Year Report FY2018 - Vanderlande · annual Dutch M&A (mergers and acquisitions) event, which is organised by the Dutch ... acknowledgements, such as from DPDHL, are proof that our

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Year ReportFY2018Vanderlande Industries Holding B.V.

Financial Year 2018

FY2018 year report Vanderlande Industries Holding B.V.

Financial Year 2018

(January 2017 - March 2018)

Vanderlande Industries Holding B.V.4– unaudited –

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Table of contents

Introduction

Changes and adjustments in reporting

Impact of the changes and adjustments in reporting

Order intake

Profit and loss account

Revenue

Order book

Balance sheet

Guarantees

Solvency ratios

Manpower employed

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Report | Financial Year 2018

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Vanderlande‘s FY2018 (January 2017 - March 2018) has featured many highlights. The most noteworthy are as follows.

Acquisition by Toyota Industries Corporation (TICO)During FY2018, Vanderlande was acquired by TICO. The financial strength of TICO will support our strategy of sustainable profitable growth and the potential for synergies can be found in cross-selling, sharing innovations and additional career opportunities for employees. The acquisition by TICO also necessitates a number of adjustments in the setup and content of our (financial) reporting. These changes are explained in more detail on the next page.

TICO and Vanderlande have been awarded the prize for ‘Best Deal of 2017’ at the annual Dutch M&A (mergers and acquisitions) event, which is organised by the Dutch company, Alex van Groningen. It is fantastic to be recognised by industry experts for our business rationale, as well as for the execution of the M&A process with its positive outcome. This was a team effort, so the award was graciously received on behalf of both TICO and Vanderlande.

Acquisitions by VanderlandeAlongside from the acquisition by TICO, Vanderlande itself was also active in acquisitions during this financial year. Sentec was acquired on 1 January to strengthen our IT capacities. On 29 June, Optosecurity was acquired to further strengthen Vanderlande’s integrated portfolio of solutions and position as the market leader for value-added logistic process automation at airports. In December 2017, Vanderlande announced that it had obtained a minority shareholding in Smart Robotics.

Innovation and other acknowledgementsWe are proud that Vanderlande’s FLEET has been elected as the winner of the 2017 inter airport Europe Innovation Award for the interTERMINAL category. The company’s flexible baggage logistics solution based on automated guided vehicles (AGVs) won the prize, seeing off strong competition to secure the accolade. This prize and other acknowledgements, such as from DPDHL, are proof that our innovative profile is recognised and appreciated by our customers.

Financial results FY2018FY2018 has been excellent for Vanderlande. It achieved an order intake of more than EUR 2 billion, which is EUR 425 million higher than the previous year’s extrapolated figure. Vanderlande’s prospect list and market environments remain very promising.

Revenue in the 15-month financial year was EUR 1,725 million, which is EUR 332 million above last year’s extrapolated figure, and is an increase of 24%. All segments are contributing to this strong growth.

The order book ultimo March 2018 is EUR 1.8 billion – a record level.

The EBIT of EUR 92 million is EUR 9 million higher than last year’s 15-month EBIT. This EBIT is positively impacted by an accounting policy change and negatively impacted by non-budgeted post-acquisition costs related to the TICO takeover. Overall, Vanderlande’s markets remain extremely positive and the company is performing above expectation across all sectors.

23 May 2018

H. Molenaar

Introduction


Due to the acquisition by TICO on 18 May 2017, several changes have been made in our external financial reporting.

Change of financial yearThe calendar year 2017 (CY2017) has been extended to 15 months, which results in a name change of the financial year to FY2018. This started on 1 January 2017 and ended on 31 March 2018. Due to this extension, Vanderlande‘s next financial year (FY2019) will be in line with TICO’s financial year.

In addition, Vanderlande no longer uses its budget as a reference, because it’s no longer comparable. For a comparison of the FY2018 figures, the company has extrapolated the 12-month CY2016 figures to 15 months in this report.

Financial reporting standardsA full analysis of the differences between Vanderlande‘s former financial accounting standard (IFRS SME) and its new IFRS standard was made during FY2018 for all relevant accounting topics (eg financial instruments, pensions, provisions and taxes). The effective date of the conversion has been set retrospectively to 1 January 2016. The differences have been identified as quantitative and qualitative (notes). A detailed overview of these, and the impact between the new and old standards, is included on the next page.

Changes and adjustments in reporting


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Impact of the changes and adjustments in reporting The impact of the changes and adjustments in reporting on the profit and loss account FY2018 is shown below:

The financial accounting standard conversion to IFRS impacts on the following profit and loss line items. > Business support improves the IFRS result, because it is no longer allowed to amortise goodwill, and the 15-month EBIT, effect amounts to EUR +1 million.

> A main part of the development costs (R&D) needs to be capitalised based on IFRS, as under the old accounting standard these were direct expenses in the profit and loss account. The 15-month EBIT impact is EUR +21 million.

> Other income and expenses decreased in the 15-month IFRS figures by EUR -2 million due to capitalisation of development subsidies. > Other income and expenses deteriorated due to the different treatment of hedged contracts (hedge accounting rules have changed), resulting in a decrease of EUR -2 million in the 15-month financial year.

As a result, the 15-month EBIT – based on IFRS – improves by EUR 18 million (+1.1% of revenue) compared with the old accounting standard.

The post-acquisition costs impact on the following profit and loss line item. > Business support increased by EUR 12 million in terms of non-budgeted post-acquisition costs.

(in EUR x 1 million)

RevenueCost of revenueContribution margin

Business supportR&D costs Other income and expensesEBIT managerial

% of revenue Contribution marginBusiness supportEBIT managerial

*including acquisition costs**excluding acquisition costs

Full IFRS** 1,725 -1,264

461

-320 -38

2 105

26.7%-18.5%

6.1%

Full IFRS* 1,725 -1,264

461

-333 -38

2 92

26.7%-19.3%

5.3%

IFRS SME** 1,725 -1,264

461

-321 -59

6 87

26.7%-18.6%

5.0%

Extrapolated IFRS SME budget **

1,621 -1,198

423

-296 -49

3 81

26.1%-18.3%

5.0%

FY2018 (15m)


Order intake(In millions of euros)

AirportsWarehousingParcelLife-cycle servicesOrder intakeExchange rate differences order bookTotal order intake

CY2016Actual YTD

Extrapolated15 months

499425274387

1,585 10

1,595

FY2018

Actual YTD15 months

537676411386

2,010-118

1,892

The order intake in FY2018 amounts to EUR 2,010 million (excluding exchange rate differences). This is a strong growth of EUR 425 million (+27%) compared with last year’s extrapolated 15-month figure. The order intake is heavily impacted by a revaluation of Vanderlande‘s order book. The revaluation changed significantly this year due to unstable and unpredictable foreign exchange markets.

Airports realised an order intake of EUR 537 million in FY2018. The orders with the highest contract value came from Hong Kong Airport, Taiwan Taoyuan Airport, Los Angeles Airport, Astaldi Vichi Santiago Airport and London Heathrow.

Warehousing attained an order intake of EUR 676 million. The largest orders came from Amazon, Edeka, Hilton Food Group, Lidl and Nike. The order intake for the full year is EUR 251 million higher than the 15-month extrapolated figure from last year.

Parcel reached an order intake of EUR 411 million. This year’s order intake is 50% higher than the extrapolated figure from CY2016. The largest orders – in terms of contract value – came from UPS in the USA, The Netherlands and France, and DHL in Mexico and Spain.

The order intake for life-cycle services is EUR 386 million. The most noteworthy orders were an eight-year service contract for Los Angeles Airport, a five-year contract for Dallas/Fort Worth Airport and a five-year contract with Zalando.


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Profit and loss account (In millions of euros)

RevenueCost of revenueContribution margin

Business support expensesResearch and development expenses Other income and expensesEBITFinancial income and expensesProfit before income tax

Income taxNon-controlling interestNet income

Ratios in % of revenueContribution marginBusiness support expensesResearch and development expensesEBITNet income

Vanderlande realised an EBIT of EUR 92 million (5.3%), which is EUR 9 million higher than the absolute EBIT extrapolated from CY2016.

The contribution margin amounts to 26.7% and is lower than last year’s figure due to the market segment mix, the cost breakdown structure of the companies projects and one-off new development project costs.

The business support expenses are – as a percentage of revenue – in line with CY2016, although Vanderlande invested in future revenue growth by strengthening its personnel base, as well as including post-acquisition TICO costs. Without the later, the business support would have been 18.5%, an improvement of 0.7% of revenues on CY2016. The (gross) research and development expenses grew with 27% compared to CY2016 in order to maintain Vanderlande‘s market-leading position, although this is not visible (due to capitalisation) in the profit and loss account. Vanderlande will continue to invest heavily in innovation and develop new concepts. The effects of the post-acquisition costs and the accounting policy change mainly compensate each other.

CY2016Actual YTD


1,393 -1,001

392

-268 -45

4 83 -1

82

-18 0

64

28.1%-19.2%

-3.3%5.9%4.6%

FY2018

Actual YTD15 months

1,725 -1,264

461

-333 -38

2 92 -5

87

-23 0

64

26.7%-19.3%

-2.2%5.3%3.7%



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Revenue

Order book

(In millions of euros)

AirportsWarehousingParcelLife-cycle servicesTotal revenue

Order book as of 31 December 2016Order intakeRevenueOrder book as of 31 March 2018

FY2018March 2018

1,652 1,892

-1,725 1,819

Revenue in the 15-month financial year was EUR 1.7 billion, which is EUR 332 million (24%) higher than last year. Revenue for all market segments has increased compared to CY2016, and represents a strong growth. The main drivers behind this increase are the favourable market conditions in combination with Vanderlande‘s increased focus strategy and its market-leading concepts and solutions.

Based on the order intake of EUR 1,892 million (including negative exchange rate differences in the order book of EUR 118 million) and revenues for the year of EUR 1,725 million, the order book amounted to EUR 1.8 billion at the end of the 2018 financial year – another record.

(In millions of euros)

The development of the order book in the 2018 financial year is as follows:

CY2016Actual YTD


374 484 240 295

1,393

FY2018

Actual YTD15 months

422 567 364 372

1,725


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Balance sheet(In millions of euros)

Non-current assetsWorking capital (net)Cash, cash equivalents and bank overdraftsInvested capital

EquityProvisionsNon-current liabilitiesFinancing

Capital investments, depreciation and amortisationCapital investments (intangible assets, property, plant and equipment, and participations and acquisitions) Depreciation and amortisation

FY2018March 2018

177 15 34

226

194 29

3 226

65

22

CY2016December 2016

140-1425

151

11635

0 151

39

13

The non-current assets at the end of March 2018 are EUR 37 million higher than at the year-end CY2016. This is mainly caused by property investments in The Netherlands and Germany, the intangible assets and deferred tax assets obtained in the acquisition of Vanderlande APC, and the capitalisation of Vanderlande‘s development costs.

The net working capital position shows an increase compared with December 2016. This development is to some extent expected to be structural, especially when considering developments in customer payment terms. A main factor behind these large swings in working capital is inherent within Vanderlande‘s project business.

The cash balance at the end of March 2018 increased by EUR 9 million when compared to the cash position as at December 2016.

The non-current liabilities are fully related to the acquisition of Vanderlande APC.

Movements in group equity consist mainly of the net income of the financial year and the change in the hedging (revaluation) reserve. No dividend payments are included in the FY2018 figures.


Guarantees

Solvency ratios

Manpower employed

In full-time equivalents

FY2018March 2018

5,431

CY2016December 2016

4,583

As of 31 March 2018, the company had issued bank guarantees to customers amounting to EUR 187 million (EUR 191 million as of 31 December 2016).

In our credit agreement framework with banks, the following credit ratios are applicable regarding solvency:

> The solvency ratio (S1) is required to be at least 22.5%. This solvency ratio is defined as group equity minus hedging (revaluation) reserve compared with the balance sheet total after deducting the amounts due to customers for contract work. As at 31 March 2018 this ratio was 35.3% (31 December 2016: 32.2%).

> The solvency ratio (S2) is required to be at least 12.5%. This solvency ratio is defined as group equity minus hedging (revaluation) reserve compared with the balance sheet total after deducting the amounts due to customers for contract work, plus the contingent liabilities. Contingent liabilities consist of issued bank guarantees, rent, lease and other commitments. As at 31 March 2018, this ratio was 24.1% (31 December 2016: 20.0%).

> As of April 2016, the EBITDA must be either at least EUR 40.0 million for any 12-month rolling period, or it must not fall below this level for three consecutive months. The 12-month EBITDA was EUR 93.3 million (CY 2016: EUR 79.2 million). The EBITDA ratio serves the same goal as the debt/EBITDA ratio.

> The interest cover ratio should always exceed 4.0:1.0. This ratio is defined as dividing the 12-month rolling EBITDA by the net financial charges. The interest cover ratio as at 31 March 2018 was 42.3:1 (31 December 2016: 88.4:1).

All Vanderlande‘s ratios are far above the minimum required levels. The change in the accounting standard has no impact on the required credit ratios as agreed in the credit agreement framework.

Manpower increased by 848 full-time equivalents (FTE) in the financial year. This is due mainly to extra service personnel needed to realise the revenue growth in life-cycle services, other execution functions in engineering and manufacturing, and some supporting functions.


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> vanderlande.com

VanderlandeVanderlandelaan 25466 RB VeghelThe Netherlands

Phone: +31 (0)413 49 49 49 Fax: +31 (0)413 36 29 10Email: [email protected]

Documents

Year Report FY2018 - Vanderlande · annual Dutch M&A (mergers and acquisitions) event, which is organised by the Dutch ... acknowledgements, such as from DPDHL, are proof that our