KTM AG Annual Report 2015

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KTM AT A GLANCE

1 Working capital = Trade and other receivables + inventories – trade and other payables2 Net fi nancial debt = Financial liabilities (current, non-current) – cash and cash equivalents – fi nancing receivables3 Gearing = Net fi nancial debt / equity including non-controlling interests4 Employees including temporary staff and external employees

+ 26.

2 %EB

IT + 18.

3 %RE

VENU

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+ 17.4

%EM

PLOY

EES

EURk 2011 2012 2013 2014 2015 Change

EARNINGS RATIOSRevenue 526,801 612,008 716,390 864,636 1,022,487 18.3%EBITDA 64,495 67,838 87,694 112,599 141,524 25.7%EBIT 31,009 36,716 54,886 75,377 95,105 26.2%EBT 19,109 25,145 46,923 70,636 85,421 20.9%Net result after tax 20,818 25,317 36,509 57,162 63,924 11.8%EBITDA margin 12.2% 11.1% 12.2% 13.0% 13.8% –EBIT margin 5.9% 6.0% 7.7% 8.7% 9.3% –

BALANCE SHEET RATIOSBalance sheet total 485,775 521,351 571,435 694,799 848,933 22.2%Working capital1 99,333 81,269 86,074 106,836 122,051 14.2%Equity 219,775 254,522 282,843 327,575 379,814 15.9%Equity in % of total assets 45.2% 48.8% 49.5% 47.1% 44.7% –Net fi nancial debt2 124,995 99,315 82,365 87,475 97,164 11.1%Gearing3 56.9% 39.0% 29.1% 26.7% 25.6% –

CASH FLOWCash fl ow from operating activities 70,348 71,673 83,240 79,649 118,104 48.3%Free cash fl ow 33,077 15,572 25,187 9,914 23,802 140.1%

EMPLOYEESEmployees as at December 314 1,755 1,702 1,849 2,143 2,515 17.4%

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ANNUALREPORT

2015

FINANCIAL YEAR FROMJANUARY 1 TO DECEMBER 31, 2015KTM AG, MATTIGHOFEN, AUSTRIA

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K T M G R O U P004

KTM AG has been listed on the Vienna Stock Exchange since

December 2003 and constitutes the ultimate group parent of the

KTM group. The most important equity holdings of KTM AG

are KTM Sportmotorcycle GmbH and Husqvarna Motorcycles

GmbH. As the core operating company, KTM AG is the backbone

in which trend-setting sports motorcycles with the KTM and

Husqvarna brands are developed and produced for offroad and

street use.

The brands are marketed via KTM Sportmotorcycle GmbH and

Husqvarna Motorcycles GmbH, two direct subsidiaries of KTM AG,

and its 29 domestic and foreign marketing companies.

The KTM group’s sales activities are supported globally by

over 2,200 independent dealers and importers as well as two

joint ventures in New Zealand and Dubai.

KTM sees itself as a driver of innovation. The motorcycles

conceived, developed and produced in the development center in

Mattighofen are not just READY TO RACE but in fact are also

champion bikes, as demonstrated impressively by numerous race

wins. With great commitment, KTM works on new concepts, tech-

nologies and models, using racing sport as a platform for pioneering

technological innovation. KTM has been extremely successful

in the most important offroad racing series, the US Supercross

World Championship, as well as on asphalt.

The most recent example of KTM’s innovative strength is a feature

both novel and unique in the motorcycle industry. The models

in the ADVENTURE range are the fi rst motorcycles ever to boast a

standard ABS that is fully functional even while cornering. What

makes this possible is MSC, the motorcycle stability control system

developed in collaboration with BOSCH. This groundbreaking tech-

nology gives us the edge over our competitors all over the world

in terms of safety and driving dynamics.

The company has successfully established Naked Bikes as the

driving force in the segment. With a unique range between

125 and 1,300 ccm, KTM is present on asphalt in all segments

and offers the latest vehicles in the market.

Successfully expanding the series to also produce smaller engine

capacities moreover demonstrated the great potential that can be

tapped here. The 125 DUKE, the 200 DUKE, and the 390 DUKE

convinced thousands of riders, young and young-at-heart alike,

of the benefi ts offered by the versatile Naked Bikes. Develop-

ment work was resolutely pursued, bringing a modern interpretation

to ultra-lightweight, fully clad Supersport models with small or

medium engine capacities.

Apart from achieving strong growth in the street segments, the

KTM group also continued to enhance its unchallenged dominance

in competitive offroad motorcycles, particularly as a result of full

integration of the long-established Husqvarna brand.

KTM GROUP

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CONTENT

History

Investor Relations

Consolidated Financial Statements

Quality

006 Foreword

008 Report of the Supervisory Board

018 History

022 Sales Markets

024 KTM Vision

026 Group Structure

028 The KTM Group as a Sales Organization

030 KTM Group: Goals and Strategy

032 Husqvarna Motorcycles:

Goals and Strategy

034 Employees

036 KTM Motorsport

038 Quality

040 Research & Development

044 KTM Technologies

046 Investor Relations

050 Corporate Governance Report

059 Consolidated Financial Statements

059 Consolidated Management Report

077 Consolidated Income Statement

078 Consolidated Statement of

Comprehensive Income

079 Consolidated statement of Financial Position

080 Consolidated statement of Cash Flows

082 Consolidated statement of Changes in Equity

083 Notes

140 Annex

143 Auditor’s Report

145 Statement of all Legal Representatives

146 Other Information

018046

059

038 KTM 2016, 1290 Super Duke GT Action Italy, Photo: Schedl R., Rider: Jo Bauer

KTM 2016, 1190 Adventure R Action Utha, Photo: Schedl R.

KTM 2016, 1290 Super Duke GT Action Italy, Photo: Schedl R.

005

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“Record employment at the Mattighofen location”

“Strengthening ofthe Austrian location”

“EBIT signifi cantly increased”

“Highest sales and revenuelevels in the company’s history”

006

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FOREWORD BY THE CHAIRMANOF THE EXECUTIVE BOARD

LADIES AND GENTLEMEN,

THE PAST FINANCIAL YEAR 2015 WAS THE BEST YEAR

FOR KTM IN ITS ENTIRE CORPORATE HISTORY. KTM

HAS BEEN THE FASTEST GROWING MOTORCYCLE BRAND

IN THE WORLD FOR YEARS NOW.

HIGHEST SALES AND REVENUE LEVELS

IN THE COMPANY’S HISTORY

By consistently implementing the global product and brand stra-

tegy on all continents, KTM successfully increased both revenue

and sales fi gures, achieving new record levels for the fi fth year

in a row in 2015. With 183,170 motorcycles sold worldwide by the

KTM and Husqvarna group brands in 2015, sales were up 15%

on the preceding year. Revenue was up in the same period by 18%

to EUR 1.02 billion.

EBIT SIGNIFICANTLY INCREASED

KTM saw a sharp rise in earnings in addition to revenue and

sales. With EBIT of EUR 95.1 million, KTM achieved record

earnings in 2015.

STRENGTHENING OF THE AUSTRIAN LOCATION

With investment of about EUR 110.9 million in 2015, KTM

invested 30% more than in 2014 in Mattighofen and Munderfi ng

and thus further expanded and strengthened the Austrian location.

RECORD EMPLOYMENT AT THE MATTIGHOFEN LOCATION

At the end of the year KTM had 2,515 employees worldwide,

thus a new record. In 2015 headcount increased by 372, of

whom 339 were new employees in Austria.

The Executive Board would like to thank all employees for

the great dedication and commitment with which they have con-

tributed to this successful development.

OUTLOOK

In particular markets, the economic conditions are still diffi cult.

In North America, a signifi cant increase for the motorcycle

market is expected for the next year. In Europe, a positive trend

is expected. Concerning the emerging markets in South America

and Asia, there are numerous uncertainties. In the medium-

term we expect the main chances for growth in Asian markets.

In 2016, the brand KTM will introduce a new generation of

Enduro motorcycles to the market.

For the brand Husqvarna, a signifi cant growth is expected for

the fi nancial year 2016. From 2017 on, the tradition brand

will introduce a large range of street motorcycles to the market.

In the mid-term we set the goal to increase our annual sales

to 250,000 units.

In fi nancial year 2016 we planned extensive investments of

more than EUR 100 million for infrastructure and the development

of new models at the location in Mattighofen and Munderfi ng. Our

motorsports team receives a new motorsports building in Munder-

fi ng with investments amounting to more than EUR 12 million.

The expenses for research and development will increase further

to reach a research ratio of about 7%. Furthermore, there will

be more investments for IT and infrastructure as a new ERP System

will be implemented in 2016.

For 2016 KTM expects further increases in revenue and sales

and a consistent profi tability.

Mattighofen, March 2016

Stefan Pierer

CEO

007

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K T M G R O U P

(F.L.T.R.) HUBERT TRUNKENPOLZ, VIKTOR SIGL, STEFAN PIERER, FRIEDRICH ROITHNER, HARALD PLÖCKINGER

EXECUTIVE BOARD

Stefan Pierer

Chairman of the Executive Board

Harald Plöckinger

Friedrich Roithner

Viktor Sigl

Hubert Trunkenpolz

SUPERVISORY BOARD

Josef Blazicek

Chairman of the Supervisory Board

Rajiv Bajaj

Deputy Chairman of the Supervisory Board

Ernst Chalupsky

Srinivasan Ravikumar

Friedrich Lackerbauer

Employee Representative

Horst Resch

Employee Representative

008

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009

REPORT OF THESUPERVISORY BOARD

R E P O R T O F T H E S U P E R V I S O R Y B O A R D

IN THE FINANCIAL YEAR 2015, THE SUPERVISORY BOARD

OF KTM AG HELD FOUR MEETINGS ON MARCH 3, ON JUNE 17,

ON SEPTEMBER 16 AND ON NOVEMBER 25, EACH TIME

IN MATTIGHOFEN, THUS FULFILLING ITS DUTIES REQUIRED

BY LAW AND UNDER THE ARTICLES OF INCORPORATION.

The Executive Board of KTM AG regularly reported to the Super-

visory Board on business development and the economic state

of the corporation, including its associated companies. The annual

fi nancial statements and the management report for the fi nancial

year 2015 as well as the consolidated fi nancial statements and

consolidated management report for the fi nancial year 2015 were

audited by KPMG Austria GmbH Wirtschaftsprüfungs- und Steuer-

beratungsgesellschaft, Linz, and did not give any reasons for

objections. The auditors certifi ed that the accounting and annual

fi nancial statements as of December 31, 2015 are consistent with

the applicable laws, that the annual fi nancial statements give, in all

material respects, a true and fair view as possible of the company’s

net assets, fi nancial position and results of operations in accor-

dance with generally accepted accounting principles, and that the

management report is consistent with the annual fi nancial state-

ments. Further, the auditors certifi ed that the consolidated fi nancial

statements give a true and fair view in all material respects of the

group’s net assets and fi nancial position as of December 31, 2015,

as well as of the results of operations and cash fl ows for the past

fi nancial year in accordance with the International Financial Report-

ing Standards (IFRS), and that the other details in the consolidated

management report do not misrepresent the group’s situation.

In its report to the Supervisory Board, the Audit Committee concurred

with the results of the fi nal audit. After reviewing the management

report and the annual statements for the fi nancial year including the

proposed appropriation of net profi t, the consolidated management

report and the consolidated fi nancial statements for the fi nancial year

2015, and reviewing the management, the Committee did not raise

any objections. The Audit Committee agreed with the appropriation of

net profi t proposed by the Executive Board and recommended to the

Supervisory Board that KPMG Austria GmbH Wirtschaftsprüfungs-

und Steuerberatungsgesellschaft, Linz, be proposed for appoint-

ment as independent auditors for the fi nancial year from January 1,

2016 to December 31, 2016 at the Annual General Meeting. In

addition, the Audit Committee also reviewed the corporate governance

report for the fi nancial year 2015 and informed the Supervisory

Board that it did not reveal any reasons for objection.

The Supervisory Board concurs with the Audit Committee’s report

and consequently also with the results of the fi nal audit. After

obtaining the fi nal results of its review of the management report

and consolidated management report, the annual fi nancial statements,

including the proposed appropriation of net profi t and consolidated

fi nancial statements, and its management review, the Supervisory

Board also raised no objections. The Supervisory Board also concurs

with the Executive Board’s proposed distribution of net profi t.

Having been accepted by the Supervisory Board, the annual

fi nancial statements can be deemed approved pursuant to sec. 96 (4)

of the Austrian Stock Corporation Law (AktG). The Supervisory

Board acknowledged the consolidated fi nancial statements and the

consolidated management report for the fi nancial year 2015.

The Supervisory Board recommends that KPMG Austria GmbH

Wirtschaftsprüfungs- und Steuerberatungsgesellschaft, Linz,

be appointed as independent auditors for the fi nancial year from

January 1, 2016 to December 31, 2016.


Josef Blazicek

Chairman of the Supervisory Board

JOSEF BLAZICEK

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KTM 2016, 1290 Super Duke Special Edt. Action Misano Circuit, Photo: Schedl R., Rider: Ranseder Michael

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KTM 2016, SX Shoot Action Hungary, Photo: Schedl R., Rider: Romain Biela

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HQV 2016, 701 Enduro Action, Photo: Schedl R., Rider: Resch Roland

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HQV 701 Vitpillen Studio Shoot, KISKA 2016

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018 K T M G R O U P

1992 NEW BEGINNINGS

STEFAN PIERER TAKES OVER KTM82

1934 EARLY BEGINNINGS 25 year old Hans Trunkenpolz

opens a fi tter’s and car workshop in the Upper

Austrian town Mattighofen. A fi rst approach to the founding of what

is later known as KTM.

1953 KTM – KRONREIF TRUNKENPOLZ MATTIGHOFEN

In 1953 the three letters “KTM” appeared for the

fi rst time to represent Kraftfahrzeuge Trunkenpolz Mattighofen.

Since the mid-1950s, when the associate Ernst Kronreif joined the

company, the meaning of the initials is clearly defi ned as “Kronreif

Trunkenpolz Mattighofen”.

1954 KTM NONSTOP – PARIS TO VIENNA In autumn

1954, a KTM attracted attention because a board

with the magic number “1000” was pinned at the handlebars

of the R125 Tourist. To make the performance and reliability of

a motorcycle known to the public, long distance races were pretty

popular in the 1950s. Therefore, on September 30, 1954, three

125 ccm Tourist and three riders, among them KTM boss Hans

Trunkenpolz, stood at the outskirts of Paris. The destination

was Vienna, a distance of 1,300 kilometers. Not only the distance,

the timing was also pretty ambitious by the standards of the time.

The group at least wanted to keep pace with the “Arlberg-Express”,

a train that needed 24 hours for the same distance. And it worked

out – the train’s time was even beaten by more than two hours.

A KTM Tourist that was faster than the express train from Paris to

Vienna should be the right motorcycle for normal tourists.

1984 AUSTRIA SETS A SIGNAL – KINI & KTM ARE

CHAMPIONS! Heinz Kinigadner becomes a national

sports hero as the Tyrolean wins for the fi rst time a world champion-

ship title in Motocross for Austria – on an Austrian manufactured

KTM race bike. Repeating the win in 1985 fi nally left a fi rst massive

footprint in the international offroad world.

YEARS HISTORY

1953

1984

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019

1998 LC8 – A NEW DIRECTION OF POWER It was 1998

when KTM began researching into its fi rst

multi-cylinder engine and, after many different confi guration types,

they decided on a 75 degree V-twin. This engine was announced

at the 2000 INTERMOT Show in Cologne, Germany, shown in a

prototype called the “LC8 Adventure”.

1999 NEW FACTORY With a rapidly increasing model

range with diverse engine types requiring more

replacement parts, a new KTM factory was opened on the outskirts

of the small Austrian town of Mattighofen. The main factory

building houses the four main production lines, assembling all the

offroad machines and street bikes from 690 ccm and above. A

cordoned off production line is where special prototype bikes and

customer race machines, such as the 450 RALLY and RC 250 R,

are produced.

2001 FIRST DAKAR VICTORY The Dakar Rally is unique

in its diffi culty for both rider and machine.

True endurance; the event is long in terms of duration and riding

distance an often features terrain as varied as the landscape. For

the biggest offroad brand, the Dakar acts a great test of its

machines. KTM fi rst won the Dakar Rally with Italian Fabrizio Meoni

in 2001. Since that fi rst victory, only KTM-mounted riders have

won this event – 15 consecutive wins is a feat no other manufacturer

has accomplished.

1992 NEW BEGINNINGS In the beginning of 1992,

Stefan Pierer and his CROSS Industries Company

took over KTM and set about not only resurrecting the Austrian

brand that began in 1953, but taking it to new levels of success.

Just 24 years later they are consistently the biggest European motor-

cycle brand, are the dominant fi gure in two-wheel offroad machines

and have over 260 World Championships in the trophy room –

including 15 consecutive Dakar victories – and are now selling more

of its street motorcycles than offroad.

EXC – READY TO RACE FOR EVERYONE Although the KTM trophy

cabinets are already bursting with Motocross and Supercross silver-

ware, Enduro is the heart of KTM; responsible for the majority of its

world championships and always at the top of the global Enduro sales

chart. Why? Because, since 1992, KTM has always provided customers

with its EXC machine - either two-stroke or four-stroke - that is ready

to fi ght for victories straight from the showroom. Upgraded each year,

this is READY TO RACE and this mentality will never change.

1994 TAKING TO THE STREET Take an LC4-powered

620 Enduro, chopped it up with an angle grinder

and fi t some 17-inch wheels in it. This is the origins of how, in

1994, KTM took to the asphalt for the fi rst time in its rebirth and

the 620 DUKE was unleashed; bringing Supermoto on the street

to the world’s riding masses. That mono-wheeling, tire-squealing bike

quickly set an attitude for KTM and, as most of us know, reputations

can last a lifetime – 22 years and counting, to be precise.

2001 FIRST DAKAR VICTORY – SINCE THAT ONLY KTM RIDERS HAVE WON THIS EVENT

19H I S T O R Y

1992

1999

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2003 A NEW ADVENTURE Although not the fi rst KTM

to carry the ’Adventure’ banner (that was

the LC4-powered 640, back in the mid-nineties), in 2003 the brand

established itself as a serious player in the Travel Enduro market

with the arrival of its fi rst multi-cylinder contender. The LC8-powered

950 ADVENTURE changed perceptions that bikes in this sector

didn’t have to be big and cumbersome. Almost 90% the same

machine that won the 2002 Dakar Rally, the 950 – later becoming

the 990 – was pivotal for the future of KTM and introduced many

more riders to the brand.

2008 A UNIQUE SUPERBIKE ARRIVES Never one to follow

the crowd, the arrival of KTM’s fi rst true Super-

bike, the RC8, tore-up the rulebook in terms of design and handling

performance. Distinctive looks matched with an equally individual

riding experience has seen the RC8 remain a fi rm favorite with

two-wheel purists. The capabilities of the RC8 R were demonstrated

when it clinched the IDM Superbike Championship in 2011 in the

hands of Martin Bauer, a class where engine tuning is very minimal.

UNBELIEVABLE – A KTM CAR After an energy loaded development

ended with another big scoop: The presentation of the KTM

X-Bow underlined KTM’s philosophy – translating the brand’s core

values even onto four wheels. This unique supersport car showed

straight away its READY TO RACE approach and demonstrated the

impressive learning curve in all development disciplines.

2003

2008

020 K T M G R O U P

2011 SMALLER CAPACITIES, BIGGER OPPORTUNITIES

Since 2007, KTM has been cooperating with

the Indian Bajaj Group to focus on the joint development of entry-

level, 125 to 390 ccm street motorcycles. Produced in India

and distributed under the KTM brand by both companies, the fi rst

model released from this partnership was the 125 DUKE in

2011, which quickly became the biggest selling machine in its

class in Europe. The 200 DUKE followed in 2012, allowing KTM

to enter the Indian market and is the fi rst KTM model ever to

be offered worldwide. Since then, the 390 DUKE was released and,

in 2014, the Supersports RC 125, RC 200 and RC 390 began

production.

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021

2013 SETTING NEW STANDARDS IN SAFETY In coopera-

tion with BOSCH, KTM developed the MSC

(Motorcycle Stability Control) and therewith is the fi rst brand world-

wide to present an ABS that works even while cornering at deep

lean angles. MSC supports the rider together with the combined

antilock braking system C-ABS (Combined ABS) and the lean angle

dependently working motorcycle traction control MTC (Motorcycle

Traction Control) in a multitude of ways – of course just within

the limits of physics. Fitted to the 1190 ADVENTURE and later the

1290 SUPER ADVENTURE, these models are not only the most

versatile of all Travel Enduros, but also the safest motorcycles in

the world.

2014 THE BIG PICTURE – THE RESTART OF HUSQVARNA

Following the acquisition of Husqvarna Motor-

cycles in early 2013, and the subsequent reunion of the Husaberg

brand into the newly established Husqvarna Motorcycles GmbH

company, 2014 was the fi rst complete fi nancial year for the “new”

Husqvarna Motorcycles.

With a full line-up of Motocross and Enduro models and a continued,

strong commitment to offroad competition, Husqvarna immediately

set a record year with 16,377 bikes sold and a revenue of more than

100 million euros. These were the best ever results in the 111-year

history of Husqvarna Motorcycles.

In late 2014, with the unveiling of the VITPILEN 401 and SVART-

PILEN 401 concept-bikes at the international motorcycles exhibition

EICMA, Husqvarna confi rmed its decision to re-enter the street

segment, giving a glimpse of what the future will hold for the iconic

Swedish brand.

2014 THE RESTART OF HUSQVARNA. REUNION OF HUSABERG AND HUSQVARNA

H I S T O R Y

2013

2014

2015 KTM GOES ELECTRIC Although a long-running project

and partially developed in public at its E-Cross

Center, as the leader of offroad motorcycling KTM has also set a new

bar for electric bikes in its typical manner with the release of the

innovative FREERIDE E-SX, E-XC and E-SM available in 2015. Despite

lacking petrol power, these bikes are still built to the company’s

READY TO RACE mantra boasting high-specifi cation components and

incredible performance.

2015

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022 K T M G R O U P

6.2 %MARKET SHARE OF KTM + HUSQVARNA

€ 301.7 MREVENUE IN NORTH AMERICA

9.6 %MARKET SHARE OF KTM + HUSQVARNA

€ 512.2 M

€ 208.6 M

REVENUE IN EUROPE

REVENUE IN OTHER COUNTRIES

KTM SALES COMPANIES

SALES MARKETS

CKD PRODUCTION

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023

SALES MARKET

KTM SALES COMPANIESAND SALES MARKETS WORLDWIDE

S A L E S M A R K E T S

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024 K T M G R O U P

KTM VISION

KTM IS A PREMIUM MANUFACTURER

OF HIGH-PERFORMANCE VEHICLES

FOR BOTH OFFROAD AND STREET USE.

THANKS TO CONTINUOUS INNOVATION

AND DIFFERENTIATED PRODUCT DESIGN,

EVERY VEHICLE BUILT IS OF THE

HIGHEST QUALITY. KTM’S CLEAR VISION

IS TO BECOME THE BIGGEST MANU-

FACTURER OF SPORT MOTORCYCLES

WORLDWIDE.

The KTM offering is a diverse and ever-

expanding product range that now covers all

essential engine capacity categories and

performance classes (125 to 1,300 ccm).

The small-engine street motorcycles – devel-

oped in cooperation with our Indian partner

Bajaj – open up a new, global segment

for KTM. In March 2011 KTM began with

its launch of a complete naked range, which

was implemented successfully between

2011 and 2013. In 2015 the introduction

KTM 1290 Super Duke GT 2016 Action Highway Frankfurt, Photo: Schedl R., Rider: Jo Bauer

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025

of the KTM 1290 SUPER DUKE GT at

EICMA signalled a decisive move into the

sports-tourer segment.

The KTM 200 and 390 DUKE models

are important steps in implementing our

global product strategy and expanding

it into emerging markets. With these,

and the RC models also developed in 5/5

collaboration with Bajaj and launched

in 2014, our street product range offers

a wide variety to young buyers.

After the launch of the travel enduro KTM

1190 ADVENTURE and R models in 2013,

the ADVENTURE range was expanded to

include the KTM 1290 SUPER ADVENTURE

as well as the KTM 1050 ADVENTURE;

these were presented to the global public

for launch in 2015. The ADVENTURE range

brings a new higher performing dynamic

to the segment, with a wide array of options

to suit any customer’s needs. Ensuring

that every bike in KTM’s arsenal is 100%

READY TO RACE.

Our successful involvement in offroad

racing all over the world further strength-

ened the KTM brand and consolidated our

leading market position. By winning

KTM’s fi rst premier-class Supercross title

in 2015, we reached a signifi cant milestone

for our global offroad programme, as well

as for our North American market visibility

and credibility. A central element of our

corporate strategy involves directly taking

the successful technology that originates

from racing and incorporating it into serial

products. The multi-regional KTM RC Cup

series was established to uncover, challenge

and fast-track new street-racing talent.

It was a successful follow up to KTM’s

re-entry into the street world championship

in 2012 which, with a racing engine

developed completely by KTM, has resulted

in class dominance. This expansion in the

street and racing fi elds fi ts seamlessly

with our global product and sports strategy.

KTM’s hundreds of world championship

titles are an ever-growing and impressive

testament to the unwavering commitment

to the sport of racing. It also sets the tone

for KTM’s return to the premier MotoGP

class in the near future. Essential elements

of KTM’s long-term growth-planning strategy

are to extend our product range and to open

up new niches and markets. Accordingly,

our strategy focuses on research & develop-

ment to keep our performance edge,

while developing our distribution network

through new strategic regional partnerships,

and optimizing – all while we invest heavily

in our global brand and build it up.

KTM cultivates a close relationship with

its customers through a well-trained network

of dealers passing on customer feedback

and potential market trends directly to the

factory. Their professionalism and customer

focus are vital to our success. KTM strives

to further advance its creation of a sustain-

able partnership with its dealers, which

is grounded in fairness and trust. Due to the

constant qualitative growth in product range

and specially-developed store concepts,

KTM dealers can run a profi table business

solely by selling KTM products and asso-

ciated services. After all, KTM has a wide

range of products and accessories, the

highest quality components and some of

the fastest motorcycles onroad and offroad.

We are a leader in various segments within

the world of READY TO RACE, so if you

want to race to win, then there’s no other

choice – it has to be KTM.

K T M V I S I O N

KTM 2016, 690 Duke R Action Still Misano, Photo: Schedl R.

01 imageteil E_130316.indd 25 13.03.16 21:26

026 K T M G R O U P

KTM AG HAS BEEN LISTED ON THE VIENNA

STOCK EXCHANGE SINCE DECEMBER 2003

AND CONSTITUTES THE ULTIMATE GROUP

PARENT OF THE KTM GROUP. SINCE THE

INTEGRATION OF THE BRAND HUSQVARNA,

KTM AG CONSEQUENTLY FOLLOWS A

TWO BRAND STRATEGY FOR “KTM” AND

“HUSQVARNA”. THEREFORE, THE SALES

ORGANIZATION HAS BEEN REALIGNED. AS

THE FINAL STEP OF THIS REORGANIZATION,

THE SUPERVISORY BOARD CONCLUDED

IN THE LATEST MEETING TO MERGE KTM

MOTORRAD AG INTO THE LISTED KTM AG.

The most important equity holdings of

KTM AG are KTM Sportmotorcycle GmbH,

Husqvarna Motorcycles GmbH, KTM

Sportcar GmbH, KTM Technologies GmbH,

KTM Immobilien GmbH, and the minority

interest in Kiska GmbH.

KTM AG develops and manufactures motor-

cycles of the brand “KTM” and “Husqvarna”

and the super sports car X-Bow and com-

prises all central group functions.

The sales companies KTM Sportmotorcycle

GmbH and Husqvarna Motorcycles GmbH

distribute the respective brands’ motor-

cycles and spare parts directly to European

dealers and global importers. The markets

in the United States, Mexico, South Africa,

Japan, and Greece are served via local

stock-carrying sales subsidiaries. The two

companies in turn hold participations in a

total of 29 domestic and foreign marketing

companies that provide marketing and

related services in the local markets for

KTM Sportmotorcycle GmbH and Husqvarna

Motorcycles GmbH.

KTM Sportcar GmbH distributes the X-Bow

super sports car.

KTM Technologies GmbH provides services

in vehicle and product development along

with consultancy, particularly in light-

weight construction and fi ber composites

for group companies and third parties.

The KTM group’s land and buildings are

bundled in KTM Immobilien GmbH.

Kiska GmbH is a design company that

provides development and design services

for KTM.

GROUP STRUCTURE

INSIGHTINTO KTM AG

01 imageteil E_100316.indd 26 10.03.16 17:41

GROUP STRUCTURE (SIMPLIFIED)

KTMRacing AG

CH 100%

KTMTechnologies

GmbH

AUT 74%

KTMImmobilien

GmbH

AUT 99.61%

KTMSportmotorcycle

India Private Ltd.

IND 100%

KTMSales companies

KTMSportmotorcycle

GmbH

AUT 100%

KTMSportcar

GmbH

AUT 100%

KiskaGmbH

AUT 26%

HusqvarnaMotorcycles

GmbH

AUT 100%

HusqvarnaSales companies

KTM AG

027G R O U P S T R U C T U R E

01 imageteil E_180416.indd 27 18.04.16 15:02

028 K T M G R O U P

THE KTM GROUP AS A SALES ORGANIZATION

BUILDING PREMIUM-QUALITY

PERFORMANCE VEHICLES IS ONLY

HALF THE TASK. CONNECTING

CUSTOMERS WITH THESE VEHICLES

IS EQUALLY IMPORTANT.

The two brands of KTM group demand top

performance in all areas. This especially

includes our authorized dealers, who provide

KTM and Husqvarna customers with nothing

less than fi rst-class service. So customer

intimacy is critical to the success of the

organization. Every year the KTM group

invests heavily in growing this area through

further development, training and

optimization of the services offered to our

customers.

Every area of the business and customer

touch point shows that the organization truly

lives and refl ects the respective brands.

Whether it is the sale of vehicles, clothing

and accessories, premium performance parts

or original spare parts. KTM group insists

KTM 2016, Headquarter

01 imageteil E_130316.indd 28 13.03.16 21:27

029

29

on high levels of customer service – both

in the workshops and showrooms, as well as

with dealers providing advisory services

and information on the many topics relevant

to building an authentic motorcycle experi-

ence. A detailed understanding of the

larger sales and marketing process is of vital

importance – and through ongoing training,

KTM provides internal staff with an ’inside

out’ perspective.

Commercial business development places

the point of sale at the center of the brand

experience. The KTM group remains

in close contact with all dealers via the KTM

and Husqvarna subsidiaries.

This keeps us close to the action, in tune

with developments and in touch with market

progression, while allowing appropriate

products and experiences to be provided

through KTM and Husqvarna Motorcycles

dealers.

In partnership with 29 international sales

subsidiaries and two additional joint

ventures in New Zealand and Dubai, KTM

group staff service and attend to over

2,200 dealers and importers worldwide on

behalf of both KTM Sportmotorcycle GmbH

and Husqvarna Motorcycles GmbH.

This ensures that all KTM and Husqvarna

dealers have one valuable thing in common:

each and every one of them lives the spirit

of the brands at all times.

INTERNATIONAL SALES SUBSIDIARIES

T H E K T M G R O U P A S A S A L E S O R G A N I Z A T I O N

KTM Dealer Showroom

HQV Dealer Showroom

01 imageteil E_130316.indd 29 13.03.16 21:28

030 K T M G R O U P

60 YEARS EXPERIENCEKTM GROUP

GOALS ANDSTRATEGY

SINCE KTM’S FOUNDATION IN 1953,

THE KTM GROUP HAS GAINED

MORE THAN 60 YEARS OF EXPERTISE

IN THE TWO-WHEELED WORLD.

Starting out as an offroad-only motorcycle

producer, KTM group progressed to be

an innovative manufacturer of street motor-

cycles and now also premium sport cars.

Today, driven by the passion of its employ-

ees, KTM has already become the biggest

European manufacturer, with a 9.6%

market share in Europe and a 6.0% share

in the US, as well as achieving a one billion

Euro revenue. To accomplish this vision,

the company’s consistent long-term

strategy is built on three pillars including

brand, globalization and innovation.

The KTM group’s corporate success is

grounded in strengthening the core values

of its two primary brands and communicat-

ing them appropriately. Every product will

always deliver on the promise implicit in

the READY TO RACE philosophy for KTM and

PIONEERING SINCE 1903 for Husqvarna

Motorcycles. Despite a marked brand

contrast between the two brands, they share

strong histories of success and innovation,

while taking very different approaches. This

new sibling rivalry within the KTM group

has benefi tted both tremendously. The clearly

differentiated profi les of the KTM group’s

brands and their continuity are mainstays

of the group’s success. Having KTM group

products and related services used globally,

and growing rapidly, is another important

factor of the continued vision.

01 imageteil E_100316.indd 30 10.03.16 17:41

031K T M G R O U P : G O A L S A N D S T R A T E G Y

Geared for the future, KTM group success-

fully markets products that were developed

with a great deal of craftsmanship. With a

long history and strong interest in motorsport,

we constantly strive to develop our overall

product range and to increase our competi-

tiveness and penetration into global markets;

we do this by identifying developing trends

and defi ning new ones. Innovation and the

highest development standards are crucial

to achieving this vision.

The unveiling of KTM’s latest sports car, the

KTM X-Bow GT4 model, proved that KTM

group is capable of developing and evolving

new product ranges outside of its traditional

core motorcycle business. The experience

gained in terms of lightweight vehicle

construction is invaluable in developing new

vehicle concepts. Additionally, KTM group

intends to take a leading developmental

role in electric powertrain innovation. The

experience gained from our research project

to develop an innovative high-power

electric motorcycle in the KTM FREERIDE-E

proved the potential of electric powertrains.

Building on this research, KTM group is

developing technology that supports alter-

native forms of mobility in urban settings.

Concept Study X-Bow GT4

01 imageteil E_100316.indd 31 10.03.16 17:41

032 K T M G R O U P

111

YEAR

S E

XPER

IEN

CE

HUSQVARNA MOTORCYCLES

GOALS ANDSTRATEGY

SINCE HUSQVARNA MOTORCYCLES JOINED

THE KTM GROUP IN 2013, IT HAS ACHIEVED

EXCEPTIONAL SUCCESS IN A VERY SHORT

TIME. IT HAS REINFORCED THE PAST

HERITAGE OF PIONEERING WHILE HIGHLIGHT-

ING THE PREMIUM-QUALITY CONSTRUCTION

AND SWEDISH ROOTS OF THE BRAND’S

NEWEST MOTORCYCLES. THIS HAS BOLDLY

RETURNED HUSQVARNA MOTORCYCLES

TO THE SPOTLIGHT, AS A LEADING FIGURE IN

INTERNATIONAL OFFROAD MOTORCYCLING.

AFTER JUST ONE YEAR IN THE KTM GROUP,

HUSQVARNA MOTORCYCLES ACHIEVED

RECORD SALES NUMBERS IN 2014 AFTER

A 111-YEAR LONG HISTORY, IMPROVING

ON THIS WITH ANOTHER RECORD-BREAKING

YEAR IN 2015.

The brand promise of PIONEERING SINCE

1903 means that Husqvarna Motorcycles

is committed to leading, innovating and

pioneering. Never resting or blending into

the crowd, Husqvarna Motorcycles constantly

has its sights set on the distant horizon,

seeking newer, better and more sensible ways

to create authentic motorcycles that deliver

real and rewarding riding experiences. With

the core values of PREMIUM, PIONEERING

and SWEDISH ROOTS as the brand’s guiding

compass, we are proud to keep blazing new

trails, and make enjoyable riding experiences

more accessible to existing motorcycle

enthusiasts, as well as exposing new users

to the exhilaration and liberation of discover-

ing the motorcycle lifestyle.

A strong focus in the ongoing commitment

to innovation and progression is a resur-

gence of Husqvarna Motorcycles’ presence

in street motorcycling. The credibility of

being a pioneering brand, combined with a

very accessible, understated and approach-

able brand personality, allows Husqvarna

Motorcycles to open up and tap into a much

wider and more mainstream target audi-

ence. The upcoming VITPILEN ’real street’

range is a bold fi rst step in this entirely

new approach.

To meet the growing demand for the brand

globally, Husqvarna Motorcycles has a

strong focus on the development of its dealer

network. Despite a strong initial surge for

Husqvarna Motorcycles in the offroad market

globally, there are still many untapped

markets, areas and customer segments that

we will access through this ever-expanding

global network.

Despite the bold move into the innovative

new street motorcycling direction, 2015 was

still enormously successful for Husqvarna

Motorcycles in global competition. Along

with several world championship titles added

in 2015, Husqvarna Motorcycles has made

a bold return to competition in the North

American market. The Rockstar Energy

Husqvarna Factory Racing team returned the

iconic Swedish brand to the premier class

in both Supercross and Motocross, with Jason

HQV 701 SUPERMOTO Studio Shoot, KISKA 2016

01 imageteil E_130316.indd 32 13.03.16 21:29

033H U S Q V A R N A : G O A L S A N D S T R A T E G Y

Anderson claiming a stunning 2nd place in

Husqvarna Motorcycles’ very fi rst Supercross

main event in 2015. The brand’s renewed

competitive success refl ects its victorious

heritage, as Husqvarna Motorcycles now sets

its sights on ambitious new goals far beyond

the traditional boundaries of competition.

FUTURE VISION:

A BOLD RETURN TO THE STREET!

In line with Husqvarna Motorcycle’s claim

“PIONEERING SINCE 1903” – the future-

focussed vision keeps the brand’s sights set

fi rmly ahead. A bold re-entry into the street

motorcycling segment will continue

the tradition of progressive and pioneering

motorcycle development.

At the annual EICMA bike show in Milan,

Husqvarna revealed the VITPILEN and

SVARTPILEN 401 concept bikes in 2014,

followed up by the VITPILEN 701 in 2015.

In both years the response and interest

were substantial. Introducing the produc-

tion street-legal 701 SUPERMOTO and

701 ENDURO bikes in 2015 provided further

evidence of Husqvarna Motorcycles’ deter-

mination to progress innovative motorcycle

designs beyond mere concepts – and actually

realize them as standard production models.

For 2017 the next step will be realized

with the arrival of the fi rst two VITPILEN

production models.

A strong commitment to continuing the

long tradition of progressive thinking and

pioneering actions will be refl ected as

much in the creation of leading motorcycles,

as it will in outstanding ways of identifying,

satisfying and engaging with the rapidly-

expanding customer base.

Pioneering will continue in every area of the

Husqvarna Motorcycles brand. As a fi rst step,

the upcoming segment-redefi ning VITPILEN

and SVARTPILEN production models will

set Husqvarna Motorcycles on a blazing

trajectory to become Europe’s third-largest

motorcycle producer – with the aim of doing

so by 2020.

Yet the vision of growth extends beyond

simply wanting to step outside of Husqvarna

Motorcycles’ traditional offroad territory –

and the vision includes strengthening

Husqvarna motorcycles, parts and accesso-

ries distribution - spreading our footprint

through an ever-increasing network.

HQV, Rider: Mathias Bellino

01 imageteil E_130316.indd 33 13.03.16 21:30

034 K T M G R O U P

EMPLOYEES

WORLD CHAMPIONSEEKS NEW TALENT

AS OF DECEMBER 31, 2015,

THE GLOBAL NUMBER OF EMPLOYEES

STOOD AT 2,515, UP 372 ON THE

PRIOR YEAR. THIS REPRESENTS AN

INCREASE OF 17%. ON AVERAGE,

THERE WERE 401 EMPLOYEES

WORKING OVERSEAS. THE PROPORTION

OF WOMEN REMAINED CONSTANT

RELATIVE TO THE PRIOR YEAR AT 21%.

As of 2015, KTM is also a proud holder of

the kununu TOP COMPANY and OPEN

COMPANY quality marks. Leading employer

evaluation platform kununu.com awards

its TOP COMPANY quality mark to employ-

ers who can demonstrate a high level

of employee satisfaction. The mark can

only be obtained from good ratings posted

by employees on the online platform.

The OPEN COMPANY quality mark honors

employers who treat their staff members

in an open and appreciative way. KTM’s

kununu company profi le offers insights into

our day-to-day work, actively encourages

employees to rate us, comments on

the ratings made and thus testifi es to our

openness to dialog.

KTM 2016, Production Mattighofen

01 imageteil E_100316.indd 34 10.03.16 17:41

035

2,515THE REGION’S LARGEST

TRAINING CENTER

Training apprentices is an important

aspect of our employment strategy. KTM

now has the largest training center in the

Braunau region. As of December 31, 2015,

we employed 94 apprentices, who follow

the vocational training programs for pro-

cess technicians, motor vehicle technicians,

metals technicians, machinery engineers,

CAD designers, mechatronics engineers,

business administrators, offi ce administra-

tors and IT engineers. It is a central goal

of the company to continue to employ

apprentices when they have completed their

training. In 2015 all 16 employees who had

completed training were given permanent

jobs in one of our departments. This

satisfi es the company’s requirement for

specialized staff and at the same time

helps enable young people to have a good

start to their professional life.

The keystone for training apprentices

is our own training workshop. In this way

basic training of all technical apprentice-

ship areas is guaranteed. In addition,

apprentices are trained in different tech-

nical departments. Great store is placed

on the technical and teaching qualifi cations

of those training the apprentices along

with their social skills. Six more employees

completed their training as apprentice

trainers in 2015.

SOCIAL COMMITMENT

To help our employees return to the work-

place after starting a family, children

aged between one and three receive educa-

tional care in the KTM crèche in groups

of not more than nine children. In this way

the company makes an important contri-

bution to reconciling work and family.

As a voluntary additional social benefi t,

the company has taken out an endowment

and whole life insurance policy with a term

of 15 years for all employees.

NEEDS-BASED FURTHER TRAINING

FOR QUALITATIVE GROWTH

Our performance is assisted by needs-

based further training. Different topics in

different formats are offered and imple-

mented in a manner that is targeted toward

the various groups. Examples of this are:

Managers from the production area

attended a training session that combines

employee management and workplace

design. Technical seminars were attended

at various specialist suppliers and also

offered internally. KTM’s internal portfolio

of training courses was also expanded in

2015. Annual employee meetings are held

to form the basis for performance-oriented

cooperation and a structured needs

analysis.

The personal development of apprentices

in addition to technical training is important

to the company. Social skills training

therefore takes place along with feedback

sessions.

E M P L O Y E E S

EMPLOYEES WORLDWIDE AT THE

END OF THE YEAR DECEMBER 31, 2015

01 imageteil E_100316.indd 35 10.03.16 17:41

036 K T M G R O U P

WORLD CHAMPIONCHIP TITLES

260MORE THAN

01 imageteil E_130316.indd 36 13.03.16 21:31

037

KTM MOTORSPORT

WHEN KTM WAS RELAUNCHED IN

THE EARLY 1990, THE READY TO RACE

MOTTO EMBODIED THE NEW SELF-

CONFIDENCE OF THE BRAND. CLEAR

OBJECTIVE: EVERY MOTORCYCLE

ROLLING OFF THE PRODUCTION LINE

OF THE MATTIGHOFEN WORKS

MUST BE READY FOR THE RACETRACK

RIGHT FROM THE START.

The READY TO RACE philosophy is still the

creed that drives the KTM motorsport

division which, with its many factory teams,

works all over the world on the very highest

level, racking up World Championship titles

nonstop. Every employee working in the

KTM motorsports division is fully committed

to racing. They are 100% committed to

the task of achieving wins for KTM and,

as a team, work together just as well as the

smoothly running racing motorcycles they

build and service. The KTM factory riders

likewise give their best on the racetrack, not

just for themselves and their team but for

everyone at KTM.

In 2015, KTM celebrated another signifi -

cant milestone in its history. The US factory

team brought both the AMA 450 Super-

cross championship and the US Pro MX

Series title back to Austria. These incredible

victories were an ideal platform for both

the brand and its bikes, catapulting KTM

into the international limelight. But that

was not all: KTM factory riders also made

their mark on the Rally, SuperEnduro,

Hard Enduro and traditional Enduro race

series. In the Moto3 class, the battle

for the title went all the way down to a fi erce

head-to-head duel in the fi nal round.

DRIVER TITLES 2015

MOTOCROSS

85 ccm: Raivo Dankers (NED)

250 SX US East: Marvin Musquin (FRA)

450 MX US: Ryan Dungey (USA)

450 SX US: Ryan Dungey (USA)

ENDURO

SuperEnduro: Taddy Blazusiak (POL)

E2: Antoine Meo (FRA)

Erzberg & Red Bull Romaniacs: Jonny Walker (GBR)

RALLY

Rallye Dakar: Marc Coma (ESP)

Cross Country Rallies: Matthias Walkner (AUT)

MANUFACTURER’S TITLES 2015

MOTOCROSS

MX2, Supercross

ENDURO

SuperEnduro, E2

RALLY

Cross Country Rallies

K T M M O T O R S P O R T

KTM Team Shoot 2016, Ryan Dungey

Marc Coma, Dakar 2015

01 imageteil E_100316.indd 37 10.03.16 17:41

01 imageteil E_100316.indd 38 10.03.16 17:41

» AS A MANUFACTURER OF PREMIUM PRODUCTS, we at KTM have set ourselves the goal of manu-

facturing products that are innovative, in line with

market requirements, safe, and, most importantly,

of high quality. The entire process of producing

a vehicle – from product idea to market analysis

to design studies, design and development,

cooperation with suppliers, the procurement of

components for series production, parts produc-

tion, the assembly of engine and vehicle, right

to packing and dispatch – is mapped by a

process-oriented quality management system and

controlled using the KTM process management

system.

» WE ACHIEVE HIGH PRODUCT QUALITY due to

production-oriented design, the use of analytical

and statistical calculation methods, comprehen-

sive checking and testing, compliance with

relevant approval rules, by a focus on process

quality and by targeted communication as well as

by implementing training measures at KTM and

at the suppliers.

» THE GLOBAL ASSEMBLY LOCATIONS are professio-

nally served by a team of high-quality QM staff.

They make sure that the know-how for manufactur-

ing in these locations is passed on and ensure

the quality of the vehicles produced there by imple-

menting a KTM-compliant quality management

system.

» AS KEY COMPONENTS OF THE MOTORCYCLES, the

engines are developed and manufactured by

KTM and guarantee the identity of motorcycles with

the KTM and Husqvarna Motorcycles brands.

» THE IMPRESSIVE TRACK RECORD IN RACING is

the best evidence of KTM’s and Husqvarna’s high

product quality and high level of engineering

competence.

QUALITY

KTM 2016, 1290 Super Duke GT Action Italy, Photo: Schedl R., Rider: Jo Bauer

01 imageteil E_100316.indd 39 10.03.16 17:41

040 K T M G R O U P

RESEARCH & DEVELOPMENT

AS A PREMIUM MANUFACTURER IN

A NICHE SEGMENT, WE PUT A SPECIAL

FOCUS ON THE AREA OF RESEARCH

AND DEVELOPMENT. INNOVATIVE

PRODUCTS AND TECHNICAL ADVANCES

ENABLE US TO MEET THE EXPECTA-

TIONS OF OUR CUSTOMERS AND OPEN

UP NEW MARKETS.

KTM places a high value on the early recog-

nition of motorcycle trends, on research

and development regarding engineering and

functionality and on researching customer

wishes so as to achieve innovative product

development close to the market. In this

context, KTM not only operates in its original

core markets but is also developing new

products in new segments and niches of

01 imageteil E_100316.indd 40 10.03.16 17:41

041

the market as soon as it identifi es them

and they become usable for the KTM brand.

The technologies and design methods

we use undergo constant development, and

our products’ technical and functional

standards are continuously improved. As

a rule, new developments are fi rst deployed

in motorsport, with the experience gained

forming a basis for the subsequent transition

to serial production.

In accordance with the KTM development

policy, the fi rst vehicles in the newly

developed Motocross generation underwent

their fi nal endurance tests in motorsport

activities in 2015. In the course of this,

we succeeded in winning every title in the

prestigious US Supercross series for the

fi rst time.

The fi nancial year just ended saw a multi-

tude of key projects in the offroad and

street areas. For instance, the start of series

production for the 701 ENDURO and

701 SUPERMOTO added two important new

models to the Husqvarna range, success-

fully bringing KTM’s sister brand back onto

the streets.

KTM also entered the highly technology-

driven sports touring segment with the

KTM 1290 SUPER DUKE GT, presented for

the fi rst time at EICMA 2015. Featuring a

large number of safety and assistance

systems, semi-active suspension and an

innovative side case system, it represents,

alongside the KTM 1290 SUPER ADVEN-

TURE, the pinnacle of the KTM product

range.

While a wide-ranging portfolio of Motocross

models was presented during the course

of 2015, the focus in the offroad segment

lay principally on developing new KTM

and Husqvarna Enduro platforms for series

production.

In 2015 we employed an average number

of 382 people (17.5% more than the

prior year and 16.1% of the total headcount)

in our Research and Development depart-

ment. In operating terms, disregarding

the effects of capitalizing and amortizing

development expenses, 6.7% of total revenue

was invested in research and development.

EMPLOYEES (ANNUAL AVERAGE)

IN RESEARCH & DEVELOPMENT

382

R E S E A R C H & D E V E L O P M E N T

01 imageteil E_130316.indd 41 13.03.16 21:32

042 K T M G R O U P

01 imageteil E_100316.indd 42 10.03.16 17:41

043

DURING 2015, NUMEROUS R&D PROJECTS WERE TAKEN FORWARD AT VARIOUS

STAGES FROM CONCEPT DEVELOPMENT TO THE START OF SERIES PRODUCTION AND

SUCCESSFULLY COMPLETED:

» Series production of the new KTM and

Husqvarna Motocross generations, which

are redefi ning the motocross segment

thanks to their equipment, the low weight

that derives from the use of innovative

technology and the handling benefi ts that

accrue as a result.

» Series production of the KTM 1290

SUPER ADVENTURE, which sets a new

standard in the premium touring segment

thanks to its multitude of innovative

safety features and the semi-active suspen-

sion developed in cooperation with WP.

» Series production of the KTM 1050

ADVENTURE, ridable with an A2 driving

license, which forms an alternative

to the KTM 1190 ADVENTURE as an

entry-level model in the 2-cylinder touring

segment.

» Series production of the fi rst two

Husqvarna street models, the 701 ENDURO

and 701 SUPERMOTO, each featuring a

700 ccm single cylinder engine.

» Series development of new KTM and

Husqvarna Enduro generations, based on

Motocross models tried and tested in the

international motorsport environment, which

impress thanks to their low weight, inno-

vative technologies and functional design.

» Series development of a new 2-stroke

offroad engine platform for use in future

Motocross and Enduro models.

» Series development of the next stage

of our 690 ccm single-cylinder engine,

which impressively combines high 55 kW

(75 PS) performance with further advances

in engine smoothness.

» Development of a new motorcycle plat-

form based on a revolutionary 2-cylinder

engine design, which will make a

substantial contribution toward opening

up new market segments.

» Development of innovative lighting

systems in LED technology to increase the

level of safety and durability under extreme

conditions.

» Concept development of new EMS systems

to ensure that the KTM and Husqvarna

model ranges comply with future emission

regulations (Euro IV and Euro V).

» Concept development of a model equipped

with an alternative drivetrain system

to meet the requirements of urban mobility

scenarios.

R E S E A R C H & D E V E L O P M E N T

RESEARCH & DEVELOPMENT

01 imageteil E_130316.indd 43 13.03.16 21:34

044 K T M G R O U P

40 HIGHLY QUALIFIED ENGINEER

S

KTM TECHNOLOGIES

KTM AG HOLDS 74% OF THE KTM

TECHNOLOGIES GMBH, WHICH PROVIDES

PROFESSIONAL ENGINEERING AND

ADVISORY SERVICES. THE COMPANY’S

SERVICES FOCUS ON DESIGN AND

PRODUCT DEVELOPMENT ALONG WITH

TECHNOLOGY DEVELOPMENT OF LIGHT-

WEIGHT CONSTRUCTION SOLUTIONS

BASED ON COMPOSITES.

Following the trend toward lightweight

construction, the company has since its

formation developed very dynamically and

with commercial success. Starting with

fewer than ten employees, the team

has now expanded to more than 40 highly

qualifi ed engineers. Today many leading

automotive manufacturers and renowned

companies from other branches of industry

are its customers and the company has

gained an outstanding reputation as a

partner in innovation and technology. This

is based on broad automotive and light-

weight construction know-how and use of

the latest development tools and methods.

Recently, activities have centered on

the development of innovative lightweight

construction vehicle concepts for the

mobility of the future, from the e-Bike via

the urban vehicle to the hybrid super

sports car. KTM Technologies is active

in projects in both the two-wheel and the

four-wheel sectors and can in its new

developments draw on extensive experience

in both these worlds.

With its specialist know-how, KTM Tech-

nologies is also a closely interconnected

development partner in design, series,

and motorsport developments for KTM AG.

An example of this is the highly functional

and ultralight roadbook tower using

carbon composite technology and found

in the 450 Rally, winning bike in the 2014

Rallye Dakar. For KTM Sportcar GmbH,

KTM Technologies is continuing to develop

the X-Bow CFK super sports car and is

currently working jointly with Reiter Engineer-

ing on a new GT4 racing car. The X-Bow is

also a good example of the multidisciplinary

skills of KTM Technologies, which include

a high-performance simulation department

in addition to standard construction and

development. Static and dynamic structural

01 imageteil E_100316.indd 44 10.03.16 17:41

045

design and aerodynamic simulation (CFD)

are among the most important areas

of expertise, as are the multiple possibilities

offered by the process simulation of various

manufacturing procedures.

Also based at the company’s premises in

Anif near Salzburg is the affi liated company

KISKA, with which very close cooperation

is maintained. The two companies have

jointly developed an integrated design and

technology process with which functional

and innovative product concepts can

be developed very effectively with fi rst-class

design. The full integration and synergy

of design and development into one process

with interdisciplinary and holistic project

teams has developed into a unique selling

point for both companies.

With its own technology center, KTM

Technologies ensures a close connection

between innovative product concepts and

material- and production-oriented execution.

It thus engages in technology develop-

ment with the emphasis on lightweight con-

struction and carbon composite technology

independently and on behalf of external

customers. Given its broad expertise over

the complete product development process,

KTM Technologies is therefore also com-

missioned as a consultant, for example for

technological direction setting, appraisals

and advising on technological matters.

As a think tank and technology driver,

KTM Technologies has a large network in

various industrial branches and cooperates

closely with universities and research

institutions. This interconnection means

that KTM Technologies always has its fi nger

on the pulse and is developing the

products and technologies of the future!

K T M T E C H N O L O G I E S

KTM X-Bow

01 imageteil E_100316.indd 45 10.03.16 17:42

01 imageteil E_100316.indd 46 10.03.16 17:42

INVESTORRELATIONSKTM AG endeavors to practice a policy

of transparent, swift and comprehensive

information to and communication

with capital market participants as well as

the general public. At regular intervals

information is therefore provided on

the economic position as well as on the

future development of KTM.

KTM 2016, 1190 Adventure R Action Utha Photo: Schedl R.

01 imageteil E_100316.indd 47 10.03.16 17:42

048 K T M G R O U P

INVESTOR RELATIONSIt is the fi rm belief of the Investor Relations team at KTM AG that

confi dence in the company and in the products can only be ensured

by a policy of transparent, swift and comprehensive information

and communication. Accordingly, we endeavor to provide investors,

analysts and the general public with comprehensive insights into

the current economic position as well as the future development.

On our website (http://company.ktm.com/) a comprehensive pool

of information on the company and on our products is offered to all

who are interested.

THE KTM BONDIn April 2012, the EUR 85 million bond (2012–2017) of KTM AG

was successfully placed. The initial offering price was 101.389%.

The bond is listed on the Second Regulated Market of the

Vienna Stock Exchange and was issued with a fi xed coupon paying

interest at 4.375%. Interest is payable semi-annually as of

October 24 and April 24; the fi rst payment of interest was made

on October 24, 2012. On the last trading day (December 30, 2015),

the closing price was EUR 104.25 (prior year: EUR 105.07).

INFORMATION ON THE KTM BOND IN SUMMARY

THE KTM SHAREDEVELOPMENT

The KTM share (ISIN: AT 0000645403) is listed on the

Third Market (MTF) of the Vienna Stock Exchange.

In 2015 the KTM share price recorded a sharp rise. On the

last trading day (December 30, 2015) of the fi nancial year 2015,

the closing price was EUR 122.00 (prior year: EUR 135.00).

Market capitalization on the last trading day of the fi nancial year

2015 amounted to EUR 1,323.09 million (10,845,000 shares

admitted to trading).

In the fi nancial year 2015, 10,845,000 shares of stock, and

thus the entire capital stock of KTM AG, were admitted to trading

on the Vienna Stock Exchange.

DEVELOPMENT OF THE KTM SHARE (JANUARY 1 TO DECEMBER 31, 2015) KTM AG ATX (indexed)

ISIN AT0000A0UJP7Market Vienna Stock Exchange,

Second Regulated Market

Issue volume EUR 85,000,000Denomination EUR 500Maturity 2012 to 2017Coupon 4.375%Issue price 101.389%

1/1/15 1/31/15 2/28/15 3/31/15 4/30/15 5/31/15 6/30/15 7/31/15 8/31/15 9/30/15 10/31/15 11/30/15 12/31/15

130%

110%

90%

70%

01 imageteil E_130316.indd 48 13.03.16 21:34

049

1 Proposal to the Annual General Meeting

Further share-related information can be found on the company’s

website at http://company.ktm.com/ and on the website of the

Vienna Stock Exchange at www.wienerboerse.at.

The Executive Board of KTM AG will propose to the Annual

General Meeting to pay out a dividend of EUR 2.00 per share for

the fi nancial year 2015.

GENERAL INFORMATION ON THE KTM SHARE

Investor Relations Offi cer: Viktor Sigl

Phone: +43 7742 6000-144

E-mail: [email protected]

OWNERSHIP STRUCTUREIn CROSS Industries AG, holding 51.28% of the voting rights

directly and indirectly through CROSS KraftFahrZeug Holding GmbH,

and Bajaj Auto Ltd., holding 47.99% of the voting rights (through

Bajaj Auto International Holdings Ltd.), KTM AG has two stable core

shareholders. The free fl oat is below one percent.

FINANCIAL CALENDAR 2016

Apr. 11, 2016 Date of evidence of “Annual General Meeting”

Apr. 21, 2016 Annual General Meeting

Apr. 25, 2016 Ex-Dividend date

Apr. 26, 2016 Date of evidence of “Dividend” (Record Date)

Apr. 28, 2016 Dividend payment date

Aug. 18, 2016 Publication of Interim Financial Statements

< 1%Free fl oat

47.99%Bajaj Auto InternationalHoldings B.V.

51.28%CROSS Industries AG

10,845,000shares

I N V E S T O R R E L A T I O N S

Symbol KTMISIN AT0000645403Listing Vienna Stock Exchange, Mid MarketNumber of shares 10,845,000Original capital EUR 10,845,000Reuters KTMP.VIBloomberg KTM AV

2015 2014 2013

Number of shares (as at December 31) 10,845,000 10,845,000 10,845,000Average number of shares outstanding 10,845,000 10,845,000 10,845,000Earnings per share EUR 5.89 5.26 3.36Dividend per share EUR 2.001 1.50 1.00Dividend yield (closing price) % 1.64% 1.11% 1.59%Highest price EUR 140.0 141.00 62.85Lowest price EUR 99.69 61.00 47.00Closing price EUR 122.00 135.00 62.85P/E ratio (closing price) EUR 20.71 25.67 18.71Market capitalization per ultimo EURm 1,323.09 1,464.08 681.61

PERFORMANCE FIGURES OF THE KTM SHARE

01 imageteil E_100316.indd 49 10.03.16 17:42

050 K T M G R O U P

The Austrian Corporate Governance Code provides Austrian stock

corporations with a framework for managing and monitoring their

company. The Code aims to establish a system of management and

control of companies and groups that is accountable and geared

to creating sustainable, long-term value. It is designed to increase

the degree of transparency for all stakeholders of a company.

The Code is based on the provisions of Austrian stock corporation,

stock exchange, and capital market law, the EU recommendations

regarding the responsibilities of members of Supervisory Boards

and the compensation of company directors as well as the

OECD Principles of Corporate Governance. Since 2002, the Code

has undergone a number of revisions.

The present Corporate Governance Report is based on the most

recent amendment of the Code, which was adopted in January 2015.

The Code can be accessed by the public at www.corporate-

governance.at.

KTM AG is fully committed to the Austrian Code of Corporate Gover-

nance in its current version. This commitment by KTM AG is voluntary

and aims to boost shareholder confi dence and to constantly optimize

the high internal legal, behavioral and ethical standards of KTM AG.

The company is further obligated to fulfi ll the standards of the

Code due to the listing of its bond on the Vienna Stock Exchange.

The Corporate Governance Report of the fi nancial year 2015 is publicly

available on the homepage of the company (company.ktm.com) in

the section Investor Relations » Corporate Governance » Governance.

This voluntary self-imposed obligation means that it must explain

non-compliance with the so-called C-rules (“comply or explain”),

which go beyond the legal requirements. In line with this part

of the Austrian Code of Corporate Governance, KTM AG explains its

non-compliance with C-Rules of the Code as follows:

C-Rule 18: No separate internal audit department has been set up

in the light of the company’s size. However, the company has

established an internal controlling and reporting system enabling

the Executive Board to identify risks and quickly implement an

appropriate response. The Supervisory Board, particularly the Audit

Committee, is regularly informed about the internal control

mechanisms and risk management, throughout the group. Further

information on risk management can be found in the consolidated

fi nancial statements as of December 31, 2015.

C-rule 31: (Fixed and variable Executive Board remuneration):

This rule is not complied with, since the publication of Executive

Board compensation divided into fi xed and variable, performance-

related remuneration is considered to be suffi cient information

for all shareholders.

C-Rule 36: The Supervisory Board strives to continually improve

its organization, work procedures and effi ciency. An explicit

self-evaluation did not take place in the fi nancial year under review.

C-Rules 41 and 43: As the Supervisory Board of KTM AG

consisted solely of four members, a Remuneration and Nomination

Committee has not been set up, as it would not lead to an increase

in effi ciency of the Supervisory Board’s work. The tasks of the

Remuneration and Nomination Committee are fulfi lled by the entire

Supervisory Board.

C-Rule 58: Two Supervisory Board members failed to attend more

than half of the Supervisory Board meetings within the fi nancial year.

C-Rule 62: In accordance with C-Rule 62 of the Austrian Code of

Corporate Governance, the company commissions an external

evaluation of compliance with the C- and R-rules of the Code regularly

every three years. Said evaluation has not been conducted due to

the lack of added value for the shareholders.

050 Adherence to the Austrian Code of Corporate Governance (ÖCGK)

051 Members of the Corporate Bodies and Their Remuneration

056 Measures to Promote Women

056 Audits and External Evaluation

CORPORATE GOVERNANCE REPORTFOR THE FINANCIAL YEAR 2015 OF KTM AG, MATTIGHOFEN, AUSTRIA

01. ADHERENCE TO THE AUSTRIAN CODE OF CORPORATE GOVERNANCE (ÖCGK)

01 imageteil E_130316.indd 50 13.03.16 21:36

051

The boards of KTM AG consist of the Executive Board, the Super-

visory Board and the Annual General Meeting. The Executive

and Supervisory Board cooperate at regular intervals based on

open and transparent discussion.

WORKING PROCEDURES OF THE EXECUTIVE BOARD

The Executive Board of KTM AG or the individual Executive

Board members, respectively, act on the basis of the

laws, the Articles of Association and the Executive Board’s

rules of procedure, laid down by the Supervisory Board, that

governs the rules of the cooperation between the Executive

Board members as well as the allocation of the duties within

the Executive Board.

Coordination within the Executive Board occurs during regular

meetings, but also in the form of an informal exchange of infor-

mation. Matters discussed at the Executive Board meetings

include the current operations and the company strategy. Also

discussed are any current or outstanding measures to be imple-

mented by the relevant Executive Board members. The rules

of procedure requires the Executive Board or the individual

Executive Board members to provide extensive information and

reporting to the Supervisory Board and defi ne an extensive

catalogue of measures and legal transactions which require the

approval of the Supervisory Board.

COMPOSITION OF THE EXECUTIVE BOARD

The Executive Board of KTM AG consists of fi ve members (Rule 16):

Stefan Pierer (CEO) (born on November 25, 1956)

• First-time appointed: October 11, 1996

• Appointed until: February 29, 2020

• Chairman of the Executive Board, Company and Product Strategy,

Research and Development, Motorsports, Quality Management

After graduating from the Montan-University (Business and Energy

Management) in Leoben, Austria, Stefan Pierer began his career

as a sales assistant at HOVAL GmbH in Marchtrenk in 1982, where

he continued on as a sales manager and authorized signatory for

upper Austria. In 1987 he founded the CROSS group in which

he acts as majority shareholder and member of the Executive Board.

He has been shareholder and member of the Executive Board

of the KTM group since 1992. In 2011 he established Pierer

Industrie AG, in which he is sole shareholder and Chairman of the

Executive Board.

Further main functions within the superior Pierer group:

• Chairman of the Executive Board of CROSS Industries AG

• Chairman of the Executive Board of Pierer Industrie AG

• Chairman of the Supervisory Board of Pankl Racing Systems AG

• Chairman of the Supervisory Board of WP AG

Mandates in Supervisory Boards or similar functions in other

foreign and domestic companies, not included in the consolidated

fi nancial statements: Chairman of the Supervisory Board of

ATHOS Immobilien Aktiengesellschaft

C-Rule 83: This rule is not complied with, since the assessment

of the functionality of risk management takes place within the internal

reporting and is communicated directly to the Executive Board.

KTM AG endeavors to abide not only by the minimum requirements

but also by all of the Code’s R-Rules (“Recommendations”).

The company is committed to the principle of transparency and the

goal of providing a true and fair view for the benefi t of all share-

holders. All relevant information is published in our annual report,

half-year reports, on the corporate website and within the context of

our ongoing press relations work. Reports are prepared in accordance

with the Internationally Recognized Accounting Principles (IFRS).

KTM AG also informs its shareholders about all issues and develop-

ments of relevance to the company through corporate news. The

fi nancial calendar points out important dates. Comprehensive infor-

mation is published on the website under the section “Investor

Relations”, and is thus available to all shareholders at the same time.

The company has issued a total of 10,845,000 ordinary shares. There

are no preferential shares or restrictions on these ordinary shares.

Accordingly, the principle of “one share – one vote” fully applies.

The Austrian Takeover Act ensures that every shareholder will receive

the same price for the shares in the case of a takeover bid (public

tender offer). The shareholder structure is depicted in the section

“Development of the KTM share” of the annual report.

C O R P O R A T E G O V E R N A N C E R E P O R T

02. MEMBERS OF THE CORPORATE BODIES AND THEIR REMUNERATION

01 imageteil E_130316.indd 51 13.03.16 21:40

052 K T M G R O U P

Harald Plöckinger (born on March 23, 1961)

• First-time appointed: April 3, 2007


• Responsible for Logistics, Business Development,

Business Interface Bajaj, Production and Purchasing

Since 2004 Harald Plöckinger has been member of the Executive

Board within the KTM group and since 2007 he is a member

of the Executive Board of KTM AG. He started his career at the

BMW group in the engine development division. Between 1990

and 2004 he was an authorized offi cer, head of production,

head of strategic planning and subsequently managing director

of Bombardier-Rotax.


• Member of the Supervisory Board of WP AG



fi nancial statements: None

Friedrich Roithner (born on March 10, 1963)

• First-time appointed: January 1, 2011


• Responsible for Group Financing and Risk Management

After graduating from the Johannes Kepler University (Business

Administration) in Linz, Austria, Friedrich Roithner started

his career at Ernst & Young GmbH. After three years he switched

to Austria Metall AG, where he was working until 2006 (since

2002 as a member of the Executive Board). Since 2007 Friedrich

Roithner is part of the management team at the CROSS group.


• Member of the Executive Board of CROSS Industries AG

• Member of the Executive Board of Pierer Industrie AG

• Deputy Chairman of the Supervisory Board of WP AG

• Member of the Supervisory Board of Pankl Racing Systems AG

• Member of the Supervisory Board of All for One Steeb AG




Viktor Sigl (born on June 29, 1974)

• First-time appointed: March 23, 2012


• Responsible for Finance, Treasury, Controlling,

Legal and Insurances, Human Resources, IT and Organization

After graduating from the Johannes Kepler University in Linz,

Austria, with a degree in Business Administration, he started his

professional carrier at KPMG in the fi eld of fi nancial auditing and

tax consultancy. In 2005, after completing his tax consultancy

examinations and an MBA program at the University of Toronto,

Canada, Viktor Sigl joined voestalpine AG to become head

of Corporate Tax & Finance Advisory. Before joining the KTM group,

he was commercial director in the fi eld of international industrial

assembly.




Hubert Trunkenpolz (born on May 17, 1962)



• Responsible for Sales, Trade Marketing and Customer Service

Hubert Trunkenpolz has been a member of the Executive Board

within the KTM group since 2004 and since 2007 he is a member

of the Executive Board of KTM AG. He started his career at

ISA Audivisual Communication Corp. as marketing manager and

subsequently at TRUMAG as managing director. He has been

at CROSS group since 1992.




WORKING PROCEDURES OF THE SUPERVISORY BOARD

In the fi nancial year 2015, the Supervisory Board diligently per-

formed the duties incumbent upon it under Austrian law, the Articles

of Association, the Austrian Code of Corporate Governance, and

the Rules of Procedure. All members of the Supervisory Board and

its committees are independent according to the terms of the

Austrian Code of Corporate Governance and were properly represented

in the relevant meetings. The Supervisory Board held a total of

four meetings last year, once every quarter (C-Rule 36 of the ÖCGK).

Furthermore, there were two meetings of the audit committee.

In accordance with the Articles of Association, the Supervisory Board

has elected a Chairman and a Deputy Chairman and has appointed

an Audit Committee in order to comply with legal requirements.

No contracts requiring approval by the Supervisory Board were

concluded between the company and members of the Supervisory

Board (C-Rule 49 of the ÖCGK).

01 imageteil E_130316.indd 52 13.03.16 21:41

053

Furthermore, the audit committee monitored the accounting

processes (including the preparation of the consolidated fi nancial

statements) and the work of the auditor (including the audit of

the consolidated fi nancial statements) as well as the effectiveness

of the system of internal control, the risk management system and

the audit system. The independence of the auditor (group fi nan-

cial auditor) was reviewed and monitored in particular as regards

the additional services given to the audited company.

For further information on the Supervisory Board’s work methods,

please refer to the Supervisory Board report.

COMPOSITION OF THE SUPERVISORY BOARD

The Supervisory Board of the company consists of six members

and is comprised as following:

Josef Blazicek (born on February 15, 1964)

• Chairman of the Supervisory Board


• End of the current term of offi ce: Annual General Meeting,

which decides on the fi nancial year 2015

Further mandates in Supervisory Boards or similar functions in

other foreign and domestic companies, listed on a stock exchange:

CROSS Industries AG, Pankl Racing Systems AG,

BEKO HOLDING AG, All for One Steeb AG (Germany)

Rajiv Bajaj (December 21, 1966)

• Deputy Chairman of the Supervisory Board

• First-time appointed: November 30, 2007;

re-appointment: April 26, 2011





Bajaj Finance Ltd., Bajaj Auto Holdings Ltd., Bajaj Finserv Ltd.,

Bajaj Holdings & Investment Ltd.

Ernst Chalupsky (born on May 5, 1954)

• Member of the Supervisory Board

• First-time appointed: April 16, 1999;

re-appointment: April 20, 2012





CROSS Industries AG

Srinivasan Ravikumar (born on May 22, 1957)

• Member of the Supervisory Board

• First-time appointed: September 26, 2012





None

Friedrich Lackerbauer

• Labor representative, assigned since January 12, 2006



None

Horst Resch

• Labor representative, assigned since January 12, 2006



None

COMMITTEES OF THE SUPERVISORY BOARD

AND THEIR MEMBERS

The Audit Committee of the company consists of three members

and is comprised as follows:

• Srinivasan Ravikumar, Chairman

• Josef Blazicek, Deputy Chairman

• Friedrich Lackerbauer, Member

In accordance with the Stock Corporation Act the Supervisory Board

of KTM AG established an Audit Committee to perform its super-

visory and control functions.

The Audit Committee is responsible for the auditing and prepara-

tion for the approval of the annual fi nancial report, the proposed

distribution of net income and the management report, as well as the

auditing of the consolidated fi nancial statements and the corporate

governance report. The committee also deals with the management

letter written by the fi nancial auditor as well as with the auditor’s

report as to the effi ciency of the risk management. The audit

committee makes a proposal for the selection of the auditor and

presents the proposal of the Supervisory Board to the Annual

General Meeting for voting. In line with C-Rule 81a of the ÖCGK, the

audit committee must also establish a mutual line of communica-

tion with the fi nancial auditor in a meeting.


01 imageteil E_130316.indd 53 13.03.16 21:42

054 K T M G R O U P

The Audit Committee of KTM AG held two meetings in the fi nancial

year 2015, in which a representative of the auditor also participated.

Since the Supervisory Board consists of no more than six members,

the tasks of the Remuneration and Nomination committee are

fulfi lled by the entire Supervisory Board.

INDEPENDENCE OF THE SUPERVISORY BOARD

A member of the Supervisory Board shall be deemed as indepen-

dent if said member does not have any business or personal

relations with the company or its executive board that constitute

a material confl ict of interests and is therefore suited to infl uence

the behavior of the member.

Ernst Chalupsky is shareholder and managing director of Saxinger,

Chalupsky & Parnter Rechtsanwälte GmbH. The KTM group

is advised by Saxinger, Chalupsky & Partner Rechtsanwälte GmbH

concerning legal affairs. The consulting services were used on

standard terms and conditions.

The independence of the Supervisory Board members is defi ned

by following guidelines:

Criterion 1: The Supervisory Board member was not a member

of the Executive Board or a top executive of KTM AG or a subsidiary

of the company in the previous fi ve-year period.

Criterion 2: The Supervisory Board member did not maintain any

business ties with the company in the previous year, which may be

considered signifi cant in scope for a Supervisory Board member.

This also applies to related party transactions with companies

in which the Supervisory Board member has a considerable economic

interest. Approval of individual transactions by the Supervisory Board

pursuant to C-Rule 48 of the Austrian Corporate Governance Code

does not automatically disqualify the Supervisory Board member as

being independent.

Criterion 3: The Supervisory Board member was not an auditor

of the company, a shareholder or employee of the auditing company

over the prior three years.

Criterion 4: The Supervisory Board member is not a member of

the Executive Board of another company, in which a member of the

Executive Board of KTM AG serves on its Supervisory Board.

Criterion 5: The Supervisory Board member has not been on the

Supervisory Board of the company for more than 15 years. This does

not apply to Supervisory Board members, who are shareholders with

a direct investment in the company or who represent the interests

of such a shareholder.

Criterion 6: The Supervisory Board member is not a close family

member (direct descendant, spouse, common law spouse, parent,

uncle, aunt, sibling, niece and nephew) of a member of the

Executive Board or of people, who fulfi ll one of the other criteria

described above.

According to C-Rule 54 of the Austrian Code of Corporate Gover-

nance, the Supervisory Board of the company shall include at least

one independent member delegated by the shareholders who is

not a shareholder with a share of more than 10% or who represents

such a shareholder’s interests. This requirement of C-Rule 54 of

the Austrian Code of Corporate Governance has been achieved since

no member of the Supervisory Board is a shareholder with a share

of more than 10% or who represents such a shareholder’s interests.

The members of the Supervisory Board of KTM AG admit to the

criterions of independence according to Rule C-53 of the Austrian

Code of Corporate Governance and declare themselves independent.

REMUNERATION REPORT

In the determination of the total remuneration with regard to

the members of the Executive Board, the supervisory board ensures

proportionality between the tasks assumed of and performance

delivered by the individual member of the executive board,

between the situation of the company and the ordinary remunera-

tion and undertakes that long-term incentives with regard

to a sustained corporate development are taken into account.

The remuneration of the Executive Board members consists

of fi xed and variable components. The variable income component

is dependent on the achievement of certain fi nancial key fi gures

and/or specifi c project milestones. The relevant targets for the

calculation are mutually determined between the company and the

management yearly.

The members of the Executive Board are eligible for a company

car. An accident insurance provides insurance cover in case of

death or disability. Personal liability insurance covers the legal liability

of the Executive Board members that result from personal injuries,

material damages or fi nancial losses of third parties. An insurance

cover exists for claims for damages due to fi nancial losses of third

parties or of the company due to breaches of duties of executive

bodies of the company. The company bears the expenditures

for those insurances. For group internal mandates and functions no

additional remunerations are granted.

01 imageteil E_100316.indd 54 10.03.16 17:42

055

In the case of premature termination without a compelling reason

the fi xed salary shall be paid out for the contractual period.

The members of the Executive Board render their services on

the basis of employment contracts liable to income tax. No further

agreements with the Executive Board exist, regarding occupa-

tional pension plans. According to contract the Executive Board

members are eligible for a voluntary severance pay, however

fundamentally they are submitted to the system of “Abfertigung

Neu” (new severance pay). Furthermore, secondment contracts

between KTM AG and CROSS Industries AG for Mr. Stefan Pierer

and Mr. Friedrich Roithner are in effect.

No stock option plans or similar share-based remuneration

systems exist. A D&O insurance exist, which covers Executive Board

and Supervisory Board as well as the management of the group

companies.

In the fi nancial year 2015 the total remuneration of the Executive

Board members amounted to EUR 1,328k (prior year: EUR 1,302k).

For performance-related remuneration, liabilities amounting to

EUR 4,605k have been determined (prior year: 3,714k). The most

important calculation parameter of the variable remuneration

is – apart from the individually agreed performance-related target

achievement – the development of the EBIT.

After the expiration of the agreed contact duration, individual board

members receive a non-recurring severance pay. As of Decem-

ber 31, 2015, liabilities for Executive Board severance pay amount-

ing to EUR 1,017k are in effect (prior year: EUR 2,087k).

In the fi nancial year 2015, the company granted

TRUE Management & Investment GmbH, which falls

within Mr. Trunkenpolz’ remit, an arm’s length loan due

December 31, 2015 with the option of extension until

February 28, 2018. At the reporting date, receivables

amount to EUR 120k. Apart from that, no other

credits, loans or advances have been granted to any

member of the Executive Board or Supervisory Board.

The KTM AG Executive Board proposes a remuner-

ation of EUR 3k for the Chairman of the Supervisory

Board for each attended meeting, EUR 2k for Super-

visory Board Members and EUR 3k for the Chairman of

the Audit Committee in the fi nancial year 2015. Due

to their signifi cant interest in, and their capacity as

shareholders of, KTM AG, Mr. Rajiv Bajaj and Mr. Sriniv-

asan Ravikumar do not receive compensation for

their function as members of the Supervisory Board.

The amount of the total remuneration of the Supervisory Board

member is resolved within the framework of the Annual General

Meeting for the respective preceding fi nancial year. Within the

27th Annual General Meeting on April 23, 2015 the total remunera-

tion for the short fi nancial year 2014 for the Supervisory Board was

resolved in the amount of EUR 19k. For the fi nancial year 2015

the total remuneration of the Supervisory Board was recognized in

the income statement in the amount of EUR 24k. Members of

the Supervisory Board that are elected into the Supervisory Board or

leave during a fi nancial year receive the remuneration corresponding

with the duration of their actual affi liation within the Supervisory

Board pro rata temporis.

The Executive Board will propose a total remuneration in this

amount to the 28th Annual General Meeting on April 21, 2016. The

individual distribution should be divided as follows, subject to the

approval of the Annual General Meeting (see table below).

Additional to the annual expense allowance the Supervisory Board

members get a compensation for their cash expenses for their

actually accrued expenses. The Supervisory Board members are

furthermore covered by a manager liability insurance of the company

up to a certain upper limit, which covers the personal liability of

the Supervisory Board members in case of a negligent breach

of duties in exercising their activity as body of the company. In the

fi nancial year 2015 no further (other) compensation has been paid

out to members of the Supervisory Board. Other business relation-

ships with Supervisory Board member did not exist.


SUPERVISORY BOARD MEMBER REMUNERATION REMUNERATION 2015 2014

JOSEF BLAZICEK EUR 16k EUR 11kChairman of the Supervisory BoardDeputy Chairman of the Audit Committee

RAJIV BAJAJ No remuneration No remunerationDeputy Chairman of the Supervisory Board

ERNST CHALUPSKY EUR 8k EUR 8kMember of the Supervisory Board

SRINIVASAN RAVIKUMAR No remuneration No remunerationMember of the Supervisory BoardChairman of the Audit Committee

FRIEDRICH LACKERBAUER No remuneration No remunerationMember of the Supervisory BoardMember of the Audit Committee

HORST RESCH No remuneration No remunerationMember of the Supervisory Board

TOTAL EUR 24k EUR 19k

01 imageteil E_130316.indd 55 13.03.16 21:44

056 K T M G R O U P

03. MEASURESTO PROMOTE WOMENIt is not anticipated that a woman will be appointed into the

Executive Board for the time being as it is not planned to enlarge

the Executive Board and existing contracts will not expire for

a number of years. Equal treatment of female and male employees

and equal career chances are a matter of fact for KTM AG. A

specifi c program to promote the career advancement of women

has not been set up.

04. AUDITS ANDEXTERNAL EVALUATIONKPMG Austria GmbH Wirtschaftsprüfungs- und Steuerberatungs-

gesellschaft, Linz, was appointed by the 27th Annual General Meeting

to serve as the auditors of the consolidated fi nancial statements

and annual fi nancial statements of the company for the fi nancial

year from January 1, 2015 until December 31, 2015. In addition to

this function, KPMG and partner offi ces around the world also

sporadically perform tax and fi nancial consulting service on behalf

of the group. Expenditures for the auditor consist of: audit consoli-

dated fi nancial statements EUR 200k (prior year: EUR 197k),

other auditing services EUR 14k (prior year: EUR 13k) and other

services EUR 24k (prior year: EUR 91k).

THE EXECUTIVE BOARD OF KTM AG


Stefan Pierer

Chairman of the Executive Board

Harald Plöckinger

Friedrich Roithner

Viktor Sigl

Hubert Trunkenpolz

01 imageteil E_100316.indd 56 10.03.16 17:42

057C O R P O R A T E G O V E R N A N C E R E P O R T

KTM 2016, Headquarter

01 imageteil E_100316.indd 57 10.03.16 17:42

02 lagebericht E_100316.indd 58 10.03.16 17:40

CONSOLIDATED MANAGEMENT REPORT

060 Course of business and

fi nancial position

MATERIAL EVENTS THAT OCCURRED

DURING THE FINANCIAL YEAR 060

061 Market development

062 Development of revenue by region

062 Sales by region

062 Development of revenue

by product group

063 Sales by product group

063 Production by product group

FINANCIAL PERFORMANCE

INDICATORS 064

064 Performance analysis

064 Analysis of the

statement of fi nancial position

066 Liquidity analysis

066 Investments

NON-FINANCIAL PERFORMANCE

INDICATORS 066

066 Employees

067 Research and development

068 Racing

068 Financial instruments

069 Quality

069 Risk report

069 Sustainability

071 Events after the reporting date

071 Disclosures pursuant

to sec. 243a UGB

072 Outlook

KTM 2016, 1290 Super Duke GT Action Italy, Foto: Schedl R.


060 K T M C O N S O L I D A T E D M A N A G E M E N T R E P O R T

1. COURSE OF BUSINESS AND FINANCIAL POSITION

According to the January 2016 assessment of the International Monetary Fund (IMF), the global economy will recover more weakly than

had been assumed in the January 2015 forecast. The IMF expects to see a 3.4% rise in global economic output in 2016, with growth of 2.1%

being forecast for industrial nations in both 2016 and 2017. For the Eurozone, however, expansion of only 1.7% is being forecast over these

two years. Growth of 2.6% is anticipated in the USA. The IMF forecasts global growth of 3.6% in 2017.

Forecast economic output for emerging and developing countries remains at 4.3% for 2016 and 4.7% for 2017. The biggest growth is

expected in India, which is forecast to grow by 7.5% in both 2016 and 2017.

MATERIAL EVENTS THAT OCCURRED DURING THE FINANCIAL YEAR

The fi nancial year 2015 will go down as another record year in KTM’s history.

By consistently implementing the global product strategy and expanding into all continents, KTM yet again successfully increased both revenue

and sales fi gures to new record levels. KTM has been among the world’s fastest growing motorcycle brands for a number of years.

In the 2015 fi nancial year, KTM increased revenue to EUR 1,022.5 million (up 18.3% compared to the prior year) and sales to 152,181 vehicles

(up 8.3% compared to the prior year). Once sales of the DUKE 200, DUKE 390, RC 200 and RC 390, sold in India by our partner Bajaj, are

included, 183,170 KTM and Husqvarna vehicles were sold worldwide in 2015. Revenues consequently broke through the EUR 1 billion barrier

for the fi rst time.

In March 2015, the Supervisory Board resolved to extend, ahead of their expiry, the current contracts of the Executive Board until

February 29, 2020.

Since the Husqvarna brand was integrated into the KTM group, KTM AG has followed a consistent two-brand strategy based on the KTM and

Husqvarna brands. The sales and marketing organization has been restructured accordingly. As the fi nal step in this reorganization program, the

Supervisory Board resolved at its March 2015 meeting to spin-off the operating business of KTM Motorrad AG from the listed company KTM AG.

New products

In 2015, KTM again brought several new models to the market. These included a new Motocross generation as well as the new 1290 SUPER

DUKE GT and the new 690 DUKE and 690 DUKE R, which were unveiled at the EICMA motorcycle fair in Milan.

In the Husqvarna brand, the focus over the next few years will be on developing a variety of street motorcycles, as well as on continuing to

expand and develop the offroad models. The fi rst street bikes – the 701 ENDURO and the 701 and 450 SUPERMOTO – went on sale in 2015.

A new Motocross generation was also launched during the course of the year 2015.

CONSOLIDATEDMANAGEMENT REPORTAS AT DECEMBER 31, 2015 OF KTM AG, MATTIGHOFEN, AUSTRIA


061C O U R S E O F B U S I N E S S A N D F I N A N C I A L P O S I T I O N

New subsidiaries

A new sales subsidiary, Husqvarna Motorcycles SA Pty. Ltd., Northriding, South Africa, was established during 2015 in order to intensify

sales and marketing activities.

A separate company, Husqvarna Motorsports, Inc., Murrieta, was also founded in order to provide support to Husqvarna motorsports

activities in the USA.

Investments

In August 2015, Oberbank Mattigtal Immobilien GmbH completed the construction of the logistics center in Munderfi ng. Costing a total

of around EUR 27 million, the center has a fl oor area of 30,000 m² and is leased by KTM Immobilien GmbH. The company has an option

to purchase the building on expiry of the 15-year lease term.

The construction of a new motorsport building has begun in Munderfi ng, completion of which is scheduled for the fi rst half of 2016.

The expected construction costs are approximately EUR 12 million.

Motorsport successes

In racing, KTM factory rider Toby Price celebrated his fi rst Dakar title at the start of 2016. This represents KTM’s 15th consecutive victory

in the world’s toughest offroad race.

In October 2015, Austrian KTM factory rider Matthias Walkner won his fi rst Cross Country Rallies world championship.

In early April, Red Bull KTM factory rider Ryan Dungey sealed the Red Bull KTM factory teams fi rst ever 450 Supercross world title in just

the 14th round of the Monster Energy Supercross World Championships in Houston.

2. MARKET DEVELOPMENT

The overall European market1 was up 10.7% on the preceding year, with 494,108 vehicles registered. The increase was due mainly to

the growth in the largest European markets such as Germany (+7.7%), Italy (+14.6%), Spain (+21.8%) and the United Kingdom (+21.0%).

Amid a diffi cult market environment, KTM brand vehicles succeeded in gaining additional market share in key markets such as Austria

(up by 1 percentage point from the prior year) and Finland (up by 3.2 percentage points). KTM has a share of 8.4% of the total European

market.

Husqvarna’s market share grew in Sweden (up by 1 percentage point from the prior year), Austria (up by 1.4 percentage points) and Finland

(up by 0.6 percentage points). Husqvarna has a share of 1.1% of the total European market.

Registrations in the overall U.S. market2 went up 4.1% in 2015 compared to 2014, rising to 419,864 vehicles.

KTM succeeded in increasing its share of the overall U.S. market to 5.2%, a rise of 0.4 percentage points from the prior year.

Husqvarna increased its market in the U.S. by 0.2 percentage points to 0.8%.

1 Motorcycles ≥ 120 ccm excluding Motocross, scooters and ATVs, including electric motorcycles2 Motorcycles ≥ 120 ccm including Motocross, excluding scooters and ATVs, including electric motorcycles



3. DEVELOPMENT OF REVENUE BY REGION

Group revenue increased by 18.3% from EUR 864.6 million in the prior year to EUR 1,022.5 million. Revenue in North America rose 49.7%

from the prior year to EUR 301.8 million; this corresponds to 29.5% of total revenue. In Europe, revenue was up 10.9% on the preceding

year, rising to EUR 512.2 million; Europe thus accounted for 50.1% of total revenue. Revenue in other countries rose by 3.6% compared to the

prior year, to EUR 208.5 million. The percentage of total revenue earned in the other countries was 20.4%.

Group revenue by region 2015 2014 Change EURk % EURk %

Europe 512,160 50.1% 461,807 10.9%North America 301,767 29.5% 201,522 49.7%Other countries 208,560 20.4% 201,307 3.6%Total 1,022,487 100.0% 864,636 18.3%

4. SALES BY REGION

Accounting for 20.6% of sales in the fi nancial year 2015, the U.S. remained the largest single market for KTM. Europe accounted for 45.2%

of sales, with the strongest sales markets being Germany (11.3%), France (5.9%), the United Kingdom (5.4%), Italy (5.1%) and Spain (3.7%).

Overall, 68.2% of total sales were generated in the ten most important countries worldwide.

5. DEVELOPMENT OF REVENUE BY PRODUCT GROUP

Motorcycles (including Sportminicycles and X-Bows) represent 83.8% of total revenue, this percentage remaining essentially constant

relative to the prior year (82.5%). Revenue in the offroad segment increased 22.5% from the prior year, to EUR 425.4 million. In the street

segment, revenue went up 18.6% from the prior year, to EUR 390.6 million. Revenue from parts, garments and accessories (PowerWear and

PowerParts) and other rose by 9.6% relative to the prior year to EUR 165.3 million.

Group revenue by product group 2015 2014 Change EURk % EURk %

Offroad sport motorcycles 425,359 41.6% 347,359 22.5%Street sport motorcycles 390,616 38.2% 329,263 18.6%Total full size 815,975 79.8% 676,622 20.6%

Sportminicycles 37,951 3.7% 34,463 10.1%X-Bow 3,214 0.3% 2,665 20.6%Parts, garments and accessories and others 165,346 16.2% 150,886 9.6%Total 1,022,487 100.0% 864,636 18.3%


063

6. SALES BY PRODUCT GROUP

In 2015 KTM sold 152,181 vehicles, including 152,114 motorcycles (up 8.2% on the preceding year) and 67 X-Bows (up 28.8%).

In the offroad segment, 71,854 motorcycles were sold (up 13.9% on the preceding year). Compared to the prior year, sales in the Motocross

segment rose 19.5% to 22,674 motorcycles and sales in the Enduro segement by 11.5% to 49,180 motorcycles (including Freeride).

In the street segment, 67,917 motorcycles were sold (up 3.3% on the preceding year).

In the Sportminicycle segment, sales went up 5.3% from the prior year, to 12,343 motorcycles.

Sales by product group 2015 2014 Change Units % Units %


Sportminicycles 12,343 8.1% 11,724 5.3%Total motorcycles 152,114 100.0% 140,522 8.2%

X-Bow 67 0.0% 52 28.8%Total 152,181 100.0% 140,574 8.3%

7. PRODUCTION BY PRODUCT GROUP

In the fi nancial year 2015, 115,419 motorcycles were manufactured at the Mattighofen production site. Compared to the prior year, this

constitutes an increase of 13,654 units, or 13.4%. Taking into account the small-engine KTM models produced by our partner Bajaj Auto Ltd.

in India, 156,652 KTM vehicles (up 8.0%) were manufactured worldwide.

Production by product group 2015 2014 Change Units % Units %


Sportminicycles 11,976 10.4% 11,757 1.9%Total motorcycles 115,372 100.0% 101,717 13.4%

X-Bow 47 0.0% 48 (2.1%)Total 115,419 100.0% 101,765 13.4%

C O U R S E O F B U S I N E S S A N D F I N A N C I A L P O S I T I O N



FINANCIAL PERFORMANCE INDICATORS

8. PERFORMANCE ANALYSIS

Net revenues rose in 2015 by 18.3% to EUR 1,022.5 million (prior year: EUR 864.6 million). This was attributable to the increase in volumes.

Approximately 95% of revenues were earned outside Austria.

Production costs increased from the prior year, rising 17.3% to EUR 720.5 million; the gross margin increased by 0.6 percentage points

compared to the prior year and is now at 29.5%.

Overheads went up EUR 31.9 million from the prior year to EUR 206.9 million (+18.3%).

Expenses for selling and marketing rose EUR 12.1 million from the prior year (+13.4%). Net expenses on motorsport increased EUR 6.1 million

compared to the prior year, to EUR 29.7 million (+25.8%). This is attributable to the rise in sales volume as well as to wide-ranging motor-

sport activities.

Expenses for infrastructure and administration went up EUR 4.1 million to EUR 36.7 million (+12.6%).

Operating development expenses in the fi nancial year 2015 rose EUR 13.9 million from the prior year, to EUR 64.7 million (+27.3%).

Net development expenses were EUR 40.9 million (prior year: EUR 31.4 million), due to the higher net capitalization of development costs

(EUR 20.9 million, a rise of 18.8% compared to the prior year) and the inclusion of research subsidies (EUR 7.0 million, a rise of 37.3%

compared to the prior year).

Other operating expenses of EUR 21.6 million chiefl y comprise warranty costs, which increased by EUR 4.1 million from the prior year,

to EUR 21.6 million (+23.6%).

Thanks to the growth in revenues and volumes, EBIT rose to EUR 95.1 million, an increase of EUR 19.7 million over the previous year’s result

of EUR 75.4 million.

The effective tax rate rose from 19.1% in 2014 to 25.2% at December 31, 2015, owing to the utilization of capitalized loss carry forwards.

The fi nancial result improved by EUR 5.0 million in 2015 compared to the prior year, to EUR –9.7 million. This was due mainly to foreign

currency losses arising on the revaluation of bank deposits. Interest expenses were EUR 8.8 million (prior year: EUR 8.0 million). Interest

income was EUR 1.3 million (prior year: EUR 0.8 million).

9. ANALYSIS OF THE STATEMENT OF FINANCIAL POSITION

The balance sheet total rose by 22.2% compared to the prior year, to EUR 848.9 million.

Non-current assets went up EUR 65.2 million (+17.0%) to EUR 449.3 million (52.9% of total assets). Property, plant and equipment rose

by EUR 37.1 million due to investments in the logistics center, in the motorsport building currently under construction and in tooling.

Intangible assets rose by EUR 27.0 million, due mainly to the net capitalization of development costs (EUR 20.9 million) and to investments

in IT infrastructure, which primarily concerned the scheduled implementation of a new ERP system as well as the global Dealer.Net platform

for dealers.


065

Trade receivables, including receivables from affi liated and associated companies, went up EUR 17.8 million to EUR 88.2 million (+25.3%).

Taking into account the receivables sold last year and this year under ABS arrangements, there was a rise in receivables by about

EUR 24.0 million (+20.1%).

In the past fi nancial year 2015, inventories rose EUR 19.7 million to EUR 161.3 million (+13.9%) due to the increase in sales volume. The

increase was essentially due to a rise in fi nished goods, merchandise and spare parts (up by EUR 18.5 million relative to December 31, 2014).

Other current assets increased by EUR 1.7 million to EUR 28.7 million and are essentially comprised of receivables due from tax offi ces,

prepayments made on inventories and valuations of derivative fi nancial instruments.

The balance sheet total was made up of the following items on the liabilities side:

The bond issued in 2012 with a nominal value of EUR 85.0 million is due in April 2017. The transaction costs incurred in connection

with the bond issue are offset against the nominal value. The change in the carrying amount by EUR 115k compared to the prior year is due

to the transaction costs being amortized to profi t or loss over the remaining term to maturity.

Non-current fi nancial liabilities of EUR 125.5 million include long-term investment facilities and research and development loans. The

EUR 61.5 million increase resulted mainly from taking out a research loan of EUR 45.0 million. In addition, long-term liabilities under fi nance

leases of EUR 20.9 million were recognized.

Employee benefi t liabilities of EUR 14.9 million comprise claims for severance and anniversary bonus payments. Actuarial losses, current

service costs and interest expenses led to a EUR 1.4 million increase in the total liability.

Deferred tax liabilities went up EUR 17.2 million, to EUR 37.7 million. The change was caused by the recognition of additional deferred

tax liabilities of EUR 5.2 million in relation to capitalized development costs and by the utilization of loss carryforwards of EUR 10.6 million

that had previously been recognized as deferred tax assets.

Other non-current liabilities amounting to EUR 6.8 million are mainly made up of sureties received; the total amount rose slightly

by EUR 0.3 million relative to the prior year.

Current fi nancial liabilities went down by EUR 2.5 million to EUR 6.1 million.

Trade payable, including payables to affi liated and associated companies, went up EUR 105.1 million to EUR 127.5 million as at the

reporting date.

Provisions amounting to EUR 8.9 million (prior year: EUR 6.8 million) essentially comprise provisions relating to guarantees and

warranties. Compared to the prior year, provisions relating to guarantees and warranties showed an increase by EUR 1.7 million on account

of the increase in sales volume.

The other current liabilities are essentially comprised of employee benefi ts, discounts and dealer bonuses as well as of liabilities

arising due to derivative fi nancial instruments being measured as of the reporting date. Other current liabilities rose by EUR 3.1 million

to EUR 53.3 million.

Owing to the substantial capital expenditure, net indebtedness rose to EUR 97.2 million (prior year: EUR 87.5 million). Gearing was 25.6%.

Equity rose by EUR 52.2 million from the prior year. The movement resulted mainly from the 2015 profi t (EUR 63.9 million), payment

of the dividend for 2014 (EUR 16.3 million) and the movement in the cash fl ow hedge reserve (EUR 4.3 million). The equity ratio as of

December 31, 2015 was thus 44.7% (prior year: 47.1%).

F I N A N C I A L P E R F O R M A N C E I N D I C A T O R S



10. LIQUIDITY ANALYSIS

Group operating cash fl ow rose to EUR 118.1 million, an increase of EUR 38.5 million relative to the prior year. There was an increase of

EUR 4.9 million on the preceding year in cash fl ow from profi t and loss items, while working capital rose by EUR 33.5 million.

Net of disposals, investments increased from EUR –69.7 million to EUR –94.3 million. Free cash fl ow therefore increased from

EUR 9.9 million to EUR 23.8 million in net terms.

The consolidated cash fl ow from fi nancing activities was EUR 27.4 million (EUR 23.8 million in the prior year), which resulted mainly from

the dividend of EUR 16.3 million paid out in 2015 and the taking out of a research loan of EUR 45.0 million.

Cash rose by EUR 49.6 million to EUR 118.4 million, thus reaching a substantially higher level than in the prior year (prior year:

EUR 68.8 million).

11. INVESTMENTS

Considerable capacity and expansion investments were undertaken in the period under review in addition to the usual high investments

in series development projects and buying tools. Construction of the KTM logistics center in Munderfi ng was completed in 2015 and work

was begun on the construction of a new motorsport building in Munderfi ng.

In total, EUR 110.9 million (prior year: EUR 84.4 million) was invested in property, plant and equipment and intangible assets during

2015. Of this, EUR 43.5 million related to capitalized development costs, EUR 14.6 million to the KTM logistics center and EUR 6.6 million

to the motorsport building currently under construction. A further EUR 9.7 million was invested in IT infrastructure.

NON-FINANCIAL PERFORMANCE INDICATORS

12. EMPLOYEES

During 2015, KTM employed an average of 2,380 employees (prior year: 2,056), of whom 401 worked outside Austria. Revenue per

employee rose by 2.2% EUR 429.6k (prior year: EUR 420.5k).

2015 2014

Revenue EURk 1,022,487 864,636Employees (average) 2,380 2,056Revenue per employee EURk 429.6 420.5


067

13. RESEARCH AND DEVELOPMENT

In the Research and Development department, KTM employed 382 persons on average (16.1% of the total headcount) in the fi nancial

year 2015. About EUR 68.8 million was invested in research and development in the fi nancial year 2015, which translates to 6.7% of total

revenue (+0.4 percentage points compared to the prior year).

The fi nancial year just ended saw a multitude of key projects in the offroad and street areas. For instance, the start of series production

for the 701 Enduro and 701 Supermoto added two important new models to the Husqvarna range, successfully bringing KTM’s sister brand

back onto the streets.

KTM also entered the highly technology-driven sports touring segment with the KTM 1290 Super Duke GT, presented for the fi rst time

at EICMA 2015. Featuring a large number of safety and assistance systems, semi-active suspension and an innovative side case system,

it represents, alongside the KTM 1290 SUPER ADVENTURE, the pinnacle of the KTM product range.

While a wide-ranging portfolio of Motocross models was presented during the course of 2015, the focus in the offroad segment lay principally

on developing new KTM and Husqvarna Enduro platforms for series production.

During 2015, numerous R&D projects were taken forward at various stages from concept development to the start of series production

and successfully completed:

p Series development of the new KTM and Husqvarna Motocross generations, which are redefi ning the motocross segment thanks to

their equipment, the low weight that derives from the use of innovative technology and the handling benefi ts that accrue as a result.

p Series development of the KTM 1290 SUPER ADVENTURE, which sets a new standard in the premium touring segment thanks to

its multitude of innovative safety features and the semi-active suspension developed in cooperation with WP.

p Series development of the KTM 1050 ADVENTURE, ridable with an A2 driving license, which forms an alternative to the

KTM 1190 ADVENTURE as an entry-level model in the 2-cylinder touring segment.

p Series development of the fi rst two Husqvarna road models, the 701 Enduro and 701 Supermoto, each featuring a 700 ccm single

cylinder engine.

p Series development of new KTM and Husqvarna Enduro generations, based on Motocross models tried and tested in the international

motorsport environment, which impress thanks to their low weight, innovative technologies and functional design.

p Series development of a new 2-stroke offroad engine platform for use in future Motocross and Enduro models.

p Series development of the next stage of our 690 ccm single-cylinder engine, which impressively combines high 55 kW (75 PS) performance

with further advances in engine smoothness.

p Development of a new motorcycle platform based on a revolutionary 2-cylinder engine design, which will make a substantial contribution

toward opening up new market segments.

N O N - F I N A N C I A L P E R F O R M A N C E I N D I C A T O R S



p Concept development of innovative lighting systems in LED technology to increase the level of safety and durability under extreme

conditions.

p Concept development of new EMS systems to ensure that the KTM and Husqvarna model ranges comply with future emission regulations

(Euro IV and Euro V).

p Concept development of a model equipped with an alternative drivetrain system to meet the requirements of urban mobility scenarios.

14. RACING

When KTM was relaunched in the early 1990s, the motto READY TO RACE embodied the new self-confi dence of the brand. Clear objective:

Every motorcycle rolling off the production line of the Mattighofen works must be ready for the racetrack right from the start.

The Ready to Race philosophy is still the creed that drives the KTM motorsport division which, with its many factory teams, works all over

the world on the very highest level, racking up World Championship titles nonstop. Every employee working in the KTM motorsport division is

fully committed to racing. They are 100% committed to the task of achieving wins for KTM and, as a team, work together just as perfectly

as the smoothly running racing motorcycles they build and service. The KTM factory riders likewise give their best on the racetrack, not just for

themselves and their team but for everyone at KTM.

In 2015, KTM celebrated another signifi cant milestone in its history. The US factory team brought both the AMA 450 Supercross champion-

ship and the US Pro MX Series title back to Austria. These incredible victories were an ideal platform for both the brand and its bikes,

catapulting KTM into the international limelight. But that was not all: KTM factory riders also made their mark on the Rally, Super Enduro,

Hard Enduro and traditional Enduro race series. In the Moto3 class, the battle for the title went all the way down to a fi erce head-to-head duel

in the fi nal round. In January 2016, KTM factory rider Toby Price took fi rst place in the Dakar Rallye, thus securing KTM’s 15th consecutive

victory in this prestigious event.

The Husqvarna brand also enjoyed an impressive return to international racing in the 2015 season, competing with talented riders in major

international competitions on both sides of the Atlantic. The Rockstar Energy Husqvarna factory team marked Husqvarna’s fi rst ever entry in

the US Supercross championships. The team also took part in the US Pro MX championships, where it achieved some very notable successes.

In the MXGP World Championships, German Max Nagl won several day stages before injury brought his season to a premature end. Among

many other successes, special mention should also be made of our victory in the E3 category at the WEC World Enduro Championships as well

as Graham Jarvis’ victory in the famous Red Bull Scramble at the Erzberg Rodeo.

Overall, we won eleven world titles in 2015 across a very wide range of racing series, bringing our total number of world title successes

to over 260.

Both brands’ commitment to motorsport also benefi ts KTM AG from a technological viewpoint, as motorsport know-how has a direct infl uence

on the development of series production models. KTM AG’s motorsport expenses in 2015 were EUR 29.7 million (prior year: EUR 23.6 million),

representing 2.9% (prior year: 2.7%) of total revenue.

15. FINANCIAL INSTRUMENTS

Regarding the use of fi nancial instruments and the related risk management goals, please refer to the related explanations in the notes to

the Consolidated Financial Statements.


069

16. QUALITY

KTM uses a process-oriented quality management system for all activities, from product idea to market analyses to design studies, design

and development, cooperation with suppliers, the procurement of components for series production, parts production, the assembly of engine

and vehicle, right to packing and dispatch.

Product quality: The high quality of the products is accomplished due to production-oriented design, the use of analytical and statistical

methods of calculation, comprehensive checking and testing, compliance with relevant approval rules, a focus on process quality, communica-

tion and training measures at KTM and at the suppliers.

Process quality: KTM was given certifi cation by the auditors of TÜV Süd LG Österreich, that it more than meets the requirements of

EN ISO 9001:2008 and of the Kraftfahrbundesamt (KBA), the German federal authority for motor vehicles and transport.

17. RISK REPORT

Regarding the risk report, please refer to the explanations in the notes to the Consolidated Financial Statements.

18. SUSTAINABILITY

Commitment to sustainability

Strategic leadership, focusing on the development of key competencies, continuously improving the work processes, working in partnership

with employees and suppliers and maintaining a process-oriented quality management system allow KTM to create added value both for the

company and for the shareholders. With an average workforce of 2,380 in Austria, KTM is one of the region’s biggest employers.

KTM uses every opportunity to respond to the demands regarding sustainability that any modern company endeavors to comply with.

For instance, the factory and administrative buildings are constructed in a resource-conserving and energy-effi cient manner, the cooling of test

chambers and toolshop is controlled using groundwater, and for the manufacturing of fabricated materials and fi nished products various

materials are sorted by type and reusable containers are used.

Suppliers

The production company in Mattighofen largely sources its requirements from the local procurement market (about 28% within a radius

of 100 km, about 33% within a radius of 200 km, about 41% within a radius of 300 km, and about 48% within a radius of 400 km);

KTM therefore plays an active role in adding and maintaining value at the regional level.

Recycling and packaging

As a manufacturing company, KTM is aware of the responsibility it has vis-à-vis the environment. The motorcycle logistics system on reusable

metal plates, which was specially developed by KTM and obviates the need for additional packing material, is regarded as an innovative

example for the entire industry.




Employees

KTM aims to offer its employees a path towards personal development. It is the experience and expertise, creativity, passion for innovation,

and productivity of our staff that really allows KTM to achieve its corporate goals.

With a view to continuously enhancing the qualifi cations and competence of its staff, KTM constantly invests in their education and training.

KTM incurred expenses of EUR 993.4k in this regard in 2015 (prior year: EUR 653.2k) In Mattighofen, apprentices are being educated

in the fi elds of mechanical engineering, automotive and production engineering and mechatronics, and as commercial employees, with the goal

of integrating them in the respective areas of responsibility and offering them employment with KTM in the long term after their fi nal exam.

As of the reporting date, KTM employed 94 apprentices, and we persist in our clear commitment to sustainable inhouse apprentice training.

In addition, KTM offers employees the possibility of in-service training for passing their fi nal apprenticeship exam. In this way, KTM makes

it possible for employees who have no formal training to be integrated into the world of work and continue their personal development.

By establishing an in-house toddler group in February 2012, KTM demonstrated its social commitment. This is also intended to facilitate

reentry into the world of work.

Health and safety

To achieve constant improvement in the area of health and safety, KTM, among other things, implements preventive measures regarding

general workplace safety, fi re protection and safety of machinery and organizes various seminars on health- and safety-related topics, health

promotion in the workplace as well as measures for ensuring suitable workplaces (including lighting, height requirements, positioning of

work equipment, use of tools or aids).

Production safety

In designing and constantly improving its work processes, KTM takes care to offer its employees a safe work environment. This includes

constant training and instruction measures, the regular maintenance of production facilities, and high-tech methods and equipment.

Quality management

The challenge of manufacturing products that are innovative, high-quality, in line with market requirements and, most importantly, safe, is

mastered by KTM using a comprehensive and process-oriented quality management system certifi ed to ISO 9001:2008. This system controls

each and every process, from product idea to market analysis to design studies, development, design, cooperation with suppliers, procurement

of components, parts production, assembly of engine and vehicle, dispatch, right to sales and customer service. Particular focus is placed

on the continuous improvement process, which ensures consistent and sustainable improvement of the quality of products and services.

Product safety

On average 515 motorcycles per day are assembled in Mattighofen, Austria. Each and every vehicle component is checked by experienced

KTM staff according to an inspection plan. Moreover, every KTM motorcycle undergoes a complete functional check at a testing station after

assembly. Intensive inproduction product audits of engines and vehicles ensure a high-quality standard during the production process.

Only then are KTM products ready to be shipped all over the world.


071

The development work performed by our KTM staff is put to the test on the racetrack by our factory teams as early as during the prototype

phase. Additionally, a testing and endurance testing program spanning all phases of prototype and series production ensures that the

series-manufactured product meets the highest standards of quality and safety. Only proven innovative designs make the transition to series

production, and they deservedly bear the motto “READY TO RACE”.

Environmental indicators

All of KTM’s offroad carburetors (EXC models) comply with the Euro III standard, the European emissions standard for motorcycles. The

standard applies not only to new, but also to existing vehicle types. Compliance with the new standard is made possible primarily by the use

of fuel injection systems.

Wings for Life

KTM supports the spinal cord research foundation “Wings for Life” set up by Heinz Kinigadner in all marketing matters. “Wings for Life”

is a non-profi t organization aiming to promote and speed up research and medical-scientifi c progress towards fi nding a cure for paraplegia

induced by spinal cord injuries.

Corporate governance

The KTM AG corporate governance report forms an integral part of the annual report, available online at http://company.ktm.com/investor-

relations/reports.html. Further information on corporate governance may be found online at http://company.ktm.com/investor-relations/

corporate-governance.html.

19. EVENTS AFTER THE REPORTING DATE

Regarding the important events which have occurred after the reporting date, please refer to the explanations in note 31 to the Consolidated

Financial Statements. Other events which have occurred after the statement of fi nancial position date and are material for the measurement of

assets and liabilities have either been refl ected in these fi nancial statements or are not known.

20. DISCLOSURES PURSUANT TO SEC. 243A OF THE AUSTRIAN COMMERCIAL CODE (UGB)

As of December 31, 2015, the capital stock amounts to EUR 10,845,000 and is subdivided into 10,845,000 bearer shares having a

par value of EUR 1.00 each. The shares grant the rights that are usually due to stockholders under the Austrian Stock Corporation Act. These

include the right to payout of the dividend resolved upon at the General Meeting as well as the right to vote at the General Meeting. All the

shares are admitted for trading on the Vienna Stock Exchange; since August 2012 the shares of KTM AG have been included in the Third

Market, which is operated as a MTF (Multi Trading Facility) by Wiener Börse AG.

Each of the following shareholders held more than 10% of the capital stock on the statement of fi nancial position date and at the time of

drawing up the fi nancial statements:

p CROSS Industries AG (directly and indirectly through CROSS KraftFahrZeug Holding GmbH): 51.28%

p Bajaj Auto Ltd. (through Bajaj Auto International Holdings B.V.): 47.99%

p Free fl oat: < 1%




For the ability of the Executive Board to issue shares, please refer to the details of the authorized capital given in the notes to the

Consolidated Financial Statements under note 20, Consolidated equity.

In the event of a change of control, Executive Board members Harald Plöckinger, Viktor Sigl, and Hubert Trunkenpolz are entitled unilaterally

to terminate their appointments under retention of all claims. These appointments expire on February 29, 2020. The same right applies

with respect to CROSS Industries AG, which has entered into a secondment agreement with KTM AG with regard to Mr. Friedrich Roithner.

This agreement also expires on February 29, 2020. For the purposes of these agreements, a change of control is present if CROSS Industries

AG, Wels, according to the defi nition of sec. 22 (2) of the Austrian Takeover Act (Übernahmegesetz), neither directly nor indirectly holds at

least 50% of the voting rights in KTM AG. No agreements are in place between the company and any Supervisory Board members or employees

providing for compensation to be due in case of a change of control.

There are no other important agreements which would be affected by a change of control or public takeover bid.

21. OUTLOOK

The general economic climate remains very diffi cult in some markets. Although we expect the North American motorcycle market to enjoy

signifi cant growth in the coming year and are also relatively bullish with regard to Europe, the emerging markets in South America and

Asia are marked by numerous uncertainties. Nevertheless, we regard Asian markets as representing the biggest growth opportunities over the

medium-term.

In 2016, we expect the KTM group to continue growing in both revenue and volume terms while sustaining current levels of profi tability.

Among other things, a new Enduro generation will be launched for the KTM brand in 2016.

We expect further substantial growth for the Husqvarna brand for 2016. From 2017, this historic brand will bring a full range of street

motorcycles onto the market.

We have set ourselves the medium-term goal of increasing annual sales to 250,000 units.

Motorsport

As previously announced, KTM will make its debut in the MotoGP racing series in 2017. The team will be unveiled in August 2016 at the

Austrian Grand Prix, which will be held at the Red Bull Ring in Spielberg.


073

Commitment to Austria

In 2016, extensive capital expenditure of over EUR 100 million will again be made in infrastructure and model development at the

Mattighofen and Munderfi ng sites. A new building is being built at Munderfi ng at a total cost of over EUR 12 million, which will provide a

new home for our motorsport team.

Research and development expenditure will continue to grow substantially, to reach approximately 7% of revenues. Substantial investments

are also being made in the IT infrastructure, and a new ERP system is being implemented in 2016.

In 2016, work will begin on the construction of the KTM Experience in Mattighofen, which will include a museum and demonstration

workshop, at a cost of approximately EUR 25 million. Completion is scheduled for fall 2017.

It is planned to hire another 120 employees in 2016.

Adequate fi nancial position

Over the last year, the KTM group again improved its treasury and fi nancial position. Major fi nancing instruments were committed and

optimized for the long term. Working capital management was further improved and will remain an area of focus during the coming

year. Suffi cient liquidity is therefore available to fund the planned growth, from a portfolio of different fi nancing instruments with a range

of counterparties.

Mattighofen, February 16, 2016

The Executive Board

Stefan Pierer Harald Plöckinger Friedrich Roithner

Viktor Sigl Hubert Trunkenpolz

O U T L O O K


03 anhang E_100316.indd 74 10.03.16 17:39

CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED

INCOME STATEMENT 077

CONSOLIDATED STATEMENT

OF COMPREHENSIVE INCOME 078


OF FINANCIAL POSITION 079


OF CASH FLOWS 080


OF CHANGES IN EQUITY 082

NOTES TO THE CONSOLIDATED

FINANCIAL STATEMENTS 083

083 The company

083 Principles of fi nancial reporting

and accounting policies

096 Notes to the consolidated

income statement

103 Notes to the consolidated

statement of fi nancial position

116 Other notes

ANNEX TO THE NOTES TO THE

CONSOLIDATED FINANCIAL STATEMENTS 140

140 Schedule of equity holdings

AUDITOR’S REPORT 143

STATEMENT OF ALL

LEGAL REPRESENTATIVES 145

Antoine Meo KTM 450, Rallye Dakar 2016, Photo: Kin M.

03 anhang E_100316.indd 75 10.03.16 17:39

076 K T M C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

03 anhang E_100316.indd 76 10.03.16 17:39

077

EURk Note 2015 2014

Revenue 5 1,022,487 864,636Cost of sales 6 (720,477) (614,292)Gross profi t 302,010 250,344

Selling and racing expenses 6 (132,345) (114,245)Research and development expenses 6 (16,385) (11,044)Infrastructure and administration expenses 6 (36,747) (32,626)Other operating expenses 7 (21,637) (17,353)Other operating income 8 210 302Result from operating activities 95,105 75,377

Interest income 1,304 822Interest expenses (8,759) (8,024)Other fi nancial result 9 (2,363) 1,833Share of the profi t of associates accounted for using the equity method 10 133 628Profi t before tax 85,421 70,636

Tax expense 11 (21,497) (13,474)PROFIT FOR THE FINANCIAL YEAR 63,924 57,162Of which attributable to the owners of the parent company 63,856 57,037

Of which attributable to non-controlling interests 68 125

EARNINGS PER SHARE (EUR)Basic (= diluted) 12 5.89 5.26

The following notes to the consolidated fi nancial statements form an integral part of the consolidated income statement.

CONSOLIDATEDINCOME STATEMENTFOR THE FINANCIAL YEAR 2015 OF KTM AG, MATTIGHOFEN, AUSTRIA

C O N S O L I D A T E D I N C O M E S T A T E M E N T

03 anhang E_110316.indd 77 11.03.16 18:21


EURk Note 2015 2014

Profi t for the fi nancial year 63,924 57,162

Currency translation of foreign subsidiaries 425 1,266Currency translation of associates accounted for using the equity method 15 (5) 0Currency translation of net investments in foreign operations 20 366 0Deferred tax on currency translation of net investments in foreign operations (91) 0Valuation of cash fl ow hedges 20 5,795 (1,391)Deferred taxes on the valuation of cash fl ow hedges (1,449) 348Other comprehensive income – Possible reclassifi cation into the income statement 5,042 223

Recognized actuarial losses 24 (280) (2,411)Deferred taxes on the recognized actuarial losses 70 603Other comprehensive income – No reclassifi cation into the income statement (210) (1,808)

Other comprehensive income 4,832 (1,585)TOTAL COMPREHENSIVE INCOME 68,756 55,577Of which attributable to the owners of the parent company 68,687 55,451

Of which attributable to non-controlling interests 68 125

The following notes to the consolidated fi nancial statements form an integral part of the consolidated statement of comprehensive income.

CONSOLIDATEDSTATEMENT OF COMPREHENSIVE INCOMEFOR THE FINANCIAL YEAR 2015 OF KTM AG, MATTIGHOFEN, AUSTRIA

03 anhang E_110316.indd 78 11.03.16 18:11

079

EURk Note Dec. 31, 2015 Dec. 31, 2014

ASSETSNon-current assetsTangible assets 13 161,239 124,138Intangible assets 14 279,780 252,755Investments accounted for using the equity method 15 3,064 2,920Deferred tax assets 11 3,595 2,480Other non-current assets 16 1,575 1,801 449,254 384,094Current assetsCash and cash equivalents 28 118,406 68,812Inventories 17 161,295 141,566Trade receivables 18 88,202 70,349Prepayments 3,100 2,941Other current assets 19 28,678 27,038 399,680 310,705ASSETS 848,933 694,799

LIABILITIESConsolidated equityShare capital 20 10,845 10,845Reserves including retained earnings 20 368,688 316,213Equity of the owners of the parent company 379,532 327,058Non-controlling interests 20 281 517 379,814 327,575Non-current liabilitiesBonds 21 84,845 84,729Financial liabilities 21 125,480 63,956Employee benefi ts 24 14,935 13,516Deferred tax liabilities 11 37,742 20,492Other non-current liabilities 22 6,764 6,509 269,766 189,203Current liabilitiesFinancial liabilities 21 6,107 8,608Trade payables 23 127,445 105,078Provisions 25 8,863 6,760Tax liabilities 1,389 5,867Prepayments 2,234 1,554Other current liabilities 22 53,315 50,153 199,353 178,021EQUITY AND LIABILITIES 848,933 694,799

The following notes to the consolidated fi nancial statements form an integral part of the consolidated statement of fi nancial position.

C O N S O L I D A T E D S T A T E M E N T O F F I N A N C I A L P O S I T I O N

CONSOLIDATEDSTATEMENT OF FINANCIAL POSITIONAS AT DECEMBER 31, 2015 OF KTM AG, MATTIGHOFEN, AUSTRIA

03 anhang E_110316.indd 79 11.03.16 18:13


EURk Note 2015 2014

Consolidated cash fl ow from operating activities+(–) Profi t (loss) for the fi nancial year 63,856 57,037+(–) Profi t (loss) allocated to non-controlling interests 68 125+(–) Interest expenses (interest income) 7,455 7,202– Interest paid (8,759) (7,331)+ Interest received 1,304 822+(–) Current income tax 6,636 6,219– Income taxes paid (8,324) (2,819)+(–) Deferred taxes 14,861 7,255+ Depreciation/Amortization of fi xed assets 46,419 37,222– Non-cash results from investments accounted for using the equity method (60) (498)–(+) Other non-cash income (expenses) 26 (3,589) 9,700 119,866 114,933

–(+) Change of inventories (14,632) (22,156)–(+) Change of trade receivables, prepayments, other current and non-current asset (14,207) (17,478)(+)– Change of trade payables, prepayments and other current and non-current liabilities 26,522 7,247(+)– Change of tax liabilities, deferred taxes and other provisions 556 (2,897) (1,762) (35,284)

Consolidated cash fl ow from operating activities 118,104 79,649

CONSOLIDATEDSTATEMENT OF CASH FLOWSFOR THE FINANCIAL YEAR 2015 OF KTM AG, MATTIGHOFEN, AUSTRIA

03 anhang E_110316.indd 80 13.03.16 21:49

081

EURk Note 2015 2014

Consolidated cash fl ow from investing activities– Investments in tangible and intangible assets (payments-out) 13, 14 (94,761) (69,568)– Investments in fi nancial assets (payments-out) (312) (477)+ Disposals of fi xed assets (payments-in) 771 310Consolidated cash fl ow from investing activities (94,302) (69,735)

Consolidated cash fl ow from fi nancing activities– Dividends to owners of the parent company 20 (16,268) (10,845)– Dividends to non-controlling interests (150) 0– Acquisition of non-controlling interests (100) 0+ Taking out of research loan 45,000 30,000– Repayment of investment loans (2,370) (2,372)+(–) Taking out (repayment) of promotional loans 6,495 2,071– Repayment of liabilities from fi nance leases (388) 0+(–) Taking out (repayment) of other current loans (5,000) 5,000+(–) Other fi nancing activities 148 (99)Consolidated cash fl ow from fi nancing activities 27,367 23,755

Consolidated cash fl ow+(–) Consolidated cash fl ow from operating activities 118,104 79,649+(–) Consolidated cash fl ow from investing activities (94,302) (69,735)+(–) Consolidated cash fl ow from fi nancing activities 27,367 23,755Change in liquid funds within the group 51,169 33,669

+(–) Effect of exchange rate fl uctuations (1,513) 3,506+(–) Consolidation-related changes in funds 2 (62) 0+ Opening balance of liquid funds within the group 68,812 31,637CLOSING BALANCE OF LIQUID FUNDS WITHIN THE GROUP 118,406 68,812Comprising: cash on hand, checks, cash in banks and time deposits 118,406 68,812

The following notes to the consolidated fi nancial statements form an integral part of the consolidated statement of cash fl ows.

C O N S O L I D A T E D S T A T E M E N T O F C A S H F L O W S

03 anhang E_100316.indd 81 10.03.16 17:39


EURk Attributable to the owners of the parent company Non- Total Share Reserves Revaluation Cash fl ow Foreign Total controlling consoli- capital including reserve hedge currency interests dated

retained reserve translation equity

earnings reserve

As at January 1, 2014 10,845 257,796 17,235 (2,539) (887) 282,450 393 282,843Currency translation 0 0 0 0 1,266 1,266 0 1,266Financial instruments 0 0 0 (1,043) 0 (1,043) 0 (1,043)Actuarial losses 0 (1,808) 0 0 0 (1,808) 0 (1,808)Other comprehensive income 0 (1,808) 0 (1,043) 1,266 (1,585) 0 (1,585)

Profi t for the fi nancial year 0 57,037 0 0 0 57,037 125 57,162Total comprehensive income 0 55,229 0 (1,043) 1,266 55,452 125 55,577

Dividends to owners of the parent company 0 (10,845) 0 0 0 (10,845) 0 (10,845)As at December 31, 2014 (= January 1, 2015) 10,845 302,180 17,235 (3,582) 379 327,058 517 327,575

Currency translation 0 0 0 0 695 695 0 695Financial instruments 0 0 0 4,346 0 4,346 0 4,346Actuarial losses 0 (210) 0 0 0 (210) 0 (210)Other comprehensive income 0 (210) 0 4,346 695 4,832 0 4,832

Profi t for the fi nancial year 0 63,856 0 0 0 63,856 68 63,924Total comprehensive income 0 63,645 0 4,346 695 68,687 68 68,756

Purchase of shares in subsidiaries 0 55 0 0 0 55 (155) (100)Dividends to non-controlling interests 0 0 0 0 0 0 (150) (150)Dividends to owners of the parent company 0 (16,268) 0 0 0 (16,268) 0 (16,268)As at December 31, 2015 10,845 349,614 17,235 764 1,075 379,532 281 379,814

CONSOLIDATEDSTATEMENT OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR 2015 OF KTM AG, MATTIGHOFEN, AUSTRIA

03 anhang E_100316.indd 82 10.03.16 17:39

083

NOTES TO THECONSOLIDATED FINANCIALSTATEMENTSFOR THE FINANCIAL YEAR 2015 OF KTM AG, MATTIGHOFEN, AUSTRIA

I. THE COMPANY

KTM AG has its registered offi ce in Mattighofen, Stallhofnerstrasse 3, Austria, and has been recorded in the commercial register at the

Provincial Court as Commercial Court of Ried im Innkreis under fi le number FN 107673 v.

KTM AG engages in the development, production and distribution of motorized vehicles for recreational purposes (power sports), in particular

under the KTM and Husqvarna brands, and holds stakes in entities engaging in the development, production and distribution of such equip-

ment. As of December 31, 2015, the KTM group includes 39 subsidiaries, located in Austria, the United States, Japan, South Africa, Mexico,

and India and in various other countries of Europe and Asia, which are included within the consolidated fi nancial statements. Furthermore,

the KTM group has equity holdings inter alia in general importers that are based in important distribution markets (New Zealand and Dubai)

as well as in various fl agship stores in Austria and Germany.

Major sales markets include the USA, Germany, Australia, France, the UK, Italy, Spain, Austria, Canada, Malaysia and other European countries.

The company is part of the same group as Pierer Konzerngesellschaft mbH, Wels (ultimate group parent) and its affi liates, and is included

within that group parent’s consolidated fi nancial statements. These consolidated fi nancial statements shall be fi led with the Provincial Court as

Commercial Court of Wels under fi le number FN 134766 k and are the consolidated fi nancial statements for the largest scope of consolidation.

The consolidated fi nancial statements for the smallest scope of consolidation are drawn up by CROSS Industries AG, Wels, and shall be fi led

with the Provincial Court as Commercial Court of Wels under fi le number FN 261823 i.

II. PRINCIPLES OF FINANCIAL REPORTINGAND ACCOUNTING POLICIES

1. PRINCIPLES OF FINANCIAL REPORTING

The consolidated fi nancial statements as of December 31, 2014 and December 31, 2015 were prepared in accordance with the International

Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and in accordance with the interpretations

of the International Financial Reporting Interpretations Committee (IFRIC) insofar as they are applied in the European Union. The additional

requirements stipulated by sec. 245a para. 1 of the Austrian Commercial Code (UGB) were also met in this context.

The fi gures in the consolidated fi nancial statements are reported in the functional currency of the group parent, the euro. Unless deviations

from the general rule are indicated specifi cally, all amounts are rounded to 1,000 euros (EURk), which may give rise to rounding differences.

N O T E S / P R I N C I P L E S O F F I N A N C I A L R E P O R T I N G A N D A C C O U N T I N G P O L I C I E S

03 anhang E_100316.indd 83 10.03.16 17:39


The group fi nancial statements were approved by the Executive Board on February 16, 2016 (prior year: February 11, 2015) for review

by the Supervisory Board, for submission to the Annual General Meeting and for subsequent publication. Within the scope of the review,

it is required to perform, the Supervisory Board may require changes to be made to the consolidated fi nancial statements.

The following amendments to existing IFRSs and new IFRSs and IFRICs have been passed by the IASB and adopted by the European

Commission. Their application consequently became mandatory as from January 1, 2015 or June 17, 2014:

p IFRIC 21 Levies

p Annual improvements (2011–2013 cycle)

The fi rst-time adoption of the indicated IFRS did not cause any major changes compared to the prior year. The accounting and valuation

methods were not changed.

Future amendments to fi nancial accounting principles

The IASB and the IFRIC have passed further standards and interpretations, application of which was not mandatory during the 2015 fi nancial

year and/or which have not yet been adopted by the European Commission. These are the following standards and interpretations:

Standard / amendment IASB date Endorsement EU date of application by EU of application

New standards and interpretationsIFRS 15: Revenue from Contracts with Customers Jan. 1, 2018 No –IFRS 9: Financial Instruments Jan. 1, 2018 No –IFRS 16: Leases Jan. 1, 2019 No –

Amended standards and interpretationsIAS 19: Defi ned Benefi t Plans: Employee Contributions Jul. 1, 2014 Yes Feb. 1, 2015Annual Improvements to IFRS 2010–2012 Jul. 1, 2014 Yes Feb. 1, 2015IAS 1: Disclosure Initiative Jan. 1, 2016 Yes Jan. 1, 2016IAS 27: Equity Method in Separate Financial Statements Jan. 1, 2016 Yes Jan. 1, 2016IAS 16 and IAS 41: Bearer Plants Jan. 1, 2016 Yes Jan. 1, 2016Annual Improvements to IFRS 2012–2014 Jan. 1, 2016 Yes Jan. 1, 2016IAS 16 and IAS 38: Clarifi cation of Acceptable Methods of Depreciation and Amortisation Jan. 1, 2016 Yes Jan. 1, 2016IFRS 11: Accounting for Acquisitions of Interests in Joint Operations Jan. 1, 2016 Yes Jan. 1, 2016IFRS 10, IFRS 12 and IAS 28: Investment Entities: Applying the Consolidation Exception Jan. 1, 2016 No –IFRS 10 and IAS 28: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture Unspecifi ed time No –

The standards with material effects on the KTM group are explained briefl y below.

p IFRS 15 defi nes when and at what amount revenues should be recognized. In addition, preparers of fi nancial statements must provide

recipients of fi nancial statements with more informative and more relevant details than before. The standard provides a single, principles-based,

fi ve-stage model to be applied to all contracts with customers. First-time application will lead to adjustments in internal processes and

documentation, as well as to additional disclosures in the notes. However, no material effects on the net assets, fi nancial position or earnings

performance of KTM AG are expected.

03 anhang E_100316.indd 84 10.03.16 17:39

085

p IFRS 16 governs the accounting treatment of leases. IFRS 16 governs the recognition, measurement and disclosure in the fi nancial

statements and notes of leases. The standard specifi es a single accounting treatment for lessees. This model requires the lessee to record

all assets and liabilities under lease arrangements in the statement of fi nancial position except where the lease is for a term of 12 months or

less or the asset is of low value (in which cases application is optional). Lessors must continue to discriminate between fi nance leases

and operating leases in their fi nancial statements. The effects on the KTM group fi nancial statements are being examined. It is expected that

the recognition of leases in the statement of fi nancial position will lead to an increase in the carrying values of property, plant and equipment

and of fi nancial liabilities.

p In June 2014 the IASB published IFRS 9 Financial Instruments, which amends the provisions governing the recognition and measurement

of fi nancial assets, the impairment provisions, and the provisions on hedge accounting. The effects of IFRS 9 on KTM are still being investigated.

The new impairment provisions, recognition of expected loss, and the simplifi cations of hedge accounting particularly affect KTM. No major

changes are expected as regards classifi cation and measurement of fi nancial instruments.

p Other amended standards and interpretations are either irrelevant to the KTM group or have no material impact.

The fi nancial reporting of the entities included within the consolidated fi nancial statements is based on the uniform fi nancial reporting provisions.

These provisions were applied by all the entities included. All subsidiaries prepare their fi nancial statements as at the same date as the group

fi nancial statements.

The fi nancial statements of all major domestic and foreign entities included in the Company’s fi nancial statements by full consolidation for which

an audit is required by national regulations or was performed voluntarily were audited by independent certifi ed public accountants, and

unqualifi ed audit opinions were issued on them.

2. SCOPE OF CONSOLIDATION

The scope of consolidation is based on application of IFRS 10 and 11. All material subsidiaries are fully consolidated in the consolidated

fi nancial statements in addition to KTM AG. Subsidiaries are companies controlled by the group. The group controls a company if it is exposed

to fl uctuating returns as a result of its commitment in the company or has rights to such returns and has the ability to infl uence these returns by

using its power of disposition over the company. The fi nancial statements of subsidiaries are included in the consolidated fi nancial statements

from the moment control begins and until the moment control ends.

A materiality threshold is set in the group to determine the scope of consolidation. Companies whose business is dormant or of low volume

and that are insignifi cant for the presentation of a true and fair view of the net assets, fi nancial position and earnings performance are not

consolidated but are reported as other non-current assets and measured at amortized cost or written down for impairment. The total statement

of fi nancial position assets, total net assets and total profi t/loss of these companies comes to less than 1% of the consolidated total.

Accordingly, 39 companies were fully consolidated in the KTM group, in addition to the group parent. The entities included in the consoli-

dated fi nancial statements are specifi ed in the schedule of equity holdings as of December 31, 2015 (see annex to the notes to the fi nancial

statements).

An associate is a company on which the group has signifi cant infl uence. Signifi cant infl uence is the possibility of participating in the fi nancial

and business decision-making processes of the company in which the participation is held. In this respect there is neither control nor joint

control of the decision-making processes. The results, assets, and liabilities of material associates are consolidated in these fi nancial statements

using the equity method. Under the equity method, investments in associates are included in the consolidated statement of fi nancial position

at cost, adjusted for changes in the group’s share of the profi t or loss and other income of the associate after the acquisition date. Three

associates are measured under the equity method in the KTM group.


03 anhang E_100316.indd 85 10.03.16 17:39


The reporting date for all companies included in the KTM AG group fi nancial statements is December 31, 2015. Where an associate

accounted for using the equity method prepares its fi nancial statements as at a different date, an interim set of fi nancial statements is prepared

for consolidation purposes.

Changes in the scope of consolidation in 2015 were as follows:

Full consolidation At equity measurement

2015 2014 2015 2014

As at January 1 39 38 3 3Additions 2 1 0 0Disposals 2 0 0 0As at December 31 39 39 3 3In Austria 6 7 1 1

Abroad 33 32 2 2

Husqvarna Motorsports, Inc., Murrieta, USA, and Husqvarna Motorcycles SA Pty Ltd, Northriding, South Africa, were established during

the fi rst half of 2015 and have thus been included in the scope of consolidation for the fi rst time.

KTM Events & Travel Services AG (in liquidation) was deconsolidated in 2015 and is thus no longer included in the consolidated fi nancial

statements of KTM AG.

Due to the loss of control, a loss on deconsolidation of EUR 146k was recognized in the income statement under other operating expenses.

Control of cash totaling EUR 62k was also lost.

KTM AG received no remuneration in relation to the deconsolidation of KTM Events & Travel Services AG during 2015.

The table below shows the main groups of assets and liabilities disposed of:

EURk

Cash and cash equivalents 62Intercompany trade receivables 684Other current assets 8Intercompany trade payables 40Other current liabilities 8Equity 706

The number of fully consolidated entities also reduced by one company due to the transfer of the operating business of KTM Motorrad AG

to KTM AG and the subsequent merger of KTM Immobilien GmbH into KTM Motorrad AG. KTM Motorrad AG was subsequently transformed into

a GmbH and renamed KTM Immobilien GmbH.

03 anhang E_100316.indd 86 10.03.16 17:39

087

An abridged representation of the KTM group structure looks as follows:

KTM AG

KTM AG is listed and forms the ultimate group parent of the KTM group. Following the transfer to KTM AG of the operating business of

KTM Motorrad AG during 2015, the corporate object of KTM AG now covers the development and production of motorcycles under the KTM and

Husqvarna brands and of the X-Bow supercar. All group head offi ce functions such as procurement, quality management, logistics, motorsport,

fi nance and accounting and human resources are contained within KTM AG. It holds direct equity interests in the material group companies

located in Austria and controls most of the KTM group’s fi nancing arrangements.

The sales companies KTM Sportmotorcycle GmbH and Husqvarna Motorcycles GmbH distribute the two brands’ motorcycles and spare parts

directly to European dealers and global importers. Markets in the United States, Mexico, South Africa, Japan and Greece are served via

local sales subsidiaries which carry their own inventories. The two companies in turn hold participations in a total of 22 domestic and foreign

marketing companies that provide marketing and related services in the local markets for KTM Sportmotorcycle GmbH and Husqvarna Motor-

cycles GmbH.

KTM Sportcar GmbH markets the X-Bow supercar.

KTM Technologies GmbH provides services in vehicle and product development along with consultancy, particularly in lightweight construction

and fi ber composites for group companies and third parties.

The KTM group’s land and buildings are bundled in KTM Immobilien GmbH.

3. CONSOLIDATION METHODS

Equity consolidation: New acquisitions are consolidated for the fi rst time using the acquisition method in accordance with IFRS 3. This means

that at the acquisition date, i.e. the date when the power to exercise control is obtained, the remeasured identifi able assets and liabilities of

the acquired business entity are contrasted to the consideration paid and, if applicable, to the amount reported for the non-controlling interests

and the fair value of the interests already held at the acquisition date. Any positive balance is capitalized as goodwill; any negative balance

is recognized as an income item, “Gain on a bargain purchase”, in the consolidated income statement after reassessing the values reported.

Any acquisition-related costs are recognized as an expense.

Transactions with owners of non-controlling interests that do not result in a loss of control are recognized directly, and exclusively, in equity

without any restatements of the assets and liabilities of the company or its goodwill.


KTM Technologies GmbH

KTM Immobilien GmbH

KTM Sport-motorcycle GmbH

KTM Sportcar GmbH

Husqvarna Motorcycles GmbH

Sales companies

Sales companies

03 anhang E_100316.indd 87 10.03.16 17:39


With the equity method, the interests in associates are recognized in the consolidated statement of fi nancial position at their cost of acquisition

plus any changes in the group’s portion of the net assets of the associate after the acquisition. The goodwill related to an entity measured by

the equity method is comprised in the carrying amount of the investment and is not amortized separately.

All receivables and liabilities, expenses and income resulting from the settlement of accounts among the included entities, as well as all intra

group results from intragroup sales of inventories were eliminated. During the fi nancial year just ended, no material results arose from intragroup

sales of property, plant and equipment or intangible assets.

Deferred taxes from consolidation are recognized in the consolidation procedures that impact profi t or loss.

Currency translation: In the separate fi nancial statements of the consolidated entities, any transactions made in foreign currency are posted

at the exchange rate valid on the transaction date. On the statement of fi nancial position date, foreign currency items are translated at the

closing rate at the end of the respective reporting period. Any and all differences in rates are recognized in the separate fi nancial statements

as expenses or income in the period in which they arise.

The group currency is the euro. The subsidiaries located outside the euro zone are regarded as entities that are economically independent.

In line with the concept of the functional currency, the assets and liabilities shown in the separate fi nancial statements of these entities,

including any goodwill reported and any value adjustments resulting from initial consolidation, were translated using the mean rate of exchange

valid on the statement of fi nancial position date, and the items of the consolidated income statement were translated using the weighted

average rate of exchange of the fi nancial year. Any foreign exchange gains or losses resulting from such currency translation are recognized

in other comprehensive income. Foreign exchange differences arising on non-current fi nancial receivables that represent net investments in

foreign operations are recognized in other comprehensive income.

The exchange rates used for translating the currencies of material effect for the consolidated fi nancial statements saw the following development:

Year-end rate Weighted average rate

Dec. 31, 2015 Dec. 31, 2014 2015 2014

CHF 1.0835 1.2024 1.0646 1.2127JPY 131.0700 145.2300 133.6310 140.5025USD 1.0887 1.2141 1.1046 1.3211ZAR 16.9530 14.0353 14.2805 14.3406MXN 18.9145 17.8679 17.6706 17.6453

4. ACCOUNTING POLICIES

The fi nancial reporting of the entities included within the consolidated fi nancial statements is based on uniform accounting policies. These

policies are identical to those of the fi nancial year 2014, except for the standards applied for the fi rst time.

The consolidated statement of fi nancial position is divided between non-current and current assets. The consolidated income statement

is subdivided according to the cost of sales method. The consolidated statement of cash fl ows is drawn up according to the indirect method.

As a matter of principle, any and all current assets and liabilities are realized or discharged within a period of twelve months after the statement

of fi nancial position date or within an operating cycle, as the case may be. All other assets and liabilities are realized or discharged outside this

period of time as a matter of principle.

03 anhang E_100316.indd 88 10.03.16 17:39

089

To increase the utility of the consolidated fi nancial statements, some individual items and presentations have been reclassifi ed as of

December 31, 2015. Additionally, the notes have been partly reordered and disclosures in the notes have been adapted and/or enhanced.

p In the consolidated income statement, amortization of capitalized development costs are disclosed from 2015 onwards under cost

of sales, rather than under research and development expenses as previously. The prior year fi gures have been restated accordingly, leading

to an increase of EUR 20,380k in cost of sales and a corresponding reduction in research and development expenses.

p Certain items in the group statement of fi nancial position have been condensed in order to improve clarity and informativeness. Goodwill

is disclosed under intangible assets. Details are provided in note 14, Intangible Assets.

p The title of the “Deferred tax” item disclosed under non-current assets has been changed to “Deferred tax assets”.

p The defi nition of operating lease expenses is standardized group-wide. This item now also includes long-term rents for land and buildings

on third party land. Prior year disclosures under note 29, Leases have been restated accordingly.

Consolidated income statement

Revenues, minus cash discounts, customer bonuses, and rebates, are recognized after the passing of the risk or, as the case may be, after

the time when performance was rendered. The regulations of IAS 11 concerning make-to-order production (percentage-of-completion method)

are not applicable due to the nature of the products made.

Other operating income is realized when economic benefi t is likely to arise from the underlying contract and a reliable determination of

the income has been made.

Interest income is realized pro rata temporis taking into account the effective yield, and dividend income is recognized when the right

to dividend payment arises.

Consolidated statement of fi nancial position

Property, plant and equipment are recognized at acquisition or production costs less depreciation. Depreciation is determined by the straight-

line method and is based on the following expected useful lives:

Useful life

Buildings 10 to 50 yearsMachinery/tools 2 to 10 yearsOffi ce furniture and equipment 3 to 8 years

The costs of self-constructed property, plant and equipment comprise direct costs including an allocation of production overheads (indirect

materials and indirect labor). Financing costs resulting from the direct attribution of borrowings and/or from the application of an average interest

rate to the expenses incurred, are not capitalized due to the absence of qualifying assets as defi ned in IAS 23.


03 anhang E_100316.indd 89 10.03.16 17:39


If property, plant, and equipment are fi nanced by leasing contracts in which the material opportunities and risks devolve to the lessee, they

are recognized as fi nance leasing. They are recognized at the lower of the fair value or present value of the minimum lease payments to

be expected in the future. They are reported under property, plant, and equipment; the corresponding payment obligations are reported under

fi nancial liabilities. Depreciation takes place on a straight-line basis over the economic useful life or, if shorter, over the term of the leasing

contract. Lease payments are divided into interest and redemption components. The interest component of lease payments is recognized

directly in the consolidated income statement.

The KTM group determines whether a property is regarded as an investment property for the purposes of IAS 40 on the basis of the following

criteria. In accordance with IAS 40.5, an investment property is a property which KTM owns or leases under a fi nance lease to earn rental

income or to achieve capital appreciation or both. This defi nition excludes properties that are held for use in the production or supply of goods

or services or for administrative purposes and properties that are held for sale in the ordinary course of the entity’s business or are in the

process of construction or development for such sale.

Goodwill is not amortized but subjected to an annual impairment test. The two brands “KTM” and “Husqvarna” are seen as cash-generating

units at KTM. The corporate assets of the cash-generating unit are compared with the value in use. Where the latter is lower, an impairment

charge is made accordingly, unless the fair value (net of costs to sell) is higher. The value in use is calculated using the discounted cash fl ow

method assuming a pre-tax WACC of 10.08% (prior year: 10.47%).

The cash fl ows used in the impairment test are based on the most recent medium-term planning fi gures approved by the Supervisory Board.

Medium-term planning usually entails a planning horizon of fi ve years. Beyond the detailed planning horizon, cash fl ows for the fi fth fi nancial

period planned in detail are used as the basis for calculating a perpetuity value. The assumption is made that the business will be a going

concern and no growth discount is applied. Medium-term planning is based on internal assumptions concerning future development of sales,

prices, and costs, the future opening up of new markets, and the composition of the product mix. The assumptions are based mainly on

the wealth of experience gained over many years and management assessments.

The utility values calculated are checked for plausibility using the multiples method and scenarios are computed regarding the discount rate

and budgeted future EBITs. Management has determined, as in the prior year, that no plausible change in the material assumptions could cause

the carrying value to exceed the recoverable amount.

Intangible assets, if acquired for valuable consideration, are capitalized at cost and are measured less amortization.

Unless stated separately, the amortization period for software and licenses is three to fi ve years.

For intangible assets generated internally, the production period is subdivided into research, development and model update phases. The costs

incurred during the research and model update phases are immediately recognized in profi t or loss. Expenditures incurred during the develop-

ment phase are capitalized as intangible assets if the developed product or process meets certain requirements confi rming the future benefi t of

such expenditure, i.e. primarily if technical feasibility and marketability have been achieved. Intangible assets generated internally are measured

at cost less amortization and write-downs. Amortization is effected using the straight-line method and is based on a useful life of fi ve years.

Capitalized development costs that can be clearly attributed to specifi c products or procedures are amortized from the commencement of series

production.

03 anhang E_100316.indd 90 10.03.16 17:39

091

Intangible assets of indeterminate useful life, such as the “KTM” brand (recognized at a value of EUR 61,103k in the course of the initial

purchase price allocation), are not amortized but are instead subjected to an annual impairment test. Any necessary impairment is accounted

for in profi t and loss. The Executive Board assumes an indeterminate useful life for the “KTM” brand because the rights are not subject to

any restrictions as to time, in law or by contract in the relevant markets and because the sustained public awareness of the brand indicates that

there has been no loss of economic value. The KTM brand is attributed to the KTM cash-generating unit.

Brand measurement is based on fair value less disposal costs and measurement takes place on the basis of the relief from royalty method.

The royalty rate in the amount of 1.5% of the revenues, which forms the basis for measurement, was derived from comparable publicly avail-

able license agreements. The impairment test as at December 31, 2015 was performed analogously to the goodwill impairment test on

the basis of the current fi ve-year planning fi gures. An asset-specifi c cost of capital of 12.1% (prior year: 14.0%) was taken as the discounting

rate. This was made up of the group pre-tax WACC of 9.1% (prior year: 11.0%) plus a risk premium for the brand of 3.0% (prior year: 3.0%).

The risk premium was derived on the basis of the WACC-to-WARA concept.

The value-determining parameters that are material when measuring the “KTM” brand are the discount rate, the royalty and the budgeted

revenues. Sensitivity analysis for these parameters indicates, as in the prior year, that no plausible change in the material assumptions could

cause the carrying value to exceed the recoverable amount.

Deferred taxes items are included to account for future tax effects expected to result from business transactions that have already been

recorded either in the consolidated fi nancial statements or in the tax accounts of the KTM group (temporary differences). Deferred taxes relating

to tax loss carry forwards are calculated taking into account their timely realizability. Deferred tax assets and deferred tax liabilities are reported

on a net basis if they are subject to the same tax jurisdiction and have similar terms. Deferred taxes items for the differences between the

tax base of fully consolidated interests or interests measured at equity and the corresponding consolidated equity are created only if realization

in the foreseeable future is probable. The calculation is based on the income tax rate customary in the respective country at the time when the

difference in value is expected to be reversed.

Financial instruments

Purchases and sales of any and all fi nancial instruments are recognized as of the respective settlement date.

Primary fi nancial instruments

Securities (held for trading) are measured at their fair value as at the reporting date. Generally, the stock-exchange prices as at the reporting

date are taken as fair values. Changes in measurement are recognized in profi t and loss.

Other fi nancial assets (fi nancial assets available for sale) are measured at their fair value on the statement of fi nancial position date. As a

matter of principle, the stock-exchange prices valid as of the statement of fi nancial position date are recognized as the fair value; changes in the

measurement are recognized in other comprehensive income, provided such changes are material. Other non-current fi nancial assets include

equity instruments that are not quoted in an active market and whose fair value cannot be reliably measured. These are accounted for at cost

less impairment. There is currently no plan to dispose of these participations.

Impairment losses are recognized for fi nancial assets if there is objective evidence. Such objective evidence includes, for instance, fi nancial

diffi culties, insolvency, breach of contract or considerable delay in payment by the obligor or issuer. In the case of an investment in an equity

instrument, a signifi cant or prolonged decline in the fair value below its cost is objective evidence of impairment. The group regards a decline

by 20% as signifi cant and a period of nine months as prolonged.


03 anhang E_100316.indd 91 10.03.16 17:39


Cash and cash equivalents include cash on hand and in banks, checks and time deposits with a fi xed term of not more than three months

(calculated from date of acquisition) and are measured at the fair value they have as of the statement of fi nancial position date.

Receivables and other assets upon initial recognition are measured at fair value and in subsequent periods are measured at amortized cost.

Foreign currency receivables are recognized in the amount translated at the closing rate at the end of the respective reporting period,

less necessary impairment losses to be recorded on account of identifi able risks. Financial receivables are classifi ed as “Loans and receivables”

and measured at amortized cost.

Individual value adjustments of fi nancial assets will only be made if they are regarded as uncollectable or partly uncollectable. Individual value

adjustments are deemed indicated in the case of fi nancial diffi culties, insolvency, breach of contract or considerable delay in payment on

the part of the customer. The individual value adjustments consist of numerous separate items none of which is material if considered on its

own. Financial assets will only be derecognized directly if the contractual rights to receive payments on the fi nancial assets no longer exist (in

particular in the case of insolvency). If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related

objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss is reversed either directly

or by adjusting the allowance account.

Financial liabilities are measured at amortized cost. Financial liabilities are classifi ed as “Other fi nancial liabilities”. Any difference between the

amount received and the repayment amount is distributed over the time to maturity by means of the effective interest method and recognized

in the fi nancial result. The issuing costs incurred in connection with bonds are recognized as an expense over the time to maturity.

Liabilities are measured at amortized cost. Liabilities denominated in foreign currencies are translated at the exchange rate ruling on the

reporting date.

Derivative fi nancial instruments and hedges

The group enters into derivative fi nancial instruments (foreign currency forwards and interest rate swaps) to hedge the foreign currency and

interest rate risk. The objective behind the use of derivative fi nancial instruments is offsetting the diversity of cash fl ows from future transactions.

Expected revenues in foreign currencies serve as the basis for planning future cash fl ows.

In accordance with IAS 39, derivatives are generally measured at market values. The KTM group applies the rules for cash fl ow hedge account-

ing defi ned by IAS 39 to these derivative fi nancial instruments. Fair value hedge accounting is not applied within the KTM group.

A cash fl ow hedge is present if variable cash fl ows from recognized assets and/or liabilities or forecast transactions that are subject to a market

price risk are being hedged. If the requirements for a cash fl ow hedge are met, the effective portion of the change in the market value of hedging

instruments has to be recognized directly in the consolidated equity, but is not recognized in profi t or loss before the transaction constituting

the hedged item has occurred. Where foreign currency hedging instruments are used, subsequent changes in the market value of the derivatives

are recognized in profi t and loss. From that date, the change in the market value can be compared to the end-of-period closing rate of the

foreign currency trade payables or foreign currency trade receivables. Any changes in earnings that may be caused by the ineffectiveness of the

derivative fi nancial instruments are recognized in profi t or loss in the consolidated income statement.

The application of hedge accounting requires certain conditions to be met. For one thing, documentation of the hedging relationship must

be available and, for another, the effectiveness of the hedge, to be determined by periodical measurements, must lie between 80% and 125%.

By testing the effectiveness of the hedge, the effective offsetting of unrealized losses and unrealized gains is documented.

03 anhang E_100316.indd 92 10.03.16 17:39

093

To measure the effectiveness of a currency hedge, the hedged items and the hedging transactions are grouped together in so-called maturity

bands according to the hedged risk. The maturity bands should not cover more than one quarter-year. The hedging relationship is tested

prospectively by comparing the material conditions (maturity, etc.) of the hedged item and the hedging transaction. Hedge effectiveness is

measured retrospectively using the dollar offset approach. This involves comparing and assessing the changes in the fair value of the hedged

item and the changes in the fair value of the hedging transaction.

In the case of interest rate hedges, prospective effectiveness is measured using a sensitivity analysis, and retrospective effectiveness testing

is performed using the dollar offset approach.

Hedging transactions that do not meet the criteria for hedging instruments within the meaning of IAS 39 qualify as trading transactions and

are classifi ed as “at fair value through profi t or loss” (held for trading). Changes in the market value are recognized in their full amount in profi t

or loss in the current period and shown in the fi nancial result.

Derivatives are measured at fair value. The fair value is the market value and is determined using accepted methods of fi nancial mathematics.

This is based on market data available as at the reporting date (interest rates, exchange rates etc.). Forward currency contracts are measured

using the closing rate on the reporting date. In the case of positive market values, the credit rating of the counterparty is included in the

measurement by means of a credit value adjustment (CVA). In the case of negative market values, a debit value adjustment (DVA) is deducted

in order to account for the own risk of default. Special models are used to estimate the measurement. They are checked for plausibility by

means of bank valuations.

Inventories are measured at the lower of cost or net realizable value on the reporting date. Net realizable value is the estimated proceeds less

estimated selling costs. Inventories are measured using the average cost method based on an examination of expected turnover, with allowances

being made for limited usability. The economic value of existing inventories is also reviewed on a case-by-case basis and additional allowances

are made as required for slow-moving items or items with limited possibilities of sale.

Costs of acquisition include all costs that were incurred in order to bring the object to its required condition and to the relevant location.

Costs of conversion comprise direct material and production costs based on normal capacity usage, plus appropriate portions of materials and

production overheads. Administrative overheads and selling costs on the other hand do not form part of the costs of production. Interest on

borrowings is not capitalized as the inventories do not constitute qualifying assets according to IAS 23.

The obligations relating to social capital consist of obligations relating to severance pay and anniversary bonuses. KTM AG is obligated by

law to make severance pay upon termination by the employer or upon retirement to all employees in Austria whose employment relationship

commenced before January 1, 2003. This defi ned benefi t obligation depends on the number of years of service and on the employee’s

relevant remuneration at the time of the event giving rise to the severance pay, and it amounts to between two and twelve monthly remunera-

tion payments. For all employees in Austria who joined after December 31, 2002, KTM AG pays a monthly 1.53% of their remuneration

into a staff severance pay fund that invests the contributions on an account maintained for the employee; at the end of the employment

relationship, the amount thus accumulated is paid out or the claim thereto is passed on. KTM AG is only obligated to pay contributions which

are recognized as expenses in the fi nancial year for which they were paid (defi ned-contribution obligation).

Defi ned benefi t obligations in respect of severance pay and anniversary bonuses are measured according to the projected unit credit method

prescribed by IAS 19 (employee benefi ts), based on actuarial reports. Within the scope of this benefi t/years of service method, both the

conditional benefi ts known as of the statement of fi nancial position date and the increases in salaries to be expected in the future are taken into

account. This method is used to determine the present value of the defi ned benefi t obligation (DBO), which is compared where required to the

fair value of the plan assets as at the reporting date.


03 anhang E_100316.indd 93 10.03.16 17:39


KTM AG is obligated under collective-bargaining agreements to pay its employees in Austria anniversary bonuses upon attaining a certain

number of years of service (from 25 years of service upwards) (defi ned benefi t obligation). In accordance with IAS 19, the actuarial result

continues to be recognized directly in the consolidated income statement. The interest result is recognized under “Other fi nancial result”.

Any differences (actuarial gains or losses) resulting at year-end between the projected severance payment obligations and the actual value of

the benefi ts are taken directly to other comprehensive income, net of any deferred taxation.

Provisions are made if a liability is owed to third parties as a result of a past event, a claim is likely to be asserted, and a reliable estimate

of the amount expected to become payable is possible.

Provisions relating to warranties are made in profi t or loss at the time when the products are sold.

Government grants are taken into account as soon as there is assurance that they will be received by the KTM group and that the group can

comply with the requirements that are imposed. As a matter of principle, subsidies are accounted for in the consolidated income statement on

the basis of a direct connection with the corresponding costs that are to be compensated by means of the subsidies.

Investment grants from public funds which cannot yet be allocated to expenses incurred and/or which must be repaid are stated in the

consolidated fi nancial statements under non-current liabilities.

During 2015, KTM AG entered into a revolving facility for the fi nancing of trade payables (supplier fi nance program) with an Austrian bank.

Under this program, the bank offers suppliers the option to have accounts receivable from KTM AG discounted at the bank and paid out in

advance of the due date. As the fi nancing costs are based on the good credit rating of the KTM group, the program offers participating suppliers

a low-cost way to obtain early settlement of their KTM AG receivables and thus optimize their working capital. KTM AG settles the liability on

the due date by paying the invoiced amount to the bank.

The program has been reviewed for compliance with civil law and with the stipulations of IAS 39. KTM AG remains legally bound by the original

obligation, as from its point of view only the identity of the creditor changes while the content of the obligation remains unaltered. Furthermore,

the program does not cause any new (additional) obligation to arise on the part of KTM AG to the bank. As the program leads to no substantial

quantitative or qualitative changes in the contractual terms (as per the criteria set out in IAS 39.40 and IAS 39 AG 62), the payables concerned

(EUR 34,338k; prior year: EUR 0k) are disclosed under trade payables and the cash fl ows under cash fl ow from operating activities.

A contingent liability is a possible obligation that arises from past events and whose existence will be confi rmed only by the occurrence or

nonoccurrence of one or more uncertain future events not wholly within the control of the entity. Furthermore, a contingent liability is a present

obligation that arises from past events but is not recognized because it is not probable that an outfl ow of resources embodying economic

benefi ts will be required to settle the obligation or the amount of the obligation cannot be measured with suffi cient reliability.

Estimates and uncertainties in judgments and assumptions

In the consolidated fi nancial statements, certain estimates and assumptions have to be made that affect the recognized assets and liabilities,

the disclosure of contingent liabilities as of the statement of fi nancial position date and the presentation of income and expenses for the

fi nancial year. Estimates and assumptions are based on empirical values that the Executive Board deems appropriate. The amounts actually

arising may differ from the estimates if assumed parameters develop contrary to expectations. If new conditions become known, they are

duly taken into account and previous assumptions are revised accordingly.

03 anhang E_100316.indd 94 10.03.16 17:39

095

p Assumptions are made in particular to assess the recoverability of goodwill and intangible assets of indeterminate useful life. Goodwill

of EUR 78,566k (prior year: EUR 78,723k) was recognized at the reporting date, along with the KTM brand, which is valued at EUR 61,103k

(prior year: EUR 61,103k) Annual checks by means of impairment testing as well as the sensitivity analysis are described in the chapter on

accounting policies.

p Deferred tax assets on tax loss carry forwards not subject to expiration are recognized based on the assumption that suffi cient taxable income

will be generated in the future to be able to use the tax loss carry forwards. In the case of uncertainties in the assumptions, corresponding value

adjustments are recorded. Only tax loss carry forwards arising in Austria are recognized in the KTM group. As of December 31, 2015, deferred

tax assets of EUR 0k (prior year: EUR 10,648k) were recognized in relation to loss carry forwards.

p In cash fl ow hedge accounting, assessments are made regarding the occurrence of future cash fl ows. The planning of future cash fl ows is

derived from sales planning and order volume planning, is checked for achievement of objectives on a monthly basis and checked for plausibility

using past experience. In line with the internal guideline on currency hedges, foreign currency hedges are generally entered into on a rolling

basis and cover a period of up to twelve months. The hedge ratio of the individual currencies is determined based on the planning uncertainty

in the respective market, on the volatility of the currency and on hedging costs. Based on the importance of the individual currencies (volume,

relevance for the result), they are aggregated by type, and different methods are applied accordingly. But the hedge ratio per currency must not

exceed 80% of the foreign currency exposure. Details of sensitivities in relation to currency and interest rate risks are provided in note 28.2,

Financial Risk Management.

p Furthermore, estimation uncertainty exists with the recognition and measurement of obligations relating to social capital. Assumptions

are made concerning the following factors: empirical values and demographic assumptions such as the retirement age of women/men

and employee fl uctuation as well as fi nancial assumptions such as the discount rate and future wage and salary trends. Liabilities for severance

pay entitlements of EUR 12,627k (prior year: EUR 11,645k) were disclosed as at the reporting date. For further details, refer to note 24,

Employee Benefi ts.

p Regarding provisions, estimates have been made in order to assess probabilities and determine the expected amount for measuring the

obligation. These assumptions essentially concern provisions relating to guarantees and warranties. Based on past experience, a direct connec-

tion was established, per product group, between the guarantee and warranty expenses incurred and the revenues. The Executive Board,

on the basis of longstanding experience, expects this relationship to remain stable. The average percentage of guarantee and warranty expenses

in the revenues is checked several times a year and adjusted if necessary. The amount recognized as a provision is therefore derived

as an average percentage, determined over a three-year observation period, of the guarantee and warranty expenses in the revenues. As at

December 31, 2015 provisions for guarantees and warranties of EUR 8,088k (prior year: EUR 6,360k) were recorded. An average increase in

the guarantee cost percentage of 10% would lead to an increase in the provision of EUR 685k (prior year: EUR 636k). Details of movements

in the guarantee and warranty provisions are provided in note 25, Provisions.

The following judgments were made in respect of the application of accounting policies in the KTM group.

p Inclusion of group companies in the scope of consolidation: Evaluation of whether a controlling infl uence exists within the meaning of

IFRS 10. Further details are provided under note 16, Other Non-current Assets.

p Finance leases: Evaluations were made with respect to the criteria for classifi cation as a fi nance lease. Further details are provided under

note 13, Property, Plant and Equipment and note 29, Leases.


03 anhang E_100316.indd 95 10.03.16 17:39


p Derecognition of receivables in connection with ABS agreements: Evaluations were made with respect to the conditions for derecognition

under IAS 39. Further details are provided under note 28, Financial Instruments.

p Investment Property: Evaluating the fi nance lease relationship recognized under Buildings, as described in note 29, Leases, required

assumptions to be made regarding whether the property in question was an investment property as per IAS 40.

The logistics center is predominantly used by the KTM group itself. A small portion is rented to third parties outside the group. These subleases

to non-group lessees concern companies which have long-term relationships with the KTM group for the supply of goods or services, and

represent an outsourced part of the KTM value chain. As the subleasing does not serve the purpose of earning rental income, but is instead

carried out in the interests of the operating business, the section that is rented to non-group third parties is disclosed under property, plant and

equipment and is not regarded as investment property.

p Supplier fi nance: Assessments were made regarding the disclosure of liabilities in relation to the supplier fi nance program. Further details

are provided under note 4, Accounting Policies.

III. NOTES TO THE CONSOLIDATED INCOME STATEMENT

5. REVENUE

Revenue by region

EURk 2015 2014

Austria 43,986 39,358Other Europe 468,174 422,449North America 301,767 201,522Other countries 208,560 201,307

1,022,487 864,636

Revenue by product group

EURk 2015 2014

Offroad sport motorcycles 425,359 347,359Street sport motorcycles 390,616 329,263Sportminicycles 37,951 34,463X-Bows 3,214 2,665Total – vehicles 857,141 713,750

Parts, garments and accessories as well as other revenues less revenue reductions 165,346 150,886 1,022,487 864,636

03 anhang E_100316.indd 96 10.03.16 17:39

097

6. PRESENTATION OF EXPENSES BY FUNCTION

The expense items shown in the consolidated income statement according to the cost of sales method can be classifi ed by their function

as follows:

Cost of sales

EURk 2015 2014

Cost of materials and cost of purchased services 640,895 540,198Personnel expenses 42,415 35,342Depreciation and amortization relating to property, plant and equipment and to intangible assets 12,925 9,412Amortization of capitalized development costs 24,514 20,380Other operating expenses (273) 8,960 720,477 614,292

Cost of sales includes income from foreign currency translation differences of EUR 13,968k (prior year: EUR 8,347k), measured at fair value

through profi t and loss. These exclude differences arising on the measurement of fi nancial instruments.

Selling and racing expenses

EURk 2015 2014

Cost of materials and cost of purchased services 12,059 16,912Personnel expenses 48,029 40,341Depreciation and amortization relating to property, plant and equipment and to intangible assets 3,432 2,513Other operating expenses 76,351 60,809Sponsorship income and contributions (7,527) (6,330) 132,345 114,245

Research and development expenses

EURk 2015 2014

Cost of materials and cost of purchased services 4,884 2,885Personnel expenses 10,394 6,558Depreciation and amortization relating to property, plant and equipment and to intangible assets 1,401 1,380Other operating expenses 6,693 5,289Subsidies (6,987) (5,067) 16,385 11,044

Expenses disclosed under research and development expenses comprise research costs and non-capitalizable development costs.

Personnel expenses before the effects of capitalizing development costs were EUR 30,064k (prior year: EUR 24,714k).

As of 2015, amortization charged to capitalized development costs is disclosed under cost of sales. The prior year fi gures have been restated

accordingly, leading to an increase of EUR 20,380k in cost of sales and a corresponding reduction in research and development expenses.

N O T E S / N O T E S T O T H E C O N S O L I D A T E D I N C O M E S T A T E M E N T

03 anhang E_100316.indd 97 10.03.16 17:39


Infrastructure and administration expenses

EURk 2015 2014

Cost of materials and cost of purchased services 282 309Personnel expenses 14,539 12,076Depreciation and amortization relating to property, plant and equipment and to intangible assets 3,747 3,112Rental and leasing expenses 5,459 6,169Insurance expenses 2,087 2,037Other operating expenses 10,634 8,923 36,747 32,626

Sponsorship income and contributions are deducted from the corresponding expenses, as are subsidies.

Total personnel expenses for 2015 before the effects of capitalizing development costs were EUR 119,162k (prior year: EUR 97,431k).

Expenses for the auditor of the fi nancial statements

The expenses attributable to the fi nancial year 2015 for the auditor of the fi nancial statements, KPMG Austria GmbH Wirtschaftsprüfungs-

und Steuerberatungsgesellschaft, amount to EUR 200k (prior year: EUR 197k). Expenses in relation to other assurance services were EUR 14k

(prior year: EUR 13k). Expenses in relation to miscellaneous audit-related advisory services were EUR 24k (prior year: EUR 91k).

Employees

2015 2014

Employees (annual average)Manual workers 1,009 863Clerical staff 1,371 1,193 2,380 2,056Employees as at December 31Manual workers 1,062 866Clerical staff 1,453 1,277 2,515 2,143In Austria 2,100 1,761

Abroad 415 382

Employee numbers as stated include contract workers and external staff.

03 anhang E_100316.indd 98 10.03.16 17:39

099

7. OTHER OPERATING EXPENSES

Other operating expenses of EUR 21,637 (prior year: EUR 17,353k) comprise customer service, guarantee and warranty expenses of

EUR 21,491k (prior year: EUR 17,351k) and miscellaneous expenses of EUR 146k (prior year: EUR 2k). Miscellaneous expenses in 2015

include the loss arising on the deconsolidation of one subsidiary.

8.OTHER OPERATING INCOME

Other operating income of EUR 210k (prior year: EUR 302k) includes income from the sale of fi xed assets of EUR 185k (prior year: EUR 182k)

and miscellaneous other operating income of EUR 25k (prior year: EUR 120k).

9. OTHER FINANCIAL RESULT

The item other fi nancial result consists of the following elements:

EURk 2015 2014

Foreign exchange valuation of bank deposits (1,617) 3,107Valuation of securities 157 0Impairment of non-current fi nancial assets (710) (981)Interest expenses for employee benefi ts (258) (328)Income from other investments 64 35 (2,363) 1,833

10. SHARE OF THE PROFIT OF ASSOCIATES ACCOUNTED FOR USING THE EQUITY METHOD

EURk 2015 2014

Kiska GmbH, Anif, Austria 102 574KTM New Zealand Ltd., Auckland, New Zealand 31 54 133 628

N O T E S / N O T E S T O T H E C O N S O L I D A T E D I N C O M E S T A T E M E N T

03 anhang E_100316.indd 99 10.03.16 17:39

K T M C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

11. TAX EXPENSE

The group’s tax expense and tax income are attributable to current taxes and deferred taxes as follows:

EURk 2015 2014

Current taxesAustria 3,416 3,314Abroad 3,220 2,905 6,636 6,219Deferred taxesAustria 16,534 9,828Abroad 340 (122)Consolidation level (2,013) (2,451) 14,861 7,255 21,497 13,474

Income taxes comprise taxes on income payable in each country as well as deferred taxes. The Austrian companies of the KTM group are

taxed at a corporate income tax rate of 25%. The calculation of foreign taxes is based on the laws and regulations that are in force or have been

adopted in the individual countries. The tax rates applicable to foreign entities vary from 8.7% to 38.0%.

The expected tax expense (derived from applying the group tax rate of 25% to the profi t before tax of EUR 85,421k (prior year: EUR 70,636k))

and the actual tax expense disclosed are reconciled as follows:

EURk 2015 2014

Expected tax expense (21,359) (17,659)Effects of foreign tax rates (714) (578)Non-temporary differences (1,328) (951)Investment allowances 1,467 1,155Utilization of loss carry forwards (208) 14Change in valuation allowances against losses carried forward 0 4,153Withholding tax 222 72Taxes in relation to prior periods 281 74Equity accounting 17 125Other 125 122 (21,497) (13,474)

100

03 anhang E_100316.indd 100 10.03.16 17:39

The following loss carry forwards within the KTM group have been recognized as assets:

EURk Dec. 31, 2015 Dec. 31, 2014

Loss carried Deferred Loss carried Deferred forward tax assets forward tax assets

KTM AG, Mattighofen, Austria 0 0 42,593 10,648

Loss carry forwards recognized as assets relate exclusively to taxes payable to the Austrian tax authorities at the level of the group parent,

KTM AG. Under current Austrian law, they may be carried forward indefi nitely. Under Austrian corporation tax law, the annual offset is limited

to 75% of taxable income.

All remaining loss carry forwards were utilized during the year.

Total deferred tax assets and liabilities were calculated from the following statement of fi nancial position items:

EURk Dec. 31, 2015 Dec. 31, 2014

Deferred tax assetsReceivables and other current assets 0 732Inventories 6,676 4,721Financial assets 446 367Losses carried forward 0 10,648Employee benefi ts 2,221 3,365Provisions 2,044 1,609Liabilities 1,454 671 12,841 22,113Deferred tax liabilitiesReceivables and other current assets (1,134) 0Intangible assets (43,614) (38,332)Property, plant and equipment (2,140) (1,682)Other (100) (111) (46,988) (40,125) (34,147) (18,012)Of which deferred tax assets 3,595 2,480

Of which deferred tax liabilities (37,742) (20,492)

Deferred tax assets include amounts for remaining sevenths of write-downs of participations to going concern value pursuant to

sec. 12 para. 3 no. 2 of the Austrian Corporate Tax Act (KStG) in the item fi nancial assets, in the amount of EUR 1,787k (prior year: EUR 1,468).

During the year under review, sevenths of EUR 391k (prior year: 427k) arising from partial write-downs were released. Deferred tax assets were

recognized for all remaining sevenths in accordance with sec. 12 of the KStG, as the requirements set out in IAS 12.34 ff. were met.

The temporary differences in the item “Intangible assets” result mainly from development costs (which are not capitalizable for tax purposes)

and the quasi-permanent differences resulting from the recognition as an asset of the “KTM” brand.

N O T E S / N O T E S T O T H E C O N S O L I D A T E D I N C O M E S T A T E M E N T 101

03 anhang E_100316.indd 101 10.03.16 17:39


As at December 31, 2015 (as at the previous year end), it was to be assumed either that under current tax regulations the differences

between the value for tax purposes of equity interests in consolidated subsidiaries and the proportion of equity recognized in the consolidated

IFRS fi nancial statements (outside-basis differences), which arise largely from retained profi ts/uncovered losses, will remain untaxed in the

foreseeable future, or that their reversal can be controlled by the group.

It was also to be assumed either that the differences between the value for tax purposes of equity interests in holdings accounted for using

the equity method and the carrying value of those holdings (outside-basis differences) will remain untaxed in the foreseeable future, or that

their reversal can be controlled by the group.

In accordance with IAS 12.39, no deferred tax was recognized in connection with the temporary differences of EUR 34,556k (prior year:

EUR 119,095k) arising in connection with holdings in subsidiaries and fi nancial investments accounted for using the equity method.

Movements in deferred taxes are as follows:

EURk 2015 2014

Deferred tax (net) as at January 1 (18,012) (16,698)Deferred taxes recognized in the income statement (14,861) (7,255)Deferred taxes recognized in other comprehensive income (1,471) 951Foreign currency translation 197 240Reclassifi cation 0 4,750Deferred tax (net) as at December 31 (34,147) (18,012)

In 2014, a provision for tax audit risks of EUR 4,750k was reclassifi ed as a tax liability. This provision was utilized in full during 2014 and 2015.

12. EARNINGS PER SHARE

In accordance with IAS 33, earnings per share were calculated based on the consolidated profi t after taxes attributable to the owners of the

group parent and the annual average fi gure of shares of stock outstanding. As of December 31, 2014 and December 31, 2015, the number of

shares outstanding was 10,845,000. The undiluted (= diluted) earnings per share are calculated as follows:

2015 2014

Owners’ share in profi ts of the parent company EURk 63,856 57,037Annual average shares outstanding unit 10,845,000 10,845,000Undiluted (= diluted) earnings per share EUR 5.89 5.26

102

03 anhang E_100316.indd 102 10.03.16 17:39

IV. NOTES TO THE CONSOLIDATED STATEMENTOF FINANCIAL POSITION

13. PROPERTY, PLANT AND EQUIPMENT

The tables below provide a breakdown of property, plant and equipment along with movements during the 2015 and 2014 fi nancial years:

EURk Land Buildings Machinery Fixtures Advance pay- Total and fi ttings ments made tools and and assets equipment under constructionCOST OF ACQUISITION AND PRODUCTIONAs at January 1, 2014 10,484 67,709 12,388 152,971 7,274 250,827Additions 4 7,581 1,742 11,461 21,892 42,680Transfers 0 805 57 6,792 (9,504) (1,851)Disposals 0 (281) (1,247) (3,362) (328) (5,217)Currency translation 13 812 5 888 11 1,728As at December 31, 2014 10,501 76,626 12,945 168,750 19,343 288,165

As at January 1, 2015 10,501 76,626 12,945 168,750 19,343 288,165Additions 543 18,089 10,650 10,183 18,228 57,692Transfers (23) 12,421 117,343 (106,832) (22,909) 0Disposals (332) (78) (9,471) (16,779) (173) (26,834)Currency translation 12 817 7 991 25 1,853As at December 31, 2015 10,700 107,874 131,475 56,313 14,514 320,876

ACCUMULATED DEPRECIATIONAs at January 1, 2014 19 19,975 11,266 120,418 0 151,678Additions 0 2,307 987 12,625 0 15,920Transfers 0 0 0 0 0 0Disposals 0 (142) (1,247) (3,150) 0 (4,539)Currency translation 2 230 4 732 0 968As at December 31, 2014 21 22,371 11,010 130,625 0 164,027

As at January 1, 2015 21 22,371 11,010 130,625 0 164,027Additions 0 3,006 11,430 6,175 0 20,611Transfers (21) 21 83,203 (83,203) 0 0Disposals 0 (30) (9,452) (16,529) 0 (26,010)Currency translation 0 247 6 756 0 1,009As at December 31, 2015 0 25,615 96,197 37,825 0 159,637

Carrying amounts as at December 31, 2014 10,480 54,255 1,935 38,125 19,343 124,138Carrying amounts as at December 31, 2015 10,700 82,259 35,278 18,488 14,514 161,239

During 2015, certain assets were reclassifi ed between machinery and fi xtures & fi ttings. Machinery used for production purposes is now

disclosed under machinery in line with uniform group rules.

N O T E S / N O T E S T O T H E C O N S O L I D A T E D S T A T E M E N T O F F I N A N C I A L P O S I T I O N 103

03 anhang E_100316.indd 103 10.03.16 17:39


Additions to buildings include assets of EUR 14,588k held under fi nance leases which had no cash fl ow effect in 2015. For more details, please

refer to note 29, Leases. Additions to property, plant and equipment also include investments of EUR 7,657k (prior year: EUR 5,370k) which

had not yet had any cash fl ow effect as of the reporting date.

The application of IAS 36 did not result in any impairment losses or reversals of impairment losses in respect of property, plant and equipment

during 2015.

14. INTANGIBLE ASSETS

The tables below provide a breakdown of intangible assets along with movements during the 2015 and 2014 fi nancial years:

EURk Goodwill Development Concessions, Advance Total costs industrial payments property rights made and and similar assets under rights and construction benefi ts as well as licenses derived thereform

COST OF ACQUISITION AND PRODUCTIONAs at January 1, 2014 95,977 129,427 89,227 0 314,631Additions 0 35,499 2,616 3,567 41,683Transfers 0 0 51 1,800 1,851Disposals 0 (19,656) (49) (24) (19,729)Currency translation 8 0 145 0 153As at December 31, 2014 95,985 145,271 91,989 5,343 338,589

As at January 1, 2015 95,985 145,271 91,989 5,343 338,589Additions 0 43,469 3,368 6,364 53,201Transfers 0 0 114 (114) 0Disposals (121) (31,368) (4,172) 0 (35,661)Currency translation (43) 0 17 0 (26)As at December 31, 2015 95,821 157,372 91,316 11,593 356,102

ACCUMULATED AMORTIZATIONAs at January 1, 2014 17,261 53,001 12,822 0 83,084Additions 0 17,860 2,908 0 20,768Transfers 0 0 0 0 0Disposals 0 (17,933) (128) 0 (18,061)Currency translation 1 0 41 0 42As at December 31, 2014 17,262 52,928 15,643 0 85,833

As at January 1, 2015 17,262 52,928 15,643 0 85,833Additions 0 22,548 3,260 0 25,808Transfers 0 0 0 0 0Disposals 0 (31,400) (3,876) 0 (35,275)Currency translation (7) 0 (36) 0 (43)As at December 31, 2015 17,255 44,076 14,992 0 76,323

Carrying amounts as at December 31, 2014 78,723 92,343 76,346 5,343 252,755Carrying amounts as at December 31, 2015 78,566 113,296 76,324 11,593 279,780

104

03 anhang E_100316.indd 104 10.03.16 17:39

Additions to intangible assets include additions of EUR 1,153k (prior year: EUR 1,855k) that had not yet had any cash fl ow effect as of

the reporting date.

An impairment charge of EUR 715k was recorded against development costs in relation to an asset which was not available for use, due to

the termination of the project. In addition, one project available for use was subjected to an impairment charge of EUR 912k owing to changes

in the assumptions made regarding future sales and the resultant impairment to value.

Capitalized goodwill results from equity consolidation and breaks down as follows:

EURk Dec. 31, 2015 Dec. 31, 2014

Goodwill in the KTM cash-generating unit 78,566 78,723

In accordance with IAS 36 Impairment, the goodwill disclosed is not amortized but is tested for impairment on an annual basis. Testing in

2015 did not reveal a need to record an impairment loss. For the method of calculation, see the accounting policies section.

By an assignment agreement dated September 17, 2013, KTM AG acquired the license right for the use of the Husqvarna brand from Pierer

Industrie AG for EUR 10,000k. The license right is being amortized over its remaining useful life of 12 years.

Another intangible asset is the value of the “KTM” brand. This was recognized at EUR 60,000k in the consolidated fi nancial statements

of KTM AG following the capital increase effected in December 2004 and the ensuing full consolidation of the KTM group, and subsequently

increased by EUR 1,103k in 2010 due to a payment on account made to KTM Kühler GmbH, Mattighofen; the brand value is subjected to

an annual impairment test in accordance with IAS 36. As of December 31, 2015, this test did not reveal a need to record an impairment loss.

For the method of calculation, see the accounting policies section.

15. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Investments in associates included under the equity method are regarded individually as immaterial.

Associates comprise strategic minority interests in KTM New Zealand Ltd., Auckland, New Zealand, and KTM Middle East Al Shafar LLC,

Dubai, United Arab Emirates, and a holding in Kiska GmbH, Anif, Austria.

KTM New Zealand Ltd. and KTM Middle East Al Shafar LLC function as general importers for products with the KTM and Husqvarna brands

in their respective markets.

Kiska GmbH is a design business that provides development and design services for KTM.

The reporting date of Kiska GmbH is March 31. The reporting date of KTM New Zealand Ltd is June 30. The reporting dates were set when

the companies were founded or at any rate before the equity interests were acquired by KTM. A change in the accounting date is not sought

on account of materiality considerations. For the purposes of accounting under the equity method, unaudited interim fi nancial statements

at December 31 were used.


03 anhang E_100316.indd 105 10.03.16 17:39


The amount of holding in Kiska GmbH has increased by 1.1% to 26%. The percentage interests in the remaining associates otherwise

were unchanged during 2015.

Movements in carrying values are as follows:

EURk

Carrying value of holding as at January 1, 2014 2,422Share of net profi t for the year 628Dividend distribution (129)Carrying value of holding as at December 31, 2014 (= January 1, 2015) 2,920

Share of net profi t for the year 133Foreign currency translation reported in other comprehensive income (5)Dividend distribution (78)Acquisition of holdings in entities accounted for using the equity method 94Carrying value of holding as at December 31, 2015 3,064

16. OTHER NON-CURRENT ASSETS

EURk Dec. 31, 2015 Dec. 31, 2014

Non-consolidated subsidiaries and fi nancial investments not accounted for under the equity method 1,575 1,762Other non-current fi nancial assets 0 39 1,575 1,801

The following information is provided in relation to non-consolidated structured entities:

During 2014, KTM Immobilien GmbH entered into a property lease as lessee. The lessor is Oberbank Mattigtal Immobilienleasing GmbH.

This is a project company whose sole purpose is the construction of the KTM logistics center in Munderfi ng. It is 90% owned by Oberbank

Leasing Gesellschaft mbH, with the remaining 10% being held by KTM Immobilien GmbH (carrying value of holding: EUR 49k).

The lease is treated as a fi nance lease in the KTM group fi nancial statements. See note 29, Leases.

As KTM Immobilien GmbH has no power of decision over the relevant returns, the lessor company is excluded from the scope of consolidation

of KTM AG due to lack of control, in accordance with IFRS.

The 10% holding in Oberbank Mattigtal Immobilienleasing GmbH represents a fi nancial interest in an equity instrument. It is measured in

accordance with IAS 39 and recognized at amortized cost due to its non-marketability.

No intention or obligation currently exists to provide fi nancial or other assistance to Oberbank Mattigtal Immobilienleasing GmbH.

106

03 anhang E_100316.indd 106 10.03.16 17:39

17. INVENTORIES

EURk Dec. 31, 2015 Dec. 31, 2014

Raw materials and supplies 18,098 17,798Work in progress 13,105 12,190Finished goods and merchandise 130,091 111,578 161,295 141,566

Inventories (gross) 187,220 164,683Write-down (25,925) (23,117)Inventories (net) 161,295 141,566

Inventories of EUR 110,683k (prior year: EUR 103,697k), excluding raw materials and supplies, were recognized at their net recoverable value.

18. RECEIVABLES

Receivables are broken down as follows:

EURk Dec. 31, 2015 Dec. 31, 2014

From third parties 82,291 65,080From affi liates 43 54From associates 3,581 3,158From non-consolidated associates and non-consolidated subsidiaries 2,287 2,057 88,202 70,349

The gross value of third-party trade receivables is stated net of individual allowances of EUR 1,908k (prior year: EUR 1,696k). No general

allowances were made.

The allowances to receivables developed as follows:

EURk

As at January 1, 2014 1,784Exchange rate differences 4Additions 468Utilization (416)Reversals (144)As at December 31, 2014 1,696

Exchange rate differences 44Additions 540Utilization (267)Reversals (105)As at December 31, 2015 1,908

Expenses for the complete derecognition of trade receivables amounted to EUR 300k (prior year: EUR 126k).


03 anhang E_100316.indd 107 10.03.16 17:39


19. OTHER CURRENT ASSETS

Other current assets consist of the following elements:

EURk Dec. 31, 2015 Dec. 31, 2014

Receivables arising from derivative fi nancial instruments 3,553 466Receivables arising from fi nancing activities 862 1,007Subsidies 4,575 7,281Deduction of receivables of ABS fi nancing 2,842 3,281Securities 1,636 0Other 5,028 5,790Other current fi nancial assets 18,497 17,825

Advance payments for inventories 3,477 4,839Receivables due from tax offi ces 6,704 4,374Other current non-fi nancial assets 10,181 9,213Other current assets 28,678 27,038

20. CONSOLIDATED EQUITY

Movements in consolidated equity are shown in the Consolidated Statement of Changes in Equity (see on page 082).

As of December 31, 2015, the nominal capital was EUR 10,845k, divided into 10,845,000 bearer shares having a par value of EUR 1.00

each. The shares grant the rights that are usually due to stockholders under the Austrian Stock Corporation Act. These include the right to

payout of the dividend resolved upon at the General Meeting as well as the right to vote at the General Meeting.

The number of shares outstanding remained unchanged during 2015 at 10,845,000.

All shares were paid up in full. The nominal capital shown in the consolidated fi nancial statements is equal to the fi gure reported in the separate

fi nancial statements of KTM AG.

A dividend of EUR 1.50 per share (prior year: EUR 1.00) was paid during 2015. The total amount paid was EUR 16,268k (prior year:

EUR 10,845k).

The revaluation reserve arose in 2005 in the course of the gradual acquisition of the former KTM group GmbH. The amount derived from the

increase in the after-tax value of the KTM brand attributable to the portion of the shares already owned by the group parent company (formerly

CROSS Holding AG, now KTM AG) before control was obtained.

108

03 anhang E_100316.indd 108 10.03.16 17:39

The cash fl ow hedge reserve (after taxes) developed as follows:

EURk

As at January 1, 2014 (2,539)Elimination of hedging relationship (recognition in operating income) 981Realization of underlying transaction (recognition in fi nancial result) 383Addition (2,407)As at December 31, 2014 (3,582)

Realization of underlying transaction (recognition in operating income) 1,904Realization of underlying transaction (recognition in fi nancial result) 1,132Addition 1,310As at December 31, 2015 764

As of December 31, 2015 ineffective components of the derivative fi nancial instruments classifi ed as cash fl ow hedges yielded a net result

(after tax) of EUR 0k (prior year: EUR 0k)

The currency translation adjustment item encompasses all exchange rate differences arising on translation of the annual fi nancial statements

of consolidated subsidiaries that were drawn up in foreign currency.

Net investments in foreign subsidiaries of KTM AG include a loan of USD 3,863k to KTM North America, Inc., USA, with no fi xed date

for repayment. As repayment is neither planned nor likely in the foreseeable future, foreign currency translation effects are recognized in other

comprehensive income.

Movements in the currency translation adjustment item were as follows:

EURk

As at January 1, 2014 (887)Currency translation of foreign subsidiaries 1,266As at December 31, 2014 379

Currency translation of foreign subsidiaries 425Currency translation of fi nancial investments accounted for using the equity method (5)Net investments in foreign operations 275As at December 31, 2015 1,075


03 anhang E_100316.indd 109 10.03.16 17:39


Non-controlling interests comprise the following:

Group company Co-shareholders Capital share 2015 Capital share 2014

% EURk % EURk

KTM Technologies GmbH, Kiska Holding GmbH 26.00 26.00 24.80 24.80Anif, Austria CROSS Industries AG 0.00 0.00 25.10 25.10KTM Immobilien GmbH CROSS KraftFahrZeug(formerly: KTM Motorrad AG), Holding GmbH 0.39 62.40 0.00 0.00Mattighofen, Austria CROSS Industries AG 0.00 0.00 1.00 0.35

Transactions with holders of non-controlling interests

By way of a sale and purchase agreement dated October 7, 2015, KTM AG acquired a 23.9% shareholding with a nominal value of

EUR 23,900.00 in KTM Technologies GmbH, Anif, from CROSS Industries AG, Wels, for a purchase price of EUR 100k. The effects of this

transaction and the change in the proportion of the equity attributable to the shareholders during the year under review were as follows:

EURk Dec. 31, 2015

Carrying value of non-controlling interest 155Purchase price paid 100Difference recorded in equity 55

Capital management

Capital management is aimed at maintaining an adequate capital base in order to remain able to achieve a return for the shareholders that is

in line with the company’s risk situation, to further develop the future of the company and to generate benefi ts for other stakeholders, too. Only

the consolidated equity entered in the books according to IFRSs is regarded as capital by the Management. As of the reporting date, the

consolidated equity ratio was 44.7% (prior year: 47.1%).

To control the management of capital, primarily the key fi gures net fi nancial debt, gearing and working capital are used.

Net fi nancial debt is as follows:

EURk Dec. 31, 2015 Dec. 31, 2014

Bonds 84,845 84,729Non-current fi nancial liabilities 125,480 63,956Current fi nancial liabilities 6,107 8,608 216,432 157,294

Cash and cash equivalents (118,406) (68,812)Receivables from fi nancing activities (862) (1,007)Net fi nancial debt 97,164 87,475

110

03 anhang E_100316.indd 110 10.03.16 17:39

21. BONDS AND FINANCIAL LIABILITIES

A fi ve-year bond (ISIN AT0000A0UJP7) with an issue volume of EUR 85,000k was successfully placed on April 24, 2012. The bond

is listed on the Second Regulated Market of the Vienna Stock Exchange with a denomination of EUR 500.00 and was issued with a fi xed

coupon paying interest at 4.375%.

Group companies’ liabilities to banks are secured by pledges recorded in the land register and duly fi led with a value of EUR 29,052k

(prior year: EUR 29,052k).

Composition of fi nancial liabilities:

EURk Dec. 31, 2015 Dec. 31, 2014

Nominal Carrying Nominal Carrying value value value value

Bonds 85,000 84,845 85,000 84,729

Non-current fi nancial liabilitiesResearch loans 75,000 75,000 30,000 30,000Promotional loans 17,154 17,154 11,770 11,770Liabilities from fi nance leases 20,908 20,908 7,376 7,376Investment loans 12,417 12,417 14,810 14,810 125,480 125,480 63,956 63,956Current fi nancial liabilitiesPromotional loans 2,161 2,161 1,050 1,050Investment loans 2,386 2,386 2,364 2,364Liabilities from fi nance leases 862 862 194 194Other 698 698 5,000 5,000 6,107 6,107 8,608 8,608 216,587 216,432 157,564 157,293

22. OTHER NON-CURRENT AND CURRENT LIABILITIES

Other non-current liabilities essentially comprise the following:

EURk Dec. 31, 2015 Dec. 31, 2014

Security deposits = Other non-current fi nancial liabilities 6,248 5,998Sundry other non-current non-fi nancial liabilities 516 511Other non-current liabilities 6,764 6,509


03 anhang E_100316.indd 111 10.03.16 17:39


In substance, other current liabilities essentially comprise the following:

EURk Dec. 31, 2015 Dec. 31, 2014

Current employee benefi ts 22,040 17,392Liabilities to tax authorities 1,363 774Other current non-fi nancial liabilities 23,403 18,166

Liabilities from derivative fi nancial instruments 2,604 7,956Of which derivatives held for trading 144 343

Of which derivatives held as cash fl ow hedges 2,460 7,613

Sales bonuses 13,398 11,761Price discounts 8,818 5,198Sundry other current fi nancial liabilities 5,092 7,072Other current fi nancial liabilities 29,912 31,987

Other current liabilities 53,315 50,153

Current employee benefi ts mainly include liabilities for unconsumed vacations, liabilities for employee bonuses, liabilities to district health

insurance funds, and wage and salary liabilities.

23. TRADE PAYABLES

Trade payables are broken down as follows:

EURk Dec. 31, 2015 Dec. 31, 2014

To third parties 121,468 87,015To affi liates 2,293 14,225To associates 3,684 3,838 127,445 105,078

24. EMPLOYEE BENEFITS

The obligations relating to social capital include claims of the employees that become due upon their retirement at the age fi xed by law or when

they have served a certain number of years in the company and that thus constitute benefi ts similar to pensions. These benefi ts were calculated

in accordance with the provisions of IAS 19.

The obligations relating to social capital consist of obligations relating to severance pay of EUR 12,627k (prior year: EUR 11,645k) and

obligations to pay anniversary bonuses of EUR 2,308k (prior year: EUR 1,871k). The present value of the defi ned benefi t obligations is reported

in the consolidated statement of fi nancial position. Liabilities relating to social capital are not fi nanced through a fund.

112

03 anhang E_100316.indd 112 10.03.16 17:39

Net liability under defi ned benefi t plans in respect of severance pay developed as follows:

EURk 2015 2014

As at January 1 11,645 8,591Current service cost 713 544Interest expenses 226 291Severance payments (95) (241)Actuarial loss 280 2,411Other (142) 50As at December 31 12,627 11,645

The actuarial loss is made up of the following factors:

EURk 2015 2014

Change in expected values 1,151 169Change in demographic assumptions 37 42Change in fi nancial assumptions (908) 2,200Actuarial loss 280 2,411

The measurement of the obligation is based on the following assumptions:

2015 2014

Discount rate 2.00% 2.00%Trend in wages and salaries 2.50% 3.00%Retirement age women/men (with transitional provisions) 62 years 62 years

The discount rate was determined taking into account the very long average terms and the long average remaining lifespans. The discount rate

is the market yield on high quality, fi xed-interest corporate bonds at the end of the reporting period.

Employee fl uctuation as determined on a company-specifi c basis has been accounted for based on age and time of service. The actuarial

measurements are based on country-specifi c mortality tables. The chosen retirement age is the retirement age fi xed by law in each country.


03 anhang E_100316.indd 113 10.03.16 17:39


A sensitivity analysis of the claims to severance pay calculated on the basis of actuarial principles showed a change in actuarial parameters

to have the following effects in the fi nancial year 2015:

Change in Change in DBO assumption Parameter Parameter decreases increases2015Discount rate 0.5%-points 7.3% (6.6%)Trend in wages and salaries 0.5%-points (6.6%) 7.2%

A sensitivity analysis of the claims to severance pay calculated on the basis of actuarial principles showed a change in actuarial parameters

to have the following effects in the fi nancial year 2014:

Change in Change in DBO assumption Parameter Parameter decreases increases2014Discount rate 0.5%-points 7.8% (7.1%)Trend in wages and salaries 0.5%-points (7.0%) 7.7%

The following table shows the expected amounts for the defi ned benefi t plans over the next several years:

EURk Dec. 31, 2015 Dec. 31, 2014

Within the next 12 months 696 451Between 2 to 5 years 2,501 2,040Between 6 to 10 years 2,907 2,913More than 10 years 16,451 16,935

Total expected payments 22,555 22,338

The obligations relating to claims to anniversary bonuses developed as follows:

EURk 2015 2014

As at January 1 1,871 1,237Current service cost 195 125Interest expenses 37 43Anniversary bonus payments 0 (7)Actuarial loss 198 462Other 7 9As at December 31 2,308 1,871

The weighted average durations of the obligations for severance pay and anniversary bonuses at December 31, 2015 were 14 and 16 years

respectively (prior year: 15 and 17 years).

114

03 anhang E_100316.indd 114 10.03.16 17:39

For employees of Austrian group companies whose employment commenced on or after January 1, 2003, contributions amounting to 1.53%

of their wages or salaries, as the case may be, were paid into a staff severance pay fund set up by law. Total contributions of EUR 920k were

paid during the year (prior year: EUR 738k).

25. PROVISIONS

Current provisions developed as follows:

EURk Provisions Provisions Total relating to for litigation current guarantees provisions and warranties

As at January 1, 2014 4,655 610 5,265Utilization (4,655) (250) (4,905)Reversals 0 (60) (60)Additions 6,360 100 6,460As at December 31, 2014 6,360 400 6,760

Utilization (6,360) (50) (6,410)Reversals 0 (220) (220)Additions 8,088 645 8,733As at December 31, 2015 8,088 775 8,863

The KTM group makes provisions relating to guarantees and warranties. The amounts of expected expenses are primarily based on earlier

experience. For more details, see under estimates and uncertainties in judgments and assumptions.

26. CASH FLOW STATEMENT

The changes in the statement of fi nancial position items presented in the cash fl ow statement cannot be directly inferred from the statement of

fi nancial position since effects that did not infl uence payments and other business transactions that did not infl uence payments are neutralized.

Other non-cash income and expenses were broken down as follows:

EURk 2015 2014

– Profi ts/+ losses from the disposal of intangible assets and property, plant, and equipment 341 2,069+ Addition/– reversal of employee benefi ts 1,209 1,880– Remaining other non-cash income/+ expenses (5,139) 5,751 (3,589) 9,700

Other noncash income/expenses include mainly measurements of foreign currency receivables and payables and impairment losses on

receivables and inventories.


03 anhang E_100316.indd 115 10.03.16 17:39


V. OTHER NOTES

27. RISK REPORT

Risk principles

As a group of companies doing business on a global scale, the KTM group faces a multitude of possible risks that are monitored by means

of a comprehensive risk management system. The Executive Board and Supervisory Board are periodically informed about risks that may have

a major impact on the group’s business operations. Management takes timely action to avoid, minimize, and hedge risks.

An internal control system adapted to the company’s needs and incorporating basic principles such as segregation of duties and dual control

has been integrated into the fi nancial reporting process. Internal and external audits ensure that the processes are continually improved

and optimized. Furthermore, a uniform reporting system is in place throughout the group, for the ongoing management and control of the risk

management process.

Continuous growth depends on a variety of factors, such as demand behavior, product development, changes in foreign exchange rates,

the general economic setting in the individual markets, prices of goods purchased from others, or employee development.

Annual model planning: The assessment of the market situation as well as annual model planning have a major impact on the development of the

group’s revenue and income. Increased market research activities and a model policy refl ecting the resulting fi ndings are means of responding to

a market environment characterized by rapidly changing situations. Group reporting processes continued to be refi ned in the fi nancial year 2015

so that the Executive Board is informed even sooner, and more comprehensively, about the degree of target achievement and about changes

concerning markets and competition.

Industry-specifi c and operational risks

Restrictions relating to motorcycling: The revenue of the KTM group depends, inter alia, on the possible offroad uses of its motorcycles and

is therefore considerably infl uenced by the national legal framework regulating offroad motorsport, motorcycle registration and rider’s licenses in

the countries where the vehicles are sold.

Technical innovation, racing: Technical innovation and the introduction of new products make a signifi cant contribution to KTM’s competitive

positioning. To this end, new trends must be identifi ed promptly. To counteract the risk, our own products’ innovative capacity must be ensured.

KTM therefore places a high value on the early recognition of motorcycle trends, on research and development regarding engineering and

functionality and on researching customer wishes so as to achieve innovative product development close to the market. Racing achievements are

not only an important marketing instrument for the company but also form the basis for product development and set standards for series

development. Valuable experience is gathered whenever products can be tested in racing conditions at racing events. Before being introduced

into series production, all technical innovations are moreover subjected to comprehensive testing by the quality management system so as to

eliminate, to the greatest extent possible, any technical defects that could have a negative effect on earnings development.

116

03 anhang E_100316.indd 116 10.03.16 17:39

Product liability risk: In its business environment, the KTM group is also exposed to claims for damages raised because of accidents and

injuries. This applies especially to the U.S., where claims asserted in product liability cases involve higher amounts of liability. Corresponding

insurance has been taken out to hedge these risks.

Procurement risk: In view of the current developments on the national and international markets, the procurement risk faced by the KTM group

mainly involves the timely introduction of suitable measures to ensure the supply of parts if suppliers become insolvent or supply bottlenecks

materialize. KTM is therefore exposed to this risk only indirectly. To minimize risk and ensure the availability of materials, KTM places great

emphasis on using predetermined criteria to carefully select new suppliers and on sustainably collaborating with existing suppliers and/or further

developing such cooperations in stable supplier relationships with a long-term approach.

As the quality of KTM’s products is strongly determined by the quality and characteristics of the subcomponents to be sourced, particular

attention is paid to the creditworthiness, operating facilities and production processes of suppliers. The continuous availability of parts is

ensured by appropriate monitoring.

Market related risks

Cyclical risk: The focus of activities of the KTM group is on the motorcycle industry. The sales opportunities for motorcycles are determined

by the general economic trend prevailing in the countries and regions where motorcycle manufacturers do business. As these last years

have shown, the motorcycle industry is generally a cyclical industry and is moreover subject to strong fl uctuations regarding demand. This risk

is counteracted by relevant market research and market forecasts, which are then taken into account in the planning process.

Competition and pricing pressure: The market for motorcycles in the industrialized countries is characterized by intense competition; KTM’s

strongest competitors are four Japanese and three European manufacturers and, on a slightly smaller scale, a U.S. manufacturer, with some

of them having the benefi t of greater fi nancial resources and higher sales fi gures and market shares. The street motorcycle market is moreover

characterized by high pricing pressure, and new competitors are trying to enter the market by relying on a low-price strategy. Due to KTM’s

successful market strategy, market leadership was achieved in Europe.

Sales risk: The largest individual sales markets of the KTM group are the European market and the U.S. market. A slump in these markets

could have a negative impact on the business activities of the KTM group. Entering new markets essentially involves a cost risk for the

KTM group as, in some of these markets, the trend of sales as well as the political framework conditions are diffi cult to assess. By collaborating

with its strategic partner Bajaj Auto Ltd., India, KTM continues to work steadily towards the implementation of a global product strategy.

Financial risks

As regards the fi nancial risks (currency risks, interest rate risks, default risks as well as liquidity risks), reference is made to the relevant

explanations given under note 28.2.

N O T E S / O T H E R N O T E S 117

03 anhang E_100316.indd 117 10.03.16 17:39


Other risk factors

Risks due to the legal framework: As the KTM group markets its motorcycles in a large number of countries, it is exposed to the risk of changes

in national regulations, terms of licenses, taxes, trade restrictions, prices, income and exchange restrictions as well as to the risk of political,

social and economic instability, infl ation and interest rate fl uctuations.

Motorcycles registered for road use must comply with corresponding provisions concerning noise and exhaust gas emissions in order to be

approved for marketing in the respective country. The possible offroad uses of motorcycles are also considerably infl uenced by the national legal

framework in the countries where the vehicles are sold. To counteract the risk, the respective regulations specifi c to the given country are

analyzed in detail prior to market entry and continue to be monitored on an ongoing basis so as to be able to respond to any changes in a timely

manner.

Compliance: In accordance with the requirements of sec. 234(b) of the Austrian Commercial Code, a corporate governance report was drawn up.

In this regard, please refer to the publication in the annual report of KTM AG and/or to the KTM website.

Business and environmental risk: Although risk cannot be fully excluded as regards forces of nature, KTM tries to minimize the risk of produc-

tion processes being affected, by providing appropriate contingency plans and insurance.

Personnel-related risks: Especially with regard to the growth course, risks may arise if key staff leave the company. Effi cient personnel

management as well as the constant pursuit of personnel development programs are designed to counteract the risk of managerial staff leaving

the company.

The risk of a shortage of skilled staff is minimized by a comprehensive apprentice training program in our own apprentice workshop. The aim

is to recruit employees from the region and to retain them in the long term.

28. FINANCIAL INSTRUMENTS

28.1. Classifi cation and fair value

The fair value of a fi nancial instrument is determined by means of quoted market prices for an identical instrument in active markets (Level 1).

If no quoted market prices in active markets are available for the instrument, the fair value is determined 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).

Reclassifi cations from one level to another are taken into account at the end of the reporting period. There were no transfers between levels

in the fi nancial year.

The following table shows the carrying amounts and fair values of the fi nancial assets (fi nancial instruments shown on the assets side), broken

down by class or measurement category according to IAS 39. Nevertheless, it does not provide information on the fair value or measurement

level of fi nancial assets not measured at fair value, where the carrying amount is a reasonable approximation of fair value or where the asset is

an equity instrument measured at acquisition cost.

118

03 anhang E_100316.indd 118 10.03.16 17:39

EURk Carrying Fair value Fair value

amount Level 1 Level 2 Level 3 Total

DECEMBER 31, 2015LOANS AND RECEIVABLESCash and cash equivalents 118,406 – – – – –Trade receivables 88,202 – – – – –Other fi nancial assets 13,307 – – – – – 219,915 –AVAILABLE FOR SALEOther non-current fi nancial assets 1,575 – – – – – 1,575 –HELD FOR TRADINGOther current assets – securities 1,636 1,636 1,636 – – 1,636 1,636 –OTHER NON-CURRENT FINANCIAL ASSETSOther current assets – Derivatives with positive market value (cash fl ow hedge) 3,553 3,553 – 3,553 – 3,553 3,553 –Total 226,680 –

DECEMBER 31, 2014LOANS AND RECEIVABLESCash and cash equivalents 68,812 – – – – –Trade receivables 70,349 – – – – –Other fi nancial assets 17,359 – – – – – 156,519 –AVAILABLE FOR SALEOther non-current fi nancial assets 1,801 – – – – – 1,801 –OTHER NON-CURRENT FINANCIAL ASSETSOther current assets – Derivatives with positive market value (cash fl ow hedge) 466 466 – 466 – 466 466 –Total 158,786 –


03 anhang E_100316.indd 119 10.03.16 17:39


Receivables sold in connection with the current ABS program are derecognized in accordance with the rules under IAS 39. Under the

ABS program, receivables insured on a revolving monthly basis are sold up to a maximum volume of EUR 75,000k (prior year: EUR 50,000k).

As at the reporting date, trade receivables of EUR 55,067k (prior year: EUR 48,926k) had been sold to third parties. The agreement was

entered into in 2012 and amended in 2014 and 2015. It runs until 2022. KTM continues to bear a risk from credit risk-related defaults up

to a contractually stipulated amount. As at December 31, 2015, the maximum ensuing risk of loss was EUR 385k (prior year: EUR 342k).

The expected loss is recorded as a liability and expensed at the time of sale. The carrying amount of the ongoing commitment was EUR 385k

(prior year: EUR 342k) as at December 31, 2015. It is disclosed under other current liabilities. The carrying amount represents the fair

value of the ongoing commitment. Income of EUR 43k (prior year: EUR 96k) and accumulated expenses since the start of the transaction of

EUR 385k (prior year: EUR 342k) were recognized during the period under review. The volume is not subject to any material fl uctuations.

The following table shows the carrying amounts and fair values of the fi nancial liabilities (fi nancial instruments shown on the liabilities side),

broken down by class or measurement category according to IAS 39. But it does not provide information on the fair value or level of fi nancial

liabilities not measured at fair value where the carrying amount is a reasonable approximation of fair value.



DECEMBER 31, 2015AT AMORTIZED COSTFinancial liabilities 109,817 111,651 – – 111,651 111,651Finance lease liabilities 21,770 – – – – –Trade payables 127,445 – – – – –Bonds 84,845 88,613 88,613 – – 88,613Other current and non-current fi nancial liabilities 33,556 – – – – – 377,435 –HELD FOR TRADINGOther fi nancial liabilities – Derivatives with negative market valuet 144 144 – 144 – 144 144 –FAIR VALUE – HEDGING INSTRUMENTSOther fi nancial liabilities – Derivatives with negative market value (cash fl ow hedge) 2,460 2,460 – 2,460 – 2,460 2,460 –Total 380,038 –

120

03 anhang E_100316.indd 120 10.03.16 17:39



DECEMBER 31, 2014AT AMORTIZED COSTFinancial liabilities 64,994 65,507 – – 65,507 65,507Finance lease liabilities 7,570 – – – – –Trade payables 105,078 – – – – –Bonds 84,729 89,310 89,310 – – 89,310Other current and non-current fi nancial liabilities 30,029 – – – – – 292,400 –HELD FOR TRADINGOther fi nancial liabilities – Derivatives with negative market value 343 343 – 343 – 343 343 –FAIR VALUE – HEDGING INSTRUMENTSOther fi nancial liabilities – Derivatives with negative market value (cash fl ow hedge) 7,613 7,613 – 7,613 – 7,613 7,613 –Total 300,356 –

Fair value determination

The table below shows the measurement technique used to determine the fair value as well as the signifi cant unobservable input factors used.

Type Measurement Signifi cant Connection between technique unobservable signifi cant unobservable input factors input factors and measurement at fair value

Financial instruments measured at fair valueForward exchange Market comparison method: Not applicable Not applicablecontracts and The fair values are based interest rate swaps on the market values determined using recognized valuation models; they are regularly checked for plausibilitySecurities Securities are measured Not applicable Not applicable at the current quoted price on the reporting date


03 anhang E_100316.indd 121 10.03.16 17:39


Type Measurement Signifi cant Connection between technique unobservable signifi cant unobservable input factors input factors and measurement at fair value

Financial instruments not measured at fair valueBonds The closing price Not applicable – on the statement of fi nancial position date is used to measure listed bondsFinancial liabilities Discounted cash fl ows Risk premium – for own credit risk

Set-off of fi nancial assets and liabilities

The group enters into set-off agreements with banks in connection with derivatives. Generally, the amounts owed by each counterparty

on a single day with regard to all outstanding transactions in the same currency according to such agreements are aggregated into a single net

amount payable by one party to the other. In certain cases – e.g. when a credit event such as a default occurs – all outstanding transactions

under the agreement are terminated, their value as of termination is determined and only a single net amount is payable for settling all

transactions. These items are not set off in the statement of fi nancial position, as such, since the net set-off of multiple transactions under

the same framework agreements does not generally occur.

KTM has paid a one-off security deposit of EUR 4,707k in relation to the Munderfi ng logistics center (disclosed as a fi nance lease)

and has made ongoing monthly deposit payments totaling EUR 53k to the lessor.

According to the terms of the lease contract, these deposits will be returned to the lessee on termination of the lease. In accordance with

IAS 32.42, the deposit is therefore set off against the liability under the fi nance lease.

The tables below show fi nancial assets and liabilities that have been offset along with amounts that are subject to a set-off agreement but

which have not been set off as they do not fulfi ll the criteria for set-off prescribed under IFRS.

EURk Financial Offset Recognized Effect Net assets on-balance- fi nancial of master amounts (gross) sheet assets set-off amounts (net) agreements (gross)

FINANCIAL ASSETS 2015Other receivables 4,760 (4,760) 0 0 0Other fi nancial assets – Derivatives with positive market value Foreign currency forwards 3,553 0 3,553 (1,143) 2,410Total 8,313 (4,760) 3,553 (1,143) 2,410

122

03 anhang E_100316.indd 122 10.03.16 17:39

EURk Financial Offset Recognized Effect Net liabilities on-balance- fi nancial of master amounts (gross) sheet liabilities set-off amounts (net) agreements (gross)

FINANCIAL LIABILITIES 2015Finance lease liabilities 26,530 (4,760) 21,770 0 21,770Other fi nancial liabilities – Derivatives with negative market value Foreign currency forwards 1,317 0 1,317 (1,143) 174 Interest rate swaps 1,287 0 1,287 0 1,287 2,603 0 2,603 (1,143) 1,460Total 29,134 (4,760) 24,374 (1,143) 23,231

EURk Financial Offset Recognized Effect Net assets on-balance- fi nancial of master amounts (gross) sheet assets set-off amounts (net) agreements (gross)

FINANCIAL ASSETS 2014Other receivables 4,707 (4,707) 0 0 0Other fi nancial assets – Derivatives with positive market value Foreign currency forwards 466 0 466 (466) 0Total 5,173 (4,707) 466 (466) 0

EURk Financial Offset Recognized Effect Net liabilities on-balance- fi nancial of master amounts (gross) sheet liabilities set-off amounts (net) agreements (gross)

FINANCIAL LIABILITIES 2014Finance lease liabilities 12,277 (4,707) 7,570 0 7,570Other fi nancial liabilities – Derivatives with negative market value Foreign currency forwards 5,371 0 5,371 (466) 4,905 Interest rate swaps 2,585 0 2,585 0 2,585 7,956 0 7,956 (466) 7,490Total 20,233 (4,707) 15,526 (466) 15,060


03 anhang E_100316.indd 123 10.03.16 17:39


The table below shows the net profi t or loss from the fi nancial instruments by IAS 39 measurement category. The results shown include net

gains/losses, total interest income/expenses and impairment losses:

EURk From From From value From Net result interest subsequent adjustment gain (loss) (total) fair value on disposal measurement

2015Loans and receivables 1,304 0 (435) (300) 569Available for sale 64 0 (710) 0 (646)Fair value – Held for trading (144) 356 0 0 212At amortized cost (7,393) 0 0 0 (7,393)Total (6,169) 356 (1,145) (300) (7,258)

2014Loans and receivables 822 0 (324) (126) 372Available for sale 35 0 (981) 0 (946)Fair value – Held for trading (391) 207 0 0 (184)At amortized cost (6,573) 0 0 0 (6,573)Total (6,107) 207 (1,305) (126) (7,331)

Changes in allowances and the derecognition of loans and receivables are disclosed in other operating expenses for the relevant overhead areas.

The remaining components of the net result are included in fi nancial income and expenses.

28.2. Financial risk management

Principles of fi nancial risk management

The KTM group is subject to credit, market and liquidity risks regarding its assets, liabilities and planned transactions. Financial risk manage-

ment is aimed at controlling and limiting those risks. The Executive Board and the Supervisory Board are periodically informed about risks that

can have a major impact on the group’s business operations.

The principles of fi nancial risk management are laid down and monitored by the Supervisory Board as well as by the Executive Board. Group

Treasury is responsible for their implementation. To protect itself against the fi nancial risks described below, the KTM group uses derivative

fi nancial instruments with the objective of safely hedging the cash fl ows from operating activities against fl uctuations of exchange rates and/or

interest rates. With foreign currency hedges, the hedging horizon generally comprises the current open items as well as any transactions planned

for the next twelve months. In exceptional cases, strategic hedge positions involving longer time periods may be entered into in consultation

with the Supervisory Board.

124

03 anhang E_100316.indd 124 10.03.16 17:39

Currency risks

As an enterprise doing business on a global scale, the KTM group is infl uenced by the general situation of the world economy, such as the

change in currency parities or the developments on the fi nancial markets. As the US dollar represents the highest individual foreign currency

risk faced by the KTM group, the development of the US dollar exchange rate is of particular importance to the development of the group’s

revenue and income. Approximately 25% of revenues were earned in US dollars in 2015 (prior year: 24%). Such currency shifts can for the most

part be offset, at least over a model year, by taking currency hedging measures and employing hedging strategies; for the fi nancial year 2016,

the US dollar business was hedged by means of positions involving EUR/USD rates ranging from 1.0765 to 1.1240.

The group is exposed to further currency risks if fi nancial assets and liabilities are settled in a currency other than the local currency of the

respective company. The companies of the group predominantly do their invoicing in local currency and largely take out fi nancing in their local

currency. Investments are primarily made in the local currency of the investing group company. For these reasons, most resulting currency

positions will be closed out naturally.

Regarding the currency risks of fi nancial instruments, sensitivity analyses were performed which show the effects that hypothetical changes in

the exchange rates have on profi t or loss (after taxes) and on the consolidated equity. The relevant balances as of the reporting date and foreign

currency purchases and sales budgeted for 2016 were used as a basis. It was assumed that the risk faced on the statement of fi nancial position

date essentially represents the risk present during the fi nancial year. The group tax rate of 25% was used as the tax rate. Furthermore it was

assumed in the analysis that all other variables, in particular the interest rates, remained constant. The currency risks of fi nancial instruments

that are of a monetary nature and denominated in a currency deviating from the functional currency were included in the analysis.

Currency risks from euro positions in subsidiaries the functional currency of which is different from the euro were attributed to the currency

risk of the respective subsidiary’s functional currency. Risks from foreign currency positions apart from the euro were aggregated on group level.

Exchange rate related differences due to the translation of fi nancial statements into the group currency were left out of consideration.

A sensitivity analysis is conducted for currency risk. In this respect effects of changes in the exchange rate of ±10% are shown on profi t and

loss, other income, and equity.

The KTM group bases the analysis on the following assumptions:

p For the sensitivity of profi t and loss, the group’s bank balances, receivables, and payables are considered, as are future inpayments

and outpayments in foreign currency that are not entered in the statement of fi nancial position in the functional currency of the group company.

Likewise, the open derivatives of the cash fl ow hedge whose underlying transaction has already been realized on the statement of fi nancial

position date (recognized as income) are used. Exposure taking account of derivative currency hedges can be extracted from the table below.

p For the sensitivity of other income, open derivatives of the cash fl ow hedge whose underlying transaction has not yet been realized on the

statement of fi nancial position date (not recognized as income) are considered. The nominal amount of open derivatives corresponds to the

exposure.


03 anhang E_100316.indd 125 10.03.16 17:39


EURk Exposures Sensitivity Exposures Sensitivity Dec. 31, 2015 Dec. 31, 2014

Devaluation Revaluation Devaluation Revaluation of EUR of EUR of EUR of EUR by 10% by 10% by 10% by 10%

EUR – USD 31,063 (2,603) 2,130 78,075 (6,510) 5,326EUR – GBP 6,158 (514) 421 6,148 (513) 420EUR – CAD 15,351 (1,279) 1,047 12,090 (1,008) 824EUR – JPY (31,963) 2,664 (2,179) (33,558) 2,797 (2,288)EUR – CHF 3,534 (294) 240 2,602 (217) 177Other 23,662 (2,009) 1,644 34,667 (2,889) 2,365Sensitivity of profi t or loss (receivables and liabilities) (4,036) 3,302 (8,340) 6,824Sensitivity of other comprehensive income (by cash fl ow hedge derivatives) 8,930 (7,307) 6,322 (5,172)Sensitivity of equity 4,895 (4,005) (2,018) 1,652

+ Expenses / – Income

Interest rate risks

Financial instruments on both the assets side and the liabilities side to some extent carry interest at variable rates. Thus the risk consists in

rising interest expenses and falling interest income resulting from an adverse change in market interest rates.

The KTM group has refi nanced part of its debt at variable rates and is thus exposed to the risk of interest rate fl uctuations on the market.

Regular monitoring of the money and capital markets and the use of interest rate swaps (fi xed interest rate payer swaps) serve to respond to this

risk. Under the interest rate swaps entered into, the entity receives variable interest payments and, in return, pays fi xed interest on the notional

amounts of the contracts entered into.

Interest rate risks thus result mainly from primary fi nancial instruments carrying interest at variable rates (cash fl ow risk). Regarding the interest

rate risks of these fi nancial instruments, sensitivity analyses were performed which show the effects that hypothetical changes in the market

interest rate level have on profi t or loss (after taxes) and on the consolidated equity. The relevant balances as of the statement of fi nancial

position date were used as a basis. It was assumed that the risk faced on the statement of fi nancial position date essentially represents the risk

present during the fi nancial year. The group tax rate of 25% was used as the tax rate. Furthermore it was assumed in the analysis that all other

variables, in particular the exchange rates, remained constant.

For interest rate risk, exposures are presented at the statement of fi nancial position date in the form of carrying amounts as follows:

EURk Fixed Variable Non interest Total interest rates interest rates bearing

DECEMBER 31, 2015Cash and cash equivalents 1,620 88,146 28,640 118,406Financing volume ABS program 0 (55,067) 0 (55,067)Financial liabilities and fi nance lease liabilities (62,963) (68,623) 0 (131,586)Bonds (84,845) 0 0 (84,845)Total (146,189) (35,544) 28,640 (153,093)

126

03 anhang E_100316.indd 126 10.03.16 17:39

EURk Fixed Variable Non interest Total interest rates interest rates bearing

DECEMBER 31, 2014Cash and cash equivalents 0 68,735 77 68,812Financing volume ABS program 0 (48,926) 0 (48,926)Financial liabilities and fi nance lease liabilities (6,640) (65,924) 0 (72,564)Bonds (84,729) 0 0 (84,729)Total (91,369) (46,116) 77 (137,408)

A sensitivity analysis was conducted for interest rate risk. In this respect changes in the interest rate of ±50 basis points are shown on profi t

and loss, other income, and equity.

EURk Sensitivity Sensitivity Dec. 31, 2015 Dec. 31, 2014

Decrease of Increase of Decrease of Increase of interest level interest level interest level interest level by 50 basis by 50 basis by 50 basis by 50 basis points points points points

Sensitivity of profi t or loss (receivables and liabilities) (144) 144 (288) 288Sensitivity of other comprehensive income (by cash fl ow hedge derivatives) (406) 398 (688) 666Sensitivity of equity (551) 542 (976) 954

+ Expenses / – Income

Default risks (credit risks)

As regards receivables due from customers, the risk of default may be rated as low as ongoing checks of the creditworthiness of new and existing

customers are performed and collateral is requested. Likewise, the default risk is to be regarded as low for the other fi nancial instruments shown

on the assets side, as the counterparties are debtors of optimum creditworthiness. The default risk on derivative fi nancial instruments with

positive market value is limited to their replacement cost; as all the counterparties are banks of good creditworthiness the default risk can be

classifi ed as low.

Default risks are largely hedged in the KTM group, by means of credit insurance on the one hand and bankable security (guarantees, letters

of credit) on the other hand. The default risks and related controls are defi ned in internal guidelines.

On the assets side, the amounts reported also represent the maximum default risk. In addition, there are no general set-off agreements, with the

exception of the set-off agreement described under note 28.1 to the consolidated fi nancial statements.


03 anhang E_100316.indd 127 10.03.16 17:39


The carrying amounts of the receivables consist of the following elements:

EURk Carrying Of which: Of which: not impaired as of the closing date and Of which: amount neither past due within the following time bands impaired impaired nor Up to 30 to 60 to More than past due 30 days 60 days 90 days 90 days as of the closing date

DECEMBER 31, 2015Trade receivables 88,202 73,951 8,210 722 271 3,352 1,696Other fi nancial receivables 13,307 13,307 0 0 0 0 0Total 101,509 87,258 8,210 722 271 3,352 1,696

DECEMBER 31, 2014Trade receivables 70,349 58,097 8,849 1,221 333 125 1,724Other fi nancial receivables 17,359 17,359 0 0 0 0 0Total 87,708 75,456 8,849 1,221 333 125 1,724

As regards the existing portfolio of (trade and other) receivables that are neither impaired nor past due, there are no signs as of the closing

date indicating that the debtors will not meet their payment obligations. There are no concentration risks. For a reconciliation of the allowance

to the portfolio of trade receivables, see note 18.

Liquidity risks

It is a material objective of fi nancial risk management in the KTM group to ensure solvency and fi nancial fl exibility at all times. Factors contri-

buting to liquidity risks include, in particular, proceeds from revenues being below the planning assumptions due to weaker demand. For

this purpose, the group maintains a liquidity reserve in the form of unused credit lines (cash credits and guarantee credits) and, if needed, in

the form of cash in banks of a high creditworthiness. Top priority is given to ensuring liquidity over the short and medium term. Another major

control parameter is the maximization of free cash fl ow by cost-cutting measures, proactive working capital management and reduced invest-

ment expenditure. From today’s perspective, suffi cient commitments have been given concerning the creditworthiness of our strategic fi nancing

partners and thus the hedging of current liquidity reserves.

Noncurrent liquidity requirements are met by the issuance of corporate shares and bonds and by taking out bank loans.

128

03 anhang E_100316.indd 128 10.03.16 17:39

The contractually agreed (undiscounted) cash fl ows (payments of interest and principal) as well as the remaining terms to maturity of the

fi nancial liabilities consist of the following elements:

EURk Carrying Cash fl ows 2016 Cash fl ows 2017 to 2020 Cash fl ows as from 2021

amount Interest Interest Re- Interest Interest Re- Interest Interest Re- fi xed variable demption fi xed variable demption fi xed variable demption

DECEMBER 31, 2015AT AMORTIZED COSTFinancial liabilities 109,817 1,055 626 5,245 2,538 1,499 96,173 0 71 8,399Finance lease liabilities 21,770 0 393 862 0 1,410 3,610 0 2,230 17,298Trade payables 127,445 0 0 127,445 0 0 0 0 0 0Bonds 84,845 3,719 0 0 1,178 0 85,000 0 0 0Other current and non-current fi nancial liabilities 33,556 0 0 27,309 0 0 921 0 0 5,327 377,435 4,774 1,019 160,861 3,716 2,909 185,704 0 2,301 31,024HELD FOR TRADINGOther fi nancial liabilities – Derivatives with negative market value 144 141 0 0 0 0 0 0 0 0 144 141 0 0 0 0 0 0 0 0FAIR VALUE – HEDGING INSTRUMENTSOther fi nancial liabilities – Derivatives with negative market value (cash fl ow hedge) 2,460 786 0 1,317 863 0 0 0 0 0 2,460 786 0 1,317 863 0 0 0 0 0Total 380,038 5,701 1,019 162,178 4,579 2,909 185,704 0 2,301 31,024


03 anhang E_100316.indd 129 10.03.16 17:39


EURk Carrying Cash fl ows 2015 Cash fl ows 2016 to 2019 Cash fl ows as from 2020

amount Interest Interest Re- Interest Interest Re- Interest Interest Re- fi xed variable demption fi xed variable demption fi xed variable demption

DECEMBER 31, 2014AT AMORTIZED COSTFinancial liabilities 64,994 110 768 8,414 205 2,172 42,833 69 150 13,747Finance lease liabilities 7,570 0 143 194 0 534 816 0 1,039 6,560Trade payables 105,078 0 0 105,078 0 0 0 0 0 0Bonds 84,729 3,719 0 0 4,896 0 85,000 0 0 0Other current and non-current fi nancial liabilities 30,029 0 0 24,031 0 0 0 0 0 5,998 292,400 3,829 911 137,717 5,101 2,706 128,649 69 1,189 26,305HELD FOR TRADINGOther fi nancial liabilities – Derivatives with negative market value 343 183 0 0 126 0 0 0 0 0 343 183 0 0 126 0 0 0 0 0FAIR VALUE – HEDGING INSTRUMENTSOther fi nancial liabilities – Derivatives with negative market value (cash fl ow hedge) 7,613 1,264 0 5,371 1,131 0 0 152 0 0 7,613 1,264 0 5,371 1,131 0 0 152 0 0Total 300,356 5,276 911 143,088 6,358 2,706 128,649 221 1,189 26,305

28.3. Derivatives and hedges

The following derivative fi nancial instruments used as hedging instruments are employed as of December 31, 2015:

EURk Nominal Fair value Exposures Maturity of amount EURk EURk Up to 1 year 1 to 5 years in 1,000 local currency

DECEMBER 31, 2015Foreign currency forwards USD 67,000 (817) 81,199 67,000 0 JPY 2,160,000 403 25,728 2,160,000 0 CAD 37,470 1,505 34,263 37,470 0 GBP 32,860 700 48,520 32,860 0 CHF 18,590 236 20,843 18,590 0 SEK 117,000 (117) 19,842 117,000 0 MXN 56,500 181 8,884 56,500 0 DKK 6,030 2 2,661 6,030 0 PLN 12,750 63 7,591 12,750 0 NOK 16,480 87 6,931 16,480 0 CZK 132,000 (7) 7,848 132,000 0 ZAR 0 0 0 0 0Interest rate swaps (payer) 74,000 (1,143) 0 44,000 30,000

130

03 anhang E_100316.indd 130 10.03.16 17:39

EURk Nominal Fair value Exposures Maturity of amount EURk EURk Up to 1 year 1 to 5 years in 1,000 local currency

DECEMBER 31, 2014Foreign currency forwards USD 37,600 (2,915) 85,057 37,600 0 JPY 2,050,000 (443) 24,949 2,050,000 0 CAD 22,300 (265) 25,663 22,300 0 GBP 31,830 (1,450) 47,273 31,830 0 CHF 20,470 (180) 20,137 20,470 0 SEK 66,000 230 18,368 66,000 0 MXN 0 0 0 0 0 DKK 6,850 1 1,751 6,850 0 PLN 13,360 42 7,144 13,360 0 NOK 11,950 84 5,404 11,950 0 CZK 108,850 26 7,178 108,850 0 ZAR 121,000 (35) 14,809 121,000 0Interest rate swaps (payer) 74,000 (2,242) 0 0 74,000

In cash fl ow hedge accounting, both variable future cash fl ows arising from non-current liabilities with maturity dates up to 2020 and future

operating cash fl ows (receipts as well as payments) planned for the next twelve months are hedged.

EURk Nominal Fair value Maturity of amount EURk Up to 1 year 1 to 5 years in 1,000 local currency

DECEMBER 31, 2015Interest rate swaps (payer) 11,000 (145) 11,000 0

DECEMBER 31, 2014Interest rate swaps (payer) 11,000 (343) 0 11,000

In the case of the following derivative fi nancial instruments no hedging relationship could be established:

Forward currency transactions

The KTM group enters into foreign currency forwards essentially to hedge intended future revenue and cost of materials denominated in

foreign currency against the risk of exchange rate fl uctuations.


03 anhang E_100316.indd 131 10.03.16 17:39


Interest rate swaps

At December 31, 2015, payer interest rate swaps of EUR 85,000k (prior year: EUR 85,000k) were held to reduce the volatility of variable

interest payments on loans. Of these, interest rate swaps with a nominal value of EUR 11,000k (prior year: EUR 11,000k) and with a negative

market value of EUR 145k (prior year: EUR 343k) were classifi ed as “held for trading”.

29. LEASES

Finance leases

Buildings include one asset held by the KTM group under a fi nance lease. The asset in question is the logistics center at the Munderfi ng site,

which was completed in 2015. After expiry of the contractual term of 15 years, there will be a pre-emptive tender right to acquire the building

at residual value.

The carrying value of assets held under fi nance leases is as follows:

EURk Buildings Payments on account and assets under construction

DECEMBER 31, 2015Acquisition and construction costs 27,050 0Accumulated depreciation 360 0Carrying value 26,690 0

DECEMBER 31, 2014Acquisition and construction costs 0 12,405Accumulated depreciation 0 0Carrying value 0 12,405

The present value of the minimum lease payments is as follows:

EURk 2015 2014

Minimum Present Minimum Present lease value lease value payments payments

Up to 1 year 1,129 1,118 338 331Up to 1 to 5 years 4,516 4,272 1,350 1,251More than 5 years 24,918 19,815 12,305 10,157 30,563 25,204 13,993 11,739

Deducting interest payments (4,034) (1,716)Deducting deposits (4,760) (4,707)Carrying value of lease obligations 21,770 7,570

132

03 anhang E_100316.indd 132 10.03.16 17:39

Payment obligations under fi nance leases are disclosed in the consolidated statement of fi nancial position under fi nancial liabilities (see note 21).

Interest on fi nance leases of EUR 135k was recorded in 2015 (prior year: EUR 0k).

The logistics center is predominantly used by the KTM group itself. A small portion is let to third parties outside the group. Payments of

EUR 1,796k and EUR 784k are expected from third parties and affi liates respectively in the next few years.

The option exists to extend each of the contracts for a further fi ve years at the end of the current term.

Operating leases

The KTM group makes use of operating leases, which are not recognized in the consolidated statement of fi nancial position, mainly for the use

of property, machinery, IT equipment and the vehicle fl eet. The leases provide for payments mainly based on variable rentals.

Lease payments of EUR 10,962k (prior year: EUR 11,906k) were classifi ed as expenses during 2015. The reported operating lease expenses

from operating leases do not include any payments under subleases recognized as expense items or any material conditional rent payments.

Future obligations under operating leases are as follows:

EURk Dec. 31, 2015 Dec. 31, 2014

Up to 1 year 9,097 7,7542 to 5 years 32,075 29,490More than 5 years 11,914 10,288 53,086 47,532

The defi nition of operating lease expenses is standardized group-wide. This item now also includes long-term rents for land and buildings

on third party land. Prior year fi gures have been restated accordingly.

Material operating leases are as follows:

p Land and buildings: The rental agreements/leases have remaining terms of up to 43 years.

p IT infrastructure and equipment: The rental agreements/leases have terms of up to 5 years.

p Vehicles and machinery: The rental agreements/leases have a remaining term of 6 years.

In some cases, the contracts may optionally be terminated after expiry of a minimum term. There are no price adjustment clauses.


03 anhang E_100316.indd 133 10.03.16 17:39


30. SEGMENT REPORTING

Information by business segment

During 2014, organizational restructuring measures relating to the implementation of the KTM group’s two-brand strategy were completed.

In 2014, therefore, internal reporting to the chief operating decision maker underwent a separation into the KTM and Husqvarna business

segments. Thus, at December 31, 2014, the requirements of IFRS 8.5 are for the fi rst time implemented for a second business segment.

The KTM group is divided by brand into two business segments, KTM and Husqvarna. The marketing activities of both brands now take place

via two different marketing entities that are separated in both corporate and staffi ng terms. The two business segments are defi ned as follows:

p KTM segment

The KTM segment comprises KTM AG along with the KTM subsidiaries specializing in the sale of KTM street and offroad motorcycles,

as well as the X-Bow supercar and in motorsport.

Upstream processes such as R&D, production and purchasing, along with group administrative group functions, continue to provide services

for both brands and therefore also continue to be centered in corporate terms in one company which is allocated to the KTM business

segment. A division of property, plant, and equipment between the two brands is not possible because of the single production location and

near-identical production processes. No such division is therefore reported internally to the chief operating decision maker.

p Husqvarna segment

The Husqvarna segment comprises Husqvarna Motorcycles GmbH and the Husqvarna subsidiaries. Husqvarna sells Husqvarna motorcycles

and is involved in motorsport.

The accounting policies for both reporting segments are the same as the group-wide accounting policies. No difference therefore exists

between the measurement of the profi t/loss or of the assets and liabilities of the segments and the equivalent fi gures for the group.

Intersegmental revenues are recorded at arm’s-length transfer prices.

The table below shows segment information for 2015:

EURk KTM Husqvarna Consoli- Group dation

2015External revenues 878,382 144,105 0 1,022,487Revenues between segments 116,077 1,499 (117,576) 0Total revenues 994,459 145,603 (117,576) 1,022,487

EBIT 84,034 12,139 (1,068) 95,105Amortization and depreciation 46,179 240 0 46,419Share in result of companies accounted for under the equity method 147 0 0 147

134

03 anhang E_100316.indd 134 10.03.16 17:39

The table below shows segment information for 2014:

EURk KTM Husqvarna Consoli- Group dation

2014External revenues 763,872 100,764 0 864,636Revenues between segments 75,827 5,431 (81,258) 0Total revenues 839,699 106,195 (81,258) 864,636

EBIT 67,638 7,375 (364) 75,377Amortization and depreciation 37,158 64 0 37,222Share in result of companies accounted for under the equity method 628 0 0 628

The operating results as per the total column agree to the operating results disclosed in the income statement. They can therefore be reconciled

to the profi t before tax by referring to the income statement.

The tables below show overall consolidated data for 2014 and 2015:

EURk 2015 2014

EURk % EURk %

Revenue by regionEurope 512,160 50% 461,807 53%North America 301,767 30% 201,522 23%Rest 208,560 20% 201,307 23% 1,022,487 100% 864,636 100%

Revenue by product groupOffroad sport motorcycles 425,359 42% 347,359 40%Street sport motorcycles 390,616 38% 329,263 38%Sportminicycles 37,951 4% 34,463 4%X-Bows 3,214 0% 2,665 0%Parts, garments and accessories as well as other revenues less revenue reductions 165,346 16% 150,886 17% 1,022,487 100% 864,636 100%

During 2015, non-current assets of EUR 426,602k (prior year: EUR 365,715k) were attributable to the home country of the business,

while EUR 14,416k (prior year: EUR 11,217k) related to other countries.

Neither the KTM segment nor Husqvarna report reliance on external customers within the meaning of IFRS 8.34.

31. EVENTS AFTER THE REPORTING DATE

Events that occurred after December 31, 2015 and are material for the measurement of the assets and liabilities have either been refl ected

in these fi nancial statements or are not known.


03 anhang E_100316.indd 135 10.03.16 17:39


32. RELATED PARTY DISCLOSURES

CROSS Industries AG, Wels, which is controlled by Stefan Pierer (and Rudolf Knünz until October 2014), holds 51.28% of the voting rights

in KTM AG, Mattighofen, directly and indirectly through CROSS KraftFahrZeug Holding GmbH, Wels, and is de facto the controlling shareholder

of KTM AG, Mattighofen.

Stefan Pierer serves as Chairman of the Executive Board of KTM AG, Mattighofen.

Rudolf Knünz formerly served as Deputy Chairman of the Supervisory Board of KTM AG (to May 22, 2014) and chairman of the Audit

Committee of KTM AG (to May 22, 2014).

In the fi nancial year 2015, the fi xed total compensation paid by group companies to the Executive Board members of KTM AG in consideration

of their services as managing directors and Executive Board members in the KTM group amounted to EUR 1,328k (prior year: EUR 1,302k).

Liabilities of EUR 4,605k (prior year: EUR 3,714k) have been recognized in relation to variable remuneration. Furthermore, no pension expenses,

in the form of contributions to pension funds and provisions for pensions, were posted in the fi nancial year 2015. Following the expiration

of the agreed term of contract, individual Members of the Executive Board receive a one-off payment (severance pay). During 2015, severance

pay of EUR 2,090k (prior year: EUR 0k) were paid to Members of the Executive Board. As at December 31, 2015, accounts payable to

Members of the Executive Board stood at EUR 1,017k (prior year: EUR 2,087k).

At the General Meeting in April 2016, it will be proposed that the remuneration to be paid to the Supervisory Board for the fi nancial year 2015

(payout in the fi nancial year 2016) shall amount to a total of EUR 24k (prior year: EUR 19k).

There are no stock option plans.

KTM AG entered into long-term secondment agreements with CROSS Industries AG regarding Executive Board members Stefan Pierer and

Friedrich Roithner.

By an assignment agreement dated September 17, 2013, KTM AG acquired the license right for the use of the Husqvarna brand from

Pierer Industrie AG for EUR 10,000k. The license right is being amortized over its remaining useful life of 12 years and is periodically tested

for impairment. Pierer Industrie AG is a subsidiary of Pierer Konzerngesellschaft mbH (ultimate group parent company). Stefan Pierer is the

owner of Pierer Konzerngesellschaft mbH and also Chairman of the Executive Board of KTM AG. A valuation was performed in order to verify

the measurement of the license right and the acquisition was approved by the Supervisory Board of KTM AG The transaction was thus carried

out at arm’s length.

Furthermore, there was an offset of a group allocation from CROSS Industries AG to KTM AG of EUR 1,000k (prior year: EUR 800k).

Rajiv Bajaj, Deputy Chairman of the Supervisory Board, is the Managing Director of Bajaj Auto Ltd., Pune, India. Srinivasan Ravikumar, a

member of the Supervisory Board, is a director of Bajaj Auto International Holdings B.V., Amsterdam, Netherlands, and President of Business

Development and Assurance at Bajaj Auto Ltd. Bajaj Auto International Holdings B.V., Amsterdam, Netherlands, a subsidiary of Bajaj Auto Ltd.,

Pune, India, held 47.99% of KTM AG as at December 31, 2015. As at December 31, 2015, accounts receivable from Bajaj Auto Ltd.,

Pune, India (including receivables from payments made in advance) stood at EUR 227k, while accounts payable to the same company stood

at EUR 2,735k (prior year: receivables of EUR 4,422k and payables of EUR 476k). Bajaj Auto International Holdings B.V. has granted KTM

Motorrad AG a short-term arm’s-length, interest-bearing loan of EUR 5,000k due on March 31, 2015.

136

03 anhang E_100316.indd 136 10.03.16 17:39

Cooperation with the Indian Bajaj group has been in place since 2007. The Bajaj group is India’s second largest manufacturer of motorcycles

and three wheelers, selling approximately 3.81 million units in the last fi nancial year (reporting date: March 31, 2015). The cooperation

focuses on the joint development of entry-level street motorcycles, which are produced in India and distributed under the “KTM” brand by

both companies in their respective core markets.

The WP group and Pankl group are subsidiaries of Cross Industries AG and act as suppliers of automotive parts to the KTM group. WP is also

charged rent at arm’s length rates for use of the KTM logistics center. The Wethje group, which is included as an associate in the consolidated

fi nancial statements of Cross Industries AG, likewise acts as a supplier to the KTM group.

Arm’s-length deliveries of motorcycles and spare parts are made to KTM New Zealand Ltd. and KTM MIDDLE EAST AL SHAFAR LLC, two

general importers in the KTM group accounted for under the equity method. Arm’s-length deliveries of motorcycles and spare parts are made

to KTM dealers in which the KTM group holds minority investments and which are accounted for as other non-current fi nancial assets.

Wohnbau-west Bauträger Gesellschaft m.b.H., a direct subsidiary of Pierer Konzerngesellschaft mbH, provided services as general contractor

in relation to the planning and construction of the KTM logistics center in Munderfi ng on behalf of Oberbank Mattigtal Immobilienleasing

GmbH, with which KTM Immobilen GmbH has concluded a lease contract on arm’s-length terms. In 2014 KTM Immobilien GmbH

made payments on account of EUR 4,835k to Oberbank Mattigtal Immobilienleasing GmbH. Construction services supplied by Wohnbau-west

Bauträger Gesellschaft m.b.H. in 2015 amounted to EUR 14,730k (prior year: EUR 7,570k). Oberbank Leasing Gesellschaft mbH and KTM AG

respectively own 90% and 10% of Oberbank Mattigtal Immobilienleasing GmbH. In 2014 KTM AG purchased the interest held by Cross

Industries AG at its book value of EUR 474k.

Mattighofen Museums-Immobilien GmbH, established in 2015, is owned by Pierer Konzerngesellschaft GmbH (51%) and KTM Immobilien

GmbH (49%). Receivables stood at EUR 17k as at December 31, 2015 (prior year: EUR 0k).

Pierer Industrie AG holds 100% of Moto Italia SRL and 25.07% of All for One Steeb AG. In 2014 the KTM group purchased spare parts

for the Husqvarna brand from Moto Italia for EUR 4.6 million. For the future sales of these spare parts, a division of margins was agreed that

was fulfi lled in 2014 ahead of schedule with a payment to Moto Italia SRL of EUR 1.3 million. No transactions took place in 2015.

All for One Steeb AG provided IT consultancy services to the KTM group for EUR 5,000k (prior year: EUR 2,292k).

KTM AG has granted an interest-bearing loan to TRUE Management & Investment GmbH, which is within the sphere of infl uence of Hubert

Trunkenpolz, a Member of the Executive Board. The loan has a maturity date of December 31, 2016, subject to annual extension options

whereby it may be extended up to a fi nal date of February 28, 2018. Loan receivables of EUR 120k (prior year: EUR 140k) were recognized

as at the reporting date.

No other loans or advances have been granted to Members of the Executive Board or the Supervisory Board of KTM AG as of the

reporting date.

Gerald Kiska serves on the Supervisory Board of CROSS Industries AG, Wels, and acts as managing shareholder of Kiska GmbH, Anif,

in which KTM AG, Mattighofen, holds an interest of 26.0%. Mr. Kiska also serves as chief executive offi cer of KTM Technologies GmbH, Anif.

Expenses of EUR 12,064k were incurred in relation to Kiska GmbH, Anif during the year (prior year: EUR 7,087k). As of December 31, 2015,

accounts payable to Kiska GmbH stood at EUR 3,681k (prior year: EUR 3,773k).


03 anhang E_100316.indd 137 10.03.16 17:39


By way of a sale and purchase agreement dated October 7, 2015, KTM AG acquired a 23.9% shareholding with a nominal value of

EUR 23,900 in KTM Technologies GmbH, Anif, from CROSS Industries AG, Wels, for a purchase price of EUR 100k.

Other material transactions with related parties and the amount of the outstanding balances with related parties (pooled at group level) were

as follows:

EURk Revenue Expenses Receivables Liabilities

2015Investments accounted for using the equity method 11,788 12,064 3,591 3,669Other non-current fi nancial assets 7,791 941 1,788 102Other subsidiaries not included in the scope of consolidation 54 115 0 8CROSS Industries AG, Wels, Austria 4 6,024 0 2,418WP AG, Munderfi ng, Austria 1,101 119,905 31 492Wethje Carbon Composites GmbH, Hengersberg, Germany 0 672 0 86Pankl Racing Systems AG, Kapfenberg, Austria 0 7,482 0 1,054Bajaj Auto Ltd., Pune, India 0 74,493 227 2,735TRUE Management GmbH, Thalheim bei Wels, Austria 18 4 0 0Pierer Konzerngesellschaft mbH, Wels, Austria 647 725 0 0Other entities 355 1,551 95 132 21,759 223,975 5,733 10,695

Material transactions with related parties and the amount of the outstanding balances with related parties (pooled at group level) were as

follows in the preceding year:

EURk Revenue Expenses Receivables Liabilities

2014Investments accounted for using the equity method 10,913 7,087 3,155 3,774Other non-current fi nancial assets 7,405 0 5,100 0Other subsidiaries not included in the scope of consolidation 4 4 29 0CROSS Industries AG, Wels, Austria 8 4,304 0 216WP AG, Munderfi ng, Austria 163 94,427 25 12,465Wethje Carbon Composites GmbH, Hengersberg, Germany 20 373 0 136Pankl Racing Systems AG, Kapfenberg, Austria 0 5,450 0 1,356Bajaj Auto Ltd., Pune, India 3,800 71,604 4,422 5,476TRUE Management GmbH, Thalheim bei Wels, Austria 0 155 140 0Pierer Konzerngesellschaft mbH, Wels, Austria 0 366 0 111Other entities 130 314 0 44 22,443 184,083 12,872 23,578

All supplies and services were and are agreed at arm’s-length prices.

138

03 anhang E_100316.indd 138 10.03.16 17:39

33. CORPORATE BODIES OF KTM AG

The following individuals were Members of the Supervisory Board in 2015:

p Josef Blazicek, Chairman

p Rajiv Bajaj, Deputy Chairman

p Ernst Chalupsky

p Srinivasan Ravikumar

p Friedrich Lackerbauer (Employee representative)

p Horst Resch (Employee representative)

The following persons were Members of the Executive Board with collective power of representation in 2015:

p Stefan Pierer, Chairman

p Harald Plöckinger

p Friedrich Roithner

p Viktor Sigl

p Hubert Trunkenpolz

Mattighofen, February 16, 2016

The Executive Board




03 anhang E_100316.indd 139 10.03.16 17:39


EURk Initial Dec. 31, 2015 Dec. 31, 2014

Company consolidation Interest Consolidation Interest Consolidation date in % type in % type

Affi liated companiesKTM Immobilien GmbH (formerly: KTM Motorrad AG), Mattighofen, Austria Sep. 1, 1999 99.61 FC 100.00 FCKTM North America, Inc., Amherst, Ohio, USA Sep. 1, 1993 100.00 FC 100.00 FCKTM-Motorsports, Inc., Amherst, Ohio, USA Sep. 1, 2000 100.00 FC 100.00 FCKTM-Sportmotorcycle Japan K.K., Tokyo, Japan Sep. 1, 2002 100.00 FC 100.00 FCKTM-Racing AG, Frauenfeld, Switzerland Jan. 28, 2003 100.00 FC 100.00 FCKTM Sportcar GmbH, Mattighofen, Austria Mar. 1, 2005 100.00 FC 100.00 FCKTM Motorcycles S.A. Pty. Ltd., Northriding, South Africa Mar. 1, 2009 100.00 FC 100.00 FCKTM Sportmotorcycle Mexico C.V. de S.A., Lerma, Mexico Jun. 1, 2009 100.00 FC 100.00 FCKTM South East Europe S.A., Elefsina, Greece Nov. 1, 2010 100.00 FC 100.00 FCKTM Technologies GmbH, Anif, Austria Dec. 1, 2009 74.00 FC 50.10 FCKTM Sportmotorcycle GmbH, Mattighofen, Austria May 1, 2011 100.00 FC 100.00 FCKTM-Sportmotorcycle India Private Limited, Pune, India Jun. 1, 2012 100.00 FC 100.00 FCHusqvarna Motorcycles GmbH, Mattighofen, Austria Jan. 1, 2013 100.00 FC 100.00 FCKTM-Sportmotorcycle GmbH, Ursensollen, Germany Dec. 31, 2013 100.00 FC 100.00 FCKTM Switzerland Ltd., Frauenfeld, Switzerland Dec. 31, 2013 100.00 FC 100.00 FCKTM Sportmotorcycle UK Limited, Brackley, United Kingdom Dec. 31, 2013 100.00 FC 100.00 FCKTM-Sportmotorcycle Espana S.L., Terrassa, Spain Dec. 31, 2013 100.00 FC 100.00 FCKTM Sportmotorcycle France SAS, Saint Priest, France Dec. 31, 2013 100.00 FC 100.00 FCKTM Sportmotorcycle Italia s.r.l., Gorle, Italy Dec. 31, 2013 100.00 FC 100.00 FCKTM-Sportmotorcycle Nederland B.V., Malden, Netherlands Dec. 31, 2013 100.00 FC 100.00 FCKTM Sportmotorcycle Scandinavia AB, Örebro, Sweden Dec. 31, 2013 100.00 FC 100.00 FCKTM-Sportmotorcycle Belgium S.A., Wavre, Belgium Dec. 31, 2013 100.00 FC 100.00 FCKTM Canada Inc., St-Bruno, Canada Dec. 31, 2013 100.00 FC 100.00 FCKTM Hungária Kft., Törökbálint, Hungary Dec. 31, 2013 100.00 FC 100.00 FC

SCHEDULE OFEQUITY HOLDINGSANNEX TO THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF KTM AG, MATTIGHOFEN, AUSTRIA

140

03 anhang E_100316.indd 140 10.03.16 17:39



KTM Central East Europe s.r.o., Bratislava, Slovakia Dec. 31, 2013 100.00 FC 100.00 FCKTM Österreich GmbH, Mattighofen, Austria Dec. 31, 2013 100.00 FC 100.00 FCKTM Nordic Oy, Vantaa, Finland Dec. 31, 2013 100.00 FC 100.00 FCKTM Sportmotorcycle d.o.o., Marburg, Slovenia Dec. 31, 2013 100.00 FC 100.00 FCKTM Czech Republic s.r.o., Pilsen, Czech Republic Dec. 31, 2013 100.00 FC 100.00 FCKTM Sportmotorcycle SEA PTE. Ltd. (formerly: KTM Sportmotorcycle Singapore PTE Ltd.), Singapore, Singapore Jan. 1, 2014 100.00 FC 100.00 FCHusqvarna Motorcycles Italia S.r.l., Albano Sant’Alessandro, Italy Dec. 31, 2013 100.00 FC 100.00 FCHusqvarna Motorcycles Deutschland GmbH, Ursensollen, Germany Dec. 31, 2013 100.00 FC 100.00 FCHusqvarna Motorcycles Espana S.L., Terrassa, Spain Dec. 31, 2013 100.00 FC 100.00 FCHusqvarna Motorcycles UK Ltd., Brackley, United Kingdom Dec. 31, 2013 100.00 FC 100.00 FCHusqvarna Motorcycles France SAS, Saint Priest, France Dec. 31, 2013 100.00 FC 100.00 FCHQV Motorcycles Scandinavia AB, Örebro, Sweden Dec. 31, 2013 100.00 FC 100.00 FCHusqvarna Motorcycles North America, Inc., Murrieta, USA Dec. 1, 2013 100.00 FC 100.00 FCHusqvarna Motorsports, Inc., Murrieta, USA Apr. 1, 2015 100.00 FC – –Husqvarna Motorcycles S.A. Pty. Ltd., Northriding, South Africa Apr. 1, 2015 100.00 FC – –KTM Events & Travel Service AG, Frauenfeld, Switzerland1 – 100.00 – 100.00 FC

Associated companiesKTM New Zealand Ltd., Auckland, New Zealand – 26.00 AE 26.00 AEKiska GmbH, Anif, Austria – 26.00 AE 24.90 AEKTM MIDDLE EAST AL SHAFAR LLC, Dubai, United Arab Emirates – 25.00 AE 25.00 AE

1 Disposal due to deconsolidation, see note 2, Scope of consolidation. FC: Full consolidation

AE: At equity

AC: At cost

S C H E D U L E O F E Q U I T Y H O L D I N G S 141

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EURk (Negative) Equity Net result

Company Dec. 31, 2015 Dec. 31, 2014 2015 2014

Other non-current fi nancial assetsKTM Australia Pty Ltd. (formerly: KTM-Sportcar Australia Pty Ltd.), Perth, Australia1 (6) (6) 0 17KTM Finance GmbH, Frauenfeld, Switzerland 2 17 2 0KTM Wien GmbH, Mattighofen, Austria 97 (27) (6) (3)KTM do Brasil Ltda., Sao Paulo, Brazil 787 738 (289) (243)KTM Braumandl GmbH, Wels, Austria 2 149 2 63Project Moto Rütter & Holte GmbH, Oberhausen, Germany 2 183 2 65MX – KTM Kini GmbH, Wiesing, Austria 2 59 2 28KTM Regensburg GmbH, Regensburg, Germany 2 24 2 (5)Oberbank Mattigtal Immobilienleasing GmbH, Linz, Austria 4,742 4,742 103 22Mattighofen Museums-Immobilien GmbH, Mattighofen, Austria 87 – (13) –KISKA, Inc., Murrieta, USA 203 – 111 –

1 Latest annual fi nancial statements available are of August 31, 20152 Not yet available



Other non-current fi nancial assetsKTM Australia Pty Ltd., Perth, Australia1 – 100.00 AC 100.00 ACKTM Finance GmbH, Frauenfeld, Switzerland1 – 100.00 AC 100.00 ACKTM Wien GmbH, Mattighofen, Austria1 – 76.00 AC 100.00 ACKTM do Brasil Ltda., Sao Paulo, Brazil1 – 100.00 AC 100.00 ACKTM Braumandl GmbH, Wels, Austria2 – 26.00 AC 26.00 ACProject Moto Rütter & Holte GmbH, Oberhausen, Germany2 – 26.00 AC 26.00 ACMX – KTM Kini GmbH, Wiesing, Austria2 – 26.00 AC 26.00 ACKTM Regensburg GmbH, Regensburg, Germany2 – 26.00 AC 26.00 ACOberbank Mattigtal Immobilienleasing GmbH, Linz, Austria – 10.00 AC 10.00 ACMattighofen Museums-Immobilien GmbH, Mattighofen, Austria2 – 49.00 AC – –KISKA, Inc., Murrieta, USA1 – 51.00 AC – –

1 Not fully consolidated, because of immateriality. FC: Full consolidation2 Not included at equity because of minor importance. AE: At equity

AC: At cost

142

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AUDITOR’SREPORT

A U D I T O R ’ S R E P O R T

REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS

We have audited the accompanying consolidated fi nancial statements of KTM AG, Mattighofen, Austria, for the fi scal year from 1 January

to 31 December 2015. These consolidated fi nancial statements comprise the consolidated balance sheet/consolidated statement of fi nancial

position as of 31 December 2015, the consolidated income statement/consolidated statement of comprehensive income, the consolidated

statement of cash fl ows and the consolidated statement of changes in equity for the fi scal year 2015 and a summary of signifi cant accounting

policies and other explanatory notes.

MANAGEMENT’S RESPONSIBILITY FOR THE CONSOLIDATED FINANCIAL STATEMENTS

The Company’s management is responsible for the preparation and fair presentation of these consolidated fi nancial statements in accordance

with International Financial Reporting Standards (IFRSs) as adopted by the EU, and the additional requirements pursuant to section 245a

UGB (Austrian Commercial Code) and for such internal control as management determines is necessary to enable the preparation of fi nancial

statements that are free from material misstatement, whether due to fraud or error.

AUDITOR’S RESPONSIBILITY

Our responsibility is to express an opinion on these consolidated fi nancial statements based on our audit. We conducted our audit in accordance

with Austrian Standards on Auditing. Those standards require that we comply with International Standards on Auditing – ISA. In accordance with

International Standards on Auditing, we are required to comply with ethical requirements and plan and perform the audit to obtain reasonable

assurance about whether the consolidated fi nancial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated fi nancial statements.

The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated fi nancial

statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Group’s preparation

and fair presentation of the consolidated fi nancial statements in order to design audit procedures that are appropriate in the circumstances,

but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. An audit also includes evaluating the

appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the

overall presentation of the consolidated fi nancial statements.

We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.

143

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OPINION

Our audit did not give rise to any objections. In our opinion, the consolidated fi nancial statements present fairly, in all material respects, the

fi nancial position of the Group as of 31 December 2015 and its fi nancial performance and its cash fl ows for the year then ended in accordance

with International Financial Reporting Standards (IFRSs) as adopted by the EU.

REPORT ON THE MANAGEMENT REPORT FOR THE GROUP

Pursuant to statutory provisions, the management report for the Group is to be audited as to whether it is consistent with the consolidated

fi nancial statements and as to whether the other disclosures are not misleading with respect to the Company’s position. The auditor’s report also

has to contain a statement as to whether the management report for the Group is consistent with the consolidated fi nancial statements and

whether the disclosures pursuant to section 243a UGB (Austrian Commercial Code) are appropriate.

In our opinion, the management report for the Group is consistent with the consolidated fi nancial statements. The disclosures pursuant to

section 243a UGB (Austrian Commercial Code) are appropriate.

Linz, 16 February 2016

KPMG Austria GmbH

Wirtschaftsprüfungs- und Steuerberatungsgesellschaft

signed by:

Mag. Ernst Pichler

Wirtschaftsprüfer

(Austrian Chartered Accountants)

This report is a translation of the original report in German, which is solely valid. The consolidated fi nancial statements together with our auditor’s opinion may only be

published if the consolidated fi nancial statements and the management report are identical with the audited version attached to this report. Section 281 paragraph 2 UGB

(Austrian Commercial Code) applies.

144

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STATEMENT OF ALLLEGAL REPRESENTATIVESFOR THE FINANCIAL YEAR 2015 OF KTM AG, MATTIGHOFEN, AUSTRIA

S T A T E M E N T O F A L L L E G A L R E P R E S E N T A T I V E S

We confi rm to the best of our knowledge that the consolidated fi nancial statements give a true and fair view of the assets, liabilities,

fi nancial position and profi t or loss of the group as required by the applicable accounting standards and that the consolidated management

report gives a true and fair view of the development and performance of the business and the position of the group, together with a

description of the principal risks and uncertainties the group faces.

We confi rm to the best of our knowledge that the separate fi nancial statements give a true and fair view of the assets, liabilities, fi nancial

position and profi t or loss of the parent company as required by the applicable accounting standards and that the management report gives a

true and fair view of the development and performance of the business and the position of the company, together with a description of the

principal risks and uncertainties the company faces.


The Executive Board



145

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FINANCIAL CALENDAR 2016

Apr. 11, 2016 Date of evidence of “Annual General Meeting”

Apr. 21, 2016 Annual General Meeting

Apr. 25, 2016 Ex-dividend date

Apr. 26, 2016 Date of evidence of “Dividend” (record date)

Apr. 28, 2016 Dividend payment date

Aug. 19, 2016 Interim Financial Statements

for the fi rst half-year 2016

INVESTOR RELATIONS

VIKTOR SIGL

Stallhofnerstrasse 3

5230 Mattighofen, Austria

Phone: +43 7742 6000-144

E-Mail: [email protected]

OTHERINFORMATION

146 K T M G R O U P

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147

IMPRINT

Owner and publisher:

KTM AG, Stallhofnerstrasse 3, 5230 Mattighofen, Austria

Registered at the Regional Court Ried im Innkreis:

FN 107673 v

Concept and design: KTM, marchesani_kreativstudio

Photos: KTM archives, Husqvarna archives

While every care was taken in compiling this annual 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 the 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 deviate from the

forward-looking statements given in the report.

Printed in accordance with the printing products directive of the

Austrian ecolabel “Das Österreichische Umweltzeichen” (UW-No 922).

03 anhang E_100316.indd 147 10.03.16 17:39

KTM AGStallhofnerstrasse 35230 Mattighofen, Austria

E-MAIL: [email protected]: www.ktmgroup.com

03 anhang E_100316.indd 148 10.03.16 17:39

Documents

KTM AG Annual Report 2015