Capital expenditure

After deducting investment grants, our capital expenditure on property, plant and equipment and on intangible assets totalled €72.2 million in 2017, which was €10.2 million more than in the previous year (2016: €62.0 million). This was broken down into €34.9 million (2016: €49.3 million) on property, plant and equipment and €37.3 million (2016: €12.7 million) on intangible assets. Additions to property, plant and equipment were mainly in connection with replacement investment in tools, equipment and machinery. The additions also related to the new TCD 2.2 engine series and the final measures to optimise our network of sites. In the first half of 2017, we also made the final capital investment in connection with stage two of the relocation of the exchange engine plant from Übersee to Ulm and with the construction of the shaft centre in Cologne-Porz.

Capital expenditure on intangible assets went mainly on the development of our new engines and the refinement of existing ones. Another major investing activity was the purchase of distribution and service rights as part of a cooperation agreement with Liebherr Machines Bulle S.A.

Before the capitalisation of development expenditure, capital investment amounted to €54.7 million (2016: €52.9 million). This was just over €15.0 million below our forecast of €70.0 million and was due, above all, to the postponement of capital expenditure in production and assembly areas. Moreover, capital expenditure in connection with the optimisation of the network of sites was lower than planned.

We exceeded our forecast of capitalised development expenditure of €15.0 million by just under €2.5 million. This was due to a higher capitalisation rate.

As in 2016, the bulk of the total capital expenditure after deducting investment grants was invested in the DEUTZ Compact Engines segment (€51.7 million in 2017 and €55.0 million in 2016). Capital expenditure in DEUTZ Customised Solutions was €20.1 million (2016: €7.0 million). The new heavy-duty engines under the Liebherr alliance are allocated to this segment. In the Other segment, capital expenditure amounted to €0.4 million (2016: €0.0 million) as a result of Torqeedo GmbH’s capital expenditure in the fourth quarter of 2017.

The main areas of capital spending in the reporting year were property, plant and equipment, intangible assets and, notably, the acquisition of Torqeedo and DEUTZ Italy (formerly IML Motori S.r.l.). The capital expenditure of these two companies, which were included in the consolidated financial statements of DEUTZ AG for the first time as at 1 October 2017, came to €73.9 million and €11.4 million respectively. For details of the individual assets and liabilities acquired in connection with the acquisitions, please refer to the notes to the consolidated financial statements.