual-value
guarantees, provided in connection with the sale of assets to leasing companies, where the
guaranteed amount is more than 10 per cent of the fair value of the asset in question. The lease
liabilities are covered to the furthest extent possible by lease receivables, future inflows of funds from
sub-leases with customers and revenue from the sale of used trucks.
Equity
The KION Group's equity rose by €1,148 million year on year to €660 million (31 December 2011:
minus €488 million). The main contributing factor h ere was the conversion of the shareholder loan into
equity, as well as the contribution made by Weichai Power for the acquisition of 25 per cent of the
shares in KION Holding 1 GmbH by way of a capital increase (see page 7). The increase in the
balance of retained earnings and net income from minus €806 million to minus €648 million was due
to the encouraging level of net income.
Funding vehicles not reported on the statement of financial position
KION makes limited use of funding vehicles not reported on the statement of financial position. As part
of its financing activities KION has, both for its own use and to be transferred on to its customers,
entered into lease agreements that in accordance with the relevant IFRS requirements are not
reported as either an asset or a liability on the statement of financial position. The nominal amount of
the contractual obligations arising from such leases not reported on the statement of financial position
was €194 million as at 31 December 2012 (31 Decembe r 2011: €205 million, see note 34, page 61).
Analysis of capital expenditure
Capital expenditure (excluding leasing and rental assets) was funded by cash flow from operating
activities and by withdrawals from the revolving part of the SFA in 2012.
The total volume of investment was €155 million, wh ich represents a year-on-year rise of 16.6 per cent
(2011: €133 million). The main reasons for this ris e were product developments and production
modifications, ongoing modernisation of the IT infrastructure and the construction and expansion of
production facilities, particularly in China and Brazil. In both segments, LMH and STILL, capital
expenditure increased.
The bulk of capital expenditure went on the development of new counterweight trucks, electric forklift
trucks and reach trucks (see the section on research and development, pages 50 to 53) – partly to
comply with stricter environmental regulations – and on innovations such as hybrid technology.
Operational investments predominantly related to equipment and machinery for the production of new
industrial trucks and components. IT investment projects related to areas such as central sales
management.
KION Holding 1 GmbH
Group management report 2012
Page 41 of 69
Table 19
Capital expenditures by segment
in € million
LMH
STILL
Financial Services
Other
Total
2012
2011
Change
89
51
0
15
155
76
43
−
14
133
17.4%
18.1%
-
7.3%
16.6%
Current capital expenditure projects do not incur any significant subsequent financial obligations.
Analysis of liquidity
Liquidity management is an important aspect of central financial management. The sources of liquidity
are cash and cash equivalents (including pledged cash deposits), cash flow from operating activities
and lines of credit available under the SFA. Cash and cash equivalents totalled €562 million as at
31 December 2012 (31 December 2011: €373 million). Taking into account the available multi-currency
revolving credit facility, KION had access to cash and cash equivalents amounting to €931 million as a t
the reporting date, compared with €499 million as a t 31 December 2011.
Table 20
Condensed cash flow statement
in € million
2012
2011
Change
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 debt
550
414
104
518
-330
1
189
213
387
-153
234
-115
1
121
>100%
7.0%
>100%
>100%
<-100%
-7.2%
56.7%
1,790
2,631
-32.0%
Cash flow from operating activities increased from €387 million in 2011 to €414 million in 2012. This
was due to the €337 million increase in EBIT, which had been influenced to some extent by non-
recurring items (see page 30). Overall, this more than offset the decrease in cash flow caused by the
net increase in leased and rental assets (after the deduction of writedowns).
Cash flow from investing activities resulted in the amount of €104 million (2011: net cash outflow of
€153 million). The outflows of cash for the acquisi tion of the outstanding shares in Linde Creighton and
for investment in plant and machinery as well as office equipment – predominantly in Brazil and China
– were offset by net inflows of €260 million from t he sale of the hydraulics business.
Due to the influencing factors described, free cash flow (see page 21) rose to €518 million (2011:
€234 million).
KION Holding 1 GmbH
Group management report 2012
Page 42 of 69
Cash flow from financing activities amounted to a total net cash outflow of €330 million in 2012 (2011 :
net cash outflow of €115 million). Repayment of the finance facilities resulted in an outflow of cash of
ay the multi-currency revolving credit facility and
€665 million, of which €138 million was used to rep
€56 million to repay the multi-currency capex facil
ity. Interest payments amounted to €130 million,
compared with €147 million in 2011. Of the moderate cash outflow of €10 million, €8 million occurred
in connection with the acquisition of the remaining shares in Voltas MH. The inflow of cash from the
contribution made as part of the resolution to carry out the capital increase had a positive effect on
cash flow.
This caused cash and cash equivalents to rise sharply, from €373 million at the end of 2011 to
€562 million at the reporting date (see page 43).
KION Holding 1 GmbH
Group management report 2012
Page 43 of 69
Net assets
Table 21
Condensed balance sheet, assets
in € million
2012
in %
2011
in %
Change
Non-current assets
thereof:
Goodwill
Brand names
Deferred tax assets
Leased assets
Rental assets
Lease receivables
Current assets
thereof:
Inventories
Trade receivables
Lease receivables
Cash
Total assets
Non-current assets
4,231
68.1%
4,160
68.6%
1,473
594
265
191
395
267
23.7%
9.6%
4.3%
3.1%
6.4%
4.3%
1,538
594
262
167
357
243
25.4%
9.8%
4.3%
2.8%
5.9%
4.0%
1,982
31.9%
1,906
31.4%
550
625
132
562
6,213
8.9%
10.1%
2.1%
9.1%
625
677
118
373
6,066
10.3%
11.2%
2.0%
6.2%
1.7%
-4.2%
-0.1%
1.1%
14.3%
10.8%
10.0%
4.0%
-12.1%
-7.6%
11.6%
50.6%
2.4%
Non-current assets increased by 1.7 per cent year on year to €4,231 million (31 December 2011:
€4,160 million).
The decline in intangible assets, which had fallen by €108 million to €2,407 million as at the reporti ng
date, was predominantly due to the reduction in goodwill as part of the sale of significant portions of
the hydraulics business. Depreciation and amortisation on technologies, developments and other
intangible assets exceeded the volume of assets capitalised during the period.
As at 31 December 2012 leased assets totalled €191 million, up by €24 million compared with
31 December 2011. The increase can primarily be attributed to the greater volume of operating leases
for industrial trucks, in which beneficial ownership remains with KION as the lessor. KION’s good
operational development led to an increase in leasing assets in spite of the separation of leased and
rental assets resulting from the new segmentation (see note 8, page 9). Rental assets also increased
by €38 million as at 31 December 2012, to €395 mill
ion.
Other property, plant and equipment declined by €53 million year on year to €500 million. New assets
were added, above all in connection with the expansion of production facilities in China and Brazil.
However, these were offset by disposals resulting from the sale of the hydraulics business, impairment
losses recognised in connection with the closure of production facilities as well as depreciation and
amortisation.
The marked increase in investments accounted for using the equity method, from €37 million to
€155 million is primarily attributable to the conso lidation of the minority shareholding in Linde
Hydraulics.
KION Holding 1 GmbH
Group management report 2012
Page 44 of 69
The increase in non-current leasing receivables by 10.0 per cent to €267 million reflects the high
number of additional long-term leasing agreements.
The increase in other financial assets from €26 mil
measurement of derivatives at fair value and the measurement of the put option on additional shares
in Linde Hydraulics.
lion to €50 million was predominantly due to the
An explanation of the change in deferred tax assets is provided in note 16 on page 27.
Acquisition of the outstanding shares in Linde Creighton resulted in additions of €27 million to non-
current assets and of €19 million to current assets .
Current assets
Current assets had grown by €76 million to €1,982 m illion as at 31 December 2012. The main reason
for this was the rise in cash and cash equivalents owing to the contributions made as part of the
resolution to carry out a capital increase in connection with Weichai Power's investment in KION
Holding 1 GmbH.
Inventories decreased by €75 million to €550 millio
n, predominantly due to the deconsolidation of
Linde Hydraulics. Moreover, the year-on-year increase resulting from KION’s operating activities was
rebalanced at the end of the year under review.
Table 22
Inventories
in € million
Materials and supplies
Work in progress
Finished goods and merchandise
Advances paid
Total inventories
2012
2011
Change
120
75
349
6
550
151
98
371
5
625
-20.5%
-23.8%
-5.8%
11.8%
-12.1%
Trade receivables fell by €51 million to €625 milli on as at 13 December 2012.
Working capital (inventories and trade receivables less trade payables) was €529 million as at the
reporting date, €138 million less than it had been a year earlier (31 December 2011: €668 million).
The substantial rise in cash and cash equivalents, from €373 million at the end of 2011 to €562 millio n
as at 31 December 2012, can be attributed to the considerable improvement to the operational cash
lion resulting from the Weichai transactions was
flow of the KION Group. The cash inflow of €738 mil
used as far as possible to repay financial debt, leading to an increase in cash of €73 million (see
page 42).
Investor relations
In April 2011 KION issued its first secured corporate bond, thereby opening up access to the
international capital markets and diversifying its investor base. With a maturity date of 2018 and a total
in
volume of €500 million, the bond was issued in a tr anche of €325 million at a fixed interest rate and
KION Holding 1 GmbH
Group management report 2012
Page 45 of 69
a tranche of €175 million at a floating interest ra te. It is listed on the Luxembourg stock exchange. The
coupon on the fixed-interest tranche (ISIN XS0616432224) is 7.875 per cent. The floating-rate tranche
(ISIN XS0616442298) is 425 basis points above the prevailing three-month EURIBOR rate, which
equated to an average interest rate of 5.0 per cent over the reporting period.
Chart 7: Bond performance since issue in April 2011
Having been rather subdued in 2011, the market for corporate bonds was generally very popular in
2012. Market growth also benefited the performance of the two KION tranches, which completely
made up for the falls in price seen during the previous year. As a result, the increase generated in
2012 was sharper than that of the benchmark index, the iBoxx. This was certainly also due to KION's
strong operational performance, as reflected in the adjusted annualised EBIT, which benefited the
bond prices.
Since issuing the bond, KION has established relationships based on transparent communications
with financial analysts and investors specialising in high-yield bonds and has integrated them in its
regular capital market communications as part of its investor relations activities. Another important
aspect of this work was the cooperation with the rating agencies Standard & Poor’s (S&P) and
Moody’s Investors Service (Moody’s), which have rated KION since the bond issue. The credit ratings
awarded did not change in 2012: the KION Group's rating was B3/stable (Moody’s) and B/stable
(S&P), while the bond's was B2 (Moody’s) and B (S&P).
During the new financial year, Moody’s raised its rating outlook for the KION Group from stable to
positive. At the same time, the very successful placement of an additional corporate bond has also
confirmed KION’s good standing with bond investors (see ‘Events after the balance sheet date’ on
page 57).
KION Holding 1 GmbH
Group management report 2012
Page 46 of 69
NON-FINANCIAL PERFORMANCE INDICATORS
KION's enterprise value is determined not only by financial KPIs but to a significant extent also by non-
financial ones. The non-financial KPIs are based on KION's relations with its customers and
employees, on its technological position and on environmental considerations. They enable
conclusions to be drawn about the extent to which KION succeeds in:
• being an attractive and responsible employer that can retain competent and committed
employees;
• developing products that meet customers' needs and environmental requirements now and in
future;
•
continually increasing the customer benefits provided by its products and services;
• designing production processes in such a way that resources are conserved and emissions
are avoided as far as possible.
KION firmly believes that these aspects are crucial to its positioning as a pioneering company in a
highly competitive environment.
Human resources
HR strategy
KION's success is founded on the capabilities and commitment of its employees. The Group's human
resources (HR) strategy is geared towards providing the best possible support for strategic
development and international growth. KION aims to always have a sufficient number of qualified,
committed employees at all levels of the Group and to offer them attractive working conditions and the
opportunities afforded by working for an international group of companies. This strategy also enables
KION to tackle the challenges of demographic change.
The KION Group's growth in 2012 was reflected in the size of its workforce, which amounted to 22,232
employees on average over the year (2011: 20,797 employees). As at 31 December 2012, a total of
21,215 employees (full-time equivalents including trainees and apprentices) were employed across
the Group. The reduction is a result of spinning off the hydraulics business. A total of 1,487 employees
transferred to the new company Linde Hydraulics on 27 December 2012 and therefore no longer
belong to the KION Group.
The number of employees in the LMH segment fell moderately. The aforementioned effect of the sale
of the hydraulics business was largely offset by growth in other areas, including the acquisition of the
sales company Linde Creighton Ltd. with 300 full-time equivalents. The service teams in eastern
Europe were also enlarged in order to meet growing demand in that region. In the STILL segment, the
decline in the number of production employees – resulting from the transfer of production to other sites
– was offset by an increase in sales and service roles. The new FS segment's headcount advanced
from 96 to 112 over the course of the year.
Every region (except Germany) registered a year-on-year rise in employee numbers. Germany is an
exception to this, as the divestment of the hydraulics business resulted in a decrease in employees in
the KION Group. The strongest percentage increases occurred in the Americas and China. As at
31 December 2012, 65.1 per cent of the workforce was employed outside Germany (31 December
2011: 61.5 per cent).
KION Holding 1 GmbH
Group management report 2012
Page 47 of 69
Headcount
Table 23
Full-time equivalents
31/12/2012
Germ any
France
Rest of Europe
China
Americas
Rest of World
Total
31/12/2011
Germ any
France
Rest of Europe
China
Americas
Rest of World
Total
LMH
STILL
3,073
2,302
3,919
3,124
122
608
13,148
4,331
2,221
3,644
2,856
161
573
13,786
3,864
739
2,193
0
457
0
7,253
3,641
899
2,379
0
373
0
7,292
FS
21
13
52
9
1
16
112
16
16
55
1
3
5
96
Other
Total
439
95
0
0
0
168
702
428
107
2
0
0
151
688
7,397
3,149
6,164
3,133
580
792
21,215
8,416
3,243
6,080
2,857
537
729
21,862
the minimum possible social
Consolidation of the European production sites, which had been initiated in 2011, was implemented in
2012 with
in close collaboration with employee
representatives. The site in Montataire (France) was shut down and manufacturing of warehouse
trucks was transferred from there to Luzzara (Italy) in the fourth quarter of 2012. The site in Bari (Italy)
closed in July 2012, with production of counterbalance trucks transferring to Hamburg.
impact and
Due to higher average number of positions during the year under review, coupled with wage and
salary adjustments, personnel costs were 13.1 per cent higher than in the previous year.
Table 24
Personnel expenses
in € million
Wages and salaries
Social security contributions
Post-employment benefit costs
Total
2012
2011
Change
947
222
34
834
200
30
1,203
1,064
13.5%
11.1%
13.4%
13.0%
KION Holding 1 GmbH
Group management report 2012
Page 48 of 69
Diversity
KION sees itself as a global provider with intercultural skills that fosters international cooperation
between employees – for example through the Linde expat programme, which enables employees to
move to a number of partner countries. As at 31 December 2012, KION employed people from 69
different countries.
Another aspect of diversity is increasing the proportion of female employees, which rose from 14.7
per cent to 15.9 per cent in 2012. Women occupied 8.6 per cent of management positions (2011: 8.2
per cent).
KION has taken a range of steps to tackle the challenges of demographic change. For example, it
ensures working conditions are suited to employees' age-related requirements and organises healthy-
living programmes so that it can continue to benefit from older employees' experience. KION also
offers partial retirement models, in which 333 employees were participating as at the reporting date
(31 December 2011: 412). On this date, 23 per cent of employees were over the age of 50
(31 December 2011: 23 per cent).
In addition, KION offers flexible working-time models that promote a good work-life-balance. For
example, Linde MH signed a company agreement about 'teleworking/home office' in the first quarter of
2012. The agreement stipulates the terms on which employees can work at home on a mutually
agreed, voluntary basis.
Development of specialist workers and executives
Finding highly qualified people to fill specialist and executive positions is crucial to KION's success. As
a result, one of the focuses of HR work was again the recruitment of suitable young talent in 2012.
KION endeavours to offer them interesting development opportunities and flexible, family-friendly
working-time models.
The Group companies collaborate on areas such as talent management and training & development
programmes. This helps to systematically identify and support staff with strong potential, high
performers and experts in key functions. Launched in 2012, KION Campus is an international, cross-
brand executive development programme aimed at the Group's 300 or so top executives. KION
cooperates with the European School of Management and Technology (ESMT) on the programme. In
addition, new managers at STILL receive support under the First Leading programme during their first
few years. Prospective managers can enhance their skills through STILL's Young Professional
programme, while international staff with high potential can participate in the International Junior
Circle. The STILL Academy offers subject-specific and interdisciplinary skills training courses.
Opportunities at LMH include a virtual assessment centre for future managers.
In March 2012 STILL was one of around 100 German companies to receive the 'Germany's Top
Employers 2012' award. Certification for this award is carried out by the international Corporate
Research Foundation (CRF Institute), which looks at what employers offer in terms of remuneration
and employee benefits, career and development opportunities, working conditions and corporate
culture.
Training and professional development
The companies in the KION Group currently offer training for 17 professions in Germany. They
employed a total of 543 trainees and apprentices as at 31 December 2012 (31 December 2011: 621
including the hydraulics business). Work placements for students combining vocational training with a
degree course are also offered in cooperation with various universities. In the year under review STILL
came third in the competition 'Hamburg's best workplace training providers'.
KION Holding 1 GmbH
Group management report 2012
Page 49 of 69
Health and safety in the workplace
The steps that the KION companies must take with regard to workplace safety, health and the
environment are laid down in a corporate policy. According to this document, KION's obligations
include taking comprehensive precautions to ensure a safe working environment and ensuring
employees know how to avoid risks and accidents.
Strict rules governing health, safety and the environment apply in all areas of the company. In the
reporting year, ten plants were audited in accordance with a group-wide standard. The audits
increased awareness of workplace safety and highlighted areas for improvement. In 2012 the KION
companies arranged 783 training courses in Germany alone on various aspects of workplace safety.
At 97 per cent, the health rate remained at the same high level as in the previous year. The number of
workplace accidents and the workdays lost as a result had fallen compared with 2011. Analysis of
accidents and detailed action plans help to reduce risks in the workplace.
KION Holding 1 GmbH
Group management report 2012
Page 50 of 69
Research and development
Strategic focus of research and development
In 2012 the KION Group again channelled a considerable proportion of its product revenue into
enhancing its portfolio so that it can consolidate its position as a leading technology provider.
Research and development (R&D) is therefore geared towards the overarching aim of containing
customers' total cost of ownership (TCO) – including purchase price, maintenance and repair costs
and fuel consumption – while complying with environmental targets and regulatory requirements. R&D
activities also focus on integrating KION's logistics solutions into customers' value chains and
harnessing the potential of new application areas.
Brand-specific and cross-brand modular and platform strategies are pursued to ensure R&D is as
cost-efficient as possible. KION has taken steps to reduce the complexity and diversity of products and
thereby accelerate the development process. The cross-brand R&D platform enables research results
and technological expertise to be shared, although responsibility for product development lies mainly
with the individual companies.
In the year under review the KION Group continued to expand its international R&D facilities so that it
can better cater to the different requirements of customers around the world. A research centre at the
new São Paulo plant was set up in 2012 to develop trucks for the South American market. KION also
expanded its development departments in Xiamen, China and Pune, India. Following the closure of
the plant in Montataire, France, the European development teams for warehouse trucks are now
located in Châtellerault, France and Luzzara, Italy.
Key R&D figures
The KION Group spent a total of €120 million on R&D in 2012, the same amount as in the previous
year. This corresponded to 2.5 per cent (2011: 2.8 per cent) of revenue, or 4.3 per cent of revenue in
new trucks and the hydraulics business. Consequently, R&D costs during the year under review were
higher than the industry average. This total included capitalised development costs of €51 million
(2011: €53 million), which were offset by depreciat ion and amortisation of €56 million (2011:
€53 million) (see note 18, page 32). The 4.1 per ce nt rise in the amount recognised as an expense
was largely attributable to a multitude of new developments and refinements – which required
additional headcount, above all in preliminary and series development – as well as higher salary costs
and material costs. The cost increases were kept down by improving efficiency, notably through cross-
brand cooperation as part of modular and platform strategies and by concentrating CAD services in
Xiamen.
The number of full-time equivalents employed in R&D totalled 847 as at the reporting date
(31 December 2011: 914, including hydraulics activities). An increase in full-time positions can be
calculated on a comparable basis, which primarily related to the expansion of the KION Asia
development centre in Xiamen (China), whereas there was only an insignificant change in headcount
in Europe.
External costs predominantly related to engineering services, materials for prototype development and
IT. LMH and Linde Hydraulics have begun to collaborate closely on developing new hydraulics
products for the future.
Total R&D spending, including depreciation, amortisation and impairment, as well as capitalisation of
assets, amounted to €120 million in 2012.
KION Holding 1 GmbH
Group management report 2012
Page 51 of 69
Table 25
Total R&D spending
in € million
R&D expenses
Amortisation/impairment charges
Capitalised development expenses
Total R&D spending
R&D spending as percentage of revenue
2012
2011
Change
124
-56
51
120
2.5%
120
-53
53
120
2.8%
4.1%
-5.7%
-4.0%
-0.1%
-
KION takes comprehensive measures to protect the products it develops against imitations. In 2012
the KION companies registered a total of 63 patents. The number of patent applications totalled 96, of
which 50 were submitted by LMH and 41 by STILL. The decrease year on year (2011: 125 patent
applications) results from the disposal of the hydraulics business. On a comparable basis, the number
of patent applications increased moderately compared to the previous year.
As at 31 December 2012, the companies of the KION Group held a total of 1,495 patent applications
and issued patents (31 December 2011: 1,720 patent applications and issued patents).
Focus of R&D in 2012
Reduction of emissions and fuel consumption
In light of the stricter exhaust emissions standards, LMH and STILL undertook significant projects to
reduce emissions (see also page 25and 56).
For example, LMH put new engines into its counterbalance trucks in the 2.5-5 tonne weight category
and fitted them with a particulate filter system as standard in order to meet the European Stage IIIB
limits for diesel-powered forklift trucks with an output of 37kW or higher, which came into force in
January 2013. Trucks in the Linde EVO series produce emissions at a far lower level than permitted
limits and achieve double-digit percentage reductions in fuel consumption. Series production will begin
in early 2013. Another major project at Linde was the development to production readiness of a new
reach truck. This truck also offers lower fuel consumption and a variety of attractive new product
features. In addition, LMH expanded the range of model variants in its electric forklift truck series in
the 2-5 tonne weight category.
A focus of development activities at STILL was the new reach truck, which is based on the Group's
platform concept. Two diesel counterbalance trucks in the 4-5 and 6-8 tonne weight category are also
being developed. They will go into series production in 2013 and will also comply with the new
emissions standards.
Drive technology
Development of new drive technologies centred on powerful lithium-ion batteries for electric and hybrid
trucks. Various sizes of battery for hand pallet trucks and towing vehicles were refined at the
development centre in Châtellerault, France. LMH and STILL expect to offer the first trucks fitted with
lithium-ion batteries at the end of 2013. They store considerably more energy and can be charged
faster than lead-acid batteries.
In addition, LMH and STILL are also pushing forward with the development of lithium-ion batteries for
counterbalance trucks in higher weight categories. Another project, which LMH is working on with a
KION Holding 1 GmbH
Group management report 2012
Page 52 of 69
strategic partner, is concerned with developing high-performance booster batteries for hybrid trucks. In
2010 STILL was the first manufacturer worldwide to go into series production with a hybrid truck. This
truck combines a drive system based on an internal combustion engine with a breaking-energy
recuperation system from an electric truck, enabling it to achieve very low emissions values. Customer
testing of the trucks provided feedback for product development. In November 2012 the hybrid truck
won the new Federal Ecodesign Award from the Federal Ministry for the Environment, Nature
Conservation and Nuclear Safety and the Federal Environment Agency.
In 2012 LMH's Electronic Systems & Drives (ES&D) unit teamed up with a strategic partner to develop
the Rotrac E2, an electric trolley for pulling very heavy loads. It can be used to shunt rail vehicles, for
example. A prototype of a container loader with an eco-friendly drive concept for use at airports has
been undergoing field-testing since mid-2012.
KION is also participating in a government-sponsored research project (E-LOG-Biofleet) to improve
handling and environmental friendliness using a fleet of industrial trucks with a fuel-cell hybrid solution.
As part of the project, Linde equipped a fleet of ten trucks, which a customer has been putting through
field tests since the end of 2012. The strategic partner for this project is a manufacturer of battery
charging systems. STILL continued its longstanding international fuel cell activities for industrial trucks
in 2012, putting an additional six trucks into operation for two clients.
Workplace safety and ergonomics
The safety features of the industrial trucks continued to be refined in 2012. The new models in the
Linde EVO series are the world's first diesel trucks with a 'curve assist' system fitted as standard. This
system adjusts cornering speed depending on the steering angle. An automatic parking brake has
been developed for electric trucks, thereby improving convenience and safety. STILL developed a new
restraint system, netProtect, which operates automatically so that the driver does not have to fasten or
undo the seatbelt manually.
The KION companies are also working on further reducing human vibration and other vibrations,
including by improving the seats and cushioning.
Region-specific and customer-specific design
In 2012, KION's R&D centre in Xiamen focused on adapting truck concepts to meet the specific
requirements of customers in China and other emerging markets. A basic, low-cost variant of a new
counterbalance truck, which has a drive unit with a torque converter, was almost ready for series
production at the end of 2012. LMH will use a platform concept to offer three models with different
drive systems in different price categories. Progress was also made with three types of warehouse
truck and a smaller towing vehicle that can pull loads of up to 2 tonnes. It will be marketed in China
and elsewhere rounding out the product range at the lower end.
In 2012 customisation of industrial trucks to meet customer requirements featured more heavily in
R&D activities than in previous years. The modular concept is intended to help KION to fulfil
customers' requirements with even greater flexibility and speed in future.
Networking
The KION Group is working on refining material-flow management systems (MMSs) to meet the
growing demand for automated solutions. At the Hannover trade fair in April 2012, STILL showcased a
prototype of an autonomous reach truck that can independently navigate through a warehouse and
respond to changes in the environment. The prototype was built in cooperation with partners as part of
a project sponsored by the Federal Ministry of Economics and Technology.
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The order-picker truck that was launched in 2012 can also navigate independently. The STILL
PalletShuttle was launched in 2012: this semi-automatic storage and retrieval system can be
integrated with STILL's MMS. Presented at CeBIT 2012, the Fleet Data Services software solution
from STILL enables vehicle and driver data to be intelligently captured, formatted and made available
online. Since February 2012 LMH has offered an extended logistics train programme, providing a
more flexible way of optimising production, warehouse and transport logistics.
Represented by STILL, KION is participating in the IdentProLog research project, which is examining
how to optimise the flow of goods by using radio frequency identification (RFID). The aim of the project
is to establish consistent standards for RFID across the industry.
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Customers
Customer focus at KION
KION focuses on the benefit for customers at every stage of the value chain. Its overarching objective
is to make the TCO – the total acquisition and operating costs for the customer – as attractive as
possible compared with competitor products. Central aspects of KION's focus on customers are:
• product development geared to creating benefits for customers (see page 50);
•
interlinking of product and service business, encompassing spare parts, maintenance, fleet
management and financing solutions;
• more than 1,100 sales and service outlets in over 100 countries, staffed by more than 8,400
employees and around 4,400 external service technicians and salespeople.
The individual brand companies are responsible for customer relations. They use tried-and-tested
feedback processes, among other things, to obtain extensive knowledge about customer preferences
in the different regions and price segments. Key account managers look after customers who are
important in terms of the volume of unit sales and potential for growth and technology. Nevertheless,
KION's reliance on individual customers is low: the ten largest customers generated 6 per cent of
consolidated revenue in 2012 (2011: 6 per cent).
Customer-related performance indicators
Systematic customer relationship management (CRM) is crucial to KION's success and is therefore an
integral element of how the Company is run. Service levels remained high in 2012, with many services
available 24 hours a day. Faster response times are achieved using technologies such as the
STILLProActive communications system, which forwards error messages to service engineers
automatically.
This high level of service is possible owing to the high number of KION trucks in use, which creates
demand for after-sales services. KION firmly believes that, by generating a high proportion of total
revenue from services, it can stabilise business performance and reduce its susceptibility to economic
downturns. At 40 per cent in 2012, this proportion was at a similar level to 2011 (42 per cent).
The KION companies gauge customer satisfaction in feedback discussions and from the degree of
customer loyalty. STILL carries out regular customer satisfaction surveys in service and sales. A CRM
project has also been launched with the aim of gaining a better understanding of the customer
structure and customer needs so that resources can be deployed in an even more targeted manner.
The number and quality of contacts with customers at trade fairs enable KION to draw conclusions
about existing and new customers' interest in product innovations.
KION's overarching aim of offering customers a lower TCO than competitors was confirmed by, among
other things, a study by the TÜV NORD Group. Two Linde warehouse trucks were subjected to a
performance test in the study, which found that their total operating costs – including energy costs –
offered potential savings of up to 20 per cent compared with competitor products.
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Marketing and sales activities
As in previous years KION took the opportunity to showcase its range of products and services at a
number of exhibitions and trade fairs.
Having acquired its trading partner Liftec Rusfors in 2011, LMH had its own stand for the first time at
CeMAT Russia – the foremost logistics trade fair in Russia. LMH's StaplerCup, an international
competition for forklift truck drivers, won the European Best Event Award (EuBEA) in Milan. Two trade
fairs in Germany – MobiliTec in Hannover and sps ipc drives in Nuremberg – provided an opportunity
to showcase the portfolio of electric trucks and electric drive systems. Baoli participated in CeMAT
Asia, where it presented its new D series of forklift trucks in the 3-tonne weight category.
STILL demonstrated product innovations at the Hannover trade fair as well as updated intralogistics
solutions at CeBIT 2012. At the International Supply Chain Conference in Berlin, STILL reported on
the use of innovative drive technologies. In 2011 STILL introduced the cubeXX concept truck, which
combines six different classes of industrial truck in a single vehicle, thereby creating greater flexibility
in warehouse management. Moreover, STILL won the German Award for Business Communications in
the category 'Best Event and Trade Fair Marketing' in 2012.
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Sustainability
KION endeavours to achieve a balance between environmental, economic and social considerations
in its business activities. This focus on sustainability is reflected in the development of eco-friendly and
safe products that help customers to conserve energy, reduce emissions and comply with strict
workplace safety standards (see the section on research and development, pages 50 to 53).
Furthermore KION designs the production processes in its plants around the globe to have as minimal
an impact on the environment as possible. The corporate policy on health, safety and the environment,
which was issued in November 2011, defines a number of requirements for the KION companies,
including:
• avoiding the release of pollutants, discharge and emissions into the environment as far as
possible;
•
reducing the volume of waste by making better use of raw materials and using recyclable
materials;
• using materials, products and processes that comply with best environmental practice; and
• using resources, energy and raw materials efficiently.
All plants capture data about their energy consumption, volumes of waste and recycling, water
consumption, CO2 emissions and volatile organic compounds (VOC). This data is included in an
annual internal environmental report. Data for 2012 was not available at the time this group
management report was compiled.
According to the 2011 environmental report, energy consumption had declined slightly compared with
2010 despite the increased volume of production. As in 2010 around 50 per cent of the energy
consumed was electricity and just under 30 per cent was gas. Approximately 92.5 per cent of waste
was recycled, resulting in a further year-on-year decrease in the volume of waste. Water consumption
rose slightly, VOC emissions declined significantly and CO2 emissions were slightly higher compared
with 2010.
The Aschaffenburg site took significant steps in the year under review to ensure environmentally-
friendly production by participating in a climate change project in the Lower Main region of Bavaria and
by implementing a heat recovery system in its foundry.
LMH and STILL also took part in the Blue Competence sustainability initiative launched by the VDMA,
in which participating companies from the plant and mechanical engineering sectors present examples
of solutions that protect the environment and conserve resources.
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EVENTS AFTER THE BALANCE SHEET DATE
On 11 January 2013, the Supervisory Board of KION GROUP GmbH expanded the Company's
Executive Board. Ching Pong Quek, who has headed up KION's entire Asia business since 2008, was
appointed to the Executive Board as Chief Asia Pacific Officer. This new post has been created in
recognition of the growing importance of the region for the Group's financial performance.
The Supervisory Board has also made the management of the Linde and STILL brands more involved
in running the Group as a whole. The CEO of Linde Material Handling GmbH, Theodor Maurer, and
the CEO of STILL GmbH, Bert-Jan Knoef, have also been appointed to the Executive Board of the
KION Group. They remain in charge of their respective brand companies.
The KION Group's Executive Board now has five members and is presided over by CEO Gordon
Riske. CFO Dr Thomas Toepfer has also assumed responsibility for HR and been appointed as the
KION Group's Labour Relations Director. Klaus Hofer, who had been in charge of human resources,
has left the Company.
At the end of January 2013, KION entered into consultations with employee representatives and trade
unions concerning the process of restructuring of its container handler and heavy forklift truck
business. This also includes the intended closure of LMH’s plant in Merthyr Tydfil (Wales, UK). The
proposed measures are intended to sustainably improve KION’s competitiveness in both areas, as
well as the efficiency of its European production network.
In February 2013, the KION Group announced that Konecranes, a world-leading group of Lifting
BusinessesTM, would take over certain assets from LMH’s container handling truck business. The
transaction should be concluded during the second quarter of 2013. LMH will continue to offer reach
stackers and empty and laden container handlers in the future, the production of which should take
place at Konecranes going forward. Both companies also signed a long-term supply agreement and
are working together to improve their respective international competitiveness in the container
handling truck business.
In February 2013, KION Finance S.A. placed a senior secured note on the European bond market with
a total volume of €650 million. The proceeds will b e used to fully refinance loans that will fall due in
2014, as well as to partially refinance loans that will fall due in the following years.
The senior secured bond, which will mature in 2020, was issued in a fixed-interest tranche (6.75 per
cent) in the amount of €450 million, and in a float ing-rate tranche (4.5 per cent above the prevailing
three-month EURIBOR rate) in the amount of €200 mil
lion.
As a result of the successful bond placement and refinancing, KION is extending the maturity profile of
the Group’s financial debt until the year 2020, as well as expanding its circle of investors. In
connection with the bond placement, Moody’s raised its rating outlook for KION from stable to positive.
In doing so, Moody’s is reacting to KION’s positive operational performance since its initial bond
placement in 2011, as well as to the reduction of its financial debt and improved strategic perspectives.
The capital increase that was resolved in 2012 in connection with Weichai Power’s 25 per cent
shareholding was entered in the commercial register on 14 January 2013.
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EXPECTED DEVELOPMENTS
Opportunities report
Recognising and seizing market, strategic and operational opportunities is an essential element of the
KION’s value-driven management. To identify these opportunities, the Company systematically
monitors, analyses and evaluates its relevant markets and tracks sectoral and macroeconomic trends.
Strategic measures are adopted and implemented on this basis at KION. These are always aimed at
profitable growth and a sustained increase in shareholder value.
KION's strengths and strategy – described in detail on pages 14 to 17 – provide the Company with
considerable opportunities.
Significant market opportunities are presented, in particular, by:
• growing demand for intralogistics products and services as a consequence of globalisation
• high demand for replacement investments, especially in developed markets
•
the trend towards outsourcing service functions to industrial truck manufacturers
KION's strategic opportunities result, in particular, from:
•
strengthening of its market-leading position in core western European markets, especially in
view of its leading technology and high proportion of customer-specific fittings;
• expansion of the service portfolio at every stage of the product lifecycle, taking advantage of
the high number of trucks in use;
• harnessing of market potential in fast-growing regions, including through the strategic
partnership concluded with Weichai Power in 2012
The main opportunities involving the supply of goods and services arise in connection with the
optimisation of production and the leveraging of group-wide synergies. The associated cost benefits
boost the Group's competitiveness.
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Risk report
Principles of risk management
KION 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 KION'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. 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. Each risk is documented in a specially developed module within the internet-based
reporting system used for the entire planning and reporting process.
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 of KION
GROUP GmbH and the Supervisory Board's audit committee are informed of the 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 applicable regulations and internal work instructions. 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, KION 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.
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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. 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.
Market risks
Cyclical fluctuations in macroeconomic activity affect the market for industrial trucks. Customers'
decisions on whether to invest, particularly in new trucks, depend to a large degree on the
macroeconomic situation and conditions in their particular sector. During an economic downturn, such
as the financial and economic crisis of 2008–2009, customers tend to postpone their purchases of
new trucks. Although demand for services is less cyclical, it correlates with the degree of utilisation in
the truck fleet – which usually declines during difficult economic periods. As KION can only adjust its
fixed costs to fluctuations in demand to a limited extent, reductions in revenue impact on earnings.
Various measures aimed at making cost structures more flexible – such as the consolidation of
production facilities – help to contain the earnings risk arising from reductions in revenue caused by
economic conditions. Diversification of the customer base in terms of industry and region as well as
expansion of service activities also play a role in mitigating risk. Moreover, KION closely monitors the
market and its competitors so that it can identify market risks at an early stage and adjust its
production capacities in good time.
Despite KION’s strong growth in emerging markets, the proportion of revenue it earns in the euro zone
continues to be high. As a result, the market conditions that prevail in the euro zone impact
significantly on KION's financial performance. Budget consolidation in affected euro-zone countries
has resulted in faltering economic growth and higher unemployment. Doubts surrounding the stability
of the financial system and the continued existence of the single currency have not been allayed,
despite a tangible calming of the markets as a result of steps taken by the European Central Bank and
politicians. These doubts are now compounded by fears about the high level of government debt in the
United States and the declining pace of growth in China. Overall, these factors could reduce
customers' willingness to invest and the resulting demand for KION products.
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 remain
uncertain. KION therefore continually monitors macroeconomic and market conditions so that it can
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react at an early stage. Besides global economic growth, KION also analyses exchange rates, price
stability, the consumer and investment climate, foreign trade activity and political stability in its key
sales markets.
Due to the strained financial and economic situation in the euro zone, risk management analyses its
possible impact on the Group’s financial position and financial performance on an ongoing basis. In
addition to continuous screening and monitoring, separate observations are regularly made in its risk
reports concerning the risks surrounding the member state financial crisis.
Competition risks
The markets in which KION operates are characterised by strong competition, including with regard to
prices. Although KION's strengths (see page 14) have enabled it to charge appropriate prices until
now, competition risks could have a negative impact on the Group's business situation and financial
performance.
Manufacturers from Asia have cost advantages in production due to the currency situation and also
because local labour costs are lower. Competition is therefore very fierce, particularly in the lower
price segment and in emerging markets. Building on their local competitive advantages, Asian
manufacturers – especially those from China – are also looking for opportunities to expand. Although
customers' high quality expectations and service needs form a barrier to growth for many of these
manufacturers, this situation is likely to intensify competition in future.
It is also conceivable that competitors will join forces and their resulting greater competitiveness will be
detrimental to KION's sales opportunities. Moreover, predictions of higher volumes and margins may
lead to overcapacity, which would put increased pressure on prices.
Alliances, partnerships, acquisitions and other measures are playing an increasing role in improving
KION's competitiveness in terms of resources, market access and product range. The steps that KION
is taking to mitigate its competition risk include making its plants more efficient and securing low-cost
sources of supply, for example through its strategic partnership with Weichai Power. KION also
continually evaluates its options for strengthening and consolidating its position in emerging markets.
Research and development risks
KION's market position and business performance depend to a large extent on its ability to remain a
leading provider of technology. This requires the Group to continually develop products that meet
customer expectations and comply with changing regulatory and technological requirements. To this
end, KION must anticipate customers' needs and quickly bring new products to market. If the
Company does not succeed in doing this, its technological and competitive position could be
compromised in the long term.
KION counteracts research and development risks by carefully managing customer relations (see
page 54), focusing on customer benefits (TCO) in its product development (see page 50) and ensuring
close cooperation between sales and development teams in order to continuously incorporate
customer requirements into the development process.
The innovations developed by KION and its subsidiaries are comprehensively protected by intellectual
property rights, in particular patents. Nevertheless, there is always the possibility that products or
product components will be imitated. There is also a risk that patent applications will not be successful.
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Strategic risks
A mainstay of KION's strategy is the exploitation of potential offered by fast-growing regions in respect
of strategic partnerships, joint ventures and the acquisition of local providers. One of the risks of such
alliances and acquisitions is that the expected benefits will materialise only partly or not at all. For
example, the organisational integration of new units can harm financial performance for a variety of
reasons. Other strategic risks arise from having inadequate experience of specific political, economic
or cultural parameters in target markets and if there is a lack of attractive strategic partners or
companies suitable for acquisition. It is also possible that a partner will collaborate with competitors if
exclusivity agreements are not in place.
KION mitigates such strategic risks by, for example, carrying out in-depth market research, conducting
thorough evaluation procedures and drafting appropriate contracts – including as part of its strategic
partnership with Weichai Power.
In the course of that partnership, Weichai Power acquired the majority of KION’s hydraulics business.
To build its industrial trucks, LMH requires hydraulic components that are manufactured by the
affiliated company Linde Hydraulics. Because LMH is highly dependent on these components, their
supply is secured by detailed contractual agreements. LMH also has access to patents and other
intellectual property rights that are important to its business activities. This mitigates the risks resulting
from no longer having unrestricted access to the hydraulics business.
Procurement and sales risks
Procurement activities constitute a potential risk for the KION Group in terms of the lack of availability
of parts and components for logistical or qualitative reasons, and the rising cost of raw materials,
energy, base products and intermediate products. As a result, there is always the possibility that KION
will face backlogs in the supply of individual raw materials and components. KION obtains some of its
key components, such as combustion engines, tyres, high-performance forged and electronic parts,
from a limited number of core suppliers.
Although there were no substantial supply bottlenecks in 2012, the risk of supply bottlenecks – such
as in the event of a shortage of raw materials – cannot be eliminated. It is also possible that suppliers
will get into economic difficulty and be unable to fulfil orders. KION mitigates this risk through
appropriate diversification of its supplier structure in the context of a global procurement organisation.
In addition, the supplier development department, which focuses on making improvements to supplier
production processes, helps suppliers to ensure the cost efficiency and qualitative excellence of their
processes.
Price changes present another procurement-related risk. In 2012 only around 27 per cent of the cost
of materials for new trucks was directly influenced by changes in commodity prices. Moreover,
conditions on the commodity markets typically affect component prices after a delay of three to six
months. KION endeavours to pass on price increases to customers but cannot always do so entirely
due to market pressures.
The main sales risks – besides a drop in revenue caused by market conditions – result from
dependence on individual customers and sectors. For example, it is possible that customers would
postpone or cancel orders during a period of economic difficulty. Significant cancellations have not
occurred in the past years, however. It is also conceivable that customers would face a liquidity
shortfall and therefore be unable to fulfil their payment obligations immediately or even at all. In terms
of its customer portfolio, KION is currently not particularly dependent on any individual sector. Its
business is also highly diversified from a regional perspective. In addition, KION supplies companies
of all sizes. The risk of possible payment defaults, which experience has shown is low for KION, can
be reduced further by realising collateral.
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Production risks
High-quality products and a high level of delivery reliability are key aspects of KION's premium
positioning. Delays in delivery or a rise in the number of complaints could harm this position and, as a
result, KION's financial situation.
KION's closely integrated manufacturing network presents a heightened 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. KION mitigates its quality-related risks 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.
Key measures related to consolidation of the European production facilities were completed in 2012
with the closure of plants in Italy and France. However, there is a risk that further structural measures
and reorganisation projects, such as the process of restructuring the container handler and heavy-duty
forklift business in Merthyr Tydfil, will not be implemented in future owing to disruption of production or
strikes. Furthermore, costs may also be incurred by the environmental restoration of sites that have
housed production facilities for many years, for example work required due to contamination. Any
damage to the environment may also lead to legal disputes and give rise to reputational risk. To
mitigate these risks, KION undertakes restructuring measures only after a comprehensive planning
process and works closely with employee representatives to ensure HR measures are implemented
with the minimum possible social impact.
IT risks
Tight integration between the different sites and with customers and other companies means that
KION also relies on its IT systems working flawlessly. KION mitigates any IT risks – which can in part
arise from the consolidation of IT systems and infrastructure – by continuously working on developing
a robust, expandable and flexible IT systems landscape. Internal IT resources are pooled in KION
Information Management Services GmbH, which has well-established processes for portfolio
management and project planning and control. Quality assurance also takes place via external
independent audits. Various technical and organisational measures protect the data of KION and its
Group companies against unauthorised access, misuse and loss. To that end, authorisation to access
the group infrastructure is verified and logged, and a virus scanner and firewall systems are also used.
Financial risks
Despite considerable improvements in the funding situation during the year under review, the Group
remains dependent on debt financing to a significant degree. This results in obligations relating to
interest and capital repayments. Group Treasury is responsible for ensuring that this does not hinder
international growth and that sufficient financial resources are always available for this purpose.
The main types of financial risks managed by Group Treasury, including risk 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.
Acquisition financing as part of the Senior Facility Agreement essentially provides the Group with the
flexibility needed to meet the requirements of the lending covenants. Accordingly, the KION Group has
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secured acquisition finance in the form of committed credit lines. The individual tranches have varying
maturities from the end of 2013 to 2018. During the year under review, KION significantly reduced its
financial liabilities by converting a shareholder loan and receiving the contribution by Weichai Power
as part of a resolution to carry out a capital increase (see pages 37 to 40). In the course of negotiating
with its lenders, KION GROUP GmbH also managed to extend the due date of its existing credit
ion. In addition, €483 million of KION’s original
facilities with a total volume of more than €1 bill
acquisition finance was funded by issuing a corporate bond for a total of €500 million in April 2011,
which will mature in 2018.
The term of the revolving loan facility was extended considerably in the year under review (see page
37). Other steps to ensure the Company's long-term funding are also regularly pursued. As
contractually agreed, the capex facility was reduced by approximately €56 million over the course of
2012.
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.
KION 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 KION's financial planning and reporting process. Group Treasury checks the
liquidity planning and uses it to determine the funding requirements of each company.
KION is exposed to currency risk because of the high proportion of its business conducted in
currencies other than the euro. Normally, at least 50 per cent of the currency 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 – to hedge the interest-rate and
currency risks arising in connection with the acquisition finance. Approximately 65 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 1.29. At the end of 2012 around 48 per cent of the interest-rate risk was
hedged by interest-rate swaps. 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 KION in terms of compliance with certain
financial covenants specified in the loan agreement. These covenants could limit the Company's
flexibility with regard to its ongoing strategic development. 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 when
defining new lending agreements. KION complied with all the lending covenants in the reporting year.
Accounting risks arising from goodwill and the brands
Goodwill and the brands represented 33 per cent of total assets as at 31 December 2012
(31 December 2011: 35 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.
KION Holding 1 GmbH
Group management report 2012
Page 65 of 69
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. KION'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 include the demand for used trucks, which stabilises the residual values of KION's 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 2012 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.
KION 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, KION offers the majority of financial services indirectly 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 2011 and 2012. 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 2012 in
preparation for the pooling of financial services activities in a separate segment. In particular, this
involved revising the regulations concerning the process organisation as well as processes for risk
management and control.
Human resources risks
KION relies on having highly qualified managers and experts in key roles. If they left, it could have a
long-term adverse impact on the Group's prospects.
That is why KION actively engages in HR work aimed at identifying and developing young
professionals with high potential who already work for the Company and retaining them over the long
term, thereby enabling succession planning for key roles across the Group. KION also positions itself
in the external market as an employer of choice. 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.
The relocation of production and other restructuring measures may result in a risk of strikes and
reactions of other kinds by the workforce. As demonstrated several times in the past, this risk is
contained by collaborating closely with employee representatives, and, if job losses are necessary,
taking comprehensive steps to ensure they are achieved with the minimum possible social impact.
KION Holding 1 GmbH
Group management report 2012
Page 66 of 69
Legal risks
The legal risks arising from KION's business are typical of those faced by any company operating in
this sector. The Group companies are a party in a number of pending lawsuits in various countries.
The individual companies 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 KION Group 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 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.
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,
KION 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 KION's
financial position and financial performance.
Aggregate risk
In 2012 KION 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 in the euro zone. As far as possible, risk prevention measures
were initiated at an early stage where risks were identified.
As conditions in the financial markets eased in the second half of 2012 and global growth is expected
to pick up slightly in 2013, KION is acting under the assumption that the economic environment will be
somewhat more favourable in 2013 than in the year under review. The situation in the global markets
remains challenging, however. Uncertainties in the euro zone, the high level of government debt in the
United States and comparatively muted growth prospects in the developed markets all continue to
pose a substantial threat to growth.
As things stand at present, there are no indications of any risks that could jeopardise the Company's
continuation as a going concern.
KION Holding 1 GmbH
Group management report 2012
Page 67 of 69
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 KION, 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. KION does not undertake to
update forward-looking statements to reflect subsequently occurring events or circumstances.
Furthermore, KION cannot guarantee that future performance and actual results will be consistent with
the stated assumptions and estimates and can accept no liability in this regard.
Expected macroeconomic conditions
According to estimates made by the International Monetary Fund (IMF), global economic growth may
pick up slightly in 2013, amounting to 3.5 per cent (2012 estimate: 3.2 per cent). The purchasing
managers’ index (PMI) also signals a slight economic recovery. Growth prospects are better in
particular for emerging markets such as Brazil and China, which could provide considerable stimulus
for European exports. The outlook for the euro zone still assumes slightly negative growth, however.
On the other hand, an economic upturn is anticipated in the euro zone beginning in 2014, which could
also provide additional momentum to the growth anticipated globally.
Global growth will be fuelled, above all, by a rise in capital expenditure, whereas consumer spending
may only increase to a small extent. The IMF predicts that the volume of global trade will grow more
robustly than it did in 2012. It also anticipates a moderate fall in commodity prices.
Overall, therefore, economic conditions may already be somewhat more benign in 2013 than in the
year under review. However, this forecast is based on the assumption that monetary and fiscal policy
will support the global economy. There are also considerable risks resulting, in particular, from the
sovereign debt problems in the euro zone and the United States, consolidation and tightening of public
finances as well as a possible destabilisation of the financial markets.
Expected sectoral conditions
The overall market for industrial trucks will continue to depend heavily on economic conditions in key
sales markets, with the level of capital investment and the growth in global trade being particularly
crucial. Whereas the global market for industrial trucks in 2012 was around 3 per cent down on the
record level achieved in 2011, KION expects demand to recover slightly in 2013 as well as in the
following year. China, other Asian countries and eastern Europe are likely to be the main growth
engines in the market. Stable demand is expected in western Europe, fuelled predominantly by the in
some cases overdue replacement of old trucks.
Market expectations are also positive
longer-term perspective. Based on current
macroeconomic forecasts and in view of past market performance, KION predicts an average annual
growth rate of about 4 per cent for the next five years, which should not involve any significant shifts of
the shares of the individual product segments in total revenue.
from a
Expected business situation and financial performance
In 2012 KION laid the foundations for continued profitable growth in subsequent years. Drawing on its
multi-brand strategy and the successive expansion of its service business, the Group intends to tap
the potential offered by the developed markets of western Europe and the emerging markets. A
continuing high level of capital investment and research and development spending serve to preserve
the technological leadership of LMH and STILL, and ensure their continued position as premium
brands.
KION Holding 1 GmbH
Group management report 2012
Page 68 of 69
Adjusted Group revenue is expected to be higher in 2013 than in 2012. KION anticipates that the new
truck business will initially grow at a faster rate than the service business in 2013 because of the
strong demand for replacement investment – as a result of the investment backlog from the financial
crisis – and due to increasing product sales in Asia and Latin America. Once pent-up capital
investment has been exhausted, KION expects that the next few years will see above-average growth
of the service business due to the large number of trucks that already exist on the market. The service
business is expected to contribute around 40 per cent of consolidated revenue.
The emerging markets are predicted to again be a significant factor in the growth of revenue. In this
context, the partnership with Weichai Power is expected to have a positive impact in the Chinese and
Asian markets as early as 2013, leading to intensified sales activities in these markets. Additional
options, such as consolidating the forklift business in China, are currently being examined. Unit sales
in Latin America are forecast to rise on the back of increased production capacity and intensified sales
activities. The service network in western and eastern Europe, which was expanded in 2012, is
intended to make a considerable contribution to growth also in the new truck business.
Similar to the Group as a whole, the two segments LMH and STILL are aiming for a moderate rise in
revenue in 2013. Following the deconsolidation of the hydraulics business, LMH intends to increase its
volume of business in all key sales regions, with above-average revenue growth in Asia and other
growth markets. STILL expects to generate growth in Latin America and eastern Europe. Moreover,
sales in 2012 were also impaired by shifts in production. Adjusted EBIT is expected to improve
moderately in both segments. KION forecasts a further rise in the volume of leasing in the FS
segment, accompanied by almost unchanged EBT. As in 2012 this business will be concentrated in
western Europe.
The good market position of the brands, the broad product portfolio, high market share in the core
markets in Germany and France, good positioning in growth markets, growing service business, the
measures taken towards a more flexible cost structure as well as economies of scale should all
contribute to moderately improving the adjusted EBIT margin in 2013 as well. It will also be positively
influenced by the consolidation of the European production facilities, which was largely completed in
2012. The higher proportion of procurement in emerging markets, which will be supported by the
partnership with Weichai Power, should have a positive effect on earnings by as early as 2013.
The consolidated result for 2012 was influenced by positive one-off items that will not occur again to
the same extent. For 2013, however, slightly positive consolidated net income is expected, which
should also reflect the reduction of debt.
In 2014, KION anticipates further moderate revenue growth, slightly improved adjusted EBIT, and
continued positive net income, all on the back of even more buoyant global economic growth.
Expected financial position
KION significantly improved its financial position in 2012, particularly owing to the investment of
Weichai Power. As a result of the successful issue of the corporate bond in February 2013 (see page
57), the debt maturity structure has also been extended. All in all, KION has significantly expanded its
financial flexibility and possesses a sound foundation for its course of growth.
The Company will continue to reduce debt levels while at the same time optimising the funding
structure. No specific steps were being planned at the time this group management report was
compiled.
KION Holding 1 GmbH
Group management report 2012
Page 69 of 69
Wiesbaden, 13 March 2013
The Executive Board
Gordon Riske
Bert-Jan Knoef
Theodor Maurer
Ching Pong Quek
Dr Thomas Toepfer
KION HOLDING 1 GmbH
Wiesbaden
Consolidated
Financial Statements
31 December 2012
KION Holding 1 GmbH
Consolidated statement of income for the year ended 31 December 2012
Consolidated income statement
€ thousand
Revenue
Cost of sales
Gross profit
Selling expenses
Research and development costs
Administrative expenses
Other income
Other expenses
Profit from at-equity investments
Other financial result
Earnings before interest and taxes
Financial income
Financial expense
Financial result
Earnings before taxes
Income taxes
Current taxes
Deferred taxes
Net income (loss)
Attributable to shareholders of KION Holding 1 GmbH
Attributable to non-controlling interests
Note
[9]
[10]
[11]
[12]
[13]
[14]
[15]
[16]
2012
2011
4,726,664
-3,429,914
4,368,395
-3,256,378
1,296,750
1,112,017
-562,404
-124,454
-313,190
294,374
-59,530
15,912
2,655
-520,547
-119,526
-283,322
81,503
-70,043
11,192
1,886
550,113
213,160
62,084
-301,569
73,664
-345,709
-239,485
-272,045
310,628
-58,885
-149,540
-122,137
-27,403
161,088
159,008
2,080
-34,041
-49,349
15,308
-92,926
-95,093
2,167
KION Holding 1 GmbH
Consolidated statement of comprehensive income for the year ended 31 December 2012
Consolidated statement of comprehensive income
€ thousand
Net income (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 at-equity investments
thereof changes in unrealised gains and losses
Other comprehensive loss (income)
Total comprehensive income (loss)
Comprehensive income (loss)
Attributable to shareholders of KION Holding 1 GmbH
Attributable to non-controlling interests
2012
2011
161,088
-92,926
2,765
2,755
10
-151,311
-214,109
62,798
6,074
27,312
-19,662
-1,576
6,476
6,476
0
8,394
13,995
-5,601
-8,149
7,071
-18,452
3,232
-26
-26
532
532
-142,498
7,253
18,590
-85,673
16,554
2,036
-87,840
2,167
KION Holding 1 GmbH
Consolidated statement of financial position at 31 December 2012
ASSETS
€ thousand
Goodwill
Other intangible assets
Leased assets
Rental assets
Other property, plant and equipment
At-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
Note
2012
2011
1/1/2011
[18]
[18]
[19]
[20]
[21]
[22]
[23]
[24]
[16]
[25]
[26]
[23]
[16]
[24]
[27]
1,473,245
933,961
191,322
395,093
500,345
154,835
267,140
50,171
264,974
1,537,996
977,555
167,354
356,682
553,816
36,545
242,840
25,732
261,963
1,507,010
986,410
156,125
321,188
590,343
37,841
246,808
17,474
241,772
4,231,086
4,160,483
4,104,971
549,927
625,462
132,129
5,501
106,778
562,357
625,369
676,553
118,381
4,953
107,096
373,451
535,529
633,265
120,950
4,550
106,790
252,884
1,982,154
1,905,803
1,653,968
Total assets
6,213,240
6,066,286
5,758,939
EQUITY AND LIABILITIES
€ thousand
Note
2012
2011
1/1/2011
Subscribed capital
Contributions for carrying out the approved capital increase
Capital reserve
Retained earnings
Accumulated other comprehensive 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
500
1,132,552
348,483
-647,687
-179,672
6,159
500
0
348,483
-806,429
-37,218
7,077
500
0
348,483
-711,504
-44,471
7,070
660,335
-487,587
-399,922
0
546,520
2,300,656
329,185
89,120
355,078
308,821
643,132
382,914
2,777,354
300,061
96,168
303,789
339,054
615,250
374,063
2,772,417
278,814
164,299
260,153
334,930
3,929,380
4,842,472
4,799,926
51,775
646,044
145,830
84,958
137,888
557,030
227,376
634,092
146,728
15,439
183,678
504,088
106,470
508,108
169,929
6,661
95,902
471,865
1,623,525
1,711,401
1,358,935
[28]
[30]
[29]
[30]
[31]
[32]
[33]
[16]
[30]
[31]
[16]
[32]
[33]
Total equity and liabilities
6,213,240
6,066,286
5,758,939
KION Holding 1 GmbH
Consolidated statement of cash flows for the year ended 31 December 2012
Consolidated statement of cash flows
€ thousand
Net income (loss)
+ income taxes
+ financial result
= Earnings before interest and taxes
Amortisation, depreciation and impairment charges of non-current assets
(excl. leased assets and rental assets)
Depreciation/Impairment of leased assets and rental assets
Other non-cash income (-) and expenses (+)
Gains (-) / losses (+) on disposal of non-current assets
Change in leased assets and rental assets
Change in lease receivables, lease liabilities and
liabilities from finance leases
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 proceeds from sale of entities (excl. cash and cash equivalents)
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 proceeds from sale of ownership interests (after control)
Contributions for carrying out the approved capital increase
Proceeds from borrowings
Loan financing costs paid
Transactions costs for carrying out the approved capital increase
Repayment of borrowings
Proceeds (+) / Repayment (-) of other capital borrowings
Cash receipts (+) / cash payments (-) for forward foreign exchange hedging contracts
Interest paid
2012
2011
161,088
149,540
239,485
-92,926
34,041
272,045
550,113
213,160
184,042
181,227
-142,530
-103,814
-245,764
24,592
20,513
56,850
-3,928
-23,311
-39,884
-26,686
37,020
-54,432
192,068
163,953
9,943
6,428
-208,691
26,056
-75,242
-36,829
114,886
-21,038
13,989
334
30,346
-42,553
414,008
386,810
7,353
-155,101
-5,510
5,317
4,488
-9,703
259,746
-2,538
3,408
-133,005
2,879
6,599
3,397
-32,916
0
-2,942
104,052
-152,580
-2,405
-10,373
138
467,000
7,676
-14,549
-1,095
-664,577
-2,723
20,490
-129,712
-2,209
-1,461
82
0
632,691
-24,579
0
-537,018
-21,052
-13,714
-147,455
= Cash flow from financing activities
-330,130
-114,715
Effect of foreign exchange rate changes on cash and cash equivalents
976
1,052
= 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
188,906
120,567
373,451
562,357
252,884
373,451
KION Holding 1 GmbH
Consolidated statement of changes in equity for the year ended 31 December 2012
Consolidated statement of changes in equity
€ thousand
Subscribed
capital
Contributions for
carrying out the
approved
capital increase
Capital
reserves
Retained
earnings
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
Accumulated other comprehensive income (loss)
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
Balance as at 31/12/2011
Balance as at 1/1/2012
Net income
Other comprehensive income (loss)
Comprehensive income
Contributions for carrying out the
approved capital increase
Transaction costs
Dividends
Eff ects on the
acquisition / disposal of
non-controlling interests
Other changes
500
500
1,137,784
-5,232
-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
348,483
-806,429
-35,549
20,892
-22,968
407
-494,664
7,077
-487,587
348,483
-806,429
-35,549
20,892
-22,968
407
-494,664
7,077
-487,587
159,008
159,008
-425
159
2,765
2,765
-151,267
-151,267
6,074
6,074
-26
-26
159,008
-142,454
16,554
1,137,784
-5,232
-425
159
2,080
-44
2,036
161,088
-142,498
18,590
-2,405
-549
1,137,784
-5,232
-2,405
-974
159
Balance as at 31/12/2012
500
1,132,552
348,483
-647,687
-32,784
-130,375
-16,894
381
654,176
6,159
660,335
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 1 of 88
Notes to the consolidated financial statements of KION Holding 1 GmbH for the
year ended 31 December 2012
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 €4,726,664 thousand in the financial year 2012 from its Linde, Fenwick, STILL, OM-STILL, Baoli
and Voltas brands (2011: €4,368,395 thousand).
The consolidated financial statements and the group management report were prepared by the Executive Board
of KION Holding 1 GmbH on 13 March 2013.
[ 2 ]
Basis of preparation
The consolidated financial statements of the KION Group for the financial year ended 31 December 2012 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 financial year 2012 have been applied in preparation of the consolidated financial statements.
Financial reporting standards adopted for the first time in the financial year under review:
The following financial reporting standard was adopted for the first time in 2012:
• Amendments to IFRS 7 'Financial Instruments: Disclosures': disclosures relating to transfers of financial
assets
The first-time adoption of this standard has had no significant effect on the presentation of the financial position or
financial performance of the KION Group.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 2 of 88
Financial reporting standards issued but not yet adopted
In the consolidated financial statements for the year ended 31 December 2012 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 2012:
• Amendments to IFRS 1 'First-time Adoption of International Financial Reporting Standards': amendments
relating to fixed transition dates and severe hyperinflation
• Amendments to IFRS 1 'First-time Adoption of International Financial Reporting Standards': amendments
relating to government loans with a below-market rate of interest
• Amendments to IFRS 7 'Financial Instruments: Disclosures': offsetting of financial assets and financial liabili-
ties
• Amendments to IFRS 7 'Financial Instruments: Disclosures': disclosures about the transition to IFRS 9 'Fi-
nancial Instruments'
IFRS 9 'Financial Instruments'
•
• Amendments to IFRS 9 'Financial Instruments': mandatory effective date;
•
• Amendments to IFRS 10 'Consolidated Financial Statements': amendments relating to the consolidation of
IFRS 10 'Consolidated Financial Statements'
investment entities
IFRS 11 'Joint Arrangements'
IFRS 12 'Disclosure of Interests in Other Entities'
•
•
• Amendments to IFRS 12 'Disclosure of Interests in Other Entities': amendments relating to the consolidation
of investment entities
Transition Guidance (Amendments to IFRS 10, IFRS 11 and IFRS 12)
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
IAS 19R 'Employee Benefits'
IAS 27R 'Separate Financial Statements'
•
•
• Amendments to IAS 27 'Separate Financial Statements': amendments relating to the consolidation of invest-
ment entities
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'
Improvements to IFRSs (2009-2011).
•
•
These standards and interpretations will be applied by the companies included in the KION Group from the date
on which they must be adopted for the first time.
The transitional requirements of the revised IAS 19R 'Employee Benefits' require retrospective application. In the
KION Group, actuarial gains and losses, in consideration of deferred taxes, are already recognised in other com-
prehensive income (loss). The Management expects that first-time adoption of the revised IAS 19 for the financial
year 2013 will increase net income (after income taxes) by €1,030 thousand and decrease other comprehe nsive
income (after deferred taxes) by €983 thousand due
to the alignment of the expected return on plan assets with
the discount rate for 2012. The retrospective recognition of previously unrecognised past service cost will result in
a reduction of retained earnings by €749 thousand a s of 1 January 2012.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 3 of 88
The impact of the first-time adoption of IFRS 10 'Consolidated Financial Statements' is currently still being evalu-
ated, but we currently do not anticipate any material effects. The effects of the first-time adoption of the other
standards and interpretations on the financial position and financial performance of the KION Group are expected
to be insignificant.
The various amendments issued in May 2012 as part of the annual improvement project mainly relate to termino-
logical 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 the income statement. The items concerned are presented and disclosed in the notes. Assets
and liabilities are classified into current and non-current items in accordance with IAS 1.60. 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 rounding of amounts added together may result in rounding differences of +/- €1 thousan d in the
corresponding totals. The separate financial statements included in the consolidation were prepared at the same
reporting date as the annual financial statements of KION Holding 1 GmbH.
[ 3 ]
Principles of consolidation
Acquisitions are accounted for using the acquisition method. In accordance with IFRS 3R, the identifiable assets
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 consid-
eration transferred is lower than the fair value of the acquiree's net assets, the difference is recognised as a gain.
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 the present proportion of the net assets of the acquiree. The option to
recognise non-controlling interests at fair value is currently not used. As a result, non-controlling interests are
recognised at the proportionate share of the fair value of the net assets attributable to them excluding goodwill.
For business contributions achieved in stages, previously held equity interests are recognised at their fair value
on the acquisition-date. The difference between their carrying amount and fair value is recognised in the consoli-
dated income statement.
For the purpose of impairment testing, goodwill is allocated to cash-generating units that are likely to benefit from
the business combination.
Transaction costs are immediately recognised in the income statement. Contingent consideration elements are
included at fair value at the acquisition-date when determining the consideration transferred. 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.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 4 of 88
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 completely eliminat-
ed. Deferred taxes are recognised on temporary tax differences resulting from consolidation entries.
Transactions with non-controlling interests are treated as transactions with the Group's equity investors. 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.
[ 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, and
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 govern their financial and operat-
ing policies so as to obtain benefits. Companies sold in the course of the financial year are deconsolidated 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
generally presumed to exist 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 a significant influence,
or that are not jointly controlled by KION Holding 1 GmbH are classified as financial investments and are not
consolidated.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 5 of 88
The following table shows the number of equity investments broken down by category:
Shareholdings by categories
Consolidated subsidiaries
Domestic
Foreign
At-equity investments in Joint Ventures and Associates
Domestic
Foreign
Subsidiaries and financial investments
recorded at cost
Domestic
Foreign
1/1/2012
Addtions
Disposals
31/12/2012
93
17
76
11
7
4
70
16
54
9
2
7
1
1
−
12
4
8
4
−
4
2
−
2
43
13
30
98
19
79
10
8
2
39
7
32
A total of 19 German and 79 foreign subsidiaries were consolidated in addition to KION Holding 1 GmbH as at 31
December 2012. Following the separation of financial services operations into separate entities, six financial
services companies were consolidated as part of the KION Group for the first time in January 2012 because they
had become more financially significant (additions, consolidated subsidiaries). Previously, these companies had
been reported at cost and are therefore reported as disposals of investments recorded at cost. In addition, a new
company, KION South Asia Pte. Ltd., Singapore, Singapore, was founded in July 2012. Information about other
acquisitions can be found in note [ 5 ] while information about disposals are provided in notes [ 6 ] and [ 13 ].
Ten joint ventures and associates were accounted for under the equity method as at 31 December 2012 (31
December 2011: eleven). In each case, measurement under the equity method was performed on the basis of the
last available annual financial statements. The addition relates to the non-controlling interest held in Linde Hy-
draulics GmbH & Co. KG.
39 (2011: 70) companies with minimal business volumes 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 as a
whole.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 6 of 88
Where other requirements are met, the following consolidated companies are exempt from the requirement to
prepare annual financial statements and management reports in accordance with sections 264 (3) and 264b HGB
due to 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 shown in the list of
shareholdings in the annex to these notes.
[ 5 ]
Acquisitions
The KION Group acquired the business operations of the UK dealer Creighton on 28 February 2012, by acquiring
100 per cent of the share capital and voting rights in Creighton Materials Handling Ltd., Birmingham, United
Kingdom (registered office relocated to Basingstoke, United Kingdom, on 28 February 2012), which itself holds 51
per cent of the share capital and voting rights in Linde Creighton Ltd., Basingstoke, United Kingdom. The KION
Group already held the other 49 per cent of the share capital and voting rights in Linde Creighton Ltd. before the
business combination. Creighton's business operations include an investment of 100 per cent in McLEMAN
FORK LIFT SERVICES LTD., Basingstoke, United Kingdom. The acquisition has enabled the KION Group to
further strengthen the leading position of the Linde brand and it's UK distribution and service network.
The carrying amount of the equity-investment in Linde Creighton Ltd. immediately prior to the acquisition date was
€3,635 thousand. Remeasurement of the previously he ld investment (49 per cent) resulted in a fair value of
€11,387 thousand. The difference of €7,752 thousand
(amount on the acquisition date) was recognised in the
income statement and reported as profit from equity-investments.
The acquisition-related costs of this business combination amounted to €60 thousand and have been reco gnised
as an expense for the current period and recorded in Administrative expenses on the face of the consolidated
income statement.
The table below shows the overall impact of this acquisition on the consolidated financial statements of KION
Holding 1 GmbH based on the final fair values on the acquisition-date.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 7 of 88
Impact of the acquisition 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
Cash payment
Fair value of the purchase price obligation
Consideration transferred
Previously held share of equity (49 per cent in Linde Creighton Ltd.)
Total
Fair value at the
acquisition date
15,794
5,017
5,437
1,025
4,029
8,036
2,149
5,131
46,618
7,907
15,472
0
23,379
23,239
11,852
0
11,852
11,387
23,239
The gross amounts of the receivables acquired as part of this transaction, which are exclusively trade receivables,
totalled €8,183 thousand. At the acquisition date it
was estimated that €147 thousand of these trade re ceivables
were irrecoverable. Revenue rose by €50,076 thousan d as a result of the acquisition. The net income (loss)
reported for 2012 contains a profit of €1,382 thous and attributable to the entity acquired. If this business combina-
tion had been completed as at 1 January 2012, this would have had no further material impact on either the
revenue or the net income (loss) reported by the KION Group for 2012.
Goodwill represents the expected strategic and geographical synergies that the KION Group is able to derive from
the business combination. The goodwill arising from this acquisition is currently not tax deductible.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 8 of 88
[ 6 ]
Disposal of subsidiaries
With effect from 27 December 2012 the KION Group sold and deconsolidated its controlling interest of 70 per cent
in Linde Hydraulics GmbH & Co. KG, Aschaffenburg (referred to below as Linde Hydraulics), to Weichai Power
Co., Ltd., Weifang, China (referred to below as Weichai Power).
Before the disposal, significant assets and liabilities of the former hydraulics business of the KION Group, includ-
ing land and buildings plus shares in the subsidiaries Linde Hydraulics Ltd., Abingdon, United Kingdom, and Linde
Hydraulics Corporation, Canfield, USA, were transferred to Linde Hydraulics. As part of the transaction, Weichai
Power granted the KION Group a put option on the remaining shares (30 per cent) in Linde Hydraulics. The KION
Group also granted Weichai Power two call options relating to these shares. The put option, which is reported in
other financial assets, is measured at fair value. The call options, also measured at fair value, are reported in
other financial liabilities.
Non-current assets of €164,669 thousand, current as sets of €63,330 thousand, cash and cash equivalents of
€3,467 thousand, non-current liabilities of €68,414
thousand and current liabilities of €30,328 thousa nd were
derecognised as a result of the sale.
The gain resulting from this sale (before tax) of € 138,276 thousand is the difference between the total considera-
tion received for the hydraulics business including the options (€271,000 thousand) and the carrying a mounts of
the assets and liabilities disposed of. It is reported on the face of the consolidated income statement as other
income.
Linde Material Handling GmbH (referred to below as LMH GmbH) continues to hold the remaining 30 per cent of
Linde Hydraulics which is included in the scope of consolidation as an at-equity investment on a going-forward
basis. It will be accounted for using the equity method. The gain from the remeasurement of the remaining shares
at fair value amounts to €108,692 thousand and is a lso reported as other income.
[ 7 ]
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 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 at the rate prevailing on the transaction date. Currency
translation differences are recognised in the income statement as other income/expenses.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 9 of 88
The following translation rates were used for currencies that are material to the financial statements:
Major foreign currency rates in €
Australia (AUD)
Brazil (BRL)
Switzerland (CHF)
China (CNY)
United Kingdom (GBP)
Russia (RUB)
U.S.A. (USD)
[ 8 ]
Accounting policies
Average rate
Closing rate
2012
2011
2012
2011
1.2420
2.5114
1.2052
8.1138
0.8112
39.9190
1.2863
1.3480
2.3273
1.2327
9.0018
0.8680
40.8810
1.3929
1.2693
2.7033
1.2079
8.2218
0.8129
40.3252
1.3197
1.2683
2.4142
1.2154
8.1551
0.8343
41.7267
1.2957
The consolidated financial statements are prepared on the separate financial statements of the parent and the
consolidated subsidiaries, which are prepared in accordance with uniform KION Group accounting policies.
In 2012 the long-term leasing business was separated from the short-term rentals and 'sale with risk' business as
part of the changes in the management structure and the separation of the financial services business. To
achieve consistency of presentation with segment reporting, this separation required reclassifications in the KION
Group's consolidated statement of financial position. Industrial trucks used in short-term rentals and 'sale with risk'
business were reclassified from 'leased assets' to 'rental assets', while industrial trucks used in long-term leasing
business continue to be reported as 'leased assets'.
In addition, procurement leasing was also separated from 'leased assets' and are reclassified to other property,
plant and equipment as it is no longer considered to be part of leased assets under the new structure.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 10 of 88
In connection with this reclassification, the corresponding liabilities are reported as other financial liabilities and no
longer as lease liabilities. The resulting reclassifications as at 1 January 2011 and 31 December 2011 are as
follows:
Assets and Liabilities
€ thousand
Assets
Leased assets
Rental assets
Other property, plant and equipment
Liabilities
Non-current lease liabilities
Other non-current financial liabilities
Current lease liabilities
Other current financial liabilities
€ thousand
Assets
Leased assets
Rental assets
Other property, plant and equipment
Liabilities
Non-current lease liabilities
Other non-current financial liabilities
Current lease liabilities
Other current financial liabilities
01.01.2011
before
reclassifications
reclassifications
01.01.2011
after
reclassifications
501,164
0
566,492
411,097
127,870
250,552
391,242
-345,039
321,188
23,851
-132,283
132,283
-80,623
80,623
156,125
321,188
590,343
278,814
260,153
169,929
471,865
31.12.2011
before
reclassifications
reclassifications
31.12.2011
after
reclassifications
539,731
0
538,121
471,131
132,719
230,381
420,435
-372,377
356,682
15,695
-171,070
171,070
-83,653
83,653
167,354
356,682
553,816
300,061
303,789
146,728
504,088
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 11 of 88
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 it can be reliably measured. Additional
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 recognised pro rata over the term of the agreement if the risks and rewards remain substantially with the
KION Group. The term 'sale with risk' and the corresponding revenue recognition are discussed in the following
section and under 'Rental assets' below.
Rendering of services
Revenue from the rendering of 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). Revenue from long-term service agreements is therefore recog-
nised on the basis of the average term of the service agreements and in line with the progressive cost trends
(constant margin).
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 provided by the Group, 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 pro rata temporis 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 tempo-
ris.
Regarding the deferral of lease income, please refer to the accounting policies for 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 overheads, including depreciation of production equipment and amor-
tisation 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 2012
Page 12 of 88
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 expenses 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 expenses on pension provisions. The expected return on plan assets
relating to pension provisions is also included in financial income.
Interest income and expenses 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 expenses 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, Financial Services and Other segments on the basis of their characteristics and risk profile. The
2012 forecast, the budget for 2013, the medium-term planning for 2014 to 2015 and the KION Group's internal
market forecasts for 2016 to 2017 were drawn up on the basis of this segment structure.
The relevant CGUs for the purposes of goodwill impairment testing are the LMH and STILL segments and the
CGU Voltas Material Handling Private Limited, Pune, India (referred to below as VMH), which is part of the Other
segment, as goodwill and brand names have been allocated to these CGUs.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 13 of 88
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 calculating the operating cash flows are taken from financial forecasts
approved by KION's management and are also used for internal management purposes. The cash flows forecast
for the next five years are used for the impairment test. The financial forecasts are based on assumptions relating
to the development of the global economy, commodity prices and exchange rates. The budget for 2013, the
medium-term planning for 2014 to 2015 and the KION Group's internal market forecasts for 2016 to 2017 were
used to determine the cash flows. Cash flows beyond the five-year planning horizon were extrapolated for the
CGUs LMH and STILL by using a growth rate of 1 per cent (2011: 1 per cent). A growth rate of 3 per cent (2011:
2 per cent) was used for VMH to take into account of the forecasted trends for the high-growth market of India
and the high level of inflation.
CGU cash flows are discounted using a weighted average cost of capital (WACC) that reflects current market
assessments of the specific risks of the CGUs. The underlying capital structure for the CGUs LMH and STILL is
determined by comparing peer group companies in the same sector. The beta factor derived from the peer group
was 1.08 (2011: 1.03). Yield curve data from the European Central Bank as at 31 October 2012 was used to
determine a risk-free interest rate; this interest rate was 2.5 per cent (2011: 3.4 per cent). The market risk premi-
um derived from empirical studies of the capital markets was set at 6.0 per cent (2011: 5.5 per cent) and reflects
the increased uncertainty currently observed in the capital markets. The country risk taken into consideration for
the CGUs LMH and STILL was 0.2 per cent and 0.5 per cent respectively (2011: 0.0 per cent respectively). The
risk-adjusted cost of borrowing before tax was based on an interest rate of 4.4 per cent (2011: 5.3 per cent). A
leverage ratio of 22.7 per cent (2011: 25.4 per cent) was calculated based on the capital structure determined for
the peer group.
To determine the country-specific WACC for VMH, a leveraged beta of 1.07 (2011: 1.10) was used, which was
based on the average of three one-year beta factors. An interest rate of 8.7 per cent (2011: 7.3 per cent) was
used as the risk-free interest rate for India as at 31 October 2012. The market risk premium is derived from empir-
ical data of the capital markets and was set at 6.0 per cent (2011: 5.5 per cent) and the country risk premium for
India was set at 3.0 per cent (2011: 2.3 per cent). The risk-adjusted cost of borrowing before tax was determined
to be 10.6 per cent (2011: 11.3 per cent). A leverage ratio of 22.7 per cent (2011: 25.4 per cent) was calculated
for the peer group as at 31 October 2012.
The pre-tax interest rate determined on the basis of these parameters and used to discount the estimated cash
flows was 10.7 per cent for LMH (2011: 10.5 per cent), 11.0 per cent for STILL (2011: 10.4 per cent) and 21.5 per
cent for VMH (2011: 14.6 per cent). The WACC after tax was 7.8 per cent for LMH (2011: 7.7 per cent), 8.0 per
cent for STILL (2011: 7.7 per cent) and 15.8 per cent for VMH (2011: 11.0 per cent).
The impairment test carried out as at 31 December 2012 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.
Other intangible assets
Other purchased intangible assets with a finite useful life are carried at cost less all accumulated amortisation and
all accumulated impairment losses. If events or market developments suggest impairment has occurred, impair-
ment 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 2012
Page 14 of 88
Other intangible assets with an indefinite useful life are carried at cost and are mainly capitalised brand names.
Brand names are not amortised because 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 impairment test is performed
in the same way as the impairment test for goodwill. Assessments of indefinite useful life are carried out in every
period.
The brand name of VMH, which is allocated to the Other segment, is subject to a usage right with a contractually
limited term and it will therefore be amortised over its useful life.
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 overheads 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 accumulated amortisation and accumulated impairment
losses. Internally generated intangible assets are not qualifying assets so finance costs are not capitalised. All
development costs which do not meet the recognition criteria are expensed as incurred and reported on the
income statement under research and development costs together with research costs and 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/rental
Years
10
10
5-7
3-15
3-8
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 nature (short-term rental) or long-term nature (leasing).
Companies in the KION Group enter into leases as lessors and as lessees. In line with IAS 17, these contracts
are classified as finance leases if substantially all of the risks and rewards incidental to ownership of the
leased/rental asset are transferred to the lessee. All other leases and rental transactions are classified as operat-
ing leases, in accordance with IAS 17.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 15 of 88
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.
Leased assets
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 over the term of the underlying leases. Lease-
related income is recognised on a straight-line basis over the terms of the leases.
In the case of these long-term leases, industrial trucks are generally sold to leasing companies. The industrial
trucks are then leased back to companies in the KION Group, who sub-lease them to customers (described below
as 'sale-and-leaseback sub-leases'). Long-term leases generally have a term of four to five years. If, in the case
of sale-and-leaseback sub-leases, the risks and rewards incidental to the head lease are substantially borne by
KION Group companies, the corresponding assets are reported as non-current leased assets. If substantially 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 lease; funding items are recognised as lease liabili-
ties.
Rental assets
Rental assets are assets resulting from short-term rentals as well as industrial trucks in relation to which signifi-
cant risks and rewards remain with the KION Group despite having been sold ('sale with risk').
In the case of short-term rentals, LMH and STILL brand companies rent industrial trucks to customers directly.
Short-term rental agreements usually have a term of one day to one year. The significant risks and rewards
remain with the LMH and STILL brand companies. The industrial trucks are carried at cost and depreciated over
their economic usefull lifes. Depending on the product group, the economic useful life is between five and seven
years.
As part of 'sale with risk' business, industrial trucks are sold to finance partners who then enter into leases with
end customers. If LMH and STILL brand companies provide material residual value guarantees or a customer
default guarantee, these transactions, which classify as sale agreements under civil law, are recognised in ac-
cordance with the provisions for lessors in operating leases and the IFRS principles for revenue recognition. In
this case, the trucks 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, an amount equivalent to the
residual value obligation is recognised under other financial liabilities. The purchase consideration paid by the
finance partner is recognised as deferred income and released to revenue on a pro rata basis over the term of the
lease between the finance partner and the end customer.
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 overheads. This includes production-related depreciation and propor-
tionate costs for administration and social insurance / employee benefits.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 16 of 88
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 as soon as the definition of a qualifying asset is met. As was the case in the previous year,
there were no qualifying assets in 2012.
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
KION Group companies also lease property, plant and equipment for their own use using finance leases, which
are recognised as other property, plant and equipment. In this case, the lower of the fair value and present value
of future lease payments is recognised at the inception of the lease. A corresponding liability to the lessor is
recognised under other financial liabilities in the statement of financial position.
Property, plant and equipment covered by finance leases is depreciated over the shorter of its 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
property, plant and equipment is depreciated and the other financial liabilities are reversed over the useful life of
the leased assets.
The difference between total finance lease liabilities and the fair value of the financed leased assets represents
the finance charge which is recognised in the income statement over the term of the lease 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.
If there are certain indications of impairment of the property, plant and equipment, the assets are tested for im-
pairment 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
recoverable amount, an impairment loss is recognised for an 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 2012
Page 17 of 88
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 exists, impairment losses not exceeding the amortised cost of
the asset concerned are reversed. This does not apply to goodwill.
Equity-accounted 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 proceeds on disposal.
If there is evidence that an associate or joint venture may be impaired, the carrying amount of the investment is
tested for impairment.
Income taxes
In the consolidated financial statements, current and deferred taxes are recognised on the basis of the tax laws of
the relevant jurisdictions. 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 differences resulting from
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 some interest
carryforwards for the first time in 2011.
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.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 18 of 88
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 overheads 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 they 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 selling costs.
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.
Trade receivables
In the first period in which they are recognised, trade receivables ('LaR') 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.
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 derivative financial instruments that do not form part
of a formally documented hedge relationship.
Available-for-sale financial instruments (AfS) are carried at fair value. If they are equity investments for which no
market price is available, they are carried at cost. Unrealised gains and losses, including deferred taxes, are
reported in other comprehensive income (loss) until they are realised.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 19 of 88
In the first period they are recognised, other financial assets which are categorised as loans and receivables
('LaR') 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.
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.
If objective facts in favour of reversing impairment losses are present on the reporting date, reversals are recog-
nised to an appropriate extent. Reversals may not exceed the amortised cost that would have arisen if the im-
pairment loss had not been recognised. In the case of debt instruments classified as available-for-sale financial
assets, 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.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 20 of 88
Derivative financial instruments
Derivative financial instruments are measured at their fair value and are reported as financial assets or financial
liabilities as at the reporting date.
Derivative financial instruments in the KION Group comprise currency forwards and interest-rate swaps and are
used for hedging purposes to mitigate exchange-rate and interest-rate risks. In addition, the options on the re-
maining shares in Linde Hydraulics are reported as derivative financial instruments (see note [ 6 ]).
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 used 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 met, 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 in note [
36 ].
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.
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 [ 29 ].
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 21 of 88
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 result in 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 is at full cost.
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. Recourse claims are not taken into account. The settlement
amount also includes cost increases identifiable as at the reporting date. Provisions 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 expenses.
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 2012
Page 22 of 88
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 realised may differ from estimates. Assumptions and estimates are applied in
particular:
•
•
•
•
•
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
to the recognition and measurement of 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 units to which goodwill is allocated,
applying the budget for 2013 and the medium-term planning for 2014 to 2015 combined with the growth predicted
in the market forecasts for 2016 to 2017 and assuming 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 [ 18 ].
Information on leases can be found in the sections on leases/rental, leased assets, rental assets and other prop-
erty, plant and equipment in this note.
Defined benefit pension obligations are calculated on the basis of actuarial parameters. As differences due to
actuarial gains and losses are recognised 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 the retirement benefit obligation in note [ 29 ].
Significant estimates are involved in calculating provisions for tax. These estimates may change on the basis of
new information and experience (see also note [ 16 ]). Where necessary, the KION Group's accounting depart-
ments 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 taking into consideration the prob-
ability of the future outflow of resources, 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 [ 32 ].
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 2012
Page 23 of 88
Notes to the consolidated income statement
[ 9 ]
Revenue
The revenue generated by the KION Group in the year under review is comprised of the following by product
category:
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 [ 39 ] Segment report.
[ 10 ] Other income
Other income is comprised of the following:
Other income
€ thousand
Net gains on the Weichai transactions
Foreign currency exchange rate gains
Profit from release of deferred lease profits
Income from reversal of provisions
Remeasurement of purchase price obligations
Gains on disposal of non-current assets
Rental income
Sundry income
Total other income
2012
2011
2,651,483
167,771
1,907,410
1,149,791
427,610
212,974
117,035
2,364,235
172,662
1,831,498
1,065,731
441,152
218,982
105,633
4,726,664
4,368,395
2012
2011
211,763
18,926
10,593
5,196
4,557
4,045
2,677
36,617
294,374
−
22,600
6,886
6,638
11,971
1,381
2,155
29,872
81,503
Net gains on the Weichai transactions relate to the gain of €138,276 thousand from the disposal of the (indirect)
controlling interest of 70 per cent in Linde Hydraulics (see also note [ 6 ]). Costs incurred in connection with the
sale amounting to €35,205 thousand are also reporte d under net gains on the Weichai transactions.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 24 of 88
In addition, the net gains on the Weichai transactions also include the gain arising from the remeasurement of the
remaining shares (30 per cent) in Linde Hydraulics at fair value in the amount of €108,692 thousand.
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 corresponding derivatives. The foreign curren-
cy exchange rate gains include gains amounting to € 9,670 thousand (2011: €11,354 thousand) on derivati ve
financial instruments used to hedge operating exchange-rate risk. These gains were offset by foreign currency
exchange rate losses (other expenses) of €5,101 tho usand in 2012 (2011: €11,542 thousand). Overall, th is re-
sulted in a net gain of €4,569 thousand (2011: net
loss of €188 thousand).
The remeasurement of purchase price obligations relates to the shares acquired in Linde Creighton Ltd., Basing-
stoke, United Kingdom in 2012. This gain results from the significantly improved market environment and a corre-
sponding increase in the value of the investment (see also note [ 5 ]).
[ 11 ] Other expenses
The breakdown of other expenses is as follows:
Other expenses
€ thousand
Foreign currency exchange rate losses
Impairment of non-current assets
Losses on disposal of non-current assets
Sundry expenses
Total other expenses
2012
2011
23,277
21,134
3,334
11,785
59,530
19,467
27,032
7,963
15,581
70,043
The change in foreign currency exchange rate gains and losses is attributable to exchange rate movements (see
also note [ 10 ]). Overall, there was a net gain of €4,569 thousand on derivative financial instrument s used to
hedge operating exchange-rate risk (2011: net loss of €188 thousand).
The impairment recognised on non-current assets in the reporting year comprised impairment losses of € 4,825
thousand on intangible assets (2011: €10,261 thousa nd) and impairment losses of €16,309 thousand on ot her
property, plant and equipment (2011: €16,771 thousa nd). It was largely caused by the planned closure of produc-
tion sites.
[ 12 ] Profit from at-equity investments
Profit from equity-accounted investments amounted to €15,912 thousand in the reporting year (2011:
8,015 thousand (average price) arising from the remeas-
€11,192 thousand). This amount includes income of €
urement of an existing equity-accounted investment of 49 per cent held in Linde Creighton Ltd., Basingstoke,
United Kingdom, over which a controlling influence can be exerted following the acquisition of the remaining
shares (see note [ 5 ]). Further details on equity-accounted investments can be found in note [ 22 ].
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 25 of 88
[ 13 ] Other financial result
Other financial result is essentially comprised of income from equity investments (€2,197 thousand) an d gains on
the disposal of equity investments (€427 thousand).
These gains on the disposal of equity investments largely
resulted from the gain of €298 thousand on the disp osal of the 80 per cent controlling interest in TPZ Linde Vilicari
Hrvatska d.o.o., Zagreb, Croatia, in February 2012.
[ 14 ] Financial income
Financial income is comprised of the following:
Financial income
€ thousand
Return on pension plan assets
Interest income from leases
Foreign currency exchange rate gains (financing)
Other interests and similar income
Total financial income
2012
2011
22,731
22,451
12,108
4,794
62,084
22,732
24,414
23,149
3,369
73,664
The return on pension plan assets item shows the expected return on plan assets used to cover pension obliga-
tions.
The interest income from leases relates to the interest portion of lease payments in financial services transactions
in which KION Group companies operate as lessors (finance leases).
Gains on foreign exchange rate differences – financing – include gains of €9,142 thousand on the trans lation of a
foreign-currency loan denominated in US dollars (2011: €19,022 thousand) and a gain of €75 thousand on
hedg-
ing transactions (2011: €22,883 thousand).
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 26 of 88
[ 15 ] Financial expense
The financial expense is comprised of the following:
Financial expense
€ thousand
Interest expense from loans
Interest cost of defined benefit obligation
Interest cost of leases
Interest expense from corporate bond
Interest cost of shareholder loan
Amortisation of finance costs
Foreign currency exchange rate losses (financing)
Interest cost of non-current financial liabilities
Other interest expenses and similar charges
Total financial expense
2012
2011
121,100
43,809
39,636
34,458
27,653
11,422
7,632
2,192
13,667
135,737
42,436
37,738
25,395
27,882
11,359
52,264
2,574
10,324
301,569
345,709
Interest expenses include interest costs of €101,23 9 thousand arising from variable-rate loan liabilities under the
senior facilities agreement (2011: €117,273 thousan d) and losses of €19,861 thousand on interest-rate swaps
(2011: €18,464 thousand).
The interest cost of the defined benefit obligation is the annual interest expense in connection with the unwinding
of the discount on non-current pension obligations.
The interest cost of leases relates to the interest portion of lease payments in financial services transactions in
which the material risks and rewards are borne by KION Group companies as the lessee (finance leases). Sale-
finance leaseback-operating sub-leases (SALB-FL-OL) incurred interest expenses of €20,719 thousand (2011 :
€19,587 thousand). These interest expenses were not
directly offset by any interest income. The corresponding
income reported within revenue as lease payments received.
The foreign currency exchange rate losses – financing – include losses on derivative financial instruments
d).
amounting to €7,588 thousand (2011: €31,843 thousan
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 27 of 88
[ 16 ]
Income taxes
income
tax expense of
The
€122,137 thousand in current tax expense (2011: €49
,349 thousand) and €27,403 thousand in deferred tax
expense (2011: deferred tax income of €15,308 thous and). The current tax expense includes expenses of
€8,820 thousand (2011: expenses of €2,602 thousand)
relating to previous financial years.
€34,041 thousand) consisted of
€149,540 thousand (2011:
expense of
At the reporting date there were income tax receivables due from tax authorities of €5,501 thousand (20 11:
€4,953 thousand) and income tax liabilities of €84, 958 thousand (2011: €15,439 thousand).
Deferred taxes are recognised for temporary differences between the tax base and the carrying amounts under
IFRS. Deferred taxes are determined on the basis of the tax rates that will apply or are expected to apply at the
realisation 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 14.11 per cent and
the solidarity surcharge (5.5 per cent of corporate income tax), the combined tax rate for companies in Germany
remained at 29.9 per cent. The income tax rates for foreign companies used in the calculation of deferred taxes
are between 10.0 per cent and 38.1 per cent (2011: 10.0 per cent and 38.5 per cent).
No deferred taxes have been recognised on differences of €96,090 thousand (2011: €100,146 thousand) be
tween
the IFRS carrying amounts and the tax base of the 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 sell
the investments in the foreseeable future.
Deferred tax assets are allocated to 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
2012
2011
107,051
4,141
33,832
8,622
121,478
250,973
46,428
31,795
-339,346
86,789
1
34,697
6,065
101,669
200,678
46,386
70,230
-284,552
264,974
261,963
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 28 of 88
Deferred tax liabilities are allocated to 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
2012
2011
452,436
3,259
150,410
398
23,706
15,361
2,597
-339,346
456,138
3,139
113,340
8,588
29,838
9,749
2,814
-284,552
308,821
339,054
The deferred tax liabilities essentially relate to the purchase price allocation as a result of the acquisition of KION
Group, particularly for intangible assets and property, plant and equipment.
Deferred tax assets amounting to €233,162 thousand
because due to the current tax structure it is unlikely that the corresponding benefit can be utilised despite the
improved
loss carryforwards of
€108,630 thousand (2011: €91,636 thousand), interes
t carryforwards of €123,952 thousand (2011: €116,06 0
thousand) and other temporary differences of €580 t housand (2011: €3,702 thousand).
(2011: €211,398 thousand) have not been recognised
income situation. Unrecognised deferred
tax assets
relate
tax
to
Deferred taxes on tax loss carryforwards and interest carryforwards are recognised to the extent that sufficient
future taxable income is expected to be generated against which the losses can be utilised. The deferred tax
assets recognised on interest carryforwards in 2011 were utilised in the year under review. No deferred taxes on
interest carryforwards had been recognised as at 31 December 2012. The total amount of unrecognised deferred
tax assets relating to loss carryforwards of €108,6 30 thousand (2011: €91,636 thousand) concerns tax l osses that
can be carried forward indefinitely.
The KION Group's tax loss carryforwards in Germany as at 31 December 2012 amounted to €289,786 thousand
(31 December 2011: €381,941 thousand) for corporate income tax and €270,800 thousand (31 December 2011 :
€263,525 thousand) for trade tax. There were also f oreign tax loss carryforwards totalling €190,476 th ousand (31
December 2011: €187,438 thousand).
The interest that can be carried forward for an indefinite period of time in Germany amounted to
€463,461 thousand as at 31 December 2012 (31 Decemb er 2011: €464,939 thousand).
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 29.9 per cent (2011: 29.8 per cent).
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 29 of 88
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 for which deferred taxes have not been recognised
Non-deductible expenses
Tax-exempt income
Tax relating to other periods
Deferred taxes prior periods
Other
Effective income taxes (current and deferred taxes)
2012
2011
310,628
-58,885
-93,002
-3,882
-322
-623
-19,972
-1,473
-7,113
-20,244
20,924
-8,820
-11,168
-3,845
-149,540
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
Tax-exempt income includes €17,410 thousand of tax- exempt income in connection with the transfer of significant
parts of the former hydraulics business of LMH GmbH to Linde Hydraulics.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 30 of 88
[ 17 ]
Other income statement disclosures
The cost of materials declined by €64,085 thousand
€2,244,069 thousand).
in the reporting year to €2,179,984 thousand (2011:
Personnel expenses increased by €138,999 thousand in 2012 to €1,202,725 thousand (2011: €1,063,726 thou
-
sand). Personnel expenses include wages and salaries of €946,574 thousand (2011: €833,585 thousand) as well
as social security contributions and expenses for pensions and other benefits of €256,151 thousand (20 11:
€230,141 thousand). The interest cost from the unwi nding of the discount on estimated pension obligations is not
recognised under personnel expenses and is instead reported under financial expense as a component of interest
cost of the defined benefit obligation. The pension expense of €33,688 thousand (2011: €29,741 thousan d) is
essentially comprised of the pension entitlements of €16,243 thousand vested in 2012 (2011: €16,242 th ousand)
and the unrecognised past service cost of €399 thou sand (2011: €177 thousand).
Impairment losses and depreciation expenses on property, plant and equipment together with impairment losses
and amortisation expenses on intangible assets amounted to €365,269 thousand in the reporting year (20 11:
€356,021 thousand). Inventories were written down b y €8,167 thousand (2011: €6,179 thousand).
The breakdown of lease and rental payments expensed in the period and related to operating leases where KION
Group companies are lessees is as follows:
Lessee: Expenses recognised for operating lease payments
€ thousand
Procurement lease contracts
Sublease contracts
Total recognised expenses for lease payments
2012
2011
80,454
18,983
99,437
67,043
38,181
105,224
The expenses in connection with sub-leases relate to leases and rental agreements in which KION Group com-
panies are both lessors and lessees. These expenses were offset by income of €53,639 thousand in 2012 (2011:
€51,072 thousand).
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 31 of 88
Notes to the consolidated statement of financial position
[ 18 ] Goodwill and other intangible assets
Goodwill is allocated to the segments as follows:
Goodwill broken down by segment
€ thousand
LMH
STILL
Other
Total goodwill
2012
2011
907,835
552,208
13,202
971,873
552,208
13,915
1,473,245
1,537,996
The change in goodwill was the result of the disposal of goodwill amounting to €80,700 thousand in the LMH
segment in connection with the sale of the controlling interest (70 per cent) in Linde Hydraulics. In addition, good-
will of €16,306 thousand arose from the acquisition of the UK dealer Creighton. It was allocated to the LMH seg-
ment.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 32 of 88
Intangible assets
€ thousand
Goodwill
Technology
&
development
Brand
names
Sundry
intangible
assets
Total
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
Balance as at 1/1/2012
1,537,996
594,379
251,723
131,453
2,515,551
Group changes
Currency translation adjustments
Additions
Disposals
Amortisation
Impairment
Reclassification
16,306
-542
185
-80,700
0
0
0
0
-85
0
0
-346
0
0
0
366
51,247
-25,094
-55,527
-4,758
-65
4,691
230
18,923
-3,433
-29,828
-67
152
20,997
-31
70,355
-109,227
-85,701
-4,825
87
Balance as at 31/12/2012
1,473,245
593,948
217,892
122,121
2,407,206
Gross carrying amount as at 31/12/2012
Accumulated amortisation
1,473,245
0
594,494
-546
426,727
-208,835
232,942
-110,821
2,727,408
-320,202
The Group intends to retain and further strengthen the Linde, STILL, OM-STILL and KION brand names on a
long-term basis. Brand names worth €473,755 thousand (31 December 2011: €473,782 thousand) are assigned
to the LMH segment. The value of brand names allocated to the STILL segment was unchanged year on year at
€114,000 thousand. These assets are not amortised a s they have an indefinite useful life. An amount of €1,830
thousand had been allocated to the Voltas brand name and is reported in the 'Other' segment in 2011 as part of
the purchase price allocation. Unlike the other brand names, the Voltas brand name is amortised over its useful
life. As at 31 December 2012 the brand names allocated to the 'Other' segment had a carrying amount of €6,193
thousand (31 December 2011: €6,597 thousand).
for
total carrying amount
technology and development assets as at 31 December 2012 was
The
€217,892 thousand (31 December 2011: €251,723 thous and). Development costs of €51,247 thousand were
capitalised in the reporting year (2011: €53,363 th ousand). Total research and development costs of
€124,454 thousand (2011: €119,526 thousand) were ex pensed. Of this amount, €60,285 thousand (2011:
€62,780 thousand) related to amortisation and impai rment losses.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 33 of 88
Impairment losses of €4,825 thousand were recognise d on these assets in 2012 to reflect the lack of opportunities
to use them in future as a result of the planned closure of production sites. Of this amount, €4,741 t housand
relates to capitalised development costs. The impairment losses related to the LMH segment.
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 the functional costs.
[ 19 ] Leased assets
The changes in leased assets in 2012 and 2011 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
2012
2011
167,354
156,125
0
708
135,096
-60,589
-51,171
-76
3,110
-451
87,897
-28,642
-49,961
-724
191,322
167,354
453,945
-262,623
455,893
-288,539
Leased assets are attributable solely to the Financial Services segment and relate to industrial trucks in the
d) and to truck equipment in the amount of €130 tho usand
amount of €191,192 thousand (2011: €167,164 thousan
(2011: €190 thousand).
Leased assets include assets leased over the long term with a carrying amount of €142,668 thousand (31 De-
cember 2011: €120,742 thousand) that are funded by means of sale-and-leaseback transactions with leasing
companies and leased assets with a residual value of €48,653 thousand (31 December 2011: €46,612 thous and)
that are largely funded internally or by means of bank loans.
Leased assets resulted in non-cancellable lease obligations from customers amounting to €189,600 thous and (31
December 2011: €162,140 thousand).
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 34 of 88
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
[ 20 ] Rental assets
The changes in rental assets in 2012 and 2011 were as follows:
Rental 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
2012
2011
189,600
80,127
106,082
3,391
162,140
66,613
94,768
759
2012
2011
356,682
321,188
1,529
1,496
193,796
-28,191
-130,056
-163
7,580
-929
196,319
-51,997
-113,992
-1,487
395,093
356,682
912,994
-517,901
923,739
-567,057
,336 thousand) and disposals amounting to €19,764
Additions amounting to €110,145 thousand (2011: €102
to the LMH segment. Additions amounting to €85,372 t hou-
thousand (2011: €28,437 thousand) are attributable
sand (2011: €84,518 thousand) and disposals amounti ng to €10,152 thousand (2011: €14,095 thousand) are
attributable to the STILL segment.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 35 of 88
The breakdown of rental assets by contract type is shown in the following table:
Rental assets broken down by contract types
Operating leases
as lessor
Sale with risk
Total
€ thousand
2012
2011
2012
2011
2012
2011
Industrial trucks
Truck equipment
Total rental assets
323,647
4,585
287,913
2,066
328,232
289,979
66,760
101
66,861
66,466
237
66,703
390,407
4,686
354,379
2,303
395,093
356,682
Rental assets comprises assets resulting from short-term rentals ('operating leases as lessor') and assets for
which significant risks and rewards remain with the KION Group although they were sold ('sale with risk').
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 36 of 88
[ 21 ]
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 1/1/2011
Group changes
Exchange rate adjustments
Additions
Disposals
Depreciation
Impairment
Reclassification
Balance as at 31/12/2011
Plant,
machinery,
and office
furniture and
equipment
Advances
paid and
assets
under
construction
212,389
1,061
1,165
47,161
-9
-68,902
-7,975
3,613
11,345
779
-291
13,627
-609
0
0
-4,775
20,076
Land and
buildings
366,609
4,404
3,686
2,049
-9,951
-15,987
-8,796
3,223
345,237
188,503
Total
590,343
6,244
4,560
62,837
-10,569
-84,889
-16,771
2,061
553,816
Gross carrying amount as at 31/12/2011
Accumulated depreciation
652,313
-307,076
1,014,798
-826,295
20,076
0
1,687,187
-1,133,371
Balance as at 1/1/2012
Group changes
Exchange rate adjustments
Additions
Disposals
Depreciation
Impairment
Reclassification
345,237
3,023
-319
9,937
-19,006
-14,105
-12,347
9,856
188,503
-173
-142
65,700
-30,374
-63,102
-3,962
5,973
20,076
0
-58
17,520
-6,215
0
0
-15,677
553,816
2,850
-519
93,157
-55,595
-77,207
-16,309
152
Balance as at 31/12/2012
Gross carrying amount as at 31/12/2012
Accumulated depreciation
322,276
637,632
-315,356
162,423
887,996
-725,573
15,646
15,646
0
500,345
1,541,274
-1,040,929
Land and buildings in the amount of €4,244 thousand (31 December 2011: €12,168 thousand) were largely
pledged as collateral for accrued retirement benefits under partial retirement agreements.
The KION Group recognised impairment losses of €16,3 09 thousand in accordance with IAS 36 in 2012, predom-
inantly in connection with the planned closure of production sites. Of this amount, €12,347 thousand r elated to
land and buildings, and €3,962 thousand to plant an d machinery as well as office furniture and equipment. The
impairment losses related to the LMH segment.
Plant and machinery as well as office furniture and equipment include assets from procurement leases (finance
leases) amounting to €15,517 thousand (31 December 2011: €15,695 thousand). The corresponding liabilit ies are
reported as other financial liabilities.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 37 of 88
[ 22 ] At-Equity-accounted investments
The KION Group reported at-equity investments with a total carrying amount of €154,835 thousand as at 3 1
December 2012 (31 December 2011: €36,545 thousand).
These associates and joint ventures are included in the
list of shareholdings in the annex to these notes. Their key figures are as follows:
At-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
2012
2011
569,374
15,260
540,068
10,960
1,073,037
712,873
576,103
494,021
132,036
4,764
107,874
5,612
54,999
24,209
30,790
30,225
4,744
25,481
51,546
25,115
26,431
26,223
2,699
23,524
The figures shown in the table are based on a notional 100 per cent investment.
The significant increase in the carrying amount of the associates mainly resulted from the remaining shares (30
per cent) in Linde Hydraulics, which were measured at their fair value of €116,143 thousand and will b e account-
ed for using the equity method on a going-forward basis.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 38 of 88
[ 23 ] 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
2012
2011
443,452
150,995
282,293
10,164
399,269
132,129
257,328
9,812
399,726
135,897
254,724
9,105
361,221
118,381
234,043
8,797
Unrealised financial income
44,183
38,505
investments
Gross
€345,499 thousand (31 December 2011: €326,930 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 €44,051 thousand (31 December 2011: €38,7
14 thousand).
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 39 of 88
[ 24 ] Other financial assets
Other financial assets of €156,949 thousand (31 Dec ember 2011: €132,828 thousand) are comprised of the
following:
Other financial assets
€ thousand
Pension assets
Investments in affiliated companies
Other investments
Loans receivable
Non-current securities
Derivative financial instruments
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
2012
2011
22,759
3,919
2,253
730
770
19,740
50,171
4,202
8,477
1,110
20,357
72,632
19,958
1,956
2,253
795
770
0
25,732
23,277
4,277
1,074
14,030
64,438
106,778
107,096
156,949
132,828
Pension assets relate to asset surpluses from defined benefit plans. 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 non-current derivative financial instruments include the put option for the remaining shares in Linde Hydrau-
lics amounting to €19,740 thousand (2011: €0 thousa
nd).
The sundry financial assets essentially include receivables from value added tax amounting to €37,178
thousand
(2011: €21,782 thousand) and non-derivative financi al receivables amounting to €35,236 thousand (31 De cember
2011: €36,237 thousand) that are within the scope o f IFRS 7.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 40 of 88
[ 25 ]
Inventories
The reported inventories are comprised of the following:
Inventories
€ thousand
Materials and supplies
Work in progress
Finished goods and merchandise
Advances paid
Total inventories
2012
2011
119,980
74,954
349,049
5,944
150,949
98,387
370,714
5,319
549,927
625,369
The year-on-year reduction in inventories was mainly attributable to disposals in the amount of €56,62 6 thousand
in connection with the sale of the controlling interest (70 per cent) in Linde Hydraulics.
[ 26 ] Trade receivables
The trade receivables are comprised 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
2012
2011
607,303
657,835
-7,620
-27,512
-15,400
3,487
14,672
651,560
701,125
-9,242
-27,988
-12,335
3,150
21,843
625,462
676,553
Valuation allowances of €50,532 thousand (31 Decembe r 2011: €49,565 thousand) were recognised for trade
receivables.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 41 of 88
[ 27 ] Cash and cash equivalents
Cash and cash equivalents
€ thousand
Cash held by banks, on hand and cheque
Pledged cash
Total cash and cash equivalents
2012
2011
561,865
492
372,957
494
562,357
373,451
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 [ 35 ].
[ 28 ] Equity
Subscribed capital and capital reserves
As at the reporting date, the Company's subscribed capital was fully paid up and amounted to €500 thous and,
which was unchanged on 31 December 2011.
In December 2012 the Shareholders' Meeting of KION Holding 1 GmbH approved a resolution to increase the
share capital by €779 thousand to €1,279 thousand. Weichai Power Co., Ltd., Weifang, China (referred to below
as Weichai Power) – a leading manufacturer in the commercial vehicles and automotive supply sector – assumed
a share of €320 thousand as part of this capital in crease and, on 27 December 2012, paid the capital contribution,
including a premium, of €467,000 thousand in cash. The remaining share amounting to €459 thousand was
taken
by the current shareholder Superlift Holding S.à r.l., Luxembourg, and was paid by contributing a shareholder loan
(non-cash capital contribution) amounting to €670,7 84 thousand (including accrued interest), also on 27 Decem-
ber 2012.
The capital increase was entered in the commercial register on 14 January 2013. The capital contributions paid
by Weichai Power and Superlift Holding S.à r.l were therefore recorded in equity under the line item 'Contributions
for carrying out the approved capital increase' as at 31 December 2012.
in connection with the capital increase. These costs were
Transaction costs of €5,232 thousand were incurred
deducted directly from the capital contributions. No tax benefits were recognised for the transaction costs owing to
the lack of opportunities to utilise them.
The capital reserve resulted from capital contributions by shareholders.
Retained earnings
The movement of retained earnings is shown in the consolidated statement of changes in equity. The retained
earnings comprise the net income (loss) for the financial year and earnings of the consolidated companies, pro-
vided they have not been distributed.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 42 of 88
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, the profit (loss) from at-equity investments, and the actuarial gains and losses in con-
nection with defined benefit pension obligations.
Non-controlling interests
Non-controlling interests in companies in the KION Group amounted to €6,159 thousand (31 December 2011:
€7,077 thousand).
[ 29 ] 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 pension 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 contributions. The total expense arising from defined contribution plans amounted to €63,895 tho usand in
2012 (2011: €56,118 thousand). Of this total, contr ibutions paid by employers into government-run plans amount-
ed to €59,682 thousand (2011: €53,337 thousand). Th
e defined contribution plan expense is reported within the
functional 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.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 43 of 88
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 as at the reporting date. Pensions are often adjusted after an employ-
ee 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.
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
Rate of remuneration increase
Rate of pension increase
Germany
UK
Other
2012
2011
2012
2011
2012
2011
3.50%
2.75%
1.75%
5.65%
2.75%
1.75%
4.35%
4.17%
2.94%
4.85%
4.18%
3.18%
2.57%
2.36%
0.26%
4.01%
2.31%
0.38%
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 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
biometric 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.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 44 of 88
The assumptions applied in calculating the defined benefit obligation as at the valuation date (31 December of the
previous year) also apply to the calculation of the interest cost and the cost of pension entitlements arising in the
current year (current service cost).
Differences between the forecast and actual change in the defined benefit obligation and changes in related plan
assets (actuarial gains and losses) are recognised immediately in other comprehensive income in accordance
with IAS 19. This ensures that the pension liability on the face of the statement of financial position is always the
actuarial present value of obligations not covered by assets.
In the case of external financed pension funds, the actuarial present value of the pension obligations as calculat-
ed in accordance with the projected unit credit method is reduced by the fair value of the assets of the external
pension plan. If the assets of the external pension funds exceed the pension obligations, a corresponding asset is
recognised in accordance with IAS 19. IAS 19.58 in conjunction with the supplementary explanatory information 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
contributions 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 funds, the net obligation is reported in pension provisions.
In the defined benefit plans in the UK, plan assets exceed the pension obligations. However the pension asset
ceiling prescribed under IFRS limiting the asset to be recognised on the statement of financial position did not
have an impact on these plans.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 45 of 88
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
2012
2011
2012
2011
2012
2011
2012
2011
Present value of defined benefit
obligation as at January 1
Group changes
Exchange differences
Current service cost
Interest cost
Employee contributions
Actuarial gains (-) and losses (+)
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
obligation as at Decem ber 31
389,271
-67,354
−
11,881
21,680
−
201,473
-11,306
−
-232
−
381,913
−
−
11,894
20,526
−
-14,150
-10,697
−
-215
−
390,396
-6,866
10,265
1,443
19,061
84
21,707
−
-16,947
−
327
362,716
−
10,769
1,245
19,132
135
12,665
−
-16,312
−
46
79,362
-247
197
2,919
3,068
834
17,471
-2,255
-2,972
−
−
75,681
284
973
3,103
2,778
781
103
-1,946
-1,584
−
−
859,029
-74,467
10,462
16,243
43,809
918
240,651
-13,561
-19,919
-232
327
820,310
284
11,742
16,242
42,436
916
-1,382
-12,643
-17,896
-215
46
−
−
−
−
−
-811
−
-811
545,413
389,271
419,470
390,396
98,377
79,362
1,063,260
859,029
thereof unfunded
thereof funded
231,397
314,016
177,739
211,532
−
419,470
−
390,396
28,186
70,191
22,148
57,214
259,583
803,677
199,887
659,142
The significant increase in the present value of the obligation caused by actuarial losses is largely attributable to
the low discount rates for German pension plans compared with the previous year.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 46 of 88
The following table shows the change in the fair value of plan assets:
Changes in plan assets
€ thousand
2012
2011
2012
2011
2012
2011
2012
2011
Germany
UK
Other
Total
Fair value of plan assets
as at 1 January
Group changes
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
38,217
-1,834
−
2,184
1,449
−
−
−
34,956 406,404 369,270
−
-4,093
11,309
10,680
18,736
18,296
17,364
17,786
5,902
7,299
84
135
-16,312
-16,947
−
−
1,936
1,325
−
−
−
50,309
−
185
2,251
6,077
2,219
834
-2,972
50,907 494,930 455,133
-5,927
−
12,151
10,865
22,732
22,731
13,714
25,312
8,180
9,518
918
916
-17,896
-19,919
−
842
2,060
-4,975
2,278
781
-1,584
40,016
38,217 439,509 406,404
58,903
50,309 538,428 494,930
In 2012 employer's contributions in the United Kingdom, which amounted to €7,299 thousand, included pay ments
of €4,931 thousand into pension funds on the basis of contractual agreements. Decisions on additions to plan
assets take into account the change in plan assets and pension obligations. For companies outside Germany,
decisions also take into account the statutory minimum coverage requirements and the amounts deductible under
local tax rules.
The payments expected for the following year amount to €24,501 thousand (2012: €21,845 thousand), whic
h
include expected employers' contributions of €11,19 5 thousand to plan assets (2012: €8,831 thousand) a nd
expected direct payments of pension benefits amounting to €13,306 thousand (2012: €13,014 thousand) th at are
not covered by corresponding reimbursements from plan assets. According to local measurement rules, there
continue to be gaps in the coverage of four plans in the United Kingdom and as a result the expected employer's
contributions in 2013 include payments of €7,595 th ousand in line with the agreements reached with the trustees.
Moreover, KION GROUP GmbH, Wiesbaden, gave an unsecured guarantee for these four UK plans in 2012. This
guarantee covers the future contractual payments of the KION Group and employees up to an upper limit of
around €75,000 thousand. This upper limit will be r educed by the payments made by the KION Group. At the
reporting date, the upper limit for the guarantee had therefore decreased to €58,067 thousand. The lik elihood of
the guarantee being used is deemed low in view of the position of the individual companies against the backdrop
of their current and future financial and earnings situations.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 47 of 88
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
2012
2011
2012
2011
2012
2011
2012
2011
Present value of the partially or
fully funded defined benefit obligation
Fair value of plan assets
314,016 211,532 419,470 390,396
38,217 439,509 406,404
40,016
70,191
58,903
57,214 803,677 659,142
50,309 538,428 494,930
Surplus (-) / deficit (+)
274,000 173,315
-20,039
-16,008
11,288
6,905 265,249 164,212
Present value of the unfunded defined
benefit obligation
231,397 177,739
−
−
28,186
22,148 259,583 199,887
Surplus (-) / deficit (+) total
505,397 351,054
-20,039
-16,008
39,474
29,053 524,832 364,099
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“
−
−
−
−
-1,071
-1,143
-1,071
-1,143
505,397 351,054
-20,039
-16,008
38,403
27,910 523,761 362,956
505,397 351,054
2,720
3,950
38,403
27,910 546,520 382,914
−
−
-22,759
-19,958
−
−
-22,759
-19,958
In addition, the KION pension plan for employees of the KION Group in Germany holds plan assets of
€19,486 thousand (2011: €18,474 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 €33, 480 thousand (2011: €30,539 thousand) were paid in connec-
tion with the main pension entitlements in the KION Group, of which €13,561 thousand (2011: €12,643 tho
usand)
was paid directly by the Company and €19,919 thousa nd (2011: €17,896 thousand) was paid from plan asse ts.
Cash contributions to plan assets in 2012 amounted to €9,518 thousand (2011: €8,180 thousand). Further more,
pension benefit payments totalling €232 thousand (2 011: €215 thousand) were transferred to external pe nsion
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 2012
Page 48 of 88
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 the increase in the defined benefit obligation at the end of the
previous year 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 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 2012 is as follows:
Cost of defined benefit obligation
Germany
UK
Other
Total
€ thousand
2012
2011
2012
2011
2012
2011
2012
2011
Current service cost
Interest cost
Expected return on plan assets
Past service cost (+) and income (-)
11,881
21,680
-2,184
−
11,894
20,526
-1,936
−
1,443
19,061
-18,296
327
1,245
19,132
-18,736
46
2,919
3,068
-2,251
72
3,103
2,778
-2,060
131
16,243
43,809
-22,731
399
16,242
42,436
-22,732
177
Gains (-) or losses (+)
on the curtailment of a plan
Total cost of
defined benefit obligation
−
−
−
−
−
-708
−
-708
31,377
30,484
2,535
1,687
3,808
3,244
37,720
35,415
Overall, the KION Group reported an expense of €21,0 78 thousand (2011: €19,704 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 the functional costs.
The actual total return on plan assets in 2012 was €48,043 thousand (2011: €36,446 thousand).
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 49 of 88
Other comprehensive income (loss)
The breakdown of actuarial gains and losses on the defined benefit obligation recognised in the statement of
comprehensive income in 2012 are as follows:
Accumulated other comprehensive income (loss)
Germany
UK
Other
Total
€ thousand
2012
2011
2012
2011
2012
2011
2012
2011
Accum ulated other com prehensive
incom e/loss as at 1 January
Group changes
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
81,458
−
65,983
−
-37,014
2,235
-40,769
−
-10,160
−
-4,925
−
34,284
2,235
20,289
−
-201,473
1,449
−
14,150
1,325
−
-21,707
17,786
-965
-12,665
17,364
-944
-17,471
6,077
-40
-103 -240,651
25,312
-1,005
-4,975
-157
1,382
13,714
-1,101
-118,566
81,458
-39,665
-37,014
-21,594
-10,160 -179,825
34,284
The changes in estimates relating to defined benefit pension entitlements resulted in a €151,311 thous and de-
crease in equity as at 31 December 2012 (after deferred taxes). Of this decrease, €151,267 thousand re lated to
shares held by the shareholders of KION Holding 1 GmbH and €44 thousand to non controlling interests.
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
2012
2011
2012
2011
2012
2011
2012
2011
Securities
Fixed-income securities
Real estate
Insurance policies
Other
Total plan assets
7,134
18,301
1,551
−
13,030
6,862
12,580
2,859
−
15,916
86,922
259,556
−
−
93,031
73,583
267,739
331
−
64,751
8,462
11,743
3,888
32,600
2,210
7,187
11,499
3,593
26,353
1,677
102,518
289,600
5,439
32,600
108,271
87,632
291,818
6,783
26,353
82,344
40,016
38,217
439,509
406,404
58,903
50,309
538,428
494,930
The plan assets do not include any real estate or other assets used by the KION Group itself. The Other category
largely comprises inflation-linked UK government bonds for the four large plans in the United Kingdom.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 50 of 88
The expected return in 2012 and 2011 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
2011
2012
2011
2012
2011
7.35%
3.74%
5.10%
−
6.68%
7.45%
3.50%
5.20%
−
6.68%
5.77%
4.31%
6.50%
−
3.19%
6.73%
4.81%
6.50%
−
4.17%
6.80%
2.40%
4.60%
4.69%
6.00%
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 expected return on plan assets was 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 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 3.75 per cent or falling to 3.25
per cent in the case of Germany as at 31 December 2012), pension entitlements would be €43,458 thousan d
(2011: €35,632 thousand) lower or €45,463 thousand
(2011: €35,747 thousand) higher, respectively. Othe r com-
prehensive loss (2011: gain) after tax would be €31 ,611 thousand (2011: €25,999 thousand) higher or
€33,081 thousand (2011: €26,036 thousand) lower.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 51 of 88
Five-year overview
The following table shows a five-year overview of experience adjustments arising from the differences between
actuarial assumptions and actual circumstances:
Five-year overview
€ thousand
2012
2011
2010
2009
2008
Present value of defined benefit obligation
as at 31 December
1,063,260
859,029
820,310
722,779
629,198
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 (+)
Net defined benefit obligation
as at 31 December
6,566
144
-76
4,858
39
538,428
494,930
455,133
401,510
320,248
25,312
524,832
13,714
364,099
17,350
365,177
51,763
321,269
-107,388
308,950
-1,071
-1,143
-1,377
40
−
523,761
362,956
363,800
321,309
308,950
While the actuarial gains and losses on the present value of the obligation only partially result in part from experi-
ence adjustments, the actuarial gains or losses on the fair value of the plan asset are entirely attributable to
experience adjustments.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 52 of 88
[ 30 ] 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.
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
Corporate bond
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
Loan agreement
2012
2011
1,858,448
51,152
1,692,072
115,224
2,509,889
223,979
2,285,910
0
489,495
0
0
489,495
4,488
623
0
3,865
487,508
0
0
487,508
7,333
3,397
0
3,936
51,775
227,376
2,300,656
2,777,354
0
0
0
0
643,132
0
0
643,132
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 €23,6 37 thousand (2011: €20,175 thousand) reduced the ca rrying
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 respective terms.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 53 of 88
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.
In July 2012 the KION Group amended its SFA loan again and extended it, thereby improving the maturity profile
of existing loans. This included a significant part (€186,677 thousand) of the existing revolving cred it line, whose
maturity was extended from December 2013 to December 2016, and €966,638 thousand of loans under Loan
Facilities B and C, whose maturities were extended from December 2014 (Loan Facility B) and December 2015
(Loan Facility C) to December 2017. In addition, the maturity of the €114,097 thousand loan agreed as part of
Loan Facility G was extended from December 2016 to June 2018.
In connection with the extension of the loan facilities, additional lines of €113,323 thousand were gr anted for the
revolving credit facility due in December 2016.
Under the terms of the extension of the loan facilities, it was also agreed to increase the interest margins by 1.0 to
1.5 percentage points. The accrued and unpaid interest (payment in kind, PIK) was capitalized for the extended
loan facilities. In future, interest will be paid immediately for the extended loans under term loan facilities B2 and
C2.
Until 31 December 2012 transaction costs of €12,899 thousand were incurred. These costs have been allocated
pro rata to each of the tranches and expensed over their respective new terms. There were also transaction costs
of €1,433 thousand in connection with the revolving credit facility. These are reported as prepaid expenses under
current financial assets and are released over the residual term of the revolving credit facility, which is currently
not being utilised.
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 the three-month EURIBOR plus a margin of 4.25 percentage points. Interest on the fixed-rate tranche is
paid semi-annually, while interest on the floating-rate tranche is paid quarterly. The bond's principal amount is
redeemed as a bullet payment on maturity. Borrowing costs of €10,505 thousand (2011: €12,492 thousand)
reduced the carrying amount of the bond as at the reporting date. These costs have been allocated pro rata to
each of the tranches and are expensed over their respective terms. The corresponding liability is reported as a
capital market liability.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 54 of 88
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 shareholder loan, amounting to €670,784 thous and
(including accrued interest), was converted into equity with effect from 27 December 2012.
Changes in net financial debt
The KION Group uses “net financial debt” as a key performance indicator for analysing the changes in its financial
liabilities. Net financial debt is defined as the difference between financial liabilities (excluding lease liabilities) and
cash and cash equivalents.
The table below gives a breakdown of the KION Group's net financial debt as at 31 December 2012.
Net financial debt
€ thousand
Corporate bond - fixed rate (2011/2018) - gross
Corporate bond - floating rate (2011/2018) - gross
Liabilities to banks (gross)
Liabilities to non-banks (gross)
./. Capitalized borrowing costs
Financial debt
./. Cash and cash equivalents
Net financial debt
2012
2011
325,000
175,000
1,882,085
4,488
-34,142
2,352,431
562,357
1,790,074
325,000
175,000
2,530,064
7,333
-32,667
3,004,730
373,451
2,631,279
The Multicurrency Revolving Credit Facility (€137,6 04 thousand) drawn down in November 2011 was repaid in
2012. In addition, the Multicurrency Capex Restructuring and Acquisition Facility was reduced by €56,1 42
thousand. Term Loan Facility D was repaid in full (€202,252 thousand) in December 2012. The financial debt
under Term Loan Facility B1 (denominated in euros) was reduced by €147,897 thousand and the financial d ebt
under term loan facility B1 (denominated in US dollars) was reduced by €123,485 thousand. Repayment of T erm
Loan Facility B1 (denominated in US dollars) generated foreign currency exchange rate gains of €2,803
thousand, as a result of which the KION Group's total repayments in 2012 amounted to €664,577 thousand.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 55 of 88
The table below gives details of the changes in financial debt and the applicable terms and conditions.
Credit terms
€ thousand
Interest rate
Notional amount
Maturity
EURIBOR + MARGIN
Term Loan Facility B1 (EUR)
EURIBOR + MARGIN
Term Loan Facility B2 (EUR)
LIBOR + MARGIN
Term Loan Facility B1 (USD)
LIBOR + MARGIN
Term Loan Facility B2 (USD)
EURIBOR + MARGIN
Term Loan Facility C1 (EUR)
EURIBOR + MARGIN
Term Loan Facility C2 (EUR)
LIBOR + MARGIN
Term Loan Facility C1 (USD)
LIBOR + MARGIN
Term Loan Facility C2 (USD)
EURIBOR + MARGIN
Term Loan Facility D
EURIBOR + MARGIN
Term Loan Facility G
Fixed rate
Term Loan Facility H1a (Corporate bond - fixed rate)
3-M-EURIBOR+MARGIN
Term Loan Facility H1b (Corporate bond - floating rate)
Multicurrency Revolving Credit Facility
EURIBOR + MARGIN
Multicurrency Capex Restructuring and Acquisition Facility EURIBOR + MARGIN
Various currencies
and interest terms
Other liabilities to banks
Other financial liabilities to non-banks
./. Capitalized borrowing costs
Total financial debt
2014
2017
2014
2017
2015
2017
2015
2017
2012
2018
2018
2018
2012
2013
2012
2011
138,503
411,117
108,014
79,129
286,645
382,818
227,105
81,271
−
115,951
325,000
175,000
−
18,216
690,881
−
310,560
−
663,033
−
310,560
−
201,742
111,210
325,000
175,000
132,691
71,596
33,316
4,488
-34,142
37,791
7,333
-32,667
2,352,431 3,004,730
Term Loan Facilities B and C were split in connection with the adjustment and extension of the Loan Facilities: B1
and C1 represent the original conditions, while B2 and C2 represent the adjusted conditions.
Financial covenants
The SFA and the contractual terms and conditions governing the issuance of the corporate bond require among
other things compliance with certain undertakings and covenants. 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 leverage, available liquidity, EBITDA, interest paid as well as 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 demand repayment of the corporate bond prior to its maturity date.
All financial covenants were complied with 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 the corporate bond (newly added SFA tranches H1a and H1b). By the reporting date a
total of 26 (31 December 2011: 26) KION Group companies (guarantors) in five countries – Germany, the UK,
France, Spain and Italy – had provided the necessary collateral.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 56 of 88
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 guarantors are pledged as security.
The carrying amounts of the financial assets pledged as collateral amounted to €600,713 thousand as at
reporting date (31 December 2011: €791,985 thousand ).
the
As had been the case at the end of 2011, no liabilities to banks were secured by pledges of real property at the
end of 2012.
[ 31 ] Lease liabilities
Lease liabilities relate solely to finance lease obligations arising from sale-and-leaseback transactions for the
funding of long-term leases with customers.
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
2012
2011
524,389
166,802
344,613
12,974
475,015
145,830
316,761
12,424
490,156
165,739
312,512
11,905
446,789
146,728
288,506
11,555
Interest included in minimum lease payments
49,374
43,367
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 57 of 88
[ 32 ] Other provisions
Other provisions relate to the following items:
Other provisions
€ thousand
Balance as at 1/1/2012
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 12/31/2012
thereof non-current
thereof current
Provisions
for product
warranties
Provisions
for personnel
Other
obligations
Total other
provisions
74,949
69,729
5,220
-454
18,001
-21,590
-6,846
0
278
43
64,381
61,356
3,025
148,103
16,935
131,168
-4,906
27,498
-40,935
-30,078
2,166
0
-11,865
89,983
18,369
71,614
56,794
9,504
47,290
5,644
33,402
-23,792
-11,053
2
25
11,622
72,644
9,395
63,249
279,846
96,168
183,678
284
78,901
-86,317
-47,977
2,168
303
-200
227,008
89,120
137,888
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 majority 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, severance pay and redundancy payments. The provision for partial retirement obligations is recognised
on the basis of individual contractual arrangements.
Other obligations largely comprise restructuring provisions, provisions for litigations, guarantees and expected
losses from onerous contracts.
The KION Group had recognised restructuring provisions (including redundancy payments) of €74,465 thous and
in 2011, predominantly in connection with the relocation of production sites. In 2012 it was possible to reverse
€20,083 thousand of this amount following finalisat ion of the negotiations on the redundancy scheme. In 2012
restructuring provisions (including redundancy payments) amounting to €28,883 thousand were recognised ,
predominantly in connection with the planned closure of production sites. As a result, total restructuring provisions
(including redundancy payments) came to €65,006 tho usand as at 31 December 2012.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 58 of 88
[ 33 ] Other financial liabilities
Other financial liabilities include the following items:
Other financial liabilities
€ thousand
Liabilities from finance leases
Deferred income
Sundry other liabilities
Derivative financial instruments
Other non-current financial liabilities
Liabilities from finance leases
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
Total other financial liabilities
2012
2011
208,136
132,662
4,323
9,957
171,070
118,455
14,264
−
355,078
303,789
92,204
84,357
161,637
33,613
40,460
65,857
37,596
2,295
9,588
29,423
83,653
86,551
128,349
17,742
38,894
50,269
41,981
3,799
10,360
42,490
557,030
504,088
912,108
807,877
The current derivative financial instruments include, among other things, two call options on the remaining shares
in Linde Hydraulics amounting to €16,520 thousand ( 2011: €0 thousand).
Other financial liabilities include non-derivative liabilities of €159,202 thousand (31 December 2011:
thousand) that fall within the scope of IFRS 7.
€180,226
Other financial liabilities also include liabilities arising from the financing of industrial trucks for short-term rental
nd) and
(reported under liabilities from finance leases) amounting to €263,745 thousand (2011: €222,246 thousa
residual value obligations amounting to €21,379 tho usand (2011: €15,765 thousand). The KION Group has r ec-
ognised other financial liabilities amounting to €1 5,216 thousand (31 December 2011: €16,712 thousand) arising
from procurement leases, which are classified as finance leases due to their terms and conditions.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 59 of 88
The liabilities from finance leases are based on the following future minimum lease payments:
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
2012
2011
331,558
105,466
217,889
8,203
300,340
92,204
200,280
7,856
279,447
94,491
178,168
6,788
254,723
83,653
164,482
6,588
Interest included in minimum lease payments
31,218
24,724
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 60 of 88
[ 34 ] 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
2012
2011
4,445
3,197
65
7,707
3,516
2,129
69
5,714
Guarantees amounting to €797 thousand (2011: €2,129
with another shareholder of a joint venture.
thousand) relate to contingent liabilities assumed jointly
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
2012
2011
194,216
7,191
2,597
18,530
205,394
6,109
1,630
16,958
222,534
230,091
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 61 of 88
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
due within one year
due in one to five years
due in more than five years
2012
2011
194,216
38,808
90,394
65,014
205,394
58,856
104,634
41,904
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
2012
2011
2012
2011
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
142,074
21,329
55,745
65,000
151,486
38,134
71,452
41,900
−
−
−
−
−
−
−
−
52,142
17,479
34,649
14
6,843
3,572
3,268
3
53,908
20,722
33,182
4
11,257
5,813
5,440
4
The future minimum lease payments for sale-and-leaseback transactions not recognised on the statement of
financial position amounting to €52,142 thousand ar e partially offset by payments received under non-cancellable
sub-leases amounting to €6,843 thousand. The future payments also include obligations arising from the refinanc-
ing 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 2012
Page 62 of 88
Other disclosures
[ 35 ] Consolidated statement of cash flows
The consolidated statement of cash flows shows the changes in cash and cash equivalents 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.
The non-cash income of €142,530 thousand essentiall y comprises the income arising from the remeasurement of
the remaining shares (30 per cent) in Linde Hydraulics at fair value (€108,692 thousand), the gain fro m the re-
measurement of the existing, formerly equity-accounted investment in Linde Creighton Ltd. (€ 8,015 tho usand)
and the income arising on the remeasurement of purchase price obligations (€4,557 thousand).
,810
Cash flow from operating activities increased by 7.0 per cent to €414,008 thousand in 2012 (2011: €386
thousand). The underlying reason for this improvement was that earnings before interest and taxes (EBIT) in-
creased to €550,113 thousand in the reporting year (2011: €213,160 thousand).
The net cash provided by investing activities of €1 04,052 thousand (2011: outflow of €152,580 thousand ) was
mainly attributable to the sale of the 70 per cent controlling interest in Linde Hydraulics for a purchase considera-
tion of €271,000 thousand including the options. Of
the total purchase consideration, €262,870 thousan d was paid
in cash and €8,130 thousand was paid into a trust a ccount. Cash payments for capital expenditures on non-
current assets and property, plant and equipment amounted to €155,101 thousand (2011: €133,005 thousan d).
The net cash used for acquisitions totalled €9,703
thousand (2011: €32,916 thousand) and essentially r elated to
the acquisition of the outstanding shares (51 per cent) in Linde Creighton Ltd., Basingstoke, United Kingdom. The
proceeds from the disposal of non-current assets primarily related to disposals of assets no longer required for
the Group's operating activities.
The net cash used for financing activities amounted to €330,130 thousand (2011: €114,715 thousand). Wh ereas
the main factors affecting this cash flow in 2011 were 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 €1 32,691
in 2012
thousand) and the repayment of SFA liabilities (outflow of €537,018 thousand), the net outflow of cash
was largely attributable to the repayment of SFA liabilities (outflow of €664,577 thousand) and the inf
low of funds
increase (inflow of
from
€467,000 thousand). Interest payments decreased by
f the
declined interest rates. In 2012 there were also receipts of €20,490 thousand from currency hedges (20 11: pay-
ments of €13,714 thousand).
the approved capital
€17,743 thousand to €129,712 thousand as a result o
the capital contribution made by Weichai Power
for
Following its consolidation for the first time in 2011, on 2 November 2012 the KION Group acquired the remaining
shares (34 per cent) in Voltas Material Handling Private Limited, Pune, India, for a purchase consideration of
€8,304 thousand. The cash used for this transaction is reported in cash flow from financing activities as required
by IAS 7.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 63 of 88
The amount of cash and cash equivalents for the year ended 31 December 2012 increased by a total of
butable to exchange-rate movements. This substantial
€188,906 thousand, €976 thousand of which was attri
increase was largely the result of the net cash provided by the sale of the 70 per cent controlling interest in Linde
Hydraulics (inflow of €262,870 thousand). Cash and cash equivalents amounted to €562,357 thousand as a t the
reporting date.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 64 of 88
[ 36 ]
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
FAHfT
AfS
LaR
HtM
FLaC
FLHfT
Fair value
Categories
Classes
€ thousand
Financial assets
Loans receivable
Financial receivables
Available-for-sale investments
Lease receivables*
Trade receivables
Other receivables
thereof non-derivative receivables
Carrying
amount
2012
730
9,587
768
399,269
625,462
59,178
35,236
thereof derivative financial instruments
23,942
21,077
Cash and cash equivalents
562,357
Financial liabilities
Liabilities to banks
Corporate bond
Other financial liabilities
Shareholder loan
Lease liabilities*
Trade payables
Other liabilities
thereof non-derivative liabilities
thereof liabilities from finance leases*
thereof derivative financial instruments
* as defined by IAS 17
1,858,448
489,495
4,488
0
475,015
646,044
503,112
159,202
300,340
43,570
768
730
9,587
625,462
35,236
730
9,587
768
398,229
625,462
59,178
35,236
23,942
562,357
1,858,448
530,906
4,488
0
475,806
646,044
503,612
159,202
300,840
43,570
1,858,448
489,495
4,488
0
646,044
159,202
23,968
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 65 of 88
Carrying amounts broken down by class and category
FAHfT
AfS
LaR
HtM
FLaC
FLHfT
Fair value
Categories
Classes
€ thousand
Financial assets
Loan receivable
Financial receivables
Available-for-sale investments
Lease receivables*
Trade receivables
Other receivables
thereof non-derivative receivables
Carrying
amount
2011
795
5,351
768
361,221
676,553
59,514
36,237
thereof derivative financial instruments
23,277
21,500
Cash and cash equivalents
373,451
Financial liabilities
Liabilities to banks
Corporate bond
Other financial liabilities
Shareholder loan
Lease liabilities*
Trade payables
Other liabilities
thereof non-derivative liabilities
thereof liabilities from finance leases*
thereof derivative financial instruments
* as defined by IAS 17
2,509,889
487,508
7,333
643,132
446,789
634,092
452,691
180,226
254,723
17,742
768
795
5,351
676,553
36,237
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
446,326
634,092
452,427
180,226
254,459
17,742
2,509,889
487,508
7,333
643,132
634,092
180,226
2,471
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
2012
2011
49,565
-483
12,010
-2,829
-7,573
-158
50,532
47,125
626
10,547
-3,092
-5,425
-216
49,565
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 66 of 88
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)
2012
2011
-1,594
2,062
13
13
8,950
14,360
-11,923
-10,109
-179,209
-225,277
The above gains and losses do not include losses arising on hedging transactions deferred in the period amount-
ing to €19,861 thousand (2011: €18,464 thousand) be cause these losses relate to a documented hedge.
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-term maturities. The carrying amounts of these financial instru-
ments approximate their fair values.
The fair value of the corporate bond that has been issued is determined using publicly listed market prices. The
calculation is based on the offer price applicable on the reporting date.
The fair value of receivables and liabilities from finance leases corresponds to the present value of the net lease
payments, taking into account the current market interest rate for similar leases.
The fair value of derivative financial instruments is determined using appropriate valuation methods on the basis
of the 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. All interest-rate swaps and currency forwards are therefore classified as
level 2 measurements.
The fair value of the put and call options for the remaining shares of Linde Hydraulics was determined using the
Black-Scholes model. The main input variables for the model were the options' exercise price, which may be
modified by individual, specific, contractually agreed factors if necessary, and the fair value of the remaining
shares in Linde Hydraulics. As at 31 December 2012 the fair value of the put option was €19,740 thousa nd and
the fair value of the call options was €16,520 thou sand. The exercise price of the put option is €77,4 29 thousand.
The exercise price of the two call options totals € 116,143 thousand. The options are classified as level 3 meas-
urements.
As at 31 December 2012 the net value calculated for the options on the remaining shares in Linde Hydraulics was
€3,220 thousand. If the fair value of the shares ha d been 10 per cent lower on the reporting date, the net value for
the options would have increased by €8,310 thousand to a total of €11,530 thousand and resulted in an additional
gain of €8,310 thousand. An increase of 10 per cent
in the fair value of the shares in Linde Hydraulics would have
decreased the net value for the options by €9,010 t housand to a total of €5,790 thousand and would hav e result-
ed in an expense of €9,010 thousand.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 67 of 88
In order to eliminate default risk to the greatest possible extent, the KION Group only enters into derivatives with
counterparties holding a good credit rating.
With the exception of derivative financial instruments and available-for-sale assets, all financial assets and liabili-
ties are measured at amortised cost.
The fair value of available-for-sale assets is determined on the basis of data in an active market and is classified
as level 1.
The following table shows the assignment of the fair values to the individual classification levels.
Financial instruments measured at fair value
€ thousand
Financial assets
thereof available-for-sale
thereof derivative instruments
Financial liabilities
thereof derivative instruments
Financial instruments measured at fair value
€ thousand
Financial assets
thereof available-for-sale
thereof derivative instruments
Financial liabilities
thereof derivative instruments
Fair Value Hierarchy
Level 1
Level 2
Level 3
2012
768
4,202
19,740
27,050
16,520
24,710
768
23,942
43,570
43,570
Fair Value Hierarchy
Level 1
Level 2
Level 3
2011
768
23,277
17,742
24,045
768
23,277
17,742
17,742
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 68 of 88
[ 37 ] 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. Following the amendment and extension of the SFA loan in July 2012, a
further corporate bond was issued in February 2013 (see 'Credit terms' table in note [ 30 ]) in order to meet long-
term financing requirements.
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 – defined as the difference between financial liabilities (excluding lease liabilities) and cash and
cash equivalents – is the key performance indicator used in liquidity planning at Group level and amounted to
€1,790,074 thousand in 2012 (2011: 2,631,279).
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 2012
Page 69 of 88
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
2012
Financial receivables
Lease receivables
Trade receivables
Other non-derivative receivables
9,587
399,269
625,462
35,236
9,587
399,269
485,621
34,492
−
16,835
734
−
110,210
1
−
5,499
9
€ 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
Impairment losses are based on the credit risk related to the receivables and are assessed primarily using factors
such as a customer’s credit rating and historical pattern of meeting payment terms.
For certain receivables that were overdue as at the reporting date, but for which no impairment losses had been
reported, the Company considered trade payables or collateral with the same counterparties. Apart from this item,
the Group did not hold any significant collateral.
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 amending and
extending the SFA loan in July 2012 as well as issuing a further corporate bond in February 2013 (see 'Credit
terms' table in note [ 30 ]).
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 70 of 88
The following table shows all of the contractually agreed payments under recognised financial liabilities as at 31
December 2012, including derivative financial instruments with negative fair values.
Liquidity analysis of financial liabilities and derivatives
€ thousand
2012
Primary financial liabilities
Gross liabilities to banks
Borrowing costs
Net liabilities to banks
Corporate bond
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
Carrying amount
2012
Cash flow
2013
Cash flow
2014 - 2017
Cash flow
from 2018
1,882,085
-23,637
1,858,448
500,000
-10,505
489,495
4,488
−
646,044
475,015
459,542
27,050
-124,369
-1,994,386
-149,793
-33,677
-138,368
-517,912
-623
−
-646,044
-166,802
-264,668
−
−
−
-344,613
-217,889
-5,269
−
−
-12,974
-8,203
438,150
-452,648
5,005
-13,751
−
−
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 71 of 88
Liquidity analysis of financial liabilities and derivatives
€ thousand
2011
Primary financial liabilities
Liabilities to banks
Borrowing costs
Net liabilities to banks
Corporate bond
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
Carrying amount
2011
Cash flow
2012
Cash flow
2013 - 2016
Cash flow
from 2017
2,530,064
-20,175
2,509,889
500,000
-12,492
487,508
7,333
643,132
634,092
446,789
434,948
17,742
-307,224
-2,643,650
−
-34,864
-143,062
-556,723
-3,397
−
-634,092
-165,739
-274,716
−
−
−
-312,512
-178,168
-6,090
-928,194
−
-11,905
-6,788
295,698
-291,278
32,127
-36,919
−
−
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 2012. They included guarantees payable 'on
first demand'. No guarantees were utilised in 2012.
The volume of business for which factoring was used in 2012 was €20,024 thousand (2011: €17,844 thousa nd).
Because all material risks and rewards are assigned to the purchaser, these assets are derecognised in full.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 72 of 88
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.
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, impair-
ments or provisions to cover the risks it identifies. It immediately takes into account of any changes in residual
values when calculating new leases.
In addition, residual values are mainly based on remarketing agreements that continued to achieve positive
outcomes in 2012. 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 2012. KION's losses from defaults are also mitigated by its
proceeds from the sale of repossessed trucks. In addition, it primarily offers financial services indirectly via select-
ed funding partners, and KION bears the counterparty risk in less than 5 per cent of cases. The credit risk man-
agement 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.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 73 of 88
At company level, hedges are entered into for highly probable future transactions on the basis of a rolling 15-
month forecast, 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 [ 38 ]).
Foreign-currency forwards are also employed to hedge the exchange rate risks resulting from internal financing.
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
2012
2011
2012
2011
Foreign-currency forwards (assets)
Foreign-currency forwards (liabilities)
Hedge
Trading
Hedge
Trading
2,865
1,337
1,006
7,448
1,765
21,500
89,240
103,671
73,758
363,277
8,650
2,471
29,765
414,160
189,351
103,018
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.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 74 of 88
Value-at-Risk
€ thousand
Currency risk
2012
2011
30,343
54,676
The value at risk in respect of currency risk as at 31 December 2012 was €30,343 thousand (31 December 2011:
€54,676 thousand). Value at risk is the gain or los s that is not expected to be exceeded over a holding period of
one year with a confidence level of 97.7 per cent (2011: 97.7 per cent).
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
2012
2012
2011
2011
Other comprehensive income (loss)
Net income (loss)
16,020
-8,469
-1,627
8,469
28,702
-9,358
-18,031
9,358
+100 bps
-100 bps
+100 bps
-100 bps
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
2012
2011
2012
2011
−
−
−
−
−
−
−
−
18,596
−
6,621
−
1,670,000
−
2,070,000
−
Hedge
Trading
Hedge
Trading
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 75 of 88
[ 38 ] 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 shipped 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 2012 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 2012.
In total, foreign-currency cash flows with a notional amount of €114,329 thousand (2011: €263,109 thou
sand)
were hedged and designated as hedged items, of which €99,744 thousand is expected by 30 September 2013
(2011: €187,298 thousand by 30 September 2012). The remaining cash flows designated as hedged items fall
due in the period up to 24 February 2014.
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 2012. Because the KION Group used interest-rate swaps to convert 48 per cent of its variable-rate
exposure into fixed-rate obligations as at the reporting date (31 December 2011: 51 per cent), it is not fully bene-
fiting from the low level of market interest rates. These swaps were designated as hedges at inception.
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. As in 2011, there were
no ineffective portions.
ousand)
In total, variable portions of future interest payments amounting to €6,340 thousand (2011: €27,196 th
were designated as hedged items, of which €2,365 th ousand are due by 30 September 2013 (2011:
€8,126 thousand fell due by 30 September 2012). The remaining cash flows designated as hedged items are due
by 31 December 2014.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 76 of 88
[ 39 ]
Segment report
The chief-operating decision makers divide the KION Group into the two brands Linde Material Handling (LMH)
and STILL, as well as the financial services (FS) activities for management purposes. Segment reporting follows
the same breakdown, taking into account the relevant organisational structures and corporate strategy of the
KION Group.
Since 2011 the chief-operating decision makers divided the KION Group into the LMH and STILL brands for
management purposes and therefore for segment reporting. Starting in 2011 the KION Group had put in place the
organisational structures required under the German Commercial Code (HGB) to enable it to manage and report
the Group's financial services activities as a separate segment in 2012. The segment reporting in the notes to the
2011 financial statements included additional voluntary disclosures based on the future reporting model. These
additional disclosures provide the basis for the comparative data. The new segment structure has been used for
management purposes since the end of 2012.
In this context, separate financial services companies have been established in the core markets of Germany,
France, United Kingdom, Italy and Spain. 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, the sales and service
companies will continue to run the financial services operations.
Description of the segments
The Linde Material Handling (LMH) segment encompasses the Linde, Fenwick and Baoli brands. The remaining
30 per cent held in Linde Hydraulics is allocated to the LMH segment at fair value and will be accounted for using
the equity method on a going-forward basis.
The STILL segment comprises the STILL and OM-STILL brands.
FS activities include 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 refinancing in conjunction with external financial partners. Besides management of
residual-value risk, risk management also includes the management of credit risk. In addition, FS provides the
financing for short-term rental fleets on behalf of the LMH and STILL brand segments.
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.
Segment management
The key performance indicator used to manage the brand segments is 'adjusted EBIT'. Segment reporting there-
fore includes a reconciliation of externally reported consolidated earnings before interest and tax (EBIT) – includ-
ing KION acquisition items and non-recurring items – to the adjusted EBIT of the segments ('adjusted EBIT').
The key performance indicator used to manage the FS segment is earnings before tax (EBT).
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 77 of 88
Intra-group transactions are generally conducted on an arm's-length basis. The regular (interest) margin income
that FS generates from its business activities reflects prevailing market conditions. Surpluses from the leasing
business that exceed this interest margin are reflected in the producer margin within the operating profit generat-
ed by the LMH and STILL brand segments.
Segment reports are prepared in accordance with the same accounting policies as the consolidated financial
statements, as described in note [ 8 ]. Contrary to these policies, however, the LMH and STILL brands' interseg-
ment sales to FS are always treated as revenue for the brand segments, irrespective of the possible remain of
opportunities and risks. These sales always take place at market price.
Assets and liabilities associated with the long-term leasing business are assigned to the FS segment. The ex-
penses in the FS segment's income statement therefore reflect, in particular, depreciation/amortisation of the
assets, interest expenses relating to the financing of these assets as well as operating expenses. These expens-
es correspond to income by the finance instalments paid by the customer (lease payments excluding service
portion).
Whereas the main feature of long-term leasing business is the provision of a financial service to the external
lessee, the focus in short-term leasing is on the service function. External customers are offered rental trucks from
a rental pool – including associated services – for short-term use. Unlike the situation in long-term leasing, finan-
cial 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 and the related income and expenses remain on the brand seg-
ments' income statement or statement of financial position.
In an indirect leasing arrangement ('sale with risk'), the otherwise 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.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 78 of 88
The following tables show information on the KION Group's operating segments for 2012 and 2011:
Segment report
€ thousand
2012
LMH
STILL
Financial
Services
Other
Consolidation/
Reconciliation
Total
Revenue from external customers
Intersegment revenue
Total revenue
2,903,163
229,084
3,132,247
1,483,832
192,758
1,676,590
296,755
212,571
509,326
42,914
208,023
250,937
− 4,726,664
−
-842,436
-842,436 4,726,664
Earnings before taxes
505,338
70,067
4,798
-205,643
-63,932
310,628
Financial income
Financial expense
= Financial result
EBIT
+ Non-recurring items
+ KION acquisition items
= Adjusted EBIT
Segment assets
Segment liabilities
Carrying amount of
equity investments
Equity result
Capital expenditures*
Depreciation**
Order intake
Number of employees***
28,180
-46,258
-18,078
523,416
-226,053
32,994
6,054
-34,089
-28,035
98,102
17,113
7,394
44,704
-41,308
3,396
21,747
-215,224
-193,477
-38,601
35,310
-3,291
62,084
-301,569
-239,485
1,402
-12,166
-60,641
550,113
−
−
55,533
1,065
44,432
−
−
-153,407
41,453
-60,641
438,159
330,357
122,609
1,402
4,513,827
1,461,278
2,068,249
1,191,605
1,040,559
998,854
902,292
4,205,982
-2,311,687 6,213,240
-2,304,814 5,552,905
135,499
13,477
89,139
102,503
2,977,674
13,148
6,148
1,226
51,115
42,661
1,576,810
7,253
13,188
1,209
53
9
509,326
112
−
−
14,794
17,735
250,937
702
−
−
−
−
154,835
15,912
155,101
162,908
-614,671 4,700,076
21,215
−
* Excluding leased assets and rental assets
** Omitted on intangible assets and property, plant and equipment excl. leased and rental assets
*** Number of employees in full-time equivalents as at 31 December
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 79 of 88
Segment report
LMH
STILL
Financial
Services
Other
Consolidation/
Reconciliation
Total
€ thousand
2011
Revenue from external customers
Intersegment revenue
Total revenue
2,601,587
251,927
2,853,514
1,461,968
204,836
1,666,804
264,896
214,864
479,760
39,944
183,365
223,309
− 4,368,395
-854,992
−
-854,992 4,368,395
Earnings before taxes
Financial income
Financial expense
= Financial result
EBIT
+ Non-recurring items
+ KION acquisition items
= Adjusted EBIT
Segment assets
Segment liabilities
Carrying amount of
equity investments
Equity result
Capital expenditures*
Depreciation**
Order intake
Number of employees***
246,450
-30,586
6,160
-191,729
-89,180
-58,885
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
−
−
279,359
100,180
2,701
43,429
23,005
1,537
67,971
-39,251
35,674
-3,577
73,664
-345,709
-272,045 0
-85,603
213,160
−
−
115,483
35,965
-85,603
364,608
4,425,263
1,495,301
1,983,278
1,064,798
840,005
798,845
708,616
5,043,405
-1,890,876 6,066,286
-1,848,476 6,553,873
19,244
5,074
75,952
100,563
2,929,844
13,786
4,647
1,557
43,270
48,152
1,694,941
7,292
12,654
459
0
0
479,760
96
−
−
13,783
16,321
223,153
688
−
−
−
−
36,545
7,090
133,005
165,036
-645,842 4,681,856
21,862
−
* Excluding leased assets and rental assets
**Omitted on intangible assets and property, plant and equipment excl. leased and rental assets
*** Number of employees in full-time equivalents as at 31 December
The table below gives a breakdown of revenue from external customers by region.
Segment revenue broken down by customer location
€ thousand
Germany
EU excl. Germany
Rest of Europe
America
Asia
Rest of world
Total segment revenue
2012
2011
1,225,236
2,253,227
247,648
324,175
485,636
190,742
1,174,777
2,114,588
203,530
280,611
434,814
160,075
4,726,664
4,368,395
There are no relationships with individual customers that generate revenue deemed to be significant as a propor-
tion of total consolidated revenue.
Financial income and expenses including all interest income and expenses are described in notes [ 14 ] and
[ 15 ].
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 80 of 88
The non-recurring items mainly comprised costs incurred in connection with severance payments, social plan
costs, costs relating to the relocation and closure of production sites and consultancy costs. They totalled €70,928
thousand in 2012 (2011: €115,483 thousand). Also in cluded for 2012 are the gain from the disposal of the control-
ling interest (70 per cent) in Linde Hydraulics (€- 103,071 thousand), the gain from the remeasurement of the
remaining shares (30 per cent) in Linde Hydraulics (€-108,692 thousand), the gain from the remeasureme nt of the
shares already held in Linde Creighton Ltd., which were previously accounted for using the equity method, (€-
8,015 thousand) and the gain from the remeasurement of purchase price obligations (€-4,557 thousand).
In 2012
material non-recurring items amounting to €-107,092 thousand were non-cash items. In the segment LMH the
non-cash items result in an income of €-109,397 tho usand and in the segment STILL €-5,825 thousand. Th e
segment other includes non-cash expenses amounting to €8,130 thousand. The KION acquisition items comp rise
depreciation, amortisation and impairment charges on the fair value adjustments identified as part of the purchase
price allocation (PPA).
The assets attributable to the Financial Services segment include long-term leases which were reported as either
leased assets or lease receivables, depending on the type of lease. At the reporting date, lease receivables due
from unrelated third parties amounted to €379,946 t housand (31 December 2011: €361,225 thousand). Ther e
were also intra-group lease receivables of €373,354 thousand (31 December 2011: €300,046 thousand), wh ich
primarily resulted from the funding of the short-term rental business of LMH and STILL.
KION Group’s consolidated statement of financial position include liabilities to leasing companies arising from
procurement leases, from financing of the rental fleet and from agreements classified as ‘sale with risk’ in the
d), which are reported as other financial liabilities. Thereof
amount of €300,340 thousand (2011: €254,723 thousan
€260,154 thousand (2011: €222,245 thousand) are all
ocated to the liabilities of Financial Services. The segment
liabilities attributable to the financial services business also include liabilities to external leasing companies of
from finance lease obligations from sale-and-leaseback
€470,180 thousand (2011: €446,789 thousand) arising
transactions for the funding of long-term leases with customers, which are reported as lease liabilities in the
consolidated financial statements. Moreover, they include net financial debt of €174,853 thousand (201 1:
€127,337 thousand) arising from general financing o f the Financial Services segment.
The equity-accounted investment (45 per cent) in Linde Leasing GmbH, Wiesbaden, was allocated to the FS
segment when the new segment reporting model was introduced. The purpose of Linde Leasing GmbH is to
provide financial services and it is therefore assigned to the FS segment.
Capital expenditures of the Financial Services segment includes additions to intangible assets and property, plant
and equipment. Leased assets are described in note [ 19 ].
Capital expenditures broken down by company location (excl. leased and rental assets)
€ thousand
Germany
EU excl. Germany
Rest of Europe
America
Asia
Rest of world
Total capital expenditures
2012
2011
104,966
30,452
733
8,411
9,915
624
92,340
27,796
233
5,849
5,378
1,409
155,101
133,005
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 81 of 88
Depreciation/amortisation relates to intangible assets with finite useful lives and property, plant and equipment.
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 (IFRS 8)
[ 40 ] Employees
2012
2011
2,552,611
695,537
27,858
46,240
122,176
49,544
2,703,550
665,590
24,492
34,672
116,428
48,671
3,493,966
3,593,403
The KION Group employed an average of 22,232 people in the reporting year (2011: 20,797). 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
2012
2011
8,497
3,245
1,807
884
3,443
3,243
1,113
8,145
3,196
1,423
1,030
3,194
2,816
993
22,232
20,797
The number of employees increased by 300 due to the first-time consolidation of Linde Creighton Ltd., Basing-
stoke, United Kingdom.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 82 of 88
[ 41 ] 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. The related parties that are controlled by the KION Group, that are able
to exert a significant influence over the KION Group, or are members of the Superlift group are either included in
the list of shareholdings (annex to these notes) or in the table below.
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
Weichai Power Co., Ltd., Weifang, China
Parent company
Entity with significant influence
Entity with significant influence
Affiliated company
Entity with significant influence
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'). The carrying
amount of the loan including accrued interests was €115,951 thousand as at 31 December 2012 (31 Decemb er
2011: €111,210 thousand).
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 shareho lder loan,
amounting to €670,784 thousand (including accrued i nterest), was converted into equity with effect from 27 De-
cember 2012.
Disposal of a significant part of the hydraulics business
The KION Group sold its controlling interest of 70 per cent in Linde Hydraulics to Weichai Power Co., Ltd., Wei-
fang, China, for a consideration of €271,000 thousa nd with effect from 27 December 2012. As part of the transac-
tion, Weichai Power granted LMH GmbH a put option on the remaining shares in Linde Hydraulics. LMH GmbH
also granted Weichai Power two call options relating to the shares. For further information, please refer to note
[ 6 ].
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 undertook to perform
advisory services for the KION Group. These advisory services relate, in particular, to financial and strategic
issues. The annual advisory fee payable to KKR and Goldman, Sachs & Co. is €4,763 thousand (2011: €4,6 24
thousand) and it has been recognised as an expense.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 83 of 88
Under the terms of the adjustment and extension of the SFA loan, an advisory fee totalling €2,015 thou sand was
paid to KKR and Goldman, Sachs & Co. This fee has been allocated pro rata as transaction costs to each of the
tranches and is expensed over their respective new terms.
Goldman & Sachs AG, Frankfurt am Main, also provided additional advisory services totalling €11,500 th ousand
in connection with the new shareholder Weichai Power and the sale of the hydraulics business.
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
2012
2011
7,421
10,845
2,622
5,901
26,789
4,403
17,262
2,964
4,825
29,454
2012
2011
4,845
35,861
6,051
132,529
4,188
39,955
4,719
769,255
179,286
818,117
[ 42 ] KION management partnership plan ('MPP')
Arrangements for management 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
partnership 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 also became parties to the co-invest agreement in 2007,
2008, 2010 and 2011.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 84 of 88
Taking account of the approved capital increase and the conversion of the shareholder loan, KION Management
Beteiligungs GmbH & Co. KG holds an equity interest of 5.711 per cent (2011: 14.61 per cent) in KION Holding 1
GmbH. In total, the Executive Board holds an interest of €2,800 thousand in the limited partner capita l of KION
Management Beteiligungs GmbH & Co. KG, which equals to an indirect interest of 1.066 per cent (2011: 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 Man-
agement Beteiligungs 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 revenue, 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 of 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
articles of association expire on 31 December 2016. The vesting period ended on 31 December 2012. 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 purchase options outstanding as at the reporting date remained unchanged at 1,034, of
which 876 (31 December 2011: 584) were exercisable.
Expenses of €159 thousand were incurred by the mana gement partnership plan in 2012 (2011: €295 thousan d).
[ 43 ] 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. On 11 January 2013 he also took over responsibility
for KION Warehouse Systems and internal audit.
On 31 December 2012 Otmar Hauck, until then Chief Operating Officer (COO) of KION GROUP GmbH, Wiesba-
den, stepped down from the Executive Board of the KION Group. He had been responsible for quality and central
operations (operational excellence & production control), purchasing, logistics, health & safety and environmental
issues in the Group.
Klaus Hofer stepped down from the Executive Board of the KION Group on 10 January 2013. As Chief Human
Resources Officer (CHRO), he had been responsible for human resources, legal affairs and internal audit.
Bert-Jan Knoef is CEO of the brand company STILL GmbH and, since 11 January 2013, has also overseen all
cross-brand logistics activities and managed the intra-group logistics service provider, Urban.
Theodor Maurer is CEO of the brand company Linde Material Handling GmbH and, since 11 January 2013, has
also held cross-brand responsibility for quality, facility management, health, safety and the environment.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 85 of 88
Harald Pinger, who had been Chief Financial Officer (CFO), stepped down from the Executive Board of the KION
Group on 31 August 2012.
Ching Pong Quek was appointed Chief Asia Pacific Officer with effect from 11 January 2013 and heads up the
KION Group's entire Asia business.
Dr Thomas Toepfer, who has been Chief Financial Officer (CFO) since 1 September 2012, is responsible, among
other things, for finance (including financial services) and IT activities. On 11 January 2013 he also took over
responsibility for purchasing and the role of Labour Relations Director.
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 2012 amounted to €12,026 thousand
(2011: €5,209 thousand). This consisted of short-te rm remuneration amounting to €5,551 thousand (2011:
thousand), post-employment benefits totalling €436 thousand (2011: €386 thousand), termination benefit s of
€6,000 thousand (2011: €0 thousand) and share-base d payments of €39 thousand (2011: €68 thousand). Th
e
current service 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 2012 (2011: loans and
advances totalling €0 thousand).
€4,755
The total remuneration paid to former members of the Executive Board in 2012 amounted to €165 thousand
(2011: €162 thousand). Provisions for pension oblig ations to former members of the Executive Board or their
surviving dependants amounting to €3,636 thousand ( 2011: €2,819 thousand) were recognised in accordanc e
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 2012 amounted to €953 thousand including VAT (2011: €1,071 thousand
There were no loans or advances to members of the Supervisory Board in 2012. 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 the members of the Supervisory Board receive for services short-term employee benefits totalled
€550 thousand in 2012 (2011: €539 thousand).
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 86 of 88
[ 44 ] Members of the Executive Board and Supervisory Board
Executive Board
Gordon Riske
CEO
Klaus Hofer
(until 10 January 2013)
CHRO
Bert-Jan Knoef
(since 11 January 2013)
Member of the Executive Board / CEO, STILL
Theodor Maurer
(since 11 January 2013)
Member of the Executive Board / CEO, LMH
Harald Pinger
(until 31 August 2012)
CFO
Ching Pong Quek
(since 11 January 2013)
Chief Asia Pacific Officer
Dr Thomas Toepfer
(since 1 September 2012)
CFO
Supervisory Board
Dr John Feldmann
(Chairman of the Supervisory Board)
Chief executive officer of the non-profit Hertie Foundation, Frankfurt am Main, member of the Supervisory Board
and member of the Supervisory Board's Presiding Committee at Bilfinger Berger SE, Mannheim
Joachim Hartig1
Deputy Chairman of the Supervisory Board
Chairman of the Plant I & II Works Council, Linde Material Handling GmbH, Aschaffenburg
Holger Brandt1
(since 19 March 2012)
Head of After Sales STILL Group, STILL GmbH, Hamburg
Dr Alexander Dibelius
Chief Executive Officer of Goldman Sachs AG, Frankfurt am Main
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 87 of 88
Denis Heljic1
(until 19 March 2012)
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
Member of Kohlberg Kravis Roberts & Co. L.P., New York
Jiang Kui
(since 27 December 2012)
President of Shandong Heavy Industry Group Co., Ltd., Jinan, China
Thilo Kämmerer1
Trade Union Secretary, IG Metall, Bamberg Administrative Office
Dr Roland Köstler1
Head of Business Law at Hans-Böckler-Stiftung, Düsseldorf
Peter Kolb1
(until 19 March 2012)
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
Member of Kohlberg Kravis Roberts & Co. L.P., New York
Dr Michael Süß
(until 26 December 2012)
Member of the Managing Board and CEO of the Energy Sector of Siemens AG, Munich
Hans-Peter Weiß1
(since 19 March 2012)
Chairman of the Plant III Works Council, Linde Material Handling GmbH, Kahl
1 Employee representatives
[ 45 ] Auditors' fees
The fees recognised as an expense and paid to the auditors of the consolidated financial statements in 2012
the audit of the financial statements, €650 thousa nd
amounted to €960 thousand (2011: €970 thousand) for
(2011: €892 thousand) for other attestation service s, €444 thousand (2011: €206 thousand) for tax cons
ultancy
services and €45 thousand (2011: €63 thousand) for other services.
KION Holding 1 GmbH
Notes to the consolidated financial statements for the year ended 31 December 2012
Page 88 of 88
[ 46 ] Events after the reporting date
The KION Group issued a corporate bond for €650,000 thousand through the consolidated subsidiary KION
Finance S.A., Luxembourg, in February 2013. Of the bond's total par value of €650,000 thousand,
€450,000 thousand is repayable at a fixed interest rate of 6.75 per cent p.a., while €200,000 thousand carries a
floating interest rate based on three-month Euribor plus a margin of 4.5 percentage points. The payout amount for
the variable portion was €1,000 thousand below the par value (discount). 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
d was
redeemed as a bullet payment on maturity. Of the total proceeds of €649,000 thousand, €636,000 thousan
used to repay existing senior facility agreement (SFA) liabilities and €13,000 thousand will be used t o pay the
expected transaction costs.
[ 47 ]
Information on preparation and approval
The Executive Board of KION Holding 1 GmbH prepared the consolidated financial statements on 13 March 2013
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, 13 March 2013
The Executive Board
Gordon Riske
Bert-Jan Knoef
Theodor Maurer
Ching Pong Quek
Dr Thomas Toepfer
KION Holding 1 GmbH
List of shareholdings for the year ended 31 December 2012
List of shareholdings as of December 31, 2012
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
1,299,794
-33,574
Annex to the notes
Consolidated affiliated companies
Domestic
2 BlackForxx GmbH
3 Eisenwerk Weilbach GmbH
4 Fahrzeugbau GmbH Geisa
5 KION Financial Services GmbH
6 KION GROUP GmbH
7 KION Holding 2 GmbH
8 KION Information Management Services GmbH
9 KION Warehouse Systems GmbH
10 Klaus Pahlke GmbH & Co. Fördertechnik KG
11 Linde Material Handling GmbH
12 LMH Immobilien GmbH & Co. KG
13 LMH Immobilien Holding GmbH & Co. KG
14 LMH Immobilien Holding Verwaltungs-GmbH
15 LMH Immobilien Verwaltungs-GmbH
16 OM Deutschland GmbH
17 Schrader Industriefahrzeuge GmbH & Co. KG
18 STILL Financial Services GmbH
19 STILL Gesellschaft mit beschränkter Haftung
Stuhr
Wiesbaden
Geisa
Wiesbaden
Wiesbaden
Wiesbaden
Wiesbaden
Reutlingen
Haan
Aschaffenburg
Aschaffenburg
Aschaffenburg
Aschaffenburg
Aschaffenburg
Germany
Germany
Germany
Germany
Germany
Germany
Germany
Germany
Germany
Germany
Germany
Germany
Germany
Germany
Neuhausen a.d. Fildern Germany
Essen
Hamburg
Hamburg
Germany
Germany
Germany
Germany
Australia
Belgium
Brazil
China
China
Denmark
France
France
France
France
France
France
France
France
France
France
France
20 Urban-Transporte Gesellschaft mit beschränkter Haftung
Unterschleißheim
Foreign
21 Linde Material Handling Pty. Ltd.
22 STILL N.V.
Huntingwood
Wijnegem
23 KION South America Fabricação de Equipamentos para Armazenagem Rio de Janeiro
Ltda.
24 KION Baoli (Jiangsu) Forklift Co., Ltd.
25 Linde (China) Forklift Truck Corporation Ltd.
26 STILL DANMARK A/S
27 BARTHELEMY MANUTENTION SAS
28 Bastide Manutention SAS
29 Bretagne Manutention S.A.
30 FENWICK FINANCIAL SERVICES SAS
31 FENWICK-LINDE S.A.R.L.
32 KION France SERVICES SAS
33 LOIRE OCEAN MANUTENTION SAS
34 Manuchar S.A.
35 MANUSOM SAS
36 OM PIMESPO FRANCE S.A.S.
37 SAS Société Angoumoisine de Manutention - SAMA
Jiangjiang
Xiamen
Kolding
Vitrolles
Toulouse
Pacé
Elancourt
Elancourt
Elancourt
Saint-Herblain
Gond Pontouvre
Rivery
Mitry Mory
Champniers
38 SM Rental SAS
39 STILL Location Services SAS
40 STILL SAS
41 KION FINANCIAL SERVICES Ltd.
42 Linde Castle Ltd.
43 Linde Creighton Ltd.
44 Linde Heavy Truck Division Ltd.
45 Linde Holdings Ltd.
46 Linde Jewsbury’s Ltd.
47 Linde Material Handling (UK) Ltd.
48 Linde Material Handling East Ltd.
49 Linde Material Handling Scotland Ltd.
50 Linde Material Handling South East Ltd.
51 Linde Severnside Ltd.
52 Linde Sterling Ltd.
53 McLEMAN FORK LIFT SERVICES LTD.
54 OM PIMESPO (UK) Ltd.
55 STILL Materials Handling Ltd.
56 Superlift UK Ltd.
57 Trifik Services Ltd.
58 KION ASIA (HONG KONG) Ltd.
59 Linde Material Handling Hong Kong Ltd.
60 Voltas Material Handling Private Limited
61 Linde Material Handling (Ireland) Ltd.
62 COMMERCIALE CARRELLI S.r.l.
63 KION Rental Services S.p.A.
64 Linde Material Handling Italia S.p.A.
65 OM Carrelli Elevatori S.p.A.
Roissy Charles de Gaulle France
Marne la Vallée
Marne la Vallée
France
France
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Exeter
Basingstoke
Basingstoke
Kwai Chung
Kwai Chung
Pune
Walkinstown
Lainate
Milan
Buguggiate
Lainate
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.
Hong-Kong
Hong-Kong
India
Ireland
Italy
Italy
Italy
Italy
19
11
19
11
7
1
6
19
11
100.00%
100.00%
100.00%
100.00%
757
288
7,329
1,558
0 [B]
0 [A]
0 [B]
0 [A]
100.00%
485,611
-57,802
100.00%
1,115,331
100.00%
100.00%
100.00%
129
22,670
12,177
0 [E]
0 [D]
0 [B]
2,502
6
100.00%
461,786
180,264
11 & 13
99.64%
42,361
14,196
11
11
11
65
11
94.00%
100.00%
100.00%
100.00%
100.00%
5
100.00%
247
29
29
-2,041
2,322
1,533
11
11
100.00%
206,247
100.00%
3,181
67
2
1
-876 [R]
2,378
0 [C]
0 [A]
0 [A]
11
100.00%
19 & 69
100.00%
19
100.00%
42,965
7,373
19,730
100.00%
23,242
100.00%
149,653
3,519
1,911
1,451
-3,518
39,518
437
1,229
689
3,689
0
22,570
9,193
2,842
1,613
193
-156 [R]
777
870
48
586
1,119
3,050
-16,583
4,102
2,131
5,811
1,928
1,325
-277
854
1,828
153 [1]
-23 [R]
-3,027
-8,320
0 [R]
-433
803
-1,697
-376
-42
-84
417
-10,618
22,319
28,660
100.00%
272,483
32 & 11
100.00%
58
11
19
31
31
31
32
11
31
31
40
65
40
31
32
32
56
47
47
47
56
47
45
47
47
47
47
47
43
65
56
11
47
11
11
83
45
100.00%
88.40%
100.00%
54.27%
100.00%
100.00%
87.81%
100.00%
50.13%
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%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
67 & 63
100.00%
64 & 65 & 67
100.00%
11
100.00%
11 & 67
100.00%
4,890
3,265
2,517
7,226
2,336
183,867
122,828
4,725
3,416
676
-384
14,332
1,447
869
3,783
4,927
10,722
49,910
8,442
86,909
477
7,956
2,497
8,112
9,686
1,552
-226
-21,676
45,616
0
29,085
3,171
15,416
5,905
483
6,662
16,209
45,161
KION Holding 1 GmbH
List of shareholdings for the year ended 31 December 2012
No.
Name
Registered office
Country
Annex to the notes
Parent
company
Holding
in (%)
Equity,
Local
GAAP,
TEUR
Earnings,
Local GAAP,
TEUR Note
Consolidated affiliated companies
Foreign
66 QUALIFT S.p.A. (formerly: Cailotto Carrelli S.p.A.)
67 STILL ITALIA S.p.A.
68 KION Finance S.A.
69 STILL Intern Transport B.V.
70 AUSTRO OM PIMESPO Fördertechnik GmbH
71 Linde Fördertechnik GmbH
72 STILL Ges.m.b.H.
73 Linde Material Handling Polska Sp. z o.o.
74 STILL POLSKA Spólka z o.o.
75 OOO "Linde Material Handling Rus"
76 OOO "STILL Forklifttrucks"
77 STILL MOTOSTIVUITOARE S.R.L.
78 Linde Material Handling AB
79 STILL Sverige AB
80 Linde Lansing Fördertechnik AG
81 STILL AG
82 KION South Asia Pte. Ltd.
83 Linde Material Handling Asia Pacific Pte. Ltd.
84 Linde Material Handling Slovenska republika s.r.o.
85 STILL SR, spol. s r.o.
86 Linde Vilicar d.o.o.
87 IBER-MICAR S.L.
88 Islavista Spain S.A.U.
89 KION Rental Services S.A.U.
90 Linde Holding de Inversiones S.R.L.
91 Linde Material Handling Ibérica, S.A.U.
92 STILL, S.A.U.
93 Linde Material Handling (Pty) Ltd.
94 Linde Material Handling Ceská republika s r.o.
95 Linde Pohony s r.o.
96 STILL CR spol. s r.o.
97 Linde Magyarország Anyagmozgatási Kft.
98 STILL Kft.
Verona
Lainate
Italy
Italy
Luxembourg
Luxembourg
Hendrik Ido Ambacht
Netherlands
Linz
Linz
Wiener Neudorf
Warsaw
Gadki
Moscow
Moscow
Giurgiu
Örebro
Stockamöllan
Dietlikon
Otelfingen
Singapore
Singapore
Trencin
Nitra
Celje
Gava
Austria
Austria
Austria
Poland
Poland
Russia
Russia
Romania
Sweden
Sweden
Switzerland
Switzerland
Singapore
Singapore
Slovakia
Slovakia
Slovenia
Spain
L’Hospitalet de Llobregat Spain
L’Hospitalet de Llobregat Spain
Pallejá
Pallejá
Spain
Spain
L’Hospitalet de Llobregat Spain
South Africa
Linbro Park
Prague
Prague
Dunaharaszti
Környe
Hungary
Hungary
64
19
-
19
65
100.00%
100.00%
-
100.00%
100.00%
11 & 70
100.00%
19
11
19
100.00%
100.00%
100.00%
11 & 3
100.00%
11 & 19
100.00%
11 & 19
100.00%
11
19
11
19
11
11
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
11 & 94
100.00%
19 & 96
100.00%
11
11
11
88
88
90
88
11
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
11
19
11
100.00%
100.00%
100.00%
1,097
8,240
27
15,908
9,845
10,130
4,710
15,907
13,131
5,125
1,659
664
39,818
2,208
13,585
7,829
-58
-436
-105
-2 [4]
4,377
-26
919
957
3,117
2,475
303
434
131
8,162
20
3,082
2,837
-58 [3]
30,545
1,461
2,467
1,360
1,396
3,102
26,895
3,060
31,079
47,517
15,101
19,543
8,736
37,665
5,778
1,409
1,349
-2,701
416
136
32
58
-5,506
378
6
1,355
-791
1,939
2,098
9,836
1,635
172
310
1,817
Ceský Krumlov
Czech Republic
11
100.00%
Czech Republic
11 & 19
100.00%
Czech Republic
11 & 19
100.00%
99 Linde Material Handling North America Corporation
Summerville
United States
Non-consolidated affiliated companies
Domestic
100 Klaus Pahlke Betriebsführungs-GmbH
101 proplan Transport- und Lagersysteme GmbH
102 Schrader Industriefahrzeuge Verwaltung GmbH
Foreign
Haan
Aschaffenburg
Essen
Germany
Germany
Germany
11
100.00%
1
100.00%
11
100.00%
46
573
72
103 Lansing Bagnall (Aust.) Pty. Ltd.
Huntingwood
Australia
47 & 11
100.00%
2,194
104 Baoli France SAS
105 SCI Champ Lagarde
106 URBAN LOGISTIQUE SAS
107 Castle Lift Trucks Ltd.
108 Creighton Materials Handling Ltd.
109 D.B.S. Brand Factors Ltd.
110 Fork Truck Rentals Ltd.
111 Fork Truck Training Ltd.
112 Lancashire (Fork Truck) Services Ltd.
113 Stephensons Enterprise Fork Trucks Ltd.
114 Sterling Mechanical Handling Ltd.
115 Urban Logistics (UK) Ltd.
Elancourt
Elancourt
Elancourt
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Basingstoke
France
France
France
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
116 Handling & Storage Equipment (Ireland) Ltd.
Walkinstown
Ireland
117 Carest SRL
118 Milano Carrelli Elevatori S.r.l.
119 URBAN LOGISTIKA S.R.L.
Lainate
Monza
Lainate
Italy
Italy
Italy
32
31
20
47
47
52
47
47
52
52
47
20
61
65
65
20
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%
100.00%
100.00%
131
104
1,437
846
0
0
356
0
0
0
1,240
473
0
10
14
48
1 [1]
0 [E]
4 [1]
0 [1]
-166 [3]
0 [1]
227 [1]
1,046 [1]
0 [1], [R]
0 [1], [R]
0 [1], [R]
0 [1], [R]
0 [1], [R]
0 [1], [R]
0 [1], [R]
127 [1]
0 [1], [R]
-1 [1], [R]
-7 [1], [R]
6 [1]
KION Holding 1 GmbH
List of shareholdings for the year ended 31 December 2012
No.
Name
Registered office
Country
Annex to the notes
Parent
company
Holding
in (%)
Equity,
Local
GAAP,
TEUR
Earnings,
Local GAAP,
TEUR Note
Non-consolidated affiliated companies
Foreign
120 TOO "Linde Material Handling Kazakhstan"
121 Linde Viljuskari d.o.o.
122 STILL VILICAR d.o.o.
123 Baoli Material Handling Ceská republika s r.o.
Almaty
Belgrade
Ljubljana
Teplice
Kazakhstan
Serbia
Slovenia
Czech Republic
124 Urban Transporte spol. s.r.o.
Moravany u Brna
Czech Republic
11 & 3
100.00%
71
19
94
20
100.00%
100.00%
100.00%
100.00%
125 TOV "Linde Material Handling Ukraine"
Kiev
Ukraine
11 & 3
100.00%
117
86
-1,087
-58
1,666
783
8,470
5,604
30,805
-
1,017
16,048
11,862
-31
15 [1]
-91 [1]
-65
812 [1]
-261
3,126 [1]
3,504 [1]
2,687 [1]
- [3]
71 [1]
290 [1]
4,025 [1]
Hagelstadt
Hamburg
Wiesbaden
Aschaffenburg
Blankenhain
Kerpen
Bremen
Germany
Germany
Germany
Germany
Germany
Germany
Germany
11
11
11
11
11
11
11
25.00%
21.00%
45.00%
30.00%
25.00%
24.96%
23.00%
Santiago de Chile
Chile
11
45.00%
12,653
1,353 [1]
Associates (at-equity investments)
Domestic
126 Beutlhauser-Bassewitz GmbH & Co. KG
127 Hans Joachim Jetschke Industriefahrzeuge (GmbH & Co.) KG
128 Linde Leasing GmbH
129 Linde Hydraulics GmbH & Co. KG
130 MV Fördertechnik GmbH
131 Pelzer Fördertechnik GmbH
132 Willenbrock Fördertechnik Holding GmbH
Foreign
133 Linde High Lift Chile S.A.
Joint Ventures (at-equity investments)
Domestic
Foreign
135 JULI Motorenwerk s.r.o.
Associates (accounted at cost)
Domestic
136 JETSCHKE GmbH
137 Linde Hydraulics Verwaltungs GmbH
134 Eisengießerei Dinklage GmbH
Dinklage
Germany
19
50.00%
4,126
140 [1]
Moravany
Czech Republic
11 & 19
50.00%
25,952
5,513
Hamburg
Aschaffenburg
Germany
Germany
138 Supralift Beteiligungs- und Kommunikationsgesellschaft mbH
Hofheim am Taunus
Germany
139 Supralift GmbH & Co. KG
Hofheim am Taunus
Germany
Foreign
140 Labrosse Equipement S.A.
141 Normandie Manutention S.A.
142 Chadwick Materials Handling Ltd.
143 EUROPA CARRELLI S.R.L.
144 Nordtruck AB
145 Carretillas Elevadoras Sudeste S.A.
146 CAYSA MANUTENCION S.L.
147 Motorové závody JULI CZ s r.o.
Other investments
Foreign
Saint-Peray
Le Grand Quevilly
Corsham
Bastia Umbra
Örnsköldsvik
Murcia
Valladolid
Moravany
France
France
U.K.
Italy
Sweden
Spain
Spain
11
11
11
11
31
31
47
67
78
91
22.00%
30.00%
50.00%
50.00%
34.00%
34.00%
48.00%
40.00%
25.00%
38.53%
91 & 145
46.71%
70
-
19
805
6,327
17,264
1,316
562
721
4,014
143
8
3 [1]
- [3]
1 [1]
8
1,736 [1]
3,389 [1]
24 [1]
-14 [2]
324 [2]
289
-1
0 [2]
Czech Republic
11
50.00%
148 TPZ Linde Vilicari Hrvatska d.o.o. (formerly: Linde Vilicari Hrvatska
Zagreb
Croatia
11
20.00%
168
20 [1]
d.o.o.)
[1] Financial figures as of 31 December 2011
[2] Last provided financial statement
[3] New during 2012
[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
[R] Dormant company
[B] Profit and loss transfer agreement with STILL Gesellschaft mit beschränkter Haftung
[C] Profit and loss transfer agreement with KION Financial Services GmbH
[D] Profit and loss transfer agreement with KION GROUP GmbH
[E] 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, 2012 and the group
management report.
Independent Auditors’ Report
the consolidated
We have audited
financial statements prepared by KION Holding 1 GmbH,
Wiesbaden/Germany, - comprising the consolidated income statement, consolidated statement of comprehensive
income, consolidated statement of financial position, consolidated statement of cash flows, consolidated
statement of changes in equity and the notes to the consolidated financial statements - and the group
management report for the business year from 1 January to 31 December 2012. The preparation of the
consolidated financial statements and the group management report in accordance with IFRS, as adopted by the
EU, as well as the regulations under German commercial law complementarily applicable under § 315a (1)
German Commercial Code (HGB) 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 ("German
Commercial Code") 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 KION Holding 1 GmbH,
Wiesbaden/Germany, comply with IFRS, as adopted by the EU, as well as the regulations under German
commercial law complementarily applicable under § 315a (1) German Commercial Code (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/Germany, 13 March 2013
Deloitte & Touche GmbH
Wirtschaftsprüfungsgesellschaft
Signed: Kompenhans
Wirtschaftsprüfer
[German Public Auditor]
Signed: J. Löffler
Wirtschaftsprüfer
[German Public Auditor]