A
NEW
A N N U A L R E P O R T
2016
KION Group
Key figures for 2016
KION Group overview
in € million
Order intake
Revenue
Order book 1
Financial performance
EBITDA
Adjusted EBITDA 2
Adjusted EBITDA margin 2
EBIT
Adjusted EBIT 2
Adjusted EBIT margin 2
Net income
Financial position 1
Total assets
Equity
Net financial debt
ROCE 3
Cash flow
Free cash flow 4
Capital expenditures 5
Employees 6
2016
(excl. Dematic)
5,553.0
5,327.7
527.2
9.9%
12.4%
317.5
2016
5,833.1
5,587.2
2,244.7
889.5
931.6
16.7%
434.8
537.3
9.6%
246.1
11,359.2
2,535.1
2,903.4
6.8%
– 1,850.0
166.7
30,544
2015
5,215.6
5,097.9
864.0
824.2
850.0
16.7%
422.8
482.9
9.5%
2014
4,771.2
4,677.9
764.1
714.2
780.4
16.7%
347.0
442.9
9.5%
Change
2016/2015
11.8%
9.6%
> 100%
7.9%
9.6%
–
2.8%
11.3%
–
221.1
178.2
11.3%
6,440.2
1,848.7
573.5
11.9%
332.7
142.6
6,128.5
1,647.1
810.7
11.4%
76.4%
37.1%
> 100%
–
305.9
133.1
<– 100%
16.9%
23,506
22,669
29.9%
1 Figures as at balance sheet date 31/12/
2 Adjusted for PPA items and non-recurring items
3 ROCE is defined as the proportion of EBIT adjusted to capital employed
4 Free cash flow is defined as cash flow from operating activities plus cash flow from investing activities;
Last year figures were adjusted due to a change in presentation, for details see ,Additional information of the condensed statement of cash flows‘
5 Capital expenditure including capitalised development costs, excluding leased and rental assets
6 Number of employees (full-time equivalents) as at balance sheet date 31/12/
All amounts in this annual report are disclosed in millions of euros (€ million) unless stated otherwise. The addition of the totals
presented may result in minor rounding differences. The percentages shown are calculated on the basis of the respective amounts,
rounded to the nearest thousand euros.
A N N U A L R E P O R T 2 0 1 6
A
360°
FORKLIFT TRUCKS,
WAREHOUSE
TECHNOLOGY,
& SUPPLY CHAIN
SOLUTIONS
FOR EVERY PART OF
THE WAREHOUSE:
SEE POSTER IN
THE JACKET OR
ONLINE AT:
kiongroup.com/A _New_Era
OUR WORLD IS
E VOLVING R APIDLY.
HOW WE LIVE, HOW
WE WORK, CUSTOMER
NEEDS, MARKE T
REQUIREMENTS –
DIGITALISATION
IS CHANGING
E VERY THING.
WITH DEMATIC
THE KION GROUP
HAS STARTED A
NEW CHAPTER
AND REPOSITIONED
ITSELF.
kiongroup.com
C O M P A N Y P R O F I L E
The KION Group is a global leader in industrial
trucks, related services and supply chain solutions.
Across more than 100 countries worldwide, the
KION Group’s logistics solutions optimise the flow of
material and information within factories, ware-
houses and distribution centres. The Group is the
largest manufacturer of industrial trucks in Europe,
the second-largest producer of forklifts globally and
a leading provider of warehouse automation.
The KION Group’s world-renowned brands are
among the best in the industry. Dematic is a global
leader in automated material handling, providing a
comprehensive range of intelligent supply chain and
automation solutions. Egemin Automation is a top-
tier logistics automation specialist. The Linde and
STILL brands serve the premium industrial truck
segment. Baoli focuses on industrial trucks in the
economy segment. Among the regional KION brand
companies, Fenwick is the largest supplier of mate-
rial handling products in France, while OM STILL is
a market leader in Italy. Voltas is a leading provider
of industrial trucks in India.
More than 1.2 million industrial trucks and over
6,000 installed systems from the KION Group are
deployed by customers in all industries and of all
sizes on six continents.
We keep the world moving.
Industry 4.0
The KION Group
adds value
in production
and logistics
I N T E L L I G E N T
T R U C K S
(cid:81) (cid:3)
(cid:3)Smart trucks with electronic
control units
(cid:81) (cid:3)
(cid:3)Driver assistance systems for
greater efficiency
F L E E T D A T A
M A N A G E M E N T
(cid:81) (cid:3)
(cid:3)Fleet data services for centralised
control and tracking
(cid:81) (cid:3)
(cid:3)Fleet optimisation
(cid:81) (cid:3)
(cid:3)Financial benefits and
improved safety
A U T O M A T E D
T R U C K S
(cid:81) (cid:3)
(cid:3)Full range of
automated trucks
(cid:81) (cid:3)
(cid:3)Enables automation of
material handling processes
A U T O M A T I O N
S Y S T E M S
(cid:81) (cid:3)
(cid:3)Customised and integrated
intralogistics solutions
(cid:81) (cid:3)
(cid:3)Automated trucks in
combination with additional
hardware and software
S E G M E N T S
I N D U S T R I A L T R U C K S
& S E R V I C E S
S U P P L Y C H A I N
S O L U T I O N S
The Industrial Trucks & Services segment encompasses
The Supply Chain Solutions segment encompasses inte-
forklift trucks, warehouse technology and related services,
grated technology and software solutions that are used to
including complementary financial services.
optimise supply chains. Manual and automated solutions are
It pursues a multi-brand strategy involving the three
provided for all functions along customers’ supply chains,
international brands Linde, STILL and Baoli plus the three
from goods inward and multishuttle warehouse systems to
regional brands Fenwick, OM STILL and Voltas.
picking and value-added packing. The segment brings to-
gether the activities of the Dematic, Egemin Automation and
Industrial Trucks & Services is made up of four operating units
Retrotech brands. Dematic, the fifth operating unit, is re-
that cover the KION Group’s existing industrial truck business:
sponsible for the shared, cross-brand market presence.
Linde Material Handling EMEA and STILL EMEA, which
each concentrate on Europe, the Middle East and Africa, plus
KION APAC and KION Americas, which hold cross -brand
responsibility for the Asia-Pacific region and the Americas
respectively.
G
N
I
T
A
R
E
P
O
S
T
I
N
U
S
D
N
A
R
B
S
T
C
U
D
O
R
P
L I N D E M H
E M E A
S T I L L
E M E A
K I O N
A P A C
K I O N
A M E R I C A S
(cid:81)(cid:3)
(cid:3)Counterbalance trucks with electric drive
(cid:81)(cid:3)
(cid:3)Counterbalance trucks with IC engine
(cid:81)(cid:3)
(cid:3)Warehouse technology: ride-on industrial trucks
(cid:81)(cid:3)
(cid:3)Warehouse technology: hand-operated industrial trucks
(cid:81)(cid:3)
(cid:3)Towing vehicles
(cid:81)(cid:3)
(cid:3)Automated trucks and autonomous trucks
G
N
I
T
A
R
E
P
O
T
I
N
U
S
D
N
A
R
B
S
T
C
U
D
O
R
P
D E M A T I C
(cid:81)(cid:3)
(cid:3)Conveyors
(cid:81)(cid:3)
(cid:3)Sorters
(cid:81)(cid:3)
(cid:3)(cid:3)Storage and retrieval systems
(cid:81)(cid:3)
(cid:3)(cid:3)Picking equipment
(cid:81)(cid:3)
(cid:3)Palletisers
C O R P O R A T E S E R V I C E S
The Corporate Services segment comprises
holding companies and other service com-
panies that provide services such as IT and
logistics across all segments.
I N T E R N A L
S E R V I C E S
H O L D I N G C O M P A N Y
F U N C T I O N S
OUR BRANDS
A N N U A L R E P O R T 2 0 1 6
A
OUR WORLD IS
E VOLVING R APIDLY.
HOW WE LIVE, HOW
WE WORK, CUSTOMER
NEEDS, MARKE T
REQUIREMENTS –
DIGITALISATION
IS CHANGING
E VERY THING.
WITH DEMATIC
THE KION GROUP
HAS STARTED A
NEW CHAPTER
AND REPOSITIONED
ITSELF.
kiongroup.com
Contents
A
4
6
8
18
21
B
24
33
37
C
56
57
71
TO OUR SHAREHOLDERS
Letter to shareholders
Executive Board
Report of the Supervisory Board
KION shares
Services for shareholders
CORPORATE GOVERNANCE
Corporate governance report
Disclosures relevant to acquisitions
Remuneration report
COMBINED MANAGEMENT REPORT
Preliminary remarks
Fundamentals of the KION Group
Report on the economic position
102
Outlook, risk report and opportunity report
D
116
117
118
120
122
124
232
233
E
236
237
238
239
239
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of cash flows
Consolidated statement of changes in equity
Notes to the consolidated financial statements
Auditors’ report
Responsibility statement
ADDITIONAL INFORMATION
Quarterly information
Multi-year overview
Disclaimer
Financial calendar
Contact
A
SHAPING CHANGE
AND HARNESSING NEW
OPPORTUNITIES:
DISCOVER HOW
THE KION GROUP
IS BEGINNING
A NEW ERA, WITH
THE AIM OF
CREATING EVEN
MORE VALUE FOR
ITS CUSTOMERS,
IN OUR
WEB SPECIAL
AT:
kiongroup.com/A _New_Era
TO OUR SHAREHOLDERS
Contents
3
3
TO OUR
SHAREHOLDERS
4
6
8
18
21
LETTER TO SHAREHOLDERS
EXECUTIVE BOARD
REPORT OF THE SUPERVISORY BOARD
KION SHARES
SERVICES FOR SHAREHOLDERS
S
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A N E W E R A
KION GROUP AG | Annual Report 2016
A1-2 Brief und Zitate Vorstand.indd 3
25.02.17 16:21
TO OUR SHAREHOLDERS
Contents
3
3
TO OUR
SHAREHOLDERS
4
6
8
18
21
LETTER TO SHAREHOLDERS
EXECUTIVE BOARD
REPORT OF THE SUPERVISORY BOARD
KION SHARES
SERVICES FOR SHAREHOLDERS
S
R
E
D
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KION GROUP AG | Annual Report 2016
I
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A1-2 Brief und Zitate Vorstand.indd 3
25.02.17 16:21
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4
» We shape the
future of
intralogistics.«
G o r d o n R i s k e
C h i e f E x e c u t i v e O f f i c e r
A N E W E R A
Annual Report 2016 | KION GROUP AG
TO OUR SHAREHOLDERS
Letter to Shareholders
5
Dear shareholders, customers, partners, employees and
friends of the KION Group,
Last year marked the dawn of a new era for our Company, and also for others.
By acquiring Dematic, a specialist for automation and supply chain optimisation,
the KION Group has become a different, more diverse and more powerful group.
We can now offer our customers around the world everything they need for their
intralogistics – from basic hand pallet trucks to the most complex of automated
material handling solutions – underpinned by what is probably the most extensive
sales and service network in the industry worldwide. By offering a comprehensive
portfolio from a single source, we are better placed than anyone else to help cus-
tomers create value. That is why, now that Dematic has joined the KION family,
we have also begun a new chapter for our industry.
Our world is evolving rapidly and our industry is being shaken up. How we live,
how we work – digitalisation is changing everything. When you order goods online,
they usually arrive the next day or, more and more frequently, the same day. Cities
are growing and people are starting to prefer using their local shops again instead
of going to a mall. Warehouses are therefore being relocated to distribution centres.
Thriving companies are those that have automation solutions with which they can
meet the constantly changing needs of today’s and, above all, tomorrow’s consumers.
All set for innovation and Intralogistics 4.0
Of course it is not only thanks to Dematic that the KION Group is fully equipped
to fulfil – and benefit from – our customers’ expectations regarding innovation
and solutions in the world of Intralogistics 4.0. Sophisticated technology has made
our smart trucks even safer, and we have refined our fleet data management
systems. We are breaking down the barriers of automation with STILL’s award-
winning autonomous order picker, iGo neo: this intelligent truck follows the oper-
ator at every turn like a willing colleague. What’s more, Linde has expanded its
range of Linde-MATIC trucks equipped with robotics, while Egemin has unveiled
new, compact versions of its automatic guided vehicle systems. We have also made
huge advances in cutting-edge drive technology: Linde and STILL went to market
with the first counterbalance trucks powered by a lithium-ion battery in 2016.
KION GROUP AG | Annual Report 2016
KION GROUP AG | Annual Report 2016
KION GROUP AG | Annual Report 2016
A N E W E R A
A N E W E R A
4
» We shape the
future of
intralogistics.«
G o r d o n R i s k e
C h i e f E x e c u t i v e O f f i c e r
A N E W E R A
Annual Report 2016 | KION GROUP AG
TO OUR SHAREHOLDERS
Letter to Shareholders
5
Our traditional business of forklift trucks and warehouse technology on the one
hand and the automation solutions from Dematic on the other are the perfect fit,
and not only in technological terms. The two companies complement each other
because they both have a strong market position and regional presence, which
will open up cross-selling potential in the medium term. Dematic will make use of
the KION Group’s outstanding reputation and the leading position of its brands in
key markets such as Europe, China and Brazil, while KION benefits from Dematic’s
strong standing in the US and European automation markets. Moreover, the com-
bination of the KION Group’s comprehensive sales and service network and Dematic’s
large installed base will also result in opportunities for further growth in the soft-
ware and service businesses and in the retrofitting and upgrading of systems.
The benefits that each company has for the other will also generate cost synergies.
KION Group is evolving in line with customer needs
Customer needs, market requirements, the technology: everything is changing
from the ground up, and our Company is of course evolving at the same time.
Since acquiring Dematic, we have put a new management and reporting structure
in place for the KION Group. The Industrial Trucks & Services, Supply Chain
Solutions and Corporate Services segments have replaced the Linde, STILL,
Financial Services and Other segments. Industrial Trucks & Services consists of
the KION Group’s existing business and is made up of four regional operating
units: Linde Material Handling EMEA and STILL EMEA, which each concentrate
on Europe, the Middle East and Africa, plus KION APAC and KION Americas,
which hold cross-brand responsibility for the Asia-Pacific region and the Ameri-
cas respectively. Supply Chain Solutions comprises the global Dematic operating
unit, Egemin Automation and Retrotech, while Corporate Services includes head-
office functions and groupwide services such as internal logistics and IT services.
In the magazine section of this annual report at www.kiongroup.com/A_New_Era,
you can discover what this new era for the KION Group means – including on a
personal level – to the people who head up our operating units. You will also find
videos, photos and stories illustrating how the KION Group is actually tackling
changing markets and technologies for the benefit of our customers.
KION GROUP AG | Annual Report 2016
KION GROUP AG | Annual Report 2016
KION GROUP AG | Annual Report 2016
A N E W E R A
A N E W E R A
4
» We shape the
future of
intralogistics.«
G o r d o n R i s k e
C h i e f E x e c u t i v e O f f i c e r
A N E W E R A
Annual Report 2016 | KION GROUP AG
TO OUR SHAREHOLDERS
Letter to Shareholders
5
New structures paying off
We have made significant progress with establishing our CTO organisation, which
has been managed by our Chief Technology Officer Dr Eike Böhm since the
summer of 2015. The organisation brings together key technical functions of the
KION Group in a centralised structure. The responsibilities have now been fully
defined, the CTO organisation’s more than 2,000 employees have attended work-
shops to learn about its purpose and objectives and major projects have got
under way. We are therefore well on track to harness the full potential of cross-brand
collaboration on product development, of course with Dematic on board.
Our new and future-proof structures following the purchase of Dematic, the con-
stant innovation in our core business of forklift trucks, warehouse technology and
related services, the corresponding changes to our Group’s structure – these are
all vital elements in achieving the targets of our Strategy 2020: more growth,
increased resilience to crises, higher profitability and greater efficiency. One of our
core tasks in 2017 will therefore be to press ahead with the integration of Dematic
so that we can add even more value for our customers, shareholders, employees
and partners in the years to come. To support the change that is needed inside
the Company, we launched the ‘Lift up’ initiative last year as a way of communi-
cating the new structures and embedding them in the corporate culture.
Profitable growth again in 2016
Clearly, the only constant in the KION Group is change. This was never more
obvious than last year, and yet we again generated profitable growth. We met our
forecasts for 2016 in full, achieving record results. Excluding the purchase of
Dematic, our revenue, adjusted EBIT, adjusted margin, and net income reached
unprecedented levels, as did the value of our order intake. The profitability of the
KION Group (excluding Dematic) rose to 9.9 per cent. In our outlook for 2017, we
predict further profitable growth in both of our new core segments, Industrial
Trucks & Services and Supply Chain Solutions.
We can thank our now more than 30,000 highly motivated and skilled employees
around the world for these outstanding results. I would like to take this opportu-
nity, on behalf of the entire Executive Board, to offer them my sincere thanks for
their fantastic efforts.
KION GROUP AG | Annual Report 2016
KION GROUP AG | Annual Report 2016
KION GROUP AG | Annual Report 2016
A N E W E R A
A N E W E R A
4
» We shape the
future of
intralogistics.«
G o r d o n R i s k e
C h i e f E x e c u t i v e O f f i c e r
A N E W E R A
Annual Report 2016 | KION GROUP AG
TO OUR SHAREHOLDERS
Letter to Shareholders
5
As you can see, there is a good reason why we called this annual report ‘A new
era’. Our Company is now not only much bigger but also much closer to our cus-
tomers because their local service engineer or sales office is now nearer. Our
portfolio of products and service is now far more extensive and it has never been
easier for customers to obtain the solution they need from a single source. But one
thing has stayed the same: our mission statement that the KION Group equates
to more than the sum of its brands.
With best wishes,
Gordon Riske
Chief Executive Officer
KION GROUP AG
KION GROUP AG | Annual Report 2016
KION GROUP AG | Annual Report 2016
KION GROUP AG | Annual Report 2016
A N E W E R A
A N E W E R A
6
Executive Board
GORDON RISKE
Chief Executive Officer (CEO)
of KION GROUP AG
born in 1957 in Detroit (USA)
DR EIKE BÖHM
Chief Technology Officer (CTO)
of KION GROUP AG
born in 1962 in Pforzheim (Germany)
CHING PONG QUEK
Chief Asia Pacific Officer
of KION GROUP AG
born in 1967 in Batu Pahat/Johor
(Malaysia)
DR THOMAS TOEPFER
Chief Financial Officer (CFO) and Labour
Relations Director of KION GROUP AG
born in 1972 in Hamburg (Germany)
» Now that Dematic
has joined the
KION family, we
have begun a new
chapter for our
customers.«
G o r d o n R i s k e
C h i e f E x e c u t i v e O f f i c e r
» When you accept
change, you will
make progress.«
C h i n g P o n g Q u e k
C h i e f A s i a P a c i f i c O f f i c e r
A N E W E R A
Annual Report 2016 | KION GROUP AG
TO OUR SHAREHOLDERS
Executive Board
7
» Dematic’s software
expertise is an
enormous asset to
the KION Group
significantly adding
value also for our
industrial truck
customers.«
D r E i k e B ö h m
C h i e f Te c h n o l o g y O f f i c e r
» The investment grade
credit rating from
Fitch is an external
confirmation of how
far KION has progressed
in recent years.«
D r T h o m a s To e p f e r
C h i e f F i n a n c i a l O f f i c e r
KION GROUP AG | Annual Report 2016
A N E W E R A
8
Report of the Supervisory Board of
KION GROUP AG
Dear shareholders,
2016 was another very successful year for KION GROUP AG. It was dominated by
the acquisition of automation and supply chain optimisation specialist Dematic, which
is having a lasting and significant impact on the business model of KION GROUP AG
and its market positioning. This is a time of transformation for KION GROUP AG. The
combination of KION GROUP AG’s excellent capabilities, expertise and experience
in developing, manufacturing, marketing and servicing industrial trucks with that of
Dematic in automating and increasing the efficiency of warehouse systems means
that the Company is now much better placed to offer top-class intralogistics solutions
and to help shape the future of intelligent logistics. The structure of KION GROUP AG
is also continuing to evolve. Since December 2016, it has had a new reporting and
management structure consisting of the Industrial Trucks & Services, Supply Chain
Solutions and Corporate Services segments, reflecting the Group’s strategic realign-
ment. In terms of business performance, the KION Group again generated encourag-
ing revenue and earnings growth and achieved all of its forecasts in 2016.
Last year, the Supervisory Board continued to fulfil the tasks and responsibilities imposed
on it by the law, the Company’s articles of incorporation and the German Corporate
Governance Code with dedication and diligence. As in previous years, there were again
many important decisions, transactions requiring approval and other matters to be
discussed and resolved upon.
Monitoring and advisory role in dialogue with the Executive Board
The Supervisory Board advised the Executive Board on all significant matters relating
to managing the Company and monitored the Executive Board’s running of the
Company. The Supervisory Board was fully involved in all major decisions affecting
the Company from an early stage. The Executive Board always notified the Super visory
Board of every significant aspect of the decisions to be made promptly and in detail,
providing both written and oral reports. Between meetings of the Supervisory Board
and between those of its committees, the chairman of the Supervisory Board, who is
A N E W E R A
Annual Report 2016 | KION GROUP AG
TO OUR SHAREHOLDERS
Report of the Supervisory Board
9
DR JOHN FELDMANN
Chairman
also chairman of the Executive Committee, remained in close contact at all times with
the Executive Board, particularly the Chief Executive Officer and the Chief Financial
Officer. There was also regular contact between the chairman of the Audit Committee
and both the Chief Financial Officer and those responsible for auditing and compliance
in the Company. This ensured that the Supervisory Board was always kept up to date on
the Company’s performance and any significant transactions, even between meetings.
The Supervisory Board satisfied itself at all times that the Company was being man-
aged lawfully and diligently by the Executive Board. Giving the specified period of
notice, the Executive Board presented to the Supervisory Board transactions that,
according to the law, the Company’s articles of incorporation or the rules of procedure
for the Executive Board of KION GROUP AG, require the Super visory Board’s consent
so that it could adopt resolutions. The Supervisory Board examined closely the reso-
lutions proposed by the Executive Board and deliberated on them before adopting them.
KION GROUP AG | Annual Report 2016
A N E W E R A
10
Main focus areas discussed by the Supervisory Board
Last year, the Supervisory Board’s deliberations again centred on the implementation
of the Strategy 2020, which the Executive Board and Supervisory Board adopted in
2013, the growth and profitability targets for KION GROUP AG defined in the strategy,
and the further development of the portfolio.
Throughout 2016, the Company’s Supervisory Board and Executive Board intensively
discussed growth opportunities arising from the organic expansion of the portfolio
and from the acquisition of additional capabilities. The focus was always on growing
the global business in industrial trucks of all categories, refining the product portfolio,
increasing market share at regional level and examining the digital transformation of
manufacturing (Industry 4.0). As in the previous year, the Supervisory Board kept a
close eye on developments in this area and discussed them with KION GROUP AG’s
management team. In the core business of industrial trucks, the Supervisory Board
and Executive Board discussed short-, medium- and long-term aspects of strategic
development, innovation and operational excellence, applying strategic parameters
such as customer satisfaction, market trends and technological developments. The
strategy meeting on 28 September 2016 was an opportunity for an in-depth exchange
of views on innovative trends in the core industrial trucks business. The main topics of
discussion were innovations relating to the integration of industrial trucks into existing
end-to-end intralogistics solutions in order to increase the efficiency of customers’
processes, particularly with regard to production logistics, order picking and warehouse
technology. Moreover, following on from the acquisition in 2015 of Egemin N.V., a
leading warehouse automation company, KION GROUP AG continued on its journey
to becoming a leading supplier of products for all areas of intralogistics by acquiring
the Dematic Group, a global player and one of the world’s top providers of automated
logistics solutions. This acquisition makes the KION Group the only company able to
supply all intralogistics products, from hand-operated trucks to fully automated ware-
houses, from a single source. The Supervisory Board regularly advised the Executive
Board on this strategic project and was kept informed by the Executive Board on the
progress of the planning and negotiations. The implementation and operation of the
new organisational structure, which had been decided upon in 2015, was closely
monitored by the Supervisory Board. The core elements of this new organisation are
decentralised, regional operating units, of which there were originally four. A further
operating unit called Dematic was created following the acquisition of the Dematic
Group. Since December 2016, the Executive Board has run the KION Group on the
basis of three segments: Industrial Trucks & Services, Supply Chain Solutions and
Corporate Services. The operating units are supported by a central R&D function and
A N E W E R A
Annual Report 2016 | KION GROUP AG
TO OUR SHAREHOLDERS
Report of the Supervisory Board
11
administrative departments. The CTO organisation, which is headed up by the Chief
Technology Officer Dr Eike Böhm, assumed groupwide responsibility for product
strategy, R&D, innovation, the production system, quality assurance and procurement
on 1 January 2016. The new external reporting format derived from this organisation
structure, which is based on the Industrial Trucks & Services, Supply Chain Solutions
and Corporate Services segments, was monitored by the Audit Committee and, in
particular, its chairman.
Other administrative functions were adapted to meet the requirements of the Group’s
new organisational structure during 2016, which involved centralising and harmonising
them. The aim for 2017 is to further optimise the integration of the Dematic Group into
the KION Group and, as a result, generate additional synergies.
Corporate governance matters
Besides the regular corporate governance matters, the issues dealt with by the Super-
visory Board during the reporting year included the governance changes required
due to the new organisational structure and the implementation of requirements and
voluntary undertakings arising for the KION Group out of Germany’s new ‘Act for
the equal participation of women and men in managerial positions in the private and
public sectors’.
The new organisational structure resulted in a shift away from responsibility for brands
towards responsibility for regions or functions. Within the Group, management
structures and work processes across legal entities had to be redesigned worldwide,
especially in the CTO organisation. The results achieved so far are very promising
and instil confidence that the increased efficiency and profit expected to be delivered
by the new organisational structure will be achieved.
Given the Group’s expansion into logistics process automation solutions, the Super-
visory Board believed it was appropriate to supplement the targets for its composition
to include valuable experience in this field of industry. In Dr Christina Reuter, the
Supervisory Board has gained a highly qualified scientist with a proven track record
focusing on automation. Moreover, the addition of both Dr Reuter as a shareholder
representative and Ms Claudia Wenzel as an employee representative means that
the Supervisory Board of KION GROUP AG now has two new and highly qualified
female members. KION therefore met the statutory requirements for the proportion of
women on the Supervisory Board of KION GROUP AG at the end of 2016. This
provided the background for the Supervisory Board’s discussions in the fourth quarter
KION GROUP AG | Annual Report 2016
A N E W E R A
12
about the upcoming election of shareholder representatives at the Annual General
Meeting on 11 May 2017. The Nomination Committee has prepared the necessary
nominations, applying the updated objectives for the composition of the Supervisory
Board. The committee examined whether the current members, who are proposed
as candidates, continue to meet the requirements for the office of shareholder repre-
sentative. It paid particular attention to the need to ensure a sufficient number of
Supervisory Board members considered independent. The Company believes that
five of the eight shareholder representatives can be classed as independent, which is
sufficient. Based on the recommendation made by the Nomination Committee, the
Supervisory Board decided at its meeting on 14 December 2016 to propose that the
Annual General Meeting re-elect the current shareholder representatives.
Another area of focus was the review and revision of the remuneration system and of the
individual remuneration for the members of the Executive Board of KION GROUP AG.
The structure of Executive Board and Supervisory Board remuneration had been defined
ahead of the IPO in 2013. In spring 2016, a consultancy reviewed it, comparing it against
the benchmark. Based on the findings, the Executive Board’s remuneration was revised
in two phases. Firstly, the remuneration system was updated with the aim of simplifying
it on the basis of past experience and bringing it closer in line with current best practice
in this area. Changes were made to both the one-year and the multiple- year variable
remuneration. It was also decided to introduce an obligation on Executive Board mem-
bers to hold shares in the Company. Secondly, the individual remuneration of each
Executive Board member was reviewed on the basis of comparative information during
the Supervisory Board meeting in September. As the remuneration of the Executive
Board had remained unchanged for three and a half years, a resolution was adopted to
adjust the amount with effect from 1 January 2017. Further details are provided in the
remuneration report on pages 37 to 53. In compliance with the recommendations in the
German Corporate Governance Code, the updated remuneration system will be pre-
sented to the Annual General Meeting for approval in May 2017.
The topics on which the Executive Board and individual managers in the Company regu-
larly submitted reports were the internal control system, risk management, internal audit
and compliance in the Group. The focus was on the processes in place as well as on
the content of the individual reports. As a result of these reports, the Supervisory Board
was able to gain an impression of the processes in place and to examine and comment
on the proposed developments in these areas. It concluded that the systems and
mechanisms at KION GROUP AG are adequate and suitable.
A N E W E R A
Annual Report 2016 | KION GROUP AG
TO OUR SHAREHOLDERS
Report of the Supervisory Board
13
At its meeting on 14 December 2016, the Supervisory Board held its final discussion
on the KION Group’s compliance with the recommendations of the German Corporate
Governance Code, the version of which dated 5 May 2015 continued to apply in 2016.
The Supervisory Board issued an unchanged comply-or-explain statement pursuant
to section 161 of the German Stock Corporation Act (AktG). It has been made perma-
nently available to the public on the KION GROUP AG website. KION GROUP AG
complies with all but one of the recommendations in the German Corporate Governance
Code (version dated 5 May 2015) and intends to continue to do so in future. As in
the previous year, the only recommendation of the Code with which KION GROUP AG
does not comply is the recommendation in section 3.8 (3) of the Code for an excess
in the D&O insurance policies for members of the Supervisory Board. KION GROUP
AG’s articles of incorporation do not provide for this type of excess. The Company
believes that such an excess is not typical at international level and would therefore
make it considerably more difficult to find independent candidates, in particular can-
didates from outside Germany.
In accordance with section 3.10 of the German Corporate Governance Code, the Execu-
tive Board and the Supervisory Board provide a detailed report on corporate govern-
ance in the KION Group in the corporate governance report. This is combined with the
declaration on corporate governance pursuant to section 289a of the German Com-
mercial Code (HGB) and can be found on pages 24 to 36 of this annual report and on
the KION GROUP AG website at kiongroup.com/GovernanceReport. For details of the
remuneration of the Executive Board and Supervisory Board for 2016, please refer to
the remuneration report, which can be found on pages 37 to 53 of this annual report.
Work of the committees
In the run-up to the Dematic transaction, the Supervisory Board of KION GROUP AG
established an ad-hoc transaction committee to ensure the Company was able to
act and the Supervisory Board was able to adopt the necessary resolutions at short
notice. To the extent permitted by law, the Supervisory Board’s decision-making powers
were delegated to the committee. The committee was made up of three employee
representatives and three shareholder representatives. The Executive Board and the
transaction team at KION GROUP AG kept the committee updated on the progress
of the negotiations. Following the successful completion of the transaction, the com-
mittee was dissolved on 31 December 2016. Since the last report, there have not
been any other material changes to the established committees.
KION GROUP AG | Annual Report 2016
A N E W E R A
14
KION GROUP AG’s Supervisory Board had four committees last year: the Mediation
Committee pursuant to section 27 (3) of the German Codetermination Act (MitbestG),
the Executive Committee, the Audit Committee and the Nomination Committee. These
committees, but primarily the Executive Committee, prepare the matters to be dis-
cussed at the meetings of the full Supervisory Board. In individual cases, the Super-
visory Board’s decision-making powers were delegated to committees within the
scope permitted by law. The chairman of the Supervisory Board is also chairman of
all committees except the Audit Committee. At the meetings of the full Supervisory
Board, the committee chairmen report in detail on the discussions of the committees
to ensure that the Supervisory Board as a whole is always fully informed.
In 2016, the Supervisory Board and its committees dealt with the matters at hand and
made the necessary decisions at a total of 22 meetings (eight full Supervisory Board
meetings and 14 committee meetings). There were also several informal confer-
ence calls for the purpose of providing the members of the Supervisory Board or the
relevant committees with advance information.
In 2016, all members of the Supervisory Board attended all Supervisory Board meet-
ings and the meetings of the respective committees of which they were members
apart from in the following cases: there were five Supervisory Board meetings at each
of which one member sent apologies and one committee meeting at which one
member sent apologies. Supervisory Board Member Tan Xuguang only participated
in half of all the Supervisory Board meetings.
Engagement of the auditors; audit of the separate and
consolidated financial statements
The Company’s independent auditors, Deloitte & Touche GmbH Wirtschaftsprüfungs-
gesellschaft, Munich, Frankfurt am Main branch office, which on 15 June 2016 changed
its registered company name to Deloitte GmbH Wirtschaftsprüfungsgesellschaft
(Deloitte), audited the Company’s separate financial statements and management report
and the consolidated financial statements and group management report for the year
ended 31 December 2016 following their engagement by the Annual General Meeting
on 12 May 2016. The corresponding proposal to the Annual General Meeting had
been prepared in meetings held between the chairman of the Audit Committee and
the auditors. They concerned the suitability and independence of the auditors and
the fees. The proposal was discussed at the Audit Committee’s meeting on 9 March 2016
and committee members were given the opportunity to speak to the auditors in
person. The key audit issues were also discussed and set out accordingly at the Audit
Committee’s meeting on 26 July 2016. The auditors were appointed by the chairman
of the Supervisory Board on 2 June 2016.
A N E W E R A
Annual Report 2016 | KION GROUP AG
TO OUR SHAREHOLDERS
Report of the Supervisory Board
15
The auditors submitted their report and the documents relating to the 2016 financial
statements to the members of the Audit Committee on 15 February 2017 and to the
members of the Supervisory Board on 22 February 2017. The report was discussed in
depth at the Audit Committee meeting on 22 February 2017 and at the full Supervisory
Board meeting on 1 March 2017, both of which were attended by the auditors. At both
of those meetings, the auditors reported in detail on the main findings of the audit and
provided comprehensive answers to all questions asked by members of the Audit
Committee and Supervisory Board. The auditors issued an unqualified opinion for the
separate financial statements for the year ended 31 December 2016, the consolidated
financial statements and the group management report which was combined with the
management report for the year ended 31 December 2016 on 22 February 2017.
Having itself scrutinised the Company’s separate financial statements, consolidated
financial statements and the combined management report for the year ended
31 December 2016, the Audit Committee then made a recommendation to the full
Supervisory Board, which the chairman of the Audit Committee explained in more
detail in his report to the meeting of the full Supervisory Board. On this basis and taking
the auditors’ opinion into consideration, the Supervisory Board held a further discus-
sion of its own and then approved the results of the independent audit at its meeting
on 1 March 2017. Based on the final outcome of the Supervisory Board’s own review,
no objections were raised. The Supervisory Board approved the Company’s sepa-
rate financial statements and consolidated financial statements for the year ended
31 December 2016 prepared by the Executive Board, thereby adopting the annual
financial statements.
At its meeting on 1 March 2017, the Supervisory Board also discussed and approved
the proposal made by the Executive Board that the distributable profit of KION GROUP
AG be appropriated for the payment of a dividend of €0.80 per no-par-value share.
In doing so, the Supervisory Board took account of the Company’s financial situation
and performance, its medium-term financial and capital-expenditure planning
and the interests of the shareholders. The Supervisory Board believes the proposed
dividend is appropriate.
KION GROUP AG | Annual Report 2016
A N E W E R A
16
Relationships with affiliated entities (dependency)
Joint control of the Company by Superlift S.à r.l. and Weichai Power ended on
31 March 2015 when the remaining KION GROUP AG shares held by Superlift S.à r.l.
were sold. There have been no dependency relationships with shareholders since
that date. A report on the Company’s relationships with affiliated entities (dependency
report) therefore did not need to be prepared for 2016.
Personnel changes on the Executive Board and Supervisory Board
There were no changes on the Executive Board of KION GROUP AG last year.
There were several changes on the Supervisory Board in 2016. Mr Wolfgang Faden
stepped down from the Supervisory Board on 12 May 2016. The Company’s Annual
General Meeting elected Dr Christina Reuter to succeed him as a shareholder repre-
sentative. In addition, Mr Kay Pietsch resigned from his position as an employee
representative on the Company’s Supervisory Board with effect from the end of
31 October 2016. The courts appointed Ms Claudia Wenzel as his successor with
effect from 1 November 2016. The Supervisory Board would like to thank Mr Faden
and Mr Pietsch for the great dedication with which they always carried out their
work in the interests of the Company.
Mr Özcan Pancarci has been deputy chairman of the Supervisory Board since
1 January 2016, replacing Mr Joachim Hartig.
A N E W E R A
Annual Report 2016 | KION GROUP AG
TO OUR SHAREHOLDERS
Report of the Supervisory Board
17
The details of this report were discussed thoroughly at the Supervisory Board meeting
on 1 March 2017 when it was adopted.
My colleagues on the Supervisory Board and I would like to thank the members of the
Executive Board and the employees of KION GROUP AG and its Group companies in
Germany and abroad for their commitment and outstanding achievements in 2016.
Dr John Feldmann
Chairman
KION GROUP AG | Annual Report 2016
A N E W E R A
18
KION shares
Moderate increase in equity markets
Gain for the KION share price
The European stock markets only showed a moderate increase
KION shares outperformed the benchmark indices in 2016. They
over the course of 2016. Although prices fell sharply at the start of
closed at €52.86 on 30 December 2016, which was 14.9 per cent
the year on the back of weaker growth in China, geopolitical ten-
higher than their 2015 year-end closing price of €46.02. The share
sions, the collapse of the oil price and other factors, they then
price largely followed the market trend in the first half of the year,
began rising again as the interest rate environment remained
registering its low for the year of €40.84 on 8 February 2016. At the
favourable to equities. The surprising vote for Brexit in the middle
end of June, KION shares were also affected by the downward
of the year created some turmoil, but only for a short time, and the
movement seen after the surprising outcome of the referendum in
second half of 2016 was characterised by minimal fluctuation
the UK in favor of leaving the European Union. From July, however,
within a narrow range. Moreover, the outcome of the US presi-
KION shares were able to increasingly buck the market trend
dential election and Italy’s referendum did not trigger any signifi-
thanks to a strong business performance and the positive per-
cant price reactions. The moderate upward trend observed at the
ception of the Dematic acquisition. The successful capital
end of 2016 was primarily supported by good economic data, a
increase on 18 July 2016 was also accompanied by rising prices.
strongly rebounding oil price and positive leading indicators. The
KION shares achieved their highest price of the year on 22 Sep-
DAX closed the year at 11,481 points, an increase of 6.9 per cent.
tember 2016 when they reached €58.09. After falling in the fourth
The MDAX rose by 6.8 per cent to reach 22,189 points.
quarter, the price at the end of the year was €52.86. > DIAGRAM 001
Share price performance between 30 December 2015 and 30 December 2016
DIAGRAM 001
€60
€58
€56
€54
€52
€50
€48
€46
€44
€42
€40
€38
€36
KION GROUP + 14.9%
+ 6.9%
+ 6.8%
MDAX
DAX
€ 46.02 *
€ 52.86 *
* Closing price
01 / 2016
02 / 2016
03 / 2016
04 / 2016
05 / 2016
06 / 2016
07 / 2016
08 / 2016
09 / 2016
10 / 2016
11 / 2016
12 / 2016
A N E W E R A
Annual Report 2016 | KION GROUP AG
TO OUR SHAREHOLDERS
KION shares
19
KION GROUP AG’s market capitalisation was €5.8 billion as at
30 December 2016. Of this total, 56.6 per cent or €3.3 billion was
in free float. The average daily Xetra trading volume in 2016 was
230 thousand shares or €11.4 million, up considerably on the
prior year. > TABLE 001
Shareholder structure as at 31 December 2016
DIAGRAM 002
0.1%
KION GROUP AG
Basic information on KION shares
TABLE 001
43.3%
WEICHAI POWER
ISIN
WKN
DE000KGX8881
KGX888
Bloomberg KGX:GR
Reuters
KGX.DE
Share type No-par-value shares
Index
MDAX, STOXX Europe 600,
MSCI Germany Small Cap, FTSE EuroMid
56.6%
FREE FLOAT
Acquisition-related capital increase and
employee equity programme
Between 12 and 27 September 2016, KION GROUP AG
repurchased a total of 50,000 shares (around 0.05 per cent of
the share capital) for use in the KION Employee Equity Pro-
gramme (KEEP).
On 18 July 2016, KION GROUP AG placed 9,890,000 new shares
The proportion of shares held by the KION Group changed
at a price of €46.44 each in order to partly finance the acquisition
only slightly as a result of KEEP and stood at 0.1 per cent as at
of Dematic. The authorised capital was used in full for this pur-
31 December 2016. The free float accounted for 56.6 per cent at
pose and the Company’s share capital was increased by
the end of the year. > DIAGRAM 002
10 per cent against cash contributions; shareholders’ pre-emp-
tion rights were excluded. The anchor shareholder Weichai Power
acquired 5,934,000, or 60 per cent, of the new shares, increasing
its stake in the Company to around 40.2 per cent at that time. The
KION shares predominantly recommended
as a buy
remaining shares were placed with institutional investors in an
accelerated bookbuilding process. The gross proceeds from the
As at 31 December 2016, nineteen brokerage houses pub-
capital increase amounted to approximately €459.3 million.
lished regular reports on the KION Group. Thirteen analysts
On 12 December 2016, Weichai Power acquired further KION
recommended KION shares as a buy, five rated them as neutral
shares, taking its stake in KION GROUP AG to the current level of
and one analyst recommended selling them. The median target
43.3 per cent. Weichai Power has undertaken not to acquire
price specified for the shares was €61.00.
more than 49.9 per cent of KION shares before 28 June 2018
(as part of a standstill agreement).
KION GROUP AG | Annual Report 2016
A N E W E R A
20
Share data
TABLE 002
Closing price at the end of 2015
High for 2016
Low for 2016
Closing price at the end of 2016
Market capitalisation at the end of 2016
Performance in 2016
€46.02
€58.09
€40.84
€52.86
€5,750.6 million
14.9%
Average daily trading volume in 2016 (no. of shares)
230.1 thousand
Average daily trading volume in 2016 (€)
Share capital
Number of shares
Earnings per share for 2016
Dividend per share for 2016*
Dividend payout rate*
Total dividend payout*
Equity ratio as at 31/12/2016
* Proposed dividend for the fiscal year 2016
€11.4 million
€108,790,000
108,790,000
€2.38
€0.80
35%
€86.9 million
22.3%
Dividend of €0.80 per share planned
ment was reached for a firmly committed bridge loan of originally
€3.0 billion as financing for the acquisition of Dematic. The financ-
The Executive Board and Supervisory Board of KION GROUP AG
ing volume was reduced by the amount of the proceeds from the
will propose a dividend of €0.80 per share to the Annual General
issue of shares and now stands at just over €2.5 billion. To refi-
Meeting on 11 May 2017. With earnings per share for 2016 of
nance part of the bridge loan, the KION Group issued promissory
€2.38, this equates to a dividend payout rate of around 35 per
notes (Schuldscheindarlehen) in February 2017 amounting to
cent of net income. > TABLE 002
€958.0 million with fixed or floating coupons. The promissory
Financing and credit ratings
notes mature in May 2022, April 2024 or April 2027. Three rating
agencies publish credit ratings for the KION Group. On 4 Janu-
ary 2017, Fitch Ratings awarded the KION Group a long-term
issuer rating of BBB- with a stable outlook. This is the first time
In February 2016, the KION Group successfully replaced the
that the KION Group has received an investment-grade rating.
financing dating back to the time before the IPO, updating its
The credit rating awarded to KION by rating agency Standard &
financing structure with much better terms. The current senior
Poor’s has been BB+ with a negative outlook since June 2016.
facilities agreement comprises a revolving credit facility of
In November, Moody’s lowered the outlook from stable to negative
€1,150.0 million (maturing in February 2022) and a fixed-term
with a credit rating of Ba1.
tranche of €350.0 million (maturing in February 2019). An agree-
A N E W E R A
Annual Report 2016 | KION GROUP AG
TO OUR SHAREHOLDERS
Services for shareholders
21
Services for shareholders
Active investor relations work
Executive Board held update calls to report on each set of quar-
terly results. The transcripts from the conference calls on the
The objective of investor relations is to ensure, through continu-
2015 financial year and the quarterly update calls along with the
ous dialogue, that the capital markets value the Company appro-
presentations form part of the extensive information for investors
priately. The Executive Board and the KION Group’s investor rela-
which is available on the Company’s website.
tions team continued their active dialogue with investors and
analysts last year. The KION Group participated in investor con-
ferences in Germany and abroad and held numerous roadshows
Information on the website
and one-on-one meetings. At these events, also the acquisition of
Dematic and its financing were explained in detail.
Detailed information on KION shares as well as press releases,
On 30 November 2016, around 60 investors and analysts
reports, presentations and information about the Annual General
took part in the KION Group’s Capital Markets Day in Frankfurt
Meeting and corporate governance in the Group can be found at
am Main. The Executive Boards of KION and Dematic presented
kiongroup.com/ir. The KION Group’s annual report is also availa-
detailed information about the new shared offering and provided
ble here, both as a PDF file and as an interactive online version.
a comprehensive picture of the automation market.
A printed copy of the annual report can be ordered under IR Con-
Around 100 shareholders participated in the Annual General
tact & Services. The contact details of the investor relations team
Meeting of KION GROUP AG on 12 May 2016. Those in attend-
are also provided here.
ance, representing 85.8 per cent of the voting share capital,
approved all the draft resolutions put forward by the Company’s
management with a substantial majority. The speeches of the
Chief Executive Officer and the chairman of the Supervisory
Board were broadcast live at kiongroup.com/agm. A webcast of
the Chief Executive Officer’s speech is also available on the Com-
pany’s website.
When the 2015 annual report was published on 17 March 2016,
the Executive Board of KION GROUP AG held a conference call
at which it presented the steps already taken to implement the
Strategy 2020 plus the planned future milestones. In addition, the
kiongroup.com/
ir
KION GROUP AG | Annual Report 2016
A N E W E R A
CORPORATE GOVERNANCE
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CORPORATE GOVERNANCE REPORT
Declaration
Executive Board and Super visory Board
shareholdings and directors’ dealings
DISCLOSURES RELEVANT TO ACQUISITIONS
REMUNERATION REPORT
Executive Board remuneration
Outlook
Supervisory Board remuneration
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CORPORATE GOVERNANCE REPORT
Declaration
Executive Board and Super visory Board
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DISCLOSURES RELEVANT TO ACQUISITIONS
REMUNERATION REPORT
Executive Board remuneration
Outlook
Supervisory Board remuneration
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Corporate governance report
Corporate governance covers the whole system of managing and
monitoring an enterprise, the principles and guidelines that shape
1. Comply-or-explain statement
pursuant to section 161 (1) AktG
its business policy and the system of internal and external control
and monitoring mechanisms. The Executive Board and Super-
Section 161 (1) AktG requires the management board and super-
visory Board of KION GROUP AG believe that an uncompromis-
visory board of a publicly listed company to issue an annual dec-
ing commitment to rigorous corporate governance in accordance
laration stating that the company has complied with, and intends
with the standards is essential to the Company’s long-term suc-
to comply with, the recommendations of the Code or stating the
cess. Compliance with these principles also promotes the trust
recommendations with which it has not complied or does not
that our investors, employees, business partners and the public
intend to comply, and the reasons why. Detailed reasons must be
have in the management and monitoring of the Company.
given for any departure from the recommendations of the Code.
There is a close correlation between the corporate govern-
The comply-or-explain statement must be made permanently
ance report required by section 3.10 of the German Corporate
available to the public on the company’s website.
Governance Code (the Code) as amended on 5 May 2015 and
The Executive Board and Supervisory Board submitted the
the content of the corporate governance declaration required by
Company’s previous comply-or-explain statement on 14/17 Decem-
section 289a of the German Commercial Code (HGB). For this
ber 2015.
reason, the Executive Board and the Supervisory Board of KION
Both decision-making bodies considered the recommen-
GROUP AG have combined the two statements.
dations of the amended Code in detail and, on 14 Decem-
DECLARATION PURSUANT TO
SECTION 289A OF THE GERMAN
COMMERCIAL CODE (HGB)
ber 2016, issued the fourth comply-or-explain statement of KION
GROUP AG as required by section 161 (1) AktG as follows:
1. Since the last comply-or-explain statement was issued in
December 2015, KION GROUP AG has complied with all but
one of the recommendations of the German Corporate
Governance Code (the Code) as amended on 5 May 2015 and
will continue to comply with them in the future.
The corporate governance declaration required by section 289a
In departure from section 3.8 (3) of the Code, the articles
HGB includes the comply-or-explain statement in accordance
of incorporation of KION GROUP AG do not provide for an
with section 161 of the German Stock Corporation Act (AktG)
excess in the D&O insurance policies for members of the
(see 1. below), relevant disclosures on corporate management
Supervisory Board. The Company believes that such an
practices extending beyond statutory requirements (see 2. below),
excess is not typical at international level and would therefore
a description of the working methods of the Executive Board and
make it considerably more difficult to find independent candi-
Supervisory Board, and a description of the working methods
dates, in particular candidates from outside Germany.
and composition of the Supervisory Board committees (see 3.
below). The declaration on corporate governance pursuant to
Wiesbaden, 14 December 2016
section 289a HGB is part of the management report. According
to section 317 (2) sentence 3 HGB, the information provided in
For the Executive Board:
accordance with section 289a HGB does not have to be included
in the audit of financial statements.
Gordon Riske
Dr Thomas Toepfer
For the Supervisory Board:
Dr John Feldmann
A N E W E R A
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CORPORATE GOVERNANCE
Corporate governance report
25
The comply-or-explain statement is available on the website of
The Supervisory Board and in particular the Supervisory
KION GROUP AG at kiongroup.com/comply_statement.
Board’s Audit Committee regularly obtain information on the pro-
cesses put in place as part of the internal control system and
have satisfied themselves as to their efficiency.
2. Relevant disclosures on corporate
governance
2.2 Accounting-related internal control system
The corporate governance of KION GROUP AG is essentially, but
For its accounting process, the KION Group has defined suitable
not exclusively, determined by the provisions of the German
structures and processes as part of its internal control and risk
Stock Corporation Act and the German Codetermination Act
management system and implemented them throughout the
(MitbestG) and also follows the recommendations of the German
Group. Besides defined control mechanisms, it includes, for
Corporate Governance Code. KION GROUP AG complies with all
example, system-based and manual reconciliation processes,
the Code’s recommendations, with one exception. These funda-
clear separation of functions, strict compliance with the double-
mental principles are combined with a commitment to sustaina-
checking principle and written policies and procedures. The over-
ble business, taking account of society’s expectations in the mar-
arching aim is for the separate financial statements, consolidated
kets in which the Company operates.
financial statements and combined management report to be
In 2016, the Executive Board and the Supervisory Board (or
fully compliant with the relevant statutory and regulatory require-
its committees) regularly discussed corporate governance issues
ments and, in particular, the applicable financial reporting stand-
in accordance with a rolling schedule of topics. This ensured that
ards. Changes to these requirements and standards are analysed
the key elements of corporate governance within the KION Group
on an ongoing basis and taken into account as appropriate.
were always on the agenda at meetings of the Company’s main
Details can be found in the risk report, which is part of the com-
decision-making bodies. The Supervisory Board in particular
bined management report.
complied with the supervisory duties incumbent upon it under the
German Stock Corporation Act. For example, the Supervisory
2.3 Risk management system
Board’s Audit Committee, which was set up partly for this pur-
pose, received regular reports on the accounting standard pro-
For the Company to be managed professionally and responsibly,
cesses, the development of the regulatory landscape, the effec-
the Executive Board must use the risk management system
tiveness of the internal monitoring and risk management systems
established in the Company to regularly gather information about
and of the audit of financial statements, and then reported back
current risks and how they are evolving, and then report on this to
to the full Supervisory Board on these matters.
the Supervisory Board’s Audit Committee. The KION Group’s risk
2.1 Internal control system
management system is documented in a Group risk policy that
defines tasks, processes and responsibilities and sets out the
rules for identifying, assessing, reporting and managing risk.
KION GROUP AG has an internal control system designed to
Specific individual risks are then reported by each Group entity
meet the specific needs of the Company. Its processes are
using an online reporting tool. Reporting on cross-segment risks
intended to ensure the correctness of the internal and external
and groupwide risks is carried out by Controlling and the relevant
accounting processes, the efficiency of the Company’s business
departments. The risks that have been reported are reviewed on
operations and compliance with key legal provisions and internal
a quarterly basis and re-assessed until the reason for reporting a
policies. These control processes also include the Company’s
risk no longer exists.
strategic planning, where the underlying assumptions and plans
are reviewed on an ongoing basis and refined as necessary.
KION GROUP AG | Annual Report 2016
A N E W E R A
26
2.4 Compliance management system
questions at any time. They are also responsible for the imple-
mentation of the compliance programme, particularly for provid-
The Executive Board and Supervisory Board of KION GROUP AG
ing advice, information and training.
consider that adhering uncompromisingly to broad-ranging com-
Actual or suspected incidents of non-compliance can be
pliance standards is essential to sustained financial success.
reported by post, email or fax. All employees can also report any
That is why a comprehensive compliance programme, centring
cases of non-compliance via a compliance hotline and can
around the KION Group Code of Compliance, has been set up for
choose to remain anonymous.
KION GROUP AG and its Group companies worldwide.
As part of its work, the compliance department at KION
The KION Group Code of Compliance, which is available in all
GROUP AG cooperates closely with the legal, internal audit and
of the main languages relevant to the Group companies of KION
human resources departments. The KION compliance commit-
GROUP AG, provides every employee with clear guidance on
tee is staffed by the heads of these departments, operating as a
how to conduct their business in accordance with sound values
cross-functional committee that primarily advises on, examines
and ethics and in compliance with the law. The aim is for all
and, if appropriate, punishes incidents of non-compliance that
employees to receive regular training on the most important com-
are reported. While the KION compliance department is respon-
pliance subjects (e.g. competition law, data protection, communi-
sible for preventing compliance violations, the internal audit unit is
cation and anti-corruption). Desk-based employees can use
tasked with checking the facts of reported non-compliance
e-learning tools to complete the mandatory training. Employees
cases. On behalf of the Executive Board, the internal auditors
who do not work at a PC attend classroom-based training. In
also monitor subsidiaries for compliance with regulations. If
addition, classroom-based courses on compliance are held for
their audits confirm cases of non-compliance, it is the task of the
particular employee groups, based on an assessment of their
human resources or legal department to remedy the violations
level of risk (e.g. managers, sales staff).
and sanction those responsible, if appropriate.
Compliance activities focus on anti-corruption, liability of
The presidents of the operating units are responsible for
senior management / directors’ and officers’ liability, data protec-
enforcing compliance. The Local Compliance Representatives
tion, IT security and foreign trade / export controls.
advise and support the directors and senior managers in ensur-
KION GROUP AG’s compliance organisation is made up of
ing compliance throughout the Group.
the following committees, functions and duties:
The Executive Board of KION GROUP AG bears collective
2.5 Audit-relevant processes
responsibility for the functioning of compliance management
within the Group; the compliance department reports to the Chief
The Company’s independent auditors, Deloitte & Touche GmbH
Executive Officer of KION GROUP AG. He has delegated respon-
Wirtschaftsprüfungsgesellschaft, Munich, Frankfurt am Main branch
sibility for ensuring compliance to the Chief Compliance Officer
office, which on 15 June 2016 changed its registered company
and the presidents of the operating units. Ultimate responsibility
name to Deloitte GmbH Wirtschaftsprüfungsgesellschaft (Deloitte),
of course remains with the CEO of the Group. The KION com-
audited the separate financial statements prepared by the Execu-
pliance department, the KION compliance team and the KION
tive Board of KION GROUP AG, the consolidated financial state-
compliance committee provide operational support to the afore-
ments and the combined management report following their
mentioned functions. The KION compliance department focuses
engagement by the Annual General Meeting on 12 May 2016.
mainly on preventing compliance violations by providing guid-
Since the audit of the 2014 separate and consolidated financial
ance, information, advice and training. It manages the KION com-
statements, the global lead service partner at Deloitte has been
pliance team, in which local and regional compliance officers of
Ms Kirsten Gräbner-Vogel. The separate financial statements, the
the Group are represented.
consolidated financial statements and the combined manage-
The members of the compliance team at KION GROUP AG
ment report are discussed by the Audit Committee and then
are available to advise all Group employees and answer their
approved by the Supervisory Board.
A N E W E R A
Annual Report 2016 | KION GROUP AG
CORPORATE GOVERNANCE
Corporate governance report
27
The independent auditors review the condensed consolidated
3. Working methods of the Executive Board
interim financial statements and the condensed interim group
management report for the first half of the year. The Executive
Board discusses all interim reports with the Audit Committee
before they are published.
and Supervisory Board and composition of
the committees of the Supervisory Board
The Executive Board and Supervisory Board of KION GROUP AG
have a close and trusting working relationship. It focuses on
2.6 Avoiding conflicts of interest
ensuring the sustained success of the Company. The members
of the Executive Board regularly attend Supervisory Board
Conflicts of interest between the governing bodies and other
meetings, unless the Supervisory Board decides to meet without
decision-makers in the Company or significant shareholders go
the Executive Board.
against the principles of good corporate governance and are
The Executive Board promptly, comprehensively and regu-
likely to be harmful to the Company. KION GROUP AG and its
larly reports to the Supervisory Board on the performance of
governing bodies therefore adhere strictly to the Code’s recom-
the KION Group. Besides the reporting obligations defined by
mendations on this subject. The employees of KION GROUP AG
law, the rules of procedure for the Executive Board of KION
and its investees are made aware of the problem of conflicts of inter-
GROUP AG set out further reporting requirements and reserva-
est as part of compliance training and are bound by rules on how
tions of approval in favour of the Supervisory Board.
to behave in the event of actual or potential conflicts of interest.
The Company attaches high priority to preventing possible
3.1 Working methods of the Executive Board
conflicts of interest from occurring in the first place and to dis-
pelling any impression that they might exist. This is especially
The Executive Board of KION GROUP AG comprises four mem-
important given the involvement of Weichai Power, whose stake
bers. It is responsible for managing the Company in the Compa-
has risen to 43.3 per cent. The Company achieves these aims by
ny’s interest, i.e. taking account of shareholders, customers,
avoiding business scenarios or personnel structures that could
employees and other stakeholders with the aim of creating
give the impression of a conflict of interest and by taking transparent
sustainable added value. The Executive Board develops the
steps that effectively prevent concerns about conflicts of interest.
Company’s strategy, discusses it with the Supervisory Board and
The Company’s Chief Executive Officer, Mr Gordon Riske,
ensures that it is implemented. Every Executive Board member is
was appointed a non-executive director of Weichai Power with
responsible for his own area of responsibility and keeps his fellow
effect from 24 June 2013, for which the Supervisory Board had
board members informed of developments on an ongoing basis.
previously given its consent. Appropriate precautions have been
> TABLE 003
taken to ensure that this role at a major shareholder of the Com-
pany does not create a conflict of interest relating personally to
Mr Riske. Formal processes have been put in place to ensure that
Mr Riske, in his role as a non-executive director of Weichai Power,
is not involved in transactions that could give rise to a conflict with
the interests of the KION Group. Nor is Mr Riske involved in trans-
actions relating to the exercise of voting rights by Weichai Power
or its subsidiaries at the Annual General Meeting of KION
GROUP AG. It has been ensured that Mr Riske maintains a strict
separation between his duties as a non-executive director of
Weichai Power and his duties as Chief Executive Officer of KION
GROUP AG and that he fulfils all of his legal obligations in the
interests of the Company.
KION GROUP AG | Annual Report 2016
A N E W E R A
28
Responsibilities of Executive Board members
TABLE 003
Member
Responsibilities
Gordon Riske
CEO of KION GROUP AG
CEO of STILL GmbH (until 31 March 2016)
LMH EMEA
STILL EMEA
KION Americas
Dematic
Corporate Strategy
Corporate Communications
Corporate Office
Internal Audit
Corporate Compliance
KION Warehouse Systems
Dr Thomas Toepfer CFO of KION GROUP AG
Accounting / Tax
Financial Services
Corporate Finance
Corporate Controlling
Corporate HR / Labour Relations Director
Legal
KION GROUP IT
Data Protection
Logistics / Urban
Health, Safety & Environment
CTO KION GROUP AG
R&D
Product Strategy
Innovation
Production System
Quality & Operations
Purchasing
Dr Eike Böhm
Rules of procedure laid down by the Supervisory Board
define the areas of responsibility of the Executive Board members
and the way in which they work together. The full Executive Board
normally meets every 14 days and meetings are chaired by the
CEO. Individual Executive Board members sometimes take part
via video conference. At the meetings, the board members dis-
cuss measures and business that, under the Executive Board’s
rules of procedure, require the approval of the full Executive
Board. Resolutions of the full Executive Board are passed by sim-
ple majority unless a greater majority is required by law. The CEO
has a casting vote in the event of a tied vote. Resolutions of the
Executive Board may also be adopted between meetings. Taking
account of the requirements of section 90 AktG, the Executive
Board provides the Supervisory Board with regular, timely and
comprehensive information on all matters of relevance to the
business as a whole relating to the intended operating policy,
strategic planning, business performance, financial position,
financial performance and business risks. The Chief Executive
Officer discusses these matters regularly with the chairman of the
Supervisory Board.
The Executive Board’s rules of procedure specify that impor-
tant transactions are subject to approval by the Supervisory
Board. Budget planning, major acquisitions or capital expendi-
ture, for example, require the consent of the Supervisory Board.
The Company is represented by two members of the Execu-
tive Board, by one member of the Executive Board acting con-
jointly with a Prokurist (person with full commercial power of rep-
resentation), or by two Prokurists.
Ching Pong Quek Member of KION GROUP AG
3.2 Working methods of the Supervisory Board
Executive Board /
Chief Asia Pacific Officer
KION APAC
The Supervisory Board of KION GROUP AG advises and moni-
tors the Executive Board in its management of the Company
and reviews its work. The Supervisory Board is fully involved
from an early stage in all decisions that are fundamental to KION
GROUP AG.
Every Executive Board member must disclose potential conflicts
The Supervisory Board of KION GROUP AG consists of
of interest to the Supervisory Board immediately and must also
16 members, eight of whom are employee representatives and
inform the other Executive Board members. All transactions
eight are shareholder representatives. The shareholder repre-
between KION GROUP AG and Executive Board members or
sentatives are elected by the Annual General Meeting by simple
related parties must be concluded on an arm’s-length basis.
majority.
A N E W E R A
Annual Report 2016 | KION GROUP AG
CORPORATE GOVERNANCE
Corporate governance report
29
The Supervisory Board has drawn up rules of procedure for its
KION GROUP AG Supervisory Board, there have been five female
work. These apply in addition to the requirements of the articles
members. The Supervisory Board will also support the inclusion
of incorporation and also define the Supervisory Board commit-
of other female board members who meet the above criteria.
tees. According to these rules, the chairman of the Supervisory
Board coordinates its work and the cooperation with the Execu-
3.4 Working methods and composition of the committees of
tive Board, chairs its meetings and represents it externally. The
the Executive Board and Supervisory Board
Supervisory Board meets in person at least twice in each half of
a calendar year, and adopts its resolutions at these meetings.
In the year under review, there were four committees at KION
Between these meetings, resolutions may also be adopted in
GROUP AG whose tasks, responsibilities and work processes
writing, by telephone or by other similar forms of voting, provided
comply with the provisions of the German Stock Corporation Act
that the chairman of the Supervisory Board or, in his absence, his
and the German Corporate Governance Code. The chairman of
deputy, decides on this procedure for the individual case con-
each committee reports regularly to the full Supervisory Board on
cerned. The Supervisory Board adopts resolutions by a simple
the committee’s work. The committees have each drawn up rules
majority of the votes cast unless a different procedure is pre-
of procedure that define their tasks and working methods.
scribed by law. If a vote is tied, the matter will only be renegotiated
if the majority of the Supervisory Board vote in favour of this
Executive Committee
option. Otherwise the Board must vote again without delay. If this
The Executive Committee consists of four shareholder repre-
new vote on the same matter also results in an equal number of
sentatives and four employee representatives. Its chairman is
votes for and against, the chairman of the Supervisory Board has
always the chairman of the Supervisory Board. It prepares the
a casting vote.
meetings of the Supervisory Board and is responsible for ongoing
matters between Supervisory Board meetings. The Executive
3.3 Objectives for the composition of the Supervisory Board
Committee also prepares the Supervisory Board’s decisions
relating to corporate governance, particularly amendments to the
The Supervisory Board strives to ensure that its composition is
comply-or-explain statement pursuant to section 161 AktG
appropriate to its responsibilities and obligations. In particular,
reflecting changed circumstances and the checking of adher-
this means considering members’ individual qualities and skills as
ence to the comply-or-explain statement. It also prepares docu-
well as the specific requirements resulting from the global busi-
ments for the Supervisory Board when Executive Board mem-
ness activities of KION GROUP AG and its Group companies.
bers are to be appointed or removed and, if applicable, when a
The Supervisory Board is therefore of the opinion that the prior-
new Chief Executive Officer is to be appointed. Documents relat-
ity in aiming for a board composition based on diversity must be
ing to any matters in connection with Executive Board remunera-
on the expertise of the individual members and on a balanced
tion are also compiled by the Executive Committee. In addition,
mix of personal qualities, experience, skills, qualifications and
the Executive Committee is responsible for resolutions concern-
knowledge of all members in line with the requirements of the
ing the conclusion, amendment and termination of Executive
business. Consequently, it has agreed upon guidelines for the
Board employment contracts and agreements with Executive
selection of Supervisory Board members in the form of a diver-
Board members governing pensions, severance packages, con-
sity statement. This also means that the Supervisory Board’s aim
sultancy and other matters and for resolutions on any matters
is to have an appropriate number of women on the Supervisory
arising as a result of such contracts and agreements, unless they
Board and to comply with the new statutory requirements for the
relate to remuneration. The responsibilities of the Executive Com-
proportion of female members of supervisory boards. Since the
mittee also include resolutions about the extension of loans to
election of Dr Christina Reuter by the Annual General Meeting on
Executive Board members, Supervisory Board members and
12 May 2016 and the appointment of Ms Claudia Wenzel by the
parties related to them within the meaning of sections 89 and
courts with effect from 1 November 2016 as members of the
115 AktG, as well as resolutions to approve contracts with
KION GROUP AG | Annual Report 2016
A N E W E R A
30
Supervisory Board members outside their Supervisory Board
Audit Committee
remit. The Executive Committee should – in consultation with the
The Audit Committee has four members, who are elected by the
Executive Board – regularly deliberate on long-term succession
Supervisory Board. Its purpose is to assist the Supervisory
planning for the Executive Board.
Board in performing its task of monitoring accounting pro-
The Executive Committee met four times in 2016. The main
cesses, compliance matters and reporting. These responsibili-
topics discussed by the Executive Committee in 2016 were
ties encompass monitoring the quality and integrity of the con-
those concerning the acquisition of the Dematic Group, the
solidated and separate financial statements (as well as related
rules for Executive Board and Supervisory Board remuneration,
disclosures), the internal control mechanisms, risk management
the Annual General Meeting and governance matters.
and the internal audit system. The Audit Committee also reviews
the work carried out by the independent auditors and checks
In 2016, the members of the Executive Committee were:
that the independent auditors are qualified and independent. It
Dr John Feldmann (chairman)
is also responsible for engaging the independent auditors,
Özcan Pancarci (deputy chairman since 1 November 2016)
determining the focus of the audit and agreeing the fee. In addi-
Dr Alexander Dibelius
Joachim Hartig
Denis Heljic
Jiang Kui
Olaf Kunz
tion, the Audit Committee exercises the rights in investee com-
panies set forth in section 32 (1) MitbestG.
The Audit Committee met five times in 2016. The main topics
discussed by the Audit Committee in 2016 were the 2015 annual
financial statements, the quarterly financial statements, the
Kay Pietsch (member and deputy chairman
budget and the regular subject of the key elements of corporate
until 31 October 2016)
Hans Peter Ring
governance within the Company.
In 2016, the members of the Audit Committee were:
Mediation Committee
Hans Peter Ring (chairman)
The Mediation Committee comprises the chairman of the Super-
Kay Pietsch (member and deputy chairman
visory Board, his deputy, an employee representative and a
until 31 October 2016)
shareholder representative. If the two-thirds-of-votes majority
Alexandra Schädler (deputy chairman
required by section 27 (3) and section 31 (3) MitbestG is not
since 1 November 2016)
reached in a vote by the Supervisory Board on the appointment
Dr John Feldmann
of an Executive Board member, the Mediation Committee must
Jörg Milla (since 1 November 2016)
propose candidates for the post to the Supervisory Board within
one month. The chairman of the Supervisory Board does not
The chairman of the Audit Committee, Hans Peter Ring, is an
have a casting vote on the candidates proposed. The Mediation
independent member and has the required expertise in the areas
Committee did not need to be convened in 2016.
of accountancy and auditing specified in sections 100 (5) and
In 2016, the members of the Mediation Committee were:
Dr John Feldmann (chairman)
Özcan Pancarci (deputy chairman)
Jörg Milla (since 1 November 2016)
Kay Pietsch (until 31 October 2016)
Hans Peter Ring
107 (4) AktG.
Nomination Committee
The Nomination Committee has four members, all of whom are
shareholder representatives and are elected by the shareholder
representatives on the Supervisory Board. The Nomination Com-
mittee’s only task is to propose new candidates for the Super-
visory Board to the Company’s Annual General Meeting. Back in
December 2015, the Supervisory Board adopted a resolution,
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Annual Report 2016 | KION GROUP AG
CORPORATE GOVERNANCE
Corporate governance report
31
following the recommendation of the Nomination Committee, to
4. Targets for the proportion of women
propose to the Annual General Meeting on 12 May 2016 that
Dr Christina Reuter be elected as a shareholder representative
Germany’s ‘Act for the equal participation of women and men
and succeed Mr Wolfgang Faden. There were no further changes
in managerial positions in the private and public sectors’ came
to the shareholder representatives on the Supervisory Board in
into force on 24 April 2015. The Act requires the supervisory
2016. In its meeting on 30 November 2016 the Nomination Com-
boards of companies that are listed or subject to equal share-
mittee resolved to propose to the Supervisory Board to propose,
holder / employee representation to define a target for the per-
jointly with the Executive Board, to the Annual General Meeting
centage of female executive board members. Also under the new
on 11 May 2017 the election of the eight incumbent shareholder
legislation, executive boards must set the targets for increasing
representatives for a new term. The Nomination Committee met
the proportion of women at the two management levels imme-
twice in 2016, both times via a conference call.
diately below the executive board. Supervisory / executive boards
must set time limits within which the targets are to be achieved.
In 2016, the members of the Nomination Committee were:
The time limits must not exceed five years. The first targets must
Dr John Feldmann (chairman)
be achieved by 30 June 2017.
Dr Alexander Dibelius (deputy chairman)
The Executive Board and Supervisory Board of KION
Birgit A. Behrendt
Jiang Kui
GROUP AG studied the new legal requirements carefully. As the
Supervisory Board was not planning any changes to the compo-
sition of the KION GROUP AG Executive Board, the target for the
Ad-hoc transaction committee
proportion of female Executive Board members was set at
In addition to the committees that existed throughout the year,
0 per cent and applies until 30 June 2017. This position did not
the Supervisory Board decided at its meeting on 10 June 2016 to
change in 2016. The Executive Board of KION GROUP AG has
establish an ad-hoc transaction committee in connection with the
set the target for the proportion of women at 10 per cent for the
acquisition of the Dematic Group. The purpose of this ad-hoc
first management level immediately below the Executive Board
transaction committee was to ensure that the Supervisory Board
and at 30 per cent for the second level of management below the
was able to participate adequately in the final phase of the trans-
Executive Board. The target at each level is also to be achieved
action. To this end, the committee was given the power to give
by 30 June 2017.
final approvals and make decisions relating both to the purchase
of the Dematic Group and to the associated financing matters
and corporate actions. The three meetings of the ad-hoc transac-
tion committee all took the form of conference calls. Following the
successful completion of the transaction, the committee was
dissolved on 31 December 2016.
The members of the ad-hoc transaction committee were:
Dr John Feldmann (chairman)
Jiang Kui
Jörg Milla (from 1 November 2016)
Özcan Pancarci
Kay Pietsch (until 31 October 2016)
Hans Peter Ring
Alexandra Schädler
KION GROUP AG | Annual Report 2016
A N E W E R A
32
EXECUTIVE BOARD AND SUPER-
VISORY BOARD SHAREHOLDINGS
AND DIRECTORS’ DEALINGS
1. Shareholdings
2. Directors’ dealings
Pursuant to section 15a of the German Securities Trading Act
(WpHG), members of the Executive Board and the Supervisory
Board and related parties are obliged to disclose transactions
involving shares in the Company or related financial instruments
(such as derivatives) if the value of these transactions reaches
€5,000 or more within one calendar year. The members of the
As at 31 December 2016, the shares in KION GROUP AG or
Company’s Executive Board and Supervisory Board did not carry
related financial instruments held directly or indirectly by all mem-
out any such transactions in 2016.
bers of the Executive Board and Supervisory Board equated to
less than 1 per cent of all the shares issued by the Company.
A N E W E R A
Annual Report 2016 | KION GROUP AG
CORPORATE GOVERNANCE
Disclosures relevant to acquisitions
33
Disclosures relevant to acquisitions,
section 315 (4) HGB
The disclosures relevant to acquisitions pursuant to section
315 (4) HGB together with the explanatory report form an inte-
gral part of the combined management report.
3. Direct or indirect shareholdings in the
Company that represent more than
10 per cent of the voting rights
1. Composition of subscribed capital
As far as the Company is aware, only Weichai Power directly or
indirectly held more than 10 per cent of the voting rights in KION
GROUP AG as at 31 December 2016 and its shareholding was
The subscribed capital (share capital) of KION GROUP AG
43.26 per cent.
amounted to €108.79 million as at 31 December 2016. It is
divided into 108.79 million no-par-value bearer shares. The
– Pursuant to the German Securities Trading Act, the share-
share capital is fully paid up. All of the shares in the Company
holding held by Weichai Power is deemed to belong to the
give rise to the same rights and obligations. Each share confers
following other companies: > TABLE 004
one vote and entitlement to an equal share of the profits. The
rights and obligations arising out of the shares are defined by
legal provisions. As at 31 December 2016, the Company held
164,468 shares in treasury. The primary intention is to offer
these treasury shares to staff as part of the KION Employee
Companies and countries to which
Weichai Power is deemed to belong
TABLE 004
Equity Programme (KEEP).
Company
Registered office
2. Restrictions on voting rights or the transfer
Weichai Group Holdings Limited
of shares
Weichai Power Co., Ltd.
Shandong Heavy Industry
Group Co., Ltd.
Jinan,
People’s Republic of China
Weifang,
People’s Republic of China
Weifang,
People’s Republic of China
The Company is not aware of any agreements entered into by
shareholders of KION GROUP AG that restrict voting rights or
the transfer of shares.
KION GROUP AG has no rights arising from the treasury
shares that it holds (section 71b AktG).
Weichai Power Hong Kong Inter-
national Development Co., Ltd.
Hong Kong,
People’s Republic of China
Other
People’s Republic of China
Registered office
Beijing,
People’s Republic of China
Since the reporting date, there may have been further changes
to the aforementioned shareholdings of which the Company is
unaware. As the shares in the Company are bearer shares, the
Company only learns about changes to the size of shareholdings
if they are notifiable pursuant to the WpHG or other regulations.
KION GROUP AG | Annual Report 2016
A N E W E R A
34
4. Shares with special rights that confer
The Supervisory Board is authorised in article 10 (3) of the
authority to exert control over the Company
articles of incorporation to amend the articles of incorporation
provided that such amendments relate solely to the wording.
There are no shares with special rights that confer the authority to
exert control over the Company.
5. Type of voting right controls in cases where
employees hold some of the Company’s
capital and do not exercise their control
rights directly
7. Authority of the Executive Board to issue or
buy back shares
The Annual General Meeting on 12 May 2016 authorised the
Company, in the period up to 11 May 2021, to acquire for treasury
up to 10 per cent of all the shares in issue at the time of the reso-
lution or in issue on the date the authorisation is exercised, which-
There are no cases where employees hold some of the Company’s
ever is the lower. Together with other treasury shares in the pos-
capital and do not exercise their control rights directly them-
session of the Company or deemed to be in its possession
selves.
6. Appointment and removal of members of
the Executive Board; amendments to the
articles of incorporation
pursuant to section 71a et seq. AktG, the treasury shares bought
as a result of this authorisation must not exceed 10 per cent of the
Company’s share capital at any time. The Company may sell the
purchased treasury shares through a stock exchange or by
means of an offer to all shareholders. It may also sell the shares in
return for a non-cash consideration, in particular in connection
with the acquisition of a business, parts of a business or equity
Members of the Company’s Executive Board are appointed and
investments. In addition, the treasury shares may be offered to
removed in accordance with the provisions of sections 84 and
employees of the Company or of an affiliated company as part of
85 AktG and section 31 MitbestG. Pursuant to article 6 (1) of the
an employee share ownership programme. The treasury shares
articles of incorporation of the Company, the Executive Board
can also be retired. Share buyback for trading purposes is pro-
must have a minimum of two members. The Supervisory Board
hibited. The authorisation may be exercised on one or more
determines the number of Executive Board members. Pursuant
occasions, for the entire amount or for partial amounts, in pursuit
to section 84 AktG and section 6 (3) of the Company’s articles of
of one or more aims, by the Company, by a Group company or by
incorporation, the Supervisory Board may appoint a Chief Exec-
third parties for the account of the Company or the account of a
utive Officer and a deputy.
Group company. At the discretion of the Executive Board, the
Section 179 (1) sentence 1 AktG requires that amendments
shares may be purchased through the stock exchange, by way of
to the articles of incorporation be passed by resolution of the
a public purchase offer made to all shareholders or by way of a
Annual General Meeting. In accordance with article 23 of the
public invitation to shareholders to tender their shares. The
articles of incorporation in conjunction with section 179 (2) sen-
authorisation to acquire shares for treasury, which existed until
tence 2 AktG, resolutions at the Annual General Meeting on
the adoption of a resolution on 12 May 2016 and had been
amendments to the articles of incorporation are passed by simple
granted by the Extraordinary General Meeting on 13 June 2013,
majority of the votes cast and by simple majority of the share cap-
was cancelled by the resolution on 12 May 2016.
ital represented in the voting unless a greater majority is specified
as a mandatory requirement under statutory provisions. The option
to stipulate a larger majority than a simple majority in any other
cases has not been exercised in the articles of incorporation.
A N E W E R A
Annual Report 2016 | KION GROUP AG
CORPORATE GOVERNANCE
Disclosures relevant to acquisitions
35
In 2016, the Company made use of the authorisation granted
ated to service the debt instruments. The 2014 authorisa-
on 12 May 2016 by the Annual General Meeting, purchasing
tion has not been used so far.
50,000 shares in the period 12 September to 27 September
2016. During the reporting year, 45,564 of the shares acquired
The 2014 Conditional Capital will be reduced by, among other
that were still in treasury were used as part of the KEEP Employee
things, the portion of the share capital attributable to shares
Equity Programme for the employees of the Company and certain
issued on the basis of the 2014 Authorised Capital. As part of the
Group companies.
capital increase in July 2016, 9.89 million new shares were issued
– On the basis of a resolution of the Company’s Annual Gen-
on the basis of the 2014 Authorised Capital. Consequently, no
more conditional capital is available on the basis of which the
eral Meeting on 19 May 2014, the Executive Board was
Executive Board would be able to issue shares.
authorised, subject to the consent of the Supervisory Board,
to increase the Company’s share capital by up to €9.89 mil-
lion by issuing up to 9.89 million new no-par-value ordinary
bearer shares for cash and / or non-cash contributions up to
and including 18 May 2019 (2014 Authorised Capital).
8. Material agreements that the Company has
signed and that are conditional upon a
change of control resulting from a takeover
bid, and the consequent effects
Based on resolutions of the Executive Board and Supervisory
Board dated 18 July 2016, the 2014 Authorised Capital was
In the event of a change of control resulting from a takeover bid,
used in full; shareholders’ pre-emption rights were disapplied.
certain consequences are set out in the following contracts (still in
The capital increase was entered in the commercial register on
force on 31 December 2016) concluded between Group compa-
20 July 2016. As part of this capital increase, the Company’s
nies of KION GROUP AG and third parties:
share capital was increased from €98.9 million to €108.79 million,
a rise of €9.89 million, as a result of issuing 9.89 million new
– Senior facilities agreement dated 28 October 2015, con-
no-par-value bearer shares. Consequently, the Executive Board
cluded between KION GROUP AG and, among others, the
currently has no further authorisation from the Annual General
London branch of UniCredit Bank AG.
Meeting to increase the Company’s share capital.
– On the basis of a resolution of the Annual General Meeting
In the event that a person, companies affiliated with this person,
or persons acting in concert within the meaning of section 2 (5) of
on 19 May 2014, the Executive Board was also authorised,
the German Securities Acquisition and Takeover Act (WpÜG)
in the period up to and including 18 May 2019, to issue con-
acquire(s) control over more than 50 per cent of the Company’s
vertible bonds, warrant-linked bonds, profit-sharing rights
voting shares, the lenders may demand that the loans drawn
and / or income bonds with or without conversion rights,
down be repaid and may cancel the loan facilities under the sen-
warrants, mandatory conversion requirements or option
ior facilities agreement.
obligations, or any combinations of these instruments
(referred to jointly as ‘debt instruments’) for a total par value
– Acquisition facilities agreement dated 4 July 2016, concluded
of up to €800 million, and to grant conversion rights and / or
between KION GROUP AG and, among others, the London
warrants to – and / or to impose mandatory conversion
branch of UniCredit Bank AG.
requirements or option obligations on – the holders / benefi-
cial owners of debt instruments to acquire up to 9.89 million
new shares of KION GROUP AG with a pro-rata amount of
the share capital of up to €9.89 million (‘2014 Authorisa-
tion’). The 2014 Conditional Capital of €9.89 million was cre-
KION GROUP AG | Annual Report 2016
A N E W E R A
36
The provisions in this agreement that apply in the event of a
9. Compensation agreements that the
change of control are identical to those in the senior facilities
agreement dated 28 October 2015.
– An agreement exists between KION GROUP AG and Volks-
Company has signed with the Executive
Board members or employees that will be
triggered in the event of a takeover bid
wagen AG for the supply of internal combustion engines.
No such agreements have been concluded between the Com-
This agreement includes a provision under which either party
pany and its current Executive Board members or employees.
may terminate the agreement without notice if there is a
change in ownership involving more than 50 per cent of
the shares in either case.
A N E W E R A
Annual Report 2016 | KION GROUP AG
CORPORATE GOVERNANCE
Remuneration report
37
Remuneration report
This remuneration report forms an integral part of the combined
Essential features of the Executive Board remuneration system
management report for KION GROUP AG. In accordance with
statutory requirements and the recommendations of the German
The remuneration of the Executive Board of KION GROUP AG is
Corporate Governance Code (DCGK) as amended on 5 May 2015,
determined in accordance with the requirements of the German
the report explains the main features and structure of the remu-
Stock Corporation Act (AktG) and the DCGK and is focused on
neration system used for the Executive Board and Supervisory
the Company’s long-term growth. It is determined so as to reflect
Board of KION GROUP AG and also discloses the remuneration
the size and complexity of the KION Group, its business and
of the individual members of the Executive Board and Super-
financial situation, its performance and future prospects, the nor-
visory Board for the work that they carried out on behalf of the
mal amount and structure of executive board remuneration in
Company and its subsidiaries in 2016. The report also reflects the
comparable companies and the internal salary structure. The
requirements of German accounting standard (GAS) 17 and HGB.
Supervisory Board also takes into account the relationship
KION GROUP AG considers that transparency and clarity sur-
between the Executive Board remuneration and the remuneration
rounding both the remuneration system itself and the remuneration
paid to senior managers and the German workforce of the Com-
of the individual members of the Executive Board and Supervisory
pany as a whole, including changes over the course of time. To
Board are fundamental to good corporate governance.
this end, the Supervisory Board has decided how the relevant
EXECUTIVE BOARD REMUNERATION
Remuneration system
benchmarks are to be defined. Other criteria used to determine
remuneration are the individual responsibilities and personal per-
formance of each member of the Executive Board. To review the
Executive Board’s remuneration, the Supervisory Board draws
on remuneration comparisons, particularly comparisons with
MDAX companies, and on recommendations from an external
remuneration consultant who is independent both of the Execu-
tive Board and of the KION Group. The Supervisory Board regu-
The Supervisory Board of KION GROUP AG is responsible for set-
larly reviews the structure and appropriateness of Executive
ting and regularly reviewing the total pay of the individual members
Board remuneration.
of the Executive Board. According to the rules of procedure for the
The total remuneration of the Executive Board comprises a
Supervisory Board, the Executive Committee prepares all Super-
non-performance-related salary and non-performance-related
visory Board resolutions pertaining to remuneration.
non-cash benefits, performance-related (variable) remuneration
The remuneration system described below has applied to
and pension entitlements. When setting the variable remunera-
the members of the KION GROUP AG Executive Board since
tion, the emphasis is on creating a measurement basis covering a
29 June 2013, the day after KION GROUP AG’s successful IPO
number of years, thus providing the members of the Executive
and listing on the Frankfurt Stock Exchange. It was approved by
Board with an incentive to contribute to the sustained and long-
the Annual General Meeting of KION GROUP AG on 19 May 2014
term growth of the Company. The system specifically allows for
with a majority of 98.77 per cent. The Supervisory Board of the
possible positive and negative developments.
former KION Holding 1 GmbH had approved this system by
The regular cash remuneration for a particular year, consist-
adopting a resolution at its meeting on 25 April 2013 in connec-
ing of a non-performance-related fixed annual salary and perfor-
tion with the Company’s conversion into a public limited com-
mance-related (variable) remuneration, has a heavy emphasis on
pany. This resolution was based on the recommendation of what
performance. If the targets set by the Supervisory Board are
was then the Human Resources Committee.
completely missed, only the fixed salary is paid. Taking account
of the cap on one-year and multiple-year variable remuneration,
the cash remuneration consists of the following components in
KION GROUP AG | Annual Report 2016
A N E W E R A
38
the event that the targets are significantly exceeded and the share
Additional special benefits
price goes up sufficiently:
– 15 per cent fixed annual salary
– 24 to 27 per cent one-year variable remuneration
– 58 to 61 per cent multiple-year variable remuneration.
Additional special benefits have been agreed for Mr Quek
because he has been sent from Singapore to China on foreign
assignment.
Under this arrangement, Mr Quek’s remuneration is struc-
tured as if he were liable for taxes and social security contribu-
The variable components of the cash remuneration make up no
tions in Singapore. KION GROUP AG pays the taxes and social
more than 85 per cent, of which approximately two-thirds are
security contributions that Mr Quek incurs in China and Germany
multiple-year components. Both the one-year and the multiple-
over and above the taxes that would theoretically apply in Singa-
year components are linked to key performance indicators used
pore. In 2016, this additional amount totalled €1,308 thousand
by the KION Group to measure its success. The remuneration
(2015: €1,299 thousand). The additional benefits also agreed with
system is thus closely tied to the success of the Company and,
Mr Quek include the cost of trips home to Singapore for him and
with a high proportion of multiple-year variable remuneration, has
his family, a company car, rental payments in Xiamen, China, and
a long-term focus aimed at promoting the KION Group’s growth.
private health insurance. In 2016, the additional benefits for Mr
The pension entitlements consist of entitlements in respect of
Quek amounted to a total of €135 thousand (2015: €158 thou-
retirement, invalidity and surviving dependants’ benefits.
sand). These additional benefits will be granted for as long as
Mr Quek’s designated place of work is Xiamen or until his service
Non-performance-related remuneration
contract with KION GROUP AG ends.
The Executive Board members of KION GROUP AG receive
non-performance-related remuneration in the form of a fixed
One-year variable remuneration
annual salary (basic remuneration) and additional benefits. The
fixed annual salary is paid at the end of each month in twelve
The one-year variable remuneration is a remuneration compo-
equal instalments, the last payment being made for the full month
nent linked to the business profitability and productivity of the
in which the Executive Board service contract ends. The Super-
KION Group in the relevant financial year. Its amount is deter-
visory Board reviews the basic remuneration at regular intervals
mined by the achievement of the following targets:
and makes adjustments if appropriate.
The additional benefits essentially comprise use of a com-
pany car and the payment of premiums for accident insurance
with benefits at a typical market level.
Performance-related remuneration
The performance-related remuneration components consist of
weighting of 30 per cent
– earnings before interest, tax and amortisation (EBITA),
– return on capital employed (ROCE), weighting of 30 per cent
– revenue, weighting of 20 per cent
– net debt, weighting of 20 per cent.
a variable remuneration component measured over one year
The target values for the financial components are derived from
(short-term incentive) and a variable remuneration component
the annual budget and specified by the Supervisory Board.
measured over several years in the form of a rolling performance
No bonus is paid if target achievement is 75 per cent or less
share plan with a three-year term (long-term incentive).
(lower target limit). In cases where the targets are significantly
exceeded, the bonus can be doubled at most (capped at
200 per cent). If the targets derived from the annual budget are
achieved in full, target achievement is 100 per cent. The target
achievement levels for the weighted targets (EBITA, ROCE,
A N E W E R A
Annual Report 2016 | KION GROUP AG
CORPORATE GOVERNANCE
Remuneration report
39
revenue and net debt) are added together to give the total tar-
In respect of the ROCE target, there is no entitlement if target
get achievement.
achievement is 75 per cent or less. If the target is significantly
The individual performance of the Executive Board members
exceeded (target achievement of 135 per cent or more), the
is assessed by the Supervisory Board, which applies a discre-
entitle ment is capped at 150 per cent. Regarding the relative TSR
tionary performance multiple with a factor of between 0.8 and
target, there is no entitlement if KION shares do not outperform
1.2. When deciding what factor to apply, the Supervisory Board
the STOXX Europe TMI Industrial Engineering Index. If the KION
looks at the extent to which the Executive Board members have
shares outperform this index by 15 per cent or more, the entitle-
achieved the individual targets set by the Supervisory Board at
ment is capped at 150 per cent. If KION shares outperform the
the start of the year. This factor enables the Supervisory Board to
STOXX Europe TMI Industrial Engineering Index by 10 per cent
increase or reduce the bonus, calculated on the basis of the total
and the ROCE targets defined each year on the basis of the
target achievement for the financial targets derived from the
budget are achieved, total target achievement will be 100 per cent.
budget, by a maximum of 20 per cent depending on the assess-
The amount paid for each tranche is determined by the final
ment of individual performance. The one-year variable remuner-
number of performance shares multiplied by the price of KION
ation is capped at 200 per cent of the contractual target bonus
shares (average price over the preceding 60 trading days) at the
and is paid after the Annual General Meeting relating to the year
end of the performance period.
in question.
Executive Board members’ individual performance is also
In the event that an Executive Board member is not entitled
taken into account in the multiple-year variable remuneration. At
to remuneration for the entire year on which the calculation is
the start of the performance period, the Supervisory Board
based, the remuneration is reduced pro rata temporis.
defines individual targets for the three-year period. Depending on
achievement of these targets, the Supervisory Board can apply a
Multiple-year variable remuneration
discretionary factor to make a final adjustment to the calculation
of the amount to be paid out at the end of the performance period
For the members of the Executive Board, multiple-year variable
by plus or minus 20 per cent, although the maximum payment
remuneration has been agreed in the form of a performance share
may not exceed 200 per cent of the allocation value.
plan. A very similar plan is offered to the Group’s senior managers.
The plan is a cash-settled long-term incentive plan that does
The basis of measurement has been defined as the total share-
not include the right to receive any actual shares. Under the
holder return (TSR) for KION shares compared with the STOXX
requirements of German accounting standard (GAS) 17, IFRS 2
Europe Total Market Index (TMI) Industrial Engineering Index and
and HGB, the total expense arising from share-based payments
return on capital employed (ROCE). Each has a weighting of
and the fair value of the performance share plan on the date of
50 per cent. The annual tranches granted under the plan have a
granting must be disclosed. > TABLE 005
term (performance period) of three years and are paid at the end
of the term, provided the defined targets have been achieved.
At the start of a performance period, a conditional entitle-
ment to a certain target number of performance shares is granted.
This preliminary number is calculated by dividing the allocation
value set out (in euros) in the service contract for the particular
Executive Board member by the fair value of one performance
share at the time of grant. At the end of the performance period,
the preliminary number of performance shares is adjusted
depending on achievement of the two targets (relative TSR and
ROCE) to give the final number of performance shares.
KION GROUP AG | Annual Report 2016
A N E W E R A
40
Performance Share Plan 2014
TABLE 005
Fair value of the
performance
share plan on the
date of grant
(in thousand €)
Number of
performance
shares granted 1
Fair value per
performance share
on date of grant
(in €)
Expense for
share-based
remuneration
in 2015 2, 3
(in thousand €)
Expense for
share-based
remuneration
in 2016 2
(in thousand €)
1,500
1,000
1,000
830
1,000
5,330
54,427
36,284
36,284
30,116
36,284
193,395
27.56
27.56
27.56
27.56
27.56
1,095
335
335
1,044
730
3,539
1,419
174
174
1,294
946
4,007
Gordon Riske
Bert-Jan Knoef 4
Theodor Maurer 4
Ching Pong Quek
Dr Thomas Toepfer
Total
1 The target number of performance shares is calculated by dividing the allocation value by the fair value of one performance share. In this calculation, the number of performance shares
is rounded to the nearest whole number where necessary.
2 The amount shown for Mr Quek includes a flat-rate allowance of 57 per cent in 2016 (2015: 50 per cent) as part of a tax equalisation agreement.
3 The amounts for Mr Knoef and Mr Maurer include the expenses recognised in the 2014 figure in connection with their departure.
4 Resigned from office on 14 January 2015; Executive Board service contract ended on 31 March 2015.
Performance Share Plan 2015
TABLE 005
Fair value of the
performance
share plan on the
date of grant
(in thousand €)
Number of
performance
shares granted 1
Fair value per
performance share
on date of grant
(in €)
Expense for
share-based
remuneration
in 2015 2, 3
(in thousand €)
Expense for
share-based
remuneration
in 2016 2
(in thousand €)
1,500
806
83
83
830
1,000
4,302
53,210
28,576
2,956
2,956
29,443
35,474
152,615
28.19
28.19
28.19
28.19
28.19
28.19
696
193
116
116
578
464
2,164
1,180
693
40
40
1,052
787
3,792
Gordon Riske
Dr Eike Böhm
Bert-Jan Knoef 4
Theodor Maurer 4
Ching Pong Quek
Dr Thomas Toepfer
Total
1 The target number of performance shares is calculated by dividing the allocation value by the fair value of one performance share. In this calculation, the number of performance shares
is rounded to the nearest whole number where necessary.
2 The amount shown for Mr Quek includes a flat-rate allowance of 57 per cent in 2016 (2015: 50 per cent) as part of a tax equalisation agreement.
3 The amounts for Mr Knoef and Mr Maurer include the expenses recognised in the 2014 figure in connection with their departure.
4 Resigned from office on 14 January 2015; Executive Board service contract ended on 31 March 2015. The fair value of the performance share plan on the date of grant was recognised
pro rata temporis up to 31 March 2015.
A N E W E R A
Annual Report 2016 | KION GROUP AG
CORPORATE GOVERNANCE
Remuneration report
41
Performance Share Plan 2016
TABLE 005
Fair value of the
performance share plan
on the date of grant
(in thousand €)
Number of
performance
shares granted 1
Fair value per
performance share
on date of grant
(in €)
Expense for share-
based remuneration
in 2016 2
(in thousand €)
1,500
1,000
830
1,000
4,330
36,179
24,120
20,019
24,120
104,438
41.46
41.46
41.46
41.46
509
339
442
339
1,629
Gordon Riske
Dr Eike Böhm
Ching Pong Quek
Dr Thomas Toepfer
Total
1 The target number of performance shares is calculated by dividing the allocation value by the fair value of one performance share. In this calculation, the number of performance shares
is rounded to the nearest whole number where necessary.
2 The amount shown for Mr Quek includes a flat-rate allowance of 57 per cent as part of a tax equalisation agreement.
The total expense in 2016 amounted to €9,429 thousand (2015:
Pension entitlements
€11,203 thousand).
Upper limits on remuneration
entitlement to a company pension plan consisting of retirement,
KION GROUP AG grants its Executive Board members direct
invalidity and surviving dependants’ benefits.
In accordance with the DCGK, remuneration is subject to upper
The Chief Executive Officer has a defined benefit entitlement
limits on the amounts payable, both overall and also in terms of
that was granted in his original service contract and was trans-
the variable components. The upper limit on the total cash
ferred to his Executive Board service contract when the Com-
remuneration to be paid, consisting of the fixed annual salary
pany changed its legal form. The amount of the entitlement is
plus the one-year and multiple-year variable remuneration,
dependent on the number of years of service and amounts to a
equals 1.7 times the target remuneration (2015: 1.7 times) –
maximum of 50 per cent of the most recent fixed annual salary
excluding the non-performance-related non-cash remuneration
awarded in the original service contract after the end of the tenth
and other benefits paid in that financial year. Both the one-year
year of service.
and the multiple- year variable remuneration are capped at
The present value of the previous defined benefit plan for the
200 per cent of the target value.
ordinary members of the Executive Board was transferred as a
starting contribution for a new defined contribution pension plan
when the Company changed its legal form. The new plan is struc-
tured as a cash balance plan and is also applied to new Executive
Board members.
KION GROUP AG | Annual Report 2016
A N E W E R A
42
For each of the other ordinary members of the Executive Board,
Executive Board members are subject to a post-contractual
a fixed annual contribution of €150 thousand (€124.5 thousand for
non-compete agreement of one year. In return, the Company
Mr Quek) is paid into their pension accounts for the duration of
pays the Executive Board member compensation for the duration
the member’s period of service on the Executive Board. Interest
of the non-compete agreement amounting to 100 per cent of his
is paid on the pension account at the prevailing statutory guaran-
final fixed salary. Other income of the Executive Board member is
teed return rate for the life insurance industry (applicable maxi-
offset against the compensation.
mum interest rate for the calculation of the actuarial reserves of
In the event that Mr Riske’s appointment is not extended for
life insurers pursuant to section 2 (1) of the German Regulation on
reasons for which he is not responsible and he has not reached
the Principles Underlying the Calculation of the Premium Reserve
the standard retirement age for the statutory pension or in the
(DeckRV)) until an insured event occurs. If higher interest is gen-
event that Mr Riske resigns for good cause before the end of his
erated by investing the pension account, it will be credited to the
appointment or suffers permanent incapacity after his period of
pension account when an insured event occurs (surplus). The
service as a result of sickness, he will receive transitional benefits
standard retirement age for the statutory pension applies. Execu-
of €288 thousand per annum on the basis of previous contracts.
tive Board members are entitled to early payment of the pension
During his current term of office, the amount of the transitional
no earlier than their 62nd birthday. In the event of invalidity or
benefits will rise by €12 thousand each year up to a maximum
death while the Executive Board member has an active service
amount of €300 thousand per annum. Severance payments in
contract, the contributions that would have been made until the
the event of early termination of his appointment without good
age of 60 are added to the pension account, although only a
cause, compensation for the post-contractual non-compete
maximum of ten annual contributions will be added. When an
agreement, pension benefits that Mr Riske receives due to his
insured event occurs, the pension is paid as a lump sum or,
previous work for other employers and income from other use of
following a written request, in ten annual instalments.
his working capacity (with the exception of remuneration for work
as a member of a supervisory or advisory board or a board of
Termination benefits
directors) will be offset against these transitional benefits.
If an Executive Board member suffers temporary incapacity,
In line with the DCGK, all Executive Board service contracts pro-
he will receive his full fixed salary for a maximum period of six
vide for a severance payment equivalent to no more than two
months plus the one-year variable remuneration. In the event of
years’ annual remuneration payable in the event of the contract
temporary incapacity for a further six months, the Executive
being terminated prematurely without good cause. The amount
Board member will receive 80 per cent of his fixed salary, but only
of annual remuneration is defined as fixed salary plus the variable
up to a point at which the service contract is terminated.
remuneration elements, assuming 100 per cent target achieve-
If an Executive Board member ceases to be employed by the
ment and excluding non-cash benefits and other additional ben-
Company as a result of death, the Executive Board member’s
efits, for the last full financial year before the end of the Executive
family will be entitled to the fixed monthly remuneration for the
Board service contract. If the Executive Board service contract
month in which the service contract ends and for the three sub-
was due to end within two years, the severance payment is cal-
sequent months, but only up to the point at which the service
culated pro rata temporis. If a service contract is terminated for
contract would otherwise have come to an end.
good cause for which the Executive Board member concerned is
responsible, no payments are made to the Executive Board mem-
ber in question. The Company does not have any commitments
for the payment of benefits in the event of a premature termination
of Executive Board contracts following a change of control.
A N E W E R A
Annual Report 2016 | KION GROUP AG
CORPORATE GOVERNANCE
Remuneration report
43
Remuneration for members of the Executive
Board in 2016
Benefits granted pursuant to the DCGK
The total remuneration granted to Executive Board members for
In accordance with the recommendations of the DCGK, as
2016 was €10,442 thousand (minimum: €3,618 thousand, maxi-
amended on 5 May 2015, the remuneration of Executive Board
mum: €17,267 thousand) (2015: €9,535 thousand). Of this
members is presented in two separate tables. Firstly, the benefits
amount, €2,372 thousand (2015: €2,098 thousand) was attribut-
granted for the year under review, including the additional bene-
able to fixed non-performance-related remuneration compo-
fits and – in the case of variable remuneration components – the
nents, €6,824 thousand (minimum: €0 thousand, maximum:
maximum and minimum remuneration achievable are shown.
€13,649 thousand) (2015: €6,372 thousand) to variable one-
> TABLE 006
year and multiple-year performance-related remuneration com-
ponents, €199 thousand (2015: €211 thousand) to non-
Secondly, > TABLE 007 shows the total remuneration allocated /
performance-related non-cash remuneration and other benefits
earned, comprising fixed remuneration, short-term variable remu-
and €1,047 thousand (2015: €854 thousand) to the pension
neration and long-term variable remuneration, broken down by
expense in accordance with IFRS. The figure shown for one-year
reference year.
variable remuneration is based on a target achievement rate of
100 per cent (minimum: 0 per cent for target achievement of
75 per cent or less, maximum: 200 per cent for target achieve-
ment of 135 per cent or more). The figure shown for multiple-year
variable remuneration is the fair value of the performance share
plans at the date of grant, representing full target achievement
(minimum: zero payment, maximum: 200 per cent of the contrac-
tual allocation value).
The additional benefits were measured at the value calcu-
lated for tax purposes. > TABLE 006
KION GROUP AG | Annual Report 2016
A N E W E R A
44
Benefits granted in 2016
Gordon Riske
CEO of KION GROUP AG
2016 (Min)
2016 (Max)
800
20
820
0
0
0
820
633
1,453
800
20
820
1,400
3,000
3,000
5,220
633
5,853
in thousand €
Non-performance-
related
components
Fixed remuneration
Non-cash remuneration and
other benefits 1
Total
Short-term
incentive
One-year variable
remuneration 2 , 3
Performance-
related
components
Share-based
long-term
incentive
Multiple-year variable
remuneration 2 , 4
Performance share plan
(1 Jan 2015 – 31 Dec 2017)
Performance share plan
(1 Jan 2016 – 31 Dec 2018)
Total
Pension expense 5
Total remuneration
Reconciliation to total remuneration as defined
by section 285 no. 9a, 314 (1) no. 6a HGB
in conjunction with GAS 17
Minus the one-year variable
remuneration granted
Plus the expected one-year
variable remuneration
(allocation)
Minus the pension expense
Plus the adjustment of the
one-year variable remunera-
tion for the previous year
Total remuneration as
defined by section 285
no. 9a, 314 (1) no. 6a HGB
in conjunction with GAS 17
2015
800
21
821
700
2016
800
20
820
700
1,500
1,500
1,500
3,021
622
3,643
1,500
3,020
633
3,653
– 700
– 700
795
– 622
756
– 633
159
80
3,275
3,156
1 Non-performance related non-cash remuneration and other benefits include expenses and / or benefits in kind, such as the use of a company car and housing costs.
2 The amount shown for Mr Quek includes a flat-rate allowance of 57 per cent (2015: 50 per cent) as part of a tax equalisation agreement.
3 The figure shown for one-year variable remuneration is based on a target achievement rate of 100 per cent (minimum: 0 per cent for target achievement of 75 per cent or less,
maximum: 200 per cent for target achievement of 135 per cent or more). The value from the year 2015 for Mr Knoef and Mr Maurer is the value defined in their termination agreements.
4 Fair value on the date of grant
5 Service cost (IAS); the service cost in accordance with the HGB is shown in TABLE 009.
A N E W E R A
Annual Report 2016 | KION GROUP AG
CORPORATE GOVERNANCE
Remuneration report
45
Dr Eike Böhm
CTO of KION GROUP AG
Since 1 August 2015
Bert-Jan Knoef
Member of KION GROUP AG Executive Board
Until 14 January 2015
TABLE 006
2015
208
14
223
167
806
806
1,195
1,195
2016
500
21
521
400
1,000
1,000
1,921
155
2,076
– 167
– 400
189
0
432
– 155
19
1,217
1,972
2016 (Min)
2016 (Max)
2015
2016
2016 (Min)
2016 (Max)
500
21
521
0
0
0
521
155
676
500
21
521
800
2,000
2,000
3,321
155
3,476
19
1
20
16
13
13
48
4
52
– 16
16
– 4
9
57
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
KION GROUP AG | Annual Report 2016
A N E W E R A
46
Benefits granted in 2016 (continued)
in thousand €
Non-performance-
related
components
Fixed remuneration
Non-cash remuneration and
other benefits 1
Total
Short-term
incentive
One-year variable
remuneration 2 , 3
Performance-
related
components
Share-based
long-term
incentive
Multiple-year variable
remuneration 2 , 4
Performance share plan
(1 Jan 2015 – 31 Dec 2017)
Performance share plan
(1 Jan 2016 – 31 Dec 2018)
Total
Pension expense 5
Total remuneration
Reconciliation to total remuneration as defined
by section 285 no. 9a, 314 (1) no. 6a HGB
in conjunction with GAS 17
Minus the one-year variable
remuneration granted
Plus the expected one-year
variable remuneration
(allocation)
Minus the pension expense
Plus the adjustment of the
one-year variable remunera-
tion for the previous year
Total remuneration as
defined by section 285
no. 9a, 314 (1) no. 6a HGB
in conjunction with GAS 17
Theodor Maurer
Member of KION GROUP AG Executive Board
Until 14 January 2015
2015
2016
2016 (Min)
2016 (Max)
19
1
20
16
13
13
48
4
52
– 16
16
– 4
9
57
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1 Non-performance related non-cash remuneration and other benefits include expenses and / or benefits in kind, such as the use of a company car and housing costs.
2 The amount shown for Mr Quek includes a flat-rate allowance of 57 per cent (2015: 50 per cent) as part of a tax equalisation agreement.
3 The figure shown for one-year variable remuneration is based on a target achievement rate of 100 per cent (minimum: 0 per cent for target achievement of 75 per cent or less,
maximum: 200 per cent for target achievement of 135 per cent or more). The value from the year 2015 for Mr Knoef and Mr Maurer is the value defined in their termination agreements.
4 Fair value on the date of grant
5 Service cost (IAS); the service cost in accordance with the HGB is shown in TABLE 009.
A N E W E R A
Annual Report 2016 | KION GROUP AG
CORPORATE GOVERNANCE
Remuneration report
47
Ching Pong Quek
Member of KION GROUP AG Executive Board /
Chief Asia Pacific Officer
Dr Thomas Toepfer
CFO of KION GROUP AG
TABLE 006
2016 (Min)
2016 (Max)
2015
552
158
710
498
2016
572
135
707
521
1,245
1,303
1,245
2,453
107
2,560
1,303
2,532
122
2,654
572
135
707
0
0
0
707
122
829
572
135
707
1,042
2015
500
17
517
400
2016
500
23
523
400
2,606
1,000
1,000
1,000
1,917
117
2,034
2,606
4,356
122
4,478
1,000
1,923
137
2,060
2016 (Min)
2016 (Max)
500
23
523
0
0
0
523
137
660
500
23
523
800
2,000
2,000
3,323
137
3,460
– 498
– 521
– 400
– 400
566
– 107
563
– 122
455
– 117
432
– 137
195
80
91
45
2,716
2,654
2,062
2,000
KION GROUP AG | Annual Report 2016
A N E W E R A
48
Allocation pursuant to the DCGK
components, €199 thousand (2015: €211 thousand) to non-per-
formance-related non-cash remuneration and other benefits and
The total remuneration allocated to / earned by Executive Board
€1,047 thousand (2015: €854 thousand) to the pension expense in
members for 2016 was €13,407 thousand (2015: €15,521 thou-
accordance with IFRS. The figure shown for one-year variable
sand). Of this amount, €2,372 thousand (2015: €2,098 thousand)
remuneration is based on a preliminary total target achievement
was attributable to fixed non-performance-related remuneration
rate of about 108 per cent calculated using preliminary earnings
components, €9,789 thousand (2015: €12,358 thousand) to varia-
figures at the beginning of 2017. This preliminary variable remuner-
ble one-year and multiple-year performance-related remuneration
ation for each Executive Board member is also subject to adjust-
Allocation in 2016
in thousand €
Non-performance-
related
components
Fixed remuneration
Non-cash remuneration
and other benefits 1
Total
Short-term
incentive
One-year variable
remuneration 2
Performance-
related
components
Share-based
long-term
incentive
Multiple-year variable
remuneration
Performance share plan 3
(29 Jun 2013 – 31 Dec 2015)
Performance share plan
(1 Jan 2014 – 31 Dec 2016)
Total
Pension expense 4
Total remuneration
Gordon Riske
Dr Eike Böhm
CEO of KION GROUP AG
CTO of KION GROUP AG
Since 1 August 2015
2015
800
21
821
875
2016
800
20
820
756
3,000
3,000
3,000
4,696
622
5,317
3,000
4,576
633
5,209
2015
208
14
223
208
0
431
431
2016
500
21
521
432
0
953
155
1,108
1 Non-performance related non-cash remuneration and other benefits include expenses and / or benefits in kind, such as the use of a company car and housing costs.
2 The figure shown for one-year variable remuneration for 2015 is the actual amount paid out, which differs from the estimated value listed in the 2015 consolidated financial statements.
3 The figure shown for multiple-year variable remuneration is the actual amount paid out, which, in Mr Quek’s case, differs from the estimated value listed in the 2015 consolidated financial statements.
4 Service cost (IAS); the service cost in accordance with the HGB is shown in TABLE 009.
A N E W E R A
Annual Report 2016 | KION GROUP AG
CORPORATE GOVERNANCE
Remuneration report
49
ment by the Supervisory Board in line with the individual perfor-
of a preliminary total target achievement rate of about 126 per cent
mance of the Executive Board member. This adjustment may vary
and is subject to the performance-based adjustment made by the
by plus or minus 20 per cent of the variable remuneration.
Supervisory Board (using a discretionary performance multiple)
For the multiple-year variable remuneration, a payment from
for individual Executive Board members. As is the case for the
the 2014 tranche of the performance share plan will be made in
one-year variable remuneration, this performance-based adjust-
spring 2017 on the basis of the achievement of the long-term tar-
ment may vary by plus or minus 20 per cent.
gets that were defined in 2014 at the start of the performance
The additional benefits were measured at the value calcu-
period. The value shown for 2016 is also calculated on the basis
lated for tax purposes. > TABLE 007
Bert-Jan Knoef
Theodor Maurer
Ching Pong Quek
Dr Thomas Toepfer
Member of KION GROUP AG
Executive Board
Member of KION GROUP AG
Executive Board
Member of KION GROUP AG
Executive Board /
Chief Asia Pacific Officer
CFO of KION GROUP AG
TABLE 007
Until 14 January 2015
Until 14 January 2015
2015
2016
2015
2016
19
1
20
16
1,255
1,255
1,290
4
1,294
–
–
–
–
–
–
–
–
–
–
19
1
20
16
1,255
1,255
1,290
4
1,294
–
–
–
–
–
–
–
–
–
–
2015
552
158
710
646
2016
572
135
707
563
2015
500
17
517
500
2016
500
23
523
432
2,587
2,606
2,000
2,000
2,587
3,944
107
4,051
2,606
3,877
122
3,998
2,000
3,017
117
3,134
2,000
2,955
137
3,092
KION GROUP AG | Annual Report 2016
A N E W E R A
50
The payments to be made in spring 2017 to two former members
In addition to the remuneration described above for Mr Knoef and
of the Executive Board from the 2014 tranche of the performance
Mr Maurer, the total remuneration paid to former members of the
share plan were also calculated on the basis of a preliminary
Executive Board amounted to €249 thousand in 2016 (2015:
total target achievement rate of about 126 per cent and amount
€230 thousand). Provisions for defined benefit obligations to for-
to €1,667 thousand. Of this total, €833 thousand is attributable to
mer members of the Executive Board or their surviving depend-
Mr Knoef and €833 thousand to Mr Maurer.
ants amounting to €9,791 thousand (2015: €8,758 thousand)
The table below shows the pension contributions (additions to the
were recognised in accordance with IAS 19.
plan) attributable to each individual Executive Board member and
In the year under review, no advances were made to mem-
their separate present values in accordance with IFRS > TABLE 008
bers of the Executive Board, and there were no loans.
and in accordance with HGB > TABLE 009.
Pension entitlements under IFRS
TABLE 008
in thousand €
Gordon Riske
Dr Eike Böhm
Bert-Jan Knoef 1
Theodor Maurer 1
Ching Pong Quek
Dr Thomas Toepfer
Service cost
2016
Service cost
2015
Present value (DBO)
31 Dec 2016
Present value (DBO)
31 Dec 2015
633
155
122
137
622
4
4
107
117
6,168
222
446
615
5,308
76
317
436
1 Resigned from office on 14 January 2015; the present value (DBO) as at 31 December 2015 was recognised under provisions for defined benefit obligations to former members of the
Executive Board or their surviving dependants in accordance with IAS 19.
Pension entitlements under HGB
TABLE 009
in thousand €
Gordon Riske
Dr Eike Böhm
Bert-Jan Knoef 1
Theodor Maurer 1
Ching Pong Quek
Dr Thomas Toepfer
Service cost
2016
Service cost
2015
Present value (DBO)
31 Dec 2016
Present value (DBO)
31 Dec 2015
481
139
102
107
415
3
4
79
78
4,176
191
347
527
3,970
68
263
335
1 Resigned from office on 14 January 2015; the present value (DBO) as at 31 December 2015 was recognised under provisions for defined benefit obligations to former members of the
Executive Board or their surviving dependants in accordance with HGB.
A N E W E R A
Annual Report 2016 | KION GROUP AG
CORPORATE GOVERNANCE
Remuneration report
51
OUTLOOK
before the start of the performance period (currently: fair value at
the start of the performance period).
The benchmark index used to calculate the total shareholder
In 2016, the Supervisory Board reviewed and updated the
return (TSR) target will be the MDAX (currently: STOXX Europe
Executive Board’s remuneration system, which had remained
Total Market Index (TMI) Industrial Engineering Index), to which
unchanged since the IPO in 2013. The Supervisory Board
KION GROUP AG belongs. In view of the share price trend that
adopted the necessary resolutions for this purpose at its meet-
has become established since the IPO in 2013, the target range
ings on 29 June 2016 and 28 September 2016.
will be adjusted so that the lower limit for the target is set at
The review was based on an analysis conducted by an exter-
0 per cent outperformance (= equal performance) and the upper
nal remuneration consultant who is independent of both the
limit (= 200 per cent target achievement) at 20 per cent outper-
Executive Board and the KION Group. It also drew on remunera-
formance. If the lower limit (= equal performance) is reached, tar-
tion comparisons, particularly with MDAX companies.
get achievement is 50 per cent and a bonus is paid. This means
On the basis of this analysis and taking account of the
that target achievement is 100 per cent if outperformance is
assumptions that it had formulated, the Supervisory Board drew
6.67 per cent (currently: lower limit if outperformance is 0 per cent,
up changes to the Executive Board remuneration system in
100 per cent target achievement if outperformance is 10 per cent
accordance with the requirement that remuneration is appro-
and upper limit if outperformance is 15 per cent).
priate and in line with normal market practice and reflecting
Similarly to the financial targets for the one-year variable
changes at KION GROUP AG since the current remuneration
remuneration, the target range for the ROCE target has been
system was introduced.
linearised and the lower and upper limits have also been
The structure of the remuneration, comprising fixed, one-
adjusted to minus 30 per cent and plus 30 per cent below / above
year variable and multiple-year variable remuneration, remains
the budgeted figure.
fundamentally unchanged. However, minor adjustments to the
The maximum possible target achievement for the two tar-
content of the individual components are to be made with effect
gets, which affects the calculation of the final number of perfor-
from 1 January 2017 in order to improve the transparency and
mance shares at the end of the performance period, has been
understandability of the system.
raised to 200 per cent (currently: 150 per cent).
The number of financial targets for the one-year variable
For the multiple-year variable remuneration, the bandwidth of
remuneration will be reduced from four to two. Starting in 2017, it
the discretionary performance multiple for evaluating the individ-
will be equally weighted between free cash flow and adjusted
ual performance of Executive Board members was also widened
EBIT. In addition, the target range has been linearised and the
to a range of 0.7 to 1.3 (currently 0.8 to 1.2). In parallel to this, the
lower and upper limits have been adjusted to minus 30 per cent
Supervisory Board has decided to increase Executive Board
and plus 30 per cent below / above the budgeted figure (pre-
members’ individual remuneration in two stages (with effect from
viously: minus 25 per cent and plus 35 per cent).
1 January 2017 and 1 January 2018) and to increase the fixed
The bandwidth of the discretionary performance multiple,
annual contribution to Dr Toepfer’s pension from 1 January 2017.
which enables the assessment of an Executive Board member’s
In addition, it was decided to introduce share ownership
individual performance to be reflected in the one-year variable
guidelines, under which individual Executive Board members are
remuneration, was widened to a range of 0.7 to 1.3 (currently:
required to hold shares worth 100 per cent of their basic remu-
0.8 to 1.2).
neration. This shareholding must be reached within four years
For the purpose of the multiple-year variable remuneration,
and held for as long as they remain on the Executive Board.
the target number of performance shares at the start of a perfor-
The amended Executive Board remuneration system will be
mance period will, from 2017, be calculated on the basis of the
put to the Annual General Meeting of KION GROUP AG for
average price of KION shares during the last 60 trading days
approval on 11 May 2017.
KION GROUP AG | Annual Report 2016
A N E W E R A
52
SUPERVISORY BOARD
REMUNERATION
Remuneration system
Based on the findings of this examination, the Supervisory
Board has decided to propose to the Company’s Annual General
Meeting that some aspects of the remuneration system of the
KION GROUP AG Supervisory Board be amended. The Super-
visory Board proposes increasing the fixed annual remuneration
of ordinary members from €45,000 to €55,000. The chairman of
the Supervisory Board is to receive three times the amount of an
The Supervisory Board’s remuneration is defined in article 18 of
ordinary member, i.e. €165,000, and the deputy is to receive
KION GROUP AG’s articles of incorporation. Members of the
two times the amount of an ordinary member, i.e. €110,000.
Supervisory Board receive fixed remuneration plus reimburse-
In view of the increased responsibility attaching to Audit
ment of out-of-pocket expenses. The annual remuneration
Committee membership and thus the greater amount of time that
amounts to €45,000 for ordinary members of the Supervisory
members are required to dedicate, the Supervisory Board also
Board, €75,000 for the deputy chairman of the Supervisory
proposes raising the remuneration of ordinary Audit Committee
Board and €105,000 for the chairman of the Supervisory Board.
members from €8,000 to €15,000 and that of the Audit Commit-
Additional remuneration is paid for being a member or chair-
tee chairman from €16,000 to €45,000.
man of a committee, although this does not apply in the case of
Furthermore, the Supervisory Board proposes increasing the
the Nomination Committee or the Mediation Committee pursuant
attendance fee for meetings of the Supervisory Board and its
to section 27 (3) of the German Codetermination Act (MitbestG).
committees from €1,250 to €1,500.
The annual remuneration for members of a committee is €8,000,
while the chairman of a committee receives double this amount.
If a member of the Supervisory Board or one of its commit-
tees does not hold their position for a full financial year, remuner-
Remuneration paid to members of the
Supervisory Board in 2016
ation is reduced pro rata temporis.
The members of the Supervisory Board receive an attend-
The total remuneration paid to the Supervisory Board in 2016 was
ance fee of €1,250 per day for meetings of the Supervisory Board
€1,165,750. Of this amount, €973,750 was attributable to remu-
and its committees, although they only receive this amount once
neration for activities carried out by the Supervisory Board. The
if they attend more than one meeting on the same day.
remuneration paid for committee work (including attendance
The Company reimburses each member for any VAT incurred
fees) totalled €192,000. The following table shows the breakdown
in connection with his or her remuneration.
of remuneration paid to each Supervisory Board member for
A D&O insurance policy without an excess has been taken
2016: > TABLE 010
out for the members of the Supervisory Board.
As the general parameters have changed significantly since
In 2016, no company in the KION Group paid or granted any
the current remuneration arrangements for the Supervisory
remuneration or other benefits to members of the Supervisory
Board were decided upon in June 2013 immediately after the IPO
Board for services provided as individuals, such as consulting or
of KION GROUP AG, the Supervisory Board decided it would be
brokerage activities. Nor were any advances or loans granted to
appropriate to also review the Supervisory Board’s remuneration
members of the Supervisory Board.
last year, in addition to that of the Executive Board. To this end, an
experienced consultancy was commissioned to examine the
appropriateness and market conformity of Supervisory Board
remuneration at KION GROUP AG.
A N E W E R A
Annual Report 2016 | KION GROUP AG
CORPORATE GOVERNANCE
Remuneration report
53
Supervisory Board remuneration
TABLE 010
Dr John Feldmann (chairman)
€105,000
€24,000
€22,500
€151,500
Fixed remuneration
Committee
remuneration
Attendance fee
Total remuneration
Özcan Pancarci (deputy chairman;
committee from 1 Nov)
Birgit Behrendt
Holger Brandt
Dr Alexander Dibelius
Wolfgang Faden (until 12 May)
Joachim Hartig
Denis Heljic
Jiang Kui*
Olaf Kunz
Jörg Milla (committee from 1 Nov)
Kay Pietsch (until 31 Oct)
Christina Reuter (from 12 May)
Hans Peter Ring
Alexandra Schädler
Tan Xuguang*
Claudia Wenzel (from 1 Nov)
Xu Ping*
Total
€75,000
€45,000
€45,000
€45,000
€18,750
€45,000
€45,000
€45,000
€45,000
€45,000
€37,500
€30,000
€45,000
€45,000
€45,000
€7,500
€45,000
€1,333
–
–
€8,000
–
€8,000
€8,000
€8,000
€8,000
€1,333
€13,333
–
€24,000
€8,000
–
–
–
€15,000
€11,250
€12,500
€15,000
€2,500
€16,250
€16,250
€17,500
€15,000
€12,500
€20,000
€6,250
€20,000
€21,250
€5,000
€2,500
€8,750
€91,333
€56,250
€57,500
€68,000
€21,250
€69,250
€69,250
€70,500
€68,000
€58,833
€70,833
€36,250
€89,000
€74,250
€50,000
€10,000
€53,750
€813,750
€112,000
€240,000
€1,165,750
* Withholding tax (pursuant to section 50a of the German
Income Tax Act (EStG))
incl. the reunification surchage was also paid over:
€62,513
€3,704
€14,471
€80,688
KION GROUP AG | Annual Report 2016
A N E W E R A
COMBINED MANAGEMENT REPORT
Contents
55
COMBINED
MANAGEMENT REPORT
56
57
57
66
69
71
71
74
90
93
PRELIMINARY REMARKS
FUNDAMENTALS OF THE KION GROUP
Profile of the KION Group
Strategy of the KION Group
Management system
REPORT ON THE ECONOMIC POSITION
Macroeconomic and sector-specific conditions
Financial position and financial performance of the KION Group
KION GROUP AG
Non-financial performance indicators
102
OUTLOOK, RISK REPORT AND OPPORTUNITY REPORT
102
104
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Outlook
Risk report
Opportunity report
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COMBINED MANAGEMENT REPORT
Contents
55
COMBINED
MANAGEMENT REPORT
56
57
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66
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93
PRELIMINARY REMARKS
FUNDAMENTALS OF THE KION GROUP
Profile of the KION Group
Strategy of the KION Group
Management system
REPORT ON THE ECONOMIC POSITION
Macroeconomic and sector-specific conditions
Financial position and financial performance of the KION Group
KION GROUP AG
Non-financial performance indicators
102
OUTLOOK, RISK REPORT AND OPPORTUNITY REPORT
102
104
111
Outlook
Risk report
Opportunity report
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56
Preliminary remarks
COMBINED MANAGEMENT REPORT
This management report combines the group management
report and the management report of KION GROUP AG. It is pub-
lished instead of a group management report in the annual report
of KION GROUP AG. In it, we report on the course of business
(including business performance), the position and the expected
development of the Group and KION GROUP AG. The combined
management report for the year ended 31 December 2016 is the
first such report to be produced. Previously, the management
report for KION GROUP AG and the group management report
for the KION Group were produced separately. Unless stated oth-
erwise, the information on the following pages refers both to the
Group and to KION GROUP AG. Sections that only contain infor-
mation on KION GROUP AG are indicated as such. The report on
the economic position includes a separate section containing dis-
closures for KION GROUP AG in accordance with the German
Commercial Code (HGB).
A N E W E R A
Annual Report 2016 | KION GROUP AG
COMBINED MANAGEMENT REPORT
Preliminary remarks
Fundamentals of the KION Group
57
Fundamentals of the KION Group
PROFILE OF THE KION GROUP
Management and control
Corporate governance
Organisational structure
The KION Group follows generally accepted standards of sound,
responsible corporate governance. The German Corporate
The KION Group is one of the world’s leading suppliers of material
Governance Code (DCGK) provides the framework for manage-
handling solutions. With a portfolio of products, technologies and
ment and control. As required by section 289a of the German
services that is unparalleled in the global market, ranging from
Commercial Code (HGB), the corporate governance standards
industrial trucks and warehouse trucks to fleet and warehouse
that the Group applies are set out in the declaration on corporate
management systems and fully automated supply chain solu-
governance. This declaration also contains the comply-or-explain
tions, the KION Group is a full-service provider catering to
statement pursuant to section 161 AktG, which was issued by the
customers of all sizes in all kinds of industries. The acquisition of
Executive Board and Supervisory Board of KION GROUP AG on
Dematic in 2016 (see page 128) also makes the KION Group the
14 December 2016, and the corporate governance report pursuant
intralogistics partner of choice for Industry 4.0.
to section 3.10 of the German Corporate Governance Code,
With around 30,000 highly qualified employees and four
which also provides information about the compliance standards
international brands, Linde, STILL, Dematic and Baoli, the KION
in the Group. The declaration on corporate governance can be
Group is represented in more than 100 countries and in all of the
viewed and downloaded on the Company’s website. It also forms
major market and price segments. More than 1.2 million industrial
part of this annual report.
trucks and over 6,000 installed systems are deployed by custom-
The essential features of the remuneration system are
ers in all industries and of all sizes on six continents.
described in the remuneration report, which is part of the 2016
The KION Group comprises the parent company KION
combined management report and can be found in the ‘Remu-
GROUP AG, which is a public limited company under German
neration report’ section of this annual report. The total amounts
law, and its subsidiaries. The KION Group’s strategic manage-
for Executive Board remuneration and Supervisory Board remu-
ment holding company, KION GROUP AG, is listed on the Frankfurt
neration are reported in the notes to the consolidated financial
Stock Exchange and is part of the MDAX, the STOXX Europe
statements (note [45]).
600 and the FTSE Euro Mid Cap. Details of treasury shares
(pursuant to section 160 (1) no. 2 of the German Stock Corpora-
Disclosures relevant to acquisitions
tion Act (AktG)) are provided in note [28] ‘Equity’ in the notes to
the financial statements of KION GROUP AG.
The disclosures relevant to acquisitions (pursuant to section 315 (4)
The strategic anchor shareholder of KION GROUP AG is
HGB) together with the explanatory report form an integral part of
Weichai Power (Luxembourg) Holding S.à r.l., Luxembourg, a
the combined management report and can be found in the ‘Dis-
subsidiary of Weichai Power Co. Ltd., which held 43.3 per cent of
closures relevant to acquisitions’ section of this annual report.
the shares at the end of 2016 as far as the Company is aware. The
free float accounted for 56.6 per cent of the shares, while the
Executive Board
remaining 0.1 per cent were treasury shares.
The Executive Board of KION GROUP AG is responsible for
the operational management of the KION Group. As before, it
had four members at the end of 2016. In July 2016, the Super-
visory Board of KION GROUP AG extended the appointment
of Chief Executive Officer Gordon Riske by a further five years
to 30 June 2022.
KION GROUP AG | Annual Report 2016
A N E W E R A
58
During the year under review, the responsibilities of the Executive
Formed at the end of 2015, the Group Executive Committee
Board members were adjusted to reflect changes to the Group’s
(GEC) advises the Executive Board of KION GROUP AG and pro-
structure. The steering of the Industrial Trucks & Services, Supply
vides input from the operating units. The committee comprises
Chain and Corporate Services segments is the joint responsibility
the Executive Board members as well as the presidents of the
of the entire Executive Board. The segment Industrial Trucks &
operating units. The President and Chief Executive Officer of
Services, following the acquisition of Dematic, encompasses
Dematic joined the GEC with effect from 1 November 2016.
activities relating to industrial trucks plus supporting financial ser-
The Executive Board maintains a relationship of trust with,
vices. The industrial truck business in the segment Industrial
and is monitored by, the Company’s Supervisory Board.
Trucks & Services is made up of four operating units – Linde Mate-
rial Handling EMEA (LMH EMEA), STILL EMEA, KION Americas
Supervisory Board
and KION APAC – in order to do even more to meet the specific
customer and market requirements of the world’s key regions and
The Supervisory Board, which was formed in accordance with
to leverage cross-brand synergies. The KION Group’s second
the German Codetermination Act (MitbestG), comprises 16 peo-
segment is now Supply Chain Solutions, which has been signifi-
ple. It advises the Executive Board in its handling of significant
cantly strengthened by the arrival of Dematic and constitutes the
matters and business transactions. To increase the efficiency of
fifth operating unit, Dematic, which also includes Egemin Automa-
its work, the Supervisory Board is supported by four committees:
tion and Retrotech.
the Nomination Committee, the Executive Committee, the Audit
As at 31 December 2016, the responsibilities of the Execu-
Committee and the Mediation Committee.
tive Board members were as follows:
The Annual General Meeting elected Dr Christina Reuter to
– Gordon Riske, Chief Executive Officer (CEO), is responsible
the Supervisory Board on 12 May 2016. She replaced Wolfgang
Faden, who stepped down from the Supervisory Board. In addi-
for the LMH EMEA, STILL EMEA, and KION Americas oper-
tion, Mr Kay Pietsch resigned from his position as a member of
ating units in the Industrial Trucks & Services segment and
the KION GROUP AG Supervisory Board with effect from
the Dematic operating unit in the Supply Chain Solutions
31 October 2016. Ms Claudia Wenzel, deputy chairwoman of the
segment. He also remains in charge of the following group
plants I & II work council at Linde Material Handling GmbH,
functions: corporate strategy, corporate communications,
Aschaffenburg, was appointed by the courts to succeed
corporate office, internal audit, corporate compliance and
Mr Pietsch as an employee representative on the Supervisory
KION Warehouse Systems.
– Dr Eike Böhm, in his role as Chief Technology Officer (CTO),
has groupwide responsibility for research and development
Board of KION GROUP AG with effect from 1 November 2016.
(R&D) and for product strategy, including innovation, the pro-
Business model
duction system, quality & operations and purchasing.
– Ching Pong Quek, Chief Asia Pacific Officer, heads up the
The KION Group’s business model is designed so that customers
KION APAC operating unit and thus the entire Asia business
of all sizes and from all kinds of industries can obtain the full
within the Industrial Trucks & Services segment.
– Dr Thomas Toepfer is Chief Financial Officer (CFO) and his
spectrum of material handling products and services from a
single source. Thanks to its broad technology base, diversified
responsibilities include corporate accounting & tax, finan-
product portfolio and worldwide service network, the KION
cial services, corporate finance, corporate controlling, cor-
Group has the most comprehensive portfolio of such products
porate HR / Labour Relations Director, legal affairs, KION
and services in the market.
Group IT, data protection, health, safety & environment and
The KION Group divides its business into two segments for
logistics / Urban.
management purposes: Industrial Trucks & Services, which cov-
ers activities relating to industrial trucks plus supporting financial
A N E W E R A
Annual Report 2016 | KION GROUP AG
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Fundamentals of the KION Group
59
services, and Supply Chain Solutions, which focuses on intelli-
requirements, the segment manufactures major components
gent supply chain and automation solutions. The two segments
itself – notably lift masts, axles, counterweights and safety equip-
of the KION Group complement each other as they each have a
ment. Other components – such as hydraulic components,
strong market position and regional presence, which opens up
electronic components, rechargeable batteries, engine compo-
opportunities for increasing revenue. The Supply Chain Solutions
nents and industrial tyres – are purchased through the global
segment makes use of the service network and the reputation of
procurement organisation.
the brands of the industrial truck business in key markets such as
As a rule, industrial trucks are built according to the custom-
Europe, China and Brazil, while the Industrial Trucks & Services
er’s individual specifications. Advantages for customers in terms
segment benefits from the strong standing of the supply chain
of total cost of ownership (TCO) underpin the international Linde
solutions business in the US and European automation markets.
and STILL brands’ premium positioning. The trucks’ hallmarks
Aligning the products and services with customers’ requirements
are cost-efficiency, high productivity and high residual values.
will be a focus project within the Group’s strategy (see page 66)
The international Baoli brand serves the lower end of the volume
in the years ahead, culminating in an integrated, customer-cen-
segment and the economy segment.
tric KION Group business model.
The segment is underpinned by an extensive sales and ser-
vice network comprising around 1,400 outlets in over 100 coun-
Industrial Trucks & Services segment
tries and staffed by approximately 16,000 service employees.
Around half of them are employed by the KION Group. In other
So that it can fully cater to the needs of material handling custom-
cases, the operating units rely on external dealers.
ers worldwide, the business model of the Industrial Trucks &
The worldwide vehicle fleet, which comprised more than
Services segment covers key steps of the value chain: product
1.2 million industrial trucks at the end of 2016, provides a stable
development, manufacturing, sales and logistics, spare parts
basis for the spare parts, maintenance and repair business. The
business, truck rental and used trucks, fleet management and
service business, which includes financial services, helps to
financial services that support the core industrial truck business.
smooth out fluctuations in the segment’s revenue and reduces
The segment operates a multi-brand strategy involving the
dependency on market cycles. This business also strengthens
three international brands Linde, STILL and Baoli plus the three
customer relationships, thereby helping to generate sales of new
national brands Fenwick, OM STILL and Voltas.
trucks. Extensive supplementary services are offered, mainly for
The segment earns a good half of its revenue by selling
premium products. However, the proportion of service business
industrial trucks. The product portfolio includes counterbalance
is continually increasing in the other price segments too.
trucks powered by an electric drive or internal combustion engine,
There are also individual orders for repairs and maintenance
warehouse trucks (ride-on and hand-operated) and towing vehi-
work as well as for spare parts. In addition, the segment looks
cles for industrial applications. It covers all load capacities, from
after entire customer fleets, using special software to monitor the
one to 18 tonnes. Worldwide research and development activi-
trucks in the fleets and to enable customers to efficiently manage
ties (R&D) enable the Industrial Trucks & Services segment to
their fleets.
consolidate its technology leadership, which it is extending in the
The operating units also have extensive used truck and rental
areas of innovative, energy-efficient and low-emission drive tech-
truck businesses, allowing peaks in capacity requirements to be
nologies and hydrostatic and diesel-electric drive systems. In this
met and customers to be supported after their leases have
field, the KION Group operates a total of 15 production facilities
expired.
for industrial trucks and components in eight countries. Produc-
Financial services support new truck business in many mar-
tion got under way at the new factory in Stříbro, which is near
kets, forming another pillar of the service business. About half of
Plzeň in the Czech Republic, during the year under review. So that
all new trucks are financed via the KION Group itself or via exter-
it can ensure security of supply and the availability of spare parts
nal banks and dealers. Offering financial services is therefore part
for important components in order to meet customers’ specific
of the truck sales process, and end customer finance is generally
KION GROUP AG | Annual Report 2016
A N E W E R A
60
linked to a service contract throughout the term of the finance
The (new) project business (business solutions) covers every
agreement. In the main sales markets with a high volume of
phase of a new installation: analysis of the customer’s needs and
financing and leasing, financial activities are handled by legally
the general parameters, provision of appropriate advice, computer
independent financial services companies. These activities
simulation of bespoke intralogistics solutions in the customer’s
include long-term leasing to customers and internal financing of
individual environment, technical planning and design of the sys-
the operating units’ short-term rental fleets.
tem, implementation of the control technology and its integration
into the customer’s existing IT infrastructure, site and project man-
Supply Chain Solutions segment
agement, plant monitoring and support for the customer during
implementation of the system, including training for the workforce.
The Supply Chain Solutions segment, with its Dematic operating
The system components, which are specified in detail for
unit, is a strategic partner to customers in a variety of industries,
each customer project, such as automatic guided vehicles, pal-
supplying them with integrated technology and software solutions
letisers, storage and picking equipment including automated
with which to optimise their supply chains. Manual and automated
storage and retrieval systems, sorters and conveyors, are manu-
solutions are provided for all functions along customers’ supply
factured inhouse at ten production facilities or, in some cases, by
chains, from goods inward and multishuttle warehouse systems
quality-assured third parties.
to picking and automated palletising. Picking equipment con-
The breadth of this offering allows the segment to offer a
trolled by radio, voice or light is available for nearly all goods and
one-stop shop for modernisation work and services (customer
packaging types, whether it is used for case, individual item, split-
solutions), which usually cover the entire lifetime of an installa-
case or pallet picking. Automated storage and retrieval systems
tion. The installed base of 6,000 or so systems provides signifi-
(ASRS) such as RapidStore and high-performance picking sta-
cant potential for this business, including on-site support pro-
tions (RapidPick) can be used to achieve very fast throughput
vided by approximately 1,700 employees in around 30 countries.
times and picking rates. At the same time, cross-docking solu-
> DIAGRAM 003
tions increase the efficiency of the system as a whole by eliminat-
ing the unnecessary handling and storage of goods.
Real-time management of the supply chain solutions is based
on the proprietary, open software platform Dematic iQ, which can
be easily integrated into customers’ existing application land-
scape. Dematic iQ offers much more than traditional warehouse
management systems, helping with the data-based optimisation
of all processes to ensure seamless order processing. It also sup-
ports performance management functions for measuring and
controlling performance.
Through its Dematic, Egemin Automation and Retrotech
brand companies, this segment is primarily involved in customer-
specific, longer-term project business. With global resources, ten
production facilities worldwide and regional teams of experts,
Dematic is able to plan and deliver logistics solutions with varying
degrees of complexity anywhere in the world.
A N E W E R A
Annual Report 2016 | KION GROUP AG
COMBINED MANAGEMENT REPORT
Fundamentals of the KION Group
61
Production sites of the KION Group
Production sites of the KION Group
DIAGRAM 003
Zwijndrecht
Châtellerault
Offenbach
Reutlingen
Milan
Hamburg
Bielefeld
Geisa
Kahl
Aschaffenburg
Luzzara
Stříbro
Český Krumlov
Weilbach
Industrial Trucks & Services
Brazil
Indaiatuba / São Paulo: Counterbalance trucks with electric drive
or IC engine, warehouse technology
China
Jingjiang: Counterbalance trucks with electric drive or IC engine,
warehouse technology
Xiamen: Counterbalance trucks with electric drive or IC engine,
heavy trucks, warehouse technology
Germany
France
Châtellerault: Warehouse technology
India
Pune: Counterbalance trucks with electric drive or IC engine,
warehouse technology
Aschaffenburg: Counterbalance trucks with electric drive or
IC engine, warehouse technology
Geisa: Component production
Italy
Luzzara: Warehouse technology
Czech Republic
Hamburg: Counterbalance trucks with electric drive or IC engine,
warehouse technology, components
Český Krumlov: Component production
Stříbro: Warehouse technology
Kahl: Spare parts warehouse, component production
United States
Reutlingen: Very narrow aisle trucks
Weilbach: Component production
Summerville: Counterbalance trucks with electric drive or
IC engine, warehouse technology
KION GROUP AG | Annual Report 2016
A N E W E R A
62
Supply Chain Solutions
Supply Chain Solutions
Australia
Australia
Sydney: Conveyors and sorters, storage and retrieval systems,
Sydney: Conveyors and sorters, storage and retrieval systems,
picking systems, automated guided vehicle systems,
picking systems, automated guided vehicle systems,
system components, mainly racking
system components, mainly racking
Belgium
Belgium
Zwijndrecht: Automated guided vehicle systems
Zwijndrecht: Automated guided vehicle systems
China
China
Suzhou: Conveyors and sorters, storage and retrieval systems,
Suzhou: Conveyors and sorters, storage and retrieval systems,
picking systems
picking systems
Germany
Germany
Bielefeld: Conveyors and sorters
Bielefeld: Conveyors and sorters
Offenbach: Conveyors and sorters, storage and retrieval systems,
Offenbach: Conveyors and sorters, storage and retrieval systems,
picking systems
picking systems
Italy
Italy
Milan: Conveyors and sorters
Milan: Conveyors and sorters
Mexico
Mexico
Monterrey: Conveyors and sorters, storage and retrieval systems,
Monterrey: Conveyors and sorters, storage and retrieval systems,
picking systems
picking systems
United States
United States
Grand Rapids: Conveyors and sorters, system components,
Grand Rapids: Conveyors and sorters, system components,
mainly for loading trailers
Holland: Automated guided vehicle systems
Salt Lake City: Conveyors and sorters, storage and retrieval
systems, picking systems, automated guided vehicle systems,
system components, mainly RapidPick
Pune
Holland
Grand Rapids
Salt Lake City
Summerville
Monterrey
Indaiatuba
Jingjiang
Suzhou
Xiamen
Sydney
A N E W E R A
Annual Report 2016 | KION GROUP AG
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Fundamentals of the KION Group
63
Market and influencing factors
Influencing factors in the Industrial Trucks & Services segment
Industrial trucks and warehouse systems are essential elements
Measured in terms of unit sales of new trucks, the growth of the
in the production and logistics processes of many manufacturers
market for industrial trucks has exceeded global economic
as well as in wholesale and retail. The main growth drivers are the
growth over the past ten years (2006–2016), rising at an average
advancing interconnectivity of the global economy and speciali-
of 3.3 per cent per year. However, it should be noted that these
sation of companies, which require additional transport services
statistics do not include price effects or the contribution from the
between what are becoming increasingly fragmented value
service business.
chains and supply chains. Moreover, complex processes are
Measured in terms of units ordered, 37.6 per cent of the
increasingly being digitalised as part of Industry 4.0, calling for
global market was attributable to IC trucks in 2016, while electric
intelligent and connected trucks and logistics solutions.
forklift trucks accounted for 17.4 per cent and warehouse trucks
Both segments are exposed to the industry’s cyclical fluctua-
for 45.0 per cent. Due to more stringent emissions regulations
tions. Economic conditions in the different regions and the rates
and the expansion of e-commerce, the KION Group expects the
of growth in global trade are therefore key influencing factors for
segmentation of the market to shift even more towards electric
the KION Group. Nonetheless, the market for material handling
forklift trucks and warehouse trucks, which are particularly suita-
solutions is a global growth market whose rates of expansion in
ble for use in buildings. In the developed economies, these two
recent years have consistently exceeded the pace of global eco-
product categories – in which the KION Group is particularly
nomic growth. The economic situation is also affected by compe-
strongly positioned – already account for the bulk of the market
tition levels, exchange rates and changes in commodity prices.
volume. By contrast, counterbalance trucks with an internal com-
Another important influencing factor is the economic develop-
bustion engine (diesel trucks) make up a comparatively high pro-
ment of individual customer segments. The most important and
portion of the total volume in growth regions.
fastest-growing of these is the e-commerce sector. Increasing
In emerging markets, demand for logistics services on the
complexity, cost pressures and shifting customer expectations
back of increasing consumer spending is being fuelled by the
require shorter lead times, an optimum flow of goods, lower
expansion of industrial and public infrastructure as well as rising
inventories and process reliability.
living standards. In mature markets, where supply chains are
Regulatory frameworks have a major impact on the business
highly sophisticated, the large number of trucks in use provides
model, both in the Industrial Trucks & Services segment and in
a strong base for replacement business and high demand for
the Supply Chain Solutions segment. The products and services
services. The KION Group estimates that a high proportion of
of companies in the KION Group have to comply with the specific
sales in western Europe are accounted for by replacement
legal requirements in their respective markets. Compliance with
investments.
the different requirements has to be verified or certified. Many of
In the long-term, due to rising customer expectations in terms
the legal requirements are enshrined in product-specific standards
of quality, efficiency and eco-friendliness of industrial trucks, the
and other norms (e.g. EN, ISO and DIN).
middle (volume) price segment is likely to become increasingly
Legal requirements also apply to the construction and oper-
important for the growth markets in particular. At the same time,
ation of production facilities, including in relation to air pollution
there is mounting competitive pressure as some manufacturers in
avoidance, noise reduction, waste production & disposal and
the economy segment based in emerging markets are pursuing
health & safety. Furthermore, the KION Group fulfils all of the legal
an international expansion strategy. In the premium segment,
provisions pertaining to exports and financing business.
customers are much more focused than before on optimising
total cost of ownership and on the integration of fully automated
intralogistics solutions. In 2016, according to the KION Group’s
estimates, the premium price segment and the economy price
segment each accounted for between 25 per cent and 30 per cent
KION GROUP AG | Annual Report 2016
A N E W E R A
64
of units ordered in the market for industrial trucks. The remainder
In 2016, the Industrial Trucks & Services segment achieved a
was attributable to the volume price segment, making it the larg-
15.0 per cent share of the global market based on unit sales
est in terms of units sold.
(2015: 15.0 per cent) and is thus the second-largest manufacturer
of industrial trucks. At the same time, the KION Group is the
Influencing factors in the Supply Chain Solutions segment
world’s leading producer of electric forklift trucks. It remained the
market leader across all product categories in Europe. The KION
The market for automation solutions has seen average annual
Group also became the top manufacturer in India. In China, it is
growth of around 8 per cent in the five years (2010 – 2015) accord-
still the leading foreign manufacturer and number three overall.
ing to the Modern Materials Handling website, which measured
And in Brazil, the KION Group is the number one for electric fork-
the revenue of the 20 largest manufacturers and took account of
lift trucks and warehouse trucks.
minor consolidation effects. This market therefore expanded at a
Based on the Modern Materials Handling’s ranking the Sup-
much faster rate than global economic output.
ply Chain Solutions segment with Dematic, Egemin and Retro-
The growth of e-commerce is the main influence on demand
tech together rank as one of the three largest suppliers. Dematic
for automated supply chains. According to market analysis by the
is a leading provider of automated technology for supply chains,
E-Commerce Foundation, global online trading expanded at an
while Egemin Automation has a particularly high profile in the
average rate of around 22 per cent between 2012 and 2016. The
fields of automated warehouse systems and automated guided
market research institution eMarketer forecasts that the volume
vehicle systems.
will more than double again by 2020. This calls for new, more
decentralised warehouse and logistics capacity that enables
faster deliveries and, due to automated processes, keeps down
The segments and their products and services
personnel expenses and floor space costs.
The digitalisation and automation of production and supply
The KION Group’s market activities are divided into five operating
chains in the context of Industry 4.0 and the multichannel strate-
units: LMH EMEA, STILL EMEA, KION APAC, KION Americas
gies being adopted in traditional industries – e.g. supermarket
and Dematic. While the operating units have full operational and
chains, grocery wholesale and retail, fashion, food and beverage
commercial responsibility within their markets, KION GROUP AG
manufacturing, and parcel and courier services – are also con-
is the strategic management holding company and is responsible
tributing to the growing need for ever more efficient supply chain
for the groupwide strategy and groupwide business standards.
solutions. This calls for concepts and solutions that help manu-
During the year under review, the segment structure was
facturers, retailers, wholesalers and service providers to keep up
amended in line with the changed internal management struc-
with rapidly changing consumer requirements. Technological
tures following the completion of the Dematic acquisition.
progress, e.g. in the field of robot-operated picking systems, is
Dematic has only been included for two months. For internal
also fuelling buy-in for automation concepts.
management purposes, the KION Group has divided its operat-
Market position
ing business into two segments that correspond to segments,
as required by international financial reporting standards
(IFRS 8). The KION Group overall has three segments, which are
also presented retrospectively for the 2015 financial year. The
The KION Group is a global leader in industrial trucks, related ser-
industrial truck business, including the supporting financial ser-
vices and supply chain solutions. Across more than 100 countries
vices, is now shown in the Industrial Trucks & Services segment,
worldwide, it designs, builds and supports logistics solutions that
while activities focusing on automated supply chain solutions
optimise the flow of material and information within factories,
make up the Supply Chain Solutions segment. Egemin Automa-
warehouses and distribution centres.
tion (including Retrotech, which was acquired in 2016) now
belongs to the Supply Chain Solutions segment, which is
A N E W E R A
Annual Report 2016 | KION GROUP AG
COMBINED MANAGEMENT REPORT
Fundamentals of the KION Group
65
Segment overview
in € million
Industrial Trucks & Services
Supply Chain Solutions
Corporate Services
Consolidation / reconciliation
Total
Revenue
Adjusted EBIT ¹
Employees ²
2016
5,202.6
366.0
242.0
– 223.4
5,587.2
2015
5,044.7
33.0
219.4
– 199.3
5,097.9
2016
586.9
6.0
305.9
– 361.5
537.3
2015
529.5
2.0
153.3
– 202.0
482.9
2016
23,064
6,810
670
–
30,544
23,506
TABLE 011
2015
22,637
323
545
–
1 Adjusted for PPA items and non-recurring items
2 Number of employees (full-time equivalents) as at balance sheet date 31/12/
headed up by Dematic. The Corporate Services segment com-
consists of forklift trucks and warehouse trucks plus associated
prises the other activities and holding functions of the KION
services, including automation and fleet management.
Group. > TABLE 011
Baoli is the international brand for the lower end of the volume
segment and the economy segment. Building on its base in China
Industrial Trucks & Services segment
and other growth markets in Asia, it is expanding its sales struc-
tures in Europe as well as in Central, South and North America.
The Industrial Trucks & Services segment encompasses the
Voltas is the national brand company for the Indian market,
activities of the brands Linde, STILL, Fenwick, OM STILL, Baoli
through which the KION India Pvt. Ltd. subsidiary manufactures
and Voltas plus the financial services business. The industrial
and sells electric and IC forklift trucks and warehouse trucks.
truck business has been organised into four operating units to
KION Financial Services (FS) is an internal funding partner for
ensure efficient and close cooperation across all regions and
the industrial trucks business, providing finance solutions to sup-
brands: LMH EMEA and STILL EMEA, which each concentrate
port sales. Its activities comprise the financing of long-term leas-
on Europe, the Middle East and Africa, plus KION APAC and
ing business for external customers, the internal financing of the
KION Americas, which hold cross-brand responsibility for the
short-term rental business and the related risk management. In
Asia-Pacific region and the Americas respectively.
the large sales markets with a high volume of financing and leas-
Linde is an international premium brand and a technology
ing, legally independent FS companies handle this business.
leader. Among its other selling points, it meets customers’ highest
requirements regarding technology, efficiency, functionality and
design. The product portfolio ranges from warehouse trucks to
heavy trucks and caters to all of the major application areas. In
France, Linde products are sold under the Fenwick brand.
STILL is predominantly an international premium provider of
trucks with electric and diesel-electric drives. It mainly focuses on
the European and Latin American markets, with the national
brand OM STILL serving the Italian market. The STILL portfolio
KION GROUP AG | Annual Report 2016
A N E W E R A
66
Supply Chain Solutions segment
From a technological perspective, the focus is on incorporat-
ing intelligent industrial trucks and fleet management services
The Supply Chain Solutions segment brings together the activi-
into integrated, automated and bespoke supply chain solutions
ties of the Dematic, Egemin Automation and Retrotech brands.
using the Dematic iQ software platform. To this end, Dematic will
The Dematic operating unit is responsible for the shared, cross-
be integrated into the KION Group’s tried-and-tested global CTO
brand market presence of the portfolio of automated supply
structure (see page 96).
chain solutions.
In sales, priority will be given to joint business development
Dematic is a leading global supplier of advanced integrated
on the basis of combined portfolios. Dematic can make use of the
automation technology as well as software and services for opti-
comprehensive sales and service organisation of Linde and STILL
mising supply chains and meeting customers’ supply chain solu-
in Europe while, conversely, Dematic’s strong market position in
tion requirements. Its portfolio of products and systems com-
North America and elsewhere should help to stimulate the truck
prises automated guided vehicle systems, palletisers, storage
business outside Europe.
and picking equipment including automated storage and retrieval
At the same time, the intelligent alignment of the production
systems, sorters and conveyors, a leading integrated software
infrastructure and shared use of corporate services should
platform and automation technologies. The offerings from
increase efficiency across the Group. This is expected to gener-
Egemin, which focuses on automated guided vehicle (AGV) sys-
ate cost synergies equating to 1 – 2 per cent of Dematic’s revenue
tems, and Retrotech, which specialises in modernising storage
within the next two to three years.
and retrieval systems and in retrofitting systems, enhance and
Overall, this action plan should generate profitable growth in
complement Dematic’s products and services.
the two segments, balance out the revenue structure and, at the
same time, secure their technological position.
Corporate Services segment
The Corporate Services segment comprises holding companies
Objectives of the Strategy 2020
and other service companies that provide services such as IT and
logistics across all segments.
The Strategy 2020 continues to provide the guiding framework for
STRATEGY OF THE KION GROUP
the KION Group. Although originally formulated for what is now
the Industrial Trucks & Services segment, it sets out the objec-
tives for the entire Group:
– Growth: The KION Group wants to accelerate its growth. To
this end, it is strengthening its leading position in the Euro-
The successful acquisitions of Egemin Automation, Retrotech and
pean market and, at the same time, capturing significant
Dematic marked the start of the process to refine the KION Group
market share in growth markets, particularly those in Asia
Strategy 2020. This will provide the basis for updating the Strat-
and North America. In the Industrial Trucks & Services seg-
egy 2020 over the course of 2017. Besides continuing with the
ment, the KION Group aims to close the gap on the global
growth strategy in the segments, the overarching objective of the
market leader by 2020. This is to be accompanied by a far
strategy is to systematically unlock the potential for cross- selling
and synergies, thereby continually increasing the benefits for cus-
greater presence in the largest price segment (volume).
– Profitability: The KION Group aims to further improve its EBIT
tomers. This potential arises from their complementary techno-
margin in order to entrench its position as the most profitable
logical position with compatible software solutions, different
supplier in the market. In doing so, it aims to improve its EBIT
regional coverage, large installed base of truck fleets and supply
margin so that it is permanently in the double-digit range –
chain solutions, and the combined strength in sales and service.
A N E W E R A
Annual Report 2016 | KION GROUP AG
COMBINED MANAGEMENT REPORT
Fundamentals of the KION Group
67
a target that has remained unchanged in communications
Global modular and platform strategy
since the IPO.
– Efficient use of capital: The KION Group is working stead-
Further development of the multi-brand strategy requires the
product portfolio to be managed end to end on the basis of the
fastly to optimise the return on capital employed (ROCE).
global modular and platform strategy. At the start of the reporting
Besides increasing earnings, the focus here is on how assets
year, the technical functions were brought together into a central
and finance are to be managed going forward.
– Resilience: The KION Group aims to improve its ability to
KION organisation under the new CTO Executive Board role.
Dematic was integrated into this organisation following its acqui-
cope with economic downturns. It is therefore also diversify-
sition in November.
ing its business in terms of regions and customer sectors
In the volume and economy segments outside western
alongside its efforts to optimise the production network and
Europe, the KION Group’s Industrial Trucks & Services segment
expand the service business.
is working with cross-brand, cost-efficient platforms for product
development and production that are also allowing a strong
degree of regional differentiation in the industrial trucks business.
Strategic focus areas of the Strategy 2020
New platforms were created and products brought to market for
electric forklift trucks, diesel trucks and warehouse trucks once
The Strategy 2020 essentially encompasses six closely related
again in 2016. The ongoing refinement of the Baoli platform and
areas of focus.
Multi-brand strategy
its localisation for different regional markets are particularly
important in the volume segment. In western Europe, the pre-
mium brands, Linde and STILL, will continue to use different plat-
The starting point is the further development of the successful
forms in order to maintain the defining characteristics of their
multi-brand strategy throughout the Group. This will ensure that
brands, but will increasingly deploy shared modules.
the Industrial Trucks & Services segment is represented in all
The current focus in the Supply Chain Solutions segment is
regions and price segments. The premium brands, Linde and
on synchronising the various types of automated guided vehicle
STILL, are continuing to consolidate their presence at the upper
(AGV) systems on one technology platform. Going forward, the
end of the volume segment on the basis of the platform strategy,
cross-segment integration of software on the basis of Dematic iQ
particularly in North America, South America and Asia. Especially
will be extremely important.
in the premium segment and at the upper end of the volume seg-
ment, seamless integration into customer-specific logistics solu-
Global production network
tions is playing an increasingly important role. IT-based assis-
In the Industrial Trucks & Services segment, the KION Group
tance systems, such as fleet data management and truck control
strives to build its industrial trucks close to the markets in which
systems, also look set to bolster sales of trucks, primarily in the
they will be sold. To this end, production facilities worldwide are
premium segment. As an international brand, Baoli will position
being efficiently integrated – harnessing economies of scale and
itself in the economy segment and at the lower end of the volume
ensuring a high level of capacity utilisation. A programme of cap-
segment with a product and sales strategy that is tailored to
ital expenditure is aimed not only at updating and expanding
regional requirements.
existing plants but also at establishing factories in new locations.
Following the multi-brand strategy, Dematic will remain the
During the reporting year, further progress was made on
leading brand in the Supply Chain Solutions segment. The
modernising the plants in Aschaffenburg (Linde) and Hamburg
Egemin Automation and Retrotech brands will be retained but as
(STILL), with a clear focus on increasing capacity, improving pro-
part of the Dematic portfolio. Overall, the leading position in sup-
cesses and containing costs. A total of around €83 million will
ply chain solutions is to be further strengthened.
have been made available for these projects between 2014 and
2021. Both sites are also working closely with the plant in Stříbro
(near Plzeň in the Czech Republic), which commenced production
KION GROUP AG | Annual Report 2016
A N E W E R A
68
of warehouse trucks in January 2016. The Aschaffenburg plant
The Supply Chain Solutions segment is gearing its portfolio
now focuses on making electric and diesel trucks and has been
to the specific needs of the high-growth customer segments and
able to structure its production processes more efficiently.
regions. Building on its solid position in the North American
Capacity at non-European sites is also continually adjusted and
market, the segment plans to make use of the strong sales and
processes optimised in response to market growth. For example,
service network for industrial trucks in order to expand its foot-
the KION North America plant in Summerville is being expanded
print in the European and Asian markets.
for the production of electric forklift and IC trucks as well as ware-
house trucks in order to close gaps in the portfolio.
Aftersales and service business
In the Supply Chain Solutions segment, the site in Monterrey
The KION Group’s strategy for aftersales and service aims to
(Mexico) opened in 2014 has joined the global production net-
unlock more of the potential offered by the installed base,
work. The assembly plant serves the North American market
which is expanding worldwide. This will help to boost revenue.
alongside the Grand Rapids site in Michigan (United States),
To this end, the Company is continually broadening its portfolio
focusing on conveyor belts, sorting equipment and multishuttle
of services and improving their quality at every stage of the
racking systems.
product lifecycle.
The KION Group is progressively extending its comprehen-
Regional growth strategies
sive service offering in the Industrial Trucks & Services segment
Having enhanced its multi-brand strategy and its modular and
to also cover the volume and economy segments in high-growth
platform strategy, as well as increasing integration between
markets. Financial services are also a key component of the ser-
the sites in its production network, the KION Group has put
vice portfolio as they support the KION Group’s core industrial
everything in place to increase its market share in strategically
business. The Company intends to further increase its market
important regions.
share by opening additional service outlets in attractive growth
The Industrial Trucks & Services segment mainly focuses on
markets and stepping up the short-term rental business.
North America and China. In North America, one of the largest
The Supply Chain Solutions segment plans to increasingly
markets for industrial trucks, the segment aims – including by cap-
provide services, e.g. for modernising logistics processes, that
italising on Dematic’s market presence – to move from being a
complement its project business.
niche provider to a major market player offering a full portfolio of
products by 2020. This will enable it to capture an increasing share
Back-office functions
of this growing market. The various platforms are being specially
The KION Group is aligning its corporate services, which provide
adapted to the American market within the context of the cross-
back-office support across the Group, with the growing require-
brand approach. For example, Baoli introduced products specifi-
ments of the global organisation in order to leverage economies
cally for the lower price segment in the reporting year. As well as
of scale and synergies. For example, KION Group IT was restruc-
expanding the range of products, KION North America is also
tured as a global shared services organisation in the reporting
strengthening the sales and service network, which encompassed
year and has begun to further standardise and pool its processes
more than 70 partners at around 220 sites at the end of 2016.
and infrastructure. In order to keep the costs of the expanded
The segment is also looking to gain additional market share
service offering low, the operating units will be integrating their
in the high-growth markets, including through new products for
administrative tasks more closely.
the volume segment that have been developed on the basis of
Baoli’s economy platform. New electric forklift trucks and ware-
house trucks are being developed, primarily for China’s fast-
growing e-commerce sector. Linde and STILL are pooling their
sales activities in Brazil, the most important sales market in South
America, in view of the difficult situation in this market.
A N E W E R A
Annual Report 2016 | KION GROUP AG
COMBINED MANAGEMENT REPORT
Fundamentals of the KION Group
69
MANAGEMENT SYSTEM
ing so that growth drivers and pertinent trends can be identified
and analysed at an early stage. 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.
Core key performance indicators
The KION Group’s strategy, which centres on value and growth,
is reflected in how the Company is managed. It uses five core key
Adjusted EBIT
Earnings-related KPI
performance indicators (KPIs) to continuously monitor market
The key figure used for operational management and analysis of
success, profitability, financial strength and liquidity. The perfor-
the KION Group’s financial performance is adjusted earnings
mance targets of the Group and the segments are based on
before interest and tax (EBIT). It is calculated in the same way as
selected financial KPIs, as is the performance-based remunera-
EBIT, except that it does not take account of purchase price allo-
tion paid to managers. As a rule, the KPIs are measured and
cation effects or any non-recurring items.
made available to the Executive Board in a comprehensive report
each month. This enables the management team to take prompt
Liquidity-related KPI
corrective action in the event of variances compared with target
figures. > TABLE 012
Free cash flow
KPIs related to business volume
It is determined by the KION Group’s operating activities and
Free cash flow is the main KPI for managing leverage and liquidity.
Order intake and revenue
investing activities. Free cash flow does not include interest aris-
ing from financing activities. Carefully targeted management of
Order intake and revenue are broken down by segment, region
working capital and detailed planning of capital expenditure are
and product category in the KION Group’s management report-
used to help in controlling the level of free cash flow.
Key performance indicators
in € million
Order intake
Revenue
Adjusted EBIT ¹
Free cash flow
2016
2015
2014
5,833.1
5,215.6
4,771.2
5,587.2
5,097.9
4,677.9
537.3
482.9
442.9
– 1,850.0
332.7
305.9
1 Adjusted for PPA items and non-recurring items
TABLE 012
ROCE
6.8%
11.9%
11.4%
KION GROUP AG | Annual Report 2016
A N E W E R A
70
ROCE
in € million
Total assets
– less selected assets¹
– less selected liabilities ²
Capital employed
EBIT normalised
ROCE
TABLE 013
2015
6,440.2
– 1,126.7
– 1,261.9
4,051.6
482.9
11.9%
2016
11,359.2
– 1,460.8
– 2,003.5
7,894.9
537.3
6.8%
1 Lease receivables, income tax receivables, cash and cash equivalents, PPA items and several items of other financial assets respectively other assets
2 Sundry other provisions, trade payables, a major part of other liabilities as well as several items of other financial liabilities
Profitability-related KPI
ROCE
Return on capital employed (ROCE) is another core KPI. It is the
ratio of adjusted EBIT to capital employed. ROCE is measured
annually and reported to the Executive Board. > TABLE 013
Other key performance indicators
Besides the aforementioned core KPIs, the KION Group uses a
variety of additional financial KPIs. The main ones are net debt,
which is used to manage the capital structure, and the EBIT mar-
gin, which together with ROCE is relevant as a component of
remuneration and as a target in the Strategy 2020. There are also
non-financial KPIs, which primarily relate to customers, employ-
ees, sustainability and technology. Some of them are used oper-
ationally as leading indicators for the financial KPIs.
The KPIs used to manage the segments are order intake, rev-
enue and adjusted EBIT.
A N E W E R A
Annual Report 2016 | KION GROUP AG
COMBINED MANAGEMENT REPORT
Report on the economic position
71
Report on the economic position
MACROECONOMIC AND
SECTOR-SPECIFIC CONDITIONS
Macroeconomic conditions
Kingdom’s referendum on whether to leave the European Union
did not have any significant impact on the eurozone in 2016.
The UK economy remained fairly steady on the whole, although
heightened uncertainty caused companies to scale back cap-
ital expenditure.
Following a very weak start to the year, the United States saw
its growth pick up significantly in the second half of the year
In 2016, the global economy expanded at a slower rate than in the
thanks to a positive trend in the job market and strong domestic
previous year due to weaker growth in the United States, the
demand. Exports were also better than expected.
European Union and China. Growth in global trade also persisted
In China, the growth rate slowed moderately – as had been
at a low level in 2016 and fell well short of expectations. The influ-
anticipated – and the shift away from industry towards the service
encing factors were the weaker economies of the major emerging
sector continued. Domestic consumption remained robust, partly
markets China and Brazil as well as declining US imports. In addi-
because of the government’s economic stimulus package.
tion, companies also held back on capital equipment spending
Particularly in the second half of the year, the Chinese economy
due to the uncertain prospects. However, consumer spending
expanded at a faster rate again than in the previous months.
was encouraging – as it had been in 2015.
Although Russia’s growth continued to slow in 2016, it showed
The economies of the European Union registered modest
signs of stabilising at the end of the year. The Brazilian market’s
growth, albeit slightly slower than in the previous year. Nonethe-
sharp downtrend persisted despite improved sentiment among
less, companies viewed their situation much more optimistically
consumers and companies following a change of leadership.
again at the end of the year. The surprising outcome of the United
> DIAGRAM 004
Gross domestic product in 2016 – real year-on-year change
DIAGRAM 004
INDIA
CHINA
WORLD
EU
GERMANY
UNITED STATES
JAPAN
RUSSIA
BRAZIL
– 3.4%
2.2%
1.8%
1.8%
1.6%
1.0%
– 0.6%
7.1%
6.7%
– 4.0%
– 3.0%
– 2.0%
– 1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
Source: Oxford Economics (as at 13 January 2017)
KION GROUP AG | Annual Report 2016
A N E W E R A
72
Sectoral conditions
small increase of 2.4 per cent in North America. Brazil, the largest
individual market in South America, contracted by 17.0 per cent,
Intralogistics, with its products and solutions for the flow of mate-
which was a slower rate than in 2015. Other major South Ameri-
rial, information and goods within companies, was again a global
can markets declined too, although Central America made gains.
growth market in the reporting year. An integral element of the
The Chinese market rallied strongly, advancing by 14.0 per cent.
market as a whole, the global market for industrial trucks also
This was the result of the tightening of emissions standards at the
expanded in 2016 and registered a year-on-year increase of
start of 2016 and a better macro economic situation in the second
7.5 per cent in new truck orders (2015: 1.0 per cent). The total
half of the year. Moreover, many companies benefited from the
number of trucks ordered across all regions and product types
government’s infrastructure spending. > TABLE 014
was 1.2 million (2015: 1.1 million). Market growth in intralogistics
system business also remains strong.
Growth in the systems business was attributable to companies’
The number of warehouse trucks sold rose sharply with
sustained capital expenditure on expanding and renewing their
growth of 12.9 per cent. This sector particularly benefited from
warehousing and logistics capacity. Booming online sales,
the sustained high demand for small, simple trucks. The signifi-
changes in customer needs and the growing use of Industry 4.0
cant increase in electric forklift trucks (up by 7.5 per cent) was
technologies were mainly responsible for the continued healthy
partly driven by ever-stricter emissions standards and advances
level of demand for logistics systems.
in battery technology. Demand for IC trucks rose slightly thanks to
According to the Logistics and Real Estate study published
the recovery of the Chinese market (up by 1.7 per cent). Unit sales
by bulwiengesa AG, the space used for logistics in Germany has
in Europe advanced rapidly to reach a record high on the back of
increased by an average annual rate of more than 8 per cent over
double-digit growth of 12.8 per cent. In western Europe, order
the past five years. There is a similarly positive trend in China and
numbers were up by 11.8 per cent in 2016, with all of the major
the United States. It is not only e-commerce-focused players but
markets except the United Kingdom registering significant gains.
also traditional retailers, manufacturers and third-party logistics
With an increase of 9.3 per cent, Germany lagged behind the
providers (3PL) that are investing in automated logistics centres in
market as a whole, but Italy and Spain generated above-average
order to align their infrastructure with the additional growth in
growth. Eastern Europe saw a sharp rise of 19.0 per cent, primar-
online shopping and faster delivery times.
ily thanks to the recovery of the Russian market. There was a
Global industrial truck market (order intake)
in thousand units
Western Europe
Eastern Europe
Middle East and Africa
North America
Central and South America
Asia-Pacific
World
Source: WITS / FEM
A N E W E R A
2016
359.9
63.7
34.6
240.9
40.3
445.8
2015
321.9
53.5
37.7
235.2
42.5
411.6
1,185.2
1,102.4
TABLE 014
Change
11.8%
19.0%
– 8.2%
2.4%
– 5.2%
8.3%
7.5%
Annual Report 2016 | KION GROUP AG
COMBINED MANAGEMENT REPORT
Report on the economic position
73
Procurement markets
Business performance
The price of steel, the most important commodity for the KION
The KION Group substantially improved its competitive position in
Group, rose slightly in 2016 as demand in China picked up again.
2016 by making targeted strategic acquisitions.
Copper prices were once more below the average for the pre-
On 1 November 2016, the KION Group successfully com-
vious year, although they rose sharply at the end of 2016. The oil
pleted its takeover of Dematic, a leading specialist in automation
price was also down year on year but began to rise sharply
and supply chain optimisation. The purchase consideration for
following OPEC’s decision in early December to cut output. In
100 per cent of the shares in Dematic came to €2.2 billion. The
overall terms, producer prices for input goods in the eurozone fell
acquisition was financed with a bridge loan that had been
slightly although prices for commodities went up significantly in
arranged with a number of banks beforehand. In July, a capital
the fourth quarter.
Financial markets
increase generated gross proceeds of around €459.3 million,
which have already been used to reduce the amount that the
Group needed to draw down under the bridge loan. In this corpo-
rate action, the pre-emption rights of the existing shareholders
were disapplied and KION GROUP AG increased its share capital
The KION Group bills a large part of its revenue in euros. In 2016,
by 10.0 per cent for cash, fully utilising the available authorised
the proportion was 60.8 per cent, which was slightly below the
capital. All 9,890,000 new shares were placed at a price of €46.44
prior-year level due to the consolidation of Dematic (2015:
each, which was determined by means of an accelerated book-
62.1 per cent). The remaining 39.2 per cent of revenue was billed
building process for institutional investors. Weichai Power, the
in foreign currencies, most notably China’s renminbi and pound
anchor shareholder of KION GROUP AG, acquired 5,934,000, or
sterling. The significance of the US dollar also increased as a
60.0 per cent, of the new shares. Institutional investors bought
result of the consolidation of Dematic.
the remaining shares in the accelerated bookbuilding process.
Overall, currency effects had a negative impact on the KION
Back in March 2016, the KION Group expanded its capabili-
Group’s business situation in 2016. Against the Chinese renminbi,
ties in the provision of automated warehousing systems by
the euro was approximately 5 per cent higher on average than in
acquiring Retrotech, a company based in North America. Retro-
2015. The euro appreciated by around 13 per cent against pound
tech is a subsidiary of Egemin US and therefore, like Dematic,
sterling and by 4 per cent against the Brazilian real. The average
forms part of the new Supply Chain Solutions segment. The pur-
US dollar exchange rate in 2016 was roughly the same as in 2015.
chase consideration amounted to approximately €25.0 million.
> TABLE 015
Currencies
Average rate per Euro
Australia (AUD)
Brazil (BRL)
China (CNY)
United Kingdom (GBP)
U.S.A. (USD)
Source: Reuters / Bloomberg
TABLE 015
2015
1.48
3.70
6.98
0.73
1.11
2016
1.49
3.86
7.35
0.82
1.11
KION GROUP AG | Annual Report 2016
A N E W E R A
74
STILL EMEA acquired its Norwegian dealer Roara AS, thereby
material handling solutions will enable it to benefit extensively
strengthening its market position in Scandinavia. All the operating
from the growth in Intralogistics 4.0.
activities in that region are now brought together in the company
In 2016, the KION Group generated revenue of around
STILL Norge AS. In Portugal, STILL has pooled its activities by
€5.6 billion, thereby exceeding the equivalent figure in 2015 of
establishing a separate presence in the country and is making
€5.1 billion by 9.6 per cent despite significant negative currency
use of the sales and distribution structures provided by the
effects. When adjusted for Dematic, which was reported for the
Spanish company STILL S.A.U. Customers are benefiting from
first time in November/December, revenue rose by 4.5 per cent.
new products, for example in the areas of automation, software
The groupwide order book, which had a value of €2.2 billion at the
solutions and intralogistics services, and are being offered com-
end of 2016 (31 December 2015: €864.0 million), will serve as a
prehensive local customer relationship management.
sound basis for future growth and also includes the order book
At the beginning of 2016, the KION Group also opened a
acquired with Dematic.
new plant near the Czech town of Stříbro close to Plzeň. The
Total revenue in the Industrial Trucks & Services segment
plant has the capacity to produce 12,000 warehouse trucks a
went up by 3.1 per cent to €5,202.6 million. The order intake was
year and operates as a smart factory based on digitally con-
also 4.6 per cent higher year on year, one of the reasons being the
nected systems. Initially, the facility will build reach trucks for the
excellent sustained level of orders in Europe. The segment was
Linde brand.
able to generate significant growth from new trucks, service busi-
In addition, LMH EMEA has opened a new spare parts distri-
ness and also financial services, more than offsetting the nega-
bution centre, again in the Czech Republic, in the city of Brno.
tive effects from currency movements. Measured in terms of units
LMH EMEA is therefore also continuing to expand its service
sold, the brands in the segment kept pace overall with the strong
activities in the fast-growing market of central and eastern Europe.
growth in the global market. Significant drivers behind the growth
In Brazil, the premium brands STILL and LMH have responded
in the industrial trucks business included truck deliveries and fleet
to the market contraction by merging their sales and distribution
management solutions in connection with e-commerce.
operations. This is helping the KION brands not only to benefit
The Supply Chain Solutions segment generated total reve-
from a fall in fixed costs but also to improve their chances of gain-
nue of €366.0 million, which equated to an increase of €333.0 mil-
ing market share in the key South American sales market.
lion compared with 2015. This rise in revenue was largely attribut-
At the same time, the international economy brand Baoli
able to Dematic, the lead company in the segment, and to
started production at the KION plant in Indaiatuba with the aim of
Retrotech, which was also acquired in the year under review. The
opening up a new market segment in Latin America. At the end of
revenue from Dematic was only included for two months, and that
the year under review, 30 dealers were already selling Baoli trucks.
from Retrotech for ten months (2015: Egemin Automation for five
FINANCIAL POSITION AND FINANCIAL
PERFORMANCE OF THE KION GROUP
months). The revenue was primarily accounted for by call-off
orders under ongoing engineering projects, some of which cover a
number of years. The revenue was recognised on a pro rata basis
using the percentage of completion method. The order intake of
€431.2 million related to project business for the most part.
EBIT, adjusted for non-recurring items, came to €537.3 mil-
lion, a year-on-year increase of 11.3 per cent. After taking into
Overall assessment of the economic situation
account purchase price allocation (PPA) effects, among other
things in connection with the KION and Dematic acquisitions, and
The KION Group is a global leader in industrial trucks, warehouse
further non-recurring items, EBIT amounted to €434.8 million.
technology, related services and supply chain solutions. It now
In total, the KION Group generated net income for the year of
has a unique portfolio of products, technologies and services in
€246.1 million (2015: €221.1 million). The earnings per share
the global market and its positioning as a full-service provider of
attributable to the shareholders of the KION Group amounted to
A N E W E R A
Annual Report 2016 | KION GROUP AG
COMBINED MANAGEMENT REPORT
Report on the economic position
75
€2.38 compared with €2.20 in 2015. KION GROUP AG will pro-
the upper third of the target corridor of €510 million to €535 mil-
pose a dividend of €0.80 per share to the Annual General Meeting
lion; the adjusted EBIT margin of 9.9 per cent significantly
(2015: €0.77 per share).
Comparison between actual and forecast
growth
exceeded the equivalent figure for 2015, as forecast. Including
Dematic, adjusted EBIT amounted to €537.3 million, slightly
higher than the specified corridor. This led to an adjusted EBIT
margin of 9.6 per cent and therefore to an improvement com-
pared with 2015. Free cash flow excluding Dematic, which was
projected to fall within the range of €280 million to €320 million,
In the past year, the KION Group was able to fully met the fore-
amounted to €317.5 million at the end of the year and was there-
casts for 2016 specified in the outlook section of the 2015 group
fore at the top end of this range. The effects from the Dematic
management report – even without taking into account the effects
acquisition led to a negative free cash flow of €1,850.0 million
arising from the acquisition of Dematic. The order intake of
overall. In line with expectations, return on capital employed
€5,553.0 million (excluding Dematic) was slightly in excess of the
(ROCE) excluding the Dematic acquisition rose slightly to
target range of €5,350 million to €5,500 million. With Dematic
12.4 per cent; with the inclusion of Dematic for two months,
included, order intake was higher than the specified band at
ROCE was 6.8 per cent and therefore below the corresponding
€5,833.1 million. Revenue excluding Dematic amounted to
figure for 2015. The following table shows the results achieved by
€5,327.7 million, coming in at the upper end of the target range of
the KION Group (both excluding and including the effects associ-
€5,200 million to €5,350 million, whereas including Dematic, the
ated with the acquisition of Dematic) compared against forecasts.
revenue of €5,587.2 million exceeded the forecast band. Adjusted
> TABLE 016
EBIT without Dematic amounted to €527.2 million and was thus in
Comparison between actual and forecast growth
TABLE 016
in € million
Order intake
Revenue
Adjusted EBIT
Free cash flow
ROCE
Outlook 2016
5,350 – 5,500
5,200 – 5,350
510 – 535
280 – 320
slightly above previous year
KION Group 2016
(excl. Dematic)
KION Group 2016
(incl. Dematic)
5,553.0
5,327.7
527.2
317.5
12.4%
5,833.1
5,587.2
537.3
– 1,850.0
6.8%
KION GROUP AG | Annual Report 2016
A N E W E R A
76
Business situation and financial performance
of the KION Group
Level of orders
€5,097.9 million. The share accounted for by the Supply Chain
Solutions segment was €364.7 million or 6.5 per cent. Currency
effects reduced revenue by €105.2 million. Overall, the proportion
of groupwide external revenue accounted for by services was
43.7 per cent (2015: 44.6 per cent). > TABLE 017
Order intake rose to €5,833.1 million, up by 11.8 per cent on the
prior-year level (2015: €5,215.6 million). Egemin Automation,
Revenue by customer location
Retrotech (from March 2016) and Dematic (from November 2016),
which together form the Supply Chain Solutions segment, con-
The increase in revenue in the KION Group was predominantly
tributed a total of €431.2 million to the order volume. Negative
attributable to the sound performance of the Industrial Trucks &
currency effects reduced order intake by €108.8 million. The
Services segment in western Europe, particularly in France, Italy
order book expanded year on year by €1,380.6 million to
and Germany. The segment’s revenue in eastern Europe also
€2,244.7 million (31 December 2015: €864.0 million). The huge
grew substantially. The significant rise in revenue in North America
leap was mainly caused by the inclusion of Dematic’s order book
was mainly attributable to the Supply Chain Solutions segment
on the reporting date.
Revenue
and its pro rata contribution to revenue from Dematic. Based on
the KION Group as a whole, 23.3 per cent of external revenue in
the reporting period (2015: 24.7 per cent) was accounted for by
fast-growing markets. Overall, 76.4 per cent of revenue (2015:
External revenue generated by the KION Group amounted to
75.0 per cent) was generated outside Germany. > TABLE 018
€5,587.2 million, an increase of 9.6 per cent on the 2015 figure of
Revenue with third parties by product category
in € million
Industrial Trucks & Services
New business
Service business
– Aftersales
– Rental business
– Used trucks
– Other
Supply Chain Solutions
Business Solutions
Service business
Corporate Services
Total revenue
2016
5,200.5
2,860.3
2,340.2
1,363.8
558.3
285.8
132.4
364.7
263.9
100.7
22.1
2015
5,044.4
2,779.9
2,264.5
1,347.0
524.1
270.4
122.9
33.0
25.7
7.4
20.5
5,587.2
5,097.9
TABLE 017
Change
3.1%
2.9%
3.3%
1.2%
6.5%
5.7%
7.7%
> 100%
> 100%
> 100%
7.7%
9.6%
A N E W E R A
Annual Report 2016 | KION GROUP AG
COMBINED MANAGEMENT REPORT
Report on the economic position
77
Revenue with third parties by customer location
in € million
Western Europe
Eastern Europe
Middle East and Africa
North America
Central and South America
Asia-Pacific
Total revenue
2016
3,982.7
459.6
100.3
295.9
148.6
600.1
2015
3,724.1
432.0
92.9
119.6
143.4
585.8
5,587.2
5,097.9
TABLE 018
Change
6.9%
6.4%
7.9%
> 100%
3.6%
2.4%
9.6%
Earnings and profitability
EBIT, EBITDA and ROCE
from purchase price allocation – especially that relating to
Dematic – and because of the non-recurring transaction costs
associated with the Dematic acquisition. The non-recurring items
Earnings before interest and tax (EBIT) improved by 2.8 per cent
in 2015 amounting to €33.0 million related mainly to expenses
to €434.8 million (2015: €422.8 million). Although there was a
and impairment losses in connection with the efficiency meas-
growth-related rise in gross profit, selling and administrative
ures initiated under the Strategy 2020.
expenses also increased. Generally, the earnings figures went up
EBIT adjusted for non-recurring items and purchase price
as a result of the acquisition of Dematic, which was included in
allocation effects (adjusted EBIT) amounted to €537.3 million
each of the figures for the first time, but only for two months. In
(2015: €482.9 million). The adjusted EBIT margin improved to
addition, functional costs rose because of the negative effects
9.6 per cent (2015: 9.5 per cent). > TABLE 019
EBIT
in € million
EBIT
+ Non-recurring items
+ PPA items
Adjusted EBIT
2016
434.8
42.2
60.4
537.3
2015
422.8
33.0
27.0
482.9
TABLE 019
Change
2.8%
27.8%
> 100%
11.3%
KION GROUP AG | Annual Report 2016
A N E W E R A
78
As a consequence of the inclusion of Dematic for two months,
expenses were higher than in the prior year (€355.9 million) for a
return on capital employed (ROCE) was 6.8 per cent (2015:
number of reasons, including consultancy expenses incurred in
11.9 per cent). While adjusted EBIT increased, there was also a
connection with the Dematic acquisition. Research and develop-
substantial rise in capital employed.
ment costs in the same period increased year on year to
Earnings before interest, tax, depreciation and amortisation
€96.5 million (2015: €89.7 million). The ‘other’ item came to
(EBITDA) reached €889.5 million, compared with €824.2 million in
€52.3 million (2015: €43.6 million). This included the share of profit
the prior year. Adjusted EBITDA rose to €931.6 million (2015:
(loss) of equity-accounted investments, which amounted to a
€850.0 million). This equated to an adjusted EBITDA margin of
profit of €6.5 million (2015: profit of €10.6 million) as well as gains
16.7 per cent. > TABLE 020
and losses from exchange differences. > TABLE 021
Key influencing factors for earnings
Net financial income / expenses
The cost of sales rose by 10.4 per cent to €4,034.6 million (2015:
The net financial expenses representing the balance of financial
€3,655.1 million). Gross profit amounted to €1,552.6 million, up by
income and financial expenses increased by €3.1 million year on
7.6 per cent on the 2015 figure of €1,442.8 million. The gross mar-
year to €95.7 million (2015: net financial expenses of €92.6 mil-
gin was 27.8 per cent compared with 28.3 per cent in 2015.
lion). Non-recurring financial expenses of €25.7 million arose in
Selling expenses grew by 7.2 per cent to €662.4 million in
February 2016 as a result of the new financing structure, but
2016 (2015: €618.0 million) as a result of the stepping up of sales
these have already been fully offset by the optimised financing
activities – also in connection with the inclusion of Egemin Auto-
arrangements put in place during the reporting year. The bridge
mation for the whole of the year and as a result of the acquisition
loan drawn down to finance the Dematic acquisition led to a
of Dematic and Retrotech. At €411.2 million, administrative
higher interest cost in the fourth quarter of 2016.
EBITDA
in € million
EBITDA
+ Non-recurring items
+ PPA items
Adjusted EBITDA
2016
889.5
42.2
0.0
931.6
2015
824.2
25.8
0.0
850.0
TABLE 020
Change
7.9%
63.5%
– 100.0%
9.6%
A N E W E R A
Annual Report 2016 | KION GROUP AG
COMBINED MANAGEMENT REPORT
Report on the economic position
79
(Condensed) income statement
in € million
Revenue
Cost of sales¹
Gross profit
Selling expenses and administrative expenses
Research and development costs¹
Other
Earnings before interest and taxes (EBIT)
Net financial expenses
Earnings before taxes
Income taxes
Net income
2016
5,587.2
– 4,034.6
1,552.6
– 1,073.6
– 96.5
52.3
434.8
– 95.7
339.2
– 93.1
246.1
2015
5,097.9
– 3,655.1
1,442.8
– 973.9
– 89.7
43.6
422.8
– 92.6
330.2
– 109.2
221.1
TABLE 021
Change
9.6%
– 10.4%
7.6%
– 10.2%
– 7.6%
20.0%
2.8%
– 3.3%
2.7%
14.7%
11.3%
1 Last year figures were adjusted due to a change in presentation in 2016, for details see note [7] to the consolidated financial statements
Income taxes
The Executive Board and the Supervisory Board propose to
Income tax expenses amounted to €93.1 million (2015: €109.2 mil-
the Annual General Meeting to be held on 11 May 2017 that an
lion). The tax rate was 27.4 per cent (2015: 33.1 per cent).
amount of €86.9 million be appropriated from the distributable
profit of KION GROUP AG for the 2016 financial year of €129.2 mil-
Net income and appropriation of profit
lion for the payment of a dividend of €0.80 per dividend-bearing
Net income amounted to €246.1 million, up by 11.3 per cent on
share. It is also proposed that a further sum of €42.3 million be
the 2015 figure of €221.1 million. Net income of €245.5 million
transferred to other revenue reserves and that €0.1 million be car-
(2015: €217.1 million) was attributable to the shareholders of
ried forward to the next accounting period. It is therefore planned
KION GROUP AG. Basic earnings per share came to €2.38 (2015:
to distribute 35 per cent of the net income accruing to KION
€2.20) based on 103.2 million (2015: 98.7 million) no-par-value
GROUP AG shareholders in dividends.
shares. Diluted earnings per share came to €2.38 (2015: €2.20)
based on an average number of shares of 103.3 million (2015:
98.7 million) during the year. These calculations did not include
around 164.5 thousand no-par-value treasury shares that had
been repurchased by KION GROUP AG as part of a buy-back to
support the KION Employee Equity Programme.
KION GROUP AG | Annual Report 2016
A N E W E R A
80
Business situation and financial performance
of the segments
Revenue
Total segment revenue went up by 3.1 per cent to €5,202.6 mil-
lion. The main factor behind the increase was higher unit sales of
Industrial Trucks & Services segment
new trucks, primarily in Germany, France, Italy and eastern
Europe. This more than made up for a fall in revenue in the United
Business performance and order intake
Kingdom, Brazil and Asian countries. Overall, new truck busi-
The brand companies in the Industrial Trucks & Services segment
ness with external customers rose to €2,860.3 million (2015:
increased orders for new trucks by 7.5 per cent to 178.3 thousand
€2,779.9 million), with electric forklift truck business continuing
units. Of this total, 61.3 per cent was accounted for by the Linde
to expand.
brand including Fenwick, 33.0 per cent by the STILL brand
Revenue from external customers in the service business
including OM STILL and the remaining 5.7 per cent by the brands
was up by 3.3 per cent to €2,340.2 million (2015: €2,264.5 mil-
Baoli and Voltas. The KION Group was able to benefit in particular
lion). The proportion of external revenue in the Industrial Trucks &
from the growth in electric forklift trucks and warehouse trucks,
Services segment accounted for by service business came to
which already account for more than 80 per cent of order intake.
45.0 per cent overall (2015: 44.9 per cent).
Orders for IC trucks fell slightly year on year but stabilised to a
significant extent in the second half of the year. Substantial
Earnings
growth occurred in some regions, primarily the European mar-
The positive trend in revenue combined with the margin improve-
kets, China and North America. However, orders fell in Central
ments in new truck business resulted in adjusted EBIT of
and South America, a consequence of the persistently weak mar-
€586.9 million, which was significantly higher than in the prior year
ket situation in Brazil.
(2015: €529.5 million). Consequently, the adjusted EBIT margin for
The total value of order intake rose by 4.6 per cent to
the segment increased to 11.3 per cent (2015: 10.5 per cent). Even
€5,383.2 million (2015: €5,146.3 million). Growth was generated
after taking into account non-recurring items and purchase price
from both new trucks and service business. Some of the gains
allocation effects, EBIT was significantly higher year on year at
were offset by negative currency effects.
€553.0 million (2015: €482.5 million).
Key figures – Industrial Trucks & Services –
in € million
Order intake
Total revenue
EBITDA
Adjusted EBITDA
EBIT
Adjusted EBIT
Adjusted EBITDA margin
Adjusted EBIT margin
2016
5,383.2
5,202.6
953.4
958.8
553.0
586.9
18.4%
11.3%
2015
5,146.3
5,044.7
868.8
882.5
482.5
529.5
17.5%
10.5%
TABLE 022
Change
4.6%
3.1%
9.7%
8.6%
14.6%
10.8%
–
–
A N E W E R A
Annual Report 2016 | KION GROUP AG
COMBINED MANAGEMENT REPORT
Report on the economic position
81
Key figures – Supply Chain Solutions –
in € million
Order intake
Total revenue
EBITDA
Adjusted EBITDA
EBIT
Adjusted EBIT
Adjusted EBITDA margin
Adjusted EBIT margin
TABLE 023
Change
> 100%
> 100%
> 100%
> 100%
<– 100%
> 100%
–
–
2015
48.8
33.0
2.4
2.4
1.2
2.0
7.2%
6.1%
2016
431.2
366.0
5.1
10.8
– 31.7
6.0
3.0%
1.6%
Adjusted EBITDA stood at €958.8 million (2015: €882.5 million).
6.1 percent). After taking into account non-recurring items and
This equated to an adjusted EBITDA margin of 18.4 per cent
purchase price allocation effects, EBIT came to minus €31.7 mil-
(2015: 17.5 per cent). > TABLE 022
lion (2015: €1.2 million).
Adjusted EBITDA amounted to €10.8 million with an adjusted
Supply Chain Solutions segment
EBITDA margin of 3.0 per cent. > TABLE 023
Business performance and order intake
Corporate Services segment
Order intake in the Supply Chain Solutions segment amounted to
€431.2 million in 2016. Dematic only contributed two months, and
Business performance
Retrotech ten months, to the order volume in the year under
The Corporate Services segment comprises holding companies
review. The segment managed to win new customer projects in a
and other service companies that provide services such as IT and
number of regions, including Europe. These projects focused on
logistics across all segments.
e-commerce, food retail and general trade in goods.
Revenue and earnings
Revenue
Total segment revenue came to €242.0 million and was therefore
Total segment revenue rose to €366.0 million as a result of acqui-
higher than the 2015 figure of €219.4 million. This revenue was
sitions, although Dematic was only included for a period of two
derived primarily from internal IT and logistics services.
months. Business solutions activities outside the KION Group
The segment reported adjusted EBIT of €305.9 million (2015:
accounted for 72.4 per cent of revenue and the service business
€153.3 million). The year-on-year increase was attributable to
for 27.6 per cent. The segment generated almost half of its reve-
higher intra-group dividend income. Adjusted EBITDA came to
nue in North America.
€323.5 million (2015: €170.5 million). > TABLE 024
Earnings
Adjusted EBIT amounted to €6.0 million (2015: €2.0 million). The
adjusted EBIT margin for this segment was 1.6 percent (2015:
KION GROUP AG | Annual Report 2016
A N E W E R A
82
Key figures – Corporate Services –
in € million
Order intake
Total revenue
EBITDA
Adjusted EBITDA
EBIT
Adjusted EBIT
2016
242.0
242.0
292.5
323.5
274.9
305.9
2015
219.8
219.4
143.4
170.5
126.2
153.3
TABLE 024
Change
10.1%
10.3%
> 100%
89.8%
> 100%
99.6%
Consolidation / reconciliation
customers that are classified as finance leases advanced to
€531.3 million (31 December 2015: €472.0 million).
Besides the intra-group supply relationships between the Indus-
The amount of deferred tax assets recognised in the state-
trial Trucks & Services, Supply Chain Solutions and Corporate
ment of financial position rose by €71.2 million to reach €420.2 mil-
Services segments, the main factor in the adjusted EBIT effect of
lion as at the reporting date. Further details regarding the change
minus €361.5 million (2015: minus €202.0 million) across all seg-
in deferred tax assets are provided in note [14] in the notes to the
ments was the intra-group dividend income.
consolidated financial statements.
Net assets
Non-current assets
Current assets
Overall, current assets increased by €724.7 million to €2,354.6 mil-
lion (31 December 2015: €1,629.9 million). This change reflected
the marked impact of Dematic on the statement of financial posi-
Non-current assets increased to €9,004.6 million (31 Decem-
tion as well as an expansion in trade receivables and inventories
ber 2015: €4,810.3 million), primarily as a result of the acquisition
in the Industrial Trucks & Services segment in line with the growth
of Dematic. Intangible assets accounted for €6,236.7 million
of the business. Working capital (inventories and trade receiva-
(31 December 2015: €2,452.5 million). Within that amount,
bles less trade payables) amounted to €869.1 million as at the
goodwill and the KION Group’s brand names rose significantly
reporting date (31 December 2015: €649.3 million).
to €4,578.1 million (31 December 2015: €2,152.2 million) owing
The breakdown of the reported inventories as at 31 Decem-
to currency effects and, in particular, the first-time consolida-
ber 2016 was as follows: > TABLE 025
tion of Dematic on the basis of a provisional purchase price
allocation.
Current lease receivables from end customers increased by
Rental assets increased to €575.3 million, reflecting the
€18.6 million year on year to €200.3 million (31 December 2015:
expansion of the rental fleet (31 December 2015: €544.0 million).
€181.7 million).
Due to the overall growth in business, leased assets for leases
Cash and cash equivalents went up by €176.5 million to
with end customers that are classified as operating leases
€279.6 million (31 December 2015: €103.1 million). A significant
increased to €429.7 million (31 December 2015: 334.4 million).
cash reserve at Dematic was one of the factors that led to this
Long-term lease receivables arising from leases with end
temporary increase as at the reporting date.
A N E W E R A
Annual Report 2016 | KION GROUP AG
COMBINED MANAGEMENT REPORT
Report on the economic position
83
Inventories
in € million
Materials and supplies
Work in progress
Finished goods and merchandise
Advances paid
Total inventories
(Condensed) statement of financial position
in € million
Non-current assets
Current assets
Total assets
Equity
Non-current liabilities
Current liabilities
Total equity and liabilities
2016
9,004.6
2,354.6
11,359.2
2,535.1
6,151.7
2,672.5
11,359.2
in %
79.3%
20.7%
–
22.3%
54.2%
23.5%
–
TABLE 025
Change
36.3%
40.4%
10.3%
> 100%
21.5%
TABLE 026
Change
87.2%
44.5%
76.4%
37.1%
> 100%
54.3%
76.4%
2015
115.9
75.0
359.5
3.1
553.5
in %
74.7%
25.3%
–
28.7%
44.4%
26.9%
–
2016
158.0
105.3
396.5
12.6
672.4
2015
4,810.3
1,629.9
6,440.2
1,848.7
2,860.0
1,731.5
6,440.2
The condensed consolidated statement of financial position as at
the KION Group optimises its financial relationships with custom-
31 December 2016 showing current and non-current assets and
ers and suppliers, manages any collateral security offered and
liabilities together with equity is presented in > TABLE 026.
mitigates the financial risk to its enterprise value and profitability,
Financial position
notably currency risk, interest-rate risk, price risk, counterparty
risk and country risk. In this way, the KION Group creates a stable
funding position from which to maintain profitable growth.
The financial resources within the KION Group are provided
Principles and objectives of financial management
on the basis of an internal funding approach. The KION Group
collects liquidity surpluses of the Group companies in central or
The KION Group pursues a conservative financial policy of main-
regional cash pools and, where possible, covers subsidiaries’
taining a strong cross-over credit profile with reliable access to
funding requirements with intercompany loans. This funding ena-
debt capital markets. By pursuing an appropriate financial man-
bles the KION Group to present a united front in the capital mar-
agement strategy, the KION Group makes sufficient cash and
kets and strengthens its hand in negotiations with banks and
cash equivalents available at all times to meet the Group compa-
other market participants. The Group occasionally arranges addi-
nies’ operational and strategic funding requirements. In addition,
tional credit lines for KION Group companies with local banks or
KION GROUP AG | Annual Report 2016
A N E W E R A
84
leasing companies in order to comply with legal, tax and other
subdivided into three tranches with staggered maturities from
regulations.
February 2018 to November 2021 and offers the best possible
The KION Group is a publicly listed corporate group and
temporary flexibility and security.
therefore ensures that its financial management takes into
In the first quarter of 2016, the KION Group had success-
account the interests of shareholders and those of the banks pro-
fully repaid the financing dating back to the time before the IPO
viding its funding. For the sake of all stakeholders, the KION Group
and updated its financing structure with much better terms. The
makes sure that it maintains an appropriate ratio of internal fund-
current senior facilities agreement (SFA) comprises a revolving
ing to borrowing. The KION Group’s borrowing is based on a
credit facility of €1,150.0 million (maturing in February 2021)
long-term approach. The core components of this borrowing will
and a fixed-term tranche of €350.0 million (maturing in Febru-
become due for repayment in the years 2018 to 2021.
ary 2019). KION GROUP AG has issued guarantees to the banks
Depending on requirements and the market situation, the
for all of the payment obligations under the new SFA. The new
KION Group will also avail itself of the funding facilities offered by
syndicated loan is not collateralised, as is typical in the current
the public capital markets in future. The KION Group therefore
market environment for companies that are on the cusp of an
seeks to maintain an investment-grade credit rating in the capital
investment-grade rating. The contractual terms of the SFA
and funding markets by rigorously pursuing a value-based strat-
require compliance with certain covenants. All the covenants
egy, implementing proactive risk management and ensuring a
were complied with as at the reporting date.
solid funding structure. Since June 2016, rating agency Standard
In September 2016, KION GROUP AG carried out another
& Poor’s has classified the KION Group as BB+ with a negative
share buyback to support its KION Employee Equity Programme
outlook, while the rating from Moody’s since 1 November 2016
(KEEP), purchasing a total of 50,000 of its own no-par-value
has been Ba1 with a negative outlook. Shortly after the reporting
shares (around 0.046 per cent of the share capital). To do so,
date on 4 January 2017, Fitch Ratings issued the KION Group
KION Group AG used the renewed authorisation granted at the
with a long-term issuer rating of BBB– with a stable outlook. This
Annual General Meeting on 12 May 2016. In October 2016, the
is the first time that the KION Group has received an invest-
KION Group employees entitled to participate in KEEP were given
ment-grade rating.
the opportunity to buy more KION shares. By 31 December 2016,
The KION Group maintains a liquidity reserve in the form of
a total of 45,564 shares had been purchased by staff (31 Decem-
unrestricted, agreed and confirmed credit lines and cash in order
ber 2015: 73,512 shares). This increased the number of shares
to ensure long-term financial flexibility and solvency. The Group
held in treasury to 164,486 as at the reporting date.
also uses derivatives to hedge currency risk.
Main capital market activities in the reporting period
Analysis of capital structure
Overall, current and non-current
liabilities had
risen by
The KION Group obtained a firm commitment for a bridge loan on
€4,232.6 million to €8,824.2 million as at the reporting date. In
attractive terms, originally in an amount of €3.0 billion, to finance
addition to the acquisition financing, the deferred tax liabilities in
the acquisition of Dematic. In July of the reporting year, KION
connection with the preliminary purchase price allocation for
GROUP AG increased its share capital by 10.0 per cent for cash
Dematic led to the increase in liabilities. The non-current liabilities
and, including the share premium, generated issue proceeds of
of €6,151.7 million (31 December 2015: €2,860.0 million) included
€459.3 million. The costs associated with the capital increase
deferred tax liabilities of €905.3 million (31 December 2015:
amounting to €2.0 million (net) were recognised directly in equity.
€302.7 million). > TABLE 026
Following this capital increase, the agreed financing under
the bridge loan was reduced by the amount of the proceeds from
Financial debt
the issue and now stands at €2,543.2 million. This loan amount
The utilisation of the bridge loan meant that the financial liabilities
was fully drawn down as at the reporting date. The bridge loan is
in the statement of financial position as at the reporting date had
A N E W E R A
Annual Report 2016 | KION GROUP AG
COMBINED MANAGEMENT REPORT
Report on the economic position
85
risen sharply compared with the figure at the end of 2015
Retirement benefit obligation
(€676.5 million) and now stood at €3,183.0 million. After deduc-
The KION Group supports pension plans in many countries.
tion of cash and cash equivalents of €279.6 million, net financial
These plans comply with legal requirements, standard local prac-
debt amounted to €2,903.4 million compared with €573.5 million
tice and the situation in the country in question. They are either
at the end of 2015. This equated to 3.1 times (2015: 0.7 times) the
defined benefit pension plans, defined contribution pension plans
adjusted EBITDA for 2016. It is important to note that the EBITDA
or multi-employer benefit plans. As at 31 December 2016, the
figure only included a contribution to earnings from Dematic cov-
retirement benefit obligation under defined benefit pension plans
ering two months. The debt is to be repaid in subsequent finan-
amounted to a total of €991.0 million. The increase compared
cial years using cash flow from operating activities and other
with the figure at the end of 2015 (€798.0 million) was partly attrib-
sources of funds.
utable to the inclusion of pension provisions at Dematic amount-
Long-term borrowing net of borrowing costs increased to
ing to €87.7 million; it was also caused by the lower level of inter-
€2,889.1 million as at the reporting date, a year-on-year rise com-
est rates. The provisions predominantly relate to pension plans in
pared with the figure of €557.2 million at the end of 2015. The
Germany. After deduction of the pension plan assets amounting
bridge loan was classified in full as a non-current financial liability
to €12.3 million, the remaining net obligation came to €978.7 mil-
as at the reporting date. One tranche (€343.2 million) is due for
lion (31 December 2015: €767.8 million).
repayment in February 2018, followed by a further tranche
Contributions to pension plans that are entirely or partly
(€1,200.0 million) in November 2018 and the third tranche
funded via funds are paid in as necessary to ensure sufficient
(€1,000.0 million) in November 2021. The fixed-term tranche of
assets are available and to be able to make future pension pay-
the SFA maturing in February 2019 has been drawn down in full
ments to pension plan participants. These contributions are
(€350.0 million). The corporate bond of €450.0 million still included
determined by factors such as the funded status, legal and tax
at the end of 2015 was repaid in full in February 2016 together
considerations, and local practice. The payments made by the
with the old revolving line of credit. As at 31 December 2016, the
KION Group in 2016 in connection with the main pension plans
unused, unrestricted SFA loan facility amounted to €924.7 million
totalled €20.6 million, comprising €13.9 million for direct pension
and together with the freely available cash and cash equivalents
payments and €6.6 million for employer contributions to plan
totalled €1,200.8 million. The KION Group works continuously to
assets. Transfers to external pension funds resulted in payments
optimise the financing of the Group (see note [50] in the notes to
of €0.1 million.
the consolidated financial statements). > TABLE 027
Net financial debt
in € million
Corporate bond (2013/2020) – fixed rate (gross)
Liabilities to banks (gross)
Other financial liabilities to non-banks
./. Capitalised borrowing costs
Financial liabilities
./. Cash and cash equivalents
Net financial debt
2016
–
3,188.6
7.2
– 12.9
3,183.0
– 279.6
2,903.4
2015
450.0
225.9
6.2
– 5.5
676.5
– 103.1
573.5
TABLE 027
Change
– 100.0%
> 100%
16.7%
<– 100%
> 100%
<– 100%
> 100%
KION GROUP AG | Annual Report 2016
A N E W E R A
86
Further details about the retirement benefit obligation are pro-
Analysis of capital expenditure
vided in the notes to the consolidated financial statements.
Lease liabilities
The KION Group’s total capital expenditure on property, plant
and equipment and on intangible assets (excluding leased and
Continuing growth in the long-term leasing business with end
rental assets) came to €166.7 million in the reporting year, com-
customers in 2016 led to a correspondingly higher funding
pared with €142.6 million in 2015. Once again, the main areas of
requirement. Lease liabilities arising from sale and leaseback
spending in the Industrial Trucks & Services segment were capi-
transactions to fund the long-term leasing business with end cus-
talised development costs in the LMH EMEA and STILL EMEA
tomers increased to €1,007.2 million (31 December 2015:
operating units and the expansion and modernisation of produc-
€855.6 million) in line with the growth of the business. Of this total,
tion and technology sites. This included continuing capital spend-
€722.0 million related to non-current and €285.2 million to current
ing at the STILL facilities in Hamburg and the LMH facilities in
lease liabilities.
Aschaffenburg, for which a total of €83 million will be made avail-
The liabilities from the short-term rental fleet and from pro-
able up to 2021. This is intended to lead to improved material
curement leases are reported under other financial liabilities (see
flows in production and logistics, and to more cost-effective pro-
note [34] in the notes to the consolidated financial statements). As
duction processes. Capital expenditure in the Supply Chain Solu-
at 31 December 2016, other financial liabilities included liabilities
tions segment mainly related to capitalised development costs as
of €440.0 million (31 December 2015: €403.2 million) arising from
well as software and licences.
sale-and-leaseback transactions used to finance the short-term
rental fleet. The item also included liabilities from residual value
Analysis of liquidity
guarantees amounting to €16.7 million (31 December 2015:
€17.8 million). The residual-value liabilities relate to residual-value
Liquidity management is an important aspect of central financial
guarantees provided in connection with the sale of assets to leas-
management. The sources of liquidity are cash and cash equiva-
ing companies, where the guaranteed amount is more than
lents, cash flow from operating activities and amounts available
10.0 per cent of the fair value of the asset in question.
under credit facilities. Cash and cash equivalents went up by
Equity
€176.5 million over the course of 2016 to reach €279.6 million
(31 December 2015: €103.1 million); €3.5 million of this was
Consolidated equity was higher than at the end of 2015, advanc-
restricted. Taking into account the credit facility that was still avail-
ing by €686.4 million to €2,535.1 million as at 31 Decem-
able, the unrestricted cash and cash equivalents available to the
ber 2016 (31 December 2015: €1,848.7 million). This rise was
KION Group as at 31 December 2016 amounted to €1,200.8 mil-
predominantly attributable to the capital increase implemented in
lion (31 December 2015: €1,193.6 million.)
July 2016 (€457.3 million) and the net income for the year
The KION Group’s net cash provided by operating activities
(€246.1 million). However, the continuing low level of interest rates
totalled €414.3 million, which was below the comparable prior-
resulted in a negative impact on pensions, as a result of which
year figure of €455.0 million. The positive trend in EBIT was offset
equity declined by €50.1 million. Other positive effects recognised
by cash outflows in connection with the Dematic deal. In addition
in other comprehensive income (€109.1 million, of which a posi-
to the cash transaction costs incurred by KION GROUP AG,
tive impact of €110.4 million from currency translation) and the
Dematic itself also incurred pre-contract expenses in connection
dividend payment (€76.0 million) led to an overall increase in
with the acquisition by the KION Group that were then reflected in
equity of €33.1 million. The equity ratio was 22.3 per cent as at
Dematic cash flows after the acquisition date. Growth in business
the reporting date (31 December 2015: 28.7 per cent).
led to a year-on-year increase in working capital and the volume
of leases, thereby reducing cash flow by a total of €52.4 million.
The net change of minus €158.2 million arising from the expan-
sion of the rental business (including finance lease liabilities) was
A N E W E R A
Annual Report 2016 | KION GROUP AG
COMBINED MANAGEMENT REPORT
Report on the economic position
87
close to the prior-year level of minus €155.9 million. Higher tax
financial liabilities taken on in connection with the acquisitions.
payments of €108.7 million (2015: €84.8 million) reduced the level
The net drawdown of financial debt in the year under review
of cash flow from operating activities.
totalled €1,744.0 million. The additional gross borrowings in 2016
The net cash used for investing activities totalled € 2,264.3 mil-
amounted to €4,362.5 million. These borrowings arose as a result
lion in the year under review (2015: €122.3 million). Cash payments
of the reorganisation of the financing structure in February 2016
for development (R&D) and for property, plant and equipment
and the need to pay the purchase consideration for the acquisition
amounted to €166.7 million (2015: €142.6 million). In particular,
of Dematic. At the same time as taking on this new debt, the KION
the purchase considerations relating to the acquisitions of Dematic
Group redeemed liabilities of €2,618.5 million in the reporting year.
and Retrotech in the reporting period led to a net cash outflow of
These redemptions consisted of the early repayment of a bond of
€2,118.7 million (after deduction of cash and cash equivalents
€450.0 million and the repayment of the revolving credit facility of
acquired). Net cash of €2,091.1 million was used for the acquisition
€1,243.0 million, which was replaced by the new SFA. In addition,
of Dematic, and €23.2 million for the acquisition of Retrotech.
the net cash proceeds from the capital increase (€456.7 million)
Cash payments for the acquisition of equity investments in the
were used to reduce the amount that needed to be made available
prior year (€84.9 million) had largely been in connection with the
under the bridge loan. The costs of obtaining financing in the year
acquisition of Egemin Automation. This amount was partly offset
under review amounted to €23.2 million (2015: €5.6 million). The
by an inflow of funds of €77.4 million generated by the sale of
distribution of a dividend of €0.77 per share resulted in an outflow
20.0 per cent of the shares in Linde Hydraulics to Weichai Power.
of funds of €76.0 million (2015: €54.3 million). The net cash used
Free cash flow – the sum of cash flow from operating activi-
for current interest payments rose to a total of €76.3 million in the
ties and investing activities – amounted to minus €1,850.0 million
year under review (2015: €50.4 million). This figure included the
as a result of the outflow of funds for the Dematic acquisition
interest payments in connection with the early redemption charge
(2015: plus €332.7 million).
(€15.2 million) levied because of the early repayment of the corpo-
Cash flow from financing activities was well into positive terri-
rate bond. The acquisition of employee shares caused a cash out-
tory at €2,026.3 million (2015: minus €329.1 million) following the
flow of €2.8 million (2015: €2.7 million). > TABLE 028
(Condensed) statement of cash flows
in € million
EBIT
Cash flow from operating activities¹
Cash flow from investing activities¹
Free cash flow
Cash flow from financing activities
Effect of foreign exchange rate changes on cash
Change in cash and cash equivalents
2016
434.8
414.3
– 2,264.3
– 1,850.0
2,026.3
0.2
176.5
2015
422.8
455.0
– 122.3
332.7
– 329.1
0.5
4.1
TABLE 028
Change
2.8%
– 8.9%
<– 100%
<– 100%
> 100%
– 52.8%
> 100%
1 Last year figures were adjusted due to a change in presentation, for details see note [37] to the consolidated financial statements
KION GROUP AG | Annual Report 2016
A N E W E R A
88
Long-term leasing business
the financial performance and financial position of the KION
Group is shown in > TABLE 029 and > TABLE 030. This information is
The sales activities of the KION Group are supported by financial
taken from the internal reporting system and is determined using
services in connection with direct long-term leasing business. In
the assumption of a minimum rate of return on the capital
this business, trucks leased directly to the end customer are
employed. The increase of €7.3 million in net financial debt relat-
refinanced by the KION Group. As in 2015, a large proportion of
ing to long-term leasing business to €106.3 million (31 Decem-
the portfolio was focused on business in western Europe. The
ber 2015: €99.0 million) was attributable to the expansion in
contribution made by the long-term leasing business in 2016 to
business activities. > TABLE 031
Profitability of long-term leasing business
in € million
Revenues
Adjusted EBITDA
Adjusted EBIT
Earnings before taxes (EBT)
Financial position of long-term leasing business
in € million
Liabilities to banks
Liabilities from financial services
Lease liabilities
Calculatory equity
Total
Leased assets
Lease receivables
Total
TABLE 029
2015
444.4
87.5
5.4
3.9
TABLE 030
2015
99.0
–
855.6
33.5
988.1
334.4
653.7
988.1
2016
480.5
99.8
4.0
4.5
2016
106.3
8.3
1,007.2
39.4
1,161.2
429.7
731.5
1,161.2
A N E W E R A
Annual Report 2016 | KION GROUP AG
COMBINED MANAGEMENT REPORT
Report on the economic position
89
Refinancing of long-term leasing business
TABLE 031
in € million
Liabilities to banks
Corporate bond (2013/2020) – fixed rate
Other financial liabilities to non-banks
./. Capitalised borrowing costs
Financial liabilities
./. Cash and cash equivalents
Net financial liabilities
Lease liabilities
Liabilities from financial services
Interest-bearing net liabilities
Liabilities from short-term rental financing
Liabilities from procurement leases
Liabilities from finance leases
Net operating debt
2016
2015
thereof
non-current
leasing business
KION Group
3,188.6
106.3
–
7.2
– 12.9
3,183.0
– 279.6
2,903.4
1,007.2
8.3
3,918.9
456.7
21.0
477.7
–
–
–
106.3
–
106.3
1,007.2
8.3
1,121.8
–
–
–
thereof
non-current
leasing business
KION Group
225.9
450.0
6.2
– 5.5
676.5
– 103.1
573.5
855.6
–
1,429.1
421.0
18.1
439.0
99.0
–
–
–
99.0
–
99.0
855.6
–
954.6
–
–
–
4,396.6
1,121.8
1,868.1
954.6
KION GROUP AG | Annual Report 2016
A N E W E R A
90
KION GROUP AG
Business activities
Business performance in 2016
The business performance and position of KION GROUP AG are
largely determined by the business performance and success of
the Group. Detailed reports in this regard are set out in the ‘Busi-
ness performance’ and ‘Financial position and financial perfor-
KION GROUP AG is the strategic management holding company
mance of the KION Group’ sections.
in the KION Group. KION GROUP AG holds all the shares in KION
Holding 2 GmbH and in the newly acquired DH Services Luxem-
bourg Holding S.à r.l. Through DH Services Luxembourg Holding
Financial performance
S.à r.l., KION GROUP AG holds all the shares in Dematic. In turn,
KION Holding 2 GmbH is the sole shareholder of Linde Material
KION GROUP AG does not have any operating activities itself.
Handling GmbH, Aschaffenburg, which holds almost all of the
The reported revenue has arisen as a result of the first-time appli-
shares of the companies in the KION Group (excluding Dematic).
cation of the provisions in the German Accounting Directive
The annual financial statements of KION GROUP AG have
Implementation Act (BilRUG) and largely relates to the provision of
been prepared in accordance with the provisions in the German
services for affiliated companies.
Commercial Code (HGB) and the German Stock Corporation Act
The cost of materials is related to the revenue from the provi-
(AktG). The management report has been combined with the
sion of services and mostly consists of expenses for consultancy
group management report. The consolidated financial state-
services.
ments have been prepared in accordance with International
Personnel expenses rose to €43.9 million (2015: €34.1 mil-
Financial Reporting Standards (IFRSs) and the additional provi-
lion) as a consequence of organisational changes following the
sions in section 315a HGB. Differences between the accounting
implementation of the CTO organisation and additions to the per-
policies in accordance with HGB and those in accordance with
formance share plans.
IFRSs arise primarily in connection with the accounting treatment
Other operating expenses went up by €14.9 million to
of financial instruments, provisions and deferred taxes.
€51.5 million. These largely comprised costs for external services
Management system, future development
and risk position
and consultancy.
The main changes in net financial income / expenses were
as follows:
– Of the total income from profit-transfer agreements, €361.3 mil-
As a holding company without any operating activities of its own,
lion (2015: €24.6 million) related to KION Holding 2 GmbH
KION GROUP AG is indirectly dependent on the earnings and
and €1.1 million (2015: €0.6 million) to proplan Transport- und
economic performance of its subsidiaries. The management sys-
tem, expected development and the opportunities and risks of
Lagersysteme GmbH.
– Interest expense and similar charges, which amounted to
the KION Group are described in detail in the ‘Management sys-
€27.0 million (2015: €2.8 million), arose mainly from expenses
tem’ and ‘Outlook, risk report and opportunity report’ sections of
for the provision of credit facilities and from bank interest
this combined management report.
expenses (2015: from unwinding the discount on the pension
provisions).
– Other interest and similar income for the most part consisted
of interest income on intercompany receivables in the amount
of €4.6 million (2015: €6.5 million).
A N E W E R A
Annual Report 2016 | KION GROUP AG
COMBINED MANAGEMENT REPORT
Report on the economic position
91
– KION GROUP AG incurred tax expenses of €23.1 million as a
in KION Holding 2 GmbH (€2,005.3 million) and the shares in pro-
result of its role as the parent company of the tax group in
plan Transport- und Lagersysteme GmbH (€0.6 million).
2016 (2015: €0.0 million).
The receivables mainly consist of loans of €586.4 million to
the Dematic Group and the Company’s entitlement to the transfer
A total net profit of €258.3 million was generated in the year under
of profits from KION Holding 2 GmbH of €361.3 million. As at
review (2015: net loss of €29.3 million). > TABLE 032
31 December 2015, there had been receivables due from KION
Holding 2 GmbH (€229.9 million).
The substantially higher profit transfer from KION Holding 2 GmbH
As a result of the capital increase of €459.3 million imple-
led to a significantly higher net profit compared to the forecast
mented in July 2016 and the higher net profit (€258.3 million), and
for the year under review, which was for a net loss in the low
after taking into account the payment of the dividend of €76.0 mil-
double-digit-million range.
lion, equity rose to €2,842.5 million (31 December 2015:
€2,200.5 million). As a consequence of the new borrowing, the
equity ratio was 51.6 per cent as at the reporting date (31 Decem-
Net assets
ber 2015: 97.6 per cent).
At the end of 2016, the total assets of KION GROUP AG had
was mainly attributable to changes in pension provisions and per-
increased by approximately 144.1 per cent year on year to
sonnel provisions. Pension provisions include provisions of
€5,505.3 million. This was predominantly attributable to the
€3.1 million (31 December 2015: €2.3 million) for former members
acquisition of the Dematic Group. The financial assets include the
of the Executive Board. KION GROUP AG recognised tax provi-
carrying amount of the equity investment in DH Services Luxem-
sions of €4.1 million as a result of taking over the role as the parent
Provisions increased by €15.9 million to €62.8 million and this
bourg Holding S.à r.l. (€2,468.5 million) – which in turn holds all
company of the tax group.
the shares in the subsidiaries in the Dematic Group –, the shares
Financial performance
in € million
Revenue
Operating income
Operating expenses
Material expenses
Personnel expenses
Other administrative expenses
Depreciation expense
Operating loss
Net financial income
Income taxes
Net income (loss)
TABLE 032
Change
–
58.3%
– 35.9%
–
– 28.7%
– 40.9%
6.4%
– 0.9%
> 100%
<– 100%
> 100%
2015
–
12.6
– 70.7
–
– 34.1
– 36.5
– 0.1
– 58.2
28.9
– 0.0
– 29.3
2016
17.6
19.9
– 96.1
– 0.7
– 43.9
– 51.5
– 0.1
– 58.7
340.0
– 23.1
258.3
KION GROUP AG | Annual Report 2016
A N E W E R A
92
Net assets
in € million
Assets
Property, plant and equipment
Financial assets
Receivables and other assets
Cash and cash equivalents
Total assets
Equity and liabilities
Equity
Retirement benefit obligation
Tax provisions
Other provisions
Liabilities
Deferred income
Total equity and liabilities
TABELLE 033
2016
2015
Change
0.1
4,474.4
974.0
56.7
5,505.3
0.2
2,005.9
248.8
0.0
2,255.0
2,842.5
2,200.5
20.3
4.1
38.4
2,599.9
0.1
5,505.3
13.5
–
33.4
7.4
0.2
2,255.0
– 32.7%
> 100%
> 100%
–
> 100%
29.2%
50.3%
–
15.0%
> 100%
– 30.9%
> 100%
At the end of the year, liabilities to banks amounted to €2,546.3 mil-
An agreement was reached for a firmly committed bridge
lion (31 December 2015: €0.0 million). These liabilities were in
loan of originally €3.0 billion as financing for the acquisition of
connection with the acquisition of Dematic. > TABLE 033
Dematic. In July 2016, KION GROUP AG increased its share cap-
Financial position
ital by 10.0 per cent for cash. The total issue proceeds came to
€459.3 million.
Following this capital increase, the agreed financing under
the bridge loan was reduced by the amount of the proceeds from
By pursuing an appropriate financial management strategy, the
the issue and now stands at €2,543.2 million. This loan amount
KION Group – either directly through KION GROUP AG or
was fully drawn down as at the reporting date. The individual
through Linde Material Handling GmbH (LMH), a subsidiary of
tranches of the bridge loan become due for repayment in the
KION GROUP AG – makes sufficient cash and cash equivalents
period from 2018 to 2021.
available at all times to meet the Group companies’ operational
Back in the first quarter of 2016, KION GROUP AG decided
and strategic funding requirements. KION GROUP AG is a pub-
to enter into a new senior facilities agreement (SFA) with a syndi-
licly listed company and therefore ensures that its financial man-
cate of banks. The SFA comprises a revolving credit facility of
agement takes into account the interests of shareholders and
€1,150.0 million and a fixed-term tranche of €350.0 million. The
banks. For the sake of these stakeholders, KION GROUP AG
SFA at LMH in existence up to that point was therefore repaid.
makes sure that it maintains an appropriate ratio of internal
The new SFA can also be utilised by other companies in the KION
funding to borrowing.
Group. KION GROUP AG has issued guarantees to the banks for
A N E W E R A
Annual Report 2016 | KION GROUP AG
COMBINED MANAGEMENT REPORT
Report on the economic position
93
all of the payment obligations under the new SFA. The SFA is not
Employees
collateralised, as is typical in the current market environment for
companies that are on the cusp of an investment-grade rating.
HR strategy
As a result of the drawdown of the bridge loan, the liabilities to
banks amounted to €2,546.3 million (31 December 2015: €0.0 mil-
The KION Group’s success is founded on the capabilities and
lion). After deduction of cash and cash equivalents, net debt
commitment of its employees. The ultimate objective of the KION
amounted to €2,489.6 million (31 December 2015: €0.0 million).
Group’s HR strategy is to provide the best possible support to the
Employees
targeted implementation of the KION Group Strategy 2020. To
this end, the KION Group draws on a wide range of measures to
ensure that there is always a sufficient number of highly qualified,
hard-working employees at all levels of its operations. Attractive
The average number of employees at KION GROUP AG was 172
working conditions and the opportunities for career progression
in 2016 (2015: 138). KION GROUP AG employed 185 people as at
afforded by working for an international group of companies play
31 December 2016 (31 December 2015: 139).
an important role in this and provide a solid basis for meeting the
NON-FINANCIAL PERFORMANCE
INDICATORS
manifold challenges presented by demographic change.
The KION Group has maintained and continued to strengthen
the high value of its employer brands, particularly those of Linde
and STILL. In 2016, STILL was recognised as one of Germany’s
best employers for the fifth year in succession by the Top
Employers Institute, an international certification organisation.
It also received a ‘Germany’s Top Employers’ award from the
The KION Group’s enterprise value is determined not only by
CRF Institute.
financial KPIs but also by non-financial influencing factors. These
are based on the Company’s relations with its customers and
Headcount
employees, on its technological position and on environmental
considerations. The KION Group can only achieve the targets
The average number of employees (full-time equivalents (FTEs),
that it has formulated for itself in the Strategy 2020 if it is an attrac-
including trainees and apprentices) in the KION Group was
tive and responsible employer that can retain competent and
24,957 in 2016 (2015: 23,129 FTEs). As at 31 December 2016,
committed employees at all sites, if it develops products and
the KION Group companies employed 30,544 FTEs, 7,038 more
solutions that are closely tailored to customers’ needs and envi-
than a year earlier.
ronmental requirements now and in future, if it continually
The increase was predominantly attributable to the acquisi-
increases the customer benefits provided by its products and
tion of Dematic. > TABLE 034
services and if it designs production processes in such a way that
resources are conserved and emissions are avoided as far as
Personnel expenses amounted to €1,520.3 million. The main rea-
possible.
son for this increase of 12.5 per cent compared with 2015 was the
The KION Group firmly believes that these aspects are
rise in average headcount for 2016 and changes to collective
important to its positioning as a pioneering company in a highly
bargaining agreements. > TABLE 035
competitive environment.
KION GROUP AG | Annual Report 2016
A N E W E R A
94
Employees (full-time equivalents)*
31/12/2016
Western Europe
Eastern Europe
Middle East and Africa
North America
Central and South America
Asia-Pacific
Total
31/12/2015
Western Europe
Eastern Europe
Middle East and Africa
North America
Central and South America
Asia-Pacific
Total
Industrial Trucks
& Services
Supply Chain
Solutions
16,005
2,103
241
187
442
4,086
23,064
15,707
1,921
229
154
485
4,141
22,637
1,931
52
0
2,910
944
973
6,810
262
0
0
54
0
7
323
* Number of employees (full-time equivalents) as at balance sheet date; allocation according to the contractual relationship
Personnel expenses
in € million
Wages and salaries
Social security contributions
Post-employment benefit costs and other benefits
Total
2016
1,198.3
258.4
63.6
1,520.3
2015
1,058.1
237.8
55.9
1,351.7
TABLE 034
Total
18,606
2,155
241
3,097
1,386
5,059
Corporate
Services
670
0
0
0
0
0
670
30,544
545
0
0
0
0
0
545
16,515
1,921
229
208
485
4,148
23,506
TABLE 035
Change
13.3%
8.7%
13.8%
12.5%
A N E W E R A
Annual Report 2016 | KION GROUP AG
COMBINED MANAGEMENT REPORT
Report on the economic position
95
Diversity
Finding highly qualified people to fill specialist and executive
positions is crucial to the KION Group’s success. As a result, one
The KION Group sees itself as a global manufacturer with strong
of the focuses of HR work across the Group in 2016 was, as in the
intercultural awareness: as at 31 December 2016, people from
previous years, the recruitment and development of suitable
83 different countries were employed across the KION Group.
young talent.
One of the ways in which the Company promotes interna-
The KION Group endeavours to offer its employees interest-
tional collaboration between employees is the KION expat
ing career opportunities and flexible, family-friendly working-time
programme, which gives employees the opportunity to transfer to
models. The Group companies also collaborate closely on areas
different countries where the KION Group is represented.
such as talent management and training & development pro-
The KION Group tackles the challenges of demographic
grammes. This helps to systematically identify and support staff
change by providing working conditions that are suited to
with potential, high performers and experts in key functions. The
employees’ age-related requirements and organising healthy-
STILL Academy offers subject-specific and interdisciplinary train-
living programmes so that it can continue to benefit from older
ing courses. There is also an academy at Linde Material Handling
employees’ experience. As at 31 December 2016, 26.5 per cent
that develops employees’ skills, particularly in sales and service.
of employees were over the age of 50 (31 December 2015:
25.1 per cent). A total of 299 employees were participating in
Training and professional development
partial retirement models as at the reporting date (31 Decem-
ber 2015: 258).
The companies in the KION Group currently offer training for
Compared with the previous year, the proportion of the KION
22 professions in Germany. They employed a total of 580 trainees
Group’s total workforce made up of women was virtually unchanged
and apprentices as at 31 December 2016 (31 December 2015:
in 2016, at 16.3 per cent (2015: 16.1 per cent). To help increase the
571). Besides providing dual vocational training schemes, KION
proportion of management positions occupied by women, the
Group companies offer work placements for students combining
Executive Board set targets that are published in the corporate gov-
vocational training with a degree course in cooperation with vari-
ernance report. Going forward, the KION Group intends to fill more
ous universities.
management positions with employees from outside Germany in
order to better reflect the Company’s international make-up.
Sharing in the Company’s success
The KION Group offers flexible working-time models that
promote a good work-life balance. In addition, Linde Material
Having successfully floated on the stock exchange, the KION
Handling has implemented a company agreement about ‘tele-
Group launched the KION Employee Equity Programme (KEEP) in
working/home office’, which stipulates the terms on which
2014. Initially limited to Germany, the programme was rolled out
employees can work at home on a mutually agreed and volun-
to more countries in 2015 and 2016. Around 1,100 employees
tary basis.
participated in this share matching programme in 2016, roughly
6 per cent of the total number who are eligible to do so.
Development of specialist workers and executives
The total participation rate for KEEP since its inception is
around 17 per cent.
In 2016, the longer-term HR strategy was revised in order to
The plan for 2017 is to give employees in other countries the
ensure even better and more targeted development for employ-
opportunity to share in the company’s success by participating
ees with high potential.
in KEEP.
In addition to the development activities geared specifically to
In 2016, the remuneration of the approximately 300 top
high-potential employees, greater priority will be given to succes-
executives was updated by continuing the long-term remunera-
sion planning for key positions in the KION Group in future and a
tion components that had been introduced in 2014, thereby
robust process will be implemented for this purpose.
aligning it with the remuneration of the Executive Board. A third
KION GROUP AG | Annual Report 2016
A N E W E R A
96
allocation under the long-term incentive plan (LTI) was made in
HSE managers at the KION Group’s production facilities and
the year under review.
in its sales and service units have the opportunity to meet and talk
Employee commitment
with one another at an annual international summit.
The health rate for 2016 stood at the high level of 97.0 per cent
(2015: 96.4 per cent). Details of the other HSE key performance
The KION Group’s products and services destined for its custom-
indicators and of the measures initiated and implemented in 2016
ers are produced by committed and motivated employees.
will be included in the KION Group’s separate sustainability
That is why all KION companies aim to ensure a high level of
report, which is expected to be published in the third quarter
employee commitment.
of 2017.
Based on the manager survey conducted in 2015 and the
action plan derived from it, a package of measures was defined
and implemented in 2016 as part of the newly defined ‘Lift up’
Research and development
corporate initiative, in particular to ensure the new organisational
structure is firmly embedded.
Strategic focus of research and development
Alongside this objective, collaboration was further improved
by holding a number of team workshops.
The focus of research and development (R&D) is determined by
Health and safety in the workplace
tive of increasing the customer benefits in all price segments and
the Strategy 2020. The KION Group pursues the primary objec-
sales regions and, by adhering to modular and platform strate-
The KION Group has a corporate policy setting out its obligations
gies, offering high quality as well as high-performance products
in respect of health, safety and the environment (HSE). These
at competitive prices. This involves structuring R&D cost-effec-
include taking comprehensive precautions to create a safe work-
tively, reducing the complexity and diversity of products and
ing environment and ensuring employees know how to avoid
shortening development times for new products. R&D essentially
risks and accidents.
works on a cross-brand and cross-region basis, which ensures
HSE activities centre on an internal audit programme, which
that research findings and technological know-how are shared
covers all of the KION Group’s production facilities as well as
across the Group. In addition, specialist product development
sales and service. The aim is to systematically document existing
teams working for the individual brand companies and regions
HSE measures and processes and to provide specific ideas for
develop customer-specific solutions.
how they can be developed further. Last year, nine central HSE
In the Industrial Trucks & Services segment, the focus for pre-
audits were carried out within the KION Group.
mium products remains on total cost of ownership for customers.
In 2016, an assessment of possible HSE risks was introduced
The objective is to minimise these costs, which include the purchase
for all sites. The starting point was a survey developed in the
price, maintenance and repair costs and energy use, while comply-
reporting year that ascertains the risk situation at each location.
ing with environmental targets and regulatory requirements in order
The KION Safety Championship, which was introduced in
to create highly efficient and competitive products for customers. In
2014, provides additional motivation for employees to continually
the volume and economy segments, the KION Group is establishing
engage with HSE matters. Based on regular reporting from the
shared, cross-brand and cost-efficient platforms that enable low-
individual units and a set of four defined evaluation criteria, a
cost production yet allow a strong degree of regional differentiation
panel of judges awards prizes to those units that have shown
in the industrial trucks. The development centre in the southern
special dedication or considerable progress in an area of HSE. In
Chinese city of Xiamen plays a particularly crucial role here.
2016, LMH EMEA’s FMO 5 shipping and logistics team in Aschaf-
The Supply Chain Solutions segment focuses, on the one
fenburg was crowned champion.
hand, on refining its central software solution, Dematic iQ. This
includes optimising the standard package and making customer-
A N E W E R A
Annual Report 2016 | KION GROUP AG
COMBINED MANAGEMENT REPORT
Report on the economic position
97
specific and region-specific modifications. On the other hand, the
Dematic) registered a total of 93 patents (2015: 70). As at
manual and automated supply chain solutions, including their
31 December 2016, the companies of the KION Group held a
components, are being constantly enhanced in order to achieve
total of 2,689 patent applications and issued patents (31 Decem-
even faster processes, seamless integration of all production and
ber 2015: 1,641 patent applications and issued patents). The
logistics steps and even greater productivity while using the same
marked increase is predominantly attributable to the first-time
amount of space.
consolidation of Dematic.
Across the segments, brand companies, and regions, the
KION Group has brought together the technical functions –
Focus of R&D in 2016
research and development, procurement, quality and production
processes – in the new CTO organisation in order to make its
Automation and connectivity
operating units more competitive. Uniform standards and global
As a result of acquiring Dematic, Egemin and Retrotech, the
coordination of technical activities should enable the KION Group
KION Group offers the full spectrum of solutions for Intralogistics
to offer more product variants with less effort and shorter devel-
4.0. These range from intelligent industrial trucks and fleet
opment processes in future.
management solutions (Industrial Trucks & Services segment) to
Key R&D figures
fully integrated, automated intralogistics systems (Supply Chain
Solutions segment), in which self-driving trucks can be included
as a component. The KION Group has also strengthened its CTO
Total spending on research and development came to €147.1 mil-
organisation with the R&D teams from Dematic and Egemin,
lion in 2016 (2015: €130.5 million), which equates to 2.6 per cent
thereby laying the foundations for success in a digital future and
of revenue. Total R&D expenditure included €50.6 million in capi-
building on a whole host of product innovations in industrial
talised development costs (2015: €40.9 million). These expenses
trucks and supply chain solutions.
were offset by depreciation and amortisation of €57.0 million
(2015: €53.3 million) (see note [17] in the notes to the consolidated
Industrial Trucks & Services
financial statements).
In 2016, STILL launched the first self-driving order picker, the
The number of full-time jobs in R&D teams grew by
iGo neo CX 20, on the market. The truck interacts with its opera-
39.8 per cent to 1,477. A total of 451 R&D employees were added
tor and automatically follows him or her during the picking pro-
as a result of the Dematic and Retrotech acquisitions. > TABLE 036
cess. This can mean time savings of up to 30 per cent and a
faster pick rate because the operator does not have to keep get-
The KION Group takes comprehensive measures to protect the
ting in and out of the truck. In addition, STILL unveiled the LiftRun-
products it develops against imitations and pursues a spe-
ner tugger train system, an automated forklift-free solution for
cific patent strategy. In 2016, the KION companies (including
on-site transporting materials.
Research and development (R&D)
in € million
Research and development costs (P&L)
Capitalised development costs
Total R&D spending
R&D spending as percentage of revenue
2016
96.5
50.6
147.1
2.6%
2015
89.7
40.9
130.5
2.6%
TABLE 036
Change
7.6%
23.7%
12.7%
–
KION GROUP AG | Annual Report 2016
A N E W E R A
98
Linde Material Handling added further models to its innovative
switched over to the FlexTruck universal mobile platform. The new
robotics series, Linde-MATIC. In the medium term, Linde is aim-
FlexTruck can include a robot arm, pallet lifter or conveyor, ena-
ing for all of the major product series to include an automated
bling it to pick the correct units from a pallet containing a single
version.
type of item in order to load up a stable, mixed-order pallet. This
The KION premium brands also continued to enhance their
new Dematic model series also comprises several modular, inter-
fleet management solutions. STILL introduced the new ‘neXXt
changeable components, such as cable harnesses and lithium-
fleet’ software, which intelligently merges data sets from differ-
ion/hydrogen fuel cell options, as well as all of the new reflector-
ent applications and areas so that customers can analyse their
less navigation features.
fleets accurately and comprehensively. The tool comprises a
Egemin Automation launched the E’tow® Easy Loop, a new
variety of web applications (apps) that can be accessed easily
standardised in-floor chain conveyor system that can be deliv-
and conveniently from anywhere. In the medium term, STILL
ered and installed particularly quickly thanks to its predefined
neXXt fleet will replace the STILLReport and STILL FleetMan-
components. The supply chain solution’s automatic chain lubri-
ager applications.
cation and self-cleaning capability enable it to run continuously
LMH added the ‘pre-op check’ app to its ‘connect:’ fleet
with virtually no maintenance, making it particularly appealing to
management system. A smartphone or tablet can now be very
logistics service providers.
easily used to carry out the check that is required each time
before a truck is used, as stipulated by the rules of the DGUV
Software development
(German Social Accident Insurance organisation). In addition,
The KION Group’s software expertise was strengthened consid-
LMH developed a new localisation technology that pinpoints the
erably by the acquisition of Dematic as well as the related imple-
location of trucks and transport containers to within centimetres
mentation of agile structures and strategic research partnerships
in real time. In the service business, LMH tested a mobile service
for visualising and simulating supply chain solutions. The Dematic
manager app that sends requests, together with the truck’s QR
iQ and Dematic iQ Analytics software offers customers in the
code and a photo of the defective function, directly to the LMH
warehousing and distribution industry a host of functions for plan-
service organisation.
Supply Chain Solutions
ning, optimising and executing orders plus comprehensive
insights into the data that they collect. This enables them to auto-
mate their facilities efficiently, regardless of whether they are
Dematic has, on the one hand, further enhanced its Multishuttle
automating individual process steps for the first time or already
storage systems. The flexible and scalable Dematic Multishuttle 2
have extensive experience of automation. Dematic iQ solutions
can significantly increase speed, accuracy and throughput in ware-
are developed and thoroughly tested by highly qualified, dedi-
houses, production plants or distribution centers. The ergonomi-
cated R&D software development teams; new functions and
cally optimized high performance order picking station RapidPick,
releases usually come onto the market several times a year. The
with its revolutionary delivery system and fully automated feeding,
solutions are then configured, adapted and optimised for the indi-
allows for rates of 1.000 order lines respectively 1.400 picks per
vidual products by equally experienced teams of software engi-
hour. A newly introduced modular sorting system increases perfor-
neers. This ensures that every customer receives a bespoke solu-
mance for numerous applications in production and distribution.
tion that is tailored specifically to their automation requirements.
The enhanced RapidStore UL 1200-1 for the automation of pallet
The new Dematic iQ 2.3 release, for example, offers even faster
warehouses was particularly developed to modify previously man-
picking, and versions of it for different customer segments have
ual processes under difficult spatial conditions.
been successfully implemented. The on-demand fulfilment func-
Dematic’s automated guided vehicle (AGV) systems have
tion enables urgent orders to be processed as a matter of priority
been fully updated: in the past three years, the automated very
at the nearest picking station.
narrow aisle trucks (VNAs) and the Flexfork 900, 1600 and 2500
counterbalance trucks have been completely redesigned and
A N E W E R A
Annual Report 2016 | KION GROUP AG
COMBINED MANAGEMENT REPORT
Report on the economic position
99
Drive technology
Customers
The development of new drive technologies in the Industrial
Trucks & Services segment is focused on lithium-ion batteries.
The KION Group’s industrial trucks and automation solutions are
STILL and Linde are using technology developed by the CTO
deployed in all kinds of industries.
Organisation in order to establish a lithium-ion standard for vari-
The Industrial Trucks & Services segment has a very broadly
ous electric forklift trucks and warehouse trucks and to gain a
diversified customer base, ranging from large key accounts with
competitive edge in this important future market.
global operations to small and medium-sized enterprises that
In 2016, Linde and STILL unveiled the first counterbalance
typically order just a few trucks each year.
trucks with lithium-ion batteries. Both manufacturers already
The Supply Chain Solutions segment benefits
from
have a number of li-ion warehouse technology models and tow
long-standing customer relationships with major players in the
tractors in their portfolios. The first Linde trucks with lithium-ion
e-commerce and logistics sectors. They influence the perfor-
technology in the 1.4 – 1.8 tonne load capacity range went on sale
mance of the segment’s new business and service business. The
in November 2016. STILL intends to offer lithium-ion batteries in
Dematic operating unit’s focus industries also include general
90 per cent of its trucks by the end of 2017.
merchandise, grocery wholesale and retail, fashion, food and
The focus of development work at Baoli was the upgrading of
beverages, and parcel and courier services. Together with
its trucks fitted with diesel engines, which must meet the new
Dematic, KION already counts among the global market leaders
China 3 emissions standard but also remain very affordable. In
in most of these sectors and enjoys excellent relationships with its
parallel, Baoli is working on new electric counterbalance trucks
customers. It has been able to strengthen these relationships
and warehouse trucks in order to expand these product lines.
through joint development projects and other initiatives.
Linde added new IC trucks in the 5 – 8 tonne load capacity
The KION brand companies again exhibited at the sector’s
range to its EVO series. The new trucks consume up to 20 per cent
leading trade fairs LogiMAT, CeMAT and MODEX in various
less fuel than their predecessors and feature extensive exhaust
regions in 2016 in order to intensify their relationships with cus-
aftertreatment.
tomers and partners. In the United States, Dematic again hosted
the Material Handling & Logistics Conference in Park City, Utah,
Modular and platform strategy
which featured a distinguished line-up of participants. More than
The KION Group is establishing shared, cross-brand platforms
50 expert discussions gave existing and prospective customers
for product development and production that are geared to the
the opportunity to find out about the latest supply chain trends.
volume and economy segments. The platforms enable the indus-
The Dematic Sprocket User Conference was also held during
trial trucks to be adapted to different regions cost-efficiently.
the event, focusing primarily on the automation of processes in
Development for the volume and economy segments is managed
facilities management. In Europe, STILL organised a customer
from China, where around one third of the R&D staff are based.
day while LMH held its World of Material Handling customer
The premium brands, Linde and STILL, have shared platforms
event, which was attended by over 7,000 customers, dealers
for the Asia-Pacific and Americas regions, whereas their products
and business partners.
for western Europe are developed using different platforms in
In September, Dematic opened its new Imagination Center
order to maintain the defining characteristics of the brands.
in Heusenstamm, Germany, in which complex intralogistics
All platforms are part of a global module strategy that enables
processes can initially be configured in a virtual environment.
products to be developed more cost-effectively and at a higher
This enables customers to look at a number of bespoke solutions
quality because of the growing number of common parts. The
in detail before deciding which concept to implement. Dematic
Group is therefore able to achieve high levels of synergy even in
is one of the first companies in Germany to offer this type of prod-
western Europe with its different platforms. Wherever possible,
uct presentation. Moreover, the KION brand companies attracted
local suppliers are used for regional product features.
attention once again in 2016 by collecting a number of awards. In
July 2016, for example, STILL received the Red Dot Award:
KION GROUP AG | Annual Report 2016
A N E W E R A
100
Product Design 2016 for the EXV-SF pallet stacker. The Red Dot
the CFO chairs the Sustainability Steering Committee, whose
Award: Product Design is a mark of quality awarded only to
members include the sustainability managers in the individual
products that clearly stand out from the rest of the field. The
operating units, the head of sustainability for the entire KION
self-driving picking system iGo neo CX 20 was one of the winners
Group and the people responsible for the various sustainability-
of an award decided upon by readers of trade journal LOGISTRA
related action areas.
in recognition of technical, business and intellectual innovations
For each action area, an individual programme has been, or
in intralogistics and commercial vehicles.
will be, created that sets out objectives and measures for refining
the sustainability activities on an ongoing basis. Responsibility for
implementing these measures lies with the person in charge of
Sustainability
the action area.
The sustainability objectives define the minimum standard
Acting responsibly has always been one of the principles by
that applies to the entire KION Group. Individual units are permit-
which the KION Group and its brand companies operate. They
ted to achieve higher standards in their sustainability activities or
strive for a balance between environmental, economic and social
to tailor them to their needs as appropriate.
considerations in their business activities. This focus on sustain-
The development of the sustainability strategy and related
ability is reflected in the Group’s eco-friendly and safe products
objectives builds on existing groupwide standards and rules of
that help customers to conserve energy, reduce emissions and
conduct, such as the KION Group Code of Compliance. This
comply with strict workplace safety standards (see the ‘Research
defines clear rules, including on the correct way for employees to
and development’ section). Furthermore, the KION Group ensures
interact with each other as well as with customers, partners and
that its production processes have as minimal an impact on the
the public. All other standards and initiatives, e.g. relating to
environment as possible and that it offers safe and discrimina-
health, safety and the environment (HSE), are derived from the
tion-free working conditions.
code. It is available to the public on the KION Group website.
Sustainability management
The corporate policy on workplace safety, health and the
environment defines a number of requirements for the KION
Group companies including compliance with, as a minimum, all
In 2016, the KION Group continued to work on the groupwide
relevant national laws, codes of conduct and industry standards,
sustainability management system that it had begun to establish
ensuring safe working conditions and providing employees with
the previous year. To this end, the reporting system introduced as
the necessary training. Adverse effects on the environment must
part of a pilot project for Linde Material Handling was rolled out to
also be avoided as far as possible.
the other departments and brand companies, although the new
The KION Group’s objective is to gradually establish a cer-
subsidiary Dematic is not yet included.
tified system for quality, environmental and occupational health
Specifically, a groupwide structure for sustainability was
and safety management at all sites. Further sites obtained such
developed and a corresponding management structure was
certification in 2016, including the Indaiatuba production facility
implemented in 2016. In addition, the preparations for a group-
in Brazil, which became certified in all three areas for the first
wide internal reporting system were completed, the relevant key
time in 2016.
performance indicators were defined and the preliminary work on
organisational structures and content were carried out in prepa-
Social aspects
ration for publishing a separate sustainability report. All of the fully
consolidated units of the KION Group are included in the sustain-
Minimum standards for employment apply at Group level that are
ability reporting system.
based on the fundamental conventions drawn up by the Interna-
The Group Executive Committee decides on the strategy,
tional Labour Organization (ILO). These include freedom of asso-
objectives and reporting process for sustainability. In addition,
ciation, the right to collective bargaining, elimination of forced and
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Report on the economic position
101
child labour, and a ban on discrimination in respect of employ-
Transparent reporting on sustainability
ment and occupation. Furthermore, the KION Group is commit-
ted to ensuring health and safety standards in the workplace and
The first groupwide sustainability report is planned for publication
to paying its employees remuneration that is appropriate to the
in the third quarter of 2017. As well as comprehensively describ-
industry in the particular country and, at the very least, provides a
ing the strategy, management approach and structures for sus-
living wage.
tainability, the report will contain data on relevant key perfor-
Information on the KION Group’s major projects and devel-
mance indicators and details of the KION Group’s success in its
opments in the area of health and safety can be found in the rele-
endeavours to develop sustainable products. For this reason, the
vant part of the ‘Employees’ section.
KION Group has not provided information on individual sustaina-
bility KPIs in the 2016 annual report.
Environmental protection
Furthermore, the release of pollutants, discharge and emissions
into the environment should be avoided as far as possible and the
volume of waste should be reduced by making better use of raw
materials and using recyclable materials. Materials, products and
processes that comply with best environmental practice should
be deployed; resources, energy and raw materials should be
used efficiently.
In the year under review, the KION Group set itself the
medium-term objective of eliminating components that are man-
ufactured using chromium trioxide (chromium VI). Aspects of sus-
tainability are enshrined in the KION Group’s purchasing terms,
which must be adhered to by suppliers and service providers.
Sustainability – particularly protection of the environment, con-
servation of resources and workplace safety – is an important
consideration when developing new products and enhancing
existing ones.
KION GROUP AG | Annual Report 2016
A N E W E R A
102
Outlook, risk report and opportunity report
OUTLOOK
Forward-looking statements
macroeconomic and industry-specific performance, which is
described below. Business planning and financial planning are
based on expected market performance, but also draw on other
assumptions, such as those relating to changes in the cost of
materials, the KION Group’s ability to command higher prices
from customers and movements in exchange rates.
The forward-looking statements and information given below
are based on the Company’s current expectations and assess-
Expected macroeconomic conditions
ments. Consequently, they involve a number of risks and uncer-
tainties. Many factors, several of which are beyond the control of
In its January economic outlook, the International Monetary Fund
the KION Group, affect the Group’s business activities and prof-
(IMF) expects the global economy’s growth to accelerate, driven
itability as well as the earnings of KION GROUP AG. Any unex-
by the United States and China. Improved estimates for Europe
pected developments in the global economy would result in the
are another contributing factor. According to this forecast, the
KION Group’s and KION GROUP AG’s performance and profits
world’s economy will expand by 3.4 per cent in 2017, compared
differing significantly from those forecast below. The KION Group
with 3.1 per cent in 2016. Following weak growth in 2016, the IMF
does not undertake to update forward-looking statements to
believes global trade will return closer to the trend growth rate of
reflect subsequently occurring events or circumstances. Further-
four per cent in 2017. Nonetheless, the IMF warns of increasing
more, the KION Group cannot guarantee that future perfor-
protectionist tendencies, which could lead to a trade war.
mance and actual profits generated will be consistent with the
The outlook for macroeconomic conditions is based, in par-
stated assumptions and estimates and can accept no liability
ticular, on higher government spending and fiscal stimulus in
in this regard.
the United States and China as well as a further stabilising of
Actual business performance may deviate from our forecasts
the oil price.
due, among other factors, to the opportunities and risks described
here. Performance particularly depends on macroeconomic
Expected sectoral conditions
and industry-specific conditions and may be negatively affected
by increasing uncertainty or a worsening of the economic and
Going forward, the overall market for industrial trucks and ware-
political situation.
Forecast for 2016
house systems will continue to depend heavily on economic con-
ditions in key sales markets. Over the past few years, the market’s
growth – measured by the number of new trucks sold and the
revenue of the largest system manufacturers – has consistently
exceeded the growth rates for global gross domestic product
The overall assessment of the financial situation of the KION
(GDP). In view of the generally positive macroeconomic pros-
Group compares the forecasts included in the 2015 group
pects, the KION Group anticipates that the worldwide market for
management report and subsequent interim reports with actual
material handling solutions will continue to expand in 2017.
performance in 2016.
Assumptions
Following substantial growth of almost eight per cent in the
global market for new industrial trucks in 2016, growth rates are
predicted to normalise, returning closer to the long-term trend of
around four per cent. A further increase in orders is expected in
Europe and North America, although growth rates will be more
The forecasts in this section are derived from the KION Group’s
modest due to the record-high market volume and political uncer-
multiple-year market, business and financial plan, which is based
tainties. Following a strong second half of 2016, the KION Group
on certain assumptions. Market planning takes into account
expects a further firming of demand in China. The constantly
Annual Report 2016 | KION GROUP AGA NEW ERA COMBINED MANAGEMENT REPORT
Outlook, risk report and opportunity report
103
increasing number of trucks in operation worldwide provides a
to €800 million. The adjusted EBIT margin is predicted to increase
sustainable customer base for the service business.
above the margin of 9.6 per cent that was generated in 2016. Free
In the warehouse systems business, the rapid expansion of
cash flow is expected to be in a range between €370 million and
e-commerce and the increasingly widespread use of Indus-
€430 million. The target figure for ROCE is in the range of
try 4.0 technologies are likely to push up demand for automa-
9.5 per cent to 10.5 per cent.
tion solutions. For this reason, the KION Group expects slightly
Order intake in the Industrial Trucks & Services segment is
faster growth, with average growth rates of around 10 per cent
expected to be between €5,450 million and €5,600 million. The
up to 2019.
Expected business situation and financial
performance of the KION Group
target figure for revenue is in the range of €5,300 million to
€5,450 million. The target range for adjusted EBIT is €605 mil-
lion to €630 million. The adjusted EBIT margin is predicted
to increase slightly above the margin of 11.3 per cent achieved
in 2016.
Order intake in the Supply Chain Solutions segment is
In 2017, the KION Group aims to build on its successful per-
expected to be between €2,350 million and €2,650 million. The tar-
formance in 2016 and, based on the forecasts for market
get figure for revenue is in the range of €2,200 million to €2,500 mil-
growth, achieve further increases in order intake, revenue and
lion. The target range for adjusted EBIT is €195 million to €230 mil-
adjusted EBIT.
lion. The adjusted EBIT margin is predicted to increase significantly
The order intake of the KION Group is expected to be
above the margin of 1.6 per cent that was generated in 2016.
between €7,800 million and €8,250 million. The target figure
The outlook is based on the assumption that material prices
for consolidated revenue is in the range of €7,500 million to
will hold steady and the current exchange rate environment will
€7,950 million. The target range for adjusted EBIT is €740 million
remain as it is. > TABLE 037
Outlook
in € million
Order intake*
Revenue*
Adjusted EBIT
Free cash flow
ROCE
TABLE 037
KION Group
Industrial Trucks & Services
Supply Chain Solutions
2016
2017
2016
2017
5,833.1
7,800 – 8,250
5,383.2
5,450 – 5,600
5,587.2
7,500 – 7,950
5,202.6
5,300 – 5,450
537.3
– 1,850.0
740 – 800
370 – 430
6.8%
9.5% – 10.5%
586.9
605 – 630
–
–
–
–
2016
431.2
366.0
6.0
–
–
2017
2,350 – 2,650
2,200 – 2,500
195 – 230
–
–
* Disclosures for the segments Industrial Trucks & Services and Supply Chain Solutions include also intra-group cross-segment order intake and revenue (Total revenue).
KION GROUP AG | Annual Report 2016
A N E W E R A
104
Expected financial position of the KION Group
RISK REPORT
As at 31 December 2016, an amount of €225.3 million had
been drawn down from the revolving credit facility, which
includes other loan liabilities and contingent liabilities. The
Risk strategy
fixed-term tranche of €350.0 million was fully drawn down as at
the end of 2016.
The business activities of the KION Group necessarily involve
A bridge loan of €3,000.0 million was agreed for the acquisi-
risk. Dealing responsibly with risk and managing it in a compre-
tion of Dematic. The agreed financing volume was reduced by the
hensive manner is an important element of corporate management.
net proceeds from the capital increase in July 2016 of €457.3 mil-
The overarching aim is to fully harness business opportunities
lion and, when the bridge loan was drawn down for the first time
while ensuring that risk always remains under control. Using its
on 1 November 2016, amounted to €2,543.2 million.
groupwide risk management system, the KION Group contains all
As at the end of 2016, the bridge loan consisted of three
identified risks by implementing suitable measures and takes
fixed-term, floating-rate tranches: tranche A2 of €343.2 million,
appropriate precautions. This ensures that the losses expected if
tranche B of €1,200.0 million and a further loan of €1,000.0 million.
these risks arise will be largely covered and therefore will not
In February 2017, KION GROUP AG partly refinanced the
jeopardise the Company’s continuation as a going concern.
bridge loan by issuing promissory notes (see note [50] in the
At the KION Group, risk management has always been
notes to the consolidated financial statements). Over the course
embedded in the corporate controlling function and plays an
of 2017, KION GROUP AG intends to use free cash flow to lower
active and wide-ranging role due to the strategic focus of cor-
its net debt still further.
porate controlling. The operational units’ business models,
strategic perspectives and specific plans of action are exam-
ined systematically. This ensures that risk management is fully
Overall statement on expected performance
integrated into the KION Group’s overall planning and report-
The basis for the long-term success of the KION Group will con-
tinue to be the strong position occupied by its international and
ing process.
national brands in western Europe and the emerging markets.
Principles of risk management
The international brands Linde and STILL, in particular, safeguard
their technology leadership and underline their status as premium
The procedures governing the KION Group’s risk management
brands in the Industrial Trucks & Services segment by maintain-
activities are laid down in internal risk guidelines. For certain types
ing high levels of capital expenditure and R&D spending. In
of risk, such as financial risk or risks arising from financial ser-
Dematic, the KION Group has acquired a leading player in the
vices, the relevant departments also have guidelines that are
expanding logistics systems segment. With a strong presence in
specifically geared to these matters and describe how to deal
the North American market, Dematic benefits from its position as
with inherent risks. Risk management is organised in such a way
the market number one in fast-growing customer segments such
that it directly reflects the structure of the Group itself. Conse-
as e-commerce, retail and wholesale.
quently, risk officers supported by risk managers have been
By pursuing its Strategy 2020 and other measures, the KION
appointed for each company and each division. A central Group
Group believes it will continue along its path of profitable growth
risk manager is responsible for the implementation of risk man-
and aims to achieve a further improvement in its market position
agement processes in line with procedures throughout the
worldwide in 2017.
Group. His or her remit includes the definition and implementation
of standards to ensure that risks are captured and evaluated.
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Outlook, risk report and opportunity report
105
The risk management process is organised on a decentralised
ments and combined management report comply with the rele-
basis. Firstly, a groupwide risk catalogue is used to capture the
vant accounting standards.
risks attaching to each company. Each risk must be captured
individually. If the losses caused by a specific risk or the likelihood
Material processes and controls in the
of this risk occurring exceed a defined limit, the KION Group’s
(Group) accounting process
Executive Board and its corporate controlling function are notified
immediately. Each risk is documented in an internet-based
For its (Group) accounting process, the KION Group has
reporting system designed specifically for the requirements of
defined suitable structures and processes within its internal
risk management. Risks affecting more than one Group com-
control and risk management system and implemented them
pany, such as market risks, competition risks, financial risks and
in the organisation.
risks arising from financial services, are not recorded individually
Changes to the law, accounting standards and other pro-
but are instead evaluated at Group level. Consequently, such
nouncements are continually analysed with regard to their rele-
risks are not quantified.
vance and effect on the consolidated financial statements and
The scope of consolidation for risk management purposes is
group management report; the relevant changes are then incor-
the same as the scope of consolidation for the consolidated finan-
porated into the Group’s internal policies and systems.
cial statements. The risks reported by the individual companies are
All consolidated entities must follow the KION GROUP IFRS
combined to form divisional risk reports as part of a rigorous report-
Accounting Manual when preparing their IFRS reporting pack-
ing process. To this end, minuted risk management meetings are
ages. This manual contains the recognition, measurement and
held once a quarter. Moreover, material risks are discussed with
disclosure rules to be applied in the KION Group’s accounting in
the segments at the business review meetings. The divisional risk
accordance with IFRS. The accounting guidelines primarily
reports are then used to compile an aggregate risk portfolio for the
explain the financial reporting principles specific to the KION
KION Group as a whole. To support this, the relevant departments
Group’s business. In addition, all companies must adhere to the
of the holding company are consulted each quarter in order to iden-
schedule defined by head office for preparing the consolidated
tify and assess risk – particularly Company-wide, cross-brand risk
financial statements and group management report.
affecting areas such as treasury, purchasing, tax, human resources
The accounting-based internal control and risk manage-
and financial services. The Executive Board of KION GROUP AG
ment system encompasses defined control mechanisms,
and the Supervisory Board’s Audit Committee are informed of the
automated and manual reconciliation processes, separation of
Group’s risk position once a quarter. The Internal Audit department
functions, the four-eyes principle and adherence to policies
audits the risk management system at regular intervals.
and instructions.
Material features of the internal control and
risk management system pertaining to the
(Group) accounting process
Principles
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 depart-
ment with specially trained employees carries out the consolida-
tion activities, reconciliations and monitoring of the stipulated
deadlines and processes. Monthly checklists have been drawn
The main objectives of the accounting-related internal control
up for the consolidation process and are worked through in a
system are to avoid the risk of material misstatements in financial
standardised manner. All postings are managed centrally and doc-
reporting, to identify material mismeasurement and to ensure
umented. This team also monitors the system-based controls and
compliance with the applicable regulations and internal instruc-
supplements them with manual checks. The entire accounting
tions. This includes verifying that the consolidated financial state-
process contains a number of specific approval stages, for which
KION GROUP AG | Annual Report 2016
A N E W E R A
106
extensive plausibility checks have been set up. Employees with
the relevant expertise provide support on specialist questions
and complex issues.
Internal control mechanisms and ongoing analysis of the
regulatory framework enable any risks that might jeopardise the
compliance of the consolidated financial statements and group
management report with accounting standards to be identified as
soon as possible so that appropriate countermeasures can be
taken. Such risks form part of the KION Group’s aggregate risk
profile and are classified as operational risk.
The Internal Audit department evaluates governance, risk
management and the control processes by following a systematic
and structured process, thus helping to bring about improve-
ments. It focuses primarily on the following aspects:
tems for avoiding financial losses;
– appropriateness and effectiveness of the internal control sys-
– compliance with legal requirements, directives from the
– correct performance of tasks and compliance with business
Executive Board, other policies and internal instructions;
principles.
Risk
Aggregate risk
Risk matrix
DIAGRAM 005
H
G
H
I
L
E
V
E
L
K
S
I
R
I
M
U
D
E
M
• Market risk
• Procurement risk
• Production risk
• Risks arising from
customer project
business
W
O
L
• Competition risk
• R&D risk
• IT risk
• Financial risk
• Risk arising from
financial services
• Human resources risk
• Sales risk
• Legal risk
LOW
MEDIUM
HIGH
PROBABILITY OF OCCURRENCE
HIGH RISK
MEDIUM RISK
LOW RISK
In 2016, the aggregate risk position was largely unchanged com-
The market risks and competition risks described, the risks along
pared with the previous year. However, the importance of risks
the value chain, the human resources risks and the legal risks
from customer project business increased significantly as a result
largely relate to the Industrial Trucks & Services and Supply Chain
of the Dematic acquisition.
Solutions segments. Risks arising from financial services mainly
With regard to 2017, the risks in the risk matrix below will be
affect the Industrial Trucks & Services segment, while financial
continually observed and evaluated in terms of their extent and
risks would predominantly impact on the Corporate Services
probability of occurrence. For example, the KION Group consid-
segment.
ers the probability of market risk materialising as low because of
the fairly positive market expectations. However, the possible
Market risks and competition risks
impact of market risk continues to be rated at a medium risk level
because of the importance of the market for the KION Group’s
Market risks
business situation and financial performance. As things stand at
Market risk can arise when the economy as a whole or a particu-
present, there are no indications of any risks that could jeopardise
lar sector does not perform as well as had been anticipated in the
the Company’s continuation as a going concern. > DIAGRAM 005
outlook. Cyclical fluctuations in macroeconomic activity affect
both the market for industrial trucks and the market for auto-
A N E W E R A
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Outlook, risk report and opportunity report
107
mated supply chain solutions. Customers’ decisions on whether
Other risks arise as a result of constant changes in the Com-
to invest depend to a large degree on the macroeconomic situa-
pany’s political, legal and social environment. Because it oper-
tion and conditions in their particular sector. During an economic
ates in countries in which the political or legal situation is uncer-
downturn, customers tend to postpone their capital expenditure
tain, the KION Group is exposed to the consequent risk of
on new industrial trucks and automated supply chain solutions.
government regulation, amendments to customs regulations,
Although demand for services is less cyclical, it correlates with
capital controls and expropriations. The KION Group mitigates
the degree of utilisation of the trucks and systems – which usually
such strategic risks by, for example, carrying out in-depth market
declines during difficult economic periods. As the KION Group
research, conducting thorough evaluation procedures to assess
can only adjust its fixed costs to fluctuations in demand to a lim-
political and economic conditions and drafting contracts appro-
ited extent, reductions in revenue impact on earnings.
priately.
Despite the acquisition of Dematic and the associated
increase in the future proportion of revenue from North America,
Competition risks
the proportion of revenue earned in the eurozone remains high.
Competition risk describes the risk that growing competitive
As a result, the market conditions that prevail there impact signif-
pressure will prevent the KION Group from achieving its predicted
icantly on the KION Group’s financial performance. In view of the
margins and market share. The markets in which the KION Group
increasing stabilisation of economic growth at a low level, the
operates are characterised by strong competition, often price-
direct market risk arising from a downturn in the economy has
driven. Price competition is compounded by some manufacturers
further reduced for the eurozone, whereas the development of
having cost advantages in production, sometimes due to the cur-
geopolitical risks is currently unforeseeable. However, unfavoura-
rency situation and sometimes because local labour costs are
ble trends affecting major trading partners, e.g. China, might
lower. This primarily affects the Industrial Trucks & Services seg-
reduce eurozone customers’ willingness to invest and conse-
ment, where competition is fierce, particularly in the economy
quently the demand for the KION Group’s products.
and volume price segments, and the impact is especially strong
A further weakening of growth in the emerging markets could
in emerging markets. Building on their local competitive strength,
also have a negative effect on global trade volumes and thus on
manufacturers in emerging markets are also looking for opportu-
growth in the material handling market. The market risks referred
nities to expand. Although the high quality expectations and
to could be heightened by geopolitical risks and possible cur-
service needs of customers in developed markets present a bar-
rency crises.
rier to growth for many of these manufacturers, this situation is
Various measures aimed at making cost structures more
likely to intensify competitive pressures in future.
flexible – such as the consolidation of production facilities and
It is also conceivable that competitors will join forces and
the platform strategy – help to contain the earnings risk arising
their resulting stronger position will be detrimental to the KION
from reductions in revenue caused by economic conditions.
Group’s sales opportunities. Moreover, predictions of higher
Diversification of the customer base in terms of industry and
volumes and margins may lead to overcapacity, which would put
region as well as expansion of service activities also play a role in
increased pressure on prices.
mitigating risk. Moreover, the KION Group closely monitors the
Although the KION Group’s strengths have enabled it to
market and its competitors so that it can identify market risks at
charge appropriate prices until now, it is taking a variety of steps to
an early stage and adjust its production capacities in good time.
contain competition risk. Alliances, partnerships, acquisitions and
Besides global economic growth and other data, the KION Group
other measures are playing an increasing role in improving the
also analyses exchange rates, price stability, the consumer and
KION Group’s competitiveness in terms of resources, market
investment climate, foreign trade activity and political stability in
access and product range. The steps that the KION Group is tak-
its key sales markets, constantly monitoring the possible impact
ing to mitigate its competition risk also include making its plants
on its financial performance and financial position.
more efficient and securing low-cost sources of supply.
KION GROUP AG | Annual Report 2016A NEW ERA 108
The KION Group also continually evaluates its options for
nents. The KION Group obtains some of its key components from
strengthening and consolidating its position in emerging markets,
a limited number of core suppliers. Key components in the Indus-
in particular through strategic partnerships, the creation of joint
trial Trucks & Services segment include internal combustion
ventures or acquisition of local manufacturers. One of the risks of
engines, tyres and high-performance forged and electronic parts.
such alliances and acquisitions is that the expected benefits will
The risk of supply bottlenecks – for example in the event
materialise only partly or not at all. For example, the organisa-
of a shortage of raw materials or financial difficulties at core
tional integration of new units can harm financial performance for
suppliers – cannot be ruled out in future. The KION Group
a variety of reasons. It is also possible that a partner will collabo-
mitigates this risk through appropriate diversification of its sup-
rate with competitors if exclusivity agreements are not in place.
plier structure in the context of a global procurement organisa-
tion. In addition, the supplier development department, which
Risks along the value chain
focuses on improving suppliers’ production processes, helps
suppliers to ensure that their processes are cost-efficient and
Research and development risks
offer excellent quality.
The KION Group’s market position and business performance
Price changes present another procurement-related risk.
depend to a large extent on its ability to remain a leading pro-
In 2016, around 25 per cent of the cost of materials for new trucks
vider of technology. This requires the Group to continually
was directly influenced by changes in commodity prices (2015:
develop products that meet customer expectations and comply
25.8 per cent). Moreover, conditions in the commodity markets
with changing regulatory and technological requirements. To this
typically affect component prices after a delay of three to
end, the KION Group must anticipate customers’ needs and
six months. The KION Group endeavours to pass on price
changing market conditions and has to quickly bring new prod-
increases to customers but cannot always do so entirely due to
ucts to market. If the Company does not succeed in doing
market pressures.
this, its technological and competitive position could be com-
promised in the long term.
Production risks
The innovations developed by the KION Group are compre-
Production risks are largely caused by quality problems, possible
hensively protected by intellectual property rights, in particular
disruptions in operational procedures or production downtime at
patents. Nevertheless, there is always the possibility that prod-
individual sites. In such cases, the KION Group’s closely inte-
ucts or product components will be imitated. There is also a risk
grated manufacturing network presents a heightened risk to its
that patent applications will not be successful.
ability to deliver goods on time. There is also a risk that structural
The KION Group mitigates research and development risk by
measures and reorganisation projects will not be implemented
focusing firmly on customer benefit in its development of prod-
owing to disruption of production or strikes. Delays in delivery or
ucts and solutions. Customer needs are incorporated into the
a rise in the number of complaints could harm the KION Group’s
development process on an ongoing basis by ensuring close
positioning in the price segments and sales markets that it
collaboration between sales and development units and taking
serves and, as a result, could harm its financial situation.
account of all region-specific requirements.
To mitigate these risks, the KION Group carries out preven-
Procurement risks
tive maintenance, implements fire protection measures, trains its
staff and builds a pool of external suppliers. The Company has
Procurement activities constitute a potential risk for the KION
taken out a commercially appropriate level of insurance cover
Group in terms of the lack of availability of parts and components
against loss. Quality assurance is a high priority throughout the
for logistical or quality reasons and the rising cost of raw materi-
value chain and reduces possible quality-related risks arising
als, energy, base products and intermediate products. As a
from the products and services provided. The KION Group
result, there is always the possibility that the KION Group will face
mitigates its quality-related risks significantly by applying rigorous
backlogs in the supply of individual raw materials and compo-
quality standards to its development activities, conducting
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Outlook, risk report and opportunity report
109
stringent controls throughout the process chain and maintaining
IT risks
close contact with customers and suppliers.
A high degree of interconnectedness between sites and with cus-
tomers and other companies means that the KION Group also
Risks arising from customer project business
relies on its IT systems working flawlessly. The KION Group
In the customer project business, risks can arise from deviations
undertakes ongoing further development of a reliable, extendable
from the original schedule, leading to revenue and profit being
and flexible IT system environment with the aim of countering any
recognised in subsequent years or, in isolated cases, contractual
IT-related risks that may arise from the failure of IT systems and
penalties having to be paid. Another possible risk is that the tech-
IT infrastructure. Internal IT resources are pooled in KION Infor-
nology deviates from the promised specifications, which may
mation Management Services GmbH, which has well-estab-
result in additional completion costs. The long-term nature of indi-
lished processes for portfolio management and project planning
vidual projects can lead to cost increases during the project life-
and control. Independent external audits are conducted to pro-
time that were not anticipated in the project costing and cannot
vide additional quality assurance. Various technical and organisa-
be passed onto the customer.
tional measures protect the data of the KION Group and its Group
To mitigate these risks in the Supply Chain Solutions seg-
companies against unauthorised access, misuse and loss. These
ment, project management includes a comprehensive process of
measures include procedures to validate and log access to the
risk management. This involves detailed evaluation of the risks
Group’s infrastructure.
when defining the technical aspects of quotations plus risk provi-
sioning based on the individual project specifications when pre-
Financial risks
paring quotations. A multistage approval process based on an
extensive list of criteria ensures that financial, country-specific,
Group Treasury is responsible for ensuring that sufficient financial
currency-specific and contractual risks are largely avoided.
resources are always available for the KION Group’s international
As projects are progressing, the potential risks in each
growth. The main types of financial risk managed by Group
individual project are analysed using detailed continuous reviews
Treasury, including risks arising from funding instruments, are
based on the individual items of work that make up the project,
liquidity risk, currency risk, interest-rate risk and counterparty
to keep potential risks to a minimum.
risk. Counterparty risk consists solely of credit risks attaching
Sales risks
to financial institutions. Risk management procedures issued
by Group Treasury stipulate how to deal with the aforemen-
The main sales risks – besides a drop in revenue caused by market
tioned risks.
conditions – result from dependence on individual customers and
Long-term financial liabilities rose by €2,331.8 million from its
sectors. For example, it is possible that customers would postpone
level at 31 December 2015 to reach €2,889.1 million at the end of
or cancel orders during a period of economic difficulty. There have
2016. As at 31 December 2016, the main components of long-
not been any significant cancellations in previous years, however. It
term borrowing were the long-term ‘Term Loan B’ under the SFA
is also conceivable that customers would face a liquidity shortfall
(€350.0 million) and the non-current liabilities associated with the
and therefore be unable to fulfil their payment obligations immedi-
new AFA that came into force for the financing of the Dematic
ately or even at all. Although the KION Group’s dependence on indi-
acquisition (€2,543.2 million). The unused, unrestricted revolv-
vidual sectors and on individual customers has increased since the
ing credit facility stood at €924.7 million as at 31 December 2016.
acquisition of Dematic due to its customer project business, the
The risk position has not changed significantly as a result of the
overall level is still considered to be low. The business is highly diver-
adjustments to the financing structure after the reporting date
sified from a regional perspective. In addition, the KION Group sup-
(see note [50] in the notes to the consolidated financial state-
plies companies of all sizes. Experience has shown that the KION
ments). Risk arising out of the lending conditions that have been
Group’s exposure to the risk of possible payment defaults is low,
agreed was not regarded as material as at 31 December 2016. It
but this risk can be further mitigated by recovering any collateral.
relates in particular to the restrictions in respect of compliance
KION GROUP AG | Annual Report 2016A NEW ERA 110
with financial covenants and upper limits for certain transactions
Risks arising from financial services
and in respect of the obligation to submit special regular reports.
The KION Group complied with all the lending covenants in the
The leasing activities of the Industrial Trucks & Services seg-
reporting year.
ment mean that the KION Group may be exposed to residual
The Company generally refers to credit ratings to manage
value risks from the marketing of trucks that are returned by
counterparty risk when depositing funds with a financial institution.
the lessee at the end of a long-term lease and subsequently
The KION Group only uses derivatives to hedge underlying
sold or re-leased. Residual values in the markets for used
operational and financial transactions; they are not used for spec-
trucks are therefore constantly monitored and forecast. The
ulative purposes. It is exposed to currency risk because of the
KION Group regularly assesses its aggregate risk position aris-
high proportion of its business conducted in currencies other
ing from financial services.
than the euro. Normally, at least 75 per cent of the currency risk
The risks identified are immediately taken into account by the
related to the planned operating cash flows based on liquidity
Company in the costing of new leases by recognising writedowns
planning is hedged by currency forwards in accordance with the
or valuation allowances and adjusting the residual values.
relevant guideline.
Risk-mitigating factors include the demand for used trucks, which
Group Treasury rigorously complies with and monitors the
stabilises the residual values of the KION Group’s industrial
strict separation of functions between the front, middle and back
trucks. The majority of the residual values have underlying remar-
offices. Each Group company’s liquidity planning is broken down
keting agreements that transfer any residual-value risk to the leas-
by currency and incorporated into the KION Group’s financial
ing company. This had a positive impact on the financial results in
planning and reporting process. Group Treasury checks the
2016. Groupwide standards to ensure that residual values are
liquidity planning and uses it to determine the funding require-
calculated conservatively, combined with an IT system for residu-
ments of each company.
al-value risk management, reduce risk and provide the basis on
The funding terms and conditions faced by the lenders them-
which to create the transparency required.
selves (manifested, for example, in the payment of liquidity premi-
The KION Group mitigates its liquidity risk and interest-rate
ums on interbank lending) may result in a future shortage of lines
risk attaching to financial services by ensuring that most of its
of credit and / or increased financing costs for companies. How-
transactions and funding loans have matching maturities and by
ever, the Group currently does not expect any further changes in
constantly updating its liquidity planning. Long-term leases are
its lines of credit or any excessive increases in margins.
primarily based on fixed-interest agreements. The credit facilities
Goodwill and brand names represented 40.3 per cent of
provided by various banks and an effective dunning process
total assets as at 31 December 2016 (31 December 2015:
ensure that the Group has sufficient liquidity.
33.4 per cent). Pursuant to IFRS, these assets are not amor-
In order to exclude currency risk, the KION Group gener-
tised and their measurement depends, above all, on future
ally funds its leasing business in the local currency used in
expectations. If these future expectations are not fulfilled,
each market.
there is a risk that impairment losses will have to be recognised
Because of low default rates, counterparty risk has not been
on these assets.
significant to date in the Group. The KION Group has not identified
The individual Group companies directly manage counter-
any material changes between 2015 and 2016. The Group also
party risks involving customers. These counterparty risks did not
mitigates any losses from defaults by its receipt of the proceeds
change significantly in 2016. Each individual Group company has
from the sale of repossessed trucks. In addition, receivables man-
established a credit management system for identifying custom-
agement has been improved by enhancing the dunning process.
er-related counterparty risks at an early stage and initiating the
The credit risk management system was updated during 2016.
necessary countermeasures. Analysis of the maturity structure of
Besides the design of the business processes, it also encom-
receivables is an integral element of monthly reporting.
passed the risk management and risk control processes.
Annual Report 2016 | KION GROUP AGA NEW ERA COMBINED MANAGEMENT REPORT
Outlook, risk report and opportunity report
111
Moreover, the KION Group offers the majority of financial services
Any damage to the environment may lead to legal disputes and
indirectly via selected financing partners that bear the risks of the
give rise to reputational risk.
finance transaction. As far as these financial services are con-
The Company has taken measures to prevent it from incur-
cerned, the KION Group bore the counterparty risk in under
ring financial losses as a result of these risks. Although legal dis-
three per cent of cases (2015: three per cent).
putes with third parties have been insignificant both currently and
in the past, the Company has a centralised reporting system to
Human resources risks and legal risks
record and assist pending lawsuits. In addition to the high quality
and safety standards applicable to all users of the Company’s
The KION Group relies on having highly qualified managers and
products, with which it complies when it develops and manufac-
experts in key roles. If they left, it could have a long-term adverse
tures the products, it has also taken out the usual types of insur-
impact on the Group’s prospects.
ance to cover any third-party claims. In addition, interdisciplinary
That is why the KION Group actively engages in HR work
teams work on the avoidance of risks arising from inadequate
aimed at identifying and developing young professionals with
contractual arrangements. A further objective of this cooperation
high potential who already work for the Company and retaining
across functions is to ensure compliance with mandatory laws,
them over the long term, thereby enabling succession planning
regulations and contractual arrangements at all times.
for key roles across the Group. The KION Group also positions
Owing to the KION Group’s export focus, legal risk and repu-
itself in the external market as an employer of choice. This will
tational risk arise due to the numerous international and local
enable it to make strategic additions to its portfolio of existing
export controls that apply. The Company mitigates these risks
staff and, in this way, avert the risk of possibly losing expertise
with a variety of measures. Consequently, export controls are an
and thereby becoming less competitive.
important part of the compliance activities carried out by the
Any restructuring measures may result in a risk of strikes and
Group companies.
reactions of other kinds by the workforce. As demonstrated sev-
eral times in the past, this risk is contained by collaborating
closely with employee representatives and, if job losses are nec-
essary, taking comprehensive steps to ensure they are achieved
with the minimum possible social impact.
The legal risks arising from the KION Group’s business are
OPPORTUNITY REPORT
typical of those faced by any company operating in this sector.
Principles of opportunity management
The Group companies are a party in a number of pending law-
suits in various countries. The individual companies cannot
Opportunity management, like risk management, forms a central
assume with any degree of certainty that they will win any of the
part of the Company’s day-to-day management. In 2016, the
lawsuits or that the existing risk provision in the form of insurance
aggregate opportunity position was largely unchanged com-
or provisions will be sufficient in each individual case. However,
pared with the previous year. Individual areas of opportunity are
the KION Group is not expecting any of these existing legal pro-
identified within the framework of the strategy process. Opportu-
ceedings to have a material impact on its financial position or
nities are determined and managed on a decentralised basis in
financial performance. These lawsuits relate, among other things,
line with the Group strategy.
to liability risks, especially as a result of legal action brought by
There are monthly reports on the opportunity situation as
third parties because, for example, the Company’s products were
part of the regular Group reporting process. As a result, the KION
allegedly faulty or the Company allegedly failed to comply with
Group is in a position to ascertain at an early stage whether
contractual obligations. Further legal risk may arise as a result of
market trends, competitive trends or events within the Group
the environmental restoration of sites that have been shut down in
require individual areas of opportunity to be re-evaluated.
recent years, for example work required due to contamination.
This may lead to reallocation of the budgets earmarked for the
KION GROUP AG | Annual Report 2016A NEW ERA 112
realisation of opportunities. Such decisions are made on the
Medium- to long-term market opportunities are presented, in
basis of the potential of the opportunity, drawing on empirical
particular, by:
values. There is no management system for the evaluation of
opportunities comparable to the system for risk management.
Categorisation of opportunities
By ‘opportunities’, we mean positive deviations from the expecta-
tions set out in the outlook relating to the economic situation and
the KION Group’s position. Opportunities are divided into three
– growing demand for intralogistics products, solutions and
services as a consequence of globalisation, industrialisation
and fragmentation of supply chains, as well as the necessary
efficiency enhancements due to limited storage space and
changing consumer needs;
– high demand for replacement investments, especially in
– the trend towards outsourcing service functions, particularly
developed markets;
categories:
in the market for industrial trucks, and growth in demand for
– Market opportunities describe the potential resulting from
finance solutions;
– increased use of industrial and warehouse trucks powered
trends in the market and competitive environment and from
by electric motors – one of the KION Group’s particular
the regulatory situation.
– Strategic opportunities are based on implementation of the
strengths;
– growing demand for automation solutions and fleet man-
Group’s strategy. They may lead to positive effects that
agement solutions in connection with the rapidly expanding
exceed planning assumptions.
– Business-performance opportunities arise in connection
with operational activities along the value chain, such as
e-commerce sector, as well as the realisation of Industry 4.0
concepts.
restructuring or cost-cutting measures.
Strategic opportunities
Opportunity situation
Market opportunities
The positive impact of strategic activities, such as the Strategy
2020, is already largely reflected in the expectations regarding the
KION Group’s financial performance in 2017. Nevertheless, the
individual activities could create positive effects that exceed
expectations. There is also a possibility that new strategic oppor-
The economy as a whole may perform better than expected
tunities that were not part of the planning may arise over the
in 2017. In addition, circumstances may occur in the wider market
course of the year, for example in the form of acquisitions and
at any time – such as quality problems at competitors or the
strategic partnerships.
effects of consolidation – that increase demand for products from
The KION Group’s medium- to long-term strategic opportu-
the KION Group brands. New, unforeseen regulatory initia-
nities in the Industrial Trucks & Services segment arise, in particu-
tives could be launched, for example the tightening of health
lar, from:
and safety regulations or emissions standards, that would push
up demand for products offered by the KION Group brands.
– a greater presence in the economy and volume price seg-
Average prices for procuring commodities over the year may be
ments, particularly as a result of the systematic implementa-
cheaper than anticipated.
tion of the groupwide platform strategy;
A N E W E R A
Annual Report 2016 | KION GROUP AG
COMBINED MANAGEMENT REPORT
Outlook, risk report and opportunity report
113
– strengthening of its market-leading position in core western
European markets by boosting its technological expertise
Business-performance opportunities
and making greater use of shared modules;
– expansion of the service portfolio, including financial ser-
Business-performance opportunities primarily arise from ongoing
activities to modernise and streamline the KION Group’s produc-
vices, at every stage of the product lifecycle, taking advan-
tion facilities and from the worldwide integration of the production
tage of the high number of trucks in use.
network. By investing in new locations, products can be assem-
bled nearer to the markets in which they are to be sold, econo-
The KION Group’s medium- to long-term strategic opportunities
mies of scale can be achieved across the Group and synergies
in the Supply Chain Solutions segment arise, in particular, from:
can be leveraged. Further development of the Group’s back-
– further consolidation of its position in the market for intralo-
office services will also help to achieve these objectives.
The following may lead to an increase in profitability in the
gistics solutions based on the growing acceptance of auto-
medium term:
mation concepts;
– the advancing digitalisation and automation of production
and supply chains as part of Industry 4.0.
– Ongoing efficiency increases at production sites may boost
– Effective use of global development capacities may create
sales and improve the gross margin.
synergies and economies of scale.
KION GROUP AG | Annual Report 2016
A N E W E R A
CONSOLIDATED FINANCIAL STATEMENTS
Contents
115
CONSOLIDATED
FINANCIAL STATEMENTS
116
CONSOLIDATED INCOME STATEMENT
117
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
118
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
120
CONSOLIDATED STATEMENT OF CASH FLOWS
122
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
124
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
124
145
155
191
Basis of presentation
Notes to the consolidated income statement
Notes to the consolidated statement of financial position
Other disclosures
232
AUDITORS’ REPORT
233
RESPONSIBILITY STATEMENT
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CONSOLIDATED FINANCIAL STATEMENTS
Contents
115
CONSOLIDATED
FINANCIAL STATEMENTS
116
CONSOLIDATED INCOME STATEMENT
117
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
118
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
120
CONSOLIDATED STATEMENT OF CASH FLOWS
122
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
124
124
145
155
191
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
Basis of presentation
Notes to the consolidated income statement
Notes to the consolidated statement of financial position
Other disclosures
232
AUDITORS’ REPORT
233
RESPONSIBILITY STATEMENT
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116
Consolidated income statement
Consolidated income statement
in € million
Revenue
Cost of sales 1
Gross profit
Selling expenses
Research and development costs 1
Administrative expenses
Other income
Other expenses
Profit (loss) from equity-accounted investments
Earnings before interest and taxes
Financial income
Financial expenses
Net financial expenses
Earnings before taxes
Income taxes
Current taxes
Deferred taxes
Net income
Note
[8]
[9]
[10]
[11]
[12]
[13]
[14]
Attributable to shareholders of KION GROUP AG
Attributable to non-controlling interests
Earnings per share according to IAS 33 (in €)
[16]
Basic earnings per share
Diluted earnings per share
1 Last year figures were adjusted due to a change in presentation in 2016, for details see note [7] to the consolidated financial statements
TABLE 038
2015
5,097.9
– 3,655.1
1,442.8
– 618.0
– 89.7
– 355.9
99.6
– 66.6
10.6
422.8
51.4
– 144.0
– 92.6
330.2
– 109.2
– 132.5
23.3
221.1
217.1
3.9
2.20
2.20
2016
5,587.2
– 4,034.6
1,552.6
– 662.4
– 96.5
– 411.2
87.7
– 41.9
6.5
434.8
88.9
– 184.5
– 95.7
339.2
– 93.1
– 86.2
– 6.9
246.1
245.5
0.5
2.38
2.38
A N E W E R A
Annual Report 2016 | KION GROUP AG
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated income statement
Consolidated statement of comprehensive income
117
Consolidated statement of
comprehensive income
Consolidated statement of comprehensive income
in € million
Net income
Items that will not be reclassified subsequently to profit or loss
Gains / losses on defined benefit obligation
thereof changes in unrealised gains and losses
thereof tax effect
Changes in unrealised gains and losses from equity-accounted
investments
Items that may be reclassified subsequently to profit or loss
Impact of exchange differences
thereof changes in unrealised gains and losses
thereof realised gains (–) and losses (+)
Gains / losses on hedge reserves
thereof changes in unrealised gains and losses
thereof realised gains (–) and losses (+)
thereof tax effect
Gains / losses from equity-accounted investments
thereof changes in unrealised gains and losses
Other comprehensive income
Total comprehensive income
Attributable to shareholders of KION GROUP AG
Attributable to non-controlling interests
Note
[29]
[40]
TABLE 039
2015
221.1
14.7
12.7
17.3
– 4.5
1.9
24.3
19.9
19.9
–
4.0
– 16.1
20.9
– 0.8
0.4
0.4
38.9
260.0
256.5
3.5
2016
246.1
– 50.4
– 50.1
– 66.9
16.7
– 0.2
108.3
109.8
109.8
–
– 1.7
21.8
– 24.0
0.4
0.1
0.1
57.9
304.0
304.0
– 0.1
KION GROUP AG | Annual Report 2016
A N E W E R A
118
Consolidated statement of financial position
Consolidated statement of financial position – Assets
TABLE 040
in € million
Goodwill
Other intangible assets
Leased assets
Rental assets
Other property, plant and equipment
Equity-accounted investments
Lease receivables
Other financial assets
Other assets
Deferred taxes
Non-current assets
Inventories
Trade receivables
Lease receivables
Income tax receivables
Other financial assets
Other assets
Cash and cash equivalents
Current assets
Total assets
Note
[17]
[17]
[18]
[19]
[20]
[21]
[22]
[23]
[24]
[14]
[25]
[26]
[22]
[14]
[23]
[24]
[27]
2016
3,605.8
2,630.9
429.7
575.3
679.1
72.7
531.3
47.5
12.3
420.2
9,004.6
672.4
998.9
200.3
35.2
82.0
86.2
279.6
2,354.6
2015
1,548.1
904.4
334.4
544.0
508.8
73.6
472.0
45.9
30.2
349.0
4,810.3
553.5
670.5
181.7
7.9
58.4
54.8
103.1
1,629.9
11,359.2
6,440.2
A N E W E R A
Annual Report 2016 | KION GROUP AG
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated statement of financial position
119
Consolidated statement of financial position – Equity and liabilities
TABLE 041
in € million
Subscribed capital
Capital reserve
Retained earnings
Accumulated other comprehensive loss
Non-controlling interests
Equity
Retirement benefit obligation
Non-current financial liabilities
Lease liabilities
Other non-current provisions
Other financial liabilities
Other liabilities
Deferred taxes
Non-current liabilities
Current financial liabilities
Trade payables
Lease liabilities
Income tax liabilities
Other current provisions
Other financial liabilities
Other liabilities
Current liabilities
Total equity and liabilities
Note
[28]
[29]
[30]
[31]
[32]
[34]
[35]
[14]
[30]
[33]
[31]
[14]
[32]
[34]
[35]
2016
108.6
2,444.4
183.4
– 207.0
5.7
2,535.1
991.0
2,889.1
722.0
92.3
349.3
202.8
905.3
2015
98.7
1,996.6
11.3
– 265.5
7.7
1,848.7
798.0
557.2
617.7
83.4
315.6
185.4
302.7
6,151.7
2,860.0
293.9
802.2
285.2
63.0
163.4
222.6
842.1
119.3
574.6
237.9
79.8
111.5
194.4
414.0
2,672.5
1,731.5
11,359.2
6,440.2
KION GROUP AG | Annual Report 2016
A N E W E R A
120
Consolidated statement of cash flows
Consolidated statement of cash flows
in € million
Earnings before interest and taxes
Note
Amortisation, depreciation and impairment charges of non-current assets
[15]
Other non-cash income (–) / expenses (+)
Gains (–) / losses (+) on disposal of non-current assets
Changes in leased assets (excluding depreciation) and lease
receivables / liabilities
Change in rental assets (excluding depreciation) and liabilities
for Finance Leases ¹
Change in inventories
Change in trade receivables / payables
Cash payments for defined benefit obligations
Change in other provisions
Change in other operating assets / liabilities
Taxes paid
Cash flow from operating activities
Cash payments for purchase of non-current assets
Cash receipts from disposal of non-current assets
Dividends received
2016
434.8
454.7
45.0
1.7
TABLE 042
2015
422.8
401.4
12.9
– 2.4
– 94.9
– 158.2
– 155.9
– 31.2
– 78.8
– 20.6
4.7
– 8.6
– 108.7
414.3
– 22.1
– 60.9
– 24.2
23.6
39.6
– 84.8
455.0
– 166.7
– 142.6
6.4
9.6
0.0
5.0
14.1
18.2
– 84.9
77.4
– 4.5
[18], [22], [31]
– 120.4
[19], [34]
[25]
[26], [33]
[29]
[32]
[37]
[37]
[37]
Acquisition of subsidiaries (net of cash acquired) and other equity investments
[5], [37]
– 2,118.7
Proceeds from disposal of shares from equity investments, net of cash
Cash receipts / payments for sundry assets
Cash flow from investing activities ¹
[37]
– 2,264.3
– 122.3
A N E W E R A
Annual Report 2016 | KION GROUP AG
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated statement of cash flows
121
Consolidated statement of cash flows
(continued)
in € million
Capital contribution from shareholders for the carried out capital increase
Capital increase from issuing of employee shares
Acquisition of treasury shares
Dividend of KION GROUP AG
Dividends paid to non-controlling interests
Cash receipts / payments for changes in ownership interests in subsidiaries
without change of control
Financing costs paid
Proceeds from borrowings
Repayment of borrowings
Interest received
Interest paid
Cash payments from other financing activities
Cash flow from financing activities
Effect of foreign exchange rate changes on cash and cash equivalents
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
Note
[37]
[28]
[37]
[37]
[37]
[37]
[37]
[37]
[37]
2016
456.7
3.2
– 2.8
– 76.0
– 2.1
0.3
– 23.2
4,362.5
– 2,618.5
8.0
– 76.3
– 5.5
2,026.3
0.2
176.5
103.1
279.6
TABLE 042
2015
0.0
3.1
– 2.7
– 54.3
– 1.5
0.5
– 5.6
911.0
– 1,134.9
7.1
– 50.4
– 1.2
– 329.1
0.5
4.1
98.9
103.1
1 Last year figures were adjusted due to a change in presentation, for details see note [37] to the consolidated financial statements
KION GROUP AG | Annual Report 2016
A N E W E R A
122
Consolidated statement of changes in equity
Consolidated statement of changes in equity
in € million
Balance as at 01/01/2015
Net income for the year
Other comprehensive income (loss)
Comprehensive income (loss)
Dividend of KION GROUP AG
Dividends paid to non-controlling interests
Acquisition of treasury shares
Changes from employee share option programme
Effects from the acquisition / disposal of
non-controlling interests
Changes from application of the equity-method
Other changes
Balance as at 31/12/2015
Balance as at 01/01/2016
Net income for the year
Other comprehensive income (loss)
Comprehensive income (loss)
Capital increase
Transaction costs
Dividend of KION GROUP AG
Dividends paid to non-controlling interests
Acquisition of treasury shares
Changes from employee share option programme
Effects from the acquisition / disposal of
non-controlling interests
Other changes
Balance as at 31/12/2016
Note
Subscribed
capital
98.7
Capital
reserves
1,996.2
[28]
[28]
[28]
[28]
[28]
[28]
[28]
[28]
[28]
[28]
[28]
[28]
[28]
[28]
0.0
0.0
– 0.1
0.1
98.7
98.7
0.0
9.9
– 0.1
0.0
– 2.6
3.0
1,996.6
1,996.6
0.0
449.4
– 2.0
– 2.7
3.2
108.6
2,444.4
Retained
earnings
– 148.2
217.1
217.1
– 54.3
– 3.2
– 0.1
11.3
11.3
245.5
245.5
– 76.0
2.6
183.4
A N E W E R A
Annual Report 2016 | KION GROUP AG
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated statement of changes in equity
123
Accumulated other comprehensive income (loss)
Cumulative
translation
adjustment
Gains / losses
on defined
benefit
obligation
Gains / losses
on hedge
reserves
Gains / losses
from equity-
accounted
investments
Equity
attributable to
shareholders of
KION GROUP AG
Non-
controlling
interests
– 31.7
– 264.6
– 4.2
– 4.3
1,641.8
20.3
20.3
12.7
12.7
4.0
4.0
2.3
2.3
217.1
39.4
256.5
– 54.3
0.0
– 2.7
3.1
0.0
– 3.2
– 0.1
– 11.4
– 251.9
– 11.4
– 251.9
110.4
110.4
– 50.1
– 50.1
– 0.2
– 0.2
– 1.7
– 1.7
– 2.0
1,841.0
– 2.0
1,841.0
– 0.1
– 0.1
245.5
58.5
304.0
459.3
– 2.0
– 76.0
0.0
– 2.8
3.2
0.0
2.6
99.0
– 302.0
– 1.9
– 2.2
2,529.4
5.3
3.9
– 0.4
3.5
0.0
– 1.5
0.0
0.0
0.3
0.0
0.0
7.7
7.7
0.5
– 0.6
– 0.1
0.0
0.0
0.0
– 2.1
0.0
0.0
0.2
0.0
5.7
TABLE 043
Total
1,647.1
221.1
38.9
260.0
– 54.3
– 1.5
– 2.7
3.1
0.3
– 3.2
– 0.1
1,848.7
1,848.7
246.1
57.9
304.0
459.3
– 2.0
– 76.0
– 2.1
– 2.8
3.2
0.2
2.6
2,535.1
KION GROUP AG | Annual Report 2016
A N E W E R A
124
Notes to the consolidated financial statements
Basis of presentation
[1] GENERAL INFORMATION ON
THE COMPANY
In order to improve the clarity of presentation, certain items are
aggregated in the statement of financial position and the income
statement. The items concerned are disclosed and explained
separately in the notes. Assets and liabilities are broken down into
current and non-current items in accordance with IAS 1.60. The
KION GROUP AG, whose registered office is at Abraham- Lincoln-
consolidated income statement is prepared in accordance with the
Strasse 21, 65189 Wiesbaden, Germany, is entered in the com-
cost of sales (function-of-expense) method.
mercial register at the Wiesbaden local court under reference
The consolidated financial statements are prepared in euros,
HRB 27060.
which is the Group’s functional currency and reporting currency.
The KION Group is a global leader in industrial trucks, ware-
All amounts are disclosed in millions of euros (€ million) unless
house technology, related services and supply chain solutions. In
stated otherwise. The addition of the totals presented may result
2016, the Group’s 30,000 highly skilled employees generated
in minor rounding differences. The percentages shown are calcu-
€5,587.2 million in revenue (2015: €5,097.9 million).
lated on the basis of the respective amounts, rounded to the
The consolidated financial statements and the combined
nearest thousand euros. The separate financial statements of the
group management report and management report of the Com-
subsidiaries included in the consolidation were prepared as at
pany were prepared by the Executive Board of KION GROUP AG
the same reporting date as the annual financial statements of
on 22 February 2017.
KION GROUP AG.
[2] BASIS OF PREPARATION
Financial reporting standards to be adopted
for the first time in the current financial year
The following financial reporting standards were adopted for the
The consolidated financial statements of the KION Group for the
first time in 2016:
financial year ended 31 December 2016 have been prepared in
accordance with section 315a of the German Commercial Code
– Amendments to IFRS 10 ‘Consolidated Financial State-
(HGB) in conjunction with the International Financial Reporting
ments’, IFRS 12 ‘Disclosure of Interests in Other Entities’ and
Standards (IFRSs) of the International Accounting Standards
IAS 28 ‘Investments in Associates and Joint Ventures’, clarifi-
Board (IASB) applicable as at the reporting date as well as the
cation relating to application of the exception to the consoli-
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 inter-
national accounting standards. All of the IFRSs and IFRICs that
had been enacted by the reporting date and that were required to
dation obligation for investment entities
relating to the acquisition of interests in joint operations
– Amendments to IFRS 11 ‘Joint Arrangements’: clarification
– Amendments to IAS 1 ‘Presentation of Financial Statements’:
– Amendments to IAS 16 ‘Property, Plant and Equipment’ and
amendments in connection with the disclosure initiative
be applied in the 2016 financial year have been applied in prepar-
IAS 38 ‘Intangible Assets’: clarification relating to revenue-
ing the consolidated financial statements.
based depreciation and amortisation
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
125
Basis of presentation
– Amendments to IAS 16 ‘Property, Plant and Equipment’ and
– Amendments to IAS 12 ‘Income Taxes’: amendments relating
IAS 41 ‘Agriculture’: amendments relating to the financial
to the recognition of deferred tax assets for unrealised losses
reporting for bearer plants
– Amendments to IAS 19 ‘Employee Benefits’: defined benefit
– Amendments to IAS 27 ‘Separate Financial Statements’:
plans: employee contributions
amendments relating to the application of the equity method
for subsidiaries, joint ventures and associates in separate
financial statements
– Annual Improvements to IFRSs (2010 – 2012)
– Annual Improvements to IFRSs (2012 – 2014).
on available-for-sale financial assets
– Amendments to IAS 40 ‘Investment Property’: clarification
in relation to transfers of property to, or from, investment
property
– IFRIC 22 ‘Foreign Currency Transactions and Advance Con-
– Annual Improvements to IFRSs (2014 – 2016).
sideration’
These standards and interpretations are expected to be applied
by the entities included in the KION Group only from the date on
The first-time adoption of these amendments to standards has
which they must be adopted for the first time. Initial information
had no significant effect on presentation of the financial perfor-
from an analysis of the impact from the first-time adoption of
mance, financial position or notes to the financial statements of
IFRS 15 ‘Revenue from Contracts with Customers’ and IFRS 16
the KION Group.
Financial reporting standards released
but not yet adopted
‘Leases’ indicates that there is likely to be a clear impact on finan-
cial position, especially as a consequence of the greater recogni-
tion of indirect end customer finance and purchase leases in the
statement of financial position. Effects will arise both from the
application of the control principle in IFRS 15 and from the appli-
cation of the right-of-use approach specified by IFRS 16. The
In its consolidated financial statements for the year ended
implications for financial position and financial performance from
31 December 2016, the KION Group has not applied the following
the first-time application of IFRS 15 ‘Revenue from Contracts with
standards and interpretations, which have been issued by the
Customers’ in respect of revenue from construction contracts
IASB but were not yet required to be adopted in 2016:
and of IFRS 9 ‘Financial Instruments’, especially in relation to the
– Amendments to IFRS 2 ‘Share-based Payment’: amend-
subsequent measurement of financial assets, are currently still
being analysed. The effects of the first-time adoption of the other
ments relating to the classification and measurement of
standards and interpretations on the presentation of the financial
share-based payment transactions
– Amendments to IFRS 4 ‘Insurance Contracts’: exempting
provisions relating to the adoption of IFRS 9 ‘Financial Instru-
ments’ before the effective date of the new version of IFRS 4
– IFRS 9 ‘Financial Instruments’
– IFRS 15 ‘Revenue from Contracts with Customers’
– Clarifications to IFRS 15 ‘Revenue from Contracts with
Customers’: amendments relating to the identification of
position and financial performance of the KION Group are
expected to be insignificant.
[3] PRINCIPLES OF CONSOLIDATION
performance obligations, classification as principal or agent,
Acquisitions are accounted for using the acquisition method. In
revenue from licenses and transition relief
– IFRS 16 ‘Leases’
– Amendments to IAS 7 ‘Statement of Cash Flows’: amend-
accordance with IFRS 3, the identifiable assets and the liabilities
assumed on the acquisition date are recognised separately from
goodwill, irrespective of the extent of any non-controlling inter-
ments in connection with the disclosure initiative
ests. The identifiable assets acquired and the liabilities assumed
are measured at their fair value.
KION GROUP AG | Annual Report 2016
A N E W E R A
126
The amount recognised as goodwill is calculated as the amount
by which the acquisition cost, the amount of non-controlling
interests in the acquiree and the fair value of all previously held
equity interest at the acquisition date exceeds the fair value of
[4] BASIS OF CONSOLIDATION
the acquiree’s net assets. If the cost of acquisition is lower than
KION GROUP AG’s equity investments include subsidiaries, joint
the fair value of the acquiree’s net assets, the difference is rec-
ventures, associates and financial investments.
ognised in income.
In addition to KION GROUP AG, the consolidated financial
For each acquisition, the Group decides on a case-by-case
statements of the KION Group include, using the acquisition
basis whether the non-controlling interest in the acquiree is rec-
method, all material subsidiaries over which KION GROUP AG
ognised at fair value or as a proportion of the net assets of the
exercises control. KION GROUP AG controls a subsidiary if it has
acquiree. The option to recognise non-controlling interests at fair
decision-making power over the main activities of the entity and
value is not currently exercised. Consequently, non-controlling
can use this power to affect the amount of the variable returns to
interests are recognised at the proportionate value of the net
which it is exposed as a result of the equity investment. Subsidi-
assets attributable to them excluding goodwill.
aries acquired in the course of the financial year are consolidated
In the case of business combinations in stages, previously
from the date on which control is obtained. Companies sold in the
held equity interests are recognised at their fair value at the acqui-
course of the financial year are deconsolidated from the date on
sition date. The difference between their carrying amount and fair
which control is lost.
value is recognised in the consolidated income statement.
A joint venture is an equity interest in which the entity is jointly
For the purpose of impairment testing, goodwill is allocated
managed by companies in the KION Group and one or more
to cash-generating units that are likely to benefit from the busi-
partners on the basis of a contractual agreement, and these par-
ness combination.
ties have rights to the net assets of the joint venture.
Transaction costs are immediately taken to income. Contin-
Associates are entities in which companies in the KION Group
gent consideration elements are included at fair value at the date
are able to exercise significant influence, either directly or indi-
of acquisition when determining the purchase consideration.
rectly, over the financial and operating policies of the entity con-
Contingent consideration elements may consist of equity instru-
cerned. Significant influence is assumed when KION GROUP AG
ments or financial liabilities. Depending on the category, changes
holds between 20 per cent and 50 per cent of the voting rights.
in their fair value are included in subsequent measurements.
Equity interests over which KION GROUP AG is unable to
The consolidated financial statements include all of the parent
exercise control or a significant influence, or that are not jointly con-
company’s material subsidiaries. Intragroup balances, transactions,
trolled by KION GROUP AG, are classified as financial investments.
income and expenses, and gains and losses on intercompany
The number of equity investments broken down by category
transactions are eliminated in full. Deferred taxes are recognised on
is shown in > TABLE 044.
temporary differences arising from consolidation transactions.
Transactions with non-controlling interests are treated as trans-
actions with the Group’s equity providers. Differences between the
consideration paid for the acquisition of a non-controlling interest
and the relevant proportion of the carrying amount of the subsid-
iary’s net assets are recognised in equity. Gains and losses aris-
ing from the sale of non-controlling interests are also recognised
in equity, provided there is no change in control.
Associates and joint ventures that are of material importance to
the presentation of the financial position and financial performance
of the KION Group are accounted for using the equity method.
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
127
Basis of presentation
Shareholdings by categories
TABLE 044
01/01/2016
Additions
Disposals
31/12/2016
Consolidated subsidiaries
Domestic
Foreign
Equity-accounted associates and joint ventures
Domestic
Foreign
Non-consolidated subsidiaries and other investments
Domestic
Foreign
102
22
80
9
5
4
55
14
41
40
4
36
–
–
–
11
–
11
3
1
2
–
–
–
6
1
5
139
25
114
9
5
4
60
13
47
A total of 25 German (2015: 22) and 114 foreign (2015: 80) subsid-
Where other requirements are met, the fully consolidated
iaries were fully consolidated in addition to KION GROUP AG as
companies listed in > TABLE 045 are exempt from the obligation to
at 31 December 2016. The acquisition of the Dematic Group
disclose annual financial statements and to prepare notes to the
involved the acquisition of DH Services Luxembourg Holding
financial statements and management reports in accordance
S.à r.l., Luxembourg, plus its 33 subsidiaries (see note [5]).
with sections 264 (3) and 264b HGB on account of their inclusion in
As had been the case a year earlier, nine joint ventures and
the consolidated financial statements. In the case of KION Hold-
associates were accounted for under the equity method as at
ing 2 GmbH and STILL Financial Services GmbH, it has been
31 December 2016. In each case, the last available annual finan-
decided solely not to disclose the annual financial statements.
cial statements were used as the basis for measurement.
A detailed overview of all the direct and indirect sharehold-
60 (2015: 55) companies with minimal business volumes or
ings of KION GROUP AG is shown in the list of shareholdings
no business operations were not included in the consolidation.
(note [47]).
The non-consolidated subsidiaries and other equity invest-
ments (joint ventures and associates that are not accounted for
using the equity method, plus financial investments) are of minor
importance to the presentation of the financial position and financial
performance of the KION Group, both individually and as a whole.
KION GROUP AG | Annual Report 2016
A N E W E R A
128
German entities exempted from disclosure requirements
Entities exempted
BlackForxx GmbH
Eisenwerk Weilbach GmbH
Fahrzeugbau GmbH Geisa
KION Financial Services GmbH
KION Holding 2 GmbH
KION Information Management Services GmbH
KION Warehouse Systems GmbH
Klaus Pahlke GmbH & Co. Fördertechnik KG
Linde Material Handling GmbH
LMH Immobilien GmbH & Co. KG
LMH Immobilien Holding GmbH & Co. KG
Schrader Industriefahrzeuge GmbH & Co. KG
STILL Financial Services GmbH
STILL Gesellschaft mit beschränkter Haftung
Urban-Transporte Gesellschaft mit beschränkter Haftung
TABLE 045
Head office
Stuhr
Wiesbaden
Geisa
Wiesbaden
Wiesbaden
Wiesbaden
Reutlingen
Haan
Aschaffenburg
Aschaffenburg
Aschaffenburg
Essen
Hamburg
Hamburg
Unterschleißheim
[5] ACQUISITIONS
Dematic
position as a full-service provider of intelligent supply chain and
automation solutions and can benefit from megatrends, such as
digitalisation and the growing e-commerce business. With tech-
nology centres and production facilities worldwide, Dematic has
more than 100 sites in 22 countries.
The cash consideration paid for the acquired net assets
On 21 June 2016, the KION Group reached agreement with funds
amounted to €1,782.7 million, plus €383.4 million to extinguish
managed by AEA Investors and the Ontario Teachers’ Pension
debt instruments. A cash flow hedge in connection with the pur-
Plan to acquire 100 per cent of the capital and voting shares in
chase price obligation denominated in foreign currency (see
DH Services Luxembourg Holding S.à r.l., Luxembourg. The deal
note [40]) gave rise to exchange-rate-driven changes of €10.4 mil-
was completed on 1 November 2016. DH Services Luxembourg
lion, which were recognised as a basis adjustment. The forward
Holding S.à r.l. is the parent company of the Dematic Group. The
exchange deals involved had been recognised beforehand using
acquisition of Dematic, a leading specialist for automation and
hedge accounting.
optimisation of supply chains, will make the KION Group one of
The incidental acquisition costs incurred by this business
the world’s top suppliers of solutions for Intralogistics 4.0. The
combination amounted to €20.2 million and have been recog-
KION Group’s sales and service network, technology and
nised in consolidated profit or loss under administrative expenses.
resources will enable it to offer customers of all sizes in diverse
The impact of this acquisition on the consolidated financial state-
industries worldwide a complete range of material handling
ments of KION GROUP AG based on the incomplete figures
products and services. The KION Group is thus strengthening its
available at the acquisition date is shown in > TABLE 046.
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
129
Basis of presentation
Impact of the acquisition of Dematic on the financial position of the KION Group
TABLE 046
in € million
Goodwill
Customer relationships
Brand names
Technology & development
Other intangible assets
Other property, plant and equipment
Deferred taxes
Other non-current assets
Non-current assets
Inventories
Trade receivables
Cash and cash equivalents
Other current assets
Current assets
Total assets
Retirement benefit obligation
Non-current financial liabilities
Deferred taxes
Other non-current liabilities
Non-current liabilities
Current financial liabilities
Trade payables
Other current liabilities
Current liabilities
Total liabilities
Total net assets
Cash payment
Repayment of debt instruments
Consideration transferred
Fair value at the
acquisition date
1,925.7
673.5
349.7
515.6
127.1
153.4
105.0
28.2
3,878.2
83.1
255.1
74.6
69.3
482.1
4,360.3
98.3
516.1
614.6
10.5
1,239.5
334.8
220.3
399.6
954.7
2,194.2
2,166.1
1,782.7
383.4
2,166.1
KION GROUP AG | Annual Report 2016
A N E W E R A
130
It has not been possible to complete the analysis of the acquired
An agreement was reached with a group of banks for a
assets and assumed liabilities before the publication date for
bridge loan (acquisition facilities agreement, AFA) to finance the
these consolidated financial statements because of the timing of
acquisition of Dematic. The original amount of the AFA was
the deal close to the reporting date, the complexity of the busi-
€3,000.0 million. This bridge loan was to be refinanced partly by
ness model and the extent of the detailed information necessary
long-term capital-market and bank debt and partly by equity. For
to carry out the measurements. The above acquisition’s purchase
this reason, KION GROUP AG implemented a capital increase in
price allocation as at 31 December 2016 should therefore be
July 2016 that generated gross proceeds of €459.3 million (see
treated as incomplete in terms of the recognition and measure-
disclosures in note [28]). The agreed financing volume was
ment of the acquired net assets at fair value – especially the
reduced by the proceeds from the issue of shares and, when the
measurement of the intangible assets, property, plant and equip-
AFA was drawn down for the first time on 1 November 2016,
ment, construction contracts, inventories and provisions. Addi-
amounted to €2,543.2 million.
tionally, the deferred taxes should be considered as incomplete.
The line item ‘Acquisition of subsidiaries (net of cash acquired)
Furthermore, the reported purchase price should be viewed as
and other equity investments’ in the consolidated statement of
incomplete due to contractual verification by KION. The goodwill
cash flows contains a net cash outflow of €2,091.1 million for the
represents both the well-qualified workforce and the KION
acquisition of the Dematic Group.
Group’s expectations of revenue synergies. The latter will be gen-
erated on the sales side as Dematic makes use of the compre-
hensive sales and service organisation of Linde and STILL in
Retrotech Inc.
Europe. At the same time, Dematic’s strong market position in
North America and elsewhere should help to stimulate the truck
On 8 February 2016, the KION Group reached agreement on the
business outside Europe. The goodwill arising from this acquisi-
acquisition of Retrotech Inc., a US systems integrator of auto-
tion is currently not tax deductible. The derived goodwill is initially
mated warehouse and distribution solutions. The transaction was
being assigned to the Dematic cash-generating unit (CGU).
closed on 1 March 2016. The purchase price for the 100 per cent
For now, the useful lives applied to the customer relationships
stake in Retrotech Inc., which is headquartered in Rochester,
are 10 to 15 years, and to technology & development 15 years.
New York State, was €25.0 million.
The receivables acquired as part of this transaction, which
The incidental acquisition costs incurred by this business
largely constitute trade receivables (€170.9 million) and unbilled
combination amounted to €0.7 million. They have been recog-
receivables from construction contracts with a net credit balance
nised as an expense for the current period and reported as
(€96.1 million), totalled €267.1 million gross. At the acquisition
administrative expenses in the consolidated income statement.
date, it was assumed that trade receivables of €11.4 million and
The impact of this acquisition on the consolidated financial state-
unbilled receivables from construction contracts with a net credit
ments of KION GROUP AG based on the figures available at the
balance of €0.5 million would not be recoverable. Consolidated
acquisition date is shown in > TABLE 047.
revenue rose by €259.5 million as a result of the acquisition. The
net income reported for 2016 contains a loss totalling €26.5 mil-
lion attributable to the entities acquired. If the business combina-
tion had been in place for the whole of the year, i.e. from 1 Janu-
ary 2016, this would have caused an increase in revenue of
€1,705.0 million and a decrease in net income of €128.2 million for
the KION Group in 2016. The loss from the acquired entities
results from non-operating losses in the course of the amortisa-
tion of the fair values determined for the acquired assets on initial
recognition of the business combination.
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
131
Basis of presentation
Impact of the acquisition of Retrotech Inc. on the financial position of the KION Group
TABLE 047
in € million
Goodwill
Other intangible assets
Trade receivables
Cash and cash equivalents
Other assets
Total assets
Financial liabilities
Trade payables
Other current financial liabilities
Other liabilities
Total liabilities
Total net assets
Cash payment
Consideration transferred
Fair value at the
acquisition date
24.3
15.4
8.8
1.7
3.0
53.2
9.6
7.5
5.0
6.2
28.3
25.0
25.0
25.0
As part of this transaction, receivables in a gross amount of
deferred tax liabilities recognised thereon, which caused the
€8.8 million were acquired, of which €5.3 million constituted
goodwill recognised to reduce by a total of €2.0 million.
unbilled receivables from construction contracts with a net credit
The goodwill represents the KION Group’s expectations of
balance. At the acquisition date, the amount of acquired trade
strategic and geographical synergies, and the benefit of the
receivables that could not be recovered was insignificant. Con-
well-qualified workforce. The goodwill arising from this acquisi-
solidated revenue rose by €17.5 million as a result of the acqui-
tion is currently not tax deductible. The derived goodwill is
sition. The net income reported for 2016 contains a loss totalling
assigned to the Egemin Automation CGU.
€4.9 million attributable to the entity acquired. If this business
The line item ‘Acquisition of subsidiaries (net of cash acquired)
combination had been in place for the whole of the year, i.e.
and other equity investments’ in the consolidated statement of
from 1 January 2016, this would have had no material impact on
cash flows contains a net cash outflow of €23.2 million for the
either the revenue or the net income (loss) reported by the KION
acquisition of Retrotech Inc.
Group for 2016.
In the second quarter of 2016, the main item was a change in
the measurement of other intangible assets within the measure-
ment period. In addition to the increase in other intangible assets,
this adjustment also caused a countervailing increase in the
KION GROUP AG | Annual Report 2016
A N E W E R A
132
Other acquisitions
The impact of these acquisitions on the consolidated financial
statements of KION GROUP AG based on the figures available at
In October 2015, 100.0 per cent of the shares in the dealer
their acquisition dates is shown in > TABLE 048.
Emhilia Material Handling S.p.A. (formerly Moden Diesel S.p.A.),
Modena, Italy, had been acquired. At the end of October 2015,
The goodwill constitutes the strategic, technological and geo-
100.0 per cent of the shares in LR Intralogistik GmbH, Wörth an
graphical synergies that the KION Group expects to derive from
der Isar, Germany, a specialist in intralogistics concepts that
these business combinations. None of the goodwill arising from the
eschew forklift trucks in favour of tugger trains, had also been
other acquisitions is currently tax deductible. The goodwill derived
acquired. These two subsidiaries were included in the KION
from these acquisitions is assigned to the STILL EMEA CGU.
Group’s basis of consolidation for the first time in January 2016
The contingent considerations in connection with the acqui-
because they had become more financially important.
sition of LR Intralogistik GmbH contractually oblige the KION
With effect from 1 September 2016, 100.0 per cent of the
Group to make additional payments to the previous shareholders
shares in the dealer STILL Norge AS (formerly Roara AS), Heim-
that are mainly dependent on the usability of certain intangible
dal, Norway, were acquired. The purchase consideration for
assets. The line item ‘Acquisition of subsidiaries (net of cash
these shares was €0.7 million.
acquired) and other equity investments’ in the consolidated state-
Impact of other acquisitions on the financial position of the KION Group
in € million
Goodwill
Other intangible assets
Leased / Rental assets
Trade receivables
Cash and cash equivalents
Other assets
Total assets
Financial liabilities
Trade payables
Other liabilities
Total liabilities
Total net assets
Cash payment
Contingent consideration
Consideration transferred
TABLE 048
Fair value at the
acquisition date
12.2
4.6
13.6
5.8
2.6
9.4
48.2
2.7
8.4
16.8
27.9
20.3
13.9
6.4
20.3
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
133
Basis of presentation
ment of cash flows contains – in addition to cash payments
which an entity operates. The modified closing-rate method is
(€0.3 million) – a cash outflow totalling €4.1 million that relates to
used for currency translation.
these contingent considerations.
The assets and liabilities of foreign subsidiaries, including
The purchase price allocation for the acquisition of STILL
goodwill, are translated at the middle spot exchange rate, i.e. at
Norge AS was incomplete as at 31 December 2016 because
the average of the bid or offer rates on the reporting date.
some details, particularly in the area of intangible assets, and
Income and expenses are translated at the average rate. With
lease data had not yet been fully evaluated. The contingent con-
the exception of income and expenses recognised as other
siderations in connection with the acquisition of STILL Norge AS
comprehensive income (loss), equity is recognised at historical
(€0.5 million) contractually oblige the KION Group to make addi-
rates. The resulting translation differences are not taken to
tional payments to the previous shareholders that are mainly
income and are recognised in other comprehensive income
dependent on the achievement of defined EBIT targets for the
(loss) until subsidiaries are disposed of.
years 2017 to 2019.
[6] CURRENCY TRANSLATION
The financial statements of foreign equity-accounted invest-
ments are also translated using the method described above.
Transactions of the consolidated entities 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-mone-
tary items at the rate prevailing on the transaction date. Currency
Financial statements in foreign currencies are translated in
translation differences are taken to income and recognised in
accordance with the functional currency concept (IAS 21 ‘The
other income / expenses or in net financial income / expenses.
Effects of Changes in Foreign Exchange Rates’). The functional
The translation rates used for currencies that are material to
currency is the currency of the primary economic environment in
the financial statements are listed in > TABLE 049.
Major foreign currency rates in €
China (CNY)
United Kingdom (GBP)
U.S.A. (USD)
Average rate
Closing rate
2016
7.3501
0.8193
1.1069
2015
6.9767
0.7264
1.1103
2016
7.3382
0.8535
1.0517
TABLE 049
2015
7.0914
0.7375
1.0857
KION GROUP AG | Annual Report 2016
A N E W E R A
134
[7] ACCOUNTING POLICIES
completion). Revenue from long-term service agreements is there-
fore recognised on the basis of the average term of the service
agreements and in line with progressive costs (constant margin).
Revenue from financial service transactions is recognised in
The accounting policies applied in these consolidated financial
the amount of the sale value of the leased asset if classified as a
statements are, besides the aforementioned accounting policies
finance lease and in the amount of the lease payments if classi-
to be adopted for the first time in 2016, fundamentally the same
fied as an operating lease. If industrial trucks are first sold to and
as those used for the year ended 31 December 2015. These con-
then leased back from a finance partner to refinance leases, the
solidated financial statements are based on the financial state-
selling margin in connection with an operating lease sub-lease is
ments of the parent company and its consolidated subsidiaries
deferred and recognised as revenue in profit or loss over the term
prepared in accordance with the standard accounting policies
of the refinancing. As part of the financial services provided by the
applicable throughout the KION Group.
Group, industrial trucks are also sold to finance partners who
Revenue recognition
then enter into leases directly with the end customer (‘indirect end
customer finance’). 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
Revenue is the fair value of the consideration received for the sale
result of an agreed customer default guarantee (‘sale with risk’),
of products and services and rental and lease income (excluding
the proceeds from the sale are deferred and recognised as reve-
VAT) after deduction of trade discounts and rebates. In accord-
nue on a straight-line basis over the term until the residual value
ance with IAS 18, revenue is recognised when it is sufficiently
guarantee or the default guarantee expires.
probable that a future economic benefit will accrue to the entity
and that it can be reliably measured. Other criteria may arise,
Construction contracts
depending on each individual transaction, such as:
Sale of goods
Revenue from construction contracts is recognised according to
the stage of completion (percentage-of-completion method).
With the exception of items classified as ‘sale with risk’, revenue
Interest income and royalties
from the sale of goods is recognised when the KION Group
delivers goods to a customer, the risks and rewards incidental to
Interest income is recognised pro rata temporis in accordance
the ownership of the goods sold are substantially transferred to
with the effective interest method. Income from royalties is
the customer and the flow of benefits to the Group is considered
deferred in accordance with the substance of the relevant agree-
to be sufficiently probable. If a customer is expected to accept
ments and recognised pro rata temporis.
goods but has yet to do so, the corresponding revenue is only
Information on the deferral of lease income is contained in the
recognised when the goods are accepted. Appropriate provi-
disclosures on the accounting treatment of leases.
sions are recognised for risks relating to the sale of goods.
Rendering of services
Cost of sales
Revenue from the rendering of services is recognised in the year
The cost of sales comprises the cost of goods and services sold
in which the services are rendered. For services provided over
and includes directly attributable material and labour costs as
several periods, revenue is recognised in accordance with the
well as directly attributable overheads, including depreciation of
proportion of the total services rendered in each period (stage of
production equipment and amortisation of certain intangible
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
135
Basis of presentation
assets, as well as write-downs of inventories. Cost of sales also
Trucks & Services, Supply Chain Solutions and Corporate Ser-
includes additions to warranty provisions, which are recognised
vices segments. The 2016 forecast, the budget for 2017, the
in the amount of the estimated cost at the date on which the
medium-term planning for 2018 to 2019 and the KION Group’s
related product is sold.
internal projections for 2020 to 2021 were drawn up on the basis
Financial income and expenses
of this reporting structure.
The CGUs identified for the purposes of testing goodwill and
brand names for impairment equate to the following operating
units treated as independent CGUs: LMH EMEA, STILL EMEA,
Financial income and expenses mainly consist of interest
KION APAC, KION Americas, Dematic and Egemin Automation.
expenses on financial liabilities, interest income from financial
The recoverable amount of a CGU is determined by calculat-
receivables, interest income from leases and the interest cost on
ing its value in use on the basis of the discounted cash flow
leases, exchange rate gains and losses on financial activities and
method. The cash flows forecast for the next five years are
the net interest cost of the defined benefit obligation.
included in the calculation for the impairment test in accordance
Interest income and expenses are recognised in profit and
with IAS 36.33(b). The financial forecasts are based on assump-
loss in accordance with the effective interest method. The effec-
tions relating to the development of the global economy, com-
tive interest method is used for calculating the amortised cost of
modity prices and exchange rates. Cash flows beyond the five-
a financial asset or financial liability and the allocation of interest
year planning horizon were extrapolated for the LMH EMEA,
income and interest expenses over the relevant periods.
STILL EMEA, KION APAC, KION Americas, Dematic and Egemin
Dividends are recognised in income when a resolution on
Automation CGUs using a growth rate of 0.5 per cent (2015:
distribution has been passed. They are reported in the consoli-
1.0 per cent).
dated income statement under other income, provided they are
CGU cash flows are discounted using a weighted average
dividends from subsidiaries carried at cost.
cost of capital (WACC) that reflects current market assessments
Goodwill
of the specific risks to individual CGUs. The underlying capital
structure for the LMH EMEA, STILL EMEA, KION APAC and KION
Americas CGUs is determined by comparing peer group compa-
nies in the same sector. The beta factor derived from this peer
Goodwill has an indefinite useful life and is not amortised. Instead,
group was 1.00 (2015: 1.07). Yield curve data from the European
it is tested for impairment in accordance with IAS 36 (‘Impairment
Central Bank (three-month average, rounded) was used to deter-
of Assets’) at least once a year, and more frequently if there are
mine the risk-free interest rate; as at 1 November 2016 the rate
indications that the asset might be impaired.
was 0.6 per cent (1 November 2015: 1.5 per cent). The market risk
Impairment testing for goodwill is performed at the level of
premium derived from empirical studies of the capital markets
the individual cash-generating units (CGUs) or groups of CGUs.
was set at 7.0 per cent (2015: 7.0 per cent) and was at the upper
A CGU is defined as the smallest identifiable group of assets that
end of the band recommended by the technical committee for
generates cash inflows from continuing use that are largely inde-
business valuation and administration (FAUB) of the German Insti-
pendent of the cash inflows from other assets or groups of
tute of Auditors (IDW), which is 5.5 per cent to 7.0 per cent. The
assets. CGUs are generally based on the lowest level of an entity
implied return on equity was 7.6 per cent, which was slightly lower
at which – for internal management purposes – the management
than in the previous year (2015: 8.5 per cent). The assumed coun-
systematically monitors and controls the goodwill. However, a
try risk was 0.16 per cent for the LMH EMEA CGU, 0.21 per cent
CGU may not be larger than an operating segment as defined in
for the STILL EMEA CGU, 0.78 per cent for the KION APAC CGU
IFRS 8 ‘Operating Segments’.
and 1.67 per cent for the KION Americas CGU. A leverage ratio of
For the purposes of internal and external reporting, the activ-
25.8 per cent (2015: 25.7 per cent) was calculated based on the
ities of the KION Group are broken down into the Industrial
capital structure determined for the peer group.
KION GROUP AG | Annual Report 2016
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A leveraged beta of 0.88 (2015: 0.95) was used to determine the
Other intangible assets with an indefinite useful life are carried
country-specific WACC for Dematic and Egemin Automation on
at cost and are mainly capitalised brand names. Brand names are
the basis of the sector-specific peer group. The risk-free interest
not amortised because they have been established in the market
rate for the US as at 1 November 2016 was 2.5 per cent; the
for a number of years and there is no foreseeable end to their use-
country-specific risk premium for the US was set at 0.15 per cent.
ful life. In accordance with IAS 36, they are tested for impairment
The risk-free interest rate for Belgium as at 1 November 2016
at least once a year or whenever there are indications that the
was 0.6 per cent (1 November 2015: 1.5 per cent); the coun-
asset might be impaired. The impairment test is performed in the
try-specific risk premium for Belgium was set at 0.15 per cent
same way as the impairment test for goodwill. Assessments of
(1 November 2015: 0.5 per cent). The WACC before tax, which is
indefinite useful life are carried out in every period.
used to discount the estimated cash flows, was calculated at
Development costs are capitalised if the following can be
9.1 per cent for LMH EMEA, 9.2 per cent for STILL EMEA,
demonstrated:
9.6 per cent for KION APAC, 11.2 per cent for KION Americas,
10.4 per cent for Dematic and 9.5 per cent for Egemin Automa-
tion. The WACC after tax was 6.5 per cent for LMH EMEA,
6.6 per cent for STILL EMEA, 7.2 per cent for KION APAC,
7.7 per cent for KION Americas, 7.4 per cent for Dematic and
6.8 per cent for Egemin Automation.
The impairment test carried out in December 2016 did not
– 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 likelihood that the intangible asset will generate future
– the availability of adequate technical, financial and other
economic benefits;
reveal any need to recognise impairment losses for the existing
resources to complete the development and to use or sell the
goodwill recognised for the LMH EMEA, STILL EMEA, KION
APAC, KION Americas, Dematic and Egemin Automation CGUs.
intangible asset; and
– the ability to reliably measure the expenditure attributable to
Sensitivity analysis has enabled us to determine that no impair-
the intangible asset during its development.
ment losses need to be recognised for goodwill, even if key
assumptions vary within realistic limits, in particular a variation in
Capitalised development costs include all costs and overheads
WACC of plus or minus 100 basis points.
directly attributable to the development process. Once they have
Other intangible assets
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
Other purchased intangible assets with a finite useful life are car-
qualifying assets so finance costs are not capitalised. All
ried at historical cost less all accumulated amortisation and all
non-qualifying development costs are expensed as incurred and
accumulated impairment losses. If events or market develop-
reported in the income statement under research and develop-
ments suggest impairment has occurred, impairment tests are
ment costs together with research costs. From 2016, the amorti-
carried out on the carrying amount of items classified as other
sation expense on capitalised development costs has been
intangible assets with a finite useful life. The carrying amount of
reported under cost of sales. The prior-year figures have been
an asset is compared with its recoverable amount, which is
restated. As a result, the cost of sales rose by €53.3 million.
defined as the higher of its value in use and its fair value less costs
Research and development costs declined by the same amount.
to sell. If the reasons for recognising impairment losses in the past
Amortisation of intangible assets with a finite useful life is rec-
no longer apply, the relevant impairment losses are reversed, but
ognised on a straight-line basis and reported under functional
subject to a limit such that the carrying amount of the asset is no
costs. The impairment losses on intangible assets are reported
higher than its amortised cost.
under other expenses.
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Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
137
Basis of presentation
The useful lives shown in > TABLE 050 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
TABLE 050
Years
4 – 15
10 – 15
5 – 7
3 – 15
2 – 10
Leases / short-term rentals
Leased assets
KION Group entities lease equipment, mainly various industrial
If the beneficial ownership of leased assets remains with a
trucks, to their customers in order to promote sales. The leases
KION Group entity as the lessor under an operating lease, the
may be of a long-term nature (leasing) or a short-term nature
assets are reported as leased assets in a separate item in the
(short-term rental) .
statement of financial position. The leased assets are carried at
Entities in the KION Group enter into leases as lessors and as
cost and depreciated on a straight-line basis over the term of the
lessees. In line with IAS 17, these contracts are classified as
underlying leases.
finance leases if substantially all of the risks and rewards inciden-
To fund leases, industrial trucks are regularly sold to leasing
tal to ownership of the leased / rental asset are transferred to the
companies. The industrial trucks are then leased back to entities
lessee. All other rentals and leases are classified as operating
in the Industrial Trucks & Services segment (head lease), who
leases, again in accordance with IAS 17.
sub-lease them to external end customers (described below as
If a KION Group entity enters into a finance lease as the les-
‘sale and leaseback sub-leases’). These long-term leases gener-
sor, the future lease payments to be made by the customer are
ally have a term of four to five years. If, in the case of sale and
recognised as lease receivables at an amount equal to the net
leaseback sub-leases, the risks and rewards incidental to the
investment in the lease. Interest income is allocated to each
head lease are substantially borne by entities in the Industrial
reporting period in order to ensure a constant return on the out-
Trucks & Services segment, the corresponding assets are
standing net investment in the lease.
reported as leased assets within non-current assets. These
leased assets are reported in the statement of financial position at
the lower of the present value of the minimum lease payments
and fair value. However, if substantially the risks and rewards inci-
dental to the head lease are transferred to the end customer, a
corresponding lease receivable is recognised. In both cases, the
funding items for these long-term customer leases, which are
funded for terms that match those of the leases, are recognised
as lease liabilities.
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Rental assets
Other property, plant and equipment
Rental assets are assets resulting from short-term rentals as well
Property, plant and equipment is carried at cost less straight-line
as industrial trucks in relation to which significant risks and
depreciation and impairment losses. The cost of internally generated
rewards remain with the KION Group despite the trucks having
machinery and equipment includes all costs directly attributable to the
been sold (‘sale with risk’).
production process and an appropriate portion of production over-
In the case of short-term rentals, entities in the Industrial
heads. This includes production-related depreciation and proportion-
Trucks & Services segment rent industrial trucks to customers
ate costs for administration and social insurance / employee benefits.
directly. Short-term rental agreements usually have a term of one
The cost of property, plant and equipment is reduced by the
day to one year. The risks and rewards remain substantially with
amount of any government grants received, provided the relevant
the entities in the Industrial Trucks & Services segment. The
requirements are met. Expenses for maintenance and repairs are
industrial trucks are carried at cost and depreciated on a straight-
recognised in income to the extent that they are not required to be
line basis over the normal useful life of between five and seven
capitalised. Borrowing costs are capitalised for certain items of
years, depending on the product group. If a sale-and-leaseback
property, plant and equipment whose acquisition or production
arrangement is in place for refinancing purposes, the assets are
exceeds one year as soon as the definition of a qualifying asset is
reported in the statement of financial position at the lower of the
met. As was the case in the previous year, there were no qualify-
present value of the minimum rental payments and fair value.
ing assets in 2016.
In an indirect end customer finance arrangement, industrial
Depreciation of property, plant and equipment is recognised
trucks are sold to finance partners who then enter into leases with
on a straight-line basis and reported under functional costs. The
end customers. If entities in the Industrial Trucks & Services seg-
useful lives and depreciation methods are reviewed annually and
ment provide material residual value guarantees or a customer
adjusted to reflect changes in conditions.
default guarantee (‘sale with risk’), these transactions, which are
The useful lives below are applied in determining the carrying
classified as sale agreements under civil law, are recognised in
amounts of items of property, plant and equipment. > TABLE 051
accordance with the provisions relating to lessors with operating
leases in conjunction with the IFRS principles for revenue recogni-
KION Group companies also lease property, plant and equip-
tion. In this case, the trucks are recognised as assets in the state-
ment for their own use using finance leases, which are recog-
ment of financial position at their cost on the date of the sale and
nised as other property, plant and equipment. In this case, the
written down to their guaranteed residual value, or zero, on a
lower of the fair value and present value of future lease payments
straight-line basis over the period until the residual value guarantee
is recognised at the inception of the lease. A corresponding liabil-
or the customer default guarantee expires. If the KION Group pro-
ity to the lessor is recognised under other financial liabilities in
vides a residual value guarantee, an amount equivalent to the resid-
the statement of financial position.
ual value obligation is recognised under other financial liabilities.
Useful life of other property, plant and equipment
Buildings
Plant and machinery
Office furniture and equipment
TABLE 051
Years
10 – 50
3 – 15
2 – 15
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
139
Basis of presentation
Property, plant and equipment covered by finance leases is depre-
carrying amount of the equity investment is adjusted in line with
ciated over the shorter of its useful life or the term of the lease,
any changes to the KION Group’s interest in the net assets of the
unless title to the leased assets passes to the lessee when the
investee. The KION Group’s interest in the profit or loss generated
lease expires, in which case the property, plant and equipment is
after acquisition is recognised in income. Other changes in the
depreciated and the other financial liabilities are reversed over the
equity of associates and joint ventures are recognised in other
useful life of the leased assets.
comprehensive income (loss) in the consolidated financial state-
The difference between total finance lease liabilities and the
ments in proportion to the Group’s interest in the associate or
fair value of the financed leased assets represents the finance
joint venture.
charge which is recognised in the income statement over the term
If the Group’s interest in the losses made by an associate or
of the lease at a constant rate of interest on the outstanding bal-
joint venture exceeds the carrying amount of the proportionate
ance in each period. At the end of the lease term, the leased assets
equity attributable to the Group, no additional losses are recog-
are either returned or purchased, or the contract is extended.
nised. Any goodwill arising from the acquisition of an associate or
If there are certain indications of impairment of the property,
joint venture is included in the carrying amount of the investment
plant and equipment, the assets are tested for impairment by
in the associate or joint venture.
comparing the residual carrying amount of the assets with their
If there is evidence that an associate or joint venture may be
recoverable amount, which is defined as the higher of value in use
impaired, the carrying amount of the investment in question is
and fair value less costs to sell. If the residual carrying amount is
tested for impairment. The carrying amount of the asset is com-
greater than the recoverable amount, an impairment loss is rec-
pared with its recoverable amount. If the carrying amount is
ognised for an asset. The impairment losses on property, plant
greater than the recoverable amount, an impairment loss is rec-
and equipment are reported under other expenses.
ognised for the equity investment.
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
Income taxes
discount rate, taking into account the current and future level of
earnings and segment-specific, technological, economic and
In the consolidated financial statements, current and deferred
general trends.
taxes are recognised on the basis of the tax laws of the jurisdic-
If an impairment test for an item of property, plant and equip-
tions involved. Deferred taxes are recognised in other compre-
ment is performed at the level of a cash-generating unit to which
hensive income (loss) if they relate to transactions also recog-
goodwill is allocated and results in the recognition of an impair-
nised in other comprehensive income (loss).
ment loss, first the goodwill and, subsequently, the assets must
Deferred tax assets and liabilities are recognised in accord-
be written down in proportion to their relative carrying amounts. If
ance with the liability method for all temporary differences
the reason for an impairment loss recognised in prior years no
between the IFRS carrying amounts and the tax base, as well as
longer applies, the relevant impairment losses are reversed, but
for temporary consolidation measures.
subject to a limit such that the carrying amount of the asset is no
Deferred tax assets also include tax refund claims that arise
higher than its amortised cost. This does not apply to goodwill.
from the expected utilisation of existing tax loss carryforwards
Equity-accounted investments
and interest carryforwards in subsequent years and whose utili-
sation is reasonably certain according to current forecasts. On
the basis of this estimate, deferred tax assets have been recog-
nised on some loss carryforwards and interest carryforwards.
In accordance with the equity method, associates and joint ven-
Deferred taxes are determined on the basis of the tax rates
tures are measured as the proportion of the interest in the equity
that will apply at the recovery date, or have been announced, in
of the investee. They are initially carried at cost. Subsequently, the
accordance with the current legal situation in each country con-
KION GROUP AG | Annual Report 2016
A N E W E R A
140
cerned. In accordance with the provisions in IAS 12, deferred tax
loss is immediately recognised as an expense in the financial year
assets and liabilities are not discounted. Deferred tax assets are
in which the loss becomes apparent. If the contract costs incurred
offset against deferred tax liabilities to the extent that they have
and the profit and loss recognised exceed the advances received,
the same maturity and relate to the same taxation authority.
the excess is recognised as an asset under trade receivables. If
the advances received exceed the capitalised costs and recog-
nised profit and loss, the excess is recognised as a liability under
Inventories
other liabilities.
Inventories are carried at the lower of cost and net realisable
estimated, the likely achievable revenue is recognised up to the
value. The acquisition costs of raw materials and merchandise
amount of the costs incurred. Contract costs are recognised as
are calculated on the basis of an average. The cost of finished
an expense in the period in which they are incurred. Variations in
goods and work in progress includes direct costs and an appro-
the contract work, claims and incentive payments are recognised
priate portion of the material and production overheads and pro-
if they are likely to result in revenue and their amount can be reli-
If the outcome of a construction contract cannot be reliably
duction-related depreciation directly attributable to the produc-
ably estimated.
tion 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
Trade receivables
not a component of cost as they are not qualifying assets as
defined by IAS 23.5. The amount recognised is an average value
In the first period in which they are recognised, trade receivables
or a value determined in accordance with the FIFO method.
categorised as loans and receivables (LaR) – with the exception
Net realisable value is the selling price that can be realised
of construction contracts with a net credit balance due from cus-
less the estimated costs of completion and the estimated costs
tomers – are carried at fair value including directly attributable
necessary to make the sale.
transaction costs. In subsequent periods they are measured at
Write-downs are recognised for inventory risks resulting from
amortised cost using the effective interest method. Appropriate
duration of storage, impaired recoverability, etc. If the reasons for
valuation allowances are recognised for identifiable individual
the recognition of the write-downs no longer apply, they are
risks. Low-interest or non-interest-bearing receivables due in
reversed, but subject to a limit such that the carrying amount of
more than one year are carried at their present value.
the asset is no higher than its cost.
Construction contracts
Cash and cash equivalents
Receivables and revenue from construction contracts are recog-
banks and current financial assets that can be transformed into
nised according to the stage of completion (percentage-of-com-
cash at any time and are only subject to a minor level of volatility.
Cash and cash equivalents comprise cash, credit balances with
pletion method). The percentage of completion is the proportion
of contract costs incurred up to the reporting date compared to
the total estimated contract costs as at the reporting date (cost-
Other financial assets
to-cost method). Under the percentage-of-completion method,
construction contracts are measured at the amount of the con-
Primary financial assets are initially recognised and derecognised
tract costs incurred to date plus the pro rata profit earned accord-
in the financial statements on their settlement dates.
ing to the percentage of completion. If it is probable that the total
The KION Group differentiates between financial assets held
contract costs will exceed the contract revenue, the expected
for trading at fair value through profit or loss (FAHfT), available for
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
141
Basis of presentation
sale financial assets (AfS) and financial assets classified as loans
Currently, derivative financial instruments in the KION Group
and receivables (LaR).
mainly comprise currency forwards that are used for hedging
The FAHfT category contains derivative financial instruments
purposes to mitigate currency risk. The KION Group did not have
that do not form part of a formally documented hedge.
any interest-rate derivatives as at 31 December 2016, as was also
Available-for-sale financial assets (AfS) are carried at fair
the case at 31 December 2015.
value. Unrealised gains and losses, including deferred taxes, are
In accordance with IAS 39, all derivative financial instruments
reported in other comprehensive income (loss) until they are real-
must be measured at their fair value irrespective of an entity’s
ised. Equity investments for which no market price is available are
purpose or intention in entering into the derivative contract. The
carried at cost less impairment losses, as observable fair values
KION Group currently uses cash flow hedges for currency risk as
are not available and reliable results cannot be obtained using
well as one net investment hedge.
other permitted valuation techniques. At present there is no inten-
In the case of cash flow hedges, derivatives are employed to
tion to sell these financial instruments.
hedge future cash flow risks from planned transactions and from
In the first period in which they are recognised, financial
firm obligations not reported in the statement of financial position.
assets categorised as loans and receivables (LaR) are carried at
The effective portion of changes in the fair value of derivatives is
fair value including directly attributable transaction costs. In sub-
initially recognised in other comprehensive income (loss) and is
sequent periods they are measured at amortised cost using the
subsequently reclassified to the income statement when the cor-
effective interest method. Appropriate valuation allowances are
responding underlying transaction is also recognised. The inef-
recognised for identifiable individual risks. Low-interest or non-in-
fective portion of the changes in fair value is recognised immedi-
terest-bearing receivables due in more than one year are carried
ately in the income statement.
at their present value.
A derivative is used as a net investment hedge to hedge the
Carrying amounts of financial assets are tested for impair-
currency risk arising on translation of a foreign subsidiary’s finan-
ment on every reporting date and whenever indications of impair-
cial statements into the Group’s reporting currency. The effective
ment arise. If there is an objective indication of impairment (such
portion of changes in the fair value of the derivative is initially rec-
as a borrower being in significant financial difficulties), an impair-
ognised in other comprehensive income (loss) and will not be
ment loss must be recognised directly in the income statement.
reclassified to the income statement until the foreign operation is
If objective facts in favour of reversing impairment losses are
sold. The ineffective portion of the changes in fair value is recog-
present on the reporting date, reversals are carried out to an
nised immediately in the income statement.
appropriate extent. The recognition of reversals must not result in
If the criteria for hedge accounting are not satisfied, changes
a carrying amount greater than the amortised cost that would
in the fair value of derivative financial instruments are recognised
have arisen if the impairment loss had not been recognised. In the
in the income statement.
case of debt instruments classified as available-for-sale financial
Further information on risk management and accounting for
assets (AfS), reversals of impairment losses are recognised in the
derivative financial instruments can be found in notes [39] and [40].
income statement.
Derivative financial instruments
Retirement benefit obligation
Derivative financial instruments are measured at their fair value
with the projected unit credit method. Future pension obliga-
and are reported as financial assets or financial liabilities as at the
tions are measured on the basis of the pro rata vested benefit
reporting date. They are initially recognised and derecognised in
entitlements as at the reporting date and discounted to their
the financial statements on their settlement dates.
present value. The calculations include assumptions about
future changes in certain parameters, such as expected salary
The retirement benefit obligation is calculated in accordance
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A N E W E R A
142
and pension increases and biometric factors affecting the amount
A restructuring provision is recognised when a KION Group
of future benefits. Pension provisions are reduced by the fair value
entity has prepared a detailed, formal restructuring plan and this
of the plan assets used to cover the Group’s benefit obligations.
plan has raised the valid expectation in those affected that the
Plan assets are measured at fair value.
entity will carry out the restructuring by starting to implement that
Remeasurements, including deferred taxes, are recognised
plan or announcing its main features to those affected by it. The
in other comprehensive income (loss). It is not permitted to reclas-
measurement of a restructuring provision only includes the direct
sify remeasurements recognised in other comprehensive income
expenditures arising from the restructuring and not associated
(loss) to profit or loss in future periods. The cost of additions to
with the ongoing activities of the entity concerned.
pension provisions is allocated to functional costs. The interest
cost on pension obligations and the interest income from plan
assets are netted and reported in net financial income / expenses.
Share-based payments
Further details can be found in note [29].
Other provisions
IFRS 2 distinguishes between equity-settled and cash-settled
share-based payment transactions.
Equity-settled share-based payment transactions are recog-
nised at their fair value at the date of grant. The fair value of the
Other provisions are recognised when the Group has a legal or
obligation is recognised as an expense under functional costs
constructive obligation to a third party as the result of a past event
over the vesting period and offset against capital reserves.
that is likely to lead to a future outflow of resources and that can be
The portion of the fair value of cash-settled share-based pay-
reliably estimated. Where there is a range of possible outcomes
ments that is attributable to service provided up to the valuation
and each individual point within the range has an equal probability
date is recognised as an expense under functional costs and is
of occurring, a provision is recognised in the amount of the mean
also reported as a liability. The fair value is recalculated on each
of the individual points. Measurement is at full cost. Provisions for
reporting date until the end of the performance period. Any
identifiable risks and contingent liabilities are recognised in the
change in the fair value of the obligation must be recognised (pro
amount that represents the best estimate of the cost required to
rata temporis) under expenses.
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
Financial liabilities and other financial liabilities
months are discounted using the standard market interest rate.
The discount rate is a before-tax rate that reflects current market
The KION Group differentiates between financial liabilities held
expectations for the time value of money and the specific risks
for trading at fair value through profit or loss (FLHfT) and finan-
inherent in the liability. The interest cost from unwinding the dis-
cial liabilities at amortised cost using the effective interest
count is recognised in interest expenses.
method (FLaC).
Warranty provisions are recognised on the basis of past or
The FLHfT category contains derivative financial instru-
estimated future claim statistics. The corresponding expense is
ments that do not form part of a formally documented hedge.
recognised in cost of sales at the date on which the revenue is
These are reported under other financial liabilities and must be
recognised. Individual provisions are recognised for claims that
carried at fair value through profit or loss.
are known to the Group.
All other financial liabilities reported under financial liabilities
Provisions for expected losses from onerous contracts and
or other financial liabilities must be categorised as FLaC. These
other business obligations are measured on the basis of the work
liabilities are initially recognised at fair value at the time they
yet to be performed.
are entered into. Directly attributable transaction costs are
deducted. These liabilities are then measured at amortised
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
143
Basis of presentation
cost. Any differences between historical cost and the settle-
growth rates for the period thereafter. Any material changes to
ment amount are recognised in accordance with the effective
these and other factors might result in the recognition of impair-
interest method.
ment losses. Further information on goodwill can be found earlier
Trade payables
in this note and in note [17].
Information on leases can be found in the sections on
leases / short-term rentals, leased assets, rental assets and other
property, plant and equipment in this note.
Trade payables are categorised as FLaC and, in the first period in
Defined benefit pension obligations are calculated on the
which they are recognised, are carried at fair value net of the
basis of actuarial parameters. As differences due to remeasure-
directly attributable transaction costs. In subsequent periods,
ments are taken to other comprehensive income (loss), any change
these liabilities are measured at amortised cost using the effec-
in these parameters would not affect the net profit for the current
tive interest method. Low-interest or non-interest-bearing liabili-
period. For further details about sensitivity analysis in relation to
ties due in more than one year are carried at their present value.
the impact of all significant assumptions, please refer to the infor-
Assumptions and estimates
mation about the retirement benefit obligation in note [29].
The recognition and measurement of other provisions is
based on an estimate of the probability of the future outflow of
resources, supplemented by past experience and the circum-
The preparation of the IFRS consolidated financial statements
stances known to the Group at the reporting date. Accordingly,
requires the use of assumptions and estimates for certain line
the actual outflow of resources for a given event may be different
items that affect recognition and measurement in the statement
from the amount recognised in other provisions. Further details
of financial position and the income statement. The actual
can be found in note [32].
amounts realised may differ from estimates. Assumptions and
Significant estimates are involved in calculating income taxes.
estimates are applied in particular:
These estimates may change on the basis of new information and
– in assessing the need for and the amount of impairment
experience (see also note [14]). Deferred tax assets on tax loss
carryforwards and interest carryforwards are recognised on the
losses on intangible assets, property, plant and equipment,
basis of an estimate of the future recoverability of the tax benefit,
and inventories;
– in determining the useful life of non-current assets;
– in classifying leases;
– in recognising and measuring defined benefit pension obliga-
– in recognising and measuring current and deferred taxes;
– in recognising and measuring assets acquired and liabilities
– in evaluating the stage of completion in the case of long-term
assumed in connection with business combinations;
tions and other provisions;
construction contracts.
i.e. an assumption as to whether sufficient taxable income or tax
relief will be available against which the carryforwards can be uti-
lised. The actual amount of taxable income in future periods, and
hence the actual utilisation of tax loss carryforwards and interest
carryforwards, may be different from the estimates made when
the corresponding deferred tax assets were recognised.
On first-time consolidation of an acquisition, all identifiable
assets and liabilities are recognised at their fair value at the acqui-
sition date. The fair values of intangible assets are determined
using appropriate valuation techniques. These measurements
are based on estimates of future cash flows, expected growth
Goodwill is tested for impairment annually at the level of the
rates, exchange rates, discount rates and useful lives. In the event
cash-generating units to which goodwill is allocated, applying the
of material changes to assumptions or circumstances, estimates
budget for 2017 and the medium-term planning for 2018 to 2019
must be reassessed and this can lead to the recognition of an
combined with the growth predicted in the market forecasts for
impairment loss for the asset concerned. For further information
the projections for 2020 to 2021 and assuming division-specific
on acquisitions, see note [5].
KION GROUP AG | Annual Report 2016
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144
Construction contracts are accounted for using the percent-
age-of-completion method based on management estimates of
the contract costs incurred. If estimates change, or if there are
differences between planned and actual costs, this is directly
reflected in the profit or loss from construction contracts. The
operating units continually review the cost estimates and adjust
them as appropriate. Further information on construction con-
tracts can be found above in this note.
Where necessary, the KION Group’s accounting depart-
ments receive assistance from external legal advisors and tax
consultants when making the estimates required.
The carrying amounts of the affected line items can be found in
the relevant notes/the consolidated statement of financial position.
The impact of a change to an estimate is recognised pro-
spectively when it becomes known and assumptions are adjusted
accordingly.
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated income statement
145
Notes to the consolidated income statement
[8] REVENUE
The revenue generated by the KION Group in the year under
review broken down by product category is as follows: > TABLE 052
Revenue with third parties by product category
in € million
Industrial Trucks & Services
New business
Service business
– Aftersales
– Rental business
– Used trucks
– Other
Supply Chain Solutions
Business Solutions
Service business
Corporate Services
Total revenue
The ‘Supply Chain Solutions’ line item includes revenue from
construction contracts amounting to €325.4 million (2015:
€33.0 million).
Further information on revenue can be found in the segment
report in note [41].
TABLE 052
2015
5,044.4
2,779.9
2,264.5
1,347.0
524.1
270.4
122.9
33.0
25.7
7.4
20.5
2016
5,200.5
2,860.3
2,340.2
1,363.8
558.3
285.8
132.4
364.7
263.9
100.7
22.1
5,587.2
5,097.9
KION GROUP AG | Annual Report 2016
A N E W E R A
146
[9] OTHER INCOME
The breakdown of other income is as follows: > TABLE 053
Other income
in € million
Foreign currency exchange rate gains
Income from reversal of provisions
Profit from release of deferred lease profits
Gains on disposal of non-current assets
Rental income
Sundry income
Total other income
The change in foreign currency exchange rate gains was attribut-
able to fluctuations in exchange rates.
The sundry income predominantly included earnings from
commission of €18.8 million (2015: €20.6 million). Sundry income
also included income from non-consolidated subsidiaries and
other investments amounting to €3.0 million (2015: €9.7 million).
TABLE 053
2015
25.2
5.3
9.9
4.0
1.3
53.8
99.6
2016
22.0
6.0
9.3
2.4
1.2
46.7
87.7
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated income statement
147
TABLE 054
2015
37.2
1.7
4.1
23.6
66.6
2016
25.1
3.0
–
13.8
41.9
[10] OTHER EXPENSES
The breakdown of other expenses is as follows: > TABLE 054
Other expenses
in € million
Foreign currency exchange rate losses
Losses on disposal of non-current assets
Impairment of non-current assets
Sundry expenses
Total other expenses
The change in foreign currency exchange rate losses was attrib-
utable to fluctuations in exchange rates.
The impairment losses recognised on non-current assets in
the previous year of €4.1 million were due to impairment losses on
capitalised development costs (see also note [17]).
[11] SHARE OF PROFIT (LOSS)
OF EQUITY-ACCOUNTED
INVESTMENTS
The share of profit (loss) of equity-accounted investments in the
reporting year amounted to a profit of €6.5 million (2015: €10.6 mil-
lion). Further details on equity-accounted investments can be
found in note [21].
KION GROUP AG | Annual Report 2016
A N E W E R A
148
[12] FINANCIAL INCOME
were offset by foreign currency exchange rate losses (financing)
(see note [13]).
The interest income from leases relates to the interest portion
of lease payments in financial services transactions in which
Financial income breaks down as shown in > TABLE 055.
KION Group entities act as lessors (finance leases).
The increase in financial income in 2016 mainly resulted from the
relates to the net interest income on the net assets of two pension
change in foreign currency exchange rate gains (financing),
plans in the United Kingdom in which plan assets exceed pension
The line item ‘Net interest income from defined benefit plans’
which was attributable to fluctuations in exchange rates, and
obligations.
also gains / losses arising on hedging transactions. These gains
Financial income
in € million
Interest income from leases
Foreign currency exchange rate gains (financing)
Net interest income from defined benefit plans
Other interest and similar income
Total financial income
TABLE 055
2015
34.8
5.8
0.9
10.0
51.4
2016
36.4
42.2
1.1
9.1
88.9
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated income statement
149
[13] FINANCIAL EXPENSES
Financial expenses break down as follows: > TABLE 056
Financial expense
in € million
Interest expense from loans
Interest expense from corporate bond
Interest cost of leases
Net interest expense from defined benefit plans
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
TABLE 056
2015
10.2
30.4
49.9
17.1
1.3
7.0
0.7
27.3
144.0
2016
16.0
18.9
50.8
18.7
7.9
45.6
1.6
25.1
184.5
In 2016, financial expenses rose by €40.5 million year on year.
charges were recognised as financial expenses. In addition, an
This increase stemmed largely from the change in foreign cur-
amount of €5.1 million representing the deferred borrowing costs
rency exchange rate losses (financing) as a consequence of the
relating to the previous syndicated loan at the time of early repay-
rise in currency risk at the end of the year. The foreign currency
ment was included in financial expenses. There was a counter-
exchange rate losses (financing) included gains / losses arising on
vailing effect from the savings on interest payments resulting from
hedging transactions in addition to the effects from exchange rate
the optimised financing structure.
fluctuations.
The interest cost of leases relates to the interest portion of
The financial expenses also included one-off expenses in
lease payments in financial services transactions in which the
connection with the repayment of the syndicated loan dated
material risks and rewards are borne by KION Group entities as
23 December 2006 that took the form of a revolving credit facility
lessees (finance leases). Sale and finance leaseback operating
of €1,243.0 million and the €450.0 million corporate bond, which
sub-leases (SALB-FL-OL) incurred interest expenses of €28.3 mil-
had been issued in 2013 and was due to mature in 2020. An
lion (2015: €27.8 million). The income from corresponding cus-
amount of €5.4 million representing the deferred borrowing costs
tomer agreements is, according to IAS 17, a component of the
relating to the corporate bond at the time of early repayment and
rental and lease payments received and is therefore reported
a cash payment of €15.2 million representing early repayment
within revenue rather than as interest income.
KION GROUP AG | Annual Report 2016
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150
Net interest expense from defined benefit plans relates to the
are determined on the basis of the tax rates that will apply at the
net interest cost of the net liability of pension plans applying the
recovery date, or have been announced, in accordance with the
discount rate for plans in which pension obligations exceed
current legal situation in each country concerned. The current
plan assets.
[14] INCOME TAXES
corporate income tax rate in Germany is 15.0 per cent plus the
solidarity surcharge (5.5 per cent of corporate income tax). Taking
into account the average trade tax rate of 15.03 per cent (2015:
14.93 per cent), the combined nominal tax rate for entities in Ger-
many was 30.85 per cent (2015: 30.75 per cent). The income tax
rates for foreign companies used in the calculation of deferred
taxes were between 9.0 per cent and 40.0 per cent (2015:
The income tax expense of €93.1 million (2015: expense of
between 10.0 per cent and 37.48 per cent).
€109.2 million) consisted of €86.2 million in current tax expense
No deferred taxes have been recognised on temporary dif-
(2015: €132.5 million) and €6.9 million in deferred tax expense
ferences of €78.7 million (2015: €164.2 million) between the net
(2015: deferred tax income of €23.3 million). The current tax
assets reported in the consolidated financial statements for the
expense included expenses of €0.3 million (2015: expenses of
Group companies and the tax base for the shares in these Group
€24.9 million) relating to previous financial years.
companies (outside basis differences) because the KION Group
At the reporting date there were income tax assets of
is in a position to manage the timing of the reversal of temporary
€35.2 million receivable from tax authorities (2015: €7.9 million)
differences and there are no plans to dispose of investments in
and income tax liabilities of €63.0 million (2015: €79.8 million).
the foreseeable future.
Deferred taxes are recognised for temporary differences
Deferred tax assets are allocated to the following items in the
between the tax base and IFRS carrying amounts. Deferred taxes
statement of financial position: > TABLE 057
Deferred tax assets
in € million
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
TABLE 057
2015
97.6
–
41.2
0.3
163.3
324.9
36.2
73.7
– 388.3
349.0
2016
110.3
1.0
53.5
1.7
216.5
395.5
37.5
52.6
– 448.4
420.2
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated income statement
151
Deferred tax liabilities are allocated to the following items in the
statement of financial position: > TABLE 058
Deferred tax liabilities
in € million
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
TABLE 058
2015
442.6
3.5
201.3
1.0
8.7
31.5
2.3
– 388.3
302.7
2016
1,075.6
5.7
214.8
0.8
15.5
36.9
4.4
– 448.4
905.3
The deferred tax liabilities essentially related to the purchase price
€1.5 million; deferred tax liabilities by €1.2 million; 2015 Egemin
allocation in the acquisition of the KION Group and Dematic, par-
Automation: deferred tax assets by €0.7 million; deferred tax lia-
ticularly for intangible assets and property, plant and equipment.
bilities by €9.3 million). In addition, the currency translation as at
In 2016, deferred taxes – without the consideration of cur-
the reporting date led to higher deferred taxes of €27.4 million,
rencs effects – of €17.2 million were recognised in other compre-
which mainly results from the first time consolidation of Dematic.
hensive income (loss), resulting in an increase in equity (2015:
These currency effects were recognised in other comprehensive
minus €5.4 million, resulting in a decrease in equity). Of this
income (loss) in the position cumulative translation adjustment
amount, deferred taxes of €16.7 million (2015: minus €4.5 million)
resulting in a decrease in equity.
arose from the remeasurement of the defined benefit obligation.
In 2016, the parent company and subsidiaries that reported
Furthermore, deferred taxes of €0.4 million (2015: minus €0.8 mil-
losses for 2016 or 2015 recognised net deferred tax assets on
lion) were recognised in connection with realised and unrealised
temporary differences and on loss carryforwards totalling
changes in the fair value of derivatives in cash flow hedges
€29.4 million (2015: €85.4 million). These assets were considered
(€1.1 million; 2015: minus €2.2 million) and net investment hedges
to be unimpaired because these companies are expected to gen-
(minus €0.7 million; 2015: €1.4 million). Furthermore, the deferred
erate taxable income in future.
taxes recognised in the statement of financial position rose as a
No deferred tax assets have been recognised on tax loss
consequence of the purchase price allocation in connection with
carry forwards of €509.3 million (2015: €115.8 million) – of which
the following acquisitions: Dematic (deferred tax assets by
€29.4 million can only be carried forward on a restricted basis –, on
€105.0 million; deferred tax liabilities by €614.6 million), Retrotech
interest carryforwards of €193.5 million (2015: €215.8 million) or on
Inc. (deferred tax assets by 0.4 million; deferred tax liabilities by
other temporary differences of €4.7 million (2015: €0.0 million).
€5.5 million) and other acquisitions (deferred tax assets by
KION GROUP AG | Annual Report 2016
A N E W E R A
152
Deferred taxes on tax loss carryforwards and interest carryfor-
The interest that can be carried forward indefinitely in Ger-
wards are capitalised to the extent that sufficient future taxable
many as at 31 December 2016 amounted to €206.1 million
income is expected to be generated against which the losses can
(31 December 2015: €296.7 million).
be utilised. The total amount of unrecognised deferred tax assets
The table below shows the reconciliation of expected income
relating to loss carryforwards is therefore €139.6 million (2015:
tax expense to effective income tax expense. The Group recon-
€29.3 million), of which €130.1 million (2015: €27.1 million) con-
ciliation is an aggregation of the individual company-specific
cerns tax losses that can be carried forward indefinitely.
reconciliations prepared in accordance with relevant local tax
The KION Group’s corporation-tax loss carryforwards in
rates, taking into account consolidation effects recognised in
Germany as at 31 December 2016 amounted to €126.1 million
income. The expected tax rate applied in the reconciliation is
(31 December 2015: €156.5 million), while trade-tax loss carry-
30.85 per cent (2015: 30.75 per cent). > TABLE 059
forwards stood at €97.3 million (31 December 2015: €142.1 mil-
lion). There were also foreign tax loss carryforwards totalling
€547.8 million (31 December 2015: €142.2 million).
Income taxes
in € million
Earnings before taxes
Anticipated income taxes
Deviations due to the trade tax base
Deviations from the anticipated tax rate
Losses for which deferred taxes have not been recognised
Change in tax rates and tax legislation
Non-deductible expenses
Tax-exempt income
Taxes relating to other periods
Deferred taxes relating to prior periods
Other
Effective income taxes (current and deferred taxes)
TABLE 059
2015
330.2
2016
339.2
– 104.6
– 101.5
– 4.0
17.3
– 6.5
1.1
– 5.4
8.7
– 0.3
5.0
– 4.4
– 93.1
– 3.9
11.9
– 9.5
– 7.2
– 1.9
2.3
– 24.9
28.5
– 3.0
– 109.2
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated income statement
153
[15] OTHER INCOME STATEMENT
DISCLOSURES
a component of interest cost of the defined benefit obligation.
Pension expenses essentially comprised the pension entitlements
of €35.3 million vested in 2016 (2015: €34.7 million) and unrecog-
nised past service income of €0.1 million (2015: unrecognised past
The cost of materials rose by €258.8 million in the reporting year
service income of €4.3 million) arising from plan amendments and
to €2,669.1 million (2015: €2,410.2 million).
curtailments.
Personnel expenses went up by €168.6 million to €1,520.3 mil-
Impairment losses and depreciation expenses on property,
lion in 2016 (2015: €1,351.7 million). These personnel expenses
plant and equipment together with impairment losses and amor-
included wages and salaries of €1,198.3 million (2015: €1,058.1 mil-
tisation expenses on intangible assets amounted to €454.7 mil-
lion), social security contributions of €258.4 million
(2015:
lion in the reporting year (2015: €401.4 million). Inventories were
€237.8 million) and expenses for pensions of €63.6 million (2015:
written down by €17.8 million (2015: €12.5 million).
€55.9 million). The interest cost from the unwinding of the discount
The breakdown of rental and lease payments expensed in
on estimated pension obligations is not recognised under person-
the period and arising in connection with operating leases in
nel expenses and is instead reported under financial expenses as
which KION Group entities are lessees is as follows: > TABLE 060
Lessee: Expenses recognised for operating lease payments
in € million
Procurement lease contracts
Sublease contracts
Total recognised expenses for lease payments
TABLE 060
2015
82.6
39.2
121.8
2016
89.6
36.3
125.9
KION GROUP AG | Annual Report 2016
A N E W E R A
154
The expenses in connection with sub-leases relate to leases and
Diluted earnings per share is calculated by adding the
rental agreements in which KION Group entities are both lessors
potential dilutive no-par-value shares that employees can
and lessees. These expenses were offset by income of €43.8 mil-
obtain for free under the employee share option programme
lion in 2016 (2015: €46.2 million).
(KEEP) to the weighted average number of shares outstanding
during the reporting period. The calculation of diluted earnings
per share was based on a weighted average of 103,278,542
no-par-value shares issued (2015: 98,740,662 no-par-value
shares). Diluted earnings per share for the reporting period
came to €2.38 (2015: €2.20).
[16] EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the net income
(loss) accruing to the KION GROUP AG shareholders by the
weighted average number of shares outstanding during the
reporting period (2016: 103,241,256 no-par-value shares; 2015:
98,721,950 no-par-value shares). The net income accruing to the
shareholders of KION GROUP AG was €245.5 million (2015:
€217.1 million); information about determining the net income
(loss) accruing to the KION GROUP AG shareholders can be
found in the consolidated income statement. Basic earnings per
share for the reporting period came to €2.38 (2015: €2.20). The
164,486 no-par-value treasury shares repurchased by KION
GROUP AG were not included in this figure as at 31 Decem-
ber 2016 (31 December 2015: 160,050).
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated statement of financial position
155
Notes to the consolidated statement of financial position
[17] GOODWILL AND OTHER
INTANGIBLE ASSETS
The goodwill previously reported and monitored by senior man-
agement for internal purposes in the LMH and STILL segments is
being transferred to the operating units in the Industrial Trucks &
Services segment (LMH EMEA, STILL EMEA, KION APAC and
KION Americas). The goodwill will therefore be reported and
With effect from 1 December 2016, the activities of the LMH,
monitored at the level of the four operating units in the future.
STILL and FS segments were allocated to the new Industrial
Goodwill is broken down by segment as follows: > TABLE 061
Trucks & Services segment (see also note [41] for more details).
Goodwill broken down by segment
in € million
Industrial Trucks & Services
LMH EMEA
STILL EMEA
KION Americas
KION Asia Pacific
Supply Chain Solutions
Dematic
Egemin Automation
Total goodwill
TABLE 061
2015
1,497.2
817.1
534.8
23.5
121.8
50.9
–
50.9
1,548.1
2016
1,504.9
813.4
546.5
23.5
121.6
2,100.9
2,024.8
76.1
3,605.8
The change in goodwill in 2016 mainly resulted from the acquisi-
(31 December 2015: €8.6 million). In 2016, a value of €349.7 mil-
tion of Dematic and other businesses, from which goodwill total-
lion was attributed to the Dematic brand name and allocated to
ling €1,962.1 million arose. Currency effects also had an impact.
the Dematic CGU as part of purchase price allocation. As at
The change in the amount of goodwill in 2015 primarily resulted
31 December 2016, this figure had risen to €367.6 million as a
from the acquisition of Egemin Automation, which gave rise to
result of currency effects. A value of €1.5 million was originally
goodwill of €50.9 million.
attributed to the Retrotech brand name, which was integrated
The Group intends to retain and further strengthen the Linde,
into the Egemin Automation CGU. This brand name is being
STILL, OM STILL and KION brand names on a long-term basis.
amortised over six years. As a result, the brand names allocated
Brand names worth €466.3 million are assigned to the LMH
to the Egemin Automation CGU increased to a carrying amount of
EMEA CGU (31 December 2015: €466.5 million) and brand
€9.9 million as at 31 December 2016 (31 December 2015:
names worth €115.0 million to the STILL EMEA CGU (31 Decem-
€8.6 million), of which €8.6 million was attributable to brand
ber 2015: €115.2 million). These assets are not amortised as they
names with an indefinite useful life (31 December 2015: €8.6 mil-
have an indefinite useful life. As at 31 December 2016, the brand
lion). The KION brand name is allocated to the Corporate Services
names allocated to the KION APAC CGU had a residual value of
segment and had a carrying amount as at 31 December 2016
€8.3 million (31 December 2015: €8.7 million), of which €8.3 mil-
of €5.1 million (31 December 2015: €5.1 million). This asset is not
lion was attributable to brand names with an indefinite useful life
amortised as it has an indefinite useful life. > TABLE 062
KION GROUP AG | Annual Report 2016
A N E W E R A
156
Intangible assets
in € million
Goodwill
Brand names
Balance as at 01/01/2015
1,497.1
595.4
Group changes
Currency translation adjustments
Additions
Disposals
Amortisation
Impairment
Balance as at 31/12/2015
Gross carrying amount as at
31/12/2015
Accumulated amortisation
Balance as at 01/01/2016
Group changes
Currency translation adjustments
Additions
Disposals
Amortisation
Balance as at 31/12/2016
Gross carrying amount as at
31/12/2016
Accumulated amortisation
48.9
2.2
–
–
–
–
1,548.1
1,548.1
–
1,548.1
1,974.9
82.8
–
–
–
3,605.8
3,605.8
–
8.6
0.4
–
–
– 0.3
–
604.1
605.6
– 1.5
604.1
353.5
14.9
–
–
– 0.3
972.2
974.1
– 1.9
Technology &
development
Sundry
intangible assets
210.0
–
0.9
40.9
– 0.3
– 53.3
– 4.1
110.1
16.3
0.7
13.0
– 0.6
– 33.2
–
TABLE 062
Total
2,412.5
73.7
4.2
53.8
– 0.9
– 86.9
– 4.1
194.1
106.2
2,452.5
451.3
– 257.3
194.1
519.1
22.5
50.6
– 0.0
– 57.0
297.0
– 190.8
106.2
824.3
34.9
22.1
– 0.1
– 57.9
2,902.1
– 449.6
2,452.5
3,671.8
155.1
72.6
– 0.1
– 115.2
729.2
929.5
6,236.7
938.5
– 209.3
1,159.5
– 230.0
6,677.9
– 441.2
The carrying amount for technology and development assets
research and development costs of €147.1 million (2015:
went up to €729.2 million as at 31 December 2016 (31 Decem-
€130.5 million) were expensed. Amortisation expenses of
ber 2015: €194.1 million), principally as a consequence of the
€57.0 million were also recognised (31 December 2015: €53.3 mil-
acquisition of Dematic. Development costs of €50.6 million were
lion); these expenses are reported under cost of sales.
capitalised in the reporting year (2015: €40.9 million). Total
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated statement of financial position
157
Impairment losses of €4.1 million were recognised on capi-
Leased assets are attributable to the Industrial Trucks & Services
talised development costs in 2015 to reflect the lack of opportu-
segment and relate to industrial trucks in the amount of €428.8 mil-
nities to use them in future following the early discontinuation of
lion (31 December 2015: €333.6 million) that are leased to exter-
production of a model series. They are reported in other
nal customers under operating leases and to office furniture and
expenses. The impairment losses related to the Industrial Trucks
equipment in the amount of €0.9 million (31 December 2015:
& Services segment.
€0.8 million).
Other intangible assets relate in particular to licences, pat-
Leased assets include assets leased over the long term with
ents, software and customer relationships.
a residual value of €367.5 million (31 December 2015: €285.9 mil-
The change to the basis of consolidation in 2016 was due
lion) that are funded by means of sale and leaseback transactions
almost entirely to the acquisition of the Dematic Group (2015:
with leasing companies and leased assets with a residual value of
acquisition of Egemin Automation).
€62.2 million (31 December 2015: €48.5 million) that are funded
[18] LEASED ASSETS
The changes in leased assets in 2016 and 2015 were as follows:
internally or by means of bank loans.
Leased assets resulted in non-cancellable minimum lease
payments from customers amounting to €402.7 million (31 Decem-
ber 2015: €325.5 million).
> TABELLE 063
Leased assets
in € million
Balance as at 01/01/
Group changes
Currency translation adjustments
Additions
Disposals
Depreciation
Reclassification
Balance as at 31/12/
Gross carrying amount as at 31/12/
Accumulated depreciation
TABLE 063
2015
279.0
– 1.7
1.8
241.1
– 104.2
– 80.6
– 1.1
334.4
675.3
– 340.9
2016
334.4
7.4
– 2.8
290.3
– 103.0
– 94.2
– 2.4
429.7
747.3
– 317.6
KION GROUP AG | Annual Report 2016
A N E W E R A
158
The following table shows the maturity structure of these
payments: > TABLE 064
Minimum lease payments
in € million
Cash receipts from minimum lease payments
due within one year
due in one to five years
due in more than five years
[19] RENTAL ASSETS
The changes in rental assets in 2016 and 2015 were as follows:
> TABLE 065
Rental assets
in € million
Balance as at 01/01/
Group changes
Currency translation adjustments
Additions
Disposals
Depreciation
Reclassification
Balance as at 31/12/
Gross carrying amount as at 31/12/
Accumulated depreciation
TABLE 064
2015
325.5
116.2
200.5
8.8
2016
402.7
144.7
248.5
9.6
TABLE 065
2015
487.1
– 3.1
– 4.1
294.8
– 72.0
– 159.3
0.5
544.0
954.5
– 410.5
2016
544.0
6.1
– 2.9
286.1
– 91.8
– 169.1
2.8
575.3
990.0
– 414.6
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated statement of financial position
159
Rental assets are allocated to the Industrial Trucks & Services
segment. The breakdown of rental assets by contract type is
shown in the following table: > TABLE 066
Rental assets broken down by contract types
TABLE 066
Operating leases as lessor
Sale with risk
Total
in € million
Industrial trucks
Truck equipment
Total rental assets
2016
514.4
3.0
517.4
2015
475.8
3.4
479.2
2016
57.9
0.0
57.9
2015
64.7
0.0
64.8
2016
572.3
3.0
575.3
2015
540.6
3.4
544.0
The rental assets item comprises assets resulting from short-term
rentals (‘operating leases as lessor’) and assets in relation to
which significant risks and rewards remain with the KION Group
although they were sold (‘sale with risk’).
[20] OTHER PROPERTY, PLANT
AND EQUIPMENT
The changes in the carrying amounts of other property, plant and
equipment are shown in > TABLE 067.
KION GROUP AG | Annual Report 2016
A N E W E R A
160
Other property, plant and equipment
in € million
Balance as at 01/01/2015
Group changes
Currency translation adjustments
Additions
Disposals
Depreciation
Reclassification
Balance as at 31/12/2015
Gross carrying amount as at 31/12/2015
Accumulated depreciation
Balance as at 01/01/2016
Group changes
Currency translation adjustments
Additions
Disposals
Depreciation
Reclassification
Balance as at 31/12/2016
Gross carrying amount as at 31/12/2016
Accumulated depreciation
Land and buildings
Plant, machinery,
and office furniture
and equipment
Advances paid
and assets under
construction
308.1
– 0.8
3.7
8.0
– 1.9
– 14.0
2.5
305.7
653.0
– 347.3
305.7
70.1
– 2.1
10.0
– 0.3
– 13.9
5.8
375.4
729.1
– 353.7
164.3
1.1
0.8
62.7
– 7.4
– 56.5
9.2
174.1
996.7
– 822.6
174.1
79.8
0.3
59.7
– 3.9
– 62.3
18.7
266.3
1,059.1
– 792.8
21.7
0.1
0.1
18.4
– 0.2
–
– 11.1
29.0
29.0
– 0.0
29.0
10.7
– 0.1
24.8
– 2.3
–
– 24.9
37.3
37.3
–
TABLE 067
Total
494.1
0.4
4.5
89.1
– 9.5
– 70.5
0.6
508.8
1,678.7
– 1,170.0
508.8
160.7
– 1.8
94.5
– 6.5
– 76.2
– 0.4
679.1
1,825.5
– 1,146.4
Land and buildings in the amount of €18.3 million (31 Decem-
Plant & machinery and office furniture & equipment include
ber 2015: €18.3 million) were largely pledged as collateral for
assets from procurement leases (finance leases) amounting to
accrued retirement benefits under partial retirement agreements.
€17.2 million (31 December 2015: €16.0 million). Depreciation on
As in the previous year, the KION Group did not recognise
these assets came to €5.6 million in 2016 (2015: €4.9 million). The
any significant impairment losses in accordance with IAS 36 on
corresponding liabilities are reported as other financial liabilities.
other property, plant and equipment in 2016.
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated statement of financial position
161
[21] EQUITY-ACCOUNTED
INVESTMENTS
The carrying amount of the equity-accounted investments
mainly resulted from the shares (10.0 per cent) in Linde Hydraulics
and the shares (45.0 per cent) in Linde Leasing GmbH, Wies-
baden. The associates and joint ventures can be seen in the list
of shareholdings (see note [47]). Their financial information is sum-
The KION Group reported equity-accounted investments with a
marised below. > TABLES 068 – 069
total carrying amount of €72.7 million as at 31 December 2016
(31 December 2015: €73.6 million).
Summarised financial information associates
in € million
Total carrying amount
Profit (+) / loss (–) from continuing operations
Other comprehensive income
Total comprehensive income
Summarised financial information joint ventures
in € million
Total carrying amount
Profit (+) / loss (–) from continuing operations
Other comprehensive income
Total comprehensive income
The amounts in the tables are based on the share held by the
KION Group in the relevant associate or joint venture.
TABLE 068
2015
45.6
4.1
2.1
6.1
TABLE 069
2015
28.0
6.5
0.9
7.4
2016
42.5
0.2
0.3
0.5
2016
30.1
6.3
0.1
6.4
KION GROUP AG | Annual Report 2016
A N E W E R A
162
[22] LEASE RECEIVABLES
The amounts recognised as lease receivables are based on
the following data: > TABLE 070
In the case of leases under which KION Group entities lease
non-cancellable sub-leases amounting to €648.4 million (31 Decem-
assets directly to customers as part of the Group’s financial ser-
ber 2015: €587.1 million).
vices activities, the Group’s net investment in the lease is reported
Lease receivables include unguaranteed residual values of
as a lease receivable.
€87.6 million (31 December 2015: €74.5 million).
Gross investments include minimum lease payments from
Lease receivables
in € million
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
TABLE 070
2015
725.8
210.8
489.6
25.4
653.7
181.7
447.5
24.5
2016
807.9
225.6
552.0
30.2
731.5
200.3
503.3
27.9
Unrealised financial income
76.3
72.0
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated statement of financial position
163
[23] OTHER FINANCIAL ASSETS
Of the change in non-consolidated subsidiaries and other
equity investments, an amount of €19.6 million resulted from
the inclusion of the shares in Italian dealer Emhilia Material
Handling S.p.A. (formerly Moden Diesel S.p.A.) and LR Intra-
The breakdown of other financial assets of €129.4 million (31 Decem-
logistik GmbH in the consolidated financial statements of the
ber 2015: €104.3 million) is shown in > TABLE 071.
KION Group in January 2016.
Other financial assets
TABLE 071
in € million
Non-consolidated subsidiaries and other investments
Loans receivable
Other financial investments
Other non-current financial assets
Derivative financial instruments
Financial receivables
Sundry other financial assets
Other current financial assets
2016
22.2
4.6
20.7
47.5
10.3
21.3
50.3
82.0
2015
42.4
2.7
0.8
45.9
5.3
15.4
37.7
58.4
Total other financial assets
129.4
104.3
KION GROUP AG | Annual Report 2016
A N E W E R A
164
[24] OTHER ASSETS
Other assets of €98.5 million (31 December 2015: €85.0 million)
comprise the following: > TABLE 072
Pension assets relate to asset surpluses from two (31 Decem-
ber 2015: two) defined benefit plans in the United Kingdom in
which plan assets exceed the present value of the defined benefit
obligation (see note [29]).
Other assets
in € million
Pension assets
Other non-current assets
Deferred charges and prepaid expenses
Sundry tax receivables
Sundry other assets
Other current assets
Total other assets
[25] INVENTORIES
The reported inventories break down as follows: > TABLE 073
Inventories
in € million
Materials and supplies
Work in progress
Finished goods and merchandise
Advances paid
Total inventories
TABLE 072
2015
30.2
30.2
32.0
22.7
0.1
54.8
85.0
TABLE 073
2015
115.9
75.0
359.5
3.1
553.5
2016
12.3
12.3
49.5
36.6
–
86.2
98.5
2016
158.0
105.3
396.5
12.6
672.4
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated statement of financial position
165
The year-on-year expansion in inventories was largely attributable
to increases in materials and supplies (36.3 per cent), work in pro-
gress (40.4 per cent) and finished goods (10.3 per cent). In
2016, write-downs of €17.8 million were recognised on invento-
[26] TRADE RECEIVABLES
ries (2015: €12.5 million). Reversals of write-downs had to be rec-
The trade receivables break down as follows: > TABLE 074
ognised in the amount of €3.2 million (2015: €4.6 million) because
the reasons for the write-downs no longer existed.
Trade receivables
in € million
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 non-consolidated subsidiaries
Trade receivables from equity-accounted investments and other investments
Construction contracts with a net credit balance due from customers
Total trade receivables
Valuation allowances of €40.4 million (31 December 2015:
€38.5 million) were recognised for trade receivables.
TABLE 074
2015
631.8
670.3
– 6.5
– 22.1
– 9.9
16.2
20.9
1.5
670.5
2016
863.6
904.0
– 4.8
– 24.7
– 11.0
13.2
19.1
103.1
998.9
KION GROUP AG | Annual Report 2016
A N E W E R A
166
The breakdown of construction contracts that had not been com-
Advances received in respect of construction contracts for which
pleted by the reporting date is presented in > TABLE 075. Con-
no work had yet been carried out amounted to €28.3 million as at
struction contracts with a net credit balance due from customers
31 December 2016 (31 December 2015: €0.0 million). Customer
are included in trade receivables (see disclosures in this note).
retentions relating to construction contracts came to €0.6 million
Construction contracts with a net debit balance due to customers
(31 December 2015: €0.0 million).
are reported under other current liabilities (see note [35]).
Construction contracts
in € million
Contract costs incurred and
recognised profits (less recognised losses)
less progress billings
Total
thereof gross amount due from customers for contract work
thereof gross amount due to customers for contract work
[27] CASH AND CASH EQUIVALENTS
The change in cash and cash equivalents is shown in the consol-
idated statement of cash flows. For more detailed information,
please also refer to note [37]. > TABLE 076
Cash and cash equivalents
in € million
Balances with banks, cash and cheques
Pledged cash
Total cash and cash equivalents
TABLE 075
2016
2015
2,247.8
– 2,445.4
– 197.6
103.1
– 300.7
71.8
– 80.2
– 8.3
1.5
– 9.9
TABLE 076
2015
102.8
0.3
103.1
2016
276.0
3.5
279.6
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated statement of financial position
167
[28] EQUITY
Retained earnings
The changes in retained earnings are shown in the consolidated
statement of changes in equity in > TABLE 043. The retained earn-
Subscribed capital and capital reserves
ings comprise the net income (loss) for the financial year and past
contributions to earnings by the consolidated entities, provided
As at 31 December 2016, the Company’s share capital amounted
they have not been distributed.
to €108.8 million (31 December 2015: €98.9 million) and was fully
The distribution of a dividend of €0.77 per share (2015:
paid up. It was divided into 108.8 million no-par-value shares
€0.55 per share) to the shareholders of KION GROUP AG resulted
(31 December 2015: 98.9 million).
in an outflow of funds of €76.0 million in 2016 (2015: €54.3 million).
With the consent of the Supervisory Board, the Executive
Board of KION GROUP AG decided on 18 July 2016 to fully utilise
the authorised capital that had existed since the 2014 Annual
Appropriation of profit
General Meeting. This capital increase was to be used to partly
finance the acquisition of Dematic. The Company’s share capital
The Executive Board and the Supervisory Board propose to the
was increased by 10.0 per cent in return for cash contributions;
Annual General Meeting to be held on 11 May 2017 that an
shareholders’ pre-emption rights were disapplied. The share
amount of €86.9 million be appropriated from the distributable
capital was increased by issuing 9.89 million new no-par-value
profit of KION GROUP AG for the 2016 financial year of €129.2 mil-
bearer shares. An amount of €449.4 million was paid into the cap-
lion for the payment of a dividend of €0.80 per dividend-bearing
ital reserves. The capital increase was entered in the commercial
share. It is also proposed that a further sum of €42.3 million be
register on 20 July 2016.
transferred to other revenue reserves and that €0.1 million be car-
The costs associated with the capital increase amounting
ried forward to the next accounting period. Roughly 35 per cent
to €2.0 million (net) were recognised directly in equity.
of the net income accruing to the KION Group shareholders will
The total number of shares outstanding as at 31 Decem-
therefore be distributed in dividends.
ber 2016 was 108,625,514 no-par-value shares (31 Decem-
ber 2015: 98,739,950 no-par-value shares). Between 12 Septem-
ber 2016 and 27 September 2016, a further 50,000 treasury
shares were repurchased via the stock exchange at an average
price of €55.54 in order to provide the shares for employees’ own
Accumulated other comprehensive
income (loss)
investments and the free shares under the KEEP 2016 employee
The breakdown of accumulated other comprehensive income
share option programme. The total cost was €2.8 million. Due to
(loss) is shown in > TABLE 043.
the issue of 45,564 no-par-value shares (2015: 73,512 no-par-
value shares) under KEEP 2016, KION GROUP AG held 164,486
The currency translation adjustment contains the exchange dif-
treasury shares at the reporting date (31 December 2015:
ferences arising from the financial statements prepared in a for-
160,050). These treasury shares are not dividend-bearing and do
eign currency of foreign subsidiaries, associates and joint ventures.
not confer any voting rights. Further details on the KEEP employee
The gains / losses on the defined benefit obligation are the
share option programme can be found in note [44].
result of remeasuring defined benefit pension obligations (see
As at 31 December 2016, KION Group employees held
also note [29]).
options on a total of 67,106 no-par-value shares (31 Decem-
ber 2015: 53,220 no-par-value shares). The share options
granted under the employee share option programme are not
dividend-bearing and do not confer any voting rights.
KION GROUP AG | Annual Report 2016
A N E W E R A
168
The gains / losses on hedge reserves are the effective portion of
Defined benefit plans
the changes in the fair value of the hedging instruments for cash
flow hedges and net investment hedges. The gains / losses from
In the case of defined benefit plans, the beneficiaries are granted
equity investments contain the share of other comprehensive
a specific benefit by the Group or an external pension fund. Due
income (loss) from associates and joint ventures accounted for
to future salary increases, the benefit entitlement at the retirement
under the equity method.
Non-controlling interests
age of the beneficiary is likely to be higher than the amount
granted as at the reporting date. Pensions are often adjusted
after an employee reaches retirement age. The amount of the
Group’s obligation, which is defined as the actuarial present value
of the obligation to provide the level of benefits currently earned
Non-controlling interests in companies in the KION Group
by each beneficiary, is expressed as the present value of the
amounted to €5.7 million (31 December 2015: €7.7 million).
defined benefit obligation (DBO) including adjustments for future
[29] RETIREMENT BENEFIT
OBLIGATION
salary and pension increases.
The KION Group currently grants pensions to almost all
employees in Germany and a number of foreign employees.
These pensions consist of fixed benefit entitlements and are
therefore reported as defined benefit plans in accordance with
IFRS. As at 31 December 2016, the KION Group had set up
defined benefit plans in 13 countries. For all of the significant
The retirement benefit obligation is recognised for obligations
defined benefit plans within the Group, the benefits granted to
to provide current and future post-employment benefits. Post-
employees are determined on the basis of their individual income,
employment benefit plans are classified as either defined bene-
i.e. either directly or by way of intermediate benefit arrangements.
fit plans or defined contribution plans, depending on the substance
The largest of the KION Group’s defined benefit plans – account-
of the plan as derived from its principal terms and conditions.
ing for 92.8 per cent of the global defined benefit obligation
(31 December 2015: 91.1 per cent) – are in Germany, the United
Defined contribution plans
Kingdom and the US.
Germany
In the case of defined contribution pension plans, the Group pays
In Germany, the pension benefits granted under the 2001 pen-
contributions to government or private pension insurance provid-
sion benefit conditions and 2002 pension benefit conditions
ers based on statutory or contractual provisions, or on a voluntary
depend on employees’ length of service and gross annual remu-
basis. The Group does not enter into any obligations above and
neration (pension component entitlement). The pension compo-
beyond the payment of contributions to an external pension fund.
nent is calculated by multiplying a certain percentage by an
The amount of future pension benefits is based solely on the
age-dependent annuitisation factor. The contribution rate is
amount of the contributions paid by the employer (and in some
3.4 per cent (2001 pension benefit conditions) or 2.0 per cent
cases the beneficiaries themselves) to the external pension fund,
(2002 pension benefit conditions) of the gross remuneration that
including income from the investment of these contributions. The
an employee earns in the computation period. Employees receive
total expense arising from defined contribution plans amounted
the pension entitlement that they have earned in the form of a
to €84.5 million in 2016 (2015: €64.2 million). Of this total, contri-
monthly retirement pension or invalidity benefit or, in the event of
butions paid by employers into government-run schemes came
their death, the entitlement is paid to their surviving dependants
to €75.0 million (2015: €56.3 million). The defined contribution
in the form of a widow’s/widower’s pension or orphans’ pension.
plan expense is reported within the functional costs.
Members of the Executive Board and other executives are pre-
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated statement of financial position
169
dominantly covered by individual pension plans. For details of the
United Kingdom
pension entitlements of KION GROUP AG Executive Board mem-
In the United Kingdom, defined benefit pension obligations pre-
bers, please refer to the information in note [45]. The amount of
dominantly relate to two plans. The defined benefits include not
the benefits paid to executives depends on the type of entitle-
only a life-long retirement pension but also surviving dependants’
ment. Under the ‘old’ individual pension plans, executives were
benefits. The amount of the pension depends on employees’
entitled to a certain percentage of income as their pension bene-
length of service and final salary.
fit. By contrast, the employer-funded entitlement under the ‘new’
The two plans were closed to new employees more than
individual pension plans consists of two components: a fixed
ten years ago. Each plan is monitored by its own board of trus-
basic pension and a variable top-up pension through which
tees, which oversees the running of the plan as well as its funded
annual components are earned within a defined contribution sys-
status and the investment strategy. The members of the board of
tem. Both components depend on the seniority of the executive.
trustees comprise people appointed by the company involved
In addition, employees in Germany are able to pay part of
and selected plan beneficiaries.
their salary into a company pension plan, for which KION pro-
Under UK law, the board of trustees is obliged to have a
vides a defined minimum rate of return to enable employees to
valuation of the plan carried out at least every three years. In
build up their personal pension provision. The pension benefits
connection with the valuation of the pension plans for the employ-
consist of retirement, invalidity and surviving dependants’ bene-
ees of the KION Group’s UK companies as at 1 January 2015,
fits. Each contribution made is converted into a capital compo-
the Company and the trustees of the pension funds agreed in
nent on the basis of a guaranteed minimum rate of return of
March 2016 on certain assumptions relevant to the valuation,
3.0 per cent and depending on the age of the employee. The cap-
according to which the deficit for the two pension plans amounted
ital components acquired each calendar year are added up to
to €11.1 million as at 1 January 2015. On this basis, the KION Group
give the pension capital. When an insured event occurs, the pen-
agreed with the trustees that it would pay approximately the
sion capital is converted into an ongoing life-long pension or a
equivalent of €4.2 million in 2016 and €3.8 million in 2017 in order
one-off capital payment.
to reduce the deficit. However, these payments are subject to the
In Germany, the KION Group also helps employees to build
condition that the annual review of the pension plans’ funding
up their own pension provision with an additional matching con-
position continues to reveal a deficit. If a payment would result in
tribution for those employees who pay part of their salary into the
the pension plans being overfunded, the KION Group would be
KION pension plan. The additional matching contribution received
exempt from its payment obligation in that year.
by executives is 50.0 per cent of the amount they defer in a calen-
In addition, collateral in rem in the form of charges on the real
dar year, although the absolute amount of this contribution is lim-
estate of Group companies in the UK and flexible collateral in respect
ited to a certain percentage of income (ranging from 2.5 per cent
of the rental fleets of UK dealers within a maximum overall limit of
to a maximum of 5.0 per cent). All other employees who partici-
approximately €21.1 million were extended for the benefit of the
pate in the company pension scheme receive up to 0.4 per cent
pension funds. The term of this collateral is limited to five years
of their gross remuneration.
(1 July 2021), and the overall limit will not be reduced by payments
Some of the KION Group’s pension obligations in Germany
made by the KION Group. The likelihood of the guarantee being used
are financed by way of contractual trust arrangements (CTAs),
is deemed low in view of the position of the individual companies with
which qualify as plan assets within the meaning of IAS 19. The
regard to their current and future financial and earnings situations.
trustees are required to follow a defined investment strategy and
guidelines. There are no statutory minimum funding require-
USA
ments. In the event of the Company’s insolvency, the company
Following the acquisition of Dematic, the KION Group maintains
pension scheme in Germany is to a large extent protected by law
three main defined benefit pension plans in the US. The defined
by the insolvency protection scheme (Pensions-Sicherungs-
benefits include not only a life-long retirement pension but also
Verein Versicherungsverein auf Gegenseitigkeit, PSVaG).
surviving dependants’ benefits.
KION GROUP AG | Annual Report 2016
A N E W E R A
170
Union employees receive pension entitlements on the basis of
The assumed discount rate is determined on the basis of the
fixed amounts for each month of service. Salaried employees
yield as at the reporting date on AA-rated, fixed-interest senior
receive benefits that generally depend on their period of service
corporate bonds with maturities that match the expected maturi-
and on their average final salary fixed on the date the plan con-
ties of the pension obligations. Pension obligations in foreign
cerned was frozen. These defined benefit plans have been frozen
companies are calculated on a comparable basis taking into
for some time now in relation to future periods of service.
account any country-specific requirements.
Two of the plans are subject to statutory minimum funding
Future increases in salaries are estimated on an annual basis
provisions that specify a certain coverage ratio and provide for
taking into account factors such as inflation and the overall eco-
annual payments to maintain the required ratio.
nomic situation.
Other countries
The biometric mortality rates used in the calculation are
based on published country-specific statistics and empirical val-
Furthermore, significant asset volumes are invested in external
ues. Since 31 December 2009, the modified Heubeck 2005 G
pension funds with restricted access in Switzerland and the
mortality tables have been used in Germany as the biometric
Netherlands. Decisions on additions to plan assets take into
basis; the modified tables include a somewhat higher life expec-
account the change in plan assets and pension obligations. They
tancy for males than the unmodified tables. The S1NA CMI 2013
also take into account the statutory minimum coverage require-
tables (standard mortality tables for self-administered pension
ments and the amounts deductible under local tax rules.
schemes (SAPS) based on normal health) with a long-term trend
Measurement assumptions
of 1.25 per cent p.a. are applied to the two defined benefit plans
in the United Kingdom. In the US, calculations use the modified
RP-2014 mortality tables with the generational projection from
the Mortality Improvement Scale MP-2016.
In accordance with IAS 19 (‘Employee Benefits’), pension provi-
The actuarial assumptions not listed in > TABLE 077, such as
sions are recognised to cover obligations arising from the current
employee turnover, invalidity, etc., are determined in accordance
and future pension entitlements of active and (after the vesting
with recognised forecasts in each country, taking into account
period has expired) former employees of the KION Group and
the circumstances and forecasts in the companies concerned.
their surviving dependants. The discount rate used to calculate
The significant weighted-average assumptions shown in
the defined benefit obligation at each reporting date is deter-
> TABLE 078 were applied to the calculation of the net interest
mined on the basis of current capital market data and long-term
cost and the cost of benefits earned in the current year (cur-
assumptions about future salary and pension increases in
rent service cost).
accordance with the best estimate principle. These assumptions
Differences between the forecast and actual change in the
vary depending on the economic conditions affecting the cur-
defined benefit obligation and changes in related assets (known
rency in which benefit obligations are denominated and in which
as remeasurements) are recognised immediately in other com-
fund assets are invested, as well as capital market expectations.
prehensive income (loss) in accordance with IAS 19. This serves
Benefit obligations are calculated on the basis of current
to ensure that the pension liability in the statement of financial
biometric probabilities as determined in accordance with actuar-
position is the present value of the defined benefit obligation.
ial principles. The calculations also include assumptions about
In the case of externally funded pension plans, this present
future employee turnover based on employee age and years
value of the defined benefit obligation is reduced by the fair value
of service and about the probability of retirement. The defined
of the assets of the external pension fund (plan assets). If the plan
benefit obligation is calculated on the basis of the significant
assets exceed the present value of the defined benefit obligation
weighted-average assumptions as at the reporting date shown
(net assets), a corresponding asset is recognised in accordance
in > TABLE 077.
A N E W E R A
with IAS 19. IAS 19.64 in conjunction with the supplementary
explanatory information in IFRIC 14 states that the recognition of
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated statement of financial position
171
an asset for an excess of plan assets is only permitted if the com-
In two defined benefit plans in the United Kingdom, plan
pany concerned, in its function as the employer, gains economic
assets exceed the present value of the defined benefit obligation.
benefits in the form of reductions in future contributions to the plan
Stipulations limiting the asset to be recognised in the statement of
or in the form of refunds from the plan. If the present value of the
financial position do not apply.
defined benefit obligation is not covered by the plan assets, the
net obligation is reported under the retirement benefit obligation.
Assumptions underlying provisions for pensions and other postemployment benefits
TABLE 077
Germany
UK
USA
Other
Discount rate
Salary increase rate
Pension increase rate
2016
1.90%
2.75%
1.75%
2015
2.35%
2.75%
1.75%
2016
2.55%
4.12%
3.47%
2015
3.75%
4.25%
3.13%
2016
4.05%
–
–
2015
–
–
–
2016
1.35%
2.51%
0.28%
2015
1.61%
2.50%
0.42%
Assumptions underlying pensions expenses
TABLE 078
Germany
UK
USA
Other
Discount rate
Salary increase rate
Pension increase rate
2016
2.35%
2.75%
1.75%
2015
2.20%
2.75%
1.75%
2016
3.75%
4.25%
3.13%
2015
3.55%
4.25%
3.18%
2016
3.80%
–
–
2015
–
–
–
2016
1.61%
2.50%
0.42%
2015
1.79%
2.49%
0.42%
KION GROUP AG | Annual Report 2016
A N E W E R A
172
Statement of financial position
the Netherlands switched to a defined contribution plan on 1 Jan-
uary 2016. The change in the fair value of plan assets is shown
The change in the present value of the defined benefit obligation
in > TABLE 080.
(DBO) is shown in > TABLE 079.
Employees in Germany paid a total of €2.9 million (2015: €2.9 mil-
The DBO in the other countries was predominantly attributable to
lion) into the KION pension plan in 2016.
subsidiaries in Switzerland (2016: €53.7 million; 2015: €57.2 mil-
In 2016, employer contributions in the United Kingdom,
lion) and the Netherlands (2016: €36.2 million; 2015: €33.1 million).
which amounted to €4.3 million, included one-off payments of
The unrecognised past service income in 2015 included
€4.2 million (2015: €5.0 million) into pension funds on the basis
income from plan curtailments amounting to €4.2 million. This
of contractual agreements. In Germany, one-off payments of
income arose in connection with an agreement reached with
€0.4 million (2015: €0.6 million) were also made to a German CTA
employee representatives in the Netherlands. The employees in
for the other members of the KION GROUP AG Executive Board.
Changes in defined benefit obligation
TABLE 079
Germany
UK
USA
Other
Total
in € million
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
Present value of defined benefit
obligation as at 01/01/
Group changes
Exchange differences
Current service cost
Past service cost (+) and income (–)
Interest expense
Employee contributions
Pension benefits directly paid by
company
Pension benefits paid by funds
Liability transfer out to third parties
Actuarial gains (+) and losses (–)
arising from
829.7
809.6
440.5
438.4
0.4
0.3
123.6
120.5 1,394.2
1,368.8
38.3
–
–
–
30.4
29.0
–
19.4
2.9
–
17.7
2.9
– 12.8
– 14.0
–
–
214.8
– 62.7
23.7
10.9
0.9
–
1.1
–
14.5
16.3
–
–
–
–
0.1
–
1.3
–
–
– 0.5
– 18.5
– 19.0
– 1.2
– 2.3
– 0.2
– 0.2
–
0.0
0.0
2.0
0.7
3.9
– 0.1
– 4.3
–
255.1
5.1
4.7
2.2
1.0
– 51.1
35.3
– 0.1
37.1
4.0
–
28.9
34.7
– 4.3
36.2
3.9
– 1.6
– 13.9
– 15.6
– 4.3
– 27.9
– 23.8
–
– 0.2
– 0.2
1.9
1.0
– 1.1
– 5.9
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
– 8.1
– 0.0
changes in demographic assumptions
–
–
changes in financial assumptions
80.4
– 25.3
83.3
– 14.4
experience adjustments
– 11.1
10.5
– 9.5
– 5.5
– 0.7
– 0.0
– 0.7
– 0.0
5.2
1.6
160.7
– 38.1
– 2.6
– 1.4
– 23.2
3.6
Present value of defined benefit
obligation as at 31/12/
thereof unfunded
thereof funded
974.7
829.7
448.5
440.5
218.1
427.7
342.6
0.0
0.0
7.9
547.0
487.0
448.5
440.5
210.3
0.4
0.4
–
127.8
123.6 1,769.1
1,394.2
37.7
90.2
33.1
473.2
376.1
90.5 1,295.9
1,018.1
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated statement of financial position
173
Changes in plan assets
TABLE 080
in € million
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
Germany
UK
USA
Other
Total
Fair value of plan assets as at 01/01/
79.8
73.6
467.2
455.5
–
Group changes
Exchange differences
Interest income on plan assets
Employee contributions
Employer contributions
Pension benefits paid by funds
Liability transfer out to third parties
Remeasurements
Fair value of plan assets as at 31/12/
–
–
1.9
2.9
0.9
– 2.3
– 0.1
3.1
86.3
–
–
1.7
2.9
1.1
–
–
156.0
– 65.7
15.5
–
4.3
24.5
17.1
–
5.1
8.3
1.0
–
0.0
– 0.5
– 18.5
– 19.0
– 1.2
– 0.1
–
–
1.1
52.8
– 15.9
–
2.9
–
–
–
–
–
–
–
–
–
79.4
73.8
626.4
603.0
–
0.6
1.1
1.0
1.3
–
156.0
4.4
1.3
1.0
2.3
– 56.7
19.5
4.0
6.6
–
28.8
20.1
3.9
8.5
– 5.9
– 4.3
– 27.9
– 23.8
–
4.0
–
0.8
– 0.1
62.8
– 0.1
– 14.0
79.8
455.7
467.2
167.0
–
81.4
79.4
790.4
626.4
The payments expected for 2017 amount to €28.5 million (2016:
The reconciliation of funded status and net defined benefit
€23.2 million), which includes expected employer contributions of
obligation to the amounts reported in the consolidated statement
€10.1 million to plan assets (2016: €6.9 million) and expected
of financial position as at 31 December is shown in > TABLE 081.
direct payments of pension benefits amounting to €18.4 million
(2016: €16.3 million) that are not covered by corresponding reim-
Overall, the funding ratio (ratio of plan assets to the present
bursements from plan assets. According to local valuation rules,
value of the defined benefit obligation) in the KION Group was
there continue to be shortfalls in the coverage of two defined ben-
44.7 per cent (2015: 44.9 per cent).
efit pension plans in the United Kingdom, as a result of which the
The changes in the retirement benefit obligations reported
expected employer contributions for 2017 include one-off pay-
in the statement of financial position are shown in > TABLE 082.
ments amounting to €3.8 million in line with the agreements
reached with the trustees.
KION GROUP AG | Annual Report 2016
A N E W E R A
174
Funded status and net defined benefit obligation
TABLE 081
in € million
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
Germany
UK
USA
Other
Total
Present value of the funded defined benefit
obligation
Fair value of plan assets
Surplus (+) / deficit (–)
Present value of the unfunded defined
benefit obligation
Net liability (–) / net asset (+)
as at 31/12/
Reported as “retirement benefit
obligation“
– 547.0 – 487.0 – 448.5 – 440.5 – 210.3
86.3
79.8
455.7
467.2
167.0
– 460.7 – 407.2
7.3
26.7
– 43.3
–
–
–
– 90.2
– 90.5 – 1,295.9 – 1,018.1
81.4
79.4
790.4
626.4
– 8.7
– 11.2
– 505.5
– 391.7
– 427.7 – 342.6
– 0.0
– 0.0
– 7.9
– 0.4
– 37.7
– 33.1
– 473.2
– 376.1
– 888.3 – 749.9
7.3
26.7
– 51.2
– 0.4
– 46.4
– 44.3
– 978.7
– 767.8
Reported as “Other non-current assets“
–
–
– 888.3 – 749.9
– 5.0
12.3
– 3.6
– 51.2
– 0.4
– 46.4
– 44.3
– 991.0
– 798.0
30.2
–
–
–
0.0
12.3
30.2
Changes in retirement benefit obligation
TABLE 082
in € million
Balance as at 01/01/
Group changes
Exchange differences
Total service cost
Net interest expense
Pension benefits directly paid by
company
Employer contributions to plan assets
Liability transfer out to third parties
Remeasurements
Balance as at 31/12/
Germany
UK
USA
Other
Total
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
4.5
0.4
0.3
44.3
46.7
798.0
787.5
749.9
736.0
38.3
–
30.4
17.4
–
–
29.0
16.0
3.6
–
– 0.6
0.0
0.1
–
58.8
0.3
0.0
0.2
2.5
0.1
0.4
– 12.8
– 14.0
–
–
–
– 0.9
– 0.2
– 1.1
– 0.1
66.2
– 16.0
888.3
749.9
–
2.2
5.0
– 0.3
– 0.3
– 0.0
–
–
– 1.0
– 11.0
3.6
51.2
0.4
–
0.0
0.0
–
–
–
–
–
2.0
0.1
3.8
0.8
– 1.1
– 1.3
–
– 2.1
46.4
–
99.1
0.8
0.4
0.9
2.1
34.3
18.7
–
1.1
29.4
17.1
– 1.6
– 13.9
– 15.6
– 2.3
–
– 2.5
– 0.2
– 3.7
– 0.1
– 0.6
55.3
– 17.6
44.3
991.0
798.0
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated statement of financial position
175
Statement of cash flows
the start of the year by the discount rate, is also recognised in
the income statement.
In the case of obligations not covered by external assets, pay-
The breakdown of the net cost of the defined benefit obli-
ments to beneficiaries are made directly by the Company and
gation (expenses less income) recognised in the income state-
therefore have an impact on cash flow from operating activities. If
ment for 2016 is shown in > TABLE 083.
the benefit obligations are backed by external assets, the pay-
ments are made from existing plan assets and have no effect on
The KION Group’s net financial income/expenses includes a
the Company’s cash flow. Instead, any contributions made to the
net interest cost of €17.6 million (2015: €16.2 million). All other
external pension fund by the Company result in a cash outflow for
components of pension expenses are recognised under func-
operating activities.
tional costs.
During the reporting year, pension benefits of €41.8 million
The actual total return on plan assets in 2016 was €82.3 mil-
(2015: €39.4 million) were paid in connection with the main pen-
lion (2015: €6.1 million).
sion entitlements in the KION Group, of which €13.9 million (2015:
€15.6 million) was paid directly by the Company and €27.9 million
(2015: €23.8 million) was paid from plan assets. Cash contribu-
Other comprehensive income (loss)
tions to plan assets in 2016 amounted to €6.6 million (2015:
€8.5 million). Furthermore, pension benefit payments totalling
The breakdown of the remeasurement of the defined benefit obli-
€0.1 million (2015: €0.1 million) were transferred to external
gation recognised in the statement of comprehensive income in
pension funds.
2016 is presented in > TABLE 084.
Income statement
obligations are listed in > TABLE 079.
The components of the remeasurements of the defined benefit
In accordance with IAS 19, actuarial computations are performed
The gains and losses on the remeasurement of plan assets are
for benefit obligations in order to determine the amount to be
attributable entirely to experience adjustments. The changes in
expensed in each period in accordance with fixed rules. The
estimates relating to defined benefit pension entitlements resulted
expenses recognised in the income statement for pensions and
in a €50.1 million decrease in equity as at 31 December 2016 after
similar obligations consist of a number of components that must
deduction of deferred taxes (31 December 2015: increase of
be calculated and disclosed separately.
€12.7 million).
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 present value of that proportion of the expected
defined benefit obligation when the pension is paid attributable
to the year under review on the basis of the maximum length of
service achievable by each employee.
Past service cost arises if there is a change to the pension
entitlement and it is recognised immediately in full.
The net interest cost / income, which is calculated by multi-
plying the net liability (present value of the defined benefit obli-
gation minus plan assets) or the net assets (if the plan assets
exceed the present value of the defined benefit obligation) at
KION GROUP AG | Annual Report 2016
A N E W E R A
176
Cost of defined benefit obligation
TABLE 083
in € million
Current service cost
Past service cost (+) and income (–)
Total service cost
Interest expense
Interest income on plan assets
Net interest expense (+) / income (–)
Total cost of defined benefit obligation
Germany
UK
USA
Other
Total
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
30.4
29.0
0.9
–
0.9
1.1
–
1.1
14.5
16.3
0.1
–
0.1
1.3
–
29.0
17.7
– 1.7
– 15.5
– 17.1
– 1.0
16.0
45.0
– 1.0
– 0.1
– 0.8
0.3
0.4
0.5
–
30.4
19.4
– 1.9
17.4
47.9
0.0
3.9
4.7
–
– 0.1
– 4.3
3.8
1.9
0.4
2.2
35.3
– 0.1
35.1
37.1
34.7
– 4.3
30.5
36.2
– 1.1
– 1.3
– 19.5
– 20.1
0.8
4.6
0.9
1.4
17.6
52.7
16.2
46.7
0.0
–
–
–
0.0
Accumulated other comprehensive income (loss)
TABLE 084
Germany
UK
USA
Other
Total
in € million
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
Accumulated other comprehensive
income / loss as at 01/01/
– 284.2
– 300.1
– 42.8
– 44.4
Exchange differences
–
–
6.7
– 2.4
–
0.6
Gains (+) and losses (–) arising
from remeasurements of defined
benefit obligation
Gains (+) and losses (–) arising
from remeasurements of plan
assets
Accumulated other comprehensive
income / loss as at 31/12/
– 69.3
14.9
– 73.7
19.9
8.2
3.1
1.1
52.8
– 15.9
2.9
– 350.4
– 284.2
– 57.1
– 42.8
11.6
–
–
–
–
–
– 28.0
– 27.8
– 355.0
– 372.3
– 0.1
– 0.9
7.1
– 3.3
– 1.9
– 0.2
– 136.8
34.6
4.0
0.8
62.8
– 14.0
– 26.0
– 28.0
– 421.9
– 355.0
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated statement of financial position
177
Composition of plan assets
The plan assets of the main pension plans consist of the following
components: > TABLE 085
Fair value of plan assets
TABLE 085
in € million
Securities
Fixed-income securities
Real estate
Insurance policies
Other
Total plan assets
thereof total assets that do not have
a quoted price in active markets
Insurance policies
Other
Germany
UK
USA
Other
Total
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
24.7
26.4
5.9
–
29.3
86.3
9.0
–
9.0
22.7
23.9
5.3
–
27.8
79.8
9.0
–
9.0
87.8
87.9
361.5
376.8
–
–
–
–
77.9
74.5
–
–
6.5
2.5
14.6
455.7
467.2
167.0
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
9.7
16.3
4.7
47.2
3.6
81.4
48.9
47.2
1.7
8.7
200.0
119.3
15.6
478.7
416.4
4.4
44.0
6.6
10.6
47.2
54.0
9.7
44.0
36.9
79.4
790.4
626.4
47.9
44.0
3.8
57.9
47.2
10.7
56.9
44.0
12.8
The plan assets do not include any real estate or other assets
used by the KION Group itself.
KION GROUP AG | Annual Report 2016
A N E W E R A
178
Sensitivity analysis
ods (projected unit credit method) as for the measurement of the
obligation recognised in the consolidated statement of financial
The present value of the defined benefit obligation is based on the
position as at 31 December 2016.
significant assumptions detailed in > TABLE 077 above. If one
assumption were to vary and the other assumptions remained
unchanged, the impact on the present value of the defined
Future pension benefit payments
benefit obligation would be as shown in > TABLE 086.
The sensitivity analysis shown in > TABLE 086 is not representative
for the next ten years for the defined benefit pension entitlements
of an actual change in the present value of the defined benefit
in existence as at 31 December 2016. The expected pension
obligation because variations in the significant assumptions are
benefits break down into future benefits to be paid directly by
unlikely to occur in isolation as, to some extent, the assumptions
the employer (for 2017: €18.4 million) and future benefits to be
are interrelated. Sensitivity is determined using the same meth-
paid from existing plan assets (for 2017: €31.3 million).
The pension benefit payments shown in > TABLE 087 are forecast
Sensitivity defined benefit obligation
in € million
Discount rate
Salary increase rate
Pension increase rate
Increase by 1.0 percentage point
Reduction by 1.0 percentage point
Increase by 0.5 percentage point
Reduction by 0.5 percentage point
Increase by 0.25 percentage point
Reduction by 0.25 percentage point
Life expectancy
Increase by 1 year
Expected payments for pension benefits
in € million
Germany
2017
2018
2019
2020
2021
2022 to 2026
17.8
18.3
19.6
20.8
22.4
138.7
UK
18.5
18.5
18.5
18.5
18.7
95.1
USA
9.6
9.1
9.3
9.9
10.4
56.1
TABLE 086
2015
– 220.8
294.6
16.2
– 17.4
38.7
– 37.1
47.8
TABLE 087
Total
49.7
49.5
51.9
54.0
56.9
317.8
2016
– 284.1
380.5
20.6
– 20.7
40.1
– 39.5
65.2
Other
3.8
3.6
4.5
4.7
5.4
27.9
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated statement of financial position
179
As at the reporting date, the average duration of the defined ben-
The KION Group also bears the full risk of possible future pen-
efit obligation, weighted on the basis of the present value of the
sion adjustments resulting from changes in longevity and inflation.
defined benefit obligation, was 22.7 years in Germany (2015:
Payroll-based contributions to the KION pension plan
22.2 years), 15.4 years in the United Kingdom (2015: 14.5 years),
made by employees in Germany are invested in fund units. If
14.3 years in the US and 16.5 years in the other countries
the actual returns on these fund units fall below the rate of
(2015: 16.8 years).
Risks
return of 3.0 per cent that has been guaranteed to participating
employees, the KION Group’s personnel expenses rise.
The funding ratio, the defined benefit obligation and the associ-
ated costs depend on the performance of financial markets. The
return on plan assets is assumed to equal the discount rate,
[30] FINANCIAL LIABILITIES
which is determined on the basis of the yield earned on AA-rated,
The financial liabilities reported by the KION Group as at 31 Decem-
fixed-interest senior corporate bonds. If the actual return on plan
ber 2016 essentially comprised interest-bearing liabilities to
assets falls below the discount rates applied, the net obligation
banks, which were predominantly attributable to the bridge loan
arising out of the pension plans increases. The amount of the net
for the financing of the Dematic acquisition and liabilities under
obligation is also particularly affected by the discount rates, and
the syndicated loan agreement.
the current low level of interest rates – especially in the eurozone –
> TABLE 088 shows the contractual maturity structure of the
is resulting in a comparatively large net obligation.
financial liabilities.
The plan assets are predominantly invested in corporate
bonds and inflation-linked UK government bonds, particularly in
the United Kingdom. The market risk attaching to plan assets –
above all in the case of equities – is mitigated by defining an
investment strategy and investment guidelines and constantly
monitoring the assets’ performance. Moreover, a downward trend
on financial markets could have a significant effect on minimum
funding requirements, some of which apply outside Germany.
KION GROUP AG | Annual Report 2016
A N E W E R A
180
Maturity structure of financial liabilities
TABLE 088
in € million
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 to non-banks
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
2016
3,175.8
287.1
2,888.6
–
–
–
–
–
7.2
6.8
0.4
–
293.9
2,889.1
2015
225.9
113.8
112.1
–
444.5
–
444.5
–
6.2
5.5
0.7
–
119.3
557.2
Liabilities to banks
Senior facilities agreement
The SFA comprises a revolving credit facility of €1,150.0 mil-
lion maturing in February 2021 and a fixed-term tranche of
€350.0 million maturing in February 2019 that has been fully
KION GROUP AG signed a syndicated loan agreement (senior
drawn down. Both the revolving credit facility and the fixed-term
facilities agreement, SFA) totalling €1,500.0 million with a syndi-
tranche have a variable interest rate. As at 31 December 2016, an
cate of international banks on 28 October 2015. On 25 Janu-
amount of €225.3 million had been drawn down from the revolv-
ary 2016, the Executive Board of KION GROUP AG decided to
ing credit facility, which includes other loan liabilities and contin-
overhaul the financing structure of the KION Group by repaying
gent liabilities. The drawdowns under the revolving credit facility
the syndicated loan dated 23 December 2006, which took the
have been classified as short term.
form of a revolving credit facility of €1,243.0 million, and the KION
Arrangement of the revolving credit facility of €1,150.0 million
Group corporate bond of €450.0 million that was issued in 2013
resulted in directly attributable transaction costs of €3.8 million.
and was due to mature in 2020. The associated repayment was
The transaction costs are recognised as prepaid expenses under
made on 15 February 2016 using funds drawn down under the
current financial assets and expensed over the term of the credit
SFA. The SFA can be used for general business purposes and
facility. Arrangement of the fixed-term tranche of €350.0 million
enables the KION Group to obtain finance on far more favourable
resulted in directly attributable transaction costs of €1.3 million.
terms than has been possible in the past.
The transaction costs were deducted from the fair value of this
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated statement of financial position
181
tranche on initial recognition and will be expensed over sub-
Changes in net financial debt
sequent periods.
KION GROUP AG has issued guarantees to the banks for all
The KION Group uses its net financial debt as a key internal
of the payment obligations under the SFA. The SFA is not collat-
figure for analysing the changes in its financial liabilities. Net
eralised, as is typical in the current market environment for com-
financial debt is defined as the difference between financial
panies that are on the cusp of an investment-grade rating. Follow-
liabilities and cash and cash equivalents.
ing repayment of the syndicated loan from 23 December 2006, all
The breakdown of the KION Group’s net financial debt as at
collateral furnished under the previous loan agreement has now
31 December 2016 is shown in > TABLE 089.
been released.
Acquisition facilities agreement
lists the applicable terms and conditions.
> TABLE 090 gives details of the changes in financial liabilities and
On 4 July 2016, KION GROUP AG reached agreement with a
group of banks on a bridge loan to finance the acquisition of
Dematic (acquisition facilities agreement, AFA), originally in an
amount of €3,000.0 million. This bridge loan is to be refinanced
partly by long-term capital-market and bank debt and partly
by equity. KION GROUP AG implemented a capital increase in
July 2016 that generated gross proceeds of €459.3 million (see
also note [28]). The agreed financing volume was reduced by the
proceeds from the issue of shares and, when the AFA was drawn
down for the first time on 1 November 2016, amounted to
€2,543.2 million.
The drawdown under the AFA comprises a total of three
fixed-term, variable-rate tranches: tranche A2 has a value of
€343.2 million maturing in February 2018 and tranche B a value of
€1,200.0 million maturing in November 2018; the third tranche is
a further loan of €1,000.0 million maturing in November 2021. The
transaction costs directly assignable in connection with each
tranche amounted to €1.3 million for tranche A2, €4.4 million for
tranche B and €7.7 million for the loan of €1,000.0 million. The
transaction costs were deducted from the fair value of each
tranche on initial recognition and will be expensed over sub-
sequent periods.
KION GROUP AG has issued guarantees to the banks for all
of the payment obligations under the AFA. No collateral has been
furnished in connection with the AFA.
KION GROUP AG | Annual Report 2016
A N E W E R A
182
Net financial debt
in € million
Corporate bond – fixed rate (2013/2020) – gross
Liabilities to banks (gross)
Other financial liabilities to non-banks
./. Capitalised borrowing costs
Financial liabilities
./. Cash and cash equivalents
Net financial debt
Credit terms
in € million
2016
–
3,188.6
7.2
– 12.9
3,183.0
279.6
2,903.4
TABLE 089
2015
450.0
225.9
6.2
– 5.5
676.5
103.1
573.5
TABLE 090
Interest rate
Notional amount
Maturity
Term Loan Facility H2a (Corporate bond – fixed rate)
Fixed rate
Multicurrency Revolving Credit Facility 3
Multicurrency Revolving Credit Facility (SFA)
Term Loan Facility B (SFA)
Bridge Loan Facility A2 (AFA)
Bridge Loan Facility B (AFA)
Term Loan Facility (AFA)
Other liabilities to banks
Other financial liabilities to non-banks
./. Capitalised borrowing costs
Total financial liabilities
EURIBOR + Margin
EURIBOR + Margin
EURIBOR + Margin
EURIBOR + Margin
EURIBOR + Margin
EURIBOR + Margin
Various currencies and
interest terms
2020
2018
2021
2019
2018
2018
2021
2016
–
–
212.1
350.0
343.2
1,200.0
1,000.0
83.3
7.2
– 12.9
3,183.0
2015
450.0
142.7
–
–
–
–
–
83.2
6.2
– 5.5
676.5
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated statement of financial position
183
Financial covenants
[31] LEASE LIABILITIES
Among other stipulations, the contractual terms of the SFA and
AFA require compliance with certain covenants. They also con-
tain a financial covenant that requires adherence to a maximum
Lease liabilities relate solely to finance lease obligations arising
level of leverage (the ratio of financial liabilities to EBITDA).
from sale and leaseback transactions for the funding of long-term
Non-compliance with the covenants may, for example, give lend-
leases with end customers.
ers the right to terminate the SFA and AFA.
The amounts recognised as lease liabilities (the present
The financial covenant is reviewed every quarter. All the
value of future minimum lease payments) are based on the fol-
covenants and the financial covenant were complied with in the
lowing data: > TABLE 091
past financial year, as had been the case in 2015.
The KION Group works continuously to optimise the financ-
ing of the Group (see note [50]).
Minimum lease payments
in € million
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
TABLE 091
2015
922.1
266.0
625.6
30.5
855.6
237.9
587.9
29.7
2016
1,084.2
315.4
737.6
31.2
1,007.2
285.2
691.9
30.1
Interest included in minimum lease payments
77.0
66.5
Whereas lease liabilities stood at €1,007.2 million (31 Decem-
ber 2015: €855.6 million), lease receivables arising from sale and
leaseback transactions amounted to €663.4 million (31 Decem-
ber 2015: €592.0 million) and leased assets under sale and lease-
back transactions totalled €367.5 million (31 December 2015:
€285.9 million).
KION GROUP AG | Annual Report 2016
A N E W E R A
184
[32] OTHER PROVISIONS
Other provisions relate to the following items: > TABLE 092
Other provisions
TABLE 092
in € million
Balance as at 01/01/2016
thereof non-current
thereof current
Group changes
Additions
Utilisations
Reversals
Additions to accrued interest
Currency translation adjustments
Other adjustments
Balance as at 31/12/2016
thereof non-current
thereof current
Provisions
for product
warranties
Provisions for
personnel
Other
obligations
Total other
provisions
57.6
23.5
34.2
12.8
26.0
– 18.9
– 7.6
–
– 0.6
0.2
69.5
18.1
51.4
90.8
43.1
47.7
11.6
34.1
– 23.9
– 2.3
1.1
0.2
– 0.6
110.9
50.6
60.4
46.4
16.9
29.6
29.5
20.6
– 12.2
– 10.2
0.1
– 0.7
1.9
75.4
23.7
51.7
194.9
83.4
111.5
53.8
80.6
– 55.0
– 20.0
1.2
– 1.1
1.5
255.7
92.3
163.4
The provisions for product warranties include contractual and
Other obligations comprise, among others, provisions for
statutory obligations arising from the sale of industrial trucks,
restructuring, litigation and expected losses from onerous contracts.
spare parts and automation solutions. It is expected that the bulk
Total restructuring provisions (including obligations under
of the costs will be incurred within the next two years after the
social plans and termination benefits) came to €28.5 million as at
reporting date.
31 December 2016 (31 December 2015: €33.2 million).
The provisions for personnel comprise provisions for partial
retirement obligations, long-service awards, annual bonuses,
severance pay, obligations under social plans and obligations
under the employee equity programmes. The provisions for par-
tial retirement obligations are recognised on the basis of individ-
ual contractual arrangements and agreements under collective
bargaining law.
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated statement of financial position
185
[33] TRADE PAYABLES
[34] OTHER FINANCIAL LIABILITIES
As at 31 December 2016, trade payables of €802.2 million (31 Decem-
Other financial liabilities comprise the following items: > TABLE 093
ber 2015: €574.6 million) included liabilities to non-consolidated
subsidiaries of €4.7 million (31 December 2015: €6.5 million) and
liabilities to equity-accounted investments and other equity
investments of €15.0 million (31 December 2015: €11.7 million).
Other financial liabilities
in € million
Liabilities from finance leases
Sundry other financial liabilities
Other non-current financial liabilities
Liabilities from finance leases
Derivative financial instruments
Liabilities from accrued interest
Sundry other financial liabilities
Other current financial liabilities
TABLE 093
2015
311.6
4.0
315.6
127.4
12.4
19.8
34.7
194.4
2016
341.7
7.5
349.3
136.0
22.4
12.4
51.8
222.6
Total other financial liabilities
571.9
510.1
KION GROUP AG | Annual Report 2016
A N E W E R A
186
The derivative financial instruments include a call option on the
The liabilities from finance leases comprise liabilities arising
10 per cent equity investment of the KION Group in Linde Hydrau-
from the financing of industrial trucks for short-term rental of
lics amounting to €0.3 million (31 December 2015: €0.6 million).
€440.0 million (31 December 2015: €403.2 million) and residual
The current sundry other financial liabilities include, for the first
value obli gations of €16.7 million (31 December 2015: €17.8 mil-
time, liabilities from financial services in connection with the
lion). The KION Group has also recognised other financial liabili-
funding of the long-term leasing business amounting to
ties amounting to €21.0 million (31 December 2015: €18.1 million)
€8.3 million (31 December 2015: €0.0 million).
arising from procurement leases classified as finance leases due
to their terms and conditions.
The finance lease obligations are based on the following
future minimum lease payments: > TABLE 094
Minimum lease payments
in € million
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
TABLE 094
2015
473.2
141.8
318.8
12.6
439.0
127.4
299.4
12.2
2016
514.2
150.3
350.6
13.3
477.7
136.0
329.0
12.8
Interest included in minimum lease payments
36.5
34.1
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated statement of financial position
187
[35] OTHER LIABILITIES
Other liabilities comprise the following items: > TABLE 095
Other liabilities
in € million
Deferred income
Other non-current liabilities
Deferred income
Personnel liabilities
Social security liabilities
Tax liabilities
Advances received
Construction contracts with a net debit balance due to customers
Other current liabilities
Total other liabilities
Please refer to the details in note [26] for further information on
construction contracts that had not yet been completed on the
reporting date.
TABLE 095
2015
185.4
185.4
77.4
186.5
36.3
64.7
39.2
9.9
414.0
2016
202.8
202.8
74.9
256.5
44.7
92.7
72.6
300.7
842.1
1,044.9
599.4
KION GROUP AG | Annual Report 2016
A N E W E R A
188
[36] CONTINGENT LIABILITIES
AND OTHER FINANCIAL
COMMITMENTS
Contingent liabilities
Litigation
The legal risks arising from the KION Group’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 they will win any of the lawsuits or that
the existing risk provision in the form of insurance or provisions
The marked increase in guarantees was predominantly attribut-
will be sufficient in each individual case. However, the KION Group
able to the inclusion of Dematic in the consolidation. In addition,
believes it is unlikely that these ongoing lawsuits will require funds
guarantees of €1.9 million related to contingent liabilities assumed
to be utilised that exceed the provisions recognised.
jointly with another shareholder of a joint venture (31 Decem-
ber 2015: €2.5 million). > TABLE 096
Contingent liabilities
in € million
Liabilities on bills of exchange
Liabilities on guarantees
Total contingent liabilities
TABLE 096
2015
6.8
23.5
30.3
2016
4.3
86.2
90.5
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated statement of financial position
189
Other financial commitments
The maturity structure of the total future minimum lease payments
under non-cancellable operating leases is shown in > TABLE 098.
Sundry other financial commitments included future payment
obligations to an associate amounting to €1.3 million (31 Decem-
ber 2015: €2.0 million). > TABLE 097
Other financial commitments
in € million
Commitments under non-cancellable operating leases
Commitments under licence and support agreements
Capital expenditure commitments in property, plant and equipment
Other financial commitments
Total other financial commitments
Minimum lease payments
in € million
Nominal minimum lease payments (gross)
due within one year
due in one to five years
due in more than five years
TABLE 097
2015
272.7
55.7
13.8
15.7
357.8
TABLE 098
2015
272.7
66.9
135.4
70.4
2016
362.7
58.5
30.0
15.4
466.6
2016
362.7
85.5
169.4
107.8
KION GROUP AG | Annual Report 2016
A N E W E R A
190
The future minimum lease payments relate to payments for leased
The future minimum lease payments for sale and leaseback
buildings, machinery, office furniture and equipment (procure-
transactions not recognised in the statement of financial position
ment leases) as well as payments for industrial trucks refinanced
amounting to €43.6 million (31 December 2015: €63.4 million) are
with a sale and leaseback and sub-leased to end customers (sale
partially offset by receipts under non-cancellable sub-leases
and leaseback sub-leases). > TABLE 099
amounting to €6.3 million (31 December 2015: €6.3 million). The
future payments also include obligations arising from the refi-
nancing of industrial trucks for which there were no offsetting
receipts under short-term sub-leases as at the reporting date.
Minimum lease payments broken down into procurement leases & sale and leaseback sub-leases
TABLE 099
in € million
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
Procurement leases
Sale and leaseback sub-leases
2016
319.1
67.0
144.7
107.4
–
–
–
–
2015
209.3
43.3
95.8
70.2
–
–
–
–
2016
43.6
18.5
24.8
0.4
6.3
2.2
4.1
0.0
2015
63.4
23.7
39.6
0.2
6.3
2.0
4.3
0.0
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
191
Other disclosures
Other disclosures
[37] CONSOLIDATED STATEMENT
OF CASH FLOWS
The KION Group’s net cash provided by operating activities
totalled €414.3 million, which was below the prior-year figure
(2015: €455.0 million). The rise in the contributions to operating
profit and other payment receipts was offset, in particular, by the
increase in rental assets (net), higher working capital, the greater
The consolidated statement of cash flows shows the changes in
volume of leasing and higher tax payments. In addition to the
cash and cash equivalents in the KION Group resulting from cash
cash transaction costs incurred by KION GROUP AG, Dematic
inflows and outflows in the year under review, broken down into
itself also incurred pre-contract expenses in connection with the
cash flow from operating, investing and financing activities. The
expected acquisition by the KION Group amounting to €63.1 mil-
effects on cash from changes in exchange rates are shown sep-
lion that was then reflected in Dematic cash flows after the acqui-
arately. Cash flow from operating activities is presented using the
sition date. These payments by Dematic are included in the cash
indirect method in which the profit or loss for the year is adjusted
flow from operating activities of the KION Group under ‘Change
for non-cash operating items.
in other operating assets / liabilities’.
In 2016, the KION Group’s segment structure was reorgan-
Net cash used for investing activities amounted to
ised and external financial reporting was then adjusted in line with
€2,264.3 million (2015: net cash used of €122.3 million). Cash
the new structure. Henceforward, operational responsibility for
payments for development (R&D) and for property, plant and
leased assets, rental assets and the financial services business
equipment amounted to €166.7 million (2015: €142.6 million).
will be pooled in the Industrial Trucks & Services segment. This
Cash payments for acquisitions came to a total of €2,118.7 mil-
has also given rise to a change in reporting in relation to cash flow
lion. The acquisition of Dematic led to a net cash outflow of
from operating activities and cash flow from investing activities.
€2,091.1 million; the other acquisitions in the reporting year
The ‘Change in rental assets (excluding depreciation)’ item has
resulted in payments of €27.6 million, of which €23.2 million
now been aggregated with another item to become ‘Change in
related to the acquisition of Retrotech Inc. Cash payments for
rental assets (excluding depreciation) and liabilities for finance
acquisitions in the prior-year period (€84.9 million) had largely
leases’ and is reported under cash flow from operating activities.
been in connection with the acquisition of Egemin Automation.
The prior-year figures have also been restated as part of this
Free cash flow – the sum of cash flow from operating activi-
reporting modification. As a result, cash flow from investing activ-
ties and investing activities – declined by €2,182.8 million in the
ities in 2015 has improved by €222.9 million, while cash flow from
reporting period to minus €1,850.0 million (2015: plus €332.7 mil-
operating activities has decreased by the same amount.
lion) as a consequence of the acquisitions.
KION GROUP AG | Annual Report 2016
A N E W E R A
192
Cash flow from financing activities came to a significant positive
balance of €2,026.3 million in 2016 (2015: minus €329.1 million),
caused by the refinancing of the acquisition of Dematic. The net
drawdown of financial debt in the year under review amounted to
€1,744.0 million (2015: net repayment of €224.0 million). While
[38] INFORMATION ON FINANCIAL
INSTRUMENTS
financial debt taken on during the year came to €4,362.5 million,
The KION Group uses both primary and derivative financial
repayments totalled €2,618.5 million. Net cash of €68.3 million
instruments. The following section summarises the relevance of
was also used for regular interest payments (2015: net cash used
these financial instruments for the KION Group.
of €43.3 million). The cost of obtaining financing in the year under
The following tables show the measurement categories
review amounted to €23.2 million (2015: €5.6 million). The distri-
defined by IAS 39. In line with IFRS 7, the tables show the carrying
bution of a dividend of €0.77 per share (2015: €0.55 per share)
amounts and fair values of financial assets and liabilities. Deriva-
resulted in a cash outflow of €76.0 million (2015: €54.3 million),
tive financial instruments forming part of a documented hedge
while the acquisition of 50,000 treasury shares required an out-
are not assigned to any of the IAS 39 measurement categories
flow of €2.8 million.
and are therefore not included in > TABLES 100 – 101.
Supported by favourable currency effects of €0.2 million
(2015: €0.5 million), this resulted overall in a substantial rise in
cash and cash equivalents, which advanced from €103.1 mil-
lion as at the end of 2015 to €279.6 million as at 31 Decem-
ber 2016. > TABLE 042
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
193
Other disclosures
Carrying amounts broken down by class and category 2016
TABLE 100
Classes
in € million
Financial assets
Non-consolidated subsidiaries and other investments
Loans receivable
Financial receivables
Other financial investments
Lease receivables¹
Trade receivables
thereof construction contracts with a net credit balance
due from customers ²
Other financial receivables
thereof non-derivative receivables
thereof derivative financial instruments
Cash and cash equivalents
Financial liabilities
Liabilities to banks
Other financial liabilities to non-banks
Lease liabilities¹
Trade payables
Other financial liabilities
thereof non-derivative liabilities
thereof liabilities from finance leases¹
thereof derivative financial instruments
1 as defined by IAS 17
2 as defined by IAS 11
Carrying
amount
22.2
4.6
21.3
20.7
731.5
998.9
103.1
60.6
50.3
10.3
279.6
3,175.8
7.2
1,007.2
802.2
571.9
71.8
477.7
22.4
Categories
FAHfT
AfS
LaR
FLaC
FLHfT
Fair value
22.2
0.5
4.6
21.3
20.2
895.9
50.3
279.6
7.5
22.2
4.6
21.3
20.7
740.8
998.9
103.1
60.6
50.3
10.3
279.6
3,188.6
7.2
1,017.5
802.2
576.7
71.8
482.5
22.4
3,175.8
7.2
802.2
71.8
13.8
KION GROUP AG | Annual Report 2016
A N E W E R A
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Carrying amounts broken down by class and category 2015
TABLE 101
Classes
in € million
Financial assets
Non-consolidated subsidiaries and other investments
Loans receivable
Financial receivables
Other financial investments
Lease receivables¹
Trade receivables
thereof construction contracts with a net credit balance
due from customers ²
Other financial receivables
thereof non-derivative receivables
thereof derivative financial instruments
Cash and cash equivalents
Financial liabilities
Liabilities to banks
Corporate bond
Other financial liabilities to non-banks
Lease liabilities¹
Trade payables
Other financial liabilities
thereof non-derivative liabilities
thereof liabilities from finance leases¹
thereof derivative financial instruments
1 as defined by IAS 17
2 as defined by IAS 11
Carrying
amount
FAHfT
AfS
LaR
FLaC
FLHfT
Fair value
Categories
42.4
2.7
15.4
0.8
653.7
670.5
1.5
43.0
37.7
5.3
103.1
225.9
444.5
6.2
855.6
574.6
510.1
58.6
439.0
12.4
42.4
0.8
2.7
15.4
669.0
37.7
103.1
2.3
42.4
2.7
15.4
0.8
658.4
670.5
1.5
43.0
37.7
5.3
103.1
225.9
469.5
6.2
860.0
574.6
512.2
58.6
441.2
12.4
225.9
444.5
6.2
574.6
58.6
6.0
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
195
Other disclosures
The change in valuation allowances for trade receivables is
Offsetting of financial instruments
presented in > TABLE 102.
As at the reporting date, the potential offsetting volume essen-
The net gains and losses on financial instruments are broken
tially arose from netting arrangements in framework agreements
down by IAS 39 category as shown in > TABLE 103.
governing derivatives trading that the KION Group had entered
into with commercial banks. The potential offsetting volume from
Gains and losses on financial instruments do not include gains /
issued financial collateral, as disclosed in 2015, related to collat-
losses arising on hedging transactions that are part of a docu-
eral in connection with the syndicated loan of 23 December 2006.
mented hedge (see also note [40]).
This collateral was released in February 2016 because of the
redemption of this loan. The following tables show actual offset-
ting and potential offsetting volumes for financial assets and
financial liabilities. > TABLES 104 – 107
Change in valuation allowances
in € million
Valuation allowances as at 01/01/
Group changes
Additions (cost of valuation allowances)
Reversals
Utilisations
Currency translation adjustments
Valuation allowances as at 31/12/
TABLE 102
2015
40.2
– 1.8
11.7
– 3.7
– 7.4
– 0.5
38.5
2016
38.5
–
10.8
– 4.1
– 5.0
0.2
40.4
Net gains and losses on financial instruments broken down by category
TABLE 103
in € million
Loans and receivables (LaR)
Available-for-sale investments (AfS)
Financial instruments held for trading (FAHfT, FLHfT)
Financial liabilities carried at amortised cost (FLaC)
2016
3.2
6.2
– 17.6
– 57.1
2015
– 9.1
9.7
18.2
– 89.6
KION GROUP AG | Annual Report 2016
A N E W E R A
196
Financial assets subject to offsetting, enforceable master netting arrangements
and similar agreements
TABLE 104
Potential offsetting
amount
Gross amounts
of recognised
financial
liabilities set
off in the
balance sheet
Net amounts of
financial assets
presented in
the balance
sheet
Gross amounts
of recognised
financial assets
owing to
netting
agreements
in connection
with financial
collaterals
received
Potential
net amount
in € million
Trade receivables
Derivative financial assets
Total
1,000.6
10.3
1,010.9
– 1.6
–
– 1.6
31/12/2016
998.9
10.3
1,009.3
–
– 4.5
– 4.5
–
–
–
998.9
5.8
1,004.8
Financial assets subject to offsetting, enforceable master netting arrangements
and similar agreements
TABLE 105
Potential offsetting
amount
Gross amounts
of recognised
financial
liabilities set
off in the
balance sheet
Net amounts of
financial assets
presented in
the balance
sheet
Gross amounts
of recognised
financial assets
owing to
netting
agreements
in connection
with financial
collaterals
received
Potential
net amount
in € million
Trade receivables
Derivative financial assets
Total
670.6
5.3
675.9
– 0.1
–
– 0.1
31/12/2015
670.5
5.3
675.8
–
– 2.7
– 2.7
–
–
–
670.5
2.6
673.1
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
197
Other disclosures
Financial liabilities subject to offsetting, enforceable master netting arrangements
and similar agreements
TABLE 106
Potential offsetting
amount
Gross amounts
of recognised
financial
liabilities
Gross amounts
of recognised
financial assets
set off in the
balance sheet
Net amounts
of financial
liabilities
presented in
the balance
sheet
owing to
netting
agreements
in connection
with financial
collaterals
pledged
Potential
net amount
in € million
Trade payables
Derivative financial liabilities
Total
803.8
22.4
826.2
– 1.6
–
– 1.6
31/12/2016
802.2
22.4
824.6
–
– 4.5
– 4.5
–
–
–
802.2
17.9
820.1
Financial liabilities subject to offsetting, enforceable master netting arrangements
and similar agreements
TABLE 107
Potential offsetting
amount
Gross amounts
of recognised
financial
liabilities
Gross amounts
of recognised
financial assets
set off in the
balance sheet
Net amounts
of financial
liabilities
presented in
the balance
sheet
owing to
netting
agreements
in connection
with financial
collaterals
pledged
Potential
net amount
in € million
Financial liabilities
Trade payables
Derivative financial liabilities
Total
676.5
574.7
12.4
1,263.7
–
– 0.1
–
– 0.1
31/12/2015
676.5
574.6
12.4
1,263.6
–
–
– 2.7
– 2.7
– 279.7
–
–
– 279.7
396.9
574.6
9.7
981.2
KION GROUP AG | Annual Report 2016
A N E W E R A
198
Fair value measurement
The fair value of the corporate bond, calculated for disclosure
in the notes to the financial statements in 2015, was determined
The majority of the cash and cash equivalents, financial receiv-
using publicly quoted prices in an active market and was there-
ables, other non-derivative receivables and liabilities, trade
fore classified as Level 1 of the fair value hierarchy. The calculation
receivables and trade payables held by the Group have short
was based on the middle rate applicable on 31 December 2015.
remaining terms to maturity. The carrying amounts of these
The fair value of receivables and liabilities from finance leases
financial instruments are roughly equal to their fair values. The
corresponds to the present value of the net lease payments, tak-
fair value of liabilities to banks corresponds to the present
ing account of the current market interest rate for similar leases.
value of the outstanding payments, taking account of the cur-
The following tables show the assignment of fair values to the
rent interest-rate curve and the Group’s own default risk. This
individual classification levels as defined by IFRS 7 for financial
fair value, calculated for the purposes of disclosure in the
instruments measured at fair value. > TABLES 108 – 109
notes to the financial statements, is classified as Level 2 of the
fair value hierarchy.
Financial instruments measured at fair value
TABLE 108
in € million
Financial assets
thereof other financial investments
thereof derivative instruments
Financial liabilities
thereof derivative instruments
Fair Value Hierarchy
Level 1
Level 2
Level 3
0.5
10.3
22.1
0.3
2016
10.8
0.5
10.3
22.4
22.4
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
199
Other disclosures
Financial instruments measured at fair value
TABLE 109
in € million
Financial assets
thereof non-consolidated subsidiaries and
other financial investments
thereof other financial investments
thereof derivative instruments
Financial liabilities
thereof derivative instruments
Fair Value Hierarchy
Level 1
Level 2
Level 3
0.8
5.3
19.6
11.9
0.6
2015
25.7
19.6
0.8
5.3
12.4
12.4
Level 1 comprises long-term financial assets for which the fair
> TABLE 110 shows the changes in fair value and the impact on the
value is calculated using prices quoted in an active market.
income statement.
All currency forwards are classified as Level 2. The fair value
of currency forwards is calculated by the system using the dis-
As at 31 December 2016, the fair value calculated for the call
counting cash flow method based on forward rates on the report-
option on the shares in Linde Hydraulics came to minus €0.3 mil-
ing date. The default risk for the Group and for the counterparty is
lion (31 December 2015: minus €0.6 million). As at the reporting
taken into account on the basis of gross figures.
date, a change in the fair value of the shares in Linde Hydraulics
The shares in non-consolidated subsidiaries allocated to
would not have had any material effect on profit or loss as a
Level 3 in 2015 related to the shares acquired in October 2015 in
consequence of the change in the fair value of the call option.
Emhilia Material Handling S.p.A. (formerly Moden Diesel S.p.A.)
In order to eliminate default risk to the greatest possible
and the shares in LR Intralogistik GmbH purchased at the end
extent, the KION Group only enters into derivatives with invest-
of October 2015. Because the acquisitions took place shortly
ment-grade counterparties.
before the reporting date, the reported fair value was the same
If events or changes in circumstances make it necessary to
as the purchase consideration. These two subsidiaries were
reclassify financial instruments to a different level, they are reclas-
included in the KION Group’s basis of consolidation for the
sified at the end of a reporting period. As had been the case in
first time in January 2016.
2015, no financial instruments were transferred between Levels 1,
The derivative financial liabilities allocated to Level 3 related
2 or 3 in 2016.
to a call option of Weichai Power on the 10 per cent shareholding
of the KION Group in Linde Hydraulics. The Black-Scholes model
and probability-weighted scenario analysis were used to calcu-
late the fair value of the call option.
KION GROUP AG | Annual Report 2016
A N E W E R A
200
Development of financial assets / liabilities classified as level 3
TABLE 110
in € million
Value as at 01/01/
Gains recognised in net financial expenses
Disposals
Value as at 31/12/
Gains for the period relating to financial assets / liabilities classified as Level 3
Change in unrealised gains for the period relating to financial liabilities held as at 31/12/
2016
– 0.6
0.3
–
– 0.3
0.3
0.3
2015
31.7
2.4
– 34.7
– 0.6
2.4
0.1
[39] FINANCIAL RISK REPORTING
Capital management
On 4 July 2016, KION GROUP AG reached an agreement
with a group of banks for a bridge loan to finance the acquisi-
tion of Dematic. KION GROUP AG also implemented a capital
increase in July 2016 that generated gross proceeds of
€459.3 million (see note [28]). As at 31 December 2016, the draw-
down of the bridge loan comprised a total of three fixed-term,
One of the prime objectives of capital management is to ensure
variable-rate tranches: tranche A2 has a value of €343.2 million
liquidity at all times. Measures aimed at achieving these objec-
maturing in February 2018 and tranche B a value of €1,200.0 mil-
tives include the optimisation of the capital structure, the reduc-
lion maturing in November 2018; the third tranche is a further loan
tion of liabilities and ongoing Group cash flow planning and man-
of €1,000.0 million maturing in November 2021 (see also note [30]).
agement. Close cooperation between local units and the Group
Taking into account credit facilities that had not yet been uti-
head office ensures that the local legal and regulatory require-
lised, the unrestricted cash and cash equivalents available to the
ments faced by foreign group companies are taken into account
KION Group as at 31 December 2016 amounted to €1,200.8 mil-
in capital management.
lion (31 December 2015: €1,193.6 million).
Net financial debt – defined as the difference between finan-
The KION Group works continuously to optimise the financing
cial liabilities and cash and cash equivalents – is the key perfor-
of the Group (see note [50]).
mance measure used in liquidity planning at Group level (see note
[30]) and amounted to €2,903.4 million as at 31 December 2016
(31 December 2015: €573.5 million).
On 15 February 2016, the KION Group repaid the corporate
bond of €450.0 million that was still outstanding and all other remain-
ing liabilities under the syndicated loan of 23 December 2006. The
associated repayment was made using funds drawn down
under a new senior facilities agreement (SFA). The SFA com-
prises a revolving credit facility of €1,150.0 million maturing in
February 2021 and a fixed-term tranche of €350.0 million matur-
ing in February 2019 that has been fully drawn down (see note [30]).
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
201
Other disclosures
Credit risk
> TABLE 111 shows the age structure of receivables as at the
reporting date.
In certain finance and operating activities, the KION Group is sub-
Valuation allowances are based on the credit risk associated
ject to credit risk, i.e. the risk that partners will fail to meet their
with the receivables, the risk being assessed mainly using
contractual obligations. This risk is limited by diversifying busi-
factors such as customer credit rating and failure to adhere to
ness partners based on certain credit ratings. The Group only
payment terms.
enters into transactions with business partners and banks hold-
Some of the receivables that were overdue as at the reporting
ing a good credit rating and subject to fixed limits. Counterparty
date, but for which no valuation allowances had been recognised,
risks involving our customers are managed by the individual
were offset by corresponding trade payables. Apart from this
Group companies.
item, the Group did not hold any significant collateral.
Age structure analysis of receivables
TABLE 111
Thereof: Neither
overdue nor
impaired at the
reporting date
Carrying
amount
Thereof: Not impaired at the
reporting date and overdue
in the following timebands
Thereof:
Impaired at the
reporting date
up to and
including 90
days overdue
more than 90
days overdue
2016
2015
in € million
Financial receivables
Lease receivables
Trade receivables
Other non-derivative receivables / assets
in € million
Financial receivables
Lease receivables
Trade receivables
Other non-derivative receivables / assets
21.3
731.5
998.9
50.3
15.4
653.7
670.5
37.7
21.3
731.5
764.0
46.6
15.4
653.7
537.6
34.2
–
–
67.2
0.6
–
–
6.1
0.5
–
–
153.7
0.0
–
–
117.6
3.0
–
–
14.0
3.1
–
–
9.1
–
KION GROUP AG | Annual Report 2016
A N E W E R A
202
Liquidity risk
the KION Group as BB+ with a negative outlook (2015: stable out-
look). Moody’s has rated the KION Group at Ba1 with a negative
Based on IFRS 7, a liquidity risk arises if an entity is unable to
outlook (2015: Ba2 with a positive outlook).
meet its financial liabilities. The KION Group maintains a liquidity
The following tables show all of the contractually agreed
reserve in the form of lines of credit and cash in order to ensure
payments under recognised financial liabilities as at 31 Decem-
financial flexibility and solvency. The age structure of financial
ber 2016 and 2015, including derivative financial instruments
liabilities is reviewed continually. Since the announcement of the
with negative fair values. > TABLES 112 – 113
Dematic acquisition in June 2016, Standard & Poor’s has rated
Liquidity analysis of financial liabilities and derivatives 2016
TABLE 112
in € million
Primary financial liabilities
Liabilities to banks
Other financial liabilities to non-banks
Trade payables
Lease liabilities
Other financial liabilities
Derivative financial liabilities
Derivatives with negative fair value
+ Cash in
– Cash out
Carrying amount
2016
Cash flow
2017
Cash flow
2018 – 2021
Cash flow
from 2022
3,175.8
7.2
802.2
1,007.2
549.4
22.1
– 293.1
– 6.8
– 802.2
– 315.4
– 222.1
– 3,026.5
– 0.4
–
– 737.6
– 350.6
452.7
– 472.6
210.7
– 222.8
–
–
–
– 31.2
– 13.3
–
–
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
203
Other disclosures
Liquidity analysis of financial liabilities and derivatives 2015
TABLE 113
in € million
Primary financial liabilities
Liabilities to banks
Corporate bond
Other financial liabilities to non-banks
Trade payables
Lease liabilities
Other financial liabilities
Derivative financial liabilities
Derivatives with negative fair value
+ Cash in
– Cash out
Carrying amount
2015
Cash flow
2016
Cash flow
2017 – 2020
Cash flow
from 2021
225.9
444.5
6.2
574.6
855.6
497.6
11.9
– 117.2
– 30.4
– 5.5
– 574.6
– 266.0
– 200.4
– 120.3
– 556.3
– 0.7
–
– 625.6
– 318.8
–
–
–
–
– 30.5
– 12.6
345.7
– 352.7
60.5
– 65.5
The calculation of future cash flows for derivative financial liabili-
Default risk
ties includes all currency forwards that have negative fair values
as at the reporting date.
For financial assets, default risk is defined as the risk that a coun-
In 2016, KION Group sold financial assets with a total value of
terparty will default, and hence is limited to a maximum of the car-
€101.3 million (2015: €75.1 million) in factoring transactions. In
rying amount of the assets relating to the counterparty involved.
some cases, the KION Group retains insignificant rights and
The potential default risk attaching to financial assets is mitigated
duties in connection with fully derecognised financial assets, pri-
by secured forms of lending such as reservation of title, credit
marily the provision of limited reserves for defaults. The recog-
insurance and guarantees, and potential netting agreements.
nised assets that serve as reserves for defaults and are reported
Specific valuation allowances for defaults are recognised
under other current financial assets stood at €1.4 million as at
to reflect the risk arising from primary financial instruments.
31 December 2016 (31 December 2015: €1.0 million). The short
Financial transactions are only entered into with selected partners
residual maturity of these financial assets means their carrying
holding good credit ratings. Investments in interest-bearing
amount was almost the same as their fair value. The maximum
securities are limited to securities with an investment-grade
downside risk arising on the transferred and fully derecognised
credit rating.
financial assets amounted to €7.4 million as at 31 December 2016
(31 December 2015: €5.0 million).
KION GROUP AG | Annual Report 2016
A N E W E R A
204
Risks arising from financial services
Moreover, the KION Group offers the majority of financial
services indirectly via selected financing partners that bear the
The leasing activities of the Industrial Trucks & Services segment
risks of the finance transaction. As far as these financial services
mean that the KION Group may be exposed to residual value
are concerned, the KION Group bore the counterparty risk in
risks from the marketing of trucks that are returned by the les-
under 3 per cent of cases (2015: 3 per cent).
see 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. The KION Group
Currency risk
regularly assesses its aggregate risk position arising from finan-
cial services.
In accordance with its treasury risk policy, the KION Group
The risks identified are immediately taken into account by
hedges exchange rate risks both locally at the level of the indi-
the Company in the costing of new leases by recognising write-
vidual companies and centrally via KION GROUP AG using
downs or valuation allowances and adjusting the residual val-
prescribed hedging ratios.
ues. Risk-mitigating factors include the demand for used trucks,
The main hedging instruments employed are foreign-cur-
which stabilises the residual values of the KION Group’s indus-
rency forwards, provided that there are no country-specific
trial trucks. The majority of the residual values have underlying
restrictions on their use.
remarketing agreements that transfer any residual-value risk to
At company level, hedges are entered into for highly probable
the leasing company. This had a positive impact on the financial
future transactions on the basis of rolling 15-month forecasts,
results in 2016. Groupwide standards to ensure that residual val-
as well as for firm obligations not reported in the statement of
ues are calculated conservatively, combined with an IT system
financial position. Currency risk arising from customer-specific
for residual-value risk management, reduce risk and provide the
construction contracts is hedged at individual company level on
basis on which to create the transparency required.
a project basis. Some of these hedges are classified as cash flow
The KION Group mitigates its liquidity risk and interest-rate
hedges for accounting purposes in accordance with IAS 39
risk attaching to financial services by ensuring that most of its
(see note [40]).
transactions and funding loans have matching maturities and by
The currency risk arising on translation of a foreign subsi-
constantly updating its liquidity planning. Long-term leases are
diary’s financial statements into the Group’s reporting currency is
primarily based on fixed-interest agreements. The credit facilities
also eliminated using a foreign-currency forward. In accordance
provided by various banks and an effective dunning process
with IAS 39, this hedge is classified as a net investment hedge
ensure that the Group has sufficient liquidity.
for accounting purposes (see note [40]).
In order to exclude currency risk, the KION Group generally
Foreign-currency forwards are also employed to hedge the
funds its leasing business in the local currency used in each market.
currency risks arising in the course of internal financing.
Because of low default rates, counterparty risk has not been
> TABLE 114 shows an overview of the foreign-currency for-
significant to date in the Group. The KION Group has not identi-
wards entered into by the KION Group. As at the reporting date,
fied any material changes between 2015 and 2016. The Group
significant currency risk arising from financial instruments was
also mitigates any losses from defaults by its receipt of the
measured for the first time using a currency sensitivity method
proceeds from the sale of repossessed trucks. In addition, receiv-
because the value-at-risk method previously used in the risk
ables management has been improved by enhancing the dun-
management system is no longer being applied as a result of the
ning process. The credit portfolio management system was
new organisational and strategic focus in the KION Group. The
updated during 2016. Besides the design of the business
prior-year figures have been restated accordingly.
processes, it also encompassed the risk management and
control processes.
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
205
Other disclosures
Foreign-currency forwards
Fair value
Notional amount
in € million
Foreign-currency forwards (assets)
Hedge Accounting
Foreign-currency forwards (liabilities) Hedge Accounting
Held for Trading
Held for Trading
2016
2.9
7.5
8.7
13.5
2015
3.1
2.3
6.4
5.5
2016
83.1
552.7
279.3
384.4
TABLE 114
2015
142.5
153.3
181.1
269.7
Currency risks from financial instruments as defined by IFRS 7 are
Currency risk in the KION Group arises mainly in connection
only included in calculating currency sensitivity if the financial
with derivative financial instruments, trade receivables and trade
instruments are denominated in a currency other than the func-
payables. It is assumed that the portfolio of financial instruments
tional currency of the reporting entity concerned. This means that
as at the reporting date is representative of the portfolio over the
currency risks resulting from the translation of the separate finan-
whole of the year.
cial statements of subsidiaries into the Group reporting currency,
The sensitivity analysis for currencies that give rise to signifi-
i.e. currency translation risks, are not included.
cant risk in the view of the KION Group is shown in > TABLE 115.
Foreign-currency sensitivity
TABELLE 115
in € million
CNY
GBP
USD
in € million
CNY
GBP
USD
2016
2015
Net income
Other comprehensive income
+ 10%
– 10%
+ 10%
– 10%
0.2
2.2
12.9
– 0.6
– 0.2
0.1
– 0.2
– 2.7
– 16.1
1.0
0.2
– 0.2
5.1
7.7
3.6
5.2
7.6
3.1
– 6.3
– 9.5
– 4.4
– 6.4
– 9.3
– 3.7
KION GROUP AG | Annual Report 2016
A N E W E R A
206
Interest-rate sensitivity
TABLE 116
in € million
Net income
+ 50 bps
– 50 bps
+ 100 bps
– 100 bps
2016
– 1.1
2016
– 0.9
2015
– 0.9
2015
0.9
The table shows the after-tax impact from changes in exchange
derivative approach under the cumulative dollar-offset method.
rates considered to be possible (+10 per cent: increase in the
The effective portion of the changes in the fair value of for-
value of the euro against the other currencies of 10.0 per cent;
eign-currency forwards is recognised in accumulated other com-
–10 per cent: fall in the value of the euro against the other curren-
prehensive income (loss) and only reversed when the corre-
cies of 10.0 per cent).
sponding hedged item is recognised in income.
Interest-rate risk
On account of the short-term nature of the Group’s payment
terms, reclassifications to the income statement and the recogni-
tion of the corresponding cash flows generally take place in the
same reporting period. A foreign-currency receivable or liability is
Interest-rate risk within the KION Group is managed centrally.
recognised when goods are despatched or received. Until the
The basis for decision-making includes sensitivity analyses of
corresponding payment is received, changes in the fair value of
interest-rate risk positions in key currencies.
the derivative are recognised in the income statement such that
A shift in the relevant yield curve of + / – 50 basis points (bps)
they largely offset the effect of the measurement of the for-
(2015: + / – 100 bps) was simulated to assess interest-rate risk.
eign-currency receivable or liability at the reporting date.
The cumulative effect after tax resulted from variable-rate expo-
The changes in fair value recognised and reclassified in other
sures and is shown in > TABLE 116.
comprehensive income in 2016 are shown in the consolidated
[40] HEDGE ACCOUNTING
Hedging currency risk
statement of comprehensive income. In matching transactions
with the recognition of the hedged item, income from hedging
transactions amounting to €0.1 million was reclassified to reve-
nue, and an amount of €14.1 million was reclassified to cost of
sales. In 2015, the gains / losses arising on hedging transactions
amounting to a net loss of €20.9 million had largely been included
in other income and other expenses. There were no significant inef-
fective portions in 2016, as had been the case in the previous year.
In accordance with its treasury risk policy, the KION Group
In total, foreign-currency cash flows of €362.4 million (2015:
applies cash flow hedge accounting in hedging the currency risks
€323.6 million) were hedged and designated as hedged items, of
arising from highly probable future transactions and firm obliga-
which €284.5 million is expected by 30 September 2017 (2015:
tions not reported in the statement of financial position in various
€188.0 million expected by 30 September 2016). The remaining
currencies. Foreign-currency forwards with settlement dates in
cash flows designated as hedged items essentially fall due in the
the same month as the expected cash flows from the Group’s
period up to 31 December 2017.
operating activities are used as hedges.
In addition, the KION Group hedges currency risk arising on
The effectiveness of the Group’s hedging transactions is
translation of a foreign subsidiary’s financial statements into the
assessed on the basis of forward rates using the hypothetical
Group’s reporting currency using a foreign-currency forward. For
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
207
Other disclosures
this purpose, it applies net investment hedge accounting, in
which only the spot rate element of the foreign-currency forward
is designated as the hedging instrument. The effectiveness of the
Group’s hedging transaction is determined on the basis of for-
[41] SEGMENT REPORT
ward rates using the hypothetical derivative approach under the
The segment structure in the KION Group was modified with
cumulative dollar-offset method. The effective portion of the
effect from 1 December 2016. The strategic profile of the KION
changes in the fair value of the foreign-currency forward is recog-
Group has undergone a fundamental change as a consequence
nised – on a cumulative basis and after taking into account
of the acquisition of Dematic. The Executive Board, as the chief
deferred taxes – in accumulated other comprehensive income
operating decision-maker (CODM), has managed the KION
(loss) and is not reversed and recognised in the income statement
Group since December 2016 on the basis of the following seg-
until the foreign operation is sold.
ments: Industrial Trucks & Services, Supply Chain Solutions and
The spot rate element of the foreign-currency forward desig-
Corporate Services. Segment reporting therefore takes into
nated as the hedging instrument had a fair value of minus €2.3 mil-
account the new organisational and strategic focus of the
lion as at 31 December 2016 (31 December 2015: minus €4.5 mil-
KION Group. As a result of the change in segment structure, the
lion) and, in the reporting year, resulted in an unrealised gain of
brands and financing activities previously reported under the
€2.2 million (2015: unrealised loss of €4.5 million), which was rec-
Linde Material Handling (LMH), STILL and Financial Services (FS)
ognised in other comprehensive income (loss). There were no inef-
segments have now been transferred to the new Industrial Trucks
fective portions of the net investment hedge in 2016, as had also
& Services segment. Henceforward, the Supply Chain Solutions
been the case in 2015. In 2016, an expense of €3.2 million (2015:
segment will encompass not only Dematic but also the activities
€0.3 million) arising in connection with the interest element of the
of Egemin and Retrotech, which were previously reported under
foreign-currency forward was recognised under financial expenses.
the Other segment. This segment will therefore bring together the
In 2016, the KION Group made use of transaction-related for-
activities related to planning, implementing and optimising supply
eign-currency forwards to hedge currency risk in connection with
chains. The segment disclosures for the prior period have been
the acquisition of Dematic. The notional amount of these currency
restated using the new segment structure.
forwards totalled €2.3 billion. Currency forwards with a total
notional amount of €1.9 billion served to hedge the purchase
price obligation for the shares and were accounted for as cash
Description of the segments
flow hedges. The resulting changes in exchange rates were
included in the reclassified changes in fair value under gains / losses
Industrial Trucks & Services
on hedge reserves and were recognised as a basis adjustment
So that it can fully cater to the needs of material handling custom-
(see note [5]).
ers worldwide, the business model of the Industrial Trucks & Ser-
vices segment covers key steps of the value chain: product devel-
opment, manufacturing, sales and logistics, spare parts business,
truck rental and used trucks, fleet management and financial
services that support the core industrial truck business. The seg-
ment operates a multi-brand strategy involving the three interna-
tional brands Linde, STILL and Baoli plus the national brands
Fenwick, OM STILL and Voltas.
Supply Chain Solutions
The Supply Chain Solutions segment, with its Dematic operating
unit, is a strategic partner to customers in a variety of industries,
KION GROUP AG | Annual Report 2016
A N E W E R A
208
supplying them with integrated technology and software solu-
to plan and deliver logistics solutions with varying degrees of
tions with which to optimise their supply chains. Manual and
complexity anywhere in the world.
automated solutions are provided for all functions along custom-
ers’ supply chains, from goods inward and multishuttle ware-
Corporate Services
house systems to picking and value-added packing. Through its
The Corporate Services segment comprises the other activities
Dematic, Egemin Automation and Retrotech brand companies,
of the holding and service companies in the KION Group. The
this segment is primarily involved in customer-specific, longer-
service companies provide services for all segments in the
term project business. With global resources, ten production
KION Group. The bulk of the total revenue in this segment is gen-
facilities worldwide and regional teams of experts, Dematic is able
erated by internal IT and logistics services.
Segment report 2016
TABELLE 117
in € million
Revenue from external customers
Intersegment revenue
Total revenue
Earnings before taxes
Financial income
Financial expenses
= Net financial expenses / income
EBIT
+ Non-recurring items
+ PPA items
= Adjusted EBIT
Segment assets
Segment liabilities
Carrying amount of equity-
accounted investments
Profit from equity-
accounted investments
Capital expenditure¹
Amortisation and depreciation ²
Order intake
Number of employees ³
Industrial Trucks
& Services
Supply Chain
Solutions
Corporate
Services
Consolidation /
Reconciliation
5,200.5
2.1
5,202.6
511.7
52.2
– 93.5
– 41.3
553.0
5.4
28.5
586.9
8,914.0
4,700.7
72.7
6.5
142.7
137.1
5,383.2
23,064
364.7
1.3
366.0
– 42.8
7.5
– 18.6
– 11.1
– 31.7
5.7
31.9
6.0
5,207.1
2,573.1
0.0
0.0
9.4
36.7
431.2
6,810
22.1
220.0
242.0
230.6
44.7
– 89.0
– 44.3
274.9
31.0
0.0
305.9
1,588.2
5,910.9
0.0
0.0
14.5
17.6
242.0
670
–
– 223.4
– 223.4
– 360.4
– 15.5
16.5
1.1
– 361.5
– 0.0
–
– 361.5
– 4,350.1
– 4,360.6
–
–
–
–
– 223.3
–
1 Capital expenditure including capitalised development costs, excluding leased and rental assets
2 On intangible assets and property, plant and equipment excluding leased and rental assets
3 Number of employees (full-time equivalents) as at balance sheet date 31/12/; allocation according to the contractual relationship
Total
5,587.2
–
5,587.2
339.2
88.9
– 184.5
– 95.7
434.8
42.2
60.4
537.3
11,359.2
8,824.2
72.7
6.5
166.7
191.4
5,833.1
30,544
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
209
Other disclosures
Segment management
EBIT for the segments (‘adjusted EBIT’). Intra-group transac-
tions are generally conducted on an arm’s-length basis. Seg-
The KPIs used to manage the segments are order intake, rev-
ment reports are prepared in accordance with the same
enue and adjusted EBIT. Segment reporting therefore includes
accounting policies as the consolidated financial statements,
a reconciliation of externally reported consolidated earnings
as described in note [7].
before interest and tax (EBIT) – including effects from purchase
> TABLES 117 – 118 show information on the KION Group’s
price allocations and non-recurring items – to the adjusted
operating segments for 2016 and 2015.
Segment report 2015
TABLE 118
in € million
Revenue from external customers
Intersegment revenue
Total revenue
Earnings before taxes
Financial income
Financial expenses
= Net financial expenses / income
EBIT
+ Non-recurring items
+ PPA items
= Adjusted EBIT
Segment assets
Segment liabilities
Carrying amount of equity-
accounted investments
Profit from equity-
accounted investments
Capital expenditure¹
Amortisation and depreciation ²
Order intake
Number of employees 3
Industrial Trucks
& Services
Supply Chain
Solutions
Corporate
Services
Consolidation /
Reconciliation
5,044.4
0.3
5,044.7
440.1
46.2
– 88.6
– 42.4
482.5
20.0
27.0
529.5
8,354.1
4,118.2
73.6
10.6
126.0
139.0
5,146.3
22,637
33.0
0.0
33.0
1.2
0.0
– 0.0
0.0
1.2
0.9
0.0
2.0
104.3
31.1
0.0
0.0
0.4
1.2
48.8
323
20.5
199.0
219.4
76.0
19.7
– 70.0
– 50.2
126.2
27.1
0.1
153.3
617.6
3,072.0
0.0
0.0
16.2
17.2
219.8
545
–
– 199.3
– 199.3
– 187.0
– 14.5
14.5
0.0
– 187.0
– 15.0
–
– 202.0
– 2,635.8
– 2,629.8
–
–
–
–
– 199.3
–
1 Capital expenditure including capitalised development costs, excluding leased and rental assets
2 On intangible assets and property, plant and equipment excl. leased and rental assets
3 Number of employees (full-time equivalents) as at balance sheet date 31/12/; allocation according to the contractual relationship
Total
5,097.9
–
5,097.9
330.2
51.4
– 144.0
– 92.6
422.8
33.0
27.0
482.9
6,440.2
4,591.5
73.6
10.6
142.6
157.4
5,215.6
23,506
KION GROUP AG | Annual Report 2016
A N E W E R A
210
Revenue with third parties broken down by customer location
in € million
Western Europe
Eastern Europe
Middle East and Africa
North America
Central and South America
Asia-Pacific
Total revenue
TABLE 119
2015
3,724.1
432.0
92.9
119.6
143.4
585.8
2016
3,982.7
459.6
100.3
295.9
148.6
600.1
5,587.2
5,097.9
External revenue by region is presented in > TABLE 119.
Capital expenditure includes additions to intangible assets
and property, plant and equipment. Leased assets are described
Revenue in Germany came to €1,321.1 million in 2016 (2015:
in note [18]. > TABLE 120
€1,276.3 million). There are no relationships with individual
customers that generate revenue deemed to be significant as a
Capital expenditure in Germany came to €100.9 million in 2016
proportion of total consolidated revenue.
(2015: €88.2 million).
Financial income and expenses including all interest income
Depreciation / amortisation relates to intangible assets with
and expenses are described in notes [12] and [13].
finite useful lives and property, plant and equipment.
The non-recurring items mainly comprised consultancy
The regional breakdown of non-current assets excluding
costs – in particular, costs relating to the acquisition of Dematic –
financial assets, financial instruments, deferred tax assets and
as well as costs incurred in connection with severance payments.
post-employment benefits is shown in > TABLE 121.
They totalled €42.2 million in 2016 (2015: €33.0 million).
The effects from purchase price allocations comprised net
Non-current assets attributable to Germany amounted to
write-downs and other expenses in relation to the hidden reserves
€2,537.2 million as at 31 December 2016 (31 December 2015:
and charges identified as part of the acquisition processes.
€2,606.0 million).
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
211
Other disclosures
Capital expenditures broken down by company location (excl. leased and rental assets)
TABLE 120
in € million
Western Europe
Eastern Europe
Middle East and Africa
North America
Central and South America
Asia-Pacific
Total capital expenditures
Non-current assets broken down by company location
in € million
Western Europe
Eastern Europe
Middle East and Africa
North America
Central and South America
Asia-Pacific
Total non-current assets (IFRS 8)
2016
133.4
3.7
0.2
16.6
1.0
11.8
166.7
2016
3,497.9
152.2
6.6
3,836.9
56.4
370.8
7,920.8
2015
113.1
7.5
0.1
2.2
0.9
18.8
142.6
TABLE 121
2015
3,310.2
129.4
6.8
35.1
36.7
321.4
3,839.6
KION GROUP AG | Annual Report 2016
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212
[42] EMPLOYEES
control (parent) if it holds more than 50 per cent of the shares in
another entity. Significant influence generally exists if an entity
holds between 20 per cent and 50 per cent of the shares in
another entity.
The KION Group employed an average of 24,957 full-time equiv-
The related parties that are solely or jointly controlled by the
alents (including trainees and apprentices) in the reporting year
KION Group or over which significant influence can be exercised
(2015: 23,129). The number of employees (with part-time staff
are included in the list of shareholdings as at 31 December 2016
included on a pro rata basis) is shown by region in > TABLE 122.
(see note [47]). Another related party is Weichai Power Co. Ltd.,
Weifang, China, which indirectly holds a 43.3 per cent stake in
The KION Group employed an average of 536 trainees and
KION GROUP AG (31 December 2015: 38.3 per cent) and is thus
apprentices in 2016 (2015: 524). The number of employees
the largest single shareholder.
increased by 6,318 following the acquisition of Dematic.
The revenue that the KION Group generated in 2016 and
[43] RELATED PARTY DISCLOSURES
2015 from selling goods and services to related parties, and
vice versa, is shown in > TABLES 123 – 124 along with the associ-
ated receivables and liabilities as at the reporting date. The
receivables include a loan that the KION Group has granted
to Linde Hydraulics GmbH & Co. KG, Aschaffenburg. The
commitment included an amount of €5.3 million (31 Decem-
In addition to the subsidiaries included in the consolidated
ber 2015: €7.0 million). This resulted in a loan receivable for the
financial statements, the KION Group has direct or indirect
KION Group of €4.0 million as at 31 December 2016 (31 Decem-
business relationships with a number of non-consolidated
ber 2015: €1.0 million); it has a variable interest rate. No valua-
subsidiaries, joint ventures and associates in the course of its
tion allowances for trade receivables had been recognised as
ordinary business activities. According to IAS 24, related parties
at the reporting date, a situation that was unchanged on the
also include entities that have control or significant influence
end of 2015.
over KION GROUP AG. An entity is usually assumed to have
Employees (average)
TABELLE 122
Germany
France
UK
Italy
Rest of Europe
USA
Asia
Rest of world
Total employees
2016
8,460
3,293
1,937
899
4,437
801
3,845
1,286
2015
8,395
3,181
1,782
811
3,939
162
3,796
1,063
24,957
23,129
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
213
Other disclosures
Related party disclosures 2016
in € million
Non-consolidated subsidiaries
Associates (equity-accounted)
Joint ventures (equity-accounted)
Other related parties*
Total
Receivables
Liabilities
Sales of goods
and services
22.8
19.7
2.3
4.7
49.5
13.1
9.2
54.4
1.6
78.3
24.7
163.0
50.7
15.1
253.5
* ‘Other related parties’ include, among others, transactions with Weichai Power and its affiliated companies
Related party disclosures 2015
in € million
Non-consolidated subsidiaries
Associates (equity-accounted)
Joint ventures (equity-accounted)
Other related parties*
Total
Receivables
Liabilities
Sales of goods
and services
24.9
19.3
1.3
4.3
49.8
13.6
8.2
53.7
0.2
75.7
19.4
152.8
48.1
12.7
232.9
* ‘Other related parties’ include, among others, transactions with Weichai Power and its affiliated companies
TABLE 123
Purchases of
goods and
services
19.7
121.1
77.4
18.2
236.5
TABLE 124
Purchases of
goods and
services
34.0
126.4
57.2
12.5
230.1
The members of the Executive Board and Supervisory Board
of KION GROUP AG are also related parties. Details of the remu-
neration of the Executive Board and Supervisory Board can be
found in note [45].
[44] VARIABLE REMUNERATION
KEEP employee share option programme
On 4 October 2016, the Executive Board decided to launch a fur-
ther share option programme for employees (KEEP 2016) in the
countries that had been included in the previous year and also for
employees in Belgium, the Czech Republic, the Netherlands,
Poland, Portugal and Spain. The period during which eligible
employees could take up this offer by making a declaration of
KION GROUP AG | Annual Report 2016
A N E W E R A
214
acceptance ran from 5 to 31 October 2016. To be eligible to par-
KION Group. The change in the number of bonus shares to be
ticipate in KEEP 2016, employees needed, at the start of the offer
granted is shown in > TABLE 125.
phase, to have had a permanent, uninterrupted employment con-
tract with a participating KION Group company for at least one
In 2016, 2,282 free shares were issued to employees as part of
year. Currently, KION GROUP AG plus 14 German (2015: twelve)
their starter blocks (2015: 8,740 free shares).
and 53 foreign (2015: 34) subsidiaries are taking part in KEEP. The
The free shares to be issued are measured at their fair value
Company is considering whether to extend the employee share
on the day on which employees obtain the right to acquire shares
option programme to other countries over the coming years.
as their own investment. The fair value on the grant date is deter-
The KEEP programme is a share matching plan. Participating
mined on the basis of Monte Carlo simulation. The measurement
employees acquire KION shares for their own investment pur-
parameters used are shown in > TABLE 126.
poses. Each set of three KION shares represents a block of
shares. Once the three-year holding period has expired, employ-
For the 2016 programme, the fair value of a bonus share was
ees are entitled to one free matching share (bonus share) for
€52.51 (2015 programme: €38.57).
each block. However, KION GROUP AG has the right to satisfy
The fair value of the bonus shares to be granted is recognised
each programme participant’s entitlement by paying a cash set-
as an expense and paid into capital reserves over the three-year
tlement instead of granting a bonus share. For employees taking
holding period.
part for the first time, the KION Group offers a special incentive
In 2016, an expense totalling €0.7 million was recognised
in the form of starter blocks. Under KEEP 2016, the KION Group
under functional costs for free shares and bonus shares in con-
will bear the cost of one KION share (free share) in each of the
nection with the employee share option programme (2015:
first six blocks of shares that an employee takes up.
€0.6 million). Of this amount, €0.3 million related to KEEP 2015
The right to obtain a bonus share lapses if participants sell
and €0.2 million to KEEP 2014 (2015: €0.2 million relating to
their own investment in KION shares or cease to work for the
KEEP 2014).
Development of the granted bonus shares
in units
Balance as at 01/01/
Granted bonus shares
Forfeited bonus shares
Balance as at 31/12/
TABLE 125
2015
29,116
24,504
– 400
53,220
2016
53,220
15,188
– 1,302
67,106
Significant measurement parameters for the KION GROUP AG employee share option programme
TABLE 126
Measurement parameters
Expected dividend yield
Price of the KION share as at grant date
KEEP 2016
KEEP 2015
€0.88
€55.02
€0.88
€41.01
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
215
Other disclosures
Each year, the Executive Board of KION GROUP AG decides
quarter of 2017. At the beginning of the performance period on
whether there will be an offer made under the share option
1 January 2016 (2015 tranche: 1 January 2015; 2014 tranche:
programme that year and which companies will participate.
1 January 2014), the managers were allocated a total of 0.2 mil-
KION performance share plan (PSP)
for managers
lion virtual shares for this tranche (2015 tranche: 0.2 million virtual
shares; 2014 tranche: 0.2 million virtual shares). The allocation
was based on a particular percentage of each manager’s individ-
ual gross annual remuneration at the time of grant. At the end of
the performance period, the number of the virtual shares is
In March 2016, a multiple-year variable remuneration component
amended depending on the degree to which the relevant targets
in the form of a performance share plan (the KION Long-Term
are achieved. The resulting final number of virtual shares multi-
Incentive Plan for Top Management 2016) with a three-year term
plied by the smoothed price of KION GROUP AG shares at
was promised retrospectively from 1 January 2016 for the man-
the end of the performance period determines the amount of
agers in the KION Group. The remuneration component meas-
cash actually paid. The KION Group has the right to adjust the
ured over the long term is based in equal parts on the total share-
amount payable at the end of the performance period in the
holder return (TSR) of KION GROUP AG shares compared with
event of exceptional occurrences or developments. The maxi-
the STOXX Europe TMI Industrial Engineering index as a measure
mum amount payable is limited to 200 per cent of the value of the
of market performance, and with return on capital employed
shares allotted to an individual at the grant date.
(ROCE) as an internal measure. It also depends on the perfor-
The pro-rata expense calculation based on the fair value of
mance of KION GROUP AG shares during the relevant period.
the virtual shares on each valuation date is carried out using
The performance period for the 2016 tranche ends on 31 Decem-
Monte Carlo simulation. The measurement parameters shown in
ber 2018 (2015 tranche: 31 December 2017). The 2014 tranche
> TABLE 127 were used to value the virtual shares on the report-
expired on 31 December 2016 and will be paid out in the second
ing date.
Significant measurement parameters of the PSP for Executive Employees
TABLE 127
Measurement parameters
Expected volatility of the KION share
Expected volatility of the STOXX Europe TMI Industrial Engineering Index
Risk-free interest rate
Expected dividend yield
Price of the KION share
Price of the STOXX Europe TMI Industrial Engineering Index at valuation date
Initial value of the KION share (60 days average)
Initial value of the STOXX Europe TMI Industrial Engineering Index (60 days average)
Valuation date 31/12/2016
Tranche 2016
Tranche 2015
30.0%
20.0%
– 0.80%
€0.88
€53.00
€243.00
€43.45
€209.26
25.0%
20.0%
– 0.83%
€0.88
€53.00
€243.00
€29.06
€200.94
KION GROUP AG | Annual Report 2016
A N E W E R A
216
Taking account of the remaining term of two years (2016 tranche)
1 January 2014), the Executive Board members were allocated a
and one year (2015 tranche), the historic volatility of KION shares
total of 0.1 million virtual shares for this tranche (2015 tranche:
was used to determine the volatility on which the valuation is
0.2 million virtual shares; 2014 tranche: 0.2 million virtual shares)
based. As at 31 December 2016, the fair value of one virtual share
with a specific fair value. The shares were allocated on the basis
was €54.00 for the 2015 tranche (31 December 2015: €39.80)
of an allocation value in euros specified in each Executive Board
and €42.86 for the 2016 tranche. On that date, the total fair value
member’s service contract.
based on 0.2 million virtual shares was €10.9 million (2015
At the end of the performance period, the number of the vir-
tranche; 31 December 2015: €8.2 million) and €7.7 million (2016
tual shares is amended depending on the degree to which the
tranche). The amount of €10.9 million that is expected to be paid
relevant targets are achieved. The resulting final number of virtual
out for the 2014 tranche is calculated on the basis of a preliminary
shares multiplied by the smoothed price of KION GROUP AG
total target achievement rate.
shares at the end of the performance period determines the
The total carrying amount for liabilities in connection with
amount of cash actually paid. The Supervisory Board can also
share-based remuneration was €20.6 million as at 31 Decem-
use a discretionary personal performance multiplier to adjust the
ber 2016 (31 December 2015: €8.5 million). Of this amount,
final payment at the end of the performance period by
€10.9 million related to the 2014 tranche (31 December 2015:
+ / – 20 per cent. The maximum amount payable is limited to
€5.7 million), €7.1 million to the 2015 tranche (31 December 2015:
200 per cent of the value of the shares allotted to an individual at
€2.7 million) and €2.6 million to the 2016 tranche. In 2016, a pro-
the grant date.
rata expense of €5.2 million in respect of the 2014 tranche (2015:
The pro-rata expense calculation based on the fair value of
€4.1 million), a pro-rata expense of €4.3 million for the 2015
the virtual shares on each valuation date is carried out using
tranche (2015: €2.7 million) and a pro-rata expense of €2.6 million
Monte Carlo simulation. The measurement parameters shown
for the 2016 tranche were recognised for twelve months under
in > TABLE 128 were used to value the virtual shares on the
functional costs.
reporting date.
KION performance share plan (PSP) for the
Executive Board
Taking account of the remaining term of two years (2016 tranche)
and one year (2015 tranche), the historic volatility of KION shares
was used to determine the volatility on which the valuation is
based. As at 31 December 2016, the fair value of one virtual share
The members of the Executive Board have been promised a mul-
was €52.89 for the 2015 tranche (31 December 2015: €39.25)
tiple-year variable remuneration component in the form of a per-
and €42.19 for the 2016 tranche. On that date, the total fair value
formance share plan with a three-year term in each case. The
based on 0.2 million and 0.1 million virtual shares respectively
remuneration component measured over the long term is based
was €8.1 million (2015 tranche; 31 December 2015: €6.0 million)
in equal parts on the total shareholder return (TSR) of KION
and €4.4 million (2016 tranche). The amount of €9.3 million that is
GROUP AG shares compared with the STOXX Europe TMI Indus-
expected to be paid for the 2014 tranche is calculated on the
trial Engineering index as a measure of market performance, and
basis of a preliminary total target achievement rate and is subject
with return on capital employed (ROCE) as an internal measure. It
to the performance-based adjustment made by the Supervisory
also depends on the performance of KION GROUP AG shares
Board for individual Executive Board members, which could
during the relevant period.
mean that a marginally lower amount is paid out.
The performance period for the 2016 tranche ends on
The total carrying amount for liabilities in connection with share-
31 December 2018 (2015 tranche: 31 December 2017). The 2014
based remuneration was €16.9 million as at 31 December 2016
tranche expired on 31 December 2016 and will be paid out in
(31 December 2015: €17.8 million). Of this amount, €9.3 million
the spring of 2017. At the beginning of the performance period
related to the 2014 tranche (31 December 2015: €5.3 million),
on 1 January 2016 (2015 tranche: 1 January 2015; 2014 tranche:
€6.0 million to the 2015 tranche (31 December 2015: €2.2 million)
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
217
Other disclosures
Significant measurement parameters for the KION GROUP AG performance share plan
TABLE 128
Measurement parameters
Expected volatility of the KION share
Expected volatility of the STOXX Europe TMI Industrial Engineering Index
Risk-free interest rate
Expected dividend yield
Price of the KION share
Price of the STOXX Europe TMI Industrial Engineering Index at valuation date
Initial value of the KION share (60 days average)
Initial value of the STOXX Europe TMI Industrial Engineering Index (60 days average)
Valuation date 31/12/2016
Tranche 2016
Tranche 2015
30.0%
20.0%
– 0.80%
€0.88
€53.00
€243.00
€43.54
€209.26
25.0%
20.0%
– 0.83%
€0.88
€53.00
€243.00
€29.06
€200.94
and €1.6 million to the 2016 tranche. In 2016, a pro-rata expense
strategy, corporate communications, corporate office, internal
of €4.0 million in respect of the 2014 tranche (2015: €3.4 million),
audit, corporate compliance and KION Warehouse Systems.
a pro-rata expense of €3.8 million for the 2015 tranche (2015:
Dr Eike Böhm, in his role as Chief Technology Officer (CTO),
€2.0 million) and a pro-rata expense of €1.6 million for the 2016
has groupwide responsibility for research and development (R&D)
tranche were recognised for twelve months under functional
and for product and technology strategy, including innovation, the
costs. In April 2016, the first payment from the 2013 tranche was
production system, quality assurance and procurement.
made on the basis of the achievement of the long-term targets
Ching Pong Quek, Chief Asia Pacific Officer, heads up the
that were defined in 2013 at the start of the performance period.
KION APAC operating unit and thus the entire Asia business
[45] REMUNERATION OF THE
EXECUTIVE BOARD AND
SUPERVISORY BOARD
Executive Board
Responsibilities
within the Industrial Trucks & Services segment.
Dr Thomas Toepfer is Chief Financial Officer (CFO) and his
responsibilities include corporate accounting & tax, financial
services, corporate finance, corporate controlling, corporate
HR / Labour Relations Director, legal affairs, KION Group IT, data
protection, health, safety & environment and logistics / Urban.
Remuneration
The remuneration paid to the Executive Board comprises a fixed
salary and non-cash benefits, pension entitlements and perfor-
mance-related components. The variable performance-related
Gordon Riske, Chief Executive Officer (CEO), is responsible for
components comprise an annually recurring component linked to
the LMH EMEA, STILL EMEA, and KION Americas operating
business performance and a multi-year performance-related
units in the Industrial Trucks & Services segment and the Dematic
component in the form of the KION performance share plan for all
operating unit in the Supply Chain Solutions segment. He also
members of the Executive Board. The pension entitlements con-
remains in charge of the following group functions: corporate
sist of retirement, invalidity and surviving dependants’ benefits.
KION GROUP AG | Annual Report 2016
A N E W E R A
218
An expense of €15.5 million was recognised for the total remuner-
The total remuneration paid to former members of the Exec-
ation for members of the Executive Board in 2016 (2015: €16.7 mil-
utive Board in 2016 amounted to €0.2 million (2015: €0.2 million).
lion). This consisted of short-term remuneration amounting to
Defined benefit obligations to former members of the Executive
€5.0 million (2015: €4.8 million), post-employment benefits total-
Board or their surviving dependants amounting to €9.8 million
ling €1.0 million (2015: €0.9 million), termination benefits of
(31 December 2015: €8.8 million) were recognised in accordance
€0.4 million (2015: €1.5 million) and share-based payments of
with IAS 19.
€9.0 million (2015: €9.6 million). The short-term remuneration
Further details of Executive Board remuneration, including
comprised non-performance-related components amounting
the individual amounts for each member, can be found in the
to €2.6 million (2015: €2.3 million) and performance-related com-
remuneration report on pages 37 to 53 of this annual report.
ponents amounting to €2.4 million (2015: €2.5 million). The cur-
rent service cost resulting from pension provisions for the Execu-
tive Board is reported under post-employment benefits. The
Supervisory Board
long-term incentive components take the form of a performance
share plan (see also note [44]).
The total remuneration paid to the members of the Supervisory
Under section 314 HGB, disclosure of the expense for share-
Board for the performance of their tasks at the parent company
based payments is not required. Rather, the payments must
and subsidiaries in 2016 amounted to €1.2 million (2015: €1.2 mil-
be included in the Executive Board members’ remuneration for
lion). There were no loans or advances to members of the Supervi-
the year in which they are paid on the basis of the fair value at
sory Board in 2016. Furthermore, the members of the Supervisory
the individual grant dates. The fair value of the share-based
Board did not receive any remuneration or benefits for services
payments at their individual grant dates, including tax equalisa-
provided as individuals, such as consulting or brokerage activities.
tion, amounted to €4.8 million (2015: €4.6 million). Furthermore,
Members of the Supervisory Board also received short-
disclosure of post-employment benefits (expense of €1.0 million;
term employee benefits of €0.8 million for employee services
2015: expense of €0.4 million) and of termination benefits
(2015: €0.8 million).
(expense of €0.4 million; 2015: expense of €1.5 million) is not
required. On this basis, the total remuneration of the members of
the Executive Board pursuant to section 314 HGB came to
€9.8 million (2015: €9.4 million).
As in the previous year, no loans or advances were made to
members of the Executive Board in 2016. The present value of
the defined benefit obligation in respect of Executive Board
members as at 31 December 2016 was €7.5 million (31 Decem-
ber 2015: €6.1 million).
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
219
Other disclosures
[46] MEMBERS OF THE
EXECUTIVE BOARD AND
SUPERVISORY BOARD
Member of the Board of Directors of Linde Material
Handling Asia Pacific Pte., Ltd., Singapore, Singapore
Chairman of the Board of Directors of Linde Material
Handling Hong Kong Ltd., Hong Kong, People’s Republic of China
Executive Board
Gordon Riske
Chief Executive Officer / CEO
Dr Thomas Toepfer
Member of the Executive Board / CFO
Chairman of the Supervisory Board of STILL GmbH, Hamburg
Chairman of the Supervisory Board of Linde Material Handling
GmbH, Aschaffenburg
Chief Executive Officer of KION Material Handling GmbH,
Chairman of the Board of Directors of KION North
Wiesbaden (until 15 August 2016)
America Corp., Summerville, USA
Member of the Executive Board of KION Holding 2 GmbH,
Member of the Board of Directors of Superlift UK Ltd.,
Wiesbaden
Basingstoke, United Kingdom
Chief Executive Officer of STILL GmbH, Hamburg
(until 31 March 2016)
Chairman of the Board of Directors of Linde (China)
Supervisory Board
Forklift Truck Co., Ltd., Xiamen, People’s Republic of China
Chairman of the Board of Directors of Egemin NV,
Dr John Feldmann
Zwijndrecht, Belgium
Chairman of the Supervisory Board
Non-Executive Director of Weichai Power Co., Ltd.,
Weifang, People’s Republic of China
Former member of the Board of Executive Directors of BASF SE,
Member of the Executive Board of the non-profit Hertie Foundation,
Ludwigshafen
Frankfurt am Main
Dr Eike Böhm
Member of the Supervisory Board of Bilfinger SE, Mannheim
(until 11 May 2016)
Member of the Supervisory Board of HORNBACH Baumarkt AG,
Member of the Executive Board / CTO
Bornheim
Member of the Supervisory Board of e.GO Mobile AG, Aachen
Co. KGaA, Neustadt an der Weinstraße
Member of the Supervisory Board of HORNBACH Holding AG &
Ching Pong Quek
Member of the Executive Board / Chief Asia Pacific Officer
Member of the Supervisory Board of HORNBACH
Management AG, Annweiler am Trifels
Özcan Pancarci 1
Member of the Board of KION South Asia Pte Ltd., Singapore,
Deputy Chairman of the Supervisory Board
Singapore
President and CEO of KION Asia Ltd., Hong Kong,
Chairman of the Plants I and II Works Council, Linde Material
People’s Republic of China
Handling GmbH, Aschaffenburg
Chairman of KION Baoli Forklift Co., Ltd., Jiangsu,
Chairman of the Group Works Council of the KION Group
People’s Republic of China
Deputy Chairman of the Supervisory Board of Linde
Member of the Board of Directors of KION India Pvte. Ltd.,
Material Handling GmbH, Aschaffenburg
Pune, India
KION GROUP AG | Annual Report 2016
A N E W E R A
220
Birgit A. Behrendt
Denis Heljic 1
Vice President and Corporate Officer, Global Programs and
Spokesperson for the STILL branches, Chairman of the European
Purchasing Operations at the Ford Motor Company,
Works Council and Deputy Chairman of the Works Council of
Dearborn, Michigan, USA
STILL GmbH, Dortmund plant
Holger Brandt 2
Jiang Kui
Head of Sales Germany at STILL GmbH, Hamburg
President and Director of Shandong Heavy Industry
Member of the Supervisory Board of STILL GmbH, Hamburg
Group Co., Ltd., Jinan, People’s Republic of China
Member of the Board of Directors of Ferretti International
Dr Alexander Dibelius
Holding S.p.A., Milan, Italy
Managing Partner at CVC Capital Partners (Deutschland) GmbH,
Member of the Board of Directors of Ferretti S.p.A., Milan, Italy
Frankfurt am Main
Member of the Executive Board of Hydraulics Drive
Member of the Board of Directors of CVC Capital Partners
Technology Beteiligungs GmbH, Aschaffenburg
(Luxemburg) SARL, Luxembourg
Member of the Supervisory Board of Linde Hydraulics
Chairman of the Supervisory Board of Diebold Nixdorf AG,
Verwaltungs GmbH, Aschaffenburg
Paderborn
Member of the Board of Directors of Shandong Heavy Industry
Chairman of the Supervisory Board of Diebold Nixdorf
India Private Ltd., Pune, India
International GmbH, Paderborn
Member of the Board of Directors of Weichai Power Co. Ltd.,
Member of the Board of Directors of Diebold Nixdorf Inc., Ohio,
Weifang, People’s Republic of China
USA
Member of the Supervisory Board of Douglas GmbH, Düsseldorf
Olaf Kunz 1
Member of the Supervisory Board of Douglas Holding AG,
Secretary (Collective Bargaining) / Lawyer at IG Metall, District
Düsseldorf
Office for the Coast, Hamburg
Member of the Supervisory Board of Kirk Beauty Investments SA,
Member of the Supervisory Board of STILL GmbH, Hamburg
Luxembourg
Member of the Shareholders’ Committee of Tipico Group Ltd.,
Jörg Milla 1
Malta
Wolfgang Faden
(until 12 May 2016)
Chairman of the Works Council of STILL GmbH, Hamburg
Deputy Chairman of the Supervisory Board of STILL GmbH,
Hamburg (since 1 November 2016)
Former Managing Director for Germany and Central Europe at
Kay Pietsch 1
Allianz Global Corporate & Specialty AG, Munich
(until 31 October 2016)
Member of the Supervisory Board of Albatros
Industrial Engineering Senior Manager in Production Systems at
Versicherungsdienste GmbH, Cologne
KION GROUP AG, Wiesbaden
Deputy Chairman of the Supervisory Board of STILL GmbH,
Joachim Hartig 1
Hamburg (until 31 October 2016)
Organisational Development Advisor, Linde Material
Handling GmbH, Aschaffenburg
Dr Christina Reuter
(since 12 May 2016)
Head of Performance & Improvement and Manufacturing Engi-
neering, Space Equipment Operations at Airbus Defence and
Space GmbH, Ottobrunn
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
221
Other disclosures
Hans Peter Ring
Management Consultant, Munich
Claudia Wenzel 1
(since 1 November 2016)
Member of the Supervisory Board of Airbus Defence and
Deputy Chairwoman of the Plants I and II Works Council of
Space GmbH, Ottobrunn
Linde Material Handling GmbH, Aschaffenburg
Member of the Supervisory Board of Bilfinger SE, Mannheim
Member of the Supervisory Board of Linde Material Handling
(until 11 May 2016)
GmbH, Aschaffenburg
Member of the Supervisory Board of Elbe
Flugzeugwerke GmbH, Dresden
Xu Ping
Member of the Supervisory Board of Fokker Technologies
Partner and member of the Management Committee of
Holding B.V., Papendrecht, Netherlands
King & Wood Mallesons, Beijing, People’s Republic of China
Alexandra Schädler 1
Trade Union Secretary on the National Executive of IG Metall,
Frankfurt am Main
Member of the Supervisory Board of Fujitsu Technology
Solutions GmbH, Munich (until 4 October 2016)
Tan Xuguang
Chairman of the Board of Directors and President of Shandong
Heavy Industry Group Co., Ltd., Jinan, People’s Republic
of China
Chairman of the Board of Directors of Ferretti International
Holding S.p.A., Milan, Italy
Chairman of the Board of Directors of Ferretti S.p.A., Milan, Italy
Chairman of the Board of Directors of Weichai Holding Group
Co., Ltd., Weifang, People’s Republic of China
Chairman of the Board of Directors and Chief Executive Officer
of Weichai Power Co. Ltd., Weifang,
People’s Republic of China
1 Employee representatives
2 Executive representatives
KION GROUP AG | Annual Report 2016
A N E W E R A
222
[47] LIST OF THE SHAREHOLDINGS OF
KION GROUP AG, WIESBADEN
The shareholdings of the KION Group as at 31 December 2016
are listed below. > TABLE 129
List of shareholdings as of December 31, 2016 (continued)
TABLE 129
No. Name
Registered
office
Country
Parent
company
Share-
holding
2016
Share-
holding
2015
Note
1 KION GROUP AG
Wiesbaden
Germany
Consolidated subsidiaries
Domestic
2 BlackForxx GmbH
3 Dematic GmbH
4 Dematic Logistics GmbH
5 Dematic Services GmbH
6 Egemin GmbH
7 Eisenwerk Weilbach GmbH
8 Fahrzeugbau GmbH Geisa
9 KION Financial Services GmbH
10 KION Holding 2 GmbH
Stuhr
Germany
22 100.00% 100.00%
Heusenstamm
Germany
Bielefeld
Germany
Heusenstamm
Germany
86 100.00%
69 100.00%
3 100.00%
–
–
–
[1]
[1]
[1]
Bremen
Wiesbaden
Geisa
Wiesbaden
Wiesbaden
Germany
Germany
Germany
Germany
Germany
Germany
Germany
Germany
30 100.00% 100.00%
14 100.00% 100.00%
22 100.00% 100.00%
14 100.00% 100.00%
1 100.00% 100.00%
10 100.00% 100.00%
22 100.00% 100.00%
14 100.00% 100.00%
10 100.00% 100.00%
11 KION Information Management Services GmbH Wiesbaden
12 KION Warehouse Systems GmbH
Reutlingen
13 Klaus Pahlke GmbH & Co. Fördertechnik KG
Haan
14 Linde Material Handling GmbH
Aschaffenburg
Germany
15 LMH Immobilien GmbH & Co. KG
Aschaffenburg
Germany
14 & 16
99.64% 99.64%
16 LMH Immobilien Holding GmbH & Co. KG
Aschaffenburg
Germany
17 LMH Immobilien Holding Verwaltungs-GmbH
Aschaffenburg
Germany
18 LMH Immobilien Verwaltungs-GmbH
Aschaffenburg
Germany
14
94.00% 94.00%
14 100.00% 100.00%
14 100.00% 100.00%
19 LR Intralogistik GmbH
Wörth a. d. Isar
Germany
22 100.00% 100.00%
20 Schrader Industriefahrzeuge GmbH & Co. KG
Essen
21 STILL Financial Services GmbH
Hamburg
22 STILL Gesellschaft mit beschränkter Haftung
Hamburg
Germany
Germany
Germany
14 100.00% 100.00%
9 100.00% 100.00%
14 100.00% 100.00%
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
223
Other disclosures
List of shareholdings as of December 31, 2016 (continued)
TABLE 129
No. Name
Registered
office
Country
Parent
company
Share-
holding
2016
Share-
holding
2015
Note
23 Urban-Transporte Gesellschaft mit
Unterschleißheim Germany
14 100.00% 100.00%
beschränkter Haftung
24 Willenbrock Fördertechnik GmbH & Co. KG
Bremen
25 Willenbrock Fördertechnik GmbH & Co. KG
Hannover
26 Willenbrock Fördertechnik Holding GmbH
Bremen
Foreign
27 Dematic Holdings Pty. Ltd.
28 Dematic Pty. Ltd.
Belrose
Belrose
Germany
Germany
Germany
Australia
Australia
26
26
14
74.00% 74.00%
74.00% 74.00%
74.00% 74.00%
86 100.00%
27 100.00%
–
–
[1]
[1]
29 Linde Material Handling Pty. Ltd.
Huntingwood
Australia
14 100.00% 100.00%
30 Egemin Group NV (formerly: Egemin NV)
Zwijndrecht
31 STILL NV
32 Dematic Sistemas e Equipamentos
de Movimentação de Materiais Ltda.
Wijnegem
São Paulo
33 KION South America Fabricação de
Equipamentos para Armazenagem Ltda.
Indaiatuba /
São Paulo
Belgium
Belgium
Brazil
Brazil
10 & 1 100.00% 100.00%
22 & 95 100.00% 100.00%
86 & 3 100.00%
–
[1]
22 100.00% 100.00%
34 Dematic Logistics de Chile Ltda.
Santiago de Chile Chile
52 & 117 100.00%
–
[1]
35 STILL DANMARK A/S
36 BARTHELEMY MANUTENTION SAS
37 Bastide Manutention SAS
38 Bretagne Manutention S.A.
39 Dematic SAS
40 Egemin SAS
41 FENWICK FINANCIAL SERVICES SAS
42 FENWICK-LINDE S.A.R.L.
43 KION France SERVICES SAS
Kolding
Vitrolles
Bruguières
Pacé
Bussy-Saint-
Georges
Heillecourt
Elancourt
Elancourt
Elancourt
Denmark
France
France
France
France
France
France
France
France
44 LOIRE OCEAN MANUTENTION SAS
Saint-Herblain
France
45 Manuchar S.A.
46 MANUSOM SAS
Gond Pontouvre France
Rivery
France
France
France
47 Société Angoumoisine de Manutention
Champniers
(SAMA) SAS
48 SM Rental SAS
Roissy Charles
de Gaulle
49 STILL Location Services SAS
50 STILL SAS
Marne la Vallée
France
Marne la Vallée
France
22 100.00% 100.00%
42
83.50% 83.50%
42 100.00% 100.00%
42 100.00% 100.00%
86 100.00%
–
[1]
30 100.00% 100.00%
43 100.00% 100.00%
43 & 14 100.00% 100.00%
14 100.00% 100.00%
42
77.01% 79.99%
42 100.00% 100.00%
50 100.00% 100.00%
50 100.00% 100.00%
42 100.00% 100.00%
43 100.00% 100.00%
43 100.00% 100.00%
KION GROUP AG | Annual Report 2016
A N E W E R A
224
List of shareholdings as of December 31, 2016 (continued)
TABLE 129
No. Name
51 URBAN LOGISTIQUE SAS
52 Dematic Ltd.
53 Dematic Group Ltd.
54 Dematic Services Ltd.
55 Egemin UK Ltd.
56 FSU Investments Ltd.
57 KION FINANCIAL SERVICES Ltd.
58 Linde Castle Ltd.
59 Linde Creighton Ltd.
60 Linde Holdings Ltd.
61 Linde Jewsbury’s Ltd.
62 Linde Material Handling (UK) Ltd.
63 Linde Material Handling East Ltd.
64 Linde Material Handling Scotland Ltd.
65 Linde Material Handling South East Ltd.
66 Linde Severnside Ltd.
67 Linde Sterling Ltd.
68 Mirror Bidco Ltd.
69 SDI Group Ltd.
70 SDI Group UK Ltd.
71 STILL Materials Handling Ltd.
72 Superlift UK Ltd.
Registered
office
Elancourt
Banbury
Banbury
Banbury
Huntingdon
Banbury
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Banbury
Banbury
Banbury
Exeter
Basingstoke
Country
France
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
Parent
company
Share-
holding
2016
Share-
holding
2015
Note
[1]
[1]
[1]
[1]
23 100.00% 100.00%
86 100.00%
89 100.00%
88 100.00%
–
–
–
30 100.00% 100.00%
86 100.00%
–
72 100.00% 100.00%
62 100.00% 100.00%
62 100.00% 100.00%
72 100.00% 100.00%
62 100.00% 100.00%
60 100.00% 100.00%
62 100.00% 100.00%
62 100.00% 100.00%
62 100.00% 100.00%
62 100.00% 100.00%
62 100.00% 100.00%
89 100.00%
56 & 86 100.00%
69 100.00%
–
–
–
[1]
[1]
[1]
72 100.00% 100.00%
14 100.00% 100.00%
73 Egemin Asia Pacific Automation Ltd.
Causeway Bay
Hong Kong
30 100.00% 100.00%
74 KION ASIA (HONG KONG) Ltd.
Kwai Chung
Hong Kong
14 100.00% 100.00%
75 Linde Material Handling Hong Kong Ltd.
Kwai Chung
Hong Kong
14 100.00% 100.00%
76 KION India Pvt. Ltd.
Pune
India
113 100.00% 100.00%
77 Linde Material Handling (Ireland) Ltd.
Walkinstown
Ireland
60 100.00% 100.00%
78 Dematic S.r.l.
79 Emhilia Material Handling S.p.A.
(formerly: Moden Diesel S.p.A)
Cernusco sul
Naviglio
Modena
80 KION Rental Services S.p.A.
Milan
81 Linde Material Handling Italia S.p.A.
Buguggiate
82 OM Carrelli Elevatori S.p.A.
83 STILL ITALIA S.p.A.
Lainate
Lainate
Italy
Italy
Italy
Italy
Italy
Italy
86 100.00%
–
[1]
81 100.00% 100.00%
81 & 82 & 83 100.00% 100.00%
14 100.00% 100.00%
14 & 83 100.00% 100.00%
22 100.00% 100.00%
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
225
Other disclosures
List of shareholdings as of December 31, 2016 (continued)
TABLE 129
Parent
company
Share-
holding
2016
Share-
holding
2015
Note
No. Name
84 Dematic Ltd.
85 HISCO Systems of Canada Ltd.
86 Dematic Group S.à r.l.
87 Dematic Holding S.à r.l.
Registered
office
Mississauga
Halifax
Country
Canada
Canada
Senningerberg
Luxembourg
Senningerberg
Luxembourg
88 DH Services Luxembourg Holding S.à r.l.
Senningerberg
Luxembourg
89 DH Services Luxembourg S.à r.l.
Senningerberg
Luxembourg
86 100.00%
130 100.00%
87 100.00%
53 100.00%
1 100.00%
54 100.00%
90 Dematic (Malaysia) Sdn. Bhd.
Shah Alam
Malaysia
111 100.00%
91 Dematic Logistics de Mexico S. de R.L. de C.V. Monterrey
92 DMTC Technology Services, S. de. R.L. de C.V. Monterrey
93 Dematic Trading de Mexico S. de. R.L. de C.V.
Mexico City
Mexico
Mexico
Mexico
52 & 117 100.00%
52 & 117 100.00%
52 & 117 100.00%
–
–
–
–
–
–
–
–
–
–
[1]
[1]
[1]
[1]
[1]
[1]
[1]
[1]
[1]
[1]
94 Egemin Handling Automation B.V.
Gorinchem
Netherlands
30 100.00% 100.00%
95 STILL Intern Transport B.V.
96 STILL Norge AS
97 AUSTRO OM PIMESPO Fördertechnik GmbH
98 Linde Fördertechnik GmbH
Hendrik Ido
Ambacht
Heimdal
Linz
Linz
Netherlands
22 100.00% 100.00%
Norway
Austria
Austria
22 100.00%
–
[1]
82 100.00% 100.00%
14 & 97 100.00% 100.00%
99 STILL Gesellschaft m.b.H.
Wiener Neudorf
Austria
22 100.00% 100.00%
100 Dematic Poland Sp.z.o.o.
101 Linde Material Handling Polska Sp. z o.o.
102 STILL POLSKA Sp. z o.o.
Poznań
Warsaw
Gadki
Poland
Poland
Poland
3 100.00%
–
[1]
14 100.00% 100.00%
22 100.00% 100.00%
103 STILL MATERIAL HANDLING ROMANIA SRL (for-
Giurgiu
Romania
14 & 22 100.00% 100.00%
merly: STILL MOTOSTIVUITOARE S.R.L.)
104 OOO “Linde Material Handling Rus”
105 OOO “STILL Forklifttrucks”
106 Linde Material Handling AB
107 STILL Sverige AB
108 Dematic Suisse Sagl
109 Linde Material Handling Schweiz AG
110 STILL AG
111 Dematic S.E.A. Pte. Ltd.
112 KION South Asia Pte. Ltd.
Moscow
Moscow
Örebro
Malmö
Lugano
Dietlikon
Otelfingen
Singapore
Singapore
113 Linde Material Handling Asia Pacific Pte. Ltd.
Singapore
Russia
Russia
Sweden
Sweden
Switzerland
Switzerland
Switzerland
Singapore
Singapore
Singapore
14 & 7 100.00% 100.00%
14 & 22 100.00% 100.00%
14 100.00% 100.00%
22 100.00% 100.00%
56 100.00%
–
[1]
14 100.00% 100.00%
22 100.00% 100.00%
86 100.00%
–
[1]
14 100.00% 100.00%
14 100.00% 100.00%
KION GROUP AG | Annual Report 2016
A N E W E R A
226
List of shareholdings as of December 31, 2016 (continued)
TABLE 129
No. Name
Registered
office
114 Linde Material Handling Slovenská republika s.r.o. Trenčin
115 STILL SR, spol. s r.o.
116 Linde Viličar d.o.o.
117 Dematic Logistic Systems S.A.U.
118 Islavista Spain S.A.U.
119 KION Rental Services S.A.U.
120 Linde Material Handling Ibérica, S.A.U.
121 STILL, S.A.U.
Nitra
Celje
Coslada
L’Hospitalet de
Llobregat
Barcelona
Pallejá
L’Hospitalet de
Llobregat
Country
Slovakia
Slovakia
Slovenia
Spain
Spain
Spain
Spain
Spain
Parent
company
Share-
holding
2016
Share-
holding
2015
Note
14 & 123 100.00% 100.00%
22 & 126 100.00% 100.00%
14 100.00% 100.00%
86 100.00%
–
[1]
14 100.00% 100.00%
118 100.00% 100.00%
118 100.00% 100.00%
118 100.00% 100.00%
122 Linde Material Handling (Pty) Ltd.
Linbro Park
South Africa
14 100.00% 100.00%
123 Linde Material Handling Česká republika s r.o.
Prague
Czech Republic
14 & 22 100.00% 100.00%
124 Linde Material Handling Parts
Český Krumlov
Czech Republic
14 100.00% 100.00%
Distribution CZ s.r.o.
125 Linde Pohony s r.o.
126 STILL ČR spol. s r.o.
Český Krumlov
Czech Republic
14 100.00% 100.00%
Prague
Czech Republic
14 & 22 100.00% 100.00%
127 STILL ARSER Iş Makineleri Servis ve Ticaret A.Ş.
Izmir
Turkey
22
51.00% 51.00%
128 Linde Magyarország Anyagmozgatási Kft.
Dunaharaszti
Hungary
14 100.00% 100.00%
129 STILL Kft.
130 Dematic Corp.
Környe
Hungary
22 100.00% 100.00%
Grand Rapids
United States
134 100.00%
–
[1]
131 Egemin Automation Inc.
Holland
United States
132 100.00% 100.00%
132 Egemin Group, Inc.
Bingham Farms United States
30 100.00% 100.00%
133 KION North America Corp.
Summerville
United States
14 100.00% 100.00%
134 Mirror Bidco Corp.
135 Retrotech Inc.
Atlanta
United States
68 100.00%
Rochester
United States
132 100.00%
136 Dematic International Trading Ltd.
Shanghai
137 Dematic Logistics Systems Ltd.
Suzhou
138 Egemin (Shanghai) Trading Company Ltd.
Shanghai
People’s
Republic of
China
People’s
Republic of
China
People’s
Republic of
China
–
–
–
–
[1]
[1]
[1]
[1]
86 100.00%
86 100.00%
73 100.00% 100.00%
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
227
Other disclosures
List of shareholdings as of December 31, 2016 (continued)
TABLE 129
No. Name
139 KION Baoli (Jiangsu) Forklift Co., Ltd.
Registered
office
Jiangjiang
140 Linde (China) Forklift Truck Corporation Ltd.
Xiamen
Parent
company
Share-
holding
2016
Share-
holding
2015
Note
74 100.00% 100.00%
14 100.00% 100.00%
Country
People’s
Republic of
China
People’s
Republic of
China
Non-consolidated subsidiaries
Domestic
141 Klaus Pahlke Betriebsführungs-GmbH
Haan
142 OM Deutschland GmbH
Neuhausen a. d.
Fildern
Germany
Germany
14 100.00% 100.00%
82 100.00% 100.00%
[R]
143 proplan Transport- und Lagersysteme GmbH
Aschaffenburg
Germany
1 100.00% 100.00%
144 Schrader Industriefahrzeuge Verwaltung GmbH
Essen
145 Trainingscenter für Sicherheit und Transport
Bremen
GmbH
146 Willenbrock Fördertechnik Beteiligungs-GmbH
Bremen
147 Willenbrock Fördertechnik Beteiligungs-GmbH
Hannover
Germany
Germany
Germany
Germany
14 100.00% 100.00%
26
74.00% 74.00%
26
26
74.00% 74.00%
74.00% 74.00%
Foreign
148 Lansing Bagnall (Aust.) Pty. Ltd.
Huntingwood
Australia
62 & 14 100.00% 100.00%
[R]
149 NDC Automation Pty. Ltd.
150 NDC Manage Pty. Ltd.
151 Baoli France SAS
152 SCI Champ Lagarde
153 Castle Lift Trucks Ltd.
154 Creighton Materials Handling Ltd.
155 D.B.S. Brand Factors Ltd.
156 Fork Truck Rentals Ltd.
157 Fork Truck Training Ltd.
158 Lancashire (Fork Truck) Services Ltd.
159 Linde Heavy Truck Division Ltd.
160 McLEMAN FORK LIFT SERVICES LTD.
161 Reddwerks Ltd.
Belrose
Belrose
Elancourt
Elancourt
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Banbury
Australia
Australia
France
France
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
U.K.
28 100.00%
28 100.00%
–
–
[1], [R]
[1], [R]
43 100.00% 100.00%
42 100.00% 100.00%
62 100.00% 100.00%
62 100.00% 100.00%
67 100.00% 100.00%
62 100.00% 100.00%
62 100.00% 100.00%
67 100.00% 100.00%
62 100.00% 100.00%
59 100.00% 100.00%
[R]
[R]
[R]
[R]
[R]
[R]
130 100.00%
–
[1], [R]
KION GROUP AG | Annual Report 2016
A N E W E R A
228
List of shareholdings as of December 31, 2016 (continued)
TABLE 129
No. Name
162 SDI Group Support Ltd.
163 Stephensons Enterprise Fork Trucks Ltd.
164 Sterling Mechanical Handling Ltd.
165 Trifik Services Ltd.
166 Urban Logistics (UK) Ltd.
Registered
office
Banbury
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Country
U.K.
U.K.
U.K.
U.K.
U.K.
167 Handling & Storage Equipment (Ireland) Ltd.
Walkinstown
Ireland
168 Carest SRL
169 COMMERCIALE CARRELLI S.r.l.
170 QUALIFT S.p.A.
171 URBAN LOGISTICA S.R.L.
172 Reddwerks Inc.
173 Retrotech Systems Canada, Inc.
174 WHO Real Estate UAB
Lainate
Lainate
Verona
Lainate
Toronto
Calgary
Vilnius
Italy
Italy
Italy
Italy
Canada
Canada
Lithuania
Parent
company
Share-
holding
2016
Share-
holding
2015
Note
69 100.00%
–
[1], [R]
67 100.00% 100.00%
62 100.00% 100.00%
62 100.00% 100.00%
23 100.00% 100.00%
77 100.00% 100.00%
82 100.00% 100.00%
83 & 80 100.00% 100.00%
81 100.00% 100.00%
23 100.00% 100.00%
[R]
[R]
[R]
[R]
[R]
[R]
130 100.00%
135 100.00%
–
–
[1], [R]
[1], [R]
26
74.00% 74.00%
175 Linde Material Handling (Malaysia) Sdn. Bhd.
Petaling Jaya
Malaysia
113 100.00% 100.00%
176 Linde Viljuškari d.o.o.
177 IBER-MICAR S.L.
Vrčin
Gavà
Serbia
Spain
98 100.00% 100.00%
14 100.00% 100.00%
178 Dematic Thailand Co. Ltd.
Bangkok
Thailand
111 & 205
73.89%
–
[1]
179 Linde Material Handling (Thailand) Co., Ltd.
Pathum Thani
Thailand
113 100.00% 100.00%
180 Baoli Material Handling Europe s.r.o.
Prague
Czech Republic
139 100.00% 100.00%
181 KION Supply Chain Solutions Czech, s.r.o.
Český Krumlov
Czech Republic
125 100.00%
–
[1]
182 Použitý Vozík CZ, s.r.o.
Prague
Czech Republic
123 100.00% 100.00%
183 Urban Transporte spol. s.r.o.
Moravany u Brna Czech Republic
23 100.00% 100.00%
184 TOV “Linde Material Handling Ukraine”
Kiev
Ukraine
14 & 7 100.00% 100.00%
Associates (equity-accounted investments)
Domestic
185 Carl Beutlhauser Kommunal- und Fördertechnik
Hagelstadt
Germany
14
25.00% 25.00%
GmbH & Co. KG
186 Hans Joachim Jetschke Industriefahrzeuge
Hamburg
Germany
14
21.00% 21.00%
(GmbH & Co.) KG
187 Linde Hydraulics GmbH & Co. KG
Aschaffenburg
Germany
188 Pelzer Fördertechnik GmbH
Kerpen
Germany
14
14
10.00% 10.00%
24.96% 24.96%
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
229
Other disclosures
List of shareholdings as of December 31, 2016 (continued)
TABLE 129
Registered
office
Country
Parent
company
Share-
holding
2016
Share-
holding
2015
Note
Santiago de Chile Chile
Saint-Péray
Saint-Etienne du
Rouvray
France
France
14
42
42
45.00% 45.00%
34.00% 34.00%
34.00% 34.00%
No. Name
Foreign
189 Linde High Lift Chile S.A.
190 Labrosse Equipement S.A.
191 Normandie Manutention S.A.
Joint Ventures (equity-accounted investments)
Domestic
192 Linde Leasing GmbH
Wiesbaden
Germany
14
45.00% 45.00%
Foreign
193 JULI Motorenwerk s.r.o.
Moravany u Brna Czech Republic
14 & 22
50.00% 50.00%
Joint Ventures (at cost)
Domestic
194 Eisengießerei Dinklage GmbH
Dinklage
Germany
22
50.00% 50.00%
Associates (at cost)
Domestic
195 JETSCHKE GmbH
Hamburg
Germany
196 Linde Hydraulics Verwaltungs GmbH
Aschaffenburg
Germany
197 MV Fördertechnik GmbH
Blankenhain
Germany
198 Supralift Beteiligungs- und Kommunikations-
gesellschaft mbH
199 Supralift GmbH & Co. KG
Hofheim am
Taunus
Hofheim am
Taunus
Germany
14
14
14
14
21.00% 21.00%
10.00% 10.00%
25.00% 25.00%
50.00% 50.00%
Germany
14
50.00% 50.00%
Foreign
200 Chadwick Materials Handling Ltd.
201 Warehouse Control Solutions Ltd.
202 Bari Servizi Industriali S.C.A R.L.
203 Nordtruck AB
204 Carretillas Elevadoras Sudeste S.A.
205 Dematic Holding (Thailand) Co., Ltd.
Corsham
Loughborough
Modugno
U.K.
U.K.
Italy
Örnsköldsvik
Sweden
Murcia
Bangkok
Spain
Thailand
62
70
82
106
120
111
48.00% 48.00%
49.00%
–
[1]
25.00% 25.00%
25.00% 25.00%
38.54% 38.54%
48.90%
–
[1]
KION GROUP AG | Annual Report 2016
A N E W E R A
230
List of shareholdings as of December 31, 2016 (continued)
TABLE 129
No. Name
Registered
office
Country
Parent
company
206 Motorové závody JULI CZ s r.o.
Moravany u Brna Czech Republic
207 DEMATIC ELECTROMECHANICAL SYSTEMS
Dubai
MIDDLE EAST L.L.C
United Arab
Emirates
14
3
Share-
holding
2016
Share-
holding
2015
50.00% 50.00%
Note
49.00%
–
[1]
Financial investments (at cost)
Foreign
208 TPZ Linde Viličari Hrvatska d.o.o.
Zagreb
Croatia
209 Balyo SA
Moissy-Cramayel France
14
14
20.00% 20.00%
10.00% 10.00%
[2]
[2]
[1] New during 2016
[2] No material influence
[R] Dormant company
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
231
Other disclosures
[48] AUDITORS’ FEES
€1,200.0 million, an amount of €611.8 million was repaid. The
bridge loan was refinanced by promissory notes (Schuldschein-
darlehen) amounting to €958.0 million. The promissory notes are
repayable as bullet payments on maturity in May 2022, April 2024
The fees recognised as an expense and paid to the auditors of
or April 2027 and have a fixed or floating-rate coupon. They are
the consolidated financial statements in 2016 amounted to
not collateralised.
€1.2 million (2015: €1.1 million) for the audit of the financial state-
ments, €0.6 million (2015: €0.6 million) for other attestation ser-
vices, €0.0 million (2015: €0.0 million) for tax consultancy services
and €0.1 million (2015: €0.8 million) for other services.
[51] INFORMATION ON PREPARATION
AND APPROVAL
[49] COMPLY-OR-EXPLAIN STATEMENT
REGARDING THE GERMAN
CORPORATE GOVERNANCE
CODE (DCGK)
The Executive Board of KION GROUP AG prepared the consoli-
dated financial statements on 22 February 2017 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.
In December 2016, the Executive Board and Supervisory Board
Wiesbaden, 22 February 2017
of KION GROUP AG submitted their comply-or-explain state-
ment for 2016 relating to the recommendations of the German
The Executive Board
Corporate Governance Code government commission pursuant
to section 161 AktG. The comply-or-explain statement has been
made permanently available to shareholders on the website of
KION GROUP AG at kiongroup.com/comply_statement.
[50] EVENTS AFTER THE
REPORTING DATE
Gordon Riske
Dr Eike Böhm
In January 2017, the term of the revolving credit facility of
Ching Pong Quek
Dr Thomas Toepfer
€1,150.0 million agreed under the SFA was extended by a year,
which means the KION Group can now utilise this credit facility
until February 2022.
Furthermore, in February 2017, KION GROUP AG partly refi-
nanced the bridge loan that it had taken out for the acquisition of
Dematic. The outstanding amount of tranche A2 of €343.2 mil-
lion, which was agreed under the AFA, was repaid in full. Of
the total amount of tranche B under the AFA, amounting to
KION GROUP AG | Annual Report 2016
A N E W E R A
232
Auditors’ report
We have audited the consolidated financial statements prepared
Our audit has not led to any reservations.
by KION GROUP AG, Wiesbaden / Germany, – comprising the
consolidated income statement, consolidated statement of com-
In our opinion, based on the findings of our audit, the consoli-
prehensive income, consolidated statement of financial position,
dated financial statements of KION GROUP AG, Wiesbaden / Ger-
consolidated statement of cash flows, consolidated statement of
many, comply with IFRS, as adopted by the EU, as well as the
changes in equity and the notes to the consolidated financial
regulations under German commercial law complementarily
statements – and the Group management report combined with
applicable under Sec. 315a (1) German Commercial Code (HGB)
the Parent’s management report for the financial year from 1 Jan-
and give a true and fair view of the net assets, financial position
uary to 31 December 2016. The preparation of the consolidated
and results of operations of the Group in accordance with these
financial statements and the combined management report in
requirements. The Group management report is consistent with
accordance with IFRS, as adopted by the EU, as well as the reg-
the consolidated financial statements, complies with the legal
ulations under German commercial law complementarily applica-
requirements and as a whole provides a suitable view of the
ble under Sec. 315a (1) German Commercial Code (HGB) are the
Company’s position and suitably presents the opportunities and
responsibility of the entity’s Executive Board. Our responsibility is
risks of future development.
to express an opinion on the consolidated financial statements
and the Group management report based on our audit.
Frankfurt am Main, 22 February 2017
We conducted our audit of the consolidated financial statements
Deloitte GmbH
in accordance with Section 317 German Commercial Code (HGB)
Wirtschaftsprüfungsgesellschaft
and German generally accepted standards for the audit of finan-
cial statements promulgated by the Institute of Public Auditors in
Germany (IDW). Those standards require that we plan and per-
form the audit such that misstatements materially affecting the
(Crampton)
(Gräbner-Vogel)
presentation of the net assets, financial position and results of
Wirtschaftsprüfer
Wirtschaftsprüferin
operations in the consolidated financial statements in accord-
(German Public Auditor)
(German Public Auditor)
ance with German principles of proper accounting and in the
Group management report are detected with reasonable assur-
ance. 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 disclo-
sures in the consolidated financial statements and the Group
management report are examined primarily on a sample basis
within the framework of the audit. The audit includes assessing
the financial statements of the consolidated entities, the determi-
nation of entities to be included in consolidation, the accounting
and consolidation principles used and significant estimates made
by the Executive Board, as well as evaluating the overall presenta-
tion of the consolidated financial statements and the Group man-
agement report. We believe that our audit provides a reasonable
basis for our opinion.
A N E W E R A
Annual Report 2016 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
233
Auditors’ report
Responsibility statement
Responsibility statement
To the best of our knowledge, and in accordance with the
applicable reporting principles for consolidated financial report-
ing, the consolidated financial statements give a true and fair view
of the financial performance and financial position of the Group,
and the management report of the Group includes a fair review of
the development and performance of the business and the
position of the Group, together with a description of the principal
opportunities and risks associated with the expected develop-
ment of the Group.
Wiesbaden, 22 February 2017
The Executive Board
Gordon Riske
Dr Eike Böhm
Ching Pong Quek
Dr Thomas Toepfer
KION GROUP AG | Annual Report 2016
A N E W E R A
ADDITIONAL INFORMATION
Contents
235
ADDITIONAL
INFORMATION
236
QUARTERLY INFORMATION
237
MULTI-YEAR OVERVIEW
238
DISCLAIMER
239
FINANCIAL CALENDAR
239
CONTACT
A N E W E R A
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ADDITIONAL INFORMATION
Contents
235
ADDITIONAL
INFORMATION
236
QUARTERLY INFORMATION
237
MULTI-YEAR OVERVIEW
238
DISCLAIMER
239
FINANCIAL CALENDAR
239
CONTACT
A N E W E R A
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Quarterly information
KION Group overview
TABLE 130
in € million
Order intake
Revenue
EBIT
Adjusted EBIT
Adjusted EBIT margin
Adjusted EBITDA
Adjusted EBITDA margin
Q4 2016
Q3 2016
Q2 2016
Q1 2016
1,782.7
1,739.5
116.6
171.2
9.8%
277.6
16.0%
1,326.6
1,283.2
112.4
126.8
9.9%
224.1
17.5%
1,427.1
1,343.8
116.8
140.8
10.5%
238.2
17.7%
1,296.7
1,220.6
89.0
98.6
8.1%
191.7
15.7%
A N E W E R A
Annual Report 2016 | KION GROUP AG
ADDITIONAL INFORMATION
Quarterly information
Multi-year overview
Multi-year overview
KION Group multi-year overview
in € million
Order intake
Revenue
Order book¹
Financial performance
EBITDA
Adjusted EBITDA²
Adjusted EBITDA margin²
EBIT
Adjusted EBIT²
Adjusted EBIT margin²
2016
5,833.1
5,587.2
2,244.7
889.5
931.6
16.7%
434.8
537.3
9.6%
2015
5,215.6
5,097.9
864.0
824.2
850.0
16.7%
422.8
482.9
9.5%
2014
4,771.2
4,677.9
764.1
714.2
780.4
16.7%
347.0
442.9
9.5%
2013
4,489.1
4,494.6
693.3
708.8
721.5
16.1%
374.2
416.5
9.3%
237
TABLE 131
2012
4,590.3
4,559.8
807.8
914.4
700.5
15.4%
549.1
408.3
9.0%
Net income
246.1
221.1
178.2
138.4
161.4
Financial position¹
Total assets
Equity
Net financial debt
ROCE³
Cash flow
Free cash flow4
Capital expenditure5
11,359.2
2,535.1
2,903.4
6.8%
6,440.2
1,848.7
573.5
11.9%
6,128.5
1,647.1
810.7
11.4%
6,026.4
1,610.0
979.3
6,213.2
660.7
1,790.1
– 1,850.0
166.7
332.7
142.6
305.9
133.1
195.6
125.8
513.6
155.1
Employees6
30,544
23,506
22,669
22,273
21,215
1 Figures as at balance sheet date 31/12/
2 Adjusted for PPA items and non-recurring items
3 ROCE is defined as the proportion of EBIT adjusted to capital employed
4 Free cash flow is defined as cash flow from operating activities plus cash flow from investing activities;
Last year figures were adjusted due to a change in presentation, for details see ,Additional information of the condensed statement of cash flows‘
5 Capital expenditure including capitalised development costs, excluding leased and rental assets
6 Number of employees (full-time equivalents) as at balance sheet date 31/12/
KION GROUP AG | Annual Report 2016
A N E W E R A
238
DISCLAIMER
Forward-looking statements
This annual report contains forward-looking statements that relate to the current plans, objectives, forecasts and estimates of the management of KION GROUP AG. These statements
only take into account information that was available up and including the date that this annual report was prepared. The management of KION GROUP AG makes no guarantee that
these forward-looking statements will prove to be right. The future development of the KION GROUP AG and its subsidiaries and the results that are actually achieved are subject to a
variety of risks and uncertainties which could cause actual events or results to differ significantly from those reflected in the forward-looking statements. Many of these factors are
beyond the control of KION GROUP AG and its subsidiaries and therefore cannot be precisely predicted. Such factors include, but are not limited to, changes in economic conditions
and the competitive situation, changes in the law, interest rate or exchange rate fluctuations, legal disputes and investigations, and the availability of funds. These and other risks and
uncertainties are set forth in the 2016 group management report. However, other factors could also have an adverse effect on our business performance and results. The KION
GROUP AG neither intends to nor assumes any separate obligation to update forward-looking statements or to change these to reflect events or developments that occur after the
publication of this annual report.
Rounding
Certain numbers in this annual report have been rounded up or down. There may therefore be discrepancies between the actual totals of the individual amounts in the tables and the
totals shown as well as between the numbers in the tables and the numbers given in the corresponding analyses in the text of the annual report. All percentage changes and key figures
were calculated using the underlying data in thousands of euros (€ thousand).
A N E W E R A
Annual Report 2016 | KION GROUP AG
ADDITIONAL INFORMATION
Disclaimer
Financial calendar / Contact
239
FINANCIAL CALENDAR
CONTACT
2 March 2017
Contacts for the media
Contacts for investors
Publication of 2016 annual report /
Financial statements press conference
Michael Hauger
Dr Karoline Jung-Senssfelder
and analyst call
Head of Corporate Communications
Head of Investor Relations and M&A
27 April 2017
michael.hauger@kiongroup.com
karoline.jung-senssfelder@kiongroup.com
Phone: +49 611 770 655
Phone: +49 611 770 450
Interim notification for the period ended
31 March 2017 and analyst call
Frank Brandmaier
11 May 2017
Head of Corporate Media Relations
Phone: +49 611 770 752
Annual General Meeting
frank.brandmaier@kiongroup.com
26 July 2017
Interim report for the period ended
30 June 2017 and analyst call
26 October 2017
Interim notification for the period ended
30 September 2017 and analyst call
Subject to change without notice
Securities identification numbers
KION GROUP AG
This annual report is available in German
ISIN: DE000KGX8881
Abraham-Lincoln-Strasse 21
and English at kiongroup.com under
WKN: KGX888
65189 Wiesbaden | Germany
Investor Relations / Financial Reports.
Phone: +49 611 770 0
Fax: +49 611 770 269
info@kiongroup.com
www.kiongroup.com
Only the content of the German version
is authoritative.
kiongroup.com/
ir
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KION GROUP AG | Annual Report 2016
A N E W E R A
KION GROUP AG
Corporate Communications
Abraham-Lincoln-Strasse 21
65189 Wiesbaden | Germany
Phone: +49 611 770 0
Fax: +49 611 770 269
info@kiongroup.com
www.kiongroup.com