S TAT E M E N T S
H1 2015
FOR THE FIRST HALF YEAR FROM
JANUARY 1 TO JUNE 30, 2015
O F K T M A G , M AT T I G H O F E N
1
KTM OVERVIEW
in million EUR
1)
Working Capital = Trade receivables + inventories - trade payables
2)
Net financial debt = Financial liabilities (current, non-current) - cash and cash equivalents - financing receivables
3)
Gearing = Net financial debt / equity including non-controlling interests
4)
Employees including temporary staff and external employees
2
TA B L E O F C O N T E N T S
3
I N T E R I M C O N S O L I D AT E D
M A N A G E M E N T R E P O RT
FOR THE 1. HALF YEAR 2015
(CONDENSED)
At the beginning of April, Red Bull KTM factory driver Ryan Dungey won the first
(1) Economic Environment 450 Supercross world championship title for the Red Bull KTM factory team in the
14th round of the Monster Energy Supercross world championship in Houston.
According to the International Monetary Fund (IMF) as of July 2015 the global
economic growth will grow further in 2015 by 3.3 %, whereas the prognosis as of In May KTM presented the models of the new motocross generation 2016, developed
April 2015 showed a growth of 3.5%. For advanced economies, a growth of 2.1 % with a lot of experience, work, information, tests, and research and development.
is projected for the current year and 2.4% for the next year. For the Euro area, a
development of 1.5 % is projected for 2015. For the year 2016, the IMF anticipates In the first half year of 2015 KTM started to build a new motorsports building in
a global economic growth of 3.8 % and for the Euro area a growth of 1.7 %. Munderfing with planned investments of EUR 13.2 million.
For emerging markets and developing economies, a growth in economic output of The construction of a new logistics center in Munderfing, with investments
4.2 % is projected for the year 2015 and a growth of 4.7 % for the year 2016. For amounting to approximately EUR 30 million, will be completed soon.
China, a growth rate of 6.8 % for the year 2015 and 6.3 % for the year 2016 is pro-
jected, as the prognosis in April already stated. The highest growth rate is expected
for China, with 7.5 % for the current and for the next year.
Compared to prior year, the overall European market1 increased by 9.6 % to approx-
(2) Business development and highlights imately 304,000 vehicles registered in the first half year of 2015. This increase is
primarily due to the upward trend in the largest European markets such as Germany
In the first half year of 2015 KTM reported consolidated revenues amounting to EUR (+8 %), the United Kingdom (+22 %) and Spain (+20 %). Registrations of KTM
515.1 million. Therefore, an increase of 25.5 % compared to same period in prior motorcycles in the overall European market could be increased to 8.1 % (+5 %
year could be achieved. Taking into account the 200 Duke, 390 Duke, RC 200 and compared to prior year).
RC 390 sold by our partner Bajaj in India 88,531 KTM motorcycles were sold world-
wide in the first half year of 2015 (+25.6 % compared to prior year). In the first six In the overall US market2 registrations increased, compared to prior year by 5.7 % to
months of 2015 KTM showed an EBITDA of EUR 70.2 million (+34.0 % compared to approximately 236,000 vehicles registered in the first half year of 2015. KTM succeed-
prior year) and an EBIT of EUR 50.3 million (+49.7 % compared to prior year). Net ed in increasing its share in the overall US market by 5.7 % to 4.6 %.
result could be increased from EUR 26.2 million in prior year to EUR 33.3 million in
the first half year of 2015.
The implementation of the global product strategy as well as the expansion into
further Asian and South American markets has been consistently pursued in the (4) Development of sales
first quarter of 2015.
In the first half year of 2015 KTM sold 70,491 Fullsize3 motorcycles (+10,896
In March 2015, the prolongation of the contracts of the Executive Board until motorcycles compared to prior year) out of which 24,336 motorcycles (+2,993
February 29, 2020 has been decided. motorcycles compared to prior year) were sold in the offroad division and 46,155
motorcycles (+7,903 motorcycles compared to prior year) in the street division.
Since the integration of the brand Husqvarna, KTM AG follows a two brand strategy Sales units of Sportminicycles decreased to 3,139 motorcycles (-1,361 motorcycles
for KTM and Husqvarna. Therefore, the sales organization has been realigned. compared to prior year). In the first six months of 2015 KTM sold 18 X-Bows (-15
As the final step of this reorganization, the Supervisory Board concluded in the X-Bows compared to prior year).
meeting in March 2015 to merge KTM Motorrad AG into the listed KTM AG.
By region, sales in North America (USA and Canada), our largest single market,
In the racing division, KTM factory rider Marc Coma celebrated his fifth title in increased to 12,740 vehicles (+3,847 vehicles compared to prior year).
the Dakar championship. This is the 14th consecutive title for KTM in the worlds
toughest rally.
1)
Motorcycles >120 ccm, excluding Motocross, Scooters and ATVs
2)
Motorcycles >120 ccm, including Motocross, excluding Scooters and ATVs
3)
Motorcycles >120 ccm
4
(5) Development of revenue (6) KTM Share
In the offroad division, revenue rose to EUR 143.1 million (+26.1 % compared to The KTM share showed a downward trend in the first half year of 2015 closing at
prior year). Revenue of Sportminicycles decreased to EUR 9.9 million compared EUR 107.95 on the last trading day (June 30, 2015). Compared to prior year balance
to prior year (-23.7 % compared to prior year). sheet date the share price rose from EUR 135 by 20.0 %. The highest closing price in
a period of six months was EUR 138.40 and the lowest closing price was EUR 104.50.
In the street division, revenue increased to EUR 278.5 million (+34.1 % compared As of June 30, 2015 the market capitalization for 10,845,000 shares admitted for
to prior year). trading amounted to EUR 1,170.7 million.
Contact: Viktor Sigl / Tel.: +43 7742 6000 144 / E-mail: ir@ktm.com
The 27th Annual General Meeting of the shareholders of KTM AG took place on
April 23, 2015 in Mattighofen.
For the business year 2014, the Annual General Meeting decided to distribute a
dividend amounting to 1.50 EUR (prior year: 1.00 EUR) per share.
The members of the Supervisory Board and the Executive Board were discharged.
No changes were made to the composition of the Executive Board and the
Supervisory Board.
16.2%
PG&A
0.2% 18.5%
X-Bow Rest of the world
1.9%
Sportminicycles
27.8% 55.4%
Offroad Europe
53.9% 26.1%
Street North America
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(8) Risk report (11) Outlook
The risk report is provided in the consolidated financial statements as of The global product strategy continues to be implemented as a result of planned
December 31, 2014. Since then, there have been no material changes in expansions and is leading to strong rates of revenue and sales growth for the
the evaluation of risks. business year.
The investment volume planned for 2015 continues on a high level. Investments
(9) Related party disclosures will continue to focus in particular on new series development projects along with
infrastructure and development investments in motorsport and logistics. The com-
All products and services rendered and received from related companies and pletion of the construction of the logistics center in Munderfing will be completed
individuals as stated in the consolidated financial statements as of December in the third quarter. Production capacities at the main plant in Mattighofen will
31, 2014 are carried out at arms lengths. In the first half year of 2015 there have also continue to be expanded. The KTM Groups liquidity and financing situation is
been no material changes regarding transaction partner, volume and nature of the marked by long-term loans and a varied portfolio of different financing instruments
business realtionship. with various counterparties. Sufficient liquidity reserves for the planned growth are
thus available.
There have been no reportable events after June 30, 2015. Chairman of the Executive Board: DI Stefan Pierer e.h.
DEVELOPEMENT OF THE KTM SHARES IN THE FIRST HY OF 2015 SHAREHOLDER STRUCTURE BY SHAREHOLDER RIGHTS (BY SHARE CAPITAL)
<1,0%
Freefloat and others
130%
120%
110% 51,2%
CROSS Industries AG
100 100%
90% 48,0%
Bajaj Auto
International
80% Holdings B.V.
76
70%
7
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
8
CONSOLIDATED STATEMENT OF CASH FLOWS
9
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
in million EUR Attributable to the owners of the parent company Non- Total
Share Reserves Cash flow Foreign Total controlling consolidated
capital including hedge currency interests equity
retained reserve translation
earnings reserve
Balance as of January 1, 2015 10.8 319.4 -3.6 0.4 327.1 0.5 327.6
Currency translation 0.0 0.0 0.0 1.2 1.2 0.0 1.2
Financial instruments 0.0 0.0 0.5 0.0 0.5 0.0 0.5
Other comprehensive income 0.0 0.0 0.5 1.2 1.7 0.0 1.7
Profit of the reporting period 0.0 33.2 0.0 0.0 33.2 0.1 33.3
Total comprehensive income 0.0 33.2 0.5 1.2 34.9 0.1 35.0
Dividend 0.0 -16.3 0.0 0.0 -16.3 0.0 -16.3
Balance as of June 30, 2015 10.8 336.4 -3.1 1.6 345.7 0.6 346.3
in million EUR Attributable to the owners of the parent company Non- Total
Share Reserves Cash flow Foreign Total controlling consolidated
capital including hedge currency interests equity
retained reserve translation
earnings reserve
Balance as of January 1, 2014 10.8 275.0 -2.5 -0.9 282.5 0.4 282.8
Currency translation 0.0 0.0 0.0 0.1 0.1 0.0 0.1
Financial instruments 0.0 0.0 0.6 0.0 0.6 0.0 0.6
Other comprehensive income 0.0 0.0 0.6 0.1 0.7 0.0 0.7
Profit of the reporting period 0.0 26.1 0.0 0.0 26.1 0.1 26.3
Total comprehensive income 0.0 26.1 0.6 0.1 26.8 0.1 26.9
Dividend 0.0 -10.8 0.0 0.0 -10.8 0.0 -10.8
Balance as of June 30, 2014 10.8 290.3 -1.9 -0.8 298.4 0.5 298.9
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NOTES TO THE INTERIM
C O N S O L I D AT E D F I N A N C I A L
S TAT E M E N T S
FOR THE 1. HALF YEAR 2015 (CONDENSED)
The accounting and valuation methods used for the consolidated financial statements
(1) The Company as of December 31, 2014 were applied unchanged, in principle, except the change in
presentation as described below. Further information regarding the accounting and
KTM AG has its registered office in Stallhofnerstrasse 3, 5230 Mattighofen, Austria, valuation methods are explained in the notes to the consolidated financial statements
and has been recorded in the commercial register at the Provincial Court as Commer- for the financial year 2014. The accounting and valuation methods applied therein
cial Court of Ried im Innkreis under file number FN 107673 v. constitute the basis for the present interim consolidated financial statements for the
first half year of 2015.
KTM AG engages in the development, production and distribution of motorized
vehicles for recreational purposes (power sports), in particular under the KTM In the consolidated statement of profit or loss of 2015, the depreciation of the cap-
and Husqvarna brands, and in the acquisition and holding of stakes in entities italized development costs is shown under cost of sales instead of research and
engaging in the development, production and distribution of such equipment. As development expenses, as they were shown so far. The prior year figures are adopted
of June 30, 2015, the KTM Group comprised 39 subsidiaries, located in Austria, accordingly und therefore cost of sales increased whereas research and development
Switzerland, the U.S., Japan, South Africa, Mexico and India as well as in various expenses decreased by EUR 10.3 million.
other European countries, which are included within the consolidated financial
statements. Furthermore, the KTM Group has equity holdings in general importers Otherwise, there were no changes in accounting and valuation methods.
that are based in important distribution markets (New Zealand and Dubai)
as well as in various flagship stores in Austria and Germany. The accounting principles of the companies included in the condensed interim consol-
idated financial statements are based on standardized accounting principles. These
Significant sales markets include the U.S., Germany, Australia, France, Malaysia, principles were fully applied by all consolidated companies.
Italy, the United Kingdom, Austria, Spain, and Canada as well as other European
countries. All further new or amended standards and interpretations that are effective in the
European Union from January 1, 2015 have no significant impact on the consolidated
interim financial statements of KTM AG.
(2) Principles of financial reporting IAS 19 Employee Contributions: Clarification of the allocation of employee contri-
butions or contributions from third parties that are linked to the period of service,
The interim financial statements of KTM AG as of June 30, 2015 were prepared in ac- as well as the creation of a facilitation, if the amount of the contributions is
cordance with the International Financial Reporting Standards (IFRS) as adopted by the depending on the years of service.
EU considering IAS 34 Interim Financial Reporting. The interim consolidated financial
statements were neither audited nor reviewed by a certified public accountant. A nnual Improvements 2010-2012: Changes and clarifications of several IFRS.
The condensed interim consolidated financial statements do not include all the informa- A nnual Improvements 2011-2013: Changes and clarifications of several IFRS.
tion and disclosures required in the annual financial statements, and should be read in
conjunction with the consolidated financial statements as of December 31, 2014.
The figures in the interim consolidated financial statements are reported in the func-
tional currency of the parent, the Euro. Unless deviations are indicated specifically, all
amounts are rounded to 1,000,000 euros (EUR million), which may give rise to rounding
differences.
Slight differences in totals from adding up rounded amounts and percentages cannot
be excluded due to automated calculation tools.
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(3) Scope of consolidation (6) Notes to the consolidated statement of profit or loss
All material subsidiaries under the legal or factual control of KTM AG have been Revenue increased, compared to prior year, by EUR 104.8 million to EUR 515.1
included in the interim consolidated financial statements of KTM AG for the first million (+ 25.5 %).
half year of 2015. Apart from the parent, 39 entities (of which 33 are foreign
entities and six are domestic entities) are therefore included by full consolidation In the first half year of 2015 gross profit rose by 30.3 % to EUR 151.7 million
in the KTM Group. compared to prior year due to an increased business volume resulting in a gross
margin ratio of 29.5 %.
The following table shows the scope of consolidation as of June 30, 2015:
Selling and racing expenses increased by EUR 11.8 million to EUR 67.3 million
Full consolidation At-equity consolidation
(+ 21.3%) compared to prior year.
As of January 1, 2015 39 3
Additions 2 0
Overhead expenses increased in total from EUR 82.8 million in the prior year to
Disposals 2 0
EUR 101.4 million (+22.5 %).
As of June 30, 2015 39 3
The result from operating activities increased to EUR 50.3 million (+ EUR
Husqvarna Motorsports, Inc., Murrieta, US, and Husqvarna Motorcycles SA Pty 16.7 million compared to prior year) due to a positive development of sales and
Ltd, Northriding, South Africa, have been founded in the first half year of 2015 revenue in the first half year of 2015. An EBIT margin of 9.8% (8.2% in prior
and are therefore included in the consolidation scope for the first time. year) could be recorded.
In the first half year 2015, KTM Events & Travel GmbH, in liquidation, was decon- The financial result increased by EUR -2.3 million to EUR -5.9 million compared
solidated and is therefore no longer included in the consolidation scope. to prior year (EUR -3.6 million) due to curreny valution effects.
Furthermore, the number of companies that are included by full consolidation The effective tax rate as of June 30, 2015, increased compared to the same
decreased by one due to the merger of KTM Motorrad AG into KTM AG. period in prior year from 13.0% to 24.8% due to the use of capitalised loss
carryforwards.
The profit for the financial year increased from EUR 26.2 million in prior year to
(4) Estimates EUR 33.3 million.
Seasonality effects occur due to a different seasonality of offroad- and street Property, plant and equipment increase by EUR 18.4 million to EUR 142.5 million
motorcycles. In the street segment, there are higher sales in the first half of the due to investments in the logistics center under construction and investments in
year, whereas in the offroad division, the main focus is on the second half of the tools.
year. Due to the increasing importance of the street segment to total revenue,
seasonal effects are straightened over the year to a great extent. Therefore,
management is not expecting a high dependency on seasons.
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(9) Intangible assets (15) Other non-current liabilities
Intangible assets include, in substance, capitalized development costs as Other non-current liabilities increased by EUR 0.3 million to EUR 6.8 million
well as license rights to brands and licenses. In the first six months of 2015, compared to December 31, 2014 and include, in substance, deposits received.
intangible assets rose by EUR 15.7 million to EUR 189.7 million due to the net
capitalization of development costs and also due to IT investments.
(10) Other non-current assets Other current liabilities rose by EUR 2.4 million to EUR 52.6 million.
Other non-current financial assets include, as reported in the consolidated Other current liabilities include, in substance, employee benefits, tax liabilities,
financial statement as of December 31, 2014, equity instruments, that are not liabilities from derivative financial instruments and liabilities due to sales bonuses
quoted in an active market and whose fair value cannot be reliably measured. and price discounts.
These are accounted for at cost less impairment
Trade receivables including receivables due from affiliated and associated (18) Notes to the consolidated statement
companies increased by EUR 36.4 million to EUR 106.7 million due to seasonal of changes in equity
influences. Taking into account the receivables sold in the first six months
of 2015 in the framework of the ABS transaction, this increase amounts to Total equity rose from EUR 327.6 million as of December 31, 2014
EUR 45.0 million. to EUR 346.3 million.
Inventories rose by EUR 14.4 million to EUR 156.0 million compared to prior year due The fair value of a financial instrument is determined by means of quoted market
to an increase in finished goods and merchandise (+ EUR 13.8 million compared to prices for an identical instrument in active markets (Level 1). If no quoted market
December 31, 2014). In the first half year 2015, allowances amounting to EUR 27.8 prices in active markets are available for the instrument, the fair value is determined
million (EUR 20.4 million in prior year) have been recognized. by means of valuation techniques for which the material parameters are based only
on observable market data (Level 2). In all other cases, the fair value is determined
on the basis of valuation techniques for which at least one material parameter is not
based on observable market data (Level 3).
(14) Financial liabilities
Reclassifications from one level to another are taken into account at the end of the
In the first half year 2015, non-current financial liabilities decreased by EUR 49.6 mil- reporting period. There were no transfers between levels in the financial year.
lion to EUR 113.6 million due to repayments as scheduled. Current financial liabilities
increased by EUR 6.1 million to EUR 14.7 million due to seasonal influences. The following table shows the carrying amounts and fair values of the financial
assets (financial instruments shown on the assets side), broken down by class or
Net Financial Debt increased in the first half year of 2015, compared to December 31, measurement category according to IAS 39. But it does not provide information on
2014, by EUR 48.2 million to EUR 135.7 million due to seasonality. The gearing ratio financial instruments not measured at fair value where the carrying amount is a
amounts to 39.3% (December 31, 2014: 26.7 %), due to seasonality. reasonable approximation of fair value.
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Fair value
million EUR Carrying amount Fair value
Level 1 Level 2 Level 3 Total
06/30/2015
Loans and receivables
Cash and cash equivalents 76.5 - - - - -
Trade receivables 106.7 - - - - -
Other financial assets 22.4 - - - - -
Sum 205.6
Sum 0.8
Total 209.8
Fair value
million EUR Carrying amount Fair value
Level 1 Level 2 Level 3 Total
12/31/2014
Loans and receivables
Cash and cash equivalents 68.8 - - - - -
Trade receivables 70.3 - - - - -
Other financial assets 22.2 - - - - -
Sum 161.3
Sum 0.5
Total 163.6
The following table shows the carrying amounts and fair values of the financial But it does not provide information on financial liabilities not measured
liabilities (financial instruments shown on the liabilities side), broken down at fair value where the carrying amount is a reasonable
by class or measurement category according to IAS 39. approximation of fair value.
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Fair value
million EUR Carrying amount Fair value
Level 1 Level 2 Level 3 Total
06/30/2015
At amortized cost
Financial liabilities 128.3 130.2 - - 130.2 130.2
Trade payables 116.7 - - - - -
Bonds 84.8 89.5 89.5 - - 89.5
Other current and non-current financial liabilities 27.3 - - - - -
Sum 357.1
Fair value
million EUR Carrying amount Fair value
Level 1 Level 2 Level 3 Total
12/31/2014
At amortized cost
Financial liabilities 72.6 73.1 - - 73.1 73.1
Trade payables 105.1 - - - - -
Bonds 84.7 89.3 89.3 - - 89.3
Other current and non-current financial liabilities 30.0 - - - - -
Sum 292.4
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Fair value determination
The following table shows the valuation technique used to determine the fair value as
well as the significant unobservable inputs used.
Loans Discounted cash flows Risk premium for own credit risk
(20) Segment reporting strategy. In 2014, therefore, internal reporting to the chief operating decision-maker
underwent a separation into the KTM and Husqvarna business segments. Thus, at
Given the previous structuring and internal reporting, the KTM Group did not until December 31, 2014, the requirements of IFRS 8.5 are for the first time implemented
2013 consist of one single business segment. The functional areas of R&D, Produc- for a second business segment.
tion, Purchasing, and Marketing and the administrative group functions are focused
on a legal company at the single global production location in Austria. Likewise, the The marketing activities of both brands now take place via two different marketing
product range and pricing for global sales connected with the bundling of oppor- entities that are separated in both corporate and staffing terms. The outsourced
tunities and risk from selling motorcycles were established on the basis of a legal processes such as R&D activities, production and purchasing, and the administra-
company at the central location. Segment reporting for a single reporting segment tive group functions continue to provide services for both brands and therefore also
was therefore restricted to cross-segment information as per IFRS 8.31ff. continue to be centered in corporate terms in one company that are to be allocated
to the KTM business segment. A division of property, plant, and equipment between
In 2014 the business volume of the Husqvarna brand measured in terms of consoli- the two brands is not possible because of the single production location and almost
dated group sales increased sharply after operating activities began in October 2013. identical production processes and is not therefore reported internally to the chief
Furthermore, in 2014 the organization was restructured to implement the two-brand operating decision-maker.
16
The table below shows segment information for the first half year 2015 and 2014:
06/30/2015
External revenue 460.6 54.5 0.0 515.1
Revenue between the segments 38.6 0.3 -38.9 0.0
Revenue total 499.2 54.8 -38.9 515.1
06/30/2014
External revenue 372.7 37.6 0.0 410.3
Revenue between the segments 21.0 2.6 -23.6 0.0
Revenue total 393.7 40.2 -23.6 410.3
The result in the balance column corresponds to the result in the statement of profit or loss. The reconciliation from the result
before tax is shown in the statement of profit or loss.
The following tables show the cross-segment information or the first half year 2014 and the first half year 2015.
In the first half year 2015 non-current assets of EUR 398.6 million (December 31, (22) Significant events after the balance sheet date
2014: EUR 365.7 million) were allocated to the companys country of origin and EUR
12.3 million (December 31, 2014: EUR 11.2 million) concern third countries. There have been no reportable events after June 30, 2015.
Neither the KTM segment nor Husqvarna report reliance on external customers within
the meaning of IFRS 8.34.
All products and services rendered and received from related companies and
individuals as stated in the consolidated financial statements as of
December 31, 2014 are carried out at arms lengths. In the first half year of 2015
there have been no material changes regarding transaction partner, volume and
nature of the business realtionship.
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S TAT E M E N T O F A L L
L E G A L R E P R E S E N TAT I V E S
We, the executive board of KTM AG, confirm to the best of our knowledge that the condensed interim consolidated financial statements for the first six months of 2015 give
a true and fair view of the assets, liabilities, financial position and profit or loss of the group as required by the applicable accounting standards and that the condensed
consolidated 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 interim consolidated financial statements, of the principal risks and uncertainties for the remaining six months of the financial year and of significant related party
transactions to be disclosed.
18
INTERIM FINANCIAL
S TAT E M E N T S H1 2015
Editorial deadline: July 24th, 2015
While every care was taken in compiling this report and checking that the data it contains is correct, slight differences in totals from adding up rounded amounts and
percentages, typographical errors and misprints cannot be excluded.
This report and the forward-looking statements it contains were prepared on the basis of all data and information available at the time of going to press.
We wish to point out, however, that various factors may cause the actual results to deviate from the forward-looking statements given in the report.
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KTM AG
5230 Mattighofen, Austria
www.ktm.com
20