[41] Segment report

The segment structure in the KION Group was modified with effect from 1 December 2016. The strategic profile of the KION Group has undergone a fundamental change as a consequence of the acquisition of Dematic. The Executive Board, as the chief operating decision-maker (CODM), has managed the KION Group since December 2016 on the basis of the following segments: Industrial Trucks & Services, Supply Chain Solutions and Corporate Services. Segment reporting therefore takes into account the new organisational and strategic focus of the KION Group. As a result of the change in segment structure, the brands and financing activities previously reported under the Linde Material Handling (LMH), STILL and Financial Services (FS) segments have now been transferred to the new Industrial Trucks & Services segment. Henceforward, the Supply Chain Solutions segment will encompass not only Dematic but also the activities of Egemin and Retrotech, which were previously reported under the Other segment. This segment will therefore bring together the activities related to planning, implementing and optimising supply chains. The segment disclosures for the prior period have been restated using the new segment structure.

Description of the segments

Industrial Trucks & Services

So that it can fully cater to the needs of material handling customers worldwide, the business model of the Industrial Trucks & Services segment covers key steps of the value chain: product development, manufacturing, sales and logistics, spare parts business, truck rental and used trucks, fleet management and financial services that support the core industrial truck business. The segment operates a multi-brand strategy involving the three international brands Linde, STILL and Baoli plus the national brands Fenwick, OM STILL and Voltas.

Supply Chain Solutions

The Supply Chain Solutions segment, with its Dematic operating unit, is a strategic partner to customers in a variety of industries, supplying them with integrated technology and software solutions with which to optimise their supply chains. Manual and automated solutions are provided for all functions along customers’ supply chains, from goods inward and multishuttle warehouse systems to picking and value-added packing. Through its Dematic, Egemin Automation and Retrotech brand companies, this segment is primarily involved in customer-specific, longer-term project business. With global resources, ten production facilities worldwide and regional teams of experts, Dematic is able to plan and deliver logistics solutions with varying degrees of complexity anywhere in the world.

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 generated by internal IT and logistics services.

Segment management

The KPIs used to manage the segments are order intake, revenue and adjusted EBIT. Segment reporting therefore includes a reconciliation of externally reported consolidated earnings before interest and tax (EBIT) – including effects from purchase price allocations and non-recurring items – to the adjusted EBIT for the segments (‘adjusted EBIT’). Intra-group transactions are generally conducted on an arm’s-length basis. Segment reports are prepared in accordance with the same accounting policies as the consolidated financial statements, as described in note [7].

> TABLES 117 – 118 show information on the KION Group’s operating segments for 2016 and 2015.

Segment report 2016

117

in € million

Industrial Trucks & Services

Supply Chain Solutions

Corporate Services

Consolidation /Reconciliation

Total

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

Revenue from external customers

5,200.5

364.7

22.1

5,587.2

Intersegment revenue

2.1

1.3

220.0

–223.4

Total revenue

5,202.6

366.0

242.0

–223.4

5,587.2

Earnings before taxes

511.7

–42.8

230.6

–360.4

339.2

Financial income

52.2

7.5

44.7

–15.5

88.9

Financial expenses

–93.5

–18.6

–89.0

16.5

–184.5

= Net financial expenses / income

–41.3

–11.1

–44.3

1.1

–95.7

EBIT

553.0

–31.7

274.9

–361.5

434.8

+ Non-recurring items

5.4

5.7

31.0

–0.0

42.2

+ PPA items

28.5

31.9

0.0

60.4

= Adjusted EBIT

586.9

6.0

305.9

–361.5

537.3

Segment assets

8,914.0

5,207.1

1,588.2

–4,350.1

11,359.2

Segment liabilities

4,700.7

2,573.1

5,910.9

–4,360.6

8,824.2

Carrying amount of equity-accounted investments

72.7

0.0

0.0

72.7

Profit from equity-accounted investments

6.5

0.0

0.0

6.5

Capital expenditure1

142.7

9.4

14.5

166.7

Amortisation and depreciation2

137.1

36.7

17.6

191.4

Order intake

5,383.2

431.2

242.0

–223.3

5,833.1

Number of employees3

23,064

6,810

670

30,544

Segment report 2015

118

in € million

Industrial Trucks & Services

Supply Chain Solutions

Corporate Services

Consolidation /Reconciliation

Total

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

Revenue from external customers

5,044.4

33.0

20.5

5,097.9

Intersegment revenue

0.3

0.0

199.0

–199.3

Total revenue

5,044.7

33.0

219.4

–199.3

5,097.9

Earnings before taxes

440.1

1.2

76.0

–187.0

330.2

Financial income

46.2

0.0

19.7

–14.5

51.4

Financial expenses

–88.6

–0.0

–70.0

14.5

–144.0

= Net financial expenses / income

–42.4

0.0

–50.2

0.0

–92.6

EBIT

482.5

1.2

126.2

–187.0

422.8

+ Non-recurring items

20.0

0.9

27.1

–15.0

33.0

+ PPA items

27.0

0.0

0.1

27.0

= Adjusted EBIT

529.5

2.0

153.3

–202.0

482.9

Segment assets

8,354.1

104.3

617.6

–2,635.8

6,440.2

Segment liabilities

4,118.2

31.1

3,072.0

–2,629.8

4,591.5

Carrying amount of equity-accounted investments

73.6

0.0

0.0

73.6

Profit from equity-accounted investments

10.6

0.0

0.0

10.6

Capital expenditure1

126.0

0.4

16.2

142.6

Amortisation and depreciation2

139.0

1.2

17.2

157.4

Order intake

5,146.3

48.8

219.8

–199.3

5,215.6

Number of employees3

22,637

323

545

23,506

External revenue by region is presented in > TABLE 119.

Revenue with third parties broken down by customer location

119

in € million

2016

2015

Western Europe

3,982.7

3,724.1

Eastern Europe

459.6

432.0

Middle East and Africa

100.3

92.9

North America

295.9

119.6

Central and South America

148.6

143.4

Asia-Pacific

600.1

585.8

Total revenue

5,587.2

5,097.9

Revenue in Germany came to €1,321.1 million in 2016 (2015: €1,276.3 million). There are no relationships with individual customers that generate revenue deemed to be significant as a proportion of total consolidated revenue.

Financial income and expenses including all interest income and expenses are described in notes [12] and [13].

The non-recurring items mainly comprised consultancy costs – in particular, costs relating to the acquisition of Dematic – as well as costs incurred in connection with severance payments. They totalled €42.2 million in 2016 (2015: €33.0 million).

The effects from purchase price allocations comprised net write-downs and other expenses in relation to the hidden reserves and charges identified as part of the acquisition processes.

Capital expenditure includes additions to intangible assets and property, plant and equipment. Leased assets are described in note [18]. > TABLE 120

Capital expenditures broken down by company location (excl. leased and rental assets)

120

in € million

2016

2015

Western Europe

133.4

113.1

Eastern Europe

3.7

7.5

Middle East and Africa

0.2

0.1

North America

16.6

2.2

Central and South America

1.0

0.9

Asia-Pacific

11.8

18.8

Total capital expenditures

166.7

142.6

Capital expenditure in Germany came to €100.9 million in 2016 (2015: €88.2 million).

Depreciation / amortisation relates to intangible assets with finite useful lives and property, plant and equipment.

The regional breakdown of non-current assets excluding financial assets, financial instruments, deferred tax assets and post-employment benefits is shown in > TABLE 121.

Non-current assets broken down by company location

121

in € million

2016

2015

Western Europe

3,497.9

3,310.2

Eastern Europe

152.2

129.4

Middle East and Africa

6.6

6.8

North America

3,836.9

35.1

Central and South America

56.4

36.7

Asia-Pacific

370.8

321.4

Total non-current assets (IFRS 8)

7,920.8

3,839.6

Non-current assets attributable to Germany amounted to €2,537.2 million as at 31 December 2016 (31 December 2015: €2,606.0 million).