Quarterly Report • Aug 29, 2018
Quarterly Report
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| EARNINGS RATIOS | H1 2017 | H1 2018 | CHANGE IN % | |
|---|---|---|---|---|
| Revenue | in € million | 758.8 | 821.8 | 8 |
| EBITDA | in € million | 105.8 | 126.2 | 19 |
| EBIT | in € million | 65.8 | 78.4 | 19 |
| Net result after tax | in € million | 41.4 | 52.7 | 27 |
| EBITDA margin | in % | 13.9 % | 15.4 % | |
| EBIT margin | in % | 8.7 % | 9.5 % | |
| STATEMENT OF FINANCIAL POSITION RATIOS | 12/31/2017 | 06/30/2018 | CHANGE IN % | |
| Balance sheet total | in € million | 1,465.2 | 1,425.6 | -3 |
| Equity | in € million | 528.6 | 490.9 | -7 |
| Equity ratio | in % | 36.1 % | 34.4 % | |
| Working Capital Employed 1) | in € million | 238.4 | 241.6 | 1 |
| Net financial debt 2) | in € million | 375.0 | 382.9 | 2 |
| Gearing 3) | in % | 70.9 % | 78.0 % | |
| CASH FLOW AND INVESTMENTS | H1 2017 | H1 2018 | CHANGE IN % | |
| Cash flow from operations | in € million | -8.8 | -49.6 | <100 |
| Cash flow from investing activity | in € million | -63.5 | -38.6 | 39 |
| Cash flow from financing activity | in € million | -94.0 | 62.8 | >100 |
| Investments 4) | in € million | 87.6 | 96.2 | 10 |
| EMPLOYEES | 12/31/2017 | 06/30/2018 | CHANGE IN % | |
| Number of employees on reporting date 5) | Number | 5,887 | 4,334 | -26 |
| VALUE CREATION | 12/31/2017 | 06/30/2018 | ||
| ROCE (Return on Capital Employed) 6) | in % | 13.9 % | 15.1 % | |
| ROE (Return on Equity) 7) | in % | 17.1 % | 19.5 % | |
| STOCK MARKET FIGURES 8) | 06/30/2017 | 06/30/2018 | CHANGE IN % | |
| Market price on June 30; SIX Swiss Exchange | in CHF | CHF 51.90 | CHF 74.80 | 44 |
| Number of shares9) | in m | 22.539 | 22.539 | |
| Market capitalization | in CHF m | 1,169.76 | 1,685.89 | 44 |
| Earnings per share | in € | 1.04 | 1.49 | 44 |
| Carrying amount per share 10) | in € | 23.45 | 21.78 | -7 |
2) Net financial debt = financial liabilities (current, non-current) - cash
3) Gearing = net financial debt/equity
4) Additions from property, plant and equipment and intangible assets according to schedule of investments
5) Number of employees on the reporting date (including temporary staff)
6) ROCE: EBIT/average capital employed Capital employed = property, plant and equipment + goodwill + intangible assets + working capital employed
7) ROE = net result after tax/average equity
8) Listed on the SIX Swiss Exchange since November 14, 2016
9 ) due to share consolidation the previous year figure was adjusted, see notes
"Notes to the consolidated income statement" 10) Equity/number of shares
GROUP STRUCTURE
simplified presentation, 06/30/2018
PF Beteiligungsverwaltungs GmbH 100% ACstyria Mobilitätscluster GmbH 12.3%
2) PEXCO GmbH "at equity"; 50.1% are held by family Puello
FOR THE FIRST HALF-YEAR 2018
The KTM Industries Group is the biggest European motorcycle producer and focuses on highly innovative sport motorcycles and electro mobility. There is a high degree of technological integration within the Group, which in this form is unique in Europe. Strategic partnerships at operating level strengthen our competitiveness in the relevant markets. All these factors form the foundation for the high level of innovation within the KTM Industries Group and secure our organic growth course in the long term.
In the first half of 2018, the KTM Industries Group continued its strong growth, and achieved record sales of €821.8 m, equivalent to an increase of +8 % compared with the same period last year. With this growth, the KTM Industries Group was able to continue to build on its leading position as Europe's largest motorcycle manufacturer, having generated record sales of over 126,800 motorcycles. The members of the Executive Board of KTM AG, Hubert Trunkenpolz and Harald Plöckinger, were appointed to the Executive Board of KTM Industries AG in January 2018.
The implementation of the global product strategy and the expansion into other Asian and South American markets were consistently pursued in the first half of 2018. The strategic alliance with our Indian partner, Bajaj, was also deepened further. Extending the cooperation to the Husqvarna Motorcycles brand has raised the partnership between Bajaj and KTM to the next level. The KTM joint venture in China with its partner CF Moto was established in early 2018 under the name "Zhejiang CFMOTO-KTMR2R Motorcycles Co., Ltd". The production of mid-class motorcycles in the Chinese city of Hangzhou is planned from 2021 onwards.
KTM was once again the number one in Europe in terms of sales volume during the first half of 2018, a period which saw four series launches. The market launches of the first model in KTM's mid-class series (2-cylinder 800 cm³) – 790 DUKE – and the Husqvarna road models, took place successfully. KTM was also able to make significant gains in market share across all world regions during the first half of the year.
The greatly anticipated KTM 790 DUKE, which was unveiled in Spring 2018, and the Husqvarna VITPILEN 701 and 401 and SVARTPILEN 401 road motorcycle models for 2018, which had already been introduced last year, have already been distributed across the KTM network of dealers. Furthermore, the existing KTM RC 390 with sports features will be joined by a sport counterpart, the KTM RC 390 R. May saw the presentation of the new KTM SX Generation in Malagrotta, Italy. The reworked and improved KTM-EXC series of the 2019 model year were also presented. During the European Adventure rally held in Sardinia in June, the public enjoyed an exclusive preview of the KTM 790 ADVENTURE R of the 2019 model year. The completely new series 2 cylinder in this adventure bike was developed together with KTM's Dakar-winning bike, the KTM 450 RALLY, and it forms the link between the Enduros and KTM's 2019 street model series.
In January 2018, the WP Group (now: KTM Components-Group), the most important supplier for motorcycle production in Mattighofen, was fully integrated into KTM AG in order to secure the continued growth of the KTM Industries Group and achieve synergy potential. During the course of integration, the lead company, 'WP Performance Systems GmbH' changed its name to 'KTM Components GmbH', while keeping the WP brand name for products in the field of suspension.
Intensive work was already underway in 2017 to expand and build on the Group's own location for radiator production in Dalian, China. Series production was also initiated at the WP Cooling Systems (Dalian) Co., Ltd. Plant in the 2018 financial year. Plans are in place to complete most of the relocation of series production to China by the end of the 2018 financial year.
The decision was taken in June to sell the Pankl Group for €130.5 m. The sale of Pankl laid the strategic and financial basis for an even greater focus in the KTM Industries Group on the two-wheel industry, particularly the development of e-mobility, over the next few years. As a result of the cash inflow from the sale, it was possible to return perpetual bonds of €60 m and reduce other financial obligations. Furthermore, the Group's net financial debt relating to the financing of the Pankl Group of €100 m was reduced, which strengthened the balance sheet structure. The 1800 employees of the Pankl Group are no longer included in the financial statements of the KTM Industries Group from June 30, 2018. As a result of the sale of Pankl, the revenue of the KTM Industries Group will reduce by about €100 m, the amount of Pankl's revenue in the second half of the year. Wolfgang Plasser, CEO of Pankl Racing Systems AG and member of the Executive Board of KTM Industries AG, stepped down from the Executive Board of KTM Industries AG during the course of the sale.
KTM Innovation GmbH was established in March 2018 in order to underpin and strengthen the KTM Industries Group's competence in the area of 'Digitalization'. This involves working in various technology fields, such as artificial intelligence, big data, blockchain and business modeling. The focus of these field is digital products and services for the core product.
According to the assessment by the International Monetary Fund (IMF) of April 2018, global economic output will grow by 3.9 % in 2018. It forecasts growth of 2.5 % for both this year and next year in industrialized nations. For the euro area, a development of 2.4 % is expected for 2018. For 2019, the IMF anticipates global economic growth of 3.9 %, with growth of 2.0 % for the euro area.
For emerging markets and developing economies, a growth in economic output of 4.9 % and 5.1 % is expected for 2018 and 2019 respectively. For China, a growth rate of 6.6 % for 2018 and 6.4 % for 2019 is forecast. The highest growth rate is expected for India, with a 7.4 % increase in economic output for the current year and 7.8 % for next year.
The European motorcycles market1 grew by 9.3 % in the first six months of 2018 compared with the previous year, equivalent to around 358,000 registered vehicles, and this increase is predominantly attributed to the development in European markets such as Germany (+12.1 %), France (+11.2 %) and Italy (+10.1 %).
KTM and also Husqvarna were able to increase their market shares in the European market. The market share of KTM is now 9 % (previous year: 7.5 %), while that of Husqvarna is 2.3 % (previous year: 1.2 %).
The number of registrations in the US motorcycle market2 fell during the first six months of 2017 by around 216,000 registered vehicles (-2.3 % compared with the previous year).
However, KTM was able to increase its market share in the US market from 5.8 % in the previous year to 6.3 %. Husqvarna likewise achieved an increase in its market share from 1.8 % in the previous year to 2.1 %.
1 Motorcycles > 120 cm³ excluding Motocross, scooters and ATVs, including electric motorcycles 2 Motorcycles > 120 cm³ including Motocross, excluding scooters and ATVs, including electric motorcycles
With record sales of over 126,808 motorcycles, the KTM Industries Group generated revenue of €821.8 m in the first half of 2018 (+8 %) following €758.8 m in the previous year. The earnings before interest and taxes (EBIT) in the first half of 2018 was €78.4 m, following €65.8 m in the previous year (+19 %), and without including the effect from the sale of the Pankl Group of €26.2 m, this figure was €52.2 m, and therefore over the budget. The EBIT margin of 6.4 % adjusted for the effect of the Pankl sale is in excess of planned targets, taking into consideration four series launches. The earnings before interest, taxes, depreciation and amortization (EBITDA) is €126.2 m, an increase compared with the previous year's figure of €105.8 m. The net result after tax for the first six months is €52.7 m (previous year: €41.4 m).
The earnings ratios are distributed across the operational core divisions as follows (excluding consolidation effects):
| KTM AG | KTM COMPONENTS GMBH |
PANKL RACING SYSTEMS AG |
|||||
|---|---|---|---|---|---|---|---|
| € million | H1 2018 | H1 2017 | H1 2018 | H1 2017 | H1 2018 | H1 2017 | |
| Revenue | 713.7 | 654.5 | 93.6 | 85.7 | 110.2 | 100.3 | |
| EBITDA | 77.7 | 82.6 | 7.8 | 6.5 | 15.4 | 15.8 | |
| EBIT | 41.8 | 52.4 | 5.0 | 3.9 | 6.8 | 9.1 | |
| Net result after tax | 30.4 | 36.5 | 3.6 | 3.0 | 5.7 | 5.1 |
The company achieved revenue of €713.7 m in the first six months of 2018, corresponding to an increase of 9.0 % compared with the same period last year.
Taking into account the KTM 200 DUKE, the KTM 390 DUKE, KTM RC 200 and KTM RC 390 models sold in India by our partner Bajaj, sales increased in the first half of 2018 to 126,808 motorcycles (+15 % on the previous year). KTM therefore achieved an EBITDA of €77.7 m (-6.1 % compared with the previous year) and an EBIT of €41.8 m (-20.2 % compared with the previous year) during the first six months of the current financial year. Taking account of the series launches during the first six months of 2018, the EBIT is below the previous year, but in excess of planned targets. The net result after tax decreased in the first six months from €36.5 m to €30.4 m.
During the first half of 2018, the KTM Components Group succeeded in increasing its revenue to €93.6 m (previous year: €85.7). The rise in revenue could be seen in all product divisions and across a majority of customer segments. KTM Components grew faster than the market due to KTM's strong growth. The EBIT exceeded the previous year's result by €5 m (previous year: €3.9 m). The improved result was attributable mainly to the increase in revenue and the ongoing optimization of production processes. The increase in revenue helped to counteract higher costs resulting from new product launches, and costs and investments for the expansion and modernization of production and machinery to secure and expand production capacities.
During the first six months of the 2018 financial year, the Pankl Group was able to continue growth in revenue, and achieved record sales of €110.2 m, which equates to growth of 9.8 % compared with the first six months of 2017 (H1 2017: €100.3 m). It achieved growth in the racing/high performance segment, while the aerospace segment declined slightly.
Due to very moderate development in Racing, especially in Q2, the EBIT fell from €9.1 m in the first six months of 2017 to €6.8 m after 6 months of the current financial year. This corresponds to an EBIT margin of 6.2 % (H1 2017: 9.1 %). Due to a more favorable development in currency compared with the previous year, and the continued low interest rate, the financial result improved from -€2.0 m in the first half of the 2017 financial year to €-1.3 m at present. It was possible to gain from investment-related tax relief in connection with a major investment project, which resulted in a positive income tax benefit in the first half of 2018. The net result after tax on June 30, 2018 was therefore €5.7 m (H1 2017: €5.1 m).
The structure of the statement of financial position of the KTM Industries Group is as follows:
| 06/30/2018 | 12/31/2017 | |||
|---|---|---|---|---|
| € million | in % | € million | in % | |
| Non-current assets | 706.2 | 49.5 % | 782.1 | 53.4 % |
| Current assets | 719.4 | 50.5 % | 683.0 | 46.6 % |
| Assets | 1,425.6 | 100.0 % | 1,465.2 | 100.0 % |
| Equity | 490.9 | 34.4 % | 528.6 | 36.1 % |
| Non-current liabilities | 473.4 | 33.2 % | 461.5 | 31.5 % |
| Current liabilities | 461.3 | 32.4 % | 475.1 | 32.4 % |
| Equity and liabilities | 1,425.6 | 100.0 % | 1,465.2 | 100.0 % |
The sale of the Pankl Group was completed before the half-year reporting date, which meant that the consolidation effects had already been recorded in the half-year statement of financial position.
The balance sheet total of the KTM Industries Group decreased slightly from €1.4652 bn to €1.4256 bn compared to the consolidated financial statements as of December 31, 2017 (-2.7 %).
The non-current assets reduced during the first half of the year, essentially as a result of the disposal of Pankl (effect of around -17 %). When taking account of the level of investment in the remaining company divisions, which continues to exceed amortizations, the assets remain overall about 10 % below the previous year's value.
The current assets increased on the one hand due to the growth-related rise in inventory, trade receivables and the realized cash addition resulting from the sale of the Pankl Group. On the other hand, the disposal of Pankl reduced the current assets. Overall the current assets increased by around 5 %.
As a result of the promissory note loans, successfully placed by KTM AG in the first half of 2018, with an issuing volume of €135 m and a term of seven or ten years, the liabilities remained above the level of last year overall, despite the deconsolidation of the Pankl Group. The promissory note loan serves to finance the company's growth in the future.
The equity decreased during the first six months by €37.6 m from €528.6 m to €490.9 m. On the one hand, equity was boosted by the net result for the period of €52.7 m, while on the other hand, dividend payments of €18.6 m and the return of perpetual bonds of €60 m recognized in equity resulted in a reduction of equity. In addition, minority shares worth €2.2 m were disposed of as part of the deconsolidation of the Pankl Group.
The cash flow from operating activities was -€49.6 m in the first six months due to the seasonal factor, and was therefore below the previous year's value of -€8.8 m, for which the planned increase in working capital was primarily responsible.
The cash outflow due to investments was -€38.6 m. Payments received from the sale of the Pankl Group of €58.5 m (including disposed cash of the Pankl Group of €9.1 m) and the successful sale of the remaining shares in the Wethje Group worth €3.7 m had a positive effect on the investment cash flow.
After taking into account the cash flow from financing activities of €62.8 m, liquid funds decreased by €25.4 m compared with December 31, 2017 to €143.7 m. The financing cash flow was primarily characterized by the placement of a new promissory note loan of €135.0 m, and the early repayment of the promissory note loan issued in 2016 in KTM AG of €32.5 m.
Investments in Research & Development in the first half of 2018 were €37.9 m (half-year 2017: €32.4 m), whereas investments in infrastructure decreased. Due to the intensive investment program over the last few years, investments in infrastructure will continue to decrease further. Overall, investments in the first half of 2018 were €96 m (previous year: €87.6 m).
The expansion of the research and development center at the Mattighofen site with an investment volume of approximately €30 m was completed for the most part in Q2 2018. The "House of Brands" for the sales and marketing of the KTM, Husqvarna Motorcycles and WP brands at the Munderfing site is scheduled for completion in the 2019 financial year. The new KTM Motohall, a digital experience exploring the history of the KTM brand in the center of Mattighofen, is expected to open its doors in Q1 2019.
The consistently high investments in series product development represent one of the key success factors of the KTM Industries Group.
The KTM Industries Group lost 1,800 employees of the Pankl Group upon the sale of the Pankl Group to the Pierer Industrie Group. On June 30, 2018, KTM Industries employed 4,334 staff, 3,645 of whom in Austria (84 %). Around 15 % of the Group's entire workforce are employed in research & development.
For details of the risk report, please refer to the consolidated financial statements as at December 31, 2017. There have been no changes to the risk assessment since that time.
Please refer to the notes of the interim financial statements for information.
Please refer to the notes of the interim financial statements for information.
The KTM Industries Group expects a further increase in both revenue and sales in the 2018 financial year, despite the missing revenue of the Pankl Group's second half of the year of €100 m.
From a regional point of view, we are expecting to see significant growth in absolute terms in the European and North American regions. We are expecting to see the greatest relative growth rates in the ASEAN region and in India. KTM plans to open a representative office in Colombia in order to boost its market presence in South America.
The planned growth is primarily expected from KTM and Husqvarna road bikes. At Husqvarna Motorcycles, the focus for the 2018 financial year is on its return to the road segment with the launch of the VITPILEN 401, SVARTPILEN 401 and VITPILEN 701. KTM is breaking into a new segment with the introduction of the new inline two-cylinder DUKE 790.
On the basic of the half year result 2018 and due to the sale of the Pankl-Group, the guidance was updated. For the 2018 financial year, the Executive Board expects a consolidated revenue of about € 1.570 billion and an operating EBIT of more than € 160 million. The Net Debt / EBITDA - ratio is expected to improve to a range between 1.0 - 1.2 x.
Wels, August 27, 2018
The Executive Board of KTM Industries AG
Stefan Pierer, CEO Friedrich Roithner, CFO Hubert Trunkenpolz Harald Plöckinger
FOR FIRST HALF-YEAR JANUARY 1, 2018 THROUGH JUNE 30, 2018
| EURk | H1 2018 | H1 2017 | |||||
|---|---|---|---|---|---|---|---|
| Continued operation |
Discontinued operation |
GROUP | Continued operation |
Discontinued operation |
GROUP | ||
| Revenue | 724,490 | 97,342 | 821,832 | 665,889 | 92,923 | 758,812 | |
| Production costs of the services provided to generate the revenue |
-525,032 | -66,018 | -591,050 | -473,777 | -62,729 | -536,506 | |
| Gross profit from sales | 199,458 | 31,324 | 230,782 | 192,112 | 30,194 | 222,306 | |
| Selling and racing expenses | -93,507 | -6,335 | -99,842 | -82,716 | -6,007 | -88,723 | |
| Research and development expenses | -13,608 | -8,067 | -21,675 | -12,738 | -4,787 | -17,525 | |
| Administration expenses | -31,572 | -12,704 | -44,276 | -27,568 | -11,920 | -39,488 | |
| Other operating expenses | -14,802 | -122 | -14,924 | -14,671 | -43 | -14,714 | |
| Other operating income | 332 | 28,3441) | 28,676 | 2,802 | 1,109 | 3,911 | |
| Earnings from at-equity holdings | -346 | 0 | -346 | 56 | 0 | 56 | |
| Result from operating activities | 45,955 | 32,440 | 78,395 | 57,277 | 8,546 | 65,823 | |
| Interest income | 1,213 | 32 | 1,245 | 820 | 37 | 857 | |
| Interest expenses | -6,319 | -885 | -7,204 | -6,692 | -998 | -7,690 | |
| Other financial and investment income (expenses) |
-789 | -437 | -1,226 | -1,969 | -1,034 | -3,013 | |
| Result before taxes | 40,060 | 31,150 | 71,210 | 49,436 | 6,551 | 55,987 | |
| Income taxes | -10,030 | -8,448 | -18,478 | -12,661 | -1,888 | -14,549 | |
| Profit or loss for the period | 30,031 | 22,702 | 52,733 | 36,775 | 4,663 | 41,438 | |
| thereof owners of the parent company | 13,581 | 20,071 | 33,652 | 18,709 | 4,688 | 23,397 | |
| thereof non-controlling shareholders | 16,450 | 2,631 | 19,081 | 18,066 | -25 | 18,041 | |
| Undiluted (=diluted) earnings per share (EUR)2) |
0.60 | 0.89 | 1.49 | 0.83 | 0.21 | 1.04 |
1) including deconsolidation effect from the sale of the Pankl-Group, see notes "Scope of consolidation" and "Notes to the consolidated income statement"
2) due to share consolidation the previous year figure was adjusted, see notes " Notes to the consolidated income statement"
FOR FIRST HALF-YEAR JANUARY 1, 2018 THROUGH JUNE 30, 2018
| EURk | H1 2018 | H1 2017 | |||||
|---|---|---|---|---|---|---|---|
| Continued operation |
Discontinued operation |
GROUP | Continued operation |
Discontinued operation |
GROUP | ||
| Profit or loss for the period | 30,031 | 22,702 | 52,733 | 36,775 | 4,663 | 41,438 | |
| Items reclassified to profit or loss or which can be subsequently reclassified |
|||||||
| Foreign currency translation | -130 | -727 | -857 | -1,969 | -1,145 | -3,114 | |
| Valuation of cash flow hedges | -1,978 | 0 | -1,978 | 12,677 | 0 | 12,677 | |
| Deferred tax on valuation of cash flow hedges |
494 | 0 | 494 | -3,169 | 0 | -3,169 | |
| -1,613 | -727 | -2,340 | 7,539 | -1,145 | 6,394 | ||
| Items not reclassified to profit or loss |
|||||||
| Revaluation of net debt from defined benefit plans |
-12 | 0 | -12 | 1,141 | 119 | 1,260 | |
| Tax effect | 3 | 0 | 3 | -285 | -30 | -315 | |
| -9 | 0 | -9 | 856 | 89 | 945 | ||
| Other net result after tax | -1,622 | -727 | -2,349 | 8,395 | -1,056 | 7,339 | |
| Total comprehensive income | 28,408 | 21,975 | 50,383 | 45,170 | 3,607 | 48,777 | |
| thereof owners of the parent company | 12,750 | 23,244 | 35,994 | 23,124 | 3,689 | 26,813 | |
| thereof non-controlling shareholders | 15,658 | -1,269 | 14,389 | 22,046 | -82 | 21,964 |
AS AT JUNE 30, 2018
| EURk | 06/30/2018 | 12/31/ 2017 |
|---|---|---|
| Assets: | ||
| Non-current assets: | ||
| Property, plant, and equipment | 276,220 | 357,324 |
| Goodwill | 96,626 | 117,125 |
| Intangible assets | 298,575 | 279,589 |
| Investments accounted for using the equity method | 14,496 | 15,050 |
| Deferred tax assets | 5,103 | 7,483 |
| Other non-current assets | 15,193 | 5,554 |
| 706,213 | 782,125 | |
| Current assets: | ||
| Inventories | 295,502 | 296,950 |
| Trade receivables | 156,076 | 120,305 |
| Receivables and other assets | 123,282 | 95,255 |
| Tax refund entitlements | 836 | 1,450 |
| Cash and cash equivalents | 143,670 | 169,068 |
| 719,366 | 683,028 | |
| 1,425,579 | 1,465,153 |
| EURk | 06/30/2018 | 12/31/2017 |
|---|---|---|
| Equity and liabilities: | ||
| Equity: | ||
| Share capital | 22,539 | 225,387 |
| Capital reserves | 9,949 | 9,949 |
| Perpetual bond | 0 | 69,453 |
| Other reserves including retained earnings | 231,619 | 13,176 |
| Equity of the owners of the parent company | 264,107 | 317,965 |
| Non-controlling interests | 226,835 | 210,614 |
| 490,942 | 528,579 | |
| Non-current liabilities: | ||
| Financial liabilities | 388,841 | 372,541 |
| Liabilities for employee benefits | 22,623 | 24,001 |
| Deferred tax liabilities | 53,373 | 53,455 |
| Other non-current liabilities | 8,523 | 11,479 |
| 473,360 | 461,476 | |
| Current liabilities: | ||
| Financial liabilities | 137,771 | 171,494 |
| Trade payables | 209,944 | 178,464 |
| Provisions | 11,677 | 11,996 |
| Tax liabilities | 4,462 | 14,153 |
| Other current liabilities | 97,423 | 98,991 |
| 461,277 | 475,098 | |
| 1,425,579 | 1,465,153 |
| EURk | H1 2018 | H1 20171) |
|---|---|---|
| Operations | ||
| Result for the period | 52,733 | 41,438 |
| + (-) Interest expenses / interest income | 5,959 | 6,833 |
| + Tax expenses | 18,478 | 14,549 |
| + Depreciation/amortization of property, plant and equipment and intangible assets | 47,819 | 40,016 |
| + (-) Other non-cash expenses (income) | -18,759 | -5,062 |
| + Interest received | 1,071 | 976 |
| - Interest payments | -5,287 | -7,049 |
| - Tax payments | -7,618 | -5,807 |
| + Dividends received | 221 | 146 |
| Gross cash flow | 94,617 | 86,040 |
| - (+) Increase (decrease) in the net current assets | -144,204 | -94,825 |
| Cash flow from operations | -49,588 | -8,785 |
| of which discontinued operation | 1,469 | 5,685 |
| Investing activity | ||
| - Payments made for the acquisition of intangible assets and property, plant and equipment | -84,014 | -88,106 |
| + Payments received from the sale of intangible assets and property, plant and equipment | 489 | 1,626 |
| + Dividends received | 0 | 183 |
| + Disposal of Pankl Racing Systems AG minus disposed-of liquid funds | 58,498 | 0 |
| - Other changes to scope of consolidation | -2,099 | 0 |
| + (-) Payments/receipts from other assets | -11,507 | 22,836 |
| Cash flow from investing activity | -38,633 | -63,461 |
| of which discontinued operation | 42,636 | -18,264 |
| Free cash flow | -88,221 | -72,246 |
1) adjusted, see notes "principles of financial reporting - Correction previous year figure"
| EURk | H1 2018 | H1 20171) |
|---|---|---|
| Financing activity | ||
| - Dividend payments to third parties | -18,588 | -17,508 |
| + (-) Disposal/acquisition of non-controlling interests | -5,037 | 5 |
| + Taking out a promissory note loan | 135,000 | 0 |
| + Taking out non-current interest-bearing liabilities | 33,547 | 0 |
| - Repayment of promissory note loan | -32,500 | -32,000 |
| - Repayment of non-current interest-bearing liabilities | -26,216 | 0 |
| - Repayment of bonds | 0 | -85,000 |
| + Repurchase of own bonds | 0 | 1,900 |
| + (-) Increase (decrease) from other financing activities | -23,377 | 6,576 |
| Cash flow from financing activity | 62,830 | -126,027 |
| of which discontinued operation | 14,356 | 18,255 |
| Total cash flow | -25,391 | -198,273 |
| of which discontinued operation | 58,461 | 5,676 |
| + Opening balance of liquid funds within the Group | 169,068 | 283,578 |
| + Effect of foreign currency fluctuations | -7 | -1,465 |
| Closing balance of liquid funds within the Group | 143,670 | 83,840 |
1) adjusted, see notes "principles of financial reporting - Correction previous year figure"
| Equity of the owners of the parent company | |||
|---|---|---|---|
| EURk | Share capital | Capital reserves | Perpetual bond |
| Balance as at January 1, 2018 | 225,387 | 9,949 | 69,453 |
| Amendments 1) | 0 | 0 | 0 |
| Balance as at January 1, 2018 after amendments | 225,387 | 9,949 | 69,453 |
| Profit or loss for the period | 0 | 0 | 0 |
| Other comprehensive income | 0 | 0 | 0 |
| Total comprehensive income | 0 | 0 | 0 |
| Transactions with shareholders | |||
| Dividends to third parties | 0 | 0 | 0 |
| Perpetual bond | 0 | 0 | -60,000 |
| Acquisition/sale of shares to subsidiaries | 0 | 0 | 0 |
| Capital measures2) | -202,848 | 0 | 0 |
| Deconsolidation of Pankl Racing Systems AG | 0 | 0 | -9,453 |
| Other | 0 | 0 | 0 |
| Balance as at June 30, 2018 | 22,539 | 9,949 | 0 |
1) Due to the initial application of IFRS 9 + IFRS 15, the opening balance was adjusted, see note "newly applied standards and interpretations"
2) Due to share consolidation in the ratio 10:1 the number of shares issued reduced from 225,386,742 to 22,538,674, see notes "Notes to the consolidated income statement"
| Balance as of January 1, 2017 | 225,387 | 9,949 | 60,000 |
|---|---|---|---|
| Profit or loss for the period | 0 | 0 | 0 |
| Other comprehensive income | 0 | 0 | 0 |
| Total comprehensive income | 0 | 0 | 0 |
| Transactions with shareholders | |||
| Dividends to third parties | 0 | 0 | 0 |
| Disposal of shares to subsidiaries | 0 | 0 | 0 |
| Other | 0 | 0 | 0 |
| Balance as at June 30, 2017 | 225,387 | 9,949 | 60,000 |
| Total consolidated | Non-controlling | Equity of the owners of the parent company | |||
|---|---|---|---|---|---|
| equity | interests | Total | Adjustment items Currency translation |
Reserve in accordance with IAS 39 |
Reserves including Perpetual bond retained earnings |
| 528,579 | 210,614 | 317,965 | -3,759 | 1,769 | 69,453 15,166 |
| 691 | 37 | 654 | 0 | 0 | 0 654 |
| 529,270 | 210,651 | 318,619 | -3,759 | 1,769 | 69,453 15,820 |
| 52,733 | 19,081 | 33,652 | 0 | 0 | 0 33,652 |
| -2,349 | -4,692 | 2,342 | 3,106 | -750 | 0 -14 |
| 50,383 | 14,389 | 35,994 | 3,106 | -750 | 0 33,638 |
| -18,588 | -11,826 | -6,762 | 0 | 0 | 0 -6,762 |
| -62,877 | 0 | -62,877 | 0 | 0 | -60,000 -2,877 |
| -5,037 | 15,975 | -21,012 | 0 | 0 | 0 -21,012 |
| 0 | 0 | 0 | 0 | 0 202,848 |
|
| -2,242 | -2,242 | 0 | 0 | 0 | -9,453 9,453 |
| -112 | 146 | 0 | 0 | 0 146 |
|
| 490,942 | 226,835 | 264,107 | -653 | 1,019 | 0 231,253 |
| 454,937 | 180,651 | 274,286 | 720 | -1,588 | 60,000 -20,182 |
| 41,438 | 18,041 | 23,397 | 0 | 0 | 0 23,397 |
| 7,339 | 3,923 | 3,416 | -2,096 | 4,940 | 0 572 |
| 48,777 | 21,964 | 26,813 | -2,096 | 4,940 | 0 23,969 |
| -17,508 | -10,746 | -6,762 | 0 | 0 | 0 -6,762 |
| 2 | 3 | 0 | 0 | 0 3 |
|
| -344 | 348 | 0 | 0 | 0 348 |
|
| 486,215 | 191,527 | 294,688 | -1,376 | 3,352 | 60,000 -2,624 |
KTM Industries AG has its headquarters at Edisonstrasse 1, 4600 Wels, and is registered with the commercial register at the Provincial Court Wels as Commercial Court, under the registration number FN 78112 x.
The KTM Industries-Group is the biggest European motorcycle producer and focuses on highly innovative sport motorcycles and electro mobility. Its globally recognized brands KTM, Husqvarna Motorcycles, and WP make it a technological and market leader in its respective segments.
The stocks of KTM Industries AG are listed on the "Swiss Performance Index (SPI)" of the SIX Swiss Exchange in Zurich and on the Vienna Stock Exchange in the "standard market auction" segment.
In order to boost efficiency increases within the Group and to realize synergy potential, the WP Group (now KTM Components Group) was fully integrated into KTM AG in January 2018 in its position as the most important supplier for the motorcycle production in Mattighofen. In the course of integration the name of the lead company 'WP Performance Systems GmbH' was changed to 'KTM Components GmbH'. On the reporting date June 30, 2018, KTM AG held 99.9 % of the KTM Components Group. KTM Industries AG continues to hold around 51.7 % of shares in KTM AG.
Upon its entry into the commercial register on March 23, 2018, KTM Innovation GmbH was established as the first port of call for digital transformation and innovation within the Group, focusing on digital products and services for the core product. KTM Industries AG holds 74.0 % of the company.
From January 3, 2018, KTM Industries AG announced it would make an offer to the shareholders of Pankl Racing Systems AG to terminate the admission for trading the Pankl shares (ISIN AT0000800800). Following the end of the acceptance period at the end of March 2018, shares of the Pankl Group rose from 94.5 % (December 31, 2017) to 98.2 %. In accordance with the resolution of the Vienna Stock Exchange of February 19, 2018, Pankl shares were traded on the Vienna Stock Exchange for the last time on May 30, 2018.
The decision was taken in June 2018 to sell the entire Pankl Group to the Pierer Industrie Group for €130.5 m. The purchase price therefore corresponds to the price that the shareholders of Pankl Racing Systems AG were offered as part of the public takeover bid up to March 2018. The sale of the Pankl Group laid the strategic and financial basis for an even greater focus in the KTM Industries Group on the two-wheel industry, particularly the development of e-mobility, over the next few years. Wolfgang Plasser, CEO of Pankl Racing Systems AG and member of the Executive Board of KTM Industries AG, stepped down from the Executive Board of KTM Industries AG during the course of the sale.
The remaining share relationships remained unchanged compared to December 31, 2017.
The condensed interim consolidated financial statements for the reporting period from January 1 to June 30, 2018 of KTM Industries AG were prepared in accordance with the International Financial Reporting Standards (IFRS), as applied in the EU, applying IAS 34 (interim reporting).
These condensed interim consolidated financial statements for the first half of 2018 have not been audited or been subject to review.
The condensed interim consolidated financial statements do not include all notes and disclosures required for year-end consolidated financial statements and should therefore be read in conjunction with the consolidated financial statements as of December 31, 2017.
The interim consolidated financial statements are prepared in euros, which is the functional currency of the parent company. Unless specifically indicated, all amounts are rounded to the nearest 1,000 euros (EUR k), which may give rise to rounding differences. Through the application of automated calculating tools rounding differences can also occur with accumulation of rounded figures and with percentages.
The accounting policies used on December 31, 2017 were applied without change, with the exception of the IFRS, the use of which is mandatory from January 1, 2018. The financial reporting of the companies included in the condensed interim consolidated financial statements is subject to uniform accounting principles, and these principles were applied by all consolidated entities.
In principle, the income tax expenditure is determined for the interim consolidated financial statements in accordance with IAS 34 as an estimate on the basis of the average annual tax rate expected for the full financial year, while already taking into consideration special tax effects of the first halfyear in the actual tax expenditure.
The provisions for obligations for severance pay and anniversary bonuses were measured according to the years of service method (projected unit credit method). Actuarial reports for the measurement are generated as of the end of the reporting period. These values are adjusted for the interim consolidated financial statements. If significant changes to the parameters occur during the year the net debt is revalued.
In the Notes to the Consolidated Financial Statements as at December 31, 2017, 'Point 3. Changes resulting from errors' made reference to the reversal of the offsetting of the promissory note loan in the 2016 consolidated financial statements of €32.0 m. Due to this misstatement, the cash level as at December 31, 2016 in the interim consolidated financial statements for the first half of 2017 should have been €32.0 m higher. For this reason, the opening balance of liquid funds in the statement of cash flows for the first half of 2017 has been adjusted in the present interim financial statements from €251.6 m to €283.6 m. The partial amount of the promissory note loan of €32.0 m that was repaid in January 2017 can be found in the cash flow from financing activity for the half-year 2017. The cash level as at June 30, 2017 corresponds to the published previous year's value of €83.8 m. For further information regarding the topic of offsetting the promissory note loan, please refer to Point 3 of the Notes to the Consolidated Financial Statements as at December 31, 2017.
The following new and amended standards and interpretations, which must be applied in the EU with effect from January 1, 2018, do not have any significant effect on the interim consolidated financial statements of KTM Industries AG:
The new standards IFRS 9 and IFRS 15 have an effect on the interim consolidated financial statement of KTM Industries AG. The table below shows the effects of IRFS 9 and IFRS 15 at January 1, 2018:
| Group statement of financial position EURk |
12/31/2017 Reported |
Amendments in accordance with IFRS 9 IFRS 15 |
01/01/2018 Adjusted |
|
|---|---|---|---|---|
| Inventories Trade receivables |
296,950 120,305 |
0 13 |
-1,811 2,677 |
295,139 122,995 |
| Current assets | 683,028 | 13 | 866 | 683,927 |
| Deferred tax assets | 7,483 | 20 | -212 | 7,271 |
| Non-current assets | 782,125 | 20 | -212 | 781,913 |
| ASSETS | 1,465,153 | 33 | 654 | 1,465,840 |
| Group statement of financial position EURk |
12/31/2017 Reported |
Amendments in accordance with IFRS 9 IFRS 15 |
01/01/2018 Adjusted |
|
|---|---|---|---|---|
| Current liabilities | 475,098 | 0 | 0 | 475,098 |
| Deferred tax liabilities | 53,455 | -8 | 4 | 53,451 |
| Non-current liabilities | 461,476 | -8 | 4 | 461,472 |
| Equity | 528,579 | 41 | 650 | 529,270 |
| EQUITY AND LIABILITIES | 1,465,153 | 33 | 654 | 1,465,840 |
The IFRS 9 and IFRS 15 standards, which must be applied in the EU with effect from January 1, 2018, and their effects on the interim consolidated financial statements of KTM Industries AG are described below.
In a comprehensive model framework, IFRS 15 defines whether, when and at what amount revenues should be recognized. The standard provides a single, principles-based, five-stage model to be applied to all contracts with customers. It replaces existing guidelines on the recording of revenue, including IAS 18 Revenue, IAS 11 Construction Contracts, and IFRIC 13 Customer Loyalty Programmes. The contract analysis to identify any required adjustments in the implementation of IFRS 15 was carried out for all of the Group's major product groups (revenue streams).
Variable considerations, such as price rebates, sales bonuses, and cash discounts were identified, and these were already shown as revenue reductions in previous years.
As warranties are not sold separately, these only provide assurance that the products being sold meet the agreed specifications. As these warranties do not depart from the statutory warranty obligations or those that are typical of the industry in terms of their duration or their content, they are deemed to be assurance-type warranties, which do not constitute a separate performance obligation. Accordingly, the warranties will continue to be established in accordance with IAS 37, which is in line with current accounting.
According to IFRS 15, revenues are recognized as soon as control passes to the customer. In a number of contracts on the make-to-order production of products, the customer controls all of the ongoing works during production. The revenue from such contracts is recorded during production, and this means that negligible revenues and any associated costs for these contracts are recognized over a period, in other words before the goods are delivered to the customer.
In the transition to IFRS 15, the KTM Industries Group has used the modified retrospective method, according to which the cumulative adjustment amounts are recorded as at January 1, 2018. Accordingly, there is no adjustment of the comparison periods shown. The table below contains a summary of the effects on accounting at the time of initial application:
| EURk | Effects as of January 1, 2018 |
|---|---|
| Assets | |
| Inventories | -1,811 |
| Contract assets | 2,677 |
| Deferred tax assets | -212 |
| 654 | |
| Equity and liabilities | |
| Deferred tax liabilities | 4 |
| Equity | 650 |
| 654 |
Due to materiality considerations, the item 'contract assets' is not shown as an individual item in the consolidated statement of financial position, but instead is included in the trade receivables.
IFRS 9 will be applied with retroactive effect to January 1, 2018. The applications of the impairment requirements of IFRS 9 result overall in an increase in trade receivables in the KTM Industries Group of EUR 13 k. Due to the fact that impairment losses had already been recognized for trade receivables in the Pankl Group, this resulted in a positive effect on the equity of KTM Industries in the KTM Industries Group as a whole at the time of initial application, as the Pankl Group still formed part of the KTM Industries Group at this time.
The measurement categories of IFRS 9 were used to classify and measure the assets side:
In the case of equity instruments (such as shares in companies not listed on the stock exchange) that are classified under IAS 39 as financial assets available for sale, the FVOCI option is being exercised now. This will lead to changes in the fair value being recorded under other comprehensive income, meaning that it will no longer be possible to regroup the changes to fair value accumulated under other comprehensive income in the income statement. KTM Industries is taking advantage of its right to choose the FVOCI option for carrying amounts of EUR 166 k (other non-current financial assets).
For the most part, the existing provisions will be adopted for the recognition and measurement of financial liabilities.
With regard to impairment loss, IFRS 9 replaces the previous "Incurred Loss" model from IAS 39 with the "Expected Credit Loss" model. In this regard, IFRS 9 defines different levels for the purposes of establishing the amount of the losses and interest receipts that are to be recorded.Trade receivables do not exhibit any significant financing components. For that reason, the simplified process for establishing the expected credit loss is used; this involves accounting for all instruments with a risk provision, which is independent of their credit quality, in the amount of the expected losses over the term to maturity. In the case of trade receivables, this amounts to fewer than 12 months and therefore corresponds to the 12-month loss. In order to determine the expected credit loss, historical default data were collected for receivables in the KTM Group over the last eight to ten years and split into geographic regions. In that regard, an expected credit loss of 0.06 % of trade receivables was determined for 2017. With regard to the Pankl Group, historical default data could not be utilized for statistical purposes due to the very few occurrences of defaults. The probability of default was therefore measured on the basis of external ratings of Pankl's most important customers, taking into account particular geographic situations. The ratings of the most important customers were weighted in terms of revenue and then used as the probability of default for the entire segment.
Cash and cash equivalents mainly comprise cash on hand and cash balances at credit institutions that have received good creditworthiness ratings from external rating agencies. For that reason, the credit risk is classified as low. According to the 12-month loss model, no significant impairment losses are expected.
| Financial assets EURk |
Classification under IAS 39 |
Classification under IFRS 9 |
Carrying amount in accordance with IAS 39 12/31/2017 |
Carrying amount in accordance with IFRS 9, 01/01/2018 |
|---|---|---|---|---|
| Financial assets measured at fair value | ||||
| Other current assets - Derivatives with positive market value that have already been assigned to receivables |
Fair value - hedging instruments |
Recorded in income statement at fair value |
4,173 | 4,173 |
| Other current assets - Derivatives with positive market value (cash flow hedge) |
Fair value - hedging instruments |
Recorded at fair value without affecting income statement |
7,452 | 7,452 |
| Other non-current financial assets | Available for sale | Recorded at fair value (without recycling) without affecting income statement |
166 | 166 |
The classification and measurement of financial instruments from IAS 39 to IFRS 9 can be carried over as follows:
| Financial assets EURk |
Classification under IAS 39 |
Classification under IFRS 9 |
Carrying amount in accordance with IAS 39 12/31/2017 |
Carrying amount in accordance with IFRS 9, 01/01/2018 |
|---|---|---|---|---|
| Financial assets not measured at fair value | ||||
| Cash and cash equivalents | Loans and receivables | Measured at amortized cost |
169,068 | 169,068 |
| Trade receivables | Loans and receivables | Measured at amortized cost |
120,305 | 120,318 |
| Other financial assets | Loans and receivables | Measured at amortized cost |
43,671 | 43,671 |
The rules for hedge accounting are applied in accordance with IFRS 9 from the 2018 financial year onwards. Since the new requirements are intended to better illustrate risk management within the group, and since the range of possible hedged items and hedging transactions has been extended, the existing hedging relationships can continue to be accounted for as hedging relationships under IFRS 9.
IFRS 9 introduces the concept of the cost of hedging. For this, the fair value of an option, the forward element of a forward contract and any foreign currency basis spreads can be excluded from the designation of a financial instrument as a hedging instrument and accounted for as the cost of hedging. In this regard, fluctuations in the value of these components that have optionally not been designated are recorded as hedging costs under other comprehensive income and reclassified in the income statement in the event that the hedged item is recognized in profit or loss.
As at January 1, 2018, no change has been made with regard to the reserves under equity as a result of the application of the accounting principles for hedging relationships under IFRS 9.
Furthermore, no significant impacts are expected for the consolidated financial statements as a result of the application of the new hedge accounting provisions under IFRS 9. The right to choose to continue recording hedging in accordance with the provisions of IAS 39 will not be used until further notice.
The table below shows the effects of the IFRS 9 and IFRS 15 standards (which are now mandatory from 2018) on the statement of financial position, with the effect on the interim financial statements of the KTM Industries Group as at June 30, 2018:
| Group statement of financial position | 06/30/2018 | Amendments in | 06/30/2018 | |
|---|---|---|---|---|
| EURk | Reported | accordance with IFRS 9 |
IFRS 15 | Without application |
| IFRS 9 & IFRS 15 | ||||
| Inventories | 295,502 | 0 | -1,057 | 296,559 |
| Trade receivables | 156,076 | -56 | 1,420 | 154,712 |
| Current assets | 719,366 | -56 | 363 | 719,059 |
| Deferred tax assets | 5,103 | 0 | -91 | 5,194 |
| Non-current assets | 706,213 | 0 | -91 | 706,304 |
| ASSETS | 1,425,579 | -56 | 272 | 1,425,363 |
| Current liabilities | 461,277 | 0 | 0 | 461,277 |
| Deferred tax liabilities | 53,373 | -14 | 0 | 53,387 |
| Non-current liabilities | 473,360 | -14 | 0 | 473,374 |
| Equity | 490,942 | -42 | 272 | 490,712 |
| EQUITY AND LIABILITIES | 1,425,579 | -56 | 272 | 1,425,363 |
In the interim consolidated financial statements, certain estimates and assumptions have to be made that affect the recognized assets and liabilities, the disclosure of contingent liabilities as at the reporting date and the presentation of income and expenses for the reporting period. Estimates and assumptions are based on empirical values that the Executive Board deems appropriate. The amounts actually arising may differ from the estimates if assumed parameters develop contrary to expectations. If new conditions become known, they are duly taken into account and previous assumptions are revised accordingly.
Estimates and uncertainties in judgments and assumptions are explained in the consolidated financial statements of KTM Industries AG as of December 31, 2017 under 'Point (6) Estimates and uncertainties in judgments and assumptions'.
At KTM AG seasonality effects occur due to the different seasonality of offroad- and street motorcycles. In the street segment, there are higher sales in the first half of the year, whereas in the offroad division, the main focus is on the second half of the year. Due to the increasing importance of the street segment in total revenues, seasonal effects are straightened over the year to a large extent. At Pankl Racing Systems AG seasonal fluctuations exist in Racing/High Performance because the racing season for the most important racing categories begins in spring and ends in the fall. Consequently the first quarter tends to be the strongest one.
All subsidiaries that are either legally or de facto under the control of KTM Industries AG are included in the interim consolidated financial statements as at June 30, 2018.
The number of companies included in the scope of consolidation changed in the first half of 2018 as shown below:
| Fully consolidated companies |
At equity companies |
|
|---|---|---|
| Balance as of December 31, 2017 | 62 | 10 |
| Additions to the scope of consolidation | 3 | 1 |
| Disposals from scope of consolidation | -11 | 0 |
| Disposals due to mergers | -1 | 0 |
| Balance as of June 30, 2018 | 53 | 11 |
| Foreign companies | 36 | 6 |
KTM Industries AG – as the parent company of the KTM Industries Group – was not taken into account in this list.
The most significant change to the scope of consolidation concerns the disposal of the Pankl Group. KTM Industries AG sold all of its 98.2 % share in Pankl Racing Systems AG in June 2018. In the course of the sale, 10 fully consolidated companies of the Pankl Group were disposed of.
In the division of the consolidated income statement and the consolidated statement of comprehensive income into continued and discontinued operation, the continued operation of the KTM Industries Group has been shown in the manner in which it will continue in the long term. The following important points emerged as part of the division into continued and discontinued operation within the KTM Industries Group:
The consolidated statement of cash flows of the KTM Industries Group showed details of the discontinued operation using 'of-which' sub-items. The most important allocation theme was to demonstrate the cash flow from the sale of the Pankl Group. The cash addition was allocated to the discontinued operation, and is included in the 'of-which' sub-item of investment cash flow at €58.5 m.
The following assets and liabilities were disposed of:
| EURk | 06/30/2018 |
|---|---|
| Property, plant, and equipment | -106,526 |
| Goodwill | -22,152 |
| Intangible assets | -3,511 |
| Deferred tax assets | -3,712 |
| Other non-current assets | -1,583 |
| Non-current assets | -137,484 |
| Inventories | -66,981 |
| Trade receivables | -23,491 |
| Receivables and other assets | -11,208 |
| Cash and cash equivalents | -9,142 |
| Current assets | -110,822 |
| Assets | -248,306 |
| Financial liabilities | 97,702 |
| Liabilities for employee benefits | 1,865 |
| Deferred tax liabilities | 658 |
| Other non-current liabilities | 3,327 |
| Non-current liabilities | 103,552 |
| Financial liabilities | 15,301 |
| Trade payables | 12,489 |
| Provisions | 274 |
| Other current liabilities | 8,711 |
| Current liabilities | 36,775 |
| Liabilities | 140,327 |
| Non-controlling interests | 2,242 |
| Net assets disposed of | -105,737 |
| Sale price | 130,517 |
| Deconsolidation profit1 | 24,780 |
The cash inflow resulting from the sale was as follows:
| EURk | 06/30/2018 |
|---|---|
| Sale price | 130,517 |
| Cash disposed of | -9,142 |
| Settlement of perpetual bonds including interest | -62,877 |
| Net cash inflow from the sale | 58,498 |
1 Including reclassification of foreign currency effects of €1.4m from the statement of comprehensive income to the income statement, the total effect is € 26.2 m.
During the first half of the year, shares in KTM South East Europe S.A., Elefsina, Greece (until now a fully consolidated subsidiary) were sold off in full with effect from January 1, 2018. The company was deconsolidated and now operates as an importer. In addition, 100 % of shares in Fuhrmann Erodiertechnik GmbH were acquired with effect from January 2, 2018, and the initial consolidation of Fuhrmann Erodiertechnik GmbH also took place on January 2, 2018. The newly established KTM Beteiligungs GmbH in Mattighofen was also initially consolidated in the first half of 2018. Furthermore, KTM Innovation GmbH was newly established in March 2018, and was fully consolidated in the KTM Industries Group. K KraftFahrZeug Holding GmbH was merged with KTM Industries AG in the first half of 2018.
In early 2018, a joint venture was established with the partner CF-Moto under the name of 'Zhejiang CFMOTO-KTMR2R Motorcycles Co., Ltd.'. The production of mid-class motorcycles in the Chinese city of Hangzhou is planned from 2021 onwards.
KTM Industries AG consists of the segments KTM, KTM Components (formerly WP), PANKL and Others, and these are explained below:
The KTM Group engages in the development, production and sale of motorized vehicles for recreational purposes (power sports), in particular under the KTM and Husqvarna Motorcyles brands, and holds equity holdings in entities engaging in the development, production and sale of such equipment.
The KTM Components Group develops and produces performance-determining components for the motorcycle and sports car industry. The product range spans the categories of chassis (chassis suspension/frame) and engine components (exhaust system/radiator).
The Pankl Group is specialized in the production of high-strength lightweight components for special niche markets such as the international racing industry, the international luxury and high-performance street vehicle industry as well as the aviation industry. Pankl mainly concentrates on developing, improving and testing products. The Pankl Group was deconsolidated in June 2018. Consequently, earnings ratios are still retained in the first half of the year, and carrying amounts were disposed of on June 30, 2018.
The 'Others' segment represents KTM Industries AG, W Verwaltungs AG, KTM Technologies GmbH, KTM Innovation GmbH, and PF Beteiligungsverwaltungs GmbH. The deconsolidation profit resulting from the sale of the Pankl Group is included in the segment reporting in the 'Others' section. Segment information for the first half of 2018 and first half of 2017 can be divided into the described segments as follows:
| H1 2018 | KTM | KTM | PANKL | Other | Consolida | GROUP |
|---|---|---|---|---|---|---|
| €m | Components | tion | ||||
| Revenues (including revenues within the segments) | 713.7 | 93.6 | 110.2 | 10.7 | -106.3 | 821.8 |
| External revenues | 713.3 | 9.0 | 97.3 | 2.2 | 0.0 | 821.8 |
| Result from operating activities | 41.8 | 5.0 | 6.8 | 25.4 | -0.7 | 78.4 |
| Investments | 75.7 | 4.6 | 16.0 | 0.1 | -0.3 | 96.2 |
| Depreciation and amortization | 35.8 | 2.7 | 8.6 | 0.7 | 0.0 | 47.8 |
| Share in the result of companies accounted for using the equity method |
0.3 | 0.0 | 0.0 | 0.0 | -0.6 | -0.3 |
| Balance sheet total | 1,247.7 | 122.3 | 0.0 | 376.9 | -321.2 | 1,425.6 |
| Equity | 491.9 | 56.1 | 0.0 | 203.7 | -260.7 | 490.9 |
| H1 2017 €m |
KTM | KTM Components |
PANKL | Other | Consolida tion |
GROUP |
|---|---|---|---|---|---|---|
| Revenues (including revenues within the segments) | 654.5 | 85.7 | 100.3 | 3.9 | -85.6 | 758.8 |
| External revenues | 654.1 | 11.6 | 92.9 | 0.2 | 0.0 | 758.8 |
| Result from operating activities | 52.4 | 3.9 | 9.1 | 2.6 | -2.3 | 65.8 |
| Investments | 64.1 | 3.2 | 20.3 | 0.0 | 0.0 | 87.6 |
| Depreciation and amortization | 30.2 | 2.6 | 6.7 | 0.5 | 0.0 | 40.0 |
| Share in the result of companies accounted for using the equity method |
0.8 | 0.0 | 0.0 | 0.0 | -0.7 | 0.1 |
| Balance sheet total | 1,034.5 | 115.4 | 218.0 | 627.7 | -592.9 | 1,402.7 |
| Equity | 450.6 | 50.6 | 82.4 | 423.3 | -520.7 | 486.2 |
In the first half-year, Group revenue amounted to €821.8 m, equivalent to an increase of €63.0 m or 8.3 % compared to the same period last year. The KTM Group (+9.0 %), the KTM Components Group (+9.2 %)and the Pankl Group (+9.8 %) achieved growth in revenues. When adjusted for the Pankl Group, the continued operation of the KTM Industries Group achieved total revenue of €724.5 m (previous year: €665.9 m).
The Group EBIT increased in the first half of 2018 by 19.1 % compared with the previous year to €78.4 m, which equates to an EBIT margin of 9.5 % (previous year: 8.7 %). When adjusted for Pankl's operating result and effects of deconsolidation of €26.2 m (including foreign currency effects of €1.4 m, which were reclassified from the statement of comprehensive income to the income statement), the operating result for the continued operation of KTM Industries Group is €46.0 m (previous year: €57.3 m). The negative difference compared with the previous year resulted from budgeted series launches in the first half of 2018. The EBIT margin of the continued operation is 6.3 %.
The result for the period amounted to €52.7 m (up 27.3 % on the previous year). €30.0 m is attributed to the continued operation.
In addition to the redemption of 2 shares to streamline the existing company share capital, a share consolidation took place in the ratio 10:1. This reduced the number of shares issued from 225,386,742 to 22,538,674. The earnings per share were €1.49 in the first half of 2018 (previous year: €1.04). The previous year's figure was adjusted.
The cash flow hedge reserve decreased the equity during the reporting period by €1.5 m. Changes to the foreign currency translation reserve resulting from currency translation of -€0.9 m were also recorded. Of these, -€1.4 m concerned effects that were reclassified in the income statement as part of the disposal of Pankl. All values are inclusive of non-controlling interests.
The non-current assets reduced by around 10 % during the first half of the year, essentially as a result of the disposal of Pankl. The current assets increased overall by around 5 %, on the one hand due to the growth-related rise in inventory, trade receivables and the realized cash addition resulting from the sale of the Pankl Group, while on the other hand, the disposal of Pankl reduced the current assets.
During the first half of 2018, KTM AG placed a promissory note loan with an issuing volume of €135 m and a term of seven or ten years, which serves to finance the company's growth in the future. Despite the deconsolidation of Pankl Group, liabilities therefore remained the same overall as the previous year.
During the first six months, consolidated equity reduced by €37.6 m to 490.9 m dividend payments worth €18.6 m, and the return of perpetual bonds recognized in equity of €62.9 m including interest resulted in a reduction of equity. The deconsolidation of the Pankl Group reduced the minority shares by €2.2 m. On the other hand, the result for the period of €52.7 m boosted equity. As a result of the integration of the KTM Components-Group into the KTM AG, the equity holding share of the KTM Components-Group in the KTM Industries-Group reduced from 88.26 % to 51.62 %. Therefore the non-controlling interests increased around €19 m, the controlling interests decreased accordingly. The equity ratio was 34.4 % (December 31, 2017: 36.1 %) on the reporting date.
Taking into account the explained effects, the balance sheet total of KTM Industries Group decreased by 2.7 % compared with the consolidated financial statements as at December 31, 2017.
At the end of the reporting period on December 31, 2017, property, plant and equipment amounting to €92.6 m were secured by pledge agreements recorded in the land register and duly filed, above all for liabilities owed to credit institutions. €30.7 m of this amount was attributed to the Pankl Group, which is no longer relevant in the KTM Industries Group as at the reporting date of June 30, 2018 in view of the sale of Pankl Racing Systems AG . As of June 30, 2018 there have been no further material changes compared with December 31, 2017.
During the first six months, the level of liquid funds in the Group fell by €25.4 m to €143.7 m. The change comprised the cash flow from operating activities of -€49.6 m, the cash flow from investing activity of -€38.6 m, and the cash flow from financing activity of €62.8 m.
The negative cash flow from operating activities is essentially attributable to the seasonal increase in net current assets. The investment cash flow remained over the previous year's level due to the sale of Pankl and the resulting cash inflow of €58.5 m. The positive cash flow from financing activity resulted primarily from the taking out of a promissory note loan of €135.0 m.
The measurement categories of IFRS 9 were used to classify and measure the assets side. The fair value of a financial instrument is determined by
means of quoted market prices for identical instruments in active markets (Level 1). If no quoted market prices in active markets are available for the instrument, the fair value is determined by means of measurement techniques for which the material inputs are based exclusively on observable market data (Level 2). In all other cases, the fair value is determined on the basis of measurement techniques for which at least one input is not based on observable market data (Level 3). The table below shows the carrying amounts and fair values of financial assets (financial instruments shown on the assets side), broken down by class and IFRS 9 measurement category. However, it does not provide any information in relation to financial assets not measured at fair value where the carrying amount is a reasonable approximation of fair value.
| Carrying amount 06/30/2018 |
Categories of IFRS 9 |
Fair value June 06/30/2018 |
|
|---|---|---|---|
| €m | |||
| Financial assets measured at fair value | |||
| Other current assets - | 2.6 | FVPL | 2.6 |
| Derivatives with positive market value that have already been assigned to receivables | |||
| Other current assets - | 4.8 | FVOCI | 4.8 |
| Derivatives with positive market value (cash flow hedge) | |||
| Other non-current financial assets | 0.2 | FV OCI* | - |
| Total | 7.6 | ||
| Financial assets not measured at fair value | |||
| Cash and cash equivalents | 143.7 | AC | - |
| Trade receivables | 156.1 | AC | - |
| Other financial assets | 72.4 | AC | - |
| Total | 372.1 | ||
| Overall total | 379.7 | ||
| Carrying amount | Categories of | Fair value | |
| 12/31/2017 | IFRS 9 | 12/31/ 2017 | |
| €m | |||
| Financial assets measured at fair value | |||
| Other current assets - | 4.2 | FVPL | 4.2 |
| Derivatives with positive market value that have already been assigned to receivables | |||
| Other current assets - | 7.5 | FVOCI | 7.5 |
| Derivatives with positive market value (cash flow hedge) | |||
| Other non-current financial assets | |||
| 0.2 | FVOCI | - | |
| Total | 11.8 | ||
| Financial assets not measured at fair value | |||
| Cash and cash equivalents | 169.1 | AC | - |
| Trade receivables | 120.3 | AC | - |
| Other financial assets | 43.7 | AC | - |
| Total | 333.0 | ||
| Overall total | 344.8 |
| Abbreviations: | ||
|---|---|---|
| AC | Amortized Cost | at amortized cost |
| FVPL | Fair Value through Profit and Loss | at fair value in the result for the period |
| FVOCI | Fair Value through OCI | at fair value in other comprehensive income |
| FV OCI* | Fair Value through OCI (without recycling) | at fair value in other comprehensive income (without recycling) |
means of quoted market prices for identical instruments in active markets (Level 1). If no quoted market prices in active markets are available for the instrument, the fair value is determined by means of measurement techniques for which the material inputs are based exclusively on observable market data (Level 2). In all other cases, the
| Carrying amount 06/30/2018 | Fair value | ||||||
|---|---|---|---|---|---|---|---|
| FVPL Fair Value through P&L |
FVOCI Fair Value through OCI (without recy cling) |
FVOCI Fair Value through OCI |
AC Amortized Cost |
Total | Level 3 | Level 2 | Level 1 |
| 2.6 | - | - | - | 2.6 | - | 2.6 | - |
| - | - | 4.8 | - | 4.8 | - | 4.8 | - |
| - | 0.2 | - | - | - | - | - | - |
| - | - | - | - | ||||
| - | - | 143.7 | - | - | - | - | |
| - | - | 156.1 | - | - | - | - | |
| - | - | 72.4 | - | - | - | - |
| Fair value | Carrying amount 12/31/2017 (IAS 39) | ||||||
|---|---|---|---|---|---|---|---|
| Fair value 12/31/ 2017 |
Level 1 | Level 2 | Level 3 | Total | Fair value - hedging instruments |
Available for sale |
Loans and Held for trading receivables |
| 4.2 | - | 4.2 | - | 4.2 | 4.2 | - | - - |
| 7.5 | - | 7.5 | - | 7.5 | 7.5 | - | - - |
| - | - | - | - | - | - | 0.2 | - - |
| - | - | - - |
|||||
| - | - | - | - | - | - | - | 169.1 - |
| - | - | - | - | - | - | - | 120.3 - |
| - | - | - | - | - | - | - | 43.7 |
The table below shows the carrying amounts and fair values of financial liabilities (financial instruments shown on the liabilities side), broken down by class and IFRS 9 measurement category. However, it does not provide any information in relation to financial liabilities not measured at fair value where the carrying amount is a reasonable approximation of fair value.
| Carrying amount 06/30/2018 |
Categories of IFRS 9 |
Fair value 06/30/2018 |
|
|---|---|---|---|
| €m | |||
| Financial liabilities measured at fair value Other financial liabilities - |
0.4 | FVPL | 0.4 |
| Derivatives with negative market value that have already been assigned to receivables | |||
| Other financial liabilities - derivatives with negative market value (cash flow hedge) |
1.9 | FVOCI | 1.9 |
| Total | 2.3 | ||
| Financial liabilities not measured at fair value | |||
| Interest-bearing liabilities | 460.1 | AC | 473.4 |
| Bonds | 57.8 | AC | 58.4 |
| Liabilities under finance leases | 8.7 | AC | - |
| Trade payables | 209.9 | AC | - |
| Other financial liabilities (current and non-current) | 48.1 | AC | - |
| Total | 784.7 | ||
| Overall total | 787.0 | ||
| Carrying amount 12/31/2017 |
Categories of IFRS 9 |
Fair value 12/31/2017 |
|
| €m | |||
| Financial liabilities measured at fair value | |||
| Other financial liabilities - | 0.1 | FVPL | 0.1 |
| Derivatives with negative market value that have already been assigned to receivables | |||
| Other financial liabilities - derivatives with negative market value (cash flow hedge) |
2.3 | FVOCI | 1.9 |
| Total | 2.4 | ||
| Financial liabilities not measured at fair value | |||
| Interest-bearing liabilities | 483.2 | AC | 502.2 |
| Bonds | 57.7 | AC | 59.5 |
| Liabilities under finance leases | 3.1 | AC | - |
| Trade payables | 178.5 | AC | - |
| Other financial liabilities (current and non-current) Total |
56.4 778.9 |
AC | - |
| Carrying amount 06/30/2018 | Fair value | |||||||
|---|---|---|---|---|---|---|---|---|
| FVPL Fair Value through P&L |
FVOCI Fair Value through OCI (without recycling) |
FVOCI Fair Value through OCI |
AC Amortized Cost |
Total | Level 3 | Level 2 | Level 1 | |
| 0.4 | - | - | - | 0.4 | - | 0.4 | - | |
| - | 1.9 | - | 1.9 | - | 1.9 | - | ||
| - | - | - | ||||||
| - | - | 460.1 | 473.4 | 473.4 | - | - | ||
| - | - | 57.8 | - | - | - | 58.4 | ||
| - | - | 8.7 | - | - | - | - | ||
| - | - | 209.9 | - | - | - | - | ||
| - | - | 48.1 | - | - | - | - |
| Carrying amount 12/31/2017 (IAS 39) | Fair value | ||||||
|---|---|---|---|---|---|---|---|
| At amortized Other cost |
Held for trading |
Fair value - hedging instruments |
Total | Level 3 | Level 2 | Level 1 | |
| - | - | 0.1 | 0.1 | - | 0.1 | - | |
| - | - | 2.3 | 1.9 | - | 1.9 | - | |
| - | - | - | |||||
| 483.2 | - | - | 502.2 | 502.2 | - | - | |
| 57.7 | - | - | 59.5 | - | - | 59.5 | |
| 3.1 | - | - | - | - | - | - | |
| 178.5 | - | - | - | - | - | - | |
| 56.4 | - | - | - | - | - | - |
Please refer to the consolidated financial statements of KTM Industries as of December 31, 2017 Point 44 (Classification and Fair Value) in relation to valuation technique.
In January 2018, KTM Industries AG sold its 75.9 % share in W Verwaltungs AG internally to KTM AG. As a result of these transactions, the equity holding share within KTM Industries Group in W Verwaltungs AG reduced from the previous figure of 88.26 % (75.9 % directly, 24 % indirectly via KTM AG) to 51.62 %.
In June 2018, KTM Industries AG sold all of its 98.2 % share in Pankl Racing Systems AG to the Pierer Industrie AG Group. This sale laid the strategic and financial basis for an even greater focus in the KTM Industries Group on the two-wheel industry, particularly the development of e-mobility, over the next few years. The purchase price was €130.5 m and therefore corresponds to the price that the shareholders of Pankl Racing Systems AG were offered as part of the public takeover bid up to March 2018. The subordinated 5 % perpetual bond of €60.0 m subscribed to by Pierer Industrie AG in the 2016 financial year was set off against the sale price, including interest incurred of €2.9 m, as part of the sale of the Pankl Group.
The Pankl Group acts as a supplier of purchased parts for the KTM Group. Due to the disposal of Pankl, trade payables in respect of the Pankl Group of €1.1 m now exist as at June 30, 2018. The previous year's values were eliminated from the KTM Industries Group as part of the debt consolidation. From June 30, 2018, the Pankl Group forms part of the Pierer Industrie Group, and is therefore a related party in accordance with IAS 24 as far as the KTM Industries Group is concerned.
All products and services rendered and received from related companies and individuals as stated in the consolidated financial statements as of December 31, 2017 are carried out at arm's length. As of Saturday, June 30, 2018 there have been no material changes.
There have been no events since June 30, 2018 that require inclusion in the reporting.
We confirm to the best of our knowledge that the condensed consolidated interim financial statements created in line with the applicable accounting standards give a true and fair view of the assets, liabilities, financial position and profit or loss of the KTM Industries Group and that the interim Group management report gives a true and fair view of important events that have occurred during the first six months of the financial year and their impact on the condensed consolidated interim financial statements, of the principal risks and uncertainties for the remaining six months of the financial year and of the major related party transactions to be disclosed.
Wels, August 27, 2018 The Executive Board of KTM Industries AG
Stefan Pierer, CEO Friedrich Roithner, CFO Hubert Trunkenpolz Harald Plöckinger
| January 28, 2019 | Announcement of preliminary annual results 2018 |
|---|---|
| March 22, 2019 | Publication of annual financial statements 2018 |
| April 15, 2019 | Record date annual general meeting |
| April 25, 2019 | 22st annual general meeting |
| May 2, 2019 | Ex-dividend day |
| May 3, 2019 | Record date dividends |
| May 6,2019 | Dividend payment day |
| August 26, 2019 | Report on the 1st half year 2019 |
| Investor Relations Michaela Friepess |
|---|
| Phone +43 7242 69 402 |
| Fax +43 7242 69 402 109 |
| e-mail [email protected] |
| ISIN Code AT0000KTMI02 | |
|---|---|
| Valor number (Switzerland) 41860974 | |
| Share category no-bar value bearer shares | |
| Share capital EUR 22,538,674 devided into 22,538,674 shares | |
| Number of listed shares 22,538,674 shares | |
| Authorized capital up to 11,269,337 shares | |
| Free Float approx. 38 Percent | |
| Securities Symbol KTMI | |
| Symbol Reuters KTMI:VI | |
| Symbol Bloomberg KTMI: AV | |
| Stock Listing: SIX Swiss Exchange, International Reporting Standard, |
Vienna Stock Exchange, Official Market
Owner and publisher KTM Industries AG Edisonstrasse 1 4600 Wels, Austria FN 78112 x / Wels Provincial and Commercial Court
Concept and design: Grafik-Buero Elena Gratzer, 4615 Holzhausen, www.grafik-buero.at Photos: KTM archive, Husqvarna archive, Pankl archive, WP archive, Adobe Stock © C. Schüßler, Grafik-Buero Elena Gratzer
The present annual report has been prepared with the utmost care and the correctness of the data was checked. Nevertheless, slight differences in the calculations may arise as result of the summation of rounded amounts and percentages, and typographical and printing errors cannot be ruled out.
References to persons such as "employees" or "staff members" are intended to be gender-neutral and insofar as the contrary appears this is solely for purposes of legibility.
This report and the forward-looking statements it contains were prepared on the basis of all the data and information available at the time of going to press. However, we are must point out that various factors may cause the actual results to deviate from the forward-looking statements given in the report.
This annual report is published in German and English. In the event of ambiguity, the German version shall take precedence.
Edisonstraße 1, 4600 Wels Telefon: +43 (0)7242 / 69402 Fax: +43 (0)7242 / 69402 / 109 [email protected] www.ktm-industries.com
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