PIERER MOBILITY AG ANNUAL REPORT 2019 2 KEY FIGURES EARNINGS RATIOS 1) 2015 2016 2017 2018 2019 Revenue in m€ 1,223.6 1,343.0 1,533.0 1,559.6 1,520.1 EBITDA in m€ 178.4 198.4 218.9 252.5 240.8 EBIT in m€ 112.9 122.3 132.5 161.2 131.7 Earnings after taxes in m€ 65.0 89.0 83.9 114.2 95.7 EBITDA margin in per cent 14.6% 14.8% 14.3% 16.2% 15.8% EBIT margin in per cent 9.2% 9.1% 8.6% 10.3% 8.7% BALANCE SHEET RATIOS 12/31/2015 12/31/2016 12/31/2017 12/31/2018 12/31/2019 Balance sheet total in m€ 1,175.9 1,423.8 1,465.2 1,353.9 1,613.9 Equity in m€ 386.6 454.9 528.6 550.8 618.6 Equity ratio in per cent 32.9% 32.0% 36.1% 40.7% 38.3% Working capital empoloyed 2) in m€ 243.3 245.2 238.4 245.3 274.2 Net debt 3) in m€ 387.4 364.6 375.0 323.3 395.8 Gearing 4) in per cent 100.2% 80.1% 70.9% 58.7% 64.0% CASH-FLOW AND CAPEX 2015 2016 2017 2018 2019 Cash-Flow from operating activities in m€ 106.9 167.8 161.3 85.5 257.4 Cash-Flow from investing activities in m€ -110.1 -158.8 -154.0 -102.1 -165.7 Cash-Flow from financing activities in m€ 50.7 139.2 -118.0 -63.3 -20.6 Capital expenditure 1) 5) in m€ 133.0 144.4 178.6 183.6 164.9 EMPLOYEES 12/31/2015 12/31/2016 12/31/2017 12/31/2018 12/31/2019 Number of employees as of balance sheet date 1) 6) Number 4,553 5,069 5,887 4,303 4,368 VALUE CREATION 12/31/2015 12/31/2016 12/31/2017 12/31/2018 12/31/2019 ROCE (Return on capital employed) 7) in per cent 14.2% 13.9% 13.9% 16.6% 12.7% ROE (Return on equity) 8) in per cent 17.2% 21.2% 17.1% 21.2% 16.4% ROIC (Return on Invested Capital) 9) in per cent 11.0% 11.7% 10.4% 13.6% 10.6% STOCK EXCHANGE RATIOS 10) - 12/31/2016 12/31/2017 12/31/2018 12/31/2019 Share price as of December 31; in CHF - 5.35 7.39 60.60 54.00 SIX Swiss Exchange 11) Number of shares 11) in m shares - 225.39 225.39 22.54 22.54 Market capitalization 12) in m CHF - 1,205.82 1,665.61 1,365.84 1,217.09 Earnings per share 13) in € - 2.31 1.98 2.99 2.42 Book value per share 13) 14) in € - 20.18 23.45 24.44 27.45 1) Previous years also include the discontinued operation (Pankl-Group) 9) ROIC = NOPAT / average capital employed; NOPAT = EBIT - taxes 2) Working Capital Employed = inventories + trade receivables - trade payables 10) since November 14th, 2016 Listing on SIX Swiss Exchange 3) Net debt = financial liabilities (current, non-current) - cash 11) Reverse stock split in a ratio 10:1 in April 2018 4) Gearing = net debt / equity 12) Calculation also includes 108,015 numbers of treasury shares as of December 31st, 2019 5) Additions from property, plant and equipment and intangible assets according to schedule of 13) Calculation in 2016 and 2017 adjusted to the new number of shares after reverse stock split investments; without first-time application effect of IFRS 16 as of January 1st, 2019 in a ratio 10:1 6) Number of employees on the reporting date (including temporary staff) 14) Equity / number of shares 7) ROCE = EBIT / average capital employed, Capital employed = property, plant and equipment + goodwill + intangible assets + working capital employed 8) ROE = earnings after taxes / average equity ANNUAL REPORT 2019 3 TABLE OF CONTENTS HIGHLIGHTS 2019 ................................................................................................. 4 GROUP STRUCTURE .............................................................................................. 6 INTRODUCTION BY THE EXECUTIVE BOARD .......................................................... 8 BODIES OF THE COMPANY ..................................................................................... 10 REPORT OF THE SUPERVISORY .............................................................................. 11 KTM Europe‘s largest motorcycle manufacturer ............................................................. 14 Motorsport ............................................................................................................. 18 HUSQVARNA MOTORCYCLES A unique history and success on two wheels ........................................................ 20 Motorsport ............................................................................................................. 24 GASGAS KTM 1290 Super Adventure S MY19 Offroad passion ..................................................................................................... 26 WP Performance-defining components for the fastest two- and four-wheelers ........... 28 E-MOBILITY ........................................................................................................... 30 RESEARCH & DEVELOPMENT ................................................................................. 32 KTM TECHNOLOGIES Driven by the new .................................................................................................. 36 EMPLOYEES ........................................................................................................... 39 SUSTAINABILITY ..................................................................................................... 42 HUSQVARNA TE 250i SHARES & INVESTOR RELATIONS .......................................................................... 44 OUTLOOK & STRATEGIC INITIATIVES ..................................................................... 47 CORPORATE GOVERNANCE 2019 IN ACCORDANCE WITH THE AUSTRIAN CODE OF CORPORATE GOVERNANCE (ÖCGK) ....................................................................... 48 CORPORATE GOVERNANCE (DCG) OF THE SIX SWISS EXCHANGE ......................... 62 MANAGEMENT REPORT ON THE CONSOLIDATED GASGAS TXT Racing 300 FINANCIAL STATEMENTS ........................................................................................ 82 CONSOLIDATED FINANCIAL STATEMENTS ............................................................. 97 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ...................................... 106 AUDITOR‘S REPORT ............................................................................................... 174 STATEMENT BY THE EXECUTIVE BOARD ................................................................ 179 FINANCIAL CALENDAR .......................................................................................... 179 4 HIGHLIGHTS 2019 CONTINUATION OF STRONG GROWTH AND MARKET SHARE GAINS KTM Industries AG – Market share gains in USA and Europe’s Leading Powered Two India – Market share in Europe on Wheeler Company – was renamed high level into PIERER Mobility AG 11.3% Market share in established markets (+30 bps) Ninth record result in a row! Registration: Europe +8.9%, North America +3.6%, India +37.0% Increase in sales continued in Market share: Europe: 11.8% (-20 bps), North America: businessyear 2019 9.7% (+60 bps), India: 7.3% (+280 bps) 280,099 motorcycles sold (+7% Vs 2018) 234,449 KTM motorcycles and 45,650 HUSQVARNA motorcycles Take-over of Australian importer in Q3/2019 KTM and Bajaj agree on new electric vehicle alliance GASGAS motorcycles – Development of a common 48 Volt electric as third motorcycle brand two-wheeler platform in the power range 3 to 10 kW for planned serial production in India in 2022 Full consolidation of e-bicycle division (PEXCO) already in December 2019 ANNUAL REPORT 2019 5 KTM 1290 Super Adventure S 6 GROUP STRUCTURE AS OF 12/31/2019 SIMPLIFIED PRESENTATION ANNUAL REPORT 2019 7 51.7% 100% 100% 100% 74% 100% 50% 60% 70%*) 99.9% Suspension PTW Design, concept E-Bicycles Powered two wheelers development & digitalization Other shareholdings: PF Beteiligungsverwaltungs GmbH 100% Platin 1483. GmbH 100% ACstyria Mobilitätscluster GmbH 12.3% *) increase to 100% in January 2020 8 INTRODUCTION BY THE EXECUTIVE BOARD The PIERER Mobility Group can look back on a success- COURSE OF BUSINESS ful financial year in 2019. By consistently implementing the global product strategy and expanding into all With its motorcycle brands KTM, Husqvarna Motorcycles continents, the Group yet again successfully increased and GASGAS, the Group is one of the technology leaders both revenue and sales figures, thereby also achieving in the premium segment and outperformed the overall new record levels in 2019. Taking into account the mo- market in the past year with a 14.5% increase in regis- torcycles sold by our partner Bajaj in India, more than trations. In Europe, the overall market grew by around 280,000 sports motorcycles of the KTM and Husqvarna 8.9% last year. During the same period, KTM succeeded Motorcycles brands were sold worldwide and the market in maintaining its high market share at approx. 12%. position in the major motorcycle markets (> 120cc) was Despite a declining overall US market (-2.7%) in 2019, further consolidated. KTM increased registrations by 3.6% and increased its market share to 9.7% by the end of the year. The As part of a series development project for PTW (“Pow- Australian and Canadian markets also recorded strong ered two wheeler”) electric vehicles in the low-voltage growth. In India, the most important future market for range (48 volts), which was developed together with KTM, KTM registrations in the financial year increased the Indian partner Bajaj, various product variants in by more than 35% compared to the previous year and the segment of electro scooters will be produced from the market share rose from 4.5% to around 7.3%. 2022 under the brands of both partners in the 3 and 10 kW power range. In the area of electric mobility, the These successes are also due to a large number of complete takeover of PEXCO GmbH was an important models of the KTM and Husqvarna Motorcycles Group step toward participating in the attractive market