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.
The net financial debt of the Vossloh Group (calculated as financial liabilities minus cash and cash equivalents and short-term securities) excluding lease liabilities rose from €174.0 million at the end of 2021 to €197.6 million at the end of the 2022 fiscal year. The increase was mainly driven by dividend, lease and interest payments. By contrast, free cash flow was positive in the 2022 fiscal year despite a noticeable increase in working capital – driven by higher procurement prices and increased stockpiling – and helped reduce net financial debt. Net financial debt, including lease liabilities in the amount of €39.9 million (previous year: €41.6 million), came to €237.5 million (previous year: €215.6 million) at the end of 2022.
Financial liabilities amounted to €316.6 million at the end of 2022, a considerable increase compared to the previous year’s figure of €291.6 million. At the end of 2021, €115 million of the financial liabilities were attributed to Schuldschein loans placed in the 2017 fiscal year with terms of seven years (until July 2024). The interest rate is fixed at 1.763 percent for an amount of €90 million, and variable for the remainder of €25 million with a margin of 120 basis points above the Euribor. In addition, a Schuldschein loan in the amount of €25 million with a term of seven years (until December 2028) and a fixed interest rate of 0.8 percent per year was placed at the end of 2021. In January 2022, Vossloh used these funds to prematurely redeem the floating-rate Schuldschein loan in the same amount maturing in July 2024. Current financial liabilities fell year on year from €69.2 million to €49.2 million as a result. At the end of 2022, an additional €88 million in financial liabilities related to drawdowns from the syndicated loan agreed in November 2017, with a total volume of €230 million and with a term that runs until November 2024. The interest rate at the end of the year was 2.75 percent based on the relevant reference interest rate (Euribor or €STR) and a margin agreed in the loan agreement, which is based on the indicator net financial debt to EBITDA. At the end of the year, the margin applied was 1.0 percent. A limit is set for this indicator (covenant). If exceeded, the lending banks are permitted to terminate the agreement ahead of time. Compliance with the covenant is verified every six months; such compliance was affirmed as of the half-year and as of the end of 2022. Furthermore, as in the previous year, Vossloh AG took out a loan of €20 million with DZ Bank with a term until July 2024 and a margin of 0.75 percent above the 3-month Euribor at the end of 2022.
When added together, the sum total of cash and cash equivalents and short-term securities came to €79.1 million at the end of the fiscal year 2022 (previous year: €76.0 million).
The hybrid note issued in February 2021 of €150 million with an indefinite term can be called and repaid by the company for the first time after five years. The interest rate over the first five years is 4.0 percent. In addition, depending on the sustainability performance measured by ISS ESG and MSCI ESG Research ratings, the redemption amount may increase. The structure of the note means that it is treated as equity in the consolidated financial statements. The resulting increase in the equity ratio and the associated strengthening of the balance sheet structure lead to significantly greater financial flexibility, which positively bolsters the implementation of the corporate strategy.
Breakdown of financial liabilities
|Other noncurrent liabilities to banks||209.4||164.3
|Noncurrent liabilities from leases||30.0||32.4|
|Noncurrent financial liabilities||267.4||222.4|
|Current liabilities to banks||13.0||34.2|
|Current liabilities from leases||9.9||9.2|
|Interest payable to hybrid capital investors||5.1||5.1|
|Other interest payable||0.9||1.0|
|Current financial liabilities||49.2||69.2|
Financial liabilities are principally measured at amortized cost. Current and noncurrent lease liabilities arise from leases which are recognized in accordance with IFRS 16. See the explanatory notes to section (11) on page 142 of the 2022 Annual Report for how these line items are measured. Bank overdrafts are shown separately from current and noncurrent liabilities to banks in the table because they were allocated to cash and cash equivalents in the cash flow statement.
For the reconciliation of the IFRS 9 valuation categories, see pages 160 et seq. of the 2022 Annual Report, “Additional information on financial instruments.”