2014 Annual Report of Kraftanlagen München GmbH
2014Annual Reportof Kraftanlagen München GmbH
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Kraftanlagen München GmbH
Ridlerstraße 31 c
80339 München
Germany
www.kraftanlagen.com
2014
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Table of Contents
Group Key Figures 4Kraftanlagen Group Sites 5Letter from the General Management 6Project Overview 9Supervisory Board Report 18General Management Report (Group Management Report and Management Report) 22Consolidated Financial Statements 41Annual Financial Statements of Kraftanlagen München GmbH 102
As a versatile service provider for industry and the
energy sector, we are utilising state-of-the-art processesand technologies all across Europe.
Annual Report 2014
3Kraftanlagen München GmbH Annual Report 2014
At a Glance –Group Key Figures
In EUR million 20112011
adjusted
2012amended
IAS 19 (2011) 2013 2014
Incoming orders 943.7 374.0 395.1 335.3 390.1
Net sales revenue 1,069.5 557.9 560.3 458.6 402.0
Employees as at 31 Decemberincluding trainees 5,058 2,002 2,041 2,052 2,292
Personnel expenses 251.0 118.8 118.3 113.8 114.0
EBIT 52.3 32.2 28.4 25.2 20.0
Profit or loss for the period/Income from continuing operations 31.1 19.0 13.8 13.6 12.0
Cash flow 22.7 - -18.2 48.4 -13.3
Net financial position(short and medium term) 154.1 149.0 86.4 143.4 108.7
Balance sheet total 626.1 383.7 359.1 382.1 361.7
Subscribed capital 25.0 25.0 25.0 25.0 25.0
Equity (including non-controlling interests) 177.7 102.1 85.5 108.6 109.0
Non-current assets 156.5 69.5 71.0 64.6 59.8
Investments in intangible assetsand poperty, plant and equipment 33.6 7.7 7.4 4.2 3.6
Amortisation of intangible assetsand depreciation of property,plant and equipment 23.7 7.4 7.6 9.4 6.1
4 Alpiq Anlagentechnik GmbH Geschäftsbericht 20104 Kraftanlagen München GmbH Annual Report 2014
Group Sites
Sites in Europe
Belgrade/Serbia
Geneva/Switzerland
Manosque/France
Ploiesti/Romania
Saint Genis Pouilly/France
Schwechat-Mannswörth/Austria
Wiener Neudorf/ Austria
Belgrade
Geneva
Manosque
Ploiesti
Saint Genis Pouilly
Schwechat-Mannswörth,
Wiener Neudorf
Sites in Germany
Headquarters Munich
Eberswalde
Erlangen
Munich
Hamburg
Heidelberg
Jülich
Munich
Jülich
Hamburg
Eberswalde
Heidelberg
Erlangen
5Kraftanlagen München GmbH Annual Report 2014
Letter from the General Management
On course for a future as a versatile service provider
The General Management of Kraftanlagen München GmbH: Alexander Gremm, Reinhold Frank, Friedrich Schmidt (left to right).
6 Kraftanlagen München GmbH Annual Report 2014
Dear Sir/Madam,
2014 was a year of transition for us, characterised by the work put in to comprehen-
sively reposition our company. As of 1 January 2015, we are positioned to face the fu-
ture with an organisation better aligned to the new market situation and one that
not only allows greater flexibility within the Kraftanlagen Group, but also the bun-
dling of capabilities and resources and, not least, the exchange of valuable experi-
ences. We are extremely confident that with the measures introduced the
foundation has been laid for a successful future.
The mainstays of our new organisation are our eight business units:
• Energy and power plant technology
• Decentralised energy supply
• Underground piping construction
• Nuclear technology
• Industrial plants and installation
• Utility services
• Engineering and consulting
• Production and welding technology
Why was repositioning necessary? Electricity markets have changed dramatically
throughout Europe, but above all in Germany. A climate of reservation has dominated
investments in power plant construction for a number of years now. The develop-
ment into a market based on renewable energies and decentralised power supply
is irreversible, yet reliable legal frameworks to accomplish the energy transition
remain elusive. However, one thing is clear: from the "energy giants" right through
to small-scale suppliers, an entire sector finds itself in a profound process of
change. This transition has also impacted on Kraftanlagen Group, primarily in rela-
tion to energy and power plant technology. For many years the driving force be-
hind Kraftanlagen Group, this segment now needs to be reformed. Technology
transition on the generation side is also giving rise to changes in terms of distribu-
tion and storage. We aim to bring our technical know-how and experience to bear
during this transition.
Service provider for industry and the energy sector
The name Kraftanlagen has stood for efficient plant technology for more than 90
years. As a versatile service provider for industry and the energy sector, we are uti-
lising state-of-the-art processes and technologies all across Europe. We are offering
custom, sustainable solutions and thereby contribute to the type of increased en-
ergy efficiency that is key to the success of the energy transition. This transition of
energy also offers a broad range of opportunities: one example of such potential be-
ing exploited above all in Germany and Switzerland is the decommissioning of nu-
clear plants. We provide integrated and efficient solutions across the entire life
cycle of nuclear plants, thereby refocusing on post-operation and decommission-
ing in addition to plants for the conditioning and disposal of radioactive waste.
7Kraftanlagen München GmbH Annual Report 2014
Progress in Internationalisation
A significant token of our progressive internationalisation and improved competi-
tiveness abroad are the new orders in Poland and the Netherlands to supply high-pres-
sure pipelines for the construction of two new 900 MW hard coal blocks in Opole and
a 120 MW steam turbine power plant in Moerdijk. Further examples of successful in-
ternational projects from various Kraftanlagen Group business units can be found on
the following pages of this annual report. A marker of our increasing growth in perfor-
mance over recent years is Kladno 7, the largest power plant block that Kraftanlagen
has ever delivered as a general contractor.
We are also expanding additional capabilities in Romania, an example being the
establishment of our subsidiary KAROM in the summer of 2014, which will provide
maintenance, modernisation and logistics services to the Romanian oil industry.
Sales moderately down, incoming orders and employee numbers rising
Amounting to EUR 390.1 million, the volume of incoming orders rose by 16.3%
against the previous year. Net sales in 2014 totalled EUR 402 million, a drop of 12.3%
compared to the previous year’s figure. This resulted from a further decline in the
execution of major projects. The Group workforce rose in the reporting year by
11.7% to 2,292 employees as of 31 December 2014, primarily as a result of the absorp-
tion of 357 employees by KAROM in Romania.
Cost reduction, well-defined structures
To create a basis for further corporate development we consistently reduced costs
in 2014, amongst other things by streamlining administration.
We have established well-defined structures incorporating clear product respon-
sibilities without redundancies within the service portfolio. Our core strength, name-
ly the sheer diversity of our products, remains unchanged. This new structure better
meets the current market requirements and enables Kraftanlagen to respond flexibly
to demands and grow in new business areas.
We are ready
Our improved competitiveness and greater growth potential provide the optimal basis
for a successful future for the repositioned Kraftanlagen Group. We would like to take
this opportunity to thank our customers and suppliers for their trusting cooperation
that has extended over decades in many cases. Our warm thanks also go out to all our
employees. In addition to contributing to our successful operating business, their com-
mitment has played a major role in achieving an extremely important objective in 2014
in the form of the effective realignment of our corporate structure.
The General Management of Kraftanlagen München GmbH
Reinhold Frank Alexander Gremm Friedrich Schmidt
8 Kraftanlagen München GmbH Annual Report 2014
Project Overview 2014
9Kraftanlagen München GmbH Annual Report 2014
In front of the new K7 block.
Kladno K7 – Brown Coal Power Plant in the Czech Republic
In its capacity as general contractor, Kraftanlagen München (KAM) has completed a
135 MW combined heat and power generation unit at the Kladno brown coal power
plant near Prague, taking the project from the planning stage right through to
handover in just three-and-a-half years. With the completion of this complex pro-
ject, Kraftanlagen reached a new performance level and delivered top quality in the
Czech Republic with regard to budget and schedule.
Kladno K7 project in figures
Electrical power performance 135 MW
District heating extraction 70 MW (max. 105 MW)
Live steam parameters 105 kg/s; 133.3 bar; 541 °C
Reheat 34 bar; 541 °C
Concrete structure 65,000 t
Steel construction 5,000 t
Converted space 210,000 m³
Technological components 18,000 connected by around 48 kmof pipeline and 700 km of cable
11Kraftanlagen München GmbH Annual Report 2014
Project Overview
Upturn in RomaniaKraftanlagen Romania is the contractual partner of OMV Petrom for the development
of oil and gas production in Romania. For the first time Kraftanlagen is providing
services upstream of oil and gas production and is expecting major development in
this market. Initial successes included the awarding of two project lots for feeding
system maintenance and a major plant construction contract. Together they involve
an order volume of over EUR 270 million, which secures capacity utilisation for the
next few years. KA Romania took on around 350 new employees in 2014.
12 Kraftanlagen München GmbH Annual Report 2014
Project Overview
Kraftanlagen Romania expands
feeding system maintenance business
Four such Caterpillar engines
supply power to Munich Airport
New Power Source for Munich Airport
Munich airport largely supplies itself with electricity, heating and cooling via a com-
bined heat and power plant (CHPP) equipped with a trigeneration system. Within
the scope of modernising the facility, which was built in 1992, in 2014 Kraftanlagen
Hamburg won the contract to plan, deliver and install a new engine station includ-
ing the commensurate auxiliary systems. The total volume of EUR 8 million also en-
compassed commissioning and documenting the scope of the contract.
Commissioned on schedule, the four new engine-generator units can be individual-
ly controlled and started up according to demand, with each delivering 4.3 MWel
and 4.2 MWth.
15Kraftanlagen München GmbH Annual Report 2014
Project Overview
Key Technology for ChinaAs a member of a German consortium, Kraftanlagen Heidelberg (KAH) is planning and
delivering to China core components of a vitrification plant for highly radioactive
liquid waste and an intermediate storage facility. Started back in 2009, the project
based in Sichuan province involves the vitrification of highly radioactive legacy
waste from a reprocessing plant near the city of Guangyuan, which has a popula-
tion of three million. Because the region is prone to earthquakes, the Chinese gov-
ernment decided to transfer the waste to a long-term storage facility in a more
secure form. Vitrification technology is globally recognised as the safest method
for encapsulating highly radioactive liquids for intermediate or final storage. The
Vitrification Plant China (VPC) complies with all the international standards for nu-
clear plants. KAH was tasked with the engineering and supply of the key technolo-
gy and components for the vitrification process.
Kraftanlagen München GmbH Annual Report 201416
Project Overview
A Chinese delegation
accepts the melting furnace,
centrepiece of the vitrification
plant, in May 2014
Patrick Mariller Chairman (shareholder representative)
Peter Schib Shareholder representative
Hans Thomas Däpp Shareholder representative
Guiseppe Giglio Shareholder representative
Peter Limacher Shareholder representative
Dr. Bernt Paudtke Shareholder representative
Alois Bauer Deputy Chairman (provisionally appointed under expedited procedure until 19 May 2014, thereafter formally appointed asan ordinary Supervisory Board member)
Thomas Martin Employee representative (provisionally appointed under expedited procedure until 19 May 2014, thereafter formally appointed as an ordinary Supervisory Board member)
Peter Ranger Employee representative (provisionally appointed underexpedited procedure until 19 May 2014)
Michael Seis Employee representative (provisionally appointed under expeditedprocedure until 19 May 2014, thereafter formally appointed as an ordinary Supervisory Board member)
Frank Bielke Employee representative (provisionally appointed under expedited procedure until 19 May 2014)
Ahmet Uzun Employee representative (provisionally appointed under expedited procedure until 19 May 2014, thereafter formally appointed as an ordinary Supervisory Board member)
Alfons Weber Employee representative (as of 19 May, 2014)
Peter Reithner Employee representative(as of 19 May, 2014)
Supervisory Board Report on the 2014 Financial Year for Kraftanlagen München GmbH
Thomas BucherSupervisory Board Chairman
Supervisory Board Report
Composition of the Kraftanlagen München GmbH Supervisory Board in the 2014 financial year
As a result of the merger between Alpiq Anlagentechnik GmbH and Kraftanlagen
München GmbH on 24 September 2013, at the behest of Alpiq Deutschland GmbH,
the employee representatives were appointed in an emergency procedure by the
district court (Amtsgericht) in Munich. Through its decision of 7 November 2013, the
district court in Munich appointed Alois Bauer, Frank Bielke, Ahmet Uzun and Peter
Ranger as provisional employee representatives on the Supervisory Board of Kraf-
tanlagen München GmbH until formal employee representative elections were
held. The court also provisionally appointed Michael Seis and Thomas Martin as
new Supervisory Board members representing IG Metall, the German metalworkers'
union. Formal elections were concluded on 19 May 2014. Alois Bauer, Michael Seis,
Thomas Martin, Peter Reithner, Alfons Weber and Ahmet Uzun were formally elect-
ed as ordinary members of the Kraftanlagen München GmbH Supervisory Board.
Accordingly, the Kraftanlagen München GmbH Supervisory Board for the finan-
cial year 2014 comprised the following persons:
18 Kraftanlagen München GmbH Annual Report 2014
Business development in the 2014 financial year
Despite posting a comparatively higher number of incoming orders, the Kraftanla-
gen Group registered declining figures against those of the previous year 2013. Tur-
moil on the energy markets continued into 2014 with a reduction in prices for oil,
gas and coal. In combination with major government funding of the new renewable
energy sources of solar and wind, this has led to declining wholesale prices and sur-
plus capacities on the electricity market, which in turn has seen our key customers’
willingness to invest in conventional power plants substantially diminish. To re-
main competitive in such a complex environment, Kraftanlagen Group aims to ex-
ploit the existing market potential in, for example, industrial plant construction
and heat generation, strengthen its European and international focus and position
the Group to take on new projects such as the decommissioning of nuclear plants.
Supervision and advisory support for the General Management in relation to business management in the 2014 financial year
The Supervisory Board of Kraftanlagen München GmbH has performed its duties in
accordance with the law, articles of association and rules of procedure and has regu-
larly advised the General Management and monitored its management activities.
During ordinary meetings throughout the 2014 financial year on 8 April 2014, 3 July
2014 and 30 October 2014, the Supervisory Board of Kraftanlagen München GmbH has
been effectively involved with the position and development of Kraftanlagen
München GmbH and its associate companies as well as significant business transac-
tions. Specifically, the Supervisory Board of the company has provided advice and
support in relation to the organisational development and the commensurate per-
sonnel and social measures at Kraftanlagen München GmbH that came into effect as
of 1 January 2015, the sale of Caliqua Anlagentechnik GmbH, and also the internation-
alisation strategy of Kraftanlagen München GmbH.
Also outside of the committee meetings, the Chairman of the Kraftanlagen
München GmbH Supervisory Board and the individual committees were kept in-
formed on a regular basis by the General Management about significant events and
decisions; in addition, they discussed important individual events with the General
Management.
Changes to the General Management of Kraftanlagen München GmbH in the 2014 financial year
At his own request and with effect from 17 March 2014, Mark von Laer resigned from
his position with the General Management of Kraftanlagen München GmbH.
Effective as of 8 April 2014, the Supervisory Board has appointed Friedrich
Schmidt as a new, additional General Manager of Kraftanlagen München GmbH.
The Supervisory Board would like to thank Mark von Laer for his commitment to
Kraftanlagen München GmbH.
Also effective as of 8 April 2014, the Supervisory Board has appointed Alexander
Gremm as Director of Labour at Kraftanlagen München GmbH.
19Kraftanlagen München GmbH Annual Report 2014
Work of the committees in the 2014 financial year
The Supervisory Board of Kraftanlagen München GmbH has duly formed Audit, Per-
sonnel and Mediation Committees. Both the Audit and Personnel Committees each
comprise two shareholder and two employee representatives. In the 2014 financial
year and in accordance with the Supervisory Board and General Management rules of
procedure, the Supervisory Board Audit Committee carried out an in-depth review of
a total of four Kraftanlagen München GmbH bids with a volume exceeding CHF 100
million and, following successful examination, approved the bid process in all four
cases. However, at the Supervisory Board meeting held on 30 October 2014, the Super-
visory Board decided to change the aforementioned rules of procedure so that an Au-
dit Committee bid review on behalf of the Alpiq Holding AG Supervisory Board could
be waived to prevent duplicate reviews for bids of CHF 100 million and over. Other-
wise, the auditing responsibilities of the Audit Committee remained unchanged.
In addition to activities carried out by the Audit Committee, the work of the Su-
pervisory Board Personnel Committee at Kraftanlagen München GmbH in the 2014
financial year should also be emphasised. In mutual consent with Mark von Laer,
the Personnel Committee facilitated termination of his contract of employment at
Kraftanlagen München GmbH.
The Kraftanlagen München GmbH Supervisory Board Mediation Committee was
not convened.
Annual financial statement and group auditing for the 2014 financial year
The annual financial statements prepared by the General Management of Kraftan-
lagen München GmbH and the consolidated financial statements as at 31 December
2014, in addition to the management report combined with the Group management
report for the 2014 financial year, including the accounting records, were audited by
the auditors from Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft, who were
selected at the shareholders' general meeting, and were duly issued with an un-
qualified audit opinion. Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft also
confirmed that accounting, valuation and consolidation within the consolidated fi-
nancial statements comply with the International Financial Reporting Standards
(IFRS), and similarly confirmed the separate financial statements of the individual
companies associated with the Group. The aforementioned documents, including
the audit report prepared by the auditors, were presented to the Supervisory Board
of Kraftanlagen München GmbH for scrutiny. Representatives of the auditors par-
ticipated in the meeting to discuss the annual and consolidated financial state-
ments on 6 July 2015 and explained the key audit results.
The Supervisory Board approved the findings of the audit carried out by the au-
ditors. The Supervisory Board raised no objections following conclusion of its own
final review of the annual and consolidated financial statements and combined
management report.
The Supervisory Board therefore approved the annual financial statements pre-
pared by the General Management and consolidated financial statements as at 31
December 2014 on 6 July 2015.
The General Management proposal for appropriation of net retained profit was
seconded by the Supervisory Board of Kraftanlagen München GmbH. In accordance
with the articles of association, adoption of the annual and consolidated financial
20 Kraftanlagen München GmbH Annual Report 2014
statements for the year ended 31 December 2014 will be decided by the sharehold-
ers’ meeting by no later than four weeks following conclusion of the Supervisory
Board audit of the company annual financial statements.
The Kraftanlagen München GmbH Supervisory Board would like to thank all em-
ployees, executive staff and the General Management of Kraftanlagen München
GmbH for their dedication and outstanding achievements in 2014. The Supervisory
Board would also like to thank the employee representatives for working with it in
such a constructive manner.
Munich, 6 July 2015
Thomas Bucher
Chairman of the Supervisory Board
21Kraftanlagen München GmbH Geschäftsbericht 2014
1. Background of the Kraftanlagen Group
1.1 Business activities and organisational structure
The Kraftanlagen Group is an international association of regional medium-sized
companies that are leaders in the field of energy, industrial and plant engineering
technology with a focus on central and eastern Europe. It offers technical infrastruc-
ture and services, from design and project planning to the production and construc-
tion of plants down to their commissioning and maintenance. It serves customers in
the industry and the energy sector as well as the public sector.
In 2014, the Kraftanlagen companies performed their services in line with the
then market segment structure of energy and environmental technology, large-scale
power plants, nuclear technology, industrial utility services and industrial plants.
As at the 2015 financial year and after an organisational restructure of the market
segments, Kraftanlagen companies will perform a wide range of services in the follow-
ing eight business units: decentralised energy supply, energy and power plant technol-
ogy, engineering and consulting, underground piping construction, fabrication and
welding, industrial plant and assembly, nuclear technology and industrial utility servic-
es. Consequently, the forecast report was prepared according to this new structure.
The Group is a one-stop shop for services ranging from the study to the approval
process, planning, supply, fabrication and assembly. In doing this, it develops flexible,
efficient and sustainable solutions for its customers. Services also include any service
or repairs and maintenance during operations after the plant has been commissioned.
With 16 companies and equity investments at numerous locations, the Kraftan-
lagen Group has a service network in the target markets. In addition to the loca-
tions of the legal entities, the Group has various branches and permanent establish-
ments so as to guarantee its proximity to the customer. You can find a full list of
shareholdings in the notes to the consolidated financial statements.
Customers are from the industry and also the energy sector. The Group works
primarily in the business-to-business segment, i.e., the end customer operates its
own business. The Kraftanlagen Group carries out regional and global projects. The
focus is on Europe, in particular the GSA region (Germany, Switzerland, Austria). In
2014, large projects were carried out in Germany, the Czech Republic, the Nether-
lands, Romania and Russia.
1.2 Management system
In addition to its operating activities, Kraftanlagen München GmbH is responsible for
managing the Group. The management of KAM also manages the Group and is com-
mitted to increasing the value of the Company in the long term.
Group management report and management report of Kraftanlagen München GmbH, Munich (KAM)
22 Kraftanlagen München GmbH Annual Report 2014
The objective of our entrepreneurial activity is to sustainably secure and expand our
market share through qualitative growth as well as to increase our income base. Key
performance indicators such as sales revenue growth coupled with the development
of the market share as well as EBIT and return on EBIT are derived from this. Rigorous
cost management and effective use of resources should help generate competitive
returns.
In order to achieve these targets, the Company has installed an efficient man-
agement system, which comprises strategic and operational planning, an early
warning system, an internal monitoring and control system, management account-
ing, quality assurance and an internal audit function. As part of the strategic and op-
erational planning, the long- and medium-term focus, development and targets of
the Kraftanlagen Group are defined once a year and the concrete operating objec-
tives set. Their achievement is tracked with the help of standardised forecasts.
All German subsidiaries are connected to KAM, either directly or indirectly,
through domination and profit and loss transfer agreements. Group companies are
included in a central financial and liquidity management system. The Kraftanlagen
consolidated financial statements are prepared in accordance with International Fi-
nancial Reporting Standards (IFRSs) as adopted by the EU; the KAM separate financial
statements are prepared in accordance with German accounting provisions (German
Commercial Code (Handelsgesetzbuch; HGB)). We have combined the management
reports of the Kraftanlagen Group and of KAM because the business development,
the economic situation and the opportunities and risks relating to future develop-
ment of KAM and the Kraftanlagen Group are closely related to each other.
The Kraftanlagen consolidated financial statements are included in the consol-
idated financial statements of Alpiq Holding AG, Lausanne, Switzerland, which are
prepared in accordance with International Financial Reporting Standards (IFRSs).
Alpiq Holding AG prepares consolidated financial statements for the largest group
of companies.
2. Economic report
2.1 Economic development
In 2014, the German economy held its ground in a difficult global economic environ-
ment. Overall, the economy was supported by a low rate of unemployment, low inter-
est rates, a low inflation rate and the weaker euro.
Adjusted for inflation, Germany’s GDP was up 1.5% on the previous year. The pos-
itive development was mainly driven by increased domestic demand and net exports.
Average GDP growth in the past ten years came to 1.2%. Average annual invest-
ment increased by 3.1%, however weakened in the second half of the year. The main
reasons for this were uncertainties regarding geopolitical risks, EU economic sanc-
tions against Russia and all-round modest global economic development. Capital
investment increased sharply by 3.7%, after adjusting for inflation. This came after
significant reluctance to invest was recorded over the past two years.
The labour market proved very robust. The unemployment rate dropped to 6.7%
(previous year: 6.9%).
23Kraftanlagen München GmbH Annual Report 2014
The consumer price index increased by 0.9%, which is the lowest inflation rate since 2009
(+0.3%). The reason for the low increase in the price level is the significant decrease in
energy prices in the global market, especially for oil and petroleum products.
2.2 Market development by product group
After the recession 2012 and 2013, the EU economy grew again in 2014 by 1.3%, yet de-
mand for electricity remained low, especially from industry. At the same time, renewa-
ble energy facilities such as solar and wind energy facilities saw continued expansion
thanks to heavy subsidies under the EEG (average EUR 23 billion per annum). The in-
crease in these capacities, together with the global oversupply of significantly dis-
counted coal imports, have fundamentally changed the European electricity market
and led to low wholesale prices. Even efforts by the European Union to intervene in the
oversupplied carbon market (suggestions to back-load and votes in the EU parliament)
resulted in significant market volatility, without sustainably supporting the price of
carbon emission allowances. Although this gave the existing coal plants an almost sta-
ble margin, the gas-fired power plants could no longer be run at a profit. The share of re-
newable energy in the energy mix was about 25% in Germany in 2014. This is to be
increased a share of over 40% by 2025. At the same time, modern and efficient gas-fired
power plants have running times of a few hundred hours per year as opposed to the
4,000 – 5,000 hours per year planned. Many operators have recorded an impairment loss
on their gas turbines to the value of materials, and in some cases have applied to have
them decommissioned. This suggests that there will be excess capacity in Germany in
the conventional power plant segment for many years. Only after nuclear power plants
have been taken offline and existing power plant capacities have been decommis-
sioned (around 2020) will new plants be built. Often discussed by the public and some
politicians, the capacity market would mostly affect existing power plants and thus not
lead to any new plants. Furthermore, this “market model” has so far been rejected by
the German federal government. For this reason, there is little willingness on the part
of energy providers or public utilities to invest in Germany.
In 2014, it was not possible to counterbalance the negative impact from the con-
tinued difficult market situation in our home market, Germany, with the changed
strategic and organisational alignment. As a result, nearly all product groups re-
corded a decline in operating performance in the 2014 financial year (the following
are unconsolidated figures). Bearing in mind the bleak market climate, we set up
and expanded strategic partnerships and joint ventures outside of Europe. These
entities are an attempt to tap market potential in Europe and the rest of the world.
Energy and environmental technology – biomass power plants as well as smaller,
decentralised units are becoming increasingly un-profitable due to the 2014 EEG re-
form, which has led to declining demand. Mid-size projects for turnkey systems
were successfully acquired in individual cases.
Many larger projects that were in the bidding process were either not fully re-
alised or pushed back to the following year. This was partly compensated for by a
continuing good demand for heat storage systems. Lower demand for this product
group decreased its operating performance in 2014 to EUR 119.2 million (previous
year: EUR 147.3 million).
Large-scale power plants – The market for large-scale power plants continues to be
poor in Germany and remained challenging in Europe. Nearly all large energy supply
24 Kraftanlagen München GmbH Annual Report 2014
companies had to recognise high impairment losses on their plants again in 2014. At
the same time, a wide range of restructuring and cost-saving measures were imple-
mented. Larger investments were not made again in 2014, not least due to this un-
certainty. Furthermore, pressure from southern European and Asian competitors is
growing in this segment. The Kraftanlagen Group is trying to use its internationali-
sation strategy to compensate for a lack of projects in Germany. However, it did not
achieve this goal in the reporting year. As a result, this product group’s operating
performance fell dramatically to EUR 54.9 million (previous year: EUR 105.8 million).
Nuclear technology – In 2014, sales revenue in the market segment nuclear technol-
ogy suffered significantly again from the German federal government’s decision to
shorten the lifespan of German nuclear power plants and to immediately close
down some of those in operation. There was hardly any recovery in 2014 from the
collapse in the maintenance and service business over the past two years, which
was caused by the catastrophic reactor incident in 2011 in Fukushima. Despite ex-
pectations to the contrary, there was no increase in demand for safety reviews at
European nuclear power plants as a result of the stress tests. By contrast, a variety
of new construction projects are planned in the rest of Europe, however none of
them have fixed start dates or the requisite permissions. The entire industry is pre-
paring for the upcoming restoration of power reactors in Germany and Switzerland,
which has also not yet begun. Despite these developments, the operating perfor-
mance in the nuclear technology business was maintained at the previous-year level
(EUR 54.7 million; previous year: EUR 54.5 million).
Industrial utility services – The market situation for industrial supply technology
(semiconductor industry, automobile construction, etc.) is virtually unchanged from
2013. This is a heterogeneous and at times somewhat parochial regional market.
Demand was stable, although there was substantial pressure on prices in this seg-
ment as well. This led to a nearly identical operating performance for this product
group of EUR 111.7 million (previous year: EUR 111.1 million).
Industrial plants – Demand in industrial piping and plant construction has shown to
be stable to date, despite increasing price pressure. This allowed important master
agreements to be extended in 2014, however no price increases could be realised.
Despite being one of the largest markets of petrochemicals in the world, Europe can
expect decreases in production and extraction capacity of up to 20% by 2020, which
could negatively affect the price level in the coming years. New plants with an aver-
age production capacity of 1 million metric tons p.a. (twice as much as in the EU) are
being built in the Middle East and Asia. This is one of the reasons why strategic part-
nerships and joint ventures should continue to be formed and expanded on outside
of Europe.
Similar to the energy and power plant business, this product group should tap
in to market potential in Europe and the rest of the world. The many overhauls and
restructures by numerous regular customers had a very positive effect on the oper-
ating performance and sales revenue this year. This led to a significant increase in
the operating performance in this product group, to EUR 83.3 million (previous year:
EUR 61.2 million).
25Kraftanlagen München GmbH Annual Report 2014
in EUR million 2013 2014Change
absoluteChange
in %
Incoming orders 335.3 390.1 54.8 16.3
Order backlog 210.9 193.9 -17.0 -8.1
Employees as at 31 Dec(number) 2,052 2,292 240 11.7
thereof trainees 69 59 -10 -14.5
2.3 Order situation and employees
At EUR 390.1 million, incoming orders in-
creased by 16.3% on the previous year. The
decrease in order backlog from EUR 210.9
million at the end of 2013 to EUR 193.9 mil-
lion at the end of 2014 resulted from the
higher volume of services rendered com-
pared to new contracts received. The rea-
son for this was the completion and billing
of larger projects. No new projects of that size were acquired.
The number of staff in the Group (including trainees) increased from 2,052 on 31
December 2013 by 11.7% to 2,292 staff on 31 December 2014, primarily due on the
one hand to taking on 357 staff from our subsidiary KAROM in Romania and on the
other due to redundancies as part of a social plan in Germany for 61 staff.
There were 59 trainees at year-end (previous year: 69), which corresponds to
2.6% of the total workforce.
2.4 Financial performance
In addition to billed revenue, the net sales
revenue reported in the statement of com-
prehensive income also includes the con-
tract revenue recognised under the percent-
age-of-completion method for construction
contracts that have not yet been billed.
In addition, the net sales revenue recog-
nised comprises the change in specific bad
debt allowances, bad debt expenses as well as provisioning for risks from large projects.
The net sales revenue of the Kraftanlagen Group in the financial year 2014, that was
planned at EUR 435.0 million, actually totalled EUR 402.0 million (previous year: EUR
458.6 million). This represents a drop of 12.3% on the previous year. The reason for this is
that fewer major projects were worked on and there were unforeseen project delays.
The EUR 58.0 million decrease in cost of materials from EUR 271.3 million to EUR
213.3 million exceeded the decline in operating performance as less work was
sourced from subcontractors and the use of materials in 2014 decreased. At EUR
114.0 million (previous year: EUR 113.8 million), personnel expenses remain virtual-
ly unchanged. Other operating expenses less other operating income deteriorated
by EUR 9.6 million from EUR -38.9 million to EUR -48.5 million. The higher negative
balance in the reporting year is due in particular to the fact that additions to or-
der-related provisions exceeded their utilisation or reversal in particular. Deprecia-
tion of property, plant and equipment and amortisation of intangible assets came
to EUR 6.1 million, down EUR 1.1 million on the previous-year figure (EUR 7.2 million).
In contrast to the previous year, no impairment losses were made (previous
year: EUR 2.2 million).
The decline in total operating performance is counterbalanced by a greater de-
crease in cost of materials, no change in personnel expenses and an increase in the
excess of operating expenses over income such that the earnings before the financial
and investment result and before income taxes (EBIT) decreased by EUR 5.2 million
(20.6%) to EUR 20.0 million and is thus EUR 4.3 million below the planned EBIT level.
However, the EBIT margin of 5.0% (previous year: 5.5%) remains at a good level. The
in EUR million 2013 2014Change
absoluteChange
in %
Net sales revenue 458.6 402.0 -56.6 -12.3
EBIT 25.2 20.0 -5.2 -20.6
in % of net sales revenue 5,5 5,0 -0.5 -
EBT 21.4 16.1 -5.3 -24.8
Profit for the period 13.5 12.0 -1.5 -11.1
26 Kraftanlagen München GmbH Annual Report 2014
difference between the target and actual EBIT is primarily due to (higher) costs
stemming from a social plan and personnel reduction (EUR 4.5 million) as well as
start-up costs for internationalisation (EUR 4.4 million), which are counterbalanced
by sales revenue from a completed large-scale project (EUR 4.0 million) that fulfilled
the criteria for revenue recognition for the first time in 2014.
At EUR -4.0 million (previous year: EUR -3.8 million), the financial result, which,
among other things, includes the interest cost for pensions and similar obligations
(EUR 2.7 million; previous year: EUR 2.8 million), remained virtually unchanged, although
greater exchange rate gains and losses were recorded than in the previous years.
Earnings before income taxes (EBT) totalled EUR 16.1 million and is therefore
down 24.8% on the previous-year figure of EUR 21.4 million.
The total tax expense fell by EUR 3.8 million year on year to EUR 4.1 million, de-
spite increased tax expenses from current taxes (increase of EUR 1.4 million to EUR
8.5 million). This is due to the stronger increase in tax income from deferred taxes
(increase of EUR 5.2 million to EUR 4.5 million). This development resulted from bill-
ing projects and a lower level of unbilled work for orders in progress.
The deferred taxes item as at 31 December 2014 was again calculated using a tax
rate of 32%. This resulted in profit for the period of EUR 12.0 million (previous year:
EUR 13.5 million).
A dividend of EUR 10.0 million (previous year: EUR 12.0 million) was paid out from KAM’s
profit for the period as at year-end and mostly in advance to Alpiq Deutschland GmbH.
2.5 Financial position
In a year-on-year comparison, it should be not-
ed that, on the one hand, one foreign subsidi-
ary is to be sold following a resolution of the
Supervisory Board and its assets and liabili-
ties classified as “held for sale” in accordance
with IFRS 5 and, on the other, a Hungarian sub-
sidiary was sold at the end of July 2014.
The composition of the balance sheet
has changed as a result, as outlined in Notes
29 and 30. The non-current assets decreased by EUR 4.8 million from EUR 64.6 million
to EUR 59.8 million, mainly due to the decline in property, plant and equipment by
EUR 2.7 million and in deferred tax assets by EUR 1.7 million as a result of billing pro-
jects that were not counterbalanced by a corresponding increase in projects under
construction.Current assets declined by EUR 15.6 million to EUR 301.9 million. De-
creases in financial receivables by EUR 14.8 million, cash and cash equivalents by
EUR 19.9 million as well as trade receivables by EUR 5.3 million (after reclassification
in accordance with IFRS 5 of EUR 20.9 million and sale of EUR 2.9 million) and other
receivables and assets by EUR 2.0 million are counterbalanced by assets held for
sale totalling EUR 23.1 million and an increase in inventories of EUR 2.9 million. With
regard to the change in financial receivables, it should be noted that there was an
increase of EUR 13.1 million, as a financial receivable was reinstated and recognised
as due from the subsidiary held for sale as part of the disposal group.
Of the trade receivables, a total of EUR 131.6 million (previous year: EUR 124.0
million) relates to receivables from billed contracts and EUR 31.2 million (previous
year: EUR 44.0 million) to unbilled contracts. The latter is composed of gross receiv-
ables from the PoC measurement in accordance with IAS 11 totalling EUR 129.0 m
in EUR million 2013 2014Change
absolute Change
in %
Non-current assets 64.6 59.8 -4.8 -7.4
Current assets 317.5 301.9 -15.6 -4.9
Total assets 382.1 361.7 -20.4 -5.3
Equity 108.6 109.0 0.4 0.4
as a percentage of total assets 28.4 30.1 1.7 -
Non-current liabilities 103.2 95.5 -7.8 -7.6
Current liabilities 170.2 157.2 -13.0 -7.6
27Kraftanlagen München GmbH Annual Report 2014
(previous year: EUR 487.7 million), netted with the EUR 97.8 million (previous year:
EUR 443.7 million) of prepayments received allocable to these contracts. The in-
crease in billed contracts of EUR 7.6 million (down from EUR 12.2 million as a result
of IFRS 5) and the decrease in unbilled contracts of EUR 12.8 million (including the
decrease of EUR 8.7 million as a result of IFRS 5) is attributed to the billing of sever-
al large contracts.
Group equity (including non-controlling interests in equity) as at 31 December
2014 was recognised at EUR 109.0 million (previous year: EUR 108.6 million), which cor-
responds to a ratio of 30.1% (previous year: 28.4%). In addition to the distribution of
the profit carried forward of EUR 0.7 million, a further EUR 9.3 million of KAM’s 2014
net income for the year in accordance with the German commercial law of EUR 32.9
million was distributed to Alpiq Deutschland GmbH (total: EUR 10.0 million) by share-
holder resolution in December 2014. There was a decrease in other comprehensive in-
come due to expenses for addition to pension provisions recognized directly in equi-
ty. After deducting the attributable deferred taxes of EUR 2.3 million, this was offset
by the increase in consolidated net retained profit of EUR 2.7 million.
Non-current liabilities came to EUR 95.6 million as at 31 December 2014 (previ-
ous year: EUR 103.2 million). EUR 6.6 million of this decline is attributable to the de-
crease in deferred tax liabilities arising from billing several large projects. Non-cur-
rent provisions include pension provisions of EUR 78.6 million (previous year: EUR
76.5 million), other personnel provisions of EUR 1.1 million (previous year: EUR 1.4
million) as well as provisions for warranty obligations and potential losses of EUR
2.6 million (previous year: EUR 3.5 million).
Current liabilities decreased by EUR 13.0 million compared to the previous year
and amount to EUR 157.2 million at the end of the year. The provisions decreased by
EUR 6.5 million (EUR 0.1 million of which as a result of IFRS 5 and EUR 0.4 million from
the disposal), trade payables by EUR 25.1 million (EUR 1.8 million of which as a result
of IFRS 5 and EUR 4.8 million from the disposal) and the financial liabilities by EUR
4.9 million in connection with the sale of the Hungarian company. Other liabilities
increased by EUR 3.8 million (after decreasing by EUR 3.4 million due to IFRS 5). Lia-
bilities associated with the planned sale amount to a total of EUR 19.7 million, EUR
13.1 million of which relate to the liability carried by the subsidy for the subsidiary
to be sold and due to KAM.
No consolidation will take place in future due to the planned sale. The decrease
in current provisions is mainly a result of the EUR 4.3 million decrease in tax provi-
sions and the EUR 3.6 million decrease in provisions for warranty obligations and po-
tential losses, which are counterbalanced by an increase of EUR 1.6 million in other
personnel provisions.
Trade payables billed decreased by EUR 12.6 million to EUR 21.2 million (EUR 1.7 mil-
lion of which as a result of IFRS 5 and EUR 4.8 million from the disposal). The balance of
prepayments received (EUR 280.8 million; previous year: EUR 264.3 million) less the un-
billed construction contracts allocable to these prepayments (EUR 248.7 million; previ-
ous year: EUR 219.7 million) declined by EUR 12.5 million to EUR 32.1 million.
Other liabilities relate to employees (EUR 12.2 million; previous year: EUR 12.8
million), tax liabilities (EUR 9.7 million; previous year: EUR 15.2 million), social secu-
rity (EUR 0.8 million; previous year: EUR 0.9 million) as well as sundry other liabilities
(EUR 37.2 million; previous year: EUR 27.3 million). The increase in the “sundry” item
is attributable to the recognition of costs associated with order processing for
billed projects.
28 Kraftanlagen München GmbH Annual Report 2014
in EUR million 2013 2014Change
absoluteChange
in %
Cash and cash equivalents 93.2 73.3 -19.9 -21.4
Cash flow
- from operating activities 48.4 -13.3 -61.7 >100
- from investing activities -43.3 4.4 47.7 >100
- from financing activities 1.7 -11.0 -12.7 >100
Change in cash and cashequivalents 6.8 -19.9 -26.7 >100
Capital expenditure onintangible assets and property, plant and equipment 4.1 3.6 -0.5 -12.2
Company acquisitions/sales - -7.5 -7.5 >100
Amortisation anddepreciation 7.2 6.1 -1.1 -15.3
Credit facility 10.0 10.0 0.0 -
- Utilisation 4.9 0 -4.9 >100
Guarantee facility 299.3 288.8 -10.5 -3.5
- Utilisation 162.2 119.7 -42.5 -26.2
2.6 Financial performance
The Kraftanlagen Group recorded cash and
cash equivalents (liquidity and financial posi-
tion from cash and cash equivalents that are
invested as a liquidity reserve in the short
term less current account liabilities) of EUR
73.3 million (previous year: EUR 93.2 million).
The cash flow from operating activities
amounted to EUR -13.3 million (previous
year: EUR 48.4 million). The change is mainly
based on an increase in receivables (previ-
ous year: decrease in receivables).
The cash flow from investing activities
(EUR 4.4 million, previous year: EUR -43.3 mil-
lion) is on the one hand due to the liquida-
tion of short-term cash investments of EUR
14.8 million in the reporting year; cash invest-
ments for a fixed term of EUR 40.0 million
were made in the previous year. On the other
hand, there was a cash outflow of EUR 7.5 million as part of the sale of a subsidiary.
At EUR 3.6 million, capital expenditure on property, plant and equipment and in-
tangible assets was EUR 0.5 million below the previous year (EUR 4.1 million). Depre-
ciation and amortisation amounted to EUR 6.1 million (previous year: EUR 7.2 mil-
lion) and disposals to EUR 0.6 million (previous year: EUR 0.3 million), including from
the sale of companies and IFRS 5. Purchases focused on replacement, rationalisation
and renewal investments. These were made with a view to boosting productivity,
reducing costs and therefore counteracting the ongoing price pressure.
The cash flow from financing activities (EUR -11.0 million; previous year: EUR 1.7
million) is mostly made up of the dividend payment to the shareholder of EUR 10.0
million (previous year: EUR 17.6 million). In the previous year, the shareholder made
a capital contribution of EUR 20.0 million.
The aforementioned changes in cash flows resulted in a decrease in cash and
cash equivalents by EUR 19.9 million to EUR 73.3 million.
With a total of cash and cash equivalents of EUR 108.3 million (previous year:
EUR 143.3 million), comprising cash of EUR 73.3 million (previous year: EUR 93.2 mil-
lion), plus short-term investments of EUR 35.3 million (previous year: EUR 50.1 mil-
lion), the Group is able to fulfil its payment obligations and to use its own financing
to drive forward the strategic further development of the Kraftanlagen Group.
2.7 Cash flows, financial position and financial performance of Kraftanlagen
München GmbH
Information for Kraftanlagen München GmbH is based on the statutory financial
statements prepared in accordance with German accounting principles.
Earnings before income taxes (EBT) totalled EUR 41.0 million, up EUR 21.4 million
on the previous-year level.
It thus exceeded expectations by EUR 10.0 million. The primary reason for this
was that the investment result was EUR 6.6 million above target and project results
were better than expected, although operating performance reached only EUR
218.2 million (plan: EUR 260.9 million).
29Kraftanlagen München GmbH Annual Report 2014
The change in the investment result of EUR 14.2 million, the increase in other operat-
ing income of EUR 4.0 million, the decrease in personnel expenses of EUR 3.2 million
as well as the decrease in depreciation and amortisation expenses of EUR 3.0 million
contributed to the increase in EBT. These effects were partially offset by the increase
in other operating expenses of EUR 4.7 million. Although the total operating perfor-
mance decreased by EUR 40.5 million, the corresponding cost of materials decreased
even more by EUR 41.5 million. Work in process decreased by EUR 111.8 million on the
previous year.
Receivables from affiliates increased by EUR 14.5 million, mostly due to higher
loans to these companies. Liabilities to affiliates decreased by EUR 58.4 million. The
main reason for this was the settlement of a prepayment of EUR 43.0 million re-
ceived upon completion of the “Kladno” project. As prepayments received from
third parties only decreased by EUR 95.3 million, and thus decreased by EUR 16.5 mil-
lion less than work in process, work in process is financed 106.3% by payments from
customers. An amount of EUR 15.7 million was therefore recognised under liabili-
ties as a prepayment received.
Intangible assets and property, plant and equipment decreased by EUR 2.2 mil-
lion, as capital expenditure was again significantly lower than depreciation and
amortisation. Financial assets remained virtually unchanged.
EUR 10.0 million was distributed to the shareholder in the reporting year. This,
along with the aforementioned factors, led to a decrease in cash and cash equiva-
lents of EUR 50.5 million. Equity increased to EUR 70.6 million due to net income for
the year of EUR 32.9 million and corresponds to 31.9% of total assets, which de-
creased by EUR 37.4 million.
30 Kraftanlagen München GmbH Annual Report 2014
3. Subsequent events
On 29 April 2015, the Company concluded a share purchase and assignment agree-
ment with Alpiq InTec AG, Zurich, for the sale of all shares in Caliqua Anlagentechnik
GmbH, Wiener Neudorf, effective 1 January 2015. We do not expect any material effect
on earnings as a result of the sale.
4. Risks and opportunities report
Entrepreneurial decisions require a conscious decision to accept risks. The task of the
risk management system of the Kraftanlagen Group is to manage the risks associated
with the alignment of the business and optimise the exploitation of strategic poten-
tial. Risk management fosters an awareness of risks at all management levels and
among all employees of the Kraftanlagen Group. The system is an integral component
of the management processes and helps to avoid risks wherever possible and, when
this is not possible to identify and assess them at an early stage to avoid any losses
eventuating for the Company. In this way, all measures have been taken to ensure
that the Group reaches its goals.
The risk management system is based on the risk policies set by the manage-
ment of the ultimate parent of the Kraftanlagen Group. These are then coordinated
at headquarters and essentially comprise the following subsystems:
• Strategic and operative planning
• Early warning system
• Internal monitoring and control system
• Management accounting
• Quality management
• Internal audit of Alpiq Holding AG.
The long- and medium-term alignment of the Kraftanlagen Group, its development
and targets and the specific operating objectives are revised and set for the follow-
ing year within the framework of the strategic and operative planning. Each quar-
ter the degree to which these goals have been attained is reviewed as part of the
standardised forecast process.
Executive management and all other management levels are informed about
the current economic position of the Group. The actual situation is analysed at all
levels. The risks pertaining to the defined goals are monitored and their impact lim-
ited by suitable measures. Possible risks for the individual entities are discussed at
regular meetings of the management of the Group with the heads of the operating
units and any needed measures are defined and implemented as part of the monthly
controlling and steering process.
In addition, internal audits and special audits have been carried out by the inter-
nal audit department of Alpiq Holding AG since 2013 as part of the organisational
changes decided upon and the transfer of holding functions to KAM. Accordingly in
2014, detailed audits were conducted at Kraftanlagen München GmbH, Kraftanlagen
Heidelberg GmbH, Caliqua Anlagentechnik GmbH as well as at Kraftanlagen Hamburg
GmbH using a set audit schedule. The audits did not lead to any significant objections.
In order to meet the requirements of Art. 728a Swiss Law of Contracts (Obliga-
tionenrecht; OR) and the German Accounting Modernisation Act (Bilanzrechts-
modernisierungsgesetz; BilMoG) a project was started in the 2010 financial year
31Kraftanlagen München GmbH Annual Report 2014
with the goal of completing the documentation of the internal control system (ICS)
of the Group and continuing to improve the system. The design of the concept for
documenting and developing the ICS was supported by the external auditor. The ef-
fectiveness of the ICS is constantly monitored by the internal audit department and
the accounting-related ICS is also reviewed by the external auditor during the audit
of the financial statements. The ICS was surveyed, documented and reviewed in the
course of spot-tests at selected entities. The internal and external audit procedures
are closely harmonised with each other. Material control weaknesses were not de-
tected in the process. The risk management of the Kraftanlagen Group and the reli-
ability of the monitoring and control system is reviewed at regular intervals. All sug-
gestions for improving the system are followed up.
Project and contractual risks
Group management regularly reviews all projects above a certain threshold follow-
ing a structured approach to identify any commercial and contractual risks. This
review covers all stages of the project from submitting the tender, administration
and performing the work and settling any warranty claims. In this way, potential
contractual and project risks can be identified and mitigated to the greatest possible
extent in good time. Practical and effective methods are chosen for each particular
case and applied accordingly. The primary goal is to systematically avoid any commercial
and contractual risks.
In addition to the risks that arise during the execution phase, the profitability of
a project frequently depends on whether subsequent work can be billed to the con-
tractual partner or accepted by them. Risks could arise if scheduled subsequent work
is not realised or proves to be unbillable. Where the analysis reveals risks, these are
assessed and considered in the balance sheet. We deal with warranty risks by de-
manding guarantees from subcontractors and providing for them in the balance
sheet. Insurance coverage is taken out to cover liability risks and claims for damages.
Our Group pursues the goal of avoiding court action wherever possible as the
outcome of such litigation is always uncertain. In cases of pending litigation, ade-
quate provision is made in the balance sheet and therefore no impact is expected
on the Group’s results of operation from current legal action. For this reason we
consider the probability of occurrence to be low.
Market and customer risks
Our customers set high quality standards with regard to our goods and services. We
must meet these expectations to defend our market position and build on it. Due to
the nature of the industry, there is a certain dependence on individual key custom-
ers, particularly those in the energy, chemicals and petrochemicals industries. The
willingness of these customers to invest depends greatly on the economic and po-
litical environment of the respective markets they serve and this has a major im-
pact on our order backlog and utilisation of capacity at the Kraftanlagen Group.
As a result of the new energy concept there are elevated risks in the industry ow-
ing to the pending closure of plants and a risk that larger projects in the power plant
sector will not be issued in the mid-term as they are no longer profitable. We attempt
to keep the overall risk exposure at a low level by analysing the forecasts and aligning
the Kraftanlagen Group towards fields of business with excellent earnings prospects
and returns which promise a solid position on markets with growth prospects either
in Germany and abroad, both in terms of organic growth and acquisitions. However, it
32 Kraftanlagen München GmbH Annual Report 2014
should be noted that due to the economic situation, of the large energy supply com-
panies as a result of the new energy concept, the market and customer-driven risks
relating to the key accounts have intensified in the past financial year
In first quarter of 2015, the state prosecutor of Munich I and the German Feder-
al Antitrust Office started proceedings against various companies active in the in-
dustry for technical building equipment, including Kraftanlagen München GmbH.
Kraftanlagen München is cooperating with the investigating authorities. There are
currently no indicators as to what the outcome of the proceedings might be. As
things stand, there is no evidence to suggest that any related risks may jeopardise
the Company’s ability to continue as a going concern.
Financial risks
Within the framework of its operating activities, the Kraftanlagen Group is exposed
to financial risks such as price risks, interest risks, credit risks, currency risks and li-
quidity risks. These are monitored using proven control and steering instruments.
The reporting system allows continuous capture, analysis, assessment and man-
agement of financial risks.
Liquidity risks are monitored centrally and managed accordingly. At present, no
liquidity bottlenecks are apparent thanks to the high level of cash and cash equiva-
lents coupled with the lines of credit and bank guarantees available to the Group.
Potential risks of counterparty default associated with the Group's investment of
cash surpluses are limited by only investing in instruments issued by highly-rate
business partners.
In the finance sector, market price risks mainly relate to exchange rates, inter-
est rates and market values of monetary investments. The Kraftanlagen Group is
primarily active in the euro zone and therefore only exposed to exchange rate fluc-
tuations to a limited extent. Derivative financial instruments are used in some cas-
es to hedge future sales revenue and prepayments against the existing risks of for-
eign exchange fluctuations.
However, derivatives are only used to hedge operating transactions. Therefore
they do not pose any additional risks to the Group. Please see the reporting in Note
28 of the notes to the financial statements “Derivative Financial Instruments” for
more information.
Thanks to the excellent liquidity, interest risks only play a subordinate role. The
management of credit risk at the Kraftanlagen Group comprises both the day-to-day
monitoring of outstanding receivables from counterparties as well as rating new and
existing counterparties. In principle, business risks are only entered into with coun-
terparties which meet the criteria laid down in the risk policies of the Kraftanlagen
Group. Risk clusters for the Kraftanlagen Group are minimised by the number and
spread of customers and by consolidating certain exposures. However, due to the na-
ture of the industry, there is a great deal of dependence on individual key customers
in the energy industry, chemicals industry and the petrochemicals industry.
Personnel-related risks
Personnel-related risks essentially constitute strategic risks and are therefore diffi-
cult to quantify. There is still stiff competition on the labour market for profession-
als and managers which remains relatively unaffected by the state of the economy
owing to the current scarcity of professionals and managers. We actively monitor
and counter personnel risks related to a lack of new talent, high employee churn, a
33Kraftanlagen München GmbH Annual Report 2014
lack of qualified staff, low level of motivation or an aging workforce. The future suc-
cess of the Company critically depends on our ability to recruit and integrate suita-
ble personnel and bind them to the Kraftanlagen Group for the long term.
Systematic succession planning for management and ensuring adequate deputies
reduces the personnel risks facing the Kraftanlagen Group at management level.
Overall risk
An overall analysis of risk reveals that the Kraftanlagen Group is primarily exposed
to market and project-related risks. These essentially comprise the risks of fluctua-
tions in the economy and the relatively high degree of dependence on key custom-
ers in the energy, chemicals and petrochemicals sector. The risks related to the
value chain are managed by our risk management system and their impact is there-
fore limited.
Apart from the external risks related to the German and the global economy and
uncertainties associated with the new energy policy, the risks within the Kraftanla-
gen Group can be limited, are transparent and do not, from today's perspective, jeop-
ardise the ability of the Kraftanlagen Group to continue as a going concern. Nor do we
see any risks that could jeopardise the economic or legal existence of the Group in
future, as we are active in a number of different markets. Moreover, our comprehen-
sive risk management system helps to secure targeted management and develop-
ment of the Kraftanlagen Group.
Opportunities
In addition to the systematic management of risks, it is also essential to support the
success of the Kraftanlagen Group by actively managing opportunities. The identi-
fication of opportunities and their strategic and financial assessment plays a role
in the strategic discussion the Supervisory Board holds regularly with the share-
holder responsible and those responsible for each of the operating divisions. The re-
sults of these meetings are incorporated into the Kraftanlagen Group’s strategic
decisions and into the annual planning processes.
In the following, we describe significant opportunities which could have positive
effects on our business situation, net assets, financial position and results of opera-
tions and thus cause the results to deviate positively from those forecast/targeted.
External growth through acquisitions
We are working intensively to expand our product and service program, also by
means of targeted business acquisitions. This offers us opportunities in the short
term for additional earnings not provided for in the business plan and could be suit-
able in the mid-term in helping us to improve our positioning in related markets.
New markets for existing services
We also analyse our market opportunities for our existing service offerings in the
regions in which we either have no presence or are underrepresented. In addition,
we consider there to be good opportunities to strengthen our portfolio in the area
of heat generation.
Opportunities in economic development and energy policy
Based on general economic development, a lack of legal provisions and uncertain-
ty in energy policy, for the time being we predict an ongoing gloomy climate for
34 Kraftanlagen München GmbH Annual Report 2014
investment in 2015 and 2016. If there were renewed investments in large-scale pow-
er plants and industrial plants, this would positively influence the business situa-
tion, net assets, financial position and results of operations of the Kraftanlagen
Group. We currently do not deem such a development to be likely. If it were to occur,
however, the effects would be felt on all business units, albeit with varying intensity
and time lag.
5. Forecast
Building on the strategy defined by the Kraftanlagen Group, a new future-oriented
organisational structure was developed at the end of 2014 and implemented at the
beginning of 2015. The main goals are a consistent reduction in costs in connection
with streamlining administration and creating clear structures as a basis for fur-
ther business development with distinct responsibilities for the products, without
redundancy in the performance spectrum, all to better meet the requirements of
the market. At the same time, the new organisational structure should bring with it
more flexibility to react to the ever-changing internal and external requirements aris-
ing from the new energy concept and highlight the development and growth capabil-
ities in the new business areas. For this reason, the old market segments energy and
environmental technology and large-scale power plants were changed over to the
business units energy and power plant technology, decentralised energy supply
and underground piping construction in 2015. There are also the business units in-
dustrial utility services (as before, however without underground piping construc-
tion), nuclear technology (now concentrated in the legal unit Kraftanlagen
Heidelberg GmbH), industrial plants and assembly, engineering and consulting as
well as fabrication and welding.
The economic data shows an improvement in business and consumer sentiment
such that economic expansion seen in the fourth quarter of 2014 will continue in the
first quarter of 2015.
The significant increase in private household consumption especially led to
positive growth stimulus.
Consumer prices in March were up by a moderate 0.3% on the previous year,
which indicates a high level of price stability.
At the time of finalizing this report, GDP growth in the first quarter came to 0.7%
compared to the previous quarter.
Construction output decreased significantly in February, however the trend of
the two-month average is still clearly upward. Finishing work and building construc-
tion increased considerably by 3.7% and 2.3% compared to the previous period. Only
civil engineering decreased by 1.7%.
Incoming orders in the processing industry developed positively (0.6%) compared
to the previous three months. The increase is attributable to the increase in orders in
Germany in the segments intermediate goods, capital goods and consumer goods. In-
ternational orders have stagnated.
The declining price of oil continues to affect the energy price level. The Brent crude
price per barrel in March was still nearly 50% lower than the previous-year figure. There
are no signs of a clear upward trend in the oil price. In January the average figure
was exceeded, but then stagnated in February and March.
As in 2014, a clear legislative framework is still lacking in the German energy
economy. Reforming the Renewable Energy Act (EEG) or the National Action Plan on
35Kraftanlagen München GmbH Annual Report 2014
Energy Efficiency (NAPE) have not changed this. The Kraftanlagen Group’s major cus-
tomers such as the energy supply companies RWE, EnBW, Vattenfall or E.ON are also
in the midst of extensive transformation processes with an uncertain outcome.
Renewed revision of the EEG should create the legal framework needed for the
new energy concept to succeed. The situation in Germany regarding conventional
power generation remains extremely tense. Due to the scheduled and definite
phase-out of nuclear energy generation, coal and especially gas are two of the key
partners on the road to the new energy concept, yet they are under increasing pres-
sure from the additional planned tax levies on carbon emissions. An example of this
is that EnBW has already announced the closure of six units. In addition, the re-
quired extensive expansion of the grid has come to a standstill although this is es-
sential if a holistic design is to work. Because of this, 2015 must become the decid-
ing year for the make-up of the electricity market. The “green book” [“Grünbuch”]
presented by Sigmar Gabriel, the German Minister for Economic Affairs, does in-
deed key questions regarding energy management in a balanced manner, which is
why the Kraftanlagen Group agrees with the results and estimates of the scientific
basis of the green book. The management feels vindicated by the strategic reserve
announced in the book as a cost-effective option to ensure supply reliability and re-
jects a capacity market for that reason. For this to take place, there would, howev-
er, have to be an expansion of gas turbine plants and gas engine power plants. Due
to its lack of flexibility, coal does not appear to be a suitable raw material to achieve
this goal.
Finally, there continues to be little clarity regarding the use of renewable or conven-
tional energy, the expansion of the grid, regulatory measures and as such little willing-
ness from our most important customers to invest in our products and services.
Bearing in mind the difficulty in forecasting, we anticipate the following develop-
ments for our newly-defined business units (the following are unconsolidated figures):
The energy and power plant technology business unit will continue to stick to
the internationalisation strategy issued and try to acquire and develop projects
identified in attractive target markets in the rest of the world. The project commis-
sioned in February 2015 in Moerdijk (Netherlands) and the package acquired in
Opole (Poland) in December 2014 demonstrate that the Kraftanlagen Group is inter-
nationally competitive. We anticipate further successes in 2015. Moreover, we see
potential in overhauling existing plants in Germany. Due to the numerous load
changes to which large conventional power plants are subject as a result of the vol-
atility in electricity generation caused by the renewable energies and for which
they are not designed, these plants are currently exposed to high levels of wear and
tear. Despite this, it will not be possible to maintain the volume of previous years in
the current situation, which is why adjustments to personnel had to be made in this
business unit. We are also nevertheless budgeting an operating result of EUR 123.1
million for energy and power plant technology for 2015, with a comparable level for
the mid-term.
In the segment of renewable energies work will continue at the Jülich solar-ther-
mal research facility with the goal of realizing further optimization. Moreover, a great
deal of work is being done on international commercialisation of the technology.
The current market situation in the decentralised energy supply business unit
is virtually identical. As explained above, a clear legislative framework is still lack-
ing in the German energy economy. Even the reform of the German Renewable En-
ergy Act (EEG) only provided a secure framework for investment in self-generated
36 Kraftanlagen München GmbH Annual Report 2014
power, combined heat and power plants, etc. which are sold in this business unit.
We anticipate a stable operating result of EUR 49.0 million for 2015 on the back of di-
verse developments in the performance spectrum, e.g., on the topic of industrial re-
frigeration.
The situation in the nuclear technology segment remains unchanged. Despite
diverse announcements of new plants made in the media, for example in the UK, no
new plants are actually being built in Europe. Irrespective of this, we will continue
to maintain all of the certificates and permissions (e.g. ASME) that were gained in
past years, which are necessary to work the international market, in order to be
able to take advantage of potential as it appears. In addition to the UK, markets in
Turkey and France will be worked intensively. Another pillar of this business unit is
the area of post-operations and decommissioning of nuclear facilities. Appropriate
preparations have already been made in order to be able to participate in this very
promising market, such as founding a company in Switzerland to acquire orders
within the scope of decommissioning nuclear power plants.
As many of these activities are difficult to assess in terms of timing, we are only
forecasting an operating performance of EUR 58.5 million for the financial year
2015. In the mid-term, we expect to see a slight rise in volume, whereby this does not
consider the potential for possible new construction projects.
We have observed stable demand in the industrial utility services business unit
and are forecasting a slight rise in business in 2015, which is also reflected in the
economic development, however considerable price pressure remains. We antici-
pate an operating performance of EUR 41.0 million in 2015. In the mid-term we are
projecting slight growth.
Industrial plants and assembly: There are positive developments to be seen here,
both in terms of the economy and in terms of customers. For example, some contracts
were won, especially in foreign countries (primarily in Romania). Operating perfor-
mance in this business unit is very much dependent upon developments in the price
of oil, especially in the rest of the world, as much of the service and maintenance work
done in the refineries is dependent upon the companies’ current profits. At the cur-
rent price of around 50 dollars per barrel, we are currently experiencing a dramatic
price fall in the oil markets thanks to the extraction of for light tight oil in the USA. Ir-
respective of this, it remains to be seen as to whether the current crises in the Middle
East or the conflict between Russia and Ukraine will influence long-term secure sup-
ply on the oil and gas markets, and in what way. Furthermore, the question remains
as to how far the global energy system can be actively influenced by politics, or if the
developments are driven more by current events, crises and uncertainties. Most ex-
perts assume that consumption of oil will rise again in the long term. The Internation-
al Energy Agency (IEA) expects an increase in consumption of 14 billion barrels per day
to 104 billion barrels per day by 2040. US subsidies for oil extracted by fracking are to
be cut back from 2020. Due to increasing demand and decreasing subsidization, the
oil price will rise again and the Middle East will play in important role in the markets.
At the same time it is assumed that the dependence will increase from its current val-
ue of 32% to 38%. For this reason, political instability in the Middle East continues to
pose a certain risk to the oil markets and thus to the continued development of the
industrial plant and assembly business unit.
As a result, we are budgeting for an operating performance of EUR 76.2 million
for 2015. We anticipate a steady or increasing operating performance in the medi-
um term, depending on the development in the price of oil.
37Kraftanlagen München GmbH Annual Report 2014
The underground piping construction business unit has been independent since
the 2015 reporting year. Before that it was part of energy and environmental tech-
nology. We are currently seeing stable demand in the supply technology product
group and are forecasting a slight rise in business in 2015, which is also reflected in
the economic development, however considerable price pressure remains. We ex-
pect an operating result of EUR 31.0 million, not including winning possible large
projects.
The fabrication and welding business unit is mostly dependent upon the perfor-
mance of the energy and power plant technology business unit. In line with this
development, we do not expect to reach the volumes in past years. For this rea-
son, corresponding capacity adjustments have been made to personnel. Due to
the stable price situation, we are budgeting an operating result of EUR 15.1 million
in this business unit for 2015.
Due to its large share in internal services for the energy and power plant technolo-
gy and industrial plants and assembly business units, the engineering and consulting
38 Kraftanlagen München GmbH Annual Report 2014
business unit is accordingly dependent on their operating result and market situa-
tion. This unit also acts as a growth indicator for these market segments. There is
still now, however, a noticeably positive investment climate by several regular cus-
tomers in the chemical industry, though the lower oil price and lack of legal frame-
work in the energy sector are dampening positive expectations. For this reason, we
anticipate an operating result of EUR 11.3 million in 2015.
Overall, we are forecasting a decline in the total (consolidated) operating perfor-
mance of the Kraftanlagen Group in 2015 to EUR 395.1 million (2014: EUR 403.1 million)
with a slightly lower EBIT, which came to EUR 20.0 million in 2014. We do aim, howev-
er, to return to continuous growth in operating performance and sales revenue.
In 2015 Kraftanlagen München GmbH anticipates operating performance of EUR
274.4 million (2014: EUR 218.2 million) and earnings before taxes (EBT) of EUR 35.0 mil-
lion (2014: EUR 41.0 million) in accordance with German accounting principles.
The Kraftanlagen Group is continuing to undertake all necessary measures to
adapt to constantly changing conditions in the market and to counter the declining
39Kraftanlagen München GmbH Annual Report 2014
demand for our core business. In addition to internationalisation and an increase in
market penetration, the continual development of the performance spectrum is
part of our strategic measures to improve our competitive edge. To achieve these
objectives, we will continue to scrutinise opportunities for growth such as purchas-
ing companies or entering into partnerships.
This requires a great deal of flexibility both in terms of the organisation and inter-
nal processes as well as from the employees. This is what the organisational project
primarily aimed to do. The project began in 2014 at group level and was continued and
further developed in 2015 accordingly via the definition of the business units.
Moreover, the cost-cutting program, also initiated in 2014, will be rigorously con-
tinued in order to further improve the earning power of the Kraftanlagen Group.
In this regard we are still targeting an EBIT return of over 5% although our focus
is on the bottom line in absolute figures.
In sum, there are good opportunities on the markets on which the Kraftanlagen
Group focuses. A decisive factor in this regard will be to remain flexible, profession-
al and to seize the opportunities that arise and complete the existing projects as
successfully as we have done in the past.
Sustainable business development can only be successful if it is combined
with corresponding staff development. The most important success factor of the
Kraftanlagen Group is still its competent, motivated and high-performing staff. Our
main goal will therefore be to retain the existing workforce, foster personal devel-
opment and qualifications and thus create the conditions needed for our employ-
ees to operate successfully on the market.
The health of our employees is our greatest asset. For this reason we place great
store by the issue of occupational health and safety.
Munich, 29 May 2015
General Management
Reinhold Frank Alexander Gremm Friedrich Schmidt
40 Kraftanlagen München GmbH Annual Report 2014
Table of Contents
Kraftanlagen Group
Consolidated Financial Statements 41 Consolidated Statement of Comprehensive Income 42 Consolidated Balance Sheet 43 Consolidated Cash Flow Statement 44 Consolidated Statement of Changes in Equity 45Notes to the Consolidated Financial Statements 46 General Information 46 Important Accounting Principles 46 Basis of Consolidation 50 Consolidation Principles 51 Currency Translation 51 Accounting and Valuation Methods 52
Notes to the Consolidated Statement of Comprehensive Income 64 Notes to the Consolidated Balance Sheet 69 Other Notes 86 Auditor s Report 100Kraftanlagen München GmbH
Balance Sheet 102 Income Statement 103 Notes and General Information 104 Accounting and Valuation Methods 104 Notes to the Balance Sheet 107 Notes to the Income Statement 111 Other Notes 116 Auditor s Report 120
2014 Consolidated Financial Statements and Annual Financial Statements ofKraftanlagen München GmbH, Munich
41Kraftanlagen München GmbH Annual Report 2014 41Kraftanlagen München GmbH Annual Report 2014
Kraftanlagen München GmbH, MunichConsolidated Statement of Comprehensive Income for 2014
Consolidated Financial Statements
in EUR thousand Notes 2013 2014
Net sales revenue 1 458,578 402,008
Other own work capitalised 2 41 0
Total operating performance 458,619 402,008
Other operating income 3 3,760 3,302
Cost of materials 4 -271,324 -213,319
Personnel expenses 5 -113,833 -114,029
Other operating expenses 6 -42,675 -51,836
Earnings before interest, taxes, depreciation and amortisation (EBITDA) 34,547 26,126
Depreciation and amortisation 7 -7,186 -6,092
Impairments 7 -2,189 0
Earnings before interest and taxes (EBIT) 25,172 20,034
Financial income 8 1,280 3,341
Financial expenses 9 -5,091 -7,314
Earnings before taxes (EBT) 21,361 16,061
Income taxes 10 -7,826 -4,061
Profit or loss for the period 13,535 12,000
Other comprehensive income
Currency translation of foreign operations 21 105 48
Net loss/profit from cash flow hedges 21 1.335 0
Deferred tax effects on cash flow hedges 21 -427 0
Other comprehensive income to be reclassified to profitor loss in subsequent periods 1,013 0
Remeasurement of actuarial obligations 21 890 -3,371
Deferred tax effects on the remeasurement 21 -283 1.068
Other comprehensive income not to be reclassified asprofit or loss in subsequent periods 607 -2,255
Other comprehensive income after taxes 1,620 -2,255
Total comprehensive income after taxes 15,155 9,745
Profit or loss for the period attributable to
Non-controlling interests 56 -750
KAM shareholders 13,479 12,750
13,535 12.000
Total comprehensive income attributable to
Non-controlling interests 68 -750
KAM shareholders 15,087 10,495
15,155 9,745
42 Kraftanlagen München GmbH Annual Report 2014
Kraftanlagen München GmbH, MunichConsolidated Balance Sheet as at 31 December 2014
in EUR thousand Notes 31 Dec 2013 31 Dec 2014
AssetsProperty, plant and equipment 11 29,649 26,955
Intangible assets 12 10,158 9,788
Financial assets 13 46 6
Other receivables and assets 15 30 0
Deferred income tax 16 24,729 23,014
Non-current assets 64,612 59,763
Inventories 18 1,313 4,234
Financial receivables 14 50,115 35,342
Trade receivables 19 168,028 162,773
Other receivables and assets 15 4,290 2,334
Income tax assets 17 460 823
Cash and cash equivalents 20 93,240 73,349
Derivative financial instruments 28 5 0
317,451 278,855
Assets held for sale 30 0 23,082
Current assets 317,451 301,937
Balance sheet total 382,063 361,700
Equity and liabilitiesSubscribed capital 21 25,000 25,000
Capital reserve 21 40,997 40,997
Other reserves 21 -13,172 -15,734
Net retained profit 21 56,448 59,198
KAM interest in equity 109,273 109,461
Non-controlling interest in equity 22 -642 -499
Equity 108,631 108,962
Provisions 23 81,428 82,299
Trade payables 25 1,913 0
Deferred income tax 16 19,878 13,272
Non-current liabilities 103,219 95,571
Provisions 23 30,741 24,193
Financial liabilities 24 4,871 0
Trade payables 25 78,423 53,288
Other liabilities 26 56,177 59,942
Income tax liabilities 27 1 2
Derivative financial instruments 28 0 1
170,213 137,426
Liabilities directly associated withassets held for sale 30 0 19,741
Current liabilities 170,213 157,167
Liabilities 273,432 252,738
Balance sheet total 382,063 361,700
43Kraftanlagen München GmbH Annual Report 2014
Consolidated Financial Statements
Kraftanlagen München GmbH, MunichConsolidated Cash Flow Statement for 2014
in TEUR 2013 2014
Operating activities
Earnings before taxes 21,361 16,061
Depreciation, amortisation and impairment of property, plant and equipment and intangible assets 9,375 6,092
Losses from the disposal of property, plant and equipment 46 23
Interest income -524 -558
Interest expenses 4,252 3,781
Expenses from derivatives 2 6
Other non-cash income and expenses 1,179 1,095
Change in other provisions and pension provisions -4,704 -6,412
Change in inventories, trade receivables and other receivables and assets 17,188 -20,504
Change in trade payables and other liabilities 1,796 383
Income taxes paid -1,544 -13,246
Net cash flow from operating activities 48,427 -13,279
Investing activities
Proceeds from the disposal of property, plant and equipment and intangible assets 244 218
Acquisition of property, plant and equipment -3,312 -3,235
Acquisition of intangible assets -801 -405
Acquisition/disposal of securities held as current assets and investments with a maturityof over three months and less than one year -40,000 14,773
Sale of subsidiaries less cash and cash equivalents received/transferred 0 -7,481
Interest received 524 558
Net cash flow from investing activities -43,345 4,428
Financing activities
Borrowings 646 0
Interest paid -1,351 -985
Dividend to the shareholder -17,552 -10,000
Capital contribution from the shareholder 20,000 0
Net cash flow from financing activities 1,743 -10,985
Net foreign exchange difference 0 -55
Net change in cash and cash equivalents 6,825 -19,891
Cash and cash equivalents as at 1 January 86,415 93,240
Cash and cash equivalents as at 31 December 93,240 73,349
Composition of cash and cash equivalents
Cash funds 93,240 73,349
44 Kraftanlagen München GmbH Annual Report 2014
Kraftanlagen München GmbH, MunichStatement of Changes in Equity for 2014
Capital attributable to the shareholders of the parent company
Changes in equity recognised directly in equity
in EUR thousandSubscribed
capital Capital reserveCurrency
translation
Remeasurement in accordance
with IAS 19 (2011)
Cash flow hedge
reserveNet retained
profitsKAM
interest
Non- controlling
interests Total
As at 1 Jan 2013 25,000 20,997 -465 -13,407 -908 54,969 86,186 -710 85,476
Profit or loss for the period after taxes 0 0 0 0 0 13,479 13,479 56 13,535
Other comprehensiveincome after taxes 0 0 93 607 908 0 1,608 12 1,620
Comprehensive income for the year 0 0 93 607 908 13,479 15,087 68 15,155
Dividend payout 0 0 0 0 0 -12,000 -12,000 0 -12,000
Other changes *) 0 20,000 0 0 0 0 20,000 0 20,000
As at 31 Dec 2013 25,000 40,997 -372 -12,800 0 56,448 109,273 -642 108,631
As at 1 Jan 2014 25,000 40,997 -372 -12,800 0 56,448 109,273 -642 108,631
Profit or loss for theperiod after taxes 0 0 0 0 0 12,750 12,750 -750 12,000
Other comprehensiveincome after taxes 0 0 48 -2,303 0 0 -2,255 0 -2,255
Comprehensive incomefor the year 0 0 48 -2,03 0 12,750 10,495 -750 9,745
Dividend payout 0 0 0 0 0 -10,000 -10,000 0 -10,000
Changes to the basisof consolidation 0 0 -307 0 0 0 -307 893 586
As at 31 Dec 2014 25,000 40,997 -631 -15,103 0 59,198 109,461 -499 108,962
*) Other changes relate to the net increase in assets by the shareholder; see Note 21
Further explanations in Notes 21 and 22
45Kraftanlagen München GmbH Annual Report 2014
Kraftanlagen München GmbH, MunichNotes to the Consolidated Financial Statements for 2014
General Information
The business activities of Kraftanlagen München GmbH (“KAM”) and its subsidiaries
comprise services related to plant and pipeline construction in Germany and abroad.
This includes planning, project management, construction, supply, completion, oper-
ation and maintenance of plants in conventional and nuclear power generation, in-
dustrial and public-sector media supply as well as chemicals and petrochemicals.
Furthermore, services include the engineering and execution of radiation protection
work for nuclear power plants, the acquisition and licensing of patents, licences and
processes and their exploitation in these areas of activity.
The Company’s registered office is in Munich, Germany. Its address is: Kraftanla-
gen München GmbH, Ridlerstrasse 31c, 80339 Munich. The Company is registered in
the Munich commercial register, under number 106176.
The consolidated financial statements are prepared as at the same balance
sheet date as for the parent company’s annual financial statements. The financial
year for the parent company is the calendar year. The consolidated financial state-
ments were prepared in euros (EUR). Unless indicated otherwise, all figures were
rounded up or down to the nearest thousand euro (EUR thousand) in accordance
with customary commercial practice.
The consolidated financial statements are made up of the comprehensive state-
ment of income, balance sheet, cash flow statement, statement of changes in equity
and notes. In addition, a Group management report is prepared in accordance with Sec-
tion 315a of the German Commercial Code (Handelsgesetzbuch; HGB) in conjunction
with Section 315 of the HGB, which is combined with the KAM management report.
The balance sheet is classified by maturity; the comprehensive statement of in-
come is presented using the nature of expense method. The consolidated financial
statements contain comparative information on the past reporting period.
The consolidated financial statements give a true and fair view of the financial
position, financial performance and cash flows of the Kraftanlagen Group.
KAM’s General Management approved the consolidated financial statements for
submission to the Supervisory Board on 29 May 2015. The consolidated financial state-
ments as at 31 December 2013 of KAM, and the group management report for the 2013 fi-
nancial year were published in the Bundesanzeiger (Federal Gazette) on 27 October 2014.
Important Accounting Principles
Basis for the preparation of the consolidated financial statements
The consolidated financial statements of KAM and its subsidiaries were prepared
voluntarily as at 31 December 2014 in accordance with the International Financial
Notes to the Consolidated Financial Statements
46 Kraftanlagen München GmbH Annual Report 2014
Reporting Standards (IFRSs) of the International Accounting Standards Board (IASB),
London, as adopted in the European Union (EU), and pursuant to the additional re-
quirements of Section 315a(1) and (3) of the HGB.
The consolidated financial statements are prepared based on the historical cost
convention. Excluded from this are derivative financial instruments, which are
measured at fair value. Due to a resolution passed by the Supervisory Board to sell
a foreign subsidiary, its assets and liabilities are recognised as “held for sale” pursu-
ant to IFRS 5. All IFRS regulations that were applicable on the balance sheet date
were observed. The requirements of the applicable standards were met in full.
Application of revised and new standards and interpretations
The accounting policies adopted are consistent with those of the previous re-
porting period except as follows:
The Group adopted the following new and revised International Financial Re-
porting Standards and their Interpretations during the financial year.
Since 1 January 2014, the new International Financial Reporting Standards on
consolidation
• IFRS 10 “Consolidated Financial Statements”
• IFRS 11 “Joint Arrangements”
• IFRS 12 “Disclosure of Interests in Other Entities”
as well as the subsequent amendments to IAS 27 “Separate Financial Statements”
as well as IAS 28 “Investments in Associates and Joint Ventures” have been subject
to mandatory adoption. The first-time adoption did not result in changes relating to
the consolidated group and had no material impact on the financial position, finan-
cial performance and cash flows of the Kraftanlagen Group.
Furthermore, the changes to the following International Financial Reporting
Standards are subject to mandatory adoption as at 1 January 2014: Amendments to
IAS 32 “Financial Instruments: Presentation”, IAS 36 “Recoverable Amount Disclo-
sures for Non-financial Assets” as well as IAS 39 “Financial Instruments: Recognition
and Measurement”. The changes had no material impact on the financial position,
financial performance and cash flows of the Kraftanlagen Group.
Further new and revised standards and interpretations had been issued by the
time the consolidated financial statements were prepared. Compliance with these
will only become mandatory in subsequent years; as such, they were not early
adopted by KAM. In some cases, future application of new and revised standards
and interpretations is subject to the condition that they are endorsed by the EU. The
following standards, interpretations and amendments to standards that are rele-
vant to the Group’s business activities had been published as at 31 December 2014,
but were not yet subject to mandatory adoption:
IAS 1 “Presentation of Financial Statements” (beginning on/after 1 January 2016)
The amendments primarily clarify the principle of materiality, sub-classification of fi-
nancial statements items as well as requirements regarding the structure of the notes.
The effect on the consolidated financial statements is currently being assessed.
47Kraftanlagen München GmbH Annual Report 2014
IFRS 9 “Financial Instruments: Classification and Measurement”
(beginning on/after 1 January 2018)
This standard mainly contains regulations for the classification and measurement
of financial assets and financial liabilities. Furthermore, the new provisions on the
impairment of financial assets as well as on hedge accounting were published. In
general, these new regulations are effective retrospectively and their effect on the
consolidated financial statements is currently being assessed.
IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments
in Associates and Joint Ventures” (beginning on/after 1 January 2016)
The amendments concern the clarification that for transactions with an associate
or joint venture the recognition of gains depends on whether the assets sold or con-
tributed are classified as a business. The effect on the consolidated financial state-
ments is currently being assessed.
IFRS 10 “Consolidated Financial Statements”, IFRS 12 “Disclosure of Interests in
Other Entities” and IAS 28 “Investments in Associates and Joint Ventures”
(beginning on/after 1 January 2016)
The amendments relate to matters arising in connection with the consolidation of
investment companies. No or no significant consequences are expected for the con-
solidated financial statements.
IFRS 11 “Joint Arrangements” (beginning on/after 1 January 2016)
The amendments clarify that the acquirer of interests in a joint operation constitut-
ing a business as defined in IFRS 3 must apply all of the principles on business com-
binations in IFRS 3 and other IFRSs except for those principles that conflict with the
guidance in IFRS 11. The effect on the consolidated financial statements is current-
ly being assessed.
IFRS 14 “Regulatory Deferral Accounts” (beginning on/after 1 January 2016)
We do not expect any consequences for the consolidated financial statements.
IFRS 15 “Revenue from Contracts with Customers”
(beginning on/after 1 January 2018)
The new standard results in a uniform model for the recognition of sales revenue
from contracts. It entails a five-step model applicable to contracts with customers.
Accordingly, sales revenue is recognised as soon as the customer obtains control of
the promised good or service. In addition, the standard is applicable to the recogni-
tion and measurement of certain non-financial assets that do not constitute con-
sideration in the course of an entity’s ordinary activities. The standard also requires
additional disclosures, including a disaggregation of total sales revenue, on perfor-
mance obligations, on reconciliations of opening and closing balances of contract net
assets and contract liabilities as well as on significant judgements and estimates.
New, extensive notes to the financial statements are also required. The effect on the
consolidated financial statements is currently being assessed.
Notes to the Consolidated Financial Statements
48 Kraftanlagen München GmbH Annual Report 2014
IAS 16 “Property, Plant and Equipment” and IAS 38 “Intangible Assets”
(beginning on/after 1 January 2016)
The amendments relate to the clarification of the question as to when reve-
nue-based methods of amortisation and depreciation for intangible assets and
property, plant and equipment can be applied. Currently, we do not expect any con-
sequences for the consolidated financial statements.
IAS 19 “Employee Benefits” (beginning on/after 1 January 2016)
The amendments regulate the recognition of contributions by employees or third
parties to defined benefit pension plans as a reduction in service cost provided that
these reflect the service rendered in the reporting period. The effect on the consol-
idated financial statements is currently being assessed.
IAS 27 “Separate Financial Statements” (beginning on/after 1 July 2014)
The amendments permit the equity method as an accounting option for shares in
subsidiaries, joint ventures and associates in the separate financial statements of
an investor. We do not expect any consequences for the consolidated financial
statements.
IFRIC 21 “Levies” (beginning on/after 17 June 2014)
The interpretation clarifies that a liability must be recognised for levies as soon as
an activity established by law occurs which triggers a payment obligation. Further-
more, levies that are triggered when specific thresholds are reached are not ac-
counted for until they are reached. No or no significant consequences are expected
for the consolidated financial statements.
“Annual Improvements to IFRSs”
The objective of the annual improvement concept is to make necessary but non-ur-
gent amendments to existing IFRSs that are not made in the course of other major
projects.
• “2010 to 2012 Cycle“ (beginning on/after 1 July 2014) As a result,
seven IFRS were amended.
• “2011 to 2013 Cycle“ (beginning on/after 1 July 2014) As a result,
four IFRS were amended.
• “2012 to 2014 Cycle“ (beginning on/after 1 January 2016) As a result,
four IFRS were amended.
To the extent that the changes or amendments have already been endorsed by the
EU, the date of first-time adoption specified refers to the date of first-time manda-
tory adoption in the EU. Otherwise it refers to the date of first-time mandatory
adoption as defined by the IASB. Implementation is executed at the latest in the
year of first-time mandatory adoption for the Company in the EU.
49Kraftanlagen München GmbH Annual Report 2014
Basis of Consolidation
In addition to Kraftanlagen München GmbH based in Germany, the KAM consolidat-
ed financial statements include 8 domestic entities (previous year: 8) and 5 foreign en-
tities (previous year: 5) in which KAM holds, either directly or indirectly, the majority
of voting rights. The financial statements of the subsidiaries were prepared using uni-
form measurement and valuation methods.
In accordance with the full consolidation method, the financial statements in-
clude all subsidiaries whose financial and operating policies can be controlled in ac-
cordance with the control concept. When consolidated, the assets and liabilities of
subsidiaries are included in full in the consolidated financial statements. Subsidiar-
ies are entities that are directly or indirectly controlled by KAM (usually when it
holds more than 50% of voting rights). These companies are included in the basis of
consolidation from the date of their acquisition. Entities are deconsolidated from
the date of sale if they are no longer controlled by KAM.
A list of KAM shareholdings pursuant to Section 313(2) of the HGB is presented
in the notes to the consolidated financial statements. This contains all direct and in-
direct associates, indicating the consolidation method applied, and provides addi-
tional further information.
Changes to the basis of consolidation
Of the entities included in the consolidated financial statements within the scope
of full consolidation, 1 foreign entity (previous year: 2) was consolidated for the first
time in the reporting year and one foreign entity was deconsolidated.
Full consolidation of Kraftanlagen Serbia d.o.o., Belgrade, Serbia (KA Serbia) in 2013
KAM founded KA Serbia by deed dated 21 May 2013. The Company essentially renders
services in connection with pipeline construction.
The entry in the commercial register was made on 16 August 2013. The start-up
capital amounted to RSD 2,847 thousand (EUR 25 thousand) and was fully paid in.
In 2013, the entity incurred a net loss since its foundation of EUR 51 thousand;
no sales revenue was generated.
Full consolidation of Kraftanlagen Romania Electro si Automatizare S.R.L.,
Ploiești, Romania (KA Romania EsA) in 2013
The wholly owned group subsidiary, Kraftanlagen Romania S.R.L., founded KA Ro-
mania EsA by deed dated 10 December 2013. The Company’s core business activities
are in the field of construction installations.
The entry was made in the commercial register on 20 December 2013. The start-
up capital amounted to RON 45 thousand (EUR 10 thousand).
Deconsolidation of KRAFTSZER Vállalkozási Kft., Budapest, Hungary (Kraftszer) in 2014
By agreement from 11 February 2014, KAM’s 90% shareholding in Kraftszer was sold
for a purchase price of EUR 100 thousand as at the closing date at the end of July
2014 to companies that are owned by the current managing minority shareholder
as well as a member of Kraftszer’s management. The sale meant that the Group lost
cash of EUR 2,891 thousand, while an additional EUR 4,690 thousand was used in
connection with the sale to redeem a loan.
Notes to the Consolidated Financial Statements
50 Kraftanlagen München GmbH Annual Report 2014
First-time consolidation of KAROM Servicii Profesionale in Industrie S.R.L.
(KAROM), Ploiesti, Romania in 2014
The wholly owned group subsidiary, Kraftanlagen Romania S.R.L., acquired a 51%
shareholding in KAROM in the incorporation process on 20 August 2014. The compa-
ny is a member of the KPK Petro Service Consortium (further members are Kraftan-
lagen Romania S.R.L. and Kremsmueller S.R.L.) and offers services in maintenance
projects for the Romanian crude oil industry.
The entry in the commercial register was made on 19 September 2014. The subsumed
capital amounted to RON 2,250 thousand (EUR 502 thousand) and was fully paid in.
In the year under review, KAROM incurred a net loss of RON 6,809 thousand (EUR
1,534 thousand). Sales revenues amounted to RON 7,837 thousand (EUR 1,765 thousand).
Consolidation Principles
The financial statements of the consolidated domestic and foreign subsidiaries
were prepared using uniform accounting and measurement methods as at the
same balance sheet date as for the financial statements of the parent company.
Capital consolidation is based on the acquisition method by offsetting acquisition
costs against the proportionate, remeasured equity of the subsidiaries on the date
of acquisition. Assets and liabilities are carried at fair value. Any remaining positive
consolidation difference is capitalised as goodwill and subjected to a regular im-
pairment test in accordance with the provisions of IFRS 3/IAS 36. Negative consoli-
dation differences are reviewed again before being released through profit or loss
immediately after the acquisition. In the event of deconsolidation, the residual val-
ues of identified hidden reserves and goodwill are taken into account when calcu-
lating the gain on disposal.
All receivables and liabilities, sales, expenses and income, as well as profit and loss
between the companies included in the consolidated financial statements are elim-
inated in the consolidation process unless they are immaterial.
Non-controlling interests represent the proportion of earnings and net assets that
is not attributable to KAM shareholders. Non-controlling interests are presented
separately in the consolidated statement of comprehensive income and consoli-
dated balance sheet. They are disclosed in the balance sheet under equity; howev-
er, this is separate from the equity of the shareholders of the parent company. The
acquisition of non-controlling interests is recognised by the Kraftanlagen Group us-
ing the partial goodwill method, which results in the difference between the pur-
chase price and the Group’s share of the fair value of the net identifiable assets
being recorded as goodwill. The Kraftanlagen Group has so far not elected to exer-
cise the option to apply the full goodwill method under IFRS 3. Future application
will be decided on a case-by-case basis.
Currency Translation
In separate financial statements, companies translate transactions concluded in
foreign currency at the exchange rate on the date of addition. Non-monetary items
are translated on the balance sheet date at the exchange rate in effect at the time
of initial recognition. Monetary items are translated at the exchange rate on the
51Kraftanlagen München GmbH Annual Report 2014
balance sheet date. Translation differences on monetary items are recognised in
the income statement as financial income or expenses.
The reporting currency of the Kraftanlagen Group is the euro. The annual financial
statements of Group companies are therefore translated into euros. Financial state-
ments are translated by determining the functional currency in accordance with IAS 21.
Using this method, assets and liabilities of companies that do not report in euros are
translated at the exchange rate on the balance sheet date; however, income and ex-
penses are translated at the average exchange rate. The relevant companies here are
economically independent foreign entities. Translation differences are shown in other
reserves.
The equity present on the date of first-time consolidation for foreign entities includ-
ed in the consolidated financial statements is translated at historical exchange rates.
The goodwill arising from the inclusion of foreign subsidiaries in the basis of
consolidation is translated at the closing rate on the balance sheet date in accord-
ance with IAS 21.47.
If a subsidiary is sold, the accumulated exchange differences are recognised as
income for the corresponding period.
Currency translation for foreign Group subsidiaries takes place at the following
exchange rates:
Annual average Balance sheet date
1 EUR corresponds to 2013 2014 2013 2014
Hungarian forint (HUF) 296.89 308.67 297.02 315.51
Romanian lei (RON) 4.42 4.44 4.34 4.48
Serbian dinara (RSD) 112.72 116.90 114.30 120.60
Notes to the Consolidated Financial Statements
Accounting and Valuation Methods
The significant accounting and valuation methods applied when preparing these
consolidated financial statements are set out below:
Property, plant and equipment
Property, plant and equipment are measured at cost, net of accumulated deprecia-
tion and any impairment losses. Depreciation is calculated on a straight-line basis,
unless another depreciation method better reflects the pattern of depreciation of
property, plant and equipment in exceptional cases. The depreciation period is
based on the estimated useful life of each asset category as follows:
Buildings 25 - 50 years
Land only written down if impaired
Other property, plant
and equipment 3 - 15 years
Assets under construction written down to the extent that impairment
is already evident
Leasehold improvements are depreciated over their estimated useful lives or, if
shorter, over the lease term.
Alongside this, the carrying amounts of property, plant and equipment are re-
viewed for impairment as soon as there are indications that the carrying amount of
52 Kraftanlagen München GmbH Annual Report 2014
an asset has exceeded its recoverable amount, which is the higher of its fair value
less costs to sell and its value in use. Property, plant and equipment are written
down in such cases. Reversals of impairments are recognised as income if the rea-
sons for the earlier impairment are no longer applicable.
Investments in replacements and improvements are capitalised if they substan-
tially extend the useful life, increase the capacity or substantially improve the qual-
ity of output of assets.
Costs relating to regular and major servicing increase the carrying amount of
property, plant and equipment if the relevant criteria for capitalisation are met. Re-
pairs, maintenance and routine upkeep of buildings and operating facilities are ex-
pensed as incurred.
The carrying amount of property, plant and equipment is derecognised upon
disposal or when no future economic benefits are expected (scrapping). Gains or
losses from the disposal of assets are recognised in profit or loss.
The residual value and useful life of an asset are reviewed at least once per year
at the end of the financial year and adjusted if necessary.
Intangible assets
Intangible assets are initially measured at cost in accordance with IAS 38 and sub-
sequently carried at cost less any accumulated amortisation and accumulated im-
pairment losses.
The useful lives of intangible assets are assessed as being finite or indefinite.
Intangible assets with finite useful lives are generally amortised in the Group on
a straight-line basis over their useful lives within the scope of subsequent measure-
ment in accordance with IAS 38. It is possible to depart from this method in individ-
ual cases. In the event of this occurring, the unit of production method is used as it
better reflects the loss of value.
Intangible assets are tested for impairment whenever there is an indication
that they may be impaired. An impairment loss is recognised if the carrying amount
of the assets exceeds its recoverable amount, which is the higher of its fair value
less costs to sell and its value in use. Reversals of impairments are recognised as in-
come if the reasons for the earlier impairment are no longer applicable.
The amortisation period and amortisation method are reviewed at least once
per year at the end of the financial year. Intangible assets currently recognised in-
clude software with a useful life of four years.
Gains and losses from the derecognition and sale of intangible assets are meas-
ured as the difference between sales proceeds and the carrying amount of the as-
set and are recognised in profit or loss in the period during which the item was
derecognised.
Business combinations and goodwill
Business combinations are accounted for using the purchase method of account-
ing. Acquisition costs are calculated as the sum of the consideration transferred.
These include not only cash payments but also the fair market value of the assets
transferred or liabilities incurred or assumed and equity instruments issued by the
buyer as at the transaction date. The net assets acquired, comprising identifiable
assets, liabilities and contingent liabilities, are recognised at their fair values. Trans-
action costs incurred in connection with business combinations are expensed as in-
curred.
53Kraftanlagen München GmbH Annual Report 2014
Goodwill is initially measured at cost, which corresponds to the difference between
the fair value of the consideration transferred together with any non-controlling in-
terests and the share in the fair value of the net assets acquired. Where the Group
does not acquire 100% ownership in business combinations, the non-controlling in-
terests are measured at the fair value of their proportion of identifiable assets and li-
abilities (partial goodwill method). Goodwill and fair value adjustments are recognised
in the assets and liabilities of the acquired entity in the entity’s local currency.
Goodwill is not amortised but is tested for impairment every year on the balance
sheet date. An impairment test for goodwill is performed in a single-step procedure at
the level of the cash-generating unit to which it is allocated. The cash-generating
units were defined based on the Energy Supply Technology (EST) and Power Genera-
tion and Plant Engineering (PGPE) business units. The EST business unit and its two
cash-generating units were sold in 2012; together with the Other business unit, con-
tinuing operations in the PGPE business unit have comprised only one cash-generat-
ing unit since 2008. As part of the Kraftanlagen Group’s restructuring process, eight
business units are to be defined as at the beginning of 2015.
As a result, management reporting for 2015 will be based on these units which
will then also constitute cash-generating units.
When testing the recoverability of the cash-generating unit, the carrying
amount is compared with the recoverable amount. The recoverable amount is the
higher of an asset’s fair value less costs to sell and its value in use. If the carrying
amount exceeds the recoverable amount, it is written down.
Upon the sale of a subsidiary, the difference between the selling price and the
net assets plus or less the cumulative translation differences and the residual val-
ue of the goodwill is recognised in profit or loss.
Transactions that result in a change in ownership interest without a change of
control led to changes in recognised goodwill up to and including the 2009 financial
year. These changes have been recognised as equity transactions since the 2010
financial year.
Government grants
Pursuant to IAS 20 "Accounting for Government Grants", these grants are only recog-
nised when there is reasonable assurance that the entity will comply with any con-
ditions attached to the grant and that the grant will be received. IAS 20
distinguishes between grants receivable as compensation for costs already in-
curred and grants relating to assets. A grant receivable as compensation for costs
already incurred is known as a grant relating to income and is recognised as income
in the period in which the costs are incurred. A grant relating to an asset can be pre-
sented as deferred income in the balance sheet and reversed over its useful life, or
it can be deducted from the asset’s carrying amount.
In the Kraftanlagen Group, government grants relating to assets are recognised
as a deduction from the asset’s carrying amount.
Financial assets
Financial assets are measured at fair value. Where this cannot be reliably deter-
mined, they are measured at amortised cost.
Notes to the Consolidated Financial Statements
54 Kraftanlagen München GmbH Annual Report 2014
Inventories
Inventories are stated at the lower of direct cost and net realisable value as at the
balance sheet date. An average value is determined for measurement purposes. Val-
uation allowances (impairments) are made for obsolete and slow-moving invento-
ries. If the net realisable value of inventories, on which valuation allowances have
been recognised, rises, the corresponding reversal of impairment losses is recog-
nised as income. Historical costs comprise all direct material and manufacturing
costs and those overheads that have been incurred in bringing the inventories to
their present location and condition.
Trade receivables
The receivables of the Kraftanlagen Group are recognised at their nominal amount
less any deductions (bonuses, discounts) and any valuation allowances (fair value).
Specific bad debt allowances are recognised if receivables become wholly or partly
non-collectible, or if they are likely to become non-collectible. It must be possible to
reliably determine their amount. Non-interest-bearing or low-interest receivables
due in more than one year are discounted.
Customer-specific construction contracts
The Kraftanlagen Group generates sales revenue almost entirely from custom-
er-specific construction contracts. In accordance with IAS 11, they are recognised
using the percentage-of-completion method. The stage of completion is measured
by reference to the extent of work performed (including proportional earnings) and
recognised under sales revenue.
Contract revenue comprises the stipulated contract values or supplementary
work values that are confirmed in writing by the customer or are highly likely to be
approved by the customer. All identifiable risks are taken fully into account.
The stage of completion is determined according to the proportion of contract
costs incurred to total contract costs (cost-to-cost method) or determined by meas-
urements on site. When it is probable that total contract costs will exceed total contract
revenue, the expected loss is recognised immediately as an expense. Impairment losses
are reversed through profit or loss as soon as the reason for the impairment loss
ceases to apply.
In individual cases where contract profit or loss cannot be reliably estimated,
sales revenue is recognised only to the extent of contract costs incurred.
If cumulated revenue (contract costs plus contract profit or loss) exceeds pre-
payments in individual cases, construction contracts are recognised under PoC re-
ceivables. If there is a negative balance following the deduction of prepayments,
construction contracts are recognised under PoC liabilities. Anticipated losses on
contracts are recognised by means of appropriate impairment losses or provisions,
which are determined by taking into account the foreseeable risks.
Financial receivables
The time deposits reported under current financial receivables are due in less than
one year. They are recognised as loans and receivables in accordance with IAS 39. Fi-
nancial receivables are subsequently measured at amortised cost using the effective
interest method.
55Kraftanlagen München GmbH Annual Report 2014
Other receivables and assets
Other receivables and assets (excluding derivatives) are recognised at their nomi-
nal value or at cost; identified risks are taken into account by means of individual
valuation allowances. Non-interest-bearing or low-interest receivables due in more
than one year are discounted.
Cash and cash equivalents
Cash and cash equivalents include cash on hand, readily available bank deposits,
time deposits and deposits due in less than three months.
Derivative financial instruments and hedging
Regardless of purpose, derivative financial instruments are initially recognised at
fair value on their settlement date and reported under a separate item (derivative
financial instruments) on the asset or liability side of the consolidated balance
sheet. All derivative financial instruments are valued based on current market con-
ditions as at the balance sheet date. The market values of currency forwards and
commodity forwards are based on information provided by the contracting parties,
which were calculated on the basis of current market data using financial valuation
models. The recognition of changes in fair value is purpose-dependent.
The Group uses derivative financial instruments such as forward exchange con-
tracts and interest rate swaps to hedge its risks associated with interest rate and
foreign currency fluctuations.
If contracts are concluded for the purpose of receiving or delivering non-finan-
cial items in accordance with the expected purchase or usage requirements and
continue to serve this purpose (“own use”), these are not accounted for as deriva-
tives under IAS 39 but as pending transactions in accordance with IAS 37.
Forecast transactions are sometimes hedged; these are accounted for as cash
flow hedges. Any unrealised gains and losses are recognised directly in equity. Cash
flow hedges involve hedging against the risk of fluctuating cash flows from a
hedged item in the future. Any gain or loss on the hedging instrument that was pre-
viously recognised directly in equity is recycled into profit or loss in the same peri-
od(s) in which the financial asset or liability affects profit or loss. If a hedged fore-
cast transaction leads to the recognition of a non-financial asset or non-financial
liability, the amounts recognised in equity are included in the initial recognition of
the asset or liability. In these cases, only the effective portion of the change in val-
ue is recognised directly in equity. The ineffective portion is recognised immediate-
ly in the profit or loss for the period. The portion of value changes initially recog-
nised in equity is reclassified to profit and loss for the period when the hedged item
is recognised in income.
If this is not the case, derivative financial instruments are not designated as
hedging instruments. In these cases, changes in fair value are recognised in profit
or loss. Moreover, in the case of a fair value hedge – that is, a hedge against the risk
of changes in fair value of hedged items – both the changes in the fair value of hedg-
ing instruments and the changes in the fair value of the associated hedged items at-
tributable to the hedged risk are recognised in profit and loss for the period. Gains
and losses from the measurement of the hedges at fair value are reported in the
same items as those of the hedged item.
The Kraftanlagen Group generally concludes hedging transactions at an intra-
group level with Alpiq Holding AG, Lausanne, Switzerland.
Notes to the Consolidated Financial Statements
56 Kraftanlagen München GmbH Annual Report 2014
Deferred taxes
In accordance with IAS 12, deferred tax assets and liabilities are recognised for tempo-
rary differences between the carrying amounts for tax purposes and the IFRS carrying
amounts (temporary concept).
A domination and profit and loss transfer agreement between Alpiq Deutschland
GmbH and KAM has no longer been in place since 2013 when AAT merged into KAM.
KAM as the controlling company and all domestic first-tier and second-tier subsidi-
aries are directly and indirectly linked with each other though domination and prof-
it and loss transfer agreements. As the Kraftanlagen Group is a consolidated tax
group, deferred taxes are recognised by applying the substance-over-form principle
in individual group companies.
Furthermore, deferred taxes are recognised on unused tax losses if it is likely that
they can be used in the near future. Deferred taxes relating to items that are recog-
nised directly in equity are themselves recognised directly in equity accordingly.
Deferred taxes are calculated at the tax rates that apply to or are expected at
the time of realisation based on the tax laws that have been enacted or substantive-
ly enacted in the individual countries. Deferred tax assets are only recognised if
their recovery is expected. Deferred taxes that have already been capitalised and
are not expected to be recovered in the foreseeable future are written down.
When the Group has an enforceable right to offset current tax refund claims
against current tax liabilities and the identity of the tax creditor is known, deferred
tax assets are offset against deferred tax liabilities.
Provisions
Principles
Provisions recognised in accordance with IAS 37 cover all (legal or constructive) ob-
ligations of uncertain timing or amount arising from past transactions or events
that are known at the balance sheet date and are likely to be settled by means of an
outflow of resources embodying economic benefits. Provisions are recognised at
their expected settlement amount; any reimbursement claims expected with cer-
tainty are recognised as separate assets. In the case of individual obligations with
a probability of occurrence of over 50%, the settlement amount with the highest
probability of occurrence is assumed.
Provisions for warranty claims are recognised as services are rendered based on
past experience, i.e., on the basis of current and estimated future claims. Provisions
for onerous contracts and for other business obligations are measured on the basis
of services to be rendered, usually in the amount expected to be incurred.
Non-current provisions (due in more than one year) are recognised at an
amount equal to the expected cash outflows discounted to the balance sheet date.
Provisions are reviewed annually as at the balance sheet date and adjusted to re-
flect current developments. The discount rates used are pre-tax rates that reflect
current market assessments of the time value of money.
Where the Kraftanlagen Group expects some or all of the expenditure required
to settle a provision to be reimbursed in full or in part by another party (e.g., by an
insurer), the reimbursement is recognised as a separate asset if it is virtually certain
that reimbursement will be received.
57Kraftanlagen München GmbH Annual Report 2014
Tax provisions
Tax provisions contain obligations from current income taxes. Income tax provi-
sions are offset against corresponding tax refund claims if they relate to the same
tax jurisdiction and their types and maturities are similar.
Provisions for pensions and similar obligations
The company pension plans in the Kraftanlagen Group are generally structured as
defined benefit plans that are based on a direct obligation, i.e. there are no legally
independent welfare funds in place. The pension plans are financed by recognizing
pension provisions; the expected future benefit obligations are spread over the en-
tire period of service. The benefits are paid by the Company directly to the benefi-
ciaries. Based on the principles of IAS 19, a direct pension obligation under German
law qualifies as an unfunded plan and is reported in the balance sheet at the value
of the net liability. As there are no separate plan assets to settle the obligation, pen-
sion payments are deducted from the provision in the balance sheet.
Pension obligations from defined benefit plans are measured using the project-
ed unit credit method. This method considers not only the pensions and vested
claims known as at the end of the reporting period but also future anticipated in-
creases in wages, salaries and pensions as well as turnover trends. The calculation
is based on actuarial methods taking into account biometric assumptions (2005
Heubeck mortality tables). The calculations are computed once a year factoring in
the applicable local parameters in each case. The respective discount rates are gen-
erally based on the return from high-quality corporate bonds with matching terms
and currencies with at least an AA rating. The provisions recognised in the balance
sheet (“net defined benefit liability”) comprise the present value of the determined
defined benefit obligation less the fair value of plan assets. If the fair value of plan
assets exceeds the present value of the defined benefit obligation, a net asset is re-
ported taking the asset ceiling into account.
Service cost is reported under personnel expenses within EBIT. The interest in-
cluded in the addition to the provision and the expected return on plan assets are
recognised as net interest income in the financial result. Actuarial gains and losses
resulting from changes in parameters or differences between previous actuarial as-
sumptions and the actual development as well as changes in the return on plan as-
sets are immediately recognised in full in group equity under other reserves. They
are not reclassified subsequently to profit or loss (recycled) at any stage but rather
remain in group equity.
Under defined contribution plans, contributions are paid on a contractual or vol-
untary basis into private pension plans. Beyond these contributions, which are in-
cluded in EBIT, the Kraftanlagen Group does not have any other payment obligations.
Liabilities
Liabilities are recognised at amortised cost. The amortised cost corresponds to the
historical cost less repayments and the amortisation of any premiums or discounts.
Leases
Lease transactions are classified as either finance leases or operating leases. The econom-
ic ownership of a leased asset is allocated to the contracting party to whom all risks and
rewards incidental to ownership of the leased asset are substantially transferred.
Notes to the Consolidated Financial Statements
58 Kraftanlagen München GmbH Annual Report 2014
If the risks and rewards are substantially transferred to the lessor (operating lease),
the leased asset is capitalised by the lessor. In this case, the lessee recognises the
lease payments during the lease in the income statement.
If the risks and rewards incidental to ownership of the leased asset are substan-
tially transferred to the lessee (finance leases), the lessee should recognise the
leased asset. The leased asset is measured at the time of addition at the present val-
ue of future lease payments and depreciated over the estimated useful life or the
shorter lease term. Liabilities from finance leases are recognised at the inception of
the lease at the present value of the minimum lease payments. The lease payments
are apportioned between the repayment of the lease liability and financial expens-
es. The financial expenses are recognised in the income statement.
Revenue recognition
Sales revenue is recognised when it is probable that the economic benefits will be
received by the Group and the revenue amount can be reliably measured. Revenue
is measured at the fair value of the consideration received. Early payment dis-
counts and other discounts are taken into account.
Sales revenue
Revenue from sales of goods and services are recognised upon delivery, i.e. the risks
and rewards inherent to the good or service have passed to the buyer.
Revenue from construction contracts is recognised pursuant to IAS 11 “Con-
struction Contracts” or IAS 18 “Revenue” using the percentage-of-completion meth-
od by reference to the stage of completion of the contract activity. Profits are only
realised from construction contracts if the final outcome of the contract can be re-
liably estimated.
Furthermore, sales revenue is only recognised if it is sufficiently probable that
the economic benefits associated with the transaction will flow to the Company.
Interest income
Interest income is recognised when the claim to the interest arises.
Dividends
Dividend income is recognised when the right to receive payment arises.
Current and deferred income taxes
Income tax is calculated on taxable profits using enacted or substantively enacted
tax rates for the individual companies’ financial statements. Income tax expendi-
ture represents the sum of current and deferred income taxes. Current tax refund
claims and tax liabilities for the current and previous periods are measured at the
amount at which a refund or payment is expected. For more information on de-
ferred income taxes, reference is made to “Deferred taxes”.
Non-current assets held for sale and discontinued operations
The Group classifies non-current assets, disposal groups and related liabilities as
held for sale if their carrying amounts will be recovered principally through a sale
transaction rather than through continuing use. Non-current assets and disposal
groups classified as held for sale are measured at the lower of carrying amount and
59Kraftanlagen München GmbH Annual Report 2014
fair value less costs to sell. The criteria for classification as held for sale are consid-
ered as met when the sale is highly probably and the asset or disposal group is avail-
able for immediate sale in its present condition. Management must have agreed to
the sale, which must be expected to occur within one year from the date of classifi-
cation for recognition as a concluded sale.
Discontinued operations are not included in the income from continuing oper-
ations and are presented separately in the consolidated statement of comprehen-
sive income as earnings after taxes from discontinued operations.
Property, plant and equipment and intangible assets, once classified as held for
sale, are no longer depreciated or amortised. Any financial assets remaining within
the Group that are counterbalanced by a corresponding liability held for sale are re-
corded separately. As a result, intercompany balances are not eliminated.
Contingent liabilities
Contingent liabilities are possible obligations arising from past events and whose
existence will be confirmed only by the occurrence of one or more uncertain future
events; however, these future events are outside the control of the Kraftanlagen
Group. Furthermore, current obligations may represent contingent liabilities when
the likelihood of an outflow of resources is not sufficiently probable for the forma-
tion of a provision and/or the amount of obligation cannot be measured with suf-
ficient reliability.
Potential or existing liabilities where it is not considered probable that an out-
flow of resources will be required are not recognised in the balance sheet. Howev-
er, the nature and extent of liabilities existing on the balance sheet date is disclosed
as a contingent liability in the notes to the consolidated financial statements.
If an outflow of resources is considered to be remote, a contingent liability is
not reported.
Exercising judgement and estimation uncertainty of management when applying
accounting and measurement methods
There has been no significant effect on the measurement of assets and liabilities re-
cognised in the financial statements arising from judgements made by manage-
ment when applying these accounting and measurement methods. The preparation
of consolidated financial statements requires management to make certain as-
sumptions, forecasts and estimates that affect the reported amounts and recog-
nition of assets and liabilities, income and expenses and contingent liabilities
during the reporting period. Assumptions and estimates largely pertain to the fol-
lowing areas:
• the assessment of projects through to project completion, particularly with
regard to accounting for supplementary work, estimating the total cost of
the contract and the date and amount of revenue recognition
• moreover, when calculating pension provisions, the choice of the underlying
assumptions, such as the imputed interest rate or trend assumptions, of bi-
ometric probabilities and accepted approximation methods when determin-
ing the pension from the statutory pension insurance fund may lead to differ-
ences compared to the actual obligations incurred over time
Notes to the Consolidated Financial Statements
60 Kraftanlagen München GmbH Annual Report 2014
• different premises and estimates can influence the recognition and measure-
ment of other provisions
• deferred tax assets are recognised for all unused tax losses to the extent that
it is probable that taxable profit will actually be available against which the
losses can be utilised. When calculating deferred tax assets, assumptions on
the timing and the amount of taxable profits need to be made as well as on
the future tax strategies
• the carrying amount of property, plant and equipment and intangible assets,
including goodwill, of the Kraftanlagen Group as at the balance sheet date on
31 December 2014 was EUR 36,743 thousand (previous year: EUR 39,807 thou-
sand). These assets are tested annually for impairment and changes in depre-
ciation/amortisation patterns. Estimates are needed on expected future
cash flows associated with the use and possible disposal of an asset to assess
whether the asset is impaired or not. Actual cash flows may differ significant-
ly from these estimates. Other factors, such as a change in the planned useful
life of assets or technical obsolescence can shorten their useful life or lead to
an impairment
• When applying acquisition accounting, all identifiable assets, liabilities and
contingent liabilities acquired in a share purchase are recognised at fair val-
ue as at the date of acquisition. Estimates are used to determine these values.
The assumptions and estimates are based on premises that reflect the knowledge
available at the respective time. The anticipated future business development was
assessed by reference to the circumstances prevailing at the time of preparing the
consolidated financial statements and the realistically assumed future develop-
ment of the industry-specific environment. Actual results may differ from estima-
ted values in the event of changes to these framework conditions that deviate from
assumptions and are beyond the control of management. If actual events differ
from anticipated developments, the premises, and, if necessary, the carrying
amounts of assets and liabilities are adjusted.
At the time the consolidated financial statements were prepared, there were no
special circumstances regarding the underlying basis, applied assumptions and es-
timates to indicate at present that a significant adjustment to carrying amounts of
assets and liabilities recognised in the consolidated financial statements will be re-
quired in the next financial year.
61Kraftanlagen München GmbH Annual Report 2014
Notes to the Consolidated Financial Statements
Kraftanlagen München GmbH Annual Report 201462
63Kraftanlagen München GmbH Annual Report 2014
Notes to the Consolidated Financial Statements
1. Net sales revenue
Sales revenue of EUR 402,008 thousand (previous year: EUR 458,578 thousand) com-
prises realised sales and realised contract values from the application of the percent-
age-of-completion method for construction contracts in progress and proportional
income from joint ventures and other services.
The distribution of net sales revenue by region is as follows:
in EUR thousand 2013 2014
Germany 338,549 269,049
Other EU countries 94,873 118,197
Rest of Europe 25,055 14,197
Rest of world 101 565
458,578 402,008
Sales revenue contains EUR 4,000 thousand in connection with a major project con-
cluded in previous years for which the revenue recognition criteria were satisfied
for the time in 2014.
2. Other own work capitalised
Of other own work capitalised, EUR 41 thousand relates to additions to property,
plant and equipment in the previous year.
3. Other operating income
in EUR thousand 2013 2014
Income from reversal of provisions 94 550
Unrealised profits from asset disposal 68 287
Insurance reimbursements 68 77
Rental income 256 200
Sundry other operating income 3,276 2,188
3,760 3,302
Rental income contains EUR 1 thousand (previous year: EUR 1 thousand) from sub-lets.
Notes to the Consolidated Statement of Comprehensive Income
64 Kraftanlagen München GmbH Annual Report 2014
4. Cost of materials
in EUR thousand 2013 2014
Cost of raw materials, consumables and supplies and purchased goods 134,805 108,679
Cost of purchased services 136,519 104,640
271,324 213,319
Changes between the cost of materials used and services purchased under cost of
materials are mainly dependent on the different structure of the project business.
The proportion of purchased materials in projects in which the Kraftanlagen Group
acts as a general contractor is very high, by contrast to the low proportion in the
case of service contracts.
5. Personnel expenses
in EUR thousand 2013 2014
Wages and salaries 92,897 92,202
Social security contributions 17,864 17,462
Pension and other benefit costs 1,498 3,064
Other 1,574 1,301
113,833 114,029
The slight decrease in wages and salaries is primarily due to personnel cuts in Germany
(average of 77 employees) which is counterbalanced by collectively bargained increas-
es and most of all the takeover of and average of 90 Romanian employees.
Of the employee benefits expense an amount of, EUR 1,324 thousand (previous
year: EUR 1,262 thousand) relates to payments for defined contribution plans (ex-
cluding statutory pension insurance schemes); this includes payments to pension
funds and direct insurance. In addition, EUR 8,393 thousand (previous year: EUR
8,632 thousand) was paid out in 2014 to statutory health insurers in Germany and
abroad; these payments qualify as contributions to defined benefit plans and are
included in the social security contributions.
Changes in the average number of employees are shown in the following table:
Headcount 2013 2014
Wage earners 975 982
Salaried employees 1,015 1,041
Employees 1,990 2,023
As at 31 December 2014, the Kraftanlagen Group employed 1,247 wage earners (previous
year: 974) and 986 salaried employees (previous year: 1,009), i.e., 2,233 employees
(previous year: 1,983).
65Kraftanlagen München GmbH Annual Report 2014
6. Other operating expenses
in EUR thousand 2013 2014
Losses on disposal of fixed assets 114 82
Other taxes 776 752
Cost of premises 2,206 2,165
Rental, lease and maintenance costs 9,080 8,510
Post and telecommunications 995 1,050
Administration costs 7,265 5,804
Marketing costs 1,048 639
Travel, hospitality and entertainment costs 11,411 9,783
Legal and consulting costs 1,627 4,437
Insurance 1,693 1,461
Sundry other operating expenses 6,460 17,153
42,675 51,836
Other operating expenses contain rental and lease expenses of EUR 6,704 thousand
(previous year: EUR 6,569 thousand) recognised through profit or loss.
The increase in legal and consulting costs relates to the addition to the provisi-
on for a long-term international project.
The increase in sundry other operating expenses is mainly attributable to the
higher addition to provisions for order processing for billed projects of EUR 12,962
thousand compared to the previous year (EUR 467 thousand). In addition, costs for
severance packages came to EUR 3,541 thousand (previous year: EUR 1,543 thou-
sand) and deconsolidation to EUR 94 thousand (previous year: none).
7. Depreciation, amortisation and impairments
This item presents the depreciation or amortisation of assets on a straight-line ba-
sis over their useful lives.
Depreciation and amortisation
in EUR thousand 2013 2014
Property, plant and equipment 6,296 5,366
Intangible assets 890 726
7,186 6,092
Impairments
in EUR thousand 2013 2014
Property, plant and equipment 2,189 0
As a result of the impairment tests, impairment losses were recognised on property,
plant and equipment in 2013 that had originally been acquired for a concluded inter-
national project. The fixed assets are written off in full due to their lack of value in use
or recoverable value.
Notes to the Consolidated Financial Statements
66 Kraftanlagen München GmbH Annual Report 2014
8. Financial income
in EUR thousand 2013 2014
Interest and similar income 524 558
Exchange gains 756 2,783
1,280 3,341
Interest and similar income include all interest income from cash and cash equiva-
lents and other loans. The increase in financial income is attributable to the fact that
exchange gains were up EUR 2,027 thousand.
9. Financial expenses
in EUR thousand 2013 2014
Interest and similar expenses 1,351 985
Interest expenses for pensions and similar obligations 2,798 2,695
Interest expenses arising from other provisions 103 101
Write-downs on financial assets 0 40
Exchange losses 837 3,487
Other financial expenses 2 6
5,091 7,314
The increase in financial expenses mainly results from higher exchange losses of
EUR 2,650 thousand. Interest expenses arising from other provisions contain the
change in present value of non-current provisions.
10. Income taxes
in EUR thousand 2013 2014
Current income taxes -7,090 -8,539
- of which relating to other periods (-34) (24)
Deferred taxes -736 4,478
-7,826 -4,061
The total tax expense decreased year on year by EUR 3,765 thousand to EUR 4,061
thousand. This corresponds to the net amount from income from deferred taxes (up
EUR 5,214 thousand) and expenses from actual taxes (up EUR 1,449 thousand). This
development mainly resulted from a reduction in work in process due to billing pro-
jects, which was only partially offset by a lower increase in inventories of work in
process for contracts that have not yet been billed. Furthermore, an additional EUR
250 thousand (previous year: EUR 500 thousand) of deferred taxes were recognised
on tax losses of an Austrian subsidiary.
67Kraftanlagen München GmbH Annual Report 2014
Notes to the Consolidated Financial Statements
As a result of the merger of Alpiq Anlagentechnik GmbH into Kraftanlagen München
GmbH, KAM has direct income tax liability beginning in the 2013 financial year.
The tax reconciliation shows the development of expected to effective income
taxes in the consolidated statement of comprehensive income. Effective income
taxes include current income taxes and deferred taxes. The currently applicable tax
rate for 2014 is 32% (previous year: 32%), which is composed of the corporate income
tax rate of 15%, a solidarity surcharge of 5.5% and the average trade tax rate.
A tax rate of 32% was primarily used to calculate deferred tax assets and liabili-
ties (previous year: 32%).
in EUR thousand 2013 2014
Earnings before tax 21,361 16,061
Theoretical tax rate 32% 32%
Theoretical tax expenses 6,836 5,140
Sources of additional/reduced expense:
Differences in foreign tax rates 71 225
Tax effects on
Tax-free income 0 -258
Non-deductible expenses 616 364
Formation/reversal of permanent differences 942 -1,326
Offsetting of unused tax losses on which no taxassets have been recognised so far -231 -127
Subsequent recognition of tax assets on previouslyunrecognised unused tax losses -500 -250
Effect of non-recognition of unused tax loss 81 0
Other tax expenses relating to other periods 18 -24
Other -7 12
Effective tax expense 7,826 4,061
Effective tax rate (in %) 37% 25%
68 Kraftanlagen München GmbH Annual Report 2014
Notes to the Consolidated Balance Sheet and other Notes
69Kraftanlagen München GmbH Annual Report 2014
Notes to the Consolidated Balance Sheet
Notes to the Consolidated Financial Statements
11. Property, plant and equipment
The following is a breakdown of property, plant and equipment and their development
in the 2014 financial year and the previous year:
in EUR thousand Land and buildingsOther property, plant
and equipmentPrepayments and assets
under construction Total
Historical costs
As at 01/01/2014 20,617 57,582 81 78,280
Disposals due to a change in thebasis of consolidation 0 -438 0 -438
Additions 17 3,218 0 3,235
Disposals 0 -4,418 0 -4,418
Reclassifications 0 81 -81 0
Assets held for sale 0 -601 0 -601
Exchange adjustments -1 -26 0 -27
As at 31/12/2014 20,633 55,398 0 76,031
Accumulated depreciation
As at 01/01/2014 7,845 40,786 0 48,631
Disposals due to a change in thebasis of consolidation 0 -381 0 -381
Additions 496 4,870 0 5,366
Disposals 0 -4,177 0 -4,177
Assets held for sale 0 -347 0 -347
Exchange adjustments 1 -17 0 -16
As at 31/12/2014 8,342 40,734 0 49,076
Carrying amounts as at 31/12/2014 12,291 14,664 0 26,955
Historical costs
As at 01/01/2013 20,626 56,862 279 77,767
Additions 0 3,230 123 3,353
Disposals -6 -2,816 0 -2,822
Reclassifications 0 320 -320 0
Exchange adjustments -3 -14 -1 -18
As at 31/12/2013 20,617 57,582 81 78,280
Accumulated depreciation
As at 01/01/2013 7,350 35,369 0 42,719
Additions *) 497 7,988 0 8,485
Disposals -1 -2,559 0 -2,560
Exchange adjustments -1 -12 0 -13
As at 31/12/2013 7,845 40,786 0 48,631
Carrying amounts as at 31/12/2013 12,772 16,796 81 29,649
*) thereof write-downs on other property, plant and equipment: EUR 2,189 thousand
70 Kraftanlagen München GmbH Annual Report 2014
Other property, plant and equipment include technical plant and machines with a
carrying amount of EUR 5,295 thousand (previous year: EUR 5,510 thousand) and oth-
er plant, operating and office equipment with a carrying amount of EUR 9,369 thou-
sand (previous year: EUR 11,286 thousand). No capitalised borrowing costs are
included in additions.
12. Intangible assets
The following is a breakdown of intangible assets and their development in the 2014
financial year and the previous year:
in EUR thousand
Concessions, intellectual property and similar
rights and assets and licences in such rights
and assets
Prepayments on concessi-ons, intellectual property
and similar rights and assets and licences in such rights and assets
Goodwill from capital consolidation Total
Historical costs
As at 01/01/2014 7,818 0 8,175 15,993
Disposals due to a change in thebasis of consolidation -151 0 0 -151
Additions 387 18 0 405
Disposals -442 0 0 -442
Assets held for sale -106 -18 0 -124
Exchange adjustments -10 0 0 -10
As at 31/12/2014 7,496 0 8,175 15,671
Accumulated depreciation
As at 01/01/2014 5,835 0 0 5,835
Disposals due to a change in thebasis of consolidation -149 0 0 -149
Additions 726 0 0 726
Disposals -442 0 0 -442
Assets held for sale -79 0 0 -79
Exchange adjustments -8 0 0 -8
As at 31/12/2014 5,883 0 0 5,883
Carrying amounts as at 31/12/2014 1,613 0 8,175 9,788
Historical costs
As at 01/01/2013 7,390 0 8,175 15,565
Additions 801 0 0 801
Disposals -369 0 0 -369
Exchange adjustments -4 0 0 -4
As at 31/12/2013 7,818 0 8,175 15,993
Accumulated depreciation
As at 01/01/2013 5,288 0 0 5,288
Additions 890 0 0 890
Disposals -341 0 0 -341
Exchange adjustments -2 0 0 -2
As at 31/12/2013 5,835 0 0 5,835
Carrying amounts as at 31/12/2013 1,983 0 8,175 10,158
71Kraftanlagen München GmbH Annual Report 2014
Notes to the Consolidated Financial Statements
At EUR 23 thousand (previous year: EUR 27 thousand), intangible assets include the
net carrying amounts pertaining to software for a telephone system that is used by
a German subsidiary under a finance lease. No capitalised borrowing costs are in-
cluded in additions.
The goodwill incurred by fully consolidated companies upon first-time consoli-
dation and stake increases is allocated to individual cash-generating units to deter-
mine impairment. Following the sale in September 2012 of the cash-generating
units “Energy Supply Technology” and “Network Technology” (EST business unit),
the Kraftanlagen Group is segmented as follows:
• Power Generation and Plant Engineering (PGPE) includes the engineering, in-
stallation and maintenance of plant in the energy technology, process engi-
neering and nuclear technology sectors.
• Other aggregates individual, non-operating entities.
The segmentation is based on the current internal reporting in the Kraftanlagen
Group, which is subdivided into eight business units as part of the restructuring at
the beginning of financial year 2015.
In the impairment test, the carrying amount of the cash-generating unit to
which goodwill was assigned was compared with the recoverable amount of the
unit. The recoverable amount of the cash-generating unit is determined by calcula-
ting the fair value less costs to sell or value in use. The fair value reflects the best
estimate of the amount for which an independent third party would acquire the
cash-generating unit under market conditions on the balance sheet date. In cases
where fair value cannot be determined, as was the case in both financial years, the
value in use is taken as the basis for recoverable amount. The value in use is deter-
mined on the basis of a business valuation model (discounted cash flow method).
In the Kraftanlagen Group recoverability of goodwill is generally tested based
on the value in use. This is based on current planning prepared by management. The
planning premises are adjusted to reflect the current information available. Due ac-
count is taken of reasonable assumptions regarding macroeconomic trends and
historical developments.
Based on the detailed financial budget, cash flow projections are made for the
next year and for another four years based on financial planning. For the subse-
quent period, unchanging cash flows are recognised as part of prudent valuation;
future growth opportunities are disregarded. Projections are based on different as-
sumptions for key estimation parameters (including discount rates, growth rates
and profit margins). Macroeconomic trends and historical developments are taken
into account here.
Discount rates are derived from a calculation of the weighted average cost of
capital, which is itself based on the debt/equity structure and the financing costs of
comparable competitors for each of the cash-generating units.
The discount rates used reflect the specific equity risk of each cash-generating unit.
72 Kraftanlagen München GmbH Annual Report 2014
The table below presents assumptions used in the impairment test:
2013 2014
Average sales growth in the planning period (%) 4.1 4.2
EBIT margin in the planning period (%) 5.2 – 5.6 5.1 – 6.1
Length of the planning period 4 years 4 years
Sales growth p. a. at the end of the planning period (%) 1.0 1.0
EBIT margin after the end of the planning period (%) 5.4 5.3
Growth markdown on the terminal value (%) 0.5 0.5
Post-tax interest rate (in %) 6.6 6.4
Pre-tax interest rate (in %) 9.5 9.2
In the last two financial years, goodwill has not changed on account of the calculations
used:
2014
in EUR thousand Value on 01/01
Reclassification todiscontinued opera-
tions/ deconsoli-dation Impairment Reclassification Currency translation Value on 31/12
Power Generation andPlant Engineering (PGPE) 8,175 0 0 0 0 8,175
2013
in EUR thousand Value on 01/01
Reclassification todiscontinued opera-
tions/ deconsolidation Impairment Reclassification Currency translation Value on 31/12
Energieerzeugungs- und Anlagentechnik (EAT) 8,175 0 0 0 0 8,175
A comparison of the fair values of the units with their carrying amounts including
goodwill did not reveal any need to recognise impairment losses in the reporting year
as the value in use determined for the cash-generating unit exceeds the carrying
amount of goodwill by far.
13. Financial assets
As in the previous year, financial assets concern investments in one domestic and
one foreign company. The carrying amount of the foreign investment was written
down in the reporting year. As a result, the residual carrying amount of the financial
assets amounts to EUR 6 thousand (previous year: EUR 46 thousand).
73Kraftanlagen München GmbH Annual Report 2014
Notes to the Consolidated Financial Statements
14. Financial receivables
Sundry other current financial receivables include time deposits and other invest-
ments with a term to maturity of three months to a year. Deposits at banks are
made only with credit institutions that have a good credit rating and/or are covered
by a deposit protection fund in their full amount. Interest accrues at interest rates
ranging between 0.25% and 0.63%; in the previous year interest accrued at interest
rates ranging between 0.32% and 0.47%. The receivable from the subsidiary held for
sale was recognised as the receivable is expected to be paid in full due to the con-
tractual arrangement.
15. Other receivables and other assets
The largest item under sundry other assets is receivables from staff members.
16. Deferred taxes
Deferred tax assets and liabilities are divided as follows:
31/12/2013 31/12/2014
in EUR thousandDeferred
tax assetsDeferred tax
liabilitiesDeferred
tax assetsDeferred tax
liabilities
Property, plant and equipment 15 839 0 680
Intangible assets 0 1 0 0
Current assets 13,981 18,913 11,799 12,563
Provisions and liabilities 10,233 125 11,215 29
24,229 19,878 23,014 13,272
Unused tax losses 500 0 0 0
24,729 19,878 23,014 13,272
The deferred tax assets of EUR 23,014 thousand (previous year: EUR 24,729 thou-
sand) do not contain any (previous year: EUR 500 thousand) recognised tax reduc-
tion claims from unused tax losses as these were reclassified applying IFRS 5 to
the item “Assets held for sale” in an amount of EUR 750 thousand.
31/12/2013 31/12/2014
in EUR thousand Non-current Current Non-current Current
Sundry other financial receivables 0 50,115 0 22,235
Financial receivables from the subsidiary held for sale (IFRS 5) 0 0 0 13,107
0 50,115 0 35,342
31/12/2013 31/12/2014
in EUR thousand Non-current Current Non-current Current
Receivables from other taxes (excluding income taxes) 0 2,401 0 134
Prepaid expenses 0 602 0 551
Sundry other assets 30 1,287 0 1,649
30 4,290 0 2,334
74 Kraftanlagen München GmbH Annual Report 2014
Furthermore, existing tax reduction claims were not recognised because the reco-
very of these unused tax losses in accordance with IAS 12.34 et seq. could not be gu-
aranteed with a sufficient degree of certainty. Domestic and foreign unused tax
losses for which no deferred tax assets have been recognised consisted of and
amount of EUR 1,445 thousand (previous year: EUR 18,022 thousand) for corporation
tax. The change includes the adjustments relating to the current taxable income as
well as taking into account the subsidiary held for sale. The existing domestic and
foreign unused tax losses can be carried forward indefinitely. Since 2004, it has on-
ly been possible to offset 60% of any current taxable income exceeding EUR 1 milli-
on using unused tax losses in Germany pursuant to the German Law to Reduce Tax
Privileges (Steuervergünstigungsabbaugesetz; StVergAbG).
Deferred tax assets are recognised for all deductible temporary differences if it
is probable that future taxable income will be available against which they can be
realised.
Deferred tax liabilities of EUR 13,272 thousand gross (previous year: EUR 19,878
thousand) were exclusively attributable to taxable temporary differences, which
primarily arose from the adjustment to uniform Group IFRS measurement and reco-
gnition principles.
The difference between the balances of the deferred tax assets and liabilities
for the 2013 and 2014 financial years amounted to EUR 4,891 thousand (previous ye-
ar: EUR -1,447 thousand). Of this amount, EUR 0 thousand (previous year: EUR -427
thousand) pertained to equity changes resulting from the hedging of cash flows,
EUR -1,068 thousand (previous year: EUR -283 thousand) to equity changes resulting
from the application of IAS 19 (2011), EUR 647 thousand (previous year: EUR 0 thou-
sand) to the deconsolidation and reclassification in accordance with IFRS 5 and EUR
8 thousand (previous year: EUR -1 thousand) to currency translation effects. The re-
maining EUR 4,478 thousand (previous year: EUR -736 thousand) was recognised as
a tax expense.
In accordance with IAS 12, deferred taxes arise from the difference between the
carrying amount of a parent company’s investment in a subsidiary for financial re-
porting purposes and the tax basis of that investment (outside basis differences) if
it is expected that the difference will be realised. As Kraftanlagen München GmbH
and the affected subsidiaries are corporations, these differences are predominant-
ly tax-exempt and permanent in nature upon realisation in accordance with Section
8b of the Corporate Income Tax Act (Körperschaftssteuergesetz; KStG).
According to IAS 12.39, no deferred tax liability should be recognised even for
temporary differences (e.g. those resulting from the 5% flat-rate allocation pursu-
ant to Section 8b of the KStG) if it is not likely, given control by the parent company,
that these differences will reverse in the foreseeable future. As the differences are
not expected to reverse, no deferred taxes had to be recognised in this regard. Out-
side basis differences came to EUR 4,529 thousand (previous year: EUR 2,506 thou-
sand), to which deferred taxes of EUR 69 thousand (previous year: EUR 40 thousand)
would be attributable.
17. Income tax assets
EUR 823 thousand in income tax assets (previous year: EUR 460 thousand) are cur-
rent receivables due from German and foreign tax authorities.
75Kraftanlagen München GmbH Annual Report 2014
Notes to the Consolidated Financial Statements
18. Inventories
in EUR thousand 31/12/2013 31/12/2014
Raw materials and consumables 636 581
Prepayments 677 3,653
1,313 4,234
Inventories were not subject to any particular disposal restrictions.
In the reporting year, impairment losses and valuation allowances for slow-/
non-moving goods amounting to EUR 183 thousand (previous year: EUR 160 thou-
sand) were recorded on raw materials and consumables.
19. Trade receivables
PoC receivables less prepayments received of EUR 31,202 thousand (previous year:
EUR 43,979 thousand) pertain to customer-specific construction contracts with a
debit balance in which the costs incurred including a profit mark-up exceed the pre-
payments received. The sum of costs incurred as recognised under PoC receivables
(assets) and payables (liabilities) including profit shares for construction contracts
amounts to EUR 377,691 thousand (previous year: EUR 707,330 thousand). The recog-
nised PoC value contains no capitalised borrowing costs.
In the financial year, a total of EUR 378,611 thousand (previous year: EUR 707,986
thousand) in prepayments received was offset against PoC receivables or payables.
Changes to the valuation allowance account for receivables from invoiced goods
and services were as follows:
31/12/2013 31/12/2014
in EUR thousand Non-current Current Non-current Current
Receivables from unbilled contracts (PoC) 0 487,605 0 128,992
less prepayments received 0 -443,626 0 -97,790
0 43,979 0 31,202
Receivables from billed contracts 0 120,490 0 130,661
Receivables from joint ventures 0 3,376 0 767
0 167,845 0 162,630
Receivables from companies in which an investment is held 0 183 0 143
0 168,028 0 162,773
76 Kraftanlagen München GmbH Annual Report 2014
in EUR thousand
As at 1 January 2013 1,859
Appropriation recognised as an expense 2,577
Use 1,654
Reversal 641
Currency translation effects -2
As at 31 December 2013 / 1 January 2014 2,139
Appropriation recognised as an expense 1,033
Use 1,570
Reversal 23
Change in the basis of consolidation / IFRS 5 -480
Currency translation effects -1
As at 31/12/2014 1,098
As in the previous year, trade receivables as at 31 December 2014 – excluding receiva-
bles from unbilled contracts that have not fallen due yet – were subject to the follow-
ing credit risks as at the balance sheet date:
Past due but not impaired
in TEURGross
receivablesValuation
allowancesNet
receivablesNeither past due
nor impaired < 30 days 30-60 days 60-90 days 90-120 days > 120 days
2014 132,526 1,098 131,428 49,758 4,515 650 695 149 75,661
2013 126,005 2,139 123,866 39,174 8,721 2,163 1,353 352 72,103
There was no indication that valuation allowances had to be recognised on receiv-
ables not impaired as at the balance sheet date.
20. Cash and cash equivalents
Cash and cash equivalents of EUR 73,349 thousand (previous year: EUR 93,240 thou-
sand) related exclusively to bank deposits, in this case mainly time and overnight de-
posits, and cash on hand. The deposits, which may be withdrawn within 24 hours or
following a period of between one day and three months, earn a variable interest
rate. Deposits at banks are made only with credit institutions that have a good credit
rating and/or are covered by a deposit protection fund in their full amount; in the case
of foreign banks, business relations only exist with banks that have a good credit rat-
ing. Interest rates ranged between 0.15% and 0.68% (previous year: 0.09% and 0.44%).
The fair value of cash and cash equivalents and short-term deposits was EUR 73,349
thousand (previous year: EUR 93,240 thousand).
21. Equity
Changes in consolidated equity are shown in the consolidated statement of chang-
es in equity.
in EUR thousand 2013 2014
Subscribed capital 25,000 25,000
77Kraftanlagen München GmbH Annual Report 2014
Notes to the Consolidated Financial Statements
In the course of the merger of the Group’s former company Alpiq Anlagentechnik
GmbH in 2013, its subscribed capital (EUR 25,000 thousand) ceased to exist by way
of confusion of rights. In order to execute the merger, the subscribed capital of the
acquiree Kraftanlagen München GmbH was increased by a contribution of EUR
14,000 thousand and a cash contribution of EUR 6,000 thousand from EUR 5,000
thousand to EUR 25,000 thousand.
The paid-in subscribed capital of the Group’s parent company was thus un-
changed at EUR 25,000 thousand. On the other hand, the Group received net assets
of EUR 20,000 thousand. This increase in net worth is reported in the capital reserve
of the previous year. The only share in the company is held by Alpiq Deutschland
GmbH, Munich.
in EUR thousand 2013 2014
Capital reserve as at 01/01 20,997 40,997
Cash contribution 20,000 0
Capital reserve as at 31/12 40,997 40,997
The other reserves concern equity changes without effect on profit or loss and com-
prise the following items:
in EUR thousand 2013 2014
Currency translation differences -372 -631
Actuarial gains and losses on the remeasurementof the net defined benefit obligation -18,807 -22,178
Deferred taxes thereon 6,007 7,075
Other reserves as at 31/12 -13,172 -15,734
Currency differences result from the translation of the balance sheet due to the
translation of equity at historical rates, of other balance sheet items at the closing
rates and of earnings at average annual rates.
Since the first-time retroactive application of the revised IAS 19 (2011) from the
2013 financial year, changes in other reserves without effect on profit resulted from
the inclusion of actuarial gains and losses on the remeasurement of the defined be-
nefit liability and the deferred taxes thereon. The increase in actuarial losses is pri-
marily attributable to the decrease in the interest rate from 3.4% in 2013 to 2.2% in
2014, which is counterbalanced by a decrease in the rate of pension increase from
2% to 1% applying Section 16(3) no. 1 of the German Company Pensions Act (Gesetz
zur Verbesserung der betrieblichen Altersversorge; BetrAVG).
Changes in net retained profit were as follows:
in EUR thousand 2013 2014
Net retained profit as at 01/01 54,969 56,448
Consolidated profit before advance distribution 13,535 12,000
Distribution -12,000 -10,000
Non-controlling interests -56 750
Net retained profit as at 31/12 56,448 59,198
78 Kraftanlagen München GmbH Annual Report 2014
In accordance with a resolution of 8 December 2014, KAM made an advance distri-
bution of EUR 716 thousand from the net retained profit and EUR 9,284 thousand
based on the expected net profit for 2014 pursuant to German GAAP (EUR 10,000
thousand in total) to the shareholder Alpiq Deutschland GmbH.
The primary objective of the Group’s capital management is to ensure that it re-
tains its ability to repay debt in the future and remains financially sound. Further-
more, focus is concentrated on the maximisation of shareholder value. Financial se-
curity is essentially maintained by a good credit rating and is controlled based on
the equity ratio, which stood at 30.1% as at 31 December (previous year: 28.4%).
22. Non-controlling interests
Non-controlling interests in the equity of consolidated subsidiaries were recognised
in this item in accordance with adjustments to the uniform accounting and meas-
urement principles of the Kraftanlagen Group. Following the sale of Kraftszer Vál-
lalkozási Kft., Budapest, there are non-controlling interests due to the first-time
consolidation of KAROM Servicii Profesionale In Industrie S.R.L., Ploiesti. The item
comprises pro rata equity (EUR 251 thousand) and the pro rata net loss for the year
(EUR 750 thousand) of this company.
23. Provisions
Statement of changes in provisions:
in EUR thousand As at 01/01/2014
Disposals consolidated
group IFRS 5 Addition *) Reversal Use As at 31/12/2014
Provisions for pensionsand similar obligations 81,570 0 -882 7,478 0 -4.681 83,485
Tax provisions 11,593 0 -58 1,631 -4 -5,914 7,248
Other provisions 19,006 -410 -157 8,046 -6,184 -4,542 15,759
112,169 -410 -1,097 17,155 -6,188 -15,137 106,492
*) EUR 3,381 thousand was added to pensions directly in equity through other comprehensive income
Other provisions were reversed because the original grounds for recognising them
no longer apply.
31/12/2013 31/12/2014
in EUR thousand Non-current Current Total Non-current Current Total
Provisions for pensionsand similar obligations 76,504 5,066 81,570 78,577 4,908 83,485
Tax provisions 0 11,593 11,593 0 7,248 7,248
Personnel provisions 1,409 1,745 3,154 1,137 3,328 4,465
Warranty obligations 1,781 3,145 4,926 1,204 2,483 3,687
Potential losses frompending transactions 1,734 9,192 10,926 1,381 6,226 7,607
Other provisions 4,924 14,082 19,006 3,722 12,037 15,759
81,428 30,741 112,169 82,299 24,193 106,492
79Kraftanlagen München GmbH Annual Report 2014
Notes to the Consolidated Financial Statements
Provision for pensions and similar obligations
The Kraftanlagen Group has company pension plans that qualify as defined benefit
and defined contribution plans.
Under defined contribution plans group companies pay contributions on a con-
tractual or voluntary basis to an external insurance company which are recorded in
the employee benefits expense as they fall due. Apart from this payment, the com-
panies do not have any further payment obligations in the event that funds later
prove insufficient to fully cover the pension benefits.
Under defined benefit plans, which mainly concern Kraftanlagen München and
its domestic subsidiaries, the Company is obligated to provide benefits to current and
former employees or their surviving dependants. Benefits are measured as at the bal-
ance date at the defined benefit obligation using the projected unit credit method,
which takes into account future salary and pension increases and other adjustments
in benefits. The defined benefit obligation is measured using actuarial methods. The
calculations are based on biometric parameters derived from 2005 G mortality tables
of Prof. Klaus Heubeck and based on the following actuarial assumptions:
in % 2013 2014
Discount rate 3.40 2.20
Rate of salary increase 3.00 2.70
Rate of pension increase 2.00 1.00
Expected returns are based on the average interest rate of assets; these were assets with
matching maturities. Other projections are based on empirical values and economic
data.
The companies of the Kraftanlagen Group, which approve defined benefit obliga-
tions, are required by works agreement to adjust the ongoing payments pursuant to
Section 16(3) no. 1 BetrAVG by at least 1% p.a.
To the extent that there are assets that are exclusively reserved for settling
these obligations, these are deducted from the obligation as plan assets and the
net liability is reported in the balance sheet:
in EUR thousand 2013 2014
Present value of the defined benefit obligation 83,375 85,730
Less the fair value of plan assets or employer’sliability insurance 1,805 2,245
Net obligation as at 31/12 81,570 83,485
The present value of the obligation developed as follows:
in EUR thousand 2013 2014
Defined benefit obligation as at 01/01 85,888 83,375
Interest expenses 2,845 2,756
Current service cost/administration cost 231 175
Total benefits paid -4,460 -4,722
Actuarial effects from the current year -949 3,335
Other *) 0 811
Defined benefit obligations as at 31/12 83,375 85,730
*) “Other” includes the addition to the provisions for severance payments for employees taken over from KAROM of
EUR 1,693 thousand as well as the reclassification of the provision for severance payments pursuant to IFRS 5 of
EUR -882 thousand.
80 Kraftanlagen München GmbH Annual Report 2014
Changes in the fair value of plan assets are presented below:
in EUR thousand 2013 2014
Value of plan assets as at 01/01 1,389 1,805
Return on plan assets 47 61
Employer contributions to plan assets 467 467
Other changes in plan assets -40 -42
Actuarial effects from the current year -58 -46
Value of plan assets as at 31/12 1,805 2,245
Interest expenses for pension provisions and the return on plan assets are recognised
in the interest result while the remaining components are reported as personnel
expenses.
The gross pension obligations totalling EUR 85,730 thousand (previous year: EUR
83,375 thousand) are allocable for the most part to Germany with EUR 84,037 thou-
sand (previous year: EUR 84,608 thousand) and Romania with EUR 1,693 thousand
(previous year: EUR 767 thousand in Austria) for provisions for severance payments.
As a rule, the pension plans of the German group companies grant employees
old-age, disability and surviving dependants’ benefits in the form of lifelong pensi-
on benefits; the amount of the benefits depends on the employee’s length of ser-
vice. Apart from direct pension commitments, the Kraftanlagen Group has commit-
ted to benefits under company pension plans that are indirectly settled via welfare
and pension funds as well as direct insurers.
The sensitivity analysis reveals the separate effects of individual changes in param-
eters on the present value of the obligation and its development.
in EUR thousand 31/12/2013 31/12/2014
Discount rate
-0.25 4,998 2,571
+0.25 -4,524 -2,442
Estimated rate of pension increase
-0.25 -1,734 -1,795
+0.25 1,842 1,859
Life expectancy
One-year increase 3,503 3,700
One-year decrease -3,573 -3,764
The sensitivity analysis is based on changes that are possible as at the end of the re-
porting period using a method that extrapolates the impact on the net defined ben-
efit obligation as a result of reasonable changes in key assumptions occurring at
the end of the reporting period. Every change in a key actuarial assumption was an-
alysed separately. Interdependencies were not taken into account. In the Kraftan-
lagen Group, wage and salary increases only have a small effect on the defined
benefit obligation.
Tax provisions
Tax provisions contain domestic and foreign taxes on income of EUR 7,248 thousand
(previous year: EUR 11,593 thousand), which were recognised for the reporting and
the previous year.
81Kraftanlagen München GmbH Annual Report 2014
Notes to the Consolidated Financial Statements
Other provisions
Other provisions were recognised at the settlement amount calculated on the balance
sheet date, taking account of projected cost increases. Other provisions cover all identifi-
able risks and other uncertain obligations. Significant items are warranty expenses and
risks, contractual risks, potential losses from pending transactions and provisions for per-
sonnel obligations, which include, among other things, part-time early retirement obliga-
tions and severance payment obligations. Provisions for potential losses from pending
transactions are partly based on reassessments of individual items, which have led to a
change in provisions compared to the previous year.
24. Financial liabilities
31/12/2013 31/12/2014
in EUR thousand Non-current Current Non-current Current
Liabilities to banks 0 4,871 0 0
Current liabilities to banks related to a short-term EUR loan from our Hungarian
subsidiary, which was repaid before it was sold.
25. Trade payables
31/12/2013 31/12/2014
in EUR thousandNon-
current CurrentNon-
current Current
Percentage of completion (PoC) 0 -219,725 0 -248,699
Prepayments received 0 264,315 0 280,821
0 44,590 0 32,122
Trade payables 1,913 33,833 0 21,166
1,913 78,423 0 53,288
PoC payables less prepayments received of EUR 32,122 thousand (previous year:
EUR 44,590 thousand) include the recognition of the gross amount due to custom-
ers for contract work as a liability, whereby prepayments received for these con-
struction contracts exceed the costs incurred including profit share.
26. Other liabilities
31/12/2013 31/12/2014
in EUR thousandNon-
current CurrentNon-
current Current
Liabilities to employees 0 12,850 0 12,237
Liabilities from other taxes (excluding income taxes) 0 15,178 0 9,684
Social security contribution liabilities 0 860 0 797
Liabilities from finance leases 0 27 0 23
Sundry other liabilities 0 27,262 0 37,201
0 56,177 0 59,942
82 Kraftanlagen München GmbH Annual Report 2014
Other liabilities mainly comprise liabilities from payroll accounting and other tax-
es and dues. Liabilities from finance leases concern obligations under lease agree-
ments for the software of a telephone system. The corresponding intangible assets
are recorded in the books of a domestic subsidiary. A reconciliation of future mini-
mum lease payments to the recognised present values and their terms to maturity
is presented below:
in EUR thousand 2013 2014
Future minimum lease payments
Due in up to 1 year 5 5
Due in 1-5 years 19 15
Due in more than 5 years 7 6
Total 31 26
Interest portion contained in future minimumlease payments 4 3
Present value of future minimum lease payments
Due in up to 1 year 4 5
Due in 1-5 years 17 14
Due in more than 5 years 6 4
Total 27 23
Sundry other liabilities relate primarily to services that have yet to be rendered for
billed contracts, which increased by EUR 10,905 thousand on the previous year.
27. Income tax liabilities
Income tax liabilities of EUR 2 thousand (previous year: EUR 1 thousand) comprised
deferred liabilities to domestic and foreign tax authorities pertaining to the tax
assessments for the reporting years.
28. Derivative financial instruments
31/12/2013 31/12/2014
in EUR thousandNon-
current CurrentNon-
current Current
Positive market values not in hedging relationships
Currency forwards 0 5 0 0
31/12/2013 31/12/2014
in EUR thousandNon-
current CurrentNon-
current Current
Negative market values not in hedging relationships
Currency forwards 0 0 0 1
83Kraftanlagen München GmbH Annual Report 2014
Notes to the Consolidated Financial Statements
The following currency forwards existed as at the reporting date which were not in an
effective hedging relationship pursuant to IAS 39:
31/12/2013 31/12/2014
Nominal amount
in TC
Market valuein EUR
thousand
Nominal amount
in TC
Market valuein EUR
thousand
Swiss francs (sale) 1,140 5 140 -1
Derivative financial instruments are used to compensate for fluctuations in exchange
rates in the context of international transactions and financing. The maximum term to
maturity of currency forwards not in hedging relationships was one month as at the
balance sheet date.
29. Disposals of entities
Kraftszer Vàllalkozàsi Kft., Budapest, Hungary, was sold on 25 July 2014 and deconsol-
idated as at 31 July 2014, taking materiality into account.
On this date, assets and liabilities amounted to:
in EUR thousand 2013 2014
Property, plant and equipment and intangible assets 0 59
Deferred tax assets 0 53
Cash and cash equivalents 0 2,891
Other current assets 0 3,240
Other current liabilities 0 -5,254
Net assets sold 0 989
Net cash flow from the sale breaks down as follows:
in EUR thousand 2013 2014
Cash and cash equivalents from the subsidiary sold 0 -2,891
Repayment of the loan as part of the sale 0 -4,690
Sale price 0 100
Net cash flow 0 -7,481
30. Assets and liabilities held for sale
Due to a resolution passed by the Supervisory Board on 30 October 2014 to sell a for-
eign subsidiary, the assets and liabilities of this company were, pursuant to the
principles of IFRS 5, recognised under the items “Assets held for sale” and “Liabili-
ties directly associated with assets held for sale”.
84 Kraftanlagen München GmbH Annual Report 2014
in EUR thousand 2013 2014
Property, plant and equipment and intangible assets 0 299
Deferred tax assets 0 917
Cash and cash equivalents 0 879
Trade receivables 0 20,875
Other current assets 0 112
Assets held for sale 0 23,082
in EUR thousand 2013 2014
Provisions 0 1,097
Deferred tax liabilities 0 319
Trade payables 0 1,766
Financial liability to KAM 0 13,107
Sundry other liabilities 0 3,452
Liabilities held for sale 0 19,741
31. Contingent liabilities and other financial obligations
As at the reporting date, there were obligations of EUR 0.1 million (previous year:
EUR 0 million) from performance bonds and EUR 3.6 million (previous year: EUR 3.9
million) from warranty agreements from operations sold in 2012; however, the buy-
er of the discontinued operation has assumed liability for the settlement of these
obligations in the event of claims. We therefore consider to risk of utilisation/cash
outflow to be unlikely.
In addition, the Kraftanlagen Group is jointly and severally liable for all joint
ventures in which it holds an interest.
Arbitration proceedings for the resolution of existing claims relating to a large-
scale foreign project are in progress.
The nominal values of other financial obligations, rental and lease contracts
(operating leases) have the following terms to maturity:
in EUR thousand 31/12/2013 31/12/2014
Due in up to 1 year 6,157 6,855
Due in 1-5 years 10,711 6,836
Due in over 5 years 13 4
16,881 13,695
These pertain to obligations from rental and lease contracts for property and movable
assets.
85Kraftanlagen München GmbH Annual Report 2014
Other Notes
32. Related party transactions
In addition to the subsidiaries included in the consolidated financial statements, the
Kraftanlagen Group also maintains relationships with related parties.
These include transactions between the Kraftanlagen Group and its associates and the
following shareholders (including the parent company and subsidiaries) of Kraftanlagen
München GmbH, Munich, which can exert a significant influence. These are:
• Alpiq Deutschland GmbH, Munich
• Alpiq Holding AG, Lausanne, Switzerland
The consolidated financial statements of Kraftanlagen München GmbH are includ-
ed in the consolidated financial statements of Alpiq Holding AG, Lausanne, Switzer-
land, which are prepared in accordance with IFRSs. These financial statements can
be viewed at the company headquarters; in addition, they are filed with the Swiss
Exchange in Zurich.
The following business relationships exist between the Kraftanlagen Group and re-
lated parties:
Alpiq Deutschland GmbH Alpiq Holding AG
in EUR thousand 31/12/2013 31/12/2014 31/12/2013 31/12/2014
Receivables
Trade receivables 0 0 4,272 6,224
Derivative financial instruments 0 0 5 0
0 0 4,277 6,224
Liabilities
Trade payables 0 5 0 0
Derivative financial instruments 0 0 0 1
0 5 0 1
Alpiq Deutschland GmbH Alpiq Holding AG
in EUR thousand 31/12/2013 31/12/2014 31/12/2013 31/12/2014
Net sales revenue 0 0 51,894 45,652
Other operating income 30 46 0 0
Cost of materials 0 0 -222 -877
Financial expenses 0 -2 -6
30 46 51,670 44,769
Receivables primarily pertain to trade receivables for work on the power plant unit
in Kladno.
Notes to the Consolidated Financial Statements
86 Kraftanlagen München GmbH Annual Report 2014
In the reporting year, sales with associates of Alpiq Holding AG totalled EUR 4,290
thousand (previous year: EUR 3,419 thousand).
All transactions with related parties are conducted at arm’s length. The Supervisory
Board and General Management also qualify as related parties. The Supervisory Board
and General Management received the following ongoing payments as parties
related to the Kraftanlagen Group:
General Management Supervisory Board
in EUR thousand 2013 2014 2013 2014
Short-term remuneration 1,931 2,082 68 23
Long-term remuneration (pension expense) 138 177 0 0
2,069 2,199 68 23
As in the previous year, other remuneration included payments to current Supervisory
Board members for legal consulting services in the respective financial year.
For the year that Alpiq Anlagentechnik GmbH was merged into Kraftanlagen
München GmbH (2013), the remuneration of the general managers of Kraftanlagen
München GmbH, who were appointed as general managers of Alpiq Anlagentechnik
GmbH on 14 June 2013, are included from this date; the remuneration of a general
manager who left the Company on 24 September 2013 is included.
The present value of obligations for pension commitments for former members
of the General Management and their surviving dependants totalled EUR 13,153
thousand (previous year: EUR 12,238 thousand). Payments to former members of
the General Management or their surviving dependants over the financial year
amounted to EUR 655 thousand (previous year: EUR 606 thousand).
33. Cash flow statement
The cash flow statement shows how the flow of cash in and out of the Group affects
cash and cash equivalents during the reporting year. In accordance with IAS 7 (“Cash
Flow Statements”), a distinction is made between cash flows from operating activi-
ties, investing and financing.
The cash flow is derived indirectly, starting from earnings before taxes. This is
adjusted for non-cash expenses and income as well as working capital changes to
arrive at the net cash flow from operating activities.
Investing activities include the acquisition and disposal of fixed assets, the
purchase or sale of subsidiaries and changes in securities and time deposits with a
term to maturity of over three months.
Financing activities consist of cash inflows and outflows from the borrowing
and repayment of financial liabilities and from dividend payments and profit and
loss transfers.
Changes in balance sheet items included in the cash flow statement cannot be
directly derived from the balance sheet because they are adjusted for exchange rate
effects and changes in the basis of consolidation (previous year).
87Kraftanlagen München GmbH Annual Report 2014
Notes to the Consolidated Financial Statements
The cash and cash equivalents presented in the cash flow statement comprise all
cash and cash equivalents (Note 20) recognised in the balance sheet less current fi-
nancial liabilities from bank overdrafts. Cash and cash equivalents as at 31 Decem-
ber comprised the following:
in EUR thousand 2013 2014
Cash and cash equivalents 93,240 73,349
Liabilities from bank overdrafts 0 0
Cash and cash equivalents as at 31 December 93,240 73,349
34. Exemption under Section 264(3) of the HGB
The following domestic subsidiaries have been exempted under Section 264(3) of
the HGB from preparing and disclosing their separate financial statements due to
their inclusion in the consolidated financial statements of Kraftanlagen München
GmbH, Munich:
Company name Headquarters
ECM Ingenieur-Unternehmen für Energie- und Umwelttechnik GmbH Munich, Germany
FINOW Rohrsysteme GmbH Eberswalde, Germany
GAH Pensions GmbH Heidelberg, Germany
Ingenieurbüro Kiefer & Voß GmbH Erlangen, Germany
Kraftanlagen Hamburg GmbH Hamburg, Germany
Kraftanlagen Heidelberg GmbH Heidelberg, Germany
Kraftanlagen Energie- und Umwelttechnik GmbH Heidelberg, Germany
Kraftanlagen Power Plants GmbH Munich, Germany
35. Reporting on financial instruments
Financial instruments include primary financial instruments and derivatives. Finan-
cial instruments on the asset side consist of financial assets, financial receivables,
trade receivables, other receivables and assets, derivative financial instruments and
cash and cash equivalents. On the liability side, they comprise financial liabilities,
trade payables, other liabilities and derivative financial instruments.
The following table shows the fair values and carrying amounts of financial assets
and financial liabilities in individual balance sheet items:
88 Kraftanlagen München GmbH Annual Report 2014
Carrying amount by valuation category Not within the scope of IFRS 7 Balance sheet
Assets as at 31/12/2014 in EUR thousand
Fair
va
lue
Hel
d f
or
tra
din
g
Ava
ilab
le f
or
sale
Hel
d to
mat
uri
ty
Loa
ns
an
d
rece
iva
ble
s
Hed
gin
g
rela
tio
nsh
ip
Mea
sure
d a
cco
r-d
ing
to
IAS
11
Mea
sure
d a
cco
r-d
ing
to
IAS
17 7
No
n-f
ina
nci
al i
nst
-ru
men
t
Tota
l
No
n-c
urr
ent
Cu
rren
t
Financial assets 6 0 6 0 0 0 0 0 0 6 6 0
Financial receivables 35,342 0 0 0 35,342 0 0 0 0 35,342 0 35,342
Trade receivables 162,773 0 0 0 131,571 0 31,202 0 0 162,773 0 162,773
Other receivables and assets 23,082 0 23,082 0 0 0 0 0 2,334 2,334 0 25,416
Cash and cash equivalents 73,349 0 0 0 73,349 0 0 0 0 73,349 0 73,349
Derivative financial instruments 0 0 0 0 0 0 0 0 0 0 0 0
Total 294,552 0 23,088 0 240,262 0 31,202 0 2,334 296,886 6 296,880
Not within the scope of IFRS 7
Liabilities as at 31/12/2014in EUR thousand
Fair
va
lue
Hel
d f
or
tra
din
g
Ava
ila
ble
fo
r sa
le
Fin
an
cia
l lia
bil
i-ti
es m
easu
red
at
am
ort
ised
co
st
Hed
gin
gre
lati
on
ship
Mea
sure
d a
cco
r-d
ing
to
IAS
11
Mea
sure
d a
cco
r-d
ing
to
IAS
17
No
n-f
ina
nci
al
inst
rum
ent
Tota
l
No
n-c
urr
ent
Cu
rren
t
Financial liabilities 0 0 0 0 0 0 0 0 0 0 0
Trade payables 53,288 0 0 21,166 0 32,122 0 0 53,288 0 53,288
Other liabilities 56,965 0 19,741 37,201 0 0 23 22,718 79,683 0 79,683
Derivative financial instruments 1 1 0 0 0 0 0 0 1 0 1
Total 110,254 1 19,741 58,367 0 32,122 23 22,718 132,972 0 132,972
Carrying amount by valuation category Not within the scope of IFRS 7 Balanc
Assets as at 31/12/2013in EUR thousand
Fair
va
lue
Hel
d f
or
tra
din
g
Ava
ilab
le f
or
sale
Hel
d to
mat
uri
ty
Loa
ns
an
d
rece
iva
ble
s
Hed
gin
g
rela
tio
nsh
ip
Mea
sure
d a
cco
rdin
g
to IA
S 11
Mea
sure
d a
cco
rdin
g
to IA
S 17
No
n-f
ina
nci
al
inst
rum
ent
Tota
l
No
n-c
urr
ent
Cu
rren
tFinancial assets 46 0 46 0 0 0 0 0 0 46 46 0
Financial receivables 50,115 0 0 0 50,115 0 0 0 0 50,115 0 50,115
Trade receivables 168,028 0 0 0 124,049 0 43,979 0 0 168,028 0 168,028
Other receivables and assets 0 0 0 0 0 0 0 0 4,320 4,320 30 4,290
Cash and cash equivalents 93,240 0 0 0 93,240 0 0 0 0 93,240 0 93,240
Derivative financialinstruments 5 5 0 0 0 0 0 0 0 5 0 5
Total 311,424 5 46 0 267,404 0 43,979 0 4,320 315,754 76 315,678
89Kraftanlagen München GmbH Annual Report 2014
Notes to the Consolidated Financial Statements
Not within the scope of IFRS 7
Liabilities as at 31/12/2013in EUR thousand
Fair
val
ue
Hel
d f
or
tra
din
g
Ava
ilab
le f
or
sale
Fin
an
cia
l lia
bil
itie
s
mea
sure
d a
t a
mo
rtis
ed c
ost
Hed
gin
g r
ela
tio
nsh
ip
Mea
sure
d a
cco
rdin
g t
o IA
S 11
Mea
sure
d a
cco
rdin
g t
o IA
S 17
No
n-f
ina
nci
al i
nst
rum
ent
Tota
l
No
n-c
urr
ent
Cu
rren
t
Financial liabilities 4,871 0 0 4,871 0 0 0 0 4,871 0 4,871
Trade payables 80,336 0 0 35,746 0 44,590 0 0 80,336 1.913 78,423
Other liabilities 27,289 0 0 27,262 0 0 27 28,888 56,177 0 56,177
Derivative financial instruments 0 0 0 0 0 0 0 0 0 0 0
Total 112,496 0 0 67,879 0 44,590 27 28,888 141,384 1,913 139,471
Fair values were determined based on the market values published on the balance
sheet date and the methods and underlying assumptions described below.
Financial assets
No active market prices for financial assets held could be derived from recent trans-
actions. As no other current information is available, they were measured at amor-
tised cost.
Financial receivables
In the case of financial receivables, fair value reflects the current market value of the
assets; as such, the fair value also corresponds to the carrying value of the financial
receivables.
Trade receivables
Trade receivables are reported under loans and receivables. As they are due within a
short period of time, their carrying values as at the balance sheet date approximate
their fair value.
The receivables from unbilled contracts in progress included in trade receivables
according to IAS 11 less proportionate prepayments are listed in a separate column
as financial instruments as defined in IFRS 7.
Other receivables and assets
Other receivables and assets are partially shown under loans and receivables (non-
pledged employer’s pension liability insurance). Carrying amounts as at the balance
sheet date correspond to fair values. The remaining receivables and assets relate
90 Kraftanlagen München GmbH Annual Report 2014
primarily to items that are not to be treated as financial instruments, e.g. other tax
assets, government grants and prepaid expenses.
Cash and cash equivalents
Cash and cash equivalents are close to maturity. Their carrying amounts as at the
balance sheet date therefore approximate their fair values.
Derivative financial instruments
The fair values of derivatives are determined using generally accepted valuation
methods.
Derivative financial instruments are used to compensate for fluctuations in ex-
change rates in the context of international transactions and financing.
Non-hedged derivatives are classified as "held for trading" and recognised as an
asset or liability. Changes in the fair value of this type of derivatives are recognised
in profit or loss for the period.
Derivatives in hedging relationships are classified as "cash flow hedging rela-
tionships" and recognised directly in other comprehensive income.
Financial liabilities
In the case of current financial liabilities, it is assumed that the fair value corre-
sponds to the carrying amount. In the case of non-current financial liabilities, the
market value is determined by discounting expected future cash outflows. Provid-
ed these bear the customary rate of interest, the carrying amount will correspond
to the fair value.
Trade payables
The majority of trade payables are due within a short period of time; consequently, their
carrying amounts as at the balance sheet date closely correspond to their fair values.
Prepayments received less proportionate receivables from unbilled contracts
according to IAS 11 that are included in trade payables are listed in a separate col-
umn outside the scope of IFRS 7.
Other liabilities
Other liabilities are partly recognised under financial liabilities measured at amor-
tised cost. These largely pertain to liabilities in connection with payroll accounting.
These liabilities are due within a short period of time; consequently, their carrying
amounts as at the balance sheet date closely correspond to their fair values.
The item also includes finance lease liabilities, which are accounted for under
IAS 17 and are presented separately in the reconciliation. The fair value of lease lia-
bilities is determined by discounting future payable lease payments.
The remaining portion is attributable to items that are not to be treated as finan-
cial instruments, e.g. tax liabilities (excluding income taxes), liabilities to employees
and deferred income. To improve reconcilability with the accounted values, these
are listed in a separate column.
91Kraftanlagen München GmbH Annual Report 2014
Notes to the Consolidated Financial Statements
Net gains or losses by measurement category:
in EUR thousand 2013 2014
Held for trading -2 -6
Loans and receivables -302 -1,173
-304 -1,179
Net losses/gains from the category “held for trading” include the results of marking
open derivatives to market; some of these are recognised in the income statement un-
der financial items, whereas others are reported under cost of materials for the period.
Net losses from the category “loans and receivables” primarily relate to ex-
change rate effects and valuation allowances.
Total interest income and expenses:
in EUR thousand 2013 2014
Total interest income 579 558
Total interest expenses -1,352 -985
-773 -427
Total interest income and expenses arise from financial instruments that are not
measured at fair value, mainly consisting of interest income from loans, time depo-
sits and bank balances. Interest expenses result primarily from bank liabilities and
guarantees.
36. Risk management systems
Die Financial liabilities (excluding derivative financial instruments) consist of bank
loans and overdrafts, finance leases, trade payables and other liabilities. The main
purpose of these financial liabilities is to finance the Group’s operations. The Group
has various financial assets such as trade receivables, cash and cash equivalents and
short-term deposits, which arise directly from its operations.
In addition, the Group also has financial derivatives. Derivative financial instru-
ments are used to hedge exchange rate risks arising from the Group’s operations
and its financing sources.
The Kraftanlagen Group is exposed in the course of its operations to strategic and
operational risks and in particular price, interest rate, credit, exchange rate and li-
quidity risks, with current exchange rate risks being immaterial, due to the relatively
low level of foreign business. Overall strategic and operational risks across the Group
are recorded and evaluated as part of an annual business risk assessment process be-
fore being assigned to the defined risk managers to monitor. The Internal Audit de-
partment reviews the implementation of the specified requirements.
Price, interest rate, credit, exchange rate and liquidity risks are assigned risk limits,
compliance with which is continuously monitored in talks with shareholders and ad-
justed in the context of the Company’s ability to manage and mitigate overall risk.
The risk policy defines the principles for the management of the Kraftanlagen
Group. These include guidelines for the assumption, evaluation, management and
mitigation of business risks and specify the organisation and responsibilities of risk
92 Kraftanlagen München GmbH Annual Report 2014
management. The aim is to maintain a reasonable balance between the business
risks taken, earnings and risk-bearing equity. The financial risk policy regulates the
content, organisation and framework of financial risk management within the Kraf-
tanlagen Group. The relevant units manage their financial risks within the scope of
the risk policy relevant to them and adhere to the limits set by the policy. The aim is
to reduce financial risks by balancing hedging costs against the risks taken.
Credit risks
Credit risks arise for the Kraftanlagen group if counterparties fail to meet their contrac-
tual obligations. The Group manages its credit risks by requiring counterparties to have
a high credit rating. The Kraftanlagen Group’s credit risk management system includes
the ongoing review of receivables from counterparties and credit assessment of both
new and existing contracting parties. In principle, business risks are only entered into
with counterparties which meet the criteria laid down in the risk policy of the Kraftan-
lagen Group. Risk clusters for the Kraftanlagen Group are minimised by the number and
spread of customers and by consolidating certain exposures. There are market-related
concentrations of risk in individual sectors due to a limited number of eligible coun-
terparties. In addition, there has been an increased risk of insolvency for individual
customers since the global financial and economic crisis.
Receivables are monitored on an ongoing basis by means of a formalised pro-
cess in the Kraftanlagen Group. It is the responsibility of the general managers of
the Group’s subsidiaries/business units to monitor receivables. They are required to
review receivables at least once per month and prepare appropriate action plans.
Decisions regarding the recognition of valuation allowances are made by the sub-
sidiaries individually. In the event of doubtful debts, impairment losses should be
recognised in the amount of the default risk; if the debt is bad, it is written off in full.
Cash and cash equivalents, time deposits and financial asset transactions are
concluded only with partners who have a good credit rating and/or are fully cov-
ered by deposit insurance. The investments are limited according to amount and
staggered over time.
The financial assets recognised in the balance sheet represent the maximum
credit risk to which the Group is exposed as at the balance sheet date. The default
risk is mitigated by means of limits per selected counterparty.
For details regarding the ageing analysis of trade receivables and the changes
in valuation allowances, please refer to Note 19.
In accordance with IFRS 7, the total carrying amount of financial assets repre-
sents the maximum credit risk to which the Kraftanlagen Group is exposed as at the
balance sheet date. The credit risk calculated as at 31 December 2014 amounted to
EUR 294,552 thousand (previous year: EUR 311,424 thousand). For a detailed list,
please refer to the table of fair values under Note 35.
Liquidity risk
Liquidity risks arise for the Kraftanlagen Group as a result of its contractual obliga-
tions to repay debts in full and on time. The role of cash and liquidity management
within the Group is to ensure its solvency at all times.
Liquidity management involves the central determination of liquidity require-
ments and surpluses. Netting in domestic subsidiaries is carried out by means of a
cash pooling process. The Kraftanlagen Group takes a prudent approach to liquidity
management: this includes maintaining sufficient cash fund reserves and the
93Kraftanlagen München GmbH Annual Report 2014
Notes to the Consolidated Financial Statements
availability of financing using a suitable level of bank loans from highly rated
banks. Short-term fluctuations in demand are also covered by liquidity manage-
ment. Thanks to its available liquidity and existing credit facilities, the Kraftanla-
gen Group is not exposed to any accumulation of risk.
The Group’s financial liabilities had the following terms to maturity as at 31
December 2014. Data is based on contractual payments (not discounted).
fBilanzstichtag ausgesetzt ist. Das so berechnete Kreditrisiko beträgt per 31.
Dezember 2014 TEUR 294.552 (Vorjahr: TEUR 311.424). Für eine detaillierte Auflistung
verweisen wir auf die Tabelle zu den beizulegenden Zeitwerten unter Position (35).
Liquidity risk
Liquidity risks arise for the Kraftanlagen Group as a result of its contractual obliga-
tions to repay debts in full and on time. The role of cash and liquidity management
within the Group is to ensure its solvency at all times.
Liquidity management involves the central determination of liquidity require-
ments and surpluses. Netting in domestic subsidiaries is carried out by means of a
cash pooling process. The Kraftanlagen Group takes a prudent approach to liquidi-
ty management: this includes maintaining sufficient cash fund reserves and the
availability of financing using a suitable level of bank loans from highly rated banks.
Short-term fluctuations in demand are also covered by liquidity management. Thanks
to its available liquidity and existing credit facilities, the Kraftanlagen Group is not
exposed to any accumulation of risk.
The Group’s financial liabilities had the following terms to maturity as at 31 De-
cember 2014. Data is based on contractual payments (not discounted).
in EUR thousand 31/12/2014Due in less than 1 year
Due in 1 to 5 years
Due in more than 5 years
Financial liabilities 0 0 0 0
Trade payables 53,288 53,288 0 0
Other liabilities 56,965 56,965 0 0
Derivative outflow 116 116 0 0
Derivative inflow -115 -115 0 0
110,254 110,254 0 0
Comparative figures as at 31 December 2013 are as follows:
in EUR thousand 31/12/2013Due in less than 1 year
Due in 1 to 5 years
Due in more than 5 years
Financial liabilities 4,871 4,871 0 0
Trade payables 80,336 78,423 1,913 0
Other liabilities 27,289 27,289 0 0
Derivative outflow 929 929 0 0
Derivative inflow -935 -935 0 0
112,490 110,577 1,913 0
94 Kraftanlagen München GmbH Annual Report 2014
Market risk
The market risk to which the Kraftanlagen Group is exposed consists largely of
price, interest rate and exchange rate risks. These risks are monitored by the Kraf-
tanlagen Group on an ongoing basis and managed through the use of derivative fi-
nancial instruments and contractual arrangements.
Price risks
Price risks arise from price trends, changes in market prices or changing correla-
tions between markets and products. The Kraftanlagen Group is exposed to the risk
of varying prices when procuring materials and servings; the Group tries to reduce
this risk through contractual arrangements with customers or subcontractors. In
plant engineering, prices depend on the respective project and its structure, meaning
that price sensitivities cannot be provided.
Interest rate risks
Interest rate risks arise for the Kraftanlagen Group as a result of fluctuations in inte-
rest rates on the capital market: these fluctuations affect the financial position, fi-
nancial performance and cash flows of the Group. Interest rate risks arise from bank
balances and time deposits. The interest rate risks to which the Group is exposed are
mainly in the eurozone. Interest rate hedging through the use of derivatives was not
deemed necessary, as the risk was assessed as low.
An increase (decrease) of 50 basis points in eurozone interest rates as at 31 De-
cember 2014 would result in an improvement (reduction) in profit for the year of
EUR 543 thousand (previous year: EUR 692 thousand). The hypothetical change in re-
sults refers to the level of liquid assets in the Group, financial receivables and cash
and cash equivalents less financial liabilities as at the balance sheet date.
Exchange rate risks
The Kraftanlagen Group mainly operates in the eurozone and is therefore exposed to li-
mited exchange rate risks. Derivative financial instruments are sometimes used to
hedge future sales revenue against existing exchange rate risks outside the eurozone.
Exchange rate risks primarily exist for the Swiss franc, Czech koruna and Romanian lei.
Net assets of foreign subsidiaries from outside the eurozone and translation
risks are not hedged against exchange rate fluctuations because differences in the
rate of inflation should compensate for exchange rate changes in the long run.
The effects of exchange rate changes on results are subsequently analysed. The
analysis was performed under the assumption that there were no other changes.
Only trade receivables and payables were included in the analysis, as their ex-
change rate risk can have a significant impact on results.
A 5% appreciation of the euro against the Czech koruna as at 31 December 2014
would have resulted in a EUR 5 thousand (previous year: EUR 72 thousand) improve-
ment in profit for the year; a depreciation by the same amount would have resulted
in a EUR 6 thousand (previous year: EUR 80 thousand) reduction.
A 5% appreciation of the euro against the Romanian lei as at 31 December 2014
would have resulted in a EUR 62 thousand (previous year: EUR 63 thousand) improve-
ment in profit for the year; a depreciation by the same amount would have resulted
in a EUR 69 thousand (previous year: EUR 70 thousand) reduction.
95Kraftanlagen München GmbH Geschäftsbericht 2014
Notes to the Consolidated Financial Statements
37. Auditor fees
Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft was engaged on 8 July 2014
to audit the annual financial statements and consolidated financial statements for
the 2014 financial year.
The following table gives an overview of the fees recognised as expenses for the
domestic group companies during the financial year for the services of Group audi-
tors Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft:
in EUR thousand 2013 2014
Fees for audit 349 307
Fees for other services 159 130
508 437
38. Shareholdings of Kraftanlagen München GmbH and the Group as at 31 December 2014
Company name Headquarters
Cu
rren
cy
Sub
scri
bed
ca
pit
al
in m
illi
on
s
Ow
ner
ship
in
tere
st in
%
(vo
tin
g ri
ghts
)
Co
nso
lid
atio
n
met
ho
d
Rep
ort
ing
dat
e
Power Generation and Plant Engineering (PGPE)
Kraftanlagen München GmbH Munich/DE EUR 25.00 F 31/12
ECM Ingenieur-Unternehmen für Energie- und Umwelttechnik GmbH Munich/DE EUR 0,05 100.0 F 31/12
FINOW Rohrsysteme GmbH Eberswalde/DE EUR 0.50 100.0 F 31/12
Ingenieurbüro Kiefer & Voß GmbH Erlangen/DE EUR 0.08 100.0 F 31/12
Kraftanlagen Hamburg GmbH Hamburg/DE EUR 0.77 100.0 F 31/12
Kraftanlagen Heidelberg GmbH Heidelberg/DE EUR 0.50 100.0 F 31/12
Kraftanlagen Energie- und Umwelttechnik GmbH Heidelberg/DE EUR 0.10 100.0 F 31/12
Kraftanlagen Power Plants GmbH Munich/DE EUR 1.00 100.0 F 31/12
Caliqua Anlagentechnik GmbH Wiener Neudorf/AT EUR 0.19 100.0 F 31/12
Kraftanlagen Romania S.R.L. Ploiesti/RO RON 2.04 100.0 F 31/12
Kraftanlagen Romania EsA S.R.L. Ploiesti/RO RON 0.05 100.0 F 31/12
KAROM Servicii Profesionalein Industrie S.R.L. Ploiesti/RO RON 2.25 51.0 F 31/12
Kraftanlagen Serbia d.o.o. Belgrade/SE RSD 2.85 100.0 F 31/12
Kraftanlagen Middle East Mechanical L.L.C. 1 Abu Dhabi/UAE AED 0.15 49.0 NC 31/12
IA Tech GmbH 2 Jülich/DE EUR 0.03 24.8 NC 31/12
Other
GAH Pensions GmbH Heidelberg/DE EUR 0.26 100.0 F 31.12.
Consolidation method
F Fully consolidated
NC Not consolidated (associate)
1 Equity as at 31/12/2013 AED -708 thousand /
Profit for 2013 AED 2,907 thousand pursuant to IFRS
2 Equity as at 31/12/2013 EUR 4 thousand /
Profit for 2013 EUR 33 thousand pursuant to local GAAP
96 Kraftanlagen München GmbH Annual Report 2014
Company bodies and the Auditor' s Report
97Kraftanlagen München GmbH Annual Report 2014
Notes to the Consolidated Financial Statements
Thomas Bucher
Chairman
CFO Alpiq Holding AG,
Lausanne, Switzerland
(from 31 March 2015)
Patrick Mariller
Chairman
Member of the Group Executive Board,
Alpiq Holding AG, Lausanne, Switzerland
(until 30 March 2015)
Alois Bauer
Deputy chair of the works council of
Kraftanlagen München GmbH, Munich
Frank Bielke
Project manager of fire safety at
Kraftanlagen Hamburg GmbH
(until 19 May 2014)
Eva Maria Catillon
Head of Group Taxes at Alpiq Holding
AG,Lausanne, Switzerland
(from 31 March 2015)
Hans Thomas Däpp
Member of the Executive Board at
Alpiq InTec Management AG,
Zurich, Switzerland
Giuseppe Giglio
Head of Group Taxes at Alpiq
Management AG,
Olten, Switzerland
(until 30 March 2015)
Peter Limacher
Chairman of the Executive Board at
Alpiq InTec Management AG, Zurich,
Switzerland
Thomas Martin
Trade union secretary of
IG Metall, administrative office
in Waiblingen
Dr. Bernt Paudtke
Lawyer at the law firm Görg
Rechtsanwälte, Munich
Peter Ranger
Strategic sales at Kraftanlagen
München GmbH, Munich
(until 19 May 2014)
Peter Reithner
Head of piping construction/GSA at
Kraftanlagen München GmbH, Munich
(from 19 May 2014)
Peter Schib
Lawyer,
Head of Group Legal at Alpiq Holding AG,
Lausanne, Switzerland
Michael Seis
Trade union secretary of
IG Metall, administrative office
in Heidelberg
Ahmet Uzun
engineer at Kraftanlagen
Heidelberg GmbH, Heidelberg
Alfons Weber
Head of underground piping
construction business unit at
Kraftanlagen München GmbH, Munich
(from 19 May 2014)
39. Company bodies
Supervisory Board
98 Kraftanlagen München GmbH Annual Report 2014
Reinhold Frank
Alexander Gremm
Mark von Laer
(until 18 March 2014)
Friedrich Schmidt
(from 8 April 2014)
General Management
Munich, 29 May 2015
General Management
Reinhold Frank Alexander Gremm Friedrich Schmidt
99Kraftanlagen München GmbH Geschäftsbericht 2014
Notes to the Consolidated Financial Statements
Translation of the German audit opinion concerning the audit of the consolidated financial statements and group management report prepared in German
Audit opinion
We have audited the consolidated financial statements prepared by Kraftanlagen
München GmbH, Munich, comprising the consolidated statement of comprehensive
income, the consolidated statement of financial position, the consolidated statement of
cash flows, the consolidated statement of changes in equity and the notes to the
consolidated financial statements, together with the group management report, which
was combined with the management report of the company, for the fiscal year from
1 January 2014 to 31 December 2014. The preparation of the consolidated financial
statements and the group management report in accordance with IFRSs [International
Financial Reporting Standards] as adopted by the EU, and the additional requirements of
German commercial law pursuant to Sec. 315a (1) HGB [“Handelsgesetzbuch”: German
Commercial Code] is the responsibility of the Company’s management. Our
responsibility is to express an opinion on the consolidated financial statements and on
the group management report based on our audit.
We conducted our audit of the consolidated financial statements in accordance with
Sec. 317 HGB and German generally accepted standards for the audit of financial
statements promulgated by the Institut der Wirtschaftsprüfer [Institute of Public
Auditors in Germany] (IDW). Those standards require that we plan and perform the
audit such that misstatements materially affecting the presentation of the financial
position and performance in the consolidated financial statements in accordance with
the applicable financial reporting framework and in the group management report are
detected with reasonable assurance. Knowledge of the business activities and the
economic and legal environment of the Group and expectations as to possible
misstatements are taken into account in the determination of audit procedures. The
effectiveness of the accounting-‐related internal control system and the evidence
supporting the disclosures in the consolidated financial statements and the group
management report are examined primarily on a test basis within the framework of the
audit. The audit includes assessing the annual financial statements of those entities
included in consolidation, the determination of entities to be included in consolidation,
the accounting and consolidation principles used and significant estimates made by
management, as well as evaluating the overall presentation of the consolidated financial
statements and the group management report. We believe that our audit provides a
reasonable basis for our opinion.
Auditor`s Report
100 Kraftanlagen München GmbH Annual Report 2014
Our audit has not led to any reservations.
In our opinion, based on the findings of our audit, the consolidated financial statements
comply with IFRSs as adopted by the EU and the additional requirements of German
commercial law pursuant to Sec. 315a (1) HGB and give a true and fair view of the net
assets, financial position and results of operations of the Group in accordance with these
requirements. The group management report is consistent with the consolidated
financial statements and as a whole provides a suitable view of the Group’s position and
suitably presents the opportunities and risks of future development.
Stuttgart, 12 June 2015
Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft Kern Braun Wirtschaftsprüfer Wirtschaftsprüferin [German Public Auditor] [German Public Auditor]
101Kraftanlagen München GmbH Annual Report 2014
Kraftanlagen München GmbH, Munich Balance sheet as at 31 December 2014
in EUR thousand Notes 31 Dec 2013 31 Dec 2014
AssetsFixed assets 1
Intangible assets 1,711 1,357
Property, plant and equipment 17,154 15,285
Financial assets 18,462 18,541
37,327 35,183
Current assets
Inventories 2 1,427 593
Receivables and other assets 3 78,733 94,959
Cash and cash equivalents 4 140,896 90,391
221,056 185,943
Deferred income 444 275
258,827 221,401
Equity and liabilitiesEquity
Subscribed capital 5 25,000 25,000
Capital reserve 6 21,975 21,975
Net retained profit 7 716 23,664
47,691 70,639
Provisions 8 95,337 83,053
Liabilities 9 115,799 67,709
258,827 221,401
Annual Financial Statements of Kraftanlagen München GmbH
102 Kraftanlagen München GmbH Annual Report 2014
Kraftanlagen München GmbH, MunichIncome statement for the 2014 financial year
in EUR thousand Notes 2013 2014
Sales revenue 12 275,087 330,024
Decrease in inventories of work in process -16,445 -111,789
Other own work capitalized 41 0
Total operating performance 258,683 218,235
Other operating income 13 11,179 15,136
Cost of materials 14 -151,193 -109,691
Personnel expenses 15 -58,470 -55,320
Amortisation, depreciation and write-downs 16 -6,458 -3,543
Other operating expenses 17 - 31,490 -36,182
Investment result 18 1,515 15,695
Interest result 19 -3,722 -3,060
Result from ordinary activities 20,042 41,270
Income taxes 20 -6,839 -8,009
Other taxes -486 -313
Net income for the year 12,716 32,948
Profit carryforward 0 716
Distribution -12,000 -10,000
Net retained profit 716 23,664
103Kraftanlagen München GmbH Annual Report 2014
General
As in the previous year, the financial statements as at 31 December 2014 were prepared
in accordance with German accounting and valuation principles and the special provi-
sions of the German Limited Liability Companies Act (Gesetz betreffend Gesellschaften
mit beschränkter Haftung; GmbHG).
The Company is subject to the requirements for large corporations. In the inter-
est of clarity of the financial statements, we have combined individual items in the
balance sheet and income statement and have explained them in the notes to the
financial statements. As before, the income statement is classified using the nature
of expense method.
All amounts in the financial statements are in thousands of euros (EUR thousand).
Accounting and Valuation Methods
The following accounting and valuation methods, which remain unchanged in com-
parison to the previous year, were used to prepare the financial statements.
The following principles are applied:
Fixed assets
Intangible assets are recognised at acquisition cost and depreciated using the
straight-line method over their estimated useful lives.
Property, plant, and equipment are measured at acquisition or production cost
less depreciation from the month of acquisition or commissioning. For assets in the
books prior to 1 January 2010, the previous carrying amounts and the declining-bal-
ance method previously used still apply. Additions to fixed assets with a limited
useful life are depreciated using the straight-line method from this point onwards.
Extraordinary write-downs are recorded to recognise assets at the lower of cost
or market. A write-up is recognised accordingly if the reasons for a lower attributa-
ble value no longer exist, with the exception of goodwill.
The acquisition or production cost of depreciable, moveable assets that can be
used independently is fully expensed in the year of acquisition or production, pro-
vided that their acquisition or production cost does not exceed EUR 150. If the ac-
quisition or production cost of these assets is between EUR 150 and EUR 410, these
assets are fully expensed in the year of acquisition.
Financial assets are recognised at the lower of cost or market. The list of share-
holdings can be found in Note 24 of the notes to the financial statements.
Notes to the financial statements for the 2014 financial year of Kraftanlagen München GmbH, Munich
Annual Financial Statements of Kraftanlagen München GmbH
104 Kraftanlagen München GmbH Annual Report 2014
Current assets
Raw materials, consumables and supplies are carried at the lower of acquisition
cost or net realisable value.
Work in process is valued at production cost. Production cost includes the cost
of materials and production and special production costs as well as overheads and
the depreciation of fixed assets used in production. Appropriate portions of the
general and administrative expenses, expenses for welfare facilities, voluntary wel-
fare benefits and expenses for the company pension plan are also included. Inter-
est on borrowed capital is not part of the production costs.
Foreseeable losses from customer orders are deducted from inventories as part of
the valuation at net realisable value. If the loss exceeds the value of work in process, a
provision is recognised for potential losses from pending transactions.
Prepayments received from customers are deducted up to the amount of capital-
ised production costs on the face of the balance sheet.
Receivables and other assets were stated at nominal value and take into ac-
count all recognisable risks. The general credit risk is provided for by a general bad
debt allowance. Cash and cash equivalents are generally stated at nominal value.
Prepaid expenses are recognised at the amount of the outstanding consideration.
Provisions and liabilities
Pension provisions are recognised on the basis of actuarial principles in accordance
with the projected unit credit method (PUC method) according to the provisions of the
German Accounting Law Modernisation Act (Bilanzmodernisierungsgesetz; BilMoG).
The 2005 G mortality tables by Prof. Dr. Klaus Heubeck were used as the biometric
calculation basis. The calculation of the provision included assumptions as to the
trends for future salaries and pensionsw.
The following assumptions in particular were used:
2013 2014
Interest rate p.a. 4.90 % 4.54 %
Salary trend p.a. 3.00 % 2.70 %
Measurement base trend p.a 3.00 % 2.70 %
Pension trend p.a. 2.00 % 1.00 %
Turnover p.a. 4.00 % 4.00 %
The provision for widow/widower pensions was calculated partly using the collec-
tive method, which uses a probability of marriage resulting from the basis applied
and partly in accordance with individual methods i.e., on the basis of actual data
from the husband/wife.
The provisions for German phased retirement agreements (partial retirement) are
calculated using actuarial principles based on the following parameters: 3.01% in-
terest rate (previous year: 3.37%), salary trend 2.70% (previous year: 3.00%).
Tax provisions and other provisions account for all contingent liabilities and poten-
tial losses from pending transactions. They are recognised at the settlement value
deemed necessary according to prudent business judgment (i.e., including future
cost and price increases). Provisions with a residual term of more than one year
were discounted.
105Kraftanlagen München GmbH Annual Report 2014
In line with the Institute of Public Auditors in Germany (Institut der Wirtschafts-
prüfer; IDW), vacation provisions are valued as non-cash obligations at full cost.
Liabilities are recorded at the settlement value.
Currency Translation
Foreign currency assets and liabilities are translated using the mean spot rate on
the balance sheet date. If they have residual terms of more than one year, the reali-
sation principle (Section 252(1) no. 4 clause 2 HGB) and the historical cost principle
(Section 253(1) sentence 1 HGB) are applied.
Derivative financial instruments
Derivative financial instruments in the form of forward exchange transactions are
used to hedge the foreign exchange risks from the industrial project business. The
hedged items and hedging transactions are generally only combined as hedges as
defined by Section 254 HGB if both the intention to hedge and the hedging relation-
ship are documented clearly from the inception of the hedge, the effectiveness of
the hedge can be reliably measured and its effectiveness is checked regularly over
the course of the hedging relationship.
Hedges are only designated if micro hedges are primarily used to hedge risks,
meaning that the effectiveness of the hedging relationship can be examined using
the critical terms match method.
The accounting presentation of hedges is generally in line with the compensa-
tory valuation method (net method).
Deferred taxes
Deferred tax assets were not recognised. There are no valuation differences from
which deferred tax liabilities could arise.
Annual Financial Statements of Kraftanlagen München GmbH
106 Kraftanlagen München GmbH Annual Report 2014
Notes to the balance sheet
1. Fixed assets
Acquisition and production costs Accumulated amortisation, depreciation and write-down Net book values
in EUR thousand
As
at 1
Jan
201
4
Ad
dit
ion
Rec
lass
ific
ati
on
Dis
po
sal
As
at 3
1 D
ec
As
at 1
Jan
201
4
Am
ort
isa
tio
n in
year
un
der
rev
iew
Rec
lass
ific
ati
on
s
Dis
po
sals
As
at 3
1 D
ec 2
014
As
at 3
1 D
ec 2
014
As
at 3
1 D
ec 2
013
Intangible assets
Rights of use 6,029 249 0 339 5,939 4,318 603 0 339 4,582 1,357 1,711
Property, plant and equipment
Land and buildings 15,457 0 0 0 15,457 6,831 351 0 0 7,182 8,275 8,625
Plant and equipment 2,940 32 0 63 2,909 1,996 132 0 64 2,064 845 944
Other equipment, furnitureand fixtures 35,848 1,092 81 3,550 33,471 28,344 2,457 0 3,495 27,306 6,165 7,504
Prepaymentsand assets under construction 81 0 -81 0 0 0 0 0 0 0 0 81
54,325 1,124 0 3,613 51,837 37,171 2,490 0 3,559 36,552 15,285 17,154
Financial assets
Shares in affiliates 59,941 0 0 807 59,134 41,641 0 0 807 40,834 18,300 18,300
Equity investments 46 0 0 0 46 0 40 0 0 40 6 46
Loans to other investees andinvestors 115 120 0 0 235 0 0 0 0 0 235 115
60,102 120 0 807 59,415 41,641 40 0 807 40,874 18,541 18,461
Total fixed assets 120,458 1,493 0 4,759 117,191 83,130 3,583 0 4,705 82,008 35,183 37,327
2. Inventories
in EUR thousand 31 Dec 2013 31 Dec 2014
Raw materials, consumables and supplies 504 468
Work in process 359,725 247,937
Prepayments 125 125
Prepayments received on account of orders -358,927 -247,937
1,427 593
Customer-specific production orders yet to be concluded are recognised under work
in process. As long as the prepayments received from customers were used to pro-
duce inventories, these are deducted from inventories on the face of the balance
sheet.
107Kraftanlagen München GmbH Annual Report 2014
3. Receivables and other assets
in EUR thousand 31 Dec 2013 31 Dec 2014
Trade receivables 34,612 36,779
Receivables from joint ventures 1,585 559
Receivables from affiliates 41,566 56,034
Receivables from other investees and investors 119 34
Other assets 851 1,553
78,733 94,959
Receivables from affiliates mostly relates to receivables from central liquidity man-
agement as well as receivables from intercompany deliveries and services. These re-
ceivables are diminished by other liabilities, which are mostly the result of profit
and loss transfer agreements.
Other assets mainly relate to refund claims from VAT and income taxes. Income
tax refund claims of EUR 799 thousand originated only after the balance sheet date.
Other assets of EUR 0 thousand (previous year: EUR 82 thousand) have a remain-
ing term of between one and five years. As in the previous year, the remaining re-
ceivables and other assets have residual terms of less than one year.
4. Cash and cash equivalents
in EUR thousand 31 Dec 2013 31 Dec 2014
Cash in hand 3 9
Bank balances 140,893 90,382
140,896 90,391
Cash and cash equivalents of EUR 325 thousand (previous year: EUR 3,870 thousand)
are subject to restrictions on disposal.
5. Subscribed capital
The fully paid-in capital stock amounts to EUR 25,000 thousand (previous year: EUR
25,000 thousand). All shares are held by Alpiq Deutschland GmbH, Munich.
Kraftanlagen München GmbH prepares consolidated financial statements
which are published in the Bundesanzeiger [German Federal Gazette]. Alpiq Hold-
ing AG, Lausanne, Switzerland, prepares consolidated financial statements for the
largest group of companies. These financial statements can be obtained at the
headquarters of the Company and will also be filed at the Swiss Exchange in Zurich.
6. Capital reserve
The capital reserve was recognised in accordance with Section 272(2) no. 4 HGB and
amounts to EUR 21,975 thousand (previous year: EUR 21,975 thousand).
Annual Financial Statements of Kraftanlagen München GmbH
108 Kraftanlagen München GmbH Annual Report 2014
7. Net retained profit
Net retained profit of EUR 23,664 thousand (previous year: EUR 716 thousand) result-
ed from net income for the year of EUR 32,948 thousand (previous year: EUR 12,716
thousand) less profit distribution of EUR 716 thousand and the advance profit dis-
tribution of EUR 9,284 thousand (previous year: EUR 12,000 thousand) to the share-
holder in accordance with the shareholder resolution dated 8 December 2014.
8. Provisions
in EUR thousand 31 Dec 2013 31 Dec 2014
Provisions for pensions and similar obligations 42,110 38,475
Tax provisions 8,963 4,505
Other provisions 44,264 40,073
95,337 83,053
Kraftanlagen München GmbH grants its employees various types of company pensions.
Covering assets of EUR 1,331 thousand (previous year: EUR 902 thousand) were off-
set against the pension provisions. The covering assets took the form of employer’s
pension liability insurance, which was measured at fair value. The fair value of an
employer’s pension liability insurance claim comprises the insured party’s policy re-
serve plus any credit balance from premium refunds (“participation feature”). The ac-
quisition costs of these covering assets totalled EUR 1,457 thousand (previous year:
EUR 990 thousand). There was therefore no restriction on distribution in accordance
with Section 268(8) HGB. Expenses from unwinding the discount on pension provi-
sions, the change in the discount rate as well as the income and expenses from the
valuation of the assets to be offset are recorded in the financial result.
Tax provisions contain domestic and foreign taxes on income and amount to
EUR 4,505 thousand (previous year: EUR 8,963 thousand).
Other provisions of EUR 40,072 thousand (previous year: EUR 44,264 thousand)
mainly relate to obligations from outstanding remaining services for completed or-
ders, warranty obligations and personnel provisions.
9. Liabilities
in EUR thousand 31 Dec 2013 31 Dec 2014
Prepayments received on account of orders 0 15,682
Trade payables 10,099 9,578
Liabilities to affiliates 92,752 34,304
Other liabilities 12,948 8,145
thereof for taxes (12,519) (7,976)
thereof for social security (19) (0)
115,799 67,709
109Kraftanlagen München GmbH Geschäftsbericht 2014
Liabilities to affiliates primarily relate to liabilities resulting from central liquidity
management. They are countered by other receivables resulting primarily from the
profit transfer agreements.
They still include liabilities to shareholders of EUR 5 thousand (previous year:
EUR 5 thousand).
As in the previous year, the liabilities disclosed above are due within one year.
No collateral was provided for liabilities, except for retentions of title and compara-
ble rights as is customary in the industry.
10. Contingent liabilities
in EUR thousand 31 Dec 2013 31 Dec 2014
Liabilities from guarantees 52,260 30,839
thereof for affiliates (52,260) (30,740)
Liabilities from warranty agreements 32,429 5,036
thereof for affiliates (28,530) (1,446)
84,689 35,875
As in the previous year, contingent liabilities relating to joint and several liability from
the participation in joint ventures.
The risk of a claim relating to the guarantees and warranty agreements for affil-
iates’ liabilities to third parties is deemed to be low because of the good net assets,
financial position and results of operations. The risk of a claim relating to the guar-
antees and warranty agreements for former affiliates’ (third parties’) liabilities to
third parties is also deemed to be low because of the good net assets, financial po-
sition and results of operations.
The significant decrease in liabilities from guarantees and warranty agree-
ments is primarily the result of billing a large project in the reporting year.
11. Other financial obligations
in EUR thousand 31 Dec 2014 thereof to affiliates
Due in 2015 5,280 120
Due between 2016 and 2019 5,434 0
Due after 2019 0 0
The obligations mainly relate to rent, lease, maintenance and consulting agreements.
In the previous year, other financial obligations totalled EUR 12,803 thousand.
110 Kraftanlagen München GmbH Annual Report 2014
Notes to the income statement
111Kraftanlagen München GmbH Annual Report 2014
Notes to the income statement
12. Sales revenue
Kraftanlagen München GmbH’s revenue can be categorised by business activity as
follows:
in EUR thousand 2013 2014
Power plant technology 94,157 107,998
Energy and environmental technology 101,851 103,527
Supply technology 36,561 66,705
Chemical and petrochemical 42,363 51,674
Sundry 155 120
275,087 330,024
Geographically, sales revenue breaks down as follows: Germany: 89%, Austria: 7%,
other countries: 4%.
13. Other operating income
in EUR thousand 2013 2014
Income from group services and allocations 6,740 6,603
Income from the reversal of provisions 2,374 3,726
thereof relating to other periods (2,374) (3,726)
Rental income 965 921
Book gains on the disposal of fixed assets 46 377
Income from currency translation 473 194
Sundry other operating income 581 3,315
thereof relating to other periods (0) (820)
11,179 15,136
Sundry other operating income mainly contains income from joint ventures.
14. Cost of materials
in EUR thousand 2013 2014
Cost of raw materials, consumables and supplies and of purchased merchandise 55,121 45,251
Cost of purchased services 96,072 64,440
151,193 109,691
Annual Financial Statements of Kraftanlagen München GmbH
112 Kraftanlagen München GmbH Annual Report 2014
15. Personnel expenses and employees
in EUR thousand 2013 2014
Wages and salaries 48,154 47,512
Social security, pension and other benefit costs 10,316 7,808
thereof for old-age pensions (1,236) (1,113)
58,470 55,320
Headcount 2013 2014
Annual average headcount excluding trainees:
Salaried employees 477 452
Wage earners 453 438
930 890
16. Amortisation, depreciation and write-downs
in TEUR 2013 2014
on intangible assets 644 603
on property, plant and equipment 5,814 2,940
thereof write-downs on property, plant and equipment (2,034) (0)
6,458 3,543
17. Other operating expenses
in EUR thousand 2013 2014
Rental, lease and maintenance costs 7,714 7,226
Travel, hospitality and entertainment costs 7,811 6,156
Restructuring costs 1,275 3,425
Legal, consulting and audit fees 3,310 2,758
Data processing expenses 1,731 1,357
Other administrative expenses 2,627 1,153
Expenses from currency translation 493 178
Losses from the disposal of fixed assets 74 26
Sundry other operating expenses 6,455 13,903
31,490 36,182
18. Investment result
in EUR thousand 2013 2014
Income from profit and loss transfer agreements 6,107 14,317
Losses absorbed from profit and loss transfer agreements -876 -1,298
Other income from equity investments 184 2,716
Other expenses from equity investments -3,900 -40
1,515 15,695
113Kraftanlagen München GmbH Annual Report 2014
The income and losses recognised stem from affiliates. Other expenses from equity
investments are the result of write-down of an equity investment.
19. Net interest
in EUR thousand 2013 2014
Other interest and similar income 564 672
thereof from affiliate (208) (158)
thereof income from the discounting of provisions (14) (0)
Interest and similar expenses - 4,286 - 3,732
thereof to affiliates (- 1,344) (- 1,309)
thereof expense from unwinding the discount on provisions (- 2,272) (- 2,013)
- 3,722 - 3,060
As in the previous year, no income was offset against expenses from unwinding of the
discount on provisions pursuant to Section 264(2) sentence 2 clause 2 HGB, as there is
no interest income from the covering assets.
20. Income taxes
Kraftanlagen München GmbH (parent of the consolidated tax group for income tax
purposes) is also the taxable entity for the companies affiliated with it though pro-
fit and loss transfer agreements. The tax expense therefore also takes into account
the tax results of the dependent companies. Expenses for income taxes of EUR 7,996
thousand relates to the financial year, EUR 13 thousand to previous years.
The previous-year expense for income taxes was a result of past tax results of
the dependent companies and of foreign permanent establishments that were not
part of the tax group.
21. Net income for the year and appropriation of profits
Management proposes to carry forward the net retained profit of EUR 23,664
thousand as at 31 December 2014 to new account.
Annual Financial Statements of Kraftanlagen München GmbH
114 Kraftanlagen München GmbH Annual Report 2014
Boards of Kraftanlagen München GmbH and the Auditor`s Report
115Kraftanlagen München GmbH Annual Report 2014
22. Related parties in accordance with Section 285 no. 21 HGB
In addition to the subsidiaries, Kraftanlagen München GmbH is connected to related
parties. Business transactions with related parties are all conducted at arm’s length
conditions.
Total remuneration of the management in the financial year was EUR 1,079
thousand. Total remuneration of the former members of management amounted to
EUR 1,533 thousand in the reporting year. Provisions for current pensions and fu-
ture pension entitlements totalling EUR 12,145 thousand were recognised for this
group of persons as at the balance sheet date.
Remuneration of EUR 23 thousand was granted to members of the supervisory
board in the year under review.
23. Auditor fees
For the compensation paid to the auditor Ernst & Young GmbH Wirtschaftsprü-
fungsgesellschaft in accordance with Section 285 no. 17 HGB reference is made to
the Company’s consolidated financial statements.
Other notes
Annual Financial Statements of Kraftanlagen München GmbH
116 Kraftanlagen München GmbH Annual Report 2014
24. List of shareholdings of Kraftanlagen München GmbH, Munich, in accordance with Section 285 no. 11 and no. 11a HGB
Share of parent company in % Currency
Equity 2014Net income/
loss for the year 2014
I. Consolidated affiliates – Germany
1. GAH Pensions GmbH, Heidelberg1 100 EUR thousand 260 215
2. Kraftanlagen Hamburg GmbH, Hamburg1 100 EUR thousand 1,150 0
3. Kraftanlagen Heidelberg GmbH, Heidelberg1 100 EUR thousand 800 0
4. Kraftanlagen Energie- und Umwelttechnik GmbH, Heidelberg2,3 100 EUR thousand 100 0
5. ECM Ingenieur-Unterneh-men für Energie- und Um-welttechnik GmbH, Munich1 100 EUR thousand 51 0
6. FINOW Rohrsysteme GmbH, Eberswalde 1 100 EUR thousand 4,647 0
7. Ingenieurbüro Kiefer & Voß GmbH, Erlangen1 100 EUR thousand 77 0
8. Kraftanlagen Power Plants GmbH, Munich1 100 EUR thousand 1,000 0
II. Consolidated affiliates – abroad4
9. Caliqua Anlagentechnik GmbH, Wiener Neudorf, Austria 100 EUR thousand 3,341 831
10. Kraftanlagen Romania S.R.L., Ploiesti, Romania5 100 RON thousand 19,154 6,925
11. Kraftanlagen Romania EsA S.R.L., Ploiesti, Romania 6 100 RON thousand -986 -1,031
12. Kraftanlagen Serbia d.o.o., Belgrade, Serbia 100 RSD thousand -2,848 -5,695
13. KAROM Servicii Profesional in Industrie S.R.L., Ploiesti, Romania6 51 RON thousand -4,559 -6,809
III. Equity investments
14. IA Tech GmbH, Jülich 7 24.8 EUR thousand 4 33
15. Kraftanlagen Middle East Mechanical L.L.C, Abu Dhabi, VAE 4, 7 49 AED thousand -3,615 -1,111
1 Domination and profit and loss transfer agreement with Kraftanlagen München GmbH, Munich
2 The shares are held by Kraftanlagen Heidelberg GmbH, Heidelberg
3 Domination and profit and loss transfer agreement with Kraftanlagen Heidelberg GmbH, Heidelberg
4 Equity and net income/net loss under IFRS
5 The shares are held by Kraftanlagen München GmbH, Munich (99.98%) and ECM Ingenieur-Unternehmen
für Energie- und Umwelttechnik GmbH, Munich (0.02%)
6 The shares are held by Kraftanlagen Romania S.R.L., Ploiesti
7 Equity and net income/loss for the year 2013
117Kraftanlagen München GmbH Annual Report 2014
Thomas Bucher
Chairman
Head of Financial Services / CFO
of Alpiq Holding AG, Lausanne,
Switzerland (since 31 March 2015)
Patrick Mariller
Chairman
Member of the Executive Board of Alpiq
Holding AG, Lausanne, Switzerland
(until 30 March 2015)
Alois Bauer
Deputy chair of the works council of
Kraftanlagen München GmbH, Munich
Frank Bielke
Project manager of fire safety at
Kraftanlagen Hamburg GmbH, Hamburg
(until 19 May 2014)
Eva Maria Catillon
Head of Group Taxes at Alpiq Holding
AG, Lausanne, Switzerland
(from 31 March 2015)
Hans Thomas Däpp
Member of the Executive Board of
Alpiq InTech Management AG, Zurich,
Switzerland
Giuseppe Giglio
Head of Group Taxes at Alpiq
Management AG, Olten, Switzerland
(until 30 March 2015)
Peter Limacher
Chairman of the Executive Board
of Alpiq InTech Management AG,
Zurich, Switzerland
Thomas Martin
Trade union secretary of IG Metall,
administrative office in Waiblingen
Dr. Bernt Paudtke Lawyer
at the law firm Görg Rechtsanwälte,
Munich
Peter Ranger
Strategic sales, Kraftanlagen
München GmbH, Munich
(until 19 May 2014)
Peter Reithner
Head of piping systems
department/ DACH,
Kraftanlagen München GmbH, Munich
(since 19 May 2014)
Peter Schib
Lawyer, head of the legal group at Alpiq
Holding AG, Lausanne, Switzerland
Michael Seis
Trade union secretary of IG Metall,
administrative office in Heidelberg
Ahmet Uzun
Construction technician, Kraftanlagen
Heidelberg GmbH, Heidelberg
Alfons Weber
Head of the underground piping
construction business unit,
Kraftanlagen München GmbH, Munich
(since 19 May 2014)
25. Boards of Kraftanlagen München GmbH, Munich
Supervisory board
Annual Financial Statements of Kraftanlagen München GmbH
118 Kraftanlagen München GmbH Annual Report 2014
Reinhold Frank
Alexander Gremm
Mark von Laer
(until 18 March 2014)
Friedrich Schmidt
(since 8 April 2014)
The management
Munich, 29 May 2015
Management
Reinhold Frank Alexander Gremm Friedrich Schmidt
119Kraftanlagen München GmbH Annual Report 2014
Translation of the German audit opinion concerning the audit of the financial statements and management report prepared in German
Audit opinion
We have audited the annual financial statements, comprising the balance sheet, the
income statement and the notes to the financial statements, together with the
bookkeeping system, and the management report, which has been combined with the
group management report of Kraftanlagen München GmbH, Munich, for the fiscal year
from 1 January to 31 December 2014. The maintenance of the books and records and
the preparation of the annual financial statements and management report in
accordance with German commercial law are the responsibility of the Company’s
management. Our responsibility is to express an opinion on the annual financial
statements, together with the bookkeeping system, and the management report based
on our audit.
We conducted our audit of the annual financial statements in accordance with Sec. 317
HGB [“Handelsgesetzbuch”: German Commercial ode] and German generally accepted
standards for the audit of financial statements promulgated by the IDW. Those
standards require that we plan and perform the audit such that misstatements
materially affecting the presentation of the net assets, financial position and results of
operations in the financial statements in accordance with [German] principles of proper
accounting and in the management report are detected with reasonable assurance.
Knowledge of the business activities and the economic and legal environment of the
Company and expectations as to possible misstatements are taken into account in the
determination of audit procedures. The effectiveness of the accounting-‐related internal
control system and the evidence supporting the disclosures in the books and records,
the annual financial statements and the management report are examined primarily on
a test basis within the framework of the audit. The audit includes assessing the
accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the annual financial statements and management
report. We believe that our audit provides a reasonable basis for our opinion.
Auditor`s Report
Annual Financial Statements of Kraftanlagen München GmbH
Kraftanlagen München GmbH Annual Report 2014120
Our audit has not led to any reservations.
In our opinion, based on the findings of our audit, the annual financial statements
comply with the legal requirements and give a true and fair view of the net assets,
financial position and results of operations of the Company in accordance with [German]
principles of proper accounting. The management report is consistent with the annual
financial statements and as a whole provides a suitable view of the Company’s position
and suitably presents the opportunities and risks of future development.
Stuttgart, 12 June 2015
Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft Kern Braun Wirtschaftsprüfer Wirtschaftsprüferin [German Public Auditor] [German Public Auditor]
121Kraftanlagen München GmbH Annual Report 2014
Annual Financial Statements of Kraftanlagen München GmbH
Kraftanlagen München GmbH Annual Report 2014122
123Kraftanlagen München GmbH Annual Report 2014
Photo credits
Giubiasco (cover photo): M.-L. Nau
KAM General Management (Page 6), Burghausen (Pages 62-63): W. Weber
Kladno (Pages 10-11 and 21): J. Maly
Romania (Pages 12-13): K. Weident
MUC (Pages 14-15), FINOW photos (Pages 30 and 38-39): P. Wild
VPC (Pages 16-17): KAH
Bucher portrait (Page 18): Alpiq
2014Annual Reportof Kraftanlagen München GmbH
ph
oto
: M.-L
. Nau
Kraftanlagen München GmbH
Ridlerstraße 31 c
80339 München
Germany
www.kraftanlagen.com
2014
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