KION GROUP AG

As a holding company without any operating activities of its own, KION GROUP AG is indirectly dependent on the earnings and economic performance of its subsidiaries. The management system, expected development and the opportunities and risks of the KION Group are described in detail in the ‘Management system’ and ‘Outlook, risk report and opportunity report’ sections of this combined management report.

The business performance and position of KION Group AG are largely determined by the business performance and success of the Group. Detailed reports in this regard are set out in the ‘Business performance’ and ‘Financial position and financial performance of the KION Group’ sections.

KION Group AG does not have any operating activities itself. The reported revenue of €47.2 million (2018: €30.5 million) largely arose from the performance of services for affiliated companies.

Other operating income fell by €5.0 million to €28.4 million and includes, in particular, gains on the measurement of bank accounts and cash pools in foreign currencies.

The cost of materials is related to the revenue from the provision of services and mostly consists of expenses for consultancy services.

Personnel expenses went up by €16.4 million to €53.9 million. This year-on-year increase was due to the higher addition to provisions for share-based remuneration and short-term incentives, and to the growth in the number of employees and annual salary rises.

Other operating expenses rose by €27.6 million to €107.8 million, mainly because of higher costs for external services and consultancy. Other operating expenses also includes foreign currency exchange rate losses resulting from the measurement of bank accounts and cash pools in foreign currencies.

The main changes in net financial income/expenses were as follows:

• Of the total income from profit-transfer agreements, €332.1 million related to Linde Material Handling GmbH (2018: €343.4 million).
• Interest expense and similar charges, which amounted to €52.9 million (2018: €54.9 million), arose mainly from the external financing of the KION Group via the promissory notes and loan agreements and, to a smaller extent, from interest charged on intercompany liabilities and the unwinding of the discount on pension provisions.
• Other interest and similar income amounting to €62.4 million (2018: €61.6 million) for the most part consisted of interest income on intercompany receivables.

KION GROUP AG incurred tax expenses of €94.6 million as a result of its role as the parent company of the tax group in 2019 (2018: €55.5 million). The tax expenses had been lower in 2018 because of a positive tax effect of €29.4 million resulting from an amendment to tax law in Germany.

A total net profit of €156.9 million was generated in the year under review (2018: €236.3 million). > TABLE 021

At the end of 2019, the total assets of KION GROUP AG had increased by approximately 1.4 per cent year on year to €7,680.5 million.

The financial assets largely comprise the carrying amounts of the equity investments in Dematic Holdings GmbH (€2,862.2 million) and Linde Material Handling GmbH (€1,368.4 million).

The receivables mainly consist of loans and cash pool receivables due from other Group companies and the Company’s entitlement to the transfer of profits from Linde Material Handling GmbH of €332.1 million (2018: €343.4 million). There are long-term loans to Group companies of €606.1 million.

After taking into account the dividend payment of €141.5 million and the €1.7 million decrease in the volume of treasury shares, the net profit of €156.9 million meant that equity rose to €3,828.6 million (2018: €3,811.6 million). Further disclosures on treasury shares can be found in the notes to the financial statements of KION GROUP AG. The equity ratio was 49.8 per cent as at the reporting date (2018: 50.3 per cent).

The €39.6 million rise in provisions to €125.1 million was mainly the result of additions in tax provisions and to the provisions for share-based remuneration and short-term incentives. Pension provisions include provisions of €10.3 million (2018: €9.5 million) for former members of the Executive Board of KION GROUP AG and its legal predecessors. KION Group AG recognised tax provisions of €44.3 million (2018: €23.2 million) including those in connection with its role as the parent company of the tax group.

Liabilities mainly consist of liabilities to banks of €1,739.5 million (2018: €1,978.7 million) as well as loan liabilities and cash pool liabilities to other Group companies. The liabilities to banks comprise the financing via the promissory notes, the acquisition facilities agreement (AFA) and other loan liabilities. > TABLE 022

By pursuing an appropriate financial management strategy, the KION Group – through KION Group AG – makes sufficient cash 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 ensures that its financial management takes into account the interests of shareholders and banks. For the sake of these stakeholders, KION GROUP AG makes sure that it maintains an appropriate ratio of internal funding to borrowing.

KION GROUP AG has a multi-currency revolving credit facility of €1,150.0 million. It has a variable interest rate and, as it currently stands, can be drawn down until February 2023. As at 31 December 2019, the amount drawn down was €0.0 million (2018: €101.8 million). The drawdowns under the revolving credit facility are classified as short term.

KION GROUP AG also has liabilities to banks from variable-rate loans in the amount of €400.0 million (2018: €600.0 million) that mature in October 2021. These include the liabilities under the AFA, of which €400.0 million was repaid early in 2019 using cash received from operating activities, additional borrowing and the issuance of a new promissory note. As at 31 December 2019, the remaining liability under the AFA amounted to €200.0 million (2018: €600.0 million).

In April 2019, KION GROUP AG issued a new variable-rate promissory note in a nominal amount of €120.5 million. In return, €20.5 million of the fixed-rate tranche of the promissory note from 2018 was repaid ahead of schedule. Promissory notes that mature between 2022 and 2027, and have variable-rate or fixed coupons, have been issued in a nominal amount totalling €1,310.0 million (2018: €1,210.0 million). KION GROUP AG has entered into a number of interest-rate derivatives in order to hedge the interest-rate risk resulting from the variable-rate tranches. Moreover, the risk of a change in the fair value of a fixed-rate tranche of the promissory note that was issued in 2018 is hedged using an interest-rate swap, thereby creating a EURIBOR-based variable-rate obligation.

The liabilities to banks and the promissory notes are not hedged. KION GROUP AG has issued guarantees to the banks for all of the payment obligations under its liabilities to them and it is the borrower in respect of all the payment obligations resulting from the promissory notes.

As at 31 December 2019, liabilities to banks amounted to €1,739.5 million (2018: €1,978.7 million). After deduction of cash and cash equivalents, net debt amounted to €1,698.8 million (2018: €1,960.4 million).

The average number of employees at KION GROUP AG was 249 in 2019 (2018: 217). KION GROUP AG employed 262 people as at 31 December 2019 (2018: 230).