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KTM AT A GLANCE
+ 11.7
%RE
VENU
E
+8.1
%EB
IT + 16.
5%EM
PLOY
EES
EURk 2012 2013 2014 2015 2016 Change
EARNINGS RATIOSRevenue 612,008 716,390 864,636 1,022,487 1,141,819 11.7%EBITDA 67,838 87,694 112,599 141,524 160,012 13.1%EBIT 36,716 54,886 75,377 95,105 102,796 8.1%EBT 25,145 46,923 70,636 85,421 94,378 10.5%Net result after tax 25,317 36,509 57,162 63,924 72,109 12.8%EBITDA margin 11.1% 12.2% 13.0% 13.8% 14.0% –EBIT margin 6.0% 7.7% 8.7% 9.3% 9.0% –
BALANCE SHEET RATIOSBalance sheet total 521,351 571,435 694,799 848,933 1,056,524 24.5%Working capital1 81,269 86,074 106,836 122,051 103,700 (15.0%)Equity 254,522 282,843 327,575 379,814 427,979 12.7%Equity in % of total assets 48.8% 49.5% 47.1% 44.7% 40.5% –Net fi nancial debt2 99,315 82,365 87,475 97,164 80,850 (16.8%)Gearing3 39.0% 29.1% 26.7% 25.6% 18.9% –
CASH FLOWCash fl ow from operating activities 71,673 83,240 79,649 118,104 165,590 40.2%Free cash fl ow 15,572 25,187 9,914 23,802 18,838 (20.9%)
EMPLOYEESEmployees as at December 314 1,702 1,849 2,143 2,515 2,931 16.5%
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
01 imageteil E_160317 v2.indd 2 16.03.17 20:19
ANNUALREPORT
2016
FINANCIAL YEAR FROMJANUARY 1 TO DECEMBER 31, 2016KTM AG, MATTIGHOFEN, AUSTRIA
01 imageteil E_160317 v2.indd 3 16.03.17 20:19
K T M G R O U P004
Every day is a chance to perform; every year is an opportunity
for success. Each day, each year is the time to step up to
the plate and assert yourself in the marketplace, moving boldly
ahead into the future.
The following annual report gives a broad overview of the
KTM GROUP’s activities and overall performance over the past
year. It is a brief pause to evaluate its efforts, and allow a
moment to prepare for and face the year ahead with renewed
focus and a shared vision.
KTM Sportmotorcycle GmbH and Husqvarna Motorcycles GmbH,
two direct subsidiaries of the group parent company KTM AG,
deliver and market the respective brands to consumers.
The KTM GROUP brands produce a range of trend-setting and
innovative powersports vehicles, sold through a solid and
expanding global network of dealers, partners, joint ventures,
subsidiaries and regional importers.
The development center in Mattighofen, Austria, is a hub of inno-
vation, where market-leading powersports vehicles are designed,
developed and produced. It is here that the KTM GROUP is
constantly driven to set new benchmarks and introduce
new technologies, designs and approaches to the market that
challenge the industry, assert themselves proudly in competition
and provide an exhilarating and rewarding experience for the
end consumer.
With strong roots in the offroad motorcycle and competition
disciplines, over the past decade, the KTM GROUP has success-
fully expanded beyond the dirt and into the realm of street-legal
motorcycles, with industry-leading models in the travel-enduro
and naked segments. The KTM GROUP has also recently
introduced smaller capacity models for entry-level riders that
cater to a wider range of global motorcyclists.
The current range of smart and versatile engine and chassis
platforms empowers the KTM GROUP to better adapt to future
market trends and to offer a desirable and relevant range of
modern powersport vehicle products.
The only certainty in the modern world is change, a change
that seems to be happening at sometimes breakneck speeds in
multiple fi elds and areas of expertise. The KTM GROUP’s focus
on innovation, technology and progress leaves the company
excited about tackling the future challenges and deliver the
next generation of industry-leading, smart, disruptive, exciting
and rewarding powersports solutions to a fast-evolving and
ever-changing world.
KTM GROUP
01 imageteil E_160317 v2.indd 4 16.03.17 20:19
CONTENT
History
Investor Relations
Consolidated Management Report
Quality
007 Foreword
009 Report of the Supervisory Board
018 History
022 Sales Markets
024 KTM GROUP Vision
026 Group Structure
028 The KTM GROUP as a Sales Organization
030 KTM: Goals and Strategy
032 Husqvarna Motorcycles:
Goals and Strategy
034 Employees
036 KTM Motorsport
038 Husqvarna Motorsport
040 Quality
042 Research & Development
046 KTM Technologies
049 Investor Relations
053 Consolidated Management Report
073 Consolidated Income Statement
074 Consolidated Statement of
Comprehensive Income
075 Consolidated Statement of Financial Position
076 Consolidated Statement of Cash Flows
078 Consolidated Statement of Changes in Equity
079 Notes
140 Annex
143 Auditor’s Report
149 Statement of all Legal Representatives
150 Other Information
018049
053
040
005
01 imageteil E_160317 v2.indd 5 17.03.17 06:15
“416 new employees”
“Record investmentat the austrian sites”
“High levelof innovation”
“EBIT signifi cantlyincreased”
“Highest sales and revenuelevels in the company’s history”
006
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FOREWORD BY THE CHAIRMAN OF THE EXECUTIVE BOARD
007
LADIES AND GENTLEMEN,
THE 2016 FINANCIAL YEAR JUST ENDED WAS THE
BEST YEAR IN THE HISTORY OF THE KTM GROUP. KTM HAS
BEEN THE FASTEST GROWING MOTORCYCLE BRAND IN
THE WORLD FOR YEARS NOW.
HIGHEST SALES AND REVENUE LEVELS
IN THE COMPANY’S HISTORY
KTM again increased both its sales and revenues and in 2016
achieved a new record high for the sixth time in a row.
With 203,423 motorcycles sold worldwide by the two group
brands KTM and Husqvarna Motorcycles in the 2016 fi nancial year,
sales were up 11% on the previous year. Revenue was up in the
same period by 12% to EUR 1.14 billion.
EBIT SIGNIFICANTLY INCREASED
KTM saw a sharp rise in earnings in addition to revenue and sales.
With EBIT of EUR 102.8 million, KTM achieved record earnings
in the 2016 fi nancial year.
INVESTMENTS
In 2016, KTM continued to maintain investments at a high level
amounting to around EUR 106 million.
RECORD EMPLOYMENT AT THE MATTIGHOFEN SITE
At the end of the year, KTM employed 2,931 people around the
world, which represents a new record level of employment.
In the 2016 fi nancial year, headcount increased by 416, of whom
391 were new employees in Austria.
The Executive Board would like to thank all employees for the
great dedication and commitment with which they have contributed
to this successful development.
OUTLOOK
The general economic climate remains tough in the individual
markets. For 2017 we expect to see slight growth in the global motor-
cycle market. With our new products, consistent implementation
of our strategy and by focusing on commercial business development
to expand the quantity and quality of our sales partners, we expect
to continue to gain market shares.
With the Husqvarna Motorcycles brand, we expect further growth
in 2017 as the range of products is being expanded to include street
motorcycles.
2017 will also see the commercial launch of new KTM models. The
KTM Street models in the ADVENTURE series, which have already
been presented at international motorcycle shows, and the new
“DUKE” naked bike models will be launched on the market in 2017.
KTM has set itself the medium-term goal of increasing annual sales
to 300,000.
The level of investment planned for 2017 remains at a high level.
The main areas of focus for investment cover in particular new series
development projects as well as investments in infrastructure and
expansion in the area of development.
In 2017 we expect to see a further increase both in sales and in
revenues.
Mattighofen, March 2017
Stefan Pierer
Chairman of the Executive Board
F O R E W O R D B Y T H E C H A I R M A N O F T H E E X E C U T I V E B O A R D
01 imageteil E_160317 v2.indd 7 16.03.17 20:19
K T M G R O U P
(F.L.T.R.) VIKTOR SIGL, FRIEDRICH ROITHNER, STEFAN PIERER, HUBERT TRUNKENPOLZ, HARALD PLÖCKINGER
EXECUTIVE BOARD
Stefan Pierer
Chairman of the Executive Board
Harald Plöckinger
Friedrich Roithner
(until July 20, 2016)
Viktor Sigl
Hubert Trunkenpolz
SUPERVISORY BOARD
Friedrich Roithner
Chairman of the Supervisory Board
(from July 21, 2016)
Josef Blazicek
Chairman of the Supervisory Board
(until July 20, 2016)
Rajiv Bajaj
Deputy Chairman of the Supervisory Board
Ernst Chalupsky
Srinivasan Ravikumar
Friedrich Lackerbauer
Employee Representative
Horst Resch
Employee Representative
008
01 imageteil E_160317 v2.indd 8 16.03.17 20:19
009
REPORT OF THE SUPERVISORY BOARD
IN THE 2016 FINANCIAL YEAR THE SUPERVISORY BOARD
OF KTM AG HELD FOUR MEETINGS ON MARCH 2, ON JUNE 21,
ON SEPTEMBER 20 AND ON DECEMBER 7, 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 2016
fi nancial year as well as the consolidated fi nancial statements and
group management report for the 2016 fi nancial year 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, 2016 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 accordance with generally accepted accounting principles, and
that the management report is consistent with the annual fi nancial
statements. 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,
2016, as well as of the results of operations and cash fl ows
for the past fi nancial year in accordance with the International
Financial Reporting Standards (IFRS), and that the other details
in the group management report do not misrepresent the group’s
situation.
In its report to the Supervisory Board, the Audit Committee of
KTM AG concurred with the results of the fi nal audit. After review-
ing the management report and the annual statements for the
fi nancial year including the proposed appropriation of net profi t, the
group management report and the consolidated fi nancial state-
ments for the 2016 fi nancial year, 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 Super-
visory Board that KPMG Austria GmbH Wirtschaftsprüfungs-
und Steuerberatungsgesellschaft, Linz, be proposed for appointment
as independent auditors for the fi nancial year from January 1, 2017
to December 31, 2017 at the Annual General Meeting. In addition,
the Audit Committee also reviewed the corporate governance report
for the 2016 fi nancial year 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
group 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 Article 96 (4)
Stock Corporation Law (AktG). The Supervisory Board acknowledged
the consolidated fi nancial statements and the group management
report for the 2016 fi nancial year.
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, 2017 to December 31, 2017.
Mattighofen, March 2017
Friedrich Roithner
Chairman of the Supervisory Board
FRIEDRICH ROITHNER
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
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018 K T M G R O U P
1992 NEW BEGINNINGS
STEFAN PIERER TAKES OVER
KTM831934 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 AND 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
01 imageteil E_170317.indd 18 17.03.17 12:57
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 KTM 450 RALLY and
KTM 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 – 16 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 270 World Championships in the trophy room –
including 16 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
silverware, 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 – 23 years and counting, to be precise.
2001 FIRST DAKAR VICTORY – SINCE THAT TIME, KTM DRIVERS ACHIEVED 16 VICTORIES IN A ROW
1992
H I S T O R Y
1999
01 imageteil E_160317 v2.indd 19 16.03.17 20:19
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 KTM 125 DUKE
in 2011, which quickly became the biggest selling machine in its
class in Europe. The KTM 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 KTM 390 DUKE was released
and, in 2014, the Supersports KTM RC 125, KTM RC 200 and
KTM RC 390 began production.
2003
2008
K T M G R O U P
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
Superbike, the KTM RC8, tore-up the rulebook in terms of design
and handling performance. Distinctive looks matched with an equally
individual riding experience has seen the KTM RC8 remain a fi rm
favorite with two-wheel purists. The capabilities of the KTM RC8 R
were demonstrated when it clinched the IDM Superbike Champion-
ship in 2011 in the hands of Martin Bauer, a class where engine
tuning is very minimal.
UNBELIEVABLE – A KTM CAR After an energy loaded develop-
ment 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 demon-
strated the impressive learning curve in all development disciplines.
01 imageteil E_160317 v2.indd 20 16.03.17 20:19
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 KTM 1190 ADVENTURE and
later the KTM 1290 SUPER ADVENTURE, these models are not only
the most versatile of all Travel Enduros, but also the safest motor-
cycles 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 114-year
history of Husqvarna Motorcycles.
In late 2014, with the unveiling of the VITPILEN 401 and
SVARTPILEN 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.
2015 KTM GOES ELECTRIC Although a long-running
project and partially developed in public at i
ts 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 KTM 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.
2016 AT THE BEGINNING of the year KTM celebrated
its 15th consecutive Dakar victory. Championships
in Supercross, Motocross and Moto3 round off another successful
motorsport year. The fi rst outing of KTM’s MotoGP bike at the
Red Bull Ring offered a foretaste of what is to come in 2017.
With an extended ADVENTURE family and a reworked DUKE range
KTM strengthens its position on asphalt.
Only two years after the presentation of the concept-bikes VITPILEN
401 and SVARTPILEN 401 at the EICMA, Husqvarna unveiled
the serial models at the same place in 2016, representing a bold
fi rst step in an exciting new direction for Husqvarna Motorcycles.
2014 THE RESTART OF HUSQVARNA. REUNION OF HUSABERG AND HUSQVARNA
H I S T O R Y
2015
2014
2016
01 imageteil E_160317 v2.indd 21 16.03.17 20:19
022 K T M G R O U P
7.0 %MARKET SHARE IN NORTH AMERICA1
€ 327.7 MREVENUE IN NORTH AMERICA
11.4 %MARKET SHARE IN EUROPE1
€ 603.6 MREVENUE IN EUROPE
€ 210.5 MREVENUE IN OTHER COUNTRIES
KTM SALES COMPANIES
SALES MARKETS
CKD PRODUCTION1 TOTAL MARKET SHARE OF KTM AND HUSQVARNA
01 imageteil E_160317 v2.indd 22 16.03.17 20:19
023
SALES MARKETS
KTM SALES COMPANIES AND SALES MARKETS WORLDWIDE
S A L E S M A R K E T S
01 imageteil E_160317 v2.indd 23 16.03.17 20:19
024 K T M G R O U P
KTM GROUP VISION
KTM 1290 SUPER DUKE R, PHOTO: SCHEDL R.
KTM GROUP IS A PREMIUM MANUFAC-
TURER 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.
Today, driven by the passion of its employ-
ees, KTM GROUP has already become
the largest European manufacturer, with
a 11.4% market share in Europe and a
7.0% share in the US, as well as achieving an
annual revenue in excess of EUR 1.1 billion.
The current trajectory sets a KTM GROUP
goal of reaching 300,000 units of annual
production by 2020. The strategy to achieve
this is by maximizing the synergies and
resources of the constituent brands, stake-
holders and infrastructure within the group.
01 imageteil E_160317 v2.indd 24 16.03.17 20:19
025K T M G R O U P V I S I O N
The KTM GROUP’s corporate success is
grounded in strengthening the core values
of its two primary brands and communi-
cating them appropriately. The ongoing
objective is to ensure that every product
always delivers on the promise implicit in
the “READY TO RACE” philosophy for
KTM and “PIONEERING SINCE 1903” for
Husqvarna Motorcycles. Despite a marked
contrast between the group’s two main
brands, they share strong histories of success
and innovation, while using very different
approaches. This new sibling rivalry within
the KTM GROUP has benefi tted both brands
tremendously. The clearly differentiated
profi les of the brands and their continuity
are mainstays of the group’s success.
The KTM GROUP 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 profes-
sionalism and customer focus are vital
to the overall success. The KTM GROUP
strives to further advance its creation of a
sustainable 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 GROUP dealers can run
a profi table business solely by selling
KTM GROUP’s wide range of products and
accessories, along with the highest quality
components and some of the most
unique and impressive motorcycles both
onroad and offroad.
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 motor-
sport, the KTM GROUP constantly strives to
develop the overall product range and to
increase its competitiveness and penetration
into global markets; this is done by identify-
ing developing trends and defi ning new ones.
Innovation and the highest development
standards are crucial to achieving this vision.
A major step towards growing mainstream
market awareness is the entry into MotoGP
in 2017.
The KTM GROUP offering is a diverse and
ever-expanding model range that now covers
all essential engine capacity categories
and performance classes (50 to 1,300 ccm).
The small-engine street motorcycles –
developed in cooperation with Indian partner
Bajaj – open up a new global segment.
Due to this, the KTM GROUP product port-
folio now comprises a more diverse and
ever-expanding range that is more appropriate
and better geared for a growing portion of
the global market. The imminent introduc-
tion of a new parallel twin engine platform,
which will initially appear in new naked
models, provides better access to the popular
and fast expanding mid-sized segments.
The unveiling of KTM’s latest sports car,
the KTM X-BOW GT4 model, follows on
from having sold over 1,000 of the original
X-BOW model. It is an ongoing project that
proves KTM GROUP is capable of developing
and evolving new product ranges outside
of its traditional core motorcycle business.
The experience gained in terms of light-
weight vehicle construction is invaluable in
developing new vehicle concepts. Additionally,
KTM GROUP has taken a leading develop-
mental role in electric powertrain innovation.
The experience gained from the research
project to develop an innovative high-power
electric motorcycle in the form of the
KTM FREERIDE-E proved the potential of
electric powertrains. Building on this research,
the KTM GROUP is developing technology
that supports alternative forms of mobility in
urban settings for multiple applications.
HUSQVARNA VITPILEN 401, PHOTO: SCHEDL R.
01 imageteil E_160317 v2.indd 25 16.03.17 20:19
026 K T M G R O U P
SINCE THE HUSQVARNA MOTORCYCLES
BRAND WAS INTEGRATED INTO THE
KTM GROUP, KTM AG HAS FOLLOWED
A CONSISTENT TWO-BRAND STRATEGY FOR
KTM AND HUSQVARNA MOTORCYCLES.
The main equity holdings of KTM AG
are KTM Sportmotorcycle GmbH, Husqvarna
Motorcycles GmbH, KTM Sportcar GmbH,
KTM Technologies GmbH, KTM Immobilien
GmbH and the minority stakes in WP AG
and KISKA GmbH.
KTM AG develops and manufactures
motorcycles under the brands KTM and
Husqvarna Motorcycles as well as the
X-BOW super sports car and comprises
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. Markets
in the United States, Mexico, South Africa,
Japan and Greece are served via local
stock-carrying sales subsidiaries. The two
companies thus hold participations in a
total of 30 domestic and foreign sales com-
panies that provide sales and marketing-
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.
The WP Group is one of the leading
European system suppliers of performance-
defi ning components for the motorcycle
and powersport industries.
KISKA GmbH is a design company that
provides development and design services
for the KTM GROUP.
GROUP STRUCTURE
KTM AG AS PARENT COMPANY
01 imageteil E_160317 v2.indd 26 16.03.17 20:19
027G R O U P S T R U C T U R E
GROUP STRUCTURE (SIMPLIFIED)
KTMRacing AG
CHE 100%
KTMTechnologies
GmbH
AUT 74%
KTMImmobilien
GmbH
AUT 99.61%
KTMSportmotor-
cycle GmbH
AUT 100%
KTMSportcar
GmbH
AUT 100%
HusqvarnaMotorcycles
GmbH
AUT 100%
WPAG
AUT 24%
KISKAGmbH
AUT 26%
KTMSales companies
HusqvarnaSales companies
KTM AG
01 imageteil E_160317 v2.indd 27 16.03.17 20:19
028 K T M G R O U P
THE KTM GROUP AS A SALES ORGANIZATION
KTM & HUSQVARNA FLAGSHIPSTORE VIENNA
BUILDING PREMIUM VEHICLES IS
ONLY HALF THE TASK. IT IS JUST AS
IMPORTANT TO BRING THE BRAND
TO LIFE FOR THE CUSTOMER IN THE
BEST WAY POSSIBLE, WIN THEM
OVER WITH EXTENSIVE ADVICE AND
EXPERT KNOWLEDGE OF THE PRODUCT,
AND THUS ESTABLISH A LASTING
LOYALTY TO THE BRAND.
The KTM GROUP demands top levels of
performance in all areas of business for the
KTM and Husqvarna Motorcycles brands.
This applies in particular to the authorized
dealers that are frequently the customer’s
fi rst point of contact with the KTM and
Husqvarna Motorcycles brands and thus
have the direct opportunity to immerse the
customers in the particular brand world.
Having close links to customers and offering
a varied range of services are crucial
factors for the success of the organization.
This is why every year the KTM GROUP
makes huge investments in developing,
training and improving its dealers, its sites
and its services.
Every area of the business and customer
touch point shows that the organization
truly embraces its brand values: Whether
it is the sale of vehicles, clothing and
01 imageteil E_160317 v2.indd 28 16.03.17 20:19
029
30INTERNATIONAL 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
accessories, premium performance parts
or original spare parts. For the KTM GROUP,
the focus is always on providing the best
support to the customers of the two brands
and the customer satisfaction that results
from this – both in the workshops and
showrooms and with the dealers that offer
advice and information in response to
the many questions about “experiencing
motorcycling”. An in-depth understanding
of the sales and marketing process
is absolutely key here – the KTM GROUP
provides continuous further training to give
its staff 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
the KTM GROUP close to the action and
developments in the market while always
allowing the appropriate products and
customer experience to be provided by the
KTM and Husqvarna Motorcycles dealers.
Through 30 sales subsidiaries and three
joint ventures in New Zealand, Dubai and
the Philippines the employees of the
KTM GROUP look after more than 2,500
independent dealers and importers for the
two brands around the world.
This ensures that all KTM and Husqvarna
Motorcycles dealers have one valuable
thing in common: Each and every one of
them embraces the spirit of these brands –
at all times.
HUSQVARNA MOTORCYCLES STORE, PHOTO: SCHEDL R.
KTM STORE
01 imageteil E_160317 v2.indd 29 16.03.17 20:19
030 K T M G R O U P
64 YEARS EXPERIENCEKTM
GOALS AND STRATEGY
KTM HAS GAINED MORE THAN 60 YEARS
OF EXPERTISE IN THE TWO-WHEELED
WORLD SINCE THE FOUNDATION IN
1953 AND IS CONVINCED TO MAINTAIN
ITS MARKET LEADERSHIP SITUATION
IN EUROPE. GROWING AND DEVELOPING
ITS DEALER NETWORK WHILST ENHANC-
ING THE RETAIL EXPERIENCE FOR
CUSTOMERS AND BUILDING A LOYAL
COMMUNITY REMAIN HIGH PRIORITIES
FOR THE BRAND.
KTM is “READY TO RACE” in all they do,
with a distinct brand personality and bold
presence in global motorcycle competition.
The core values of ADVENTURE, PURITY,
PERFORMANCE and EXTREME, guide
all activities and allow for an authentic inter-
pretation of READY TO RACE across all
segments, markets and areas of business.
With a strong presence as an offroad
motorcycle producer, KTM has progressed
to become one of the world’s most inno-
vative manufacturers of street motorcycles
and also premium sports cars. Today,
driven by the passion of its employees,
KTM’s goal is to become the biggest manu-
facturer of sport motorcycles worldwide.
In March 2011, KTM began with its launch
of a complete naked range, which was
implemented successfully between 2011
and 2013, and which will be further
strengthened by the upcoming addition
of the future parallel twin KTM 790 DUKE
model. In 2015, the introduction of the
KTM 1290 SUPER DUKE GT at EICMA
signaled a decisive move into the sports-
tourer segment.
The KTM 200 and 390 DUKE models
are important steps towards capitalizing
on the brand and maximizing business
opportunities. With these and the KTM RC
models, which were launched in 2014
and produced in collaboration with Bajaj,
the street product range now offers a wide
variety to young buyers.
After the launch of the travel enduro
KTM 1190 ADVENTURE and R models in
2013, and the further expansion in 2015
of the ADVENTURE range to include
the KTM 1290 SUPER ADVENTURE and
KTM 790 DUKE PROTOTYPE
01 imageteil E_160317 v2.indd 30 16.03.17 20:19
031K T M : G O A L S A N D S T R A T E G Y
KTM 1290 SUPER ADVENTURE R, PHOTO: CHYTKA M.
KTM 1050 ADVENTURE models, a
striking new look adorned the revised range
models unveiled in 2016 for the 2017
model year. The ADVENTURE range
brings a new higher-performing dynamic
to the segment, with a wide array of
options to suit any customer’s needs with
the KTM 1090 ADVENTURE and R
to KTM 1290 SUPER ADVENTURE R, S
and T, ensuring every bike in KTM’s arsenal
is 100% READY TO RACE.
The successful involvement in racing all
over the world further strengthens the
KTM brand and consolidates its leading
market position. By winning, market visibility
and credibility are created and stays true
to the company’s racing DNA. A central
element of the corporate strategy involves
taking the successful technology that
originates from racing and directly incor-
porating it into serial products. With racing
as the promise, KTM has established many
racing programs that identify talent and
offer a path to the highest echelon of
motorsport racing. This signals a long-term
commitment to establish a solid foothold
in all the areas of motorsport that the
KTM brand competes in. Winning is
the culture of the company and fl ows into
the products and everything else they do.
An essential element of KTM’s long-term
growth-planning strategy is to further extend
the product range, opening up new niches
and markets. Accordingly, the strategy
focuses on research & development to keep
the performance edge, while developing
its distribution network through new strategic
regional partnerships, and optimizing –
all while investing heavily in the global brand
and continuing to build it up.
KTM is a leader in various segments
within the world of READY TO RACE, so
if you race to win, then there’s no other
choice – it has to be KTM.
01 imageteil E_160317 v2.indd 31 16.03.17 20:19
032 K T M G R O U P
114
YEAR
S E
XPER
IEN
CE
HUSQVARNA MOTORCYCLES
GOALS AND STRATEGY
HUSQVARNA VITPILEN 401 AERO CONCEPT BIKE, PHOTO: SCHEDL R.
HUSQVARNA MOTORCYCLES’ VISION
IS TO STAY TRUE TO ITS BRAND PROMISE
OF “PIONEERING SINCE 1903” AND
THROUGH THIS BRAND PROMISE, DEVELOP
A FULL RANGE MOTORCYCLE BRAND THAT
ELEVATES HUSQVARNA TO THE THIRD
LARGEST EUROPEAN MANUFACTURER
OVER THE NEXT FEW YEARS.
Since Husqvarna Motorcycles joined the
KTM GROUP in 2013, it has achieved
exceptional success in a very short time,
with impressive annual growth each
subsequent year and is well on track to
realizing this vision. Boldly returning
Husqvarna Motorcycles to the international
spotlight and improving rider awareness
for the brand is a goal that will be achieved
through broadening the dealer network
and consequent improved global sales.
After just one year in the KTM GROUP,
Husqvarna Motorcycles achieved record
offroad model sales numbers for their
114-year long history in 2014, as the best
year within the long-term company’s history,
improving on further record-breaking years
in 2015 and 2016 after introducing new
street-legal models. The few short years of
the new brand that re-unites Husaberg
and Husqvarna Motorcycles once more, has
reinforced the proven past heritage of the
PIONEERING brand value. This revealed a
new PIONEERING focus that is less nostalgic
and retrospective than before, but instead
focuses on innovation and progression.
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 experi-
ences. With the brand values of PREMIUM,
PIONEERING and SWEDISH ROOTS
as the brand’s guiding compass, Husqvarna
is proud to keep blazing new trails and
make enjoyable riding experiences more
accessible to existing motorcycle enthu-
siasts, as well as exposing new users to the
exhilaration and liberation of discovering
the motorcycle lifestyle.
A strong focus on an ongoing commitment
to innovation and progression has led
01 imageteil E_160317 v2.indd 32 16.03.17 20:19
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
to a resurgence of Husqvarna Motorcycles’
presence in street motorcycling. The
credibility of being a pioneering brand, com-
bined with a very accessible, understated
and approachable brand personality,
allows Husqvarna Motorcycles to open up
and tap into a much wider and more main-
stream target audience. The upcoming
VITPILEN and SVARTPILEN “Real Street”
range is a bold fi rst step in this entirely
new direction.
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 will be accessed through
this ever-expanding global network.
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 tradi-
tional boundaries of competition.
FUTURE VISION:
A BOLD RETURN TO THE STREET!
In line with Husqvarna Motorcycle’s
“PIONEERING SINCE 1903” claim, 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 Motorcycles revealed the
VITPILEN 401 and SVARTPILEN 401
concept bikes in 2014, followed up by the
VITPILEN 701 in 2015 and the fi rst
production bikes in this range in 2016,
alongside a new concept bike – the
VITPILEN 401 AERO. The response and
interest shown in this new range to date
has been substantial.
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 motor-
cycles as it will in outstanding ways of
identifying, satisfying and engaging with
the rapidly-expanding customer base. As a
fi rst step, the upcoming segment-redefi ning
VITPILEN and SVARTPILEN production
models will set Husqvarna Motorcycles
on a trajectory to becoming Europe’s third-
largest motorcycle producer.
HUSQVARNA 701 ENDURO, PHOTO: BARBANTI A.
01 imageteil E_160317 v2.indd 33 16.03.17 20:19
034 K T M G R O U P
EMPLOYEES
WORLD CHAMPION SEEKS NEW TALENT
AS OF DECEMBER 31, 2016, THE
GLOBAL NUMBER OF EMPLOYEES STOOD
AT 2,931, UP 416 ON THE PREVIOUS
YEAR. THIS REPRESENTS AN INCREASE
OF 17%. AS OF DECEMBER 31, 2016,
THERE WERE 440 EMPLOYEES WORKING
OVERSEAS. THE PROPORTION OF WOMEN
WAS ALMOST UNCHANGED RELATIVE
TO THE PREVIOUS YEAR AT 22%.
THE REGION’S LARGEST
TRAINING CENTER
Training apprentices is an important aspect
of our employment strategy. KTM AG now
has more vocational training places than
any other employer in the Braunau region.
As of December 31, 2016, we employed
110 apprentices (previous year: 94), who were
training in 11 vocational training programs.
Training to become an “operations
logistician” has been newly added in 2016.
01 imageteil E_160317 v2.indd 34 16.03.17 20:19
035
2,931
E M P L O Y E E S
EMPLOYEES WORLDWIDE
AS OF DECEMBER 31, 2016
It is a central aim of the company to
continue to employ apprentices when they
have completed their training. In 2016
all 21 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.
In 2016, KTM AG successfully passed the
recertifi cation for the INEO award of
the Upper Austrian Economic Chamber for
another three years. In addition, the company
came 3rd in offering the best apprentices
for the “Place to Perform” certifi cate.
NEEDS-BASED FURTHER TRAINING
FOR QUALITATIVE GROWTH
Our performance is assisted by further
training based on needs and specifi c target
groups. For this purpose, training courses
have been offered in the categories of
languages, personal development, specialist
training, management and team develop-
ment in different learning formats.
Our own training workshop forms a corner-
stone of apprentice workshop. This is
where the appropriate basic training for all
technical professions and specialist training
is delivered. In addition, the apprentices
rotate through different departments
where they receive training. Great store is
placed on ensuring that staff training
the apprentices have the right technical and
teaching qualifi cations and social skills.
As well as their technical training,
the personal development of apprentices
is important to the company. Social skills
training/workshops therefore take place,
as well as feedback sessions.
Our managers make use of “pit stops”
in module form to refl ect on issues such
as leadership, employee and team
development, to acquire new inputs and
tools for expanding their scope of action.
Annual employee reviews are conducted
to form the basis for performance-oriented
cooperation.
SOCIAL COMMITMENT
To help our employees return to the work-
place after starting a family, children aged
between one and three receive educational
care in the KTM crèche in groups of
not more than nine children. In this way
the company makes an important contribu-
tion to reconciling work and family.
As a voluntary additional social benefi t,
the company has taken out an endow-
ment and whole life insurance policy with
a term of 15 years for all employees.
01 imageteil E_160317 v2.indd 35 16.03.17 20:19
036 K T M G R O U P
MOTOCROSS MX2 ������� ������
MOTO3 ��� ���
DAKAR RALLY�� � ����
SUPERCROSS 450��� �����
271 ����� ��������� �����
������� 2�1�����
ENDURO WOMEN��� ���
MOTOCROSS 85��� �����
SUPERENDURO JUNIOR����� ����� �����
MOTOCROSS 125���� ������
����� �������������� 2�1�
WORLD CHAMPIONCHIP TITLES
270MORE THAN
01 imageteil E_160317 v2.indd 36 16.03.17 20:19
037
2016 WORLD CHAMPION TITLES
MOTOGP
Moto3: Brad Binder (RSA)
ENDURO
SuperEnduro Junior: Manuel Lettenbichler (GER)
Enduro Woman: Laia Sanz (ESP)
MOTOCROSS
85 ccm: Rene Hofer (AUT)
125 ccm: Jago Geerts (BEL)
MX2: Jeffrey Herlings (NED)
450 Supercross: Ryan Dungey (USA)
2016 MANUFACTURER TITLES
Moto3, Supercross, MX2, SuperEnduro,
Cross-Country Rallies
2016 OTHER VICTORIES
RALLY
Rallye Dakar: Toby Price (AUS)
Finke Desert Race: Toby Price (AUS)
EXTREME ENDURO
Alès Trêm: Jonny Walker (GBR)
Red Bull Minas Riders: Alfredo Gomez (ESP)
Extreme XL Lagares: Alfredo Gomez (ESP)
The Wall: Alfredo Gomez (ESP)
Red Bull 111 Megawatt: Jonny Walker (GBR)
Hixpania Hard Enduro: Alfredo Gomez (ESP)
K T M M O T O R S P O R T
WHEN KTM WAS RELAUNCHED
IN THE EARLY 1990S, THE MOTTO
“READY TO RACE” 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 Champion-
ship titles non-stop. 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 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.
With more than 270 world championship
titles, KTM is the world’s most success-
ful motorsport brand. At the beginning of
the year, Toby Price managed to secure
KTM’s 15th Dakar victory in a row. After the
factory accelerated its commitment to
the prestigious Supercross in the USA in the
2015 season, the American Ryan Dungey
won the Supercross World Championship
title for the Austrian manufacturer on his
KTM 450 SX-F, secured double victory
by winning the US Pro Motocross Champion-
ship and thus marked another milestone
in the company’s history. In 2016 the
Red Bull KTM Factory Racing Team in the
USA successfully defended its title in the
Supercross Series. 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.
Jeffrey Herlings claimed another MX2 title
for KTM with his impressive performances.
But KTM has also managed to fi rmly
establish itself in road racing too. In October
2016, Brad Binder became Moto3 world
champion with four races to spare. And it
will not be long before the next stage:
In 2017 KTM will be entering the Moto2
with a chassis developed in cooperation
with WP, and will be entering the MotoGP
with its own factory team and a motorcycle
developed entirely in Mattighofen – the
KTM RC16. The successfully tested
KTM MotoGP bike will be ridden in its fi rst
season by the Briton Bradley Smith and
the Spaniard Pol Espargaró.
RED BULL KTM AJO TEAM BRAD BINDER KTM RC 250 GP PARC FERMÉ ARAGÓN 2016
KTM MOTORSPORT
READY TO RACE
01 imageteil E_160317 v2.indd 37 16.03.17 20:19
038 K T M G R O U P
HUSQVARNA MOTORCYCLES REMAIN
COMMITTED TO COMPETITION. EVEN WITH
THE BOLD MOVE INTO THE STREET
MOTORCYCLING SECTOR, THE LAST TWO
SEASONS WERE STILL ENORMOUSLY
SUCCESSFUL FOR HUSQVARNA MOTORCY-
CLES IN OFFROAD RACING. SPEARHEADING
THE BRAND’S RETURN TO AMA RACING,
JASON ANDERSON CLAIMED A STUNNING
SECOND IN HUSQVARNA MOTORCYCLES’
FIRST SUPERCROSS EVENT IN 2015,
BEFORE GIVING THE BRAND THEIR FIRST
SUPERCROSS VICTORIES IN 2016.
Establishing the global Rockstar Energy
Husqvarna Factory Racing team at the start
of 2016, Husqvarna Motorcycles further
strengthened their presence in all offroad
disciplines worldwide.
Making a strong start to the year Colton
Haaker earned Husqvarna their fi rst title
of 2016 by claiming the FIM SuperEnduro
World Championship. Returning to home
soil, Haaker went on to wrap up an incredible
season by securing the AMA EnduroCross
Championship at the end of the eight-round
2016 series.
PABLO QUINTANILLA, MOROCCO 2016
01 imageteil E_160317 v2.indd 38 16.03.17 20:19
039
Leading Husqvarna Motorcycles’ fi ve-rider
US offroad team in GNCC series,
Josh Strang claimed second in the 2016
championship standings. Battling at the top
of the ultra-competitive FIM Motocross
World Championship Max Nagl once again
led Husqvarna’s assault of the coveted
MXGP series fi nishing third overall in the
premiere class for 2016.
Husqvarna’s success in the Enduro World
Championship continued throughout 2016,
with FE 450 mounted Mathias Bellino
wrapping up his season as runner-up in the
Enduro 2 World Championship standings.
Further strong results came in the Enduro
Junior category, where Josep Garcia fi nished
the season in third place. Meanwhile,
Danny McCanney fi nished third overall
in the Enduro 1 class, with rookie Pascal
Rauchenecker claimed fi fth.
Establishing Husqvarna as a dominant
force in extreme enduro racing, Rockstar
Energy Husqvarna Factory Racing’s Graham
Jarvis was on winning form at some of the
season’s most prestigious events, including
Erzberg, Romaniacs, GetzenRodeo,
Ukupacha Extreme and the Roof of Africa.
Dakar Rally 2016 signaled the start of an
exciting chapter in the new era of Husqvarna
Motorcycles, with Pablo Quintanilla ending
the grueling 13-day event third overall.
Leading the rally team’s assault on the 2016
FIM Cross-Country Rallies World Champion-
ship, the Chilean gave Husqvarna their fi rst
rally world title.
Motorsport is an integral part of Husqvarna’s
114 year history, and will continue to be
one of the driving factors in the development
of class-leading production motorcycles.
Husqvarna Motorcycles remains resolute
about achieving success at the highest levels
of two-wheeled motorsport.
2016 WORLD CHAMPIONS
FIM CROSS-COUNTRY RALLIES
WORLD CHAMPIONSHIP
Pablo Quintanilla (CHL)
FIM SUPERENDURO
WORLD CHAMPIONSHIP
Colton Haaker (USA)
AMA ENDUROCROSS CHAMPIONSHIP
Colton Haaker (USA)
2016 MOTORSPORT RESULTS
EXTREME ENDURO
Graham Jarvis (GBR), winner at:
The Tough One, Red Bull Romaniacs, Red Bull
Hare Scramble, Battle of Vikings, GetzenRodeo,
Ukupacha Extreme, Roof of Africa
RALLYE DAKAR
Pablo Quintanilla (CHL), third place
FIM ENDURO WORLD CHAMPIONSHIP
Enduro 1 – Daniel McCanney (GBR), third place
Enduro 1 – Pascal Rauchenecker (AUT), fi fth place
Enduro 2 – Mathias Bellino (FRA), second place
Enduro Junioren – Josep Garcia (ESP), third place
FIM MOTOCROSS
WORLD CHAMPIONSHIP
Max Nagl (GER), third place
US OFF-ROAD GNCC CHAMPIONSHIP
Josh Strang (AUS), second place
HUSQVARNA MOTORSPORT
SUCCESSFUL OFFROAD SEASON
H U S Q V A R N A M O T O R S P O R T
COLTON HAAKER, MADRID 2016
01 imageteil E_160317 v2.indd 39 16.03.17 20:19
QUALITY
» AS A MANUFACTURER OF PREMIUM PRODUCTS,
we at KTM GROUP have set ourselves the goal
of manufacturing 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 production, 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
professionally served by a team of high-quality
QM staff. They make sure that the know-how
for manufacturing in these locations is passed on
and ensure the quality of the vehicles produced
there by implementing a KTM-compliant quality
management system.
» AS KEY COMPONENTS OF THE MOTORCYCLES,
the engines are developed and manufactured by
KTM GROUP and guarantee the identity of motor-
cycles with the KTM and Husqvarna Motorcycles
brands.
» THE IMPRESSIVE TRACK RECORD IN RACING is the
best evidence of KTM’s and Husqvarna Motorcycles’
high product quality and high level of engineering
competence.
01 imageteil E_160317 v2.indd 41 16.03.17 20:19
042 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 CONSISTENT IMPLEMEN-
TATION OF TECHNICAL INNOVATIONS
ENABLE US TO MEET THE HIGH
EXPECTATIONS OF OUR CUSTOMERS
AND OPEN UP NEW MARKETS IN A
SUSTAINABLE WAY.
The KTM GROUP places a high value
on the early recognition of motorcycle trends,
on research and development regarding
engineering and functionality and on imple-
menting customer wishes so as to achieve
innovative product development close to
the market. In this context, the KTM GROUP
not only operates in its original core markets
but is also developing new products in
previously unexplored segments and niches
KTM DEVELOPMENT DEPARTMENT
01 imageteil E_160317 v2.indd 42 16.03.17 20:19
043
EMPLOYEES (ANNUAL AVERAGE)
IN RESEARCH & DEVELOPMENT
487
R E S E A R C H & D E V E L O P M E N T
of the market as soon as it identifi es them
and they become usable for the KTM and
Husqvarna Motorcycles brands.
The technologies, design methods and
development processes we use undergo
constant development, and our products’
technical and functional standards are con-
tinuously improved. As a rule, new develop-
ments in the offroad segment are fi rst
trialled in motorsport, with the experience
gained forming a basis for the subsequent
transition to serial production.
Following this development policy, the
fi rst vehicles in the newly developed KTM
and Husqvarna Enduro-generations under-
went their fi nal endurance tests in our
global motorsport activities. The fact that
our vehicles are “READY TO RACE”
in every way is confi rmed by many of our
customers deploying their motorcycles in
extreme conditions all around the globe –
whether on the road or off the beaten track.
The fi nancial year just ended saw a multi-
tude of different projects in the offroad
and street segments. Above all there was
the transfer to series production of the
KTM 1290 SUPERDUKE GT, with which
KTM has succeeded in redefi ning the sports
touring segment. The model, which is
equipped with a series of innovative safety
systems and new kinds of comfort
features, managed to secure top marks in
highly regarded comparative tests.
Another key project was the further develop-
ment of the KTM ADVENTURE range of
models: As well as revising numerous details,
these models are noted in particular for
their completely redeveloped full LED head-
lamp unit and the new TFT dashboard,
which enables the rider to be linked up to
the motorcycle for the fi rst time. Alongside
this, the development of new Husqvarna
Motorcycles models in the road segment
continued apace. The vehicles, which were
presented during the EICMA fair in November
2016, polarize opinion in particular due
to their clear design approaches focusing
on the bare essentials.
The development of the KTM mid-size
models, which are equipped with an inline
2-cylinder engine for the fi rst time, was
consistently pushed forward during the last
year of research. Following the completion
of the fundamental research and develop-
ment work on the engine and chassis,
a fi rst ridable prototype was then presented
to the international trade audience.
In the 2016 fi nancial year we employed
an average of 487 people (28% more than
the previous year and 18% of the total
workforce) in our Research and Develop-
ment department. In operating terms,
disregarding the effects of capitalizing and
amortizing development expenses, 8.1%
of total revenue was invested in research
and development.
01 imageteil E_160317 v2.indd 43 16.03.17 20:19
045
DURING THE 2016 FINANCIAL YEAR, NUMEROUS R&D PROJECTS WERE TAKEN
FORWARD AT VARIOUS STAGES FROM CONCEPT DEVELOPMENT TO THE START OF
SERIES PRODUCTION AND SUCCESSFULLY COMPLETED:
R E S E A R C H & D E V E L O P M E N T
RESEARCH & DEVELOPMENT
» Start of series production of the new
KTM and Husqvarna Motorcycles Enduro-
generations, which are again setting the
standard in their class thanks to their equip-
ment, the low weight that derives from the
use of the latest development technologies
and the handling benefi t under extreme
conditions that accrues as a result.
» Start of series production of the new
KTM 1290 SUPERDUKE GT in the sports
touring segment. Thanks to a multitude
of innovative safety features, such as the
semi-active chassis or the inclination-depen-
dent motorcycle stability control “MSC”
and the LED cornering light, along with the
KTM 1290 SUPER ADVENTURE it
represents the pinnacle of technology in
the KTM range of models.
» Start of series production of the
KTM 690 DUKE R. In addition to the com-
prehensively revised 690 ccm single-
cylinder unit, whose smoothness has been
improved still further by using a second
balancer shaft, the model now also features
advanced safety features and infotain-
ment functions on a newly developed TFT
instrument panel.
» Series development of the fundamentally
revised KTM ADVENTURE model range.
The successful ADVENTURE touring concept
has been further improved by integrating
the latest technologies, such as the
6.5” TFT display including Bluetooth and
USB interfaces and the full LED headlight
as well as a series of safety systems and
a semi-active chassis.
» Series development of new KTM DUKE-
models in the entry-level segment. The
agile naked bikes in the 125 to 390 ccm
range have been fundamentally recon-
fi gured. Emission levels have been further
reduced in accordance with the EU IV
standard – and the ridability of the single-
cylinder engine has been further enhanced
with Ride-by-Wire. Just like other KTM
models, they now also offer a wealth of
connectivity functions.
» Series development of the new Husqvarna
VITPILEN and SVARTPILEN models. As
well as the high-volume 701 ENDURO
and 701 SUPERMOTO, the VITPILEN and
SVARTPILEN models open the next chapter
in the Husqvarna brand strategy. With
their progressive, clear design, they reinter-
pret the retro trend and appeal to a wider
range of customers.
» Development of a new motorcycle plat-
form based on a revolutionary 2-cylinder
engine design, which will make a substantial
contribution to opening up new markets
in the naked and touring segments. A
prototype of the KTM 790 DUKE naked bike
was unveiled at the EICMA International
Motorcycle Show in Milan in November 2016.
» Concept development for new drive
systems in the area of electrical mobility
and consistent evolution of energy storage
and battery management systems for
motorcycle applications. Development of
a model equipped with an alternative
drivetrain system to meet the requirements
of modern mobility scenarios.
» Concept development for new connec-
tivity systems for the digital networking
of the rider and motorcycle. In addition to
safety-related equipment such as auto-
mated emergency call systems or interlinked
vehicles for a sustainable reduction
in accidents, this also comprises enhanced
comfort and infotainment functions for
the rider.
» Development of concepts for new
approaches in relation to EMS systems and
exhaust gas purifi cation to ensure
that the KTM and Husqvarna model ranges
comply with current (EU IV) and future
emissions regulations (EU V). These include
both a reduction in fuel consumption and
a reduction in exhaust emissions.
01 imageteil E_160317 v2.indd 45 16.03.17 20:20
046 K T M G R O U P
70 HIGHLY QUALIFIED ENGINEER
S
KTM TECHNOLOGIES
KTM TECHNOLOGIES IS AN INNOVATIVE
ENGINEERING COMPANY AND A STRONG
PARTNER FOR DEVELOPMENT AND
TECHNICAL CONSULTANCY SERVICES
WITH REGISTERED OFFICE IN ANIF NEAR
SALZBURG. IT IS OWNED BY KTM AG
(74% STAKE) AND KISKA HOLDING GMBH
(26% STAKE). THE COMPANY’S MAIN
AREAS OF FOCUS ARE ON DEVELOPING
CONCEPTS, PRODUCTS AND TECH-
NOLOGY, AND TECHNICAL CONSULTANCY.
Since the company was founded in 2008,
it has developed very dynamically and
with great commercial success. The key to
this are the highly skilled engineers, who
now number almost 70 and have a broad
range of expertise. In addition to KTM AG,
the company’s customers today include
prestigious vehicle manufacturers and
well-known companies from various sectors
such as sport, mechanical engineering,
medical technology, along with smart con-
sumer electronics.
With its broad knowledge of different
specialist areas, KTM Technologies is a
closely integrated development partner for
KTM AG’s concept, series and motorsport
developments. The main areas of focus in
the working relationship are developing
plastic components, developing electrics/
electronics and developing product concepts.
Right from the outset, the working relation-
ship has also extended to further develop-
ment of the X-BOW CFRP super sports car,
recently in particular the GT4 racing car.
The company is frequently consulted as a
creative driver of innovation and technology.
This is based on its extensive automotive
knowledge and expertise in lightweight con-
struction, as well as utilizing the very latest
development methods and processes.
Solutions for the mobility of the future have
been a key focal point since the company
was founded. These include developing
creative product concepts: from the highly
integrated e-bike and city vehicles of
the future, through to sports cars made from
multiple materials. KTM Technologies com-
bines the momentum and experience gained
from different industries to create new
products, and generates great added value
through the transfer of technology.
A major strength offering great promise
for the future of KTM Technologies is the
highly effi cient simulation department,
which enables products to be designed and
assessed at an early stage. This allows
01 imageteil E_160317 v2.indd 46 16.03.17 20:20
047K T M T E C H N O L O G I E S
KTM X-BOW RR FACELIFT RACETRACK, PHOTO: KERNASENKO J.
development times to be reduced, risks to
be minimized and product characteristics
to be enhanced. This has major advantages
particularly for the virtual design and
development of new and innovative concepts.
In addition to static structural design and
optimization, the most important areas
of expertise include crash simulation as well
as fl uid dynamics simulation (aerodynamics/
thermodynamics). In addition, there are
various possible process simulation options
for different manufacturing processes as
part of industrialization.
In lightweight technology development,
KTM Technologies guarantees a close link
between product conception and a design
that suits the material or manufacturing
process in its own technical facility.
The main focus in technology development
is on developing and qualifying methods
and process solutions for the industrial use
of carbon-composite and hybrid material
solutions.
In March 2016, KTM Technologies was
presented with the JEC Group 2016
Innovation Award in the RTM category for
“THE CAVUS PROJECT”. As part of CAVUS,
KTM Technologies teamed up with project
partners to present an innovative core
technology for the industrial manufacture
of complex CFRP hollow components
at the world’s most important event for
composites.
It worked with its affi liated company KISKA
to establish an integrated design/develop-
ment process which enables functional
and innovative product concepts to be devel-
oped very effectively from one single
source at the Anif site. The combination
of brand, customer, market, design and
technology guarantees exceptional products
with great potential to be successful.
KTM Technologies is a highly capable
development partner, ideas powerhouse
and technology driver, delivering solutions
with a real benefi t. It is also a catalyst
for future-oriented products and solutions!
01 imageteil E_160317 v2.indd 47 16.03.17 20:20
INVESTOR RELATIONS
2016KTM GROUP 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 develop-
ment of KTM GROUP.
01 imageteil E_160317 v2.indd 49 16.03.17 20:20
050 K T M G R O U P
INVESTOR RELATIONS
On our website www.ktmgroup.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 to 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 (12/30/2016), the closing price was
EUR 102.20 (previous year: EUR 104.25).
INFORMATION ON THE KTM BOND IN SUMMARY
THE KTM SHAREUp to June 2016, 10,845,000 shares of stock, and thus the
entire share capital of KTM AG, were admitted to trading on the
Vienna Stock Exchange. The KTM share (ISIN: AT0000645403)
was listed until June 2016 in the Third Market (MTF) of the
Vienna Stock Exchange.
DELISTING IN THE 2016 FINANCIAL YEAR
On March 29, 2016, K KraftFahrZeug Holding GmbH (previously:
CROSS KraftFahrZeug Holding GmbH) announced that it was
issuing a public acquisition offer to all free fl oat shareholders of
KTM AG as an accompanying measure for withdrawing the shares
of KTM AG from the Third Market (MTF) of the Vienna Stock
Exchange. The offer price was EUR 122.50 per share. At the end
of June 24, 2016, the share was withdrawn from the Third Market
of the Vienna Stock Exchange.
On July 20, 2016, the extraordinary general meeting of KTM AG
resolved to convert the previous bearer shares into registered
shares. This amendment to the articles of association was recorded
in the commercial register in September.
The Executive Board of KTM AG is proposing to the Annual
General Meeting to pay out a dividend of EUR 2.00 per share
for the 2016 fi nancial year.
Further information can be found
on the company’s website at
www.ktmgroup.com/en/investor-relations.
ISIN AT0000A0UJP7Market Vienna Stock Exchange,
Second Regulated Market
Issue volume EUR 85,000,000Denomination EUR 500Maturity 2012 to 2017Coupon 4.375%Initial offering price 101.389%
IT IS THE FIRM BELIEF OF THE INVESTOR RELATIONS TEAM AT KTM AG THAT CONFIDENCE
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.
01 imageteil E_160317 v2.indd 50 16.03.17 20:20
051I N V E S T O R R E L A T I O N S
OWNERSHIP STRUCTUREWith KTM Industries AG (previously: CROSS Industries AG),
which directly and indirectly via K KraftFahrZeug Holding GmbH
(previously: CROSS KraftFahrZeug Holding GmbH) holds 51.67%
of the voting rights, and with Bajaj Auto Ltd. (via Bajaj Auto
International Holdings Ltd.), which holds 47.99% of the voting
rights, KTM AG has two stable core shareholders. The share of
other small shareholders is below one percent.
SHAREHOLDER STRUCTURE OF KTM AG
By voting rights (share capital) as at December 31, 2016
0.34%Others
47.99%Bajaj Auto International Holdings B.V.
51.67%KTM Industries AG
10,845,000shares
KTM HEADQUARTER
01 imageteil E_160317 v2.indd 51 16.03.17 20:20
2016
CONSOLIDATED MANAGEMENT REPORT
054 Course of business and
fi nancial position
SIGNIFICANT EVENTS DURING THE
FINANCIAL YEAR 054
056 Market development
057 Development of revenue by region
057 Sales by region
057 Development of revenue
by product group
058 Sales by product group
058 Production by product group
FINANCIAL PERFORMANCE
INDICATORS 059
059 Performance analysis
059 Analysis of the
statement of fi nancial position
061 Liquidity analysis
061 Investments
NON-FINANCIAL PERFORMANCE
INDICATORS 061
061 Employees
062 Research and development
063 Racing
064 Financial instruments
064 Quality
065 Risk report
065 Sustainability
067 Disclosures pursuant
to section 243a UGB
068 Outlook
02 lagebericht E_150317.indd 53 16.03.17 20:20
054 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 K T M A G
1. COURSE OF BUSINESS AND FINANCIAL POSITION
According to the January 2017 assessment of the International Monetary Fund (IMF), the global economy is set to experience a slight recovery.
The IMF expects a 3.4% rise in global economic output in 2017, with growth of 1.9% in 2017 and 2.0% in 2018 being forecast for advanced
economies.
Expansion of only 1.6% is forecast for the Eurozone in 2017 and 2018. Growth of 2.3% is anticipated in the U.S. The IMF forecasts global
growth of 3.6% in 2018.
Economic output for emerging markets and developing economies is forecast to grow by 4.5% in 2017 and 4.8% in 2018. The biggest
growth is expected in India, which is forecast to grow by 7.2% in 2017 and by 7.7% in 2018. Growth of 4.9% is expected in the ASEAN
countries in 2017.
SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR
The fi nancial year 2016 goes 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, thereby also achieving new record levels in 2016. KTM has been among the world’s fastest growing motorcycle
brands for a number of years.
In 2016, KTM increased revenue to EUR 1,141.8 million (up 11.7% compared to the prior year) and sales to 167,550 vehicles (up 10.1%
compared to the prior year).
Once sales of the KTM DUKE 200, KTM DUKE 390, KTM RC 200 and KTM RC 390, sold in India by our partner Bajaj, are included,
203,423 KTM and Husqvarna vehicles were sold worldwide in 2016.
As a result, revenues in 2016 again broke the EUR 1 billion barrier.
Investments
Work on the new EUR 12 million motorsport building in Munderfi ng began in 2015. The new building was completed and occupied during
the second quarter of 2016. The offi cial opening was held with promoters, sponsors and team managers in early October.
Summer 2016 also saw the implementation of the new SAP ERP system at the Austrian sites.
CONSOLIDATEDMANAGEMENT REPORTAS AT DECEMBER 31, 2016 OF KTM AG, MATTIGHOFEN, AUSTRIA
02 lagebericht E_150317.indd 54 16.03.17 20:20
055C 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
Total capital expenditure in 2016 was EUR 106 million. Of this, EUR 58 million related to development projects, EUR 10 million to other
intangible assets and EUR 39 million to property, plant and equipment.
Motorsport successes
Racing chalked up yet another victory in January, when Red Bull KTM factory rider Toby Price celebrated his fi rst victory in the Dakar Rally.
Pablo Quintanilla took third place for the Husqvarna team with his Husqvarna FR 450.
After a successful 2015, Ryan Dungey had another successful season in 2016, producing impressive performances on his KTM 450 SX-F
FACTORY EDITION. He secured fi rst place in the 450 Supercross World Championship for himself and KTM.
The offi cial team presentation took place in August 2016 at our home Grand Prix in the Red Bull Ring in Spielberg, and included the new
RC16 for our debut in the MotoGP series.
Brad Binder won the World Championship in the Moto3 series in autumn 2016.
New models
With unsurpassed performance and a fi rst-class range of innovative rider assistance systems, KTM’s new KTM 1290 SUPER DUKE GT,
available from the fi rst dealers since the end of March, sets new standards in the world of sports touring.
In May, KTM exhibited its new Sportminicycles for 2017. The new variants – KTM 50 SX, KTM 65 SX and KTM 85 SX – are aimed at up-and-
coming young racing talent. KTM also presented the new, fully redesigned Enduro generation for 2017.
In early October, KTM’s appearance at the INTERMOT international motorcycle show in Cologne featured the unveiling of four new models
for the KTM ADVENTURE range.
At the EICMA motorcycle show in Milan in November, it was all about KTM’s new Street models: the new DUKE models for 2017 are even
feistier than before. A glimpse of the future was also on show, in the form of the KTM 790 DUKE PROTOTYP. Husqvarna Motorcycles also
unveiled its new VITPILEN 401 and SVARTPILEN 401 models, as well as the new VITPILEN 401 AERO design study, setting out a vision for
the future of Husqvarna’s street models.
Finance
In June 2016, a EUR 120 million promissory note loan issue was succesfully placed, with maturities of between fi ve to ten years.
Capital markets
On March 29, 2016, K KraftFahrZeug Holding GmbH (formerly: CROSS KraftFahrZeug Holding GmbH) announced its intention to make a
public takeover bid for all free-fl oating shares in KTM AG to accompany the withdrawal of KTM AG shares from the Third Market (MTF) of the
Vienna Stock Exchange. The offer price was EUR 122.50 per share. At the end of June 24, 2016, the shares were withdrawn from the Third
Market of the Vienna Stock Exchange.
On July 20, 2016, the Extraordinary General Meeting of KTM AG resolved to convert the previous bearer shares into registered shares. This
amendment to the articles of association was recorded in the Austrian commercial register in September.
02 lagebericht E_150317.indd 55 16.03.17 20:20
056 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 K T M A G
Sales network
KTM and Bajaj have agreed to extend their joint sales network to Indonesia. This mainly affects the KTM DUKE and RC model families,
up to 400 ccm, which are developed and assembled under the alliance between KTM and Bajaj. Bajaj will sell the motorcycles through a chain
of dealers with the aim of achieving further growth in this growing, price-sensitive market.
New companies
In March, 26% of the Barcelona-based Cero Design Studio S.L. in Spain were acquired.
In addition, KTM acquired a 24% stake in July in WP AG, Munderfi ng, its main supplier of frames, exhausts, suspension struts and radiators.
In September, a further 84% of KTM Logistikzentrum GmbH (formerly Oberbank Mattigtal Immobilienleasing GmbH) were acquired.
The KTM Group now holds 94% of the company.
KTM Asia Motorcycle Manufacturing Inc., Philippines, was established as a joint venture with our Philippine partner Ayala Corporation.
KTM holds 34% of the company. A CKD (completely knocked down) assembly plant is being built in the Philippines in collaboration with KTM’s
partner and importer Ayala Corporation.
In the fourth quarter of 2016, KTM established KTM Sportmotorcycle MEA DMCC, a new 100%-owned sales subsidiary in Dubai.
In addition, WP Performance Sports GmbH was founded in November in Munderfi ng together with WP Performance Systems GmbH.
KTM owns 74% of the shares in this company.
2. MARKET DEVELOPMENT
The overall European market¹ was up 14.3% on the preceding year, with 565,655 vehicles registered. The increase was due mainly to the
growth in the largest European markets such as Germany (14.5%), Italy (21.6%), Spain (25.2%) and Sweden (41.8%).
Amid a diffi cult market environment, KTM brand vehicles succeeded in gaining additional market share in key markets such as Austria (up
by 7.0 percentage points from the prior year) and Sweden (up by 3.5 percentage points). KTM has a share of 9.8% of the total European market
(prior year: 8.4%).
Husqvarna Motorcycles’ market share grew in Sweden (up by 3.8 percentage points from the prior year), Italy (up 0.4 percentage points)
and Germany (up 0.4 percentage points). Husqvarna has a share of 1.6% of the total European market (prior year: 1.1%).
New registrations in the overall U.S. market² fell slightly to 406,826 vehicles in 2016 (prior year: 419,864 vehicles).
Despite this, KTM succeeded in increasing its share of the overall U.S. market to 5.5%, a rise of 0.3 percentage points compared to the
prior year.
Husqvarna increased its market share in the U.S. by 0.7 percentage points to 1.5%.
1 Motorcycles ≥ 120 ccm excluding Motocross, scooters and ATVs, including electric motorcycles2 Motorcycles ≥ 120 ccm including Motocross, excluding scooters and ATVs, including electric motorcycles
02 lagebericht E_150317.indd 56 16.03.17 20:20
057
3. DEVELOPMENT OF REVENUE BY REGION
Group revenue increased by 11.7% from EUR 1,022.5 million in the prior year to EUR 1,141.8 million. Revenue in North America rose 8.6%
from the prior year to EUR 327.7 million; this corresponds to 28.7% of total revenue. In Europe, revenue was up 17.8% on the preceding
year, rising to EUR 603.6 million; Europe thus accounted for 52.9% of total revenue. Revenue in other countries rose by 1.0% compared to the
prior year, to EUR 210.5 million. The percentage of total revenue earned in the other countries was 18.4%.
Group revenue by region 2016 2015 Change EURk % EURk %
Europe 603,562 52.9% 512,160 17.8%North America 327,704 28.7% 301,767 8.6%Other countries 210,553 18.4% 208,560 1.0%Total 1,141,819 100.0% 1,022,487 11.7%
4. SALES BY REGION
Accounting for 22.2% of sales in the fi nancial year 2016, the U.S. remained the largest single market for KTM. Europe accounted for 49.9%
of sales, with the strongest sales markets for the group as a whole being Germany (11.1%), France (6.3%), Australia (5.9%), the UK (5.7%),
Italy (5.2%) and Spain (4.2%). Overall, 69.6% 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 83.9% of total revenue, this percentage remaining essentially constant relative
to the prior year (83.8%). Revenue in the Offroad division increased 23.7% from the prior year, to EUR 526.1 million. Revenue in the Street
division, at EUR 381.9 million, showed little movement relative to the prior year (–2.2%). Revenue from Parts, Garments and Accessories
(KTM PowerWear and KTM PowerParts) and others rose by 11.3% relative to the prior year to EUR 184.0 million.
Group revenue by product group 2016 2015 Change EURk % EURk %
Offroad sport motorcycles 526,082 46.1% 425,359 23.7%Street sport motorcycles 381,983 33.5% 390,616 (2.2%)Total full size 908,064 79.5% 815,975 11.3%
Sportminicycles 44,749 3.9% 37,951 17.9%X-Bow 5,000 0.4% 3,214 55.5%Parts, garments and accessories and others 184,006 16.1 % 165,346 11.3%Total 1,141,819 100.0% 1,022,487 11.7%
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
02 lagebericht E_150317.indd 57 16.03.17 20:20
058 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 K T M A G
6. SALES BY PRODUCT GROUP
In 2016 KTM sold 167,550 vehicles, comprising 167,467 motorcycles and Sportminicycles (up 10.1% on the preceding year) and
83 X-Bows (up 23.9%).
In the Offroad division, 86,769 motorcycles were sold (up 20.8% on the preceding year). Sales in the Enduro division (including Freeride)
rose by 16.4% to 57,249 motorcycles.
In the Street division, 66,201 motorcycles were sold (down 2.5% on the preceding year).
In the Sportminicycle division, sales went up 17.5% from the prior year, to 14,497 motorcycles.
Sales by product group 2016 2015 Change Units % Units %
Offroad sport motorcycles 86,769 51.8% 71,854 20.8%Street sport motorcycles 66,201 39.5% 67,917 (2.5%)Total full size 152,970 91.3% 139,771 9.4%
Sportminicycles 14,497 8.7% 12,343 17.5%Total motorcycles 167,467 100.0% 152,114 10.1%
X-Bow 83 0.0% 67 23.9%Total 167,550 100.0% 152,181 10.1%
7. PRODUCTION BY PRODUCT GROUP
In the fi nancial year 2016, 134,584 motorcycles were manufactured at the Mattighofen production site. Compared to the prior year, this
constitutes an increase of 19,212 units, or 16.7%. Taking into account the small-engined KTM models produced by our partner Bajaj Auto Ltd.
in India, 163,250 KTM vehicles (up 4.2%) were manufactured worldwide.
Production by product group 2016 2015 Change Units % Units %
Offroad sport motorcycles 86,080 63.9% 72,519 18.7%Street sport motorcycles 33,444 24.8% 30,877 8.3%Total full size 119,524 88.8% 103,396 15.6%
Sportminicycles 15,060 11.2% 11,976 25.8%Total motorcycles 134,584 100.0% 115,372 16.7%
X-Bow 55 0.0% 47 17.0%Total 134,639 100.0% 115,419 16.7%
02 lagebericht E_150317.indd 58 16.03.17 20:20
059
FINANCIAL PERFORMANCE INDICATORS
8. PERFORMANCE ANALYSIS
Net revenues rose in 2016 by 11.7% to EUR 1,141.8 million (prior year: EUR 1,022.5 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 10.0% to EUR 792.3 million; the gross margin increased by 1.1 percentage points
compared to the prior year and is now at 30.6%.
Overheads went up EUR 42.2 million from the prior year to EUR 249.2 million (+20.4%).
Expenses for selling and marketing rose EUR 18.1 million from the prior year (+17.6%). Net expenses on motorsport increased EUR 1.7 million
compared to the prior year, to EUR 31.4 million (+5.7%). This is attributable to the rise in sales volume as well as to wide-ranging motorsport
activities.
Expenses for infrastructure and administration went up EUR 6.8 million to EUR 43.6 million (+18.6%). The increase is the result of
substantial capital investment, especially in IT.
Operating development expenses in the fi nancial year 2016 rose EUR 27.9 million from the prior year, to EUR 92.6 million (+43.1%). Taking
account of the capitalization of a higher amount of development costs totaling to EUR 32.0 million (a rise of 53.1% compared to the prior year)
as well as research subsidies of EUR 8.7 million (up 24.3% compared to the prior year) brought net development expenses to EUR 51.9 million
(prior year: EUR 40.9 million).
Other operating expenses of EUR 27.5 million chiefl y comprise warranty costs, which increased to EUR 27.3 million, a rise of EUR 5.8 million
(+27.2%) from the prior year.
EBIT rose to EUR 102.8 million (prior year: EUR 95.1 million) owing to the increase in sales volume and revenues, a rise of EUR 7.7 million.
The effective tax rate dropped from 25.2% in 2015 to 23.6% at December 31, 2016.
The fi nancial result dropped by EUR 1.2 million in 2016 compared to the prior year, to EUR –8.4 million. This was due mainly to the
translation of foreign currency bank deposits. Interest expenses were EUR 9.6 million (prior year: EUR 8.8 million). Interest income was
EUR 1.9 million (prior year: EUR 1.3 million).
9. BALANCE SHEET ANALYSIS
Balance sheet total rose by 24.4% compared to the prior year, to EUR 1,056.5 million.
Non-current assets went up EUR 66.6 million (+14.8%) to EUR 515.9 million (48.8% of total assets). Property, plant and equipment rose
by EUR 12.0 million due to capital expenditure on the motorsport building and on tooling. The EUR 35.8 million rise in intangible assets results
mainly from the capitalization of development costs with a net total of EUR 32.0 million and from investments in IT infrastructure, essentially
the implementation during the year of a new ERP system.
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
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060 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 K T M A G
Trade receivables, including receivables from affi liated and associated companies, went up EUR 11.0 million to EUR 99.2 million (+12.5%)
due to the rise in sales volume. Taking into account the receivables sold last year and this year under the ABS program, there was a rise in
receivables by about EUR 10.0 million (+7.0%).
In the past fi nancial year 2016, inventories rose EUR 3.3 million to EUR 164.5 million (+2.0%) due to the increase in sales volume.
Other current assets increased by EUR 8.0 million to EUR 30.0 million. They essentially comprise prepayments made on inventories, research
grants receivables 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 116k compared to the prior year is due
to the transaction costs being amortized through profi t or loss over the remaining term to maturity. The liability on the bond also reduced by
EUR 83.1 million due to the early repayment of a part of the bond.
Long-term fi nancial liabilities of EUR 212.6 million comprise long-term capital expenditure loans, research and promotional loans and
a promissory note loan. The EUR 87.0 million increase resulted mainly from taking out a promissory note loan of EUR 120.0 million.
The EUR 20.9 million of liabilities from fi nance leases that were disclosed in the prior year were dissolved owing to the initial consolidation
of KTM Logistikzentrum GmbH.
Employee benefi t liabilities of EUR 17.3 million comprise claims for severance and anniversary bonus payments. Actuarial losses, current
service costs and interest expenses led to a EUR 2.4 million increase in the total liability.
Deferred tax liabilities went up EUR 6.6 million, to EUR 44.3 million. The increase is essentially due to the recognition of EUR 8.0 million
in deferred tax on capitalized development costs.
Other non-current liabilities amounting to EUR 7.4 million are mainly made up of deposits received; the total amount rose only slightly by
EUR 0.7 million relative to the prior year.
Short-term fi nancial liabilities went up EUR 16.7 million, to EUR 22.8 million.
Trade payables, including payables to affi liated and associated companies, went up EUR 127.5 million to EUR 160.1 million as at the
reporting date.
Provisions (EUR 10.2 million; prior year: EUR 8.9 million) essentially comprise provisions relating to guarantees and warranties. Compared
to the prior year, provisions relating to guarantees and warranties showed an increase of EUR 1.3 million on account of the increase in sales
volume.
The other current liabilities essentially comprise 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 11.7 million to EUR 65.0 million.
Net fi nancial debt fell to EUR 80.9 million (prior year: EUR 97.2 million). Gearing¹ consequently stood at 18.9% (prior year: 25.6%).
1 Gearing = Net fi nancial debt divided by equity
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061
Equity rose by EUR 48.2 million from the prior year. The movement resulted from the 2016 profi t (EUR 72.1 million), payment of the
dividend for 2015 (EUR 21.7 million) and the movement in the cash fl ow hedge reserve (EUR 3.1 million). The equity ratio as of December 31,
2016 was thus 40.5% (prior year: 44.7%).
10. LIQUIDITY ANALYSIS
Consolidated cash fl ow from operating activities rose to EUR 165.6 million, an increase of EUR 47.5 million relative to the prior year. There was
an increase of EUR 15.6 million on the preceding year in cash fl ow from profi t and loss items, while working capital fell by EUR 31.9 million.
Net of disposals, capital expenditure increased from EUR –94.3 million to EUR –146.8 million. Free cash fl ow therefore fell from
EUR 23.8 million to EUR 18.8 million in net terms.
The consolidated cash fl ow from fi nancing activities was EUR 99.3 million (prior year: EUR 27.4 million), which resulted mainly from the
dividend of EUR 21.7 million paid out in 2016 and the taking out of a promissory note loan of EUR 120.0 million.
Cash rose by EUR 118.3 million to EUR 236.8 million and was thus substantially higher than at the end of the prior year (prior year:
EUR 118.4 million).
11. CAPITAL EXPENDITURE
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 new motorsport building in Munderfi ng was completed.
In total, EUR 106.4 million (prior year: EUR 110.9 million) was invested in property, plant and equipment and intangible assets during 2016.
Of this, EUR 57.8 million relates to capitalized development costs and EUR 9.0 million to investments in IT infrastructure.
NON-FINANCIAL PERFORMANCE INDICATORS
12. EMPLOYEES
During 2016, KTM employed an average of 2,737 employees (prior year: 2,380), of whom 425 (prior year: 401) worked outside Austria.
Revenue per employee was EUR 417.2k (prior year: EUR 429.6k).
2016 2015
Revenue EURk 1,141,819 1,022,487Employees (average) 2,737 2,380Revenue per employee EURk 417.2 429.6
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13. RESEARCH AND DEVELOPMENT
In the Research and Development department, KTM employed an average of 487 staff in 2016 (prior year: 382), representing 17.8% of
total headcount. Around EUR 92.6 million (formerly: EUR 68.8 million) was invested in research and development in 2016, which translates
to 8.1% of total revenue (+1.4 percentage points compared to the prior year).
The fi nancial year just ended saw a multitude of different projects in the offroad and street divisions. Above all there was the transfer to
series production of the KTM 1290 Superduke GT, with which KTM has succeeded in redefi ning the sports touring division. The model, which
is equipped with a series of innovative safety systems and new kinds of comfort features, managed to consistently secure top marks in highly
regarded comparative tests.
Another key project was the further development of the KTM Adventure range of models: As well as revising numerous details, these models
are noted in particular for their completely redeveloped full LED headlamp unit and the new TFT dashboard, which enables the rider to
be linked up to the motorcycle for the fi rst time. Alongside this, the development of new HUSQVARNA models in the street division continued
apace. The vehicles, which were presented during the EICMA fair in November 2016, polarize opinion in particular due to their clear design
approaches focusing on the bare essentials.
The development of the KTM mid-size models, which are equipped with an inline two-cylinder engine for the fi rst time, was consistently
pushed forward during the last year of research. Following the completion of the fundamental research and development work on the engine
and chassis, a fi rst ridable prototype was then presented to the international trade audience.
During 2016, numerous R&D projects were taken forward at various stages from concept development to the start of series production and
successfully completed:
p Start of series production of the new KTM and HUSQVARNA Enduro generations, which are again setting the standard in their class thanks
to their equipment, the low weight that derives from the use of the latest development technologies and the handling benefi t under extreme
conditions that accrues as a result.
p Start of series production of the new KTM 1290 Superduke GT in the sports touring division. Thanks to a multitude of innovative safety
features, such as the semi-active chassis or the inclination-dependent motorcycle stability control “MSC” and the LED cornering light, along
with the KTM 1290 Super Adventure it represents the pinnacle of technology in the KTM range of models.
p Start of series production of the KTM 690 Duke/R. In addition to the comprehensively revised 690 ccm single-cylinder unit, whose
smoothness has been improved still further by using a second balancer shaft, the model now also features advanced safety features and
infotainment functions on a newly developed TFT instrument panel.
p Series development of the fundamentally revised KTM Adventure model range. The successful adventure touring concept has been further
improved by integrating the latest technologies, such as the 6.5“ TFT display including Bluetooth and USB interfaces and the full LED
headlight as well as a series of safety systems and a semi-active chassis.
p Series development of new KTM Duke models in the entry-level division. The agile naked bikes in the 125 ccm to 390 ccm range have
been fundamentally reconfi gured. Emission levels have been further reduced in accordance with the EU IV standard and the ridability of the
single-cylinder engine has been further enhanced with ride-by-wire. Just like other KTM models, they now also offer a wealth of connectivity
functions.
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063
p Series development of the new HUSQVARNA Vitpilen/Svartpilen models. As well as the high-volume 701 Enduro and 701 Supermoto,
the Vitpilen and Svartpilen models open the next chapter in the HUSQVARNA brand strategy. With their progressive, clear design, they
reinterpret the retro trend and appeal to a wider range of customers.
p Development of a new motorcycle platform based on a revolutionary two-cylinder engine design, which will make a substantial contribution
to opening up new markets in the naked and touring divisions. A prototype of the KTM 790 Duke naked bike was unveiled at the EICMA
International Motorcycle Show in Milan in November 2016.
p Concept development of new drivetrain systems for electric vehicles and the ongoing development of energy storage and battery
management systems for motorcycle applications. Development of a model equipped with an alternative drivetrain system to meet the
requirements of modern mobility scenarios.
p Concept development for new connectivity systems for the digital networking of rider and motorcycle. In addition to safety-related equipment
such as automated emergency call systems or interlinked vehicles for a sustainable reduction in accidents, this also comprises enhanced
comfort and infotainment functions for the rider.
p Development of concepts for new approaches in relation to EMS systems and exhaust gas purifi cation to ensure that the KTM and
HUSQVARNA model ranges comply with current (EU IV) and future emissions regulations (EU V). These include both a reduction in fuel
consumption and a reduction in exhaust emissions.
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 non-stop. 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 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.
With more than 270 world championship titles, KTM is the world’s most successful motorsport brand. At the beginning of the year,
Toby Price managed to secure KTM’s 15th Dakar victory in a row. After the factory accelerated its commitment to the prestigious Supercross
in the USA in the 2015 season, the American Ryan Dungey won the Supercross World Championship title for the Austrian manufacturer on
his KTM 450 SX-F, secured double victory by winning the US Pro Motocross Championship and thus marked another milestone in the
company’s history. In 2016 the Red Bull KTM Factory Racing Team in the USA successfully defended its title in the Supercross Series. 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. Jeffrey Herlings claimed another MX2 title for KTM with his impressive performances. But KTM has also managed to fi rmly establish
itself in road racing too. In October 2016, Brad Binder became Moto3 world champion with four races to spare.
And it will not be long before the next stage: in 2017 KTM will be entering Moto2 with a chassis developed in cooperation with WP, and will
be entering the MotoGP series with its own factory team and a motorcycle developed entirely in Mattighofen: the KTM RC16. The successfully
tested KTM MotoGP bike will be ridden in its fi rst season by the Briton Bradley Smith and the Spaniard Pol Espargaró.
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The Husqvarna Motorcycles brand also celebrated another impressive year in international racing in the 2016 season. Even with the bold
move into the street motorcycling sector, the last two seasons were still enormously successful for Husqvarna Motorcycles in offroad racing.
Spearheading the return to AMA racing, Jason Anderson achieved an excellent second-place fi nish in Husqvarna Motorcycles’ fi rst-ever
Supercross World Championship in 2015, before the brand clocked up its fi rst Supercross victories in 2016. Establishing the global Rockstar
Energy Husqvarna Factory Racing team at the start of 2016, Husqvarna Motorcycles further strengthened their presence in all offroad
disciplines worldwide. Motorsport has been a constant feature of Husqvarna’s 113-year history and will continue to be the driving force behind
the development of top-class series motorcycles. Husqvarna Motorcycles remains resolute about achieving success at the highest levels of
two-wheeled motorsport.
Overall, we won twelve world titles in 2016 across a very wide range of racing series, bringing our total number of world title successes to
over 270.
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 2016 were EUR 31.4 million (prior year: EUR 29.7 million),
thus accounting for 2.7% (prior year: 2.9%) 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 fi nancial statements.
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, communication 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.
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065
17. RISK REPORT
Regarding the risk report, please refer to the explanations in the notes to the consolidated fi nancial 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 2,737 (prior year: 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 29% within a radius
of 100 km, about 35% within a radius of 200 km, about 44% within a radius of 300 km, and about 51% 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 for 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 employees 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.
Total spending on these areas was EUR 1,216.5k in 2016 (prior year: EUR 993.4k). 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 110 apprentices, and we persist in our clear commitment to sustainable in-house 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.
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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, procure-
ment 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 593 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 in-production 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.
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 new KTM offroad carburetors (EXC models) comply with the Euro IV 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.
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067
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
nonprofi 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.
19. DISCLOSURES PURSUANT TO SECTION 243A OF THE AUSTRIAN COMMERCIAL CODE (UGB)
As of December 31, 2016, the share capital amounts to EUR 10,845k and is subdivided into 10,845k registered shares with 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.
KTM AG shares were admitted for trading on the Vienna Stock Exchange until June 24, 2016, latterly forming part of the Third Market,
which is operated as an MTF (Multi Trading Facility).
On March 29, 2016, K KraftFahrZeug Holding GmbH (formerly CROSS KraftFahrZeug Holding GmbH) announced its intention to make a
public takeover bid for all free-fl oating shares in KTM AG to accompany the withdrawal of KTM AG shares from the Third Market (MTF) of the
Vienna Stock Exchange. The offer price was EUR 122.50 per share.
At the end of June 24, 2016, the shares were withdrawn from the Third Market of the Vienna Stock Exchange.
On July 20, 2016, the Extraordinary General Meeting of KTM AG resolved to convert the previous bearer shares into registered shares. This
amendment to the articles of association was recorded in the Austrian commercial register in September.
Each of the following shareholders held more than 10% of the share capital on the reporting date and at the time of drawing up the fi nancial
statements:
p KTM Industries AG (formerly CROSS Industries AG), directly and indirectly through
K KraftFahrZeug Holding GmbH (formerly: CROSS KraftFahrZeug Holding GmbH): 51.67%
p Bajaj Auto Ltd. (through Bajaj Auto International Holdings B.V.): 47.99%
p Other small shareholders: < 1%
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. A change of control is deemed
to exist for the purposes of these agreements if KTM Industries AG (formerly: CROSS Industries AG), Wels, no longer holds either directly
or indirectly at least 50% of the voting rights in KTM AG, within the meaning of section 22 (2) of the Austrian Takeovers Act. 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.
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20. OUTLOOK
Economic position
The general economic climate remains tough in the individual markets. For 2017 we expect to see slight growth in the global motorcycle
market. With our new products, consistent implementation of our strategy and by focusing on commercial business development to expand
the quantity and quality of our sales partners, we expect to continue to gain market shares.
Growth in the North American motorcycle market was fl at in 2016. This trend will continue in 2017. However, KTM expects to achieve
continued growth in market share in North America.
The situation in the emerging markets in South America and Asia remains tense due to the economic environment and domestic political
crises. However, we see signifi cant growth opportunities over the medium term in both South America and Asia, especially for smaller-engined
models. We will substantially increase our focus and efforts in these regions accordingly.
Cooperation with our Philippine partner Ayala Corporation, the KTM and Husqvarna importer in the Philippines, is progressing in a very
positive way, such that the planned assembly of models from the KTM DUKE and RC families up to 400 ccm will start as scheduled in the
fi rst quarter of 2017 and open up new distribution opportunities in the ASEAN region.
Development of business
In 2017, KTM expects to see a further increase in both revenues and volumes.
With the Husqvarna Motorcycles brand, we expect further growth in 2017 as the range of products is being expanded to include a broad range
of street motorcycles.
2017 will also see the commercial launch of new KTM models. The KTM Street models in the ADVENTURE series, which have already been
presented at international motorcycle shows, and the new “DUKE” naked bike models will be launched on the market in 2017.
KTM has set itself the medium-term goal of increasing annual sales to 300,000.
Motorsport
In 2017, KTM will join the MotoGP series with the riders Pol Espargaró and Bradley Smith. KTM is also starting the Moto2 race series in the
coming year. KTM is already involved in Moto3, so will therefore be represented in all three series.
Investments
The level of investment planned for 2017 remains high. The main areas of focus for investment cover in particular new series development
projects as well as investments in infrastructure and expansion in the area of development.
KTM is investing some EUR 25 million at its Mattighofen site on expanding and extending its research and development center. The overall
investment should be completed by the end of 2017. Investing in this expansion will create around 100 new jobs at Mattighofen for highly
qualifi ed employees.
During 2017, work will also begin on extending the logistics center and expanding the quality assurance section at the main site in Mattighofen.
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069
Adequate fi nancial position
Over the last year, KTM further enhanced its treasury and fi nancial position. Working capital management was further improved and will
remain an area of focus during the coming year.
In April 2017, the EUR 85 million bond listed on the Vienna Stock Exchange will be repaid as planned.
Suffi cient liquidity is available for planned growth, owing in particular to the placement of the promissory note loan in 2016.
Mattighofen, February 15, 2017
The Executive Board
Stefan Pierer Harald Plöckinger
Viktor Sigl Hubert Trunkenpolz
O U T L O O K
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2016
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED
INCOME STATEMENT 073
CONSOLIDATED STATEMENT
OF COMPREHENSIVE INCOME 074
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION 075
CONSOLIDATED STATEMENT
OF CASH FLOWS 076
CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY 078
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS 079
079 The company
079 Principles of fi nancial reporting
and accounting policies
094 Notes to the consolidated
income statement
100 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 149
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072 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 K T M A G
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073C 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
EURk Note 2016 2015
Revenue 5 1,141,819 1,022,487Cost of sales 6 (792,281) (720,477)Gross profi t 349,538 302,010
Selling and racing expenses 6 (152,096) (132,345)Research and development expenses 6 (26,017) (16,385)Infrastructure and administration expenses 6 (43,566) (36,747)Other operating expenses 7 (27,526) (21,637)Other operating income 8 107 210Share of the profi t of associates accounted for using the equity method 9 2,357 0Result from operating activities 102,796 95,105
Interest income 1,865 1,304Interest expenses (9,597) (8,759)Other fi nancial result 10 (686) (2,363)Share of the profi t of associates accounted for using the equity method 9 0 133Profi t before tax 94,378 85,421
Tax expense 11 (22,269) (21,497)PROFIT FOR THE FINANCIAL YEAR 72,109 63,924Of which attributable to the owners of the parent company 72,012 63,856
Of which attributable to non-controlling interests 97 68
EARNINGS PER SHARE (EUR)Basic (= diluted) 12 6.64 5.89
CONSOLIDATEDINCOME STATEMENTFOR THE FINANCIAL YEAR 2016 OF KTM AG, MATTIGHOFEN, AUSTRIA
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074 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 K T M A G
EURk Note 2016 2015
Profi t for the fi nancial year 72,109 63,924
Currency translation of foreign subsidiaries 992 425Currency translation of associates accounted for using the equity method 15 11 (5)Currency translation of net investments in foreign operations 20 116 366Deferred tax on currency translation of net investments in foreign operations (29) (91)Valuation of cash fl ow hedges 20 (4,152) 5,795Of which associates accounted for using the equity method: EUR 25k (prior year: EUR 0k)
Deferred taxes on the valuation of cash fl ow hedges 20 1,038 (1,449)Other comprehensive income – Possible reclassifi cation into the income statement (2,024) 5,042
Recognized actuarial losses 24 (759) (280)Of which associates accounted for using the equity method: EUR 1k (prior year: EUR 0k)
Deferred taxes on the recognized actuarial losses 24 190 70Other comprehensive income – No reclassifi cation into the income statement (569) (210)
Other comprehensive income (2,593) 4,832TOTAL COMPREHENSIVE INCOME 69,516 68,756Of which attributable to the owners of the parent company 69,419 68,687
Of which attributable to non-controlling interests 97 68
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 2016 OF KTM AG, MATTIGHOFEN, AUSTRIA
03 anhang E_150317.indd 74 16.03.17 20:21
075
EURk Note Dec. 31, 2016 Dec. 31, 2015
ASSETSNon-current assetsTangible assets 13 173,288 161,239Intangible assets 14 315,653 279,780Investments accounted for using the equity method 15 22,702 3,064Deferred tax assets 11 3,317 3,595Other non-current assets 16 927 1,575 515,888 449,254Current assetsCash and cash equivalents 28 236,752 118,406Inventories 17 164,544 161,295Trade receivables 18 99,239 88,202Prepayments 2,365 3,100Current tax assets 7,718 6,704Other current assets 19 30,018 21,974 540,637 399,680ASSETS 1,056,524 848,933
LIABILITIESConsolidated equityShare capital 20 10,845 10,845Reserves including retained earnings 20 416,417 368,688Equity of the owners of the parent company 427,261 379,532Non-controlling interests 20 718 281 427,979 379,814Non-current liabilitiesBonds 21 0 84,845Financial liabilities 21 212,554 125,480Employee benefi ts 24 17,310 14,935Deferred tax liabilities 11 44,305 37,742Other non-current liabilities 22 7,426 6,764 281,595 269,766Current liabilitiesBonds 21 83,061 0Financial liabilities 21 22,760 6,107Trade payables 23 160,084 127,445Provisions 25 10,207 8,863Tax liabilities 424 1,389Prepayments 5,431 2,234Other current liabilities 22 64,983 53,315 346,950 199,353EQUITY AND LIABILITIES 1,056,524 848,933
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 OF DECEMBER 31, 2016 OF KTM AG, MATTIGHOFEN, AUSTRIA
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076 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 K T M A G
EURk Note 2016 2015
Consolidated cash fl ow from operating activities+(–) Profi t (loss) for the fi nancial year 72,012 63,856+(–) Profi t (loss) allocated to non-controlling interests 97 68+(–) Interest expenses (interest income) 7,732 7,455– Interest paid (8,832) (8,759)+ Interest received 1,865 1,304+(–) Current income tax 14,128 6,636– Income taxes paid (14,839) (8,324)+(–) Deferred taxes 8,141 14,861+ Depreciation/Amortization of fi xed assets 57,458 46,419– Non-cash results from investments accounted for using the equity method (2,241) (60)–(+) Other non-cash income (expenses) 26 (94) (3,589) 135,428 119,866
–(+) Change of inventories 16,436 (14,632)–(+) Change of trade receivables, prepayments, current tax assets, other current and non-current asset (24,605) (14,207)+(–) Change of trade payables, prepayments and other current and non-current liabilities 4 38,694 26,522+(–) Change of tax liabilities, deferred taxes and other provisions (363) 556 30,162 (1,762)
Consolidated cash fl ow from operating activities 165,590 118,104
CONSOLIDATEDSTATEMENT OF CASH FLOWSFOR THE FINANCIAL YEAR 2016 OF KTM AG, MATTIGHOFEN, AUSTRIA
03 anhang E_150317.indd 76 16.03.17 20:21
077
EURk Note 2016 2015
Consolidated cash fl ow from investing activities– Investments in tangible and intangible assets (payments-out) 13, 14 (131,855) (94,761)– Investments in fi nancial assets (payments-out) (15,072) (312)+(–) Changes in the scope of consolidation 164 0+ Disposals of fi xed assets (payments-in) 11 771Consolidated cash fl ow from investing activities (146,752) (94,302)
Consolidated cash fl ow from fi nancing activities– Dividends to owners of the parent company 20 (21,690) (16,268)– Dividends to non-controlling interests 0 (150)– Acquisition of non-controlling interests 0 (100)– Repurchase of own bonds (1,966) 0+ Taking out of promissory note loan (less transaction costs) 119,540 0+ Taking out of research loans 0 45,000+ Taking out of investment loans 9,500 0+ Taking out of promotional loans 0 6,495– Repayment of investment loans (3,403) (2,370)– Repayment of promotional loans (2,161) 0– Repayment of liabilities from fi nance leases (645) (388)– Taking out of other current loans 0 (5,000)+(–) Other fi nancing activities 86 148Consolidated cash fl ow from fi nancing activities 99,261 27,367
Consolidated cash fl ow+(–) Consolidated cash fl ow from operating activities 165,590 118,104+(–) Consolidated cash fl ow from investing activities (146,752) (94,302)+(–) Consolidated cash fl ow from fi nancing activities 99,261 27,367Change in liquid funds within the group 118,099 51,169
+(–) Effect of exchange rate fl uctuations 247 (1,513)+(–) Consolidation-related changes in funds 0 (62)+ Opening balance of liquid funds within the group 118,406 68,812CLOSING BALANCE OF LIQUID FUNDS WITHIN THE GROUP 236,752 118,406Comprising: cash on hand, checks, cash in banks and time deposits 236,752 118,406
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
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078 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 K T M A G
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 of January 1, 2015 10,845 302,180 17,235 (3,582) 379 327,058 517 327,575Currency 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 of December 31, 2015 (= January 1, 2016) 10,845 349,614 17,235 764 1,075 379,532 281 379,814
Currency translation 0 0 0 0 1,090 1,090 0 1,090Financial instruments 0 0 0 (3,114) 0 (3,114) 0 (3,114)Actuarial losses 0 (569) 0 0 0 (569) 0 (569)Other comprehensive income 0 (569) 0 (3,114) 1,090 (2,593) 0 (2,593)
Profi t for the fi nancial year 0 72,012 0 0 0 72,012 97 72,109Total comprehensive income 0 71,443 0 (3,114) 1,090 69,419 97 69,516
Transactions with non-controlling interests 0 0 0 0 0 0 340 340Dividends to owners of the parent company 0 (21,690) 0 0 0 (21,690) 0 (21,690)As of December 31, 2016 10,845 399,368 17,235 (2,350) 2,165 427,261 718 427,979
CONSOLIDATEDSTATEMENT OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR 2016 OF KTM AG, MATTIGHOFEN, AUSTRIA
03 anhang E_150317.indd 78 16.03.17 20:21
079
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 leisure purposes (power sports), in particular under
the KTM and Husqvarna brands, and holds equity interests in other entities engaging in the development, production and distribution of such
equipment. As of December 31, 2016, the KTM Group includes 42 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, France, Australia, the UK, Italy, Spain, Canada, Austria, Sweden and other European countries.
The company is part of the same group as Pierer Konzerngesellschaft mbH, Wels (ultimate parent company) and its affi liates, and is included
within the consolidated fi nancial statements of that group. These consolidated fi nancial statements are fi led with the Provincial Court of
Wels in its capacity as Commercial Court 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 KTM Industries AG, Wels (formerly: CROSS
Industries AG, Wels) and are fi led with the Provincial Court of Wels in its capacity as Commercial Court under fi le number FN 78112 x.
II. PRINCIPLES OF FINANCIAL REPORTINGAND ACCOUNTING POLICIES
1. PRINCIPLES OF FINANCIAL REPORTING
The consolidated fi nancial statements as of December 31, 2015 and December 31, 2016 were prepared in accordance with the International
Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and in accordance with the inter-
pretations of the International Financial Reporting Interpretations Committee (IFRIC), insofar as they are applied in the European Union. The
additional requirements stipulated by section 245a para 1 of the Austrian Commercial Code (UGB) were also met in this context.
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
NOTES TO THECONSOLIDATED FINANCIALSTATEMENTSFOR THE FINANCIAL YEAR 2016 OF KTM AG, MATTIGHOFEN, AUSTRIA
03 anhang E_150317.indd 79 16.03.17 20:21
080 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 K T M A G
The fi gures in the consolidated fi nancial statements are reported in the functional currency of the group parent, the euro. Unless specifi cally
indicated, all amounts are rounded to the nearest 1,000 euros (EURk), which may give rise to rounding differences.
The consolidated fi nancial statements were approved by the Executive Board on February 15, 2017 (prior year: February 16, 2016) 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 IASB has passed the following amendments to existing IFRSs and several new IFRSs and IFRICs that have already been endorsed by
the European Commission and are therefore to be mandatorily applied as from January 1, 2016:
p IFRS 10, IFRS 12 and IAS 28 (Amendment): Investment Entities: Applying the Consolidation Exception
p IFRS 11 (Amendment): Accounting for Acquisitions of Interests in Joint Operations
p IAS 1 (Amendment): Disclosure Initiative
p IAS 16 and IAS 38 (Amendment): Clarifi cation of Acceptable Methods of Depreciation and Amortisation
p IAS 16 and IAS 41 (Amendment): Agriculture: Bearer Plants
p IAS 19 (Amendment): Defi ned Benefi t Plans: Employee Contributions
p IAS 27 (Amendment): Equity Method in Separate Financial Statements
p Annual Improvements to IFRS 2010–2012: Amendments to IFRS 2, IFRS 3, IFRS 8, IFRS 13, IAS 16, IAS 24 and IAS 38
p Annual Improvements to IFRS 2012–2014: Amendments to IFRS 5, IFRS 7, IAS 19, IAS 34
The fi rst-time adoption of the above IFRSs did not lead to any material changes compared to the prior year. They did not result in any changes
to the accounting policies.
Future amendments to fi nancial reporting provisions
The IASB and the IFRIC have passed further standards and interpretations, application of which was not mandatory during the 2016 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 Endorsed EU date of application by EU? of application
New standards and interpretationsIFRS 15: Revenue from Contracts with Customers Jan. 1, 2018 Yes Jan. 1, 2018IFRS 9: Financial Instruments Jan. 1, 2018 Yes Jan. 1, 2018IFRS 16: Leases Jan. 1, 2019 No –
Amended standards and interpretationsIFRS 14: Regulatory Deferral Accounts Jan. 1, 2016 No –IFRS 2: Classifi cation and Measurement of Share-based Payment Transactions (Amendment) Jan. 1, 2018 No –IFRS 4: Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts (Amendment) Jan. 1, 2018 No –IFRS 10 and IAS 28: Sale or Contribution of Assets between Postponedan Investor and its Associate or Joint Venture (Amendment) indefi nitely No –
03 anhang E_150317.indd 80 16.03.17 20:21
081
Standard / amendment IASB date Endorsed EU date of application by EU? of application
IFRS 15: Clarifi cations to IFRS 15 (Amendment) Jan. 1, 2018 No –IAS 7: Disclosure Initiative (Amendment) Jan. 1, 2017 No –IAS 12: Recognition of Deferred Tax Assets for Unrealised Losses (Amendment) Jan. 1, 2017 No –IAS 40: Transfers of Investment Property (Amendment) Jan. 1, 2018 No –IFRIC 22: Foreign Currency Transactions and Advance Consideration Jan. 1, 2018 No –Annual Improvements to IFRS Standards 2014–2016 Cycle: Amendments to IFRS 12 Jan. 1, 2017 No –Annual Improvements to IFRS Standards 2014–2016 Cycle: Amendments to IFRS 1 and IAS 28 Jan. 1, 2018 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
position of KTM AG are expected.
p IFRS 16 governs the accounting treatment of leases. IFRS 16 governs the recognition, measurement and disclosure of leases in the
fi nancial statements and notes. 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 consolidated fi nancial statements are being examined. It is
expected that the recognition of leases in the balance sheet will lead to an increase in the carrying amounts 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. KTM will be affected in particular by the new impairment provisions, the recognition of expected losses and the simplifi cations
of hedge accounting. No material 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 uniform fi nancial reporting rules.
These rules were applied by all consolidated entities. All subsidiaries prepare their fi nancial statements as at the same reporting date as the
consolidated 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.
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
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082 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 K T M A G
2. SCOPE OF CONSOLIDATION
The scope of consolidation is based on the application of IFRS 10 and IFRS 11. KTM AG and all material subsidiaries are fully consolidated
in the consolidated fi nancial statements. Subsidiaries are companies controlled by the group. The group controls a company if it is exposed to,
or has rights to, variable returns from its involvement in the entity and has the ability to infl uence these returns by means of its power over
the company. The fi nancial statements of subsidiaries are included in the consolidated fi nancial statements from the moment control begins
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 position are not consoli-
dated but are reported as other non-current assets and measured at amortized cost or written down for impairment. The total balance sheet
assets, total net assets and total profi t/loss of these companies comes to less than 0.1% of the consolidated total.
Accordingly, 42 companies are 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, 2016 (see Annex to the notes to the fi nancial
statements).
An associate is an entity over which the group has signifi cant infl uence. Signifi cant infl uence is the power to participate in the fi nancial
and operating policy decisions of the investee entity but is not control or joint control of the policy-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, invest-
ments 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. Five associates are measured under the equity method in the
KTM Group.
The reporting date for all companies included in the KTM AG consolidated fi nancial statements is December 31, 2016. Where an associate
accounted for using the equity method prepares its fi nancial statements to a different date, an interim set of fi nancial statements is prepared
for consolidation purposes.
Changes in the scope of consolidation in 2016 were as follows:
Full consolidation At equity valuation
2016 2015 2016 2015
As of January 1 39 39 3 3Additions 3 2 3 0Disposals 0 2 0 0As of December 31 42 39 6 3Of which in Austria 8 6 3 1
Of which abroad 34 33 3 2
Under a sale-and-purchase agreement dated September 16, 2016, KTM Immobilien GmbH acquired an additional 83.63% of the shares
of Oberbank Mattigtal Immobilienleasing GmbH, Linz. The holding thus rose from 10% to 93.63%. Oberbank Mattigtal Immobilien-
leasing GmbH was the owner of the KTM logistics center in Munderfi ng, which it leased to the KTM Group under a fi nance lease. As a result
of the company’s acquisition, the fi nance lease was cancelled ahead of term (see note 29). At the Extraordinary General Meeting held on
September 16, 2016, Oberbank Mattigtal Immobilienleasing GmbH, Linz, resolved to change its name to KTM Logistikzentrum GmbH and
to transfer its registered offi ce to Mattighofen. KTM Logistikzentrum GmbH has been consolidated as from September 16, 2016.
03 anhang E_150317.indd 82 16.03.17 20:21
083
The following assets and liabilities were absorbed into the group:
EURk
Non-current assets 26,068Cash and other current assets 4,884Liabilities owed to credit institutions (21,147)Other current liabilities (161)Other current liabilities (fi nancial) (4,854)Non-controlling interest (287)Difference (debit item) 242Purchase price 4,745
Cash taken over 4,883Net cash infl ow on acquisition 138
The carrying amount of equity represents the fair value on the acquisition date. The non-controlling interest was recognized on the basis
of the proportionate carrying amount of the assets and liabilities.
The difference (debit item) of EUR 242k arising on initial consolidation was recognized as an expense.
After the initial consolidation, liabilities owed by KTM Logistikzentrum GmbH to credit institutions were repaid by KTM AG on its behalf and
converted into an intercompany loan for the same amount.
Further information as per IFRS 3.B64q is not provided on grounds of immateriality, as the business combination has no effect on the
statement of comprehensive income. Expenses in connection with the logistics center were already incorporated into KTM’s results before
initial consolidation, on account of the pre-existing fi nance lease relationship.
The KTM Group holds 100% of the shares of the newly established sales subsidiary KTM Sportmotorcycle MEA DMCC, Dubai. The company
has been fully consolidated as from December 1, 2016.
WP Performance Sports GmbH was founded in Munderfi ng in November 2016 and has been fully consolidated as from December 1, 2016.
The KTM Group holds 74% of the shares.
In March 2016, a 26% holding was acquired in Cero Design Studio S.L., the registered offi ce of which is in Barcelona, Spain. The shares
are recognized at cost of acquisition.
In July 2016, KTM AG acquired 24% of the shares of WP AG, Munderfi ng. In the consolidated fi nancial statements, the company is recognized
as an investment accounted for using the equity method.
KTM Group also acquired a 34% holding in KTM Asia Motorcycle Manufacturing Inc., Philippines. In the consolidated fi nancial statements,
the company is recognized as an investment accounted for using the equity method.
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_150317.indd 83 16.03.17 20:21
084 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 K T M A G
KTM Technologies GmbH
KTM Immobilien GmbH
KTM Sport-motorcycle GmbH
KTM Sportcar GmbH
Husqvarna Motorcycles GmbH
Sales companies
Sales companies
Changes in the scope of consolidation during 2015 are described below:
Husqvarna Motorsports, Inc., Murrieta, USA, and Husqvarna Motorcycles SA Pty Ltd, Northriding, South Africa, were established during the
fi rst half of 2015 and were thus 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. Liquidation had not yet been completed as of December 31, 2016.
Due to the loss of control, a loss on deconsolidation of EUR 146k was recognized in the income statement for 2015 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 2016.
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 in 2015 due to the transfer of the operating business of KTM AG
to KTM AG and the subsequent merger of KTM Immobilien GmbH into KTM AG. KTM AG was subsequently transformed into a GmbH and
renamed KTM Immobilien GmbH.
An abridged representation of the KTM Group structure looks as follows:
KTM AG
Organizational chart (abridged)
KTM AG is 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 purchasing, 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.
03 anhang E_150317.indd 84 16.03.17 20:21
085
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 also hold equity interests in a total of 23 domestic and foreign
sales companies that provide sales and marketing-related services in local markets on their behalf.
KTM Sportcar GmbH markets the X-Bow super sports car.
KTM Technologies GmbH provides vehicle and product development services 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 vested in KTM Immobilien GmbH.
3. CONSOLIDATION METHODS
Equity consolidation: The initial consolidation of new acquisitions is performed 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 compared with the consideration paid and, if applicable, with 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.
With the equity method, the interests in associates are recognized in the consolidated statement of fi nancial position at their cost of acquisi-
tion 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 contained within the carrying amount of the investment and is not amortized separately.
IFRS 3 does not apply to common control transactions. In such cases, the KTM Group follows the acquisition method in the same way as
under IFRS 3.
All receivables, payables, expenses and income resulting from the settlement of accounts between consolidated entities, along with all profi ts
and losses from intragroup sales of inventories, have been 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. Foreign currency items on the reporting date are translated at the closing rate. All foreign
exchange differences are recognized in the separate fi nancial statements as expenses or income in the period in which they arise.
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
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086 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 K T M A G
The group currency is the euro. Subsidiaries located outside the eurozone 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 reported goodwill and any valuation adjustments resulting from initial consolidation, are translated at the mid rate valid on the
reporting date and items in the consolidated income statement are translated using the weighted average exchange rate for 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.
Movements in the exchange rates used for translating currencies material to the consolidated fi nancial statements were as follows:
Closing rate Average rate
Dec. 31, 2016 Dec. 31, 2015 2016 2015
CHF 1.0739 1.0835 1.0909 1.0646JPY 123.4000 131.0700 120.4408 133.6310USD 1.0541 1.0887 1.1032 1.1046ZAR 14.4570 16.9530 16.1289 14.2805MXN 21.7719 18.9145 20.6817 17.6706
Source: Exchange rates as of December 31, 2016 according to ECB
4. ACCOUNTING POLICIES
The fi nancial reporting of the entities included in the consolidated fi nancial statements is based on uniform accounting policies. These
policies are identical to those of the fi nancial year 2015, 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.
All current assets and liabilities will in principle be realized or discharged within a period of twelve months of the reporting date or within
one operating cycle, as the case may be. All other assets and liabilities will in principle be realized or discharged outside this period of time.
To increase the utility of the consolidated fi nancial statements, some individual items and presentations have been reclassifi ed as of
December 31, 2016. Additionally, the notes have been partly reordered and disclosures in the notes have been adapted and/or enhanced.
p A new balance sheet item, “Tax refunds receivable”, has been added. Prior year fi gures have been adjusted accordingly.
p In the income statement, the share of the profi t of associates accounted for using the equity method has been disclosed for the fi rst time
in the result from operating activities, as it relates to holdings that are integrated into the operating activities of the KTM Group as material
suppliers or customers. No adjustment has been made to the prior year fi gures on grounds of immateriality (EUR 133k).
03 anhang E_150317.indd 86 16.03.17 20:21
087
Consolidated income statement
Revenues, minus cash discounts, customer bonuses, and rebates, are recognized upon the passing of the risk as per the terms of the
transaction (Incoterms) or, as the case may be, at the time when performance was rendered. The rules under IAS 11 regarding 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 the economic benefi t arising from the underlying contract becomes probable and a reliable deter-
mination of the income can be made.
In the income statement, the share of the profi t or loss of associates accounted for using the equity method has been disclosed as a separate
line item in the result from operating activities. All of the associates accounted for using the equity method are holdings that are integrated
into the operating activities of the KTM Group as material suppliers or customers.
Interest income is realized pro rata temporis taking into account the effective yield. Dividend income is recognized when the right to
dividend payment arises.
Consolidated statement of fi nancial position
Property, plant and equipment are recognized at cost 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 yearsFixtures and fi ttings, tools and equipment 3 to 8 years
The construction costs of self-built property, plant and equipment represent the specifi c actual 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.
Property, plant and equipment held under leasing contracts in which the material opportunities and risks devolve to the lessee (fi nance leases)
is recognized as an asset. Such assets are recognized at the lower of the fair value and the present value of the future expected minimum
lease payments. They are reported under property, plant and equipment; the corresponding payment obligations are reported under fi nancial
liabilities. Depreciation is charged on a straight-line basis over the useful economic life, or over the term of the lease if shorter. Lease payments
are divided into interest and redemption components. The interest component of lease obligations is recognized directly in the consolidated
income statement.
Goodwill is not amortized but subjected to an annual impairment test. The two brands “KTM” and “Husqvarna” are identifi ed as cash-
generating units in 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 10.4% (prior year: 10.1%).
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
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088 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 K T M A G
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 the 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.
Scenarios are calculated regarding the discount rate and budgeted future EBIT. Management has determined, as in the prior year, that
no plausible change in the material assumptions could cause the carrying amount 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. Costs
incurred during the research and model update phases are immediately recognized in profi t or loss. Expenditure incurred during the
development phase is capitalized as an intangible asset 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 impairments. Amortization is charged using the straight line method over 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.
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 charged to
profi t or 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 costs of disposal. Measurement is performed in accordance with the relief from royalty
method. The royalty rate of 1.5% of revenue which forms the basis for measurement has been derived from comparable publicly available
license agreements. The impairment test as at December 31, 2016 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 12.5% (prior year: 12.1%) was taken as the discounting
rate. This was made up of the Group pre-tax WACC of 9.5% (prior year: 9.1%) 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 parameters that are material to the measurement of the “KTM” brand are the discount rate, royalty and 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
amount to exceed the recoverable amount.
03 anhang E_150317.indd 88 16.03.17 20:21
089
Deferred tax 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 are of a similar duration. Deferred tax items for differences between
the tax base of fully consolidated interests or interests measured at equity and the corresponding consolidated equity are recognized only if
realization is probable within the foreseeable future. The calculation is based on the income tax rate customary in the relevant country at the
time when the difference in value is expected to reverse.
Financial instruments
Purchases and sales of all fi nancial instruments are recognized as at the settlement date.
Primary fi nancial instruments
p 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 or loss.
p Other fi nancial assets (fi nancial assets available for sale) are measured at their fair value on the reporting date. As a matter of principle,
the stock-exchange prices valid as of the reporting 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 are
currently no plans to dispose of these holdings.
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 of 20% as signifi cant and a period of nine months as prolonged.
p 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 reporting date.
p 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 allowances are only made against fi nancial assets if they are regarded as uncollectable or partly uncollectable. Signs that an
individual allowance is required are fi nancial diffi culties, insolvency, breach of contract or considerable delay in payment on the part of the
customer. The individual allowances consist of numerous separate items, none of which is material if considered on its own. Financial assets
are only derecognized directly if the contractual rights to receive payment cease to 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.
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
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090 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 K T M A G
p 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 amount repayable is apportioned over the period to maturity using the effective interest method and
recognized in the fi nancial result. Issuing costs incurred in connection with bonds are recognized as an expense over the time to maturity.
p Liabilities are measured at amortized cost. Liabilities denominated in foreign currencies are translated at the closing rate.
Derivative fi nancial instruments and hedges
The group enters into derivative fi nancial instruments (forward currency transactions and interest rate swaps) to hedge foreign currency
and interest rate risk. The aim of using derivative fi nancial instruments is to offset fl uctuations in 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 value. The KTM Group applies the rules for cash fl ow hedge
accounting 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 business 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 must be recognized directly in consolidated equity. However, it is not recognized in profi t or loss until
the hedged transaction takes place. Where foreign currency hedges are used, subsequent changes in the market value of the derivatives are
recognized in profi t or loss. Thereafter the change in the market value is compared with the value of the foreign currency trade payables
or receivables as translated at the period-end exchange rate. Any changes in earnings that are caused by the ineffectiveness of the hedge
are recognized in the consolidated income statement.
The application of hedge accounting requires certain conditions to be met. The hedging relationship must be documented and the effective-
ness of the hedge, as determined by regular periodic measurements, must lie between 80% and 125%. Effectiveness tests are conducted
in order to demonstrate that unrealized losses and unrealized gains are effectively offset.
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 method.
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.
03 anhang E_150317.indd 90 16.03.17 20:21
091
Derivatives are measured at fair value. The fair value is the market value and is determined using accepted methods of fi nancial mathematics.
This determination is based on the market data (interest rate, exchange rate, etc.) prevailing on the reporting date. The forward rate applicable
on the reporting date is used for measuring forward currency transactions. In the case of positive market values, the credit standing 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 analysis of coverage, with write-downs 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 over-heads. Administrative overheads and selling costs on the other hand do not form part of the costs of conversion. Interest on
borrowings is not capitalized as the inventories do not constitute qualifying assets as defi ned in 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 remuneration into
a staff severance pay fund that invests the contributions in 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’s obligation extends only to the making of the contribu-
tions, 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. The projected unit credit method (also known as the years of service
method) takes account of both the benefi ts vested as at the reporting date and future expected increases in salaries. 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.
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 is
directly recognized 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.
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_150317.indd 91 16.03.17 20:21
092 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 K T M A G
Provisions relating to warranties are established and charged through 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. In principle, subsidies are accounted for in the consolidated income statement by way
of direct offset against the costs they are intended to cover.
Investment grants from public funds which cannot yet be allocated to expenses incurred and/or which must be repaid are disclosed in
the consolidated fi nancial statements under non-current liabilities.
KTM AG has entered into a supplier fi nance program (a revolving facility for the fi nancing of trade payables) with an Austrian credit institution.
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 standing 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 liabilities concerned (EUR 64,949k; prior year: EUR 34,338k) are disclosed under trade payables and the cash fl ows under cash fl ow
from operating activities.
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 at the reporting 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 the assumptions are revised accordingly.
p Assumptions are made in particular to assess the recoverability of goodwill and intangible assets of indeterminate useful life. Goodwill
of EUR 78,614k (prior year: EUR 78,566k) was recognized at the reporting date, along with the KTM brand, which is valued at EUR 61,103k
(prior year: EUR 61,103k). The annual impairment tests and sensitivity analysis performed are described in the note on accounting policies.
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, reviewed against actual fi gures on a monthly basis and checked for plausibility
based on 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 uncertainty in
the planning for the relevant market, on the volatility of the currency and on the hedging costs. Currencies are aggregated by type based on
their signifi cance (volume, relevance to results) and different methods are applied accordingly. However, the hedge ratio per currency must not
exceed 80% of the foreign currency exposure. For details on sensitivities to currency and interest rate risks, please refer to the explanations
provided in note 28.2. “Financial risk management”.
03 anhang E_150317.indd 92 16.03.17 20:21
093
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 staff 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 14,396k (prior year: EUR 12,627k) were recorded. For further explanations, see 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
relationship has been established for each product group between revenues and the guarantee and warranty expenses incurred. The Executive
Board, on the basis of longstanding experience, expects this relationship to remain stable. The average percentage value of guarantee and
warranty expenses in terms of revenue is checked several times a year and adjusted if necessary. The amount recognized as a provision
is calculated from the average percentage of revenue accounted for by guarantee and warranty expenses over a three-year observation period.
As of December 31, 2016 provisions for guarantees and warranties of EUR 9,388k (prior year: EUR 8,088k) were recorded. An average
increase in the guarantee cost percentage of 10% would lead to an increase in the provision of EUR 769k (prior year: EUR 685k). For move-
ments in the provisions relating to guarantees and warranties, see 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. “Finance leases”.
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. “Other fi nancial instruments”.
p Investment property:
The KTM logistics center is predominantly used by the KTM Group itself. A small portion is let to third parties outside the group.
These subleases to non-group tenants 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 let 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”.
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
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094 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 K T M A G
III. NOTES TO THE CONSOLIDATED INCOME STATEMENT
5. REVENUE
Revenue by region
EURk 2016 2015
Austria 55,038 43,986Other Europe 548,524 468,174North America 327,704 301,767Other countries 210,553 208,560 1,141,819 1,022,487
Revenue by product group
EURk 2016 2015
Offroad sport motorcycles 526,082 425,359Street sport motorcycles 381,983 390,616Sportminicycles 44,749 37,951X-Bows 5,000 3,214Total – vehicles 957,814 857,141
Parts, garments and accessories as well as other revenues less revenue reductions 184,005 165,346 1,141,819 1,022,487
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 2016 2015
Cost of materials and cost of purchased services 684,965 640,895Personnel expenses 57,465 42,415Depreciation and amortization relating to property, plant and equipment and to intangible assets 16,090 12,925Amortization of capitalized development costs 25,851 24,514Other operating expenses 7,910 (273) 792,281 720,477
03 anhang E_150317.indd 94 16.03.17 20:21
095
Cost of sales includes income from foreign currency translation differences of EUR 2,720k (prior year: EUR 13,968k), measured at fair value
through profi t or loss. These exclude differences arising on the measurement of fi nancial instruments.
Selling and racing expenses
EURk 2016 2015
Cost of materials and cost of purchased services 18,184 12,059Personnel expenses 53,819 48,029Depreciation and amortization relating to property, plant and equipment and to intangible assets 4,501 3,432Other operating expenses 88,045 76,351Sponsorship income and contributions (12,451) (7,527) 152,096 132,345
Research and development expenses
EURk 2016 2015
Cost of materials and cost of purchased services 5,751 4,884Personnel expenses 13,846 10,394Depreciation and amortization relating to property, plant and equipment and to intangible assets 3,678 1,401Other operating expenses 11,465 6,693Subsidies (8,722) (6,987) 26,017 16,385
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 38,197k (prior year: EUR 30,064k).
Infrastructure and administration expenses
EURk 2016 2015
Cost of materials and cost of purchased services 491 282Personnel expenses 17,377 14,539Depreciation and amortization relating to property, plant and equipment and to intangible assets 6,583 3,747Rental and leasing expenses 3,958 5,459Insurance expenses 2,577 2,087Other operating expenses 12,581 10,634 43,566 36,747
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_150317.indd 95 16.03.17 20:21
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 K T M A G096
Sponsorship income and contributions are deducted from the corresponding expenses, as are subsidies.
Total personnel expenses for 2016 before the effects of capitalizing development costs were EUR 122,627k (prior year: EUR 119,162k).
Expenses for the auditor of the fi nancial statements
The expenses attributable to the fi nancial year 2016 for the auditor of the fi nancial statements, KPMG Austria GmbH Wirtschaftsprüfungs-
und Steuerberatungsgesellschaft, amount to EUR 208k (prior year: EUR 200k). Expenses in relation to other assurance services were
EUR 10k (prior year: EUR 14k). Expenses in relation to miscellaneous auditrelated advisory services were EUR 47k (prior year: EUR 24k).
Employees
2016 2015
Employees (annual average)Manual workers 1,156 1,009Clerical staff 1,581 1,371 2,737 2,380Employees as of December 31Manual workers 1,250 1,062Clerical staff 1,681 1,453 2,931 2,515Of which In Austria 2,491 2,100
Of which abroad 440 415
Employee numbers as stated include agency and external staff.
7. OTHER OPERATING EXPENSES
Other operating expenses of EUR 27,526k (prior year: EUR 21,637k) comprise customer service, guarantee and warranty expenses
of EUR 27,329k (prior year: EUR 21,491k) and miscellaneous expenses of EUR 197k (prior year: EUR 146k).
8. OTHER OPERATING INCOME
Other operating income of EUR 107k (prior year: EUR 210k) includes income from the derecognition of a fi nance lease (prior year: income
of EUR 185k from the disposal of fi xed assets and other operating income of EUR 25k).
03 anhang E_150317.indd 96 16.03.17 20:21
097
9. SHARE OF THE PROFIT OF ASSOCIATES ACCOUNTED FOR USING THE EQUITY METHOD
EURk 2016 2015
Kiska GmbH, Anif 357 102KTM New Zealand Ltd., Auckland, New Zealand 36 31WP AG, Munderfi ng 1,964 0 2,357 133
10. OTHER FINANCIAL RESULT
The other fi nancial result is made up as follows:
EURk 2016 2015
Foreign exchange valuation of bank deposits 69 (1,617)Valuation of securities 178 157Impairment of non-current fi nancial assets (718) (710)Interest expenses for employee benefi ts (284) (258)Income from other investments 68 64 (686) (2,363)
11. TAX EXPENSE
The group’s tax expense and tax income are attributable to current taxes and deferred taxes as follows:
EURk 2016 2015
Current taxAustria 9,985 3,416Abroad 4,143 3,220 14,128 6,636Deferred taxAustria 7,385 16,534Abroad (58) 340Consolidation level 814 (2,013) 8,141 14,861 22,269 21,497
Income taxes comprise taxes on income payable in each country as well as deferred taxes. The Austrian companies of the KTM Group are
subject to 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%.
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
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The expected tax expense (derived from applying the Group tax rate of 25% to the profi t before tax of EUR 94,378k (prior year:
EUR 85,421k)) and the actual tax expense disclosed are reconciled as follows:
EURk 2016 2015
Expected tax expense (23,595) (21,359)Effects of foreign tax rates (968) (714)Non-temporary differences (601) (1,328)Investment allowances 2,090 1,467Utilization of loss carry-forwards not recognized (331) (208)Withholding tax 400 222Taxes in relation to prior periods 152 281Equity accounting 606 17Other (22) 125 (22,269) (21,497)
Total deferred tax assets and liabilities were calculated from the following balance sheet items:
EURk Dec. 31, 2016 Dec. 31, 2015
Deferred tax assetsInventories 6,161 6,676Financial investments 506 446Employee benefi ts 3,063 2,221Provisions 2,381 2,044Liabilities 1,910 1,454 14,021 12,841Deferred tax liabilitiesReceivables and other current assets (1,101) (1,134)Intangible assets (51,519) (43,614)Property, plant and equipment (2,298) (2,140)Other (90) (100) (55,008) (46,988) (40,987) (34,147)Of which deferred tax assets 3,317 3,595
Of which deferred tax liabilities (44,305) (37,742)
Deferred tax assets in relation to fi nancial assets include EUR 2,025k (prior year: EUR 1,787k) in relation to the remaining sevenths of
write-downs of equity holdings to going concern value pursuant to section 12 para 3 no 2 of the Austrian Corporate Tax Act (KStG). During the
year under review, sevenths of EUR 480k (prior year: EUR 391k) were released. Deferred tax assets were recognized for all remaining sevenths
in accordance with section 12 of the KStG, as the requirements set out in IAS 12.34 ff. were met.
098
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Temporary differences in relation to intangible assets result mainly from development costs that cannot be capitalized for tax purposes and
the quasi-permanent differences that result from the recognition as an asset of the “KTM” brand.
As of December 31, 2016 (as also 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 amount of those holdings (outside-basis differences) will remain untaxed in the foreseeable future, since
there are no plans to dispose of the holdings.
In accordance with IAS 12.39, no deferred tax was recognized in connection with the temporary differences of EUR 46.690k (prior year:
EUR 34,556k) 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 2016 2015
Deferred tax (net) as of January 1 (34,147) (18,012)Deferred taxes recognized in the income statement (8,141) (14,861)Deferred taxes recognized in other comprehensive income 1,199 (1,471)Currency translation differences 101 197Deferred tax (net) as of December 31 (40,987) (34,147)
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 average number of shares outstanding during the year. As of December 31, 2015 and December 31, 2016, the number
of shares outstanding was 10,845,000.
The undiluted (= diluted) earnings per share are calculated as follows:
2016 2015
Share of the profi t of owners of the parent company EURk 72,012 63,856Annual average of stock outstanding Units 10,845,000 10,845,000Undiluted (= diluted) earnings per share EUR 6.64 5.89
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 099
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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 2016 and 2015:
EURk Land Buildings Machinery Fixtures Advance pay- Total and fi ttings ments made tools and and assets equipment under constructionCOST OF ACQUISITION AND PRODUCTIONAs of 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 of December 31, 2015 10,700 107,874 131,475 56,313 14,514 320,876
As of January 1, 2016 10,700 107,874 131,475 56,313 14,514 320,876Additions 442 1,020 11,169 9,422 16,909 38,962Additions due to consolidation scope 4,066 22,800 0 0 0 26,866Transfers 0 13,663 6,081 2,280 (21,985) 39Disposals (1,031) (27,059) (635) (2,997) 0 (31,722)Currency translation 4 128 0 368 6 506As of December 31, 2016 14,181 118,426 148,090 65,386 9,444 355,527
ACCUMULATED DEPRECIATIONAs of 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 of December 31, 2015 0 25,615 96,197 37,825 0 159,637
As of January 1, 2016 0 25,615 96,197 37,825 0 159,637Additions 0 3,915 14,581 7,378 0 25,874Additions due to consolidation scope 0 798 0 0 0 798Transfers 0 0 69 (69) 0 0Disposals 0 (1,016) (629) (2,783) 0 (4,428)Currency translation 0 38 1 319 0 358As of December 31, 2016 0 29,350 110,219 42,670 0 182,239
Carrying amounts December 31, 2015 10,700 82,259 35,278 18,488 14,514 161,239Carrying amounts December 31, 2016 14,181 89,076 37,871 22,716 9,444 173,288
100
03 anhang E_150317.indd 100 16.03.17 20:21
During 2015, certain assets were reclassifi ed between machinery and fi xtures and fi ttings, tools and equipment. Machinery used for
production purposes is now disclosed under machinery in line with uniform group rules.
The disposals of EUR 26,043k under buildings relate to the cancellation of the fi nance lease relating to the KTM logistics center.
This is offset by net additions of EUR 26,068k from changes in the scope of consolidation, which are due to the initial consolidation of
KTM Logistikzentrum GmbH.
Additions to buildings in 2016 include an amount of EUR 1,291k (prior year: EUR 14,588k) in relation to assets held under fi nance leases,
which had no cash fl ow effect. For more details, please refer to note 29. “Finance leases”.
In the consolidated statement of cash fl ows, an adjustment of EUR 4,887k (prior year: EUR 7,657k) has been made to additions to
property, plant and equipment to refl ect transactions that had no cash fl ow effect.
The application of IAS 36 did not result in any impairment losses or reversals of impairment losses in respect of property, plant and equip-
ment during the year.
14. INTANGIBLE ASSETS
The tables below provide a breakdown of intangible assets along with movements during 2016 and 2015:
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 of 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 of December 31, 2015 95,821 157,372 91,316 11,593 356,102
As of January 1, 2016 95,821 157,372 91,316 11,593 356,102Additions 242 57,841 9,038 310 67,431Transfers 0 0 11,551 (11,590) (39)Disposals 0 (37,743) (5,766) 0 (43,509)Currency translation 22 0 87 0 109As of December 31, 2016 96,085 177,470 106,226 313 380,094
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 101
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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
ACCUMULATED AMORTIZATIONAs of 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 of December 31, 2015 17,255 44,076 14,992 0 76,323
As of January 1, 2016 17,255 44,076 14,992 0 76,323Additions 242 25,851 5,490 0 31,583Transfers 0 0 0 0 0Disposals 0 (37,743) (5,766) 0 (43,509)Currency translation (26) 0 71 0 45As of December 31, 2016 17,471 32,184 14,787 0 64,442
Carrying amounts December 31, 2015 78,566 113,296 76,324 11,593 279,780Carrying amounts December 31, 2016 78,614 145,286 91,439 313 315,653
In the consolidated statement of cash fl ows, an adjustment of EUR 901k (prior year: EUR 1,153k) has been made to additions to intangible
assets to refl ect transactions that had no cash fl ow effect.
In 2016, an impairment charge of EUR 214k (prior year: EUR 715k) was recorded against the development costs of assets that were
not available for use, due to the termination of projects. In addition, one project available for use was subjected to an impairment charge of
EUR 2,663k (prior year: 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, 2016 Dec. 31, 2015
Goodwill assigned to the cash-generating unit “KTM” 78,614 78,566
In accordance with IAS 36 Impairment, the goodwill disclosed is not amortized but is tested for impairment on an annual basis. Testing
in 2016 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 11 years.
102
03 anhang E_150317.indd 102 16.03.17 20:21
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, 2016, 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
Associates comprise strategic minority interests in KTM New Zealand Ltd., Auckland, New Zealand, KTM MIDDLE EAST AL SHAFAR LLC,
Dubai, United Arab Emirates, and KTM Asia Motorcycle Manufacturing Inc., Philippines, as well as holdings in Kiska GmbH, Anif, and
WP AG, Munderfi ng (both Austria).
By way of a sale and purchase agreement dated July 6, 2016, KTM AG 1,200,000 of the 5,000,000 registered shares of no par value
in WP AG, Munderfi ng, from KTM Industries AG (formerly: CROSS Industries AG), Wels, at a purchase price of EUR 14,400k. This represents
a holding of 24%. Due to the signifi cant infl uence held by KTM AG, the WP Group is included in the consolidated fi nancial statements of
KTM AG as an associate and accounted for using the equity method.
The acquisition is a “common control” transaction, as WP AG, Munderfi ng, was controlled by KTM Industries AG (the immediate parent
company of the KTM Group) both before and after it took place. The acquisition method was applied in the same way as under IFRS 3.
The WP Group is one of the leading European suppliers of suspension components for motorcycles and powersport products.
Relations between this company and the KTM Group are set out in note 32.
Summary IFRS fi nancial information for WP AG for the fi nancial year from January 1 to December 31, 2016 is presented in the table below.
The full amounts are disclosed, i.e. they have not been adjusted to refl ect KTM AG’s proportionate holding and no consolidation adjustments
have been made.
EURk Dec. 31, 2016
Non-current assets 63,303Current assets 43,211Equity 53,460Non-current liabilities 29,490Current liabilities 23,564
EURk 2016
Revenue 166,106Earnings before taxes (EBT) 11,374Total comprehensive income 14,091Of which profi t for the year 14,228
Of which other comprehensive income (137)
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
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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 K T M A G
The table below provides a reconciliation from WP AG’s net equity to the carrying amount of the holding:
EURk Dec. 31, 2016
Equity of the owners of the parent company 52,794Of which amount of the above relating to KTM AG’s holding (24%) 12,671
Goodwill 3,785Consolidation effects (65)Carrying amount 16,390
Other holdings in associates are not considered to be material on an individual basis.
KTM New Zealand Ltd. and KTM MIDDLE EAST AL SHAFAR LLC act as general importers for KTM and Husqvarna branded products in
their respective markets.
Kiska GmbH is a design business that provides development and design services for KTM.
The reporting dates of Kiska GmbH and KTM New Zealand Ltd. are March 31 and June 30 respectively. These reporting dates were set
when the companies were founded, before KTM acquired its holdings. A change in the reporting date is not sought on account of materiality
considerations. For the purposes of accounting under the equity method, unaudited interim fi nancial statements as at December 31
were used.
During 2015, the holding in Kiska GmbH increased by 1.1% to 26%.
KTM Asia Motorcycle Manufacturing Inc., Philippines, was founded in June 2016 in partnership with Ayala Corp. The KTM Group holds
26% of the company. The company will begin assembling KTM motorcycles in the Philippines from CKD (completely knocked down) kits in
mid-2017. The company was not yet operationally active as at December 31, 2016. Only immaterial expenses had been incurred, in relation
to the establishment of the company, and no revenue had been earned. On these grounds, the company has not been accounted for using
the equity method as at December 31, 2016.
Investments accounting for using the equity method also include the holding of EUR 2,349k (prior year: EUR 49k) in Mattighofen Museums-
Immobilien GmbH, Mattighofen, which functions purely as a project company (for the construction of KTM World) and makes no operating
profi t or loss.
104
03 anhang E_150317.indd 104 16.03.17 20:21
Movements in the carrying amounts of holdings accounted for using the equity method were as follows in 2016:
EURk WP AG Other Total associates
As of January 1, 2016 0 3,064 3,064Acquisition of holdings in entities accounted for using the equity method 14,400 2,959 17,359Share of net profi t for the year 1,964 393 2,357Other comprehensive income – cash fl ow hedge reserve 25 0 25Other comprehensive income – IAS 19 reserve 1 0 1Other comprehensive income – foreign currency translation 0 11 11Dividends 0 (116) (116)As of December 31, 2016 16,390 6,311 22,702
Movements in the carrying amounts of holdings accounted for using the equity method were as follows in 2015:
EURk Other associates
As of January 1, 2015 2,920Share of net profi t for the year 133Other comprehensive income – foreign currency translation (5)Dividend (78)Acquisition of holdings in entities accounted for using the equity method 94As of December 31, 2015 3,064
16. OTHER NON-CURRENT ASSETS
EURk Dec. 31, 2016 Dec. 31, 2015
Non-consolidated subsidiaries 507 941Investments not accounted for using the equity method 420 634 927 1,575
105N 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
03 anhang E_150317.indd 105 16.03.17 20:21
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 K T M A G
17. INVENTORIES
EURk Dec. 31, 2016 Dec. 31, 2015
Raw materials and supplies 29,569 18,098Work in progress 16,763 13,105Finished goods and merchandise 118,213 130,091 164,544 161,295
Inventories (gross) 190,667 187,220Write-down (26,123) (25,925)Inventories (net) 164,544 161,295
Inventories of EUR 93,041k (prior year: EUR 110,683k), excluding raw materials and supplies, were recognized at their net realizable value.
18. TRADE RECEIVABLES
Trade receivables are made up as follows:
EURk Dec. 31, 2016 Dec. 31, 2015
From third parties 93,694 82,291From affi liated companies 0 43From associates 4,660 3,581From non-consolidated associates and non-consolidated subsidiaries 885 2,287 99,239 88,202
The gross value of third-party trade receivables is stated net of individual allowances of EUR 3,418k (prior year: EUR 1,908k). No general
allowances were made.
Movements in allowances on receivables were as follows:
EURk
As as January 1, 2015 1,696Exchange rate differences 44Additions 540Utilization (267)Reversals (105)As of December 31, 2015 = January 1, 2016 1,908
Exchange rate differences (18)Additions 2,222Utilization (507)Reversals (187)As of December 31, 2015 3,418
106
03 anhang E_150317.indd 106 16.03.17 20:21
Expenses for the complete derecognition of trade receivables amounted to EUR 172k (prior year: EUR 300k).
19. OTHER CURRENT ASSETS
Other current assets are made up as follows:
EURk Dec. 31, 2016 Dec. 31, 2015
Receivables arising from derivative fi nancial instruments 3,169 3,553Receivables arising from fi nancing activities 774 862Subsidies 6,864 4,575Deduction of receivables of ABS fi nancing 2,722 2,842Securities 2,047 1,636Other 7,459 5,028Other current fi nancial assets 23,035 18,497
Advance payments for inventories 6,983 3,477Other current non-fi nancial assets 6,983 3,4774
Other current assets 30,018 21,974
20. CONSOLIDATED EQUITY
Movements in consolidated equity are shown in the consolidated statement of changes in equity (see Annex I/7).
As of December 31, 2016, the share capital amounts to EUR 10,845,000 and is subdivided into 10,845,000 registered shares having
a par value of EUR 1.00 each. The shares grant the customary rights due to stockholders under the Austrian Stock Corporations Act. These
include the right to payout of the dividend resolved upon at the Annual General Meeting as well as the right to vote at the General Meeting.
Following the delisting from the Vienna Stock Exchange in June 2016, the shares were changed from bearer shares to registered shares
in September 2016.
The fi gure of stock outstanding remained unchanged during 2016 at 10,845,000.
All shares have been 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 2.00 per share (prior year: EUR 1.50) was paid during 2016. The total amount paid was EUR 21,690k (prior year:
EUR 16,268k).
The revaluation reserve was generated 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.
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 107
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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 K T M A G
The cash fl ow hedge reserve (after taxes) developed as follows:
EURk
As of January 1, 2015 (3,582)Realization of hedged item (recognition in operating income) 1,904Realization of hedged item (recognition in the fi nancial result) 1,132Addition 1,310As of December 31, 2015 = January 1, 2016 764
Realization of hedged item (recognition in operating income) (1,619)Realization of hedged item (recognition in the fi nancial result) 751Addition (2,271)Cash fl ow hedge reserve in relation to entities accounted for using the equity method 25As of December 31, 2016 (2,350)
As of December 31, 2016, 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 foreign currency translation reserve comprises all exchange rate differences arising as a consequence of the currency translation of
the annual fi nancial statements of consolidated subsidiaries that had been 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 foreign currency translation reserve item were as follows:
EURk
As of January 1, 2015 379Foreign currency translation foreign subsidiaries 425Foreign currency translation investments accounted for using the equity method (5)Net investments foreign operations 275As of December 31, 2015 1,075
Foreign currency translation foreign subsidiaries 1,014Foreign currency translation investments accounted for using the equity method (11)Net investments foreign operations 87Foreign currency translation foreign subsidiaries 2,165
Reserves, including retained earnings, include actuarial losses of EUR 1k (prior year: EUR 0k) in relation to entities accounted for using the
equity method.
108
03 anhang E_150317.indd 108 16.03.17 20:21
The following subsidiaries are included in non-controlling investments:
Group company Co-shareholders Share of equity 2016 Share of equity 2015
% EURk % EURk
KTM Technologies GmbH, Kiska Holding GmbH 26.00 26.00 26.00 26.00AnifKTM Immobilien GmbH, K KraftFahrZeug Holding GmbH 0.39 62.40 0.39 62.40Mattighofen (formerly: CROSS KraftFahrZeug Holding GmbH)WP Performance Sports GmbH, WP Performance 26.00 26.00 0 0Munderfi ng Systems GmbHKTM Logistikzentrum GmbH, P Immobilienverwaltung GmbH 6.00 6.00 0 0Mattighofen
Transactions with owners 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 23,900k in KTM Technologies GmbH, Anif, from KTM Industries AG (formerly: 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 amount of non-controlling interest acquired 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 as reported under IFRS is regarded as capital by Management. As of the reporting date, the consolidated
equity ratio was 40.5% (prior year: 44.7%).
The principal key fi gures used for capital management purposes are net fi nancial debt, gearing, free cash fl ow and working capital.
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 109
03 anhang E_150317.indd 109 16.03.17 20:21
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 K T M A G
Net fi nancial debt is made up of the following:
EURk Dec. 31, 2016 Dec. 31, 2015
Bonds 83,061 84,845Promissory note loan 119,572 0Non-current fi nancial liabilities 92,982 125,480Current fi nancial liabilities 22,760 6,107 318,375 216,432
Cash and cash equivalents (236,752) (118,406)Receivables from fi nancing activities (774) (862)Net fi nancial debt 80,850 97,164
The other key fi gures are as follows:
EURk Dec. 31, 2016 Dec. 31, 2015
Gearing 19% 26%Free cash fl ow 18,838 23,802Working capital 103,700 122,051
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%. In 2016, bonds with a value of EUR 1,966k (nominal value: EUR 1,900k) were repurchased and eliminated from
the fi nancial liability.
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).
110
03 anhang E_150317.indd 110 16.03.17 20:21
Composition of fi nancial liabilities
EURk Dec. 31, 2016 Dec. 31, 2015
Nominal Carrying Nominal Carrying amount amount amount amount
Non-current fi nancial liabilitiesBonds 0 0 85,000 84,845Promissory note loan 120,000 119,572 0 0Research loans 61,875 61,875 75,000 75,000Promotional loans 12,610 12,610 17,154 17,154Investment loans 17,485 17,485 12,417 12,417Finance lease liabilities 1,013 1,013 20,908 20,908 212,983 212,554 125,480 125,480Current fi nancial liabilitiesBonds 83,100 83,061 0 0Research loans 13,125 13,125 0 0Promotional loans 4,544 4,544 0 0Investment loans 3,415 3,415 2,386 2,386Finance lease liabilities 278 278 862 862Other 1,398 1,398 698 698 105,860 105,822 6,107 6,107 318,843 318,376 216,587 216,432
22. OTHER NON-CURRENT AND CURRENT LIABILITIES
Other non-current liabilities essentially comprise the following:
EURk Dec. 31, 2016 Dec. 31, 2015
Security deposits = other non-current fi nancial liabilities 6,923 6,248Sundry other non-current non-fi nancial liabilities 504 516Other non-current liabilities 7,426 6,764
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 111
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Other current liabilities essentially comprise the following:
EURk Dec. 31, 2016 Dec. 31, 2015
Current employee benefi ts 24,720 22,040Tax liabilities 1,257 1,363Other current non-fi nancial liabilities 25,977 23,403
Liabilities from derivative fi nancial instruments 7,051 2,604Of which derivatives held for trading 0 144
Of which derivatives held as cash fl ow hedges 7,051 2,460
Sales bonuses 17,004 13,398Price discounts 3,757 8,818Sundry other current fi nancial liabilities 11,194 5,092Other current fi nancial liabilities 39,006 29,912
Other current liabilities 64,983 53,315
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 made up as follows:
EURk Dec. 31, 2016 Dec. 31, 2015
To third parties 153,684 121,468To affi liated companies 2,844 2,293To associates 3,556 3,684 160,084 127,445
24. EMPLOYEE BENEFITS
Social capital obligations comprise employee entitlements that become due upon retirement at the age fi xed by law or on completion of a
certain number of years of service in the company and thus constitute benefi ts of a nature 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 14,396k (prior year: EUR 12,627k)
and obligations to pay anniversary bonuses of EUR 2,914k (prior year: EUR 2,308k). 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
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Net liability under defi ned benefi t plans in respect of severance pay developed as follows:
EURk 2016 2015
As of January 1 12,627 11,645Current service cost 709 713Interest expenses 242 226Severance payments (216) (95)Additions (disposals) 258 (142)Actuarial loss 759 280Other 19 0As of December 31 14,369 12,627
The actuarial loss is made up of the following factors:
EURk 2016 2015
Change in expected values 261 1,151Change in demographic assumptions 27 37Change in fi nancial assumptions 470 (908)Actuarial loss 759 280
The measurement of the obligation is based on the following assumptions:
2016 2015
Discount rate 1.50% 2.00%Trend in wages and salaries 2.25% 2.50%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 on the reporting date.
Employee fl uctuation is determined on a company-specifi c basis and takes account of age and length of service. The actuarial measurements
are based on country-specifi c mortality tables. The chosen retirement age is the statutory retirement age in each country.
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 113
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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 2016:
Change in Change in DBO assumption when parameter when parameter decreases increases
Discount rate 0.5%-points 7.1% (6.5%)Trend in wages and salaries 0.5%-points (6.5%) 7.0%
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 2015:
Change in Change in DBO assumption when parameter when parameter decreases increases
Discount rate 0.5%-points 7.3% (6.6%)Trend in wages and salaries 0.5%-points (6.6%) 7.2%
The following table shows the expected amounts for the defi ned benefi t plans over the next several years:
EURk Dec. 31, 2016 Dec. 31, 2015
Within the next 12 months 707 696Between 2 to 5 years 2,998 2,501Between 6 to 10 years 3,144 2,907More than 10 years 15,862 16,451Total expected payments 22,712 22,555
The obligations relating to claims to anniversary bonuses developed as follows:
EURk 2016 2015
As of January 1 2,308 1,871Current service cost 235 195Interest expenses 46 37Anniversary bonus payments 0 0Additions 69 0Actuarial loss 259 198Other (3) 7As of December 31 2,914 2,308
The weighted average durations of the obligations for severance pay and anniversary bonuses at December 31, 2016 were 14 and 16 years
respectively (prior year: 14 and 16 years).
114
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For employees of Austrian group companies whose employment commenced on or after January 1, 2003, contributions amounting to 1.53%
of wages or salary were paid into a statutory staff severance pay fund. Total contributions of EUR 1,168k were paid during the year (prior year:
EUR 920k).
25. PROVISIONS
Movements in short-term provisions are shown in the table below:
EURk Provisions Provisions Total relating to for litigation current guarantees provisions and warranties
As of January 1, 2015 6,360 400 6,760Utilization (6,360) (50) (6,410)Reversals 0 (220) (220)Additions 8,088 645 8,733As of December 31, 2015 8,088 775 8,863
As of January 1, 2016 8,088 775 8,863Utilization (8,088) (337) (8,425)Reversals 0 (334) (334)Additions 9,388 715 10,103As of December 31, 2016 9,388 819 10,207
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 the note on estimates and uncertainties in judgments and assumptions.
26. STATEMENT OF CASH FLOWS
Changes in balance sheet items as presented in the statement of cash fl ows cannot be derived directly from the statement of fi nancial position,
since non-cash effects due to currency translation and other non-cash items are eliminated.
Other non-cash income and expenses are made up as follows:
EURk 2016 2015
– Profi ts/+ losses on disposal of intangible assets and property, plant and equipment 1,251 341+ Addition/– reversal of employee benefi ts 1,806 1,209– Remaining other non-cash income/+ expenses (3,151) (5,139) (94) (3,589)
Other non-cash income/expenses mainly comprise changes in the measurement of foreign currency receivables and payables and movements
in allowances on receivables and inventories.
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 115
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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 2016 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 achieve-
ments 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
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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 US, 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, three European and, to a lesser extent, one US manufacturer, some of which possess greater
fi nancial resources and have higher sales fi gures and market shares. The street motorcycle market is, in addition, 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 has been achieved in Europe.
Sales risk: The largest individual sales markets of the KTM Group are the European market and the US. 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., Pune, India, KTM continues to work steadily towards the implementation of a global product strategy.
Financial risks
With regard to fi nancial risks (currency risks, interest rate risks, default risks as well as liquidity risks), please refer to the comments under
note 28.
N O T E S / O T H E R N O T E S 117
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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 K T M A G
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 relevant provisions concerning noise and exhaust gas emissions in order to be approved
for sale in each country. In addition, the possible offroad uses of motorcycles are considerably infl uenced by the national legal framework
in the countries where the vehicles are sold. To counteract the risk, the regulations in each country are analyzed in detail prior to market entry
and subsequently monitored on an ongoing basis so that timely responses can be made to any changes.
Business and environmental risk: Although risk cannot be fully excluded as regards forces of nature, KTM tries to minimize the risk of
production 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 identical instruments 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 measurement techniques
for which the material inputs are based exclusively on observable market data (Level 2). In all other cases, the fair value is determined on the
basis of measurement techniques for which at least one material input 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 table below shows the carrying amounts and fair values of fi nancial assets by class and IAS 39 measurement category. 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
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EURk Carrying Fair value Fair value
amount Level 1 Level 2 Level 3 Total
DECEMBER 31, 2016LOANS AND RECEIVABLESCash and cash equivalents 236,752 – – – – –Trade receivables 99,239 – – – – –Other fi nancial assets 17,819 – – – – – 353,810 –AVAILABLE FOR SALEOther non-current fi nancial assets 927 – – – – – 927 –HELD FOR TRADINGOther current assets – securities 2,047 2,047 2,047 – – 2,047 2,047 –FAIR VALUE – HEDGING INSTRUMENTSOther current assets – Derivatives with positive market value (cash fl ow hedge) 3,169 3,169 – 3,169 – 3,169 3,169 –Total 359,953 –
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 –FAIR VALUE – HEDGING INSTRUMENTSOther current assets – Derivatives with positive market value (cash fl ow hedge) 3,553 3,553 – 3,553 – 3,553 3,553 –Total 226,680 –
N O T E S / O T H E R N O T E S 119
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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 75,000k).
As at the reporting date, trade receivables of EUR 54,071k (prior year: EUR 55,067k) 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, 2016, the maximum ensuing risk of loss was EUR 391k (prior year: EUR 385k).
The expected loss is recorded as a liability and expensed at the time of sale. The carrying amount of the ongoing commitment was EUR 391k
(prior year: EUR 385k) as at December 31, 2016. It is disclosed under other current liabilities. The carrying amount represents the fair
value of the ongoing commitment. Expenses of EUR 6k (prior year: EUR 43k) were recognized through profi t or loss in the period under
review; the cumulative total since the start of the agreement is EUR 391k (prior year: EUR 385k). The volume is not subject to any material
fl uctuations.
The table below shows the carrying amounts and fair values of fi nancial liabilities, broken down by class and IAS 39 measurement category.
However, it does not provide information on the fair value or measurement level of fi nancial liabilities not measured at fair value if the carrying
amount is a reasonable approximation of fair value.
EURk Carrying Fair value Fair value
amount Level 1 Level 2 Level 3 Total
DECEMBER 31, 2016AT AMORTIZED COSTFinancial liabilities 114,452 116,254 – – 116,254 116,254Finance lease liabilities 1,291 – – – – –Trade payables 160,084 – – – – –Bond 83,061 84,928 84,928 – – 84,928Promissory note loan 119,572 123,112 – – 123,112 123,112Other current and non-current fi nancial liabilities 38,878 – – – – – 517,337 –HELD FOR TRADINGOther fi nancial liabilities – Derivatives with negative market value – – – – – – – –FAIR VALUE – HEDGING INSTRUMENTSOther fi nancial liabilities – Derivatives with negative market value (cash fl ow hedge) 7,051 7,051 – 7,051 – 7,051 7,051 –Total 524,388 –
120
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EURk Carrying Fair value Fair value
amount Level 1 Level 2 Level 3 Total
DECEMBER 31, 2015AT AMORTIZED COSTFinancial liabilities 109,817 111,651 – – 111,651 111,651Finance lease liabilities 21,770 – – – – –Trade payables 127,445 – – – – –Bond 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 value 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 –
Fair value determination
The table below shows the measurement techniques used to determine 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 currency transactions Market comparison method: Not applicable Not applicableand interest rate swaps Fair values are based on the market values determined using recog- nized valuation models. They are regularly checked for plausibilitySecurities Securities are measured Not applicable Not applicable at the current quoted price on the reporting date
N O T E S / O T H E R N O T E S 121
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Type Measurement Signifi cant unobservable input factors technique
Financial instruments not measured at fair valueBonds The listed bond Not applicable is measured at the closing price on the reporting datePromissory note loan, Discounted cash fl ows Risk premium for own credit riskfi nancial liabilities
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 under such agreements
by each counterparty on a given day for all outstanding transactions in the same currency 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, since the net set-off of multiple transactions under the same framework agreements does
not generally occur.
KTM paid a one-off security deposit of EUR 4,707k in relation to the Munderfi ng logistics center (disclosed as a fi nance lease in the prior
year) and made ongoing monthly deposit payments totaling EUR 53k to the lessor. According to the terms of the lease contract, these deposits
were to be returned to the lessee on termination of the lease. In accordance with IAS 32.42, the deposit was therefore set off against the
liability under the fi nance lease. As stated in note 29, the fi nance lease was cancelled ahead of term during 2016.
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.
122
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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 2016Other fi nancial assets – Derivatives with positive market value Foreign currency forwards 3,169 0 3,169 (2,043) 1,126Total 3,169 0 3,169 (2,043) 1,126
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 2016Other fi nancial liabilities – Derivatives with negative market value Foreign currency forwards 6,503 0 6,503 (2,043) 4,460 Interest rate swaps 548 0 548 0 548 7,051 0 7,051 (2,043) 5,008Total 7,051 0 7,051 (2,043) 5,008
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
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
N O T E S / O T H E R N O T E S 123
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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 allowance of disposal measurement
2016Loans and receivables 1,865 0 (2,035) (172) (342)Available for sale 68 0 (718) 0 (650)Fair value – Held for trading 0 178 0 0 178At amortized cost (8,776) 0 0 0 (8,776)Total (6,843) 178 (2,753) (172) (9,589)
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)
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
management is aimed at controlling and limiting those risks. The Executive Board and the Supervisory Board are informed on a regular basis
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 in order to safely hedge cash fl ows from operating activities against fl uctuations in exchange rates and/or interest
rates. With foreign currency hedges, the timescale for hedging generally covers current open items and 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
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Currency risks
As an enterprise doing business on a global scale, the KTM Group is infl uenced by general global economic data such as changes in
currency rates or developments in the fi nancial markets. As the US dollar represents the highest individual foreign currency risk faced by the
KTM Group, movements in the US dollar exchange rate are of particular importance to the development of the group’s revenue and income.
Approximately 24% of revenues were earned in US dollars in 2016 (prior year: 25%). Such currency shifts can for the most part be offset
over at least one model year by taking currency hedging measures and employing hedging strategies; for the fi nancial year 2017, the US dollar
business was hedged by means of positions involving EUR/USD rates ranging from 1.0735 to 1.1495.
The group is exposed to further currency risks where fi nancial assets and liabilities are settled in a currency other than the local currency
of the relevant company. The companies of the group predominantly do their invoicing in local currency and largely take out fi nancing in local
currency. Financial 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.
Sensitivity analyses have been performed on currency risks in relation to fi nancial instruments in order to 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 reporting
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. Currency risks relating to fi nancial
instruments of a monetary nature that are denominated in a currency other than the functional currency were included in the analysis.
Currency risks relating to euro items in subsidiaries whose functional currency is not the euro were attributed to the currency risk of
the 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 disregarded.
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 or
loss, other income, and equity.
The KTM Group bases the analysis on the following assumptions:
p For the sensitivity of profi t or loss, the Group’s bank balances, receivables and payables are considered, as are future receipts and pay-
ments in foreign currency that are not accounted for in the functional currency of the group company. Account is also taken of open derivatives
on cash fl ow hedges where the hedged item has already been realized on the reporting date (recognized as income). Exposure, taking account
of derivative currency hedges, is indicated in the table below.
p For the sensitivity of other income, account is taken of open derivatives from cash fl ow hedges where the hedged item has not yet been
realized on the reporting date (movements are not recognized in profi t or loss). The exposure corresponds to the notional amount of the open
derivatives.
N O T E S / O T H E R N O T E S 125
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EURk Exposures Sensitivity Exposures Sensitivity Dec. 31, 2016 Dec. 31, 2016 Dec. 31, 2015 Dec. 31, 2015
Devaluation Revaluation Devaluation Revaluation of EUR of EUR of EUR of EUR by 10% by 10% by 10% by 10%
EUR – USD 48,403 (4,053) 3,316 31,063 (2,603) 2,130EUR – GBP 27,024 (2,253) 1,843 6,158 (514) 421EUR – CAD 24,775 (2,065) 1,689 15,351 (1,279) 1,047EUR – JPY (53,208) 4,434 (3,628) (31,963) 2,664 (2,179)EUR – CHF 15,040 (1,253) 1,025 3,534 (294) 240Other 46,952 (3,524) 2,883 23,662 (2,009) 1,644Sensitivity of profi t or loss (receivables and liabilities) (8,713) 7,129 (4,036) 3,302Sensitivity of other comprehensive income (by cash fl ow hedge derivatives) 14,305 (11,704) 8,930 (7,307)Sensitivity of equity 5,592 (4,575) 4,895 (4,005)
+ Expenses / – Income
Interest rate risks
Certain fi nancial instruments on both the assets side and the liabilities side bear interest at variable rates. Thus the risk consists in rising
interest expenses or 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). Sensitivity analyses
were performed on the interest rate risks of these fi nancial instruments in order to show the effects that hypothetical changes in the market
interest rate level have on profi t or loss (after tax) and on the consolidated equity. The relevant balances as of the reporting date were used
as a basis. It was assumed that the risk faced on the reporting 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 at the reporting date in the form of carrying amounts were as below:
EURk Fixed Variable Not interest Total interest interest bearing
DECEMBER 31, 2016Cash and cash equivalents1 81,783 154,969 0 236,752Financing volume ABS program 0 (54,071) 0 (54,071)Financial liabilities and fi nance lease liabilities (143,347) (91,968) 0 (235,314)Bond (83,061) 0 0 (83,061)Total (144,625) 8,931 0 (135,695)
1 Variable interest subject to zero per cent fl oor for reference interest rate
126
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EURk Fixed Variable Not interest Total interest interest 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)Bond (84,845) 0 0 (84,845)Total (146,189) (35,544) 28,640 (153,093)
A sensitivity analysis was performed on interest rate risk. This showed the effects of changes in the interest rate of ±50 basis points on profi t or
loss, other comprehensive income and equity.
EURk Sensitivity Sensitivity Dec. 31, 2016 Dec. 31, 2015
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) 0 146 (144) 144Sensitivity of other comprehensive income (by cash fl ow hedge derivatives) (245) 240 (406) 398Sensitivity of equity (245) 386 {551) 542
+ Expenses / – Income
Default risks (credit risks)
The risk of default on receivables from customers may be rated as low, as ongoing checks of the creditworthiness of new and existing customers
are performed and collateral is requested. Like-wise, the default risk for other fi nancial assets is to be regarded as low, 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 and bankable security (guarantees, letters of credit). 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.
N O T E S / O T H E R N O T E S 127
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The carrying amounts of the receivables comprise the following:
EURk Carrying Of which: Of which: not impaired as of the closing date and Of which: amount neither overdue within the following time bands impaired impaired nor Up to 30 to 60 to More than overdue 30 days 60 days 90 days 90 days as of the closing date
DECEMBER 31, 2016Trade receivables 99,239 83,114 11,228 901 700 2,480 816Other fi nancial receivables 17,819 17,819 0 0 0 0 0Total 117,058 100,933 11,228 901 700 2,480 816
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
As regards the current portfolio of trade and other receivables that are neither impaired nor past due, there are no indications as of the
reporting date 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 con-
tributing 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
investment expenditure. From today’s perspective, suffi cient commitments have been given concerning the creditworthiness of our strategic
fi nancing partners and thus the security of short-term liquidity reserves.
Non-current liquidity requirements are met by the issuance of shares and bonds and by taking out bank loans.
The contractually agreed (undiscounted) cash fl ows (payments of interest and principal) and the remaining terms to maturity of the fi nancial
liabilities comprise the following:
128
03 anhang E_150317.indd 128 16.03.17 20:21
EURk Carrying Cash fl ows 2017 Cash fl ows 2018 to 2021 Cash fl ows as from 2022
amount Interest Interest Re- Interest Interest Re- Interest Interest Re- Dec. 31, fi xed variable demption fi xed variable demption fi xed variable demption 2016
AT AMORTIZED COSTFinancial liabilities 114,452 1,173 494 21,084 2,207 687 88,207 129 – 3,763Finance lease liabilities 1,291 – 13 278 – 22 1,013 – – –Trade payables 160,084 – – 160,084 – – – – – –Bonds 83,061 1,178 – 83,100 – – – – – –Promissory note loan 119,572 1,272 562 – 5,062 2,232 8,000 5,166 1,363 112,000Other current and non-current fi nancial liabilities 38,878 – – 38,878 – – – – – – 517,337 3,623 1,069 303,424 7,270 2,942 97,220 5,295 1,363 115,763HELD FOR TRADINGOther fi nancial liabilities – Derivatives with negative market value – – – – – – – – – – – – – – – – – – – –FAIR VALUE – HEDGING INSTRUMENTSOther fi nancial liabilities – Derivatives with negative market value (cash fl ow hedge) 7,051 273 – 6,249 818 – 255 – – – 7,051 273 – 6,249 818 – 255 – – –Total 524,388 3,895 1,069 309,673 8,088 2,942 97,474 5,295 1,363 115,763
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- Dec. 31, fi xed variable demption fi xed variable demption fi xed variable demption 2015
AT AMORTIZED COSTFinancial liabilities 109,817 1,055 626 5,245 2,538 1,499 96,173 – 71 8,399Finance lease liabilities 21,770 – 393 862 – 1,410 3,610 – 2,230 17,298Trade payables 127,445 – – 127,445 – – – – – –Bonds 84,845 3,719 – – 1,178 – 85,000 – – –Other current and non-current fi nancial liabilities 33,556 – – 27,309 – – 921 – – 5,327 377,435 4,774 1,019 160,861 3,716 2,909 185,704 – 2,301 31,024HELD FOR TRADINGOther fi nancial liabilities – Derivatives with negative market value 144 141 – – – – – – – – 144 141 – – – – – – – –FAIR VALUE – HEDGING INSTRUMENTSOther fi nancial liabilities – Derivatives with negative market value (cash fl ow hedge) 2,460 786 – 1,317 863 – – – – – 2,460 786 – 1,317 863 – – – – –Total 380,038 5,701 1,019 162,178 4,579 2,909 185,704 – 2,301 31,024
N O T E S / O T H E R N O T E S 129
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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 K T M A G
28.3. Derivatives and hedges
The following derivative fi nancial instruments used as hedging instruments are employed as of December 31, 2016:
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, 2016Foreign currency forwards USD 135,800 (4,625) 183,020 118,800 17,000 JPY 2,410,000 (525) 39,564 2,410,000 0 CAD 50,700 (634) 56,570 49,700 1,000 GBP 40,250 2,637 69,359 39,250 1,000 CHF 18,900 (198) 23,848 18,900 0 SEK 111,600 72 19,941 111,600 0 MXN 0 0 0 0 0 DKK 10,250 0 2,694 10,250 0 PLN 19,250 61 10,428 19,250 0 NOK 48,200 (72) 8,160 48,200 0 CZK 83,450 9 9,123 83,450 0 ZAR 50,000 (60) 19,585 50,000 0Interest rate swaps (payer) 30,000 (548) 0 0 30,000
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 11,350 57 6,710 11,350 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
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 fi fteen months are hedged.
130
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N O T E S / O T H E R N O T E S 131
The following derivative fi nancial instruments have not been hedged:
EURk Nominal Fair value Maturity of amount EURk Up to 1 year 1 to 5 years in 1,000 local currency
DECEMBER 31, 2016Interest rate swaps (payer) 0 0 0 0
DECEMBER 31, 2015
Interest rate swaps (payer) 11,000 (144) 11,000 0
Forward currency transactions
The KTM Group enters into forward currency transactions essentially to hedge intended future revenue and cost of materials denominated
in foreign currency against the risk of exchange rate fl uctuations.
Interest rate swaps
At December 31, 2016, payer interest rate swaps of EUR 30,000k (prior year: EUR 85,000k) were held to reduce the volatility of variable
interest payments on loans. Interest rate swaps of EUR 55,000k expired during 2016 in accordance with the terms of the transactions.
As at December 31, 2016, interest rate swaps with a nominal value of EUR 0 (prior year: EUR 11,000k) and a negative market value of EUR 0
(prior year: EUR 144k) were classifi ed as “held for trading”.
29. LEASES
Finance leases
In the prior year, buildings included one asset held by the KTM Group under a fi nance lease. The asset in question was the logistics center
at the Munderfi ng site, which was completed in 2015. A preemptive tender right existed to acquire the building at its residual value after
expiry of the contractual term of 15 years. Outstanding lease liabilities in relation to the logistics center at Munderfi ng were settled with the
lessor in full ahead of term in connection with the acquisition of KTM logistics center. Disclosure of the logistics center in the Group’s property,
plant and equipment remains unchanged, following the initial consolidation of KTM Logistikzentrum GmbH on September 16, 2016.
In December 2016, fi nance leases with a term of 3 to 5 years were entered into for tooling (“special leasing”). No interest payments were
made on these leases in 2016.
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The carrying amount of assets held under fi nance leases is as follows:
EURk Machinery
2016Acquisition and construction costs 1,316– Accumulated depreciation 25Carrying amount as of December 31, 2016 1,291
EURk Buildings
2015Acquisition and construction costs 27,050– Accumulated depreciation 360Carrying amount as of December 31, 2015 26,690
The present value of the minimum lease payments is as follows:
EURk 2016 2015
Minimum Present Minimum Present lease value of lease value of payments minimum payments minimum lease lease payments payments
Up to 1 year 291 290 1,129 1,1181 to 5 years 1,035 1,000 4,516 4,272Over 5 years 0 0 24,918 19,815 1,327 1,291 30,563 25,204
Less interest payments (36) (4,034)Less deposits 0 (4,760)Carrying amount of lease obligations 1,291 21,770
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 293k was recorded during the year (prior year: EUR 135k). This relates entirely to the fi nance lease for the
logistics center, which was paid off ahead of term in September 2016.
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 rental amounts.
132
03 anhang E_150317.indd 132 16.03.17 20:21
Lease payments of EUR 12,221k (prior year: EUR 10,962k) were expensed during 2016. The operating lease expenses disclosed 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, 2016 Dec. 31, 2015
Up to 1 year 12,328 9,0972 to 5 years 36,943 32,075Over 5 years 10,214 11,914 59,485 53,086
The defi nition of operating lease expenses is set on a group-wide basis. This item includes long-term rents for land and buildings.
Material operating leases are as follows:
p Land and buildings: The rental agreements/leases have remaining terms of up to 42 years.
p IT infrastructure, licenses and equipment: The rental agreements/leases have terms of up to 5 years.
p Vehicles and machinery: The rental agreements/leases have terms of up to 6 years.
In some cases, the contracts may optionally be terminated after expiry of a minimum term. There are no price adjustment clauses.
30. SEGMENT REPORTING
Information by operating 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 operating 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,
in the X-Bow supercar and in motorsport.
Upstream processes such as R&D, production and purchasing, along with Group administrative 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 operating
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.
N O T E S / O T H E R N O T E S 133
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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 K T M A G134
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.
Inter-segmental revenues are recorded at arm’s-length transfer prices.
The table below shows segment information for 2016:
EURk KTM Husqvarna Consoli- Group dation
External revenues 933,017 208,802 0 1,141,819Revenues between segments 168,416 2,303 (168,719) 0Total revenues 1,099,433 211,105 (168,719) 1,141,819
EBIT 76,195 23,451 3,150 102,796Amortization and depreciation 57,140 318 0 57,458Share in result of companies accounted for under the equity method 2,357 0 0 2,357
The table below shows segment information for 2015:
EURk KTM Husqvarna Consoli- Group dation
External 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
03 anhang E_150317.indd 134 16.03.17 20:21
135
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 2015 and 2016:
EURk 2016 2015
EURk % EURk %
Revenue by regionEurope 603,562 53% 512,160 50%North America 327,704 29% 301,767 30%Rest 210,553 18% 208,560 20% 1,141,819 100% 1,022,487 100%
Revenue by product groupOffroad sport motorcycles 526,082 46% 425,359 42%Street sport motorcycles 381,983 33% 390,616 38%Sportminicycles 44,749 4% 37,951 4%X-Bows 5,000 0% 3,214 0%PG&A 184,006 16% 165,346 16% 1,141,819 100% 1,022,487 100%
During 2016, non-current assets of EUR 496,585k (prior year EUR 426,602k) were attributable to the home country of the business, while
EUR 19,303k (prior year: EUR 14,416k) 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, 2016 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.
32. RELATED PARTY DISCLOSURES
KTM Industries AG (formerly: CROSS Industries AG), Wels, which is controlled by Stefan Pierer, holds 51.67% of the voting rights in KTM AG,
Mattighofen, directly and indirectly through K KraftFahrZeug Holding GmbH (formerly: CROSS KraftFahrZeug Holding GmbH), Wels, and is
defacto the controlling shareholder of KTM AG, Mattighofen.
Stefan Pierer serves as Chairman of the Executive Board of KTM AG, Mattighofen.
N O T E S / O T H E R N O T E S
03 anhang E_150317.indd 135 16.03.17 20:21
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 K T M A G
Changes in the Executive Board and Supervisory Board
At the meeting of the Supervisory Board in June 2016, a resolution was passed approving the departure by mutual consent of Friedrich
Roithner from the Executive Board of KTM AG as from July 20, 2016.
On July 20 2016, an Extraordinary General Meeting of KTM AG was held in Mattighofen. At this meeting, a resolution was passed electing
Friedrich Roithner to the Supervisory Board with effect from July 21, 2016 (for the remainder of the term of offi ce of the Supervisory Board
elected at the 28th Annual General Meeting on April 21, 2016).
In the fi nancial year 2016, 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 1,323k (prior year:
EUR 1,328k). Liabilities of EUR 4,900k (prior year: EUR 4,605) 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 2016.
Following the expiration of the agreed contractual term, the members of the Executive Board receive a one-off payment (severance pay).
During 2016, severance payments of EUR 41k (prior year: EUR 2,090k) were paid to members of the Executive Board. As of December 31,
2016, liabilities of EUR 2,076k exist for Executive Board severance payments (prior year: EUR 1,017k).
At the Annual General Meeting in April 2017, it will be proposed that the remuneration to be paid to the Supervisory Board for the
fi nancial year 2016 (payout in the fi nancial year 2017) shall amount to a total of EUR 24k (prior year: EUR 24k).
There are no stock option plans.
KTM AG has entered into a long-term posting agreement with KTM Industries AG (formerly: CROSS Industries AG) concerning the Chairman
of the Executive Board, Stefan Pierer. A further posting agreement with KTM Industries AG existed for Mr. Friedrich Roithner until July 20,
2016.
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 11 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 KTM Industries AG (formerly: CROSS Industries AG) to KTM AG of EUR 1,722k
(prior year: EUR 1,000k).
Rajiv Bajaj, Deputy Chairman of the Supervisory Board, is the General Manager of Bajaj Auto Ltd., Pune, India. Srinivasan Ravikumar,
member of the Supervisory Board, is a director of Bajaj Auto International Holdings B.V., Amsterdam, Netherlands, and President of Business
Development and Assurance, Bajaj Auto Ltd., Pune, India. Bajaj Auto International Holdings B.V., Amsterdam, Netherlands, a subsidiary
of Bajaj Auto Ltd., Pune, India, held 47.99% of KTM AG at December 31, 2016. As at December 31, 2016, accounts receivable from Bajaj
Auto Ltd., Pune, India (including receivables from payments made in advance) stood at EUR 4,255k, while accounts payable to the same
company stood at EUR 2k (prior year: receivables of EUR 227k and payables of EUR 2,735k). Bajaj Auto International Holdings B.V.,
Amsterdam, Netherlands, granted KTM AG a short-term arm’s-length, interest-bearing loan of EUR 5,000k due on March 31, 2015, which
was repaid as agreed during 2015. Bajaj Auto International Holdings B.V., Amsterdam, Netherlands, granted KTM AG a short-term arm’s-
length, interest-bearing loan of EUR 10,000k from October 24, 2016 to December 22, 2016.
136
03 anhang E_150317.indd 136 16.03.17 20:21
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 3.89 million units in the last fi nancial year (reporting date: March 31, 2016). 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 KTM Industries AG (formerly: 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.
In July 2016, KTM AG acquired 24% of the shares in WP AG, from KTM Industries AG (formerly: CROSS Industries AG), Wels, at a purchase
price of EUR 14,400k. The transaction was approved at the Supervisory Board meeting of June 21, 2016.
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 authorized KTM dealers in which the KTM Group holds minority investments and which are accounted for as other non-current
fi nancial assets.
KTM Asia Motorcycle Manufacturing Inc., Philippines, was jointly founded in June 2016 in partnership with Ayala Corp. The KTM Group
holds 26% of the company. The company will begin assembling KTM motorcycles in the Philippines from CKD (completely knocked down) kits
in mid-2017. The company was not yet operationally active as of December 31, 2016.
In 2015, 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 Immobilien-
leasing GmbH (now KTM Logistikzentrum GmbH), with which KTM Immobilen GmbH concluded a fi nance lease agreement on arm’s-length
terms. Construction services supplied by Wohnbau-west Bauträger Gesellschaft m.b.H. amounted to EUR 14,730k in 2015.
Mattighofen Museums-Immobilien GmbH, established in 2015, is owned by Pierer Konzerngesellschaft GmbH (51%) and KTM Immobilien
GmbH (49%). Receivables of EUR 17k existed as at December 31, 2016 (prior year: EUR 17k). During 2016, KTM Immobilien GmbH
paid a shareholder grant of EUR 2,300k to Mattighofen Museums-Immobilien GmbH. The amount was proportionate to the size of its share-
holding.
KTM AG has granted TRUE Management & Investment GmbH, which falls within the sphere of infl uence of Executive Board member
Hubert Trunkenpolz, an arm’s length loan due December 31, 2017 with the option of extension until February 28, 2018. Loan receivables
of EUR 100k (prior year: EUR 120k) 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 KTM Industries AG (formerly: CROSS Industries AG), Wels, and acts as managing share-
holder of Kiska GmbH, Anif, in which KTM AG, Mattighofen, holds an interest of 26.0%. Mr. Kiska is also employed by KTM Technologies
GmbH, Anif, as general manager. Expenses of EUR 13,679k were incurred in relation to services provided by Kiska GmbH, Anif,
during the year (prior year: EUR 12,064k). As of December 31, 2016, accounts payable to Kiska GmbH stood at EUR 3,473k (prior year:
EUR 3,681k).
N O T E S / O T H E R N O T E S 137
03 anhang E_150317.indd 137 16.03.17 20:21
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 K T M A G138
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 KTM Industries AG (formerly: CROSS Industries AG), Wels for a purchase price of
EUR 100k.
Other material business transactions with related parties and the amount of the outstanding balances with related parties (summarized
at Group level) were as follows:
EURk Revenue Expenses Receivables Liabilities
2016Investments accounted for using the equity method 6,829 14,634 2,961 3,473Other non-current fi nancial assets 3,183 2,507 1,201 123Other subsidiaries not included in the scope of consolidation 2,055 218 105 11KTM Industries AG (formerly: CROSS Industries AG), Wels 27 5,325 112 2,267WP Group, Munderfi ng 3,495 139,328 57 180Wethje Carbon Composites GmbH, Hengersberg, Germany 108 903 43 90Pankl Group, Kapfenberg 0 5,565 0 426Bajaj Auto Ltd., Pune, India 0 65,452 4,255 2TRUE Management GmbH, Thalheim bei Wels 2 25 2 0Pierer Konzerngesellschaft mbH, Wels 412 516 0 0Other entities 800 761 862 29 16,911 235,235 9,598 6,601
Material business transactions with related parties and the amount of the outstanding balances with related parties (summarized at Group
level) were as follows in the preceding year:
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 8KTM Industries AG (formerly: CROSS Industries AG), Wels 4 6,024 0 2,418WP Group, Munderfi ng 1,456 121,334 126 621Wethje Carbon Composites GmbH, Hengersberg, Germany 0 672 0 86Pankl Group, Kapfenberg 0 7,482 0 1,054Bajaj Auto Ltd., Pune, India 0 74,493 227 2,735TRUE Management GmbH, Thalheim bei Wels 18 4 0 0Pierer Konzerngesellschaft mbH, Wels 647 725 0 0Other entities 0 122 0 3 21,759 223,975 5,733 10,695
All supplies and services were and are agreed at arm’s-length prices.
03 anhang E_150317.indd 138 16.03.17 20:21
139
33. CORPORATE BODIES OF KTM AG
The following individuals were members of the Supervisory Board in 2016:
p Friedrich Roithner, Chairman (from July 21, 2016)
p Josef Blazicek, Chairman (until July 20, 2016)
p Rajiv Bajaj, Deputy Chairman
p Ernst Chalupsky
p Srinivasan Ravikumar
p Friedrich Lackerbauer (employee representative)
p Horst Resch (employee representative)
The following individuals were members of the Executive Board with collective power of representation in 2016:
p Stefan Pierer, Chairman
p Harald Plöckinger
p Friedrich Roithner (until July 20, 2016)
p Viktor Sigl
p Hubert Trunkenpolz
Mattighofen, February 15, 2017
The Executive Board
Stefan Pierer Harald Plöckinger
Viktor Sigl Hubert Trunkenpolz
N O T E S / O T H E R N O T E S
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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 K T M A G
EURk Initial Dec. 31, 2016 Dec. 31, 2015
Company consolidation Interest Consolidation Interest Consolidation date in % type in % type
Affi liated companiesKTM Immobilien GmbH, Mattighofen Sep. 1, 1999 99.61 FC 99.61 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 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 Dec. 1, 2009 74.00 FC 74.00 FCKTM Sportmotorcycle GmbH, Mattighofen 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 Jan. 1, 2013 100.00 FC 100.00 FCKTM Sportmotorcycle Deutschland GmbH (formerly: KTM-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 FCKTM Central East Europe s.r.o., Bratislava, Slovakia Dec. 31, 2013 100.00 FC 100.00 FCKTM Österreich GmbH, Mattighofen Dec. 31, 2013 100.00 FC 100.00 FCKTM Nordic Oy, Vantaa, Finland Dec. 31, 2013 100.00 FC 100.00 FC
140
SCHEDULE OFEQUITY HOLDINGSANNEX TO THE NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF KTM AG, MATTIGHOFEN, AUSTRIA
03 anhang E_150317.indd 140 16.03.17 20:21
EURk Initial Dec. 31, 2016 Dec. 31, 2015
Company consolidation Interest Consolidation Interest Consolidation date in % type in % type
KTM 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., 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, CA, USA Dec. 1, 2013 100.00 FC 100.00 FCHusqvarna Motorsports, Inc., Murrieta, CA, USA Apr. 1, 2015 100.00 FC 100.00 FCHusqvarna Motorcycles S.A. Pty. Ltd., Northriding, South Africa Apr. 1, 2015 100.00 FC 100.00 FCKTM Events & Travel Service AG, Frauenfeld, Switzerland1 – 100.00 – 100.00 –KTM Logistikzentrum GmbH, Mattighofen (formerly: Oberbank Mattigtal Immobilienleasing GmbH, Linz) Sep. 16, 2016 93.63 FC 10.00 ACWP Performance Sports GmbH, Munderfi ng Nov. 30, 2016 74.00 FC – –KTM Sportmotorcycle MEA DMCC, Dubai, United Arab Emirates Nov. 30, 2016 100.00 FC – –
Associated companiesKTM New Zealand Ltd., Auckland, New Zealand – 26.00 AE 26.00 AEKiska GmbH, Anif – 26.00 AE 26.00 AEKTM MIDDLE EAST AL SHAFAR LLC, Dubai, United Arab Emirates – 25.00 AE 25.00 AEWP AG, Munderfi ng – 24.00 AE – –KTM Asia Motorcycle Manufacturing Inc.,Binan, Laguna, Philippines – 34.00 AE – –Mattighofen Museums-Immobilien GmbH, Mattighofen2 – 49.00 AE 49.00 AC
1 In liquidation FC: Full consolidation2 Not included at-equity in prior year due to minor signifi cance 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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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 K T M A G
EURk Equity Net result
Company Dec. 31, 2016 Dec. 31, 2015 2016 2015
Other non-current fi nancial assetsKTM Australia Pty Ltd., Perth, Australia1 6 (6) 0 0KTM Finance GmbH, Frauenfeld, Switzerland 2 17 2 0KTM Wien GmbH, Mattighofen 2 97 2 (6)KTM do Brasil Ltda., Sao Paulo, Brazil 746 787 (268) (289)KTM Braumandl GmbH, Wels 2 138 2 20Project Moto Rütter & Holte GmbH, Oberhausen, Germany 2 268 2 106MX – KTM Kini GmbH, Wiesing 2 98 2 14KTM Regensburg GmbH, Regensburg, Germany 2 (23) 2 (46)KISKA, Inc., Murrieta, USA 557 203 308 111Cero Design Studio S.L., Barcelona, Spain 2 297 2 151
1 Latest annual fi nancial statements available are of August 31, 20162 Not yet available
EURk Initial Dec. 31, 2016 Dec. 31, 2015
Company consolidation Interest Consolidation Interest Consolidation date in % type in % type
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, Vösendorf1 – 76.00 AC 76.00 ACKTM do Brasil Ltda., Sao Paulo, Brazil1 – 100.00 AC 100.00 ACKTM Braumandl GmbH, Wels2 – 26.00 AC 26.00 ACProject Moto Rütter & Holte GmbH, Oberhausen, Germany2 – 26.00 AC 26.00 ACMX – KTM Kini GmbH, Wiesing2 – 26.00 AC 26.00 ACKTM Regensburg GmbH, Regensburg, Germany2 – 26.00 AC 26.00 ACKISKA, Inc., Murrieta, USA1 – 51.00 AC 51.00 ACCero Design Studio S.L., Barcelona, Spain2 – 26.00 AC - –
1 Not fully consolidated because immaterial FC: Full consolidation2 Not included at-equity due to minor signifi cance AE: At equity
AC: At cost
142
03 anhang E_150317.indd 142 16.03.17 20:21
A U D I T O R ’ S R E P O R T
REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS
AUDIT OPINION
We have audited the consolidated fi nancial statements of KTM AG, Mattighofen, Austria, and its subsidiaries (the Group), which
comprise the consolidated balance sheet/consolidated statement of fi nancial position as at 31 December 2016, the consolidated income
statement/ consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated state-
ment of cash fl ows for the year then ended, and the notes to the consolidated fi nancial statements, including a summary of signifi cant
accounting policies.
In our opinion, the consolidated fi nancial statements present fairly, in all material respects, the consolidated fi nancial position of the
Group as at 31 December 2016, and its consolidated fi nancial performance and consolidated cash fl ows for the year then ended
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).
BASIS FOR OUR OPINION
We conducted our audit in accordance with Austrian Standards on Auditing. These standards require the audit to be conducted in
accordance with International Standards on Auditing (ISA). Our responsibilities pursuant to these rules and standards are described in
the “Auditors’ Responsibility” section of our report. We are independent of the audited entity within the meaning of Austrian commercial
law and professional regulations, and have fulfi lled our other responsibilities under those relevant ethical requirements. We believe
that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgment, were of most signifi cance in our audit of the consolidated
fi nancial statements. Our audit procedures relating to these matters were designed in the context of our audit of the consolidated fi nancial
statements as a whole. Our opinion on the consolidated fi nancial statements is not modifi ed with respect to any of the key audit matters
described below, and we do not express an opinion on these individual matters.
IMPAIRMENT OF GOODWILL
We refer to section II.4. Accounting policies and VI.14. Intangible assets, of the notes to the consolidated fi nancial statements.
143
AUDITOR’SREPORT
03 anhang E_150317.indd 143 16.03.17 20:21
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 K T M A G144
Risk for the Financial Statements
In its consolidated fi nancial statements, KTM AG has recognized goodwill with a carrying value of MEUR 78.6.
Goodwill is tested for impairment at least annually and whenever there is an indication that goodwill may be impaired. For this purpose,
KTM AG estimates the recoverable amount, which represents the relevant measure of value for the impairment test, using the discounted cash
fl ow method. Goodwill is allocated to the cash-generating unit ”KTM” for testing purposes. The outcome of the valuation is highly dependent
on the assessment of future cash fl ows (taking into account future revenue growth, profi t margins and long-term growth rates) and the
discount rate used, and is therefore subject to signifi cant uncertainty. A review of the impairment test is complex and based on a number of
judgmental factors. The risk for the consolidated fi nancial statements is an overstatement of goodwill.
Our Response
We compared the cash fl ows on which the impairment test is based with the current fi ve-year-planning as approved by the supervisory board.
We analyzed adherence to budget on the basis of historical information.
We evaluated the appropriateness of the signifi cant assumptions and management judgment on which the fi ve-year-planning is based
as well as the calculation of the impairment test.
We compared the cost of capital used by KTM AG to the discount rates used by a peer-group of comparable companies.
We assessed the appropriateness of assumptions used to determine the discount rate by comparing them to reference values specifi c to
the relevant market and sector; furthermore we re-performed the calculation used to determine the discount rate.
We carried out a sensitivity analysis to determine whether the carrying value tested insuffi ciently covered by the recoverable amount taking
into account realistic changes in the underlying assumptions. We assessed whether the long-term development of the level of profi tability
in the terminal value period is consistent and plausible.
In performing these audit procedures we made use of our valuation specialists.
We also evaluated whether the disclosures on the impairment of goodwill made by KTM AG in the consolidated notes are complete and
appropriate.
IMPAIRMENT OF THE BRAND KTM
We refer to section II.4. Accounting policies and VI.14. Intangible assets, of the notes to the consolidated fi nancial statements.
Risk for the Financial Statements
In its consolidated fi nancial statements, KTM AG has recognized an intangible asset with an indefi nite useful life and a carrying value of
MEUR 61 for the brand KTM.
03 anhang E_150317.indd 144 16.03.17 20:21
145
The brand is tested for impairment at least annually and whenever there is an indication that it may be impaired. For this purpose KTM AG
estimates the recoverable amount of the brand, which is the relevant measure of value for the impairment test, using the relief-from-royalty-
method. The outcome of the valuation is highly dependent on the assessment of future revenue, the underlying license fee and discount
rate and is therefore subject to signifi cant uncertainty. A review of the impairment test is complex and based on a number of judgmental
factors. The risk for the consolidated fi nancial statements is an overstatement of the value of the brand.
Our Response
We compared the revenues (cash fl ows) on which the impairment test is based to the current fi ve-year-planning as approved by the supervisory
board. We analyzed the adherence to budget on the basis of historical information.
We evaluated the appropriateness of the signifi cant assumptions and management judgment on which the fi ve-year-planning is based as
well as the calculation of the impairment test.
We compared the cost of capital, discount rates and the underlying license rates used by KTM AG to those used by a peer-group of comparable
companies.
We assessed the appropriateness of assumptions used to determine the discount rate by comparing them to reference values specifi c to
the relevant market and sector; furthermore we re-performed the calculation used to determine the discount rate.
We carried out a sensitivity analysis to determine whether the carrying value tested is suffi ciently covered by the recoverable amount taking
into account realistic changes in the underlying assumptions. We assessed whether the long-term development of the level of profi tability
in the terminal value period is consistent and plausible.
In performing these audit procedures we made use of our valuation specialists.
We also evaluated whether the disclosures on the brand with an indefi nite useful life made by KTM AG in the notes are complete and
appropriate.
MANAGEMENT’S RESPONSIBILITY AND RESPONSIBILITY OF THE AUDIT COMMITTEE
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 consolidated
fi nancial statements that are free from material misstatement, whether due to fraud or error.
Management is also responsible for assessing the Group’s ability to continue as a going concern, and, where appropriate, to disclose matters
that are relevant to the Group’s ability to continue as a going concern and to apply the going concern assumption in its fi nancial reporting, except in
circumstances in which liquidation of the Group or closure of operations is planned or cases in which such measures appear unavoidable.
The audit committee is responsible for overseeing the Group’s fi nancial reporting process.
A U D I T O R ’ S R E P O R T
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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 K T M A G146
AUDITORS’ RESPONSIBILITY
Our aim is to obtain reasonable assurance about whether the consolidated fi nancial statements as a whole are free of material misstatements,
whether due to fraud or error, and to issue an audit report that includes our opinion. Reasonable assurance represents a high degree of
assurance, but provides no guarantee that an audit conducted in accordance with Austrian Standards on Auditing, which require the audit to
be performed in accordance with ISA, will always detect a material misstatement when it exists. Misstatements may result from fraud or
error and are considered material if they could, individually or in the aggregate, reasonably be expected to infl uence the economic decisions
of users taken on the basis of these consolidated fi nancial statements.
As part of an audit in accordance with Austrian Standards on Auditing, which require the audit to be performed in accordance with ISA,
we exercise professional judgment and retain professional skepticism throughout the audit.
Moreover:
p We identify and assess the risks of material misstatement of the consolidated fi nancial statements, whether due to fraud or error, we plan
and perform procedures to address such risks and obtain suffi cient and appropriate audit evidence to serve as a basis for our audit opinion.
The risk that material misstatements due to fraud remain undetected is higher than that of material misstatements due to error, since fraud may
include collusion, forgery, intentional omissions, misleading representation or override of internal control.
p We obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circum-
stances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control.
p We evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates as well as related disclosures
made by management.
p We conclude on the appropriateness of management’s use of the going concern assumption and, based on the audit evidence obtained,
whether a material uncertainty exists related to events or conditions that may cast signifi cant doubt on the entity’s ability to continue as a
going concern. In case we conclude that there is a material uncertainty about the entity’s ability to continue as a going concern, we are
required to draw attention to the respective note in the fi nancial statements in our audit report or, in case such disclosures are not appropriate,
to modify our audit opinion. We conclude based on the audit evidence obtained until the date of our audit report. Future events or conditions
however may result in the Company departing from the going concern assumption.
p We evaluate the overall presentation, structure and content of the consolidated fi nancial statements, including the disclosures, and
whether the consolidated fi nancial statements represent the underlying transactions and events in a manner that achieves fair presentation.
p We obtain suffi cient appropriate audit evidence regarding the fi nancial information of the entities and business activities within the Group
to express an opinion on the consolidated fi nancial statements. We are responsible for the direction, supervision and performance of the
group audit. We remain solely responsible for our audit opinion.
03 anhang E_150317.indd 146 16.03.17 20:21
147
p We communicate with the audit committee regarding, among other matters, the planned scope and timing of our audit as well as
signifi cant fi ndings including any signifi cant defi ciencies in internal control that we identify in the course of our audit.
p We report to the audit committee that we have complied with the relevant professional requirements in respect of our independence
and that we will report any relationships and other events that could reasonably affect our independence and, where appropriate, related
measures taken to ensure our independence.
p From the matters communicated with the audit committee we determine those matters that required signifi cant auditor attention
in performing the audit and which are therefore key audit matters. We describe these key audit matters in our audit report except in the
circumstances where laws or other legal regulations forbid publication of such matter or in very rare cases, we determine that a matter
should not be included in our audit report because the negative effects of such communication are reasonably expected to outweigh its
benefi ts for the public interest.
REPORT ON OTHER LEGAL REQUIREMENTS
GROUP MANAGEMENT REPORT
In accordance with Austrian Generally Accepted Accounting Principles the group management report is to be audited as to whether
it is consistent with the consolidated fi nancial statements and as to whether it has been prepared in accordance with legal requirements.
The legal representatives of the Company are responsible for the preparation of the group management report in accordance with Austrian
Generally Accepted Accounting Principles.
We have conducted our audit in accordance with generally accepted standards on the audit of group management reports as applied
in Austria.
Opinion
In our opinion, the group management report has been prepared in accordance with legal requirements and is consistent with the consolidated
fi nancial statements. The disclosures pursuant to Section 243a UGB (Austrian Commercial Code) are appropriate.
Statement
Based on our knowledge gained in the course of the audit of the consolidated fi nancial statements and the understanding of the Group
and its environment, we did not note any material misstatements in the group management report.
A U D I T O R ’ S R E P O R T
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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 K T M A G148
OTHER INFORMATION
The legal representatives of the Company are responsible for other information. Other information comprises all information provided in
the annual report, with the exception of the consolidated fi nancial statements, the group management report, and the auditor’s report thereon.
We expect the annual report to be provided to us after the date of the opinion.
Our opinion on the consolidated fi nancial statements does not cover other information, and we will not provide any kind of assurance on it.
In conjunction with our audit, it is our responsibility to read this other information as soon as it becomes available, and to assess whether
it contains any material inconsistencies with the consolidated fi nancial statements and our knowledge gained during our audit, or any apparent
material misstatement of fact.
AUDITOR IN CHARGE
The auditor in charge is Mister Mag. Ernst Pichler.
Linz, 15 February 2017
KPMG Austria GmbH
Wirtschaftsprüfungs- und Steuerberatungsgesellschaft
signed by:
Mag. Ernst Pichler
Wirtschaftsprüfer
(Austrian Chartered Accountant)
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 group management report are identical with the audited version attached to this report.
Section 281 Paragraph 2 UGB (Austrian Commercial Code) applies.
03 anhang E_150317.indd 148 16.03.17 20:21
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.
Mattighofen, March 2017
The Executive Board
Stefan Pierer Harald Plöckinger
Viktor Sigl Hubert Trunkenpolz
149
STATEMENT OF ALLLEGAL REPRESENTATIVESFOR THE FINANCIAL YEAR 2016 OF KTM AG, MATTIGHOFEN, AUSTRIA
03 anhang E_150317.indd 149 16.03.17 20:21
K T M G R O U P
INVESTOR RELATIONS
VIKTOR SIGL
Stallhofnerstrasse 3
5230 Mattighofen, Austria
Phone: +43 7742 6000-144
E-Mail: [email protected]
150
CONTACT
03 anhang E_150317.indd 150 16.03.17 20:21
151
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_150317.indd 151 16.03.17 20:21
KTM AGStallhofnerstrasse 35230 Mattighofen, Austria
M: [email protected]: www.ktmgroup.com
03 anhang E_150317.indd 152 16.03.17 20:21