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. Financing and the provision of liquidity of the group of companies typically take place centrally through Vossloh AG as the 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. Vossloh only uses derivative financial instruments to hedge specific risks from existing or expected future underlying transactions.
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 had been in place since 2015 and was scheduled to expire in April 2018. The financing agreement has a term until November 2023 and, after the exercise of the first extension option in November 2018, still contains one option to extend the credit period by one year, which can be exercised in November 2019. 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. Compliance with a covenant in the form of a ratio of net financial debt to EBITDA was agreed here. 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 the key figure in question determines the interest (basis points above Euribor). This was at the end of the 2018 fiscal year 1.2 percent. As at the end of the 2018 fiscal year, €56.2 million of the credit line had been utilized (previous year: €0.0 million). Compliance with the covenant is checked every six months; this was the case in 2018.
The Vossloh Group’s net financial debt increased substantially from €207.7 million at the end of 2017 to €307.3 million at the end of the 2018 fiscal year. The main drivers of this increase were the acquisitions of the Australian concrete tie manufacturer Austrak Pty Ltd. and the rail milling business of STRABAG Rail GmbH. The increase can also be attributed to dividend distributions, interest payments and negative free cash flow in 2018. Financial liabilities amounted to €356.5 million at the end of the 2018 fiscal year, and were thus higher than the corresponding figure for the previous year of €304.5 million. The total sum of cash, cash equivalents and short-term securities at the end of 2018 amounted to €49.2 million (previous year: €96.8 million).
Current financial liabilities totaled €88.6 million at the end of 2018, and were thus higher than the previous year‘s value of €55.7 million. The increase can primarily be attributed to the acquisitions of Austrak Pty Ltd. and the rail milling business of STRABAG Rail GmbH during the 2018 fiscal year, which were financed with the funds available from the syndicated loan. The scheduled repayment of the €50 million Schuldschein loan from 2013, which was also refinanced from utilizations of the syndicated loan, was carried out as well.
Breakdown of financial liabilities
|Other long-term liabilities to banks||263.7||248.8|
|Noncurrent finance leases||4.2||0.0|
|Non-current financial liabilities||267.9||248.8|
|Short-term liabilities to banks||86.3||54.1|
|Current finance leases||0.8||0.0|
|Current financial liabilities||88.6||55.7|
Financial debts are principally carried at amortized cost.
For the reconciliation of the financial liabilities to the IFRS 9 valuation categories, see page 104 et seq. of the 2018 Annual Report, “First-time application of standards and interpretations”.
At a US Group company, there are covenants related to a bank line that could be used for project-related guarantees. In this context, the necessary covenants were fulfilled at all times.