2014 Annual Report of Kraftanlagen München GmbH · Annual Report photo: M.-L. Nau of Kraftanlagen...

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


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.


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


Project Overview 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


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.


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.


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:


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.


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


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)


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%).


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


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).


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


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


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


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


(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.



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).


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.


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


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


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


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


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


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


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.


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


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


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



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


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


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


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


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


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.


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”


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”


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.



IAS 16 “Property, Plant and Equipment” and IAS 38 “Intangible Assets”


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.


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.



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


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


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


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.


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.



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.


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.



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.


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.



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


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



• 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.



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


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


4. Cost of materials


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


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).


6. Other operating expenses


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


Property, plant and equipment 6,296 5,366

Intangible assets 890 726

7,186 6,092

Impairments


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.



8. Financial income


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


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


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.



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%).


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%


Notes to the Consolidated Balance Sheet and other Notes


Notes to the Consolidated Balance Sheet


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


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


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


As at 01/01/2014 5,835 0 0 5,835

Disposals due to a change in thebasis of consolidation -149 0 0 -149


Disposals -442 0 0 -442

Assets held for sale -79 0 0 -79


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


Disposals -369 0 0 -369


As at 31/12/2013 7,818 0 8,175 15,993


As at 01/01/2013 5,288 0 0 5,288


Disposals -341 0 0 -341


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



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.


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).



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


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


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.



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


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


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.


Subscribed capital 25,000 25,000



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.


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:


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:


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


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



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:


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:


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.


Changes in the fair value of plan assets are presented below:


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.



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


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


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:


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



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:


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:


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”.



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


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.


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.



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).



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:


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:


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



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


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.



Net gains or losses by measurement category:


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:


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


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



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


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.



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:


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


Company bodies and the Auditor' s Report



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


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


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


(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


(from 19 May 2014)

39. Company bodies

Supervisory Board


Reinhold Frank

Alexander Gremm

Mark von Laer


Friedrich Schmidt

(from 8 April 2014)

General Management

Munich, 29 May 2015

General Management




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


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]


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


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


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



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.


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.



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.


3. Receivables and other assets


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


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).



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


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


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


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


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.


Notes to the income statement


Notes to the income statement

12. Sales revenue

Kraftanlagen München GmbH’s revenue can be categorised by business activity as

follows:


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


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


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



15. Personnel expenses and employees


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


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


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


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


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.



Boards of Kraftanlagen München GmbH and the Auditor`s Report


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



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


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


Alois Bauer

Deputy chair of the works council of


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


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


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,


(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,


(since 19 May 2014)

25. Boards of Kraftanlagen München GmbH, Munich

Supervisory board



Reinhold Frank

Alexander Gremm

Mark von Laer


Friedrich Schmidt

(since 8 April 2014)

The management

Munich, 29 May 2015

Management



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



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]



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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2014 Annual Report of Kraftanlagen München GmbH · Annual Report photo: M.-L. Nau of Kraftanlagen...

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Transcript of 2014 Annual Report of Kraftanlagen München GmbH · Annual Report photo: M.-L. Nau of Kraftanlagen...