2015 - Kraftanlagen Overview 2015 9 Supervisory Board Report 26 ... reliable storage system, ... • Replacement of tube bundles and radiation harps on the batch furnace of

2015Annual Report of Kraftanlagen München GmbH

Table of Contents

Group Key Figures 4Kraftanlagen Group Sites 5Letter from the General Management 6Project Overview 2015 9Supervisory Board Report 26General Management Report (Group Management Report and Management Report) 30Annual Financial Statements of Kraftanlagen München GmbH 51

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 2015

3Kraftanlagen München GmbH Annual Report 2015

At a Glance –Group Key Figures

In EUR million 2011 2012 2013 2014 2015

Incoming orders 374.0 395.1 335.3 390.1 410.0

Net sales revenue 557.9 560.3 458.6 402.0 318.2

Employees as at 31 Decemberincluding trainees 2,002 2,041 2,052 2,292 2,100

Personnel expenses 118.8 118.3 113.8 114.0 107.2

EBIT 32.2 28.4 25.2 20.0 20.0

Profit or loss for the period /Income from continuing operations 19.0 13.8 13.6 12.0 11.8

Cash flow - -18.2 48.4 -13.3 -15.2

Net financial position(short and medium term) 149.0 86.4 143.4 108.7 79.0

Balance sheet total 383.7 359.1 382.1 361.7 311.9

Subscribed capital 25.0 25.0 25.0 25.0 25.0

Equity (including noncontrolling interests) 102.1 85.5 108.6 109.0 106.5

Non-current assets 69.5 71.0 64.6 59.8 54.4

Investments in intangible assetsand poperty, plant and equipment 7.7 7.4 4.2 3.6 4.6

Amortisation of intangible assetsand depreciation of property,plant and equipment 7.4 7.6 9.4 6.1 5.7

4 Kraftanlagen München GmbH Annual Report 2015

Group Sites

Sites in Europe

Belgrade/Serbia

Geneva/Switzerland

Manosque/France

Olten/Switzerland

Ploiesti/Romania

Saint Genis Pouilly/France

Schwechat-Mannswörth/Austria

Belgrade

Geneva

Manosque

Ploiesti

Saint Genis Pouilly

Sites in Germany

Headquarters Munich

Burghausen

Berlin

Eberswalde

Munich

Erlangen

Essen

Hamburg

Heidelberg

Jülich

Kempten

Munich

Jülich

Hamburg

Essen

Eberswalde

Berlin

Heidelberg

Erlangen

Kempten

Burghausen

Olten

Schwechat-Mannswörth


Letter from the General Management

Flexible, safe, innovative

The General Management Board of Kraftanlagen München GmbH: Alexander Gremm, Reinhold Frank, Friedrich Schmidt (ftl).


Dear Sir/Madam,

Last year, we started to develop a market-oriented organisation and pooled our

strengths as the Kraftanlagen Group. Today, we have an excellent network, both at

business unit level and with our parent company, Alpiq AG. As a result, we are not

only better prepared to meet current market requirements but also able to respond

with flexibility to changing framework conditions.

Solutions for the future

Kraftanlagen München is more than a service provider. As a versatile partner for the

energy industry and the industry of the future, we adopt an integrated approach.

We are driven by the desire to use individual, sustainable solutions to create the

basis for the flexible and safe supply of power and heat. We also safeguard the

production processes of our industrial customers, including those operating in the

chemical and petrochemical industry, by creating optimum conditions for the

operation of plants, power plants and buildings. We plan, build and maintain state-

of-the-art plant technology throughout Europe: quickly controllable power plants,

energy-efficient upgrades to existing power plants by integrating new components

such as thermal storage modules, recovery of waste heat from industrial

plants, decentralised energy supplies, installation of the latest generation of

instrumentation and control technology, and refinery modernisation and

maintenance. These are just some of our solutions for meeting both current and

future challenges.

Kraftanlagen supports the heating transition

We believe that the debate in Germany about the energy transition has thus far

focussed too much on CO2 emissions during power generation. As more than twice

as much primary energy is consumed for the production of heat than for the

production of power, a heating transition is clearly necessary in order to achieve

the aims of the energy transition. For this reason, our Group is increasingly pursuing

projects that focus on the generation, storage and consumption of heat rather than

power-driven projects. As a specialist for the water-steam cycle, we serve both the

power-producing and the heat-consuming industries.

Leading the way with innovative power plant concepts

Our largest current project, the erection of a gas engine heating power plant in Kiel,

is the only one of its kind in Central Europe and considered exemplary. Its key

features are the combination of modern gas engines with proven storage technology

to supply power and heating, combined heat and power generation, quick control

and an output range of 0 to 190 MW with an almost consistently high level of

efficiency. This power plant is confirmation of the expertise and potential of the

Kraftanlagen Group. In the year of this report, despite a declining market, the Group

acquired two of its most important projects: one in Kiel and the other Moerdijk,

where we are erecting a turnkey 120-MW steam turbine power plant. An overview of

other successful national and international projects is available on the following

pages of this report.


Development of new business areas

In 2015, the Group reached new milestones in its development. The decentralised

energy supply business unit (Kraftanlagen Hamburg) expanded its activities with the

move into industrial refrigeration technology. In addition, Kraftanlagen Hamburg

and Alpiq InTec Verona (AIT) agreed a cooperation to develop the combined heat and

power generation business area. The expertise of the nuclear technology business

unit (Kraftanlagen Heidelberg) provided the basis for the foundation of Swiss

Decommissioning AG, with which Alpiq is positioning itself on the Swiss market at

an early stage as a supplier of integrated solutions for the post-operation and

dismantling of nuclear installations, as well as for radiation protection and

decontamination. We are also working with Alpiq AG to develop the solar thermal

power plants business area into a highly flexible and economically attractive solution.

Our Concentrated Solar Power (CSP) solar tower technology with open volumetric

receiver offers a number of advantages, including the integration of a simple and

reliable storage system, as well as combination with conventional power plants to

create a hybrid power plant.

Confident into the future

As a result of the further decrease in major projects, in 2015, the operating income

of EUR 318.8 million was down EUR 71.6 million from the previous year. However, the

Kraftanlagen Group succeeded in increasing the number of incoming orders. The

order volume is currently EUR 410.0 million compared with EUR 390.1 million in

2014. The resulting order backlog ensures good utilisation of capacity and gives us

confidence for the future. Our flexible response to the market and a considerable

reduction in overheads have had a positive effect on our competitiveness. This

trend reversal is due not least to the tremendous commitment of our employees, to

whom we would like to express our sincere gratitude. We would also like to thank

our customers and suppliers for a successful collaboration.

The General Management of Kraftanlagen München GmbH

Reinhold Frank Alexander Gremm Friedrich Schmidt


Project Overview 2015


The olefin plant at the Ruhr Oel Refinery, Gelsenkirchen-Scholven. (Source: BP Europa SE)

Oil giant awards contract worth millions

In 2015, Ruhr Oel GmbH, a company of BP plc, Germany’s largest refinery operator,

awarded all contracts relating to the 2016 TÜV shutdown of the Gelsenkirchen-

Scholven refinery to the Essen branch of Kraftanlagen München (KAM). This is the

first time that KAM has taken on all subcontracts for a turnaround of this refinery.

Until now, the work has been performed by different companies.

Shutdown period:

August to October 2016

Work:

• Replacement of tube bundles and radiation harps on the batch furnace of

olefin unit IV, overhaul of the steam drums, partial piping for cracked gas

coolers

• Mechanical work, such as exchanging pipe bundles for cleaning,

exchanging safety valves in aromatic 5, olefin 4, flare and cooling plant

• Repairs to pipes in all subsections of the plant

• Plant shutdown and start-up for the operator



A powerhouse for MoerdijkIn February 2015, Attero B.V. appointed Kraftanlagen München (KAM) general

contractor to build a new steam turbine power plant in Moerdijk, the Netherlands.

This constitutes the largest part of a total investment of 100 million euros in the

modernisation of the site. The scope of performance includes planning and

constructing the power plant, including the steam turbine, generator, electrical

engineering and control technology, pipe systems, and the inlet and outlet

structures for the cooling water system. With the steam turbine plant, the client

wants to make more sustainable use of the energy generated by its waste

incineration plant south of Rotterdam. The power plant is to be handed over to the

operator in the third quarter of 2017.


Incineration capacity: 12.5 t waste/h

Thermal power output: 150 MW (option for the future)

Electrical power output: 123 MW

Technical data:


A steam turbine power plant generates electricity with the waste heat from the waste incineration plant in Moerdijk. (Source: Attero)

The construction site by Kiel Fjord on 8 October 2015. (Source: Stadtwerke Kiel AG / Luftbildservice Bernot)


From 0 to 190 megawatts in 5 minutes

Kraftanlagen München (KAM) is building a state-of-the-art, gas-fired heating power

plant with combined heat and power generation, the only one of its kind in Europe.

In summer 2015, Stadtwerke Kiel (Kiel public utility company) commissioned

general contractor Kraftanlagen München (KAM) and its partner, GE Jenbacher

Gasmotoren, to construct a gas engine heating power plant (GHKW) with combined

heat and power generation. It consists of 20 gas engines, each with an electrical

output of 9.5 MW, and a total output of 190 MW electrical and 192 MW thermal. The

plant sets new standards in terms of flexibility, efficiency and environment-

friendliness. The modular power plant is not only able to balance out grid

fluctuations to optimum effect but also supplies electricity for distribution on the

balancing energy market.


A giant by the RhineBlock 9 of Grosskraftwerk Mannheim was officially commissioned on 22 September

2015. Four days later, the operator hosted a large Block 9 information day in

Mannheim-Neckarau. Some 20,000 visitors came to see the new plant. Kraftanlagen

München planned, manufactured and supplied the high-pressure piping systems

for the modern hard-coal-fired power plant. In Block 9, our welders joined 3,450

weld seams. In total, the project required 154,000 hours of installation.



General view of Grosskraftwerk Mannheim with the new Block 9 in the right foreground. (Source: GKM)

Electrical evaporation system, including the piping systems for connection to the existing overall plant. (Source: H2O GmbH)


Decommissioning in BiblisRWE appointed Kraftanlagen Heidelberg general contractor for the supply and

installation of two electrical vacuum evaporation systems for the Biblis nuclear

power plant. An electrical evaporation system that operates independently of the

existing steam circuits is needed to shut down and decommission sections of the

plant. Kraftanlagen Heidelberg has already erected an electrical vacuum

evaporation system as a pilot project for EnBW in Obrigheim. This has been in

continuous, fault-free operation since its commissioning in 2014.


New power for FordSTEAG New Energies awarded Kraftanlagen Hamburg the contract for a combined

heat and power generation plant for Ford-Werke in Saarlouis. It consists of five

CHP modules with a total capacity of 22 MWel and 20 MWth. The project of the

decentralised energy supply business unit commenced in October 2015 and project

completion is planned for November 2016.



Cylinder bank of a gas engine. Comparable engines are used in Saarlouis. (Source: KA Hamburg)

Installation work in Salzburg (Source: KA München)


Important connector for district heating in Salzburg

Salzburg AG commissioned Kraftanlagen München to supply and install a district

heating main pipe as part of a future south/west main connection in Salzburg.

To cross under ducts, protective pipes are installed using skids. This project is

scheduled to run from March 2015 to September 2016.

Total line length: 1,250 m

Plastic jacket pipelines: hot water 2 x DN 400

Installation in protective pipes: approx. 25 m

Project data:


HVAC for Lichterfelde heating power plant

Spanish energy Group Iberdrola awarded the utility services business unit of the

Kraftanlagen Group a turnkey contract to plan, supply, install, commission and

document the HVAC systems (heating, ventilation, air-conditioning) for the new

heating power plant in Berlin-Lichterfelde. The power plant operated by Vattenfall is

to use efficient combined heat and power to generate about 230 MW of district heat

and about 300 MW of electricity. Compared with the existing power plant that it will

replace, the plant should save about 170,000 tons CO₂ per year. As part of the project,

KAM is equipping both the turbine hall and the boiler house, as well as the switch-

gear building and the water treatment system, gas compressor and gas throttling

system with building services, including instrumentation and control technology.

Project duration: November 2014 to April 2016.



The power station by Teltow Canal supplies district heating to some 100,000 homes in south-west Berlin. (Source: Vattenfall)

Thomas BucherChairman of the Supervisory Board

Supervisory Board Report on the 2015 Financial Year for Kraftanlagen München GmbH

Supervisory Board Report

The Supervisory Board of Kraftanlagen München GmbH is required to prepare an

audit report in accordance with Section 171 of the German Stock Corporations

Act (Aktiengesetz; AktG) in conjunction with Section 25(1) no. 2 of the German

Codetermination Act (Mitbestimmungsgesetz; MitbestG). The Supervisory Board

complies with this obligation by issue of this report. In connection with this, it also

refers to the significant events at Kraftanlagen München GmbH that are relevant

for the purposes of Section 171 of the AktG and are also reported.

Composition of the Kraftanlagen München GmbH Supervisory Board in the 2015 financial year

Mr. Alois Bauer, former Deputy Chairman of the Supervisory Board, left Kraftanlagen

München GmbH effective 31 December 2015. In the Supervisory Board elections on

19 May 2014, Mr. Dieter Ziehe was elected to replace Mr. Alois Bauer and thus joined

the Kraftanlagen München GmbH Supervisory Board in place of Mr. Alois Bauer as

at 1 January 2016.

The Supervisory Board elected Mr. Michael Seis as the new Deputy Chairman of

the Supervisory Board at its meeting on 8 April 2016.

The Kraftanlagen München GmbH Supervisory Board for the 2015 financial year

comprised the following persons:

Patrick Mariller (until 30 March 2015) Chairman (shareholder representative)

Thomas Bucher (since 31 March 2015) Chairman (shareholder representative)

Peter Schib Shareholder representative

Hans Thomas Däpp Shareholder representative

Guiseppe Giglio (until 30 March 2015) Shareholder representative

Eva Maria Catillon (since 31 March 2015) Shareholder representative

Peter Limacher Shareholder representative

Dr. Bernt Paudtke Shareholder representative

Alois Bauer (until 31 December 2015) Deputy Chairman

Thomas Martin Employee representative

Michael Seis Deputy Chairman (since April 2016)

Ahmet Uzun Employee representative

Alfons Weber Employee representative

Peter Reithner Employee representative


Business development in the 2015 financial year

Despite a persistently challenging market environment, the Kraftanlagen Group

acquired forward-looking projects and therefore increased its order intake in

comparison to 2014. However, operating performance decreased slightly on

account of delays in large-scale projects.

The upheaval on the energy markets continued in 2015 and the investment

climate in the industry remains tense. Existing excess capacity in the conventional

power plant segment led to a further fall in the stock exchange price for electricity

and make new investments in this segment less attractive. Demand in industrial

piping and plant construction as well as industrial supply technology remained

stable thanks to a sound economy, even though market prices were subject to

increased pressure also as a result of a further drop in the oil price. In order to

survive in this challenging environment, the Kraftanlagen Group will systematically

exploit the existing market potential in, for example, the interface between the

heating and electricity market, and continue to press ahead with enhancing the

organisation and the range of services.

Supervision and advisory support for the General Management in relation to business management in the 2015 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

regularly advised the General Management and monitored its management

activities.

During ordinary meetings throughout the 2015 financial year on 31 March 2015,

6 July 2015 and 27 October 2015, the Supervisory Board of Kraftanlagen München

GmbH closely examined the position and development of Kraftanlagen München

GmbH and its associate companies as well as significant business transactions.

Specifically, the Supervisory Board of the Company provided support in relation to

the organisational development and the associated personnel and welfare

measures at Kraftanlagen Heidelberg GmbH, which was implemented effective as

at 15 February 2016.

Also outside of the committee meetings, the Chairman of the Kraftanlagen

München GmbH Supervisory Board and the individual committees were kept

informed 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 2015 financial year

There were no changes to the General Management of Kraftanlagen München

GmbH in the 2015 financial year.


Work of the committees in the 2015 financial year

The Supervisory Board of Kraftanlagen München GmbH has duly formed Audit,

Personnel and Mediation Committees. The Audit and Personnel Committees each

comprise two shareholder and two employee representatives.

On 27 October 2015, by mutual agreement the Kraftanlagen München GmbH

Supervisory Board Personnel Committee extended the service agreement for

Mr. Alexander Gremm, which was concluded on 1 July 2013 to expire on 30 June 2016,

effective from 1 July 2016 for a further three years until 30 June 2019.

The Kraftanlagen München GmbH Supervisory Board Audit and Mediation

Committees were not convened.

Annual financial statement and group auditing for the 2015 financial year

The annual financial statements prepared on 31 May 2016 by the General

Management of Kraftanlagen München GmbH and the consolidated financial

statements as at 31 December 2015, in addition to the management report combined

with the Group management report for the 2015 financial year, including the

accounting records, were audited by the auditors from Ernst & Young GmbH

Wirtschaftsprüfungsgesellschaft, who were elected at the annual meeting, and

were duly issued with an unqualified audit opinion. Ernst & Young GmbH

Wirtschaftsprüfungsgesellschaft also confirmed that accounting, measurement

and consolidation principles applied in the consolidated financial statements

comply with the International Financial Reporting Standards (IFRS), and likewise

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 participated in the

meeting to discuss the annual and consolidated financial statements on 13 July

2016 and explained the key audit results.

The Supervisory Board approved the findings of the audit carried out by the

auditors. 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

prepared by the General Management and consolidated financial statements as at

31 December 2015 on 13 July 2016. 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 2015 will be decided by the annual meeting by no later than four

weeks following conclusion of the Supervisory Board audit of the Company annual

financial statements.


The Supervisory Board of Kraftanlagen München GmbH would like to thank all

employees, executive staff and the General Management of Kraftanlagen München

GmbH for their dedication and outstanding achievements in 2015. The Supervisory

Board would also like to thank the employee representatives for working with it in

such a constructive manner.

Munich, 13 July 2016

Thomas Bucher

Chairman of the Supervisory Board


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

infrastructure and services, from design and project planning to the production

and construction of plants through to their commissioning and maintenance. It

serves customers in the industry and the energy sector as well as the public sector.

After an organisational restructure of the market segments, Kraftanlagen

companies have rendered a wide range of services since the beginning of the 2015

financial year in the following eight business units: decentralised energy supply,

energy and power plant technology, engineering and consulting, underground

piping construction, fabrication and welding, industrial plant and assembly,

nuclear technology and industrial utility services.

The Group is a one-stop shop for services ranging from studies to the approval

process, planning, supply, fabrication and assembly. 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 13 companies and equity investments at numerous locations, the

Kraftanlagen Group has a service network in the target markets. In addition to the

locations of the legal entities, the Group has various branches and permanent

establishments 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 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

2015, large-scale projects were carried out in Romania, Poland, Austria, the

Netherlands and Switzerland.

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

committed to increasing the value of the Company in the long term.

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.

Management Report

Group Management Report and Management Report of Kraftanlagen München GmbH, Munich (KAM)


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 help generate

competitive returns.

In order to achieve these targets, the Group has installed an efficient management

system, which comprises strategic and operational planning, an early warning

system, an internal monitoring and control system, management accounting, quality

assurance and an internal audit function. As part of the strategic and operational

planning, the long- and medium-term focus, development and targets of the

Kraftanlagen Group are defined once a year and the concrete operating objectives

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 Financial 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 development of KAM and the Kraftanlagen Group are

closely related to each other.

The Kraftanlagen consolidated financial statements are included in the

consolidated 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

The German economy was in good shape despite the challenging global economic

environment in 2015. Gross domestic product (GDP) increased as expected by 1.7 %

in 2015 according to preliminary calculations by the Federal Statistical Office. The

main driver of this upward trend for the economy as a whole was domestic demand,

which was strengthened by a low rate of inflation caused by the oil price, ongoing

increases in income and employment and low interest rates.

Following a strong start to the year, overall investments were less dynamic in

spite of the favourable financing opportunities. Uncertainties were caused by

greater geopolitical risks and a weaker global economy attributable to a slowdown

in growth in the emerging countries.

The positive development on the labour market continued in 2015. The

unemployment rate fell by 0.3 percentage points to 6.4 %, whereby 2.7 million

persons were registered as unemployed on average over the year.

Despite the European Central Bank’s continued expansive monetary policy,

price developments in Germany recorded a price increase of 0.3 %, reaching the

lowest point since the crisis in 2009. This was mainly due to the sharp drop in energy

and commodity prices.


2.2 Market development of the business units

The transformation of the energy industry also continued in 2015 and the market

situation remains tense for energy suppliers. Nevertheless, energy suppliers remain

a key customer group for the Kraftanlagen Group. The low electricity price on the

energy exchange, which is attributable to the rising share of renewable energies,

low prices for commodities and CO2 emission allowances as well as excess

capacities, increased the cost pressure on the market, which has also been passed

onto suppliers and service providers in the industry. As a result of the rapidly

increasing shares of renewable energies in electricity production, energy supply

companies are faced with the challenge that they are no longer able to use the

power plants operated with fossil fuels in a profitable way because of declining full

load hours. They also have to operate significantly more flexibly because of the

volatility of wind and solar power. Due to the fact that existing power plants and

their components are not designed to use renewable energies, higher levels of wear

and tear are expected while the maintenance and service budgets at operators are

expected to decrease. The existing excess capacities will also remain for the medium

term, which will continue to impact on the investment climate in power plant

construction.

However, the Kraftanlagen Group succeeded in winning new orders in the area

of more flexible plants (e. g., gas engine power plants), storage technologies (heat

accumulators) and at the interface between the heating and electricity market

(hybrid processes, power-to-heat, combined heat and power). The servicing and

maintenance segment also remained stable and could even benefit in the long term

from the imposed running of conventional power plants in a way that causes more

wear and tear.

The expansion of renewable energies is progressing further worldwide and in

Germany. For example, electricity production from renewable energies in 2015 in

Germany was already at almost 33 %, which almost corresponds to the target for

2020 of at least 35 % from renewable energies. The topic of energy efficiency and

heat also became more relevant. The introduction of the National Action Plan on

Energy Efficiency (NAPE) created an instrument that aims above all to promote

energy efficiency and energy saving.

Demand in industrial piping and plant construction as well as industrial

supply technology (chemical, petrochemical, semiconductor industry, automobile

construction, etc.) remained stable thanks to a sound economy, even though market

prices are constantly subject to increased pressure as a result of a greater number

of providers squeezing into this segment from the contracting area of energy

plant engineering. In addition, the sharp drop in the oil price intensified the

reluctance to invest in certain areas, especially exploration and extraction (upstream).

It is not only the Kraftanlagen Group that is feeling the increasing competition

and price pressure: Bilfinger’s energy division is up for sale and the insolvent

German subsidiary of structural engineering service provider Imtech is being taken

over by the Zech group. Added to this are various new competitors that are joining

the market, some of which evolved from this insolvency. The resulting uncertainties

on the market and at customers also offer opportunities for Kraftanlagen, as we

remain a secure point of contact for customers. Competition is nonetheless higher,

as struggling companies step up the price war in an attempt to appear attractive

for potential investors and new, relatively unknown competitors are aggressively

entering the market.


The strategic and organisational realignment that began in 2014 and was

systematically driven forward in 2015 had a positive effect. The Group’s order intake

increased considerably. Against this background, the Group will continue to press

ahead with enhancing the organisation, expanding the performance spectrum,

particularly in the area of renewable energies and electrical, measuring, control

and regulation technology as well as establishing and increasing the business in

Germany and abroad so as to systematically exploit the existing market potential.

The development of the individual business units (BU) is presented in the

following. The previous-year figures have been amended in line with the

reorganisation into eight units (previous year: five) as well as adjusted for the units

that have been sold.

Energy and power plant technology – The market for large and medium power

plants remains poor in Germany and challenging in the other European countries.

Nevertheless, two large-scale projects were won, one in Moerdijk and one in Kiel.

The innovative, state-of-the-art project in Kiel is particularly forward-looking, as it

meets the increasingly flexible market requirements and positions Kraftanlagen

for the future. Furthermore, potential growth areas were expanded further with

additional power-to-heat projects and concentrated solar power (CSP) activities. At

EUR 62.6 million, operating performance was significantly lower year on year

(previous year: EUR 137.6 million), which is attributable to the low order intake in

this BU in 2014. We anticipate an operating performance of over EUR 100 million

again in 2016 on account of the aforementioned order intake.

Decentralised energy supply – Decentralised energy supply continues to offer

potential in Germany, even though it is constantly subject to varying market

conditions caused by the changing political framework. The German Renewable

Energy Act (Erneuerbare-Energie-Gesetz; EEG) cost allocation on own consumption

and lower remuneration, which entered into force in 2014, has now made the

construction of new plants less profitable, as a result of which the market stagnated.

Nevertheless, several projects were won in the area of block-type thermal

power plants. The area of fire protection still offers good business potential.

Operating performance decreased slightly to EUR 43.0 million (previous year:

EUR 45.0 million).

Nuclear technology – The sector continues to face declining demand for the

servicing and maintenance of power reactors. This market volume has therefore

sunk further, resulting in a decrease in order intake. Even if many international

nuclear power plants are being built or being planned, the European sector is

waiting for the upcoming dismantling of decommissioned power reactors. At the

same time, however, there has been great uncertainty relating to the planned

implementation strategies of politicians and power plant operators. The poor

market situation led to a decrease in operating performance to EUR 39.0 million

(previous year: EUR 44.4 million). Structural measures and a strategic reorganisation

have been implemented in response to this.

Supply technology – The market situation for industrial supply technology

(semiconductor industry, automobile construction, pharmaceuticals, etc.) is

unchanged from 2014 in the key areas. This is a heterogeneous and to date regional

market. Demand remained stable and is supported by the economy, although there

was substantial pressure on prices in this segment as well. This led to a nearly

identical year-on-year operating performance of EUR 40.2 million (previous year:

EUR 40.1 million).


in EUR million 2014 2015Change

absoluteChange

in %

Order intake 390.1 410.0 19.9 5.1

Order backlog 193.9 249.3 55.4 28.6

Employees as at 31 Dec (number) 2,292 2,100 -192 -8.4

thereof trainees 59 47 -12 -20.3

Industrial plant and assembly – The further drop in the oil price and the

associated tense market situation for companies from the oil and gas industry

resulted in greater reluctance to invest in the upstream segment and therefore

falling demand. By contrast, the downstream segment (refining and sale) and

the chemical industry benefited from the low oil price, which caused a

positive development in the area of overhauling plants. There is nevertheless

increased pressure on labour costs in the assembly segment in Germany, as

foreign competitors operate with an aggressive price policy because of their

comparatively cheaper wage level. Strategic partnerships and joint ventures should

therefore continue to be formed and expanded on outside of Germany. The

expansion of the business in Romania meant the operating performance increased

to EUR 86.7 million (previous year: EUR 80.3 million).

Underground piping construction – Demand in the now independent business

unit is stable, but has had a very strong regional focus so far. Price pressure in this

product segment remains very high on account of the low potential for

differentiation in terms of the services offered. Among other things, this is due to

the fact that a large number of much smaller companies operate in this market

segment and there are currently only a few large-scale projects with more

differentiation potential on the market. Winning an order for a district heating

transmission line in North Rhine-Westphalia was the first project to be acquired in

this region, thus expanding the business in Germany further. The operating

performance of this business unit was increased to EUR 30.6 million (previous year:

EUR 28.0 million) in its first independent year.

Fabrication and welding – This business division also reflects Germany’s

changing energy policy (phase-out of nuclear power, reluctance to invest in power

plants operated with fossil fuels), which means that the majority of orders are now

acquired in other countries. Furthermore, lower labour costs at foreign competitors

lead to disadvantages in a business that is primarily based on price competition.

The expansion of the performance spectrum to cover new business segments

(petrochemical, wind offshore, district heating) is therefore being driven forward

further and is already bearing some fruits. This is also reflected in the higher

operating performance of EUR 9.4 million (previous year: EUR 7.9 million).

Engineering and consulting – Due to the fact that its main role is to act as an

internal service provider for the energy and power plant technology and industrial

plant and assembly business units, the operating performance of this business unit

is highly dependent on their market situation. While capacity utilisation in the

energy and power plant technology unit was good, the operating performance

stagnated in the petrochemical and chemical industries. This is primarily

attributable to the cautious investment behaviour of large core customers.

Nevertheless, the operating performance increased marginally to EUR 7.3 million

(previous year: EUR 7.1 million).

2.3 Order situation and employees

The order intake amounted to EUR 410.0 million and

increased by EUR 19.9 million (5.1 %) compared to the

previous year. Adjusted for deconsolidations, this

increase came to EUR 47.4 million.

The order backlog increased accordingly from EUR

193.9 million at the end of 2014 to EUR 249.3 million at


the end of 2015, although an order backlog of EUR 37.4 million left the Group after

deconsolidation.

The number of employees in the Group (including trainees) decreased by 8.4 %

from 2,292 on 31 December 2014 to 2,100 employees as at 31 December 2015,

primarily due to the sale of a company (91 employees) as well as the reduction of a

total of 100 employees at Kraftanlagen München, Kraftanlagen Heidelberg and the

Romanian company.

There were 47 trainees at year-end (previous year: 59), which corresponds to

2.2 % of the total workforce.

2.4 Financial performance

In addition to billed revenue, the net sales revenue reported in the statement of

comprehensive income also includes the contract revenue recognised under the

percentage-of-completion method for construction contracts that have not yet been

billed. In addition, the net sales revenue recognised comprises the change in specific

bad debt allowances, bad debt expenses as well as provisioning for risks from large-

scale projects. The net sales revenue of the Kraftanlagen Group in the 2015 financial

year, that was planned at EUR 395.1 million, actually totalled EUR 318.2 million

(previous year: EUR 402.0 million). This represents a drop of 20.8 % on the previous year.

In addition to the EUR 29.3 million reduction

caused by sales, the reason for this is that

fewer large-scale projects were worked on.

The EUR 60.0 million decrease (EUR

21.1 million of which from deconsolidations)

in cost of materials from EUR 213.3 million to

EUR 153.3 million exceeded the decline in

operating performance as less work was sourced from subcontractors and the use of

materials in 2015 decreased. Personnel expenses decreased by EUR 6.8 million from EUR

114.0 million in the previous year to EUR 107.2 million. EUR 5.4 million of this decrease

was attributable to sales. Other operating expenses less other operating income

improved by EUR 16.5 million from EUR -48.5 million to EUR -32.0 million. This is due in

particular to the fact that additions to order-related provisions were lower than their

utilisation or reversal. Depreciation of property, plant and equipment and amortisation

of intangible assets came to EUR 5.7 million, down EUR 0.4 million on the previous-year

figure (EUR 6.1 million).

The decline in total operating performance is counterbalanced by greater decreases

in cost of materials and the excess of operating expenses over operating income

combined with a disproportionate decrease in personnel expenses such that the

earnings before the financial and investment result and before income taxes (EBIT)

remained unchanged at EUR 20.0 million; however, this is EUR 3.9 million below the

planned EBIT level. However, the EBIT margin of 6.3 % (previous year: 5.0 %) is at a good

level because of the lower net sales revenue. The net sales revenue, which was

significantly below target, is also the main reason for the fact that the planned EBIT

level was not reached on account of the lack of funds to cover fixed costs. Revenue from

the revaluation of a completed large-scale project (EUR 5.0 million; previous year:

EUR 4.0 million) was actually realised in 2015 (plan: EUR 3.0 million); however, this was

counterbalanced by unplanned costs, primarily for restructuring measures and the

redundancy plan and for the insufficient funds to cover fixed costs.


absoluteChange

in %

Net sales revenue 402.0 318.2 -83.8 -20.8

EBIT 20.0 20.0 0,0 0.0

as a percentage of net sales revenue 5.0 6.3 1.3 -

EBT 16.1 17.5 1.4 8.7

Profit or loss for the period 12.0 11.8 -0.2 -1.6


At EUR -2.5 million (previous year: EUR -4.0 million), the financial result improved

chiefly as a result of lower interest expenses for pensions and similar obligations

(EUR 1.9 million; previous year: EUR 2.7 million) and the EUR 0.5 million increase in the

balance of exchange rate gains and losses.

Earnings before income taxes (EBT) totalled EUR 17.5 million, up 8.7 % on the

previous-year figure of EUR 16.1 million.

The total tax expense rose by EUR 1.7 million year on year to EUR 5.7 million,

despite decreased tax expenses from current taxes (increase of EUR 2.9 million to

EUR 5.7 million). This is due to the stronger decrease in tax income from deferred taxes

(increase of EUR 4.5 million to a tax expense of EUR 0.1 million). This development

resulted from billing projects and a lower level of unbilled work for orders in progress.

The deferred taxes item as at 31 December 2015 was again calculated using a

tax rate of 32 %. This resulted in profit for the period of EUR 11.8 million (previous

year: EUR 12.0 million). A dividend of EUR 12.0 million (previous year: EUR 10.0 million)

was paid out to Alpiq Deutschland GmbH at year-end.

2.5 Financial position

In a year-on-year comparison, current assets of EUR 23.1 million and current

liabilities of EUR 19.7 million were included for a subsidiary that was sold at the

beginning of 2015. The assets and liabilities

were reported as “held for sale” in 2014

pursuant to IFRS 5. The composition of

the balance sheet has changed as a

result, as outlined in Note 27. Non-current

assets decreased by EUR 5.3 million from

EUR 59.8 million to EUR 54.5 million, mainly

due to the decline in property, plant and

equipment by EUR 1.0 million and in deferred

tax assets by EUR 4.2 million as a result of

adjusting the tax carrying amount for a large-scale project that was billed in

previous years to the measurement under German commercial law.

Adjusted in the previous year for the sale, current assets decreased by EUR

21.4 million to EUR 257.4 million. This is counterbalanced by decreases in financial

receivables (down EUR 18.6 million), cash and cash equivalents (down EUR 11.1 million)

and inventories (down EUR 2.0 million) as well as an increase in trade receivables (up

EUR 9.8 million). With regard to the change in financial receivables, it should be noted

that there was an increase of EUR 13.1 million in 2014, as a financial receivable revived

as part of the disposal group and was recognised as due from the subsidiary that has

since been sold.

Of the trade receivables, a total of EUR 126.6 million (previous year: EUR

131.6 million) relates to receivables from billed contracts and EUR 46.0 million (previous

year: EUR 31.2 million) to unbilled contracts. The latter is composed of gross receivables

from the PoC measurement in accordance with IAS 11 totalling EUR 176.4 million

(previous year: EUR 129.0 million), netted with the EUR 130.4 million (previous year: EUR

97.8 million) of prepayments received allocable to these contracts. The EUR 5.0 million

decrease in billed contracts as well as the EUR 14.8 million increase in unbilled contracts

is attributed to the billing of several large-scale projects in 2014 and the build-up of

new large-scale projects in 2015.


absoluteChange

in %

Non-current assets 59.8 54.5 -5.3 -8.9

Current assets 301.9 257.4 -44.5 -14.7

Total assets 361.7 311.9 -49.8 -13.8

Equity 109.0 106.5 -2.5 -2.3

as a percentage of total assets 30.1 34.1 4.0 -

Non-current liabilities 95.5 91.7 -3.8 -4.0

Current liabilities 157.2 113.7 -43.5 -27.7


Group equity (including non-controlling interests in equity) as at 31 December 2015

was recognised at EUR 106.5 million (previous year: EUR 109.0 million), which corresponds

to a ratio of 34.1 % (previous year: 30.1 %). A dividend of EUR 12.0 million (previous year:

EUR 10.0 million) was paid out from the net retained profit to Alpiq Deutschland GmbH.

At EUR 58.8 million, the net retained profit barely changed because the consolidated net

profit for the year virtually matched the dividend. As a result, the decrease in equity is

almost exclusively attributable to the deterioration in other comprehensive income

due to expenses for additions to pension provisions recognised directly in equity after

deducting the attributable deferred taxes of EUR 2.1 million.

Non-current liabilities came to EUR 91.7 million as at 31 December 2015 (previous

year: EUR 95.6 million). EUR 5.3 million of this decline is attributable to the decrease in

deferred tax liabilities arising from sales revenue that has been realised but the

corresponding inventories have not been replenished. This decrease is counterbalanced

by a EUR 1.4 million increase in non-current provisions. Non-current provisions include

pension provisions of EUR 78.8 million (previous year: EUR 78.6 million), other personnel

provisions of EUR 1.5 million (previous year: EUR 1.1 million) as well as provisions

for warranty obligations and potential losses of EUR 3.3 million (previous year:

EUR 2.6 million).

Adjusted for the sale, current liabilities decreased by EUR 23.7 million compared to

the previous year and amount to EUR 113.7 million at the end of the year. The decrease

in trade payables of EUR 6.6 million and other liabilities of EUR 16.1 million is significant.

Trade payables billed decreased by EUR 5.6 million to EUR 15.6 million. The balance

of prepayments received (EUR 101.5 million; previous year: EUR 280.8 million) less the

unbilled construction contracts allocable to these prepayments (EUR 70.3 million;

previous year: EUR 248.7 million) declined by EUR 0.9 million to EUR 31.2 million.

Other liabilities relate to employees (EUR 11.7 million; previous year: EUR 12.2

million), tax liabilities (EUR 6.0 million; previous year: EUR 9.7 million), social security

(EUR 0.7 million; previous year: EUR 0.8 million) as well as sundry other liabilities

(EUR 25.3 million; previous year: EUR 37.2 million). The decrease in sundry other

liabilities is attributable to the recognition of costs associated with order processing

for billed projects, which was comparatively high in connection with the billing of

large-scale projects in the previous year.

2.6 Financial performance

The Kraftanlagen Group recorded cash and cash equivalents (liquidity and financial

position from cash and cash equivalents that are invested as a liquidity reserve in

the short term less current account liabilities) of EUR 62.3 million (previous year:

EUR 73.3 million).

The cash flow from operating activities amounted to EUR -15.2 million (previous

year: EUR -13.3 million). The change is mainly based on an increase in receivables

and the decrease in liabilities compared to the previous year.

The cash flow from investing activities (EUR 16.8 million; previous year:

EUR 4.4 million) is characterised by the sale of a subsidiary with a net cash inflow of

EUR 15.6 million in the reporting year. In addition, deposits of EUR 5.5 million were

released in a year-on-year comparison. At EUR 4.6 million, capital expenditure on

property, plant and equipment and intangible assets was EUR 1.0 million above the

previous year (EUR 3.6 million). Capital expenditure is counterbalanced by

depreciation and amortisation of EUR 5.7 million (previous year: EUR 6.1 million)

and disposals to EUR 0.2 million (previous year: EUR 0.6 million). 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 -12.6 million; previous year: EUR -11.0

million) is mostly made up of the dividend

payment to the shareholder of EUR 12.0

million (previous year: EUR 10.0 million).

The aforementioned changes in cash

flows resulted in a decrease in cash and

cash equivalents by EUR 11.0 million to EUR

62.3 million.

With a total of cash and cash equivalents

of EUR 79.0 million (previous year: EUR 108.3

million), comprising cash of EUR 62.3 million

(previous year: EUR 73.3 million), plus short-

term investments of EUR 16.7 million (previous year: EUR 35.3 million), 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.

The extension of key rental agreements resulted in an overall increase of

EUR 11.6 million in financial obligations in 2015.

2.7 Cash flows, financial position and financial performance of

Kraftanlagen München GmbH

Information for Kraftanlagen München GmbH is based on the statutory annual

financial statements prepared in accordance with German accounting principles.

Earnings before income taxes (EBT) totalled EUR 33.5 million, down EUR

7.5 million on the previous-year and EUR 4.7 million on target. Earnings before

income taxes (EBT) of EUR 13.5 million are expected for the coming financial year.

The reason for the lower earnings target in comparison to the reporting year is a

considerably higher billing volume with revenue recognition in accordance with

HGB in 2015, which will be counterbalanced by a greater increase in inventories

reported at production cost in 2016. The EUR 15.3 million decrease in the investment

result combined with a virtually unchanged interest result had a negative effect on

earnings. Although this largely corresponds to expectations, there were also

unplanned effects from the underutilisation of capacities, poor price quality and

the subsequent need for restructuring measures at equity investments.

Other operating income also decreased by EUR 7.0 million due to reversals of

provisions totalling EUR 3.7 million in 2014, which are counterbalanced by a mere

EUR 0.2 million in the reporting year. Furthermore, income from group allocations

decreased by EUR 2.7 million on account of the decreased use of services. By

contrast, income of EUR 1.7 million was generated from the sale of a majority

shareholding.

Primarily as a result of the completion of major large-scale projects, sales

revenue increased year on year by EUR 9.1 million, but was still EUR 72.9 million

short of the target figure as the planned billing of an additional large-scale project

was delayed. As in the previous year, this led to a decrease in inventories of EUR


absoluteChange

in %

Cash and cash equivalents 73.3 62.3 -11.0 -15.0

Cash flow

- from operating activities -13.3 -15.2 -1.9 -14.3

- from investing activities 4.4 16.8 12.4 >100

- from financing activities -11.0 -12.6 -1.6 -14.5

Change in cash and cash equivalents -19.9 -11.0 8.9 44.7

Capital expenditure on intangible assets and property, plant and equipment 3.6 4.6 1.0 27.8

Company acquisitions / sales -7.5 15.6 23.1 >100

Amortisation and depreciation 6.1 5.7 -0.4 -6.6

Credit facility 10.0 10.0 0.0 -

- Utilisation 0.0 0.0 0.0 -

Guarantee facility 288.8 257.5 -31.3 -10.8

- Utilisation 119.7 151.9 32.2 26.9


122.5 million, which exceeded the previous-year figure (EUR 111.8 million) by 9.6 %.

The Company anticipates a further decrease in sales revenue of EUR 110.6 million

for the coming year. This estimate is based on the fact that newly acquired large-

scale projects will only result in corresponding sales revenue from the 2017 financial

year onwards.

In terms of total operating performance, cost of materials recorded a

disproportionate decrease of 3 % as a result of the lower power procured. Total

operating performance decreased by EUR 1.6 million or 1 %.

Personnel expenses rose by EUR 0.5 million, even though the number of

employees decreased by 7 %. The increase relates to the higher expenses for

pensions from the measurement of pension obligations. Based on the number of

employees, personnel expenses per employee rose by 8.5 %.

Other operating expenses decreased by EUR 12.7 million. The main reasons for

this were the recognition of a provision for outstanding remaining services for

completed orders that is no longer needed (previous year: expense of EUR 8.5

million) as well as last year’s restructuring expenses of EUR 3.4 million.

Fixed assets decreased overall by EUR 3.5 million, primarily as a result of the sale

of a majority shareholding with a carrying amount of EUR 1.7 million. Depreciation

and amortisation decreased by EUR 0.5 million compared to the previous year and,

at EUR 1.7 million, exceeded new investments.

94.4 % (previous year: 106.3 %) of work in progress (EUR 125.4 million; previous

year: EUR 247.9 million) was financed by customer prepayments in the reporting

year. As a result, EUR 22.7 million more cash and cash equivalents than in the

previous year was tied up, which corresponds to the expected product cycle.

Trade receivables, including receivables from joint ventures, decreased overall

by EUR 8.7 million. This results from the higher reduction in receivables due to the

payment received on receivables relating to the projects completed in 2014, which

is counterbalanced by a relatively smaller increase in receivables from large-scale

projects billed towards the end of 2015.

Provisions and liabilities decreased by EUR 30.2 million in total. The main

reasons for this are the reduction of provisions relating to orders, the provision for

restructuring, trade payables and liabilities from transaction taxes as well as the

complete deletion of liabilities from prepayments received on account of orders.

EUR 12.0 million was distributed from the net retained profit to the

shareholder in the reporting year. Nevertheless, the Company’s equity increased

to EUR 84.6 million as a result of the profit for the year of EUR 26.0 million. As total

assets decreased by EUR 16.2 million, this corresponds to an equity ratio of 41.3 %

(previous year: 31.9 %). Cash and cash equivalents decreased by EUR 13.0 million

to EUR 77.4 million that is equivalent to 37.7 % (previous year: 40.8 %) of total

assets.

3. Subsequent events

By agreement dated 2 February 2016, Kraftanlagen München purchased Jakob

Ebling Heizung, Lüftung, Sanitär GmbH in Nierstein, which will be allocated to

the supply technology business unit. By agreement dated 9 May 2016, IPIP S.A.

in Ploiesti, Romania, was acquired for the industrial plant and assembly business

unit.


4. Risks and opportunities report

Entrepreneurial decisions require a conscious acceptance of risks. The task of the

risk management system of the Kraftanlagen Group is to recognise and manage the

risks associated with the alignment of the business and optimise the exploitation

of strategic potential. Risk management fosters an awareness of risks at all

management and staff unit 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 management

of the ultimate parent of the Kraftanlagen Group. These are then coordinated at

head office 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

following year within the framework of the strategic and operative planning. There

is also an annual risk inventory with the operational divisions and the staff units.

These findings are then pooled in a risk matrix, the potential loss and responsibilities

are defined and countermeasures are developed. Each quarter the degree to which

these qualitative and quantitative goals have been attained is reviewed as part of

the standardised forecast process.

Executive management and all other management levels are informed in the

monthly reporting about the current economic position of the Group. The actual

situation is analysed at all levels and compared to the target. The risks pertaining

to the defined goals are monitored and their impact limited 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

internal 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 2015, detailed audits were conducted at Kraftanlagen München

GmbH and at Kraftanlagen Romania S.R.L. 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

(Obligationenrecht; OR) and the German Accounting Modernisation Act

(Bilanzrechtsmodernisierungsgesetz; BilMoG) a project was started in the 2010

financial year with the goal of completing the documentation of the internal

control system 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 effectiveness of the ICS is constantly monitored by the internal audit

department and the accounting-related ICS is also reviewed by the external auditor

as part of 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 harmonised with each other. Material control

weaknesses were not detected in the process. The risk management of the

Kraftanlagen Group and the reliability of the monitoring and control system are

reviewed at regular intervals. Any suggestions for improving the system are

followed up.

Project and contractual risks

Group management regularly reviews all projects above a certain threshold following

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

contractual 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 accounted for.

We deal with warranty risks by demanding 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, adequate 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

customers, particularly those in the energy, chemicals and petrochemicals

industries. The willingness of these customers to invest depends greatly on the

economic and political environment of the respective markets they serve and this

has a major impact 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 owing to the pending closure of plants and a risk that contracts for

larger projects in the power plant sector will not be awarded 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 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 companies 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. The volatile oil price in particular affects

the willingness of customers to invest in the refinery business. The industrial plant

and assembly business unit and the Romanian subsidiary are particularly affected

by this.

In the first quarter of 2015, the state prosecutor of Munich I and the German

Federal Antitrust Office started proceedings against various companies active in

the industry 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 significant risks may

arise for the Company in connection with this.

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

liquidity risks. These are monitored using proven control and steering instruments.

The reporting system allows continuous capture, analysis, assessment and

management 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

equivalents 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-rated

business partners.

In the finance sector, market price risks mainly relate to exchange rates, interest

rates and market values of monetary investments. The Kraftanlagen Group is

primarily active in the euro zone and therefore only exposed to exchange rate

fluctuations to a limited extent. Derivative financial instruments are used in some

cases to hedge future sales revenue and prepayments against the existing risks of

foreign 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 26 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 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

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 nature 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

difficult to quantify. There is still stiff competition on the labour market for

professionals and managers which remains relatively unaffected by the state of the

economy owing to the current scarcity of professionals and managers. The

succession arrangements for construction and assembly heads are a particular

challenge for the Kraftanlagen Group. We therefore 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 success of

the Company critically depends on our ability to recruit and integrate suitable

personnel and bind them to the Kraftanlagen Group for the long term. Systematic

succession planning for management caused, for example, by implementing

targeted junior management development programmes and ensuring adequate

deputies reduce 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 fluctuations

in the economy and the relatively high degree of dependence on key customers in the

energy, chemicals and petrochemicals sector. The new energy concept in Germany

also has a massive influence on virtually all of the Group’s business units, which the

Group has to respond to quickly and flexibly. The risks related to the value chain are

managed by our risk management system and their impact is therefore 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 Kraftanlagen

Group can be limited, are transparent and do not, from today's perspective, jeopardise

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 with a variety of major customers.

Moreover, our comprehensive risk management system helps to secure the targeted

management and development 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

identification and tracking of opportunities and their strategic and financial

assessment plays a key role in the strategic discussion the Supervisory Board holds

regularly with the shareholder responsible and those responsible for each of the

operating divisions. The results 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 operations 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 programme, also by

means of targeted business acquisitions. This offers us opportunities in the short


term for additional earnings and could be suitable in the mid-term in helping us to

improve our positioning and strategy 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 uncertainty

in energy policy, for the time being we predict an ongoing gloomy climate for

investment in 2016 and 2017. If there were renewed investments in large-scale

power plants and industrial plants, this would positively influence the business

situation, 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

Economic situation

In its annual economic report, the German Federal Government expects gross

domestic product (GDP) to grow by 1.7 % in 2016 and therefore a similar

development to 2015, which was driven by a consistent upward trend for the

domestic economy. A further recovery is also anticipated for Europe, even though

the situation will remain challenging on account of geopolitical risks and the

slowdown in growth in the emerging countries.

A gradual global economic recovery, increasing employment on the basis of a

sound economy, marked increases in income and the continued favourable

financing opportunities for companies are expected to lead to higher capital

expenditures in 2016 (up 2.3 % on the previous year). Private consumption remains

the main driver as a result of the greater purchasing power, which is fuelled by

wage increases, a continued weak inflation rate and an expansive monetary

policy by the European Central Bank. Further growth in government spending is

expected (up 3.5 %) with regard to the persistently high level of immigration.

German exports are forecast to increase moderately (up 3.2 %) due to the slight

acceleration in the global economy and global trade, combined with a low

external value of the euro against the US dollar.

Forecasts for industrial and construction activity are positive overall, although

the foreign trade risks are still high. For example, the most recent slump on the

financial market in China may indicate that the slowdown there could impact the

global economy to a greater extent than previously expected. In the face of lower

sales potential, this could also dampen the activities and investments of German

companies in Germany.

In light of the high demand for workers and the robust economic growth, the

labour market is also expected to perform well in 2016. Due to the slow integration

of refugees into the labour market, the migration of refugees will initially have


little effect on employment. The lack of skilled workers – particularly in the

commercial sector – therefore remains a focus of attention. Despite the fact that

unemployment figures increased moderately over the course of the year, this

should be balanced out by an increase in persons in work covered by social

security and result in an unchanged unemployment rate of 6.4 %.

General developments

Developments in the energy industry in Germany and the EU are still dynamic and

significantly dependent on political decisions. This makes them difficult to

predict. Various laws that will have an influence on future market developments

were passed in Germany in 2015. It will also be interesting to see how the targets

prescribed at the Climate Change Conference in Paris will be implemented into

the legislature and how the markets will change.

The outlook for the construction of industrial CHP plants is clouded by the law

amending the German Combined Heat and Power Act (Kraft-Wärme-

Kopplungsgesetz; KWKG), which entered into force as at 1 January 2016, as it

contains reduced expansion targets and cuts to some subsidies for the industrial

energy supply. By contrast, the sharp increase in compensation at plants for

public supply lines (particularly small plants), the increase in subsidies in the

heating grids and heat storage systems as well as the support for existing

inventories and the extension of the law’s period of application should result in

investment security and new momentum for plant construction in the energy

sector.

The Federal Ministry of Economics and Energy’s white paper on the future

electricity market design also clarified that the aim is not to have a capacity

market in Germany, but instead to promote market mechanisms and flexibility. As

gas and steam power plants, power-to-heat or heat storage systems are also

particularly flexible, we hope that this will result in additional business potential.

The implementation of the capacity reserve to be introduced and how this will

work in interaction with the balancing energy market remains questionable. The

law on the digitization of the new energy concept will also drive forward the

digitization of the industry further (conclusion of legislative procedure planned

for May 2016).

In addition, the investment behaviour of many of our customers is directly

linked to the future development of the oil price. On account of a persistently

high supply, this fell below the USD 30 mark (Brent) for the first time at the

beginning of 2016, even though initial talks on curbing supply have now been

held between Russia, Saudi Arabia, Qatar and Venezuela. That being said, prices

are not expected to recover in the short term as a result of Iran increasingly

pushing into the market as a supplier after its sanctions were eased. Thus, the

German Federal Government estimates a price of USD 34 (Brent) for 2016 and the

International Energy Agency (IEA) does not anticipate that the oil market will

stabilise in 2016.

The business environment of the Kraftanlagen Group remains challenging

against the background of the persistently low oil price, the reluctance to invest

in the conventional power plant business, the increasing price pressure and the

strong influence of political decisions on the markets. Nevertheless, our declared

objective is to grow further and continuously expand our performance spectrum,


in order to enhance our position as an integral solutions provider for industry as

well as for the future energy and heating supply. We also intend to further

increase our competitiveness by creating a streamlined organisation, improving

internal processes and exploiting group-wide synergies.

In light of this, we anticipate the following developments for our business

units (the following are unconsolidated figures):

Business units

Energy and power plant technology – Although this BU succeeded in acquiring the

large-scale project in Moerdijk for a new steam turbine power plant to use energy

from a waste incineration plant as well as the planning order for a gas motor power

plant in Kiel, the market for conventional power plants in Germany and Europe

continues to be challenging. Energy suppliers are still reluctant to invest as a result

of a low stock exchange price for electricity – caused by excess capacity in

conventional power plants, further growth of renewable energies and low prices

for commodities – which has a negative impact on our traditional business in power

plant construction. In its 2014 current account report, the German Federal

Government estimates excess capacity of approx. 10 GW in the period up to 2017,

although this does not take excess capacities in the European market into account.

This, in addition to the phase-out of nuclear energy, may mean it will only be

possible to reduce excess capacities from 2020 onwards, although increasing

market integration could counterbalance indications of shortages in the power

plant segment.

However, we see potential in overhauling and converting existing plants, as

these have to be operated increasingly more flexibly causing more wear and tear as

well as in the greater requirements for flexibility on the market. We are therefore

optimistic that there is more business potential in the increased use of CHP power

plants, heat storage systems and power-to-heat, which is why we intend to expand

activities in the heating market and in the area of combined heat and power. It is

also expected that there will be a long-term global switch to low CO2 energy sources

(gas) and renewable energies, whereby increased activities in areas such as

renewable energies, especially with our promising CSP technology, are anticipated

to drive growth. Furthermore, we will continue our internationalisation strategy

outside the DACH region (Germany, Austria and Switzerland) and try to acquire

projects identified in attractive target markets in the rest of the world. An operating

performance of EUR 144 million is therefore planned, also as a result of the two

large-scale projects.

Decentralised energy supply – Above all, the market for small CHP plants continues

to offer potential on account of the new KWKG and the political climate protection

targets. The areas of hot water and steam generation as well as cremation facilities

also appear to be stable, which indicates a positive business development for

2016. In the medium term, smaller hybrid plants, e. g., with integrated battery

storage device, could also be interesting for the Group. In the area of fire protection,

there is particular potential for providing services, which is why the aim is to

expand activities here. We anticipate a stable operating result of EUR 52 million on

the back of plans to dynamically develop the performance spectrum, e. g., in the

area of industrial refrigeration.


Nuclear technology – The situation in the area of nuclear technology remains

challenging. This has already been responded to with the implementation of

structural measures in 2015 with a view to streamlining the business unit. However,

all competencies and approvals will remain in the unit, so as to be well positioned

for the promising dismantling and post-operation of nuclear power plants. Among

other things, this has an effect on the operating performance, which is expected to

be EUR 53 million in 2016. Nevertheless, there is a great deal of uncertainty on the

market relating to the dismantling strategies of the government and energy

suppliers. Alongside the area of dismantling and post-operation, there is also

medium-term potential in the decontamination business and international

projects for disposal and waste treatment of nuclear power plants (e. g., in China), as

investments are still being made in nuclear technology outside western Europe and

at the same time many plants also have to be disposed of in the foreseeable future.

Supply technology – The market for industrial supply technology continues to grow

slightly, as customers (semiconductor industry, automotive, pharmaceuticals, etc.)

are still investing on account of the stable economy. We have, however, seen

greater price pressure that will increase further. The topic “Industry 4.0” and

increasing digitalisation will be drivers for future developments. We therefore plan

to enhance activities, e. g., in the area of process optimisation, energy efficiency or

energy management. The acquisition of Jakob Ebling, Heizung, Lüftung, Sanitär

GmbH, the transfer of the industry services that were previously allocated to the

nuclear technology BU and the general expansion of the business are the reasons

behind an anticipated higher operating performance of EUR 68 million. We see

additional potential for sustainable growth in this segment in the medium term.

Industrial plants and assembly – The operating performance of this business unit

depends very much on the oil price and its development, as many servicing and

maintenance budgets are dependent on the current cash flow of the operators and

work is awarded corresponding to this dependence. The low oil price thus has a

negative impact on the upstream business because extracting companies are

cutting back on investments. At the same time, this benefits the downstream and

midstream areas (refineries, petrochemical and chemical industries). The steady

economy and positive market prospects in the chemical industry lead us to

anticipate further growth in the medium term. An increasing or volatile oil price

does nevertheless harbour risks for the investment security of our customers and

thus for our operating performance. We expect a positive contribution and boost

for this business unit in May 2016 from the acquisition of Romanian engineering

company IPIP S.A.A constant operating performance of EUR 80 million is

anticipated for 2016 as a result of these contrasting effects. Prices are also

increasing coming under pressure as a result of foreign service providers with

lower pay levels. We therefore plan to systematically drive forward the expansion

of the performance spectrum and our development into an EPC service provider

in this segment.

Underground piping construction – No major changes are expected in the market

environment in 2016 compared to 2015, although the new KWKG is expected to

eliminate some uncertainties for municipal utilities and energy suppliers. This will

stabilise the market and may lead to new investments. In the medium term, we


anticipate steady demand for our services, as the trend towards urbanisation

continues. However, this development is still dependent on political triggers. The

high cost pressure caused by the large number of small and medium-sized

enterprises competing for small-scale projects has prompted us to shift the focus

increasingly on national large-scale projects in future. The aim is also to push ahead

with expanding the very regional business to the DACH region so that we can enter

additional markets. Operating performance is therefore anticipated to remain

constant at EUR 31 million.

Fabrication and welding – The business unit is heavily dependent on the

performance of the energy and power plant technology BU and the aforementioned

industry developments. The business outside Germany and the expansion of the

performance spectrum to cover additional areas such as the petrochemical

industry, wind offshore and district heating will therefore also be continued in

order to tap new business fields and build on the current position. Operating

performance of EUR 15 million is expected.

Engineering and consulting – Due to the fact that its main role is to act as an

internal service provider for the energy and power plant technology and industrial

plant and assembly business units, the operating performance is correspondingly

dependent on their market situation. This unit also acts as an indicator for these

market segments and can sense how tense the investment climate currently is. As

the BU is also a good indicator for new industry developments and technologies,

the focus is increasingly on expanding the service portfolio. The cost item is also

expected to sustainably decrease using a “nearshoring” concept (relocation of

detail engineering services to Romania). We anticipate an operating performance

of EUR 7 million in 2016.

Overall, we are forecasting a significant increase in the total (consolidated)

operating performance for the Kraftanlagen Group to EUR 415.6 million (2015:

EUR 319.0 million) with slightly improved earnings before taxes (2015: EUR

17.5 million; up 5.5 %).

The Kraftanlagen Group is continuing to undertake all necessary measures to

flexibly adapt to rapid market changes and to counter the challenging market

situation for our core business. In addition to internationalisation and greater

market penetration, the continual vertical and horizontal expansion of the

performance spectrum is part of our strategic measures to enhance the service

level for our customers and also to improve our competitive edge on other market

players. To achieve these objectives, we will continue to scrutinise opportunities

for growth such as purchasing companies or entering into partnerships.

This requires a great deal of flexibility both in terms of the organisation and

internal processes as well as from the employees. The Kraftanlagen Group is also

working continually on increasing its competitiveness, for example, by constantly

reviewing the efficiency and effectiveness of internal processes to achieve a better

administrative cost structure. This results in projects to centralise information

technology within the Group and to enhance organisational structures. We intend

to continue and complete these projects in 2016.

We are still targeting an EBIT return of over 5 %, although our focus is on the

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 react flexibly and adaptably

to 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 development of staff and management. The most important

success factor of the Kraftanlagen Group is still its competent, motivated and high-

performing people. Our main goal will therefore be to encourage the personal

development and qualifications of the existing workforce for the long term and

thus create the conditions needed for our employees to operate successfully on the

market.

The health of our employees is our greatest asset. For this reason, we give top

priority to occupational health and safety.

Munich, 31 May 2016

General Management




Table of contents

Kraftanlagen Group

Consolidated Financial Statements 51 Consolidated Statement of Comprehensive Income 52 Consolidated Balance Sheet 53 Consolidated Cash Flow Statement 54 Consolidated Statement of Changes in Equity 55Notes to the Consolidated Financial Statements 56 General Information 56 Important Accounting Principles 56 Basis of Consolidation 60 Consolidation Principles 62 Currency Translation 62 Accounting and Measurement Methods 63 Notes to the Consolidated Statement of Comprehensive Income 74 Notes to the Consolidated Balance Sheet 80 Other Notes 96 Audit Opinion 110Kraftanlagen München GmbH

Balance Sheet 112 Income Statement 113 Notes to the Financial Statements and General Information 114 Accounting and Measurement Methods 117 Notes to the Balance Sheet 122 Notes to the Income Statement 126 Audit Opinion 130

Consolidated Financial Statements and Financial Statements 2015 of Kraftanlagen München GmbH, Munich

51Kraftanlagen München GmbH Annual Report 2015 51Kraftanlagen München GmbH Annual Report 2015

Kraftanlagen München GmbH, MunichConsolidated Statement of Comprehensive Income for 2015

Consolidated Financial Statements

in EUR thousand Notes 2014 2015

Net sales revenue 1 402,008 318,189

Other operating income 2 3,302 3,573

Cost of materials 3 -213,319 -153,285

Personnel expenses 4 -114,029 -107,223

Other operating expenses 5 -51,836 -35,536

Earnings before interest, taxes, depreciation and amortisation (EBITDA) 26,126 25,718

Depreciation and amortisation 6 -6,092 -5,691

Earnings before interest and taxes (EBIT) 20,034 20,027

Finance income 7 3,341 714

Finance costs 8 -7,314 -3,205

Earnings before taxes (EBT) 16,061 17,536

Income taxes 9 -4,061 -5,740

Profit or loss for the period 12,000 11,796

Other comprehensive income

Currency translation of foreign operations 20 48 -28

Other comprehensive income potentially to be reclassified to profit or loss in subsequent periods 48 -28

Remeasurement of actuarial obligations 20 -3,371 -3,151

Deferred tax effects on the remeasurement 20 1,068 1,052

Other comprehensive income not to be reclassified as profit or loss in subsequent periods -2,303 -2,099

Other comprehensive income after taxes -2,255 -2,127

Comprehensive income after taxes 9,745 9,669

Profit or loss for the period attributable to:

Non-controlling interests -750 -22

KAM shareholders 12,750 11,818

12,000 11,796

Comprehensive income attributable to:

Non-controlling interests -750 53

KAM shareholders 10,495 9,616

9,745 9,669


Kraftanlagen München GmbH, MunichConsolidated Balance Sheet as at 31 December 2015

in EUR thousand Notes 31 Dec 2014 31 Dec 2015

AssetsProperty, plant and equipment 10 26,955 26,045

Intangible assets 11 9,788 9,388

Financial assets 12 6 231

Other receivables and assets 14 0 6

Deferred income tax 15 23,014 18,762

Non-current assets 59,763 54,432

Inventories 17 4,234 2,191

Financial receivables 13 35,342 16,735

Trade receivables 18 162,773 172,588

Other receivables and assets 14 2,334 3,452

Income tax assets 16 823 190

Cash and cash equivalents 19 73,349 62,270

278,855 257,426

Assets held for sale 27 23,082 0

Current assets 301,937 257,426

Total assets 361,700 311,858

Equity and liabilitiesSubscribed capital 20 25,000 25,000

Capital reserves 20 40,997 40,997

Other reserves 20 -15,734 -17,861

Net retained profit 20 59,198 58,776

KAM shareholders’ interest in equity 109,461 106,912

Non-controlling interest in equity 21 -499 -446

Equity 108,962 106,466

Provisions 22 82,299 83,687

Other liabilities 24 18 13

Deferred income tax 15 13,272 7,972

Non-current liabilities 95,589 91,672

Provisions 22 24,193 23,195

Trade payables 23 53,288 46,727

Other liabilities 24 59,942 43,796

Income tax liabilities 25 2 2

Derivative financial instruments 26 1 0

137,408 113,720

Liabilities directly associated with assets held for sale 27 19,741 0

Current liabilities 157,149 113,720

Liabilities 252,738 205,392

Total equity and liabilities 361,700 311,858


Consolidated Financial Statements

Kraftanlagen München GmbH, MunichConsolidated Cash Flow Statement for 2015

in TEUR 2014 2015

Operating activities

Earnings before taxes 16,061 17,536

Depreciation, amortisation and impairment of property, plant and equipment and intangible assets 6,092 5,691

Gains/losses from the disposal of property, plant and equipment 23 -115

Interest income -558 -303

Interest expenses 3,781 2,609

Expenses from derivatives 6 -1

Other non-cash income and expenses 1,095 0

Change in other provisions and pension provisions -6,412 -5,254

Change in inventories, trade receivables and other receivables and assets -20,504 -8,007

Change in trade payables and other liabilities 383 -22,695

Income taxes paid -13,246 -4,720

Net cash flow from operating activities -13,279 -15,259

Investing activities

Proceeds from the disposal of property, plant and equipment and intangible assets 218 208

Acquisition of property, plant and equipment -3,235 -4,159

Acquisition of intangible assets -405 -444

Acquisition/disposal of securities held as current assets and investments with a maturity of over three months and less than one year 14,773 5,500

Investment in financial assets 0 -225

Sale of subsidiaries less cash received/transferred -7,481 15,648

Interest received 558 303

Net cash flow from investing activities 4,428 16,831

Financing activities

Interest paid -985 -665

Dividend to the parent company -10,000 -12,000

Net cash flow from financing activities -10,985 -12,665

Net foreign exchange difference -55 14

Net change in cash and cash equivalents -19,891 -11,079

Cash and cash equivalents as at 1 January 93,240 73,349

Cash and cash equivalents as at 31 December 73,349 62,270

Composition of cash and cash equivalents

Cash funds 73,349 62,270


Kraftanlagen München GmbH, MunichStatement of Changes in Equity for 2015

Capital attributable to the shareholders of the parent company

Changes in equity recognised directly in equity

in EUR thousandSubscribed

capitalCapital

reservesCurrency

translation

Remeasurement in accordance

with IAS 19 (2011)Net retained

profit

KAM shareholders’

interestNon-controlling

interests Total

As at 1 Jan 2014 25,000 40,997 -372 -12,800 56,448 109,273 -642 108,631

Profit or loss for the period after taxes 0 0 0 0 12,750 12,750 -750 12,000

Other comprehensive income after taxes 0 0 48 -2,303 0 -2,255 0 -2,255

Comprehensive income for the year 0 0 48 -2,303 12,750 10,495 -750 9,745

Dividend payout 0 0 0 0 -10,000 -10,000 0 -10,000

Changes relating to the basis of consolidation 0 0 -307 0 0 -307 893 586

As at 31 Dec 2014 25,000 40,997 -631 -15,103 59,198 109,461 -499 108,962

As at 1 Jan 2015 25,000 40,997 -631 -15,103 59,198 109,461 -499 108,962

Profit or loss for the period after taxes 0 0 0 0 11,818 11,818 -22 11,796

Other comprehensive income after taxes 0 0 -28 -2,099 0 -2,127 0 -2,127

Comprehensive income for the year 0 0 -28 -2,099 11,818 9,691 -22 9,669

Dividend payout 0 0 0 0 -12,000 -12,000 0 -12,000

Other changes 0 0 0 0 0 0 75 75

Changes relating to the basis of consolidation 0 0 0 0 -240 -240 0 -240

As at 31 Dec 2015 25,000 40,997 -659 -17,202 58,776 106,912 -446 106,466


Kraftanlagen München GmbH, MunichNotes to the Consolidated Financial Statements for 2015

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, operation and maintenance of plants in conventional and nuclear

power generation, industrial and public-sector media supply as well as chemicals

and petrochemicals. Furthermore, services include the planning and execution of

radiation protection work for nuclear power plants, the acquisition and awarding

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:

Kraftanlagen 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 statements 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

statement 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 Section 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

income 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 31 May 2016.

The consolidated financial statements as at 31 December 2014 of KAM and the

group management report for the 2014 financial year were published in the

Bundesanzeiger (German Federal Gazette) on 17 August 2015.

Notes to the Consolidated Financial Statements


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 2015 in accordance with the International Financial

Reporting Standards (IFRSs) of the International Accounting Standards Board (IASB),

London, as adopted in the European Union (EU), and pursuant to the additional

requirements 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. In a year-on-year

comparison, due to a resolution passed by the Supervisory Board to sell a foreign

subsidiary, its assets and liabilities are recognised as “held for sale” pursuant to IFRS 5.

All IFRS rules that were applicable on the balance sheet date were observed. The

requirements of the applicable standards were met in full.

Application of amended and new standards and interpretations

The accounting policies adopted are consistent with those of the previous reporting

period.

Furthermore, certain standards and amendments applicable for financial years

beginning on or after 1 January 2015 were applied for the first time in the Group. The

Group did not early adopt any other standards, interpretations or amendments

that have been issued but are not yet effective.

First-time adoption of the new standards and amendments in 2015, the effects

of which are described in the following, did not have any significant effects on 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.

Furthermore, levies that are triggered when specific thresholds are reached are not

accounted for until they are reached. There has been no effect on the consolidated

financial statements.

Furthermore, the Annual Improvements to IFRSs “2011 to 2013 Cycle” are subject

to mandatory adoption as at 1 January 2015. The improvements to the omnibus

standards, which were published in the course of the annual improvements project,

mainly serve to remove inconsistencies and clarify wording. The changes had no

material impact on the financial position, financial performance and cash flows of

the Kraftanlagen Group.

Further new and amended standards and interpretations had been issued by

the time the consolidated financial statements were prepared. Adoption will only

become mandatory in subsequent years; as such, they were not early adopted by

KAM. In some cases, future application of new and amended 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

relevant to the Group’s business activities had been published as at the date of

preparation of the consolidated financial statements but were not yet subject to

mandatory adoption:


IFRS 9 “Financial Instruments: Classification and Measurement”

(beginning on/after 1 January 2018)

This standard mainly contains rules 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 are published. In

general, these new rules are effective retrospectively and their effect on the

consolidated financial statements is currently being assessed.

IFRS 10 “Consolidated Financial Statements”, IFRS 12 “Disclosure of Interests in

Other Entities” and IAS 28 “Investments in Associates and Joint Ventures” (beginning

on/after 1 January 2016)

The amendments relate to matters arising in connection with the consolidation of

investment companies. No or no significant consequences are expected for the

consolidated financial statements.

IFRS 11 “Joint Arrangements” (beginning on/after 1 January 2016)

The amendments clarify that the acquirer of interests in a joint operation constituting

a business as defined in IFRS 3 must apply all of the principles on business combinations

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 currently being

assessed.

IFRS 14 “Regulatory Deferral Accounts” (beginning on/after 1 January 2016)

There has been no effect on 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

recognition and measurement of certain non-financial assets that do not constitute

consideration in the course of an entity’s ordinary activities. The standard also

requires additional disclosures, including a disaggregation of total sales revenue,

on performance 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.

IFRS 16 “Leases” (beginning on/after 1 January 2019)

IFRS 16 regulates the recognition, valuation, presentation and disclosure of leases

in the financial statements of both the lessee and the lessor.

This new standard on leases introduces a uniform model for the accounting

treatment at the lessee, under which the lessee generally recognises all leases as

well as the associated contractual rights and obligations in its statement of

financial position. Application of the new standard means that lessees will no

longer have to make the distinction previously required under IAS 17 between

finance leases and operating leases. The lessee has to recognise every lease as a

liability in the amount of the future lease payments as well as a right-of-use asset



for the underlying asset in the amount of the present value of the future lease

payments plus the directly allocable costs. The right-of-use asset is amortised and

the lease liability remeasured using mathematical finance methods over the term

of the lease agreement. IFRS 16 also contains a number of other rules on presentation

and disclosure as well as on sale and leaseback transactions. The effect on our

consolidated financial statements is currently being assessed. At present, we

assume that total assets and EBITDA will increase as a result of applying the new

standard.

IAS 1 “Presentation of Financial Statements” (beginning on/after 1 January 2016)

The amendments primarily clarify the principle of materiality, sub-classification of

financial statements items as well as requirements regarding the structure of the

notes. The effect on the consolidated financial statements is currently being

assessed.

IAS 7 “Statement of Cash Flows” (beginning on/after 1 January 2017)

The aim of the amendments is that an entity has to disclose any amendments to

financial liabilities where cash inflows and outflows are reported under the cash

flow from financing activities in the cash flow statement. The effect on the


IAS 12 “Income Taxes” (beginning on/after 1 January 2017)

The amendment of IAS 12 clarifies the fact that write-downs to a lower market value

of debt instruments that are recognised at fair value on account of a change in the

market interest level result in deductible temporary differences. The effect on the


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


The amendments relate to the clarification of the question as to when revenue-

based methods of amortisation and depreciation for intangible assets and

property, plant and equipment can be applied. Currently, we do not expect any

consequences for the consolidated financial statements.

IAS 19 “Employee Benefits” (beginning retrospectively on/after 1 February 2015)

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. As there are no

defined benefit pension plans in the group companies where contributions are paid

by employees or third parties, this amendment is irrelevant for the Group.

IAS 27 “Separate Financial Statements” (beginning on/after 1 January 2016)

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.


“Annual Improvements to IFRSs”:

The objective of the annual improvement concept is to make necessary but

non-urgent amendments to existing IFRSs that are not made in the course of

other major projects.

• “2010 to 2012 Cycle” (beginning on 1 February 2015)

As a result, seven IFRSs were amended.

• “2012 to 2014 Cycle” (beginning on/after 1 January 2016)

As a result, four IFRSs 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

mandatory 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 companies in the EU. There

has been no effect on the consolidated financial statements.

Basis of Consolidation

In addition to Kraftanlagen München GmbH based in Germany, the KAM consolidated

financial statements include seven domestic entities (previous year: eight) and five

foreign entities (previous year: five) in which KAM holds, either directly or indirectly,

the majority of voting rights. The financial statements of the subsidiaries were

prepared using uniform measurement and valuation methods.

In accordance with the full consolidation method, the financial statements

include all subsidiaries whose financial and operating policies can be controlled in

accordance with the control concept. During full consolidation, the assets and

liabilities of subsidiaries are included in full in the consolidated financial

statements. Subsidiaries 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 indirect

associates, indicating the consolidation method applied and further information.

Changes relating to the basis of consolidation

Of the entities included in the consolidated financial statements within the scope

of full consolidation, one foreign entity (previous year: one) was consolidated for

the first time in the reporting year and one foreign entity was deconsolidated. The

assets and liabilities of a German subsidiary were transferred to another KAM

subsidiary by way of a merger effective 1 January 2015.

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

company is a member of the KPK PetroService Consortium (further members are

Kraftanlagen Romania S.R.L. and Kremsmueller S.R.L.) and offers services as part

of maintenance projects for the Romanian crude oil industry. The entry in the

commercial register was made on 19 September 2014. The subscribed capital

amounts to RON 2,250 thousand (EUR 502 thousand) and is fully paid in.

In 2014, 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).

Deconsolidation of Caliqua Anlagentechnik GmbH, (Caliqua),

Wiener Neudorf, Austria

By agreement dated 29 April 2015, KAM sold its 100 % shareholding in Caliqua to

Alpiq InTec AG, Zurich, for a purchase price of EUR 3,420 thousand. In accordance

with IFRS 5, the assets and liabilities of Caliqua were reported as “held for sale” as

at 31 December 2014. The sale meant that the Group lost cash of EUR 879 thousand;

however, Caliqua’s loans of EUR 13,107 thousand were settled.

First-time Consolidation of Swiss Decommissioning AG, Olten, Switzerland

The wholly owned subsidiary Kraftanlagen Heidelberg GmbH founded and

acquired all shares in Swiss Decommissioning AG on 6 March 2015. The purpose of

the company is the handling of projects in the area of post-operation as well as

decommissioning, sanitising and dismantling nuclear power plants and other

nuclear plants as well as rendering planning and execution services relating to

radiation protection and decontamination at these plants. The entry in the

commercial register was made on 9 March 2015.

The subscribed capital amounted to CHF 100 thousand (EUR 93 thousand) and

was fully paid in. Swiss Decommissioning did not generate any sales revenue in

the reporting year and recorded a loss of CHF 261 thousand (EUR 244 thousand).

Acquisition of a further 26.2 % of the shares in IA Tech GmbH, Jülich

By agreement dated 21 September 2015, Kraftanlagen München GmbH acquired

further shares in the company and now holds 51 %. Despite the majority interest,

the company is not fully consolidated on account of a balanced distribution of

voting rights. For materiality reasons, this is reported at acquisition cost under

financial assets as at 31 December 2015.

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 impairment test in accordance with the provisions of IFRS 3/IAS 36.

Negative consolidation differences are reviewed again before being released

through profit or loss immediately after the acquisition. In the event of

deconsolidation, the residual values of identified hidden reserves and goodwill are

taken into account when calculating 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

eliminated 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

consolidated balance sheet. They are disclosed in the balance sheet under equity;

however, 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 using the partial goodwill method, which results in the difference between

the purchase 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

exercise 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 the separate financial statements, the 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 finance income or costs.

The reporting currency of the Kraftanlagen Group is the euro. The annual

financial statements of group companies are therefore translated into euros.

Financial statements 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 expenses 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

included 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

accordance 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:



Accounting and Measurement Methods

The significant accounting and measurement 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

depreciation 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

reviewed 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 reasons for the earlier impairment are no longer applicable.

Investments in replacements and improvements are capitalised if they

substantially extend the useful life, increase the capacity or substantially improve

the quality 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.

Repairs, maintenance and routine upkeep of buildings and operating facilities are

expensed 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.

Annual average Balance sheet date

1 EUR corresponds to 2014 2015 2014 2015

Swiss franc (CHF) - 1.07 - 1.08

Hungarian forint (HUF) 308.67 - 315.51 -

Romanian lei (RON) 4.44 4.44 4.48 4.52

Serbian dinar (RSD) 116.90 120.36 120.60 121.20


Intangible assets

Intangible assets are initially measured at cost in accordance with IAS 38 and

subsequently carried at cost less any accumulated amortisation and accumulated

impairment 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 measurement

in accordance with IAS 38. It is possible to depart from this method in individual 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

income 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 include

software with a useful life of four years.

Gains and losses from the derecognition and sale of intangible assets are measured

as the difference between sales proceeds and the carrying amount of the asset 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 accounting.

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. Transaction costs incurred in

connection with business combinations are expensed as incurred.

Goodwill is initially measured at cost, which corresponds to the difference between

the fair value of the consideration transferred together with any non-controlling

interests 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

interests are measured at the fair value of their proportion of identifiable assets and

liabilities (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. Following the sale of the

“EST” (Energy Supply Technology) business unit in 2012, the existing “PGPE” (Power

Generation and Plant Engineering) and “Other” cash-generating units were redefined

from 2015 onwards as a result of a reorganisation process that introduced eight

business units. On this basis, the goodwill from the six former cash-generating units

was distributed in accordance with the relative earnings power.

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 value 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 and Disclosure of

Government Assistance”, these grants are only recognised when there is reasonable

assurance that the entity will comply with any conditions attached to the grant and

that the grant will be received. IAS 20 distinguishes between grants receivable as

compensation for costs already incurred 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 presented 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 cost.

Financial assets

Financial assets are measured at fair value. Where this cannot be reliably

determined, 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.

Valuation allowances (impairments) are made for obsolete and slow-moving

inventories. If the net realisable value of inventories on which valuation allowances

have been recognised rises, the corresponding reversal of impairment losses is

recognised as income. Production costs comprise all direct materials 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 customer-

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 measurements 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

prepayments in individual cases, construction contracts are recognised under

PoC receivables. 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. Financial

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 nominal

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

conditions 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.

If necessary, the Group uses derivative financial instruments such as forward

exchange contracts to hedge its risks associated with foreign currency fluctuations.

If contracts are concluded for the purpose of receiving or delivering non-financial



items in accordance with the expected purchase or usage requirements and

continue to serve this purpose (“own use”), these are not accounted for as derivatives

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

previously recognised directly in equity is recycled into profit or loss in the same

period(s) in which the financial asset or liability affects profit or loss. If a hedged

forecast 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 value is recognised directly in equity. The ineffective portion is recognised

immediately in the profit or loss for the period. The portion of value changes

initially recognised 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

hedging instruments and the changes in the fair value of the associated hedged

items attributable 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

intragroup level with Alpiq Holding AG, Lausanne, Switzerland.

No financial instruments were used as at the balance sheet date.

Deferred taxes

In accordance with IAS 12, deferred tax assets and liabilities are recognised for

temporary differences between the carrying amounts for tax purposes and the IFRS

carrying amounts (temporary concept).

KAM as the controlling company and all domestic first-tier and second-tier

subsidiaries are directly and indirectly linked with each other though domination

and profit and loss transfer agreements. As the Kraftanlagen Group is a 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

recognised 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 substantively

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)

obligations 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

certainty 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

reflect 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 provisions

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 recognising

pension provisions; the expected future benefit obligations are spread over the

entire period of service. The benefits are paid by the Company directly to the

beneficiaries. 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, pension payments are deducted from the provision in the balance sheet.

Pension obligations from defined benefit plans are measured using the

projected 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 increases 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 generally 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 reported only taking the asset

ceiling into account.

Service cost is reported under personnel expenses within EBIT. The interest

included 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 assumptions and the actual development as well as changes in the

return on plan assets 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

voluntary basis into private pension plans. Beyond these contributions, which are

included 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

economic 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 substantially 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 value 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 finance costs. The

finance costs 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 discounts

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 “Construction

Contracts” or IAS 18 “Revenue” using the percentage-of-completion method 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

reliably 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 expenditure 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 deferred 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

considered to be met only when the sale is highly probable and the asset

or disposal group is available 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 classification for recognition as a completed sale.

Discontinued operations are not included in the income from continuing

operations and are presented separately in the consolidated statement of

comprehensive 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 recorded 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

formation of a provision and/or the amount of obligation cannot be measured

with sufficient reliability.



Potential or existing liabilities where it is not considered probable that an outflow

of resources will be required are not recognised in the balance sheet. However,

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

The preparation of the consolidated financial statements requires management

to make judgements, estimates and assumptions. Estimates are made primarily

for the measurement of assets, liabilities and contingent liabilities acquired

through business combinations, impairment tests according to IAS 36,

measurement of provisions for pensions, other provisions as well as provisions

for income taxes. The preparation of consolidated financial statements requires

management to make certain assumptions, forecasts and estimates that affect

the reported amounts and recognition of assets and liabilities, income and

expenses and contingent liabilities during the reporting period. Assumptions and

estimates largely pertain to the following 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

• when calculating pension provisions, the choice of the underlying

assumptions, such as the imputed interest rate or trend assumptions, of

biometric probabilities and accepted approximation methods when

determining the pension from the statutory pension insurance fund may

lead to differences compared to the actual obligations incurred over time

• different premises and estimates can influence the recognition and

measurement 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 2015 was EUR 35,433 thousand (previous year:

EUR 36,743 thousand). These assets are tested annually for impairment and

changes in depreciation/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 significantly 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 value 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

development of the industry-specific environment. Actual results may differ from

estimated 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 estimates to indicate at present that a significant adjustment to carrying

amounts of assets and liabilities recognised in the consolidated financial

statements will be required in the next financial year.





1. Net sales revenue

Sales revenue of EUR 318,189 thousand (previous year: EUR 402,008 thousand)

comprises realised sales and realised contract values from the application of the

percentage-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 2014 2015

Germany 269,049 246,495

Other EU countries 118,197 60,373

Rest of Europe 14,197 9,009

Rest of world 565 2,312

402,008 318,189

Sales revenue contains EUR 5,000 thousand in connection with a major project

concluded in previous years for which the revenue recognition criteria were

satisfied for the time in 2015 (previous year: EUR 4,000 thousand).

2. Other operating income


Income from reversal of provisions 550 0

Book gains from asset disposal 287 167

Insurance reimbursements 77 84

Rental income 200 201

Sundry 2,188 3,121

3,302 3,573

3. Cost of materials


Cost of materials and supplies and purchased goods 108,679 70,355

Cost of purchased services 104,640 82,930

213,319 153,285

Notes to the Consolidated Statement of Comprehensive Income


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.

4. Personnel expenses


Wages and salaries 92,202 89,015

Social security contributions 17,462 16,075

Pension and other benefit costs 3,064 1,204

Other 1,301 929

114,029 107,223

The decrease in wages and salaries is primarily due to personnel cuts in salaried

employees (average of 83 employees) combined with an increase in wage

earners (average of 145 employees), especially outside Germany. Social security

contributions have in turn decreased. The decrease in pension and other benefit

costs chiefly stems from the addition of the provision for severance payments at

Romanian companies in the previous year.

Of the personnel expense for pensions, an amount of EUR 1,147 thousand

(previous year: EUR 1,324 thousand) relates to payments for defined contribution

plans (excluding statutory pension insurance schemes); this includes payments to

pension funds and direct insurance. In addition, EUR 7,894 thousand (previous year:

EUR 8,393 thousand) was paid out in 2015 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 2014 2015

Wage earners 1,041 1,186

Salaried employees 982 899

Employees 2,023 2,085

As at 31 December 2015, the Kraftanlagen Group employed 1,163 wage earners

(previous year: 1,247) and 890 salaried employees (previous year: 986), i. e., 2,053

employees (previous year: 2,233).


5. Other operating expenses


Losses on disposal of fixed assets 82 52

Other taxes 752 251

Cost of premises 2,165 2,152

Rental, lease and maintenance costs 8,510 7,216

Post and telecommunications 1,050 1,094

Administration costs 5,804 5,510

Marketing costs 639 484

Travel, hospitality and entertainment costs 9,783 9,426

Legal and consulting costs 4,437 2,681

Insurance 1,461 1,283

Sundry 17,153 5,387

51,836 35,536

Other operating expenses contain rental and lease expenses of EUR 5,736 thousand

(previous year: EUR 6,704 thousand) recognised through profit or loss.

The decrease in legal and consulting costs partially results from the one-off

addition to the provision for a long-term international project.

The decrease 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 in the previous year (2015: EUR 608 thousand). In addition, costs

for severance packages came to EUR 1,768 thousand (previous year: EUR

3,541 thousand).

6. Depreciation, amortisation and impairments

This item presents the depreciation or amortisation of assets on a straight-line

basis over their useful lives.

Depreciation and amortisation


Property, plant and equipment 5,366 4,927

Intangible assets 726 764

6,092 5,691

7. Finance income


Interest and similar income 558 303

Exchange gains 2,783 410

Other finance income 0 1

3,341 714



Interest and similar income include all interest income from cash and cash

equivalents and other loans. The decrease in finance income is attributable to the

fact that exchange gains were down EUR 2,373 thousand.

8. Finance costs


Interest and similar expenses 985 665

Interest expenses for pensions and similar obligations 2,695 1,827

Interest expenses arising from other provisions 101 117

Write-downs on financial assets 40 0

Exchange losses 3,487 596

Other finance costs 6 0

7,314 3,205

The decrease in finance costs is mainly due to the EUR 2,891 thousand decrease in

exchange losses and the EUR 868 thousand decrease in interest expenses for

pensions.

Interest expenses arising from other provisions contain the change in present

value of non-current provisions.

9. Income taxes


Current income taxes -8,539 -5,674

(thereof relating to other periods) (24) (837)

Deferred taxes 4,478 -66

-4,061 -5,740

The total tax expense increased year on year by EUR 1,679 thousand to EUR

5,740 thousand. This corresponds to the net amount from income from deferred

taxes (down EUR 4,544 thousand) and expenses from actual taxes (down EUR

2,865 thousand). The latter relate to the reversal of tax provisions for a long-term

international project. The comparatively higher income from deferred taxes in the

previous year mainly resulted from billed projects, which was only partially

counterbalanced by a lower increase in inventories for contracts that have not yet

been billed. Furthermore, EUR 250 thousand of deferred taxes were recognised on

tax losses of an Austrian subsidiary in the previous 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 2015 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

liabilities (previous year: 32 %).



Earnings before tax 16,061 17,536

Theoretical tax rate 32 % 32 %

Theoretical tax expense 5,140 5,612

Sources of additional/reduced expense

Differences in foreign tax rates 225 934

Tax effects on:

Tax-free income -258 -4

Non-deductible expenses 364 165

Reversal of permanent differences -1,326 -44

Offsetting of unused tax losses on which no tax assets have been recognised so far -127 -21

Subsequent recognition of tax assets on previously unrecognised unused tax losses -250 0

Effect of non-recognition of unused tax loss 0 188

Other tax expenses relating to other periods -24 -837

Other 317 -253

Effective tax expense 4,061 5,740

Effective tax rate 25 % 33 %



Notes to the Consolidated Balance Sheet and other Notes


Notes to the Consolidated Balance Sheet

10. Property, plant and equipment

The following is a breakdown of property, plant and equipment and their development

in the 2015 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 1 Jan 2015 20,633 55,398 0 76,031

Additions 51 3,779 329 4,159

Disposals 0 -2,521 0 -2,521

Exchange adjustments -5 -65 0 -70

As at 31 Dec 2015 20,679 56,591 329 77,599

Accumulated depreciation

As at 1 Jan 2015 8,342 40,734 0 49,076

Additions 502 4,425 0 4,927

Disposals 0 -2,427 0 -2,427


As at 31 Dec 2015 8,841 42,713 0 51,554

Carrying amounts as at 31 Dec 2015 11,838 13,878 329 26,045

Historical Costs

As at 1 Jan 2014 20,617 57,582 81 78,280

Additions / disposals due to a change in the basis 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


As at 31 Dec 2014 20,633 55,398 0 76,031

Accumulated depreciation

As at 1 Jan 2014 7,845 40,786 0 48,631

Additions / disposals due to a change in the basis 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 Dec 2014 8,342 40,734 0 49,076

Carrying amounts as at 31 Dec 2014 12,291 14,664 0 26,955


Other property, plant and equipment include plant and machinery with a carrying

amount of EUR 6,521 thousand (previous year: EUR 5,295 thousand) and other

equipment, furniture and fixtures with a carrying amount of EUR 7,357 thousand

(previous year: EUR 9,369 thousand). No capitalised borrowing costs are included in

additions.

11. Intangible assets

The following is a breakdown of intangible assets and their development in the

2015 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 concessions, intellectual

property and similar rights and assets and

licences in such rights and assets

Goodwill from capital consolidation Total

Historical Costs

As at 1 Jan 2015 7,496 0 8,175 15,671

Additions 444 0 0 444

Disposals -184 0 -79 -263

Assets held for sale 0 0 0 0

Exchange adjustments -1 0 0 -1

As at 31 Dec 2015 7,755 0 8,096 15,851

Accumulated amortisation

As at 1 Jan 2015 5,883 0 0 5,883


Disposals -184 0 0 -184

As at 31 Dec 2015 6,463 0 0 6,463

Carrying amounts as at 31 Dec 2015 1,292 0 8,096 9,388

Historical Costs

As at 1 Jan 2014 7,818 0 8,175 15,993

Additions/disposals due to a change in the basis of consolidation -151 0 0 -151


Disposals -442 0 0 -442

Assets held for sale -106 -18 0 -124


As at 31 Dec 2014 7,496 0 8,175 15,671

Accumulated amortisation

As at 1 Jan 2014 5,835 0 0 5,835

Additions / disposals due to a change in the basis of consolidation -149 0 0 -149


Disposals -442 0 0 -442

Assets held for sale -79 0 0 -79


As at 31 Dec 2014 5,883 0 0 5,883

Carrying amounts as at 31 Dec 2014 1,613 0 8,175 9,788



At EUR 22 thousand (previous year: EUR 23 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 included in additions.

The goodwill incurred by fully consolidated companies upon first-time

consolidation and stake increases is allocated to individual cash-generating units

to determine impairment.

Following a reorganisation of the corporate structure, the Kraftanlagen Group

distinguishes between the following six cash-generating units from 2015 onwards,

which for the most part correspond to the business units, with the exception that

three business units were combined into one cash-generating unit on account of

the interdependencies between these units:

• Energy and power plant technology, engineering and consulting as well as

fabrication and welding: planning, production, assembly, construction and

commissioning of piping systems in portions or for entire power plants;

consulting, feasibility studies, project simulation and management, concepts,

technical calculations and support, supervision; supply of machinery projects

with piping systems and components produced in-house

• Decentralised energy supply: design, planning and construction of plants for

municipal and industrial energy supply, environmental technology and fire

protection

• Underground piping construction: planning and construction of supply

networks for district heating, steam, gas and water supply services for

municipal suppliers as well as for industrial companies and power plant

operators

• Nuclear technology: services covering the entire life cycle of nuclear power

plants (planning, delivery and assembly of process systems in nuclear power

plants and research institutes)

• Industrial plants and assembly: delivery of plant engineering and piping

systems for all media, pressure and temperature ranges in the chemical and

petroleum industry

• Supply technology: systems and components of supply technology (heating,

ventilation, cooling, industrial media supply, water treatment, fire protection,

electronics, measurement, control and regulation technology, service and

maintenance)

The goodwill previously allocated to the “PGPE” unit was distributed among these

cash-generating units in accordance with the relative earnings power.

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

calculating 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 determined 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

account 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 subsequent

period, unchanging cash flows are recognised as part of prudent valuation; future

growth opportunities are disregarded. Projections are based on different

assumptions 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:

Based on October 2015, a post-tax interest rate of 6.2 % (previous year: 6.4 %) was

used to calculate the present value of future net cash inflows. Extrapolation to the

pre-tax rate that must be stated pursuant to IAS 36 results in interest rates of 9.0 %

(previous year: 9.2 %).

in EUR million Nuclear technologyDecentralised energy supply Supply technology

Industrial plants and assembly Piping construction

Energy and power plant technology,

fabrication and welding,

engineering and consulting

Average sales growth in the planning period (%) 7.9 6.1 12.1 4.0 1.6 -0.6

EBIT margin in the planning period (%) 1.9 to 4.3 5 to 4.3 5.4 to 5.6 3.3 to 3.7 2.8 to 4.9 5.5 to 6.3

Length of the planning period 4 4 4 4 4 4

Sales growth p. a. after the end of the planning period (%) 1.0 1.0 1.0 1.0 1.0 1.0

EBIT margin after the end of the planning period (%) 4.3 5.0 5.6 3.7 4.9 6.3



Goodwill has changed as follows on account of the organisational realignment and

the sale of Caliqua Anlagentechnik:

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.

A significant increase in the discount rate or a significant negative deviation of

the underlying cash flows from the forecasts would not result in the need to record

any impairment losses on goodwill.

One exception is the “nuclear technology” cash-generating unit, where the

value in use exceeds the carrying amount by EUR 4,664 thousand. A rise in the

discount rate of 0.93 percentage points would use up this excess amount.

12. Financial assets

Financial assets concern an investment in one domestic company in which a

further 26.2 % shares were acquired in the reporting year, bringing the total

shareholding to 51 % (without majority voting rights), and which was reported at

cost in accordance with IAS 39. The investment in a foreign company reported under

this item in the previous year was liquidated in the reporting year. As a result, the

carrying amount of the financial assets amounts to EUR 231 thousand (previous

year: EUR 6 thousand).

2015

in EUR thousand Value on 1 Jan Deconsolidation Impairment Reclassification Value on 31 Dec

Power Generation and Plant Engineering (PGPE) 8,175 -79 0 -8,096 0

Energy and power plant technology 0 0 0 3,557 3,557

Decentralised energy supply 0 0 0 995 995

Underground piping construction 0 0 0 387 387

Nuclear technology 0 0 0 996 996

Industrial plants and as-sembly 0 0 0 744 744

Supply technology 0 0 0 1,417 1,417

8,175 -79 0 8,096

2014

in EUR thousand Value on 1 Jan Deconsolidation Impairment Reclassification Value on 31 Dec

Power Generation and Plant Engineering (PGPE) 8,175 0 0 0 8,175


13. Financial receivables

31 Dec 2014 31 Dec 2015

in TEUR Non-current Current Non-current Current

Sundry other financial receivables 0 22,235 0 16,735

Financial receivables from the subsidiary held for sale (IFRS 5) 0 13,107 0 0

0 35,342 0 16,735

Sundry other current financial receivables include time deposits and other

investments 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 0.07 % and 0.5 %; in the previous year interest

accrued at interest rates ranging between 0.25 % and 0.63 %. In the previous year,

the receivable from the subsidiary held for sale was recognised, as the receivable

was expected to be paid in full due to the contractual arrangement.

14. Other receivables and other assets

31 Dec 2014 31 Dec 2015

in EUR thousand Non-current Current Non-current Current

Receivables from other taxes (excluding income taxes) 0 134 0 192

Prepaid expenses 0 551 0 1,963

Sundry other assets 0 1,649 6 1,297

0 2,334 6 3,452

The largest item under sundry other assets is receivables from staff members.

15. Deferred taxes

Deferred tax assets and liabilities break down as follows:

31 Dec 2014 31 Dec 2015

in EUR thousandDeferred

tax assetsDeferred

tax liabilitiesDeferred

tax assetsDeferred

tax liabilities

Property, plant and equipment 0 680 0 565

Current assets 11,799 12,563 5,634 7,159

Provisions and liabilities 11,215 29 13,128 248

23,014 13,272 18,762 7,972

The deferred tax assets of EUR 18,762 thousand (previous year: EUR 23,014 thousand)

do not contain any recognised tax reduction claims from unused tax losses. Existing

tax reduction claims were not recognised because the recovery of these unused tax

losses in accordance with IAS 12.34 et seq. could not be guaranteed with a sufficient

degree of certainty. Domestic and foreign unused tax losses for which no deferred

tax assets have been recognised consisted of an amount of EUR 1,891 thousand

(previous year: EUR 1,445 thousand) for corporation tax. The change includes the



adjustments relating to the current taxable income. The existing domestic and

foreign unused tax losses can be carried forward indefinitely. Since 2004, it has only

been possible to offset 60 % of any current taxable income exceeding EUR 1 million

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 7,972 thousand gross (previous year: EUR

13,272 thousand) were exclusively attributable to taxable temporary differences,

which primarily arose from the adjustment to uniform Group IFRS measurement

and recognition principles.

The difference between the balances of the deferred tax assets and liabilities

for the 2014 and 2015 financial years amounted to EUR 1,048 thousand (previous

year: EUR 4,891 thousand). Of this amount, EUR -1,052 thousand (previous year: EUR

-1,068 thousand) pertained to equity changes resulting from the application of IAS

19 (2011), EUR 7 thousand (previous year: EUR 8 thousand) to currency translation

effects and EUR 647 thousand in the previous year to the deconsolidation and

reclassification in accordance with IFRS 5. The remaining EUR -66 thousand was

recognised as a tax expense (previous year: tax income of EUR 4,478 thousand).

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

reporting 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 predominantly

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 pursuant 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. Outside

basis differences came to EUR 3,907 thousand (previous year: EUR 4,529 thousand),

to which deferred taxes of EUR 63 thousand (previous year: EUR 69 thousand) would

be attributable.

16. Income tax assets

EUR 190 thousand in income tax assets (previous year: EUR 823 thousand) are

current receivables due from German and foreign tax authorities

17. Inventories

in EUR thousand 31 Dec 2014 31 Dec 2015

Materials and supplies 581 773

Prepayments 3,653 1,418

4,234 2,191

Inventories were not subject to any particular disposal restrictions.


In the reporting year, impairment losses and valuation allowances for slow-

moving goods amounting to EUR 173 thousand (previous year: EUR 183 thousand)

were recorded on materials and supplies.

18. Trade receivables

31.12.2014 31.12.2015

in EUR thousand langfristig kurzfristig langfristig kurzfristig

Receivables from unbilled contracts (PoC) 0 128,992 0 176,382

less prepayments received 0 -97,790 0 -130,360

31,202 46,022

Receivables from billed contracts 0 130,661 0 120,071

Receivables from joint ventures 0 767 0 6,409

162,630 172,502

Receivables from other investees and investors 0 143 0 86

0 162,773 0 172,588

PoC receivables less prepayments received of EUR 46,022 thousand (previous year:

EUR 31,202 thousand) pertain to customer-specific construction contracts with a

debit balance in which the costs incurred including a profit mark-up exceed the

prepayments received. The sum of costs incurred as recognised under PoC

receivables (assets) and payables (liabilities) including profit shares for construction

contracts amounts to EUR 246,726 thousand (previous year: EUR 377,691 thousand).

The recognised PoC value contains no capitalised borrowing costs.

In the financial year, a total of EUR 231,864 thousand (previous year: EUR

378,611 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:

in EUR thousand

As at 1 Jan 2014 2,139

Addition recognised as an expense 1,033

Use 1,570

Reversal 23

Change in the basis of consolidation -480

Currency translation effects -1

As at 31 Dec 2014 / 1 Jan 2015 1,098

Addition recognised as an expense 4

Use 37

Reversal 522

As at 31 Dec 2015 543

As in the previous year, trade receivables as at 31 December 2015 – excluding

receivables from unbilled contracts that have not fallen due yet – were subject to

the following credit risks as at the balance sheet date:



There was no indication that valuation allowances had to be recognised on

receivables not impaired as at the balance sheet date.

19. Cash and cash equivalents

Cash and cash equivalents of EUR 62,270 thousand (previous year: EUR

73,349 thousand) related exclusively to bank deposits, in this case mainly time and

overnight deposits, 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 rating. Interest rates ranged between 0.07 % and 0.5 %

(previous year: 0.15 % and 0.68 %). The fair value of cash and cash equivalents and

short-term deposits was EUR 62,270 thousand (previous year: EUR 73,349 thousand).

On 31 December 2015, EUR 91 thousand (previous year: EUR 115 thousand) of cash

and cash equivalents was restricted.

20. Equity

Changes in consolidated equity are shown in the consolidated statement of

changes in equity.


Subscribed capital 25,000 25,000

Subscribed capital remains unchanged at EUR 25,000 thousand. The only share in

the company is held by Alpiq Deutschland GmbH, Munich.


Capital reserves 40.997 40.997

The other reserves concern equity changes without effect on profit or loss and

comprise the following items:


Currency translation differences -631 -659

Actuarial losses on the remeasurement of the net defined benefit obligation -22,178 -25,329

Deferred taxes thereon 7,075 8,127

Other reserves as at 31/12 -15,734 -17,861

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.

Past due but not impaired

in EUR thousand

Gross receivables

Valuation allowances

Net receivables

Neither past due nor impaired < 30 days 30-60 days 60-90 days 90-120 days > 120 days

2015 127,023 543 126,480 39,586 4,023 488 421 21 81,941

2014 132,526 1,098 131,428 49,758 4,515 650 695 149 75,661


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 losses on the remeasurement of the defined benefit liability

and the deferred taxes thereon. The increase in actuarial losses is primarily

attributable to the change in the original parameters during the transition in 2013

(decrease in the interest rate from 3.4 % in 2013 to 1.85 % in 2015), which is

counterbalanced by a decrease in the rate of pension increase from 2 % (2013) 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 1 Jan 56,448 59,198

Reclassification from other comprehensive income on account of deconsolidation

0 -240

Consolidated profit before distribution 12,000 11,796

Distribution -10,000 -12,000

Non-controlling interests 750 22

Net retained profit as at 31 Dec 59,198 58,776

In accordance with a resolution dated 10 December 2015, KAM made a distribution

of EUR 12,000 thousand from the net retained profit to the shareholder Alpiq

Deutschland GmbH.

The primary objective of the Group’s capital management is to ensure that it

retains its ability to repay debt in the future and remains financially sound.

Furthermore, the focus is concentrated on the maximisation of shareholder value.

Financial security is essentially maintained by a good credit rating and is controlled

based on the equity ratio, which stood at 34.1 % as at 31 December (previous year:

30.1 %).

21. 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

measurement principles of the Kraftanlagen Group. There are no non-controlling

interests in KAROM Servicii Profesionale In Industrie s.r.l. Ploiesti. The item

comprises pro rata equity (EUR 424 thousand) and the pro rata net income for the

year (EUR 22 thousand) of this company.

22. Provisions

Statement of changes in provisions:

in EUR thousand As at 1 Jan 2015 Addition Reversal Other changes * Use As at 31 Dec 2015

Provisions for pensions and similar obligations 83,485 1,486 0 3,363 -4,645 83,689

Tax provisions 7,248 5,873 -4,946 -1 -605 7,569

Other provisions 15,759 7,389 -518 117 -7,123 15,624

106,492 14,748 -5,464 3,479 -12,373 106,882

* “Other changes” include the effects from the statement of other comprehensive income, interest rates and currency effects .



Other provisions were reversed because the original grounds for recognising them

no longer apply.

Provisions 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

contractual 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 companies 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 obliged to provide benefits to current and

former employees or their surviving dependants. Benefits are measured as at the

balance 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 % 2014 2015

Discount rate 2.20 1.85

Rate of salary increase 2.70 2.70

Rate of pension increase 1.00 1.00

Expected returns are based on the average interest rate of the investment; these

were investments with matching maturities. Other projections are based on

empirical values and economic data.

The companies of the Kraftanlagen Group that enter into defined benefit

obligations are required by works agreement to adjust the ongoing payments

pursuant to Section 16(3) no. 1 of the 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:

31 Dec 2014 31 Dec 2015

in EUR thousand Non-current Current Total Non-current Current Total

Provisions for pensions and similar obligations 78,577 4,908 83,485 78,843 4,846 83,689

Tax provisions 0 7,248 7,248 0 7,569 7,569

Personnel provisions 1,137 3,328 4,465 1,498 2,431 3,929

Warranty obligations 1,204 2,483 3,687 1,099 3,141 4,240

Potential losses from pending transactions 1,381 6,226 7,607 2,247 5,208 7,455

Other provisions 3,722 12,037 15,759 4,844 10,780 15,624

82,299 24,193 106,492 83,687 23,195 106,882



Present value of the defined benefit obligation 85,730 86,296

Less the fair value of plan assets or employer’s liability insurance 2,245 2,607

Net obligation as at 31 Dec 83,485 83,689

The present value of the obligation developed as follows:


Defined benefit obligation as at 1 Jan 83,375 85,730

Interest expenses 2,756 1,876

Current service cost 175 84

Total benefits paid -4,722 -4,738

Actuarial effects from the current year 3,335 3,363

Other 811 -19

Defined benefit obligation as at 31 Dec 85,730 86,296

*) “Other” includes currency translation differences and also 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 in the previous year.

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


Value of plan assets as at 1 Jan 1,805 2,245

Return on plan assets 61 49

Employer contributions to plan assets 467 422

Other changes in plan assets -42 -93

Actuarial effects from the current year -46 -16

Value of plan assets as at 31 Dec 2,245 2,607

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 86,296 thousand (previous year:

EUR 85,730 thousand) are allocable for the most part to Germany with EUR

84,808 thousand (previous year: EUR 84,037 thousand) and Romania with EUR

1,488 thousand (previous year: EUR 1,693 thousand) 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

pension benefits; the amount of the benefits depends on the employee’s length of

service. Apart from direct pension commitments, the Kraftanlagen Group has

committed 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

parameters on the present value of the obligation and its development.




Discount rate

-0.25 2,571 2,598

+0.25 -2,442 -2,467

Estimated rate of pension increase

-0.25 -8 -40

+0.25 8 45

Life expectancy

One-year increase 3,700 3,893

One-year decrease -3,764 -3,939

The sensitivity analysis is based on changes that are possible as at the end of the

reporting period using a method that extrapolates the impact on the net defined

benefit 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 analysed separately. Interdependencies were not taken into account. In the

Kraftanlagen 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 7,569 thousand

(previous year: EUR 7,248 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 identifiable risks and other uncertain obligations.

Significant items are warranty expenses and risks, contractual risks, potential

losses from pending transactions and provisions for personnel obligations, which

include, among other things, part-time early retirement obligations 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.

23. Trade payables

31 Dec 2014 31 Dec 2015


Percentage of completion (PoC) 0 -248,699 0 -70,344

Prepayments received 0 280,821 0 101,504

0 32,122 0 31,160

Trade payables 0 21,166 0 15,567

0 53,288 0 46,727

PoC payables less prepayments received of EUR 31,160 thousand (previous year: EUR

32,122 thousand) include the recognition of the gross amount due to customers for

contract work as a liability, whereby prepayments received for these construction

contracts exceed the costs incurred including profit share.


24. Other liabilities

31 Dec 2014 31 Dec 2015


Liabilities to employees 0 12,237 0 11,740

Liabilities from other taxes (excluding income taxes) 0 9,684 0 6,008

Liabilities from social security contributions 0 797 0 698

Liabilities from finance leases 18 5 13 5

Sundry other liabilities 0 37,201 0 25,345

18 59,924 13 43,796

Other liabilities mainly comprise liabilities from payroll accounting and other taxes

and dues.

Liabilities from finance leases concern obligations under lease agreements

for the software of a telephone system. The corresponding intangible assets are

recorded in the books of a domestic subsidiary. A reconciliation of future minimum

lease payments to the recognised present values and their terms to maturity is

presented below:


Future minimum lease payments

Due in up to one year 5 5

Due in one to five years 15 11

Due in more than five years 6 4

Total 26 20

Interest portion contained in future minimum lease payments 3 2

Present value of future minimum lease payments

Due in up to one year 5 5

Due in one to five years 14 10

Due in more than five years 4 3

Total 23 18

EUR 19,913 thousand (previous year: EUR 32,335 thousand) of sundry other liabilities

relates primarily to services that have yet to be rendered for billed contracts.

25. Income tax liabilities

Income tax liabilities of EUR 2 thousand (previous year: EUR 2 thousand) comprised

deferred liabilities to domestic and foreign tax authorities pertaining to the tax

assessments for the reporting years.



26. Derivative financial instruments

The following currency forwards which were not in an effective hedging relationship

pursuant to IAS 39 existed as at the previous-year reporting date:

31 Dec 2014 31 Dec 2015

Nominalamount in TC

Market value in EUR thousand

Nominalamount in TC

Market value in EUR thousand

Swiss francs (sale) 140 -1 0 0

Derivative financial instruments are used to compensate for fluctuations in

exchange rates in the context of international transactions and financing.

27. Assets and liabilities held for sale

Due to a resolution passed by the Supervisory Board on 30 October 2014 to sell a

foreign subsidiary, in the previous year, the assets and liabilities of this company

were, pursuant to the principles of IFRS 5, recognised under the items “Assets held

for sale” and “Liabilities directly associated with assets held for sale”.

The company was sold to a company of the Alpiq Group as at 1 January 2015.

in EUR thousand 2014

Property, plant and equipment and intangible assets 299

Deferred tax assets 917

Cash and cash equivalents 879

Trade receivables 20,875

Other current assets 112

Assets held for sale 23,082


Provisions 1,097

Deferred tax liabilities 319

Trade payables 1,766

Financial liability to KAM 13,107

Sundry other liabilities 3,452

Liabilities held for sale 19,741

Net cash flow from the sale breaks down as follows:


Cash and cash equivalents from the subsidiary sold -879

Repayment of the loan as part of the sale 13,107

Sale price 3,420

Net cash flow 15,648

28. Contingent liabilities and other financial obligations

As at the reporting date, there were obligations of EUR 2,730 thousand (previous

year: EUR 3,590 thousand) from warranty agreements and EUR 552 thousand

(previous year: EUR 99 thousand) from guarantees in favour of the entities of the

operations sold in 2012; however, the buyer 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 31.12.2014 31.12.2015

Due in up to one year 6,855 6,755

Due in one to five years 6,836 11,398

Due in over five years 4 8,194

13,695 26,347

These pertain to obligations from rental and lease contracts for property and

movable assets.


Other Notes

29. 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

included in the consolidated financial statements of Alpiq Holding AG, Lausanne,

Switzerland, which are prepared in accordance with IFRSs. These financial

statements can be viewed at the company head office; in addition, they are filed

with the Swiss Exchange in Zurich.

The following business relationships exist between the Kraftanlagen Group and

related parties:

Alpiq Deutschland GmbH Alpiq Holding AG

in EUR thousand 31 Dec 2014 31 Dec 2015 31 Dec 2014 31 Dec 2015

Receivables

Trade receivables 0 0 6,224 1,963

0 0 6,224 1,963

Liabilities

Trade payables 5 5 0 187

Derivative financial instruments 0 0 1 0

5 5 1 187

Alpiq Deutschland GmbH Alpiq Holding AG

in EUR thousand 2014 2015 2014 2015

Net sales revenue 0 0 45,652 202

Other operating income 46 85 0 269

Cost of materials 0 0 -877 -9

Other operating expenses 0 0 0 -204

Finance income 0 0 0 4

Finance costs 0 0 -6 0

46 85 44,769 262



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

3,436 thousand (previous year: EUR 4,290 thousand).

Business transactions with related parties are all conducted at arm’s length

conditions.

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 2014 2015 2014 2015

Short-term remuneration 2,082 991 23 6

Long-term remuneration (pension expense) 117 55 0 0

2,199 1,046 23 6

The present value of obligations for pension commitments for former members

of the General Management and their surviving dependants totalled EUR

13,568 thousand (previous year: EUR 13,153 thousand). Payments to former members

of the General Management or their surviving dependants over the financial year

amounted to EUR 662 thousand (previous year: EUR 655 thousand).

30. 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, investing and financing activities.

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 19) recognised in the balance sheet less

current financial liabilities from bank overdrafts. Cash and cash equivalents as at

31 December comprised the following:


Cash and cash equivalents 73,349 62,270

Liabilities from bank overdrafts 0 0

Cash and cash equivalents as at 31 December 73,349 62.270



31. 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 Registered offices

GAH Pensions GmbH Heidelberg, Germany

Kraftanlagen Power Plants GmbH Munich, Germany

ECM Ingenieur-Unternehmen für Energie- und Umwelttechnik GmbH Munich, Germany

Finow Rohrsysteme GmbH Eberswalde, Germany

Kraftanlagen Hamburg GmbH Hamburg, Germany

Kraftanlagen Heidelberg GmbH Heidelberg, Germany

Kraftanlagen Energie- und Umwelttechnik GmbH Heidelberg, Germany

32. Reporting on financial instruments

Financial instruments include primary financial instruments and derivatives.

Financial 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 Dec 2015 in EUR thousand

Fair

val

ue

Hel

d f

or

tra

din

g

Ava

ilab

le fo

r sa

le

Hel

d t

o m

atu

rity

Loa

ns

an

d

rece

iva

ble

s

Hed

gin

g

rela

tio

nsh

ip

Mea

sure

d

acc

ord

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 assets 231 0 231 0 0 0 0 0 0 231 231 0

Financial receivables 16,735 0 0 0 16,735 0 0 0 0 16,735 0 16,735

Trade receivables 172,588 0 0 0 126,566 0 46,022 0 0 172,588 0 172,588

Other receivables and assets 0 0 0 0 0 0 0 0 3,458 3,458 6 3,452

Securities 0 0 0 0 0 0 0 0 0 0 0 0

Cash and cash equivalents 62,270 0 0 0 62,270 0 0 0 0 62,270 0 62,270

Derivative financial instruments 0 0 0 0 0 0 0 0 0 0 0 0

Total 251,824 0 231 0 205,571 0 46,022 0 3,458 255,282 237 255,045




Balance sheet

Liabilities as at 31 Dec 2015 in EUR thousand

Fair

val

ue

Hel

d f

or

tra

din

g

Ava

ilab

le fo

r sa

le

Hel

d to

mat

uri

ty

Loan

s an

d r

ecei

vab

les

Hed

gin

g r

ela

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

t

Financial liabilities 0 0 0 0 0 0 0 0 0 0 0

Trade payables 46,727 0 0 15,567 0 31,160 0 0 46,727 0 46,727

Other liabilities 25,363 0 0 25,345 0 0 18 18,446 43,809 13 43,796

Derivative financial instruments 0 0 0 0 0 0 0 0 0 0 0

Total 72,090 0 0 40,912 0 31,160 18 18,446 90,536 13 90,523



Balance sheet

Assets as at 31 Dec 2014in EUR thousand

Fair

val

ue

Hel

d f

or

tra

din

g

Ava

ilab

le fo

r sa

le

Hel

d to

mat

uri

ty

Loa

ns

an

d

rece

iva

ble

s

Hed

gin

g

rela

tio

nsh

ip

Mea

sure

d

acc

ord

ing

to

IAS

11

Mea

sure

d

acc

ord

ing

to

IAS

17

No

n-f

ina

nci

al

inst

rum

ent

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 25,416 0 25,416

Securities 0 0 0 0 0 0 0 0 0 0 0 0

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

Total 294,552 0 23,088 0 240,262 0 31,202 0 2,334 296,886 6 296,880



Balance sheet

Liabilities as at 31 Dec 2014in EUR thousand

Fair

val

ue

Hel

d f

or

tra

din

g

Ava

ila

ble

fo

r sa

le

Fin

anci

al li

abil

itie

s m

easu

red

at

am

ort

ised

co

st

Hed

gin

g

rela

tio

nsh

ip

Mea

sure

d

acc

ord

ing

to

IAS

11

Mea

sure

d

acc

ord

ing

to

IAS

17

No

n-f

ina

nci

al

inst

rum

ent

Tota

l

No

n-c

urr

ent

Cu

rren

tFinancial liabilities 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 18 79,665

Derivative financial instruments 1 1 0 0 0 0 0 1 0 1

Summe 110,254 1 19,741 58,367 0 32,122 23 22,718 132,972 18 132,954

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

transactions. As no other current information is available, they were measured at

amortised 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

exchange 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

relationships” and recognised directly in other comprehensive income.

Financial liabilities

In the case of current financial liabilities, it is assumed that the fair value corresponds

to the carrying amount. In the case of non-current financial liabilities, the market

value is determined by discounting expected future cash outflows. Provided 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

column outside the scope of IFRS 7.


Other liabilities

Other liabilities are partly recognised under financial liabilities measured at

amortised cost. These largely pertain to liabilities in connection with payroll

accounting. These liabilities are mostly 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

liabilities is determined by discounting future payable lease payments.

The remaining portion is attributable to items that are not to be treated as

financial instruments, e. g., tax liabilities (excluding income taxes), liabilities to

employees and deferred income. To improve reconcilability with the recognised

values, these are listed in a separate column.

Net gains or losses by measurement category:


Held for trading -6 1

Loans and receivables -1,173 -294

-1,179 -293

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

under the financial result, whereas others are reported under cost of materials for

the period.

Net losses from the category “loans and receivables” primarily relate to

exchange rate effects and valuation allowances.

Total interest income and expenses:


Total interest income 558 303

Total interest expenses -985 -665

-427 -362

Total interest income and expenses arise from financial instruments that are not

measured at fair value, mainly consisting of interest income from loans, time

deposits and bank balances. Interest expenses result primarily from bank liabilities

and guarantees.



33. Risk management systems

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.

If necessary, the Group also makes use of derivative financial instruments.

Derivative financial instruments 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

liquidity 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 before being assigned to the defined risk managers to monitor.

The Internal Audit department 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 adjusted 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 Kraftanlagen 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

contractual 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 Kraftanlagen 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 counterparties. 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

process 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

subsidiaries individually. In the event of doubtful debts, impairment losses should

be recognised in the amount of the default risk; if the debt is uncollectible, 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

covered by deposit insurance. The investments are limited in terms of 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 18.

In accordance with IFRS 7, the total carrying amount of financial assets

represents 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 2015

amounted to EUR 251,824 thousand (previous year: EUR 294,552 thousand). For a

detailed list, please refer to the table of fair values under Note 32.



Liquidity risk

Liquidity risks arise for the Kraftanlagen Group as a result of its contractual

obligations 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

requirements 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

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 December 2015. Data is based on contractual payments (not discounted).

in EUR thousand 31 Dec 2015 Due in less than one year

Due in one to five years

Due in more than five years

Trade payables 46,727 46,727 0 0

Other liabilities 25,363 25,363 0 0

Derivative outflow 0 0 0 0

Derivative inflow 0 0 0 0

72,090 72,090 0 0

Comparative figures as at 31 December 2014 are as follows:

in EUR thousand 31 Dec 2014 Due in less than one year

Due in one to five years

Due in more than five years

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

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

Kraftanlagen Group on an ongoing basis and managed through the use of derivative

financial instruments and contractual arrangements.

Price risks

Price risks arise from price trends, changes in market prices or changing correlations

between markets and products. The Kraftanlagen Group is exposed to the risk of

varying prices when procuring materials and services; 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

interest rates on the capital market: these fluctuations affect the financial position,

financial 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 December 2015 would result in an improvement (reduction) in profit for the

year of EUR 395 thousand (previous year: EUR 543 thousand). The hypothetical

change in results 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 limited 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 exchange

rate risk can have a significant impact on results.

A 5 % appreciation of the euro against the Romanian lei as at 31 December 2015

would have resulted in a EUR 279 thousand reduction (previous year: EUR

62 thousand improvement) in profit for the year; a depreciation by the same

amount would have resulted in a EUR 309 thousand improvement (previous year:

EUR 69 thousand reduction).

A 5 % appreciation of the euro against the Swiss franc as at 31 December 2015

would have resulted in a EUR 48 thousand (previous year: EUR 3 thousand)

reduction in profit for the year; a depreciation by the same amount would have

resulted in a EUR 54 thousand (previous year: EUR 3 thousand) improvement.

Kraftanlagen München GmbH Geschäftsbericht 2015 105


34. Auditor fees

Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft was engaged on 13 July 2015

to audit the annual financial statements and consolidated financial statements for

the 2015 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

auditors Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft:


Fees for audit 307 279

Fees for other services 130 524

437 803

35. Shareholdings of Kraftanlagen München GmbH and

the Group as at 31 December 2015

Company name Registered offices

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

Kraftanlagen München GmbH Munich/DE EUR 25.00 F 31 Dec

ECM Ingenieur-Unternehmen für Energie- und Umwelttechnik GmbH 1 Munich/DE EUR 0.05 100.0 F 31 Dec

FINOW Rohrsysteme GmbH Eberswalde/DE EUR 0.50 100.0 F 31 Dec

Kraftanlagen Hamburg GmbH Hamburg/DE EUR 0.77 100.0 F 31 Dec

Kraftanlagen Heidelberg GmbH Heidelberg/DE EUR 0.50 100.0 F 31 Dec

Kraftanlagen Energie- und Umwelttechnik GmbH Heidelberg/DE EUR 0.10 100.0 F 31 Dec

Kraftanlagen Power Plants GmbH Munich/DE EUR 1.00 100.0 F 31 Dec

Kraftanlagen Romania S.R.L. Ploiesti/RO RON 2.04 100.0 F 31 Dec

Kraftanlagen Romania EsA S.R.L. Ploiesti/RO RON 0.05 100.0 F 31 Dec

KAROM Servicii Profesionalein Industrie S.R.L.

Ploiesti/RORON 2.25 51.0 F 31 Dec

Kraftanlagen Serbia d.o.o. Belgrade/SE RSD 2.85 100.0 F 31 Dec

IA Tech GmbH2 Jülich/DE EUR 0.03 51.0 (50.0) NC 31 Dec

Swiss Decommissioning AG Olten/CH CHF 0.10 100.0 F 31 Dec

Other

GAH Pensions GmbH Heidelberg/DE EUR 0.26 100.0 F 31 Dec

Consolidation method

F Fully consolidated

NC Not consolidated (associate)

1 Merger of Ingenieurbüro Kiefer & Voß GmbH as at 1 January 2015

2 Equity as at 31 December 2014: EUR -39 thousand / loss for 2014:

EUR 44 thousand pursuant to local law


Company bodiesand the Auditor' s Report



Thomas Bucher

Chairman (since 31 March 2015)

CFO Alpiq Holding AG,

Lausanne, Switzerland

(since 31 March 2015)

Patrick Mariller

Chairman

Member of the Group Executive Board,

Alpiq Holding AG,


(until 30 March 2015)

Alois Bauer

Deputy Chairman

Chair of the works council of

Kraftanlagen München GmbH, Munich

(until 31 December 2015)

Michael Seis

Deputy Chairman

(since 8 April 2015)

Trade union secretary of

IG Metall, administrative office in

Heidelberg

Eva Maria Catillon

Head of Group Taxes at Alpiq Holding AG,



Hans Thomas Däpp

Member of the Executive Board at

Alpiq InTec Management AG,

Zurich, Switzerland

Giuseppe Giglio

Head Group Taxes der Alpiq

Management AG, Olten/Schweiz


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 Reithner

Head of piping construction/GSA at


Peter Schib

Lawyer,

Head of Group Legal at Alpiq Holding AG,


Ahmet Uzun

Design engineer at

Kraftanlagen Heidelberg GmbH,

Heidelberg

Alfons Weber

Head of underground piping

construction business unit at

Kraftanlagen München GmbH,

Munich

Dieter Ziehe

Company controller of


Ingolstadt

(since 1 January 2016)

36. Company bodies

Supervisory Board


Reinhold Frank

Diplom-Ingenieur (engineer) and Diplom-Wirtschaftsingenieur

(industrial engineer)

Alexander Gremm

Diplom-Ingenieur (FH) (engineer (UAS))

Friedrich Schmidt

Diplom-Ingenieur (FH) (industrial engineer (UAS))

General Management

Munich, 31 May 2016

General Management


Kraftanlagen München GmbH Geschäftsbericht 2015 109


Translation of the German audit opinion concerning the audit of the consolidated financial statements and group management report prepared in German

1271/16

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 to 31 December 2015. The preparation of the consolidated financial statements and the group management report in accordance with IFRSs 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, financial performance and cash flows 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


1271/16

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 financial position, financial performance and cash flows 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, 31 May 2016

Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft Kern Bühler Wirtschaftsprüfer Wirtschaftsprüfer [German Public Auditor] [German Public Auditor]


Kraftanlagen München GmbH, MunichBalance sheet as at 31 December 2015

in EUR thousand Notes 31 Dec 2014 31 Dec 2015

AssetsFixed assets 1

Intangible assets 1,357 986

Property, plant and equipment 15,285 13,666

Financial assets 18,541 17,043

35,183 31,695

Current assets

Inventories 2 593 8,742

Receivables and other assets 3 94,959 86,794

Cash and cash equivalents 4 90,391 77,433

185,943 172,969

Prepaid expenses 275 488

221,401 205,152

Equity and liabilitiesEquity

Subscribed capital 5 25,000 25,000

Capital reserves 6 21,975 21,975


70,639 84,636

Provisions 8 83,053 75,992

Liabilities 9 67,709 44,524

221,401 205,152

Annual Financial Statements of Kraftanlagen München GmbH


Kraftanlagen München GmbH, Munich Income statement for the 2015 financial year

in EUR thousand Notes 2014 2015

Sales revenue 12 330,024 339,120

Decrease in inventories of work in process -111,789 -122,520

Total operating performance 218,235 216,600

Other operating income 13 15,136 8,176

Cost of materials 14 -109,691 -106,402

Personnel expenses 15 -55,320 -55,864

Amortisation, depreciation and write-downs 16 -3,543 -3,002

Other operating expenses 17 -36,182 -23,495

Investment result 18 15,695 382

Interest result 19 -3,060 -2,888

Result from ordinary activities 41,270 33,507

Income taxes 20 -8,009 -7,462

Other taxes -314 -48

Net income for the year 21 32,947 25,997

Profit carryforward 717 23,664

Distribution -10,000 -12,000



General

As in the previous year, the financial statements as at 31 December 2015 were

prepared in accordance with German accounting and valuation principles and the

special provisions of the German Limited Liability Companies Act (Gesetz betreffend

Gesellschaften mit beschränkter Haftung; GmbHG).

The Company, which has its head office in Munich and is registered at the

Munich local court under the number HR B 106176, is subject to the requirements

for large corporations. In the interest 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

comparison 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 amortised 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-

balance 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

attributable value. A write-up is recognised accordingly if the reasons for a lower

attributable 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,

provided that their acquisition or production cost does not exceed EUR 150. If the

acquisition 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

shareholdings can be found in Note 24 of the notes to the financial statements.

Notes to the financial statements for the 2015 financial year of Kraftanlagen München GmbH, Munich



Current assets

Raw materials, consumables and supplies are carried at the lower of acquisition

cost or attributable value.

Work in process is valued at production cost. In addition to the direct cost of

materials, direct labour and other special direct costs, production costs include

overheads and the depreciation of fixed assets used in production. Appropriate

portions of the general and administrative expenses, expenses for welfare facilities,

voluntary welfare benefits and expenses for the company pension plan are also

included. Interest 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 realizable 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

capitalised production costs on the face of the balance sheet.

Receivables and other assets were stated at nominal value and take into

account 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 pensions.

The following assumptions in particular were used:

2014 2015

Interest rate p. a.: 4.54 % 3.89 %

Salary trend p. a.: 2.70 % 2.70 %

Measurement base trend p. a.: 2.70 % 2.70 %

Pension trend p. a.: 1.00 % 1.00 %

Turnover p. a.: 4.00 % 4.00 %

The provision for widow/widower pensions was calculated partly using the

collective 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 spouse.

In the previous year, there were provisions for special German phased retirement

agreements (‘Altersteilzeit’) calculated using actuarial principles based on the

following parameters: interest rate of 3.01 % and salary trend of 2.7 %.

Tax provisions and other provisions account for all contingent liabilities and

potential 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

Wirtschaftsprüfer; 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

realisation principle (Section 252(1) no. 4 clause 2 of the HGB) and the historical cost

principle (Section 253(1) sentence 1 of the 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 of the HGB if both the intention to hedge and the

hedging relationship 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 compensatory

valuation method (net method).

No financial instruments were used in the reporting year.

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 cost

Accumulated amortisation, depreciation and write-downs

Net book values

in EUR thousand

As

at 1

Jan

201

5

Ad

dit

ion

s

Dis

po

sals

As

at 3

1 D

ec 2

015

As

at 1

Jan

201

5

Am

ort

isa

tio

n

in y

ear

un

der

re

view

Dis

po

sals

As

at 3

1 D

ec 2

015

As

at 3

1 D

ec 2

014

As

at 3

1 D

ec 2

015

Intangible assets

Rights of use 5,939 235 41 6,133 4,582 605 40 5,147 1,357 986

Property, plant and equipment

Land and buildings 15,457 20 0 15,477 7,182 353 0 7,535 8,275 7,942

Plant and machinery 2,909 0 187 2,722 2,064 129 187 2,006 845 716

Other equipment, furniture and fixtures 33,471 477 1,690 32,258 27,306 1,915 1,642 27,579 6,165 4,679

Prepayments and assets under construction 0 329 0 329 0 0 0 0 0 329

51,837 826 1,877 50,786 36,552 2,397 1,829 37,120 15,285 13,666

Financial assets

Shares in affiliates 59,134 0 1,723 57,411 40,834 0 0 40,834 18,300 16,577

Equity investments 46 225 40 231 40 0 40 0 6 231

Loans to other investees and investors 235 0 0 235 0 0 0 0 235 235

59,415 225 1,763 57,877 40,874 0 40 40,834 18,541 17,043

Total fixed assets 117,191 1,286 3,681 114,796 82,008 3,002 1,909 83,101 35,183 31,695

2. Inventories


Raw materials, consumables and supplies 468 412

Work in process 247,937 125,416

Prepayments 125 1,312

Prepayments received on account of orders -247,937 -118,398

593 8,742

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

produce inventories, these are deducted from inventories on the face of the balance

sheet.


3. Receivables and other assets


Trade receivables 36,779 22,556

Receivables from joint ventures 559 6,096

Receivables from affiliates 56,034 57,659

Receivables from other investees and investors 34 0

Other assets 1,553 483

94,959 86,794

Receivables from affiliates mostly relates to receivables from central liquidity

management as well as receivables from intercompany deliveries and services.

These receivables are diminished by other liabilities, which are mostly the result of

profit and loss transfer agreements.

Other assets mainly relate to receivables from the sale of fixed assets.

All receivables and other assets are due within one year.

4. Cash and cash equivalents


Cash in hand 9 10

Bank balances 90,382 77,423

90,391 77,433

Cash and cash equivalents of EUR 185 thousand (previous year: EUR 325 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 Holding

AG, Lausanne, Switzerland, prepares consolidated financial statements for the

largest group of companies. These financial statements can be viewed at the

company head office; in addition, they are filed with the Swiss Exchange in Zurich.

6. Capital reserves

Capital reserves were recognised in accordance with Section 272(2) no. 4 of the HGB

and amount to EUR 21,975 thousand (previous year: EUR 21,975 thousand).



7. Net retained profit


Profit carryforward 716 23,664

Distribution from profit carryforward -716 -12,000

Net income for the year 32,948 25,997

Advance profit distribution -9,284 0

Net retained profit as at year-end 23,664 37,661

In accordance with a shareholder resolution dated 10 December 2015, EUR

12,000 thousand was distributed from the net retained profit.

8. Provisions


Provisions for pensions and similar obligations 38,475 39,143

Tax provisions 4,505 6,850

Other provisions 40,073 29,999

83,053 75,992

Kraftanlagen München GmbH grants its employees various types of company

pensions.

Covering assets of EUR 1,693 thousand (previous year: EUR 1,331 thousand) were

offset 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 reserve plus any credit balance from premium refunds (“participation

feature”). The acquisition cost of these covering assets totalled EUR 1,828 thousand

(previous year: EUR 1,457 thousand). There was therefore no restriction on

distribution in accordance with Section 268(8) of the HGB. Expenses from unwinding

the discount on pension provisions as well as the income and expenses from the

valuation of the assets offset are recorded in the financial result.

Tax provisions contain domestic and foreign taxes on income and amount to

EUR 6,850 thousand (previous year: EUR 4,505 thousand).

Other provisions of EUR 29,999 thousand (previous year: EUR 40,073 thousand)

mainly relate to obligations from outstanding remaining services for billed orders,

warranty obligations and personnel provisions.

119Kraftanlagen München GmbH Geschäftsbericht 2015

9. Liabilities


Prepayments received on account of orders 15,682 0

Trade payables 9,578 5,734

Liabilities to affiliates 34,304 34,515

Other liabilities 8,145 4,275

(thereof for taxes) (7,976) (4,132)

(thereof for social security) (0) (0)

67,709 44,524

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

comparable rights as is customary in the industry.

10. Contingent liabilities


Liabilities from guarantees 30,839 34,893

(thereof for affiliates) (30,740) (34,340)

Liabilities from warranty agreements 5,036 4,232

(thereof for affiliates) (1,446) (1,502)

35,875 39,125

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

affiliates’ liabilities to third parties is deemed to be low because of the good net

assets, financial position and results of operations.

11. Other financial obligations

in EUR thousand 31 Dec 2015thereof to

affiliates

Due in 2016 5,093 0

Due between 2017 and 2020 7,473 3

Due after 2020 6,970 0

The obligations mainly relate to rent, lease, maintenance and consulting

agreements. In the previous year, other financial obligations totalled EUR

10,714 thousand.



Notes to the Income Statement


Notes to the Income Statement

12. Sales revenue

Kraftanlagen München GmbH’s sales revenue can be categorised according to

business unit as follows:


Energy and power plant technology 184,410 217,314

Industrial plants and assembly 49,194 57,508

Supply technology 63,314 29,229

Piping construction 26,950 28,102

Sundry 6,156 6,967

330,024 339,120

The previous-year figures were adjusted from “business activity” to the new

“business units” structure to ensure comparability.

Geographically, total operating performance revenue breaks down as follows:

Germany: 82 %, Austria: 6 %, Poland: 7 %, other countries: 5 %.

13. Other operating income


Income from group services and allocations 6,603 3,916

Book gains on the disposal of fixed assets 377 1,850

Rental income 921 681

Income from currency translation 194 273

Income from reversal of provisions 3,726 186

(thereof relating to other periods) (3,726) (186)

Sundry other operating income 3,315 1,270

(thereof relating to other periods) (820) (450)

15,136 8,176



14. Cost of materials


Cost of raw materials, consumables and supplies and of purchased merchandise 45,251 52,969

Cost of purchased services 64,440 53,433

109,691 106,402

15. Personnel expenses and employees

in TEUR 2014 2015

Wages and salaries 47,512 44,367

Social security, pension and other benefit costs 7,808 11,497

(thereof for old-age pensions) (1,113) (3,270)

55,320 55,864

Headcount 2014 2015

Annual average headcount excluding trainees

Salaried employees 452 399

Wage earners 438 429

890 828

16. Amortisation, depreciation and write-downs


on intangible assets 603 605

on property, plant and equipment 2,940 2,397

(thereof write-downs on property, plant and equipment) (0) (0)

3,543 3,002

17. Other operating expenses


Rental, lease and maintenance costs 7,226 6,505

Travel, hospitality and entertainment costs 6,156 5,692

Legal, consulting and audit fees 2,758 2,841

Data processing expenses 1,357 1,313

Other administrative expenses 1,153 940

Expenses from currency translation 178 399

Losses from the disposal of fixed assets 26 30

Restructuring costs 3,425 0

Sundry other operating expenses 13,903 5,775

36,182 23,495


18. Investment result


Income from profit and loss transfer agreements 14,317 5,059

Losses absorbed from profit and loss transfer agreements -1,298 -4,677

Other income from equity investments 2,716 0

Other expenses from equity investments -40 0

15,695 382

The income and losses recognised stem from affiliates.

19. Interest result


Other interest and similar income 672 407

(thereof from affiliates) (158) (136)

(thereof income from the discounting of provisions) (0) (0)

Interest and similar expenses -3,732 -3,295

(thereof from affiliates) (-1,309) (-1,093)

(thereof expenses from unwinding the discount on provisions) (-2,013) (-1,735)

-3,060 -2,888

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 of the

HGB, as there is no interest income from the covering assets.

20. Income taxes

Kraftanlagen München GmbH (parent of the tax group for income tax purposes) is

also the taxable entity for the companies affiliated with it though profit 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

10,448 thousand relates to the reporting year. This is reduced by income tax refunds

relating to previous years of EUR 2,986 thousand.

21. Net income for the year and appropriation of profits

General Management proposes that the annual meeting resolve to carry forward

the net retained profit of EUR 37,661 thousand as at 31 December 2015 to new

account.



22. Related parties in accordance with Sec. 285 no. 21 of the 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 General Management in the financial year was EUR

1,045 thousand (previous year: EUR 1,076 thousand). Total remuneration of the

former members of General Management amounted to EUR 184 thousand in the

reporting year (previous year: EUR 1,533). Provisions for current pensions and

future pension entitlements totalling EUR 3,957 thousand (previous year: EUR

12,145 thousand) were recognised for this group of persons as at the balance sheet

date.

Remuneration of EUR 6 thousand was granted to members of the Supervisory

Board in the reporting year (previous year: EUR 23 thousand).

23. Auditor fees

For the compensation paid to the auditor Ernst & Young GmbH

Wirtschaftsprüfungsgesellschaft, Stuttgart, reference is made to the Company’s

consolidated financial statements in accordance with Section 285 no. 17 of the

HGB.

Other Notes


24. List of shareholdings of Kraftanlagen München GmbH, Munich, in accordance with Section 285 no. 11 and no. 11a of the HGB

Share of parent company in % Currency Equity 2015

Net income / net loss for 2015

I. Consolidated affiliates – Germany

1. GAH Pensions GmbH, Heidelberg 1 100

EUR thousand 260 0

2. Kraftanlagen Hamburg GmbH, Hamburg 1 100

EUR thousand 1,150 0

3. Kraftanlagen Heidelberg GmbH, Heidelberg 1 100

EUR thousand 800 0

4. Kraftanlagen Energie- und Umwelttechnik GmbH, Heidelberg 2, 3 100

EUR thousand 100 0

5. ECM Ingenieur-Unter- nehmen für Energie- und Umwelttechnik GmbH, Munich 1 100

EUR thousand 128 0

6. FINOW Rohrsysteme GmbH, Eberswalde 1 100


7. Kraftanlagen Power Plants GmbH, Munich 1 100


II. Consolidated affiliates – abroad 4

8. Kraftanlagen Romania S.R.L., Ploiesti, Rumänien 5 100

RON thousand 21,506 2,152

9. Kraftanlagen Romania EsA S.R.L., Ploiesti, Rumänien 6 100

RON thousand -1,989 -1,004

10. Kraftanlagen Serbia d.o.o., Belgrad, Serbien 7 100

RSD thousand -2,848 -41,711

11. KAROM Servicii Profesio-nal in Industrie S.R.L., Ploiesti, Rumänien 6 51

RON thousand -4,110 -205

12. Swiss Decommissioning AG, Olten, Schweiz 2 100 TCHF 59 -41

III. Equity investments

13. IA Tech GmbH, Jülich 7 51EUR

thousand -25 -44

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 / net loss for 2014



Boards of Kraftanlagen München GmbHand the Auditor`s Report


Thomas Bucher

Chairman (since 31 March 2015)

Head of Financial Services / CFO

of Alpiq Holding AG, Lausanne,

Switzerland


Patrick Mariller

Chairman

Member of the Executive Board

of Alpiq

Holding AG, Lausanne, Switzerland


Alois Bauer

Deputy Chairman

Deputy chair of the works council of


(until 31 December 2015)

Michael Seis

Deputy Chairman

(since 8 April 2015)


administrative office in Heidelberg

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


administrative office in Waiblingen

Dr. Bernt Paudtke

Lawyer at the law firm Görg

Rechtsanwälte, Munich

Peter Reithner

Head of piping construction/GSA at


Peter Schib

Rechtsanwalt, Leiter Group Legal der

Alpiq Holding AG, Lausanne/Schweiz

Ahmet Uzun

Lawyer, head of the legal group at

Alpiq Holding AG, Lausanne,

Switzerland

Alfons Weber

Head of the underground piping

construction business unit,


Dieter Ziehe

Company controller of


Ingolstadt

(since 1 January 2016)

25. Boards of Kraftanlagen München GmbH, Munich

Supervisory Board



Reinhold Frank

Diplom-Ingenieur (engineer) and Diplom-Wirtschaftsingenieur

(industrial engineer)

Alexander Gremm

Diplom-Ingenieur (FH) (engineer (UAS))

Friedrich Schmidt

Diplom-Ingenieur (FH) (industrial engineer (UAS))

General Management

Munich, 31 May 2016

General Management



Translation of the German audit opinion concerning the audit of the financial statements and management report prepared in German

1200/16

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 of Kraftanlagen München GmbH, Munich, for the fiscal year from 1 January to 31 December 2015. 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 Code] 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 net assets, financial position and results of operations in the annual 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

Kraftanlagen München GmbH Geschäftsbericht 2015130


1200/16

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, 31 May 2016

Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft Kern Bühler Wirtschaftsprüfer Wirtschaftsprüfer [German Public Auditor] [German Public Auditor]


Photo credits

Jülich (cover photo):): DLR/Lannert

KAM General Management (Page 6): W. Weber

Gelsenkirchen-Scholven (Pages 10–11): BP Europa SE

Moerdijk (Pages 12–13): Attero

Kiel (Pages 14–15):

Stadtwerke Kiel AG / Luftbildservice Bernot

Mannheim (Pages 16–17): GKM

Biblis (Pages 18–19): H2O GmbH

Saarlouis (Pages 20–21): KA Hamburg

Salzburg (Pages 22–23): KA München

Lichterfelde (Pages 24–25): mit freundlicher Genehmigung

von Iberdrola Ingenieria y Construccion S.A.U

Portrait Bucher (Pages 26): Alpiq

Image Jülich (Pages 29): A. Herrmann

Kraftanlagen München GmbH

Ridlerstraße 31 c

80339 München

Germany

www.kraftanlagen.com

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