Creditor Relations

Conservative financing structures constitute the central and basic idea of Vossloh's financing strategies. In the management of its capital structure, Vossloh focuses on the key data for companies with an investment grade rating. Financing and the provision of liquidity of the group of companies typically take place centrally through Vossloh AG as the Group holding company. High creditworthiness of contracting parties plays just as significant a role as our commitment to building and maintaining long-term relationships with our lending partners. Vossloh only uses derivative financial instruments to hedge specific risks from existing or expected future underlying transactions.

The net financial debt of the Vossloh Group (calculated as financial liabilities minus cash and cash equivalents and short-term securities) excluding lease liabilities fell significantly from €307.4 million at the end of 2020 to €174.0 million at the end of the 2021 fiscal year. The significant decrease was mainly due to inflows from the hybrid note placed in February 2021 of roughly €150 million and a positive free cash flow in 2021. This was offset in particular by dividend, lease and interest payments and by the payments totaling €10.6 million for the acquisition of ETS Spoor in 2021. At the end of 2021, net financial debt including lease liabilities of €41.6 million (previous year: €43.9 million) amounted to €215.6 million (previous year: €351.3 million).

Financial liabilities amounted to €291.6 million at the end of 2021, a considerable decrease compared to the previous year’s figure of €419.5 million. This was largely due to the hybrid note, which is allocated to equity in accordance with IFRS. Current financial liabilities fell year on year from €175.0 million to €69.2 million. The figure for the previous year included the Schuldschein loan of €135 million that came due in July 2021.

When added together, the sum total of cash and cash equivalents and short-term securities came to €76.0 million at the end of 2021 (previous year: €68.1 million).

At the end of 2020, €250 million of the financial liabilities were attributed to Schuldschein loans placed in the 2017 fiscal year with terms of four years (until July 2021) totaling €135 million and seven years (until July 2024) totaling €115 million. The interest rate was fixed at 0.988 percent for the four-year maturities for an amount of €85 million and variable at an amount of €50 million with a margin of 85 basis points above Euribor. For the seven-year maturities, a partial amount of €90 million had a fixed interest rate of 1.763 percent and the remaining amount of €25 million, 120 basis points above Euribor. In July 2021, Vossloh used the funds from the hybrid note to fully redeem the Schuldschein loans with four-year terms. In addition, a Schuldschein loan in the amount of €25 million with a term of seven years (until December 2028) and a fixed interest rate of 0.8 percent per year was placed at the end of 2021. In January 2022, Vossloh used these funds to prematurely redeem the floating-rate Schuldschein loan in the same amount maturing in July 2024.

An additional €35.7 million in financial liabilities relates to drawdowns from the syndicated loan agreed in November 2017, totaling €230 million and with a term that runs until November 2024. The interest rate is based on the amount of an indicator stipulated in the credit agreement (net financial debt relative to EBITDA), as well as the extent of the drawdowns on the line of credit, and was 0.9 percent at the end of the year under review. A limit is set for this indicator (covenant). If exceeded, the lending banks are permitted to terminate the agreement ahead of time. Compliance with the covenant is verified every six months; such compliance was affirmed as of the half-year and as of the end of 2021.

Breakdown of financial liabilities

Financial liabilities are principally measured at amortized cost. Current and noncurrent lease liabilities arise from leases which are recognized in accordance with IFRS 16. See the explanatory notes to section (11) on page 136 of the 2021 Annual Report for how these line items are measured. Bank overdrafts are shown separately from current and noncurrent liabilities to banks in the table because they were allocated to cash and cash equivalents in the cash flow statement.

For the reconciliation of the IFRS 9 valuation categories, see pages 153 et seq. of the 2021 Annual Report, “Additional information on financial instruments.”

• Hybrid Notes