Creditor Relations

Financing principles

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.

Financial position

The net financial debt in the Vossloh Group was significantly reduced from €218.6 million at the end of 2015 to €83.9 million was of December 31, 2016. The decrease was primarily attributable to the net cash inflow of €123.1 million from the capital increase in June 2016. The positive free cash flow of €25.2 million also contributed towards reducing net financial debt. Financial liabilities totaled €255.6 million as of December 31, 2016 and were therefore below the level of the balance sheet date of the previous year of €279.1 million. The total of cash and cash equivalents and short-term securities amounted to €171.7 million at the end of 2016 and was therefore substantially higher than in the prior year (€60.5 million). A significant portion of the high level of cash and cash equivalents was used for the acquisition of Rocla at the beginning of 2017.

Current financial liabilities of the Vossloh Group were at a very low level of €8.7 million at the end of 2016 and were therefore significantly lower than the corresponding prior-year level of €25.6 million. In 2015 Vossloh AG secured the medium-term financing of the Group with the concluding of a syndicated loan of €500 million.

Breakdown of financial liabilities

€ million20162015*
Other long-term liabilities to banks246.9253.5
Noncurrent finance leases0.00.0
Non-current financial liabilities246.9253.5
Short-term liabilities to banks8.124.6
Interest payable0.61.0
Current notes payable0.00.0
Current finance leases0.00.0
Current financial liabilities8.725.6
Financial liabilities255.6279.1

* Prior-year figures presented for comparative purposes (see page 78 of the 2016 Annual Report).

Financial debts are principally carried at amortized cost.

In spring 2015, a syndicated loan of €500 million with a term of three years was concluded between Vossloh AG and eleven banks. The loan has two tranches: €200 million are available in the form of a bullet loan (€100 million cancelled by voluntary prepayment in March 2017), €300 million in the form of a revolving credit line, i.e. a flexibly available credit line. The interest rate is dependent on the amount of specific indicators known as covenants; at the end of 2016 it was 1.25 percent. At the same time, a breach of the thresholds defined in these covenants leads to an early right of cancellation on the part of the lending banks. The covenants are defined as the ratio of net financial debt to EBITDA, the ratio of EBITDA to the net interest result, and the equity ratio. Compliance with the covenants was reviewed every quarter; they were complied with in the entire reporting year as well as in the previous year from the beginning of the reviews.

In July 2017, Vossloh AG successfully issued a Schuldschein loan of €250 million in four tranches. The tranches of the Schuldschein loan with maturity terms of four and seven years bear partly fixed and partly floating interest rates and comprise volumes of €135 million for four years and €115 million for seven years. Thereby, a first milestone of the medium- and long-term Group refinancing was achieved. The cash inflow was used for repayment of the remaining €100 million bullet loan and for partial reduction of the revolving credit line (see above). Under the revolving credit line now some €150 million are still available.

For the reconciliation of the financial liabilities to the IAS 39 valuation categories, see pages 104 ff. of the 2016 Annual Report, “Additional information on financial instruments”.

Covenants exist for two US Group companies in connection with bank credit lines, which as of the balance sheet date were not utilized.