Creditor Relations

Financing principles

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.

Financial position

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 slightly from €321.3 million at the end of 2019 to €307.4 million at the end of the 2020 fiscal year despite COVID-19. This was mainly due to a significantly positive free cash flow from continuing operations. Running counter to this were free cash flow from discontinued operations and lease and interest payments. The proceeds from the sale of the Locomotives business unit failed to fully cover the negative free cash flow from discontinued operations of €54.1 million. Net financial debt, including lease liabilities of €43.9 million (previous year: €49.1 million), came to €351.3 million (previous year: €370.4 million) at the end of 2020.

Financial liabilities amounted to €419.5 million at the end of the year under review, a slight decrease compared to the previous year’s figure of €427.1 million. Current financial liabilities went up considerably year on year, from €41.3 million to €175.0 million. This increase was mainly due to €135 million in Schuldschein loans, whose term ends in July 2021, being reclassified as current financial liabilities. Noncurrent financial liabilities went down accordingly. When added together, the sum total of cash and cash equivalents and short-term securities came to €68.1 million at the end of 2020 (previous year: €56.7 million).

Excluding lease liabilities, €250 million of the total financial liabilities at the end of 2020 were attributed to Schuldschein loans placed in the 2017 fiscal year with terms of four years (until July 2021) totaling €135 million and terms of seven years (until July 2024) totaling €115 million. The agreed interest rate is 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 has a fixed interest rate of 1.763 percent and the remaining amount of €25 million, 120 basis points above Euribor. A floor of 0.0 percent is respectively applicable to the reference value. The Schuldschein loans are unsecured and have not been arranged with any covenants.

An additional €83 million relates to drawdowns from the syndicated loan agreed in November 2017 with a current volume of €230 million and a term which runs until November 2024. If necessary, it can be increased by up to a further €70 million during the term of the loan. Interest is applied to drawdowns based on 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 1.50 percent at the end of the fiscal year. 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 and was affirmed as of the half-year and as of the end of 2020. The existing liability stemming from this syndicated loan is reported under noncurrent financial liabilities as required by the terms of the contract.

Breakdown of financial liabilities

€ million20202019
Other noncurrent liabilities to banks177.3347.5
Noncurrent liabilities from leases34.437.5
Overdraft facilities32.80.8
Noncurrent financial liabilities244.5385.8
Current liabilities to bank157.013.4
Interest payable1.51.5
Current notes payable0.00.0
Current liabilities for outstanding dividend payments4.24.2
Current liabilities from leases9.511.6
Overdraft facilities2.810.6
Current financial liabilities175.041.3
Financial liabilities419.5427.1

Financial liabilities are principally measured at amortized cost. Vossloh has current and noncurrent lease liabilities arising from leases which are recognized in accordance with IFRS 16.

For the reconciliation of the IFRS 9 valuation categories, see pages 145 et seq. of the 2020 Annual Report, “Additional information on financial instruments.”