Conservative financing structures constitute the central and basic idea of Vossloh's financing strategies. In the management of its capital structure, Vossloh focuses on the key data for companies with an investment grade rating. The financing of a group of companies generally takes place through Vossloh AG as a group holding company. High creditworthiness of contracting parties plays just as significant a role as our commitment to building and maintaining long-term relationships with our lending partners. Derivative financial instruments are exclusively used for hedging existing or foreseeable underlying transactions.
The Vossloh Group’s net financial debt has risen from its low level of €85.0 million at the end of 2016 to €207.7 million at the end of the 2017 fiscal year. The increase was mainly due to the use of cash and cash equivalents from the capital increase in the previous year for the acquisition of the Tie Technologies business unit in January 2017 reported at the end of 2016. In addition, the negative free cash flow of €(22.3) million in 2017 also had an increasing effect on net financial debt. The cash inflow from the sale of the former Electrical Systems business unit at the beginning of 2017 had a reducing effect. The total of cash and cash equivalents and short-term securities amounted to €96.8 million at the end of 2017 and was therefore substantially lower than in the previous year (€170.5 million). Financial liabilities amounted to €304.5 million as of December 31, 2017 and were therefore above the previous year’s figure of €255.6 million.
In July 2017, Schuldschein loans with terms of four years amounting to €135 million and seven years amounting to €115 million were issued by Vossloh AG. The agreed interest rate is fixed at 0.988 percent for the four-year maturities for an amount of €85 million, and variable at an amount of €50 million with a margin of 85 basis points above Euribor. For the seven-year maturities, a partial amount of €90 million has a fixed interest rate of 1.763 percent and the remaining amount of €25 million, 120 basis points above Euribor. A floor of 0.0 percent is respectively applicable to the reference value.
At the end of November 2017, Vossloh AG concluded a new €150 million syndicated loan with eight banks, thus completely replacing the syndicated loan, which has existed since 2015 and was scheduled to expire in April 2018. The financing agreement has a term of five years until November 2022 and contains two options to extend the credit period by one year each. These options can be exercised at the end of the first and second years of the term. In addition, the volume of the loan can be increased if needed by up to €150 million. The funds are available to the Company in the form of a revolving line of credit that can be flexibly accessed. The ratio of net financial debt to EBITDA was agreed as a covenant. If the agreed threshold of this key figure is breached, this will allow the lending banks to terminate the agreement ahead of time. At the same time, the amount of this ratio determines the interest (basis points above Euribor). This would currently be 1.0 percent. As at the end of the 2017 fiscal year, however, the credit line had not been utilized. Compliance with the covenant must be proven every six months.
Current financial liabilities amounted to €55.7 million as of December 31, 2017 and were thereby significantly higher than the corresponding figure for the previous year of €8.7 million. The increase resulted from the Schuldschein loan from 2013 with a volume of €50 million, which was reclassified from noncurrent to current financial liabilities at the end of the 2017 fiscal year due to its maturity in the fourth quarter of 2018.
Breakdown of financial liabilities
|Other long-term liabilities to banks||248.8||246.9|
|Noncurrent finance leases||0.0||0.0|
|Non-current financial liabilities||248.8||246.9|
|Short-term liabilities to banks||54.1||8.1|
|Current finance leases||0.0||0.0|
|Current financial liabilities||55.7||8.7|
* Prior-year figures presented for comparative purposes (see page 106 of the 2017 Annual Report).
Financial debts are principally carried at amortized cost.
For the reconciliation of the financial liabilities to the IAS 39 valuation categories, see page 128 et seq. of the 2017 Annual Report, “Additional information on financial instruments”.
At a U.S. Group company, there are certain restrictions on individual transactions related to a bank line that were met at all times.