ANNUAL
REPORT
2017
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KION Group
Key figures for 2017
KION Group overview
in € million
Order intake
Revenue
Order book ¹,²
Financial performance
EBITDA
Adjusted EBITDA ³
Adjusted EBITDA margin ³
EBIT
Adjusted EBIT ³
Adjusted EBIT margin ³
Net income
Financial position ¹
Total assets
Equity
Net financial debt
ROCE 4
Cash flow
Free cash flow 5
Capital expenditures 6
Employees 7
2017
7,979.1
7,653.6
2,614.6
1,185.7
1,223.9
16.0%
549.4
765.6
10.0%
2016
5,833.1
5,587.2
2,396.6
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%
Change
2017/2016
36.8%
37.0%
9.1%
33.3%
31.4%
–
26.3%
42.5%
–
426.4
246.1
221.1
73.3%
11,228.4
11,297.0
3,148.8
2,095.5
9.9%
2,495.7
2,903.4
6.9%
378.3
218.3
– 1,850.0
166.7
6,440.2
1,848.7
573.5
11.9%
332.7
142.6
– 0.6%
26.2%
– 27.8%
–
>100%
31.0%
31,608
30,544
23,506
3.5%
1 Figures as at balance sheet date 31/12/ (adjusted due to the final purchase price allocation Dematic)
2 Order backlog 2016 adjusted to reflect specific customer orders from long-term construction contracts in the segment SCS
3 Adjusted for PPA items and non-recurring items
4 ROCE is defined as the proportion of EBIT adjusted to capital employed
5 Free cash flow is defined as cash flow from operating activities plus cash flow from investing activities
6 Capital expenditure including capitalised development costs, excluding leased and rental assets
7 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 pre-
sented may result in minor rounding differences. The percentages shown are calculated on the basis of the respective amounts,
rounded to the nearest thousand euros.
ENVIRONMENT
SOCIETY
PRODUCTS
In what respects
is sustainability
a driving force
in our success?
EMPLOYEES
SAFETY
We think and act sustainably throughout the KION
Group. This is reflected in our products, in our com-
mitment to society and the environment, in our
approach to safety and in our highly skilled employ-
ees – in every part of the Company, and to the
benefit or our customers.
We keep the world moving.
Contents
A
7
14
16
26
30
B
34
43
47
C
64
65
78
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
111
Outlook, risk report and opportunity report
D
126
127
128
130
132
134
240
248
E
252
253
254
255
255
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
Independent auditors’ report
Responsibility statement
ADDITIONAL INFORMATION
Quarterly information
Multi-year overview
Disclaimer
Financial calendar
Contact
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. The Linde and STILL brands
serve the premium industrial truck segment. Baoli
focuses on industrial trucks in the economy seg-
ment. Among the regional KION brand companies,
Fenwick is the largest supplier of material handling
products in France, while OM STILL is a market
leader in Italy. OM Voltas is a leading provider of
industrial trucks in India.
More than 1.3 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
■ Smart trucks with electronic
control units
■ 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
■ Fleet data services for central-
ised control and tracking
■ Fleet optimisation
■ Financial benefits and
improved safety
A U T O M A T E D
T R U C K S
■ Full range of
automated trucks
■ Enables automation of
material handling processes
A U T O M A T I O N
S Y S T E M S
■ Customised and integrated
intralogistics solutions
■ 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 integrated
forklift trucks, warehouse technology and related services,
technology and software solutions that are used to optimise
including complementary financial services. It pursues a
supply chains. Manual and automated solutions are provided
multi-brand strategy involving the three international brands
for all functions along customers’ supply chains, from goods
Linde, STILL and Baoli plus the three regional brands
inward and multishuttle warehouse systems to picking and
Fenwick, OM STILL and OM Voltas.
value-added packing. The Supply Chain Solutions segment
comprises the Dematic brand.
Industrial Trucks & Services is made up of four operating
units that cover the KION Group’s existing industrial truck
business: 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
for North and South America, respectively.
G
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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
■
■
■
■
Counterbalance trucks with electric drive
Counterbalance trucks with IC engine
Warehouse technology: ride-on industrial trucks
Warehouse technology: hand-operated industrial trucks
■
Towing vehicles
■
Automated trucks and autonomous trucks
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D E M A T I C
■
Conveyors
■
Sorters
■
■
Storage and retrieval systems
Picking equipment
■
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
How is it possible
to collect plastic
bottles and karma
at the same time?
SOCIETY
X I A M E N
C H I N A
What is boosting green
agriculture?
PRODU CTS
M O D E S T O ,
U S A
C A
Who is giving
opportunities to
young women
from India’s rural
areas?
P U N E
I N D I A
EMPLO YEES
V E L K É B Í L O V I C E
C Z E C H R E P U B L I C
What can you do
when your truck
needs more than just
a new coat of paint?
ENVIRONMEN T
What’s that
protecting
man and
machine?
SAFETY
P U N E
I N D I A
H O Y A
G E R M A N Y
When it comes to finding the right
answers, the KION Group is ahead
of the pack. Whether it’s with tailor-
made intralogistics solutions – or
in terms of sustainability.
To find out how we are meet-
ing our responsibilities, visit:
kiongroup.com/responsibility
Annual Report 2017 | KION GROUP AG TO OUR SHAREHOLDERS
Contents
5
TO OUR
SHAREHOLDERS
7
14
16
26
30
LETTER TO SHAREHOLDERS
EXECUTIVE BOARD
REPORT OF THE SUPERVISORY BOARD
KION SHARES
SERVICES FOR SHAREHOLDERS
KION GROUP AG | Annual Report 2017 The past year has
been another
momentous one.
G o r d o n R i s k e
CEO
TO OUR SHAREHOLDERS
Letter to Shareholders
7
Dear shareholders, customers, partners, employees and
friends of the KION Group,
Rarely has there been such an exciting time to be fulfilling our customers’ needs in
connection with material handling and intralogistics solutions. As well as becoming an
increasingly prevalent part of our day-to-day lives, digitalisation has been firmly estab-
lished in our industry for some time, too. E-commerce continues to boom. Automation
is crucial to getting ahead of the competition. Constantly changing requirements
regarding the speed and efficiency of material handling are turbocharging the innova-
tiveness, creativity and dedication of the KION Group’s employees worldwide, who
work day in, day out to find solutions for our customers.
The past year has been another exciting and momentous one for us, and we main-
tained our path of profitable growth. Our revenue and the value of our order intake
increased significantly, due to both organic growth and the acquisition of Dematic.
The rise in orders received by the Industrial Trucks & Services segment – our tradi-
tional business of forklift trucks, warehouse technology and related services – was
particularly impressive. 2017 was the first time that more than 200,000 trucks were
ordered within the space of one year – a figure that represented a 13 per cent
increase on 2016.
The year began on a positive note when, in January, rating agency Fitch gave the
KION Group an investment-grade credit rating for the first time in recognition of our
excellent financial profile. Just a few weeks later, we issued a promissory note for more
than €1 billion with great success, utilising the favourable interest-rate environment to
refinance a large part of the Dematic acquisition. In May, a capital increase generated
gross proceeds of around €603 million that were also used to refinance the acquisition.
We began to significantly expand our plant in Stříbro, Czech Republic, so that Dematic
conveyor systems can be produced there. In North America, we launched a broad
portfolio of new trucks. Moreover, we now offer our European customers trucks that
have a lifting capacity of two to three tonnes and are fitted with lithium-ion batteries.
‘Response and responsibility’ as the title of the annual report
We have given this year’s annual report the title ‘response and responsibility’. One of
the main reasons for including ‘responsibility’ is that, a few months ago, we produced
a groupwide sustainability report for the first time, documenting how everything that
we do is underpinned by a forward-looking and values-based approach to our business.
We also chose to include ‘response’ in the title.
KION GROUP AG | Annual Report 2017
+1 3 %
For the first time, the KION brand
companies received orders for more
than 200,000 industrial trucks in a
single year – up 13 per cent.
We are proud
that the integra-
tion of Dematic
is now at a very
advanced stage.
G o r d o n R i s k e
CEO
TO OUR SHAREHOLDERS
Letter to Shareholders
9
Our acquisition of Dematic in 2016 was a very important response to the opportunities
and challenges that we face in our industry. Since then, we have been able to offer
everything that our customers need in terms of intralogistics, from hand pallet trucks
to highly complex, automated supply chain solutions. We firmly believed at the time,
and remain convinced, that this was exactly the step we needed to take to position
ourselves for further profitable growth. We are just as confident of our entire Group’s
prospects for the medium to long term as we were when Dematic became the youngest
member of the KION family. And we can proudly report, following the great progress
made over the past year, that the integration of Dematic is now at a very advanced stage.
Another hugely important response is our “KION 2027” strategy, which we are presenting
to you for the first time in this report. Since we unveiled our Strategy 2020 four years
ago, a lot of other things besides the purchase of Dematic have happened. The acquisition
made it necessary to introduce a new structure for managing the Company. The
KION Group now comprises the Industrial Trucks & Services segment, our traditional
business involving forklift trucks and warehouse technology, the Supply Chain Solutions
segment – which now only comprises Dematic – and Corporate Services. We have
also created a new internal organisational structure. The Group is now run as five Oper-
ating Units, each with responsibility for their own business success. And, under the
leadership of our Chief Technology Officer Eike Böhm, we have pooled our research
and development capabilities from across all brands and regions to create a highly
effective centralised R&D unit.
The “KION 2027” strategy reflects these major developments and focuses on profitable
growth. This of course benefits you, our shareholders. Our other objectives are similar
to those in the Strategy 2020: to grow at a faster rate than the market, to be the most
profitable supplier in the industry, to generate a profit at every stage of the business
cycle and to always offer our shareholders an attractive return on their investment.
Action areas point the way
The clearly defined action areas in the KION 2027 strategy show the route that we
need to take to achieve these objectives, namely through innovation, digitalisation,
automation, efficient energy use, and products and processes that deliver an even better
performance. We foster innovation by creating a suitable, effective environment and
putting cutting- edge processes in place. Not only are we developing digital solutions for
our customers, we are also digitalising our own operations. Our products enable our
customers to achieve the maximum benefit from automation. We strive to lead the
way in using energy as efficiently as possible; at the same time, we are focusing on
new energy sources. And if we can improve the performance of our trucks, we will
also boost our own efficiency as a Group.
KION GROUP AG | Annual Report 2017
” K ION 2 0 27“
s t r a t e g y
The KION Group strategy for
further profitable growth over
the next decade.
Fantastic
opportunities
lie ahead of us.
G o r d o n R i s k e
CEO
TO OUR SHAREHOLDERS
Letter to Shareholders
11
Fantastic opportunities lie ahead of us. The material handling market is expected to
double in size over the next ten years. In the same period, the market for supply chain
solutions is likely to grow to such an extent that it will overtake global forklift truck
and warehouse technology business. While the EMEA market will probably remain
the biggest region worldwide in absolute terms, the fastest growth is predicted for the
Americas and the Asia-Pacific region. In all these markets, we are excellently placed
to achieve sustained business success in both segments.
Sustainability and shared values that are here to stay
The KION Group is not only firmly focused on the future. Being a good corporate citizen
is also a cornerstone of our success. Sustainability is becoming a guiding principle for
everything that we do, and we genuinely mean this. We are aligning our processes
accordingly, raising awareness among employees and managers and calling on them
to play their part in the KION Group becoming a little bit more sustainable every day.
Our suppliers and business partners are also in our sights. We are encouraging and
requiring them to show their commitment, because corporate citizenship does not
start and finish at the factory gate. Instead, we want our entire value chain to live up to
our high standards. We want to be a leader in our industry in terms of our sustainability
efforts, too.
Part of being an organisation with a healthy corporate culture is having clear values.
The process with which we developed our shared KION Group values – integrity,
collaboration, courage and excellence – involved giving a voice to hundreds of people
across the Group. These values represent the convictions of the entire KION Group
and are enshrined in our daily work. By integrity, we mean doing the right thing.
Collaboration shows that we trust each other. We demonstrate courage in our approach
to innovation and change. And we deliver outstanding benefits for our customers
through our excellent work.
The results for the period under review, which are the first to include a full year of the
contribution from Dematic, provide further evidence of how these values are now very
much embedded in our organisation and are being translated into commercial success.
The KION Group ended 2017 by recording strong growth and achieved its KPI targets,
as adjusted in October. Driven by organic growth and the acquisition of Dematic, the
Group achieved new records in order intake, revenue, adjusted EBIT, adjusted margin
and net income. The profit margin rose to 10.0 per cent. In 2018, the KION Group
aims to build on its successful performance in 2017 and, based on the outlook for
market growth, achieve further increases in order intake, revenue and adjusted EBIT.
KION GROUP AG | Annual Report 2017
M a r k e t s e t t o
d o u b l e i n s i z e
According to forecasts, the material
handling market will double in size
over the next ten years.
We have set
ourselves clear
new targets
with the
“KION 2027”
strategy.
G o r d o n R i s k e
CEO
TO OUR SHAREHOLDERS
Letter to Shareholders
13
3 2 , 0 0 0
Almost 32,000 committed and
highly qualified employees
We have once again delivered an excellent set of results thanks to the approximately
32,000 committed and highly qualified employees who now make up our global
workforce. My fellow Executive Board members and I would like to offer our heartfelt
gratitude to them for their outstanding efforts.
The KION Group – your KION Group – has evolved a great deal over the past twelve
months. We have set ourselves clear new targets with the “KION 2027” strategy and
further strengthened our internal structures. Rather than simply reacting to the intra-
logistics opportunities and challenges of tomorrow, we have honed our ability to antici-
pate key developments that will benefit our customers, supported by the best technology,
excellent employees and very robust business and financial foundations. This means
we can continue to do what we do best: come up with the right response.
With best wishes,
Gordon Riske
Chief Executive Officer
KION GROUP AG
KION GROUP AG | Annual Report 2017
14
Executive Board
01 GORDON RISKE
Chief Executive Officer (CEO)
of KION GROUP AG
born in 1957 in Detroit (USA)
02 DR EIKE BÖHM
Chief Technology Officer (CTO)
of KION GROUP AG
born in 1962 in Pforzheim
(Germany)
03 CHING PONG QUEK
Chief Asia Pacific Officer
of KION GROUP AG
born in 1967 in Batu Pahat /Johor
(Malaysia)
04 DR THOMAS TOEPFER
Chief Financial Officer (CFO)
and Labour Relations Director
of KION GROUP AG
born in 1972 in Hamburg
(Germany)
01
04
TO OUR SHAREHOLDERS
Executive Board
15
03
02
16
Report of the Supervisory Board of
KION GROUP AG
Dear shareholders,
2017 was another successful year for KION GROUP AG. It was dominated by the
integration of automation and supply chain optimisation specialist Dematic, which had
been acquired the previous year. The Supervisory Board of KION GROUP AG provided
extensive advice and support on this process. The acquisition is bringing about sus-
tained and significant changes to the business model of KION GROUP AG and its market
positioning, transforming the Company into a provider of end-to-end solutions for
automated intralogistics. Of particular importance in this context are innovations for
tackling the future challenges of Industry 4.0 and for integrating industrial trucks into
existing intralogistics solutions in order to increase the efficiency of customers’ pro-
cesses, particularly with regard to warehouse system logistics, warehouse technol-
ogy and order picking. Today, the KION Group is one of only a few companies able
to supply all intralogistics products, from hand-operated warehouse trucks to fully
automated warehouses, from a single source. The first integrated customer projects
incorporating products both from the traditional material handling business and from
the Supply Chain Solutions segment were initiated over the course of 2017.
Alongside the integration of the business, the refinancing of the Dematic acquisition
was successfully completed in May of last year when a second capital increase was
carried out. The Company was able to secure highly attractive refinancing terms by
utilising the currently favourable environment for borrowing and by capitalising on
the strong interest in KION GROUP AG among equity investors.
Another focus of the Supervisory Board’s work was its involvement in refining the
strategy for the KION Group following the acquisition of Dematic. The Company pro-
duced scenarios for the changes that will occur in relation to its markets, technologies,
customers and competitors over the next ten years. These provided the foundations
for developing the “KION 2027” strategy. Particular attention is given to the require-
ments in the various customer segments arising from the automation of intralogistics
and related services, which are based on unlocking the full potential of the data that
is collected. The aspects summarised under the heading ‘Industry 4.0’ – automation
of processes in order to provide greater benefits for customers as well as brand-new
digital services and solutions to problems – will be extremely important to the markets
that will be relevant to the Company in the future. On this basis, the Executive Board
and Supervisory Board met on several occasions to discuss and reach agreement
on guidelines and principles for updating the Group’s strategy, the Group’s business
Annual Report 2017 | KION GROUP AG
TO OUR SHAREHOLDERS
Report of the Supervisory Board
17
DR JOHN FELDMANN
Chairman
aspirations and future positioning and the resulting action plans and objectives. Having
deliberated on the “KION 2027” strategy extensively, the Supervisory Board gave its
approval at its meeting on 27 November 2017.
In this context, the Supervisory Board examined developments in the industrial truck
business on the basis of strategic parameters such as customer satisfaction, market
trends and new technologies. It also held in-depth discussions on innovation and
operational excellence in this area of the Company’s business. The Supervisory Board
talked at length with the Executive Board about the strategic direction of this business
and about operational matters, including further capital expenditure. The Supervisory
Board is supporting the Executive Board in broadening the basis for the Company’s
future through capital expenditure in these areas.
Last but not least, the Company needs to use the market’s current strong growth
to further optimise internal processes and strengthen its resilience in periods of
economic weakness.
KION GROUP AG | Annual Report 2017
18
Monitoring and advisory role in dialogue with the Executive Board
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.
In addition to the focus areas outlined above, the Supervisory Board, as in previous
years, discussed numerous other issues and transactions requiring consent, made
necessary decisions, advised the Executive Board on all significant matters relating to
managing the Company and monitored the Executive Board’s running of the Company’s
business. The Supervisory Board was fully involved in major decisions affecting the
Company from an early stage. The Executive Board always notified the Supervisory
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
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 internal audit and com-
pliance in the Company. This ensured that the Supervisory Board was continually and
promptly updated 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 managed 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 Supervisory
Board’s consent so that it could adopt resolutions. The Supervisory Board examined
closely the resolutions proposed by the Executive Board and deliberated on them
before adopting them.
Corporate governance matters
Besides the regular corporate governance matters, the issues dealt with by the
Supervisory Board during the reporting year included the evolution of the corporate
culture and new statutory requirements, as well as recommendations and sugges-
tions in the German Corporate Governance Code.
In the first half of 2017, the Company conducted another survey of managers on the
leadership culture. Building on the data collected in 2015, the Organizational Health
Index (OHI) was ascertained. This time, the managers at Dematic were also included
in the study. A comparison of the results from the previous survey shows where the
Annual Report 2017 | KION GROUP AG
TO OUR SHAREHOLDERS
Report of the Supervisory Board
19
Company currently stands in terms of its leadership culture, what progress has been
made and which individual topics require more work. Overall, the data showed an
encouraging trend with regard to how the surveyed employees identify with the Com-
pany’s goals and their positive perception of the leadership culture. In the latest updates
to the remuneration system for the Executive Board, the Supervisory Board defined
further improvements to the OHI as one of the parameters for setting the long-term
variable remuneration.
The Executive Board and Supervisory Board believe that clearly and unambiguously
formulated principles and values that are communicated and put into practice in the
Company at all management levels are vital for the Company’s sustained success.
The Supervisory Board is taking a keen interest in the related measures and processes.
Another focus of corporate governance work was the report on non-financial key per-
formance indicators, which was produced voluntarily for the first time in the year under
review. In this sustainability report, the Company provided information on the pro-
cesses that have been put in place in the area of sustainability management as well
as those currently being implemented. This is the first time that the Company has
combined all of this information in one document. In the opinion of the Supervisory
Board, business management focused on sustainability provides a ‘licence to operate’,
i.e. society’s acceptance of a company and its business model. The Supervisory Board
received information on the preparations for this report during several meetings, at
which it also discussed the matter with the Executive Board and the relevant managers
within the Company. In 2018, the Company will again produce such a report for 2017,
which will have to be audited by the Supervisory Board. Consulting an external
auditor, the Supervisory Board therefore went through, and discussed, the necessary
processes last year on the basis of the voluntary report.
The Supervisory Board also scrutinised the new requirements in the German Corporate
Governance Code regarding skills profiles for supervisory boards. Led by the chairman
of the Supervisory Board and supported by external advisors and a manager from the
legal department, the Supervisory Board created a profile containing 17 skills areas in
the second half of the year and also decided on the content and format of the related
reporting. The Executive Committee provided advice and support during the prepara-
tions and submitted a recommendation. The draft and the final proposal for the skills
model were deliberated upon extensively by the Supervisory Board during several
meetings. The Supervisory Board was fully aware that, with 17 skills areas, the KION
skills profile is very comprehensive and at the upper end of the scale compared with
profiles produced by other companies. Nevertheless, the Supervisory Board firmly
believes that the combination of knowledge and experience in the various skills areas
that are important to the Company should be, as they have been in the past, an
KION GROUP AG | Annual Report 2017
20
important criterion when selecting new Supervisory Board members in future.
The Supervisory Board’s skills profile has been incorporated into the Company’s
diversity concept.
In compliance with the statutory requirements, the updated remuneration system for
the Executive Board, which has applied since 1 January 2017, was presented to the
Annual General Meeting for approval in May 2017, where it was confirmed by a large
majority. Similarly, the revised remuneration system for the Supervisory Board was
approved with an overwhelming majority at the Annual General Meeting.
The topics on which the Executive Board and individual managers in the Company
regularly gave reports during the meetings of the Supervisory Board and its commit-
tees 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 existing processes and to examine and comment on pro-
posed developments in these areas. It concluded that the systems and mechanisms
at KION GROUP AG are adequate, suitable and effective.
The Supervisory Board and Audit Committee received information on a number of
occasions from those responsible within the Company and from the independent
auditors about changes to the auditors’ opinion on the audit of the financial statements.
At its meeting on 13 December 2017, the Supervisory Board held its final discussion
on the KION Group’s compliance with the new recommendations of the German
Corporate Governance Code, which was updated in 2017. 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 permanently 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
7 February 2017) 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 incorpo-
ration 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 diffi-
cult to find independent candidates, in particular candidates from outside Germany.
Annual Report 2017 | KION GROUP AG
TO OUR SHAREHOLDERS
Report of the Supervisory Board
21
In accordance with section 3.10 of the German Corporate Governance Code, the
Executive Board and the Supervisory Board provide a detailed report on corporate
governance at KION GROUP AG in the corporate governance report. This is combined
with the declaration on corporate governance pursuant to sections 289f and 315d of
the German Commercial Code (HGB) and can be found on pages 34 to 42 of this annual
report and on the KION GROUP AG website at kiongroup.com/GovernanceReport.
Work of the committees
In the run-up to the capital increase carried out in May, the Supervisory Board of
KION GROUP AG established an ad-hoc 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 four
employee representatives and four shareholder representatives. The Executive Board
of KION GROUP AG kept the committee updated on the progress of the capital
increase. The committee was dissolved on 31 December 2017. Since the last report,
there have not been any other material changes to the established committees.
KION GROUP AG’s Supervisory Board had four standing 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 discussed at the meetings of the full Supervisory Board. In individual
cases, the Supervisory 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. The chairmen of the com-
mittees each report regularly to the full Supervisory Board on their committee’s
deliberations. In addition, the minutes of the committee meetings are distributed to
the other members of the Supervisory Board for information purposes once the
committee members have approved them. This ensures that the Supervisory Board
as a whole is always fully informed about the committees’ deliberations.
In 2017, the Supervisory Board and its committees dealt with the matters at hand and
made the necessary decisions at a total of 20 meetings. These consisted of nine meet-
ings of the full Supervisory Board, five of the Audit Committee, four of the Executive
Committee and two of the ad-hoc committee. The Nomination Committee and Medi-
ation Committee did not meet in the reporting period. There were also several informal
conference calls for the purpose of providing the members of the Supervisory Board
or the relevant committees with advance information. In 2017, all members of the
KION GROUP AG | Annual Report 2017
22
Supervisory Board attended all Supervisory Board meetings and the meetings of the
respective committees of which they were members apart from in the following cases:
There were six Supervisory Board meetings at each of which one member sent
apologies and two committee meetings at each of which one member sent apologies.
Supervisory Board member Tan Xuguang participated in fewer than half of all
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 (Deloitte), Munich, Frankfurt am Main branch office, audited the separate
financial statements, the consolidated financial statements and the combined manage-
ment report for KION GROUP AG and the Group for the year ended 31 December 2017
following their engagement by the Annual General Meeting on 11 May 2017. The cor-
responding 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 22 February 2017 and committee
members were given the opportunity to speak to the auditors in person.
The key audit issues were discussed and set out accordingly at the Audit Commit-
tee’s meeting on 25 July 2017. The auditors were appointed by the chairman of the
Supervisory Board on 27 November 2017.
The auditors submitted their report and the documents relating to the 2017 financial
statements to the members of the Audit Committee on 12 February 2018 and to the
members of the Supervisory Board on 21 February 2018.
The report was discussed in depth at the Audit Committee meeting on 21 Febru-
ary 2018 and at the full Supervisory Board meeting on 28 February 2018, 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.
Annual Report 2017 | KION GROUP AG
TO OUR SHAREHOLDERS
Report of the Supervisory Board
23
The auditors issued an unqualified opinion for the separate financial statements for the
year ended 31 December 2017, the consolidated financial statements and the group
management report, which was combined with the Company’s management report,
for the year ended 31 December 2017 on 21 February 2018. Having itself scrutinised
the Company’s separate financial statements, consolidated financial statements and
combined management report for the year ended 31 December 2017, the Audit Com-
mittee 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 discussion of its own and then approved the
results of the Audit Committee’s review at its meeting on 28 February 2018.
Based on the final outcome of its own review, the Supervisory Board did not raise any
objections. The Supervisory Board approved the Company’s separate financial state-
ments and consolidated financial statements for the year ended 31 December 2017
prepared by the Executive Board, thereby adopting the annual financial statements.
At its meeting on 28 February 2018, 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 €0.99 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.
Non-financial declaration
After consulting the Supervisory Board, the Company commissioned an auditor to
carry out an external review of the content of the non-financial Group declaration pur-
suant to section 315b HGB. The Supervisory Board will take account of the auditor’s
assessment in its own review of the non-financial Group declaration and in the resolu-
tion that it adopts. The sustainability report and the non-financial declaration will be
published on the Company’s website by 30 April 2018.
KION GROUP AG | Annual Report 2017
24
Relationships with affiliated entities (dependency)
The Supervisory Board also examined the report concerning relationships with affiliated
entities (dependency report), which the Executive Board signed off on 21 February 2018.
The auditors reviewed this report, prepared an auditors’ report on it and issued the
following opinion based on their audit, which they completed without identifying any
deficiencies on 21 February 2018:
Based on our audit and assessment in accordance with professional standards, we
confirm that
1. the facts in the report are stated accurately,
2. the consideration given by the entity for the transactions specified in the report
was not unreasonably high,
3. there are no circumstances in respect of the measures specified in the report that
would justify an opinion materially different from the opinion of the Executive Board.
The dependency report and the auditors’ report about it were submitted to all the
members of the Supervisory Board in good time and were discussed in detail in the
presence of the auditors at the Supervisory Board meeting on 28 February 2018.
The auditors reported on the main findings of their audit. The Supervisory Board agreed
with the findings of the audit. Based on the final outcome of its own review, the Super-
visory Board did not raise any objections to the Executive Board’s declaration at the
end of the report concerning relationships with affiliated entities.
Personnel changes on the Executive Board and Supervisory Board
There were no changes on the Executive Board of KION GROUP AG last year. However,
at the request of the Chief Financial Officer, Dr Toepfer, the Supervisory Board reached
a mutual agreement on 27 November 2017 on the termination of his appointment as a
member of the Executive Board with effect from the end of 31 March 2018.
There were several changes on the Supervisory Board in 2017:
The employee representatives Mr Brandt and Mr Hartig did not stand for re-election
when the employees voted for their representatives on the Supervisory Board in
spring 2017. At this election of employee representatives, all of the other employee
representatives were re-elected to the Supervisory Board. Dr Frank Schepp was
elected to the Supervisory Board to replace Mr Brandt as an executive representative
and Mr Stefan Casper to replace Mr Hartig as an employee representative, in both cases
with effect from 11 May 2017. The Supervisory Board would like to thank Mr Brandt
Annual Report 2017 | KION GROUP AG
TO OUR SHAREHOLDERS
Report of the Supervisory Board
25
and Mr Hartig for the great dedication with which they always carried out their work in
the interests of the Company.
The details of this report were discussed thoroughly at the Supervisory Board meeting
on 28 February 2018 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 2017.
Dr John Feldmann
Chairman
KION GROUP AG | Annual Report 2017
26
KION shares
Robust upward trend in the equity markets
KION shares outperform benchmark
despite correction
With volatility at a low level, stock market prices soared and indices
reached record heights in 2017. The DAX closed the year at
The price of KION shares rose sharply and steadily in the first
12,918 points – not far off its high for the year – and gained
three quarters of 2017 and reached an all-time high of €81.40 on
12.5 per cent, while the MDAX added 18.1 per cent. This uptrend
2 October 2017. After the outlook for the year was adjusted in
was supported, firstly, by expansionary central bank policy in
October 2017 due to the Supply Chain Solutions segment not
the eurozone, which kept deposit rates and bond yields at
performing as expected, there was a marked price correction.
rock- bottom levels and thus made equities more attractive.
The share price subsequently remained flat. Despite some of the
Secondly, stock market prices were driven up by the healthy
previous gains being negated, the KION share price rose by
economy, companies’ rising profits and positive sentiment indi-
36.2 per cent to €71.98 over the course of the year, thereby out-
cators. Despite political uncertainties created by the United King-
performing its benchmark DAX and MDAX indices considerable.
dom’s approaching exit from the European Union, the elections in
On 11 May 2017, the Annual General Meeting voted in favour
France and the Netherlands, the quest for Catalonian independ-
of distributing a dividend of €0.80 per share for 2016. As in the
ence and the dispute with North Korea, the stock markets proved
previous year, when a dividend of €0.77 was paid, the dividend
robust. The failure of the exploratory talks on the formation of a
payout ratio was 35 per cent. The total dividend payout, however,
coalition following Germany’s general election also only halted
increased by 14.3 per cent to €86.9 million mainly owing to the
their upward progress temporarily.
capital increase carried out the year before.
Share price performance between 30 December 2016 and 29 December 2017
DIAGRAM 001
€85
€80
€75
€70
€65
€60
€55
€50
€45
KION GROUP AG + 36.2%
+ 12.5%
+ 18.1%
MDAX
DAX
€ 52.86 *
€ 71.98 *
* Closing price
01 / 2017
02 / 2017
03 / 2017
04 / 2017
05 / 2017
06 / 2017
07 / 2017
08 / 2017
09 / 2017
10 / 2017
11 / 2017
12 / 2017
Annual Report 2017 | KION GROUP AG
TO OUR SHAREHOLDERS
KION shares
27
KION GROUP AG’s market capitalisation was €8.5 billion at the
placement price of €64.83, the KION Group generated gross pro-
end of 2017. Of this total, 56.6 per cent or €4.8 billion was
ceeds of €602.9 million. Between 10 and 30 October 2017, KION
attributable to shares in free float. The average daily Xetra trading
GROUP AG repurchased a total of 60,000 shares (around
volume in 2017 was 332 thousand shares or €22.0 million, which
0.05 per cent of the share capital) for use in the KION Employee
was again up considerably on the prior year. > TABLE 001
Equity Programme (KEEP). In October 2017, the KION Group
Basic information on KION shares
TABLE 001
36,294 shares had been purchased by staff (31 December 2016:
employees entitled to participate in KEEP were given the oppor-
tunity to buy more KION shares. By 31 December 2017, a total of
ISIN
WKN
DE000KGX8881
KGX888
Bloomberg KGX:GR
Reuters
KGX.DE
Share type No-par-value shares
45,564 shares). The number of shares held in treasury stood at
160,829 as at the reporting date. > DIAGRAM 002
Shareholder structure as at 31 December 2017
DIAGRAM 002
Index
MDAX, MSCI World, STOXX Europe 600,
FTSE EuroMid
0.1%
KION GROUP AG
43.3%
WEICHAI POWER
56.6%
FREE FLOAT
Annual General Meeting approves further
financing for growth
KION GROUP AG’s Annual General Meeting on 11 May 2017, at
which 82.2 per cent of the voting share capital was represented,
approved the creation of new authorised capital of up to
€10,879,000.00 or 10 per cent of the share capital. The Executive
Board has thus been authorised, subject to the consent of the
Supervisory Board, to issue additional shares on this basis up
to and including 10 May 2022, excluding shareholders’ sub-
scription rights.
Most of this authorised capital was used on 22 May 2017 to
refinance a large part of the remaining bridge loan (AFA) that had
been granted for the purchase of Dematic. By issuing 9.3 million
new shares – equating to 8.55 per cent of the share capital – at a
KION GROUP AG | Annual Report 2017
28
Shareholder structure remains stable
Sound borrowing situation, improved
credit ratings
Weichai Power Co. Ltd. purchased 4,023,275 new shares in the
context of the capital increase, maintaining its stake in KION
To refinance the AFA, a promissory note with an extended maturity
GROUP AG at the unchanged level of 43.3 per cent and remaining
profile and a volume of €1,010.0 million was issued in February
the biggest single shareholder. At the end of 2017, 56.6 per cent
2017. The three tranches have maturity periods of five, seven and
of the Company’s shares were in free float, while KION GROUP AG
ten years.
held 0.1 per cent. The standstill agreement, which remains in
In January 2017, the KION Group received an investment-
force until 28 June 2018, prevents Weichai Power from holding
grade rating for the first time. Fitch Ratings gave the Group a
more than 49.9 per cent of the Company’s shares.
long-term issuer rating of BBB– with a stable outlook, reflecting
its improved financial profile, high level of profitability and stable
free cash flow. In April 2017, rating agency Standard & Poor’s ini-
tially raised its credit rating for the KION Group from BB+ with a
negative outlook to BB+ with a stable outlook before upgrading it
again, to BB+ with a positive outlook, in September 2017.
KION shares predominantly recommended
as a buy
As at 31 December 2017, 21 brokerage houses published reports
on the KION Group (31 December 2016: 19). Of this total, twelve
analysts recommended KION shares as a buy, eight rated
them as neutral and one analyst recommended to sell them.
The median target price specified for the shares was €75.00
(31 December 2016: €61.00).
Dividend of €0.99 per share planned
The Executive Board and Supervisory Board of KION GROUP AG
will propose a dividend of €0.99 per share to the Annual General
Meeting on 9 May 2018. This equates to a dividend payout ratio of
around 35 per cent with earnings per share (pro forma) for the
year 2017 of 2.91 €. This results in an increase of the dividend per
share of 23.8 per cent and an increase in total dividend payout of
34.3 per cent year on year due to the capital increase. The earn-
ings per share of 3.72 € based on the net income was adjusted
due to the revaluation of deferred tax liabilities (net) in connection
with the corporate income tax rate reduction approved in the US.
> TABLE 002
Annual Report 2017 | KION GROUP AG
TO OUR SHAREHOLDERS
KION shares
29
Share data
TABLE 002
Closing price at the end of 2016
High for 2017
Low for 2017
Closing price at the end of 2017
Market capitalisation at the end of 2017
Performance in 2017
€52.86
€81.40
€51.27
€71.98
€8,500.1 million
36.2%
Average daily trading volume in 2017 (no. of shares)
332.0 thousand
Average daily trading volume in 2017 (€)
Share capital
Number of shares
Earnings per share for 2017
Earnings per share for 2017 (pro forma) ¹
Dividend per share for 2017
Dividend payout rate ¹,²
Total dividend payout ²
Equity ratio as at 31/12/2017
€22.0 million
€118,090,000
118,090,000
€3.72
€2.91
€0.99
35%
€116.7 million
28.0%
¹ Adjusted due to the remeasurement of deferred taxes in connection with the corporate income tax rate reduction approved in the US; see also ‘income taxes’
² Proposed dividend for the fiscal year 2017
KION GROUP AG | Annual Report 2017
30
Services for shareholders
Active investor relations work
and quarterly conference calls, along with the associated pres-
entations, form part of the extensive information for investors that
The objective of investor relations is to ensure, through continuous
is available on the Company’s website.
dialogue, that the capital markets value the Company appro-
priately. The Executive Board and the KION Group’s investor
relations team continued their active dialogue with investors and
Information on the website
analysts last year. The KION Group participated in many investor
conferences in Germany and abroad and held numerous road-
Detailed information on KION shares as well as press releases,
shows and one-on-one meetings.
reports, presentations and information about the Annual General
Around 85 shareholders participated in the Annual General
Meeting and corporate governance in the Group can be found at
Meeting of KION GROUP AG on 11 May 2017. All the draft resolu-
kiongroup.com/ir. The KION Group’s annual report is also avail-
tions put forward by the Company’s management were approved
able here, both as a PDF file and as an interactive online version.
with a substantial majority.
The contact details of the investor relations team can be found
The speeches of the Chief Executive Officer and the chairman of
under IR Contact & Services.
the Supervisory Board were broadcast live at kiongroup.com/agm.
A webcast of the Chief Executive Officer’s speech is also available
on the Company’s website.
When the 2016 annual report was published on 2 March 2017,
the Executive Board of KION GROUP AG held a financial state-
ments press conference, conference call and analyst conference
at which it presented the KION Group as a more broadly based
and more powerful group of companies following the acquisition
of automation and supply chain optimisation specialist Dematic.
In addition, the Executive Board held conference calls to report
on each set of quarterly results. Recordings from the financial
statements press conference and the transcripts from the annual
kiongroup.com/
ir
Annual Report 2017 | KION GROUP AG
31
KION GROUP AG | Annual Report 2017 Annual Report 2017 | KION GROUP AG CORPORATE GOVERNANCE
Contents
33
CORPORATE
GOVERNANCE
34
43
47
47
59
CORPORATE GOVERNANCE REPORT
DISCLOSURES RELEVANT TO ACQUISITIONS
REMUNERATION REPORT
Executive Board remuneration
Supervisory Board remuneration
KION GROUP AG | Annual Report 2017 34
Corporate governance report
Also constitutes the declaration on corporate
governance pursuant to section 289f and
section 315d HGB
The Executive Board and Supervisory Board submitted the Compa-
ny’s previous comply-or-explain statement on 14 December 2016.
Both decision-making bodies again considered the recom-
mendations of the amended Code in detail and, on 13 / 18 Decem-
Corporate governance covers the whole system of managing and
ber 2017, issued the following comply-or-explain statement of
monitoring an enterprise, the principles and guidelines that shape
KION GROUP AG as required by section 161 (1) AktG:
its business policy and the system of internal and external control
and monitoring mechanisms. The Executive Board and Supervi-
1. Since issuing the last comply-or-explain statement in Decem-
sory Board of KION GROUP AG believe that a commitment, born
ber 2016, KION GROUP AG has complied with all but one of
from responsibility for the Company, to rigorous corporate gov-
the recommendations of the German Corporate Governance
ernance in accordance with the accepted standards is essential
Code (the ,Code’) as amended on 7 February 2017 and intends
to the Company’s long-term success. Compliance with these
to do so in the future.
principles also promotes the trust that our investors, employees,
In derogation of section 3.8 (3) of the Code, the articles of
business partners and the public have in the management and
association of KION GROUP AG do not provide for a deduct-
monitoring of the Company.
able for members of the Supervisory Board under a D&O
There is a close correlation between the corporate governance
insurance. The Company believes that such deductable is not
report required by the German Corporate Governance Code (the
customary on an international level and would therefore make
Code) as amended on 7 February 2017 and the content of the
it considerably more difficult to find independent candidates,
declaration on corporate governance required by section 289f
in particular candidates from outside Germany.
and section 315d of the German Commercial Code (HGB). For
this reason, the Executive Board and the Supervisory Board of
Frankfurt am Main, 13 / 18 December 2017
KION GROUP AG have combined the two statements below in
accordance with section 3.10 of the Code. The declaration on
For the Executive Board:
corporate governance pursuant to section 289f and section 315d
HGB is part of the management report. According to section 317
Gordon Riske
Dr Thomas Toepfer
(2) sentence 6 HGB, the accuracy of the information provided in
accordance with section 289f and section 315d HGB is not part
of the audit of the financial statements.
For the Supervisory Board:
1. Comply-or-explain statement
pursuant to section 161 (1) AktG
Dr John Feldmann
The comply-or-explain statement is permanently available to the
public on the website of KION GROUP AG at kiongroup.com/
Section 161 (1) of the German Stock Corporation Act (AktG)
comply_statement.
requires the management board and supervisory board of a pub-
licly listed company to issue an annual declaration stating that the
company has complied with, and intends to comply with, the rec-
ommendations of the Code or stating the recommendations with
which it has not complied or does not intend to comply, and the
reasons why.
Annual Report 2017 | KION GROUP AG
CORPORATE GOVERNANCE
Corporate governance report
35
2. Corporate governance practices
Group. Besides defined control mechanisms, it includes, for
example, system-based and manual reconciliation processes,
The corporate governance of KION GROUP AG is essentially, but
clear separation of functions, strict compliance with the double-
not exclusively, determined by the provisions of the German
checking principle and written policies and procedures. The over-
Stock Corporation Act and the German Codetermination Act
arching aim is for the separate financial statements, consolidated
(MitbestG) and also follows the recommendations of the German
financial statements and combined management report to be
Corporate Governance Code. KION GROUP AG complies with all
fully compliant with the relevant statutory and regulatory require-
the Code’s recommendations, with one exception. These funda-
ments and, in particular, the applicable financial reporting
mental principles are combined with a commitment to sustain-
standards. Changes to these requirements and standards are
able business, taking account of society’s expectations in the
analysed on an ongoing basis and taken into account as appro-
markets in which the Company operates.
priate. Details can be found in the risk report, which is part of the
In 2017, the Executive Board and the Supervisory Board (or
combined management report.
its committees) regularly discussed corporate governance issues
in accordance with a rolling schedule of topics. This ensured that
2.3 Risk management system
the key elements of corporate governance within the KION Group
were always on the agenda at meetings of the Company’s main
For the Company to be managed professionally and responsibly,
decision-making bodies. The Supervisory Board in particular
the Executive Board must use the risk management system
complied with the supervisory duties incumbent upon it under the
established in the Company to regularly gather information about
German Stock Corporation Act. For example, the Supervisory
current risks and how they are evolving, and then report on this to
Board’s Audit Committee, which was set up partly for this pur-
the Supervisory Board’s Audit Committee. The KION Group’s risk
pose, received regular reports on the standard accounting pro-
management system is documented in a Group risk policy that
cesses, changes to the regulatory environment and the effective-
defines tasks, processes and responsibilities and sets out the
ness of the internal control and risk management systems and of
rules for identifying, assessing, reporting and managing risk.
the audit of financial statements, and then reported back to the
Specific individual risks are then reported by each Group entity
full Supervisory Board on these matters.
using an online reporting tool. Reporting on cross-segment risks
2.1 Internal control system
and groupwide risks is carried out by Controlling and the relevant
departments. The risks that have been reported are reviewed on
a quarterly basis and re-assessed until the reason for reporting a
KION GROUP AG has an internal control system designed to
risk no longer exists.
meet the specific needs of the Company. Its processes are
intended to ensure the correctness of the internal and external
2.4 Compliance management system
accounting processes, the efficiency of the Company’s business
operations and compliance with key legal provisions and internal
The Executive Board and Supervisory Board of KION GROUP AG
policies. These control processes also include the Company’s
consider that adhering rigorously to broad-ranging compliance
strategic planning, where the underlying assumptions and plans
standards is essential to sustained financial success. That is why
are reviewed on an ongoing basis and refined as necessary.
a suitable compliance programme, centring around the KION
Group Code of Compliance, has been set up for KION GROUP AG
2.2 Accounting-related internal control system
and its Group companies worldwide.
The KION Group Code of Compliance, which is available in all
For its accounting process, the KION Group has defined suitable
of the main languages relevant to the Group companies of KION
structures and processes as part of its internal control and risk
GROUP AG, provides every employee with clear guidance on
management system and implemented them throughout the
how to conduct their business in accordance with sound values
KION GROUP AG | Annual Report 2017 36
and ethics and in compliance with the law. The aim is for all
combined management report. Since the audit of the 2014 sep-
employees to receive regular training on the most important com-
arate and consolidated financial statements, Ms Kirsten Gräbner-
pliance subjects (e.g. competition law, data protection, communi-
Vogel has been the global lead service partner at the appointed
cation and anti-corruption).
independent auditors, Deloitte GmbH Wirtschaftsprüfungs-
Compliance activities focus on anti-corruption, liability of senior
gesellschaft (Deloitte). The separate financial statements, the
management / directors’ and officers’ liability, data protection, IT
consolidated financial statements and the combined manage-
security and foreign trade / export controls.
ment report are discussed by the Audit Committee and then
The Executive Board of KION GROUP AG bears collective
approved by the Supervisory Board.
responsibility for the functioning of compliance management
The independent auditors review the condensed consolidated
within the Group; the compliance department reports to the Chief
interim financial statements and the condensed interim group
Executive Officer of KION GROUP AG. He has delegated the per-
management report for the first half of the year. The Executive
formance of compliance duties to the Chief Compliance Officer.
Board discusses the two quarterly statements and the half-year
The presidents of the Operating Units are responsible for compli-
interim report with the Audit Committee before they are published.
ance within the operating business, while the functional managers
are responsible for core administrative processes in the depart-
2.6 Avoiding conflicts of interest
ments at the Group’s headquarters. Ultimate responsibility for
the compliance management system of course remains with the
Conflicts of interest between the governing bodies and other
CEO of the Group. The KION compliance department, the KION
decision-makers in the Company or significant shareholders go
compliance team and the KION compliance committee provide
against the principles of good corporate governance and may be
operational support to the aforementioned functions. The KION
harmful to the Company. KION GROUP AG and its governing
compliance department focuses mainly on preventing compliance
bodies therefore adhere strictly to the Code’s recommendations
violations by providing guidance, information, advice and training.
on this subject. The employees of KION GROUP AG and its inves-
It manages the KION compliance team, in which local and regional
tees are made aware of the problem of conflicts of interest as part
compliance officers of the Group are represented.
of compliance training and are bound by rules on how to behave
Actual or suspected incidents of non-compliance can be
in the event of actual or potential conflicts of interest.
reported by post, email or fax. All employees can also report any
The Company attaches high priority to preventing possible
cases of non-compliance via a 24/7 compliance hotline, choosing
conflicts of interest from occurring in the first place and to dispelling
to remain anonymous if they wish.
any impression that they might exist. This is especially important
As part of its work, the compliance department at KION
given the involvement of Weichai Power, whose stake has risen to
GROUP AG cooperates closely with the legal, internal audit and
43.3 per cent. The Company achieves these aims by avoiding
human resources departments. The KION compliance committee
business scenarios or personnel structures that could give the
is staffed by the heads of these departments, operating as a
impression of a conflict of interest and by taking transparent
cross-functional committee that primarily advises on, examines
steps that effectively prevent concerns about conflicts of interest.
and, if appropriate, punishes incidents of non-compliance that
The Company’s Chief Executive Officer, Mr Gordon Riske,
are reported.
was appointed a non-executive director of Weichai Power with
effect from 24 June 2013, for which the Supervisory Board had
2.5 Audit of the financial statements
previously given its consent. Appropriate precautions have been
taken to ensure that this role at a parent company of the Com-
The Company’s independent auditors, which are appointed by
pany does not create a conflict of interest relating personally to
means of a resolution of the Annual General Meeting, audit the
Mr Riske. Formal processes have been put in place to ensure that
separate financial statements prepared by the Executive Board of
Mr Riske, in his role as a non-executive director of Weichai Power,
KION GROUP AG, the consolidated financial statements and the
is not involved in transactions that could give rise to a conflict with
Annual Report 2017 | KION GROUP AG CORPORATE GOVERNANCE
Corporate governance report
37
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
Responsibilities of Executive Board members
TABLE 003
Member
Responsibilities
strict separation between his duties as a non-executive director
Gordon Riske
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.
CEO of KION GROUP AG
LMH EMEA
STILL EMEA
Dematic
Digitalization@KION
Corporate Strategy
Corporate Communications
Corporate Office
Internal Audit
Corporate Compliance
Dr Thomas Toepfer CFO of KION GROUP AG
3. Working methods of the Executive Board
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
ensuring the sustained success of the Company. The members
of the Executive Board regularly attend Supervisory Board
meetings, unless the Supervisory Board decides to meet with-
out the Executive Board.
The Executive Board promptly, comprehensively and regu-
larly reports to the Supervisory Board on the performance of
the KION Group. Besides the reporting obligations defined by
Dr Eike Böhm
law, the rules of procedure for the Executive Board of KION
GROUP AG set out further reporting requirements and reserva-
tions of approval in favour of the Supervisory Board.
3.1 Working methods of the Executive Board
The Executive Board of KION GROUP AG comprises four mem-
bers. It is responsible for managing the Company in the Company’s
Ching Pong Quek
interest, i.e. taking account of shareholders, customers, employ-
ees and other stakeholders with the aim of creating sustainable
added value. The Executive Board develops the Company’s
strategy, discusses it with the Supervisory Board and ensures
that it is implemented. Every Executive Board member is respon-
KION Americas
Corporate 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 of KION GROUP AG
Product & Technology Strategy
Product Development Industrial Trucks
Software Development
Product Development Supply Chain Solutions
Module & Component Development
Procurement
Quality
Production System
Chief Asia Pacific Officer of KION
GROUP AG
KION APAC
sible for his own area of responsibility and keeps his fellow board
Every Executive Board member must disclose potential conflicts
members informed of developments on an ongoing basis.
of interest to the Supervisory Board immediately and must also
> TABLE 003
inform the other Executive Board members. All transactions
between KION GROUP AG and Executive Board members or
related parties must be concluded on an arm’s-length basis.
KION GROUP AG | Annual Report 2017 38
Rules of procedure laid down by the Supervisory Board define
According to these rules, the chairman of the Supervisory Board
the areas of responsibility of the Executive Board members and
coordinates its work and the cooperation with the Executive
the way in which they work together. The full Executive Board nor-
Board, chairs its meetings and represents it externally. The
mally meets every 14 days and meetings are chaired by the CEO.
Supervisory Board meets in person at least twice in each half of
Individual Executive Board members sometimes take part via
a calendar year, and adopts its resolutions at these meetings. In
video conference. At the meetings, the board members discuss
2017, there were nine Supervisory Board meetings in total.
measures and business that, under the Executive Board’s rules of
Between these meetings, resolutions may also be adopted in
procedure, require the approval of the full Executive Board. Res-
writing, by telephone or by other similar forms of voting, provided
olutions of the full Executive Board are passed by simple majority
that the chairman of the Supervisory Board or, in his absence, his
unless a greater majority is required by law. The CEO has a cast-
deputy, decides on this procedure for the individual case con-
ing vote in the event of a tied vote. Resolutions of the Executive
cerned. The Supervisory Board adopts resolutions by a simple
Board may also be adopted between meetings. Taking account
majority of the votes cast unless a different procedure is prescribed
of the requirements of section 90 AktG, the Executive Board
by law. If a vote is tied, the matter will only be renegotiated if the
provides the Supervisory Board with regular, timely and compre-
majority of the Supervisory Board vote in favour of this option.
hensive information on all matters of relevance to the business as
Otherwise the Board must vote again without delay. If this new
a whole relating to the intended operating policy, strategic plan-
vote on the same matter also results in an equal number of votes
ning, business performance, financial position, financial perfor-
for and against, the chairman of the Supervisory Board has a
mance and business risks. The Chief Executive Officer discusses
casting vote. The Supervisory Board has the efficiency of its work
these matters regularly with the chairman of the Supervisory Board.
and processes reviewed by an external party at regular intervals.
The Executive Board’s rules of procedure specify that impor-
tant transactions are subject to approval by the Supervisory
3.3 Working methods and composition of the committees of
Board. Budget planning, major acquisitions or capital expenditure,
the Supervisory Board
for example, require the consent of the Supervisory Board.
In accordance with its articles of association, the Company is
KION GROUP AG’s Supervisory Board had four standing com-
represented by two members of the Executive Board or by one
mittees plus an ad-hoc transaction committee in the year under
member of the Executive Board acting conjointly with a Prokurist
review. Their tasks, responsibilities and work processes comply
(person with full commercial power of representation).
with the provisions of the German Stock Corporation Act and the
German Corporate Governance Code. The chairman of each
3.2 Working methods of the Supervisory Board
committee reports regularly to the full Supervisory Board on the
committee’s work. The minutes of the committee meetings are
The Supervisory Board of KION GROUP AG appoints the mem-
made available to all Supervisory Board members. The perma-
bers of the Executive Board, advises and monitors the Executive
nent committees have each drawn up rules of procedure that
Board in its management of the Company and reviews its work.
define their tasks and working methods.
The Supervisory Board is fully involved from an early stage in all
decisions that are fundamental to KION GROUP AG.
Executive Committee
The Supervisory Board of KION GROUP AG consists of
The Executive Committee consists of four shareholder repre-
16 members, eight of whom are employee representatives and
sentatives and four employee representatives. Its chairman is
eight are shareholder representatives. The shareholder representa-
always the chairman of the Supervisory Board. It prepares the
tives are elected by the Annual General Meeting by simple majority.
meetings of the Supervisory Board and is responsible for ongo-
The Supervisory Board has drawn up rules of procedure for
ing matters between Supervisory Board meetings. The Execu-
its work. These apply in addition to the requirements of the articles
tive Committee also prepares the Supervisory Board’s deci-
of association and also define the Supervisory Board committees.
sions relating to corporate governance, particularly amendments
Annual Report 2017 | KION GROUP AG CORPORATE GOVERNANCE
Corporate governance report
39
to the comply- or-explain statement pursuant to section 161 AktG
Mediation Committee
reflecting changed circumstances and the checking of adherence
The Mediation Committee comprises the chairman of the Super-
to the comply-or-explain statement. It also prepares documents
visory Board, his deputy, an employee representative and a
for the Supervisory Board when Executive Board members are to
shareholder representative. It only convenes in exceptional cases.
be appointed or removed and, if applicable, when a new Chief
If the two-thirds-of-votes majority required by section 27 (3) and
Executive Officer is to be appointed. Documents relating to any
section 31 (3) MitbestG is not reached in a vote by the Super-
matters in connection with Executive Board remuneration are
visory Board on the appointment of an Executive Board member,
also compiled by the Executive Committee. In addition, the Exec-
the Mediation Committee must propose candidates for the post
utive Committee is responsible for resolutions concerning the
to the Supervisory Board within one month. The chairman of the
conclusion, amendment and termination of Executive Board
Supervisory Board does not have a casting vote on the candi-
employment contracts and agreements with Executive Board
dates proposed. The Mediation Committee did not need to be
members governing pensions, severance packages, consultancy
convened in 2017.
and other matters and for resolutions on any matters arising as a
result of such contracts and agreements, unless they relate to
In 2017, the members of the Mediation Committee were:
remuneration. The responsibilities of the Executive Committee
Dr John Feldmann (chairman)
also include resolutions about the extension of loans to Executive
Özcan Pancarci (deputy chairman)
Board members, Supervisory Board members and parties related
Jörg Milla
to them within the meaning of sections 89 and 115 AktG, as well as
Hans Peter Ring
resolutions to approve contracts with Supervisory Board members
outside their Supervisory Board remit. The Executive Committee
Audit Committee
should – in consultation with the Executive Board – regularly delib-
The Audit Committee comprises four members. Its primary pur-
erate on long-term succession planning for the Executive Board.
pose is to monitor financial reporting (including non-financial
The Executive Committee met four times in 2017. The main
reporting), the accounting process, the effectiveness of the inter-
topics discussed and deliberated upon by the Executive Committee
nal control system, the risk management system, the internal
in 2017 concerned the new KION 2027 strategy, the profile of
audit system, the auditing of the financial statements and compli-
skills and expertise for the Supervisory Board and matters relating
ance, thereby supporting the Supervisory Board in its task of
to the Annual General Meeting and governance.
monitoring the Company’s management. The Audit Committee
also reviews the work carried out by the independent auditors
In 2017, the members of the Executive Committee were:
and checks that the independent auditors are qualified and inde-
Dr John Feldmann (chairman)
Özcan Pancarci (deputy chairman)
Dr Alexander Dibelius
Joachim Hartig (until 11 May 2017)
Denis Heljic
Jiang Kui
Olaf Kunz
Hans Peter Ring
pendent. It is also responsible for engaging the independent
auditors, determining the focus of the audit and agreeing the fee.
In addition, the Audit Committee exercises the rights in investee
companies set forth in section 32 (1) MitbestG.
The Audit Committee met five times in 2017. The main topics
discussed by the Audit Committee in 2017 were the 2016 annual
financial statements, the quarterly statements, the interim report,
the budget, the Company’s first sustainability report and the reg-
Claudia Wenzel (from 11 May 2017)
ular subject of the key elements of corporate governance within
the Company.
KION GROUP AG | Annual Report 2017 40
In 2017, the members of the Audit Committee were:
was then dissolved on 31 December 2017 following the success-
Hans Peter Ring (chairman)
Alexandra Schädler (deputy chairwoman)
Dr John Feldmann
Jörg Milla
ful completion of the capital increase on 22 May 2017.
The members of the ad-hoc transaction committee were:
Dr John Feldmann (chairman)
Dr Alexander Dibelius
The chairman of the Audit Committee, Hans Peter Ring, is an
Denis Heljic
independent member of the Supervisory Board and has the
Jiang Kui
required expertise in the areas of accountancy and auditing
Jörg Milla
specified in sections 100 (5) and 107 (4) AktG.
Nomination Committee
Özcan Pancarci
Hans Peter Ring
Alexandra Schädler
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-
4. Diversity
mittee’s only task is to propose new candidates for the Supervisory
Board to the Company’s Annual General Meeting. At its meeting on
One of the main concerns of good corporate governance is to
30 November 2016, the Nomination Committee resolved to recom-
ensure that appointments to the Executive Board and Supervi-
mend that the Supervisory Board propose all eight shareholder rep-
sory Board are appropriate to the specific needs of the business.
resentatives on the Supervisory Board for re-election at the end of
Key criteria in this regard include the professional and personal
their term of office at the Annual General Meeting on 11 May 2017.
skills and qualifications of the members of the Executive Board
The Supervisory Board followed this recommendation. All eight
and Supervisory Board as well as diversity in the composition of
shareholder representatives were then re-elected at the Annual
both boards, an appropriate degree of female representation and
General Meeting. The Nomination Committee did not meet in 2017.
the independence of the Supervisory Board.
In 2017, the members of the Nomination Committee were:
Composition of the Supervisory Board
Dr John Feldmann (chairman)
The Supervisory Board has laid down specific requirements and
Dr Alexander Dibelius (deputy chairman)
objectives for its composition in recognition of its responsibilities
Birgit A. Behrendt
Jiang Kui
and obligations and taking into account the business needs of
KION GROUP AG. Besides having the minimum professional
skills required to be a Supervisory Board member, as specified by
Ad-hoc transaction committee
law and the highest courts, all members of the Supervisory Board
In addition to the committees that existed throughout the year,
of KION GROUP AG should meet the following criteria:
the Supervisory Board decided at its meeting on 11 May 2017 to
establish an ad-hoc transaction committee in connection with a
possible capital increase from authorised capital. The purpose of
this ad-hoc transaction committee was to ensure that the Super-
visory Board was adequately involved in the transaction and had
the necessary flexibility. To this end, the committee was autho-
rised to give final approvals and make decisions about the capital
increase from authorised capital. It met twice. The committee
KION GROUP AG
– Identification with the fundamental values and beliefs of
– Positive attitude towards the basic principles of responsible
– Personal integrity and a responsible approach to dealing with
corporate governance
potential conflicts of interest
Annual Report 2017 | KION GROUP AG CORPORATE GOVERNANCE
Corporate governance report
41
– Ability to devote the expected amount of time required and
compliance with the limit on the number of mandates that
may be held at any one time
– In-depth understanding of the markets in EMEA, the Americas
– Experience
and Asia
– Management of companies with international presence,
Other targets set by the Supervisory Board with regard to its
including the development of corporate cultures and organ-
composition are a standard age limit of no more than 70 at the
isational structures
time of appointment/election and a maximum limit for length of
– Supervisory board membership in companies with interna-
membership of four terms of office. All of the current Supervisory
tional presence
Board members meet these requirements.
In addition, the Supervisory Board has defined what it con-
siders to be an adequate number of independent Supervisory
– Acquisitions and strategic alliances
– Experience and expertise
– Corporate governance and compliance principles as well
Board members. Accordingly, five shareholder representatives
as their implementation in at least two of the regions rele-
on the Supervisory Board should be independent within the
vant to the Company
meaning of section 5.4.2 of the Code. These five members are
– Accounting and auditing
currently Ms Behrendt, Dr Reuter, Dr Dibelius, Dr Feldmann and
– Capital markets and international financing
Mr Ring. As regards the employee representatives, the Super-
visory Board believes their role as representatives of the employees
Each of these fields of competence is currently covered by at
does not, per se, compromise their independence.
least five members of the Supervisory Board.
The Supervisory Board is of the opinion that the priority in
As 31.25 per cent of its members are female (five of 16), the
aiming for a board composition based on diversity is the expertise
Supervisory Board meets the statutory requirements regarding
of the individual members and a balanced mix of personal quali-
gender representation on supervisory boards pursuant to section
ties, experience, skills, qualifications and knowledge in line with
96 (2) AktG. The shareholder representatives and the employee
the requirements of the business. This is the basis on which the
representatives are agreed that attaining the objectives in relation
Supervisory Board has drawn up its profile of skills and expertise.
to diversity, in particular the objectives relating to the involvement
The following profile of skills and expertise defines the knowledge
of women and people from different cultural backgrounds, is con-
acquired through professional practice (experience) and theore-
sidered to be in the interests of KION GROUP AG and a task that
tical / academic knowledge (expertise) that should be represented
forms part of the collective responsibility of the entire Supervisory
on the Supervisory Board:
– Experience
– Automotive industry, components and drive technologies
Board. The Supervisory Board therefore supports the inclusion of
additional female members and members from different cultural
backgrounds who meet the above criteria insofar as the skills
requirements are met.
– Intralogistics
When proposing candidates to the Annual General Meeting
– Automation, particularly automation in intralogistics
in future, the Nomination Committee and Supervisory Board will
– Service / aftersales business, particularly in intralogistics
take all of the aforementioned targets into account and strive to
– Development of international marketing strategies and
ensure that the profile of skills and expertise is (still) achieved. The
product portfolio strategies
– Expertise
– Development and assessment of technology
Nomination Committee and Supervisory Board have no influence
on the composition of the group of employee representatives on
the Supervisory Board because the employees in Germany are
– Service / aftersales business models and technological
free to choose whom they elect.
developments in this area
– Digitalisation and automation
KION GROUP AG | Annual Report 2017 42
Composition of the Executive Board
Appointments to management positions below the level of the
Against the background of the aforementioned diversity consid-
Executive Board of KION GROUP AG
erations as well as demographic requirements and strategic
When selecting candidates for senior management levels, the
operating challenges, the Supervisory Board strives to give due
Executive Board generally considers that it is under an obligation
consideration to female candidates for the Executive Board but is
to make such selections on the basis of diversity, capability,
guided exclusively by the skills and qualifications of the persons
character and experience. As regards the number of women
concerned when making appointments to the Executive Board.
appointed to senior management positions in the Company, the
When implementing these objectives during the process of
Executive Board is striving in its implementation of the new
appointing successors or recruiting for a new position, the Super-
“KION 2027” strategy to increase the current proportion of
visory Board draws up a shortlist of candidates who appear to be
women in management positions. The HR initiative under the
suitable for the Company as a result of their strategic manage-
“KION 2027” strategy, for example, will include a dedicated
ment experience, expertise, skills and qualifications. Demo-
diversity program whose activity areas are currently being
graphic criteria (including the standard retirement age of 65 for
defined during workshops with participants drawn from various
Executive Board members) and diversity criteria are then also
Operating Units and sites.
taken into account, depending on the existing composition of the
In this context, the Executive Board set the first target at
Executive Board. However, these criteria are of a subordinate
10 per cent for the first management level below the Executive
nature when making a final decision on the person to appoint.
Board of KION GROUP AG and at 30 per cent for the second
In line with this, the Supervisory Board therefore set the first
management level, to be achieved by 30 June 2017. The specifi-
target for the proportion of women on the Executive Board of
cation of this type of target is required by Germany’s ‘Act for the
KION GROUP AG at 0 per cent, to be achieved by 30 June 2017.
equal participation of women and men in managerial positions in
The specification of this type of target is required by Germany’s
the private and public sectors’. The target for the first manage-
‘Act for the equal participation of women and men in managerial
ment level below the Executive Board of KION GROUP AG was
positions in the private and public sectors’. The target was
achieved by this date. The target for the second management
achieved by this date. The new target for the proportion of women
level was not achieved. However, this was solely because of
on the Executive Board of KION GROUP AG was again set at
restructuring in the CTO Organisation. Otherwise, this target would
0 per cent for the defined follow-on period up to 31 December
also have been met. The new targets for the proportion of women
2021. When this percentage was chosen midway through 2017,
at the two management levels below the Executive Board of KION
no changes to the composition of the Executive Board were
GROUP AG were set at 10 per cent and 30 per cent respectively
planned or foreseeable.
for the defined follow-on period up to 31 December 2021.
Annual Report 2017 | KION GROUP AG CORPORATE GOVERNANCE
Disclosures relevant to acquisitions
43
Disclosures relevant to acquisitions,
section 315a and 289a HGB
The disclosures relevant to acquisitions pursuant to section 315a
and 289a HGB together with the explanatory report form an integral
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 (Luxem-
bourg) Holding S.à r.l., Luxembourg (“Weichai Power”) directly or
indirectly held more than 10 per cent of the voting rights in KION
The subscribed capital (share capital) of KION GROUP AG
GROUP AG as at 31 December 2017 and its shareholding was
amounted to €118.09 million as at 31 December 2017. It is divided
43.26 per cent.
into 118.09 million no-par-value bearer shares. The share capital
is fully paid up. All of the shares in the Company give rise to the
same rights and obligations. Each share confers one vote and
– Pursuant to the German Securities Trading Act (WpHG), the
shareholding held by Weichai Power is deemed to belong to
entitlement to an equal share of the profits. The rights and obliga-
the following other companies: > TABLE 004
tions arising out of the shares are defined by legal provisions. As
at 31 December 2017, the Company held 160,829 shares in
treasury. The primary intention is to offer these treasury shares to
staff as part of the KION Employee Equity Programme (KEEP).
Companies and countries to which
Weichai Power is deemed to belong
TABLE 004
Company
Registered office
2. Restrictions on voting rights or the transfer
of shares
Shandong Heavy Industry
Group Co., Ltd.
Weichai Group Holdings Limited
The Company is not aware of any agreements entered into by
shareholders of KION GROUP AG that restrict voting rights or the
Weichai Power Co., Ltd.
Jinan,
People’s Republic of China
Weifang,
People’s Republic of China
Weifang,
People’s Republic of China
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 sharehold-
ings if these changes are notifiable pursuant to the WpHG or
other regulations.
KION GROUP AG | Annual Report 2017 44
4. Shares with special rights that confer
The Supervisory Board is authorised in article 10 (3) of the articles
authority to exert control over the Company
of association to amend the articles of association 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
resolution or in issue on the date the authorisation is exercised,
There are no cases where employees hold some of the Company’s
whichever is the lower. Together with other treasury shares in the
capital and do not exercise their control rights directly themselves.
possession of the Company or deemed to be in its possession
6. Appointment and removal of members of
the Executive Board; amendments to the
articles of association
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
Members of the Company’s Executive Board are appointed and
with the acquisition of a business, parts of a business or equity
removed in accordance with the provisions of sections 84 and 85
investments. In addition, the treasury shares may be offered to
AktG and section 31 MitbestG. Pursuant to article 6 (1) of the arti-
employees of the Company or of an affiliated company as part of
cles of association of the Company, the Executive Board must
an employee share ownership program. The treasury shares can
have a minimum of two members. The Supervisory Board deter-
also be retired. Share buyback for trading purposes is prohibited.
mines the number of Executive Board members. Pursuant to
The authorisation may be exercised on one or more occasions,
section 84 AktG and section 6 (3) of the Company’s articles of
for the entire amount or for partial amounts, in pursuit of one or
association, the Supervisory Board may appoint a Chief Executive
more aims, by the Company, by a Group company or by third par-
Officer and a deputy.
ties for the account of the Company or the account of a Group
Section 179 (1) sentence 1 AktG requires that amendments
company. At the discretion of the Executive Board, the shares
to the articles of association be passed by resolution of the
may be purchased through the stock exchange, by way of a pub-
Annual General Meeting. In accordance with article 23 of the arti-
lic purchase offer made to all shareholders or by way of a public
cles of association in conjunction with section 179 (2) sentence 2
invitation to shareholders to tender their shares.
AktG, resolutions at the Annual General Meeting on amendments
In 2017, the Company again made use of this authorisation,
to the articles of association are passed by simple majority of the
purchasing 60,000 shares in the period 10 to 30 October 2017.
votes cast and by simple majority of the share capital represented
During the reporting year, 63,657 of the shares acquired that
in the voting unless a greater majority is specified as a mandatory
were still in treasury were used as part of the KEEP Employee
requirement under statutory provisions. The option to stipulate a
Equity Programme for the employees of the Company and certain
larger majority than a simple majority in any other cases has not
Group companies.
been exercised in the articles of association.
Annual Report 2017 | KION GROUP AG CORPORATE GOVERNANCE
Disclosures relevant to acquisitions
45
– On the basis of a resolution of the Company’s Annual Gen-
eral Meeting on 11 May 2017, the Executive Board was
– On the basis of a resolution of the Annual General Meeting on
11 May 2017, the Executive Board was also authorised, in the
authorised, subject to the consent of the Supervisory Board,
period up to and including 10 May 2022, to issue convertible
to increase the Company’s share capital by up to €10.88 mil-
bonds, warrant-linked bonds, profit-sharing rights and / or
lion by issuing up to 10.88 million new no-par-value ordinary
income bonds with or without conversion rights, warrants,
bearer shares for cash and / or non-cash contributions up to
mandatory conversion requirements or option obligations, or
and including 10 May 2022 (2017 Authorised Capital). The
any combinations of these instruments (referred to jointly as
2017 Authorised Capital became effective when the corre-
‘debt instruments’) for a total par value of up to €1 billion, and
sponding change to the articles of association was entered in
to grant conversion rights and / or warrants to – and / or to
the commercial register at the Wiesbaden local court (HRB
impose mandatory conversion requirements or option obli-
27060) on 12 May 2017.
gations on – the holders / beneficial owners of debt instru-
ments to acquire up to 10.88 million new shares of KION
With the consent of the Supervisory Board’s ad-hoc transaction
GROUP AG with a pro-rata amount of the share capital of up
committee set up for this purpose, the Executive Board resolved
to €10.88 million (‘2017 Authorisation’). The 2017 Conditional
on 22 May 2017 to use part of the 2017 Authorised Capital and,
Capital of €10.88 million was created to service the debt
disapplying shareholders’ pre-emption rights, to increase the
instruments. The 2017 Authorisation has not been used so far.
Company’s share capital by a nominal €9.3 million to €118.090 mil-
lion by issuing 9.3 million new no-par-value bearer shares in the
The 2017 Conditional Capital will be reduced by, among other
Company. This increase equates to an 8.55 per cent rise in the
things, the portion of the share capital attributable to shares
Company’s share capital in existence on the effective date and at
issued on the basis of the 2017 Authorised Capital. As part of the
the time of use of the 2017 Authorised Capital. The capital
capital increase in May 2017, 9.3 million new shares were issued
increase took effect when its implementation was entered in the
on the basis of the 2017 Authorised Capital. Consequently, con-
commercial register at the Wiesbaden local court under HRB
ditional capital of up to €1.579 million is available on the basis of
27060 on 23 May 2017. Consequently, the Executive Board is
which the Executive Board would be able to issue shares.
currently authorised by the Annual General Meeting to increase
the Company’s share capital by up to €1.579 million by issuing up
to 1.579 million new no-par-value bearer shares for cash and / or
non-cash contributions.
KION GROUP AG | Annual Report 2017 46
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
In the event of a change of control resulting from a takeover bid,
The provisions in these agreements that apply in the event of a
change of control are largely identical to those in the senior facili-
ties agreement dated 28 October 2015.
– Agreement between KION GROUP AG and Volkswagen AG
for the supply of internal combustion engines that has since
certain consequences are set out in the following significant
been ordinarily terminated
contracts (still in force on 31 December 2017) concluded between
Group companies of KION GROUP AG and third parties.
– Senior facilities agreement dated 28 October 2015, concluded
between KION GROUP AG and, among others, the London
branch of UniCredit Bank AG
9. Compensation agreements that the
Company has signed with the Executive
Board members or employees that will
be triggered in the event of a takeover bid
In the event that a person, companies affiliated with this person,
No such agreements have been concluded between the Company
or persons acting in concert within the meaning of section 2 (5) of
and its current Executive Board members or employees.
the German Securities Acquisition and Takeover Act (WpÜG)
acquire(s) control over more than 50 per cent of the Company’s
voting shares, the lenders may demand that the loans drawn
down be repaid and may cancel the loan facilities under the
senior facilities agreement.
– Acquisition facilities agreement dated 4 July 2016, concluded
between KION GROUP AG and, among others, the London
branch of UniCredit Bank AG
The provisions in this agreement that apply in the event of a
change of control are identical to those in the senior facilities
agreement dated 28 October 2015.
– Promissory note agreements (seven tranches with different
coupons and maturities) dated 13 February 2017 / 29 March
2017, concluded between KION GROUP AG and Landes-
bank Baden-Württemberg; the latter subsequently passed
them on to its investors
Annual Report 2017 | KION GROUP AG CORPORATE GOVERNANCE
Remuneration report
47
Remuneration report
This remuneration report forms an integral part of the combined
ber 2016, taking account of the requirements of stock com-
management report for KION GROUP AG. In accordance with
pany law and the DCGK.
statutory requirements and the recommendations of the German
Corporate Governance Code (DCGK) as amended on 7 Febru-
Essential features of the Executive Board remuneration system
ary 2017, the report explains the main features and structure of
the remuneration system used for the Executive Board and
The remuneration of the Executive Board of KION GROUP AG is
Supervisory Board of KION GROUP AG and also discloses the
determined in accordance with the requirements of the German
remuneration of the individual members of the Executive Board
Stock Corporation Act and the DCGK and is focused on the
and Supervisory Board for the work that they carried out on
Company’s long-term growth. It is determined so as to reflect the
behalf of the Company and its subsidiaries in 2017. The report
size and complexity of the KION Group, its business and financial
also reflects the requirements of German accounting standard
situation, its performance and future prospects, the normal
(GAS) 17 and the HGB.
amount and structure of executive board remuneration in compa-
KION GROUP AG considers that transparency and clarity
rable companies and the internal salary structure. The Supervi-
surrounding both the remuneration system itself and the remuner-
sory Board also takes into account the relationship between the
ation of the individual members of the Executive Board and Super-
Executive Board remuneration and the remuneration paid to sen-
visory Board are fundamental to good corporate governance.
ior managers and the German workforce of the Company as a
EXECUTIVE BOARD REMUNERATION
Remuneration system
whole, including changes over the course of time. To this end, the
Supervisory Board has decided how the relevant benchmarks
are to be defined. Other criteria used to determine remuneration
are the individual responsibilities and personal performance of
each member of the Executive Board. To review the Executive
Board’s remuneration, the Supervisory Board draws on remuner-
ation comparisons, particularly comparisons with MDAX compa-
nies, and on recommendations from an external remuneration
The Supervisory Board of KION GROUP AG is responsible for
consultant who is independent both of the Executive Board and
setting and regularly reviewing the total pay of the individual mem-
of the KION Group. The Supervisory Board regularly reviews the
bers of the Executive Board. According to the rules of procedure
structure and appropriateness of Executive Board remuneration.
for the Supervisory Board, the Executive Committee prepares all
The total remuneration of the Executive Board comprises a
Supervisory Board resolutions pertaining to remuneration.
non-performance-related salary and non-performance-related
The remuneration system described below has applied to the
non-cash benefits, performance-related (variable) remuneration
members of the KION GROUP AG Executive Board since 1 Jan-
and pension entitlements. When setting the variable remunera-
uary 2017, replacing the previous remuneration system that had
tion, the emphasis is on creating a measurement basis covering a
applied from the day after KION GROUP AG’s successful IPO and
number of years, thus providing the members of the Executive
listing on the Frankfurt Stock Exchange. The remuneration system
Board with an incentive to contribute to the sustained and long-
applicable since 1 January 2017 was approved by the Annual
term growth of the Company. The system specifically allows for
General Meeting of KION GROUP AG on 11 May 2017 with a
possible positive and negative developments.
majority of 71.68 per cent. The Supervisory Board has acknowl-
The regular cash remuneration for a particular year, consisting
edged these voting results and will continue to review this subject
of a non-performance-related fixed annual salary and perfor-
going forward.
mance-related (variable) remuneration, has a heavy emphasis on
As recommended by the Executive Committee, the Super-
performance. If the targets set by the Supervisory Board are
visory Board approved the remuneration system by adopting
completely missed, only the fixed salary is paid. Taking account
resolutions at its meetings on 29 June 2016 and 28 Septem-
of the cap on one-year and multiple-year remuneration, the cash
KION GROUP AG | Annual Report 2017 48
remuneration consists of the following components in the event
Additional special benefits
that the targets are significantly exceeded and the share price
goes up sufficiently:
– 17 to 19 per cent fixed annual salary
– 24 to 27 per cent one-year variable remuneration
– 54 to 59 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 structured
as if he were liable for taxes and social security contributions in
Singapore. KION GROUP AG pays the taxes and social security
contributions that Mr Quek incurs in China and Germany over
The variable components of the cash remuneration make up no
and above the taxes that would theoretically apply in Singapore.
more than 81 to 83 per cent, of which approximately two-thirds
In 2017, this additional amount totalled €1,225 thousand (2016:
are multiple-year components. Both the one-year and the
€1,278 thousand). The additional benefits also agreed with
multiple-year components are linked to key performance indicators
Mr Quek include the cost of trips home to Singapore for him and
used by the KION Group to measure its success. The remuneration
his family, a company car, rental payments in Xiamen, China, and
system is thus closely tied to the success of the Company and,
private health insurance. In 2017, the additional benefits for
with a high proportion of multiple-year variable remuneration, has
Mr Quek amounted to a total of €118 thousand (2016: €135 thou-
a long-term focus aimed at promoting the KION Group’s growth.
sand). These additional benefits will be granted for as long as
The pension entitlements consist of entitlements in respect of
Mr Quek’s designated place of work is Xiamen or until his service
retirement, invalidity and surviving dependants’ benefits.
contract with KION GROUP AG ends.
Non-performance-related remuneration
One-year variable remuneration
The Executive Board members of KION GROUP AG receive
non-performance-related remuneration in the form of a fixed
The one-year variable remuneration is a remuneration component
annual salary (basic remuneration) and additional benefits. The
linked to the business profitability and productivity of the KION
fixed annual salary is paid at the end of each month in twelve
Group in the relevant financial year. Its amount is determined by
equal instalments, the last payment being made for the full month
the achievement of the following targets:
in which the Executive Board service contract ends. The Super-
visory Board reviews the basic remuneration at regular intervals
and makes adjustments if appropriate.
The additional benefits essentially comprise use of a com-
pany car and the payment of premiums for accident insurance
– Adjusted earnings before interest and taxes (EBIT), weighting
– Free cash flow, weighting of 50 per cent
of 50 per cent
with benefits at a typical market level.
The target values for the financial components are derived from
the annual budget and specified by the Supervisory Board.
Performance-related remuneration
No bonus is paid if target achievement is 70 per cent or less
The performance-related remuneration components consist of
(lower target limit). In cases where the targets are significantly
a variable remuneration component measured over one year
exceeded (upper target limit of 130 per cent), the bonus can be
(short-term incentive) and a variable remuneration component
doubled at most (capped at 200 per cent). If the targets derived
measured over several years in the form of a rolling performance
from the annual budget are achieved in full, target achievement is
share plan with a three-year term (long-term incentive).
100 per cent. The target achievement levels for the weighted
targets (adjusted EBIT and free cash flow) are added together to
give the total target achievement.
The individual performance of the Executive Board members is
assessed by the Supervisory Board, which applies a discretionary
Annual Report 2017 | KION GROUP AG CORPORATE GOVERNANCE
Remuneration report
49
performance multiple with a factor of between 0.7 and 1.3. For
In respect of the ROCE target, there is no entitlement if target
2017, the main criteria used to assess individual performance are
achievement is 70 per cent or less. If the target is significantly
growth of market share, successful innovations, the Organiza-
exceeded (target achievement of 130 per cent or more), the
tional Health Index (OHI) and the integration of Dematic into the
entitlement is capped at 200 per cent. Regarding the relative
KION Group. The discretionary performance multiple enables the
TSR target, there is no entitlement if KION shares do not out-
Supervisory Board to increase or reduce the bonus, calculated
perform the MDAX. If the KION shares outperform this index by
on the basis of the total target achievement for the financial
20 per cent or more, the entitlement is capped at 200 per cent. If
targets derived from the budget, by a maximum of 30 per cent
KION shares outperform the MDAX by 6.67 per cent and the
depending on the assessment of individual performance. The
ROCE targets defined each year on the basis of the budget are
one-year variable remuneration is capped at 200 per cent of the
achieved, total target achievement will be 100 per cent.
contractual target bonus and is paid subsequent to the adoption
The amount paid for each tranche is determined by the final
of the annual financial statements relating to the year in question.
number of performance shares multiplied by the price of KION
In the event that an Executive Board member is not entitled
shares (average price over the preceding 60 trading days) at the
to remuneration for the entire year on which the calculation is
end of the performance period.
based, the remuneration is reduced pro rata temporis.
Executive Board members’ individual performance is also
taken into account in the multiple-year variable remuneration. At
Multiple-year variable remuneration
the start of the performance period, the Supervisory Board
defines targets for the three-year period. For the 2017 to 2019
For the members of the Executive Board, multiple-year variable
performance period, the main criteria used to assess individual
remuneration has been agreed in the form of a performance
performance are – as for the one-year variable remuneration –
share plan. A very similar plan is offered to the Group’s senior
growth of market share, successful innovations, the Organiza-
managers. The basis of measurement has been defined as the
tional Health Index (OHI) and the integration of Dematic into the
total shareholder return (TSR) for KION shares compared with the
KION Group. Depending on achievement of these targets, the
MDAX and return on capital employed (ROCE). Each has a
Supervisory Board can apply a discretionary factor to make a
weighting of 50 per cent. The annual tranches promised under
final adjustment to the calculation of the amount to be paid out at
the plan have a term (performance period) of three years and are
the end of the performance period by plus or minus 30 per cent,
paid at the end of the term, provided the defined targets have
although the maximum payment may not exceed 200 per cent of
been achieved.
the allocation value.
At the start of a performance period, a conditional entitlement
The plan is a cash-settled long-term incentive plan that
to a certain target number of performance shares is granted. This
does not include the right to receive any actual shares. Under the
preliminary number is calculated by dividing the allocation value
requirements of GAS 17, IFRS 2 and the HGB, the total expense
set out (in euros) in the service contract for the particular Executive
arising from share-based payments and the fair value of the per-
Board member by the share price on the relevant date at the start
formance share plan on the date of granting must be disclosed.
of the performance period. This share price, which is calculated
> TABLE 005
to two decimal places, is determined from the average Xetra clos-
ing price of KION shares (closing auction prices) on the Frankfurt
Stock Exchange (or a successor system that replaces it) over the
last 60 trading days prior to the start of the performance period.
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 2017 50
Performance Share Plan 2015
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 2
(in €)
Expense for
share-based
remuneration
in 2016 3
(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
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
TABLE 005
Expense for
share-based
remuneration
in 2017 3
(in thousand €)
1,124
725
10
10
943
749
3,562
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 fair value was calculated using the Monte Carlo method
3 The amount shown for Mr Quek includes a flat-rate allowance of 55 per cent in 2017 (2016: 57 per cent) as part of a tax equalisation agreement
4 Resigned from office on 14/01/2015; Executive Board service contract ended on 31/03/2015. The fair value of the performance share plan on the date of grant was recognised pro rata
temporis up to 31/03/2015
Performance Share Plan 2016
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 2
(in €)
Expense for
share-based
remuneration
in 2016 3
(in thousand €)
Gordon Riske
Dr Eike Böhm
Ching Pong Quek
Dr Thomas Toepfer 4
Total
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
TABLE 005
Expense for
share-based
remuneration
in 2017 3
(in thousand €)
1,062
708
905
– 339
2,336
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 fair value was calculated using the Monte Carlo method
3 The amount shown for Mr Quek includes a flat-rate allowance of 55 per cent in 2017 (2016: 57 per cent) as part of a tax equalisation agreement
4 All of Dr Toepfer’s entitlements under the performance share plan have expired because he is leaving the Company on 31/03/2018
Annual Report 2017 | KION GROUP AG CORPORATE GOVERNANCE
Remuneration report
51
Performance Share Plan 2017
Gordon Riske
Dr Eike Böhm
Ching Pong Quek
Dr Thomas Toepfer 3
Total
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 €)
1,600
1,000
830
1,000
4,430
29,712
18,570
15,413
18,570
82,265
53.85
53.85
53.85
53.85
TABLE 005
Expense for
share-based
remuneration
in 2017 2
(in thousand €)
650
406
522
0
1,578
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 55 per cent as part of a tax equalisation agreement
3 All of Dr Toepfer’s entitlements under the performance share plan have expired because he is leaving the Company on 31/03/2018
The total expense in 2017 amounted to €7,476 thousand (2016:
The Chief Executive Officer has a defined benefit entitlement
€9,429 thousand).
that was granted in his original service contract and was trans-
ferred to his Executive Board service contract when the Company
Upper limits on remuneration
changed its legal form. The amount of the entitlement is dependent
on the number of years of service and amounts to a maximum of
In accordance with the DCGK, remuneration is subject to upper
50 per cent of the most recent fixed annual salary awarded in the
limits on the amounts payable, both overall and also in terms of
original service contract after the end of the tenth year of service.
the variable components. The upper limit on the total cash
The present value of the previous defined benefit plan for the
remuneration to be paid, consisting of the fixed annual salary plus
ordinary members of the Executive Board was transferred as a
the one-year and multiple-year variable remuneration, equals
starting contribution for a new defined contribution pension plan
roughly 1.7 times the target remuneration (2016: 1.7 times) –
when the Company changed its legal form. The new plan is
excluding the non-performance-related non-cash remuneration
structured as a cash balance plan and is also applied to new
and other benefits paid in that financial year. Both the one-year
Executive Board members.
and the multiple-year variable remuneration are capped at
200 per cent of the target value.
Pension entitlements
KION GROUP AG grants its Executive Board members direct
entitlement to a company pension plan consisting of retirement,
invalidity and surviving dependants’ benefits.
KION GROUP AG | Annual Report 2017 52
Fixed annual contributions of €250 thousand for Dr Toepfer,
pays the Executive Board member compensation for the duration
€150 thousand for Dr Böhm and €124.5 thousand for Mr Quek
of the non-compete agreement amounting to 100 per cent of his
are paid into their pension accounts for the duration of the mem-
final fixed salary. Other income of the Executive Board member is
ber’s period of service on the Executive Board. Interest is paid on
offset against the compensation.
the pension account at the prevailing statutory guaranteed return
In the event that Mr Riske’s appointment is not extended for
rate for the life insurance industry (applicable maximum interest
reasons for which he is not responsible and he has not reached
rate for the calculation of the actuarial reserves of life insurers pur-
the standard retirement age for the statutory pension or in the
suant to section 2 (1) of the German Regulation on the Principles
event that Mr Riske resigns for good cause before the end of his
Underlying the Calculation of the Premium Reserve (DeckRV))
appointment or suffers permanent incapacity after his period of
until an insured event occurs. If higher interest is generated by
service as a result of sickness, he will receive transitional benefits
investing the pension account, it will be credited to the pension
of €300 thousand per annum on the basis of previous contracts.
account when an insured event occurs (surplus). The standard
Severance payments in the event of early termination of his
retirement age for the statutory pension applies. Executive Board
appointment without good cause, compensation for the post-
members are entitled to early payment of the pension no earlier
contractual non-compete agreement, pension benefits that
than their 62nd birthday. In the event of invalidity or death while
Mr Riske receives due to his previous work for other employers
the Executive Board member has an active service contract, the
and income from other use of his working capacity (with the
contributions that would have been made until the age of 60 are
exception of remuneration for work as a member of a supervisory
added to the pension account, although only a maximum of ten
or advisory board or a board of directors) will be offset against
annual contributions will be added. When an insured event
these transitional benefits.
occurs, the pension is paid as a lump sum or, following a written
If an Executive Board member suffers temporary incapacity,
request, in ten annual instalments.
he will receive his full fixed salary for a maximum period of
Termination benefits
six months plus the one-year variable remuneration. In the event
of temporary incapacity for a further six months, the Executive
Board member will receive 80 per cent of his fixed salary, but only
In line with the DCGK, all Executive Board service contracts
up to a point at which the service contract is terminated.
provide for a severance payment equivalent to no more than
If an Executive Board member ceases to be employed by
two years’ annual remuneration payable in the event of the
the Company as a result of death, the Executive Board member’s
contract being terminated prematurely without good cause. The
family will be entitled to the fixed monthly remuneration for the
amount of annual remuneration is defined as fixed salary plus the
month in which the service contract ends and for the three sub-
variable remuneration elements, assuming 100 per cent target
sequent months, but only up to the point at which the service
achievement and excluding non-cash benefits and other additional
contract would otherwise have come to an end.
benefits, for the last full financial year before the end of the Exec-
utive Board service contract. If the Executive Board service con-
Share ownership guidelines
tract was due to end within two years, the severance payment is
calculated pro rata temporis. If a service contract is terminated for
In connection with the updated remuneration system for Execu-
good cause for which the Executive Board member concerned is
tive Board members that has been in force since 1 January 2017,
responsible, no payments are made to the Executive Board mem-
the Supervisory Board decided to introduce share ownership
ber in question. The Company does not have any commitments
guidelines, under which all Executive Board members are required
for the payment of benefits in the event of a premature termination
to hold shares worth 100 per cent of their basic remuneration.
of Executive Board contracts following a change of control.
They have to build up their shareholding to this percentage and
Executive Board members are subject to a post-contractual
hold the shares for as long as they remain on the Executive Board.
non-compete agreement of one year. In return, the Company
The obligation to hold the full number of shares begins no later
Annual Report 2017 | KION GROUP AG CORPORATE GOVERNANCE
Remuneration report
53
than four years after the start of the obligation to hold shares. In
Benefits granted pursuant to the DCGK
the first four years, they are permitted to increase their shareholding
incrementally: they must hold 25 per cent of the full number of
The total remuneration granted to Executive Board members
shares no later than twelve months after the start of the obliga-
for 2017 was €10,279 thousand (minimum: €4,228 thousand,
tion, 50 per cent by the end of the second year and 75 per cent
maximum: €16,331 thousand) (2016: €10,442 thousand). Of this
by the end of the third year. The Executive Board members held
amount, €2,958 thousand (2016: €2,372 thousand) was attribut-
the required number of shares as at 31 December 2017 and thus
able to fixed non-performance-related remuneration compo-
fulfilled this obligation.
nents, €6,051 thousand (minimum: €0 thousand, maximum:
The relevant number of shares is determined on the basis of
€12,102 thousand) (2016: €6,824 thousand) to variable one-year
the arithmetic mean (rounded to two decimal places) of the Xetra
and multiple-year performance-related remuneration components,
closing prices (closing auction prices) of the Company’s shares
€186 thousand (2016: €199 thousand) to non-performance- related
on the Frankfurt Stock Exchange (or a successor system that
non-cash remuneration and other non-performance- related
replaces it) over the last 60 trading days prior to the start of the
benefits and €1,084 thousand (2016: €1,047 thousand) to the
obligation to hold the shares and then rounded to the nearest
pension expense in accordance with IFRS. The figure shown for
whole number.
one-year variable remuneration is based on a target achievement
It is not necessary to acquire further shares once the full
rate of 100 per cent (minimum: 0 per cent for target achievement
number of shares has been reached, nor will there be an obliga-
of 70 per cent or less, maximum: 200 per cent for target achieve-
tion to purchase additional shares if the share price falls. There
ment of 130 per cent or more). The figure shown for multiple-year
is only an obligation to purchase additional shares if there is a
variable remuneration is the fair value of the performance share
change to the fixed annual remuneration in the member’s
plans at the date of grant, representing full target achievement
Executive Board service contract or if a capital reduction, capital
(minimum: zero payment, maximum: 200 per cent of the contrac-
increase or stock split takes place.
tual allocation value).
The additional benefits were measured at the value calculated
for tax purposes. > TABLE 006
Remuneration for members of the Executive
Board in 2017
In accordance with the recommendations of the DCGK, as amended
on 7 February 2017, the remuneration of Executive Board mem-
bers is presented in two separate tables. Firstly, the benefits
granted for the year under review, including the additional benefits
and – in the case of variable remuneration components – the
maximum and minimum remuneration achievable are shown.
> TABLE 006
Secondly, > TABLE 007 shows the total remuneration allocated /
earned, comprising fixed remuneration, short-term variable remu-
neration and long-term variable remuneration, broken down by
reference year.
KION GROUP AG | Annual Report 2017 54
Benefits granted in 2017
TABLE 006
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 5
(01/01/2016 – 31/12/2018)
Performance share plan 5
(01/01/2017 – 31/12/2019)
Total
Pension expense 6
Total remuneration
Reconciliation to total remuneration as defined by
section 285 no. 9a, section 314 (1) no. 6a HGB in conjunction with GAS 17
Gordon Riske
CEO of KION GROUP AG
2016
800
20
820
2017
1,100
2017
(Min)
1,100
2017
(Max)
1,100
21
21
21
1,121
1,121
1,121
700
800
1,500
1,600
1,500
3,020
633
1,600
3,521
664
0
0
0
1,121
664
1,600
3,200
3,200
5,921
664
3,653
4,185
1,785
6,585
2,076
2,147
3,547
2,654
2,675
Dr Eike Böhm
Ching Pong Quek
Dr Thomas Toepfer
CTO of KION GROUP AG
Member of KION GROUP AG Executive
CFO of KION GROUP AG
Board / Chief Asia Pacific Officer
400
400
1,000
1,000
800
521
515
2,000
1,303
1,287
2016
500
21
521
1,000
1,921
155
2017
575
20
595
1,000
1,995
152
2017
(Min)
575
2017
(Max)
575
20
595
2,000
3,395
152
20
595
0
0
0
595
152
747
2016
572
135
707
1,303
2,532
122
2017
633
118
751
1,287
2,552
124
2017
(Min)
633
118
751
0
0
0
751
124
874
2017
(Max)
633
118
751
1,029
2,573
2,573
4,353
124
4,477
2016
500
2017
650
2017
(Min)
650
2017
(Max)
650
27
677
450
0
23
523
400
1,000
1,000
1,923
1,127
137
145
2,060
1,272
27
677
0
0
677
145
822
27
677
900
0
1,577
145
1,722
Minus the one-year variable remuneration granted
– 700
– 800
– 400
– 400
– 521
– 515
– 400
– 450
Plus the expected one-year
variable remuneration (allocation)
Minus the pension expense
Plus the adjustment of the
one-year variable remuneration
for the previous year
Total remuneration as
defined by section 285
no. 9a, section 314 (1) no. 6a HGB
in conjunction with GAS 17
756
– 633
664
– 664
80
77
432
– 155
332
– 152
563
– 122
427
– 124
432
–137
374
– 145
19
1
80
– 9
45
44
3,156
3,462
1,972
1,928
2,654
2,456
2,000
1,095
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 55 per cent (2016: 57 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 70 per cent or less,
maximum: 200 per cent for target achievement of 130 per cent or more)
4 Fair value on the date of grant
5 All of Dr Toepfer’s entitlements under the performance share plan have expired because he is leaving the Company on 31/03/2018
6 Service cost (IAS); the service cost in accordance with the HGB is shown in TABLE 009
Annual Report 2017 | KION GROUP AG
CORPORATE GOVERNANCE
Remuneration report
55
Benefits granted in 2017
TABLE 006
Dr Eike Böhm
Ching Pong Quek
CTO of KION GROUP AG
Member of KION GROUP AG Executive
Board / Chief Asia Pacific Officer
Dr Thomas Toepfer
CFO of KION GROUP AG
2016
500
21
521
2017
575
20
595
400
400
1,000
1,000
1,000
1,921
155
1,000
1,995
152
3,653
4,185
1,785
6,585
2,076
2,147
2017
(Min)
575
2017
(Max)
575
2016
572
135
707
2017
633
118
751
20
595
800
521
515
2,000
1,303
1,287
1,303
2,532
122
2,000
3,395
152
1,287
2,552
124
3,547
2,654
2,675
20
595
0
0
0
595
152
747
2017
(Min)
633
118
751
0
0
0
751
124
874
2017
(Max)
633
118
751
1,029
2,573
2,573
4,353
124
4,477
2016
500
2017
650
2017
(Min)
650
2017
(Max)
650
27
677
450
0
23
523
400
1,000
1,000
1,923
1,127
137
145
2,060
1,272
27
677
0
0
677
145
822
27
677
900
0
1,577
145
1,722
Minus the one-year variable remuneration granted
– 700
– 800
– 400
– 400
– 521
– 515
– 400
– 450
432
– 155
332
– 152
563
– 122
427
– 124
432
–137
374
– 145
19
1
80
– 9
45
44
3,156
3,462
1,972
1,928
2,654
2,456
2,000
1,095
in thousand €
Non-performance-
related
components
Short-term
One-year variable
incentive
remuneration 2 , 3
Multiple-year variable remuneration 2 , 4
Share-based
Performance share plan 5
Performance-
related
components
long-term
incentive
Fixed remuneration
Non-cash remuneration and
other benefits 1
Total
(01/01/2016 – 31/12/2018)
Performance share plan 5
(01/01/2017 – 31/12/2019)
Total
Pension expense 6
Total remuneration
Reconciliation to total remuneration as defined by
section 285 no. 9a, section 314 (1) no. 6a HGB in conjunction with GAS 17
Gordon Riske
CEO of KION GROUP AG
2016
800
20
820
1,500
3,020
633
2017
1,100
2017
(Min)
1,100
2017
(Max)
1,100
21
21
21
1,121
1,121
1,121
0
0
0
1,600
3,200
3,200
5,921
664
1,600
3,521
664
1,121
664
700
800
1,500
1,600
Plus the expected one-year
variable remuneration (allocation)
Minus the pension expense
Plus the adjustment of the
one-year variable remuneration
for the previous year
Total remuneration as
defined by section 285
no. 9a, section 314 (1) no. 6a HGB
in conjunction with GAS 17
756
– 633
664
– 664
80
77
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 55 per cent (2016: 57 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 70 per cent or less,
maximum: 200 per cent for target achievement of 130 per cent or more)
4 Fair value on the date of grant
5 All of Dr Toepfer’s entitlements under the performance share plan have expired because he is leaving the Company on 31/03/2018
6 Service cost (IAS); the service cost in accordance with the HGB is shown in TABLE 009
KION GROUP AG | Annual Report 2017
56
Allocation pursuant to the DCGK
non-performance-related non-cash remuneration and other
non-performance-related benefits and €1,084 thousand (2016:
The total remuneration allocated to / earned by Executive Board
€1,047 thousand) to the pension expense in accordance with
members for 2017 was €15,209 thousand (2016: €13,501 thou-
IFRS. The figure shown for one-year variable remuneration is
sand). Of this amount, €2,958 thousand (2016: €2,372 thousand)
derived from a preliminary total target achievement rate of about
was attributable to fixed non-performance-related remuneration
95 per cent based on the budgeted figure. This target achieve-
components, €10,981 thousand (2016: €9,883 thousand) to var-
ment rate was calculated using preliminary earnings figures at
iable one-year and multiple-year performance-related remunera-
the beginning of 2018 and equates to a payout of around
tion components, €186 thousand (2016: €199 thousand) to
83 per cent of the target value for one-year variable remuneration.
Allocation in 2017
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
(01/01/2014 – 31/12/2016)
Performance share plan
(01/01/2015 – 31/12/2017)
Total
Pension expense 4
Total remuneration
Gordon Riske
CEO of KION GROUP AG
Dr Eike Böhm
Ching Pong Quek
Dr Thomas Toepfer
CTO of KION GROUP AG
Member of KION GROUP AG Executive
CFO of KION GROUP AG
Board / Chief Asia Pacific Officer
2016
800
20
820
833
3,000
3,000
4,653
633
5,286
2017
1,100
21
1,121
664
3,000
3,000
4,785
664
5,449
2016
500
21
521
433
0
954
155
1,109
2017
575
20
595
332
1,611
1,611
2,538
152
2,690
2016
572
135
707
554
2,586
2,586
3,848
122
3,970
2017
633
118
751
427
2,573
2,573
3,751
124
3,874
2016
500
23
523
476
2,000
2,000
2,999
137
3,136
TABLE 007
2017
650
27
677
374
2,000
2,000
3,051
145
3,196
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 2016 is the actual amount paid out, which differs from the estimated value listed in the 2016 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 2016 consolidated financial statements.
4 Service cost (IAS); the service cost in accordance with the HGB is shown in TABLE 009
Annual Report 2017 | KION GROUP AG
CORPORATE GOVERNANCE
Remuneration report
57
This preliminary variable remuneration for each Executive Board
period. The value shown for 2017 is also calculated on the basis
member is also subject to adjustment by the Supervisory Board
of a preliminary total target achievement rate of about 126 per cent
in line with the individual performance of the Executive Board
and is subject to the performance-based adjustment made by the
member. This adjustment may vary by plus or minus 30 per cent
Supervisory Board (using a discretionary performance multiple)
of the variable remuneration.
for individual Executive Board members. Based on the conditions
For the multiple-year variable remuneration, a payment from
of the plan at the grant date, this performance-based adjustment
the 2015 tranche of the performance share plan will be made in
may vary by plus or minus 20 per cent.
spring 2018 on the basis of the achievement of the long-term
The additional benefits were measured at the value calcu-
targets that were defined in 2015 at the start of the performance
lated for tax purposes. > TABLE 007
Allocation in 2017
in thousand €
Non-performance-
related
components
Fixed remuneration
Non-cash remuneration and other benefits 1
Total
Short-term
incentive
One-year variable
remuneration 2
Multiple-year variable remuneration
Share-based
Performance share plan 3
Performance-
related
components
long-term
incentive
(01/01/2014 – 31/12/2016)
Performance share plan
(01/01/2015 – 31/12/2017)
Total
Pension expense 4
Total remuneration
2016
800
20
820
833
3,000
3,000
4,653
633
5,286
2017
1,100
21
1,121
664
3,000
3,000
4,785
664
5,449
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 2016 is the actual amount paid out, which differs from the estimated value listed in the 2016 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 2016 consolidated financial statements.
4 Service cost (IAS); the service cost in accordance with the HGB is shown in TABLE 009
Gordon Riske
CEO of KION GROUP AG
Dr Eike Böhm
Ching Pong Quek
CTO of KION GROUP AG
Member of KION GROUP AG Executive
Board / Chief Asia Pacific Officer
Dr Thomas Toepfer
CFO of KION GROUP AG
2016
500
21
521
433
0
954
155
1,109
2017
575
20
595
332
1,611
1,611
2,538
152
2,690
2016
572
135
707
554
2,586
2,586
3,848
122
3,970
2017
633
118
751
427
2,573
2,573
3,751
124
3,874
2016
500
23
523
476
2,000
2,000
2,999
137
3,136
TABLE 007
2017
650
27
677
374
2,000
2,000
3,051
145
3,196
KION GROUP AG | Annual Report 2017
58
The payments to be made in spring 2018 to two former members
In addition to the remuneration described above for Mr Knoef
of the Executive Board from the 2015 tranche of the performance
and Mr Maurer, the total remuneration paid to former members
share plan were also calculated on the basis of a preliminary total
of the Executive Board amounted to €254 thousand in 2017
target achievement rate of about 126 per cent and amount to
(2016: €249 thousand). Provisions for defined benefit obligations
€333 thousand. Of this total, €167 thousand is attributable to
to former members of the Executive Board or their surviving
Mr Knoef and €167 thousand to Mr Maurer.
dependants amounting to €9,765 thousand (2016: €9,791 thou-
The table below shows the pension contributions (additions
sand) were recognised in accordance with IAS 19.
to the plan) attributable to each individual Executive Board mem-
In the year under review, no advances were made to mem-
ber and their separate present values in accordance with IFRS
bers of the Executive Board, and there were no loans.
and in accordance with HGB > TABLE 008 – 009.
Pension entitlements under IFRS
TABLE 008
in thousand €
Gordon Riske
Dr Eike Böhm
Ching Pong Quek
Dr Thomas Toepfer
Service cost
2017
Service cost
2016
Present value (DBO)
31/12/2017
Present value (DBO)
31/12/2016
664
152
124
145
633
155
122
137
6.491
364
557
864
6.168
222
446
615
Pension entitlements under HGB
TABLE 009
in thousand €
Gordon Riske
Dr Eike Böhm
Ching Pong Quek
Dr Thomas Toepfer
Service cost
2017
Service cost
2016
Present value (DBO)
31/12/2017
Present value (DBO)
31/12/2016
460
133
98
156
481
139
102
107
4,872
326
505
738
4,176
191
347
527
Annual Report 2017 | KION GROUP AG CORPORATE GOVERNANCE
Remuneration report
59
SUPERVISORY BOARD REMUNERATION
Remuneration system
Based on the consultant’s findings, some aspects of the
remuneration system for the Supervisory Board of KION
GROUP AG were amended. Based on a resolution adopted by
the Annual General Meeting on 11 May 2017, the fixed annual
remuneration of ordinary members was
increased
from
€45,000 to €55,000 as at 1 June 2017. The chairman of the
The Supervisory Board’s remuneration is defined in article 18 of
Supervisory Board receives three times the amount of an ordi-
KION GROUP AG’s articles of incorporation. Members of the
nary member, i.e. €165,000, and his deputy receives two times
Supervisory Board receive fixed remuneration plus reimburse-
the amount of an ordinary member, i.e. €110,000.
ment of out-of-pocket expenses. Additional remuneration is paid
In view of the increased responsibility attaching to Audit
for being a member or chairman of a committee, although this
Committee membership and thus the greater amount of time that
does not apply in the case of the Nomination Committee or the
members are required to dedicate, the remuneration of ordinary
Mediation Committee pursuant to section 27 (3) of the German
Audit Committee members was raised from €8,000 to €15,000
Codetermination Act (MitbestG). If a member of the Supervisory
and that of the Audit Committee chairman from €16,000 to
Board or one of its committees does not hold their position for a
€45,000; his deputy receives two times the amount of an ordinary
full financial year, remuneration is reduced pro rata temporis. The
member, i.e. €30,000.
members of the Supervisory Board receive an attendance fee per
Furthermore, the attendance fee for meetings of the
day for meetings of the Supervisory Board and its committees,
Supervisory Board and its committees was increased from
although they only receive this amount once if they attend more
€1,250 to €1,500.
than one meeting on the same day.
The Company reimburses each member for any VAT incurred
As the general parameters had not changed significantly
in connection with his or her remuneration.
since the remuneration arrangements applicable to the Supervi-
A D&O insurance policy without an excess has been taken
sory Board until 31 May 2017 which had been decided upon
out for the members of the Supervisory Board.
immediately prior to the IPO of KION GROUP AG in June 2013,
the Supervisory Board decided it would be appropriate to also
review its own remuneration in 2016, in addition to that of the
Executive Board. To this end, a remuneration consultant who was
independent of the Supervisory Board and the KION Group was
commissioned to examine the appropriateness and market con-
formity of Supervisory Board remuneration at KION GROUP AG.
KION GROUP AG | Annual Report 2017 60
Remuneration paid to members of the
Supervisory Board in 2017
In 2017, no company in the KION Group paid or granted any
remuneration or other benefits to members of the Supervisory
Board for services provided as individuals, such as consulting or
The total remuneration paid to the Supervisory Board in 2017 was
brokerage activities. Nor were any advances or loans granted to
€1,386,416.67. Of this amount, €954,583.33 was attributable to
members of the Supervisory Board.
remuneration for activities carried out by the Supervisory Board.
The remuneration paid for committee work (including attendance
fees) totalled € 431,833.33. The following table shows the break-
down of remuneration paid to each Supervisory Board member
for 2017: > TABLE 010
Annual Report 2017 | KION GROUP AG CORPORATE GOVERNANCE
Remuneration report
61
Supervisory Board remuneration
TABLE 010
Dr John Feldmann (chairman)
€140,000.00
€28,083.33
€21,000.00
€189,083.33
Fixed remuneration
Committee
remuneration
Attendance fee
Total remuneration
Joachim Hartig (until 11/05)
€18,750.00
€3,333.33
Behrendt, Birgit
Holger Brandt (until 11/05)
Dr Alexander Dibelius
Stefan Casper (from 11/05)
Denis Heljic
Jiang Kui *
Olaf Kunz
Milla, Jörg
Özcan Pancarci
Dr Frank Schepp (from 11/05)
Hans Peter Ring
Dr Christina Reuter
Alexandra Schädler
Tan Xuguang *
Claudia Wenzel (committee from 11/05)
Xu, Ping *
Total
* Withholding tax (pursuant to section 50a of the German
Income Tax Act (EStG)) incl. the reunification surcharge was
also paid over in the following amounts:
€50,833.33
€18,750.00
€50,833.33
€35,833.33
€50,833.33
€50,833.33
€50,833.33
€50,833.33
€95,416.67
€35,833.33
€50,833.33
€50,833.33
€50,833.33
€50,833.33
€50,833.33
€50,833.33
–
–
€8,000.00
–
€8,000.00
€8,000.00
€8,000.00
€12,083.33
€5,000.00
€9,750.00
€3,750.00
€16,750.00
€14,750.00
€24,250.00
€15,500.00
€20,000.00
€24,000.00
€27,083.33
€60,583.33
€22,500.00
€75,583.33
€50,583.33
€83,083.33
€74,333.33
€78,833.33
€86,916.67
€8,000.00
€24,250.00
€127,666.67
–
€13,250.00
€49,083.33
€40,916.67
€21,000.00
€112,750.00
–
€9,750.00
€20,833.33
€24,000.00
–
€2,750.00
€5,333.33
€21,750.00
–
€9,750.00
€60,583.33
€95,666.67
€53,583.33
€77,916.67
€60,583.33
€954,583.33
€150,583.33
€281,250.00
€1,386,416.67
€70,616.31
€3,704.46
€12,965.62
€87,286.39
KION GROUP AG | Annual Report 2017 Annual Report 2017 | KION GROUP AG COMBINED MANAGEMENT REPORT
Contents
63
COMBINED
MANAGEMENT REPORT
64
65
65
73
76
78
78
81
99
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
104
Non-financial performance indicators
111
OUTLOOK, RISK REPORT AND OPPORTUNITY REPORT
111
113
120
Outlook
Risk report
Opportunity report
KION GROUP AG | Annual Report 2017 64
Preliminary remarks
COMBINED MANAGEMENT REPORT
The management report published in the 2017 annual report
combines the group management report and the management
report of KION GROUP AG. Unless stated otherwise, the descrip-
tion of the course of business (including business performance),
position and expected development refers both to the Group and
to KION GROUP AG. Sections that only contain information on
KION GROUP AG are indicated as such. The report on the eco-
nomic position includes a separate section containing disclo-
sures for KION GROUP AG in accordance with the German Com-
mercial Code (HGB).
Annual Report 2017 | KION GROUP AG COMBINED MANAGEMENT REPORT
Preliminary remarks
Fundamentals of the KION Group
65
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 Cor-
The KION Group is one of the world’s leading suppliers of integrated
porate Governance Code (DCGK) provides the framework for
supply chain solutions. Its portfolio encompasses forklift trucks,
management and control. As required by section 289f and sec-
warehouse technology and supply chain solutions, including the
tion 315d of the German Commercial Code (HGB), the corporate
related services. Across more than 100 countries worldwide, the
governance standards that the Group applies are set out in the
KION Group designs, builds and supports logistics solutions that
declaration on corporate governance. This declaration also con-
optimise material and information flow within factories, warehouses
tains the comply-or-explain statement pursuant to section 161
and distribution centres. The Group is the largest manufacturer of
AktG, which was issued by the Executive Board and Supervisory
industrial trucks in Europe, the second-largest producer of forklifts
Board of KION GROUP AG on 13 / 18 December 2017, and the
globally and a leading provider of automation technology.
corporate governance report pursuant to section 3.10 of the
The Linde and STILL brands serve the premium industrial
German Corporate Governance Code, which also provides
truck segment. Baoli focuses on industrial trucks at the lower end
information about the compliance standards in the Group. The
of the volume segment and in the economy segment. Among
declaration on corporate governance can be viewed and down-
KION’s regional industrial truck brand companies, Fenwick is the
loaded on the Company’s website. It also forms part of this annual
largest supplier of material handling products in France, OM
report and is a component of the combined management report.
STILL is a market leader in Italy and OM Voltas is a leading pro-
The essential features of the remuneration system are
vider of industrial trucks in India. Dematic is a leading global sup-
described in the remuneration report, which is part of the 2017
plier of integrated automation technology, software and services
combined management report and can be found in the ‘Remu-
for optimising supply chains. More than 1.3 million industrial
neration report’ section of this annual report. The total amounts
trucks and over 6,000 installed systems are deployed by cus-
for Executive Board remuneration and Supervisory Board remu-
tomers in all industries and of all sizes on six continents.
neration are reported in the notes to the consolidated financial
The KION Group comprises the parent company KION
statements (note [45]).
GROUP AG, which is a public limited company under German
law, and its subsidiaries. The KION Group’s strategic manage-
Disclosures relevant to acquisitions
ment holding company, KION GROUP AG, is listed on the
Frankfurt Stock Exchange and is part of the MDAX, the STOXX
The disclosures relevant to acquisitions (pursuant to section 315a
Europe 600 and the FTSE Euro Mid Cap. Details of treasury
and section 289a HGB) together with the explanatory report form
shares (pursuant to section 160 (1) no. 2 of the German Stock
an integral part of the combined management report and can be
Corporation Act (AktG)) are provided in note [28] ‘Equity’ in the
found in the ‘Disclosures relevant to acquisitions’ section of this
notes to the consolidated financial statements.
annual report.
The parent company of KION GROUP AG is Weichai Power
(Luxembourg) Holding S.à r.l., Luxembourg, a subsidiary of
Non-financial declaration
Weichai Power Co. Ltd., Weifang, China, which held 43.3 per cent
of the shares at the end of 2017 as far as the Company is aware.
A separately published sustainability report provides detailed
The free float accounted for 56.6 per cent of the shares, while the
information on the sustainable management of the KION Group.
remaining 0.1 per cent were treasury shares.
The report for the year under review contains, for the first time,
the KION Group’s non-financial declaration as required under the
KION GROUP AG | Annual Report 2017 66
German law to implement the corporate social responsibility
the KION Americas Operating Unit in the Industrial Trucks &
(CSR) directive. The declaration focuses on targets, action steps
Services segment.
and due diligence processes relating to the key environmental,
In November 2017, KION GROUP AG announced that Dr Thomas
social and employee-related aspects of the KION Group’s busi-
Toepfer would be leaving the Company on 31 March 2018 in
ness model, the observation of human rights and the fight against
order to take on a new role outside the KION Group.
corruption and bribery.
The Group Executive Committee (GEC) advises the Execu-
In accordance with the statutory disclosure deadlines defined
tive Board of KION GROUP AG and provides input from the
in section 325 HGB, the KION Group publishes its annual sustain-
Operating Units. The committee comprises the Executive Board
ability report (including the non-financial report) by no later than
members as well as the presidents of the Operating Units.
the end of April each year on its website, where it will remain avail-
The Executive Board maintains a relationship of trust with,
able for at least ten years.
and is monitored by, the Company’s Supervisory Board.
Executive Board
Supervisory Board
The Executive Board of KION GROUP AG is responsible for the
The Supervisory Board, which was formed in accordance with the
operational management of the KION Group. As before, it had
German Codetermination Act (MitbestG), comprises 16 people. It
four members at the end of 2017. As at 31 December 2017, the
advises the Executive Board in its handling of significant matters
responsibilities of the Executive Board members were as follows:
and business transactions. To increase the efficiency of its work,
– Gordon Riske, Chief Executive Officer (CEO), was respon-
sible for the LMH EMEA and STILL EMEA Operating Units
the Supervisory Board is supported by four standing committees:
the Nomination Committee, the Executive Committee, the Audit
Committee and the Mediation Committee.
in the Industrial Trucks & Services segment and the
The term of office of the members of the Supervisory Board
Dematic Operating Unit. He also remained in charge of the
ended at the Annual General Meeting on 11 May 2017. All of the
following group functions: corporate strategy, corporate
existing shareholder representatives were re-elected by the
communications, corporate office, internal audit and cor-
Annual General Meeting for a further five years. Dr Frank Schepp
porate compliance. In addition, he took on responsibility
and Stefan Casper were elected as employee representatives,
for the Digitalization@KION initiative.
– Dr Eike Böhm, in his role as Chief Technology Officer (CTO),
had groupwide responsibility for research and development
(R&D) in the areas of industrial trucks and supply chain
solutions including modules & components, for software
development, procurement and quality.
– Ching Pong Quek, Chief Asia Pacific Officer, headed up the
KION APAC Operating Unit and thus the entire Asia business
within the Industrial Trucks & Services segment.
– Dr Thomas Toepfer was Chief Financial Officer (CFO) and his
responsibilities included corporate accounting & tax, financial
replacing Holger Brandt and Joachim Hartig. At the constitutive
meeting held after the Annual General Meeting, the Supervisory
Board re-elected Dr John Feldmann as chairman.
Business model and organisational structure
The KION Group’s business model is designed so that customers
of all sizes and from all kinds of industries can obtain the full spec-
trum of material handling products and services from a single
source. Thanks to its broad technology base, diversified product
services, corporate finance, corporate controlling, corporate
portfolio and worldwide service network, the KION Group has the
HR / Labour Relations Director, legal affairs, KION Group IT,
most comprehensive portfolio of such products and services in
data protection, health, safety & environment and logis-
the market.
tics / Urban. He also took over responsibility from Mr Riske for
The KION Group’s market activities are divided into five Operating
Units: LMH EMEA, STILL EMEA, KION APAC, KION Americas
Annual Report 2017 | KION GROUP AG COMBINED MANAGEMENT REPORT
Fundamentals of the KION Group
67
and Dematic. LMH EMEA and STILL EMEA each concentrate on
Industrial Trucks & Services segment
Europe, the Middle East and Africa. KION APAC and KION Amer-
icas hold cross-brand responsibility for industrial truck business
The Industrial Trucks & Services segment encompasses the
in the Asia-Pacific region and the Americas respectively. Dematic
activities of the international brand companies Linde, STILL and
is the global supply chain solutions business. While the Operating
Baoli, the local brand companies Fenwick, OM STILL and OM
Units have full operational and commercial responsibility within
Voltas plus the financial services business.
their markets, KION GROUP AG is the strategic management
Linde is an international premium brand and technology
holding company and is responsible for the groupwide strategy
leader that meets customers’ most sophisticated requirements
and groupwide business standards.
regarding technology, efficiency, functionality and design. In
For internal management purposes, the KION Group has
France, Linde products are sold under the Fenwick brand.
divided its operating business into two segments that correspond
STILL is predominantly an international premium provider of
to the segments as required by international financial reporting
trucks with electric and diesel-electric drives. It mainly focuses on
standards (IFRS 8). The industrial truck business, including the
the European and Latin American markets, with the national
supporting financial services, is shown in the Industrial Trucks &
brand OM STILL serving the Italian market.
Services segment, while activities focusing on end-to-end solutions
Baoli is the international brand for the lower end of the volume
make up the Supply Chain Solutions segment. The two operating
segment and the economy segment.
segments complement each other because they both have a strong
OM Voltas is the national brand company for the Indian
market position and regional presence. The Corporate Services
market, through which the KION India Pvt. Ltd. subsidiary
segment comprises the other activities and holding functions of the
manufactures and sells electric and IC forklift trucks and ware-
KION Group. These include service companies that provide
house trucks.
services such as IT and logistics across all segments. > TABLE 011
Segment overview
in € million
Industrial Trucks & Services
Supply Chain Solutions
Corporate Services
Consolidation / reconciliation
Total
Revenue
Adjusted EBIT ¹
Employees ²
2017
5,630.9
2,006.3
266.6
– 250.3
7,653.6
2016
5,202.6
366.0
242.0
– 223.4
5,587.2
2017
640.1
181.4
530.7
– 586.5
765.6
2016
586.9
6.0
305.9
– 361.5
537.3
2017
24,090
6,820
698
–
31,608
30,544
TABLE 011
2016
23,064
6,810
670
–
1 Adjusted for PPA items and non-recurring items
2 Number of employees (full-time equivalents) as at balance sheet date 31/12/
KION GROUP AG | Annual Report 2017 68
KION Financial Services (FS) is an internal funding partner for the
and staffed by approximately 17,800 service employees. Just
Industrial Trucks & Services segment, providing finance solutions
under half of them are employed by the KION Group. In other
to support sales. Its activities comprise the financing of long-term
cases, the Operating Units rely on external dealers.
leasing business for external customers, the internal financing of
The worldwide vehicle fleet, which comprised more than
the short-term rental business and the related risk management.
1.3 million industrial trucks at the end of 2017, provides a stable
In the large sales markets with a high volume of financing and
basis for the spare parts, maintenance and repair business. The
leasing, legally independent FS companies handle this business.
service business, which includes financial services, helps to
So that it can fully cater to the needs of material handling customers
smooth out fluctuations in the segment’s revenue and reduces
worldwide, the business model of the Industrial Trucks & Services
dependency on market cycles. This business also strengthens
segment covers key steps of the value chain: product develop-
customer relationships, thereby helping to generate sales of new
ment, manufacturing, sales and logistics, spare parts business,
trucks. Extensive supplementary services are offered, mainly for
truck rental and used truck businesses, fleet management and
premium products. However, the proportion of service business
financial services that support the core industrial truck business.
is continually increasing in the other price segments too.
The segment earns just over half of its revenue by selling
There are also individual orders for repairs and maintenance
industrial trucks. The product portfolio includes counterbalance
work as well as for spare parts. In addition, the segment looks
trucks powered by an electric drive or internal combustion engine,
after entire customer fleets, using special software to monitor the
warehouse trucks (ride-on and hand-operated) and towing vehi-
trucks in the fleets and to enable customers to efficiently manage
cles for industrial applications. It covers all load capacities, from
their fleets.
one to 18 tonnes. Worldwide research and development activities
The Operating Units also have extensive rental truck and used
enable the Industrial Trucks & Services segment to consolidate its
truck businesses, allowing peaks in capacity requirements to be
technology leadership, which it is extending in the areas of inno-
met and customers to be supported after their leases have expired.
vative, energy-efficient and low-emission drive technologies and
Financial services support new truck business in many mar-
hydrostatic and diesel-electric drive systems. In this field, the
kets, forming another pillar of the service business. About half of
KION Group operates a total of 16 production facilities for indus-
all new trucks are financed via the KION Group itself or via exter-
trial trucks and components in eight countries. So that it can
nal banks and financing partners. Offering financial services is
ensure security of supply and the availability of spare parts for
therefore part of the truck sales process. End customer finance is
important components in order to meet customers’ specific
generally linked to a service contract throughout the term of the
requirements, the segment manufactures major components
finance agreement. In the main sales markets with a high volume
itself – notably lift masts, axles, counterweights and safety equip-
of financing and leasing, financial activities are handled by legally
ment. Other components – such as hydraulic components, elec-
independent financial services companies. These activities
tronic components, rechargeable batteries, engine components
include long-term leasing to customers and internal financing of
and industrial tyres – are purchased through the global procure-
the Operating Units’ short-term rental fleets.
ment organisation.
As a rule, industrial trucks are built according to the customer’s
Supply Chain Solutions segment
individual specifications. Advantages for customers in terms of
total cost of ownership (TCO) underpin the international Linde
The Supply Chain Solutions segment is a leading global supplier
and STILL brands’ premium positioning. The trucks’ hallmarks
of integrated automation technology, software and services for
are cost-efficiency, high productivity and high residual values.
optimising supply chains. Since the start of 2018, all solutions
The international Baoli brand serves the lower end of the volume
have been marketed under the central Dematic brand, including
segment and the economy segment.
those previously sold under the Egemin Automation and NDC
The segment is underpinned by an extensive sales and service
Automation product brands.
network comprising around 1,400 outlets in over 100 countries
Annual Report 2017 | KION GROUP AG COMBINED MANAGEMENT REPORT
Fundamentals of the KION Group
69
Manual and automated solutions are provided for all functions
are manufactured inhouse at ten production facilities or, in some
along customers’ supply chains, from goods inward and multishuttle
cases, by quality-assured third parties.
warehouse systems to picking, automated palletising and auto-
The breadth of this offering allows the segment to offer a one-
mated guided vehicle systems. Picking equipment controlled by
stop shop for modernisation work and services (customer ser-
radio, voice or light is available for nearly all goods and packaging
vices), which usually cover the entire lifetime of an installation. The
types, whether it is used for case, individual item, split-case or
installed base of more than 6,000 systems provides significant
pallet picking. Automated storage and retrieval systems (ASRS)
potential for this business, including on-site support provided by
such as RapidStore and high-performance picking stations
approximately 1,300 employees (not including back-office staff) in
(RapidPick) can be used to achieve very fast throughput times
over 20 countries. > DIAGRAM 003
and picking rates. In 2017, an ultracompact order picking system
was added under a global partnership with AutoStore® that
enables significantly more inventory to be stored within the same
floor space. At the same time, cross-docking solutions increase
the efficiency of the system as a whole by eliminating the
unnecessary handling and storage of goods.
Real-time management of the supply chain solutions is based
on the proprietary, software platform Dematic iQ, which can be
easily integrated into customers’ existing application landscape.
Dematic iQ offers much more than traditional warehouse man-
agement systems, helping with the data-based optimisation of all
processes to ensure seamless order processing. It also supports
performance management functions for measuring and con-
trolling performance.
The segment is primarily involved in customer-specific,
longer-term project business. With global resources, ten produc-
tion facilities worldwide and regional teams of experts, Dematic is
able to plan and implement logistics solutions with varying
degrees of complexity anywhere in the world.
The (new) project business (business solutions) covers every
phase of a new installation: analysis of the customer’s needs and
the general parameters, provision of appropriate advice, computer
simulation of bespoke intralogistics solutions in the customer’s
individual environment, technical planning and design of the sys-
tem, implementation of the control technology and its integration
into the customer’s existing IT infrastructure, site and project man-
agement, plant monitoring and support for the customer during
implementation of the system, including training for the workforce.
The system components, which are specified in detail for
each customer project, such as automatic guided vehicles,
palletisers, storage and picking equipment including auto-
mated storage and retrieval systems, sorters and conveyors,
KION GROUP AG | Annual Report 2017 70
Production sites of the KION Group
Production sites of the KION Group
DIAGRAM 003
Dinklage
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
France
Xiamen: Counterbalance trucks with electric drive or IC engine,
heavy trucks, warehouse technology
Germany
Aschaffenburg: Counterbalance trucks with electric drive or
IC engine
Dinklage: Counterweights for forklift trucks, construction
equipment and cranes, component production
Geisa: Component production
Châtellerault: Warehouse technology
India
Pune: Counterbalance trucks with electric drive or IC engine,
warehouse technology
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 center, component production
Reutlingen: Very narrow aisle trucks
Weilbach: Component production
United States
Summerville: Counterbalance trucks with electric drive or IC
engine, warehouse technology
Annual Report 2017 | KION GROUP AG Supply Chain Solutions
Australia
Sydney: Conveyor and sortation systems, automated guided
vehicle systems, system components and racking
Belgium
Zwijndrecht: Automated guided vehicle systems
China
Suzhou: Conveyor, sortation, storage and retrieval systems
Germany
Bielefeld: Sortation systems
Offenbach: Conveyor, sortation, storage and retrieval systems
Italy
Milan: Sortation systems
Mexico
Monterrey: Conveyor, sortation, storage and retrieval systems
United States
Grand Rapids: Conveyor, sortation, storage and retrieval systems,
system components
Holland: Automated guided vehicle systems
Salt Lake City: Conveyor, sortation, storage and retrieval systems,
automated guided vehicle systems, system components
Pune
COMBINED MANAGEMENT REPORT
Fundamentals of the KION Group
71
Holland
Grand Rapids
Salt Lake City
Summerville
Monterrey
Indaiatuba
Jingjiang
Suzhou
Xiamen
Sydney
KION GROUP AG | Annual Report 2017 72
Market and influencing factors
Regulatory frameworks have a major impact on the business
model, both in the Industrial Trucks & Services segment and in
According to the KION Group’s estimates, the material handling
the Supply Chain Solutions segment. The products and services
market – comprising forklift trucks, warehouse technology and
of companies in the KION Group have to comply with the specific
supply chain solutions – has expanded at a faster rate than global
legal requirements in their respective markets. Compliance with
economic growth over the past five years. The value of the market
the different requirements has to be verified or certified. Many of
has increased at an average annual rate of more than 6 per cent.
the legal requirements are enshrined in product-specific stand-
Of the relevant market volume, almost 60 per cent is esti-
ards and other norms (e.g. EN, ISO and DIN).
mated to be attributable to industrial trucks and related services,
Legal requirements also apply to the construction and oper-
which are essential elements in the production and logistics pro-
ation of production facilities, including in relation to air pollution
cesses of many manufacturers as well as in the wholesale and
avoidance, noise reduction, waste production & disposal and
retail sectors. The remaining market volume is accounted for by
health & safety. The KION Group fulfils all of these requirements
supply chain solutions, the growth of which is fuelled in no small
as well as all the legal provisions pertaining to exports and
part by the increasing automation and digitalisation of production
financing business.
and logistics processes in various industries. The main overarching
growth drivers are the advancing interconnectivity of the global
Influencing factors in the Industrial Trucks & Services segment
economy and additional transport services between ever-more
fragmented value chains and supply chains, which necessitate
In recent years, the value of the global market for industrial trucks
decentralised warehouse and logistics capacity. The strong
has increased by around 4 to 5 per cent per year. This is due in
growth of e-commerce and the increasing prevalence of multi-
equal measure to the growth in the volume of new truck business
channel approaches in all kinds of industries are boosting capital
and the overall rise in the contribution from the service business.
expenditure on the reconfiguration of supply chains. Stimulus
Measured in terms of units ordered, 38 per cent of the global
also comes from the growing use of electric industrial trucks and
market was attributable to IC counterbalance trucks in 2017,
new drive solutions, such as lithium-ion technology.
while electric forklift trucks accounted for 17 per cent and ware-
The market as a whole is exposed to cyclical fluctuations.
house trucks for 45 per cent. IC trucks continue to make up a
Economic conditions in the different regions and the rates of
comparatively high proportion of the total volume in growth
growth in global trade therefore have a major influence on custom-
regions. However, the most dynamic growth in the new truck
ers’ willingness to invest. Nevertheless, there are cyclical differ-
business in recent years has been for forklift trucks and ware-
ences between the segments. Historically, new business in the
house trucks powered by an electric motor. Much of the additional
ITS segment has shown a very strong correlation with the perfor-
volume is attributable to the electrification of manual hand pallet
mance of broad economic indicators, such as industrial output.
trucks, which have been replaced by entry-level trucks in the
By contrast, the SCS segment tends to be less cyclical owing to
lower weight categories. The use of new drive technologies, such
longer projects that often last several years. In both segments,
as lithium-ion drive systems, is also rising steadily. Moreover,
the service business is generally more stable as it is linked to the
driverless transport solutions developed by automating standard
installed base of trucks and systems. The economic situation is
warehouse trucks are becoming more and more appealing
also affected by competition levels, exchange rates and changes
to customers.
in commodity prices. Economic trends within individual customer
The upper price segment continues to benefit from cus-
segments are another important factor. The most significant of
tomers’ growing requirements regarding the quality, efficiency
these are manufacturing, the food industry, general merchan-
and eco-friendliness of industrial trucks and from higher expecta-
dise and grocery wholesale and retail, logistics services and
tions in terms of service, availability of spare parts and flexible
e-commerce, which has the highest growth rates.
rental solutions. In this segment, customers are much more
focused than before on optimising total cost of ownership and,
Annual Report 2017 | KION GROUP AG COMBINED MANAGEMENT REPORT
Fundamentals of the KION Group
73
increasingly, on the ability to integrate the trucks into fully auto-
Market position
mated intralogistics solutions. At the same time, there is mounting
competitive pressure worldwide as some manufacturers in the
In 2017, the Industrial Trucks & Services segment achieved a
economy segment based in emerging markets are pursuing an
14.4 per cent share of the global market based on unit sales
international expansion strategy. In mature markets and, increas-
(2016: 15.0 per cent) and is thus the second-largest manufacturer
ingly, in growth regions, the large number of trucks in use also
of industrial trucks. At the same time, the KION Group is the
provides a strong base for replacement business and rising
world’s leading producer of electric forklift trucks. It remained the
demand for services.
market leader in Europe. In China, it is still the leading foreign
manufacturer and number three overall. The KION Group is also
Influencing factors in the Supply Chain Solutions segment
among the leading providers in Brazil and India.
According to the KION Group’s estimates, the market for supply
Supply Chain Solutions segment (Dematic) is among the three
chain solutions has expanded at twice the rate of the market for
largest suppliers. Dematic has a global presence and is a leading
industrial trucks and services over the past five years owing to
provider of automated technology for supply chains, automated
growing demand in the main customer industries. Both the pro-
warehouse systems and automated guided vehicle systems.
In a ranking compiled by Modern Materials Handling, the
ject business (business solutions) and downstream services
(customer services) contributed to this expansion. The service
business benefits from the ever-larger installed base and the
trend towards the outsourcing of logistics processes.
The growth of e-commerce has a major influence on demand
for supply chain solutions, including warehouse automation and
STRATEGY OF THE KION GROUP
solutions for sorting and for automated goods transport.
Strategic activities in 2017
According to market analysis by the Ecommerce Foundation,
global online trading (B2C) expanded at an average rate of around
The focus in the 2017 reporting year was on implementing
15 per cent between 2013 and 2017. Increasing complexity, cost
strategic measures under the Strategy 2020.
pressures and shifting customer expectations require shorter
In the context of its overarching growth initiatives, the KION
lead times, a more efficient flow of goods, a wider product range
Group made improvements to its production operations and its
and process reliability. This is pushing up demand for decentral-
sales and brand strategies in order to support joint business
ised warehouse and logistics capacity that enables faster deliveries
development. As part of this process, the Stříbro site in the
and, due to automated processes, keeps down personnel
Czech Republic is being expanded to include a new plant for
expenses and required space. The digitalisation and automation
Dematic’s automated conveyor systems. This capital expenditure
of industrial production and supply chains and the multichannel
project, which began in March 2017, will enable multishuttles and
strategies being adopted in traditional industries – e.g. super-
modular conveyor systems to be built at the plant from 2018 to
market chains, grocery wholesale and retail, fashion, food and
support the SCS segment’s strategy for growth in Europe.
beverage manufacturing, and parcel and courier services – are
Baoli raised its profile as an international brand for the lower
also contributing to this. At the same time, the focus of techno-
end of the volume segment and the economy segment by
logical progress is increasingly shifting towards software and
founding KION Baoli EMEA. This business is being expanded in
robotics solutions.
central and eastern Europe, and elsewhere, using the infra-
structure of Baoli’s sister brand STILL. This will also improve the
opportunities for joint business development by ITS and SCS.
Business was stepped up significantly in North America by
introducing five new trucks, the development of which was
KION GROUP AG | Annual Report 2017 74
decided upon under the Strategy 2020. KION North America,
trucks. This means production processes can be structured
along with its truck brands, is now listed as an official supplier for
more efficiently in future. Moreover, Dematic realised its first cost
numerous customers of Dematic. This collaboration also included
synergies through the shared use of corporate services at the
joint appearances at trade fairs (see the ‘Customers’ section).
level of the KION Group.
Once the product launch of warehouse trucks scheduled for 2018
has taken place, KION will have a complete product portfolio
tailored to the American market. Electric forklift trucks and ware-
Refinement of the strategy: “KION 2027”
house trucks are an extremely important element in the imple-
mentation of integrated supply chain solutions. In 2017, the SCS
In the year under review, the KION Group further developed its
segment laid the foundations for a one-brand strategy. Bringing
Strategy 2020 to create “KION 2027”, which it began implement-
together the full SCS range – including the automated guided
ing at the start of 2018 once the Supervisory Board had given its
vehicle systems – under the global Dematic brand and dropping
approval. “KION 2027” builds on the success of the Strategy
the existing Egemin Automation and NDC Automation brands will
2020 (formulated before the acquisition of Dematic), under which
make it easier to position the range in a customer-focused way in
profitable growth, efficient use of capital and a high level of resil-
all markets. As part of this, Egemin was integrated into Dematic,
ience to economic fluctuation have been achieved over the past
thereby creating benefits both for innovation management and
five years. The strong position achieved with the Strategy
customer management.
2020, particularly in the ITS segment, is to be consolidated.
Both segments have also made further improvements to their
Another objective of “KION 2027” is to unlock the potential of all
product range. In the ITS segment, Linde Material Handling
the companies in the Group and to focus even more on a joint
began selling electric forklift trucks with more powerful lithium-ion
customer-centric strategy for innovation, sales and branding. The
batteries in the fast-growing two to three tonne load capacity
main emphasis in this regard will be the overarching development
range. A new solution for pallet handling and order picking in nar-
and marketing of integrated, automated supply chain solutions
row aisles was also brought to the market. Virtually all warehouse
and mobile automation solutions. Overall, the KION Group is
logistics activities can now be carried out with a lithium-ion variant.
striving to steadily increase its share of the global material handling
STILL expanded its product range with new ride-on pallet trucks
market and to continue to have the highest profitability in the
and pallet stackers that will increase handling capacities. In addi-
industry. The other aims are to ensure the Group remains cri-
tion, it launched new picking trucks on the market and now also
sis-resistant and maintains an adequate return on capital
offers a broad portfolio of products featuring lithium-ion tech-
employed.
nology. In September, Dematic signed a global agreement with
the Norwegian warehouse systems provider AutoStore®, thereby
expanding its range of integrated omnichannel solutions with an
ultracompact goods-to-person warehouse order picking system.
Strategic fields of action in the “KION 2027”
strategy
Around the world, Dematic will be offering a system solution as
well as extensive services. Version 2.5, introduced in July 2017, of
“KION 2027” provides guidance on the strategic direction to be
the Dematic iQ software platform includes a new system solution
taken by the KION Group over the next decade. The strategy is
for material flow analysis.
aligned with the KION Group’s vision: “We are the best company
The steps taken to increase efficiency included, in particular,
in the world at understanding our customers’ material handling
the redesign of the plant structure at LMH in Aschaffenburg and
needs and providing the right solutions.” The KION Group is
the elimination of ramp-up problems at Dematic’s site in Monterrey,
much more than the sum of its brands and regions.
Mexico. Following the transfer of warehouse truck production to
At the core of the strategy lies the range of material handling
the Stříbro plant and the relocation of Linde Hydraulics, the focus
solutions offered to customers. The KION Group wants to evolve
in Aschaffenburg is now on electric forklift trucks and diesel
more towards being a solution provider in both segments. In the
Annual Report 2017 | KION GROUP AG COMBINED MANAGEMENT REPORT
Fundamentals of the KION Group
75
ITS segment, consultancy and project work are increasingly
being added to the traditional portfolio of products and services.
– Innovation: The KION Group is driving innovation in the material
handling market with an effective innovation ecosystem and
And in the SCS segment, the range of solutions for customers is
cutting-edge, rapid development processes. It is developing
being expanded through partnerships, such as with AutoStore®.
new technologies into innovative products for use in both
Five strategic fields of action have been defined for the
segments. To this end, it enters into strategic partnerships
“KION 2027” strategy:
– Energy: In the material handling market, the KION Group
wants to lead the way in terms of efficient energy use by its
products and solutions. Thanks in no small part to the high
with research institutes, universities and innovative compa-
nies so that it can go to market quickly with new products
and solutions.
– Performance: The KION Group is continually improving its
internal efficiency and the performance of its products from a
energy-efficiency of its premium brands’ products, the KION
customer perspective. It is continuing to fully leverage its
Group is a global market leader for electric forklift trucks and
synergies as a strategic management holding company.
warehouse trucks. A focus of the strategy will be to develop
and commercialise new energy sources for industrial trucks
and related services, such as the provision of advice on
energy matters.
– Digital: The KION Group will transform its business in an
increasingly digital world. The digitalisation of customer
solutions, which will even include fully automated ware-
houses incorporating robotics solutions, will be accompanied
by the digitalisation of internal processes. Digital solutions will
be developed for customers to improve the efficiency of their
intralogistics. The KION Group will digitalise its inhouse pro-
cesses so that they are more effective. It will not only integrate
software into solutions but also increasingly market it to
customers as a separate product. New internal organisa-
tional structures will enable the KION Group to cater to the
high expectations regarding the speed at which solutions are
created and adapted. This will pave the way for agile devel-
opment and embed it across the KION Group.
– Automation: The KION Group’s solutions will enable customers
to use automated technologies effectively and will help them
on their journey to a ‘lights-out’ warehouse. Today, the KION
Group and its two segments cover the complete spectrum,
from customers with just one forklift truck to those with fully
automated large-scale warehouses. It will develop different
solutions so that it can offer all customers a scalable automa-
tion solution that is suited to their particular requirements and
to which extra components can be added.
KION GROUP AG | Annual Report 2017
76
MANAGEMENT SYSTEM
Core key performance indicators
Earnings-related KPI
Adjusted EBIT
The key figure used for operational management and analysis of
the KION Group’s financial performance is adjusted earnings
before interest and tax (EBIT). It is calculated in the same way as
The KION Group’s strategy, which centres on value and growth, is
EBIT, except that it does not take account of purchase price
reflected in how the Company is managed. It uses five core key
allocation effects or any non-recurring items.
performance indicators (KPIs), which remained unchanged in the
reporting year, to continuously monitor market success, profita-
Liquidity-related KPI
bility, financial strength and liquidity. The performance targets of
the Group and the segments are based on selected financial KPIs,
Free cash flow
as is the performance-based remuneration paid to managers. As
Free cash flow is the main KPI for managing leverage and liquidity.
a rule, the KPIs are measured and made available to the Executive
It is determined by the KION Group’s operating activities and
Board in a comprehensive report each month. This enables the
investing activities. Free cash flow does not include interest
management team to take prompt corrective action in the event of
arising from financing activities. Carefully targeted management
variances compared with target figures. > TABLE 012
of working capital and detailed planning of capital expenditure are
KPIs related to business volume
Order intake and revenue
used to help in controlling the level of free cash flow.
Profitability-related KPI
Order intake and revenue are broken down by segment, region
ROCE
and product category in the KION Group’s management reporting
Return on capital employed (ROCE) is another core KPI. It is the
so that growth drivers and pertinent trends can be identified and
ratio of adjusted EBIT to capital employed. ROCE is measured
analysed at an early stage. Order intake is a leading indicator for
annually. > TABLE 013
revenue. The length of time between receipt and invoicing of an
order varies between business units and product groups.
Key performance indicators
in € million
Order intake
Revenue
Adjusted EBIT *
Free cash flow
2017
2016
2015
7,979.1
5,833.1
5,215.6
7,653.6
5,587.2
5,097.9
765.6
537.3
482.9
378.3
– 1,850.0
332.7
* Adjusted for PPA items and non-recurring items
TABLE 012
ROCE
9.9%
6.9%
11.9%
Annual Report 2017 | KION GROUP AG COMBINED MANAGEMENT REPORT
Fundamentals of the KION Group
77
Return on capital employed (ROCE)
in € million
Total assets
– less selected assets ¹
– less selected liabilities ²
Capital employed
Adjusted EBIT
ROCE
TABLE 013
2016
11,297.0
– 1,460.5
– 2,003.5
7,833.1
537.3
6.9%
2017
11,228.4
– 1,443.3
– 2,086.3
7,698.8
765.6
9.9%
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
Other key performance indicators
Besides the aforementioned core KPIs, the KION Group uses a
wealth of additional financial KPIs. The main ones are net debt,
which is used to manage the capital structure, and the EBIT
margin, 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, employees,
sustainability and technology. Some of them are used opera-
tionally as leading indicators for the financial KPIs.
The KPIs used to manage the segments are order intake,
revenue and adjusted EBIT.
KION GROUP AG | Annual Report 2017 78
Report on the economic position
MACROECONOMIC AND
SECTOR-SPECIFIC CONDITIONS
Overall, the growth of economies in the EU was markedly
higher than in the previous year but also broader and stronger.
Receding political risks – despite the UK’s approaching departure
from the EU – provided support for domestic demand. The EU
countries also benefited from the revival of global trade and the
Macroeconomic conditions
related increase in export business.
In the United States, economic growth was much faster
The global economy is experiencing an upturn and, in 2017,
than in 2016. This expansion was driven by a robust job market,
expanded at a much stronger rate than in previous years. Signifi-
rising consumer spending, corporate capital expenditure and
cant stimulus came from the economic recovery in the European
foreign trade.
Union (EU), robust growth in the United States and generally
China’s growth held steady at the prior-year level, sup-
resurgent expansion in emerging markets. The world’s economy
ported by an increase in public-sector investment. The inhibit-
was also boosted by increasing investment activity and the
ing effect on growth of the continued sharp rise in debt levels
growth of foreign trade in Asia. This in turn benefited global trade,
was more than offset by the country’s expansionary economic
which boomed. Demand from consumers remained robust,
policy. > DIAGRAM 004
which also had a positive effect.
Gross domestic product in 2017 – real year-on-year change
DIAGRAM 004
6.8%
6.2%
CHINA
INDIA
WORLD
GERMANY
EU
USA
JAPAN
RUSSIA
BRAZIL
3.0%
2.5%
2.4%
2.3%
1.8%
1.6%
1.1%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
Source: Oxford Economics (as at 16/01/2018)
Annual Report 2017 | KION GROUP AG COMBINED MANAGEMENT REPORT
Report on the economic position
79
Sectoral conditions
14.3 per cent) and warehouse trucks (up by 16.8 per cent) were
also into double digits.
The global material handling market, which comprises industrial
At 9.7 per cent, the rate of growth in western Europe was
trucks and supply chain solutions, again grew at a faster rate
down slightly on the previous year, although this remains a
than the global economy in 2017. The main driving forces,
fast-moving and by far the biggest market for warehouse trucks.
besides the worldwide rise in the trade of goods, were growing
In eastern Europe, orders were up by 21.6 per cent, which was
demand for industrial trucks in China and the automation of
roughly the same as the growth rate in 2016. Overall, the EMEA
warehousing and logistics combined with an increasing volume
region (western Europe, eastern Europe, Middle East and Africa)
of warehouse capacity.
generated growth of 11.1 per cent. The Americas region (North,
Central and South America) recovered in the year under review,
Industrial Trucks & Services
having been subdued in the previous year, and saw a rise of
12.3 per cent; while North America recorded generally good
Measured in terms of the number of new trucks ordered, the
growth of 10.2 per cent, catch-up effects meant that Central and
global market for industrial trucks expanded at the exceptionally
South America generated a disproportionately strong increase of
strong rate of 17.9 per cent in 2017, compared with 7.5 per cent in
29.8 per cent. Brazil, the largest individual market in South Amer-
the previous year. Orders were up across all product categories
ica, expanded by 45.4 per cent. Boosted by the marked rise in
and sales regions, reaching a total of 1.4 million trucks. IC trucks
China, Asia-Pacific as a whole (APAC region) was the fast-
made a particularly strong gain (up by 20.8 per cent), primarily
est-growing region worldwide with an increase in orders of
driven by significant growth of over 30 per cent in the Chinese
28.5 per cent. The share of the overall market accounted for by
market. The rates of increase for electric forklift trucks (up by
this region rose from 37.5 per cent to 40.9 per cent. > TABLE 014
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
2017
395.5
78.4
36.4
277.7
37.7
571.4
2016
360.6
64.5
34.3
251.9
29.0
444.8
1,397.2
1,185.2
TABLE 014
Change
9.7%
21.6%
6.1%
10.2%
29.8%
28.5%
17.9%
KION GROUP AG | Annual Report 2017 80
Supply Chain Solutions
Procurement markets
The market for supply chain solutions also sustained its growth
On the whole, prices for the commodities used by the KION Group
trend in 2017 thanks again to customers reconfiguring their
rose sharply over the course of 2017. The average price of steel,
logistics processes and supply chains. According to a survey by
the most important commodity, was far higher in the reporting
the Peerless Research Group, multichannel approaches and
year than in 2016. Copper became more expensive too. The oil
e-commerce continued to gain ground in all kinds of industries,
price rallied significantly, also rising a long way above the average
resulting in higher requirements regarding the speed and precision
for 2016. Following a sharp price increase in the first half of the
with which warehouses and distribution centres can be managed.
year, the amount spent on rubber in 2017 was higher than in the
The survey found that capital expenditure on enlarging and mod-
previous year.
ernising warehouses and on the related technologies was expected
to increase by around 9 per cent in 2017. There was also greater
use of warehouse management systems than in 2016.
Financial markets
The Ecommerce Foundation’s outlook for the global e-com-
merce market (B2C) anticipated growth of 17 per cent in 2017.
The KION Group bills a large part of its revenue in euros. However,
Improved internet access and increased use of social media for
the consolidation of Dematic – which generates a high volume of
buying goods are contributing to this trend. Of the total market
revenue in North America – for the whole of the year meant that
volume, around 50 per cent is attributable to the APAC region.
the proportion of revenue billed in euros fell significantly, from
This region includes China, which is the world’s largest individual
60.8 per cent to 52.0 per cent. The remaining 48.0 per cent of
market and also leads the way in terms of mobile e-commerce.
revenue was billed in foreign currencies, the most important of
The Logistics and Real Estate series of studies published by
which for the KION Group were the US dollar, China’s renminbi
bulwiengesa AG shows that demand for logistics premises in
and pound sterling.
Germany remained high last year, with construction activity and
Overall, currency effects had a negative impact on the KION
capital expenditure reaching record levels. According to the
Group’s business situation in 2017. Compared with 2016, the
study, there was 12 per cent more logistics space in 2017 than in
euro was approximately 4 per cent higher on average against the
the previous year. Demand for space rose at a similar rate in
Chinese renminbi and around 7 per cent higher against pound
China and the United States, driven mainly by the steady increase
sterling. Against the US dollar, the euro appreciated by roughly
in e-commerce.
2 per cent. > TABLE 015
Currencies
Average rate per Euro
Australia (AUD)
Brazil (BRL)
China (CNY)
United Kingdom (GBP)
USA (USD)
Source: Reuters/Bloomberg
TABLE 015
2016
1.49
3.86
7.35
0.82
1.11
2017
1.47
3.61
7.63
0.88
1.13
Annual Report 2017 | KION GROUP AG COMBINED MANAGEMENT REPORT
Report on the economic position
81
Business performance
By the end of 2017, tranche A2 (€343.2 million) and tranche B
(€1,200.0 million) of the bridge loan and the fixed-term tranche
In 2017, the main focus was on integrating the Dematic subsidi-
(€350.0 million) of the senior facilities agreement (SFA) had been
aries acquired and on utilising shared potential for increasing
repaid in full. The long-term tranche (€1,000.0 million) of the bridge
revenue and efficiency. The SCS segment optimised its organi-
loan is still outstanding and is due to mature in October 2021.
sational structure by merging Egemin Automation into Dematic.
At the end of 2017, the lowering of the corporate income tax
This will predominantly result in cost benefits for administration
rate that was approved in the United States led to the non-cash
and customer management going forward. Retrotech Inc. was
remeasurement of the KION Group’s deferred tax assets and
also integrated into Dematic North America’s customer service
liabilities. As a result, the KION Group’s income tax position
organisation, thereby expanding the aftersales business. An
and thus its net income unexpectedly improved by a total of
action plan to pool procurement activities was also initiated, and
€92.2 million.
this should have an impact on costs in 2018. Originating from
the period before the acquisition, the inefficiencies at the plant
in Monterrey, Mexico, were completely eliminated in 2017. Work
has been taking place since March of last year to extend the
Stříbro site to include a factory for automated conveyor sys-
tems. The new factory is due to start manufacturing modules for
Dematic’s automated storage and retrieval systems for the
European market in 2018.
FINANCIAL POSITION AND FINANCIAL
PERFORMANCE OF THE KION GROUP
The bridge loan (acquisition facilities agreement, AFA)
Overall assessment of the economic situation
agreed between the KION Group and its core group of banks
for the acquisition of Dematic originally had a volume of
The KION Group finished 2017 with strong growth, achieving the
€3,000.0 million and was drawn down in an amount of
targets set in October for its KPIs. The figures for 2016 in the
€2,543.2 million. In the first quarter of 2017, it was then partly
income statement include the contributions from Dematic in
refinanced by successfully placing a promissory note with a
November and December, the period in which it was consoli-
total volume of €1,010.0 million. This note, which has a signifi-
dated for the first time. The comparability between the full-year
cantly extended maturity profile, is divided into several tranches
figures for 2016 and 2017 is therefore limited.
that have maturity periods of five, seven and ten years and have
Following a strong fourth quarter, order intake for the
fixed or floating-rate coupons. The capital increase in the second
KION Group as a whole amounted to €7,979.1 million (2016:
quarter of 2017 was another important refinancing measure.
€5,833.1 million) despite negative currency effects and was
This involved KION GROUP AG issuing a total of 9,300,000 new
predominantly attributable to encouraging growth in the new
shares at a placement price of €64.83 per share on 22 May 2017.
truck business. Moreover, Dematic’s customer orders were
All of the new shares were placed with institutional investors
included for the full financial year for the first time. The order book
against cash contributions in an accelerated bookbuilding
expanded by 9.1 per cent year on year to reach €2,614.6 million
process; shareholders’ pre-emption rights were disapplied.
at the end of the year (31 December 2016: €2,396.6 million).
KION GROUP AG’s share capital rose by 8.55 per cent in total.
Despite negative currency effects, the KION Group generated
The gross proceeds from the capital increase came to
consolidated revenue of €7,653.6 million. This was due not only to
€602.9 million. The Company’s new no-par-value bearer shares
higher unit sales but also to the growth of the service business in
are dividend-bearing from the 2017 financial year.
Industrial Trucks & Services.
KION GROUP AG | Annual Report 2017 82
Total revenue in the Industrial Trucks & Services segment went up
than the targets set in 2016. The revised target ranges were
by 8.2 per cent to €5,630.9 million, with order intake rising by
achieved or slightly exceeded.
8.8 per cent.
The KION Group’s order intake of €7,979.1 million was slightly
While the year-on-year increase in the value of order intake
above the upper end of the range of €7,550 million to €7,900 million
and revenue in the Industrial Trucks & Services segment was
(2016 outlook: €7,800 million to €8,250 million). Consolidated
stronger than anticipated, order intake and revenue in the Supply
revenue came to €7,653.6 million, compared with the expected
Chain Solutions segment were less than originally expected.
target range of €7,400 million to €7,700 million (2016 outlook:
The reasons for this were the reluctance to invest observed in the
€7,500 million to €7,950 million). At €765.6 million, adjusted EBIT
US retail sector and delays by customers in awarding projects.
was also in line with the revised expectation of between €715 million
The segment’s total revenue amounted to €2,006.3 million.
and €765 million (2016 outlook: €740 million to €800 million). Free
Adjusted for non-recurring items and purchase price allocation
cash flow, which stood at €378.3 million, came in at the upper
effects, the KION Group’s EBIT came to €765.6 million. This
end of the range of €320 million to €380 million (2016 outlook:
improvement of €228.3 million was due, in particular, to the
€370 million to €430 million), while ROCE at 9.9 per cent was
inclusion of Dematic for the full year. Significantly higher prices
within the target range of 9.0 per cent to 10.0 per cent (2016 out-
for materials adversely affected the KION Group’s adjusted
look: 9.5 per cent to 10.5 per cent).
EBIT and could not be passed on to customers entirely. Despite
The Industrial Trucks & Services segment slightly exceeded
the higher cost of materials and negative currency effects, the
the raised targets for order intake and revenue and the target for
KION Group’s adjusted EBIT margin improved substantially, by
adjusted EBIT, while the results of the Supply Chain Solutions
0.4 percentage points, to 10.0 per cent. After taking into account
segment were within the new target ranges. > TABLES 016 – 017
purchase price allocation (PPA) effects and further non-recurring
items, EBIT amounted to €549.4 million.
In total, the KION Group generated net income of €426.4 million
(2016: €246.1 million). This included positive overall effects on
taxes resulting from the remeasurement of deferred taxes in con-
Business situation and financial performance
of the KION Group
nection with the lowering of corporate income tax in the United
Level of orders
States that was approved just before the end of the year. The
basic earnings per share attributable to the shareholders of the
Despite the depreciation of currencies such as the renminbi, US
KION Group amounted to €3.72, compared with €2.38 in 2016.
dollar and pound sterling against the euro, the KION Group’s
KION GROUP AG will propose a dividend of €0.99 per share to
order intake rose by 36.8 per cent to €7,979.1 million. Whereas
the Annual General Meeting (2016: €0.80 per share).
the performance of the Industrial Trucks & Services segment
exceeded expectations, Dematic’s project business was more
subdued. The order book expanded by 9.1 per cent year on year
to €2,614.6 million (31 December 2016: €2,396.6 million). By the
end of the year, substantial customer orders had been placed,
especially in the long-term project business.
Comparison between actual and
forecast growth
The targets for the KION Group’s core KPIs set out in the 2016
outlook were revised downward overall in October 2017 because
the Supply Chain Solutions segment was not performing as well
as expected. At the same time, all of the targets of the Industrial
Trucks & Services segment except adjusted EBIT were revised
upward because the actual results were expected to be higher
Annual Report 2017 | KION GROUP AG COMBINED MANAGEMENT REPORT
Report on the economic position
83
Comparison between actual and forecast growth – KION Group
TABLE 016
in € million
Order intake
Revenue
Adjusted EBIT
Free cash flow
ROCE
KION Group
2017
Outlook
2017 Outlook
adjusted
7,800 – 8,250
7,550 – 7,900
7,500 – 7,950
7,400 – 7,700
740 – 800
370 – 430
715 – 765
320 – 380
9.5% – 10.5%
9.0% – 10.0%
2017
Actual
7,979.1
7,653.6
765.6
378.3
9.9%
Comparison between actual and forecast growth – segments
TABLE 017
Industrial Trucks & Services
Supply Chain Solutions
in € million
2017
Outlook
2017 Outlook
adjusted
Order intake *
5,450 – 5,600
5,650 – 5,800
Revenue *
Adjusted EBIT
5,300 – 5,450
5,450 – 5,600
605 – 630
605 – 630
2017
Actual
5,859.5
5,630.9
640.1
2017
Outlook
2017 Outlook
adjusted
2,350 – 2,650
1,900 – 2,100
2,200 – 2,500
1,950 – 2,100
195 – 230
170 – 195
2017
Actual
2,099.2
2,006.3
181.4
* Disclosures for the segments Industrial Trucks & Services and Supply Chain Solutions include also intra-group cross-segment order intake and revenue (Total revenue)
The consolidated revenue of the KION Group increased by
37.0 per cent to €7,653.6 million (2016: €5,587.2 million). This
significant rise in revenue was attributable to organic revenue
growth in the Industrial Trucks & Services segment and to the
inclusion of Dematic in the Supply Chain Solutions segment for
the full reporting period. The proportion of consolidated revenue
accounted for by services fell from 43.7 per cent in 2016 to
39.1 per cent in 2017 because customer orders in the project
business routinely have a high value while the value of the service
business is significantly lower. > TABLE 018
KION GROUP AG | Annual Report 2017 84
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
2017
5,626.9
3,126.0
2,500.9
1,429.5
619.3
306.6
145.5
2,001.8
1,509.1
492.7
24.8
7,653.6
2016
5,200.5
2,860.2
2,340.2
1,363.8
558.3
285.8
132.4
364.7
263.9
100.7
22.1
5,587.2
TABLE 018
Change
8.2%
9.3%
6.9%
4.8%
10.9%
7.3%
9.9%
> 100%
> 100%
> 100%
12.5%
37.0%
Revenue by customer location
Earnings and profitability
In EMEA, an important sales region for the Industrial Trucks &
EBIT, EBITDA and ROCE
Services segment, the KION Group’s revenue went up by around
Earnings before interest and tax (EBIT) amounted to €549.4 million,
17 per cent. The rise in western Europe was 16.2 per cent, with
up by 26.3 per cent on the 2016 figure of €434.8 million. EBIT
Germany, France, Italy and Spain seeing particularly large
included negative effects from purchase price allocations of
increases. On the whole, the KION Group kept pace with the
€176.2 million (2016: €60.4 million). In 2017, EBIT was also
growth of the industrial truck market and consolidated its leading
adversely affected by non-recurring items of €40.1 million (2016:
position in this region. The significant double-digit revenue growth
€42.2 million) that arose mainly in connection with the integration
in the Asia-Pacific (APAC) region was primarily attributable to the
of Dematic and the start-up costs for the new plant in Monterrey,
strong expansion of the Chinese market, which particularly bene-
Mexico. The non-recurring items in 2016 had included transac-
fited the Industrial Trucks & Services segment. In the Americas
tion costs relating to the acquisition of Dematic. EBIT adjusted for
region (North, Central and South America), market share in the
non-recurring items and purchase price allocation effects
new truck business increased – especially in North America. The
(adjusted EBIT) rose to €765.6 million (2016: €537.3 million). The
sharp year-on-year rise in revenue in the Asia-Pacific and
adjusted EBIT margin improved to 10.0 per cent (2016:
Americas sales regions was influenced by the inclusion of
9.6 per cent). > TABLE 020
Dematic for the whole of 2017. Overall, 20.6 per cent of consoli-
dated revenue was accounted for by growth markets in the
reporting period (2016: 23.3 per cent). The majority of revenue –
81.4 per cent – was generated outside Germany (2016:
76.4 per cent). > TABLE 019
Annual Report 2017 | KION GROUP AG COMBINED MANAGEMENT REPORT
Report on the economic position
85
2017
4,627.8
537.9
152.9
1,266.5
163.1
905.5
7,653.6
2017
549.4
40.1
176.2
765.6
2016
3,982.7
459.6
100.3
295.9
148.6
600.1
5,587.2
2016
434.8
42.2
60.4
537.3
TABLE 019
Change
16.2%
17.0%
52.4%
> 100%
9.8%
50.9%
37.0%
TABLE 020
Change
26.3%
– 4.9%
> 100%
42.5%
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
EBIT
in € million
EBIT
+ Non-recurring items
+ PPA items
Adjusted EBIT
Return on capital employed (ROCE) increased by 3 percentage
points year on year to 9.9 per cent in 2017. This improvement was
due to the fact that Dematic’s earnings contributions had only
been included for the months of November and December in
2016. While adjusted EBIT went up sharply, there was only a small
countervailing change in capital employed.
EBITDA rose to €1,185.7 million (2016: €889.5 million).
Adjusted EBITDA came to €1,223.9 million (2016: €931.6 million).
The adjusted EBITDA margin decreased from 16.7 per cent in
2016 to 16.0 per cent in 2017. > TABLE 021
KION GROUP AG | Annual Report 2017 86
EBITDA
in € million
EBITDA
+ Non-recurring items
+ PPA items
Adjusted EBITDA
2017
1,185.7
36.4
1.8
1,223.9
2016
889.5
42.2
–
931.6
TABLE 021
Change
33.3%
– 13.7%
−
31.4%
Key influencing factors for earnings
revenue. The prior-year figure had been influenced by various
The cost of sales rose by 41.3 per cent to €5,699.1 million (2016:
factors, including consultancy expenses in connection with the
€4,034.6 million), a disproportionately strong increase compared
Dematic acquisition. Research and development costs went up
with that of revenue. Higher prices for materials, particularly steel
by 41.9 per cent to €137.0 million (2016: €96.5 million). The ‘other’
and lead, pushed up the cost of sales in the new truck business
item came to €18.2 million (2016: €52.3 million). This included the
significantly. Negative currency effects – especially relating to
share of profit (loss) of equity-accounted investments, which
pound sterling, the renminbi and the US dollar – also squeezed
amounted to a profit of €13.6 million (2016: profit of €6.5 million),
the gross margin. The gross margin for the Group as a whole
as well as gains and losses from exchange differences. The figure
contracted from 27.8 per cent in 2016 to 25.5 per cent in the year
for the ‘other’ item also comprised impairment losses on assets
under review. Selling expenses and administrative expenses
of €14.8 million (2016: €0.0 million), of which €8.6 million related to
totalled €1,286.3 million (2016: €1,073.6 million). This increase of
the Egemin brand name. > TABLE 022
19.8 per cent was disproportionately small compared with that of
(Condensed) income statement
in € million
Revenue
Cost of sales
Gross profit
Selling expenses and administrative expenses
Research and development costs
Other
Earnings before interest and taxes (EBIT)
Net financial expenses
Earnings before taxes
Income taxes
Net income
2017
7,653.6
– 5,699.1
1,954.5
– 1,286.3
– 137.0
18.2
549.4
– 81.1
468.3
– 41.9
426.4
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
TABLE 022
Change
37.0%
– 41.3%
25.9%
– 19.8%
– 41.9%
– 65.2%
26.3%
15.3%
38.1%
55.0%
73.3%
Annual Report 2017 | KION GROUP AG COMBINED MANAGEMENT REPORT
Report on the economic position
87
Net financial income / expenses
The Executive Board and the Supervisory Board will propose
The net financial expenses representing the balance of financial
to the Annual General Meeting to be held on 9 May 2018 that, of
income and financial expenses decreased to €81.1 million year on
the distributable profit of KION GROUP AG for the 2017 financial
year (2016: net financial expenses of €95.7 million). The prior-year
year amounting to €168.1 million, a dividend totalling €116.7 mil-
figure had included one-off financial expenses of €25.7 million
lion be distributed. This equates to €0.99 per dividend-bearing
incurred in connection with optimisation of the financing structure
share. It is also proposed that a sum of €51.2 million be trans-
in February 2016. Overall, current interest expense on borrowing
ferred to other revenue reserves and that €0.1 million be carried
increased year on year due to the acquisition of Dematic, but
forward to the next accounting period. This would give a dividend
exchange differences had a countervailing positive impact on net
payout rate of approximately 35 per cent of adjusted net income.
financial income/expenses. As a result of the early repayment of
financial liabilities, transaction costs of €3.5 million were recog-
nised as expenses in 2017.
Income taxes
Business situation and financial performance
of the segments
Income tax expenses fell sharply to €41.9 million (2016: €93.1 mil-
Industrial Trucks & Services segment
lion). The low tax rate of 8.9 per cent is attributable to the
reduction of the corporate income tax rate from 35.0 per cent to
Business performance and order intake
21.0 per cent that was approved in the United States. The
The Industrial Trucks & Services segment expanded its new truck
remeasurement of deferred tax liabilities, which relate mainly to
business in all sales regions. Across all the brand companies, the
the purchase price allocation for Dematic, led to deferred tax
number of orders for forklift trucks and warehouse trucks rose by
income of €92.2 million in the Group. Adjusted for this non-recurring
13.0 per cent to 201.4 thousand. The Linde brand (including Fen-
tax item, the tax rate was comparable with the previous year at
wick) registered a slightly higher increase and accounted for
28.6 per cent (2016: 27.4 per cent).
61.6 per cent of the new truck business. STILL (including OM
STILL) generated 31.7 per cent of new orders; the remaining
Net income and appropriation of profit
6.7 per cent was attributable to the Baoli and OM Voltas brands.
Net income increased by €180.4 million to €426.4 million (2016:
All product categories saw their orders go up significantly, with IC
€246.1 million). The net income attributable to the shareholders of
trucks more than making up for their decline in the previous year.
KION GROUP AG was €424.8 million (2016: €245.5 million). Basic
Electric forklift trucks and warehouse trucks, which are particu-
earnings per share came to €3.72 based on 114.3 million (2016:
larly important elements in integrated supply chain solutions,
103.2 million) no-par-value shares; this was the weighted average
together accounted for 82.1 per cent of the order volume.
number of shares outstanding during the reporting year. Adjusted
All the brand companies saw particularly strong increases in
for the non-recurring tax item of €92.2 million included in net
the APAC and EMEA regions. Eastern Europe stood out within
income, basic earnings per share (pro forma) on a comparable
the EMEA region, with Poland, Russia and the Czech Republic
basis with the previous year stood at €2.91 (2016: €2.38). Diluted
being the main contributors. In western Europe, the biggest rises
earnings per share, which is calculated by adding the potential
in order numbers were registered in France and Italy. The KION
dilutive no-par-value shares under the employee share option
Group returned to a path of growth in South and Central America,
programme, amounted to €3.71 based on a weighted average
having reported decreases in 2016. The largest percentage
number of shares of 114.4 million (2016: 103.3 million) and €2.91
increase was in North America, although the region remained at
on a pro-forma basis (2016: €2.38). These calculations did not
a moderate level in absolute terms.
include around 160.8 thousand no-par-value treasury shares that
were repurchased by KION GROUP AG as part of a buy-back to
support employee equity programmes.
KION GROUP AG | Annual Report 2017 88
The total value of order intake rose by 8.8 per cent to €5,859.5 mil-
(2016: €586.9 million). At 11.4 per cent, the adjusted EBIT margin
lion (2016: €5,383.2 million) despite negative currency effects.
was moderately above its 2016 level of 11.3 per cent. After taking
This included an increase in order intake in the service business.
into account non-recurring items and purchase price allocation
Revenue
effects, EBIT amounted to €637.6 million (2016: €553.0 million).
Adjusted EBITDA stood at €1,054.1 million (2016: €958.8 mil-
Total segment revenue went up by 8.2 per cent to €5,630.9 mil-
lion). This equated to an adjusted EBITDA margin of 18.7 per cent
lion (2016: €5,202.6 million). Revenue from new truck business
(2016: 18.4 per cent). > TABLE 023
with external customers rose by 9.3 per cent or €265.8 million to
€3,126.0 million, while the growth in the service business was
Supply Chain Solutions segment
also encouraging at 6.9 per cent. Aftersales and rental business
generated 81.9 per cent of the total revenue from the service
Business performance and order intake
business of €2,500.9 million. The proportion of the segment’s
In 2017, the Supply Chain Solutions segment received orders
external revenue accounted for by the service business came to
from customers with a total volume of €2,099.2 million (2016:
44.4 per cent overall and was thus virtually the same as the
€431.2 million, including Dematic for two months). Around
prior-year figure of 45.0 per cent.
75 per cent of order intake was accounted for by project business
Earnings
(business solutions) and around 25 per cent by the service busi-
ness (customer services). Following muted intake in the first three
Despite the significantly higher prices for materials, particularly
quarters of the year, a number of delayed customer projects were
steel and lead, and negative exchange rate effects, especially
eventually officially placed with Dematic at the end of the year.
in connection with pound sterling, the positive revenue trend
Approximately a third of order intake was received in the fourth
pushed up adjusted EBIT by 9.1 per cent to €640.1 million
quarter of 2017.
Key figures – Industrial Trucks & Services –
in € million
Order intake
Total revenue
EBITDA
Adjusted EBITDA
EBIT
Adjusted EBIT
Adjusted EBITDA margin
Adjusted EBIT margin
2017
5,859.5
5,630.9
1,052.5
1,054.1
637.6
640.1
18.7%
11.4%
2016
5,383.2
5,202.6
953.4
958.8
553.0
586.9
18.4%
11.3%
TABLE 023
Change
8.8%
8.2%
10.4%
9.9%
15.3%
9.1%
–
–
Annual Report 2017 | KION GROUP AG
COMBINED MANAGEMENT REPORT
Report on the economic position
89
Key figures – Supply Chain Solutions –
in € million
Order intake
Total revenue
EBITDA
Adjusted EBITDA
EBIT
Adjusted EBIT
Adjusted EBITDA margin
Adjusted EBIT margin
2017
2,099.2
2,006.3
182.3
210.3
– 23.8
181.4
10.5%
9.0%
2016
431.2
366.0
5.1
10.8
– 31.7
6.0
3.0%
1.6%
TABLE 024
Change
> 100%
> 100%
> 100%
> 100%
24.7%
> 100%
–
–
Revenue
Corporate Services segment
Total segment revenue amounted to €2,006.3 million (2016:
€366.0 million, including Dematic for two months). Project
Business performance
business accounted for 75.4 per cent of external revenue and
The Corporate Services segment comprises holding companies
the service business for 24.6 per cent. Improved efficiency at
and other service companies that provide services such as IT
the plant in Monterrey, Mexico, resulted in a year-on-year
and logistics across all segments.
increase in output, leading to a higher level of revenue from
business solutions. The segment generated 56.9 per cent of
Revenue and earnings
its revenue in North America.
Total segment revenue came to €266.6 million (2016: €242.0 mil-
lion) and was predominantly derived from internal IT and logis-
Earnings
tics services.
The segment’s adjusted EBIT amounted to €181.4 million
The segment reported adjusted EBIT of €530.7 million (2016:
(2016: €6.0 million, including Dematic for two months), giving
€305.9 million). This significant increase was attributable to the
an adjusted EBIT margin of 9.0 per cent (2016: 1.6 per cent).
strong financial performance of the subsidiaries, which resulted in
Currency effects and higher cost prices for materials had an
higher intra-group dividend income (including profit and loss
adverse impact. After taking into account non-recurring items
transfers) than in the previous year. Adjusted EBITDA amounted
and purchase price allocation effects, EBIT came to minus
to €546.0 million (2016: €323.5 million). > TABLE 025
€23.8 million (2016: minus €31.7 million).
Adjusted EBITDA amounted to €210.3 million with an
adjusted EBITDA margin of 10.5 per cent (2016: 3.0 per cent).
> TABLE 024
KION GROUP AG | Annual Report 2017 90
Key figures – Corporate Services –
in € million
Order intake
Total revenue
EBITDA
Adjusted EBITDA
EBIT
Adjusted EBIT
2017
266.6
266.6
537.5
546.0
522.2
530.7
2016
242.0
242.0
292.5
323.5
274.9
305.9
TABLE 025
Change
10.2%
10.2%
83.8%
68.8%
90.0%
73.5%
Consolidation / reconciliation
particularly impacted on goodwill, which fell by €190.4 million to
€3,382.5 million. The sharp drop in other intangible assets to
Besides the intra-group supply relationships between the Indus-
€2,333.9 million (31 December 2016: €2,602.7 million) was
trial Trucks & Services, Supply Chain Solutions and Corporate
largely attributable to current write-downs in connection with
Services segments, the main factor in the adjusted EBIT effect
the purchase price allocations, especially in the Supply Chain
of minus €586.5 million (2016: minus €361.5 million) across all
Solutions segment.
segments was the intra-group dividend income.
Rental assets increased to €651.4 million, reflecting the
Net assets
continued expansion of the rental fleet in the Industrial Trucks &
Services segment (31 December 2016: €575.3 million). Leased
assets for leases with end customers that are classified as oper-
ating leases also increased owing to the higher volume of busi-
The purchase price allocation (PPA) for the acquisition of Dematic
ness, rising from €429.7 million to €522.3 million as at 31 Decem-
was finalised in the reporting year, leading to the retrospective
ber 2017. Long-term lease receivables arising from leases with
restatement of the carrying amounts as at 31 December 2016.
end customers that are classified as finance leases swelled to
Currency translation effects as at the end of 2016 fell by a total
€647.8 million (31 December 2016: €531.3 million).
of €39.4 million because goodwill and other intangible assets
At €370.5 million, the amount of deferred tax assets recog-
had been allocated to individual companies for the purposes of
nised in the statement of financial position as at the reporting date
foreign currency translation. The finalisation of the PPA in 2017
was lower than the figure recognised at the end of 2016 of
resulted in a reduction of deferred tax assets and liabilities and a
€419.8 million. Further details regarding the change in deferred
corresponding decline of €13.1 million in goodwill retrospectively
tax assets are provided in note [14] in the notes to the consoli-
in the prior year.
Non-current assets
dated financial statements.
Non-current assets decreased to €8,746.9 million as at the
reporting date (31 December 2016: €8,942.4 million). Intangible
assets accounted for €5,716.4 million (31 December 2016:
€6,175.6 million). The depreciation of the US dollar against the euro
Annual Report 2017 | KION GROUP AG COMBINED MANAGEMENT REPORT
Report on the economic position
91
Current assets
in the project business with a net credit balance due from cus-
tomers amounted to €94.7 million as at the reporting date, which
Overall, current assets rose by 5.4 per cent to €2,481.5 million
was virtually unchanged on the amount as at 31 December 2016.
(31 December 2016: €2,354.6 million). The €96.2 million increase
The KION Group’s net working capital, which comprises
in inventories to €768.6 million (31 December 2016: €672.4 mil-
inventories, trade receivables and unbilled construction contracts
lion) was largely attributable to the growth of the Industrial Trucks &
(net) less trade payables and advances received, increased to
Services segment.
€606.2 million as at the reporting date (31 December 2016:
Trade receivables were also up, rising by 9.5 per cent to
€495.9 million). > TABLE 026
€1,094.1 million as at 31 December 2017. Construction contracts
Inventories
in € million
Materials and supplies
Work in progress
Finished goods and merchandise
Advances paid
Total inventories
2017
185.2
109.0
459.0
15.4
768.6
2016
158.0
105.3
396.5
12.6
672.4
TABLE 026
Change
17.2%
3.5%
15.8%
21.9%
14.3%
The groupwide optimisation of cash management (cash pooling)
The condensed consolidated statement of financial position
enabled cash and cash equivalents to be reduced to €173.2 million
as at 31 December 2017 showing current and non-current assets
as at 31 December 2017 (31 December 2016: €279.6 million).
and liabilities together with equity is presented in > TABLE 027.
Current lease receivables from end customers increased by
€27.7 million year on year to €228.0 million (31 December 2016:
€200.3 million).
KION GROUP AG | Annual Report 2017 92
(Condensed) statement of financial position
in € million
Non-current assets *
Current assets
Total assets *
Equity*
Non-current liabilities *
Current liabilities
Total equity and liabilities *
2017
8,746.9
2,481.5
11,228.4
3,148.8
5,230.0
2,849.6
11,228.4
in %
77.9%
22.1%
–
28.0%
46.6%
25.4%
–
2016
8,942.4
2,354.6
11,297.0
2,495.7
6,128.9
2,672.5
11,297.0
in %
79.2%
20.8%
–
22.1%
54.3%
23.7%
–
* Prior-year figures were adjusted due to retrospective changes of the purchase price allocation (PPA) for Dematic
TABLE 027
Change
– 2.2%
5.4%
– 0.6%
26.2%
– 14.7%
6.6%
– 0.6%
Financial position
The KION Group is a publicly listed corporate group and
therefore ensures that its financial management takes into
Principles and objectives of financial management
account the interests of shareholders, promissory note investors
and the banks providing its funding. For the sake of all stakehold-
The KION Group pursues a conservative financial policy of main-
ers, the KION Group makes sure that it maintains an appropriate
taining a strong credit profile with reliable access to debt capital
ratio of internal funding to borrowing. The KION Group’s borrow-
markets. By pursuing an appropriate financial management strat-
ing is based on a long-term approach. The individual tranches
egy, the KION Group makes sufficient cash and cash equivalents
of this borrowing will become due for repayment in the years
available at all times to meet the Group companies’ operational
2021 to 2027.
and strategic funding requirements. In addition, the KION Group
Depending on requirements and the market situation, the
optimises its financial relationships with customers and suppliers
KION Group will also avail itself of the funding facilities offered by
and mitigates the financial risk to its enterprise value and profita-
the public capital markets in future. The KION Group therefore
bility, notably currency risk, interest-rate risk, price risk, counter-
seeks to maintain an investment-grade credit rating in the capital
party risk and country risk. In this way, the KION Group creates a
and funding markets by rigorously pursuing a value-based strat-
stable funding position from which to maintain profitable growth.
egy, implementing proactive risk management and ensuring a
The financial resources within the KION Group are provided on
solid funding structure. Since September 2017, rating agency
the basis of an internal funding approach. The KION Group collects
Standard & Poor’s has classified the KION Group as BB+ with a
liquidity surpluses of the Group companies in central or regional
positive outlook, while the rating from Fitch Ratings has been
cash pools and, where possible, covers subsidiaries’ funding
BBB– with a stable outlook since January 2017. The KION Group
requirements with intercompany loans. This funding enables the
thus has an investment-grade credit rating, helping it to secure
KION Group to present a united front in the capital markets and
more advantageous funding conditions in the capital markets.
strengthens its hand in negotiations with banks and other market
The KION Group maintains a liquidity reserve in the form of
participants. The Group occasionally arranges additional credit
unrestricted, agreed and confirmed credit lines and cash in order
lines for KION Group companies with local banks or leasing
to ensure long-term financial flexibility and solvency. In addition, it
companies in order to comply with legal, tax and other regulations.
uses derivatives to hedge currency risk. It also entered into
Annual Report 2017 | KION GROUP AG COMBINED MANAGEMENT REPORT
Report on the economic position
93
interest- rate swaps in 2017 in order to hedge interest-rate risk
Analysis of capital structure
arising on floating-rate financial liabilities.
Among other stipulations, the contractual terms of the senior
Current and non-current liabilities fell by €721.7 million to
facilities agreement (SFA), bridge loan (AFA) and promissory
€8,079.6 million as at the reporting date (31 December 2016:
note set out certain covenants. In addition, there is a financial
€8,801.3 million). The main reason was the repayment of
covenant that involves ongoing testing of adherence to a defined
non-current liabilities following the corporate actions carried out
maximum level of leverage (the ratio of financial liabilities to
in the year under review. Non-current liabilities also included
EBITDA). Non-compliance with the covenants or with the defined
deferred tax liabilities of €665.2 million, which were down signifi-
maximum level of leverage as at a particular reporting date may
cantly compared with the end of the previous year (31 December
potentially give lenders a right of termination or lead to an increase
2016: €882.5 million) owing to the lowering of the corporate
in interest payments.
income tax rate that was approved in the United States. This,
All covenants were complied with in the past financial year, as
combined with the netting of deferred tax assets, reduced the
had been the case in 2016.
deferred tax liabilities by €92.2 million. Deferred tax assets and
liabilities also decreased by €13.1 million owing to the Dematic
Main corporate actions in the reporting period
purchase price allocation being finalised. > TABLE 027
The bridge loan (AFA) agreed for the acquisition of Dematic,
Financial debt
which was still drawn down in an amount of €2,543.2 million at
By using the proceeds from the capital increase carried out in
the end of 2016, was significantly reduced in 2017 as a result of
May 2017 and making other repayments, the KION Group
the successful placement of a promissory note with a nominal
reduced its current and non-current financial liabilities to
amount of €1,010.0 million in the first quarter of 2017. The
€2,268.7 million (31 December 2016: €3,183.0 million). After deduc-
promissory note is divided into several tranches that mature in
tion of cash and cash equivalents, net financial debt amounted
May 2022, April 2024 and April 2027 and have floating-rate or
to €2,095.5 million (31 December 2016: €2,903.4 million). This
fixed coupons. The interest-rate risk resulting from the floating-
equated to 1.7 times the adjusted EBITDA on an annualised basis.
rate tranches is hedged using a number of interest-rate deriva-
Long-term borrowing (net of borrowing costs) was reduced
tives (cash flow hedges). Another important funding activity
by €864.2 million to €2,024.8 million as at the reporting date. This
was the capital increase in May 2017, which generated gross
sum includes the promissory note with a volume of €1,010.0 mil-
proceeds of €602.9 million. By the end of 2017, tranche A2
lion that was issued in the first quarter of 2017. Tranche A2 of the
(€343.2 million) and tranche B (€1,200.0 million) of the bridge
AFA (€343.2 million), tranche B of the AFA (€1,200.0 million) and
loan and the fixed-term tranche (€350.0 million) of the senior
the fixed-term tranche of the SFA (€350.0 million) were repaid in
facilities agreement (SFA) had been repaid in full.
full in the year under review. The long-dated tranche (€1,000.0 mil-
In November 2017, the KION Group employees entitled to
lion) of the bridge loan is still outstanding and is due to mature
participate in KEEP were given the opportunity to buy more KION
in October 2021. The €50.1 million decrease in current financial
shares. By 31 December 2017, a total of 36,294 shares had
liabilities compared with the end of 2016 was mainly due to the
been purchased by staff (31 December 2016: 45,564 shares).
reduction in the drawdowns under the revolving credit facility.
The number of shares held in treasury therefore stood at 160,829
> TABLE 028
as at the reporting date (31 December 2016: 164,486).
KION GROUP AG | Annual Report 2017 94
Net financial debt
in € million
Liabilities to banks (gross)
Promissory note (gross)
Other financial liabilities to non-banks
./. Capitalised borrowing costs
Financial liabilities
./. Cash and cash equivalents
Net financial debt
2017
1,259.6
1,010.0
7.7
– 8.6
2,268.7
– 173.2
2,095.5
2016
3,188.6
–
7.2
– 12.9
3,183.0
– 279.6
2,903.4
TABLE 028
Change
– 60.5%
−
6.6%
33.1%
– 28.7%
38.1%
– 27.8%
Retirement benefit obligation
benefit pension plans in the United Kingdom and US. Transfers to
The KION Group supports pension plans in many countries.
external pension funds resulted in payments of €0.3 million.
These plans comply with legal requirements, standard local
The total carrying amount for liabilities in connection with
practice and thus the situation in the country in question. They
share-based remuneration was €38.1 million as at 31 Decem-
are either defined benefit pension plans, defined contribution
ber 2017 (31 December 2016: €37.4 million).
pension plans or multi-employer benefit plans. As at 31 Decem-
ber 2017, the retirement benefit obligation under defined ben-
Lease liabilities
efit pension plans amounted to a total of €1,002.7 million, which
Further expansion of the long-term leasing business with end
was only slightly higher than the figure at the end of 2016 of
customers in 2017 led to a correspondingly higher funding
€991.0 million.
requirement. Lease liabilities arising from sale and leaseback
The net obligation under defined benefit pension plans
transactions to fund the long-term leasing business with end
was almost unchanged year on year at €978.5 million (31 Decem-
customers increased to €1,131.1 million (31 December 2016:
ber 2016: €978.7 million). Changes in estimates relating to defined
€1,007.2 million). Of this total, €798.2 million related to non-current
benefit pension entitlements resulted in an €18.7 million increase
and €332.9 million to current lease liabilities.
in equity (after deferred taxes).
The liabilities from the short-term rental fleet and from pro-
Contributions to pension plans that are entirely or partly
curement leases are reported under other financial liabilities (see
funded via funds are paid in as necessary to ensure sufficient
note [34] in the notes to the consolidated financial statements). As
assets are available and to be able to make future pension
at the reporting date, other financial liabilities included liabilities of
payments to pension plan participants. These contributions are
€493.8 million (31 December 2016: €440.0 million) arising from
determined by factors such as the funded status, legal and tax
sale-and-leaseback transactions used to finance the short-term
considerations, and local practice. The payments made by the
rental fleet. This item also included liabilities from residual value
KION Group in 2017 in connection with the main pension plans
guarantees amounting to €18.2 million (31 December 2016:
totalled €28.2 million, comprising €17.9 million for direct pension
€16.7 million). The residual-value liabilities relate to residual-value
payments and €10.0 million for employer contributions to plan
guarantees provided in connection with the sale of assets to
assets. This included contributions of €8.9 million that had to
leasing companies, where the guaranteed amount is more than
be paid under existing minimum funding provisions for defined
10.0 per cent of the fair value of the asset in question.
Annual Report 2017 | KION GROUP AG COMBINED MANAGEMENT REPORT
Report on the economic position
95
Equity
€173.2 million at the end of 2017 (31 December 2016: €279.6 mil-
Consolidated equity was higher than at the end of 2016, rising
lion). Taking into account the credit facility that was still freely
by €653.1 million to €3,148.8 million as at 31 December 2017
available, the unrestricted cash and cash equivalents available to
(31 December 2016: €2,495.7 million). The capital increase
the KION Group as at the reporting date amounted to €1,138.0 mil-
caused a net increase of €599.9 million. Net income (€426.4 mil-
lion (31 December 2016: €1,200.8 million).
lion) and actuarial effects on pensions also boosted the Group’s
Net cash provided by operating activities totalled €615.8 mil-
equity. However, there was a negative impact of €315.2 million
lion, which was significantly above the prior-year figure of
resulting from exchange differences at the reporting date, which
€414.3 million because Dematic had only made a contribution to
meant that negative effects of €282.8 million were recognised
operations for the months of November and December in 2016.
overall in other comprehensive income. Finalisation of the pur-
Furthermore, expenses of €63.1 million in connection with the
chase price allocation led to equity as at 31 December 2016
Dematic transaction had been recognised and negatively
being retrospectively lowered by €39.4 million. The equity ratio
impacted cash flow from operating activities at the end of 2016.
increased from 22.1 per cent at the end of 2016 to 28.0 per cent
The rise in earnings and margins in 2017 was offset by a
as at 31 December 2017.
growth-related increase in net working capital and the volume of
leasing, which meant cash flow was down by a total of €181.9 mil-
Analysis of capital expenditure
lion year on year. The net change of minus €205.8 million arising
from the expansion of the rental business (including liabilities
The KION Group’s total capital expenditure on property, plant
from finance leases) was bigger than the prior-year net change
and equipment and on intangible assets (including capitalised
of minus €158.2 million. Higher tax payments of €136.3 million
development costs and excluding leased and rental assets)
resulting from improved earnings at the KION companies
came to €218.3 million in the reporting year. The main areas of
(2016: €108.7 million) reduced the level of cash flow from operat-
spending were capitalised development costs (see the ‘Research
ing activities.
and development’ section) and the expansion and modernisation
The net cash used for investing activities amounted to
of production and technology sites in the Industrial Trucks &
€237.6 million. This was significantly less than the prior-year figure
Services segment. This included a large-scale project to update
of €2,264.3 million, which had been heavily influenced by the net
Linde Material Handling’s Aschaffenburg site, where a total of
cash outflow of around €2.1 billion for the acquisition of Dematic.
€60 million is being spent on optimising the material flow in pro-
Smaller acquisitions were carried out in 2017, the total cash
duction and logistics and will result in more cost-effective produc-
payments for which came to €13.3 million net. By contrast, cash
tion processes by 2021. Capital expenditure in the Supply Chain
payments for development (R&D) and for property, plant and
Solutions segment related to capitalised development costs
equipment were up significantly year on year at €218.3 million
and, above all, software, licences and the new production facility
(2016: €166.7 million), mainly due to the inclusion of Dematic for
in the Czech Republic.
the full year.
Analysis of liquidity
Free cash flow – the sum of cash flow from operating activi-
ties and investing activities – amounted to €378.3 million (2016:
minus €1,850.0 million).
Liquidity management is an important aspect of central financial
The net cash used for financing activities of €472.5 million
management in the KION Group. The sources of liquidity are
was primarily due to the net repayment of financial debt in an
cash and cash equivalents, cash flow from operating activities
amount of €914.7 million, which outweighed the inflows from the
and amounts available under credit facilities. Using cash pools,
capital increase of €598.6 million. The gross repayment amount
liquidity is managed in such a way that the Group companies
of €3,340.0 million included the repayment in full of tranches A2
can always access the cash that they need. The optimisation of
(€343.2 million) and B (€1,200.0 million) of the bridge loan and the
cash management caused cash and cash equivalents to fall to
fixed-term tranche of the SFA (€350.0 million). The additional
KION GROUP AG | Annual Report 2017 96
gross borrowings in 2017 amounted to €2,425.3 million and
Long-term leasing business
included the issuance of the promissory note with a volume of
€1,010.0 million in the first quarter of 2017. The net cash used for
The sales activities of the KION Group are supported by financial
current interest payments rose to a total of €58.1 million in 2017
services in connection with direct long-term leasing business. In
due to higher average net debt during the year (2016: €46.7 mil-
this business, trucks leased directly to the end customer are
lion excluding early repayment charges paid of €29.6 million). The
refinanced by the KION Group. The portfolio of the long-term
non-recurring interest payments in 2016 had related to the
leasing business, which supports the KION Group’s sales activi-
charges for early redemption of the KION Group’s corporate
ties, continued to be focused predominantly in western Europe at
bond and early repayment of a bond of Dematic. The dividend
the end of 2017. The long-term leasing business had a positive
paid in May 2017 of €0.80 per share resulted in an outflow of
impact on the KION Group’s financial performance in 2017
funds of €86.9 million. The acquisition of employee shares caused
( > TABLE 030) and also influenced its financial position ( > TABLE 031).
a cash outflow of €4.3 million (2016: €2.8 million). > TABLE 029
This information is taken from the internal reporting system and is
determined using the assumption of a minimum rate of return on
the capital employed. Net financial debt relating to the long-term
leasing business increased to €133.9 million (31 December 2016:
€106.3 million). > TABLE 032
(Condensed) statement of cash flows
in € million
EBIT
Cash flow from operating activities
Cash flow from investing activities
Free cash flow
Cash flow from financing activities
Effect of foreign exchange rate changes on cash
Change in cash and cash equivalents
2017
549.4
615.8
– 237.6
378.3
– 472.5
– 12.2
– 106.4
2016
434.8
414.3
– 2,264.3
– 1,850.0
2,026.3
0.2
176.5
TABLE 029
Change
26.3%
48.6%
89.5%
> 100%
<– 100%
<– 100%
<– 100%
Annual Report 2017 | KION GROUP AG COMBINED MANAGEMENT REPORT
Report on the economic position
97
Profitability of long-term leasing business
in € million
Revenue
Adjusted EBITDA
Adjusted EBIT
Earnings before taxes (EBT)
Financial position of long-term leasing business
in € million
Liabilities to banks (gross)
Liabilities from financial services
Lease liabilities
Calculatory equity
Total
Leased assets
Lease receivables
Total
2017
574.3
121.0
3.6
5.5
2017
133.9
85.7
1,131.1
47.4
1,398.1
522.3
875.8
1,398.1
2016
480.5
99.7
4.0
4.5
2016
106.3
8.3
1,007.2
39.4
1,161.2
429.7
731.5
1,161.2
TABLE 030
Change
19.5%
21.3%
– 10.5%
20.4%
TABLE 031
Change
25.9%
> 100%
12.3%
20.4%
20.4%
21.6%
19.7%
20.4%
KION GROUP AG | Annual Report 2017 98
Refinancing of long-term leasing business
TABLE 032
2017
2016
in € million
Liabilities to banks (gross)
Promissory note – gross
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
thereof
non-current
leasing business
thereof
non-current
leasing business
KION Group
133.9
3,188.6
106.3
KION Group
1,259.6
1,010.0
7.7
– 8.6
–
–
–
2,268.7
133.9
– 173.2
2,095.5
1,131.1
85.7
3,312.3
512.1
29.4
541.4
–
133.9
1,131.1
85.7
1,350.7
–
–
–
–
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
–
–
–
3,853.8
1,350.7
4,396.6
1,121.8
Annual Report 2017 | KION GROUP AG COMBINED MANAGEMENT REPORT
Report on the economic position
99
KION GROUP AG
Business activities
the Group. Detailed reports in this regard are set out in the ‘Busi-
ness performance’ and ‘Financial position and financial perfor-
mance of the KION Group’ sections.
By contract dated 13 March 2017, KION Holding 2 GmbH
was merged into KION GROUP AG; the merger cut-off date was
defined as 1 January 2017. The merger took effect when it was
KION GROUP AG is the strategic management holding company
entered in the commercial register on 22 June 2017. As the impact
in the KION Group. KION GROUP AG holds all the shares in DH
on the financial performance and financial position of KION
Services Luxembourg Holding S.à r.l. and thus all the shares in the
GROUP AG is not material, no further disclosures are provided.
subsidiaries in the Supply Chain Solutions segment. Furthermore,
KION GROUP AG is the sole shareholder of Linde Material Han-
dling GmbH, Aschaffenburg, which holds almost all the shares of
Financial performance
the companies in the Industrial Trucks & Services segment.
The annual financial statements of KION GROUP AG have
KION GROUP AG does not have any operating activities itself.
been prepared in accordance with the provisions in the German
The reported revenue largely arises from the performance of ser-
Commercial Code (HGB) and the German Stock Corporation Act
vices for affiliated companies.
(AktG). The management report has been combined with the
Other operating income went up by €2.5 million to €22.4 mil-
group management report. The consolidated financial state-
lion and includes, in particular, gains on the measurement of bank
ments have been prepared in accordance with International
accounts and cash pools in foreign currencies.
Financial Reporting Standards (IFRSs) and the additional provi-
The cost of materials is related to the revenue from the
sions in section 315e HGB. Differences between the accounting
provision of services and mostly consists of expenses for con-
policies in accordance with HGB and those in accordance with
sultancy services.
IFRSs arise primarily in connection with the accounting treatment
Personnel expenses fell to €42.4 million (2016: €43.9 million)
of financial instruments, provisions and deferred taxes.
due to a smaller addition to the provisions for performance share
Management system, future development
and risk position
plans and bonuses. There was a countervailing effect from the
increase in the number of employees, resulting in a rise in salaries.
Other operating expenses rose by €16.8 million to €68.3 mil-
lion owing to losses on the measurement of bank accounts and
cash pools in foreign currencies. Costs for external services and
As a holding company without any operating activities of its own,
consultancy are another substantial component of other operat-
KION GROUP AG is indirectly dependent on the earnings and
ing expenses.
economic performance of its subsidiaries. The management sys-
The main changes in net financial income/expenses were
tem, expected development and the opportunities and risks of
as follows:
the KION Group are described in detail in the ‘Management sys-
tem’ and ‘Outlook, risk report and opportunity report’ sections of
this combined management report.
Business performance in 2017
The business performance and position of KION GROUP AG are
largely determined by the business performance and success of
– Of
the
total
income
from profit-transfer agreements,
€500.6 million related to Linde Material Handling GmbH. In
2016, KION Holding 2 GmbH (now merged into KION
GROUP AG) had transferred its profit of €361.3 million to
KION GROUP AG; this figure included the amount for Linde
Material Handling GmbH.
– Interest expenses and similar charges, which amounted to
€48.8 million (2016: €27.0 million), arose mainly from the
KION GROUP AG | Annual Report 2017 100
external financing of the KION Group via the promissory note
Net assets
and the loan facilities as well as, to a smaller extent, from
interest charged on intercompany liabilities and the unwind-
At the end of 2017, the total assets of KION GROUP AG had
ing of the discount on pension provisions (2016: from the pro-
increased by approximately 38.8 per cent year on year to
vision of credit facilities).
– Other interest and similar income in the amount of €28.6 million
(2016: €4.6 million) consisted for the most part of interest income
€7,643.9 million. This was attributable, in particular, to KION
GROUP AG having taken over the management of the cash pool
for all KION Group companies in 2017. All consolidated compa-
on intercompany receivables. This rise is attributable to KION
nies use the cash pool to make their liquidity available to KION
GROUP AG taking over the management of the cash pool in
GROUP AG.
2017, resulting in an increase in intercompany receivables.
– KION GROUP AG incurred tax expenses of €79.4 million as a
result of its role as the parent company of the tax group in
The financial assets largely comprise the carrying amounts
of the equity investments in DH Services Luxembourg Holding
S.à r.l. (€2,862.2 million) and Linde Material Handling GmbH
2017 (2016: €23.1 million). The use of tax loss and interest
(€1,368.4 million).
carryforwards had reduced tax expenses in 2016.
The receivables mainly consist of loans and cash pool
receivables due from other Group companies and the Company’s
A total net income of €335.5 million was generated in the year
entitlement to the transfer of profits from Linde Material Han-
under review (2016: €258.3 million). > TABLE 033
dling GmbH of €500.6 million (2016: transfer of profits from
KION Holding 2 GmbH of €361.3 million). There are long-term
loans of €224.5 million.
Financial performance
in € million
Revenue
Other operating income
Material expenses
Personnel expenses
Other operating expenses
Depreciation expense
Operating loss
Net financial income
Income taxes
Net income
2017
24.3
22.4
– 0.5
– 42.4
– 68.3
– 0.2
– 64.8
479.7
– 79.4
335.5
2016
17.6
19.9
– 0.7
– 43.9
– 51.5
– 0.1
– 58.7
340.0
– 23.1
258.3
TABLE 033
Change
38.3%
12.4%
25.0%
3.3%
– 32.7%
<– 100%
– 10.5%
41.1%
<– 100%
29.9%
Annual Report 2017 | KION GROUP AG COMBINED MANAGEMENT REPORT
Report on the economic position
101
TABLE 034
2017
2016
Change
2.9
4,231.2
3,389.3
20.5
7,643.9
0.1
4,474.4
974.0
56.7
5,505.3
3,692.9
2,842.5
32.1
27.6
35.7
3,855.6
–
7,643.9
20.3
4.1
38.4
2,599.9
0.1
5,505.3
> 100%
– 5.4%
> 100%
– 63.8%
38.8%
29.9%
58.2%
> 100%
– 7.0%
48.3%
– 100.0%
38.8%
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
As a result of the capital increase of €602.9 million imple-
December 2016: €3.1 million) for former members of the Executive
mented in May 2017, the €1.1 million increase in the volume of
Board. KION GROUP AG recognised tax provisions of €27.6 million
treasury shares and the higher net income (€335.5 million), and
in connection with its role as the parent company of the tax group.
after taking into account the payment of the dividend of €86.9 mil-
Liabilities mainly consist of liabilities to banks of €2,214.8 mil-
lion, equity rose to €3,692.9 million (31 December 2016:
lion (31 December 2016: €2,546.3 million) as well as loan liabilities
€2,842.5 million). The equity ratio was 48.3 per cent as at the
and cash pool liabilities to other Group companies. The liabilities
reporting date (31 December 2016: 51.6 per cent).
to banks comprise the financing via the promissory note, the
Provisions increased by €32.6 million to €95.4 million; this was
bridge loan (acquisition facilities agreement, AFA) and the syndi-
mainly attributable to changes in pension provisions and tax provi-
cated
loan agreement
(senior
facilities agreement, SFA).
sions. Pension provisions include provisions of €3.3 million (31
> TABLE 034
KION GROUP AG | Annual Report 2017 102
Financial position
As at 31 December 2017, liabilities to banks amounted to
€2,214.8 million (31 December 2016: €2,546.3 million). After
By pursuing an appropriate financial management strategy, the
deduction of cash and cash equivalents, net debt amounted to
KION Group – through KION GROUP AG – makes sufficient cash
€2,194.3 million (31 December 2016: €2,489.6 million).
and cash equivalents available at all times to meet the Group
companies’ operational and strategic funding requirements.
KION GROUP AG is a publicly listed company and therefore
Employees
ensures that its financial management takes into account the
interests of shareholders and banks. For the sake of these stake-
The average number of employees at KION GROUP AG was 190
holders, KION GROUP AG makes sure that it maintains an appro-
in 2017 (2016: 172). KION GROUP AG employed 195 people as at
priate ratio of internal funding to borrowing.
31 December 2017 (31 December 2016: 185).
On 4 July 2016, KION GROUP AG entered into an agreement
for a bridge loan of originally €3.0 billion to finance the acquisition
of Dematic. This bridge loan has been refinanced in several ways,
which means that the liabilities under the AFA as at 31 December
2017 consisted solely of a floating-rate loan of €1.0 billion that is
due to mature in 2021. The funds for repaying the AFA were
essentially generated by two financing measures. In the first
quarter of 2017, a promissory note with a nominal value totalling
€1,010.0 million was issued. The promissory note is divided into
several tranches that mature between 2022 and 2027 and have
floating-rate or fixed coupons. KION GROUP AG entered into a
number of interest-rate derivatives in order to hedge the inter-
est-rate risk resulting from the floating-rate tranches. In May 2017,
it implemented a capital increase that generated gross proceeds
of €602.9 million.
On 28 October 2015, KION GROUP AG signed a syndicated
loan agreement totalling €1.5 billion with a syndicate of interna-
tional banks. Following early repayment of the fixed-term tranche
of €350 million, the SFA consisted solely of the revolving credit
facility of €1,150.0 million as at 31 December 2017. It has a vari-
able interest rate and is due to mature in 2022. As at 31 Decem-
ber 2017, an amount of €184.7 million had been drawn down from
the revolving credit facility.
KION GROUP AG has issued guarantees to the banks for all
of the payment obligations under the AFA and SFA. Neither loan
is collateralised.
Annual Report 2017 | KION GROUP AG COMBINED MANAGEMENT REPORT
Report on the economic position
103
Final declaration to the report on relationships
with affiliated entities (,Abhängigkeitsbericht‘)
pursuant to section 312 (3) sentence 3 of the
German Stock Corporation Act (AktG)
With respect to the legal transactions and other measures
mentioned in the report on relationships with affiliated entities,
we hereby declare that in each case the Company received
appropriate consideration in accordance with the circumstances
of which we were aware at the time when the legal transactions
were concluded or the measures were taken or omitted and that
it did not suffer any disadvantages as a result of such measures
having been taken or omitted.
Frankfurt am Main, 21 February 2018
The Executive Board
Gordon Riske
Dr Eike Böhm
Ching Pong Quek
Dr Thomas Toepfer
KION GROUP AG | Annual Report 2017 104
NON-FINANCIAL PERFORMANCE
INDICATORS
Our shared KION Group values
In 2017, we defined our shared values as part of an international
multi-stage process involving employees from across all units,
The KION Group’s enterprise value is determined not only by
countries and hierarchy levels. Eleven global workshops with a
financial KPIs but also by non-financial factors. They are based on
total of around 1,000 participants were held on all continents,
the Company’s relations with its customers and employees, on its
ensuring that the entire workforce was represented. The values –
technological position and on environmental considerations. The
integrity, collaboration, courage and excellence – provide a
KION Group can only achieve the targets that it has formulated for
common basis for our work together.
itself in the Strategy 2027 if it is an attractive and responsible
employer that can retain competent and committed employees at
Headcount
all sites, if it develops products and solutions that are closely
tailored to customers’ needs and environmental requirements
The average number of employees (full-time equivalents (FTEs),
now and in future, if it continually increases the customer benefits
including trainees and apprentices) in the KION Group was
provided by its products and services and if it designs production
31,064 in 2017 (2016: 24,957 FTEs).
processes in such a way that resources are conserved and
As at 31 December 2017, the KION Group companies
emissions are avoided as far as possible.
employed 31,608 FTEs, 1,064 more than a year earlier. The
The KION Group firmly believes that these aspects are
increase mainly took place in western and eastern Europe and
important to its positioning as a pioneering company in a highly
was due, among other reasons, to the consolidation of Eisen-
competitive environment.
giesserei Dinklage GmbH and the purchase of Nordtruck AB.
> TABLE 035
Employees
HR strategy
The KION Group’s success is founded on the capabilities and
commitment of its employees. The ultimate objective of the KION
Group’s HR strategy is to provide the best possible support for
the targeted implementation of the KION 2027 strategy. 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
working conditions and the opportunities for career progression
afforded by working for an international group of companies play
an important role in this and provide a solid basis for meeting the
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,
STILL and Dematic. In 2017, STILL was recognised as a top
employer for the sixth year in succession by the Top Employers
Institute, an certification organisation.
Annual Report 2017 | KION GROUP AG COMBINED MANAGEMENT REPORT
Report on the economic position
105
Employees (full-time equivalents) *
31/12/2017
Western Europe
Eastern Europe
Middle East and Africa
North America
Central and South America
Asia-Pacific
Total
31/12/2016
Western Europe
Eastern Europe
Middle East and Africa
North America
Central and South America
Asia-Pacific
Total
Industrial Trucks
& Services
Supply Chain
Solutions
16,634
2,349
237
219
459
4,192
24,090
16,005
2,103
241
187
442
4,086
23,064
2,098
84
11
2,808
839
980
6,820
1,931
52
0
2,910
944
973
6,810
TABLE 035
Total
19,430
2,433
248
3,027
1,298
5,172
Corporate
Services
698
0
0
0
0
0
698
31,608
670
18,606
0
0
0
0
0
2,155
241
3,097
1,386
5,059
670
30,544
* Number of employees (full-time equivalents) as at balance sheet date; allocation according to the contractual relationship
Personnel expenses amounted to €1,989.7 million. The main
reason for this increase of 30.9 per cent compared with 2016 was
the rise in average headcount for 2017 and changes to collective
bargaining agreements. > TABLE 036
KION GROUP AG | Annual Report 2017 106
Personnel expenses
in € million
Wages and salaries
Social security contributions
Post-employment benefit costs and other benefits
Total
2017
1,590.4
320.8
78.5
1,989.7
2016
1,198.3
258.4
63.6
1,520.3
TABLE 036
Change
32.7%
24.2%
23.4%
30.9%
Diversity
Development of specialist workers and executives
The KION Group sees itself as a global manufacturer with strong
In 2016, the longer-term HR strategy was revised in order to
intercultural awareness: as at 31 December 2017, people from
ensure even better and more targeted development for employ-
86 different countries were employed across the KION Group.
ees with high potential.
One of the ways in which the Company promotes interna-
In addition to the development activities geared specifically to
tional collaboration between employees is the KION expat pro-
high-potential employees, greater priority will be given to succes-
gramme, which gives employees the opportunity to transfer to
sion planning for key positions in the KION Group in future and a
different countries where the KION Group is represented.
long-term process will be implemented for this purpose.
The KION Group is tackling the challenges of demographic
Finding highly qualified people to fill specialist and executive
change in a variety of ways, for example by providing working
positions is very important to the KION Group. As a result, one of
conditions that are suited to employees’ age-related require-
the focuses of HR work across the Group in 2017 was, as in the
ments and organising healthy-living programmes so that it can
previous years, the recruitment and development of suitable
continue to benefit from older employees’ experience. As at
young talent.
31 December 2017, 27.0 per cent of employees were over the age
The KION Group endeavours to offer its employees interesting
of 50 (31 December 2016: 26.5 per cent).
career opportunities and flexible, family-friendly working-time
Compared with the previous year, the proportion of the
models. The Group companies also collaborate closely on areas
KION Group’s total workforce made up of women was virtually
such as talent management and training & development pro-
unchanged in 2017, at 16.0 per cent (2016: 16.3 per cent).
grammes. This helps to systematically identify and support staff
To help increase the proportion of management positions occu-
with potential, high performers and experts in key functions. The
pied by women, the Executive Board set targets that are pub-
STILL Academy offers subject-specific and interdisciplinary train-
lished in the corporate governance report. Going forward, the
ing courses. There is also an academy at Linde Material Handling
KION Group intends to fill more management positions interna-
and Dematic that develops employees’ skills, particularly in sales
tionally in order to better fulfil the continually growing require-
and service.
ments placed on the Company.
The KION Group offers flexible working-time models that pro-
mote a good work-life balance. In addition, Linde Material Handling
has implemented a company agreement about ‘teleworking/home
office’, which stipulates the terms on which employees can work
at home on a mutually agreed and voluntary basis.
Annual Report 2017 | KION GROUP AG COMBINED MANAGEMENT REPORT
Report on the economic position
107
Training and professional development
A new manager survey was carried out in 2017 which
revealed that the action plan derived from the earlier survey had
The companies in the KION Group currently offer training for
been successfully implemented and we were therefore able to
19 professions in Germany. Besides providing dual vocational
improve on the results of the 2015 survey.
training schemes, KION Group companies offer work place-
ments for students combining vocational training with a degree
Health and safety in the workplace
course in cooperation with various universities. They employed a
total of 579 trainees and apprentices as at 31 December 2017
The KION Group has a corporate policy setting out its obligations
(31 December 2016: 580).
in respect of health, safety and the environment (HSE). These
include taking comprehensive precautions to create a safe work-
Sharing in the Company’s success
ing environment and ensuring employees know how to avoid
risks and accidents. The policy was updated in 2017.
The KION Group launched the KION Employee Equity Programme
HSE activities centre on an internal audit programme, which
(KEEP) in 2014. Initially limited to Germany, the programme was
covers all of the KION Group’s production facilities as well as
then rolled out to more countries. Around 1,100 employees par-
sales and service. The aim is to systematically document existing
ticipated in this share matching programme in 2017, roughly
HSE measures and processes and to provide specific ideas for
5 per cent of the total number who are eligible to do so.
how they can be developed further. Last year, nine central HSE
The plan for 2018 is to give employees in other countries the
audits were carried out within the KION Group. Having started in
opportunity to share in the company’s success by participating
2016, the evaluation of possible HSE risks at sales and service
in KEEP.
sites was completed in 2017.
In 2017, the remuneration of the approximately 450 top exec-
The KION Safety Championship, which was introduced in
utives was updated by continuing the long-term remuneration
2014, offers additional motivation for employees to continually
components that had been introduced in 2014. Another alloca-
engage with HSE matters. Based on regular reporting from the
tion under the long-term incentive plan (LTI) was made in the year
individual units and a set of four defined evaluation criteria, a
under review.
Employee commitment
panel of judges awards prizes to those units that have shown
special dedication or considerable progress in an area of HSE. In
2017, Linde China’s tools and cutting team in Xiamen was
crowned champion.
The KION Group’s products and services destined for its cus-
HSE managers at the KION Group’s production facilities and
tomers are produced by committed and motivated employees.
in its sales and service units have the opportunity to meet and talk
That is why all KION companies aim to ensure a high level of
with one another at annual conferences.
employee commitment.
The health rate for 2017 stood at the high level of 96.7 per cent
Based on the manager survey conducted in 2015 and the
(2016: 96.2 per cent). Details of the other HSE key performance
action plan derived from it, a package of measures was defined
indicators and of the measures initiated and implemented in 2017
and implemented in 2016 as part of the new ‘Lift up’ corporate
will be included in the KION Group’s separate sustainability
initiative, in particular to ensure the new organisational structure is
report, which will be published in April 2018 on the following web-
firmly embedded and to communicate the KION Group’s strategy
site: http://reports.kiongroup.com/2017/sr.
more widely.
Alongside this objective, collaboration was further improved
by holding a number of team workshops.
KION GROUP AG | Annual Report 2017 108
Research and development
which ensures that research findings and technological know-
how are shared across the Group. Building on this, local product
Strategic focus of research and development
development teams working for the individual brand companies
and regions develop customer-specific solutions.
The KION Group’s innovation strategy is an integral element of
KION 2027. Research and development is set up so as to provide
Key R&D figures
the best possible support for the KION Group’s objective of
becoming the world’s leading supplier of integrated, automated
Total spending on research and development came to €212.3 mil-
supply chain solutions and mobile automation solutions. The
lion in 2017 (2016: €147.1 million), which equates to 2.8 per cent of
innovativeness of the portfolio is being significantly increased by
revenue (2016: 2.6 per cent). The increase was predominantly
concentrating even more heavily on automation and robotics
attributable to Dematic being consolidated for the whole of the
solutions that are based on an overarching software platform and
year. Total R&D expenditure included €75.4 million in capitalised
enable fully automated warehouses to become a reality. The
development costs (2016: €50.6 million). Alongside this addition
focus areas selected for product development will push forward
to capitalised development costs, there were amortisation and
the integration of autonomous trucks and automated guided
impairment charges of €69.0 million (2016: €57.0 million) (see note
vehicle systems into end-to-end solutions for warehouses. This
[17] in the notes to the consolidated financial statements).
means an even stronger emphasis on new drive technologies and
At 1,533, the number of full-time jobs in R&D teams was up
automation / robotics solutions. Another area of focus is the
by 3.8 per cent compared with the end of 2016. > TABLE 037
refinement of the warehouse management system.
Given that the digitalisation of solutions and processes is of
The KION Group takes comprehensive measures to protect the
the utmost importance for the KION Group’s future portfolio,
products it develops against imitations and pursues a dedicated
research and development form part of an overarching digitalisa-
patent strategy. In 2017, the KION companies applied for a total of
tion strategy. The KION Digital Campus is helping to significantly
101 new patents (2016: 93). As at 31 December 2017, the compa-
accelerate projects to digitalise the existing core business and
nies of the KION Group held a total of 2,808 patent applications
ensure that they are fully aligned with the requirements of the
and issued patents (31 December 2016: 2,689 patent applica-
Operating Units and their customers.
tions and issued patents).
At the same time, R&D will continue to be structured
cost-effectively. The complexity and diversity of products will be
further reduced and development times for new products will
be shortened, despite the wider range available to customers.
R&D essentially works on a cross-brand and cross-region basis,
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
2017
137.0
75.4
212.3
2.8%
2016
96.5
50.6
147.1
2.6%
TABLE 037
Change
41.9%
49.0%
44.4%
–
Annual Report 2017 | KION GROUP AG COMBINED MANAGEMENT REPORT
Report on the economic position
109
Focus of R&D in 2017
Automation and connectivity
foods, the Multishuttle 2 Freezer. This means that a complete line
of products for the cold chain market can now be offered.
Dematic has also unveiled a new automated truck configuration
The two segments have developed numerous products aimed at
that forms part of the compact range. This product range is
further improving the automation and connectivity of warehouse
based on a modular system that offers particularly fast delivery
and logistics solutions. This enables customers to speed up their
times and low up-front costs.
processes even more, seamlessly integrate all stages of produc-
tion and logistics and use the same floor space more efficiently.
Warehouse management system
One of the products launched by Linde is the new Linde
The Supply Chain Solutions segment also focused on refining the
R-MATIC reach truck, which autonomously fills shelves with
central software solution, Dematic iQ. In the second quarter of
goods and replenishes them with a high level of process reliability.
2017, Dematic published an update for its Dematic IQ software
The development and production of automated trucks is also the
(version 2.4). Among other benefits, the update enables stock to
objective of the alliance with French robotics developer Balyo,
be replenished more quickly on the shop floor, reduces product
which was extended in May 2017. The new Linde K-MATIC order-
damage and allows more products to be stored in the same
picker truck and other products have been introduced under this
space. The iQ 2.5 version released in the third quarter also offers
partnership. Automated versions can now be supplied for virtually
innovative material flow analysis that makes it much easier to
all of the main warehouse trucks and very narrow aisle (VNA)
manage complex systems on a day-to-day basis thanks, in part,
trucks. Also available is the new Truck Call app for digital order
to the clear presentation of data.
management, which enables transport tasks to be managed more
effectively. Digitalisation extends to safety features, too. Linde
Drive technology
Safety Guard, an assistance system for alerting pedestrians and
In 2017, Linde and STILL equipped significantly more trucks with
avoiding collisions, and Linde Safety Scan contribute to the safety-
lithium-ion technology. Customers of Linde, for example, now
conscious management of the entire material handling process.
have a choice of more than 30 warehouse truck models fitted with
STILL has added an automated tugger train solution to its
a lithium-ion battery, including pallet stackers, double stackers,
portfolio of automation solutions as a new member of the iGO
order pickers and reach trucks – thereby encompassing virtually
product family. The iGo neo CX 20, a self-driving order picker
all logistics tasks in the warehouse.
launched in 2016, has been integrated with solutions from
Dematic (e.g. the Pick-to-Voice system) and added to the port-
folio. The product range for efficient and rapid warehouse pro-
cesses and picking is rounded off by the innovative horizontal and
vertical order pickers and the very narrow aisle trucks with swivel
traverse or telescopic forks that were introduced on the market in
2017. Another efficient piece of equipment for the warehouse is
the new ECU 15 C electric pallet truck while, for the medium to
long-distance transport of goods, sit-on low-lift and high-lift pallet
trucks along with double-decker pallet trucks are now available
with powerful lithium-ion technology. STILL also teamed up with
Audi and Dematic on an innovative project to create a smart fac-
tory incorporating the automated transport of bulk carriers – from
the high rack warehouse to the packing line.
One of the new developments from Dematic is an automated,
low-energy solution for fulfilling orders of refrigerated and frozen
KION GROUP AG | Annual Report 2017 110
Customers
Sustainability
The KION Group’s industrial trucks and supply chain solutions
Acting responsibly is one of the principles by which the KION
are deployed in all kinds of industries.
Group and its brand companies operate. They strive for a balance
The Industrial Trucks & Services segment has a very broadly
between environmental, economic and social considerations in
diversified customer base, ranging from large key accounts with
their business activities. This focus on sustainability is reflected in
global operations to small and medium-sized enterprises that
the Group’s eco-friendly and safe products that help customers
typically order just a few trucks each year.
to conserve energy, reduce emissions and comply with strict
The Supply Chain Solutions segment benefits from long-stand-
workplace safety standards (see the ‘Research and develop-
ing customer relationships with major players in the e-commerce
ment’ section). Furthermore, the KION Group ensures that its
and logistics sectors. They influence the success of the seg-
production processes have as minimal an impact on the environ-
ment’s new business and service business. The Dematic Oper-
ment as possible and that it offers safe and discrimination-free
ating Unit’s focus industries also include general merchandise,
working conditions.
grocery wholesale and retail, fashion, food and beverages, and
The first groupwide sustainability report was published in the
parcel and courier services. The KION Group including Dematic
year under review. As well as comprehensive information on strat-
already ranks among the global market leaders in most of these
egy, the management approach and structures for sustainability,
sectors and enjoys excellent relationships with its customers. It
the report contains data on relevant key performance indicators.
has been able to strengthen these relationships through joint
The report to be published in 2018 (see: http://reports.kiongroup.
development projects and other initiatives.
com/2017/sr) will also include the KION Group’s non-financial
The KION brand companies again exhibited at the sector’s
declaration as required under the German law to implement the
leading trade fairs in various regions in 2017 in order to intensify
CSR directive. For this reason, the KION Group has not provided
their collaboration with customers and partners.
detailed information in the 2017 combined management report.
The KION Group’s full range of products in the Industrial Trucks
& Services and Supply Chain Solutions segments was represented
for the first time at ProMat, which was held in Chicago in April 2017.
Numerous new products were unveiled. For example, the market
launch of new Linde and Baoli counterbalance trucks in North
America was announced. Dematic demonstrated its Dematic iQ
warehouse execution system, robotics order picking and other
products. The KION brands also showcased the full spectrum of
solutions at Movimat in São Paulo in October 2017. At the Hannover
Messe trade fair (CeMat preview), STILL highlighted the latest topics
and solutions. The KION Group also participated in various other
trade fairs, including Logistica in Utrecht, where Dematic exhibited
innovative technologies for the storage and retrieval of small parts,
and Logimat in Stuttgart, at which not only Linde and STILL but also
Baoli presented their portfolios for the EMEA region. In addition,
numerous customer and dealer events as well as training courses
were held.
Once again, the KION brand companies attracted attention
by collecting a number of accolades in 2017. STILL, for example,
was again among the winners at the International Forklift Truck of
the Year (IFOY) awards.
Annual Report 2017 | KION GROUP AG COMBINED MANAGEMENT REPORT
Outlook, risk report and opportunity report
111
Outlook, risk report and opportunity report
OUTLOOK
Assumptions
Forward-looking statements
The forecasts in this section are derived from the KION Group’s
multiple-year market, business and financial plan, which is based
on certain assumptions. Market planning takes into account
macroeconomic and industry-specific performance, which is
The forward-looking statements and information given below are
described below. Business planning and financial planning are
based on the Company’s current expectations and assessments.
based on expected market performance, but also draw on other
Consequently, they involve a number of risks and uncertainties.
assumptions, such as those relating to changes in the cost of
Many factors, several of which are beyond the control of the KION
materials, the KION Group’s ability to command higher prices
Group, affect the Group’s business activities and profitability as
from customers and movements in exchange rates.
well as the earnings of KION GROUP AG. Any unexpected develop-
ments in the global economy would result in the KION Group’s
Expected macroeconomic conditions
and KION GROUP AG’s performance and profits differing signifi-
cantly from those forecast below. The KION Group does not
In its outlook for 2018 published in January, the International
undertake to update forward-looking statements to reflect subse-
Monetary Fund (IMF) predicts global output growth of 3.9 per cent,
quently occurring events or circumstances. Furthermore, the
which is slightly higher than the rate for the past year. Besides the
KION Group cannot guarantee that future performance and
sustained upturn in Europe and Asia, stimulus from the US tax
actual profits generated will be consistent with the stated assump-
reforms approved in late 2017 is having a positive effect. At
tions and estimates and can accept no liability in this regard.
4.6 per cent, the worldwide volume of trade is expected to be
Actual business performance may deviate from our fore-
close to its 2017 level.
casts due, among other factors, to the opportunities and risks
The outlook for macroeconomic conditions is based, in par-
described here. Performance particularly depends on macroe-
ticular, on the assumption that conditions in financial markets will
conomic and industry-specific conditions and may be negatively
continue to be favourable and that market sentiment will remain
affected by increasing uncertainty or a worsening of the eco-
upbeat. These factors will support further growth of demand,
nomic and political situation.
particularly in terms of capital expenditure. Furthermore, it is
expected that trading partners of the United States will also ben-
Outlook for 2017
efit from the US tax reforms.
Expected sectoral conditions
The overall assessment of the financial situation of the KION
Group compares the outlook included in the 2016 combined
Going forward, the overall market for industrial trucks and ware-
management report and the adjusted outlook in the Q3 2017
house systems will continue to depend heavily on the strength
quarterly statement with actual performance in 2017.
of the economy in the main sales markets. In past years, the
market’s growth – measured by the number of new trucks sold
and the revenue of the largest system manufacturers – has con-
sistently exceeded the growth rates for global gross domestic
product (GDP). In view of the generally positive macroeconomic
prospects, the KION Group anticipates that the worldwide mar-
ket for industrial trucks and warehouse systems will continue to
expand in 2018.
KION GROUP AG | Annual Report 2017 112
Following very strong growth in the global market for new indus-
to €835 million. Free cash flow is expected to be in a range
trial trucks in 2017, growth rates are predicted to normalise,
between €410 million and €475 million; the cash payment for the
returning closer to the long-term trend of around 4 per cent.
planned acquisition of a non-controlling interest in the Chinese
Europe and North America are expected to register further mod-
company EP Equipment has already been factored in. The target
erate increases in orders. The KION Group anticipates continued
figure for ROCE is in the range of 8.7 per cent to 9.7 per cent. The
growth in demand in China, with a rise in the proportion of electric
outlook for free cash flow and ROCE reflects the impact of apply-
forklift trucks and warehouse trucks. The constantly increasing
ing the new IFRS accounting standards for the first time. Further
number of trucks in operation worldwide provides a sustainable
details can be found in the ‘Basis of preparation’ section of the
customer base for the service business.
notes to the consolidated financial statements.
Demand for supply chain solutions is likely to be underpinned
Order intake in the Industrial Trucks & Services segment is
by the strong inclination to invest seen in the main customer
expected to be between €5,950 million and €6,150 million. The
industries in connection with multichannel and e-commerce
target figure for revenue is in the range of €5,700 million to
strategies. In the years ahead, market growth of around
€5,900 million. The target range for adjusted EBIT is €650 million
10 per cent per year is predicted.
to €685 million.
Expected business situation and financial
performance of the KION Group
Order intake in the Supply Chain Solutions segment is
expected to be between €2,100 million and €2,400 million. The
target figure for revenue is in the range of €2,000 million to
€2,300 million. The target range for adjusted EBIT is €180 million
to €215 million.
In 2018, the KION Group aims to build on its successful performance
The outlook is based on the current exchange rate environ-
in 2017 and, based on the forecasts for market growth, achieve
ment and the assumption that material prices will hold steady.
further increases in order intake, revenue and adjusted EBIT.
> TABLE 038
The order intake of the KION Group is expected to be
between €8,050 million and €8,550 million. The target figure for
consolidated revenue is in the range of €7,700 million to
€8,200 million. The target range for adjusted EBIT is €770 million
Outlook
in € million
Order intake *
Revenue *
Adjusted EBIT
Free cash flow
ROCE
TABLE 038
KION Group
Industrial Trucks & Services
Supply Chain Solutions
2017
Actual
2018
Outlook
2017
Actual
2018
Outlook
2017
Actual
2018
Outlook
7,979.1
8,050 – 8,550
5,859.5
5,950 – 6,150
2,099.2
2,100 – 2,400
7,653.6
7,700 – 8,200
5,630.9
5,700 – 5,900
2,006.3
2,000 – 2,300
765.6
378.3
9.9%
770 – 835
410 – 475
8.7% – 9.7%
640.1
650 – 685
181.4
180 – 215
–
–
–
–
–
–
–
–
* Disclosures for the segments Industrial Trucks & Services and Supply Chain Solutions include also intra-group cross-segment order intake and revenue (Total revenue)
Annual Report 2017 | KION GROUP AG COMBINED MANAGEMENT REPORT
Outlook, risk report and opportunity report
113
Expected financial position of the KION Group
Principles of risk management
Having significantly reduced its borrowing in the reporting year,
The procedures governing the KION Group’s risk management
the KION Group intends to use free cash flow to achieve a further
activities are laid down in internal risk guidelines. For certain types
moderate decrease in net debt.
of risk, such as financial risk or risks arising from financial services,
Overall statement on expected performance
risks. Risk management is organised in such a way that it directly
reflects the structure of the Group itself. Consequently, risk
The KION Group believes it will continue along its path of profit-
officers supported by risk managers have been appointed for
able growth and aims to further improve its market position
each company and each division. A central Group risk manager
the relevant departments also have guidelines that are specifically
geared to these matters and describe how to deal with inherent
worldwide in 2018.
RISK REPORT
Risk strategy
is responsible for the implementation of risk management pro-
cesses in line with procedures throughout the Group. His or her
remit includes the definition and implementation of standards to
ensure that risks are captured and evaluated.
The risk management process is organised on a decentral-
ised basis. Firstly, a groupwide risk catalogue is used to capture
the risks attaching to each company. Each risk must be captured
individually. If the losses caused by a specific risk or the likelihood
of this risk occurring exceed a defined limit, the KION Group’s
The business activities of the KION Group necessarily involve risk.
Executive Board and its corporate controlling function are notified
Dealing responsibly with risk and managing it in a comprehensive
immediately. Each risk is documented in an internet-based
manner is an important element of corporate management. The
reporting system designed specifically for the requirements of
overarching aim is to fully harness business opportunities while
risk management. Risks affecting more than one Group com-
ensuring that risk always remains under control. Using its group-
pany, such as market risks, competition risks, financial risks and
wide risk management system, the KION Group contains all iden-
risks arising from financial services, are not recorded individually
tified risks by implementing suitable measures and takes appro-
but are instead evaluated at Group level. Consequently, such
priate precautions. This ensures that the losses expected if these
risks are not quantified.
risks arise will be largely covered and therefore will not jeopardise
The scope of consolidation for risk management purposes is
the Company’s continuation as a going concern.
the same as the scope of consolidation for the consolidated
Risk management is embedded in the corporate controlling
financial statements. The risks reported by the individual compa-
function and plays an active and wide-ranging role due to the
nies are combined to form divisional risk reports as part of a rig-
strategic focus of corporate controlling. The Operating Units’
orous reporting process. To this end, minuted risk management
business models, strategic perspectives and specific plans of
meetings are held once a quarter. Moreover, material risks are
action are examined systematically. This ensures that risk man-
discussed with the segments at the business review meetings.
agement is fully integrated into the KION Group’s overall planning
The divisional risk reports are then used to compile an aggregate
and reporting process.
risk portfolio for the KION Group as a whole. To support this, the
relevant departments of the holding company are consulted
each quarter in order to identify and assess risk – particularly
Company-wide, cross-brand risk affecting areas such as treasury,
purchasing, tax, human resources and financial services. The
Executive Board of KION GROUP AG and the Supervisory
KION GROUP AG | Annual Report 2017 114
Board’s Audit Committee are informed of the Group’s risk posi-
functions, the double-checking principle and adherence to
tion once a quarter. The Internal Audit department audits the risk
policies and instructions.
management system at regular intervals.
The employees involved in the (Group) accounting process
Material features of the internal control and
risk management system pertaining to the
(Group) accounting process
Principles
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
up for the consolidation process and are worked through in a
The main objectives of the accounting-related internal control
standardised manner. All postings are managed centrally and
system are to avoid the risk of material misstatements in financial
documented. This team also monitors the system-based controls
reporting, to identify material mismeasurement and to ensure
and supplements them with manual checks. The entire accounting
compliance with the applicable regulations and internal instruc-
process contains a number of specific approval stages, for which
tions. This includes verifying that the consolidated financial state-
extensive plausibility checks have been set up. Employees with
ments and combined management report comply with the rele-
the relevant expertise provide support on specialist questions
vant accounting standards.
and complex issues.
Internal control mechanisms and ongoing analysis of the reg-
Material processes and controls in the
ulatory framework enable any risks that might jeopardise the
(Group) accounting process
compliance of the consolidated financial statements and group
management report with accounting standards to be identified as
For its (Group) accounting process, the KION Group has defined
soon as possible so that appropriate countermeasures can be
suitable structures and processes within its internal control and risk
taken. Such risks form part of the KION Group’s aggregate risk
management system and implemented them in the organisation.
profile and are classified as operational risk.
Changes to the law, accounting standards and other pro-
The Internal Audit department evaluates governance, risk
nouncements are continually analysed with regard to their rele-
management and the control processes by following a systematic
vance and effect on the consolidated financial statements and
and structured process, thus helping to bring about improve-
group management report; the relevant changes are then incor-
ments. It focuses primarily on the following aspects:
porated into the Group’s internal policies and systems.
All consolidated entities must follow the KION GROUP IFRS
Accounting Manual when preparing their IFRS reporting pack-
ages. This manual contains the recognition, measurement and
disclosure rules to be applied in the KION Group’s accounting in
accordance with IFRS. The accounting guidelines primarily
explain the financial reporting principles specific to the KION
Group’s business. In addition, all companies must adhere to the
schedule defined by head office for preparing the consolidated
financial statements and group management report.
The accounting-based internal control and risk manage-
ment system encompasses defined control mechanisms,
automated and manual reconciliation processes, separation of
systems for avoiding financial losses
– appropriateness and effectiveness of the internal control
– compliance with legal requirements, directives from the
– correct performance of tasks and compliance with business
Executive Board, other policies and internal instructions
principles
Annual Report 2017 | KION GROUP AG COMBINED MANAGEMENT REPORT
Outlook, risk report and opportunity report
115
Risk
Aggregate risk
The aggregate risk position was largely unchanged compared
with the end of 2016. With regard to 2018, the risks in the risk
matrix below will be continually observed and evaluated in terms
of their extent and probability of occurrence. For example, the
KION Group considers the probability of market risk materialising
as low because of the generally positive market expectations.
However, the possible 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 business situation and financial perfor-
mance. As things stand at present, there are no indications of any
risks that could jeopardise the Company’s continuation as a
going concern. > DIAGRAM 005
The market risks and competition risks described, the risks
along the value chain, the human resources risks and the legal
risks largely relate to the Industrial Trucks & Services and Supply
Chain Solutions segments. Risks arising from financial services
mainly affect the Industrial Trucks & Services segment, while
financial risks would predominantly impact on the Corporate
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
• Production risk
• Procurement 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
Services segment.
HIGH RISK
MEDIUM RISK
LOW RISK
Market risks and competition risks
Market risks
Despite the increase in the proportion of revenue generated
Market risk can arise when the economy as a whole or a particu-
outside the eurozone (due in part to the strong North American
lar sector does not perform as well as had been anticipated in the
business of the Supply Chain Solutions segment), the bulk of
outlook. Cyclical fluctuations in macroeconomic activity affect
revenue continues to be billed in euros. As a result, the market
both the market for industrial trucks and the market for auto-
conditions that prevail in the eurozone impact significantly on the
mated supply chain solutions. Customers’ decisions on whether
KION Group’s financial performance. In view of the continued sta-
to invest depend to a large degree on the macroeconomic situa-
bilisation of economic growth, even – and especially – in coun-
tion and conditions in their particular sector. During an economic
tries that were hit hard by the financial and economic crisis, the
downturn, or even just periods of heightened economic uncer-
direct market risk arising from a downturn in the economy has
tainty, customers tend to postpone their capital expenditure
further reduced for the eurozone. However, any weakening of
plans. Although demand for services is less cyclical, it correlates
economic growth affecting major trading partners, e.g. China,
with the degree of utilisation of the trucks and systems – which
might reduce eurozone customers’ willingness to invest and con-
usually declines during difficult economic periods. As the KION
sequently the demand for the KION Group’s products.
Group can only adjust its fixed costs to fluctuations in demand to
Any loss of momentum in the emerging markets could also
a limited extent, reductions in revenue impact on earnings.
have a negative effect on global trade volumes and thus on
KION GROUP AG | Annual Report 2017
116
growth in the material handling market. The market risks referred
manufacturers in emerging markets are also looking for opportu-
to could be heightened by geopolitical risk, including protectionist
nities to expand. Although the high quality expectations and ser-
measures and possible currency crises. However, it is not cur-
vice needs of customers in developed markets present a barrier
rently foreseeable whether these risks will become relevant and
to growth for many of these manufacturers, this situation is likely
then have a material effect on the business situation and financial
to intensify competitive pressures in future.
performance. The geopolitical situation is monitored closely.
It is also conceivable that competitors will join forces and
Various measures aimed at making cost structures more
their resulting stronger position will be detrimental to the KION
flexible – such as the consolidation of production facilities, lever-
Group’s sales opportunities. Moreover, predictions of higher
aging of cost synergies and the platform strategy – help to con-
volumes and margins may lead to overcapacity, which would put
tain the earnings risk arising from reductions in revenue caused
increased pressure on prices.
by economic conditions. Diversification of the customer base in
Although the excellent customer benefits provided by its
terms of industry and region as well as expansion of service activ-
products have enabled the KION Group to charge appropriate
ities also play a role in mitigating risk. Moreover, the KION Group
prices until now, it is taking a variety of steps to contain competi-
closely monitors the market and its competitors so that it can
tion risk. Alliances, partnerships, acquisitions and other meas-
identify market risks at an early stage and adjust its production
ures are increasingly playing a role in improving the KION Group’s
capacities in good time. Besides global economic growth and
competitiveness in terms of resources, market access and product
other data, the KION Group also analyses exchange rates, price
range. The steps that the KION Group is taking to mitigate its
stability, the consumer and investment climate, foreign trade
competition risk also include making its plants more efficient and
activity and political stability in its key sales markets, constantly
securing low-cost sources of supply.
monitoring the possible impact on its financial performance and
The KION Group also continually evaluates its options for
financial position. Other risks arise as a result of constant changes
strengthening and consolidating its position in emerging markets,
in the Company’s political, legal and social environment. Because
in particular through proactive cross-selling by the two operating
it operates in countries in which the political or legal situation is
segments, strategic partnerships, the creation of joint ventures or
uncertain, the KION Group is exposed to the consequent risk of
acquisition of local manufacturers. One of the risks of such
government regulation, changes to customs rules, capital con-
alliances and acquisitions is that the expected benefits will mate-
trols and expropriations. The KION Group mitigates such strate-
rialise only partly or not at all. For example, the organisational inte-
gic risks by, for example, carrying out in-depth market research,
gration of new units can harm financial performance for a variety
conducting thorough evaluation procedures to assess political
of reasons. It is also possible that a partner will collaborate with
and economic conditions and drafting contracts appropriately.
competitors if exclusivity agreements are not in place.
Competition risks
Risks along the value chain
Competition risk describes the risk that growing competitive
pressure will prevent the KION Group from achieving its predicted
Research and development risks
margins and market share. The markets in which the KION Group
The KION Group’s market position and business performance
operates are characterised by strong competition, often price-
depend to a large extent on its ability to build on its leading tech-
driven. Price competition is compounded by some manufacturers
nological position in respect of individual products and system
having cost advantages in production, sometimes due to the cur-
solutions in order to become the leading supplier of automated
rency situation and sometimes because local labour costs are
supply chain solutions and mobile automation solutions. This
lower. This mainly affects the Industrial Trucks & Services seg-
requires the Group to continually develop products that meet
ment, where competition is fierce, particularly in the economy
customer expectations and comply with changing regulatory and
and volume price segments, and the impact is especially strong
technological requirements. To this end, the KION Group must
in emerging markets. Building on their local competitive strength,
anticipate customers’ needs and changing market conditions –
Annual Report 2017 | KION GROUP AG COMBINED MANAGEMENT REPORT
Outlook, risk report and opportunity report
117
including the growing use of digital technologies in value chains –
Production risks
and has to quickly bring new products to market. If the Company
Production risks are largely caused by quality problems, possible
does not succeed in doing this, its technological and competitive
disruptions to operational procedures or production downtime at
position could be compromised in the long term.
individual sites. In such cases, the KION Group’s closely inte-
The innovations developed by the KION Group are compre-
grated manufacturing network presents a heightened risk to its
hensively protected by intellectual property rights, in particular
ability to deliver goods on time. There is also a risk that structural
patents. Nevertheless, there is always the possibility that prod-
measures and reorganisation projects will not be implemented
ucts or product components will be imitated. There is also a risk
owing to disruption of production or strikes. Delays in delivery or
that patent applications will not be successful. The KION Group
a rise in the number of complaints could harm the KION Group’s
mitigates research and development risk by focusing firmly on
positioning in the price segments and sales markets that it serves
customer benefit in its development of products and solutions.
and, as a result, could harm its financial situation.
Customer needs are incorporated into the development pro-
To mitigate these risks, the KION Group carries out preven-
cess on an ongoing basis by ensuring close collaboration
tive maintenance, implements fire protection measures, trains its
between sales and development units and taking account of all
staff and builds a pool of external suppliers. The Company has
region-specific requirements.
taken out a commercially appropriate level of insurance cover
Procurement risks
against loss. Quality assurance is a high priority throughout the
value chain and reduces possible quality-related risks arising
Procurement activities constitute a potential risk for the KION
from the products and services provided. The KION Group miti-
Group in terms of the general lack of availability of parts and com-
gates its quality-related risks significantly by applying rigorous
ponents and the rising cost of raw materials, energy, inputs and
quality standards to its development activities, conducting strin-
intermediate products. In particular, restricted capacity in a tight
gent controls throughout the process chain and maintaining
supplier market could result in the KION Group facing backlogs in
close contact with customers and suppliers.
the supply of individual raw materials and components. The KION
Group obtains some of its key components from a limited number
Risks arising from customer project business
of core suppliers. Key components in the Industrial Trucks & Ser-
In the customer project business, risks can arise from deviations
vices segment include internal combustion engines, tyres and
from the schedule originally agreed with the customer, potentially
high-performance forged and electronic parts.
leading to revenue and profit being recognised in subsequent
The risk of supply bottlenecks – for example in the event of a
years or, in isolated cases, contractual penalties having to be paid.
shortage of raw materials or financial difficulties at core suppliers
Another possible risk is that the technology deviates from the
– cannot be ruled out in future. The KION Group mitigates this risk
promised specifications, which may result in additional completion
through appropriate diversification of its supplier structure in the
costs. The long-term nature of individual projects can lead to cost
context of a global procurement organisation. In addition, the
increases over the term of the project that were not anticipated in
supplier development department, which focuses on improving
the project costing and cannot be passed onto the customer.
suppliers’ production processes, helps suppliers to ensure that
To mitigate these risks in the Supply Chain Solutions seg-
their processes are cost-efficient and offer excellent quality.
ment, project management includes a comprehensive process of
Price changes present another procurement-related risk. In 2017,
risk management. This involves detailed evaluation of the risks
around 25 per cent of the cost of materials for new trucks was
when defining the technical aspects of quotations plus financial
directly influenced by changes in commodity prices (2016: around
risk provisioning based on the individual project specifications
25 per cent). Moreover, conditions in the commodity markets typ-
when preparing quotations. A multistage approval process based
ically affect component prices after a delay of three to six months.
on an extensive list of criteria ensures that financial, country-spe-
The KION Group endeavours to pass on price increases to cus-
cific, currency-specific and contractual risks are largely avoided.
tomers but cannot always do so entirely due to market pressures.
KION GROUP AG | Annual Report 2017 118
The potential risks that may arise in the project realisation phase
Financial risks
are analysed in every individual project using detailed continuous
reviews based on the individual items of work that make up the
Group Treasury is responsible for ensuring that sufficient financial
project. This keeps potential risks to a minimum.
resources are always available for the KION Group’s international
Sales risks
growth. The main types of financial risk managed by Group
Treasury, including risks arising from funding instruments, are
The main sales risks – besides a drop in revenue caused by mar-
liquidity risk, currency risk, interest-rate risk and counterparty risk.
ket conditions – result from dependence on individual customers
Counterparty risk consists solely of credit risks attaching to finan-
and sectors. For example, it is possible that customers would
cial institutions. Risk management procedures issued by Group
postpone or cancel orders during a period of economic difficulty.
Treasury stipulate how to deal with the aforementioned risks.
There have not been any significant cancellations in previous
Non-current financial liabilities fell by €864.3 million from their
years, however. It is also conceivable that customers would face
level at 31 December 2016 to reach €2,024.8 million at the end of
a liquidity shortfall and therefore be unable to fulfil their payment
2017. As at 31 December 2017, the main financial liabilities classi-
obligations immediately or even at all. Because of its customer
fied as non-current were a promissory note with a volume of
project business, the Supply Chain Solutions segment generally
€1,010.0 million plus the amount of €1,000.0 million still outstand-
has a greater dependence on individual sectors and individual
ing under the bridge loan (AFA) following substantial repayments.
customers than the Industrial Trucks & Services segment. Never-
The unused, unrestricted SFA loan facility stood at €965.3 million
theless, the concentration risk for the KION Group overall is still
as at 31 December 2017. Risk arising out of the lending and
considered to be low. The business is highly diversified from a
promissory note conditions that have been agreed was not
regional perspective. In addition, the KION Group supplies com-
regarded as material as at 31 December 2017. It relates in particular
panies of all sizes. Experience has shown that the KION Group’s
to the restrictions in respect of compliance with financial cove-
exposure to the risk of possible payment defaults is low, but this
nants and upper limits for certain transactions and in respect of
risk can be further mitigated by recovering any collateral.
the obligation to submit special regular reports. The KION Group
IT risks
complied with all the obligations in this regard in the reporting
year. Some of the Group’s financing takes the form of floating-rate
A high degree of interconnectedness between sites and with cus-
financial liabilities. Interest-rate swaps were entered into in 2017 in
tomers and other companies means that the KION Group also
order to hedge the resultant interest-rate risk.
relies on its IT systems working flawlessly. The KION Group under-
The Company generally refers to credit ratings to manage
takes ongoing further development of a reliable, extendable and
counterparty risk when depositing funds with a financial institu-
flexible IT system environment with the aim of countering any
tion. The KION Group only uses derivatives to hedge underlying
IT-related risks that may arise from the failure of IT systems and IT
operational and financial transactions; they are not used for spec-
infrastructure. Internal IT resources are pooled in the cross-seg-
ulative purposes. It is exposed to currency risk because of the
ment KION IT function, which has well-established processes
high proportion of its business conducted in currencies other
for portfolio management and project planning and control.
than the euro. Normally, at least 75 per cent of the currency risk
Independent external audits are conducted to provide addi-
related to the planned operating cash flows based on liquidity
tional quality assurance. Various technical and organisational
planning is hedged by currency forwards in accordance with the
measures protect the data of the KION Group and the Group
relevant guideline. Group Treasury rigorously complies with and
companies against unauthorised access, misuse and loss.
monitors the strict separation of functions between the front, mid-
These measures include procedures to validate and log access
dle and back offices. Each Group company’s liquidity planning is
to the Group’s infrastructure.
broken down by currency and incorporated into the KION Group’s
financial planning and reporting process. Group Treasury checks
Annual Report 2017 | KION GROUP AG COMBINED MANAGEMENT REPORT
Outlook, risk report and opportunity report
119
the liquidity planning and uses it to determine the funding require-
residual-value risk management, reduce risk and provide the
ments of each company.
basis on which to create the transparency required.
The funding terms and conditions faced by the lenders them-
The KION Group mitigates its liquidity risk and interest-rate
selves (manifested, for example, in the payment of liquidity premi-
risk attaching to financial services by ensuring that most of its
ums on interbank lending) may result in a future shortage of lines
transactions and funding loans have matching maturities and by
of credit and / or increased financing costs for companies. How-
constantly updating its liquidity planning. Long-term leases are
ever, the Group currently does not expect any further changes in
primarily based on fixed-interest agreements. The credit facilities
its lines of credit or any excessive increases in margins.
provided by various banks and an effective dunning process
Goodwill and brand names represented 38.5 per cent of total
ensure that the Group has sufficient liquidity.
assets as at 31 December 2017 (31 December 2016: 40.1 per cent).
In order to exclude currency risk, the KION Group generally
Pursuant to IFRS, these assets are not amortised and their meas-
funds its leasing business in the local currency used in each market.
urement depends, above all, on future expectations. If these future
Because of low default rates, counterparty risk has not been
expectations are not fulfilled, there is a risk that impairment losses
significant to date in the Group. The KION Group has not identified
will have to be recognised on these assets.
any material changes between 2016 and 2017. The Group also
The individual Group companies directly manage counter-
mitigates any losses from defaults by its receipt of the proceeds
party risks involving customers. These counterparty risks did not
from the sale of repossessed trucks. Furthermore, receivables
change significantly in 2017. Each individual Group company has
management and credit risk management are refined on an
established a credit management system for identifying custom-
ongoing basis. Besides the design of the business processes,
er-related counterparty risks at an early stage and initiating the
these refinements also encompass the risk management and risk
necessary countermeasures. Analysis of the maturity structure of
control processes.
receivables is an integral element of monthly reporting.
Moreover, the KION Group mostly offers financial services
indirectly via selected financing partners that bear the risks of the
Risks arising from financial services
finance transaction. As far as these financial services are con-
cerned, the KION Group bore the counterparty risk in under
The leasing activities of the Industrial Trucks & Services segment
3 per cent of cases (2016: 3 per cent).
mean that the KION Group may be exposed to residual value risks
from the marketing of trucks that are returned by the lessee at the
Human resources risks and legal risks
end of a long-term lease and subsequently sold or re-leased.
Residual values in the markets for used trucks are therefore con-
The KION Group relies on having highly qualified managers and
stantly monitored and forecast. The KION Group regularly assesses
experts in key roles. If they left, it could have a long-term adverse
its aggregate risk position arising from financial services.
impact on the Group’s prospects.
The risks identified are immediately taken into account by the
That is why the KION Group actively engages in HR work
Company in the costing of new leases by recognising writedowns
aimed at identifying and developing young professionals with
or valuation allowances and adjusting the residual values.
high potential who already work for the Company and retaining
Risk-mitigating factors include the demand for used trucks, which
them over the long term, thereby enabling succession planning
stabilises the residual values of the KION Group’s industrial
for key roles across the Group. The KION Group also positions
trucks. In many cases, the residual values are based on remarketing
itself in the external market as an employer of choice. This will
agreements that transfer any residual-value risk to the leasing
enable it to make strategic additions to its portfolio of existing
company. This had a positive impact on the financial results in
staff and, in this way, avert the risk of possibly losing expertise
2017. Groupwide standards to ensure that residual values are
and thereby becoming less competitive.
calculated conservatively, combined with an IT system for
Any restructuring measures may result in a risk of strikes and
reactions of other kinds by the workforce. As demonstrated
KION GROUP AG | Annual Report 2017 120
several 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.
OPPORTUNITY REPORT
The legal risks arising from the KION Group’s business are
Principles of opportunity management
typical of those faced by any company operating in this sector.
The Group companies are a party in a number of pending law-
Opportunity management, like risk management, forms a central
suits in various countries. The individual companies cannot
part of the Company’s day-to-day management. In 2017, the
assume with any degree of certainty that they will win any of the
aggregate opportunity position was largely unchanged com-
lawsuits or that the existing risk provision in the form of insurance
pared with the previous year. Individual areas of opportunity are
or provisions will be sufficient in each individual case. However,
identified within the framework of the strategy process. Opportu-
the KION Group is not expecting any of these existing legal pro-
nities are determined and managed on a decentralised basis in
ceedings to have a material impact on its financial position or
line with the Group strategy.
financial performance. These lawsuits relate, among other things,
There are monthly reports on the opportunity situation as
to liability risks, especially as a result of legal action brought by
part of the regular Group reporting process. As a result, the KION
third parties because, for example, the Company’s products were
Group is in a position to ascertain at an early stage whether mar-
allegedly faulty or the Company allegedly failed to comply with
ket trends, competitive trends or events within the Group require
contractual obligations. Further legal risk may arise as a result of
individual areas of opportunity to be re-evaluated. This may lead
the environmental restoration of sites that have been shut down in
to reallocation of the budgets earmarked for the realisation of
recent years, for example work required due to contamination.
opportunities. Such decisions are made on the basis of the
Any damage to the environment may lead to legal disputes and
potential of the opportunity, drawing on empirical values. There is
give rise to reputational risk.
no management system for the evaluation of opportunities com-
The Company has taken measures to prevent it from incur-
parable to the system for risk management.
ring financial losses as a result of these risks. Although legal dis-
putes with third parties have been insignificant both currently and
in the past, the Company has a centralised reporting system to
Categorisation of opportunities
record and assist pending lawsuits. In addition to the high quality
and safety standards applicable to all users of the Company’s
‘Opportunities’ are understood as positive deviations from the
products, with which it complies when it develops and manufac-
expectations set out in the outlook relating to the economic situ-
tures the products, it has also taken out the usual types of insur-
ation and the KION Group’s position. Opportunities are divided
ance to cover any third-party claims. In addition, interdisciplinary
into three categories:
teams work on the avoidance of risks arising from inadequate
contractual arrangements. A further objective of this cooperation
across functions is to ensure compliance with mandatory laws,
regulations and contractual arrangements at all times.
Owing to the KION Group’s export focus, legal risk and rep-
utational risk arise due to the numerous international and local
export controls that apply. The Company mitigates these risks
with a variety of measures. Consequently, export controls are an
important part of the compliance activities carried out by the
– Market opportunities describe the potential resulting from
trends in the market and competitive environment and from
the regulatory situation.
– Strategic opportunities are based on implementation of the
Group’s strategy. They may lead to positive effects that
exceed planning assumptions.
– Business-performance opportunities arise in connection
with operational activities along the value chain, such as
Group companies.
restructuring or cost-cutting measures.
Annual Report 2017 | KION GROUP AG COMBINED MANAGEMENT REPORT
Outlook, risk report and opportunity report
121
Opportunity situation
Strategic opportunities
Market opportunities
The positive impact of the strategic activities under the KION
strategy is already largely reflected in the expectations regarding
The economy as a whole may perform better than expected in
the KION Group’s financial performance in 2018. Nevertheless,
2018. In addition, circumstances may occur in the wider market
the individual activities could create positive effects that exceed
at any time – such as quality problems at competitors or the
expectations. There is also a possibility that new strategic oppor-
effects of consolidation – that increase demand for products from
tunities that were not part of the planning may arise over the
the KION Group brands. New, unforeseen regulatory initiatives
course of the year, for example in the form of acquisitions and
could be launched, for example the tightening of health and safety
strategic partnerships.
regulations or emissions standards, that would push up demand
The KION Group’s medium- to long-term strategic opportu-
for products offered by the KION Group brands. Average prices
nities in the Industrial Trucks & Services segment arise, in par-
for procuring commodities over the year may be cheaper than
ticular, from:
anticipated. Medium- to long-term market opportunities are pre-
sented, in particular, by:
– growing demand for intralogistics products, solutions and
services as a consequence of globalisation, industrialisation
and fragmentation of supply chains as well as efficiency
increases that are needed due to limited warehouse space
and changing consumer requirements
– high demand for replacement investments, especially in
– the trend towards outsourcing service functions, particularly
developed markets
in the market for industrial trucks, and growth in demand for
finance solutions
– increased use of industrial and warehouse trucks powered
by electric motors – one of the KION Group’s particular
strengths
– growing demand for automation solutions and fleet manage-
ment solutions in connection with the rapidly expanding e-com-
merce sector and the implementation of Industry 4.0 projects
– achievement of a leading global market and technology posi-
tion with regard to truck automation and innovative drive
technologies as an integral element of automated warehouse
solutions
– a greater presence in the economy and volume price seg-
ments, particularly as a result of the systematic implementa-
tion of the segment-wide platform strategy
– further strengthening of its market-leading position in the
EMEA region and achievement of a significant position in the
Americas region, in particular by boosting its technological
expertise, making greater use of shared modules and har-
nessing potential for cross-selling
– expansion of the service portfolio, including financial services,
at every stage of the product lifecycle, taking advantage of
the high number of trucks in use and the installed base of
supply chain solutions
KION GROUP AG | Annual Report 2017 122
The KION Group’s medium- to long-term strategic opportunities
The following may lead to an increase in profitability in the
in the Supply Chain Solutions segment arise, in particular, from
medium term:
sales and improve the gross margin.
– Ongoing efficiency increases at production sites may boost
– Effective use of global development capacities may create
– Activities to improve operational excellence and lower costs
synergies and economies of scale.
may help the KION Group to achieve future growth with a dis-
proportionately small rise in costs.
– further consolidation of its position in the market for intralo-
gistics solutions based on the growing acceptance of auto-
mation concepts,
– the advancing digitalisation and automation of production
– strengthening of the market position in the EMEA region –
and supply chains, and
above all, central and eastern Europe – by using the sales
structures of Industrial Trucks & Services.
Business-performance opportunities
Business-performance opportunities arise firstly from ongoing
activities to modernise and streamline the KION Group’s produc-
tion facilities and from the worldwide integration of the production
network. By investing in new locations and expanding existing
ones, products can be assembled nearer to the markets in which
they are to be sold, economies of scale can be achieved across
the Group and synergies can be leveraged. Secondly, activities
are carried out under the KION strategy aimed at improving oper-
ational excellence in logistics, technology & product development
and production and at lowering material and quality costs, for
example by reducing the complexity of the product range.
Annual Report 2017 | KION GROUP AG 123
KION GROUP AG | Annual Report 2017 Annual Report 2017 | KION GROUP AG CONSOLIDATED FINANCIAL STATEMENTS
Contents
125
CONSOLIDATED
FINANCIAL STATEMENTS
126
CONSOLIDATED INCOME STATEMENT
127
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
128
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
130
CONSOLIDATED STATEMENT OF CASH FLOWS
132
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
134
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
134
153
163
199
Basis of presentation
Notes to the consolidated income statement
Notes to the consolidated statement of financial position
Other disclosures
240
INDEPENDENT AUDITORS’ REPORT
248
RESPONSIBILITY STATEMENT
KION GROUP AG | Annual Report 2017 126
Consolidated income statement
Consolidated income statement
in € million
Revenue
Cost of sales
Gross profit
Selling expenses
Research and development costs
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
TABLE 039
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
2017
7,653.6
– 5,699.1
1,954.5
– 829.6
– 137.0
– 456.8
75.7
– 71.1
13.6
549.4
132.2
– 213.3
– 81.1
468.3
– 41.9
– 184.9
143.0
426.4
424.8
1.6
3.72
3.71
Annual Report 2017 | KION GROUP AG CONSOLIDATED FINANCIAL STATEMENTS
Consolidated income statement
Consolidated statement of comprehensive income
127
Consolidated statement of
comprehensive income
Consolidated statement of comprehensive income
TABLE 040
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
Gains / losses on hedge reserves
thereof changes in unrealised gains and losses
thereof realised gains (–) and losses (+)
thereof tax effect
Gains/losses on available-for-sale financial instruments
thereof changes in unrealised gains and losses
thereof tax effect
Gains / losses from equity-accounted investments
thereof changes in unrealised gains and losses
Other comprehensive loss (income)
Total comprehensive income
Attributable to shareholders of KION GROUP AG
Attributable to non-controlling interests
Note
[29]
[40]
2017
426.4
19.7
18.7
26.7
– 8.0
1.0
– 302.5
– 315.2
– 315.2
3.7
11.6
– 5.5
– 2.4
8.4
8.5
– 0.1
0.6
0.6
– 282.8
143.6
142.5
1.1
2016
246.1
– 50.4
– 50.1
– 66.9
16.7
– 0.2
68.9
70.5
70.5
– 1.7
21.8
– 24.0
0.4
–
–
–
0.1
0.1
18.5
264.6
264.6
– 0.1
* Prior-year figures were adjusted due to retrospective changes of the purchase price allocation (PPA) for Dematic, for details see note [5] to the consolidated financial statements
KION GROUP AG | Annual Report 2017 128
Consolidated statement of financial position
Consolidated statement of financial position – Assets
TABLE 041
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]
2017
3,382.5
2,333.9
522.3
651.4
676.9
80.3
647.8
57.1
24.2
370.5
8,746.9
768.6
1,094.1
228.0
14.4
119.0
84.3
173.2
2,481.5
2016
3,572.9
2,602.7
429.7
575.3
678.3
72.7
531.3
47.5
12.3
419.8
8,942.4
672.4
998.9
200.3
35.2
82.0
86.2
279.6
2,354.6
11,228.4
11,297.0
* Prior-year figures were adjusted due to retrospective changes of the purchase price allocation (PPA) for Dematic, for details see note [5] to the consolidated financial statements
Annual Report 2017 | KION GROUP AG CONSOLIDATED FINANCIAL STATEMENTS
Consolidated statement of financial position
129
Consolidated statement of financial position – Equity and liabilities
TABLE 042
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
Note
[28]
[29]
[30]
[31]
[32]
[34]
[35]
[14]
[30]
[33]
[31]
[14]
[32]
[34]
[35]
2017
117.9
3,034.0
521.3
– 528.8
4.4
3,148.8
1,002.7
2,024.8
798.2
95.6
407.8
235.7
665.2
2016
108.6
2,444.4
183.4
– 246.4
5.7
2,495.7
991.0
2,889.1
722.0
92.3
349.3
202.8
882.5
5,230.0
6,128.9
243.9
923.9
332.9
82.6
149.0
296.7
820.7
293.9
802.2
285.2
63.0
163.4
222.6
842.1
2,849.6
2,672.5
Total equity and liabilities *
11,228.4
11,297.0
* Prior-year figures were adjusted due to retrospective changes of the purchase price allocation (PPA) for Dematic, for details see note [5] to the consolidated financial statements
KION GROUP AG | Annual Report 2017 130
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
Change in net working capital *
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
Acquisition of subsidiaries (net of cash acquired) and other equity investments
[5], [37]
Cash receipts / payments for sundry assets
Cash flow from investing activities
[37]
[18], [22], [31]
– 143.6
– 120.4
TABLE 043
2016
434.8
454.7
45.0
1.7
2017
549.4
636.4
24.6
– 0.2
– 205.8
– 109.6
– 28.2
– 4.0
33.2
– 136.3
615.8
– 158.2
– 28.6
– 20.6
4.7
– 90.0
– 108.7
414.3
– 218.3
– 166.7
4.0
9.3
– 13.3
– 19.3
– 237.6
6.4
9.6
– 2,118.7
5.0
– 2,264.3
[19], [34]
[29]
[32]
[37]
[37]
[37]
Annual Report 2017 | KION GROUP AG CONSOLIDATED FINANCIAL STATEMENTS
Consolidated statement of cash flows
131
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 receipts / 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
TABLE 043
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
2017
598.6
2.3
– 4.3
– 86.9
– 2.7
0.5
– 7.4
2,425.3
– 3,340.0
7.5
– 58.1
– 7.3
– 472.5
– 12.2
0.2
– 106.4
176.5
279.6
173.2
103.1
279.6
Note
[37]
[28]
[37]
[37]
[37]
[37]
[37]
[37]
[37]
* Net working capital comprises inventories, trade receivables and unbilled construction contracts (net) less trade payables and advances received
KION GROUP AG | Annual Report 2017 132
Consolidated statement of changes in equity
Consolidated statement of changes in equity
in € million
Balance as at 01/01/2016
Net income for the year
Other comprehensive income (loss)
Comprehensive income (loss)
Dividend of KION GROUP AG
Capital increase
Transaction costs
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
Balance as at 01/01/2017
Net income for the year
Other comprehensive income (loss)
Comprehensive income (loss)
Dividend of KION GROUP AG
Capital increase
Transaction costs
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
Balance as at 31/12/2017
Retained
earnings
11.3
245.5
245.5
– 76.0
2.6
183.4
183.4
424.8
424.8
– 86.9
Note
Subscribed
capital
98.7
Capital
reserves
1,996.6
[28]
[28]
[28]
[28]
[28]
[28]
[28]
[28]
[28]
[28]
[28]
[28]
[28]
[28]
[28]
0.0
9.9
– 0.1
0.0
0.0
449.4
– 2.0
– 2.7
3.2
108.6
2,444.4
108.6
2,444.4
0.0
9.3
– 0.1
0.1
0.0
593.6
– 3.0
– 4.3
3.2
117.9
3,034.0
521.3
– 255.1
– 283.3
1.8
8.4
– 0.6
3,144.4
Accumulated other comprehensive income (loss)
Gains / losses
on available-
Gains / losses
attributable to
Gains / losses
Equity
Cumulative
on defined
Gains / losses
for-sale
from equity-
shareholders
Non-
translation
adjustment
benefit
on hedge
financial
accounted
of KION
controlling
obligation
reserves
instruments
investments
GROUP AG
interests
– 11.4
– 251.9
0.0
– 2.0
1,841.0
71.0
71.0
– 50.1
– 50.1
0.0
– 0.1
– 0.1
– 0.2
– 1.7
– 1.7
– 1.9
– 1.9
3.7
3.7
59.7
– 302.0
– 2.2
2,490.0
59.7
– 302.0
– 314.8
– 314.8
18.7
18.7
0.0
0.0
8.4
8.4
– 2.2
1.6
1.6
TABLE 044
Total
1,848.7
246.1
18.5
264.6
– 76.0
459.3
– 2.0
– 2.1
– 2.8
3.2
0.2
2.6
2,495.7
2,495.7
426.4
– 282.8
143.6
– 86.9
602.9
– 3.0
– 2.7
– 4.3
3.3
0.2
3,148.8
7.7
0.5
– 0.6
– 0.1
– 2.1
0.0
0.0
0.0
0.0
0.0
0.2
0.0
5.7
5.7
1.6
– 0.5
– 2.7
1.1
0.0
0.0
0.0
0.0
0.0
0.2
4.4
245.5
19.1
264.6
– 76.0
459.3
– 2.0
0.0
– 2.8
3.2
0.0
2.6
2,490.0
424.8
– 282.4
142.5
– 86.9
602.9
– 3.0
0.0
– 4.3
3.3
0.0
Annual Report 2017 | KION GROUP AG CONSOLIDATED FINANCIAL STATEMENTS
Consolidated statement of changes in equity
133
Consolidated statement of changes in equity
Dividends paid to non-controlling interests
Acquisition of treasury shares
Changes from employee share option programme
Effects from the acquisition / disposal of non-controlling
in € million
Balance as at 01/01/2016
Net income for the year
Other comprehensive income (loss)
Comprehensive income (loss)
Dividend of KION GROUP AG
Capital increase
Transaction costs
interests
Other changes
Balance as at 31/12/2016
Balance as at 01/01/2017
Net income for the year
Other comprehensive income (loss)
Comprehensive income (loss)
Dividend of KION GROUP AG
Capital increase
Transaction costs
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
Balance as at 31/12/2017
Retained
earnings
11.3
245.5
245.5
– 76.0
2.6
183.4
183.4
424.8
424.8
– 86.9
Note
Subscribed
capital
98.7
Capital
reserves
1,996.6
[28]
[28]
[28]
[28]
[28]
[28]
[28]
[28]
[28]
[28]
[28]
[28]
[28]
[28]
[28]
0.0
9.9
– 0.1
0.0
0.0
9.3
– 0.1
0.1
0.0
449.4
– 2.0
– 2.7
3.2
0.0
593.6
– 3.0
– 4.3
3.2
108.6
2,444.4
108.6
2,444.4
Accumulated other comprehensive income (loss)
Cumulative
translation
adjustment
Gains / losses
on defined
benefit
obligation
– 11.4
– 251.9
71.0
71.0
– 50.1
– 50.1
59.7
– 302.0
59.7
– 302.0
– 314.8
– 314.8
18.7
18.7
Gains / losses
on hedge
reserves
– 0.2
– 1.7
– 1.7
– 1.9
– 1.9
3.7
3.7
Gains / losses
on available-
for-sale
financial
instruments
Gains / losses
from equity-
accounted
investments
Equity
attributable to
shareholders
of KION
GROUP AG
0.0
– 2.0
1,841.0
0.0
– 0.1
– 0.1
245.5
19.1
264.6
– 76.0
459.3
– 2.0
0.0
– 2.8
3.2
0.0
2.6
0.0
0.0
8.4
8.4
– 2.2
2,490.0
– 2.2
1.6
1.6
2,490.0
424.8
– 282.4
142.5
– 86.9
602.9
– 3.0
0.0
– 4.3
3.3
0.0
117.9
3,034.0
521.3
– 255.1
– 283.3
1.8
8.4
– 0.6
3,144.4
TABLE 044
Total
1,848.7
246.1
18.5
264.6
– 76.0
459.3
– 2.0
– 2.1
– 2.8
3.2
0.2
2.6
2,495.7
2,495.7
426.4
– 282.8
143.6
– 86.9
602.9
– 3.0
– 2.7
– 4.3
3.3
0.2
3,148.8
Non-
controlling
interests
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
5.7
1.6
– 0.5
1.1
0.0
0.0
0.0
– 2.7
0.0
0.0
0.2
4.4
KION GROUP AG | Annual Report 2017 134
Notes to the consolidated financial statements
Basis of presentation
[1] GENERAL INFORMATION ON
[2] BASIS OF PREPARATION
THE COMPANY
The consolidated financial statements of the KION Group for the
KION GROUP AG, whose registered office is at Abraham-
financial year ended 31 December 2017 have been prepared in
Lincoln-Strasse 21, 65189 Wiesbaden, Germany, is entered in
accordance with section 315e of the German Commercial Code
the commercial register at the Wiesbaden local court under refer-
(HGB) in conjunction with the International Financial Reporting
ence HRB 27060. The Company has had a new business address
Standards (IFRSs) of the International Accounting Standards
since November 2017: Thea-Rasche-Strasse 8, 60549 Frankfurt
Board (IASB) applicable as at the reporting date as well as the
am Main, Germany.
associated interpretations (IFRICs) of the IFRS Interpretations
Shandong Heavy Industry Group Co., Ltd., Jinan, People’s
Committee (IFRS IC) as adopted by the European Union in
Republic of China, is the company that prepares the global
accordance with Regulation (EC) No. 1606 / 2002 of the European
consolidated financial statements for the largest number of
Parliament and of the Council concerning the application of
affiliated companies. These consolidated financial statements
international accounting standards. All of the IFRSs and IFRICs
are not publicly available.
that had been enacted by the reporting date and that were
Weichai Power Co., Ltd., Weifang, People’s Republic of China,
required to be applied in the 2017 financial year have been applied
is the company that prepares the global consolidated financial
in preparing the consolidated financial statements.
statements for the smallest number of affiliated companies.
In order to improve the clarity of presentation, certain items
These are available in English on the websites of the Hong
are aggregated in the statement of financial position and the
Kong Stock Exchange (www.hkexnews.hk) and the company
income statement. The items concerned are disclosed and
(www.weichaipower.com).
explained separately in the notes. Assets and liabilities are broken
The KION Group is a global leader in industrial trucks,
down into current and non-current items in accordance with
warehouse technology, related services and supply chain
IAS 1.60. The consolidated income statement is prepared in
solutions. In 2017, the Group’s approximately 32,000 highly
accordance with the cost of sales (function-of-expense) method.
skilled employees generated €7,653.6 million in revenue (2016:
The consolidated financial statements are prepared in euros,
€5,587.2 million).
which is the Group’s functional currency and reporting currency.
The consolidated financial statements and the combined
All amounts are disclosed in millions of euros (€ million) unless
group management report and management report of the
stated otherwise. The addition of the totals presented may result
Company were prepared by the Executive Board of KION
in minor rounding differences. The percentages shown are calcu-
GROUP AG on 21 February 2018.
lated on the basis of the respective amounts, rounded to the
nearest thousand euros. The separate financial statements of the
subsidiaries included in the consolidation were prepared as at
the same reporting date as the annual financial statements of
KION GROUP AG.
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
135
Basis of presentation
Financial reporting standards to be adopted
for the first time in the current financial year
– Amendments to IFRS 9 ‘Financial Instruments’: amendments
relating to the classification of particular prepayable financial
The following financial reporting standards were adopted for
the first time in 2017:
– Amendments to IFRS 12 ‘Disclosure of Interests in Other
Entities’: amendments in connection with the annual improve-
ments to IFRSs (2014–2016)
– Amendments to IAS 7 ‘Statement of Cash Flows’: amend-
– Amendments to IAS 12 ‘Income Taxes’: amendments relating
ments in connection with the disclosure initiative
to the recognition of deferred tax assets for unrealised losses
on available-for-sale financial assets.
The first-time adoption of these amendments to standards has
had no significant effect on presentation of the financial perfor-
mance, financial position or notes to the financial statements
of the KION Group. To provide a more detailed overview of the
assets
– IFRS 15 ‘Revenue from Contracts with Customers’
– Clarifications to IFRS 15 ‘Revenue from Contracts with
Customers’: amendments relating to the identification of
performance obligations, classification as principal or agent,
revenue from licences and transition relief
– IFRS 16 ‘Leases’
– IFRS 17 ‘Insurance Contracts’
– Amendments to IAS 19 ‘Employee Benefits’: amendments
in connection with the remeasurement of net defined benefit
liabilities resulting from plan amendments, curtailments or
settlements
– Amendments to IAS 28 ‘Investments in Associates and Joint
Ventures’: amendments in connection with the annual
improvements to IFRSs (2014–2016)
– Amendments to IAS 28 ‘Investments in Associates and Joint
Ventures’: clarification relating to the accounting treatment of
KION Group’s financing-related incoming and outgoing pay-
long-term interests that form part of the net investment in the
ments, a reconciliation of liabilities arising from financing activities
in the current reporting period has been added in note [37] in
connection with improvements to the disclosure requirements.
Financial reporting standards released but not
yet adopted
In its consolidated financial statements for the year ended 31 Decem-
associate or joint venture
– Amendments to IAS 40 ‘Investment Property’: clarification
in relation to transfers of property to, or from, investment
property
Consideration’
– IFRIC 22 ‘Foreign Currency Transactions and Advance
– IFRIC 23 ‘Uncertainty over Income Tax Treatments’
– Annual Improvements to IFRSs (2015 – 2017).
ber 2017, the KION Group has not applied the following standards
These standards and interpretations are expected to be
and interpretations, which have been issued by the IASB but were
applied by the entities included in the KION Group only from
not yet required to be adopted in 2017:
the date of mandatory initial application. An exception is IFRS
– Amendments to IFRS 2 ‘Share-based Payment’: amendments
relating to the classification and measurement of share-based
16 ‘Leases’, which because of its interactions with IFRS 15
‘Revenue from Contracts with Customers’ is being adopted
early, on 1 January 2018.
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’
KION GROUP AG | Annual Report 2017 136
For the majority of financial assets, the new classification rules in
of such transactions – previously regarded as sales transactions
IFRS 9 do not require any change to the respective measurement
– being categorised as leases in future. In particular, this will
model. However, the first-time adoption of IFRS 9 primarily results
cause leased assets to rise by between €660.0 million and
in changes to the subsequent measurement of financial assets.
€720.0 million. Correspondingly, there will be additional residu-
The KION Group applies the simplified impairment approach of
al-value liabilities of between €290.0 million and €350.0 million as
IFRS 9 for the majority of financial assets and thus recognises life-
well as deferred revenues of between €520.0 million and
time expected losses. As a result of the new impairment model,
€580.0 million. The KION Group is adopting IFRS 16 retrospec-
which is based on expected losses, the KION Group expects the
tively for the first time with effect from 1 January 2018; it will
loss allowance recognised for counterparty risks to be reduced
restate the prior-year figures in accordance with the pertinent tran-
by between €25.0 million and €35.0 million. The KION Group is
sitional provisions. As a result of retrospective adoption, the
adopting IFRS 9 for the first time from 1 January 2018; as per-
decrease in retained earnings as at 1 January 2017 is likely to be
mitted under the applicable transitional provisions, the prior-year
in the region of €145.0 million to €195.0 million.
figures will not be restated. Furthermore, it is expected that all
The effects of the first-time adoption of the other aforemen-
existing hedging relationships will also satisfy the requirements
tioned standards and interpretations on the presentation of the
in IFRS 9 regarding hedge accounting. The amended hedge
financial position and financial performance of the KION Group
accounting requirements are applied prospectively.
are expected to be immaterial.
Based on the analysis of the implications of the first-time
adoption of IFRS 15 as at the transition date, it is expected that
the revenue recognition pattern (point in time vs. over time) for
the vast majority of today’s new business and service business
contracts as well as construction contracts will not change. In the
Supply Chain Solutions segment, KION expects that revenue will
[3] PRINCIPLES OF CONSOLIDATION
have to be recognised later for only a few, individual construction
Acquisitions are accounted for using the acquisition method. In
contracts currently accounted for by the percentage-of-comple-
accordance with IFRS 3, the identifiable assets and the liabilities
tion method in accordance with IAS 11, because the IFRS 15
assumed on the acquisition date are recognised separately
criteria for revenue recognition over time are not met. The result-
from goodwill, irrespective of the extent of any non-controlling
ing effect on the financial position of the KION Group is expected
interests. The identifiable assets acquired and the liabilities
to be less than €50.0 million and for the financial performance
assumed are measured at their fair value.
insignificant. The KION Group is adopting IFRS 15 retrospectively
The amount recognised as goodwill is calculated as the
for the first time with effect from 1 January 2018 and is restating
amount by which the acquisition cost, the amount of non-con-
the prior-year figures accordingly. Overall, there is no material
trolling interests in the acquiree and the fair value of all previously
impact on retained earnings as at 1 January 2017.
held equity interest at the acquisition date exceeds the fair value
Analysis of the first-time adoption of IFRS 16 indicates
of the acquiree’s net assets. If the cost of acquisition is lower
that, as at the transition date, all off-balance procurement leases
than the fair value of the acquiree’s net assets, the difference is
that were previously recognised as operating leases must in
recognised in income.
future be recorded in the statement of financial position as a right
For each acquisition, the Group decides on a case-by-
of use asset plus a corresponding lease liability. This will result
case basis whether the non-controlling interest in the acquiree
in additional right of use assets of between €240.0 million and
is recognised at fair value or as a proportion of the net assets
€280.0 million as well as liabilities from procurement leases of
of the acquiree. KION GROUP AG recognises non-controlling
between €260.0 million and €300.0 million. Moreover, in relation
interests at the proportionate value of the net assets attributa-
to indirect end customer financing, the application of IFRS 15
ble to them excluding goodwill.
and IFRS 16 is expected to result in a not insignificant proportion
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
137
Basis of presentation
In the case of business combinations in stages, previously held
equity interests are recognised at their fair value at the acquisition
date. The difference between their carrying amount and fair value
is recognised in the consolidated income statement.
[4] BASIS OF CONSOLIDATION
For the purpose of impairment testing, goodwill is allo-
KION GROUP AG’s equity investments include subsidiaries,
cated to cash-generating units that are likely to benefit from
joint ventures, associates and financial investments.
the business combination.
In addition to KION GROUP AG, the consolidated financial
Transaction costs are immediately taken to income. Contingent
statements of the KION Group include, using the acquisition
consideration elements are included at fair value at the date of
method, all material subsidiaries over which KION GROUP AG
acquisition when determining the purchase consideration. Con-
exercises control. KION GROUP AG controls a subsidiary if it has
tingent consideration elements may consist of equity instruments
decision-making power over the main activities of the entity and
or financial liabilities. Depending on the category, changes in their
can use this power to affect the amount of the variable returns to
fair value are included in subsequent measurements.
which it is exposed as a result of the equity investment. Subsidi-
The consolidated financial statements include all of the
aries acquired in the course of the financial year are consolidated
parent company’s material subsidiaries. Intragroup balances,
from the date on which control is obtained. Companies sold in the
transactions, income and expenses, and gains and losses on
course of the financial year are deconsolidated from the date on
intercompany transactions are eliminated in full. Deferred taxes
which control is lost.
are recognised on temporary differences arising from consoli-
A joint venture is an equity interest in which the entity is jointly
dation transactions.
managed by companies in the KION Group and one or more
Transactions with non-controlling interests are treated as
partners on the basis of a contractual agreement, and these
transactions with the Group’s equity providers. Differences
parties have rights to the net assets of the joint venture.
between the consideration paid for the acquisition of a non-con-
Associates are entities in which companies in the KION Group
trolling interest and the relevant proportion of the carrying amount
are able to exercise significant influence, either directly or indi-
of the subsidiary’s net assets are recognised in equity. Gains and
rectly, over the financial and operating policies of the entity con-
losses arising from the sale of non-controlling interests are also
cerned. Significant influence is assumed when KION GROUP AG
recognised in equity, provided there is no change in control.
holds between 20 per cent and 50 per cent of the voting rights.
Associates and joint ventures that are of material impor-
Equity interests over which KION GROUP companies are
tance to the presentation of the financial position and financial
unable to exercise control or a significant influence, or that are not
performance of the KION Group are accounted for using the
jointly controlled by them, are classified as financial investments.
equity method.
The number of equity investments broken down by category
is shown in > TABLE 045.
KION GROUP AG | Annual Report 2017 138
Shareholdings by categories
TABLE 045
01/01/2017
Additions
Disposals
31/12/2017
Consolidated subsidiaries
Domestic
Foreign
Equity-accounted associates and joint ventures
Domestic
Foreign
Non-consolidated subsidiaries and other investments
Domestic
Foreign
139
25
114
9
5
4
60
13
47
7
1
6
–
–
–
3
3
–
8
2
6
–
–
–
7
1
6
138
24
114
9
5
4
56
15
41
A total of 24 German (2016: 25) and 114 foreign (2016: 114) sub-
These non-consolidated subsidiaries and other equity invest-
sidiaries were fully consolidated in addition to KION GROUP AG
ments (joint ventures and associates that are not accounted
as at 31 December 2017.
for using the equity method, plus financial investments) are of
In connection with the integration of Egemin and Retrotech
minor importance to the presentation of the financial position
into Dematic, a total of five subsidiaries were merged into other
and financial performance of the KION Group, both individually
subsidiaries and were therefore no longer included in the basis of
and as a whole.
consolidation. KION Supply Chain Solutions Czech, s.r.o., Český
Where other requirements are met, the fully consolidated
Krumlov, Czech Republic, was founded in January 2017 and will
companies listed in > TABLE 046 are exempt from the obligation
start manufacturing modules for Dematic’s automated conveyor
to disclose annual financial statements and to prepare notes to
systems from early 2018.
the financial statements and management reports in accordance
As had been the case a year earlier, nine joint ventures and
with sections 264 (3) and 264b HGB on account of their inclusion
associates were accounted for under the equity method as at
in the consolidated financial statements. In the case of STILL
31 December 2017. In each case, the last available annual
Financial Services GmbH, it has been decided solely not to
financial statements were used as the basis for measurement.
disclose the annual financial statements.
Equity investments in 56 (2016: 60) companies with mini-
A detailed overview of all the direct and indirect sharehold-
mal business volumes or no business operations were gener-
ings of KION GROUP AG is shown in the list of shareholdings
ally recognised at amortised cost. This includes the start-up
(note [47]).
Comnovo GmbH, which was acquired by Linde Material Han-
dling GmbH in July 2017. The financial investment in Balyo SA is
measured at fair value due to Balyo’s IPO in 2017.
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
139
Basis of presentation
German entities exempted from disclosure requirements
Entities exempted
BlackForxx GmbH
Eisenwerk Weilbach GmbH
Fahrzeugbau GmbH Geisa
KION Financial Services 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
LR Intralogistik GmbH
Schrader Industriefahrzeuge GmbH & Co. KG
STILL Financial Services GmbH
STILL Gesellschaft mit beschränkter Haftung
Urban-Transporte Gesellschaft mit beschränkter Haftung
TABLE 046
Head office
Stuhr
Wiesbaden
Geisa
Wiesbaden
Frankfurt am Main
Reutlingen
Haan
Aschaffenburg
Aschaffenburg
Aschaffenburg
Wörth an der Isar
Essen
Hamburg
Hamburg
Unterschleißheim
KION GROUP AG | Annual Report 2017 140
[5] ACQUISITIONS
the purchase price allocations did not have a material impact
on the KION Group’s consolidated income statement.
Dematic purchase price allocation
Other acquisitions
The purchase price allocation for the acquisition of DH Services
With effect from 3 October 2017, the remaining share capital
Luxembourg Holding S.à r.l., Luxembourg, on 1 November 2016
and voting rights (75.0 per cent) in Nordtruck AB, Örnsköldsvik,
that was recognised in the consolidated financial statements of
Sweden, were acquired. The purchase consideration for these
KION GROUP AG as at 31 December 2016 was provisional.
shares was €4.8 million. Remeasurement of the investment of
As part of the finalisation of the purchase price allocation
25.0 per cent previously held, which had been recognised at
(PPA) for the acquisition of Dematic in the third quarter of 2017,
cost, resulted in a fair value of €1.6 million. The difference of
the intangible assets were allocated to individual companies. This
€1.5 million resulting from remeasurement was taken to income
adjustment resulted in a reduction of deferred tax liabilities and a
and recognised in the consolidated income statement under
corresponding decline of €13.1 million in goodwill.
other income.
As a result of the retrospective restatement of the purchase
Furthermore, the remaining share capital and voting rights
price allocation as at 1 November 2016, adjustments were also
(50.0 per cent) in Eisengiesserei Dinklage GmbH, Dinklage,
made to the carrying amounts as at 31 December 2016. These
Germany, were acquired with effect from 15 November 2017.
adjustments are presented in > TABLE 047.
The purchase consideration for these shares was €2.4 million.
Remeasurement of the investment of 50.0 per cent previously
Currency translation effects as at 31 December 2016 fell by a
held, which had been recognised at cost, resulted in a fair value
total of €39.4 million because goodwill and other intangible assets
of €2.4 million. The difference of €0.9 million resulting from
had been allocated to individual companies for the purposes of
remeasurement was taken to income and recognised in the
foreign currency translation. The retrospective adjustments to
consolidated income statement under other income.
Consolidated statement of financial position
TABLE 047
in € million
Assets
Goodwill
Other intangible assets
Other property, plant and equipment
Deferred taxes
Equity and liabilities
Accumulated other comprehensive income
Deferred taxes
31/12/2016
Before
Adjustments
Adjustment
Purchase price
allocation Dematic
Effects from
exchange
differences
31/12/2016
After
Adjustments
3,605.8
2,630.9
679.1
420.2
– 207.0
905.3
– 13.1
0.0
–
– 0.3
–
– 13.3
– 19.8
– 28.2
– 0.8
– 0.1
– 39.4
– 9.5
3,572.9
2,602.7
678.3
419.8
– 246.4
882.5
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
141
Basis of presentation
Impact of the other acquisitions on the financial position of the KION Group
TABLE 048
in € million
Goodwill
Other property, plant and equipment
Leased / Rental assets
Lease receivables
Trade receivables
Cash and cash equivalents
Other assets
Total assets
Financial liabilities
Lease liabilities
Trade payables
Other liabilities
Total liabilities
Total net assets
Cash payment
Consideration transferred
Previously held share of equity
Total
Fair value at the
acquisition date
9.5
3.7
1.0
7.3
3.8
0.3
5.2
30.7
4.0
7.9
3.6
4.1
19.6
11.1
7.2
7.2
4.0
11.1
The impact of these acquisitions on the consolidated financial
The line item ‘Acquisition of subsidiaries (net of cash acquired)
statements of KION GROUP AG based on the figures available
and other equity investments’ in the consolidated statement of
at their acquisition dates is shown in > TABLE 048.
cash flows contains a net cash outflow totalling €6.9 million for
these transactions.
The goodwill constitutes the strategic, technological and geo-
The purchase price allocations for the other acquisitions
graphical synergies that the KION Group expects to derive from
presented were considered provisional as at 31 December 2017
these business combinations. None of the goodwill arising from
because some details, particularly the measurement of intangible
the other acquisitions is currently tax deductible. The goodwill
assets, provisions and leases, had not yet been fully evaluated.
derived from Nordtruck AB is assigned to the LMH EMEA Oper-
In addition, the deferred taxes should be considered provisional.
ating Unit, while that derived from Eisengiesserei Dinklage GmbH
is assigned to the STILL EMEA Operating Unit.
KION GROUP AG | Annual Report 2017 142
[6] CURRENCY TRANSLATION
Financial statements in foreign currencies are translated in
accordance with the functional currency concept (IAS 21 ‘The
Effects of Changes in Foreign Exchange Rates’). The functional
currency is the currency of the primary economic environment
in which an entity operates. The modified closing-rate method
is used for currency translation.
translation differences are taken to income and recognised in
other income/expenses or in net financial income / expenses.
The translation rates used for currencies that are material to
the financial statements are listed in > TABLE 049.
[7] ACCOUNTING POLICIES
The assets and liabilities of foreign subsidiaries, including
The accounting policies applied in these consolidated financial
goodwill, are translated at the middle spot exchange rate, i.e. at
statements are, besides the aforementioned accounting policies
the average of the bid or offer rates on the reporting date. Income
to be adopted for the first time in 2017, fundamentally the same as
and expenses are translated at the average rate. With the excep-
those used for the year ended 31 December 2016. These consol-
tion of income and expenses recognised as other comprehensive
idated financial statements are based on the financial statements
income (loss), equity is recognised at historical rates. The resulting
of the parent company and its consolidated subsidiaries pre-
translation differences are not taken to income and are recog-
pared in accordance with the standard accounting policies appli-
nised in other comprehensive income (loss) until subsidiaries
cable throughout the KION Group.
are disposed of.
The financial statements of foreign equity-accounted invest-
ments are also translated using the method described above.
Revenue recognition
Transactions of the consolidated entities in foreign currencies
are translated into the relevant company’s functional currency at
Revenue is the fair value of the consideration received for the sale
the rate prevailing on the transaction date. On the reporting date,
of products and services and rental and lease income (excluding
monetary items are translated at the closing rate and non-mone-
VAT) after deduction of trade discounts and rebates. In accordance
tary items at the rate prevailing on the transaction date. Currency
with IAS 18, revenue is recognised when it is sufficiently probable
Major foreign currency rates in €
Australia (AUD)
Brazil (BRL)
China (CNY)
United Kingdom (GBP)
U.S.A. (USD)
Average rate
Closing rate
2017
1.4734
3.6090
7.6292
0.8764
1.1300
2016
1.4884
3.8560
7.3501
0.8193
1.1069
2017
1.5372
3.9785
7.8024
0.8881
1.2005
TABLE 049
2016
1.4597
3.4288
7.3382
0.8535
1.0517
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
143
Basis of presentation
that a future economic benefit will accrue to the entity and that
Construction contracts
it can be reliably measured. Other criteria may arise, depending
on each individual transaction, such as:
Revenue from construction contracts is recognised according to
the stage of completion (percentage-of-completion method).
Sale of goods
Revenue from the sale of goods is recognised when the
KION Group delivers goods to a customer, the risks and rewards
Interest income is recognised pro rata temporis in accordance
incidental to the ownership of the goods sold are substantially
with the effective interest method. Income from royalties is
transferred to the customer and the flow of benefits to the Group
deferred in accordance with the substance of the relevant agree-
is considered to be sufficiently probable. If a customer is expected
ments and recognised pro rata temporis.
Interest income and royalties
to accept goods but has yet to do so, the corresponding revenue
is only recognised when the goods are accepted. Appropriate
provisions are recognised for risks relating to the sale of goods.
Cost of sales
Rendering of services
The cost of sales comprises the cost of goods and services sold
and includes directly attributable material and labour costs as
Revenue from the rendering of services is recognised in the year
well as directly attributable overheads, including depreciation of
in which the services are rendered. For services provided over
production equipment, amortisation expense on capitalised
several periods, revenue is recognised in accordance with the
development costs and certain intangible assets, and write-
proportion of the total services rendered in each period (stage of
downs of inventories. Cost of sales also includes additions to
completion). Revenue from long-term service agreements is
warranty provisions, which are recognised in the amount of the
therefore recognised on the basis of the average term of the service
estimated cost at the date on which the related product is sold.
agreements and in line with progressive costs (constant margin).
Revenue from financial service transactions is recognised in
the amount of the sale value of the leased asset if classified as a
Financial income and expenses
finance lease and in the amount of the lease payments if classi-
fied as an operating lease. If industrial trucks are first sold to and
Financial income and expenses mainly consist of interest
then leased back from a finance partner to refinance leases, the
expenses on financial liabilities, interest income from financial
selling margin in connection with an operating lease sub-lease is
receivables, interest income from leases and the interest cost on
deferred and recognised as revenue in profit or loss over the term
leases, exchange rate gains and losses on financial activities and
of the refinancing. In addition, as part of the financial services pro-
the net interest cost of the defined benefit obligation.
vided by the Group, industrial trucks are sold to finance partners
Interest income and expenses are recognised in profit and
who enter into leases directly with the end customer (‘indirect end
loss in accordance with the effective interest method. The effec-
customer finance’). If significant risks and rewards remain with
tive interest method is used for calculating the amortised cost of
KION Group companies as a result of an agreed residual value
a financial asset or financial liability and the allocation of interest
guarantee that accounts for more than 10 per cent of the asset’s
income and interest expenses over the relevant periods.
value or as a result of an agreed customer default guarantee (‘sale
Dividends are recognised in income when a resolution on
with risk’), the proceeds from the sale are deferred and recog-
distribution has been passed. They are reported in the consoli-
nised as revenue on a straight-line basis over the term until the
dated income statement under other income, provided they are
residual value guarantee or the default guarantee expires.
dividends from subsidiaries carried at cost.
KION GROUP AG | Annual Report 2017 144
Goodwill
Yield curve data from the European Central Bank (three-
month average, rounded) was used to determine the risk-free
Goodwill has an indefinite useful life and is therefore not amor-
interest rate; as at 1 November 2017, the rate was 1.25 per cent
tised. Instead, it is tested for impairment in accordance with IAS
(1 November 2016: 0.6 per cent). The market risk premium
36 ‘Impairment of Assets’ at least once a year, and more fre-
derived from empirical studies of the capital markets was set at
quently if there are indications that the asset might be impaired.
6.75 per cent (2016: 7.0 per cent) and was within the band recom-
Impairment testing for goodwill is performed at the level of
mended by the technical committee for business valuation and
the individual cash-generating units (CGUs) or groups of CGUs.
administration (FAUB) of the German Institute of Auditors (IDW),
A CGU is defined as the smallest identifiable group of assets
which is 5.5 per cent to 7.0 per cent.
that generates cash inflows from continuing use that are largely
The implied return on equity was 8.0 per cent, which was
independent of the cash inflows from other assets or groups of
slightly higher than in the previous year (2016: 7.6 per cent). The
assets. CGUs are generally based on the lowest level of an entity
mark-up for the assumed country risk was 0.16 per cent for the
at which – for internal management purposes – the management
LMH EMEA CGU (2016: 0.16 per cent), 0.19 per cent for the STILL
systematically monitors and controls goodwill. However, a CGU
EMEA CGU (2016: 0.21 per cent), 0.85 per cent for the KION
may not be larger than an operating segment as defined in
APAC CGU (2016: 0.78 per cent), 1.62 per cent for the KION
IFRS 8 ‘Operating Segments’.
Americas CGU (2016: 1.67 per cent) and 0.11 per cent for the
For the purposes of internal and external reporting, the activ-
Dematic CGU (2016: 0.15 per cent).
ities of the KION Group are broken down into the Industrial Trucks
The underlying capital structure for the LMH EMEA, STILL
& Services, Supply Chain Solutions and Corporate Services
EMEA, KION APAC and KION Americas CGUs is determined by
segments. The 2017 forecast, the budget for 2018, the medium-
comparing peer group companies in the same sector. The beta
term planning for 2019 to 2020 and the KION Group’s internal
factor derived from this peer group was 1.05 (2016: 1.00). A lever-
projections for 2021 to 2022 were drawn up on the basis of this
age ratio of 26.8 per cent (2016: 25.8 per cent) was calculated
reporting structure.
based on the capital structure determined for the peer group.
The CGUs identified for the purposes of testing goodwill and
Based on a sector-specific peer group, a leveraged beta of
brand names for impairment equate to the Operating Units LMH
0.89 (2016: 0.88) and a leverage ratio of 0.0 per cent (2016:
EMEA, STILL EMEA, KION APAC, KION Americas in the segment
1.8 per cent) were used for the Dematic CGU.
Industrial Trucks & Services and Dematic in the segment Supply
The WACC before tax, which is used to discount the esti-
Chain Solutions.
mated cash flows, was calculated at 9.3 per cent for LMH
The recoverable amount of a CGU is determined by calcu-
EMEA, 9.3 per cent for STILL EMEA, 8.9 per cent for KION
lating its value in use on the basis of the discounted cash flow
APAC, 11.7 per cent for KION Americas and 9.8 per cent for
method. The cash flows forecast for the next five years are
Dematic. The WACC after tax was 6.6 per cent for LMH EMEA,
included in the calculation for the impairment test in accordance
6.7 per cent for STILL EMEA, 7.6 per cent for KION APAC,
with IAS 36.33(b). The financial forecasts are based on assump-
7.8 per cent for KION Americas and 7.6 per cent for Dematic.
tions relating to the development of the global economy, com-
The impairment test carried out in the fourth quarter of 2017
modity prices and exchange rates. Cash flows beyond the
did not reveal any need to recognise impairment losses for the
five-year planning horizon were extrapolated for the LMH EMEA,
existing goodwill recognised for the LMH EMEA, STILL EMEA,
STILL EMEA, KION APAC, KION Americas and Dematic CGUs
KION APAC, KION Americas and Dematic CGUs. Using sensitiv-
using a growth rate of 0.5 per cent (2016: 0.5 per cent).
ity analysis, it was determined that no impairment losses need to
CGU cash flows are discounted using a weighted average
be recognised for goodwill, even if key assumptions vary within
cost of capital (WACC) that reflects current market assessments
realistic limits, in particular variations in WACC of plus or minus
of the specific risks to individual CGUs.
100 basis points.
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
145
Basis of presentation
– the likelihood that the intangible asset will generate future
– the availability of adequate technical, financial and other
economic benefits,
resources to complete the development and to use or sell the
intangible asset, and
– the ability to reliably measure the expenditure attributable to
the intangible asset during its development.
Other intangible assets
Other purchased intangible assets with a finite useful life are
carried at historical cost less all accumulated amortisation and
all accumulated impairment losses. If events or market develop-
ments suggest impairment has occurred, impairment tests are
carried out on the carrying amount of items classified as other
intangible assets with a finite useful life. The carrying amount of
an asset is compared with its recoverable amount, which is
Capitalised development costs include all costs and overheads
defined as the higher of its value in use and its fair value less costs
directly attributable to the development process. Once they have
to sell. If the reasons for recognising impairment losses in the past
been initially capitalised, these costs and internally generated
no longer apply, the relevant impairment losses are reversed, but
intangible assets – particularly internally generated software – are
subject to a limit such that the carrying amount of the asset is no
carried at cost less accumulated amortisation and accumulated
higher than its amortised cost.
impairment losses. Internally generated intangible assets are
Other intangible assets with an indefinite useful life are
not qualifying assets so finance costs are not capitalised. All
carried at cost and are capitalised brand names. Brand names
non-qualifying development costs are expensed as incurred and
are not amortised because they have been established in the
reported in the income statement under research and develop-
market for a number of years and there is no foreseeable end to
ment costs together with research costs.
their useful life. In accordance with IAS 36, they are tested for
Amortisation of intangible assets with a finite useful life is
impairment at least once a year or whenever there are indications
recognised on a straight-line basis and, with the exception of
that the asset might be impaired. The impairment test is per-
the amortisation expense on capitalised development costs, is
formed in the same way as the impairment test for goodwill and
reported under functional costs. The impairment losses on
uses the same assumptions. Assessments of indefinite useful life
intangible assets are reported under other expenses.
are carried out in every period.
The useful lives shown in > TABLE 050 are applied in deter-
Development costs are capitalised if the following can be
mining the carrying amounts of other intangible assets.
demonstrated:
– the technical feasibility of the intangible asset,
– the intention to complete the intangible asset and use or sell it,
– the ability to use or sell the intangible asset,
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
KION GROUP AG | Annual Report 2017 146
Leases / short-term rentals
for these long-term customer leases, which are funded for terms
that match those of the leases, are recognised as lease liabilities.
KION Group entities lease industrial trucks and related items of
equipment to their customers in order to promote sales. The
leases may be of a short-term nature (short-term rental) or
Rental assets
long-term nature (leasing).
Entities in the KION Group enter into leases as lessors and as
Rental assets are assets resulting from short-term rentals as well
lessees. In line with IAS 17, these contracts are classified as
as industrial trucks in relation to which significant risks and
finance leases if substantially all of the risks and rewards incidental
rewards remain with the KION Group despite the trucks having
to ownership of the leased / rental asset are transferred to the
been sold (‘sale with risk’).
lessee. All other rentals and leases are classified as operating
In the case of short-term rentals, entities in the Industrial
leases, again in accordance with IAS 17.
Trucks & Services segment rent industrial trucks to end custom-
If a KION Group entity enters into a finance lease as the
ers directly. Short-term rental agreements usually have a term of
lessor, the future lease payments to be made by the customer are
one day to one year. The risks and rewards remain substantially
recognised as lease receivables at an amount equal to the net
with the entities in the Industrial Trucks & Services segment.
investment in the lease. Interest income is allocated to each
The industrial trucks are carried at cost and depreciated on a
reporting period in order to ensure a constant return on the
straight-line basis over the normal useful life of between five
outstanding net investment in the lease.
and seven years, depending on the product group. If a sale-and-
Leased assets
leaseback arrangement is in place for refinancing purposes,
the assets are reported in the statement of financial position at
the lower of the present value of the minimum rental payments
and fair value.
If the beneficial ownership of leased assets remains with a
In an indirect end customer finance arrangement, industrial
KION Group entity as the lessor under an operating lease, the
trucks are sold to finance partners who enter into leases with
assets are reported as leased assets in a separate item in the
end customers. If entities in the Industrial Trucks & Services
statement of financial position. The leased assets are carried at
segment provide residual value guarantees on a significant scale
cost and depreciated on a straight-line basis over the term of
or provide a customer default guarantee (‘sale with risk’), these
the underlying leases.
transactions, which are classified as sale agreements under civil
To fund leases, industrial trucks are generally sold to leasing
law, are recognised in accordance with the provisions relating
companies. The industrial trucks are then leased back to entities
to lessors with operating leases in conjunction with the IFRS
in the Industrial Trucks & Services segment (head lease), who
principles for revenue recognition. In this case, the trucks are
sub-lease them to external end customers (described below as
recognised as assets in the statement of financial position at their
‘sale and leaseback sub-leases’). If, in the case of sale and lease-
cost on the date of the sale and written down to their guaranteed
back sub-leases, the risks and rewards incidental to the head
residual value, or zero, on a straight-line basis over the period
lease are substantially borne by entities in the Industrial Trucks &
until the residual value guarantee or the customer default guaran-
Services segment, the corresponding assets are reported as
tee expires. If the KION Group provides a residual value guarantee,
leased assets within non-current assets. These leased assets are
an amount equivalent to the residual value obligation is recog-
reported in the statement of financial position at the lower of the
nised under other financial liabilities.
present value of the minimum lease payments and fair value.
However, if substantially the risks and rewards incidental to the
head lease are transferred to the end customer, a corresponding
lease receivable is recognised. In both cases, the funding items
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
147
Basis of presentation
Other property, plant and equipment
Property, plant and equipment covered by finance leases is
depreciated over the shorter of its useful life or the term of the
Property, plant and equipment is carried at cost less straight-
lease, unless title to the leased assets passes to the lessee when
line depreciation and impairment losses. The cost of internally
the lease expires, in which case the property, plant and equip-
generated machinery and equipment includes all costs directly
ment is depreciated and the other financial liabilities are reversed
attributable to the production process and an appropriate por-
over the useful life of the leased assets.
tion of production overheads. This includes production-related
The difference between total finance lease liabilities and the
depreciation and proportionate costs for administration and
fair value of the financed leased assets represents the finance
social insurance / employee benefits.
charge which is recognised in the income statement over the
The cost of property, plant and equipment is reduced by the
term of the lease at a constant rate of interest on the outstanding
amount of any government grants received, provided the relevant
balance in each period. At the end of the lease term, the leased
requirements are met. Expenses for maintenance and repairs are
assets are returned or purchased, or the contract is extended.
recognised in income to the extent that they are not required to be
If there are certain indications of impairment of the property,
capitalised. Borrowing costs are capitalised for certain items of
plant and equipment, the assets are tested for impairment by
property, plant and equipment whose acquisition or production
comparing the residual carrying amount of the assets with their
exceeds one year as soon as the definition of a qualifying asset
recoverable amount, which is defined as the higher of value in use
is met. As was the case in the previous year, there were no quali-
and fair value less costs to sell. If the residual carrying amount is
fying assets in 2017.
greater than the recoverable amount, an impairment loss is rec-
Depreciation of property, plant and equipment is recognised
ognised for an asset. The impairment losses on property, plant
on a straight-line basis and reported under functional costs. The
and equipment are reported under other expenses.
useful lives and depreciation methods are reviewed annually and
If the recoverable amount is calculated on the basis of value
adjusted to reflect changes in conditions.
in use, the expected future cash flows are discounted using a
The useful lives below are applied in determining the carrying
risk-adjusted discount rate, taking into account the current and
amounts of items of property, plant and equipment. > TABLE 051
future level of earnings and segment-specific, technological,
economic and general trends.
KION Group companies also lease property, plant and equipment
If an impairment test for an item of property, plant and equip-
for their own use through finance leases, which are recognised as
ment is performed at the level of a cash-generating unit to which
other property, plant and equipment. In this case, the lower of the
goodwill is allocated and results in the recognition of an impair-
fair value and present value of future lease payments is recog-
ment loss, first the goodwill and, subsequently, the assets must
nised at the inception of the lease. A corresponding liability to
be written down in proportion to their relative carrying amounts. If
the lessor is recognised under other financial liabilities in the
the reason for an impairment loss recognised in prior years no
statement of financial position.
longer applies, the relevant impairment losses are reversed, but
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
KION GROUP AG | Annual Report 2017 148
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 and
Equity-accounted investments
interest carryforwards in subsequent years and whose utilisation
is reasonably certain according to current forecasts. On the basis
of this estimate, deferred tax assets have been recognised 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
carrying amount of the equity investment is adjusted in line with
concerned. In accordance with the provisions in IAS 12, deferred
any changes to the KION Group’s interest in the net assets of the
tax assets and liabilities are not discounted. Deferred tax assets
investee. The KION Group’s interest in the profit or loss generated
are offset against deferred tax liabilities to the extent that they
after acquisition is recognised in income. Other changes in the
have the same maturity and relate to the same taxation authority.
equity of associates and joint ventures are recognised in other
comprehensive income (loss) in the consolidated financial state-
ments in proportion to the Group’s interest in the associate or
Inventories
joint venture.
If the Group’s interest in the losses made by an associate or
Inventories are carried at the lower of cost and net realisable
joint venture exceeds the carrying amount of the proportionate
value. The acquisition costs of raw materials and merchandise
equity attributable to the Group, no additional losses are recog-
are calculated on the basis of an average. The cost of finished
nised. Any goodwill arising from the acquisition of an associate or
goods and work in progress includes direct costs and an
joint venture is included in the carrying amount of the investment
appropriate portion of the material and production overheads
in the associate or joint venture.
and production-related depreciation directly attributable to the
If there is evidence that an associate or joint venture may
production process. Administrative costs and social insur-
be impaired, the carrying amount of the investment in question
ance / employee benefits are included to the extent that they
is tested for impairment. The carrying amount of the asset is
are attributable to the production process. The amount recog-
compared with its recoverable amount. If the carrying amount is
nised is an average value or a value determined in accordance
greater than the recoverable amount, an impairment loss is rec-
with the FIFO method.
ognised for the equity investment.
Net realisable value is the selling price that can be realised
Income taxes
less the estimated costs of completion and the estimated costs
necessary to make the sale.
Write-downs are recognised for inventory risks resulting
from duration of storage, impaired recoverability, etc. If the
In the consolidated financial statements, current and deferred
reasons for the recognition of the write-downs no longer apply,
taxes are recognised on the basis of the tax laws of the jurisdictions
they are reversed, but subject to a limit such that the carrying
involved. Deferred taxes are recognised in other comprehensive
amount of the asset is no higher than its cost.
income (loss) if they relate to transactions also recognised in other
comprehensive income (loss).
Deferred tax assets and liabilities are recognised in accord-
Construction contracts
ance with the liability method for all temporary differences
between the IFRS carrying amounts and the tax base, as well as
Receivables and revenue from construction contracts are recog-
for temporary consolidation measures.
nised according to the stage of completion (percentage-of-com-
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
149
Basis of presentation
pletion method). The percentage of completion is the proportion
Other financial assets
of contract costs incurred up to the reporting date compared to
the total estimated contract costs as at the reporting date (cost-
Primary financial assets are initially recognised and derecognised
to-cost method). Under the percentage-of-completion method,
in the financial statements on their settlement dates.
construction contracts are measured at the amount of the con-
The KION Group differentiates between financial assets held
tract costs incurred to date plus the pro rata profit earned accord-
for trading at fair value through profit or loss (FAHfT), available for
ing to the percentage of completion. If it is probable that the total
sale financial assets (AfS) and financial assets classified as loans
contract costs will exceed the contract revenue, the expected
and receivables (LaR).
loss is immediately recognised as an expense in the financial year
The FAHfT category contains derivative financial instruments
in which the loss becomes apparent. If the contract costs incurred
that do not form part of a formally documented hedge. Derivative
and the profit and loss recognised exceed the progress billings,
financial instruments forming part of a documented hedge are not
the excess is recognised as an asset under trade receivables (see
assigned to any of the IAS 39 measurement categories.
note [26]). If the progress billings exceed the capitalised costs and
Available-for-sale financial assets (AfS) are carried at fair
recognised profit and loss, the excess is recognised as a liability
value. Unrealised gains and losses, including deferred taxes, are
under other liabilities (see note [35]).
reported in other comprehensive income (loss) until they are real-
If the outcome of a construction contract cannot be reliably
ised. Equity investments for which no market price is available are
estimated, the likely achievable revenue is recognised up to the
carried at cost less impairment losses, as observable fair values
amount of the costs incurred. Contract costs are recognised as
are not available and reliable results cannot be obtained using
an expense in the period in which they are incurred. Variations in
other permitted valuation techniques. At present there is no inten-
the contract work, claims and incentive payments are recognised
tion to sell these financial instruments.
if they are likely to result in revenue and their amount can be
In the first period in which they are recognised, financial
reliably estimated.
Trade receivables
assets categorised as loans and receivables (LaR) are carried
at fair value including directly attributable transaction costs. In
subsequent periods they are measured at amortised cost using
the effective interest method. Appropriate valuation allowances
are recognised for identifiable individual risks. Low-interest or
In the first period in which they are recognised, trade receivables
non-interest-bearing receivables due in more than one year are
categorised as loans and receivables (LaR) are carried at fair
carried at their present value.
value including directly attributable transaction costs. In subse-
Carrying amounts of financial assets are tested for impairment
quent periods they are measured at amortised cost using the
on every reporting date and whenever indications of impairment
effective interest method. Appropriate valuation allowances
arise. If there is an objective indication of impairment (such as a
are recognised for identifiable individual risks. Low-interest or
borrower being in significant financial difficulties), an impairment
non-interest-bearing receivables due in more than one year are
loss must be recognised directly in the income statement.
carried at their present value.
If objective facts in favour of reversing impairment losses are
Cash and cash equivalents
present on the reporting date, reversals are carried out to an
appropriate extent. The recognition of reversals must not result in
a carrying amount greater than the amortised cost that would
have arisen if the impairment loss had not been recognised. In the
Cash and cash equivalents comprise cash, credit balances with
case of debt instruments classified as available-for-sale financial
banks and current financial assets that can be transformed into
assets (AfS), reversals of impairment losses are recognised in the
cash at any time and are only subject to a minor level of volatility.
income statement.
KION GROUP AG | Annual Report 2017 150
Derivative financial instruments
plan assets used to cover the Group’s benefit obligations. Plan
assets are measured at fair value.
Derivative financial instruments are measured at their fair value
Remeasurements, including deferred taxes, are recognised
and are reported as financial assets or financial liabilities as at the
in other comprehensive income (loss). It is not permitted to reclas-
reporting date. They are initially recognised and derecognised in
sify remeasurements recognised in other comprehensive income
the financial statements on their settlement dates.
(loss) to profit or loss in future periods. The cost of additions to
Currently, derivative financial instruments in the KION Group
pension provisions is allocated to functional costs. The interest
mainly comprise currency forwards and interest-rate swaps
cost on pension obligations and the interest income from plan
that are used for hedging purposes to mitigate currency risk and
assets are netted and reported in net financial income / expenses.
interest-rate risk.
Further details can be found in note [29].
In accordance with IAS 39, all derivative financial instruments
must be measured at their fair value irrespective of an entity’s
purpose or intention in entering into the derivative contract. The
Other provisions
KION Group currently uses cash flow hedges for currency risk
and interest-rate risk.
Other provisions are recognised when the Group has a legal or
In the case of cash flow hedges, derivatives are employed to
constructive obligation to a third party as the result of a past event
hedge future cash flow risks from existing hedged items, planned
that is likely to lead to a future outflow of resources and that
transactions and firm obligations not reported in the statement of
can be reliably estimated. Where there is a range of possible
financial position. The effective portion of changes in the fair value
outcomes and each individual point within the range has an equal
of derivatives is initially recognised in other comprehensive income
probability of occurring, a provision is recognised in the amount
(loss) and is subsequently reclassified to the income statement
of the mean of the individual points. Measurement is at full cost.
when the corresponding hedged item is also recognised. The
Provisions for identifiable risks and contingent liabilities are
ineffective portion of the changes in fair value is recognised
recognised in the amount that represents the best estimate of
immediately in the income statement.
the cost required to settle the obligations. Recourse claims are
If the criteria for hedge accounting are not satisfied, changes
not taken into account. The settlement amount also includes
in the fair value of derivative financial instruments are recognised
cost increases identifiable as at the reporting date. Provisions
in the income statement.
with a maturity of more than twelve months are discounted using
Further information on risk management and accounting
the standard market interest rate. The discount rate is a before-
for derivative financial instruments can be found in notes [39]
tax rate that reflects current market expectations for the time
and [40].
Retirement benefit obligation
value of money and the specific risks inherent in the liability.
The interest cost from unwinding the discount is recognised in
interest expenses.
Warranty provisions are recognised on the basis of past or
estimated future claim statistics. The corresponding expense is
The retirement benefit obligation is calculated in accordance with
recognised in cost of sales at the date on which the revenue is
the projected unit credit method. Future pension obligations are
recognised. Individual provisions are recognised for claims that
measured on the basis of the pro rata vested benefit entitlements
are known to the Group.
as at the reporting date and discounted to their present value.
Provisions for expected losses from onerous contracts and
The calculations include assumptions about future changes in
other business obligations are measured on the basis of the work
certain parameters, such as expected salary and pension
yet to be performed.
increases and biometric factors affecting the amount of future
A restructuring provision is recognised when a KION Group
benefits. Pension provisions are reduced by the fair value of the
entity has prepared a detailed, formal restructuring plan and this
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
151
Basis of presentation
plan has raised the valid expectation in those affected that the
cost. Any differences between historical cost and the settle-
entity will carry out the restructuring by starting to implement that
ment amount are recognised in accordance with the effective
plan or announcing its main features to those affected by it. The
interest method.
measurement of a restructuring provision only includes the direct
expenditures arising from the restructuring and not associated
with the ongoing activities of the entity concerned.
Trade payables
Share-based payments
Trade payables are categorised as FLaC and, in the first period in
which they are recognised, are carried at fair value net of the
directly attributable transaction costs. In subsequent periods,
IFRS 2 distinguishes between equity-settled and cash-settled
these liabilities are measured at amortised cost using the effective
share-based payment transactions.
interest method. Low-interest or non-interest-bearing liabilities
Equity-settled share-based payment transactions are recog-
due in more than one year are carried at their present value.
nised at their fair value at the date of grant. The fair value of the
obligation is recognised as an expense under functional costs
over the vesting period and offset against capital reserves.
Assumptions and estimates
The portion of the fair value of cash-settled share-based
payments that is attributable to service provided up to the valua-
The preparation of the IFRS consolidated financial statements
tion date is recognised as an expense under functional costs and
requires the use of assumptions and estimates for certain line
is also reported as a liability. The fair value is recalculated on each
items that affect recognition and measurement in the statement
reporting date until the end of the performance period. Any
of financial position and the income statement. The actual
change in the fair value of the obligation must be recognised
amounts realised may differ from estimates. Assumptions and
(pro rata temporis) under expenses.
estimates are applied in particular:
Financial liabilities and other financial liabilities
The KION Group differentiates between financial liabilities held
for trading at fair value through profit or loss (FLHfT) and finan-
cial liabilities at amortised cost using the effective interest
method (FLaC).
The FLHfT category contains derivative financial instruments
that do not form part of a formally documented hedge. These are
reported under other financial liabilities and must be carried at fair
value through profit or loss. Derivative financial instruments form-
ing part of a documented hedge are not assigned to any of the
IAS 39 measurement categories.
– in assessing the need for and the amount of impairment
losses on intangible assets, property, plant and equipment,
and inventories,
obligations and other provisions,
– in determining the useful life of non-current assets,
– in classifying leases,
– in recognising and measuring defined benefit pension
– 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, and
construction contracts.
All other financial liabilities reported under financial liabili-
Goodwill is tested for impairment annually at the level of the
ties or other financial liabilities must be categorised as FLaC.
cash-generating units to which goodwill is allocated, applying the
These liabilities are initially recognised at fair value at the time
budget for 2018 and the medium-term planning for 2019 to 2020
they are entered into. Directly attributable transaction costs
combined with the growth predicted in the market forecasts for
are deducted. These liabilities are then measured at amortised
the projections for 2021 to 2022 and assuming division-specific
KION GROUP AG | Annual Report 2017 152
growth rates for the period thereafter. Any material changes to
On first-time consolidation of an acquisition, all identifiable
these and other factors might result in the recognition of impairment
assets and liabilities are recognised at their fair value at the
losses. Further information on goodwill can be found earlier in this
acquisition date. The fair values of identifiable assets are deter-
note and in note [17].
mined using appropriate valuation techniques. These measure-
Information on leases can be found in the sections on
ments are based, for example, on estimates of future cash
leases / short-term rentals, leased assets, rental assets and other
flows, expected growth rates, exchange rates, discount rates
property, plant and equipment in this note.
and useful lives. In the event of material changes to assumptions
Defined benefit pension obligations are calculated on the basis
or circumstances, estimates must be reassessed and this can
of actuarial parameters. As differences due to remeasurements
lead to the recognition of an impairment loss for the asset con-
are taken to other comprehensive income (loss), any change in
cerned. For further information on acquisitions, see note [5].
these parameters would not affect the net profit for the current
Construction contracts are accounted for using the percent-
period. For further details about sensitivity analysis in relation
age-of-completion method based on management estimates of
to the impact of all significant assumptions, please refer to the
the contract costs incurred. If estimates change, or if there are
information about the retirement benefit obligation in note [29].
differences between planned and actual costs, this is directly
The recognition and measurement of other provisions is
reflected in the profit or loss from construction contracts. The
based on an estimate of the probability of the future outflow of
Operating Units continually review the cost estimates and adjust
resources, supplemented by past experience and the circum-
them as appropriate. Further information on construction contracts
stances known to the Group at the reporting date. Accordingly,
can be found earlier in this note.
the actual outflow of resources for a given event may be different
Where necessary, the KION Group’s accounting departments
from the amount recognised in other provisions. Further details
receive assistance from external advisors when making the
can be found in note [32].
estimates required.
Significant estimates are involved in calculating income taxes.
The carrying amounts of the affected line items can be
These estimates may change on the basis of new information and
found in the relevant notes / the consolidated statement of
experience (see also note [14]). In the year under review, this new
financial position.
information concerns the future tax rates in the US, which have a
The impact of a change to an estimate is recognised pro-
direct impact on the level of deferred taxes. Deferred tax assets
spectively when it becomes known and assumptions are
on tax loss carryforwards and interest carryforwards are recog-
adjusted accordingly.
nised on the basis of an estimate of the future recoverability of the
tax benefit, i.e. an assumption as to whether sufficient taxable
income or tax relief will be available against which the carryfor-
wards can be utilised. The actual amount of taxable income in
future periods, and hence the actual utilisation of tax loss carry-
forwards and interest carryforwards, may be different from the
estimates made when the corresponding deferred tax assets
were recognised.
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated income statement
153
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 €1,725.6 million (2016:
€325.4 million). The figure for 2016 only includes Dematic for two
months because it was acquired on 1 November 2016.
Detailed information on the geographical breakdown of
revenue is provided in note [41].
TABLE 052
2016
5,200.5
2,860.2
2,340.2
1,363.8
558.3
285.8
132.4
364.7
263.9
100.7
22.1
5,587.2
2017
5,626.9
3,126.0
2,500.9
1,429.5
619.3
306.6
145.5
2,001.8
1,509.1
492.7
24.8
7,653.6
KION GROUP AG | Annual Report 2017 154
[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
Gains on disposal of non-current assets
Rental income
Sundry income
Total other income
The rise in foreign currency exchange rate gains was largely
attributable to gains arising in the course of the Group companies’
operating activities. This line item also contains gains on hedges
that were entered into in order to hedge currency risk arising from
the operating business but do not form part of a documented
hedging relationships. Sundry income also included income from
non-consolidated subsidiaries and other equity investments
amounting to €2.1 million (2016: €3.0 million).
TABLE 053
2016
22.0
6.0
2.4
1.2
56.0
87.7
2017
34.5
2.5
3.3
1.2
34.3
75.7
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated income statement
155
TABLE 054
2016
25.1
3.0
–
13.8
41.9
2017
40.1
3.3
14.8
12.8
71.1
[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
Gains arising from operational foreign currency positions recog-
nised under foreign currency exchange rate gains (see note [9])
were offset by losses shown under foreign currency exchange
rate losses. These arose partly in connection with the hedging of
foreign currency positions in the operating business for which the
hedge instruments in question do not form part of a documented
hedging relationship. Of the total amount recognised as impair-
ment of non-current assets, €8.6 million resulted from giving up
the Egemin brand. The remaining amount was attributable to
buildings, plant & machinery and office furniture & equipment.
[11] SHARE OF PROFIT (LOSS) OF
EQUITY-ACCOUNTED INVEST-
MENTS
The share of profit (loss) of equity-accounted investments in
the reporting year amounted to a profit of €13.6 million (2016:
€6.5 million). Further details on equity-accounted investments
can be found in note [21].
KION GROUP AG | Annual Report 2017 156
[12] FINANCIAL INCOME
The interest income from leases relates to the interest portion
of lease payments in financial services transactions in which
KION Group entities operate as lessors (finance leases).
The line item ‘Net interest income from defined benefit
Financial income breaks down as shown in > TABLE 055.
plans’ relates to the net interest income on the net assets of two
pension plans in the United Kingdom in which plan assets
The increase in financial income in 2017 mainly resulted from gains
exceed pension obligations.
in connection with foreign currency positions in internal financing
and from the related hedging transactions. These gains were
offset by corresponding exchange rate losses (see note [13]).
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
2016
36.4
42.2
1.1
9.1
88.9
2017
36.2
87.5
0.4
8.2
132.2
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated income statement
157
[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 expense from promissory note
Interest cost of leases
Net interest expense from defined benefit plans
Amortisation of finance costs
Foreign currency exchange rate losses (financing)
Compounding of non-current financial liabilities
Other interest expenses and similar charges
Total financial expense
TABLE 056
2016
16.0
18.9
–
50.8
18.7
7.9
45.6
1.6
25.1
2017
29.6
–
12.2
47.6
19.3
8.8
66.6
0.0
29.2
213.3
184.5
In 2017, financial expenses rose by €28.8 million year on year.
rental and lease payments received and is therefore reported
This increase stemmed largely from the rise in the current interest
within revenue rather than as interest income.
expense on loans and the promissory note in connection with the
Net interest expense from defined benefit plans relates to
acquisition of Dematic and from exchange rate losses (see note
the net interest cost of the net liability of pension plans applying
[12] for details of the countervailing exchange rate gains).
the discount rate for plans in which pension obligations exceed
At the time of the early repayment of certain financial liabilities
plan assets.
(see also note [30]), deferred borrowing costs of €3.5 million were
reclassified as financial expenses. The prior-year figure included
one-off financial expenses of €25.7 million, which were also incurred
in connection with the optimisation of the financing structure.
The interest cost of leases relates to the interest portion of
lease payments in financial services transactions in which the
[14] INCOME TAXES
material risks and rewards are borne by KION Group entities as
The income tax expense of €41.9 million (2016: expense of
lessees (finance leases). Sale and finance leaseback operating
€93.1 million) consisted of €184.9 million in current tax expense
sub-leases (SALB-FL-OL) incurred interest expenses of €27.7 mil-
(2016: current tax expense of €86.2 million) and €143.0 million
lion (2016: €28.3 million). The income from corresponding cus-
in deferred tax income (2016: deferred tax expense of €6.9 mil-
tomer agreements is, according to IAS 17, a component of the
lion). The current tax expense included income of €16.2 million
KION GROUP AG | Annual Report 2017 158
(2016: expense of €0.3 million) relating to previous financial years.
15.03 per cent), the combined nominal tax rate for entities in
The deferred tax income included income of €92.2 million, which
Germany was 30.82 per cent (2016: 30.85 per cent). The income
relates to the decision taken on 22 December 2017 to lower the
tax rates for foreign companies used in the calculation of deferred
corporate
income
tax
rate
in
the United States
from
taxes were between 9.0 per cent and 34.0 per cent (2016:
35.0 per cent to 21.0 per cent.
between 9.0 per cent and 40.0 per cent).
At the reporting date, there were income tax assets of
No deferred taxes have been recognised on temporary differ-
€14.4 million receivable from tax authorities (2016: €35.2 million)
ences of €231.4 million (2016: €78.7 million) between the net
and income tax liabilities of €82.6 million (2016: €63.0 million).
assets reported in the consolidated financial statements for the
Deferred taxes are recognised for temporary differences
Group companies and the tax base for the shares in these Group
between the tax base and IFRS carrying amounts. Deferred taxes
companies (outside basis differences) because the KION Group
are determined on the basis of the tax rates that will apply at the
is in a position to manage the timing of the reversal of temporary
recovery date, or have been announced, in accordance with the
differences and there are no plans to dispose of investments in
current legal situation in each country concerned. The current
the foreseeable future.
corporate income tax rate in Germany is 15.0 per cent plus the
Deferred tax assets are allocated to the following items in the
solidarity surcharge (5.5 per cent of corporate income tax). Taking
statement of financial position: > TABLE 057
into account the average trade tax rate of 15.00 per cent (2016:
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 carry forwards, interest carry forwards and tax credits
Offsetting
Total deferred tax assets
* Prior-year figures were adjusted due to retrospective changes of the purchase price allocation (PPA) for Dematic
TABLE 057
2016
109.9
1.0
53.5
1.7
216.5
395.5
37.5
52.6
– 448.4
419.8
2017
143.9
1.0
67.7
2.3
229.8
430.5
29.1
38.7
– 572.5
370.5
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated income statement
159
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
2016
1,052.8
5.7
214.8
0.8
15.5
36.9
4.4
– 448.4
882.5
2017
854.9
3.0
296.9
0.7
16.6
60.1
5.5
– 572.5
665.2
* Prior-year figures were adjusted due to retrospective changes of the purchase price allocation (PPA) for Dematic
The deferred tax liabilities essentially related to the purchase price
Dematic acquisition: rise in deferred tax assets of €104.8 million
allocation in the acquisition of the KION Group and Dematic, par-
and rise in deferred tax liabilities of €601.2 million). In addition,
ticularly for intangible assets and property, plant and equipment.
currency translation as at the reporting date led to deferred taxes
In 2017, deferred taxes – not including currency effects – of
of €33.9 million (2016: minus €18.0 million) that were predomi-
minus €10.5 million were recognised in other comprehensive
nantly attributable to the first-time consolidation of Dematic.
income (loss), resulting in a decrease in equity (2016: €17.2 mil-
These currency effects were recognised in other comprehensive
lion, resulting in an increase in equity). Of this amount, deferred
income (loss) under cumulative translation adjustment, result-
taxes of minus €8.0 million (2016: €16.7 million) arose from the
ing in an increase in equity (2016: resulting in a decrease in
remeasurement of the defined benefit obligation. Furthermore,
equity).
deferred taxes of minus €2.4 million (2016: €0.4 million) were rec-
In 2017, the parent company and subsidiaries that reported
ognised in connection with realised and unrealised changes in
losses for 2017 or 2016 recognised net deferred tax assets on
the fair value of derivatives in cash flow hedges (minus €1.7 mil-
temporary differences and on loss carryforwards totalling
lion; 2016: €1.1 million) and net investment hedges (minus
€24.2 million (2016: €29.4 million). The assets were considered
€0.7 million; 2016: minus €0.7 million). In 2017, deferred taxes of
to be unimpaired because these companies are expected to
minus €0.1 million were recognised for the first time on the
generate taxable income in future.
remeasurement of available-for-sale financial instruments, result-
No deferred tax assets have been recognised on tax loss
ing in a decrease in equity.
carryforwards of €526.0 million (2016: €509.3 million) – of which
The deferred taxes recognised in the statement of financial
€13.0 million (2016: €29.4 million) can only be carried forward on
position also rose as a consequence of the purchase price allo-
a restricted basis –, on interest carryforwards of €185.0 million
cation in connection with the other acquisitions (2017: rise in
(2016: €193.5 million) or on other temporary differences of
deferred tax assets of €1.5 million; 2016 primarily in relation to the
€5.2 million (2016: €4.7 million).
KION GROUP AG | Annual Report 2017 160
Deferred taxes are recognised on tax loss carryforwards and
The interest that can be carried forward indefinitely in
interest carryforwards to the extent that sufficient future taxable
Germany as at 31 December 2017 amounted to €185.0 million
income is expected to be generated against which the losses can
(31 December 2016: €206.1 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 €124.5 million (2016:
tax expense to effective income tax expense. The Group recon-
€139.6 million), of which €120.9 million (2016: €130.1 million)
ciliation is an aggregation of the individual company-specific
concerns 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 2017 amounted to €109.1 million
income. The expected tax rate applied in the reconciliation is
(31 December 2016: €126.1 million), while trade-tax loss carry-
30.82 per cent (2016: 30.85 per cent). > TABLE 059
forwards stood at €88.6 million (31 December 2016: €97.3 mil-
lion). There were also foreign tax loss carryforwards totalling
€481.1 million (31 December 2016: €547.8 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
Non-taxable income / tax-exempt income
Taxes relating to other periods
Deferred taxes relating to prior periods
Non-creditable withholding tax on dividends
Other
Effective income taxes (current and deferred taxes)
TABLE 059
2016
339.2
– 104.6
– 4.0
17.3
– 6.5
1.1
– 5.4
8.7
– 0.3
5.0
–
– 4.4
– 93.1
2017
468.3
– 144.3
– 2.6
3.2
– 27.9
92.2
– 5.8
34.7
16.2
3.7
– 9.8
– 1.4
– 41.9
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated income statement
161
[15] OTHER INCOME STATEMENT
DISCLOSURES
obligation. Pension expenses essentially comprised the pension
entitlements of €40.6 million vested in 2017 (2016: €35.3 million)
and unrecognised past service income of €0.1 million (2016:
€0.1 million) arising from plan amendments and curtailments.
Impairment losses and depreciation expenses on property,
The cost of materials rose by €904.6 million in the reporting year
plant and equipment together with impairment losses and amor-
to €3,573.7 million (2016: €2,669.1 million). The figure for 2016
tisation expenses on intangible assets amounted to €636.4 mil-
only includes Dematic for two months because it was acquired
lion in the reporting year (2016: €454.7 million). Inventories were
on 1 November 2016.
written down by €18.0 million (2016: €17.8 million).
Personnel expenses went up by €469.4 million to €1,989.7 mil-
The breakdown of rental and lease payments expensed in
lion in 2017 (2016: €1,520.3 million). These personnel expenses
the period and arising in connection with operating leases in
included wages and salaries of €1,590.4 million
(2016:
which KION Group entities are lessees is as follows: > TABLE 060
€1,198.3 million), social security contributions of €320.8 million
(2016: €258.4 million) and expenses for pensions of €78.5 million
The expenses in connection with sub-leases relate to leases and
(2016: €63.6 million). The interest cost from the unwinding of the
rental agreements in which KION Group entities are both lessors
discount on estimated pension obligations is not recognised
and lessees. These expenses were offset by income of €37.3 mil-
under personnel expenses and is instead reported under financial
lion in 2017 (2016: €43.8 million).
expenses as a component of interest cost of the defined benefit
Lessee: Expenses recognised for operating lease payments
in € million
Procurement lease contracts
Sublease contracts
Total recognised expenses for lease payments
TABLE 060
2016
89.6
36.3
125.9
2017
126.4
35.9
162.4
KION GROUP AG | Annual Report 2017 162
[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 (2017: 114,328,999 no-par-value shares; 2016:
103,241,256 no-par-value shares). The net income accruing to
the shareholders of KION GROUP AG was €424.8 million (2016:
€245.5 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 €3.72 (2016: €2.38).
The 160,829 no-par-value treasury shares repurchased by
KION GROUP AG were not included in this figure as at 31 Decem-
ber 2017 (31 December 2016: 164,486).
Diluted earnings per share is calculated by adding the
potential dilutive no-par-value shares that employees can
obtain for free under the employee share option programme
(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 114,356,934
no-par-value shares issued (2016: 103,278,542 no-par-value
shares). Diluted earnings per share for the reporting period
came to €3.71 (2016: €2.38).
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated statement of financial position
163
Notes to the consolidated statement of financial position
[17] GOODWILL AND OTHER
INTANGIBLE ASSETS
Goodwill is broken down by segment as follows: > TABLE 061
Goodwill broken down by segment
in € million
Industrial Trucks & Services
LMH EMEA
STILL EMEA
KION Americas
KION Asia Pacific
Supply Chain Solutions
Dematic
Total goodwill
TABLE 061
2016
1,504.9
813.4
546.5
23.5
121.6
2,068.0
2,068.0
3,572.9
2017
1,511.0
817.7
549.7
23.5
120.1
1,871.5
1,871.5
3,382.5
The change in goodwill in 2017 mainly resulted from currency
and allocated to the Supply Chain Solutions segment as part of
effects. There was also an impact from the acquisitions of
the original purchase price allocation. In 2017, impairment losses
Eisengiesserei Dinklage GmbH and Nordtruck AB, from which
of €8.6 million were recognised due to the Egemin Automation
goodwill totalling €9.5 million arose. In 2016, the change in good-
brand name being subsumed within the Dematic brand name. As
will was mainly due to the acquisition of Dematic and other busi-
a result, the brand names allocated to the Supply Chain Solutions
nesses, from which goodwill totalling €1,949.1 million arose.
segment decreased to a carrying amount of €350.6 million as at
The Group intends to retain and further strengthen the Linde,
31 December 2017 (31 December 2016: €359.6 million), of which
STILL, OM STILL and KION brand names on a long-term basis.
€349.7 million was attributable to brand names with an indefinite
Brand names worth €466.2 million are assigned to the LMH
useful life (31 December 2016: €358.3 million). The KION brand
EMEA CGU (31 December 2016: €466.3 million) and brand
name is allocated to the Corporate Services segment and had
names worth €114.8 million to the STILL EMEA CGU (31 Decem-
a carrying amount as at 31 December 2017 of €5.1 million
ber 2016: €115.0 million). These assets are not amortised as they
(31 December 2016: €5.1 million). This asset is not amortised as it
have an indefinite useful life. As at 31 December 2017, the brand
has an indefinite useful life. > TABLE 062
names allocated to the KION APAC CGU had a residual value of
€7.8 million (31 December 2016: €8.3 million) and had an indefi-
nite useful life. In 2016, a value of €349.7 million was attributed to
the Dematic brand name and allocated to the Supply Chain Solu-
tions segment as part of the purchase price allocation. A value of
€8.6 million was attributed to the Egemin Automation brand name
KION GROUP AG | Annual Report 2017
164
Intangible assets
in € million
Goodwill
Brand names
Technology &
development
Sundry
intangible assets
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
Balance as at 01/01/2017
Group changes
Currency translation adjustments
Additions
Disposals
Amortisation
Impairment
Balance as at 31/12/2017
Gross carrying amount as at
31/12/2017
Accumulated amortisation
1,548.1
1,961.8
63.0
–
–
–
3,572.9
3,572.9
–
3,572.9
9.5
– 199.8
–
0.0
–
–
3,382.5
3,382.5
– 0.0
604.1
353.5
– 3.0
–
–
– 0.3
954.3
956.2
– 1.9
954.3
–
– 0.9
–
–
– 0.2
– 8.6
944.6
955.2
– 10.6
TABLE 062
Total
2,452.5
3,658.7
107.1
72.6
– 0.1
– 115.2
194.1
519.1
17.0
50.6
– 0.0
– 57.0
106.2
824.3
30.0
22.1
– 0.1
– 57.9
723.7
924.6
6,175.6
933.1
– 209.3
723.7
–
– 59.8
75.4
–
– 69.0
–
1,154.7
– 230.0
924.6
0.1
– 86.0
24.8
3.7
– 148.2
–
6,616.8
– 441.2
6,175.6
9.6
– 346.5
100.2
3.7
– 217.5
– 8.6
670.3
719.0
5,716.4
917.2
– 246.9
1,049.5
– 330.5
6,304.3
– 587.9
The total carrying amount for technology and development assets
Other intangible assets relate in particular to licences, patents,
as at 31 December 2017 was €670.3 million (31 December 2016:
software and customer relationships.
€723.7 million). Development costs of €75.4 million were capital-
The change to the basis of consolidation in 2016 had been
ised in the reporting year (2016: €50.6 million). Research and
due almost entirely to the acquisition of the Dematic Group.
development costs totalling €137.0 million (2016: €96.5 million)
were expensed. Furthermore, amortisation expenses of
€69.0 million were recognised (31 December 2016: €57.0 million);
these expenses are reported under cost of sales.
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated statement of financial position
165
[18] LEASED ASSETS
Leased assets include assets leased over the long term with
a residual value of €420.8 million (31 December 2016: €367.5 mil-
lion) that are funded by means of sale and leaseback transactions
with leasing companies and leased assets with a residual value of
The changes in leased assets in 2017 and 2016 were as follows:
€101.5 million (31 December 2016: €62.2 million) that are funded
> TABLE 063
internally or by means of bank loans.
Leased assets are attributable to the Industrial Trucks & Services
payments under operating leases with customers amounting to
segment and relate to industrial trucks in the amount of €522.3 mil-
€514.3 million (31 December 2016: €402.7 million).
lion (31 December 2016: €429.7 million) that are leased to external
The following table shows the maturity structure of these
customers under operating leases.
future payments: > TABLE 064
Leased assets resulted in non-cancellable minimum lease
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
Minimum lease payments
in € million
Cash receipts from future minimum lease payments
due within one year
due in one to five years
due in more than five years
TABLE 063
2016
334.4
7.4
– 2.8
290.3
– 103.0
– 94.2
– 2.4
429.7
747.3
– 317.6
TABLE 064
2016
402.7
144.7
248.5
9.6
2017
429.7
0.5
– 2.2
327.9
– 116.7
– 116.4
– 0.5
522.3
897.2
– 374.9
2017
514.3
185.2
317.3
11.8
KION GROUP AG | Annual Report 2017 166
[19] RENTAL ASSETS
The changes in rental assets in 2017 and 2016 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 065
2016
544.0
6.1
– 2.9
286.1
– 91.8
– 169.1
2.8
575.3
990.0
– 414.6
2017
575.3
0.5
– 9.8
347.2
– 77.0
– 185.2
0.4
651.4
1,114.7
– 463.3
Rental assets are allocated solely to the Industrial Trucks & Services
The rental assets item comprises assets resulting from short-term
segment. The breakdown of rental assets by contract type is
rentals (‘operating leases as lessor’) and assets in relation to
shown in the following table: > TABLE 066
which significant risks and rewards remain with the KION Group
although they were sold (‘sale with risk’).
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
2017
586.3
1.9
588.2
2016
514.4
3.0
517.4
2017
63.2
0.0
63.2
2016
57.9
0.0
57.9
2017
649.5
1.9
651.4
2016
572.3
3.0
575.3
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated statement of financial position
167
[20] OTHER PROPERTY, PLANT AND
EQUIPMENT
Land and buildings in the amount of €18.3 million (31 Decem-
ber 2016: €18.3 million) were largely pledged as collateral for
accrued retirement benefits under partial retirement agreements.
Plant & machinery and office furniture & equipment include
assets from procurement leases (finance leases) amounting to
The changes in the carrying amounts of other property, plant and
€27.6 million (31 December 2016: €17.2 million). Depreciation on
equipment are shown in > TABLE 067.
these assets came to €9.9 million in 2017 (2016: €5.6 million). The
corresponding liabilities are reported as other financial liabilities.
Other property, plant and equipment
in € million
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
Balance as at 01/01/2017
Group changes
Currency translation adjustments
Additions
Disposals
Depreciation
Impairment
Reclassification
Balance as at 31/12/2017
Gross carrying amount as at 31/12/2017
Accumulated depreciation
Land and buildings
Plant, machinery,
and office furniture
and equipment
Advances paid
and assets under
construction
305.7
69.1
– 2.2
10.0
– 0.3
– 13.9
5.8
374.2
727.9
– 353.7
374.2
1.4
– 12.2
9.7
– 1.5
– 18.3
– 0.5
3.0
355.9
714.6
– 358.7
174.1
80.9
– 0.3
59.7
– 3.9
– 62.3
18.7
266.8
1,059.6
– 792.8
266.8
2.0
– 10.0
90.2
– 2.8
– 84.2
– 5.8
18.0
274.3
1,091.5
– 817.2
29.0
10.7
– 0.1
24.8
– 2.3
–
– 24.9
37.3
37.3
–
37.3
0.3
– 1.1
37.2
– 6.0
–
–
– 20.9
46.7
46.7
–
TABLE 067
Total
508.8
160.7
– 2.6
94.5
– 6.5
– 76.2
– 0.4
678.3
1,824.7
– 1,146.4
678.3
3.7
– 23.3
137.0
– 10.3
– 102.4
– 6.2
0.1
676.9
1,852.8
– 1,175.9
KION GROUP AG | Annual Report 2017 168
[21] EQUITY-ACCOUNTED INVEST-
MENTS
The carrying amount of the equity-accounted investments
mainly resulted from the shares (10.0 per cent) in Linde Hydraulics
GmbH & Co. KG, Aschaffenburg (‘Linde Hydraulics’), the shares
(45.0 per cent) in Linde Leasing GmbH, Wiesbaden, and the
shares (50.0 per cent) in JULI Motorenwerk s.r.o, Moravany,
The KION Group reported equity-accounted investments with a
Czech Republic. The associates and joint ventures can be seen in
total carrying amount of €80.3 million as at 31 December 2017 (31
the list of shareholdings (see note [47]). Their financial information
December 2016: €72.7 million).
is summarised below. > TABLES 068 – 069
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
2016
42.5
0.2
0.3
0.5
TABLE 069
2016
30.1
6.3
0.1
6.4
2017
43.8
5.2
– 0.7
4.5
2017
36.4
8.5
1.3
9.7
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated statement of financial position
169
[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 €715.2 million
assets directly to customers as part of the Group’s financial
(31 December 2016: €648.4 million).
services activities, the Group’s net investment in the lease is
Lease receivables include unguaranteed residual values of
reported as a lease receivable.
€107.3 million (31 December 2016: €87.6 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
2016
807.9
225.6
552.0
30.2
731.5
200.3
503.3
27.9
2017
962.2
262.5
655.6
44.1
875.8
228.0
605.3
42.4
Unrealised financial income
86.5
76.3
KION GROUP AG | Annual Report 2017 170
[23] OTHER FINANCIAL ASSETS
The breakdown of other financial assets of €176.1 million
(31 December 2016: €129.4 million) is shown in > TABLE 071.
Other financial assets
in € million
Investments in 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
The non-consolidated subsidiaries and other equity investments
include the equity investment in Balyo SA in an amount of
€11.7 million (31 December 2016: €2.7 million), which is measured
at fair value due to Balyo’s IPO in 2017.
TABLE 071
2016
22.2
4.6
20.7
47.5
10.3
21.3
50.3
82.0
2017
36.0
2.2
18.9
57.1
30.0
30.3
58.7
119.0
Total other financial assets
176.1
129.4
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated statement of financial position
171
[24] OTHER ASSETS
Other assets of €108.5 million (31 December 2016: €98.5 million)
comprise the following: > TABLE 072
Pension assets relate to asset surpluses from two defined benefit
plans in the United Kingdom (31 December 2016: two), 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
Other current assets
Total other assets
TABLE 072
2016
12.3
12.3
49.5
36.6
86.2
98.5
2017
24.2
24.2
40.2
44.0
84.3
108.5
KION GROUP AG | Annual Report 2017 172
[25] INVENTORIES
[26] TRADE RECEIVABLES
The reported inventories break down as follows: > TABLE 073
The trade receivables break down as follows: > TABLE 074
The year-on-year expansion in inventories was largely attributable
Valuation allowances of €51.1 million (31 December 2016:
to increases in materials and supplies (17.2 per cent), work in pro-
€40.4 million) were recognised for trade receivables.
gress (3.5 per cent) and finished goods (15.8 per cent). In 2017,
The breakdown of construction contracts that had not been
write-downs of €18.0 million were recognised on inventories
completed by the reporting date is presented in > TABLE 075.
(2016: €17.8 million). Reversals of write-downs had to be recog-
nised in the amount of €7.5 million (2016: €3.2 million) because
the reasons for the write-downs no longer existed.
Inventories
in € million
Materials and supplies
Work in progress
Finished goods and merchandise
Advances paid
Total inventories
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
TABLE 073
2016
158.0
105.3
396.5
12.6
672.4
TABLE 074
2016
863.6
904.0
– 4.8
– 24.7
– 11.0
13.2
19.1
103.1
998.9
2017
185.2
109.0
459.0
15.4
768.6
2017
958.5
1,009.6
– 10.0
– 25.8
– 15.3
13.2
27.7
94.7
1,094.1
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated statement of financial position
173
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
TABLE 075
2017
2016
2,300.1
– 2,469.4
– 169.3
94.7
– 264.0
2,247.8
– 2,445.4
– 197.6
103.1
– 300.7
Construction contracts with a net credit balance due from cus-
tomers are included in trade receivables. Construction con-
tracts with a net debit balance due to customers are reported
under other current liabilities (see note [35]). Advances received
[27] CASH AND CASH EQUIVALENTS
in respect of construction contracts for which no work had yet
The change in cash and cash equivalents is shown in the consol-
been carried out amounted to €19.2 million as at 31 Decem-
idated statement of cash flows. For more detailed information,
ber 2017 (31 December 2016: €28.3 million). Customer reten-
please also refer to note [37]. > TABLE 076
tions relating to construction contracts came to €0.3 million
(31 December 2016: €0.6 million).
Cash and cash equivalents
in € million
Balances with banks, cash and cheques
Pledged cash
Total cash and cash equivalents
TABLE 076
2016
276.0
3.5
279.6
2017
172.8
0.4
173.2
KION GROUP AG | Annual Report 2017 174
[28] EQUITY
date (31 December 2016: 164,486). These treasury shares are not
dividend-bearing and do not confer any voting rights. Further
details on the KEEP employee share option programme can be
found in note [44].
Subscribed capital and capital reserves
As at 31 December 2017, KION Group employees held
options on a total of 50,166 no-par-value shares (31 Decem-
As at 31 December 2017, the Company’s share capital amounted
ber 2016: 67,106 no-par-value shares). The share options granted
to €118.1 million (31 December 2016: €108.8 million) and was fully
under the employee share option programme are not divi-
paid up. It was divided into 118.1 million no-par-value shares
dend-bearing and do not confer any voting rights.
(31 December 2016: 108.8 million).
The Annual General Meeting on 11 May 2017 voted to create
new authorised capital that will enable the KION Group to con-
Retained earnings
tinue to meet its funding needs quickly and flexibly. Subject to the
consent of the Supervisory Board, the Executive Board is author-
The changes in retained earnings are shown in the consolidated
ised until 10 May 2022 to increase the Company’s share capital
statement of changes in equity in > TABLE 044. The retained earnings
by up to €10.879 million by way of an issue of up to 10,879,000
comprise the net income (loss) for the financial year and past con-
new no-par-value bearer shares (2017 Authorised Capital).
tributions to earnings by the consolidated entities, provided they
With the consent of the Supervisory Board, the Executive
have not been distributed.
Board of KION GROUP AG decided on 22 May 2017 to utilise the
The distribution of a dividend of €0.80 per share (2016: €0.77
authorised capital created by the 2017 Annual General Meeting.
per share) to the shareholders of KION GROUP AG resulted in an
The purpose of the capital increase was to partly refinance the
outflow of funds of €86.9 million in May 2017 (2016: €76.0 million).
bridge loan taken out for the acquisition of Dematic. The Company’s
share capital was increased by 8.55 per cent in return for cash
contributions; shareholders’ pre-emption rights were disapplied.
Appropriation of profit
The share capital was increased by issuing 9.3 million new
no-par-value bearer shares. The gross proceeds from the capital
The Executive Board and the Supervisory Board propose to the
increase came to €602.9 million. An amount of €593.6 million was
Annual General Meeting to be held on 9 May 2018 that an amount
paid into the capital reserves. The capital increase was entered in
of €116.7 million be appropriated from the distributable profit of
the commercial register on 23 May 2017.
KION GROUP AG for the 2017 financial year of €168.1 million for
The costs associated with the capital increase amounting to
the payment of a dividend of €0.99 per dividend-bearing share. It
€3.0 million (net) were recognised directly in equity.
is also proposed that a further sum of €51.2 million be transferred
The total number of shares outstanding as at 31 December
to other revenue reserves and that €0.1 million be carried forward
2017 was 117,929,171 no-par-value shares (31 December 2016:
to the next accounting period. If the net income is adjusted for
108,625,514 no-par-value shares). Between 10 October 2017 and
remeasurement of deferred tax assets and liabilities in connection
30 October 2017, a further 60,000 treasury shares were repur-
with the lowering of the corporate income tax rate in the United
chased via the stock exchange at an average price of €72.15 in
States, this equates to a dividend payout rate of around
order to provide the shares for employees’ own investments and
35 per cent of the net income accruing to the shareholders of the
the free shares under the KEEP 2017 employee share option pro-
KION Group.
gramme. The total cost was €4.3 million. Due to the issue of
27,363 bonus shares under KEEP 2014 and 36,294 no-par-value
shares (2016: 45,564 no-par-value shares) under KEEP 2017,
KION GROUP AG held 160,829 treasury shares at the reporting
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated statement of financial position
175
Accumulated other comprehensive income (loss)
Defined contribution plans
The breakdown of accumulated other comprehensive income
In the case of defined contribution pension plans, the Group pays
(loss) is shown in > TABLE 044.
contributions to government or private pension insurance pro-
The currency translation adjustment contains the exchange
viders based on statutory or contractual provisions, or on a vol-
differences arising from the financial statements prepared in a for-
untary basis. The Group does not enter into any obligations above
eign currency of foreign subsidiaries, associates and joint ventures.
and beyond the payment of contributions to an external pension
The gains/losses on the defined benefit obligation are the
fund. The amount of future pension benefits is based solely on
result of remeasuring defined benefit pension obligations (see
the amount of the contributions paid by the employer (and in
also note [29]).
some cases the beneficiaries themselves) to the external pension
The gains/losses on hedge reserves are the effective portion
fund, including income from the investment of these contribu-
of the changes in the fair value of the hedging instruments for
tions. The total expense arising from defined contribution plans
cash flow hedges and net investment hedges. The gains/losses
amounted to €92.9 million in 2017 (2016: €84.5 million). Of this
on available-for-sale financial instruments relate to the remeasure-
total, contributions paid by employers into government-run
ment of the equity investment in Balyo SA at fair value.
schemes came to €72.8 million (2016: €75.0 million). The defined
The gains/losses from equity-accounted investments contain
contribution plan expense is reported within the functional costs.
the share of other comprehensive income (loss) from associates
and joint ventures accounted for under the equity method.
Defined benefit plans
Non-controlling interests
In the case of defined benefit plans, the beneficiaries are granted
a specific benefit by the Group or an external pension fund. Due
Non-controlling interests in companies in the KION Group
to future salary increases, the benefit entitlement at the retirement
amounted to €4.4 million (31 December 2016: €5.7 million).
age of the beneficiary is likely to be higher than the amount
[29] RETIREMENT BENEFIT
OBLIGATION
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
by each beneficiary, is expressed as the present value of the
defined benefit obligation (DBO) including adjustments for future
salary and pension increases.
The retirement benefit obligation is recognised for obligations
The KION Group currently grants pensions to almost all
to provide current and future post-employment benefits. Post-
employees in Germany and a number of foreign employees.
employment benefit plans are classified as either defined benefit
These pensions consist of fixed benefit entitlements and are
plans or defined contribution plans, depending on the substance
therefore reported as defined benefit plans in accordance with
of the plan as derived from its principal terms and conditions.
IFRS. As at 31 December 2017, the KION Group had set up
defined benefit plans in 13 countries. For all of the significant
defined benefit plans within the Group, the benefits granted to
employees are determined on the basis of their individual income,
i.e. either directly or by way of intermediate benefit arrangements.
The largest of the KION Group’s defined benefit plans – together
accounting for 93.0 per cent of the global defined benefit obligation
KION GROUP AG | Annual Report 2017 176
(31 December 2016: 92.8 per cent) – are in Germany, the United
invested on the capital markets and, at the same time, entitlement
Kingdom and the US.
to a guaranteed pension benefit is granted.
Germany
In addition, employees in Germany are able to pay part of
their salary into a company pension plan, for which KION pro-
In Germany, the pension benefits granted under the 2001 pen-
vides a defined minimum rate of return to enable employees to
sion benefit conditions and 2002 pension benefit conditions
build up their personal pension provision. The pension benefits
depend on employees’ length of service and gross annual
consist of retirement, invalidity and surviving dependants’ bene-
remuneration (pension component entitlement). The pension
fits. Each contribution made is converted into a capital compo-
component is calculated by multiplying a certain percentage by
nent on the basis of a guaranteed minimum rate of return of
an age-dependent annuitisation factor. The contribution rate is
3.0 per cent and depending on the age of the employee. The cap-
3.4 per cent (2001 pension benefit conditions) or 2.0 per cent
ital components acquired each calendar year are added up to
(2002 pension benefit conditions) of the gross remuneration that
give the pension capital. When an insured event occurs, the pen-
an employee earns in the computation period. Employees receive
sion capital is converted into an ongoing life-long pension or a
the pension entitlement that they have earned in the form of a
one-off capital payment.
monthly retirement pension or invalidity benefit or, in the event of
In Germany, the KION Group also helps employees to build
their death, the entitlement is paid to their surviving dependants
up their own pension provision with an additional matching con-
in the form of a widow’s/widower’s pension or orphans’ pension.
tribution for those employees who pay part of their salary into
Members of the Executive Board and other executives are pre-
the KION pension plan. The additional matching contribution
dominantly covered by individual pension plans. For details of the
received by executives is 50.0 per cent of the amount they defer
pension entitlements of KION GROUP AG Executive Board mem-
in a calendar year, although the absolute amount of this contri-
bers, please refer to the information in note [45]. The amount of
bution is limited to a certain percentage of income (ranging from
the benefits paid to executives depends on the type of entitle-
2.5 per cent to a maximum of 5.0 per cent). All other employees
ment. Under the ‘old’ individual pension plans, executives were
who participate in the company pension scheme receive up to
entitled to a certain percentage of income as their pension bene-
0.4 per cent of their gross remuneration.
fit. By contrast, the employer-funded entitlement under the ‘new’
Some of the KION Group’s pension obligations in Germany
individual pension plans consists of two components: a fixed
are financed by way of contractual trust arrangements (CTAs),
basic pension and a variable top-up pension through which
which qualify as plan assets within the meaning of IAS 19. The
annual components are earned within a defined contribution sys-
trustees are required to follow a defined investment strategy and
tem. Both components depend on the seniority of the executive.
guidelines. There are no statutory minimum funding require-
The existing employer-funded company pension schemes for
ments. In the event of the Company’s insolvency, the company
employees covered by collective pay agreements and those not
pension scheme in Germany is to a large extent protected by law
subject to such agreements (2001 pension benefit conditions,
by the insolvency protection scheme (Pensions-Sicherungs-
2002 pension benefit conditions, KION pension plan) was closed
Verein Versicherungsverein auf Gegenseitigkeit, PSVaG).
to new entrants with effect from 1 January 2018. From this date,
the 2018 pension benefit conditions apply to new entrants at par-
United Kingdom
ticipating companies.
In the United Kingdom, defined benefit pension obligations pre-
On 1 January 2018, the KION pension plan was replaced by
dominantly relate to two plans. The defined benefits include not
the 2018 KION pension plan for all employees covered by collec-
only a life-long retirement pension but also surviving dependants’
tive pay agreements and those not subject to such agreements at
benefits. The amount of the pension depends on employees’
participating companies. The new pension plans are also
length of service and final salary.
designed as defined contribution plans. The contributions are
The two plans were closed to new employees more than ten
years ago. Each plan is monitored by its own board of trustees,
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated statement of financial position
177
which oversees the running of the plan as well as its funded status
Other countries
and the investment strategy. The members of the board of
Furthermore, significant asset volumes are invested in external
trustees comprise people appointed by the company involved
pension funds with restricted access in Switzerland and the
and selected plan beneficiaries.
Netherlands. Decisions on additions to plan assets take into
Under UK law, the board of trustees is obliged to have a val-
account the change in plan assets and pension obligations. They
uation of the plan carried out at least every three years. In con-
also take into account the statutory minimum coverage require-
nection with the valuation of the pension plans for the employees
ments and the amounts deductible under local tax rules.
of the KION Group’s UK companies as at 1 January 2015, the
Company and the trustees of the pension funds agreed in
March 2016 on certain assumptions relevant to the valuation,
Measurement assumptions
according to which the deficit for the two pension plans amounted
to €11.1 million as at 1 January 2015. On this basis, the
In accordance with IAS 19 ‘Employee Benefits’, pension provi-
KION Group agreed with the trustees that it would pay approxi-
sions are recognised to cover obligations arising from the current
mately the equivalent of €3.6 million in 2017 in order to reduce the
and future pension entitlements of active and (after the vesting
deficit. The trustees and the Company are currently assessing the
period has expired) former employees of the KION Group and
valuation of the pension plans as at 1 January 2018.
their surviving dependants. The discount rate used to calculate
In addition, collateral in rem in the form of charges on the real
the defined benefit obligation at each reporting date is deter-
estate of Group companies in the UK and flexible collateral in
mined on the basis of current capital market data and long-term
respect of the rental fleets of UK dealers within a maximum over-
assumptions about future salary and pension increases in
all limit of approximately €20.3 million were extended for the
accordance with the best estimate principle. These assumptions
benefit of the pension funds. The term of this collateral is limited
vary depending on the economic conditions affecting the cur-
to four years (1 July 2021), and the overall limit will not be reduced
rency in which benefit obligations are denominated and in which
by payments made by the KION Group. The likelihood of the
fund assets are invested, as well as capital market expectations.
guarantee being used is deemed low in view of the position of the
Benefit obligations are calculated on the basis of current
individual companies with regard to their current and future
biometric probabilities as determined in accordance with actuarial
financial and earnings situations.
principles. The calculations also include assumptions about future
United States
employee turnover based on employee age and years of service
and about the probability of retirement. The defined benefit obli-
Following the acquisition of Dematic, the KION Group maintains
gation is calculated on the basis of the significant weighted-aver-
three main defined benefit pension plans in the US. The defined
age assumptions as at the reporting date shown in > TABLE 077.
benefits include not only a life-long retirement pension but also
surviving dependants’ benefits.
Unionised employees receive pension entitlements on the
basis of fixed amounts for each month of service. Salaried em ploy-
ees receive benefits that generally depend on their period of ser-
vice and on their average final salary fixed on the date the plan
concerned was frozen. These defined benefit plans have been
frozen for some time now in relation to future periods of service.
Two of the plans are subject to statutory minimum funding
provisions that specify a certain coverage ratio and provide for
annual payments amounting to approximately the equivalent of
€5.3 million to maintain the required ratio.
KION GROUP AG | Annual Report 2017 178
Assumptions underlying provisions for pensions and other postemployment benefits
TABLE 077
Germany
UK
USA
Other
Discount rate
Salary increase rate
Pension increase rate
2017
1.95%
2.75%
1.75%
2016
1.90%
2.75%
1.75%
2017
2.35%
4.12%
3.37%
2016
2.55%
4.12%
3.47%
2017
3.60%
2016
4.05%
–
–
−
−
2017
1.41%
1.49%
0.27%
2016
1.35%
2.51%
0.28%
The assumed discount rate is determined on the basis of the yield
The actuarial assumptions not listed in > TABLE 077, such as
as at the reporting date on AA-rated, fixed-interest senior corpo-
employee turnover, invalidity, etc., are determined in accordance
rate bonds with maturities that match the expected maturities of
with recognised forecasts in each country, taking into account
the pension obligations. Pension obligations in foreign companies
the circumstances and forecasts in the companies concerned.
are calculated on a comparable basis taking into account any
The significant weighted-average assumptions shown in
country-specific requirements.
> TABLE 078 were applied to the calculation of the net interest
Future increases in salaries are estimated on an annual basis
cost and the cost of benefits earned in the current year (current
taking into account factors such as inflation and the overall eco-
service cost).
nomic situation.
Differences between the forecast and actual change in the
The biometric mortality rates used in the calculation are
defined benefit obligation and changes in related assets (known
based on published country-specific statistics and empirical
as remeasurements) are recognised immediately in other com-
values. Since 31 December 2009, the modified Heubeck 2005 G
prehensive income (loss) in accordance with IAS 19. This serves
mortality tables have been used in Germany as the biometric
to ensure that the pension liability in the statement of financial
basis; the modified tables include a somewhat higher life expec-
position is the present value of the defined benefit obligation.
tancy for males than the unmodified tables. The S1NA CMI 2013
In the case of externally funded pension plans, this present
tables (standard mortality tables for self-administered pension
value of the defined benefit obligation is reduced by the fair value
schemes (‘SAPS’) based on normal health) with a long-term trend
of the assets of the external pension fund (plan assets). If the plan
of 1.25 per cent p.a. are applied to the two defined benefit plans
assets exceed the present value of the defined benefit obligation
in the United Kingdom. In the US, calculations use the modified
(net assets), a corresponding asset is recognised in accordance
RP-2014 mortality tables with the generational projection from
with IAS 19. IAS 19.64 in conjunction with the supplementary
the Mortality Improvement Scale MP-2016.
explanatory information in IFRIC 14 states that the recognition of
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated statement of financial position
179
Assumptions underlying pensions expenses
TABLE 078
Germany
UK
USA
Other
Discount rate
Salary increase rate
Pension increase rate
2017
1.90%
2.75%
1.75%
2016
2.35%
2.75%
1.75%
2017
2.55%
4.12%
3.47%
2016
3.75%
4.25%
3.13%
2017
4.05%
2016
3.80%
–
–
−
–
2017
1.35%
2.51%
0.28%
2016
1.61%
2.50%
0.42%
an asset for an excess of plan assets is only permitted if the com-
pany concerned, in its function as the employer, gains economic
benefits in the form of reductions in future contributions to the plan
or in the form of refunds from the plan. If the present value of the
defined benefit obligation is not covered by the plan assets, the net
obligation is reported under the retirement benefit obligation.
In two defined benefit plans in the United Kingdom, plan
assets exceed the present value of the defined benefit obligation.
Stipulations limiting the asset to be recognised in the statement of
financial position do not apply.
KION GROUP AG | Annual Report 2017 180
Statement of financial position
Employees in Germany paid a total of €3.5 million (2016:
The change in the present value of the defined benefit obligation
€2.9 million) into the KION pension plan in 2017.
(DBO) is shown in > TABLE 079.
In 2017, employer contributions in the United Kingdom,
which amounted to €3.9 million, included one-off payments of
The DBO in the other countries was predominantly attributable
€3.6 million (2016: €4.2 million) into pension funds on the basis
to subsidiaries in Switzerland (2017: €50.2 million; 2016: €53.7 mil-
of contractual agreements. In Germany, one-off payments of
lion) and the Netherlands (2017: €35.7 million; 2016: €36.2 million).
€0.5 million (2016: €0.4 million) were also made to a German CTA
The change in the fair value of plan assets is shown in
for the other members of the KION GROUP AG Executive Board.
> TABLE 080.
Changes in defined benefit obligation
TABLE 079
Germany
UK
USA
Other
Total
in € million
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
974.7
829.7
448.5
440.5
218.1
0.4
127.8
123.6 1,769.1
1,394.2
0.5
–
38.3
–
–
–
214.8
–
–
– 17.4
– 62.7
– 28.2
10.9
– 4.6
– 0.1
– 0.1
2.0
0.7
3.9
1.9
1.0
0.5
255.1
– 50.2
– 51.1
40.6
– 0.1
38.1
4.5
35.3
– 0.1
37.1
4.0
– 1.1
– 17.9
– 13.9
– 5.9
– 28.3
– 27.9
–
– 0.4
– 0.2
4.0
1.4
1.0
– 1.9
– 2.7
0.1
35.5
30.4
–
18.0
3.5
–
19.4
2.9
– 15.6
– 12.8
1.0
–
0.9
–
10.9
14.5
–
–
–
–
– 1.2
– 0.5
– 2.3
– 16.6
– 18.5
– 0.2
–
0.1
–
7.7
–
– 0.4
– 7.7
–
5.0
14.2
1.2
0.1
–
1.3
–
–
– 1.2
–
–
– 8.1
– 0.0
–
–
changes in demographic assumptions
–
–
– 0.4
changes in financial assumptions
– 11.8
80.4
experience adjustments
– 1.7
– 11.1
2.8
0.1
83.3
– 9.5
– 0.0
– 0.7
– 0.7
5.2
4.6
4.5
– 0.7
160.7
0.0
– 2.6
– 0.5
– 23.2
Present value of defined benefit
obligation as at 31/12/
1,001.4
974.7
428.9
448.5
210.0
218.1
124.2
127.8 1,764.4
1,769.1
thereof unfunded
thereof funded
436.9
427.7
0.0
0.0
7.3
7.9
564.5
547.0
428.9
448.5
202.6
210.3
37.6
86.6
37.7
481.8
472.6
90.2 1,282.6
1,296.5
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
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated statement of financial position
181
Changes in plan assets
TABLE 080
Germany
UK
USA
Other
Total
in € million
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
Fair value of plan assets as at 01/01/
86.3
79.8
455.7
467.2
167.0
–
81.4
79.4
790.4
626.4
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/
–
–
1.6
3.5
0.9
– 1.2
– 0.1
2.9
93.8
–
–
1.9
2.9
0.9
–
–
–
156.0
– 17.9
– 65.7
– 21.9
11.1
15.5
–
3.9
–
4.3
5.6
–
3.9
8.3
1.0
–
0.0
–
– 3.9
0.8
1.0
1.3
–
0.6
1.1
1.0
1.3
–
156.0
– 43.6
– 56.7
19.1
4.5
10.0
19.5
4.0
6.6
– 2.3
– 16.6
– 18.5
– 7.7
– 1.2
– 2.7
– 5.9
– 28.3
– 27.9
– 0.1
–
–
–
3.1
12.4
52.8
18.0
–
2.9
–
0.6
–
4.0
– 0.1
33.9
– 0.1
62.8
86.3
448.7
455.7
165.0
167.0
78.4
81.4
785.9
790.4
The payments expected for 2018 amount to €26.1 million (2017:
The reconciliation of funded status and net defined benefit
€28.5 million), which includes expected employer contributions of
obligation to the amounts reported in the consolidated statement
€6.8 million to plan assets (2017: €10.1 million) and expected
of financial position as at 31 December is shown in > TABLE 081.
direct payments of pension benefits amounting to €19.3 million
(2017: €18.4 million) that are not covered by corresponding reim-
bursements from plan assets. The expected employer contributions
for 2018 include payments of €5.1 million for one plan in the US.
KION GROUP AG | Annual Report 2017 182
Funded status and net defined benefit obligation
TABLE 081
in € million
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
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
– 564.5 – 547.0 – 428.9 – 448.5 – 202.6 – 210.3
– 86.6
– 90.2 – 1,282.6 – 1,295.9
93.8
86.3
448.7
455.7
165.0
167.0
– 470.7 – 460.7
19.8
7.3
– 37.6
– 43.3
78.4
– 8.1
81.4
785.9
790.4
– 8.7
– 496.7
– 505.5
– 436.9 – 427.7
– 0.0
– 0.0
– 7.3
– 7.9
– 37.6
– 37.7
– 481.8
– 473.2
– 907.5 – 888.3
19.8
7.3
– 45.0
– 51.2
– 45.8
– 46.4
– 978.5
– 978.7
“retirement benefit obligation“
– 907.5 – 888.3
Reported as “Other non-current assets“
–
–
– 4.4
24.2
– 5.0
– 45.0
– 51.2
– 45.8
– 46.4 – 1,002.7
– 991.0
12.3
–
–
–
–
24.2
12.3
Overall, the funding ratio (ratio of plan assets to the present
The changes in the retirement benefit obligations reported in
value of the defined benefit obligation) in the KION Group was
the statement of financial position are shown in > TABLE 082.
44.5 per cent (2016: 44.7 per cent).
Changes in retirement benefit obligation
TABLE 082
in € million
Balance as at 01/01/
Group changes
Exchange differences
Total service cost
Net interest expense
Germany
UK
USA
Other
Total
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
888.3
749.9
0.5
38.3
5.0
–
3.6
–
–
58.8
51.2
0.4
46.4
44.3
991.0
798.0
–
35.5
16.5
–
– 0.2
– 0.6
– 6.3
30.4
17.4
0.0
0.1
0.0
0.1
2.5
0.1
0.4
–
– 0.0
–
0.1
2.1
– 0.4
– 3.9
–
2.4
– 11.0
45.0
51.2
–
– 0.8
3.9
0.6
– 1.9
– 1.3
0.1
– 1.3
45.8
2.0
0.1
3.8
0.8
0.5
– 7.3
39.5
19.3
99.1
2.1
34.3
18.7
– 1.1
– 17.9
– 13.9
– 1.3
–
– 6.4
– 0.3
– 2.1
– 15.6
– 2.5
– 0.2
55.3
46.4 1,002.7
991.0
Pension benefits directly paid by
company
Employer contributions to plan assets
Liability transfer out to third parties
Remeasurements
Balance as at 31/12/
– 15.6
– 12.8
–
–
– 0.9
– 0.4
– 16.4
– 0.9
– 0.2
66.2
907.5
888.3
– 0.3
– 0.3
–
– 0.3
4.4
–
2.2
5.0
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated statement of financial position
183
Statement of cash flows
The service cost is the new pension entitlement arising in the
financial year and is recognised in the income statement. It is cal-
In the case of obligations not covered by external assets, pay-
culated as the present value of that proportion of the expected
ments to beneficiaries are made directly by the Company and
defined benefit obligation when the pension is paid attributable to
therefore have an impact on cash flow from operating activities. If
the year under review on the basis of the maximum length of ser-
the benefit obligations are backed by external assets, the pay-
vice achievable by each employee.
ments are made from existing plan assets and have no effect on
Past service cost arises if there is a change to the pension
the Company’s cash flow. Instead, any contributions made to the
entitle ment and it is recognised immediately in full.
external pension fund by the Company result in a cash outflow for
The net interest expense / income, which is calculated by multi-
operating activities.
plying the net liability (present value of the defined benefit obligation
During the reporting year, pension benefits of €46.2 million
minus plan assets) or the net assets (if the plan assets exceed the
(2016: €41.8 million) were paid in connection with the main pen-
present value of the defined benefit obligation) at the start of the year
sion entitlements in the KION Group, of which €17.9 million
by the discount rate, is also recognised in the income statement.
(2016: €13.9 million) was paid directly by the Company and
The breakdown of the net cost of the defined benefit obliga-
€28.3 million (2016: €27.9 million) was paid from plan assets.
tion (expenses less income) recognised in the income statement
Cash contributions to plan assets in 2017 amounted to €10.0 mil-
for 2017 is shown in > TABLE 083.
lion (2016: €6.6 million). Furthermore, pension benefit payments
totalling €0.3 million (2016: €0.1 million) were transferred to
external pension funds.
Income statement
In accordance with IAS 19, actuarial computations are performed
for benefit obligations in order to determine the amount to be
expensed in each period in accordance with fixed rules. The
expenses recognised in the income statement for pensions and
similar obligations consist of a number of components that must
be calculated and disclosed separately.
KION GROUP AG | Annual Report 2017 184
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
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
35.5
30.4
1.0
–
1.0
0.9
–
0.9
10.9
14.5
0.1
–
0.1
7.7
0.1
4.0
3.9
–
– 0.1
– 0.1
0.1
1.3
3.9
1.4
3.8
1.9
40.6
– 0.1
40.5
38.1
35.3
– 0.1
35.1
37.1
–
30.4
19.4
– 1.9
– 11.1
– 15.5
– 5.6
– 1.0
– 0.8
– 1.1
– 19.1
– 19.5
17.4
47.9
– 0.2
0.8
– 1.0
– 0.1
2.1
2.2
0.4
0.5
0.6
4.5
0.8
4.6
18.9
59.5
17.6
52.7
–
35.5
18.0
– 1.6
16.5
52.0
The KION Group’s net financial income/expenses includes a net
Other comprehensive income (loss)
interest expense of €18.9 million (2016: €17.6 million). All other com-
ponents of pension expenses are recognised under functional costs.
The breakdown of the remeasurement of the defined benefit obli-
The actual total return on plan assets in 2017 was €53.1 mil-
gation recognised in the statement of comprehensive income in
lion (2016: €82.3 million).
2017 is presented in > TABLE 084.
Accumulated other comprehensive income (loss)
TABLE 084
Germany
UK
USA
Other
Total
in € million
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
Accumulated other comprehensive
income / loss as at 01/01/
– 350.4
– 284.2
– 57.1
– 42.8
Exchange differences
–
–
2.1
6.7
11.6
– 1.3
–
– 26.0
– 28.0
– 421.9
– 355.0
0.6
0.7
– 0.1
1.5
7.1
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/
13.5
– 69.3
– 2.5
– 73.7
– 20.4
8.2
0.8
– 1.9
– 8.7
– 136.8
2.9
3.1
12.4
52.8
18.0
2.9
0.6
4.0
33.9
62.8
– 334.0
– 350.4
– 45.1
– 57.1
7.9
11.6
– 24.0
– 26.0
– 395.1
– 421.9
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated statement of financial position
185
The components of the remeasurements of the defined benefit
Composition of plan assets
obligations are listed in > TABLE 079.
The gains and losses on the remeasurement of plan assets
The plan assets of the main pension plans consist of the following
are attributable entirely to experience adjustments. The changes
components: > TABLE 085
in estimates relating to defined benefit pension entitlements
resulted in an €18.7 million increase in equity as at 31 Decem-
The plan assets do not include any real estate or other assets
ber 2017 after deduction of deferred taxes (31 December 2016:
used by the KION Group itself.
decrease of €50.1 million).
Fair value of plan assets
in € million
Shares
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
TABLE 085
Germany
UK
USA
Other
Total
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
26.7
28.8
6.7
–
31.6
93.8
9.0
–
9.0
24.7
26.4
5.9
–
29.3
86.3
9.0
–
9.0
53.8
87.8
362.9
361.5
–
–
–
–
72.6
78.9
–
–
77.9
74.5
–
–
32.0
6.5
13.5
14.6
448.7
455.7
165.0
167.0
7.9
–
7.9
–
–
–
–
–
–
–
–
–
10.1
12.1
5.4
46.3
4.5
78.4
47.8
46.3
1.5
9.7
163.1
200.0
16.3
482.7
478.7
4.7
47.2
3.6
12.1
46.3
81.6
10.6
47.2
54.0
81.4
785.9
790.4
48.9
47.2
1.7
64.7
46.3
18.4
57.9
47.2
10.7
Sensitivity analysis
The present value of the defined benefit obligation is based on the
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 bene-
fit obligation would be as shown in > TABLE 086.
KION GROUP AG | Annual Report 2017 186
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
TABLE 086
2016
– 284.1
380.5
20.6
– 20.7
40.1
– 39.5
65.2
2017
– 279.7
373.1
18.7
– 18.7
42.2
– 40.2
61.7
The sensitivity analysis shown in > TABLE 086 is not representative
Future pension benefit payments
of an actual change in the present value of the defined benefit
obligation because variations in the significant assumptions are
The pension benefit payments shown in > TABLE 087 are forecast
unlikely to occur in isolation as, to some extent, the assumptions
for the next ten years for the defined benefit pension entitlements
are interrelated. Sensitivity is determined using the same methods
in existence as at 31 December 2017. The expected pension ben-
(projected unit credit method) as for the measurement of the
efits break down into future benefits to be paid directly by the
obligation recognised in the consolidated statement of financial
employer (for 2018: €19.3 million) and future benefits to be paid
position as at 31 December 2017.
from existing plan assets (for 2018: €28.8 million).
Expected payments for pension benefits
in € million
Germany
2018
2019
2020
2021
2022
2023 to 2027
18.4
19.1
20.5
22.0
24.2
145.3
UK
16.8
17.3
17.3
17.4
17.6
89.1
USA
9.2
9.0
9.6
10.1
10.5
56.1
Other
3.7
4.0
4.9
5.2
4.6
27.6
TABLE 087
Total
48.1
49.4
52.3
54.8
56.9
318.2
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated statement of financial position
187
As at the reporting date, the average duration of the defined ben-
The KION Group also bears the full risk of possible future
efit obligation, weighted on the basis of the present value of the
pension adjustments resulting from changes in longevity and
defined benefit obligation, was 22.2 years in Germany (2016:
inflation.
22.7 years), 15.5 years in the United Kingdom (2016: 15.4 years),
Payroll-based contributions to the KION pension plan made
14.1 years in the US (2016: 14.3 years) and 16.0 years in the other
by employees in Germany are invested in fund units. If the actual
countries (2016: 16.5 years).
returns on these fund units fall below the rate of return of
3.0 per cent that has been guaranteed to participating employ-
ees, the KION Group’s personnel expenses rise.
Risks
The funding ratio, the defined benefit obligation and the asso-
ciated costs depend on the performance of financial markets.
The return on plan assets is assumed to equal the discount rate,
which is determined on the basis of the yield earned on AA-rated,
[30] FINANCIAL LIABILITIES
fixed-interest senior corporate bonds. If the actual return on plan
The financial liabilities reported by the KION Group as at
assets falls below the discount rates applied, the net obligation
31 December 2017 essentially comprised interest-bearing liabili-
arising out of the pension plans increases. The amount of the net
ties to banks and a promissory note. The liabilities to banks were
obligation is also particularly affected by the discount rates, and
predominantly attributable to the loan for the financing of the
the current low level of interest rates – especially in the eurozone –
Dematic acquisition and liabilities under the syndicated loan
is resulting in a comparatively large net obligation.
agreement.
The plan assets are predominantly invested in corporate
> TABLE 088 shows the contractual maturity structure of the
bonds and inflation-linked UK government bonds, particularly in
financial liabilities.
the United Kingdom. The market risk attaching to plan assets –
above all in the case of equities – is mitigated by defining an invest-
ment strategy and investment guidelines and constantly monitor-
ing the assets’ performance. Moreover, a downward trend in
financial markets could have a significant effect on minimum
funding requirements, some of which apply outside Germany.
KION GROUP AG | Annual Report 2017 188
Maturity structure of financial liabilities
in € million
Liabilities to banks
due within one year
due in one to five years
due in more than five years
Promissory note
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
TABLE 088
2016
3,175.8
287.1
2,888.6
–
–
–
–
–
7.2
6.8
0.4
–
2017
1,253.7
236.5
1,017.2
–
1,007.3
–
744.0
263.3
7.7
7.4
0.3
–
243.9
2,024.8
293.9
2,889.1
Liabilities to banks
facility, which includes other loan liabilities and contingent liabili-
ties. The drawdowns under the revolving credit facility have been
Senior facilities agreement
classified as short term.
KION GROUP AG signed a syndicated loan agreement (senior
facilities agreement, SFA) of originally €1,500.0 million with a
Acquisition facilities agreement
syndicate of international banks on 28 October 2015. The SFA
On 4 July 2016, KION GROUP AG reached agreement with a
comprised a revolving credit facility of €1,150.0 million and a
group of banks on a bridge loan to finance the acquisition of
fixed-term tranche of €350.0 million. The fixed-term tranche of
Dematic (acquisition facilities agreement, AFA), originally in an
€350.0 million, which had a variable interest rate and was due to
amount of €3,000.0 million. This bridge loan was refinanced by
mature in February 2019, was repaid in full ahead of schedule in
means of two corporate actions in 2017, which means that the
2017. As a result of the early repayment, deferred borrowing costs
liabilities under the AFA as at 31 December 2017 consisted solely
of €0.9 million were recognised under financial expenses.
of a floating-rate loan of €1,000.0 million that is due to mature in
On the reporting date, the SFA consisted solely of the
October 2021.
revolving credit facility, which has a variable interest rate and will
The amount drawn down under the AFA as at 31 December
mature in February 2022. As at 31 December 2017, an amount of
2016 was €2,543.2 million and was divided into three variable-rate
€184.7 million had been drawn down from the revolving credit
tranches repayable as bullet payments on maturity: tranche A2 of
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated statement of financial position
189
€343.2 million, tranche B of €1,200.0 million and the loan of
each tranche on initial recognition and will be expensed over
€1,000.0 million. Tranche A2 and tranche B of the AFA were
subsequent periods.
repaid in full in 2017. The funds for the repayment were provided
The KION Group entered into a number of interest-rate
by the promissory note issued in the first quarter of 2017 with a
derivatives in order to hedge the interest-rate risk resulting from
nominal amount totalling €1,010.0 million and the capital increase
the floating-rate tranches of the promissory note. The interest-rate
carried out in May 2017, which generated gross proceeds of
derivatives are accounted for as cash flow hedges (see also
€602.9 million (see also note [28]). In connection with the early
note [40]).
repayment of these tranches, previously deferred borrowing
The SFA, AFA and promissory note are not collateralised.
costs of €2.5 million were recognised under financial expenses.
KION GROUP AG has issued guarantees to the banks for all of
the payment obligations under the SFA and AFA.
Promissory note
Changes in net financial debt
The promissory note issued in 2017 in an amount of €1,010.0 mil-
lion is divided into three tranches with different maturities and
The KION Group uses its net financial debt as a key internal figure
floating-rate or fixed coupons: a tranche of €746.0 million maturing
for analysing the changes in its financial liabilities. Net financial
in May 2022, a tranche of €236.5 million maturing in April 2024
debt is defined as the difference between financial liabilities and
and a tranche of €27.5 million maturing in April 2027. Issuance of
cash and cash equivalents.
the promissory note resulted in directly attributable transaction
The breakdown of the KION Group’s net financial debt as at
costs of €3.1 million. These were deducted from the fair value of
31 December 2017 is shown in > TABLE 089.
Net financial debt
in € million
Liabilities to banks (gross)
Promissory note (gross)
Other financial liabilities to non-banks
./. Capitalised borrowing costs
Financial liabilities
./. Cash and cash equivalents
Net financial debt
TABLE 089
2016
3,188.6
–
7.2
– 12.9
3,183.0
– 279.6
2,903.4
2017
1,259.6
1,010.0
7.7
– 8.6
2,268.7
– 173.2
2,095.5
KION GROUP AG | Annual Report 2017 190
> TABLE 090 gives details of the changes in financial liabilities and
lists the applicable terms and conditions.
Credit terms
TABLE 090
Interest rate
Notional amount
Maturity
in € million
Multicurrency Revolving Credit Facility (SFA)
Term Loan Facility B (SFA)
Bridge Loan Facility A2 (AFA)
Bridge Loan Facility B (AFA)
Term Loan Facility (AFA)
Promissory note (5 years term)
Promissory note (7 years term)
Promissory note (10 years term)
Other liabilities to banks
Other financial liabilities to non-banks
./. Capitalised borrowing costs
Total financial liabilities
EURIBOR + Margin
EURIBOR + Margin
EURIBOR + Margin
EURIBOR + Margin
2017
178.0
–
–
–
EURIBOR + Margin
1,000.0
EURIBOR + Margin /
fixed rate
EURIBOR + Margin /
fixed rate
EURIBOR + Margin /
fixed rate
Various currencies and
interest terms
746.0
236.5
27.5
81.6
7.7
– 8.6
2,268.7
2016
212.1
350.0
343.2
1,200.0
1,000.0
–
–
–
83.3
7.2
– 12.9
3,183.0
2022
2019
2018
2018
2021
2022
2024
2027
Covenants
liabilities to EBITDA). Non-compliance with the covenants or with
the defined maximum level of leverage as at a particular reporting
Among other stipulations, the contractual terms of the SFA, AFA
date may potentially give lenders a right of termination or lead to
and promissory note set out certain covenants. In addition, there
an increase in interest payments.
is a financial covenant that involves ongoing testing of adherence
All covenants were complied with in the past financial year, as
to a defined maximum level of leverage (the ratio of financial
had been the case in 2016.
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated statement of financial position
191
[31] LEASE LIABILITIES
Whereas lease liabilities stood at €1,131.1 million (31 Decem-
ber 2016: €1,007.2 million), lease receivables arising from sale and
leaseback transactions amounted to €739.1 million (31 Decem-
ber 2016: €663.4 million) and leased assets under sale and
Lease liabilities relate solely to finance lease obligations arising
leaseback transactions totalled €420.8 million (31 December 2016:
from sale and leaseback transactions for the funding of long-term
€367.5 million).
leases with end customers.
The amounts recognised as lease liabilities (the present value
of future minimum lease payments) are based on the following
data: > TABLE 091
Future minimum lease payments
in € million
Total future minimum lease payments (gross)
due within one year
due in one to five years
due in more than five years
TABLE 091
2016
1,084.2
315.4
737.6
31.2
2017
1,203.9
363.1
806.1
34.7
Present value of future minimum lease payments
1,131.1
1,007.2
due within one year
due in one to five years
due in more than five years
332.9
764.3
33.9
285.2
691.9
30.1
Interest included in future minimum lease payments
72.8
77.0
KION GROUP AG | Annual Report 2017 192
[32] OTHER PROVISIONS
Other provisions relate to the following items: > TABLE 092
Other provisions
TABLE 092
in € million
Balance as at 01/01/2017
thereof non-current
thereof current
Group changes
Additions
Utilisations
Reversals
Additions to accrued interest
Currency translation adjustments
Other adjustments
Balance as at 31/12/2017
thereof non-current
thereof current
Provisions
for product
warranties
Provisions for
personnel
Other
obligations
Total other
provisions
69.5
18.1
51.4
0.0
45.1
– 20.8
– 12.4
0.0
– 2.5
2.6
81.6
21.8
59.8
110.9
50.6
60.4
0.2
40.8
– 52.5
– 1.5
0.0
– 0.6
– 1.4
95.8
53.8
42.1
75.4
23.7
51.7
0.2
31.9
– 9.2
– 21.3
– 0.0
– 2.4
– 7.4
67.2
20.1
47.2
255.7
92.3
163.4
0.4
117.8
– 82.5
– 35.2
0.0
– 5.5
– 6.1
244.6
95.6
149.0
The provisions for product warranties include contractual and
Other obligations comprise, among others, provisions for re-
statutory obligations arising from the sale of industrial trucks,
structuring, 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 cash payments will be incurred within the next two years
social plans and termination benefits) came to €12.7 million as at
after the reporting date.
31 December 2017 (31 December 2016: €28.5 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
partial retirement obligations are recognised on the basis of
individual contractual arrangements and agreements under
collective bargaining law.
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated statement of financial position
193
[33] TRADE PAYABLES
[34] OTHER FINANCIAL LIABILITIES
As at 31 December 2017, trade payables of €923.9 million
Other financial liabilities comprise the following items: > TABLE 093
(31 December 2016: €802.2 million) included liabilities to
non-consolidated subsidiaries of €6.0 million (31 December
2016: €4.7 million) and liabilities to equity-accounted investments
and other equity investments of €17.7 million (31 December 2016:
€15.0 million).
Other financial liabilities
TABLE 093
in € million
Liabilities from finance leases
Derivative financial instruments
Sundry other financial liabilities
Other non-current financial liabilities
Liabilities from finance leases
Liabilities for financial services
Derivative financial instruments
Liabilities from accrued interest
Sundry other financial liabilities
Other current financial liabilities
2017
382.3
1.9
23.6
407.8
159.1
85.7
3.3
14.5
34.1
296.7
2016
341.7
–
7.5
349.3
136.0
8.3
22.4
12.4
43.6
222.6
Total other financial liabilities
704.5
571.9
KION GROUP AG | Annual Report 2017 194
The non-current derivative financial instruments consist of a
The liabilities from finance leases comprise liabilities arising
number of interest-rate derivatives that were entered into in order
from the financing of industrial trucks for short-term rental of
to hedge the interest-rate risk resulting from the floating-rate
€493.8 million (31 December 2016: €440.0 million) and residual
tranches of the promissory note. The current derivative financial
value obligations of €18.2 million (31 December 2016: €16.7 mil-
instruments include a call option of Weichai Power (Luxembourg)
lion). The KION Group has also recognised other financial liabili-
Holding S.à r.l., Luxembourg (‘Weichai Power’) on the 10 per cent
ties amounting to €29.4 million (31 December 2016: €21.0 million)
equity investment of the KION Group in Linde Hydraulics amount-
arising from procurement leases classified as finance leases due
ing to €0.0 million (31 December 2016: €0.3 million).
to their terms and conditions.
The liabilities for financial services relate to the funding of the
The liabilities from finance leases are based on the following
long-term leasing business.
future minimum lease payments: > TABLE 094
Future minimum lease payments
TABLE 094
in € million
Total future minimum lease payments (gross)
due within one year
due in one to five years
due in more than five years
Present value of future minimum lease payments
due within one year
due in one to five years
due in more than five years
2017
576.3
173.6
383.7
19.0
541.4
159.1
363.7
18.6
2016
514.2
150.3
350.6
13.3
477.7
136.0
329.0
12.8
Interest included in future minimum lease payments
34.8
36.5
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated statement of financial position
195
[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
2016
202.8
202.8
74.9
256.5
44.7
92.7
72.6
300.7
842.1
2017
235.7
235.7
76.2
253.0
48.2
110.8
68.5
264.0
820.7
1,056.3
1,044.9
KION GROUP AG | Annual Report 2017 196
[36] CONTINGENT LIABILITIES AND
Litigation
OTHER FINANCIAL
COMMITMENTS
Contingent liabilities
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 contingent liabilities include guarantees to external
will be sufficient in each individual case. However, the KION Group
parties. In addition, guarantees of €1.6 million related to contin-
believes it is unlikely that these ongoing lawsuits will require funds
gent liabilities assumed jointly with another shareholder of a joint
to be utilised that exceed the provisions recognised.
venture (31 December 2016: €1.9 million). > TABLE 096
Contingent liabilities
in € million
Liabilities on bills of exchange
Liabilities on guarantees
Total contingent liabilities
TABLE 096
2016
4.3
86.2
90.5
2017
–
48.2
48.2
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Notes to the consolidated statement of financial position
197
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 2016: €1.3 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
Future minimum lease payments
in € million
Nominal future minimum lease payments (gross)
due within one year
due in one to five years
due in more than five years
TABLE 097
2016
362.7
58.5
30.0
15.4
466.6
TABLE 098
2016
362.7
85.5
169.4
107.8
2017
442.0
56.1
51.6
14.2
563.9
2017
442.0
96.1
192.8
153.0
KION GROUP AG | Annual Report 2017 198
The future minimum lease payments relate to payments for leased
partially offset by receipts under non-cancellable sub-leases
buildings, machinery, office furniture and equipment (procure-
amounting to €2.4 million (31 December 2016: €6.3 million). The
ment leases) as well as payments for industrial trucks refinanced
future payments also include obligations arising from the refi-
with a sale and leaseback and sub-leased to end customers (sale
nancing of industrial trucks for which there were no offsetting
and leaseback sub-leases). > TABLE 099
receipts under short-term sub-leases as at the reporting date.
The future minimum lease payments for sale and leaseback
transactions not recognised in the statement of financial position
amounting to €29.4 million (31 December 2016: €43.6 million) are
Future minimum lease payments broken down into procurement leases & sale and leaseback sub-leases
TABLE 099
in € million
Future minimum lease payments (cash out)
due within one year
due in one to five years
due in more than five years
Future 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
2017
412.5
80.4
179.2
153.0
–
–
–
–
2016
319.1
67.0
144.7
107.4
–
–
–
–
2017
29.4
15.7
13.6
0.0
2.4
1.7
0.7
–
2016
43.6
18.5
24.8
0.4
6.3
2.2
4.1
0.0
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
199
Other disclosures
Other disclosures
[37] CONSOLIDATED STATEMENT OF
CASH FLOWS
Free cash flow – the sum of cash flow from operating activi-
ties and investing activities – improved to €378.3 million in the
reporting period (2016: minus €1,850.0 million). The prior-year
figure had been influenced by acquisitions.
The net cash used for financing activities was €472.5 million.
The consolidated statement of cash flows shows the changes in
In 2016, cash flow from financing activities had amounted to a
cash and cash equivalents in the KION Group resulting from cash
significant positive balance of €2,026.3 million, caused by the refi-
inflows and outflows in the year under review, broken down into
nancing of the acquisition of Dematic. The decline in the reporting
cash flow from operating, investing and financing activities. The
year is primarily due to the net repayment of financial debt in an
effects on cash from changes in exchange rates are shown sep-
amount of €914.7 million, which outweighed the inflows from the
arately. Cash flow from operating activities is presented using the
capital increase of €598.6 million. While financial debt taken on
indirect method in which the earnings before interest and taxes
during the year came to €2,425.3 million, repayments totalled
for the year is adjusted for non-cash operating items.
€3,340.0 million. Net cash of €50.6 million was also used for inter-
The KION Group’s net cash provided by operating activities
est payments (2016: net cash used of €68.3 million). The costs of
totalled €615.8 million, which was significantly higher than the
obtaining financing in the year under review amounted to €7.4 mil-
prior-year figure (2016: €414.3 million). This increase was attribut-
lion (2016: €23.2 million). The distribution of a dividend of €0.80
able to contributions from operating profit and other incoming
per share (2016: €0.77 per share) resulted in a cash outflow of
payments. The effect was amplified because, unlike in the prior
€86.9 million (2016: €76.0 million), while the acquisition of 60,000
year, Dematic made contributions to operations for twelve months
treasury shares required an outflow of €4.3 million. Additional
in 2017. The higher net working capital, the rise in the volume of
information for 2017 on the changes to liabilities arising from
rentals and leasing, and higher tax payments were fully offset as
financing activities can be found in > TABLE 100.
a result. Furthermore, expenses of €63.1 million in connection
with the Dematic transaction had been recognised and negatively
impacted cash flow from operating activities at the end of 2016.
Net cash used for investing activities amounted to €237.6 mil-
lion (2016: net cash used of €2,264.3 million). The main influence
on the prior-year figure was the net cash outflow of €2,091.1 mil-
lion for the acquisition of Dematic. Smaller acquisitions were car-
ried out in 2017, the total cash payments for which came to
€13.3 million net. Cash payments for development (R&D) and
for property, plant and equipment amounted to €218.3 million
(2016: €166.7 million).
KION GROUP AG | Annual Report 2017 200
Reconciliation of liabilities arising from financing activities
TABLE 100
in € million
Non-current financial liabilities
Current financial liabilities
Liabilities from accrued interest
Liabilities from procurement leases
Total liabilities financial activities
01/01/2017
Cash flows
2,889.1
293.9
12.4
21.0
– 860.5
– 54.2
– 58.1
– 11.8
3,216.4
– 984.6
Non-cash changes
Foreign
exchange
movement
Other
changes
31/12/2017
– 0.5
– 4.4
– 0.0
– 0.4
– 5.3
– 3.2
8.5
60.3
20.5
86.1
2,024.8
243.9
14.5
29.4
2,312.5
Partly due to negative currency effects of €12.2 million (2016: pos-
The following tables show the measurement categories
itive currency effects of €0.2 million), this resulted overall in a
defined by IAS 39. In line with IFRS 7, the tables show the carrying
decrease in cash and cash equivalents, which fell from €279.6 mil-
amounts and fair values of financial assets and liabilities. Deriva-
lion at the end of 2016 to €173.2 million as at 31 December 2017.
tive financial instruments forming part of a documented hedge
> TABLE 042
are not assigned to any of the IAS 39 measurement categories
and are therefore not included in > TABLES 101 – 102.
[38] INFORMATION ON FINANCIAL
INSTRUMENTS
The KION Group uses both primary and derivative financial instru-
ments. The following section summarises the relevance of these
financial instruments for the KION Group.
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
201
Other disclosures
Carrying amounts broken down by class and category 2017
TABLE 101
Classes
in € million
Financial assets
Investments in non-consolidated subsidiaries
and other investments
Loans receivable
Financial receivables
Other financial investments
Lease receivables ¹
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
Promissory note
Other financial liabilities to non-banks
Lease liabilities ¹
Trade payables
Other financial liabilities
thereof non-derivative liabilities
thereof liabilities from finance leases ¹
thereof derivative financial instruments
1 as defined by IAS 17
2 as defined by IAS 11
Carrying
amount
Categories
FAHfT
AfS
LaR
FLaC
FLHfT
Fair value
36.0
2.2
30.3
18.9
875.8
1,094.1
94.7
88.7
58.7
30.0
173.2
1,253.7
1,007.3
7.7
1,131.1
923.9
704.5
157.8
541.4
5.2
36.0
0.5
2.2
30.3
18.4
999.4
58.7
173.2
22.2
36.0
2.2
30.3
18.9
878.3
1,094.1
94.7
88.7
58.7
30.0
173.2
1,259.6
1,021.0
7.7
1,135.5
923.9
706.6
157.8
543.6
5.2
1,253.7
1,007.3
7.7
923.9
157.8
1.0
KION GROUP AG | Annual Report 2017 202
Carrying amounts broken down by class and category 2016
TABLE 102
Classes
in € million
Financial assets
Investments in 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 liabilities ¹
Trade payables
Other financial liabilities
thereof non-derivative liabilities
thereof liabilities from finance leases ¹
thereof derivative financial instruments
1 as defined by IAS 17
2 as defined by IAS 11
Carrying
amount
Categories
FAHfT
AfS
LaR
FLaC
FLHfT
Fair value
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
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
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
203
Other disclosures
The change in valuation allowances for trade receivables is
As at the reporting date, the KION Group’s trade receivables
presented in > TABLE 103.
of €0.4 million (31 December 2016: €1.6 million) were actually
The net gains and losses on financial instruments are broken
offset by trade payables of the same amount. In addition, there
down by IAS 39 category as shown in > TABLE 104.
was a potential offsetting volume of €3.1 million in connection
In 2017, the net gains and losses on available-for-sale financial
with derivative financial instruments as at 31 December 2017
instruments included, for the first time, gains of €8.5 million arising
(31 December 2016: €4.5 million). The potential offsetting volume
on the measurement of the equity investment in Balyo SA. These
essentially arose from netting arrangements in framework agree-
gains were recognised in other comprehensive income (loss).
ments governing derivatives trading that the KION Group had
Gains and losses on financial instruments do not include gains /
entered into with commercial banks.
losses arising on hedging transactions that are part of a docu-
mented hedge (see also note [40]).
Change in valuation allowances
in € million
Valuation allowances as at 01/01/
Additions (cost of valuation allowances)
Reversals
Utilisations
Currency translation adjustments
Valuation allowances as at 31/12/
TABLE 103
2016
38.5
10.8
– 4.1
– 5.0
0.2
40.4
2017
40.4
20.6
– 6.3
– 2.4
– 1.2
51.1
Net gains and losses on financial instruments broken down by category
TABLE 104
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)
2017
– 7.3
15.1
35.8
– 94.6
2016
3.2
6.2
– 17.6
– 57.1
KION GROUP AG | Annual Report 2017 204
Fair value measurement
Level 1 comprises the equity investment in Balyo SA as well as
other financial assets for which the fair value is calculated using
The majority of the cash and cash equivalents, financial receiv-
prices quoted in an active market.
ables, other non-derivative receivables and liabilities, trade
Interest-rate swaps and currency forwards are classified as
receivables and trade payables held by the Group have short
Level 2. The fair value of derivative financial instruments is deter-
remaining terms to maturity. The carrying amounts of these
mined by the system using appropriate valuation methods on the
financial instruments are roughly equal to their fair values. The
basis of the observable market information at the reporting date.
fair value of liabilities to banks and the promissory note corre-
The default risk for the Group and for the counterparty is taken
sponds to the present value of the outstanding payments, tak-
into account on the basis of gross figures. The fair value of inter-
ing account of the current interest-rate curve and the Group’s
est-rate swaps is calculated as the present value of the future
own default risk. This fair value, calculated for the purposes of
cash flows. Both contractually agreed payments and forward
disclosure in the notes to the financial statements, is classified
interest rates are used to calculate the cash flows, which are then
as Level 2 of the fair value hierarchy.
discounted on the basis of a yield curve that is observable in the
The fair value of lease receivables, lease liabilities and liabili-
market. The fair value of the currency forwards is calculated by
ties from finance leases corresponds to the present value of the
the system using the discounting method based on forward rates
net lease payments, taking account of the current market interest
on the reporting date.
rate for similar leases.
The derivative financial liabilities allocated to Level 3 relate to
The following tables show the assignment of fair values to the
a call option of Weichai Power on the 10 per cent shareholding of
individual classification levels as defined by IFRS 7 for financial
the KION Group in Linde Hydraulics. The Black-Scholes model
instruments measured at fair value. > TABLES 105 – 106
and probability-weighted scenario analysis were used to calcu-
late the fair value of the call option. As at 31 December 2017, the
fair value calculated for the call option on the shares in Linde
Hydraulics came to minus €0.0 million (31 December 2016: minus
Financial instruments measured at fair value
TABLE 105
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
11.7
0.5
30.0
5.2
0.0
2017
42.1
11.7
0.5
30.0
5.2
5.2
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
205
Other disclosures
Financial instruments measured at fair value
TABLE 106
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
€0.3 million). Unrealised gains of €0.3 million in connection with
If events or changes in circumstances make it necessary to
the call option were recognised in net financial income / expenses
reclassify financial instruments to a different level, they are reclas-
in 2017 (2016: €0.3 million). As at the reporting date, a change in
sified at the end of a reporting period. As had been the case in
the fair value of the shares in Linde Hydraulics would not have had
2016, no financial instruments were transferred between Levels 1,
any material effect on profit or loss as a consequence of the
2 or 3 in 2017.
change in the fair value of the call option.
In order to eliminate default risk to the greatest possible
extent, the KION Group only enters into derivatives with invest-
ment-grade counterparties.
KION GROUP AG | Annual Report 2017 206
[39] FINANCIAL RISK REPORTING
Capital management
Taking into account credit facilities that had not yet been uti-
lised, the unrestricted cash and cash equivalents available to the
KION Group as at 31 December 2017 amounted to €1,138.0 mil-
lion (31 December 2016: €1,200.8 million).
One of the prime objectives of capital management is to ensure
Default risk
liquidity at all times. Measures aimed at achieving these objec-
tives include the optimisation of the capital structure, the reduc-
In certain finance and operating activities, the KION Group is sub-
tion of liabilities and ongoing Group cash flow planning and man-
ject to credit risk, i.e. the risk that partners will fail to meet their
agement. Close cooperation between local units and the Group
contractual obligations. This risk is defined as the risk that a coun-
head office ensures that the local legal and regulatory require-
terparty will default, and hence is limited to a maximum of the car-
ments faced by foreign Group companies are taken into account
rying amount of the assets relating to the counterparty involved.
in capital management.
Default risk is limited by diversifying business partners based on
Net financial debt – defined as the difference between finan-
certain credit ratings. The Group only enters into transactions with
cial liabilities and cash and cash equivalents – is the key perfor-
business partners and banks holding a good credit rating and
mance measure used in liquidity planning at Group level (see note
subject to fixed limits. The potential default risk attaching to finan-
[30]) and amounted to €2,095.5 million as at 31 December 2017
cial assets is also mitigated by secured forms of lending such as
(31 December 2016: €2,903.4 million).
reservation of title, credit insurance and guarantees, and potential
The financial liabilities reported by the KION Group as at
netting agreements. Counterparty risks involving our customers
31 December 2017 consisted of liabilities under the syndicated
are managed by the individual Group companies. Financial trans-
loan agreement (SFA), liabilities under the loan for the financing of
actions are only entered into with selected partners holding good
the Dematic acquisition (AFA) and a promissory note. The SFA
credit ratings. Investments in interest-bearing securities are limited
comprises a variable-rate revolving credit facility of €1,150.0 mil-
to securities with an investment-grade credit rating.
lion maturing in February 2022. A fixed-term tranche originally
> TABLE 107 shows the age structure of receivables as at the
agreed under the SFA, which had a volume of €350.0 million and
reporting date.
was due to mature in February 2019, was repaid in full ahead of
Specific valuation allowances for defaults are recognised to
schedule in 2017 (see note [30]).
reflect the risk arising from primary financial instruments. Valua-
As at 31 December 2017, the drawdown under the AFA con-
tion allowances are based on the credit risk associated with the
sisted of a floating-rate bullet loan of €1,000.0 million maturing in
receivables, the risk being assessed mainly using factors such as
October 2021. A year earlier, the amount drawn down under the
customer credit rating and failure to adhere to payment terms.
AFA was €2,543.2 million and also included two variable-rate
Some of the receivables that were overdue as at the report-
tranches repayable as bullet payments on maturity that were
ing date, but for which no valuation allowances had been recog-
repaid in full ahead of schedule in 2017: tranche A2 of €343.2 mil-
nised, were offset by corresponding trade payables. Apart from
lion and tranche B of €1,200.0 million. The funds used for the
this item, the Group did not hold any significant collateral.
repayment came from two corporate actions carried out in 2017.
In the first quarter of 2017, a promissory note with a nominal value
totalling €1,010.0 million was issued. In May 2017, a capital
increase was implemented that generated gross proceeds of
€602.9 million (see also note [28]).
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
207
Other disclosures
Age structure analysis of receivables
TABLE 107
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
2017
2016
in € million
Financial receivables
Lease receivables
Trade receivables
Other non-derivative receivables
in € million
Financial receivables
Lease receivables
Trade receivables
Other non-derivative receivables
30.3
875.8
1,094.1
58.7
21.3
731.5
998.9
50.3
30.3
875.8
870.8
55.9
21.3
731.5
764.0
46.6
–
–
9.8
1.9
–
–
67.2
0.6
–
–
201.3
0.0
–
–
153.7
0.0
–
–
12.1
0.9
–
–
14.0
3.1
Liquidity risk
with a stable outlook in recognition of its improved financial
profile, high level of profitability and stable free cash flow. In
Based on the definitions in IFRS 7, a liquidity risk arises if an entity
September 2017, rating agency Standard & Poor’s raised its
is unable to meet its financial liabilities. The KION Group main-
credit rating for the KION Group from BB+ with a stable outlook
tains a liquidity reserve in the form of lines of credit and cash in
to BB+ with a positive outlook.
order to ensure financial flexibility and solvency. The age structure
The following tables show all of the contractually agreed
of financial liabilities is reviewed continually. In January 2017, the
undiscounted payments under recognised financial liabilities as
KION Group received an investment-grade rating for the first time.
at 31 December 2017 and 2016, including derivative financial
Fitch Ratings gave the Group a long-term issuer rating of BBB–
instruments with negative fair values. > TABLES 108 – 109
KION GROUP AG | Annual Report 2017 208
Liquidity analysis of financial liabilities and derivatives 2017
TABLE 108
in € million
Primary financial liabilities
Liabilities to banks
Promissory note
Other financial liabilities to non-banks
Lease liabilities
Trade payables
Other financial liabilities
Derivative financial liabilities
Derivatives with negative fair value
+ Cash in
– Cash out
Carrying amount
2017
Cash flow
2018
Cash flow
2019 – 2022
Cash flow
from 2023
1,253.7
1,007.3
7.7
1,131.1
923.9
699.3
5.2
– 267.1
– 1,083.2
–
– 7.4
– 363.1
– 923.9
– 331.4
– 788.8
– 0.3
– 806.1
–
– 383.7
–
– 295.5
–
– 34.7
–
– 19.0
182.5
– 189.9
16.2
– 18.9
2.6
– 1.6
Liquidity analysis of financial liabilities and derivatives 2016
TABLE 109
in € million
Primary financial liabilities
Liabilities to banks
Other financial liabilities to non-banks
Lease liabilities
Trade payables
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
1,007.2
802.2
549.4
22.1
– 293.1
– 6.8
– 315.4
– 802.2
– 222.1
– 3,026.5
– 0.4
– 737.6
–
– 350.6
452.7
– 472.6
210.7
– 222.8
–
–
– 31.2
–
– 13.3
–
–
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
209
Other disclosures
The calculation of future cash flows for derivative financial liabili-
transactions and funding loans have matching maturities and by
ties includes all currency forwards that have negative fair values
constantly updating its liquidity planning. Long-term leases are
as at the reporting date.
primarily based on fixed-interest agreements. The credit facilities
In 2017, the KION Group sold financial assets with a total
provided by various banks and an effective dunning process
value of €132.0 million (2016: €101.3 million) in factoring transac-
ensure that the Group has sufficient liquidity.
tions. In some cases, the KION Group retains insignificant rights
In order to exclude currency risk, the KION Group generally
and duties in connection with fully derecognised financial assets,
funds its leasing business in the local currency used in each market.
primarily the provision of limited reserves for defaults. The recog-
Because of low default rates, counterparty risk has not been
nised assets that serve as reserves for defaults and are reported
significant to date in the Group. The KION Group has not identi-
under other current financial assets stood at €2.6 million as at
fied any material changes between 2016 and 2017. The Group
31 December 2017 (31 December 2016: €1.4 million). The short
also mitigates any losses from defaults by its receipt of the pro-
residual maturity of these financial assets means their carrying
ceeds from the sale of repossessed trucks. In addition, receiva-
amount was almost the same as their fair value. The maximum
bles management has been improved by enhancing the dunning
downside risk arising on the transferred and fully derecognised
process. The credit portfolio management system was updated
financial assets amounted to €16.2 million as at 31 December 2017
during 2017. Besides the design of the business processes, it
(31 December 2016: €7.4 million).
also encompassed the risk management and control processes.
Risks arising from financial services
Moreover, the KION Group offers the majority of financial ser-
vices indirectly via selected financing partners that bear the risks
of the finance transaction. As far as these financial services are
concerned, the KION Group bore the counterparty risk in under
The leasing activities of the Industrial Trucks & Services segment
3 per cent of cases (2016: 3 per cent).
mean that the KION Group may be exposed to residual value
risks from the marketing of trucks that are returned by the lessee
at the end of a long-term lease and subsequently sold or
Currency risk
re-leased. Residual values in the markets for used trucks are
therefore constantly monitored and forecast. The KION Group
In accordance with its treasury risk policy, the KION Group
regularly assesses its aggregate risk position arising from finan-
hedges exchange rate risks both locally at the level of the individual
cial services.
companies and centrally via KION GROUP AG using prescribed
The risks identified are immediately taken into account by the
hedging ratios.
Company in the costing of new leases by recognising writedowns
The main hedging instruments employed are foreign-cur-
or valuation allowances and adjusting the residual values.
rency forwards, provided that there are no country-specific
Risk-mitigating factors include the demand for used trucks, which
restrictions on their use.
stabilises the residual values of the KION Group’s industrial
In the Industrial Trucks & Services segment, hedges are
trucks. The majority of the residual values have underlying remar-
entered into at company level for highly probable future transac-
keting agreements that transfer any residual-value risk to the leas-
tions on the basis of rolling 15-month forecasts, as well as for firm
ing company. This had a positive impact on the financial results in
obligations not reported in the statement of financial position.
2017. Groupwide standards to ensure that residual values are cal-
Currency risk arising from customer-specific construction contracts
culated conservatively, combined with an IT system for residual-
in the Supply Chain Solutions segment is hedged at individual
value risk management, reduce risk and provide the basis on
company level on a project basis. Some of these hedges are
which to create the transparency required.
classified as cash flow hedges for accounting purposes in
The KION Group mitigates its liquidity risk and interest-rate
accordance with IAS 39 (see note [40]).
risk attaching to financial services by ensuring that most of its
KION GROUP AG | Annual Report 2017 210
The hedging that had still been in place in 2016 for the currency
Significant currency risk arising from financial instruments is
risk arising on translation of a foreign subsidiary’s financial state-
measured using a currency sensitivity method. Currency risks
ments into the Group’s reporting currency (net investment hedge)
from financial instruments as defined by IFRS 7 are only included
expired at the start of 2017 (see note [40]).
in calculating currency sensitivity if the financial instruments are
In addition, foreign-currency forwards are employed to hedge
denominated in a currency other than the functional currency of
the currency risks arising in the course of internal financing.
the reporting entity concerned. This means that currency risks
> TABLE 110 shows an overview of the foreign-currency forwards
resulting from the translation of the separate financial statements
entered into by the KION Group.
of subsidiaries into the Group reporting currency, i.e. currency
translation risks, are not included.
Foreign-currency forwards
Fair value
Notional amount
in € million
Foreign-currency forwards (assets)
Foreign-currency forwards (liabilities)
Hedge accounting
Held for trading
Hedge accounting
Held for trading
2017
7.8
22.1
2.3
1.0
2016
2.9
7.5
8.7
13.5
2017
224.8
502.1
100.3
95.3
TABLE 110
2016
83.1
552.7
279.3
384.4
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
211
Other disclosures
Currency risk relevant to currency sensitivity in the KION
– 10 per cent: fall in the value of the euro against the other curren-
Group arises mainly in connection with derivative financial instru-
cies of 10.0 per cent).
ments, trade receivables and trade payables. It is assumed that
the portfolio of financial instruments as at the reporting date is
representative of the portfolio over the whole of the year. The sen-
Interest-rate risk
sitivity analysis for the relevant currencies is shown in > TABLE 111.
The table shows the after-tax impact from changes in exchange
Interest-rate risk within the KION Group is managed centrally.
rates considered to be possible (+ 10 per cent: increase in the
The basis for decision-making includes sensitivity analyses of
value of the euro against the other currencies of 10.0 per cent;
interest-rate risk positions in key currencies.
Foreign-currency sensitivity
TABLE 111
in € million
GBP
USD
in € million
GBP
USD
Net income
Other comprehensive loss (income)
+ 10%
– 10%
+ 10%
– 10%
2017
2016
0.2
11.4
2.2
12.9
– 0.3
– 13.9
– 2.7
– 16.1
9.2
5.1
7.7
3.6
– 11.2
– 6.3
– 9.5
– 4.4
KION GROUP AG | Annual Report 2017 212
Some of the Group’s financing takes the form of floating-rate
currencies. Foreign-currency forwards with settlement dates in
financial liabilities. Interest-rate swaps were entered into in 2017 in
the same month as the expected cash flows from the Group’s
order to hedge the resultant interest-rate risk. > TABLE 112 pro-
operating activities are used as hedges.
vides an overview of the interest-rate derivatives used by the
The effectiveness of the Group’s hedging transactions is
KION Group.
assessed on the basis of forward rates using the hypothetical
A shift in the relevant yield curve of + / – 50 basis points (bps)
derivative approach under the cumulative dollar-offset method.
(2016: + / – 50 bps) was simulated to assess interest-rate risk. The
The effective portion of the changes in the fair value of foreign-
cumulative effect after tax resulted from variable-rate exposures
currency forwards is recognised in accumulated other compre-
and is shown in > TABLE 113.
hensive income (loss) and only reversed when the corresponding
[40] HEDGE ACCOUNTING
Hedging currency risk
hedged item is recognised in income.
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
recognised when goods are despatched or received. Until the
corresponding payment is received, changes in the fair value
of the derivative are recognised in the income statement such
In accordance with its treasury risk policy, the KION Group
that they largely offset the effect of the measurement of the
applies cash flow hedge accounting in hedging the currency risks
foreign-currency receivable or liability at the reporting date.
arising from highly probable future transactions and firm obliga-
The changes in fair value recognised and reclassified in other
tions not reported in the statement of financial position in various
comprehensive income in 2017 are shown in the consolidated
Interest-rate swaps
Fair value
Notional amount
in € million
2017
2016
Interest-rate swaps (assets)
Interest-rate swaps (liabilities)
Hedge accounting
Held for trading
Hedge accounting
Held for trading
–
0.1
1.9
–
–
–
–
–
2017
–
50.0
760.0
–
TABLE 112
2016
–
–
–
–
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
213
Other disclosures
Interest-rate sensitivity
TABLE 113
in € million
Net income
Other comprehensive loss (income)
+ 50 bps
– 50 bps
+ 50 bps
– 50 bps
2017
0.0
9.9
2017
– 1.2
– 4.9
2016
– 1.1
–
2016
– 0.9
–
statement of comprehensive income. In matching transactions
income statement until the foreign operation is sold. There were
with the recognition of the hedged item, income from hedging
no ineffective portions of the net investment hedge in 2017, as
transactions amounting to €1.5 million (2016: €0.1 million) was
had also been the case in 2016. The effectiveness of the Group’s
reclassified to revenue, and an amount of €4.0 million (2016:
hedging transaction was determined on the basis of forward
€14.1 million) was reclassified to cost of sales. There were no sig-
rates using the hypothetical derivative approach under the
nificant ineffective portions in 2017, as had been the case in the
cumulative dollar-offset method. In 2017, an expense of €0.7 mil-
previous year.
lion (2016: €3.2 million) arising in connection with the interest
In total, foreign-currency cash flows of €325.2 million (2016:
element of the foreign-currency forward was recognised under
€362.4 million) were hedged and designated as hedged items, of
financial expenses.
which €306.7 million is expected by 31 December 2018 (2016:
In 2016, the KION Group had made use of transaction-related
€357.3 million expected by 31 December 2017). The remaining
foreign-currency forwards to hedge currency risk in connection
cash flows designated as hedged items fall due in the period up
with the acquisition of Dematic. The notional amount of these cur-
to 31 December 2019 (2016: 31 December 2018).
rency forwards totalled €2.3 billion. Currency forwards with a total
The hedging that had still been in place in 2016 for the cur-
notional amount of €1.9 billion served to hedge the purchase price
rency risk arising on translation of a foreign subsidiary’s financial
obligation for the shares and were accounted for as cash flow
statements into the Group’s reporting currency (net investment
hedges. The resulting changes in exchange rates were included in
hedge) expired at the start of 2017. Only the spot rate element of
the reclassified changes in fair value under gains/losses on hedge
the foreign-currency forward was designated as the hedging
reserves and were recognised as a basis adjustment.
instrument. In the reporting year, an unrealised loss of €0.2 million
(2016: unrealised gain of €2.2 million) was recognised in other
comprehensive income (loss) in connection with this hedging.
This effective portion of the hedge recognised in other compre-
hensive income (loss) is not reversed and recognised in the
KION GROUP AG | Annual Report 2017 214
Hedging of interest-rate risk
[41] SEGMENT REPORT
The KION Group uses cash flow hedge accounting in connection
with the hedging of interest-rate risk.
The KION Group issued a promissory note in 2017 as part
The Executive Board, as the chief operating decision-maker
of its financing. It hedged the interest-rate risk arising on the
(CODM), manages the KION Group on the basis of the following
variable-rate tranches of the promissory note by entering into a
segments: Industrial Trucks & Services, Supply Chain Solutions
number of interest-rate swaps, thereby transforming the variable
and Corporate Services. Segment reporting therefore takes into
interest-rate exposure into fixed-rate obligations.
account the organisational and strategic focus of the KION Group.
The effectiveness of the Group’s hedging transactions is
assessed using the hypothetical derivative approach under the
cumulative dollar-offset method. In 2017, the effective portion of
Description of the segments
the changes in fair value of the interest-rate swaps resulted in an
unrealised loss of €1.3 million, which was recognised – after tak-
Industrial Trucks & Services
ing deferred taxes into account – in other comprehensive income
So that it can fully cater to the needs of material handling cus-
(loss). There were no ineffective portions.
tomers worldwide, the business model of the Industrial Trucks &
In total, variable cash flows of €12.9 million were hedged and
Services segment covers key steps of the value chain: product
designated as hedged items, of which €10.2 million relates to
development, manufacturing, sales and service, truck rental
cash flows that are expected in 2019 to 2022. The remaining cash
and used trucks, fleet management and financial services that
flows of €2.6 million are likely to materialise from 2023 onwards.
support the core industrial truck business. The segment oper-
The KION Group did not have any interest-rate hedges in 2016.
ates a multi-brand strategy involving the three international
brands Linde, STILL and Baoli plus the national brands Fenwick,
OM STILL and OM Voltas.
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
215
Other disclosures
Supply Chain Solutions
Segment management
The Supply Chain Solutions segment, with its Dematic Operat-
ing Unit, is a strategic partner to customers in a variety of indus-
The KPIs used to manage the segments are order intake,
tries, supplying them with integrated technology and software
revenue and adjusted EBIT. Segment reporting therefore includes
solutions with which to optimise their supply chains. Manual and
a reconciliation of externally reported consolidated earnings
automated solutions are provided for all functions along cus-
before interest and tax (EBIT) – including effects from purchase
tomers’ supply chains, from goods inward and multishuttle
price allocations and non-recurring items – to the adjusted EBIT
warehouse systems to picking and value-added packing. This
for the segments (‘adjusted EBIT’). Intra-group transactions are
segment is primarily involved in customer-specific, longer-term
generally conducted on an arm’s-length basis. Segment reports
project business operated under the leadership of the Dematic
are prepared in accordance with the same accounting policies as
brand name. With global resources, ten production facilities
the consolidated financial statements, as described in note [7].
worldwide and regional teams of experts, Dematic is able to
> TABLES 114 – 115 show information on the KION Group’s
plan and deliver logistics solutions with varying degrees of com-
operating segments for 2017 and 2016.
plexity anywhere in the world.
Corporate Services
The Corporate Services segment comprises the other activities
of the holding and service companies in the KION Group. The
service companies provide services for all segments in the
KION Group. The bulk of the total revenue in this segment is gen-
erated by internal IT and logistics services.
KION GROUP AG | Annual Report 2017 216
Segment report 2017
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 expenditure ¹
Amortisation and depreciation ²
Order intake
Number of employees ³
Industrial Trucks
& Services
Supply Chain
Solutions
Corporate
Services
Consolidation /
Reconciliation
5,626.9
4.0
5,630.9
592.3
48.1
– 93.4
– 45.3
637.6
1.7
0.9
640.1
8,117.1
5,240.4
80.3
13.6
153.7
113.3
5,859.5
24,090
2,001.8
4.5
2,006.3
– 21.9
66.8
– 64.8
2.0
– 23.8
29.9
175.3
181.4
4,690.1
1,970.3
0.0
0.0
47.0
191.3
2,099.2
6,820
24.8
241.8
266.6
485.6
49.3
– 86.0
– 36.6
522.2
8.5
0.0
530.7
1,787.8
4,243.7
0.0
0.0
17.5
15.4
266.6
698
–
– 250.3
– 250.3
– 587.7
– 32.0
30.8
– 1.1
– 586.5
0.0
–
– 586.5
– 3,366.5
– 3,374.8
–
–
–
–
– 246.2
−
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
TABLE 114
Total
7,653.6
–
7,653.6
468.3
132.2
– 213.3
– 81.1
549.4
40.1
176.2
765.6
11,228.4
8,079.6
80.3
13.6
218.3
319.9
7,979.1
31,608
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
217
Other disclosures
Segment report 2016
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 expenditure ¹
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
4,700.9
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
5,144.9
2,550.3
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
5,910.7
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 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
TABLE 115
Total
5,587.2
−
5,587.2
339.2
88.9
– 184.5
– 95.7
434.8
42.2
60.4
537.3
11,297.0
8,801.3
72.7
6.5
166.7
191.4
5,833.1
30,544
KION GROUP AG | Annual Report 2017 218
External revenue by region is presented in > TABLE 116.
new plant in Monterrey, Mexico. They totalled €40.1 million in
Revenue in Germany came to €1,423.1 million in 2017 (2016:
2017 (2016: €42.2 million).
€1,321.1 million). There are no relationships with individual
The effects from purchase price allocations comprised net
customers that generate revenue deemed to be significant as a
write-downs and other expenses in relation to the hidden reserves
proportion of total consolidated revenue.
and charges identified as part of the acquisition processes.
Financial income and expenses including all interest income
Capital expenditure includes additions to intangible assets
and expenses are described in notes [12] and [13].
and property, plant and equipment. Leased assets are described
The non-recurring items mainly comprised consultancy
in note [18]. > TABLE 117
costs – in particular costs relating to the acquisition and integra-
Capital expenditure in Germany came to €122.6 million in
tion of Dematic – and, in the previous year, start-up costs for the
2017 (2016: €100.9 million).
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 116
2016
3,982.7
459.6
100.3
295.9
148.6
600.1
5,587.2
2017
4,627.8
537.9
152.9
1,266.5
163.1
905.5
7,653.6
Capital expenditures broken down by company location (excl. leased and rental assets)
TABLE 117
in € million
Western Europe
Eastern Europe
Middle East and Africa
North America
Central and South America
Asia-Pacific
Total capital expenditures
2017
162.8
6.6
0.6
31.6
3.5
13.3
2016
133.4
3.7
0.2
16.6
1.0
11.8
218.3
166.7
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
219
Other disclosures
Depreciation/amortisation relates to intangible assets with finite
useful lives and property, plant and equipment.
The regional breakdown of non-current assets excluding
financial assets, financial instruments, deferred tax assets and
[42] EMPLOYEES
post-employment benefits is shown in > TABLE 118.
The KION Group employed an average of 31,064 full-time
Non-current assets attributable to Germany amounted to
equivalents (including trainees and apprentices) in the reporting
€3,143.7 million as at 31 December 2017 (31 December 2016:
year (2016: 24,957). The number of employees (with part-time staff
€3,058.4 million).
included on a pro rata basis) is shown by region in > TABLE 119.
The KION Group employed an average of 541 trainees and
apprentices in 2017 (2016: 536).
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)
* Prior-year figures were adjusted due to retrospective changes of the purchase price allocation (PPA) for Dematic
Employees (average)
Germany
France
UK
Italy
Rest of Europe
USA
Asia
Rest of world
Total employees
TABLE 118
2016
4,209.3
152.2
6.6
2,838.4
104.0
548.5
7,858.9
TABLE 119
2016
8,460
3,293
1,937
899
4,437
801
3,845
1,286
2017
4,369.6
200.7
6.5
2,380.0
90.7
519.6
7,567.0
2017
9,127
3,508
2,396
1,094
5,100
3,038
4,267
2,534
31,064
24,957
KION GROUP AG | Annual Report 2017 220
[43] RELATED PARTY DISCLOSURES
versa, is shown in > TABLES 120 – 121 along with the associated
receivables and liabilities as at the reporting date. The receivables
include a loan that the KION Group has granted to Linde Hydrau-
lics GmbH & Co. KG, Aschaffenburg. The commitment included
In addition to the subsidiaries included in the consolidated finan-
an amount of €9.3 million (31 December 2016: €5.3 million). This
cial statements, the KION Group has direct or indirect business
resulted in a loan receivable for the KION Group of €8.0 million as
relationships with a number of non-consolidated subsidiaries,
at 31 December 2017 (31 December 2016: €4.0 million); it has a
joint ventures and associates in the course of its ordinary busi-
variable interest rate. No valuation allowances for trade receiva-
ness activities.
bles had been recognised as at the reporting date, a situation that
The related parties that are solely or jointly controlled by the
was unchanged on the end of 2016.
KION Group or over which significant influence can be exercised
The members of the Executive Board and Supervisory Board
are included in the list of shareholdings as at 31 December 2017
of KION GROUP AG are also related parties. Details of the remu-
(see note [47]).
neration of the Executive Board and Supervisory Board can be
Another related party is Weichai Power Co. Ltd., Weifang,
found in note [45].
China, which indirectly holds a 43.3 per cent stake in KION
In its consolidated financial statements, which are published
GROUP AG. Since 2017, it has therefore had a majority at the
on the website of the Hong Kong Stock Exchange, Weichai
Annual General Meeting and can exercise control over the KION
Power Co. Ltd. states that its highest-level parent company is
Group. In the context of the capital increase in May 2017, Weichai
Shandong Heavy Industry Group Co., Ltd., Jinan, People’s
Power (Luxembourg) Holding S.à r.l., Luxembourg (‘Weichai
Republic of China, which itself is owned by Shandong Province
Power’), acquired 4,023,275 of the new shares in line with its
and thus the People’s Republic of China. The exemption for gov-
stake in KION GROUP AG, which remained unchanged at
ernment-related entities were applied. There were no transac-
43.3 per cent. The distribution of a dividend of €0.80 per share to
tions that were significant, either individually or taken together,
the shareholders of Weichai Power resulted in an outflow of funds
between the KION Group and companies with which the KION
from KION GROUP AG of €37.7 million.
Group is closely associated solely because of its relationship with
The revenue that the KION Group generated in 2017 and
Shandong Heavy Industry Group Co., Ltd.
2016 from selling goods and services to related parties, and vice
Related party disclosures 2017
in € million
Non-consolidated subsidiaries
Associates (equity-accounted)
Joint ventures (equity-accounted)
Other related parties *
Total
Receivables
Liabilities
Sales of goods
and services
28.7
25.1
1.5
10.9
66.2
15.7
11.2
60.1
2.7
89.7
31.1
158.1
56.8
23.5
269.4
TABLE 120
Purchases of
goods and
services
21.7
126.4
83.2
7.7
239.0
* ‘Other related parties’ include, among others, transactions with Weichai Power and its affiliated companies
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
221
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
TABLE 121
Purchases of
goods and
services
19.7
121.1
77.4
18.2
236.5
* ‘Other related parties’ include, among others, transactions with Weichai Power and its affiliated companies
[44] VARIABLE REMUNERATION
KEEP employee equity programme
The KEEP programme is a share matching plan. Participating
employees acquire KION shares for their own investment pur-
poses. Each set of three KION shares represents a share pack-
age. Once the three-year holding period has expired, employees
are entitled to one free matching share (bonus share) for each
share package. However, KION GROUP AG has the right to sat-
On 1 November 2017, the Executive Board of KION GROUP AG
isfy each programme participant’s entitlement by paying a cash
decided to launch a further share option programme for employ-
settlement instead of granting a bonus share. For employees tak-
ees (KEEP 2017) in the countries that had been included in the
ing part for the first time, the KION Group offers a special incen-
previous year. The period during which eligible employees could
tive in the form of starter packages. Under KEEP 2017, the KION
take up this offer by making a declaration of acceptance ran from
Group will bear the cost of one KION share (free share) in each of
2 to 22 November 2017. To be eligible to participate in KEEP 2017,
the first five share packages that an employee takes up.
employees needed, at the start of the offer phase, to have had a
The right to obtain a bonus share lapses if participants sell
permanent, uninterrupted employment contract with a participat-
their own investment in KION shares or cease to work for the
ing KION Group company for at least one year. Currently, KION
KION Group. The change in the number of bonus shares to be
GROUP AG plus 17 German (2016: 14) and 60 foreign (2016: 53)
granted is shown in > TABLE 122.
subsidiaries are eligible to take part in KEEP. The Company is
considering whether to extend the employee equity programme
to other countries over the coming years.
KION GROUP AG | Annual Report 2017 222
Development of the granted bonus shares
in units
Balance as at 01/01/
Granted subscription rights
Issued bonus shares
Forfeited subscription rights
Balance as at 31/12/
TABLE 122
2016
53,220
15,188
0
– 1,302
67,106
2017
67,106
12,098
– 27,363
– 1,675
50,166
In 2017, 2,545 free shares were issued to employees as part of
In 2017, an expense totalling €0.9 million was recognised
their starter packages (2016: 2,282 free shares).
under functional costs for free shares and bonus shares in con-
The free shares to be issued are measured at their fair value
nection with the employee share option programme (2016:
on the day on which employees obtain the right to acquire shares
€0.7 million). Of this amount, €0.2 million related to KEEP 2017,
as their own investment. The fair value on the grant date is deter-
€0.2 million to KEEP 2016 (2016: €0.2 million), €0.3 million to
mined on the basis of Monte Carlo simulation. The measurement
KEEP 2015 (2016: €0.3 million) and €0.2 million to KEEP 2014
parameters used are shown in > TABLE 123.
(2016: €0.2 million).
For KEEP 2017, the fair value of a bonus share was €62.02
Each year, the Executive Board of KION GROUP AG decides
(KEEP 2016: €52.51; KEEP 2015: €38.57).
whether there will be an offer made under the share option pro-
The fair value of the bonus shares to be granted is recognised
gramme that year and which companies will participate.
as an expense and paid into capital reserves over the three-year
holding period. The holding period for KEEP 2014 ended on
1 October 2017 and the bonus shares were issued to the eligible
employees at no cost.
Significant measurement parameters for the KION GROUP AG Share Matching Programme
TABLE 123
Measurement parameters
Expected dividend
Price of the KION share as at grant date
KEEP 2017
KEEP 2016
KEEP 2015
€0.88
€64.62
€0.88
€55.02
€0.88
€41.01
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
223
Other disclosures
KION performance share plan (PSP)
for managers
this tranche (2016 tranche: 0.2 million phantom shares; 2015
tranche: 0.2 million phantom shares). The allocation was based
on a particular percentage of each manager’s individual gross
The 2017 tranche of the multiple-year variable remuneration
annual remuneration at the time of grant. At the end of the perfor-
component for the managers in the KION Group (LTI 2017) with a
mance period, the number of the phantom shares is amended
defined period (three years) was granted with effect from 1 Janu-
depending on the degree to which the relevant targets are
ary 2017. The remuneration component measured over the long
achieved. The resulting final number of phantom shares multi-
term is based in equal parts on the total shareholder return (TSR)
plied by the smoothed price of KION GROUP AG shares at the
of KION GROUP AG shares compared with the performance of
end of the performance period determines the amount of cash
the MDAX index (previously the STOXX Europe TMI Industrial
actually paid. The KION Group has the right to adjust the amount
Engineering index) as a measure of market performance, and
payable at the end of the performance period in the event of
with return on capital employed (ROCE) as an internal measure. It
exceptional occurrences or developments. The maximum amount
also depends on the performance of KION GROUP AG shares
payable is limited to 200.0 per cent of the value of the shares
during the relevant period.
allotted to an individual at the grant date.
The performance period for the 2017 tranche ends on
The pro-rata expense calculation based on the fair value of
31 December 2019 (2016 tranche: 31 December 2018). The 2015
the phantom shares on each valuation date is carried out using
tranche expired on 31 December 2017 and will be paid out in the
Monte Carlo simulation. The measurement parameters shown
second quarter of 2018.
in > TABLE 124 were used to value the phantom shares on the
At the beginning of the performance period on 1 January 2017
reporting date.
(2016 tranche: 1 January 2016; 2015 tranche: 1 January 2015), the
managers were allocated a total of 0.2 million phantom shares for
Significant measurement parameters of the PSP for Executive Employees
TABLE 124
Measurement parameters
Expected volatility of the KION share
Expected volatility of the MDAX Index
Expected volatility of the STOXX Europe TMI Industrial Engineering Index
Risk-free interest rate
Expected dividend
KION share price at the valuation date
Price of the MDAX Index at valuation date
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 MDAX Index (60-days average)
Valuation date 31/12/2017
Tranche 2017
Tranche 2016
25.0%
15.0%
–
– 0.68%
€0.88
€72.71
€26,193.74
–
€53.85
€21,178.13
25.0%
–
10.0%
– 0.78%
€0.88
€72.71
–
€292.74
€43.54
–
Initial value of the STOXX Europe TMI Industrial Engineering Index (60-days average)
–
€209.26
KION GROUP AG | Annual Report 2017 224
Taking account of the remaining term of two years (2017 tranche)
capital employed (ROCE) as an internal measure. It also depends
and one year (2016 tranche), the historic volatility of KION shares
on the performance of KION GROUP AG shares during the
was used to determine the volatility on which the valuation is
relevant period.
based. As at 31 December 2017, the fair value of one phantom
The performance period for the 2017 tranche ends on
share was €67.18 for the 2016 tranche (31 December 2016:
31 December 2019 (2016 tranche: 31 December 2018). The 2015
€42.86) and €65.60 for the 2017 tranche. On that date, the total
tranche expired on 31 December 2017 and will be paid out in
fair value based on 0.2 million phantom shares was €11.7 million
the spring of 2018. At the beginning of the performance period
(2016 tranche; 31 December 2016: €7.7 million) and €11.6 million
on 1 January 2017 (2016 tranche: 1 January 2016; 2015 tranche:
(2017 tranche). The amount of €11.4 million that is expected to be
1 January 2015), the Executive Board members were allocated a
paid out for the 2015 tranche (2016: €10.9 million for the 2014
total of 0.1 million phantom shares for this tranche (2016 tranche:
tranche) is calculated on the basis of a preliminary total target
0.1 million phantom shares; 2015 tranche: 0.2 million phantom
achievement rate. In April 2017, the first payment from the 2014
shares) on the basis of the starting price of KION shares (60-day
tranche was made on the basis of the achievement of the long-
average; previously the fair value at the time of grant). The shares
term targets that were defined in 2014 at the start of the perfor-
were allocated on the basis of an allocation value in euros spec-
mance period.
ified in each Executive Board member’s service contract.
The total carrying amount for liabilities in connection with
At the end of the performance period, the number of the
share-based remuneration was €23.0 million as at 31 December
phantom shares is amended depending on the degree to which
2017 (31 December 2016: €20.6 million). Of this amount, €11.4 mil-
the relevant targets are achieved. The resulting final number of
lion related to the 2015 tranche (31 December 2016: €7.1 million),
phantom shares multiplied by the smoothed price of KION
€7.8 million to the 2016 tranche (31 December 2016: €2.6 million)
GROUP AG shares at the end of the performance period deter-
and €3.9 million to the 2017 tranche. In 2016, there had also been
mines the amount of cash actually paid. The Supervisory Board
an amount of €10.9 million relating to the 2014 tranche. In 2017, a
can also use a discretionary personal performance multiplier to
pro-rata expense of €4.3 million in respect of the 2015 tranche
adjust the final payment at the end of the performance period by
(2016: €4.3 million), a pro-rata expense of €5.2 million for the 2016
+/– 30.0 per cent. The maximum amount payable is limited to
tranche (2016: €2.6 million) and a pro-rata expense of €3.9 million
200.0 per cent of the value of the shares allotted to an individual
for the 2017 tranche were recognised for twelve months under
at the grant date.
The pro-rata expense calculation based on the fair value of
the phantom shares on each valuation date is carried out using
Monte Carlo simulation. The measurement parameters shown in
> TABLE 125 were used to value the phantom shares on the
reporting date.
functional costs.
KION performance share plan (PSP) for the
Executive Board
The members of the Executive Board have been promised a
multiple-year variable remuneration component in the form of
a performance share plan with a three-year term in each case.
The remuneration component measured over the long term is
based in equal parts on the total shareholder return (TSR) of KION
GROUP AG shares compared with the performance of the MDAX
index (previously the STOXX Europe TMI Industrial Engineering
index) as a measure of market performance, and with return on
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
225
Other disclosures
Significant measurement parameters of the KION GROUP AG Performance Share Plan
TABLE 125
Measurement parameters
Expected volatility of the KION share
Expected volatility of the MDAX Index
Expected volatility of the STOXX Europe TMI Industrial Engineering Index
Risk-free interest rate
Expected dividend
Price of the KION share at valuation date
Price of the MDAX Index at valuation date
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 MDAX Index (60-days average)
Valuation date 31/12/2017
Tranche 2017
Tranche 2016
25.0%
15.0%
–
– 0.68%
€0.88
€72.71
€26,193.74
–
€53.85
€21,178.13
25.0%
–
10.0%
– 0.78%
€0.88
€72.71
–
€292.74
€43.54
–
Initial value of the STOXX Europe TMI Industrial Engineering Index (60-days average)
–
€209.26
Taking account of the remaining term of two years (2017 tranche)
The total carrying amount for liabilities in connection with
and one year (2016 tranche), the historic volatility of KION shares
share-based remuneration was €15.1 million as at 31 December
was used to determine the volatility on which the valuation is
2017 (31 December 2016: €16.9 million). Of this amount, €9.5 mil-
based. As at 31 December 2017, the fair value of one phantom
lion related to the 2015 tranche (31 December 2016: €6.0 million),
share was €65.13 for the 2016 tranche (31 December 2016:
€4.0 million to the 2016 tranche (31 December 2016: €1.6 million)
€42.19) and €65.60 for the 2017 tranche. On that date, the total
and €1.6 million to the 2017 tranche. In 2016, there had also been
fair value based on 0.1 million phantom shares was €5.2 million
an amount of €9.3 million relating to the 2014 tranche. In 2017, a
(2016 tranche; 31 December 2016: €4.4 million) and €4.2 million
pro-rata expense of €3.6 million in respect of the 2015 tranche
(2017 tranche). The amount of €9.5 million that is expected to be
(2016: €3.8 million), a pro-rata expense of €2.3 million for the 2016
paid out for the 2015 tranche (2016: €9.3 million for the 2014
tranche (2016: €1.6 million) and a pro-rata expense of €1.6 million
tranche) is calculated on the basis of a preliminary total target
for the 2017 tranche were recognised for twelve months under
achievement rate. In March 2017, a payment from the 2014
functional costs.
tranche was made on the basis of the achievement of the long-
term targets that were defined in 2014 at the start of the perfor-
mance period.
KION GROUP AG | Annual Report 2017 226
[45] REMUNERATION OF THE EXECU-
TIVE BOARD AND SUPERVISORY
BOARD
Executive Board
Responsibilities
An expense of €13.6 million was recognised for the total
remuneration for members of the Executive Board in 2017 (2016:
€15.5 million). This consisted of short-term remuneration amount-
ing to €5.0 million (2016: €5.0 million), post-employment benefits
totalling €1.1 million (2016: €1.0 million), termination benefits of
€0.0 million (2016: €0.4 million) and share-based payments of
€7.5 million (2016: €9.0 million). The short-term remuneration
comprised non-performance-related components amounting to
€3.1 million (2016: €2.6 million) and performance-related compo-
Gordon Riske, Chief Executive Officer (CEO), is responsible for
nents amounting to €1.9 million (2016: €2.4 million). The current
the LMH EMEA and STILL EMEA Operating Units in the Industrial
service cost resulting from pension provisions for the Executive
Trucks & Services segment and the Dematic Operating Unit. He
Board is reported under post-employment benefits. The long-
also remains in charge of the following group functions: corporate
term incentive components take the form of a performance share
strategy, corporate communications, corporate office, internal
plan (see also note [44]).
audit and corporate compliance. In addition, he takes on respon-
Under section 314 HGB, disclosure of the expense for share-
sibility for the Digitalisation@KION initiative.
based payments is not required. Rather, the payments must be
Dr Eike Böhm, in his role as Chief Technology Officer (CTO),
included in the Executive Board members’ remuneration for the
has groupwide responsibility for research and development (R&D)
year in which they are paid on the basis of the fair value at the indi-
in the areas of industrial trucks and supply chain solutions includ-
vidual grant dates. The fair value of the share-based payments at
ing modules & components, for software development, procure-
their individual grant dates, including tax equalisation, amounted
ment and quality.
to €3.9 million (2016: €4.8 million). Furthermore, disclosure of
Ching Pong Quek, Chief Asia Pacific Officer, heads up the
post-employment benefits (expense of €1.1 million; 2016: expense
KION APAC Operating Unit and thus the entire Asia business
of €1.0 million) and of termination benefits (expense of €0.0 million;
within the Industrial Trucks & Services segment.
2016: expense of €0.4 million) is not required. On this basis, the
Dr Thomas Toepfer is Chief Financial Officer (CFO) and his
total remuneration of the members of the Executive Board pursu-
responsibilities include corporate accounting & tax, financial
ant to section 314 HGB came to €8.9 million (2016: €9.8 million).
services, corporate finance, corporate controlling, corporate
As in the previous year, no loans or advances were made to
HR / Labour Relations Director, legal affairs, KION Group IT, data
members of the Executive Board in 2017. The present value of the
protection, health, safety & environment and logistics / Urban. He
defined benefit obligation in respect of Executive Board members
also took over responsibility from Mr Riske for the KION Americas
as at 31 December 2017 was €8.3 million (31 December 2016:
Operating Unit in the Industrial Trucks & Services segment.
€7.5 million).
Remuneration
The total remuneration paid to former members of the Exec-
utive Board in 2017 amounted to €0.3 million (2016: €0.2 million).
The remuneration paid to the Executive Board comprises a fixed
Defined benefit obligations to former members of the Executive
salary and non-cash benefits, pension entitlements and perfor-
Board or their surviving dependants amounting to €9.8 million
mance-related components. The variable performance-related
(31 December 2016: €9.8 million) were recognised in accordance
components comprise an annually recurring component linked to
with IAS 19.
business performance and a multi-year performance-related
Further details of Executive Board remuneration, including
component in the form of the KION performance share plan for all
the individual amounts for each member, can be found in the
members of the Executive Board. The pension entitlements con-
remuneration report on pages 43 to 56 of this annual report.
sist of retirement, invalidity and surviving dependants’ benefits.
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
227
Other disclosures
Supervisory Board
Dr Eike Böhm
Member of the Executive Board / CTO
The total remuneration paid to the members of the Supervisory
Board for the performance of their tasks at the parent company
Member of the Supervisory Board of e.GO Mobile AG, Aachen
and subsidiaries in 2017 amounted to €1.4 million (2016:
€1.2 million). There were no loans or advances to members of
Ching Pong Quek
the Supervisory Board in 2017. Furthermore, the members of
Member of the Executive Board / Chief Asia Pacific Officer
the Supervisory Board did not receive any remuneration or ben-
efits for services provided as individuals, such as consulting or
Member of the Board of KION South Asia Pte Ltd.,
brokerage activities.
Singapore, Singapore
Members of the Supervisory Board also received short-term
President and CEO of KION Asia Ltd.,
employee benefits of €0.8 million for employee services (2016:
Hong Kong, People’s Republic of China
€0.8 million).
[46] MEMBERS OF THE EXECUTIVE
BOARD AND SUPERVISORY
BOARD
Executive Board
Gordon Riske
Chief Executive Officer (CEO)
Chairman of KION Baoli Forklift Co., Ltd.,
Jiangsu, People’s Republic of China
Member of the Board of Directors of KION India Pvte. Ltd.,
Pune, India
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
Dr Thomas Toepfer
Member of the Executive Board / CFO
Member of the Executive Board of KION Holding 2 GmbH,
Wiesbaden (until 22 June 2017)
Member of the Executive Board of KION Holding 2 GmbH,
Chairman of the Supervisory Board of STILL GmbH, Hamburg
Wiesbaden (until 22 June 2017)
Chairman of the Supervisory Board of Linde Material Handling
Chairman of the Board of Directors of Linde (China)
GmbH, Aschaffenburg
Forklift Truck Co., Ltd., Xiamen, People’s Republic of China
Chairman of the Board of Directors of KION North America
Chairman of the Board of Directors of Dematic NV (formerly
Corp., Summerville, USA
Egemin Group NV), Zwijndrecht, Belgium (until 15 May 2017)
Member of the Board of Directors of Superlift UK Ltd.,
Non-Executive Director of Weichai Power Co., Ltd.,
Basingstoke, United Kingdom
Weifang, People’s Republic of China
Member of the Executive Board of the non-profit Hertie Foundation,
Frankfurt am Main
KION GROUP AG | Annual Report 2017 228
Supervisory Board
Dr Alexander Dibelius
Dr John Feldmann
Frankfurt am Main
Chairman of the Supervisory Board
Deputy Chairman of the Board of Directors of Breitling S.A.,
Managing Partner at CVC Capital Partners (Deutschland) GmbH,
Grenchen, Switzerland
Former member of the Board of Executive Directors of BASF SE,
Member of the Board of Directors of CVC Capital Partners
Ludwigshafen
(Luxembourg) SARL, Luxembourg
Member of the Supervisory Board of HORNBACH Baumarkt AG,
Chairman of the Supervisory Board of Diebold Nixdorf AG,
Bornheim
Paderborn
Member of the Supervisory Board of HORNBACH Holding AG &
Chairman of the Supervisory Board of Diebold Nixdorf Interna-
Co. KGaA, Neustadt an der Weinstrasse
tional GmbH, Paderborn
Member of the Supervisory Board of HORNBACH Management
Member of the Board of Directors of Diebold Nixdorf Inc., Ohio,
AG, Annweiler am Trifels
USA
Özcan Pancarci 1
Member of the Supervisory Board of Douglas GmbH, Düsseldorf
Member of the Supervisory Board of Douglas Holding AG,
Deputy Chairman of the Supervisory Board
Düsseldorf
Chairman of the Plants I and II Works Council, Linde Material
Luxembourg
Handling GmbH, Aschaffenburg
Member of the Shareholders’ Committee of Tipico Group Ltd.,
Member of the Supervisory Board of Kirk Beauty Investments SA,
Chairman of the Group Works Council of the KION Group
Malta
Deputy Chairman of the Supervisory Board of Linde Material
Handling GmbH, Aschaffenburg
Joachim Hartig 1 (until 11 May 2017)
Former Organisational Development Advisor at Linde Material
Birgit A. Behrendt
Handling GmbH, Aschaffenburg (retired)
Vice President of Joint Ventures, Alliances and Commercial
Affairs at Ford of Europe GmbH, Cologne
Denis Heljic 1
Member of the Supervisory Board of Ford Werke GmbH, Cologne
Spokesperson for the STILL branches,
Member of the Board of Directors of Ford Sollers Holding LLC,
Chairman of the European Works Council and Deputy Chairman
Chelny, Russia
of the Works Council of STILL GmbH, Dortmund plant
Member of the Audit Committee of Ford Sollers Holding LLC,
Chelny, Russia
Holger Brandt 2 (until 11 May 2017)
Senior Vice President of the DACH Region at STILL GmbH,
Hamburg
Stefan Casper 1 (since 11 May 2017)
Chairman of the Works Council of KION Warehouse Systems
GmbH, Reutlingen
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
229
Other disclosures
Jiang Kui
Alexandra Schädler 1
President of Shandong Heavy Industry Group Co., Ltd.,
Trade Union Secretary on the National Executive of IG Metall,
Jinan, People’s Republic of China
Frankfurt am Main
Member of the Board of Directors of Ferretti International Holding
Member of the Supervisory Board of Linde Material Handling
S.p.A., Milan, Italy
GmbH, Aschaffenburg (since 18 January 2017)
Member of the Board of Directors of Ferretti S.p.A., Milan, Italy
Member of the Executive Board of Hydraulics Drive Technology
Dr Frank Schepp 2 (since 11 May 2017)
Beteiligungs GmbH, Aschaffenburg
Vice President of Quality at KION GROUP AG, Frankfurt am Main
Member of the Supervisory Board of Linde Hydraulics
(based in Aschaffenburg)
Verwaltungs GmbH, Aschaffenburg
Member of the Board of Directors of PSI, Delaware, USA
Tan Xuguang
Member of the Board of Directors of Shandong Heavy Industry
Chairman of the Board of Directors and President of Shandong
India Private Ltd., Pune, India
Heavy Industry Group Co., Ltd., Jinan, People’s Republic of China
Member of the Board of Directors of Shantui Construction
Chairman of the Board of Directors of Shandong Communica-
Machinery Co. Ltd. Jining, People’s Republic of China
tions Industry Group Holding Co., Ltd., Jinan, People’s Republic
Member of the Board of Directors of Weichai Power Co. Ltd.,
of China
Weifang, People’s Republic of China
Chairman of the Board of Directors of Ferretti International
Holding S.p.A., Milan, Italy
Olaf Kunz 1
Chairman of the Board of Directors of Ferretti S.p.A., Milan, Italy
Head of Collective Bargaining at IG Metall District Office for the
Chairman of the Board of Directors of Weichai Holding Group
Coast, Hamburg
Co., Ltd., Weifang, People’s Republic of China
Member of the Supervisory Board of STILL GmbH, Hamburg
Chairman of the Board of Directors and Chief Executive Officer of
Weichai Power Co., Ltd., Weifang, People’s Republic of China
Jörg Milla 1
Chairman of the Works Council of STILL GmbH, Hamburg
Claudia Wenzel 1
Deputy Chairman of the Supervisory Board of STILL GmbH,
Full-time works council member, HQ and plant 2 at Linde Material
Hamburg
Handling GmbH, Aschaffenburg
Dr Christina Reuter
Xu Ping
Head of Central Manufacturing Engineering & Operational
Partner and Member of the Management Committee at King &
Excellence for Space Equipment Operations at Airbus Defence
Wood Mallesons, Beijing, People’s Republic of China
and Space GmbH, Taufkirchen
Hans Peter Ring
Management Consultant, Munich
Member of the Supervisory Board of Airbus Defence and Space
GmbH, Taufkirchen
Member of the Supervisory Board of Fokker Technologies
Holding B.V., Papendrecht, Netherlands
1 Employee representatives
2 Executive representatives
KION GROUP AG | Annual Report 2017 230
[47] LIST OF THE SHAREHOLDINGS OF
KION GROUP AG, WIESBADEN
The shareholdings of the KION Group as at 31 December 2017
are listed below. > TABLE 126
List of shareholdings as at 31 December 2017 (continued)
TABLE 126
No. Name
Registered
office
Country
Parent
company
Share-
holding
2017
Share-
holding
2016
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 Eisengießerei Dinklage GmbH
7 Eisenwerk Weilbach GmbH
8 Fahrzeugbau GmbH Geisa
9 KION Financial Services GmbH
Stuhr
Germany
Heusenstamm
Germany
Bielefeld
Germany
Heusenstamm
Germany
Dinklage
Wiesbaden
Geisa
Wiesbaden
Germany
Germany
Germany
Germany
10 KION Information Management Services GmbH
Frankfurt am Main Germany
11 KION Warehouse Systems GmbH
Reutlingen
12 Klaus Pahlke GmbH & Co. Fördertechnik KG
Haan
Germany
Germany
13 Linde Material Handling GmbH
Aschaffenburg
Germany
21 100.00% 100.00%
82 100.00% 100.00%
82 100.00% 100.00%
3 100.00% 100.00%
21 100.00% 50.00%
13 100.00% 100.00%
21 100.00% 100.00%
13 100.00% 100.00%
1 100.00% 100.00%
21 100.00% 100.00%
13 100.00% 100.00%
1 100.00% 100.00%
14 LMH Immobilien GmbH & Co. KG
Aschaffenburg
Germany
13 & 15
99.64% 99.64%
15 LMH Immobilien Holding GmbH & Co. KG
Aschaffenburg
Germany
16 LMH Immobilien Holding Verwaltungs-GmbH
Aschaffenburg
Germany
17 LMH Immobilien Verwaltungs-GmbH
Aschaffenburg
Germany
18 LR Intralogistik GmbH
Wörth a. d. Isar
Germany
19 Schrader Industriefahrzeuge GmbH & Co. KG
Essen
20 STILL Financial Services GmbH
Hamburg
21 STILL Gesellschaft mit beschränkter Haftung
Hamburg
Germany
Germany
Germany
13
94.00% 94.00%
13 100.00% 100.00%
13 100.00% 100.00%
21 100.00% 100.00%
13 100.00% 100.00%
9 100.00% 100.00%
13 100.00% 100.00%
22 Urban-Transporte Gesellschaft mit
Unterschleißheim Germany
13 100.00% 100.00%
beschränkter Haftung
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
231
Other disclosures
List of shareholdings as at 31 December 2017 (continued)
TABLE 126
No. Name
Registered
office
23 Willenbrock Fördertechnik GmbH & Co. KG
Bremen
24 Willenbrock Fördertechnik GmbH & Co. KG
Hannover
25 Willenbrock Fördertechnik Holding GmbH
Bremen
Foreign
26 Dematic Holdings Pty. Ltd.
27 Dematic Pty. Ltd.
Belrose
Belrose
28 Linde Material Handling Pty. Ltd.
Huntingwood
29 Dematic NV (formerly: Egemin Group NV)
Zwijndrecht
30 STILL NV
31 Dematic Sistemas e Equipamentos
de Movimentação de Materiais Ltda.
Wijnegem
São Paulo
32 KION South America Fabricação de
Equipamentos para Armazenagem Ltda.
Indaiatuba /
São Paulo
Country
Germany
Germany
Germany
Australia
Australia
Australia
Belgium
Belgium
Brazil
Brazil
Parent
company
Share-
holding
2017
Share-
holding
2016
Note
25
25
13
74.00% 74.00%
74.00% 74.00%
74.00% 74.00%
82 100.00% 100.00%
26 100.00% 100.00%
13 100.00% 100.00%
53 & 3 100.00% 100.00%
21 & 91 100.00% 100.00%
82 & 3 100.00% 100.00%
21 100.00% 100.00%
33 Dematic Logistics de Chile Ltda.
Santiago de Chile Chile
51 & 115 100.00% 100.00%
34 STILL DANMARK A/S
35 BARTHELEMY MANUTENTION SAS
36 Bastide Manutention SAS
Kolding
Vitrolles
Bruguières
37 Bretagne Manutention SAS (formerly:
Pacé
Bretagne Manutention S.A.)
38 Dematic SAS
Bussy-Saint-
Georges
Denmark
France
France
France
France
21 100.00% 100.00%
41
82.00% 83.50%
41 100.00% 100.00%
41 100.00% 100.00%
82 100.00% 100.00%
39 FENWICK FINANCIAL SERVICES SAS
Elancourt
France
42 100.00% 100.00%
40 FENWICK-LINDE OPERATIONS SAS
Cenon sur Vienne France
41 100.00%
–
[1]
41 FENWICK-LINDE SAS (formerly:
FENWICK-LINDE S.A.R.L.)
Elancourt
France
42 100.00% 100.00%
42 KION France SERVICES SAS
Elancourt
43 LOIRE OCEAN MANUTENTION SAS
Saint-Herblain
France
France
44 Manuchar SAS (formerly: Manuchar S.A.)
Gond Pontouvre
France
45 MANUSOM SAS
46 Société Angoumoisine de
Manutention (SAMA) SAS
47 SM Rental SAS
48 STILL Location Services SAS
49 STILL SAS
50 URBAN LOGISTIQUE SAS
Rivery
Champniers
France
France
Roissy Charles de
Gaulle
France
Marne la Vallée
France
Marne la Vallée
France
Elancourt
France
13 100.00% 100.00%
41
74.04% 77.01%
41 100.00% 100.00%
49 100.00% 100.00%
49 100.00% 100.00%
41 100.00% 100.00%
42 100.00% 100.00%
42 100.00% 100.00%
22 100.00% 100.00%
KION GROUP AG | Annual Report 2017 232
List of shareholdings as at 31 December 2017 (continued)
TABLE 126
No. Name
51 Dematic Ltd.
52 Dematic Group Ltd.
53 Dematic Holdings UK 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.
73 KION India Pvt. Ltd.
76 Dematic S.r.l.
77 Emhilia Material Handling S.p.A.
78 KION Rental Services S.p.A.
79 Linde Material Handling Italia S.p.A.
80 OM Carrelli Elevatori S.p.A.
81 Dematic Ltd.
82 Dematic Group S.à r.l.
83 Dematic Holding S.à r.l.
74 Linde Material Handling (Ireland) Ltd.
Walkinstown
75 Baoli EMEA S.p.A. (formerly: STILL ITALIA S.p.A.) Lainate
Registered
office
Country
Banbury
Banbury
Banbury
Banbury
Huntingdon
Banbury
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Banbury
Banbury
Banbury
Exeter
Basingstoke
Pune
Cernusco sul
Naviglio
Modena
Milan
Buguggiate
Lainate
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
India
Ireland
Italy
Italy
Italy
Italy
Italy
Italy
Parent
company
Share-
holding
2017
Share-
holding
2016
Note
82 100.00% 100.00%
85 100.00% 100.00%
82 100.00%
–
[1]
84 100.00% 100.00%
29 100.00% 100.00%
82 100.00% 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%
85 100.00% 100.00%
56 & 82 100.00% 100.00%
69 100.00% 100.00%
72 100.00% 100.00%
13 100.00% 100.00%
111 100.00% 100.00%
60 100.00% 100.00%
21 100.00% 100.00%
82 100.00% 100.00%
79 100.00% 100.00%
75 & 79 & 80 100.00% 100.00%
13 100.00% 100.00%
13 & 75 100.00% 100.00%
84 DH Services Luxembourg Holding S.à r.l.
Senningerberg
Luxembourg
1 100.00% 100.00%
Mississauga
Canada
82 100.00% 100.00%
Senningerberg
Luxembourg
83 100.00% 100.00%
Senningerberg
Luxembourg
52 100.00% 100.00%
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
233
Other disclosures
List of shareholdings as at 31 December 2017 (continued)
TABLE 126
No. Name
Registered
office
Country
Parent
company
Share-
holding
2017
Share-
holding
2016
Note
85 DH Services Luxembourg S.à r.l.
Senningerberg
Luxembourg
54 100.00% 100.00%
86 Dematic (Malaysia) Sdn. Bhd.
Shah Alam
Malaysia
109 100.00% 100.00%
87 Dematic Logistics de Mexico S. de R.L. de C.V. Monterrey
88 DMTC Technology Services, S. de. R.L. de C.V. Monterrey
89 Dematic Trading de Mexico S. de. R.L. de C.V.
Mexico City
Mexico
Mexico
Mexico
51 & 115 100.00% 100.00%
51 & 115 100.00% 100.00%
51 & 115 100.00% 100.00%
90 Dematic B.V. (formerly: Egemin Handling
Gorinchem
Netherlands
5 100.00% 100.00%
Automation B.V.)
91 STILL Intern Transport B.V.
92 STILL Norge AS
Hendrik Ido
Ambacht
Heimdal
93 AUSTRO OM PIMESPO Fördertechnik GmbH
Linz
94 Linde Material Handling Austria GmbH (formerly:
Linz
Netherlands
21 100.00% 100.00%
Norway
Austria
Austria
21 100.00% 100.00%
80 100.00% 100.00%
13 & 93 100.00% 100.00%
Linde Fördertechnik GmbH)
95 STILL Gesellschaft m.b.H.
96 Dematic Poland Sp. z o.o.
97 Linde Material Handling Polska Sp. z o.o.
98 STILL POLSKA Sp. z o.o.
Wiener Neudorf
Austria
Poznań
Warsaw
Gadki
Poland
Poland
Poland
21 100.00% 100.00%
3 100.00% 100.00%
13 100.00% 100.00%
21 100.00% 100.00%
99 STILL MATERIAL HANDLING ROMANIA SRL
Giurgiu
Romania
13 & 21 100.00% 100.00%
100 OOO “Linde Material Handling Rus”
101 OOO “STILL Forklifttrucks”
102 Linde Material Handling AB
103 Linde Material Handling Financial Services AB
104 Nordtruck AB
105 STILL Sverige AB
106 Dematic Suisse Sagl
107 Linde Material Handling Schweiz AG
108 STILL AG
109 Dematic S.E.A. Pte. Ltd.
110 KION South Asia Pte. Ltd.
Moscow
Moscow
Örebro
Örebro
Örnsköldsvik
Malmö
Lugano
Dietlikon
Otelfingen
Singapore
Singapore
111 Linde Material Handling Asia Pacific Pte. Ltd.
Singapore
112 Linde Material Handling Slovenská republika s.r.o. Trenčin
113 STILL SR, spol. s.r.o.
114 Linde Viličar d.o.o.
115 Dematic Logistic Systems S.A.U.
Nitra
Celje
Coslada
Russia
Russia
Sweden
Sweden
Sweden
Sweden
Switzerland
Switzerland
Switzerland
Singapore
Singapore
Singapore
Slovakia
Slovakia
Slovenia
Spain
13 & 7 100.00% 100.00%
13 & 21 100.00% 100.00%
13 100.00% 100.00%
102 100.00%
–
[1]
102 100.00% 25.00%
21 100.00% 100.00%
82 100.00% 100.00%
13 100.00% 100.00%
21 100.00% 100.00%
82 100.00% 100.00%
13 100.00% 100.00%
13 100.00% 100.00%
13 & 122 100.00% 100.00%
21 & 125 100.00% 100.00%
13 100.00% 100.00%
82 100.00% 100.00%
KION GROUP AG | Annual Report 2017 234
List of shareholdings as at 31 December 2017 (continued)
TABLE 126
No. Name
116 Islavista Spain S.A.U.
117 KION Rental Services S.A.U.
118 Linde Material Handling Ibérica, S.A.U.
119 STILL, S.A.U.
Registered
office
L’Hospitalet de
Llobregat
Barcelona
Pallejá
L’Hospitalet de
Llobregat
Country
Spain
Spain
Spain
Spain
Parent
company
Share-
holding
2017
Share-
holding
2016
Note
13 100.00% 100.00%
116 100.00% 100.00%
116 100.00% 100.00%
116 100.00% 100.00%
120 Linde Material Handling (Pty) Ltd.
Linbro Park
South Africa
13 100.00% 100.00%
121 KION Supply Chain Solutions Czech, s.r.o.
Český Krumlov
Czech Republic
52 100.00% 100.00%
122 Linde Material Handling Česká republika s.r.o.
Prague
Czech Republic
13 & 21 100.00% 100.00%
123 Linde Material Handling Parts
Český Krumlov
Czech Republic
13 100.00% 100.00%
Distribution CZ s.r.o.
124 Linde Pohony s.r.o.
125 STILL ČR spol. s.r.o.
126 STILL Regional Service Center, s.r.o.
Český Krumlov
Czech Republic
13 100.00% 100.00%
Prague
Prague
Czech Republic
13 & 21 100.00% 100.00%
Czech Republic
21 100.00%
–
[1]
127 STILL ARSER Iş Makineleri Servis ve Ticaret A.Ş.
Izmir
128 Linde Magyarország Anyagmozgatási Kft.
Dunaharaszti
Turkey
Hungary
Hungary
21
51.00% 51.00%
13 100.00% 100.00%
21 100.00% 100.00%
Környe
Grand Rapids
United States
68 100.00% 100.00%
129 STILL Kft.
130 Dematic Corp.
131 KION North America Corp.
Summerville
United States
13 100.00% 100.00%
132 Dematic International Trading Ltd.
Shanghai
133 Dematic Logistics Systems Ltd.
Suzhou
134 Egemin Asia Pacific Automation Ltd.
Causeway Bay –
Hong Kong
135 Egemin (Shanghai) Trading Company Ltd.
Shanghai
136 KION ASIA (HONG KONG) Ltd.
Kwai Chung –
Hong Kong
137 KION Baoli (Jiangsu) Forklift Co., Ltd.
Jiangjiang
People’s
Republic of
China
People’s
Republic of
China
People’s
Republic of
China
People’s
Republic of
China
People’s
Republic of
China
People’s
Republic of
China
82 100.00% 100.00%
82 100.00% 100.00%
29 100.00% 100.00%
134 100.00% 100.00%
13 100.00% 100.00%
136 100.00% 100.00%
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
235
Other disclosures
List of shareholdings as at 31 December 2017 (continued)
TABLE 126
No. Name
138 Linde Material Handling Hong Kong Ltd.
Registered
office
Kwai Chung -
Hong Kong
139 Linde (China) Forklift Truck Corporation Ltd.
Xiamen
Parent
company
Share-
holding
2017
Share-
holding
2016
Note
13 100.00% 100.00%
13 100.00% 100.00%
Country
People’s
Republic of
China
People’s
Republic of
China
Non-consolidated subsidiaries
Domestic
140 Comnovo GmbH
141 KION IoT Systems GmbH
Dortmund
Germany
Frankfurt am Main Germany
13 100.00%
1 100.00%
–
–
142 Klaus Pahlke Betriebsführungs-GmbH
Haan
Germany
13 100.00% 100.00%
143 Linde Material Handling Rental Services GmbH
Aschaffenburg
Germany
13 100.00%
–
144 OM Deutschland GmbH
Neuhausen a. d.
Fildern
Germany
80 100.00% 100.00%
145 proplan Transport- und Lagersysteme GmbH
Aschaffenburg
Germany
1 100.00% 100.00%
146 Schrader Industriefahrzeuge Verwaltung GmbH
Essen
147 Trainingscenter für Sicherheit und
Bremen
Transport GmbH
148 Willenbrock Fördertechnik Beteiligungs-GmbH
Bremen
149 Willenbrock Fördertechnik Beteiligungs-GmbH
Hannover
Foreign
150 Lansing Bagnall (Aust.) Pty. Ltd.
Huntingwood
151 NDC Automation Pty. Ltd.
152 NDC Manage Pty. Ltd.
153 Baoli France SAS
154 SCI Champ Lagarde
155 Castle Lift Trucks Ltd.
156 Creighton Materials Handling Ltd.
157 D.B.S. Brand Factors Ltd.
158 Fork Truck Rentals Ltd.
159 Fork Truck Training Ltd.
160 Lancashire (Fork Truck) Services Ltd.
161 Linde Heavy Truck Division Ltd.
162 McLEMAN FORK LIFT SERVICES LTD.
Belrose
Belrose
Elancourt
Elancourt
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Germany
Germany
Germany
Germany
Australia
Australia
Australia
France
France
UK
UK
UK
UK
UK
UK
UK
UK
13 100.00% 100.00%
25
74.00% 74.00%
25
25
74.00% 74.00%
74.00% 74.00%
62 & 13 100.00% 100.00%
27 100.00% 100.00%
27 100.00% 100.00%
42 100.00% 100.00%
41 100.00% 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%
[1]
[1]
[1]
[R]
[R]
[R]
[R]
[R]
[R]
[R]
[R]
[R]
[R]
KION GROUP AG | Annual Report 2017 236
List of shareholdings as at 31 December 2017 (continued)
TABLE 126
No. Name
163 Reddwerks Ltd.
164 Stephensons Enterprise Fork Trucks Ltd.
165 Sterling Mechanical Handling Ltd.
166 Trifik Services Ltd.
167 Urban Logistics (UK) Ltd.
Registered
office
Banbury
Basingstoke
Basingstoke
Basingstoke
Basingstoke
Country
UK
UK
UK
UK
UK
168 Handling & Storage Equipment (Ireland) Ltd.
Walkinstown
Ireland
169 Carest SRL
170 COMMERCIALE CARRELLI S.r.l.
171 QUALIFT S.p.A.
172 URBAN LOGISTICA S.R.L.
173 WHO Real Estate UAB
Lainate
Lainate
Verona
Lainate
Vilnius
Italy
Italy
Italy
Italy
Lithuania
Parent
company
Share-
holding
2017
Share-
holding
2016
Note
130 100.00% 100.00%
67 100.00% 100.00%
62 100.00% 100.00%
62 100.00% 100.00%
22 100.00% 100.00%
74 100.00% 100.00%
80 100.00% 100.00%
75 & 78 100.00% 100.00%
79 100.00% 100.00%
22 100.00% 100.00%
25
74.00% 74.00%
[R]
[R]
[R]
[R]
[R]
[R]
[R]
174 Linde Material Handling (Malaysia) Sdn. Bhd.
Petaling Jaya
Malaysia
111 100.00% 100.00%
175 Linde Viljuškari d.o.o.
176 IBER-MICAR S.L.
Vrčin
Gavà
Serbia
Spain
94 100.00% 100.00%
13 100.00% 100.00%
177 Dematic Thailand Co. Ltd.
Bangkok
Thailand
109 & 200
73.89% 73.89%
178 Linde Material Handling (Thailand) Co., Ltd.
Pathum Thani
Thailand
111 100.00% 100.00%
179 Baoli Material Handling Europe s.r.o.
180 Použitý Vozík CZ, s.r.o.
Prague
Prague
Czech Republic
137 100.00% 100.00%
Czech Republic
122 100.00% 100.00%
181 Urban Transporte spol. s.r.o.
Moravany
Czech Republic
22 100.00% 100.00%
182 TOV “Linde Material Handling Ukraine”
Kiev
Ukraine
13 & 7 100.00% 100.00%
Associates (equity-accounted investments)
Domestic
183 Carl Beutlhauser Kommunal- und Fördertechnik
Hagelstadt
Germany
13
25.00% 25.00%
GmbH & Co. KG
184 Hans Joachim Jetschke Industriefahrzeuge
Hamburg
Germany
13
21.00% 21.00%
(GmbH & Co.) KG
185 Linde Hydraulics GmbH & Co. KG
Aschaffenburg
Germany
186 Pelzer Fördertechnik GmbH
Kerpen
Germany
13
13
10.00% 10.00%
24.96% 24.96%
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
237
Other disclosures
List of shareholdings as at 31 December 2017 (continued)
TABLE 126
No. Name
Foreign
Registered
office
Country
Parent
company
Share-
holding
2017
Share-
holding
2016
Note
187 Linde High Lift Chile S.A.
Santiago de Chile Chile
188 Labrosse Equipement SAS (formerly:
Saint-Péray
France
Labrosse Equipement S.A.)
189 Normandie Manutention SAS (formerly:
Normandie Manutention S.A.)
Saint-Etienne du
Rouvray
France
13
41
45.00% 45.00%
34.00% 34.00%
41
34.00% 34.00%
Joint Ventures (equity-accounted investments)
Domestic
190 Linde Leasing GmbH
Wiesbaden
Germany
13
45.00% 45.00%
Foreign
191 JULI Motorenwerk s.r.o.
Moravany
Czech Republic
13 & 21
50.00% 50.00%
Associates (at cost)
Domestic
192 JETSCHKE GmbH
Hamburg
Germany
193 Linde Hydraulics Verwaltungs GmbH
Aschaffenburg
Germany
194 MV Fördertechnik GmbH
195 Supralift Beteiligungs- und Kommunikations-
gesellschaft mbH
196 Supralift GmbH & Co. KG
Foreign
197 Chadwick Materials Handling Ltd.
198 Bari Servizi Industriali S.C.A R.L.
199 Carretillas Elevadoras Sudeste S.A.
200 Dematic Holding (Thailand) Co., Ltd.
201 Motorové závody JULI CZ s.r.o.
Blankenhain
Hofheim am
Taunus
Hofheim am
Taunus
Corsham
Modugno
Murcia
Bangkok
Moravany
202 DEMATIC ELECTROMECHANICAL SYSTEMS
Dubai
MIDDLE EAST L.L.C.
Germany
Germany
13
13
13
13
21.00% 21.00%
10.00% 10.00%
25.00% 25.00%
50.00% 50.00%
Germany
13
50.00% 50.00%
UK
Italy
Spain
Thailand
Czech Republic
United Arab
Emirates
62
80
118
109
13
3
48.00% 48.00%
25.00% 25.00%
38.54% 38.54%
48.90% 48.90%
50.00% 50.00%
49.00% 49.00%
KION GROUP AG | Annual Report 2017 238
List of shareholdings as at 31 December 2017 (continued)
TABLE 126
Registered
office
Country
Parent
company
Share-
holding
2017
Share-
holding
2016
Note
No. Name
Financial investments
Foreign
203 Balyo SA
204 TPZ Linde Viličari Hrvatska d.o.o.
Zagreb
Croatia
[1] New during 2017
[2] No material influence
[R] Dormant company
Moissy-Cramayel
France
13
13
6.48% 10.00%
20.00% 20.00%
[2]
[2]
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
239
Other disclosures
[48] AUDITORS’ FEES
[51] INFORMATION ON PREPARATION
AND APPROVAL
The fees recognised as an expense and paid to the auditors of
the consolidated financial statements in 2017 amounted to
The Executive Board of KION GROUP AG prepared the consoli-
€2.1 million (2016: €1.8 million) for the audit of the financial state-
dated financial statements on 21 February 2018 and approved
ments, €0.1 million (2016: €0.0 million) for other attestation
them for forwarding to the Supervisory Board. The Supervisory
services, €0.0 million (2016: €0.0 million) for tax consultancy
Board has the task of examining and deciding whether to approve
services and €0.1 million (2016: €0.1 million) for other services.
the consolidated financial statements.
[49] COMPLY-OR-EXPLAIN STATEMENT
REGARDING THE GERMAN COR-
PORATE GOVERNANCE CODE
(DCGK)
Frankfurt am Main, 21 February 2018
The Executive Board
In December 2017, the Executive Board and Supervisory Board
Gordon Riske
Dr Eike Böhm
of KION GROUP AG submitted their comply-or-explain statement
for 2017 relating to the recommendations of the German Corpo-
rate 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.
Ching Pong Quek
Dr Thomas Toepfer
[50] EVENTS AFTER THE REPORTING
DATE
In January 2018, the term of the revolving credit facility of
€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 2023.
KION GROUP AG | Annual Report 2017 240
Independent auditors’ report
To KION GROUP AG, Wiesbaden/Germany
with the consolidated financial statements, complies with the
Report on the audit of the consolidated
financial statements and the combined
management report
German statutory requirements and suitably presents the
opportunities and risks of future development. Our audit
opinion on the combined management report does not
extend to the content of the parts of the combined manage-
ment report detailed in the Chapter “Other information”.
Audit opinions
Pursuant to Sec. 322 (3) Sentence 1 of the German Commercial
We have audited the consolidated financial statements of KION
Code (HGB), we state that our audit has not led to any reserva-
GROUP AG, Wiesbaden/Germany, and its subsidiaries (Group) –
tions with respect to the propriety of the consolidated financial
which comprise the consolidated balance sheet as at 31 Decem-
statements and the combined management report.
ber 2017, the group income statement, the consolidated state-
ment of comprehensive income, the consolidated statement of
Basis for audit opinions
cash flows and the consolidated statement of changes in equity
We conducted our audit of the consolidated financial state-
for the business year from 1 January to 31 December 2017 as
ments and combined management report in accordance with
well as the notes to the consolidated financial statements includ-
Sec. 317 of the German Commercial Code (HGB) and the EU
ing a summary of significant accounting methods. In addition, we
Audit Regulation (No. 537/2014, hereinafter “EU Audit Regula-
have audited the combined management report on the entity and
tion”), and German generally accepted standards for the audit of
the Group of KION GROUP AG, Wiesbaden/Germany, for the
consolidated financial statements promulgated by the Institute
business year from 1 January to 31 December 2017. In conformity
of Public Auditors in Germany [Institut der Wirtschaftsprüfer]
with German legal regulations we have not audited the parts of
(IDW). Our responsibilities under these requirements and princi-
the combined management report specified in the Chapter
ples are further described in the Chapter “Auditors’ responsibil-
“Other information” of our independent auditors’ report with
ity for the audit of the consolidated financial statements and the
regard to their content.
combined management report” of our independent auditors’
report. We are independent of the group entities in accordance
In our opinion, based on our knowledge obtained during the audit
with European and German commercial law and rules of profes-
– the accompanying consolidated financial statements in all
material respects comply with the International Financial
sional conduct and we have fulfilled our other ethical responsi-
bilities applicable in Germany in accordance with these require-
ments. In addition, pursuant to Article 10 (2) Lit. f) of the EU
Reporting Standards (IFRS), as adopted by the EU, and the
Audit Regulation, we declare that we have not provided any
additional requirements of German commercial law pursuant
prohibited non-audit services pursuant to Article 5 (1) of the EU
to Sec. 315e (1) German Commercial Code (HGB) and give a
Audit Regulation. We believe that the audit evidence we have
true and fair view of the net assets and financial position in
obtained is sufficient and appropriate to provide a basis for our
accordance with German principles of proper accounting as
audit opinions on the consolidated financial statements and the
at 31 December 2017 as well as its results of operations for
combined management report.
the business year from 1 January to 31 December 2017, and
– the accompanying combined management report as a whole
provides a suitable view of the Group’s position. In all material
respects, this combined management report is consistent
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
241
Independent auditors’ report
Key audit matters in the audit of the consolidated financial
discounted cash
flow method on the basis of KION
statements
GROUP AG’s budget consisting of the operative three-years
Key audit matters are those matters that, in our professional
plan (budget 2018 and medium-term budget 2019 to 2020) as
judgement, were of most significance in our audit of the consoli-
well as of a projection concerning two further years, which is
dated financial statements for the business year from 1 January
adjusted using assumptions about long-term growth rates.
to 31 December 2017. These matters were addressed in the con-
The result of this measurement highly depends on the Legal
text of our audit of the consolidated financial statements as a
representative’s estimation of the forecast cash flows of the
whole and in forming our audit opinion thereon but we do not pro-
corresponding operating entities as well as the discount rate
vide a separate opinion on these matters.
used (weighted average cost of capital – WAAC) and, there-
fore, is subject to great uncertainty. Therefore and due to the
In the following we present the key audit matters in our view:
underlying complexity of the valuation models applied, this
matter was of particular significance in the scope of our audit.
1) Recoverability of the goodwill and brand names with indefinite
useful life
The entity’s information on the goodwill and brand names with
2) Recognition of leases as regards sales
indefinite useful life is provided in Note [7] and [17] of the con-
3) Realisation of revenue regarding construction contracts in the
solidated financial statements.
Supply Chain Solutions business segment
Our presentation of these key audit matters has been structured
standing of the method applied during the impairment test,
b. During our audit, we, among other things, obtained an under-
as follows:
the budget process of KION as well as the determination of
the cashgenerating units and assessed the determination of
a) Description (including reference to corresponding information
the WACC. In this context, we considered the Group’s adher-
within the consolidated financial statements)
ence to the budget process over the past years.
b) Auditors’ response
Regarding the impairment test, we audited the appropriate-
1) Recoverability of the goodwill and brand names with indefinite
ness of the expected future cash flows mainly by comparing
useful life
the information with the operative budget (2018) approved by
a. As at 31 December 2017, the goodwill and brand names with
the Supervisory Board and with the medium-term budget
indefinite useful life in the consolidated financial statements
(2019 to 2020) approved by the Legal representatives and by
amount to mEUR 3,382.5 (30.1% of total assets) and
examining the key valuation assumptions and parameters for
mEUR 943.7 (8.4% of total assets), respectively. The goodwill
plausibility based on expectations about macroeconomic and
and brand names with indefinite useful life are tested by
industry-specific trends. As a significant portion of the value in
Management for impairment each year. This impairment test is
use has been determined based on projected cash flows for
conducted regardless of whether there are external or internal
the period following the five-year budget (period of perpetuity),
indicators for an impairment. The impairment test is con-
we also audited in particular the sustained growth rate applied
ducted at the level of the operating entities as cash-generating
for the period of perpetuity based on industry-specific market
units by determining the corresponding realisable amount and
expectations. With respect to the evaluation of the discount
comparing that realisable amount with the corresponding
rate, we consulted
internal valuation specialists, who
carrying value. The realisable amount is determined using the
convinced themselves of the appropriateness of the discount
KION GROUP AG | Annual Report 2017
242
rate used based on market comparisons. Due to the great
Group-wide, consistent lease applications shall ensure that
significance of the goodwill and the brand names with indefinite
the recognition, categorisation and classification of the various
useful life in the consolidated financial statements, we finally
contract types according to the IFRS are complete and cor-
conducted sensitivity analyses with regard to both the growth
rect. The determination of the criteria and parameters in these
expectations of the future cash flows from the operating enti-
applications are subject to the Legal representative’s judge-
ties and the applied discount rate.
ment. The classification and entry routines of the lease appli-
cations are updated, programmed and managed centrally in
2) Recognition of leases as regards sales
Germany while the contract input is performed locally in the
a. To a great extent, KION uses leases as a sales instrument in
operating or the Group’s own financial services entities. In the
the business segment Industrial Trucks & Services. The corre-
financial year 2017, in this context, a new lease application was
sponding agreements comprise contracts, under which the
introduced in the operating group entities, with this new appli-
KION entities qualify as contract parties, and those, under
cation replacing the previous applications in selected compo-
which the lease object was sold to external financial partners.
nent areas.
The following three contract types are primarily used:
– Single Step Lease: The lease object is directly leased to
– Sale and Leaseback Sublease: The lease object is sold to
the consumer.
a financial partner and subsequently leased back. At the
same time, the lease object is also rented out under a
sublease contract to the consumer.
– Indirect consumer financing: The (lease) object is sold to a
financial partner, who rents it out to a consumer.
Due to the high transaction volume in connection with the var-
ious contract types, any errors in this area may considerably
affect the consolidated financial statements. For this reason,
the assessment of the accounting for leases was of particular
significance in the scope of our audit.
The entity’s information on the accounting for leases is pro-
vided in the Notes [7], [18], [19], [22], [31] and [34].
b. As part of our audit, we first updated our understanding of the
As at 31 December 2017, the carrying value of the lease
process including our understanding of the existing contract
receivables and of the lease assets amounts to mEUR 875.8
types as well as the entity’s internal controls regarding leases.
(finance leases) (7.8% of total assets) and mEUR 1,173.7 (oper-
ating leases and indirect consumer financing, which does not
In the light of our understanding of the organisational compo-
meet the requirements under IAS 18) (10.5% of total assets),
sition and the overall process, the audit on the one hand
respectively. Single-step leases and sale-and-leaseback sub-
focused on the lease applications used and on the other hand
lease contract types are classified as finance leases or oper-
on the completeness and accuracy of the data input in the
ating leases within the meaning of IAS 17. Revenue realisation
individual component areas.
with respect to the indirect consumer financing is governed by
IAS 18 and, consequently, depends on whether the material
With respect to the lease applications used, we examined,
benefits and risks are transferred to the financial partner. If the
where required, the appropriateness, implementation and
requirements for realisation of revenue according to IAS 18 are
effectiveness of the IT controls in line with our audit strategy.
not met, the purchase price paid by the financing party is rec-
As part of this examination, we consulted internal IT specialists.
ognised as deferred charge and proportionately recognised
as revenue over the term of the lease agreement between
In a next step, we obtained an understanding of whether the
financing party and consumer.
automated entry and classification routines used in the lease
applications comply with the relevant IFRS. To this end, we
first examined the KION Accounting Manual, which represents
Annual Report 2017 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
243
Independent auditors’ report
the basis for routine programming, for conformity with the
Construction contracts, the determination of which is based
IFRS. In addition, we assessed whether the entry and classifica-
on the percentage of completion of the individual projects,
tion routines have been appropriate. To this end, regarding the
make up a significant portion of the revenue in the business
lease applications, which have already been used in the prior
segment Supply Chain Solutions as they amount to mEUR
year, we examined, on the one hand, the revision protocols of
1,725.6 and account for 86.2% of the business segment’s total
the financial year for compliance with the KION Accounting
revenue. The percentage of completion is determined based
Manual. On the other hand, we made examinations on a sample
on the proportion of the contract costs that have already been
basis both in the form of random samples and judgemental
incurred to the total estimated contract costs as at the balance
selections by making sure that all contract types used were
sheet date.
subject to the examination. Based on the data inputs, we
assessed for each selected contract whether the results of the
The revenue highly depends on estimations subject to the
lease applications comply with the relevant IFRS.
legal representative’s judgement particularly concerning the
total contract costs and the resulting percentage of comple-
We examined the data inputs made in the financial year in the
tion. Also taking into account the high amount of revenue
individual component areas for accuracy directly in the operat-
related to construction contracts in the consolidated financial
ing entities on a sample basis in the form of mathematical and
statements, this matter is of particular significance in the
statistical methods and extrapolated any identified deviations to
scope of our audit.
the corresponding basic population. In this context, apart from
the accuracy, we audited the appropriate cut-off and complete-
The information in the notes to the consolidated financial
ness of the data inputs on the basis of the original contracts.
statements concerning revenue realisation from construction
Where required, we received confirmations of third parties to
contracts in the business segment Supply Chain Solutions is
assess the completeness of the entered contracts.
provided in Notes [7] and [8].
Due to the introduction of a new lease application in selected
b. As part of our audit, we deepened our knowledge of the pro-
group entities in the financial year, we additionally examined
cesses concerning the project business including our under-
the required migration of the historical contract data for com-
standing of the corresponding internal controls of the Group.
pleteness and accuracy and the entry and classification
We examined the appropriateness of the internal controls’
routines for appropriateness. This examination was performed
design and implementation regarding the estimation of the per-
in the form of a reconciliation of the assessed results of the
centage of completion and continued review of contract costs.
lease applications and comparison between the transferred
and the migrated contract data.
Based on that, we assessed the estimations made for indi-
vidual projects, which were selected based on risk consider-
3) Realisation of revenue regarding construction contracts in the
ations. To this end, we examined the current cost reports
Supply Chain Solutions business segment
and project calculations taking into account the customer
a. In the business segment Supply Chain Solutions, KION’s rev-
contracts with respect to the percentage of completion of the
enue increased from mEUR 364.7 to mEUR 2,001.8 in the
selected projects. To this end, we additionally consulted the
financial year 2017 primarily due to the acquisition of the
employees responsible for the relevant projects on matters
Dematic group in November 2016. Accordingly, the business
such as the current project phase, any risks including penal-
segment’s contribution to the Group’s total revenue increased
ties and changes to original assumptions and requested
from 6.5% to 26.2% due to the full-year effect.
declarations on unexpected project developments, which
were compared with supplementary evidence. In addition,
we have convinced ourselves, where required, of the project
KION GROUP AG | Annual Report 2017 244
progress on site and have taken into account the adherence
Responsibilities of the legal representatives and the Supervisory
to the budget planning based on retrospective analyses of
Board for the consolidated financial statements and the combined
selected projects.
management report
Other information
The legal representatives are responsible for the preparation of
the consolidated financial statements, which comply with the
The legal representatives are responsible for the other informa-
requirements of the IFRS, as adopted in the EU, and the addi-
tion. The other information comprises the following documents
tional requirements of German commercial law pursuant to Sec.
received prior to the date of this independent auditors’ report:
315e (1) German Commercial Code (HGB) in all material respects,
– the Group’s statement on business management specified in
– The assurance pursuant to Sec. 297 (2) Sentence 4 German
the combined management report,
Commercial Code (HGB) to the consolidated financial state-
so that the consolidated financial statements in accordance with
German principles of proper accounting give a true and fair view
of the net assets, financial position and results of operations of
the Group in accordance with these requirements. In addition, the
legal representatives are responsible for the internal controls they
ments and assurance pursuant to Sec. 315 (1) Sentence 5
have identified as necessary in order to enable the preparation of
German Commercial Code (HGB) to the Group management
consolidated financial statements that are free from material
report, and
– The remaining parts of the annual report, with the exception
of the audited consolidated financial statements and com-
misstatements, whether intentional or unintentional.
In preparing the consolidated financial statements, the Legal
bined management report as well as our independent audi-
representatives are responsible for assessing the Group’s ability
tors’ report.
to continue as a going concern. Furthermore, they have the
responsibility to disclose matters related to going concern, as
In addition, the other information comprises the separate non-
applicable. In addition, they are responsible for using the going
financial Group report, which is expected to be published to KION
concern basis of accounting, unless this conflicts with the Group’s
GROUP AG’s website by 30 April 2018.
intention to liquidate the Group or wind down operations or there
is no realistic alternative.
Our audit opinions on the consolidated financial statements and
the combined management report do not extend to cover the
In addition, the Legal representatives are responsible for the
other information, and accordingly we do not issue an audit
preparation of the combined management report, which as a
opinion or any other form of assurance conclusion thereon.
whole provides a suitable view of the Company’s position, is con-
sistent with the consolidated financial statements in all material
In connection with our audit, our responsibility is to read the
respects, complies with German legal regulations and suitably
other information and, in doing so, to consider whether the
presents the opportunities and risks of future development.
other information
– is materially inconsistent with the consolidated financial
statements, the combined management report or our knowl-
edge obtained in the audit, or
– otherwise appears to be substantially misstated.
Furthermore, the Legal representatives are responsible for such
arrangements and measures (systems) which it has deemed
necessary in order to enable the preparation of a combined man-
agement report in accordance with the German commercial law
to be applied and to furnish sufficient and appropriate evidence
for the statements in the management report.
Annual Report 2017 | KION GROUP AG
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
245
Independent auditors’ report
The Supervisory Board is responsible for overseeing the Group’s
As part of an audit, we exercise professional judgement and
financial reporting process for the preparation of the consolidated
maintain professional scepticism. We also
financial statements and the combined management report.
Auditors’ responsibility for the audit of the consolidated financial
– identify and assess the risks of material misstatements in the
consolidated financial statements and in the combined man-
statements and the combined management report
agement report, whether intentional or unintentional, design
Our objectives are to obtain reasonable assurance about whether
and perform audit procedures responsive to those risks and
the combined financial statements as a whole are free from mate-
obtain audit evidence that is sufficient and appropriate to
rial misstatements, whether intentional or unintentional, and
provide a basis for our audit opinion. The risk of not detecting
whether the combined management report as a whole provides
a material misstatement resulting from fraud is higher than
an appropriate view of the Group’s position and, in all material
one resulting from error, as fraud may involve collusion, for-
respects, is consistent with the findings of the audit, is in accord-
gery, intentional omissions, misrepresentations, or the over-
ance with German legal regulations, and appropriately presents
the opportunities and risks of future development, as well as to
issue an independent auditors’ report that includes our opinions
ride of internal control.
– obtain an understanding of internal control relevant to the
audit of the consolidated financial statements and the
on the consolidated financial statements and the combined man-
arrangements and measures relevant to the audit of the com-
agement report.
bined management report in order to design audit proce-
dures that are appropriate in the circumstances, but not for
Reasonable assurance is a high level of assurance, but is not a
the purpose of expressing an opinion on the effectiveness of
guarantee that an audit conducted in accordance with Sec. 317
of the German Commercial Code (HGB) and the EU Audit Regu-
lation and German generally accepted standards for the audit of
these systems.
– evaluate the appropriateness of the accounting policies used
by the Legal representatives and the reasonableness of
financial statements promulgated by the Institute of Public Audi-
accounting estimates and related disclosures made by the
tors in Germany (IDW), will always detect a material misstatement
Legal representatives.
when it exists. Misstatements can arise from fraud or error and
are considered material if individually or in the aggregate, they
could reasonably be expected to influence the economic deci-
sions of users taken on the basis of these consolidated financial
statements and the combined management report.
KION GROUP AG | Annual Report 2017 246
– conclude on the appropriateness of the legal representative’s
use of the going concern basis of accounting and, based on
– evaluate the consistency of the combined management
report with the consolidated financial statements, its legal
the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant
doubt on the Group’s ability to continue as a going concern.
consistency and the view provided of the Group’s position.
– perform audit procedures on the forward-looking information
presented by the Legal representatives in the combined
If we conclude that there is a material uncertainty, we are
management report. On the basis of sufficient appropriate
required to draw attention in our independent auditors’ report
audit evidence, we particularly evaluate the significant
to the related disclosures in the consolidated financial state-
assumptions underlying the forward-looking information by
ments and combined management report, or, if such disclo-
the Legal representatives and evaluate the correct derivation
sures are inadequate, to modify our corresponding opinion.
of forward-looking information from these assumptions. We
Our conclusions are based on the audit evidence obtained
do not issue an independent opinion on the forward-looking
up to the date of our independent auditors’ report. However,
information or on the underlying assumptions. There is a sig-
future events or conditions may cause the Group to cease to
nificant unavoidable risk that future events will differ materi-
continue as a going concern.
– evaluate the overall presentation, structure and content of the
consolidated financial statements, including the disclosures
ally from the forward-looking information.
We communicate with those charged with governance, among
and whether the consolidated financial statements represent
other matters, the planned scope and timing of the audit and
the underlying transactions and events in a manner that the
significant audit findings, including any deficiencies in internal
consolidated financial statements give a true and fair view of
control, which we identify during our audit.
the net assets and financial position as well as the results of
operations of the Group in accordance with the IFRS, as
We also provide those charged with governance with a statement
applicable in the EU, and the additional requirements of
that we have complied with relevant ethical requirements regard-
German commercial law pursuant to Sec. 315e (1) German
ing independence, and communicate with them all relationships
Commercial Code (HGB).
– obtain sufficient appropriate audit evidence regarding the
financial information of the entities or business activities
and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
within the Group to express opinions on the consolidated
From the matters communicated with those charged with gov-
financial statements and the combined management report.
ernance, we determine those matters that were of most signifi-
We are responsible for the direction, supervision and perfor-
cance in the audit of the consolidated financial statements of the
mance of the group audit. We remain solely responsible for
current reporting period and are therefore the key audit matters.
our audit opinions.
We describe these matters in our independent auditors’ report on
the consolidated financial statements unless law or regulation
precludes public disclosure about the matter.
Annual Report 2017 | KION GROUP AG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
247
Independent auditors’ report
Other legal and regulatory requirements
Other information pursuant to Article 10 EU Audit Regulation
We were appointed by the annual general meeting on 11 May
2017 to audit the consolidated financial statements. We were
engaged by the Supervisory Board on 16 May 2017 and 20/27
November 2017. We have been engaged continuously as the
auditor of the consolidated financial statements of KION GROUP
AG, Wiesbaden/Germany, which was named KION 1 Holding
GmbH until 12 June 2013, since the business year 2007. Since
the financial year 2013, the entity has been a public interest entity
within the meaning of Sec. 319a (1) Sentence 1 German Commer-
cial Code (HGB).
We confirm that the audit opinions contained in this independent
auditors’ report are consistent with the additional report to the
audit committee pursuant to Article 11 EU Audit Regulation
(“Prüfungsbericht”).
Responsible Auditor
The auditor responsible for the audit is Kirsten Gräbner-Vogel.
Frankfurt am Main/Germany, 21 February 2018
Deloitte GmbH
Wirtschaftsprüfungsgesellschaft
(Crampton)
(Gräbner-Vogel)
Wirtschaftsprüfer
Wirtschaftsprüferin
(German Public Auditor)
(German Public Auditor)
KION GROUP AG | Annual Report 2017 248
Responsibility statement
To the best of our knowledge, and in accordance with the
applicable reporting principles
for consolidated
financial
reporting, the consolidated financial statements give a true
and fair view of the financial performance and financial posi-
tion of the Group, and the group management report, which is
combined with the Company’s management report, includes a
fair review of the development and performance of the busi-
ness and the position of the Group, together with a description
of the principal opportunities and risks associated with the
expected development of the Group.
Frankfurt am Main, 21 February 2018
The Executive Board
Gordon Riske
Dr Eike Böhm
Ching Pong Quek
Dr Thomas Toepfer
Annual Report 2017 | KION GROUP AG 249
KION GROUP AG | Annual Report 2017 Annual Report 2017 | KION GROUP AG ADDITIONAL INFORMATION
Contents
251
ADDITIONAL
INFORMATION
252
QUARTERLY INFORMATION
253
MULTI-YEAR OVERVIEW
254
DISCLAIMER
255
FINANCIAL CALENDAR
255
CONTACT
KION GROUP AG | Annual Report 2017 252
Quarterly information
Quarterly information
in € million
Order intake
thereof Industrial Trucks & Services
thereof Supply Chain Solutions
Total revenue
thereof Industrial Trucks & Services
thereof Supply Chain Solutions
Adjusted EBITDA
thereof Industrial Trucks & Services
thereof Supply Chain Solutions
Adjusted EBITDA margin
thereof Industrial Trucks & Services
thereof Supply Chain Solutions
EBIT
thereof Industrial Trucks & Services
thereof Supply Chain Solutions
Adjusted EBIT
thereof Industrial Trucks & Services
thereof Supply Chain Solutions
Adjusted EBIT margin
thereof Industrial Trucks & Services
thereof Supply Chain Solutions
Q4 2017
Q3 2017
Q2 2017
Q1 2017
TABLE 127
2,279.6
1,579.6
692.9
1,978.3
1,560.8
413.1
325.5
301.9
35.0
16.5%
19.3%
8.5%
153.8
190.6
– 22.1
203.8
191.8
27.2
10.3%
12.3%
6.6%
1,847.2
1,351.6
492.7
1,847.4
1,329.9
514.2
309.5
256.6
66.0
16.8%
19.3%
12.8%
135.3
151.6
2.4
194.7
152.5
58.7
10.5%
11.5%
11.4%
1,970.5
1,513.7
452.3
2,016.4
1,417.0
596.0
326.0
267.5
68.3
16.2%
18.9%
11.5%
163.7
167.0
13.5
214.2
166.7
61.4
10.6%
11.8%
10.3%
1,881.7
1,414.6
461.3
1,811.4
1,323.2
483.0
263.0
228.1
41.0
14.5%
17.2%
8.5%
96.6
128.4
– 17.6
152.9
129.1
34.2
8.4%
9.8%
7.1%
Annual Report 2017 | KION GROUP AG ADDITIONAL INFORMATION
Quarterly information
Multi-year overview
Multi-year overview
KION Group multi-year overview
in € million
Order intake
Revenue
Order book ¹,²
Financial performance
EBITDA
Adjusted EBITDA ³
Adjusted EBITDA margin ³
EBIT
Adjusted EBIT ³
Adjusted EBIT margin ³
2017
7,979.1
7,653.6
2,614.6
1,185.7
1,223.9
16.0%
549.4
765.6
10.0%
2016
5,833.1
5,587.2
2,396.6
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%
253
TABLE 128
2013
4,489.1
4,494.6
693.3
708.8
721.5
16.1%
374.2
416.5
9.3%
Net income
426.4
246.1
221.1
178.2
138.4
Financial position ¹
Total assets
Equity
Net financial debt
ROCE 4
Cash flow
Free cash flow 5
Capital expenditure 6
11,228.4
11,297.0
3,148.8
2,095.5
9.9%
2,495.7
2,903.4
6.9%
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
–
378.3
218.3
– 1,850.0
166.7
332.7
142.6
305.9
133.1
195.6
125.8
Employees 7
31,608
30,544
23,506
22,669
22,273
1 Figures as at balance sheet date 31/12/ (adjusted due to the final purchase price allocation Dematic)
2 Order backlog 2016 adjusted to reflect specific customer orders from long-term construction contracts in the segment SCS
3 Adjusted for PPA items and non-recurring items
4 ROCE is defined as the proportion of EBIT adjusted to capital employed
5 Free cash flow is defined as cash flow from operating activities plus cash flow from investing activities
6 Capital expenditure including capitalised development costs, excluding leased and rental assets
7 Number of employees (full-time equivalents) as at balance sheet date 31/12/
KION GROUP AG | Annual Report 2017 254
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 2017 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).
Annual Report 2017 | KION GROUP AG ADDITIONAL INFORMATION
Disclaimer
Financial calendar / Contact
255
FINANCIAL CALENDAR
CONTACT
1 March 2018
Contacts for the media
Contacts for investors
Publication of 2017 annual report
Financial statements press conference
Michael Hauger
Senior Vice President
Dr Karoline Jung-Senssfelder
Vice President, Head of Investor
6 March 2018
Capital Markets Day
26 April 2018
Corporate Communications
Relations/M&A
Phone: +49 69 201 107 655
Phone: +49 69 201 107 450
michael.hauger@kiongroup.com
karoline.jung-senssfelder@kiongroup.com
Quarterly statement for the period ended
Frank Brandmaier
31 March 2018 (Q1 2018) and analyst call
Senior Director Corporate
9 May 2018
Media Relations
Phone: +49 69 201 107 752
Annual General Meeting
frank.brandmaier@kiongroup.com
26 July 2018
Interim report for the period ended
30 June 2018 (Q2 2018) and analyst call
25 October 2018
Quarterly statement for the period
ended 30 September 2018 (Q3 2018)
and analyst call
Subject to change without notice
Securities identification numbers
KION GROUP AG
This annual report is available in German
ISIN: DE000KGX8881
Thea-Rasche-Strasse 8
and English at kiongroup.com under
WKN: KGX888
60549 Frankfurt am Main | Germany
Investor Relations / Financial Reports.
Phone: +49 69 201 100
Fax: +49 69 201 107 690
info@kiongroup.com
www.kiongroup.com
The content of the German version
is authoritative.
kiongroup.com/
ir
KION GROUP AG | Annual Report 2017 KION GROUP AG
Corporate Communications
Thea-Rasche-Strasse 8
60549 Frankfurt am Main | Germany
Phone: +49 69 201 100
Fax: +49 69 201 107 690
info@kiongroup.com
www.kiongroup.com