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Annual Report 2014
The BAUER Group is an international construction and machinery manufacturing
concern based in Schrobenhausen, Bavaria. The stock market-listed holding
company BAUER Aktiengesellschaft is the parent of more than 110 subsidiary
businesses across its Construction, Equipment and Resources segments. Bauer
is a leader in the execution of complex excavation pits, foundation and vertical
seals, as well as in the development and manufacture of related machinery for
this dynamic market. The Group also deploys its expertise in the exploration,
mining and safeguarding of valuable natural resources. In 2014 the companies
of the BAUER Group employed some 10,400 people in around 70 countries and
achieved total Group revenues of EUR 1.56 billion.
Passion for progress –
The origins of Bauer date back as far as 1790, and still today the company's
success is founded on highly flexible application of the specialist know-how it
has built up over those many years. As an innovator and technology leader,
Bauer has played a major role in the advancement of the international specialist
foundation engineering industry and related busniess fields. Indeed, today Bauer
is also the world market leader in the manufacture of the relevant machinery. It is
with just such innovative strength and a keen focus on the challenges of the future
that the Group is also developing its recently established Resources segment.
The Group at a glance
GROUP KEY FIGURES 2011 – 2014
IFRS in EUR million 2011 2012 2013 ** 2014 Change
2013/2014
Total Group revenues 1,371.8 1,435.8 1,504.2 1,560.2 3.7 %
of which Germany 370.3 378.6 410.4 440.2 7.3 %
International 1,001.5 1,057.2 1,093.8 1,120.0 2.4 %
International in % 73.0 73.6 72.7 71.8 n/a
of which Construction 606.6 655.2 741.7 713.0 -3.9 %
Equipment 636.5 589.1 628.6 651.8 3.7 %
Resources 211.5 262.8 188.9 252.8 33.9 %
Other/Consolidation -82.8 -71.3 -55.0 -57.4 n/a
Consolidated revenues 1,327.1 1,376.1 1,447.5 1,506.0 4.0 %
Sales revenues 1,219.6 1,344.4 1,402.2 1,375.7 -1.9 %
Orders received 1,506.9 1,470.8 1,484.5 1,557.7 4.9 %
Orders in hand 750.0 785.0 765.2 762.7 -0.3 %
EBITDA 164.5 163.8 124.0 171.0 37.9 %
EBITDA margin in % (of sales revenues) 13.5 12.2 8.8 12.4 n/a
EBIT 82.3 72.0 30.1 76.4 n/a
EBIT margin in % (of sales revenues) 6.7 5.4 2.1 5.6 n/a
Net profit or loss 34.1 25.8 -19.4 15.7 n/a
Capital investment in property, plant and equipment 96.6 96.4 91,9 64.1 -30.3 %
Shareholders’ equity 461.0 462.5 419.8 418.9 -0.2 %
Equity ratio in % 30.9 30.2 26.5 26.6 n/a
Net assets 1,491.1 1,529.4 1,585.8 1,575.1 -0.7 %
Earnings per share 1.86 1.44 -0.99 0.85 n/a
Distribution 8.57 5.14 0.00 2.57* n/a
Dividend per share in EUR 0.50 0.30 0.00 0.15* n/a
Return on equity after tax in % 7.7 5.6 -4.2 3.7 n/a
Employees (on average over the year) 9,646 10,253 10,264 10,405 1.4 %
of which Germany 4,065 4,090 4,144 4,158 0.3 %
International 5,581 6,163 6,120 6,247 2.1 %
At variance with the consolidated revenues presented in the Group income statement, the total Group revenues
presented here include portions of revenues from associated companies as well as revenues of non-consolidated
subsidiaries and joint ventures.
* Proposed; subject to the consent of the Annual General Meeting to be held on June 25, 2015
** Previous year adjusted; see notes on page 106
DEVELOPMENT OF TOTAL GROUP REVENUES BY SEGMENT
in EUR million
2011 1,372
2012 1,436
2013 1,504
2014 1,560
Construction Equipment Resources
GR
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>>>
CONSTRUCTION SEGMENT KEY FIGURES
in EUR '000 2013 * 2014 Change
Total Group revenues 741,673 713,005 -3.9 %
Sales revenues 657,456 634,096 -3.6 %
Orders received 727,287 665,244 -8.5 %
Orders in hand 498,701 450,940 -9.6 %
EBIT 21,209 25,068 18.2 %
Net profit or loss 5,472 1,858 -66.0 %
Employees (on average over the year) 5,531 5,675 2.6 %
EQUIPMENT SEGMENT KEY FIGURES
in EUR '000 2013 * 2014 Change
Total Group revenues 628,612 651,772 3.7 %
Sales revenues 561,615 545,223 -2.9 %
Orders received 632,053 693,967 9.8 %
Orders in hand 116,525 158,720 36.2 %
EBIT 32,223 36,917 14.6 %
Net profit or loss 5,055 9,513 88.2 %
Employees (on average over the year) 2,998 3,038 1.3 %
RESOURCES SEGMENT KEY FIGURES
in EUR '000 2013 * 2014 Change
Total Group revenues 188,861 252,830 33.9 %
Sales revenues 182,579 195,860 7.3 %
Orders received 180,054 255,837 42.1 %
Orders in hand 150,020 153,027 2.0 %
EBIT -23,965 15,932 n/a
Net profit or loss -31,444 4,347 n/a
Employees (on average over the year) 1,449 1,400 -3.4 %
* Previous year adjusted; see notes on page 106
BAUER Aktiengesellschaft Annual Report 2014
2 Management Board of the Company
4 Foreword
6 Milestones in the Company's History
8 The World is our Market
10 Highlights 2014
12 Mission and Strategy
15 Combined Management Report
82 The Bauer Share
84 Corporate Governance Report
88 Report of the Supervisory Board
91 Balance Sheet and Income Statement
of BAUER Aktiengesellschaft
in accordance with HGB
95 Consolidated Financial Statements
in accordance with IFRS
180 Assurance by the legal representatives
181 Auditors' Report
182 Glossary
184 Imprint
2
Management Board of the Company
PROF. DR.-ING. E.H. DIPL.-KFM. THOMAS BAUER
(CHAIRMAN)
Prof. Thomas Bauer (born 1955) heads the Participations in
Subsidiaries, Financial Reporting, Planning and Controlling
functions on the Management Board of BAUER Aktien gesell-
schaft.
After studying business economics at the Ludwig Maximilian
University in Munich, he worked in the USA. He joined the
family company in 1982. In 1986 he became sole managing
director of BAUER Spezialtiefbau GmbH and since 1994 he
has been Chairman of the Management Board of BAUER
Aktiengesellschaft.
Prof. Thomas Bauer is President of the German Construction
Industry Confederation, Vice-President of the Confederation
of German Industry (BDI) and Vice-President of the Confed-
eration of Bavarian Industry (vbw) − the Bavarian business
association. He is an honorary professor of the Technical
University in Munich.
Supervisory Board mandates:
• BAUER Spezialtiefbau GmbH, Schrobenhausen
(chairman) ¹
• BAUER Maschinen GmbH, Schrobenhausen
(chairman) ¹
• BAUER Resources GmbH, Schrobenhausen ¹
• SCHACHTBAU NORDHAUSEN GmbH, Nordhausen
(chairman) ¹
• BAUER EGYPT S.A.E., Cairo (chairman) ¹
¹ Supervisory Board mandate within the Group
² Membership of Supervisory Boards or comparable controlling committees of businesses in Germany and abroad according to Section 285 No. 10
of the German Commercial Code (HGB)
3MANAGEMENT BOARD OF THE COMPANY
DIPL.-BETRIEBSWIRT (FH) HARTMUT BEUTLER
Hartmut Beutler (born 1957) is responsible for the Finance,
Legal Affairs and Insurance, and Facility Management functions
on the Management Board of BAUER Aktien gesellschaft.
He studied business economics (specializing in the construction
industry) at Biberach University of Applied Sciences and joined
BAUER Spezialtiefbau GmbH as a trainee in 1983. He later
became deputy head of the company's Accounting depart-
ment and assistant to the Management Board. After working
as head of IT, Facility Management, Legal Affairs and Insurance
at BAUER Spezialtiefbau GmbH, as well as being a company
"Prokurist" (holder of power of attorney), Hartmut Beutler was
appointed to the Management Board of BAUER Aktiengesell-
schaft in 2001.
Supervisory Board mandates:
• BAUER Resources GmbH, Schrobenhausen ¹
• Schrobenhausener Bank e.G. (chairman) ²
DIPL.-ING. HEINZ KALTENECKER
Heinz Kaltenecker (born 1951) is responsible for Partici-
pations in Subsidiaries as well as the Human Resources
and Information Technology functions on the Management
Board of BAUER Aktiengesellschaft. He is also the Labor
Relations Director.
After studying civil engineering at the Technical University
of Karlsruhe, he joined BAUER Spezialtiefbau GmbH in 1978.
He has held a number of senior management posts, including
being managing director of BAUER Spezialtiefbau GmbH
from 2001 to 2007. Heinz Kaltenecker was managing director
of BAUER Resources GmbH from 2007 to 2010. He has
been a member of the Management Board of BAUER Aktien-
gesellschaft since 1997. Heinz Kaltenecker is a board mem-
ber of the German Geotechnical Society and a member of
the Large Construction Companies subcommittee of the
German Construction Industry Confederation.
Supervisory Board mandates:
• BAUER Spezialtiefbau GmbH, Schrobenhausen ¹
• BAUER Maschinen GmbH, Schrobenhausen ¹
• BAUER Resources GmbH, Schrobenhausen (chairman) ¹
• SCHACHTBAU NORDHAUSEN GmbH, Nordhausen ¹
4
Foreword
Dear Shareholders, Partners and Friends of our company,
Ladies and Gentlemen,
In 2014 despite a great deal of turbulence in our markets, we succeeded in achieving our revenue targets. With total Group
revenues of EUR 1.56 billion, we exceeded the previous year's value by 3.7 %. This was not an easy matter, given the numerous
disturbances to our business. We are all the more grateful to our employees for their magnificent work which enabled us to meet
this target.
Over the past decades, our Group has pursued a strategy of increasing internationalization, thereby creating a significant
advantage for itself: we are at home throughout the world. In this way, we can compensate for fluctuations in construction
markets, which are frequently volatile, and develop the Group in a steady manner. Unfortunately, it is sometimes the case that
problems concentrate in different regions to such an extent that we are excessively impacted for a period of time. In that case,
our broad base may also have a detrimental effect temporarily. Nevertheless, we remain totally convinced that our international
presence represents a major advantage in the medium and long terms.
What were the turbulent influences last year? First and foremost, we should identify the conflict in Ukraine that has triggered a
new misunderstanding between Russia and the Western world. The events in eastern Ukraine, sanctions and counter-sanctions
have imposed significant restrictions on business relationships. For our company, that means a severe decline in demand for
our machines especially in Russia.
In Syria and Iraq the Islamic State terrorist group has expanded. For a time, it seemed that the Western world would not be
able to overcome this threat. This situation triggered uncertainty in the neighboring countries, placing further obstacles in the
path of their development. There is no prospect for improvement anytime soon, as a result of which individual markets have
been lost as far as our construction activities are concerned.
From mid-2014 onwards, the oil price came under significant pressure. This will pose problems to Germany as an industrial
location. Although people will be able to fill their fuel tanks for less money, the growth in consumption thus triggered is unlikely
to be able to compensate for expected sales problems to the oil-producing states which are affected by the price drop. The
business prospects for German industrial companies such as ours would worsen if fewer investments were made in these
countries.
In China, the market for construction machinery has slipped totally out of kilter in recent years. As a result of exaggerated
growth expectations for the construction market there, local manufacturers of construction machinery built up enormous
surplus capacity. The equipment produced was then dumped on the markets by means of questionable financing solutions.
Many construction companies could no longer afford the payments, as a result of which large stocks of returned machines
have built up. On the other hand, we were satisfied with our production and sales in China, as we concentrated on large and
special machinery.
It is pleasing to see that many markets are still positive, such as the Far East, or have come back again, such as in the Middle
East. As a result, we succeeded in increasing our revenues in spite of the difficulties.
However, we were unable to achieve the targets for profit after tax that we set in April 2014. In the USA, we did not succeed
in achieving the expected improvement in the major Center Hill Dam project. We had to report significant losses again as a
result of further delays. In the Resources segment, we reorganized the structures and some subsidiaries, as well as closing
5FOREWORD
sites and terminating business. This had an additional detrimental effect on our results. In addition to these factors, one of our
large subsidiaries was fined by the Federal Cartel Office. All in all, this produced a significantly negative result. By means of a
non-operative one-time income, the last predicted profit after tax was able to be achieved nevertheless, with EUR 15.7 million.
The one-time income derives from the sale of shares in our subsidiary in Oman that was built up over recent years and is active
with long-term projects in the environmental area.
In addition to making significant efforts to deal with all these topics, we also devoted a great deal of work during the past year
to preparing the company to face the future even more effectively. A cost-cutting program was implemented in all parts of the
company, which will continue to have positive effects in the future as well. All major investments in our plants were able to be
completed, as a result of which the full attention of our management team is concentrated on markets, products and commercial
processes. This will give us stability for the future in a continuing volatile environment.
The successes of the past year mean that we are looking to the future with confidence. In the area of deep drilling rigs, the
engineering contract agreed in May 2014 with Saxon Energy Services Inc. resulted in the order of two 375 ton rigs in December.
This will present great opportunities in the future as well. Additionally, a sales contract was signed for two already completed
rigs. In the Construction segment, we successfully completed some unique reference projects in the form of the foundation
work for what will be the tallest buildings in the world and Europe, as well as a section of the bridge between Hong Kong and
Macau. In Equipment, many new and continuing developments are improving our chances of selling machines.
Without doubt, years such as 2013 and 2014 are by no means simple for a company and its workforce. Nevertheless, we are
aware of our strengths that will allow us to make significant progress in future. The successes we were able to achieve last
year in spite of great turbulence have confirmed our confidence in our plans for the future. Our company is firmly embedded
in the market of more than 70 countries in the world. The construction processes, equipment and many other activities are
excellently developed, and our company infrastructure has been expanded to a very high level. All stores and service centers
worldwide are networked with one another, and with their functions and flexibility they can meet the complex demands of our
construction operations and our machine customers with outstanding effectiveness.
The current significant fluctuations in markets are not very pleasant for us. However, we can compensate for them well with
our worldwide presence, giving us the opportunity to carry out interesting projects time and time again in diverse regions.
Overall, we see many opportunities in the market, as a result we are planning further growth for 2015.
It is important for us to express our thanks to all our employees, shareholders, customers and partners for the loyalty and
support they provided during the past year. 2014 was characterized not only by successes but also many disappointments,
specifically the development in our share price. We are making intensive efforts to grow the value of the company again. Our
employees in about 80 countries of the world and the entire management team are working with total commitment on bringing
the full strength of the company to bear again.
Sincerely,
Prof. Thomas Bauer
6
Milestones in the Company's History
1958
- Invention of the injection anchor on the construction site of
the Bayrischer Rundfunk building in Munich
1969
- First anchor drilling rig UBW 01
1972
- Construction of the new head office administration block
1975
- First contracts in Libya, Saudi Arabia and the United Arab
Emirates
1976
- First heavy-duty rotary drilling rig BG 7
1984
- Work complex West begins operations; manufacture and
deployment of the first trench cutter
1902
- Drilling of an artesian well for Schrobenhausen railway
station
1928
- Dipl.-Ing. Karl Bauer constructs the Schrobenhausen water
supply system; construction of wells and water pipes
throughout Bavaria
1948
- First works on Wittelsbacherstrasse
1840
- Copper cladding for the steeple roof of St. Jakob's church
in Schrobenhausen
1900
- Start of well drilling by Andreas Bauer
1790
- Sebastian Bauer acquires a coppersmith's shop in the
center of Schrobenhausen; in the 19th century, subse-
quent Bauer generations were engaged in copper work-
ing, primarily for breweries and domestic households
1956
- Dr.-Ing. Karlheinz Bauer, a shareholder in the company
since 1952, becomes sole managing director; construction
of a first office building in Wittelsbacherstrasse
Dipl.-Ing. Karl Bauer (left) turned the company into
an industrial well builder known throughout Bavaria.
Dr.-Ing. Karlheinz Bauer (center) led the company onto
the international stage, taking it into the field of specialist
foundation engineering and launching equipment manu-
facturing operations. Prof. Dr. Dipl.-Kfm. Thomas Bauer
shaped the current global Group, with a network of
operations on every continent.
1790 – 1948 1956 – 1984
7MILESTONES IN THE COMPANY'S HISTORY
1986
- Prof. Thomas Bauer becomes sole managing director
of BAUER Spezialtiefbau GmbH and drives forward the
international growth of the Group
1990
- Founding of BAUER und MOURIK Umwelttechnik GmbH
and of SPESA Spezialbau und Sanierung GmbH
1992
- Takeover of SCHACHTBAU NORDHAUSEN GmbH
2007
- Founding of BAUER Resources GmbH, entailing a
restructuring of the mining and environmental business;
market launch of the three new segments: Construction,
Equipment and Resources
2008
- Expansion of machinery manufacturing capacities in
Aresing and Nordhausen as well as in Tianjin and
Shanghai, China
2009
- The BAUER Group completed the largest investment
program in the company's history: new administration
building in Schrobenhausen, Edelshausen plant,
machinery manufacturing plant in Conroe, Texas, USA
2011
- The first deep drilling rig is sold to South America;
construction of an underwater drilling rig and successful
deployment of it for a tidal turbine off the coast of Scotland
2012
- During the year, the Group's global workforce topped the
10,000 mark for the first time
2013
- Bauma Innovation Prize for an underwater drilling technique
2014
- Execution of the Schwarzkopf Tunnel bypass railway
project in Lower Franconia, the largest project signed in
Germany to date
1986 – 2006 2007 – 2014
1994
- Founding of BAUER Aktiengesellschaft
1998
- Takeover of KLEMM Bohrtechnik GmbH
2001
- BAUER Maschinen GmbH becomes independent company
2002
- Purchase of large machinery manufacturing facility in Aresing
2003 – 2005
- Specialist companies in a variety of fields are acquired
and integrated into the BAUER Group: FWS Filter- und
Wassertechnik GmbH; PRAKLA Bohrtechnik GmbH;
TracMec Srl, Imola, Italy; Pileco, Inc., Houston, Texas, USA
2006
- BAUER AG is listed on the stock market
8
The World is our Market
OVER 110 GROUP COMPANIES
IN MORE THAN 70
COUNTRIES
EUR 1.56 BILLION TOTAL
GROUP REVENUES
10,405 EMPLOYEES FROM 76 NATIONS
9THE WORLD IS OUR MARKET
Construction
Equipment sales
Resources
Equipment production locations
28 PRODUCTION FACILITIES
and many other service centers and construction yards
10
Schwarzkopf Tunnel bypass
Heigenbrücken/Hain i. Spessart,
Germany – In the middle of the
Spessart hills, BAUER Spezialtiefbau
GmbH worked on its biggest ever con-
struction site in Germany from January
to December 2014. In a joint venture,
it carried out the special foundation
work for a new section of the railway
line between Würzburg and Frankfurt.
As part of this, the existing passage
through the Schwarzkopf Tunnel is to
be replaced.
This Schwarzkopf Tunnel is 160 years
old, and is showing its age. ICE trains
can only pass through it at a maximum
speed of 70 km/h. Freight traffic even
requires a second locomotive due to
the steep gradient. As a result, the line
is now being leveled, and this requires
construction of four new tunnels.
The work by Bauer Spezialtiefbau on
the order worth about EUR 43 million
includes the portion of the tunneling
that is not done by mining methods,
but using the open construction
method in several sections over a
length of 2,800 m. In order to prepare
for the mining tunnel work, Bauer
excavated portal pits and shotcrete
walls with a height of up to 30 meters
for a total of ten tunnel entrances and
exits. In addition, there is work such
as soil nailing along the existing tracks
or pile foundations for railway embank-
ments. Several BG 28 and BG 40 rigs,
as well as anchor drilling rigs are being
employed. The main part of Bauer
Spezialtiefbau's work will be completed
in fall 2015.
Longest sea bridge in the world
Hong Kong, China – The special
foundation work subsidiary BAUER
Hong Kong Ltd. was involved in con-
struction of the Hong Kong-Zhuhai-
Macau bridge from April 2013 to
December 2014. It is the world's
longest bridge over open water, and is
currently being built in the Pearl Delta.
The 50 km long connection between
the cities of Hong Kong, Macau and
Zhuhai completes the southern ring
section of a gigantic infrastructure
measure.
Bauer Hong Kong was contracted
by the joint venture, Dragages-China
Harbour-VSL, to manufacture offshore
bored piles for the Hong Kong Link
Road, a ten km long section from the
border between China and Hong Kong
as far as Hong Kong International
Airport. The piles with 2,300 and
2,500 mm diameter are up to 115 m
long, and have been embedded into the
rock to a depth of two to five meters.
Bauer Hong Kong had to undertake all
the work for the EUR 72 million project
from the water – a particular challenge.
Five BG 40 rotary drilling rigs were used
– four of them were custom-built with an
extended mast and larger main winches.
They were transported by ship to steel
platforms, each of which is just large
enough for one rig. In addition, there
were pontoons for four bentonite plants,
300 ton cranes and accessories.
Replacement bore in Coswig
Coswig, Germany – BAUER Umwelt
GmbH carried out a replacement
bore for a customer in Coswig near
to Dresden, from November 2013
to May 2014. Severe contamination
of the ground and groundwater had
been identified on the site of a former
tarpaper factory.
The contaminated soil excavated using
the large bore hole method was placed
in gas-tight containers for transport
to the Hirschfeld soil treatment center
and to disposal sites. A total of about
45,000 tons of soil material were
disposed of. In addition, the water
pumped out was treated in a specially
installed water treatment plant.
Highlights 2014
11HIGHLIGHTS 2014
A BG 40 rig with a large bore diameter
of 2,000 mm was used. More than 400
bores were drilled down to a drilling
depth of 17 m.
The large bore hole method is practically
vibration-free, which means it can be
employed in the immediate vicinity of
sensitive buildings. This fact, combined
with the short construction period,
offered the advantage that production
by the company on site as well as
at neighboring companies was only
inconvenienced to a minor extent.
In-house exhibition 2014
Schrobenhausen, Germany – The
in-house exhibition held from 10 to
13 May in Schrobenhausen proved to
be a veritable highlight. Over four days,
more than 1,700 guests from over
70 countries visited the event to find
out about the innovations and equip-
ment from BAUER Maschinen GmbH
and its subsidiaries.
The large machines were presented
in the courtyard of the head office: the
PremiumLine of the heavy-duty rotary
drilling rigs was represented by three
BG's and the ValueLine by the bestsell-
er BG 26 as well as by a new BG 11 H.
With its compact dimensions and low
weight, it permits easy transport which
makes it particularly appealing for the
oil and gas industry. Bauer Maschinen
presented its 100th MC duty-cycle
crane in the form of the MC 96 – in
combination with a massive Leffer
VRM 3000 casing oscillator. The sub-
sidiaries were also represented by
many interesting innovations.
In the "Old Welding Shop", visitors
were able to find out about further
offers and services. The live presenta-
tions on the plant premises in Aresing
proved to be a particular draw. It was
possible to observe tried-and-tested
machine technology and new develop-
ments in application. Once again on
this occasion, the Bavarian evening
proved to be a highlight and has been
appreciated by customers from far-off
countries for several years now.
Deep drilling rigs sold
Edelshausen, Germany – BAUER Deep
Drilling GmbH, the subsidiary of the
BAUER Group that is specialized in
deep drilling, signed an agreement with
Saxon Energy Services Inc. in Decem-
ber 2014 for the manufacture and sale
of two ATD 750 deep drilling rigs.
Saxon Energy Services Inc. is an
international drilling company and is a
fully owned subsidiary of Schlumberger,
the world's largest oilfield service com-
pany. The rigs are the result of a joint
development process for a new series
of deep drilling rigs, which began in May
2014 on the basis of an engineering
contract signed at the time.
Additionally, a sales contract was signed
for the two already completed TBA
300/440 M1 and TBA 440 M2 deep
drilling rigs. Already in 2009, BAUER
Maschinen GmbH decided to open
up a new business area with the deep
drilling division. In 2011, the first TBA
300 deep drilling rig was delivered to a
customer in Venezuela. This product
range has already been expanded with
several developments.
More information:
http://www.bauer.de/
en/bauer_group/world
12
>>> Target: ~ 40 percent of total Group revenues
>>> Market leader in specialist foundation engineering
machinery and equipment
>>> New products for mining, deep drilling and offshore
drilling
>>> 80 percent of sales generated outside of Germany
>>> Multi-branding strategy
Mission and Strategy
OUR MISSION
SERVICES, EQUIPMENT AND PRODUCTS DEALING
WITH GROUND AND GROUNDWATER
>>>
13MISSION AND STRATEGY
>>> The world is our market
>>> World market leadership in specialist foundation
technologies
>>> Powerful development of drilling techniques
and applications for related markets such as
environment, water and natural resources
>>> Target: ~ 20 percent of total Group revenues
>>> Activities in environmental technology, mining,
deep drilling, well construction, materials
>>> Target: ~ 40 percent of total Group revenues
>>> Global provider of specialist foundation engineering services
>>> Specialist construction services
>>> Focus on complex international projects
>>> Optimization of worldwide organizational structures
and of the Group's self-managed business units
>>> Annual growth from 3 to 8 percent
OUR STRATEGY
15
In Abu Dhabi, BAUER Spezialtiefbau GmbH carried out the foundation work for an offi ce and commercial building. A 1 m thick
diaphragm wall was built and piles with diameters of 750 mm and 900 mm were drilled.
The Group
Group structure
Corporate Governance and control system
Business Report
Macro-economic trend
Course of business
Trend by Segment
Construction segment
Equipment segment
Resources segment
Other/Consolidation segments
Earnings, financial and net asset position
Trend in orders
Group earnings position
Group financial and net asset position
Financial Statements of BAUER Aktiengesellschaft
Sustainability
Sustainability within the BAUER Group
Employees
Capital Investments
Research and Development
Health Safety Environment (HSE)
Quality
Legal disclosures
Remuneration Report
Statutory disclosures regarding takeovers
Follow-up Report
Risk and Opportunity Report
Risk Report
Opportunity Report
Forecast Report
Combined Management Report
17
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40
45
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46
49
54
55
55
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57
58
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61
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63
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77
I.
II.
III.
IV.
V.
VI.
VII.
VIII.
IX.
X.
17
GROUP STRUCTURE
The products and services of the BAUER Group, based
in the Bavarian town of Schrobenhausen, are focused on
the ground and groundwater fields. The Group’s three seg-
ments – Construction, Equipment and Resources – operate
more than 110 subsidiary companies in some 70 countries
worldwide.
The Construction segment carries out all the established
methods and techniques of specialist foundation engineering
all over the world. These include creating complex excavation
pits, foundations for large infrastructure projects and buildings,
cut-off walls and ground improvements. It also carries out
other specialist construction activities, including civil engi-
neering and remediation works.
The Equipment segment develops and produces equipment,
tools and machines for specialist foundation engineering and
other underground drilling operations, such as mines, wells,
geothermal energy, oil and gas. In addition to its headquarters
in Schrobenhausen, the Equipment segment operates a global
distribution network, as well as additional production facilities
in Germany, China (Shanghai and Tianjin), Malaysia, Russia
(at two locations), Italy, Turkey and the USA, among other
locations. With exports accounting for around 80 percent of
its total sales, BAUER Maschinen GmbH is the world market
leader in specialist foundation engineering equipment.
The Resources segment is focused on products and services
in the areas of water, environment and natural resources.
BAUER Resources GmbH is the holding company of the
business segment, under the umbrella of which the subsidiaries
operate as full-service providers with their focus on environ-
mental technology, water and natural resources for industrial
customers.
BAUER Aktiengesellschaft is the holding company of the
Group, and is listed on the Frankfurt Stock Exchange.
BAUER AG provides central management and service
functions for its affiliates. These specifically include human
resources, accounting, finance, legal and tax affairs, IT, facility
management, and health, safety and environment (HSE).
CORPORATE GOVERNANCE AND CONTROL SYSTEM
The principal task of the Management Board of BAUER AG
is the strategic management of a global group of companies.
As part of central strategies, goals and regulations, the main
companies in the three operating segments – Construction,
Equipment and Resources – develop their own detailed
strategies which are converged at holding company level and
integrated into the strategic corporate planning process.
The development and implementation of a self-managing
organizational structure with decentralized business units
unburdened by complex decision-making hierarchies is the
primary characteristic of corporate governance within the
BAUER Group. The managers of those Group companies
operate under their own responsibility, and are provided with
a large degree of independence within the framework of the
corporate strategy in determining how their business units
progress.
The autonomous management of the individual operating
business units is constrained by framework guidelines and
standards laid down in the Group and subsidiary Corporate
Management Manuals. The principles of proper conduct,
including adherence to our ethical and moral standards,
are defined by an ethics management and values program
covering all the companies of the BAUER Group, backed by
corporate management guidelines and a code of conduct
imposed on our employees, among other measures.
Systems and departments handling central functions assist
in implementing standard processes and support the work
of the operating units by providing the necessary backup
services. The self-managing structure is linked to a central-
ized system of risk management and control, and to a central
Group accounting function. Internal auditing systems monitor
compliance with laws and standards across the Group.
Statements regarding the role of the Management Board and
Supervisory Board and in relation to other issues of corporate
governance are set out in the Declaration on Corporate Gover-
nance on pages 84 to 87 of this Annual Report, which is
published on the Internet at http://www.bauer.de/en/inves-
Combined Management ReportI. THE GROUP
In the middle of the Spessart region, BAUER Spezialtiefbau GmbH will be working on its largest German construction site
so far – the Schwarzkopf Tunnel bypass – until autumn 2015. Several BG 28 and BG 40 rigs, as well as anchor drilling rigs are
being employed.
18COMBINED MANAGEMENT REPORTThe Group
integrated within the scope of internal Group management
activities. They primarily comprise balance sheet and income
statement figures and indicators of capital structure, profitability
and liquidity derived from them.
Non-financial performance indicators
As part of a comprehensive reporting system, many non-
financial indicators are measured in assessing the performance
of the Group which individually, in terms of internal controls and
beyond that scope, have no material significance. The reporting
on trends in those performance indicators in the “Sustainability”
section is primarily intended to convey an overall picture of the
operations of the BAUER Group.
The indicators included originate, among other sources,
from the Human Resources function, such as workforce
numbers – categorized by segment, employment type and
region. Furthermore, continuing and further education indica-
tors are included in the reporting, such as the budget applied,
the number of employees attending the seminars offered,
and the number of seminars and conferences held. Reporting
also covers performance indicators from the Research and
Development function. They include the number of registered
patents, expenditure on research and development, and the
number of staff employed in those areas.
tor_relations/reports in the Investor Relations section under
Reports & Accounts.
Financial performance indicators
The trend in total Group revenues is used as the fundamental
and significant key financial performance indicator for the
management of the Group. The total Group revenues
represent the revenues of all the companies forming part of
our Group. The difference between the consolidated revenues
and the total Group revenues is derived from the revenues
of the associated companies, from our subcontractor shares
in joint ventures, and from the revenues of non-consolidated
companies. The trend in total Group revenues and the
contributions to them by the various segments are depicted in
the Business Report and in the “Trend by Segment” section.
Alongside total Group revenues, earnings before interest and
taxes (EBIT) and the net profit or loss for the period are used as
key financial performance indicators for internal management.
The Business Report and the “Trend by Segment” section
detail the trends in EBIT and net profit or loss for the period
and trends in the various segments.
A wide range of other financial performance indicators,
which are of comparatively minor significance to the medium-
and long-term development of the Group, are collated and
19COMBINED MANAGEMENT REPORT
Business Report
II. BUSINESS REPORT
of the countries in the region are sticking to their construction
projects, something which represents a positive sign.
• At first sight, it appears logical to draw the conclusion that
the drop in the oil price will have a positive effect on the
German economy. Thanks to the lower price of fuel, the
general public will have more money to spend on other
consumer goods. However, this upside will by no means
compensate for the drop in orders placed with German
companies. Although the order books of construction
firms in the Arab world are currently full, it remains unclear
which projects might be delayed as a result of the low oil
price. And it is not only Arab countries that are affected.
Malaysia, Mexico, Brazil, Russia, Angola, Venezuela
and Azerbaijan are dependent on oil. This also affects
conglomerates that earn their money with oil. As a result,
the situation cannot be said to be positive.
• Over recent years, China has acted as a powerhouse for
the global economy, but is now displaying some weak-
nesses. Many companies nowadays are heavily dependent
on the market there. These include the major German car
companies as well as their components suppliers and
many capital goods manufacturers. In the engineering
business, we can already see what problems can arise in
this country. The construction equipment business in China
grew many times over, on the back of the building boom.
It was clear that the bubble in the sector would burst
once the construction market had normalized. Chinese
machinery manufacturers did not see this coming, as a
result of which the factories’ production is going straight to
stock, and the majority of the equipment is being dumped
on the market through reckless financing models. Now,
however, these machines are being returned because
many construction companies overextended themselves
with these investments. Our strategy of concentrating on
large and special machines in China does add up, on the
other hand. We are satisfied with our success.
• The countries in the eurozone are making strenuous efforts
to get a grip on their economic problems, but there is
not yet any prospect of achieving stability any time soon.
Many companies are no longer able to compensate for
volatility in the foreign exchange markets. What is needed
is a reliable policy in order to return to a steady course of
MACRO-ECONOMIC TREND
Germany is doing well – to judge from the raw data. Tax
revenues are booming, the economy is growing and the
government is not planning to assume any new borrowing.
However, a less cursory glance at the situation reveals that
there are many problems in the world, the dark clouds of
which are casting their shadow over Germany as well.
The repercussions of the financial crisis and the credit crunch
suffered by many European countries mean that the overall
system still cannot settle on an even keel. Germany is part of
this system, and due to its presumed strength has to bear a
considerable share of the burden.
In addition to the familiar problem areas, new crisis hot-spots
have also arisen; these will also have significant effects on the
economic development of countries and regions in the world.
• Russia and Ukraine are not regarded as the most impor-
tant countries for Germany’s export business. This fact
perhaps made it easier for the politicians to impose sanc-
tions on Russia in the wake of the events in the Crimea –
in the hope of inducing a change of policy. Unfortunately,
past experience shows that punitive measures such as
these take a long time to bear fruit, and can even lead to
a hardening of attitudes and tit-for-tat countermeasures.
The conflict is lodged in a spiral of this kind, while hopes
for a rapid resolution are evanescent. This will have a
greater impact on the German economy than many people
appreciate. Russia is highly important for Germany – more
so than is indicated by the raw data.
• Scarcely anyone would have imagined that a group of
extremists could have taken over and terrorized large
areas of Iraq and Syria within a matter of weeks. For some
months, it seemed that the western world was incapable
of reversing the advance of the Islamic State, at least to
a certain extent. At present, it appears that the threat
posed to the Arab world will continue for some time yet.
Economically, it is spreading great uncertainty. Neighbor-
ing countries such as Jordan, Lebanon and Turkey will
thus have more limited opportunities to develop their
economies on a stable basis. This fragile situation could
deteriorate at any time, and this is noticeably curtailing the
opportunities offered to western companies. At least many
20COMBINED MANAGEMENT REPORTBusiness Report
to major problems. A business such as the BAUER Group,
however, which operates on a very large number of markets,
must expect to face a multitude of problems in volatile times.
Nevertheless, a global presence does mean that there will
always be rising markets available. We regard our strategy
as the biggest advantage in terms of our ongoing develop-
ment in that respect. As well as confronting country-specific
problems, this also means that strategic options regularly
open up, providing us with the opportunity to grow.
Against the background of this economic situation in the
construction sector, we are convinced that the BAUER
Group will again be able to achieve increasing orders so as
to sustain healthy growth in the years ahead, in spite of the
disruptions.
Sales of construction machinery are linked directly to the
situation on construction markets, so healthy selling oppor-
tunities are also to be expected in that sector over the years
ahead. Deep drilling markets will also grow again, as future
oil and gas exploration drilling will need to be carried out at
ever shorter intervals, so entailing a rise in drilling capacity.
In parallel with the general trends, future trends on construc-
tion markets in the various regions around the world will vary
in some cases:
Germany
The German construction market will continue to see positive
growth over the coming years. Residential construction is
being buoyed up, above all because of the low interest rates.
Public-sector construction is benefiting from an enormous
backlog of infrastructure work, something which governments
now have much more money at their disposal to pay for.
The development of commercial construction will depend
on industry’s future prospects.
The widely anticipated positive effects of the reversal of
energy policy in Germany to favor renewable energies have
not been realized, however. Only the onshore wind power
sector is still generating strong order flow. The necessary
north-to-south power transfer lines are not currently being
implemented, and the development of offshore wind power
has largely come to a standstill. Even the urgently required
growth in conventional power station capacity is not yet
development. However, there is no sign of this happening
at the moment.
The considerable number of crises and problematic areas
will represent threats for years to come. Rarely has there
been such an accumulation of issues facing the world as
is the case today. Fortunately, there have also been some
very positive developments. The most important of these is,
without doubt, the upswing in the US economy. The United
States has once again assumed its role as the driving force
in the global economy. Many countries of the Far East are
also enjoying highly dynamic growth, such as Indonesia,
Malaysia and the Philippines. What is more, many markets
are highly stable and are well placed to face the future.
The construction sector in Germany is one such market that
is developing very well. Sustained low interest rates and the
positive economic situation are inducing people to invest in
real estate. Also, the government is finally setting about making
good the huge deficiencies in Germany’s infrastructure. For
this reason, the favorable situation is set to continue for a
few years more.
There is also a very pressing necessity and demand for
construction activities internationally. Everywhere, there
are huge deficiencies when it comes to refurbishing infra-
structure and constructing new transport arteries and supply
systems. Also, commercial companies and residential building
operations have a great demand for construction services.
Once again, the crises and problems existing in the world
represent the greatest stumbling block, however.
Under such circumstances, it may be better for construction
companies to operate on only a small number of markets
as and when they are on an upswing. As soon as those
markets decline again, such a strategy can very quickly lead
in % Germany
overall
West
Germany
East
Germany
Sales 4.4 5.0 2.1
Hours worked 4.6 5.2 2.8
Employees 1.1 1.5 -0.1
Orders received -0.5 -0.6 -0.1
Source: Central Federation of the German Construction Industry
Construction statistics Germany – Change 2014/2013
21COMBINED MANAGEMENT REPORT
Business Report
sector to a halt. The neighboring states such as Jordan and
Lebanon are also hamstrung by the situation, as a result of
which economic development has significantly abated there.
Further developments in the Arab countries, which were
characterized by revolutionary political upheavals in the
past years, remain uncertain. Many clashes are still taking
place in Libya and Egypt, with repeated incidents of rioting.
Nevertheless, the construction sector in Egypt is currently
experiencing an astonishing upturn. The expansion to the
Suez Canal that got underway within an extremely short time
will require considerable building activities. In Cairo, work will
get underway within the next few years to expand the metro
network. Our local subsidiary has already landed considerable
orders, and will be able to increase its sales significantly
given this market situation.
Asia-Pacific, Far East & Australia
Construction markets in the Far East remain pleasingly
stable. Almost every country in the region is undertaking
major infrastructure projects. In Hong Kong, construction
sector capacities are being well utilized by extensive rail and
road construction works. The same is true in Singapore and
Malaysia. For example, new underground railway lines and
urban motorways are being constructed in Singapore. The
port – one of the most important and biggest in the world –
is being relocated. Economies such as Indonesia and the
Philippines are also seeing healthy growth. By contrast,
the Australian economy is no longer developing quite so
positively. Trends in this construction market are somewhat
slower.
Americas
The USA’s economy is returning to its role as the driver
of global growth. A very high level of backlog demand
has arisen in many infrastructure areas, due to a lack of
adequate investment over recent decades. Major efforts will
be made over the coming years to make good this deficit,
and a positive side effect of this commitment will be a further
boost to the economy. Overall, we regard the situation as
stable, and offering good opportunities for further growth
in both our Construction and Equipment segments. Trends
in the Canadian construction market are likewise favorable.
Interesting projects are regularly seen in Central America.
happening due to a lack of clear policy framing. Those
statements do contain a positive aspect: once the works
start, they will have to be completed rapidly.
Europe
We predict that growth on construction markets in Western
Europe will be modest over the coming years. Many countries
have had to impose strict budget constraints which will
hamper the further development of their infrastructure. There
are nonetheless a number of opportunities for us in Europe,
especially in Switzerland. In France, a new circular metro
line is being built around Paris, and is requiring extensive
construction activities. Other cities are also planning to
upgrade their infrastructure.
Smaller markets in Eastern Europe largely collapsed as a
result of the financial crisis. There have recently been signs
of a slight upturn, though at a very low level.
The crisis embroiling Russia and Ukraine is currently imposing
an enormous burden on these countries’ development.
Ukraine is practically no longer capable of maintaining a
construction sector – due to lack of funds. Although Russia
is attempting to keep finance flowing into its building sector,
the financial deficits brought about by sanctions and the low
oil price are forcing the country to pursue a policy of extreme
frugality. Commercial construction has almost shut down
entirely. It can be assumed that Russia will suffer from the
consequences of the crisis for years to come – even if the
conflict were to be resolved rapidly. As a result, the equip-
ment sales business will also decline significantly.
Middle East & Central Asia
The oil-rich and gas-rich countries of the Middle East,
such as Abu Dhabi, Saudi Arabia and Qatar, have lots of
large-scale construction projects in the pipeline and being
carried out. Metro systems are being constructed in Doha
and in Riyadh, while intensive extensions to railway lines
are in progress throughout the entire region. The football
World Cup in Qatar will trigger additional building volumes.
Construction has also bounced back in Dubai in a big way.
Conditions are highly problematic in Iraq and in Syria, however.
Armed conflict with the Islamic State has almost brought
economic development and specifically the construction
22COMBINED MANAGEMENT REPORTBusiness Report
same commitment as they were just a few years ago, when
environmental issues were seen as the major risk to global
economic development. Dialog with major polluters, such as
China, must be intensified. The financial burdens we face in
dealing with this over the years ahead will be substantial. On
the other hand, it does of course offer major opportunities for
companies operating in the relevant fields.
These issues are opening up wide-ranging new opportunities
for us too. In operation for several years now, our Resources
segment is focused on matters relating to the environment,
water and natural resources. We have already achieved
success in many countries around the world, and we believe
that demand for these products and services will continue
to grow strongly.
Africa
In Africa, it will be worthwhile actively pursuing new business,
even though the economic weakness of the countries con-
cerned means the business generated will not make a major
contribution to our total Group revenues. Some countries
have very good chances of improving their prosperity based
on their enormous raw material resources.
As a result of the described political risks and economic
issues, a number of vitally important challenges which also
need to be met have been pushed into the background. In
Germany and many other countries, demographic trends are
posing major economic challenges. Environmental problems,
particularly air pollution, are rising. In this context, too, neces-
sary policies are currently no longer being pursued with the
The north of Munich will be getting a significantly new look with the “Schwabinger Tor” project. BAUER Spezialtiefbau GmbH excavated the up to 12 m deep pit, which has an area of 35,000 m².
>>>
23COMBINED MANAGEMENT REPORT
Business Report
excellent lines; consequently, in early 2014, we assumed it
would be possible to conduct the remainder of the project
on a much better basis. Unfortunately, this expectation
turned out to be over-optimistic. During the second cutting
of the wall in the dam area, drilling progress returned to a
lower level. The concrete mixture used proved to be exces-
sively hard for the planned progress to be achieved. Also,
many other procedures on the site, such as permanent
monitoring of quality, took longer than planned, as a
result of which the construction time and thus the costs
significantly exceeded the expected amounts. This meant
the project delivered a loss in 2014, which reached the low
double digit million range. The project will be completed in
the second quarter of 2015 with an outstanding technical
achievement.
Business in Russia, Egypt, Indonesia, Hong Kong and
Thailand was very pleasing. In Hong Kong, the major project
involving foundation works for a section of the new bridge
between Hong Kong and Macau was completed in early
2015.
The Equipment segment had to cope with significant market
upheavals once again during the reporting period. The
greatest problems were the behavior of Chinese manufacturers
which continued to produce with significant overcapacity,
and the methods they employed of dumping their equipment
onto the market via risky financing schemes. Our European
competitors were also affected by the situation. Our strategy
of concentrating on special equipment of the highest quality
and providing perfect customer support meant that we were
able to expand our sales further in spite of the significant
competition. In 2014, we succeeded in selling more large
machines once again.
Developments in Russia and Ukraine proved problematical
for us. In Russia, orders tailed off almost entirely as a result
of the sanctions and the economic problems these triggered
towards the end of the year. This represents the loss of
an important market for our companies. In 2014, we had
planned sales of about EUR 80 million for the Group in
Russia and Ukraine, but we were only able to achieve about
half of this figure. We are expecting even lower sales in future.
As a result, we need to look to compensate for this, a task
which will not be easy.
Global economic trends will stabilize again in the medium
term. The current causes of destabilization will fall away
again over coming years. The currently still enormous cost
differences and imbalances in many countries will likewise
reduce significantly. After all, people in China are also aware
of the value of professional work in other countries, and
will demand the same standards for themselves. There are
already several signs of this happening: good equipment
operators in most countries now have similar pay levels
to those in the old-established industrial nations for example.
This will impact on all businesses, including our competitors.
The outcome of the global changes will be much larger
markets, on which orders will again need to be fought for
against a background of similar conditions. German companies
will be able to focus on their specialties and enjoy healthy
revenues on the larger market. The BAUER Group, too, will
maintain that focus.
COURSE OF BUSINESS
In 2014, the BAUER Group was hit by some problems with
a major financial impact and also faced some difficult market
conditions. On the other hand, we have also achieved some
pleasing successes. Overall, however, we were only able to
post a positive profit after tax by means of a one-time income
item.
In the Construction segment, we are well established in all
international markets. Specifically in Germany, our specialist
foundation engineering business was able to contribute with
a positive development. The numerous disturbances in the
world meant it was necessary to respond to changes quickly.
Nevertheless, our business was effectively distributed over the
regions of the world. Revenues declined slightly compared
to the previous year because a relatively large number of
very large projects were carried out the year before. During
the year under review, it was rather the small and medium
projects which characterized our revenues.
The factor which affected us most was the development in
our dam remediation project at Center Hill dam in the USA.
We had already been obliged to post a loss in the previous
year. Significant problems arose during the site mobilization
and the technical preparation work for the project, leading
to a considerable delay. However, from the end of 2013
onwards, the diaphragm walling works proceeded along
24COMBINED MANAGEMENT REPORTBusiness Report
generated by selling 21 percent of the shares in this
company.
The companies in the segment which manufacture well
engineering materials were reorganized following a difficult
previous year. Once again, a loss was reported in 2014.
We are confident that business will now develop better.
The year was highly unsatisfactory for our exploration
companies. Following the end of the major project in Jordan,
we had hoped it would be possible to relocate the capacity
becoming available to other regions without interruption.
However, weakness in the mining market during the previous
year meant that exploration drilling ceased almost entirely.
As a result of political upheavals in the region, it also proved
impossible to attract an adequate number of orders for other
work. Consequently, we had to accept significant losses
resulting from the overcapacities.
Many re-organizational measures were undertaken in the
Resources segment. Activities were merged or, in some cases,
terminated. We have withdrawn from many regions. All of
these issues led to a financial cost. Consequently, a loss in
the segment could only be avoided by one-time income from
the sale of shares mentioned previously.
2014 was an extremely challenging year. We had to deal
with markets changing at breakneck pace, at the same
time as correcting our own mistakes and aligning internal
structures better to face the future again. The cost reduction
program amounting to about EUR 20 million was implemented
successfully in order to safeguard overall profits, and will be
continued in the coming year as well. The positive effects will
bear fruit for years to come.
Another important goal for the year was to comply with
the financial covenants of our financing agreements with
Our deep drilling business achieved very satisfactory
development in 2014. In May, the agreement was signed to
develop a new deep drilling rig for Saxon Energy Services
Inc. Following joint development work, we received the order
to manufacture two rigs at the end of the year. Additionally,
a sales contract was signed in December for two already
completed deep drilling rigs.
In the Resources segment, the environmental business
continued to develop very well. There were many attrac-
tive projects, especially in Germany. Our subsidiary in
Oman enjoyed a successful year, with many appealing
new opportunities for the future. One-time income was
Geographical breakdown of total Group revenues
in EUR million
Total 1.560
Germany 440 (28 %)
Africa 62 (4 %)
Americas 172 (11 %)
Asia-Pacific,
Far East &
Australia
377 (24 %)
Middle East & Central Asia
232 (15 %)
Europe (other)
125 (8 %)
EU (excl. Germany)
152 (10 %)
in EUR million ForecastsActual 2014
11.04.2014 14.08.2014 14.11.2014
Total Group revenues ~ 1,550 ~ 1,550 ~ 1,550 1,560
EBIT ~ 75 ~ 75 ~ 75 76.4
Net profit or loss ~ 20 - 25 ~ 15 - 20 ~ 15 - 20 15.7
Forecast/actual comparison 2014
25COMBINED MANAGEMENT REPORT
Business Report
regard to total Group revenues and EBIT. At the 2014
year-end, this is expected to be towards the bottom end of
the range from about EUR 15 to 20 million.
The final results for 2014 are now as follows: total Group
revenues rose by 3.7 percent to EUR 1.56 billion. Sales
revenues fell slightly by 1.9 percent to EUR 1.38 billion.
EBIT came to EUR 76.4 million (previous year: EUR
30.1 million). The net profit for the period was EUR
15.7 million (previous year: EUR -19.4 million).
Summary
All in all, we cannot be satisfied with our results for 2014.
We were only able to achieve a positive result due to the
one-time income from the sale of shares in Oman. We regard
the business trend as continuing positive, because even in
tricky circumstances we once again succeeded in increasing
total Group revenues slightly. The financial year 2015 will
build on that foundation.
slightly increased revenue. Furthermore, we aim to achieve a
long-term improvement in key financial figures. Although we
still have some work to do to achieve this, we were able to
meet the target. The net debt to EBITDA ratio has returned
below 4.0. The EBITDA to net interest coverage ratio was
also improved.
As a result of the aforementioned problems, we were regret-
tably forced to adjust our forecast downwards once in the
course of 2014. In our 2013 Annual Report we predicted total
Group revenues of about EUR 1.55 billion, EBIT around EUR
75 million, and profit after tax of about EUR 20 to 25 million.
As a result of special effects, including above all our dam
project in USA which burdened us with a significant loss, we
were obliged to adjust our forecast for profit after tax in the
half-year report to about EUR 15 to 20 million.
In the nine-month interim report, the forecast for the profit
after tax was concretized, with an unchanged outlook with
Geographical breakdown of total Group revenues
in EUR million (segments after deducting Other/Consolidation)
1,600
1,400
1,200
1,000
800
600
400
200
0
Resources
249
Equipment
612
Construction
international
510
Construction
Germany
189
Total 1,560
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
27
Our customer Ammico Contracting Co. W.L.L. was involved in the construction of a large commercial complex on the artifi cial
island “The Pearl”, which is just off the east coast of Qatar. A cut-off wall up to 700 m long and 8 m deep was built using the cutter-
soil-mixing-method. They used a BG 28 with a BCM 5 mixing head.
in EUR million 2013
Revenues *
2014
Revenues
Share
Year 2014
Change against
previous year
Orders
in hand
Co
nstr
uc
tio
n
BAUER Spezialtiefbau GmbH (BST)
BST, Germany 119.4 133.2 8.6 % 11.6 % +
Subsidiaries, Germany 24.0 16.7 1.1 % -30.4 % +
BST, international 67.3 98.9 6.3 % 47.0 % •
Subsidiaries, international 547.3 502.5 32.2 % -8.2 % •
BST Group total 758.0 751.3 48.2 % -0.9 % •
SCHACHTBAU NORDHAUSEN GmbH Subsidiaries (SBN) 73.9 66.1 4.2 % -10.6 % •
less intra-Group revenues and IFRS adjustments -90.2 -104.4 -6.7 %
Construction total 741.7 713.0 45.7 % -3.9 % •
Eq
uip
me
nt
BAUER Maschinen GmbH (BMA) 391.7 383.3 24.6 % -2.1 % •
Equipment subsidiaries 453.3 468.7 30.0 % 3.4 % •
BMA Group total 845.0 852.0 54.6 % 0.8 % •
SBN 62.3 62.0 4.0 % -0.5 % •
less intra-Group revenues and IFRS adjustments -278.7 -262.2 -16.8 %
Equipment total 628.6 651.8 41.8 % 3.7 % •
Re
so
urc
es
BAUER Resources GmbH (BRE) 9.6 29.5 1.9 % n/a
Resources subsidiaries 193.2 231.1 14.8 % 19.6 % -
BRE Group total 202.8 260.6 16.7 % 28.5 % -
SBN 19.8 33.9 2.2 % 71.2 % ++
less intra-Group revenues and IFRS adjustments -33.7 -41.7 -2.7 %
Resources total 188.9 252.8 16.2 % 33.9 % •
Oth
er
BAUER Aktiengesellschaft (BAG) 37.0 37.1 2.4 % 0.3 %
Other subsidiaries 2.3 2.3 0.1 %
Total Other/services 39.3 39.4 2.5 % 0.3 %
less intra-Group revenues and IFRS adjustments -94.3 -96.8 -6.2 %
Group total (including non-controlling interests) 1,504.2 1,560.2 100.0 % 3.7 % •
of which: Germany 410,4 440,2 28.2 % 7.3 %
International 1,093.8 1,120.0 71.8 % 2.4 %
Notes on the table: List also includes non-consolidated holdings Evaluation of orders in hand in relation to planned revenues:
-- weak; - slightly weak; • adequate; + well adequate; ++ very well adequate; Percentages and totals are calculated on the basis of unrounded starting values
Breakdown Germany/international according to country in
which accounting figures were allocated. For reasons of
complexity the figures are not absolutely precise.
Breakdown of total Group revenues by subsegment
COMBINED MANAGEMENT REPORTBusiness Report
* Previous year adjusted; see notes on page 106
29COMBINED MANAGEMENT REPORT
Trend by Segment
In Jeddah, Saudi Arabia, what will soon be the tallest building in the world is under construction – the Kingdom Tower. Bauer
drilled 70 piles – with up to 109 m they are extremely long – with diameters of 1,500 and 1,800 mm. Another 200 piles with
lengths up to 90 m were also installed.
III. TREND BY SEGMENT
CONSTRUCTION SEGMENT
West Region, however, failed to achieve its targets, attracting
only a few orders. However, the planned earnings and the
planned revenues were well surpassed.
The major project at the Schwarzkopf Tunnel should be
highlighted in particular. This involves extensive special
foundation engineering for the bypass rail link between Hanau
and Nantenbach, with a total volume of above EUR 40 million.
We still have significant work to accomplish on the project
until autumn 2015. In addition to this, the major project at the
Zerben lock was completed successfully in November.
Next year, we are expecting a decline in revenues for the
German specialist foundation engineering business, because
there are fewer major projects on the market overall.
SCHACHTBAU NORDHAUSEN GmbH, which operates
primarily in Germany, works on behalf of all three of the
Group’s segments. The company and its subsidiaries
increased total revenues against the previous year’s
figure, but earnings were down against planned levels.
An improvement is expected in 2015. As the company
operates in all three segments, the effects of the individual
divisions are detailed in the respective segment reports. The
Construction division achieved revenues on the same level
as the previous year. The Environmental Technology division,
operating primarily in the biogas field and in the construction
of treatment plants, is likewise assigned to the Construction
segment. Although it was able to increase revenues, the
negative result remained at the previous year’s level. SPESA
Spezialbau und Sanierung GmbH, which is allocated to
In the 2014 business year, the Construction segment earned
total Group revenues of EUR 713.0 million, down slightly on
the previous year’s value of EUR 741.7 million by -3.9 percent.
The reason for this is that more major projects were handled
in the year before than in 2014 itself. Segment EBIT of EUR
25.1 million was slightly up on the previous year’s level of
EUR 21.2 million. The net profit for the period decreased
markedly from EUR 5.5 million to EUR 1.9 million. The decline
in the net profit for the period is chiefly due to economic
problems with our dam project at Center Hill in Tennessee,
USA. It was not possible to offset the loss incurred in the
project against any deferred tax assets, as a result of which
the income tax expense increased significantly compared to
the previous year.
2014 was characterized by good conditions overall in the
world construction market, which proved to have a positive
effect on our companies in Germany and the Far East above
all. Furthermore, the markets in the Middle East once again
showed significant signs of life. The business situation was
good on the whole, but was negatively affected by the
problems with the Center Hill dam project to such an extent
that we failed to achieve our earnings targets markedly.
Germany
As in the previous years, our German construction business
performed better than expected once again. Revenues and
results were significantly above expectations. The contracts
procured were spread very unevenly around the various
regions however. Capacities in the South region were very
well utilized, and well utilized in the North East region. The
in EUR '000 2013 * 2014 Change
Total Group revenues 741,673 713,005 -3.9 %
Sales revenues 657,456 634,096 -3.6 %
Orders received 727,287 665,244 -8.5 %
Orders in hand 498,701 450,940 -9.6 %
EBIT 21,209 25,068 18.2 %
Net profit or loss 5,472 1.858 -66.0 %
Employees (on average over the year) 5,531 5,675 2.6 %
Construction key figures
* Previous year adjusted; see notes on page 106
30COMBINED MANAGEMENT REPORTTrend by Segment
We are expecting the business situation to be significantly
less favorable in 2015 because of sanctions.
The situation in the markets of Western Europe was also highly
differentiated. Our subsidiary in the Netherlands failed to meet
expectations in terms of revenues and earnings. Last year
was very poor in the UK. Following major underground railway
orders in previous years, there were scarcely any projects on
the market in the business year just finished. Consequently, the
planned revenue target was missed by a wide mark, and the
result is negative. There are signs of an improvement in 2015.
In Switzerland, revenues increased thanks to a good market
position. Our subsidiary in Austria failed to meet its targets
because of a dearth of projects in the summer months. On the
whole, markets in Southern Europe remain weak.
Middle East & Central Asia
Following political unrest in the markets of the Middle East
over recent years, the construction sector once again
enjoyed a significant upswing in the course of 2014. Our
companies in the United Arab Emirates, above all Abu Dhabi
and Dubai, are once again operating at full capacity and
were able to increase revenues and earnings significantly;
the situation is similar in Qatar where work started on several
orders particularly in the second half of 2014. Our subsidiary
in Lebanon was also largely on target in terms of revenues
and earnings.
Revenues declined in Saudi Arabia, above all because of
the completion of the major project at the Kingdom Tower,
involving the foundation work for what will be in future the
tallest building in the world. Order books remain buoyant
here, and upcoming major projects – especially for the metro
system in the capital city Riyadh – mean that prospects are
bright. Overall, we believe the region is once again on an
upward trend.
Asia-Pacific, Far East & Australia
The construction sector in the markets of the Far East
continues to deliver pleasing performance. Our subsidiaries in
Indonesia and Thailand benefited from very full order books
with pleasing results. Prospects remain highly positive. Hong
Kong was characterized by the foundation works for a section
of the Hong Kong-Zhuhai-Macau bridge that were completed
in early 2015. The project was able to be concluded suc-
cessfully.
Schachtbau in the organizational structure, succeeded in
improving its result during the reporting year although with a
slight decline in revenues.
The holding Wöhr + Bauer GmbH, which develops and
builds urban real estate such as office buildings and parking
garages, was able to complete a large number of relatively
large projects during the reporting year, as well as starting
new ones.
Europe
Trends on European construction markets remain regionally
very variable. In Eastern Europe, revenues in Hungary,
Georgia and Bulgaria increased, while Romania underper-
formed slightly. Overall, perspectives have improved again
somewhat following a few weak years. Azerbaijan is also
offering us good opportunities for new projects. In Russia,
work was completed on the Lakhta Tower in St. Petersburg,
which is set to be Europe’s tallest building; subsequent
to this, we carried out some add-on and follow-up order.
Revenues and earnings were on a good level overall.
Geographical breakdown of total Group revenues
Construction segment
in EUR million (after deduction of Consolidation)
Total 699
Germany 189 (27 %)
Africa 49 (7 %)
Americas 68 (10 %)
Asia-Pacific,
Far East &
Australia
199 (29 %)
Middle East & Central Asia
94 (13 %)
Europe (other)
64 (9 %)
EU (excl. Germany)
36 (5 %)
31COMBINED MANAGEMENT REPORT
Trend by Segment
the Dominican Republic. We are expecting the situation to
improve in the region during the current year.
Africa
Once again in 2014, the performance of our holding in Egypt
was more than pleasing. In the difficult prevailing conditions,
it succeeded in closing the financial year with revenues up on
the previous year and healthy earnings. Order levels continue
to be very high, because numerous construction projects
are being carried out. For example, extensive work is being
conducted on the metro system in Cairo. We assume that
we will be able to increase our revenues further in the current
year. There are individual project opportunities available from
time to time in other countries as well.
Outlook
Revenues in the Construction segment declined slightly during
the completed business year. Above all, this was because
some major projects were processed and concluded during
the previous year. In some regions, we merged capacities to
a greater extent and ceased our activities in some countries
– such as Algeria. The trend in the segment was positive,
apart from the losses incurred by the major project at Center
Hill dam, representing a significant negative influence.
Overall, the regions of the world continue to perform positively,
in spite of all the existing political and economic disruptions.
Our global presence provides us with an excellent opportunity
to exploit opportunities in regions with a favorable trend in
their construction sectors, thereby making up for weaker
markets. Overall, orders in hand have declined in relation
to the previous year, this being due to the situation that there
are currently more small and medium projects available on the
market. The major projects have been completed during the
past two years.
We are expecting our revenues to be slightly higher than those
of the previous year in 2015. As far as EBIT is concerned,
we are expecting a slight improvement, while the improvement
in profit after tax should be considerable.
In Malaysia, there were somewhat fewer orders than
expected, as a result of which revenues were somewhat
lower than planned even though they attained a very high
level in total. In the Philippines, project delays represented
somewhat of a hindrance to revenues, although the situation
with orders in hand is good on the whole. The market in
Vietnam is displaying the first signs of a recovery following
weakness during previous years.
In 2014, extensive diaphragm walling works were constructed
for several dams in Bhutan as well as on Mauritius. The work
will continue into the current business year as well. The
projects are proceeding very pleasingly. The market in
Australia in 2014 was very slow. We expect this to continue
in 2015 as well.
Overall, we are expecting continued good development for
the region in the current business year.
Americas
Our subsidiary in the USA was kept busy through 2014
primarily by the large-scale Center Hill dam project. The
difficulties getting the project off the ground led to a backlog
of work. At the start of the year, we had expected to make
good this deficit, at least in part, by increasing performance.
Unfortunately, this proved to be impossible because of
further delays and problems that arose during the course
of the year, as a result of which a significant loss was once
again incurred. From a technical perspective, the project has
been carried out to an excellent standard. The work will be
concluded in the second quarter of 2015. As well as this, a
larger number of different specialist foundation engineering
orders were handled in the USA. There were only a few
orders available on the Canadian market during the year, as
a result of which revenues declined here. The prospects are
looking brighter again for the current year.
In Latin America, we are focusing our activities on Panama
above all else. Our subsidiary’s performance was somewhat
below expectations during the past business year. Individual
orders are being carried out in the other markets – such as
33
A highlight was the in-house exhibition, which took place in Schrobenhausen in May 2014. Over four days, more than
1,700 guests from over 70 countries visited the event to fi nd out about the innovations and equipment from
BAUER Maschinen GmbH and its subsidiaries.
COMBINED MANAGEMENT REPORTTrend by Segment
Paris. We were also able to achieve good sales in the Baltic
states, although the markets in Eastern Europe continue to
be at a low level. There is a lack of funding for major invest-
ments. Spain and Portugal continued to perform weakly.
In Russia, sales up to the middle of 2014 were completely ac-
cording to plan. During the second half of the year, however,
first sanctions and then the significant decline in the value
of the ruble exerted an influence on the market. At the start
of the embargo, it was questionable whether we would be
able to deliver several items of machinery to Russia, although
the situation was resolved within a few weeks. However,
demand collapsed markedly in the second half of the year. In
the current business year, we are expecting to see a further
noticeable decline in sales volume compared to 2014.
Middle East & Central Asia
The markets of the Middle East developed significantly better
than in the year before. In spite of continuing uncertainties
in the region, demand increased noticeably because of a
greater number of infrastructure projects being implemented.
Our sales were significantly above the planned targets,
delivering a pleasing contribution to earnings. In the United
Arab Emirates, including Dubai, there was a reinvigoration
of the construction market. Numerous infrastructure
projects got under way in Qatar. In Saudi Arabia, additional
machinery was required in particular for the expansion of the
Holy Mosque in Mecca. Sales in Iraq, however, were weak.
Overall, the perspectives for the markets in the region are
once again good.
In the past business year, total Group revenues in the
Equipment segment increased slightly by 3.7 percent, from
EUR 628.6 million to EUR 651.8 million. Sales revenues, on
the other hand, fell back by 2.9 percent from EUR 561.6 mil-
lion to EUR 545.2 million. Segment EBIT increased sharply
by 14.6 percent from EUR 32.2 million to EUR 36.9 million.
The net profit for the period increased markedly from
EUR 5.1 million to EUR 9.5 million.
In 2014, in spite of fierce competition, we succeeded in
maintaining sales volume at approximately the same level as
the previous year. The markets of the Middle and Far East
enjoyed particularly positive development, as did sales of
large machinery and cutters. This led to an increased result,
and further benefited from the trend in the US dollar. The
still too low capacity utilization of the plants and losses at
individual subsidiaries hampered a greater increase.
Germany & Europe
Sales in Germany were slightly below the previous year, in
line with our expectations. In 2014, like in the previous year,
the plants at our headquarters in Schrobenhausen had
adequate capacity utilization. We are expecting an improve-
ment during the current year because of production of two
deep drilling rigs for Saxon Energy Services Inc.
Sales volumes in Western and Southern Europe were above
planned values. Alongside good market conditions in Italy,
we were above all able to sell some machinery to France,
including several cutters for the expansion of the metro in
EQUIPMENT SEGMENT
in EUR '000 2013 2014 Change
Total Group revenues 628,612 651.772 3.7 %
Sales revenues 561,615 545,223 -2.9 %
Orders received 632,053 693,967 9.8 %
Orders in hand 116,525 158,720 36.2 %
EBIT 32,223 36.917 14.6 %
Net profit or loss 5,055 9,513 88.2 %
Employees (on average over the year) 2,998 3,038 1.3 %
Equipment key figures
34COMBINED MANAGEMENT REPORTTrend by Segment
relocation to the new plant in Tianjin contributed to this, and
was completed by October 2013. The new plant’s capacity
was already utilized to a significant extent in 2014, with
scope for further growth.
The market in Japan was satisfactory overall. There are once
again major infrastructure projects in the pipeline, which
represent interesting opportunities. Australia proved to be
rather weak, this being a corollary of the weak demand from
the mining industry.
Americas
Although the market situation in the USA improved in 2014,
we were unable to meet our targets entirely despite achiev-
ing slight improvements in sales and earnings compared to
the previous year. In the USA, the business is predominantly
characterized by renting equipment to customers. We
took an important step in setting the course for the future
by merging locations of BAUER-Pileco Inc. and BAUER
Manufacturing Inc. at our site in Conroe, near to Houston.
We are expecting this to deliver synergy effects which will
lead to significant cost savings. We were also able to reduce
our rental fleet by selling equipment. Production capacity in
Conroe was not yet adequately utilized in 2014, as a result of
which we still recorded a relatively small loss.
In South America, our sales volumes were at a similar level to
those of the previous year. The market in Brazil continued to
perform weakly. Many projects have been postponed here.
Africa
In Africa, we were not quite able to match our sales in the
previous year. Egypt enjoyed positive development because
of the growth in the construction market. The remaining
countries of Africa, however, were weak. There was signifi-
cant reluctance to invest in West Africa, as a result of Ebola,
and the mining industry displayed hardly any demand for
equipment. Production in Botswana, where our joint venture
manufactures blast-hole drilling rigs and well drilling rigs for
Southern Africa, failed to meet our expectations in 2014
because of weak markets.
Parts & Service
The Parts & Service business has continued to develop
steadily over recent years, delivering a good contribution to
revenues and earnings in the past business year. The spare
As a result of delays in major projects, we suffered a decline in
sales compared to the previous year in Turkey and Azerbaijan.
The other countries of Central Asia such as Kazakhstan were
influenced by the uncertainty generated by the Russia/Ukraine
crisis. Here, our sales were below the expected levels. As in
the previous years, the Indian market was weak.
Asia-Pacific, Far East & Australia
Markets in the Far East continued to be very positive. We
were able to increase our sales volumes somewhat once
again, achieving a good contribution to earnings. Hong Kong
has become an excellent market for our duty-cycle crane
series. We were also able to achieve good sales volumes in
Malaysia, as in Singapore. Here, we were able to sell some
machines in particular which will be used in the extensive
expansion of Changi Airport. The Philippines and Indonesia
continue to develop along positive lines.
As before, the Chinese market is characterized by significant
overcapacity, meaning that the competitive situation remains
tight. In spite of these difficult conditions, we succeeded in
achieving a satisfactory contribution to earnings. The smooth
Geographical breakdown of total Group revenues
Equipment segment
in EUR million (after deduction of Consolidation)
Total 612
Germany 118 (19 %)
Africa 9 (1 %)
Americas 96 (16 %)
Asia-Pacific,
Far East &
Australia
177 (29 %)
Middle East & Central Asia
60 (10 %)
Europe (other)
56 (9 %)
EU (excl. Germany)
96 (16 %)
35
applications. During 2014, an increasing volume of large
machine sales was achieved, as well as better sales of
cutters, leading to increased earnings for the segment.
Some subsidiaries delivered unsatisfactory performance
in the past financial year. PRAKLA Bohrtechnik GmbH, a
specialist for well drilling rigs, was confronted by very weak
demand, leading to a significant decline in revenues and a
negative result. MAT Mischanlagentechnik GmbH, a manu-
facturer of products for mixing and separating technology,
also recorded a negative result due to poor demand.
In contrast, a good business year with very positive results
was experienced by RTG Rammtechnik GmbH, with its pile-
drivers and piling leaders, SPANTEC Spann- & Ankertechnik
GmbH, which makes anchor products for foundation engi-
neering applications and EURODRILL GmbH, which makes
rotary drives and hydraulic hammers. KLEMM Bohrtechnik
GmbH, a manufacturer of anchor drilling technology, once
again slightly increased its revenues in 2014.
Outlook
Overall, the Equipment segment was able to perform
positively in 2014 amongst conditions characterized by
fierce competition and some difficult markets. The nearly
stable sales volume with an increase in earnings as well as
the trends in Deep Drilling were very pleasing. On the other
hand, the results recorded by some subsidiaries as well
as capacity utilization at the plants, which is still too low,
imposed a burden.
The business remains significantly affected by short-term
customer orders, representing a major challenge for produc-
tion planning which has to look many months ahead as a
result of delivery lead times for purchasing. The markets in
the Middle East should post a continued rising trend and
increased demand, whereas the Russian market will tail off
markedly. For 2015, we are expecting that revenues, EBIT
and profit after tax will be slightly up on the previous year.
parts business continues to be positive, whereas demand
for drilling tools and add-on units was somewhat weaker.
Consequently, revenues and earnings were somewhat down
on the previous year.
Deep drilling
In May 2014, BAUER Deep Drilling GmbH and Saxon
Energy Services Inc. concluded an engineering contract for
development and manufacturing of onshore deep drilling
rigs with a hook load of 375 metric tons. Saxon Energy
Services Inc. is a subsidiary of Schlumberger, the worlds's
largest oilfield service company. Following joint develop-
ment work, the order for production and sale of two rigs,
designation ATD 750, was signed in December. These will
be manufactured in the BAUER Maschinen GmbH plants
in Germany and also partially assembled in the US plant
in Conroe, near Houston. As a result, we are expecting
that capacity utilization, in particular of the plants at our
Schrobenhausen headquarters, will be increased during
the current year.
Additionally, a sales contract was signed at the end of
2014 for the two already completed TBA 300/440 M1 and
TBA 440 M2 rigs. A 100 metric ton rig will also be delivered
to China in 2015.
As a result, the Deep Drilling business has taken a major
step forward. Work is in progress towards certification by
the American Petroleum Institute (API), and is expected
to be completed in 2015. This would open up new sales
opportunities.
Products & subsidiaries
BAUER Maschinen GmbH manufactures rotary drilling
rigs (the BG series), duty-cycle cranes (the MC series) and
cutters (the BC series) at a number of plants. The BG series
is the most important and extensive machine range, and is
divided in two product lines: the ValueLine rigs are optimized
for kelly drilling, while the PremiumLine rigs are multifunction
units for a wide variety of specialist foundation engineering
COMBINED MANAGEMENT REPORTTrend by Segment
37
BAUER Umwelt GmbH conducted replacement drilling for a customer in Coswig, near Dresden. A total of about 45,000 t of
soil material were disposed of. A BG 40 rig with a large bore diameter of 2,000 mm was used. More than 400 bores were drilled
down to a drilling depth of 17 m.
COMBINED MANAGEMENT REPORTTrend by Segment
levels in the areas of environment and water treatment.
Reorganization of the Resources segment proceeded
intensively in 2014. The previous split into the business areas
Materials, Exploration & Mining Services and Environment
has been replaced by a regional sales organization which is
functionally supported by competence centers. In the regions
of America, Europe and Africa as well as the Middle East &
Asia, the subsidiaries now operate as full-line providers of all
products and services offered by the Resources segment.
The competence centers of Water Treatment, Process and
Biotechnology, Environmental Rehabilitation and Waste
Management, Drilling Technologies as well as Well Drilling and
Geothermal pool their expertise and support the subsidiaries
in carrying out projects.
Germany & Europe
The GWE Group offers solutions for well-drilling and geother-
mal, for which purpose it manufactures products for devel-
opment, delivery and distribution of water and geothermal
energy. Following weak performance in the previous year,
some restructuring measures were initiated and are still in
progress. These measures, as well as stagnating markets in
Europe, had an impact on results which remained negative.
Above all because of growth in Germany, Austria, Swit-
zerland and new customers in the energy sector, it proved
possible to increase revenues slightly. Business improved on
the whole, but work is continuing on optimizing costs.
The Polish subsidiary, which produces and sells well
construction materials, was able to increase revenues slightly
year-on-year despite operating in a stagnating market
Total Group revenues in the Resources segment grew
significantly by 33.9 percent from EUR 188.9 million to
EUR 252.8 million. Sales revenues grew by 7.3 percent
from EUR 182.6 million to EUR 195.9 million. Segment
EBIT was once again significantly positive following the
loss made during the previous year (EUR -24.0 million),
at EUR 15.9 million. The net profit for the period was
EUR 4.3 million (previous year: EUR -31.4 million).
The key results of the segment were significantly influenced
by a one-time income. The increase in total Group revenues
contains an income item from sale and consolidation
amounting to EUR 36.5 million resulting from the sale of
21 percent of the shares in our subsidiary BAUER Nimr LLC
in Oman. The shareholding up to that point was 70 percent.
The company’s principal activity involves operating the large-
scale reed-bed treatment plant under an operating contract
set to last a further 15 years. Without sale of these shares,
the EBIT and the net profit for the period would have been
in the red as a result of negative earnings contributions –
specifically from the subsidiaries in the area of exploration
and mining services – and as a result of expenditure for the
reorganization of the segment.
The Resources segment is undergoing reorganization and
adjustment to the changed market situation following the
loss it suffered in 2013. The loss was above all due to a
major project in Jordan, as well as weak demand for well
construction materials and from the mining area. The signifi-
cant increase in revenues during 2014, even without taking
account of the sale of shares, is above all due to good order
RESOURCES SEGMENT
in EUR '000 2013 * 2014 Change
Total Group revenues 188,861 252,830 33.9 %
Sales revenues 182,579 195,860 7.3 %
Orders received 180,054 255,837 42.1 %
Orders in hand 150,020 153,027 2.0 %
EBIT -23,965 15,932 n/a
Net profit or loss -31,444 4,347 n/a
Employees (on average over the year) 1,449 1,400 -3.4 %
Resources key figures
* Previous year adjusted; see notes on page 106
38COMBINED MANAGEMENT REPORTTrend by Segment
recent years, it has been possible to expand projects with
customers from the automotive industry in particular, which
were handled successfully. There are still good prospects for
the future here.
In 2014, Esau & Hueber GmbH, a specialist for brewery,
beverage and biotechnology, achieved revenues which were
both above target and higher than the previous year thanks
to good demand for brewery technology and systems for the
pharmaceuticals industry. The result was also significantly
improved. An expansion to capacity has already been com-
pleted, and will result in further improvements in production.
The order books of our foreign subsidiaries reveal a highly
diverse situation. In Italy, revenues were at the level of the
previous year in spite of project delays. The result improved.
Two Resources companies in Spain were merged. There has
been a slight uptick in the market for environment and water
there. Some activities, including those in Hungary, will not be
continued as a result of unsatisfactory developments.
FORALITH Drilling Support AG, a specialist for deep and
extended-reach exploration drilling based in Switzerland,
was able to carry out some projects successfully in Europe
during the past business year; as a result, it improved its
revenues and earnings. BAUER Foralith GmbH had to
absorb significant burdens due to drilling rigs with underused
capacity. In future, the activities of both companies will be
more closely meshed, so that synergy and cost effects can
be leveraged more effectively.
The Resources segment also incorporates the Mining division
of SCHACHTBAU NORDHAUSEN GmbH. It proved possible
to increase revenues once again as a result of the very vigorous
market. Alongside many projects in Germany, a considerable
order is being handled in Kazakhstan. In spite of a fine that
imposed a significant burden on the area, it was possible to
report a positive result.
Middle East & Asia
The Site Group for Services and Well Drilling Ltd. Co. in
Jordan is still undergoing reorganization following the loss
incurred during the major Disi-Amman project in 2013.
Following completion of this project, it did not prove possible
to find another use for the drilling rigs used there because
the decisions on some very interesting projects were post-
environment, and consequently also improved its result. In
Hungary, revenues and earnings were on target, at the level
of the previous year. The sales company in France increased
its revenues and earnings despite a difficult market situation,
but nevertheless failed to meet its targets.
BAUER Umwelt GmbH is a central provider of products and
services for environmental technology in Germany. In 2014,
it was able to increase its revenues significantly, thereby
exceeding the planned goals. The result was also improved,
with a healthy positive performance. It was possible to carry
out numerous projects, above all in the areas of remediation
of polluted sites and waste mangement. Orders in hand
continued to be at a high level, as a result of which further
positive development is expected.
BAUER Water GmbH plans, builds and installs water treat-
ment plants for customers all over the world. Following a
weak first half of 2014, revenues were significantly increased
in the second half. The result improved markedly following a
loss in the previous year, and is now showing a surplus. Over
Geographical breakdown of total Group revenues
Resources segment
in EUR million (after deduction of Consolidation)
Total 249
Germany 133 (54 %)
Africa 4 (2 %)
Americas 8 (3 %)
Asia-Pacific,
Far East &
Australia
1 (0 %)Middle East &
Central Asia
78 (31 %)
Europe (other)
5 (2 %)
EU (excl. Germany)
20 (8 %)
39
subsidiary in Ghana was able to increase its revenues
year-on-year; it also improved its result.
Americas
Our subsidiary, which produces and sells well construction
materials in Chile, suffered from weak demand from the
mining sector. Revenues were down on the previous year,
and the result was slightly negative.
Activities in Peru were terminated and the subsidiaries in
Canada closed.
Reorganization
The reorganization of the segment that was started in 2014
entailed some fundamental changes. In future, we will
pursue the strategy of concentrating even more on core
competences at the same time as focusing on the greatest
potential markets. This goes hand-in-hand with a consolida-
tion and cessation of some businesses and subsidiaries.
The restructured regional sales organization – supported by
competence centers described above – is intended to push
ahead with this strategy rapidly.
By the time the reorganization is finished, Resources
should have become a full-service provider focusing on
environmental technology, water and natural resources for
industrial customers, predominantly from the oil, gas and
mining industries.
Outlook
The extensive reorganization of the segment will continue
until the end of 2015. We are expecting the situation to
improve for our drilling companies during the current year.
We continue to see significant opportunities in the environ-
mental field, as well as in water treatment. For 2015, we are
assuming that revenues will be well above the level of the
previous year. The absence of the one-off income for 2014
deriving from the sale of shares as well as charges incurred
during the reorganization mean that the EBIT should be
slightly in the positive area, whereas it is currently expected
that the profit after tax will be slightly negative.
poned due to the political situation in the region. As a result,
revenues and earnings were significantly below the planned
targets. We are expecting new projects and better capacity
utilization for the current year.
The subsidiary in the United Arab Emirates is active above
all in the environmental sector. It developed pleasingly and
is handling an increased number of projects for the oil and
gas industries. Revenues were up on the previous year. In
Saudi-Arabia, activities are still at the beginning, but this
market does offer good opportunities. Drilling activities in
Australia have been brought to a close.
The operative business of BAUER Nimr LLC in Oman
focused primarily on operation of the large-scale reed-bed
treatment plant which processes water contaminated with
oil for the local oil company. Following an expansion last
year, 115,000 m3 of water is being purified there every day.
At the end of 2014, 21 percent of the shares in the BAUER
Nimr LLC subsidiary in Oman were sold. This led to a high
one-off income for the Resources segment in the Group's
consolidated financial statements.
Africa
The mining markets have been weak for quite a long time,
and there has been little demand for exploration work;
as a result of this, 2014 was unsatisfactory for our drilling
companies. A slight upturn only became apparent at the
end of the year. In Africa, as a result, our activities were
restructured and a new strategy was initiated for operating
in the markets.
In Morocco, our subsidiary has specialized in undertaking
irrigation projects which allowed it to improve its revenues
year-on-year. Further opportunities are apparent in this area.
Earnings failed to meet expectations.
In South Africa, revenues were significantly down on the
previous year, and earnings were negative as a result. In
future, activities in Senegal will be looked after from Ghana.
As a result of favorable orders at the end of the year, our
COMBINED MANAGEMENT REPORTTrend by Segment
40COMBINED MANAGEMENT REPORTTrend by Segment
OTHER/CONSOLIDATION SEGMENTS
profit for the period of EUR 4.9 million (previous year:
EUR 6.0 million) includes EUR 1.6 million comprising the
net profit of BAUER AG disregarding the aforementioned
payments. The segment’s revenues are especially generated
by intra-Group charges.
The Consolidation segment reflects the consolidation
within the Group. The negative EBIT of EUR -4.8 million
(previous year: EUR -4.5 million) largely matches the
EUR 5.0 million of dividend payments by Group sub-
sidiaries to BAUER AG. The net loss for the period was
EUR -4.9 million (previous year: EUR -4.5 million).
The Other and Consolidation segments bundle the revenues
and earnings of the Group which cannot be allocated to the
operating segments. The Other segment essentially comprises
the revenues of the parent company BAUER AG itself,
generated from a wide variety of administrative services
provided to Group subsidiaries.
The Other segment reports EBIT of EUR 3.3 million (pre-
vious year: EUR 5.1 million). This includes EUR 5.0 million
of dividend payments by Group subsidiaries to the parent
company. Part of the fine resulting from proceedings against
one of our companies has also been posted here. The net
SPESA Spezialbau und Sanierung GmbH did remediation work on a ski jump in Oberhof in Thuringia for the first time. To secure the slope of the main jump against sliding, a shotcrete plate was installed at an inclination of approximately 37 degrees and deep-anchored with 36 soil nails.
>>>
41COMBINED MANAGEMENT REPORT
Trend by Segment
Breakdown of total Group revenues across the companies of the BAUER GroupShareholdings < 50 % are listed with their revenue share
in EUR million 2013 * 2014
BAUER Spezialtiefbau GmbH - Group
BAUER Spezialtiefbau GmbH, Schrobenhausen, Germany (BST) 186.7 232.1
Wöhr + Bauer GmbH, Munich, Germany (33 % share) – (sub-group consolidated financial statements) 17.5 14.5
BAUER Funderingstechniek B.V., Mijdrecht, Netherlands 4.8 4.7
BAUER Technologies Limited, Bishops Stortford, UK 43.2 2.6
BAUER Spezialtiefbau Schweiz AG, Baden-Dättwil, Switzerland 15.2 28.6
TERRABAUER, S.L., Madrid, Spain (30 % share) 1.0 0.4
BAUER Magyarország Speciális Mélyépítö Kft., Budapest, Hungary 6.0 7.7
BAUER ROMANIA S.R.L., Bucarest, Rumania 1.9 2.1
BAUER BULGARIA EOOD, Sofia, Bulgaria 1.8 4.5
BAUER SPEZIALTIEFBAU Gesellschaft m.b.H., Vienna, Austria 15.0 14.4
OOO BAUER Technologie, Moscow, Russian Federation 36.7 31.3
BAUER EGYPT S.A.E. Specialised Foundation Contractors, Cairo, Egypt 20.8 22.9
BAUER LEBANON FOUNDATION SPECIALIST S.a.r.l., Beirut, Lebanon 11.3 16.5
BAUER Georgia Foundation Specialists LCC, Batumi, Georgia 3.0 3.3
BAUER International FZE, Dubai, United Arab Emirates 35.5 37.0
BAUER Geotechnical Specialized Foundation LLC, Abu Dhabi, United Arab Emirates 8.3 20.7
BAUER International Qatar LLC, Doha, Qatar 8.0 13.8
Saudi BAUER Foundation Contractors Ltd., Jeddah, Saudi Arabia 25.3 10.8
BAUER (MALAYSIA) SDN. BHD., Petaling Jaya, Malaysia - (sub-group consolidated financial statements) 95.4 84.7
BAUER Hong Kong Limited, Hong Kong, People’s Republic of China 41.6 45.3
BAUER Vietnam Ltd., Ho Chi Minh City, Vietnam 3.1 2.9
BAUER Foundations Philippines, Inc., Quezon City, Philippines 15.9 10.2
P.T. BAUER Pratama Indonesia, Jakarta, Indonesia 26.0 30.2
Thai BAUER Co. Ltd., Bangkok, Thailand 17.6 21.2
BAUER Foundation Australia Pty Ltd., Brisbane, Australia 13.8 6.7
BAUER FOUNDATION CORP., Odessa, Florida, USA 48.9 42.2
BAUER Foundations Canada Inc., Calgary, Canada 19.1 9.1
BAUER FUNDACIONES PANAMÁ S.A., Panama City, Panama 11.9 11.7
Other BST shareholdings 16.3 17.2
Joint ventures, Germany - (BST share only) 6.4 2.0
Intra-Group sales -84.3 -93.9
BST Group total 673.7 657.4
SCHACHTBAU NORDHAUSEN GmbH - Group
SCHACHTBAU NORDHAUSEN GmbH, Nordhausen, Germany (SBN) 102.1 107.3
SBN participations 30.1 33.8
Joint ventures SCHACHTBAU NORDHAUSEN GmbH - (SBN share only) 1.7 0.0
SPESA Spezialbau und Sanierung GmbH, Schrobenhausen, Germany 17.0 14.2
Joint ventures SPESA - (SPESA share only) 5.1 6.7
Intra-Group sales -61.3 -59.0
SBN Group total 94.7 103.0
BAUER Maschinen GmbH - Group
BAUER Maschinen GmbH, Schrobenhausen, Germany (BMA) 391.7 383.3
KLEMM Bohrtechnik GmbH, Drolshagen, Germany 39.9 42.9
EURODRILL GmbH, Drolshagen, Germany 13.1 12.4
RTG Rammtechnik GmbH, Schrobenhausen, Germany 28.4 26.4
Compared to the breakdown of total Group revenues by segment, in the breakdown of total Group revenues by company the total of the individual groups is shown
after consolidation.
* Previous year adjusted; see notes on page 106
43COMBINED MANAGEMENT REPORT
Trend by Segment
The Magdeburg Waterway Construction Authority is conducting remediation work on the Zerben lock on the Mittelland Canal.
Since March 2013, Bauer has carried out 10,000 m² of diaphragm wall, 20,000 m² of sheet pile walls, 930 buoyancy piles and
505 ground anchors as part of a joint venture. The work was concluded in November 2014.
Continued: Breakdown of total Group revenues across the companies of the BAUER GroupShareholdings < 50 % are listed with their revenue share
in EUR million 2013 * 2014
BAUER Maschinen GmbH - Group
MAT Mischanlagentechnik GmbH, Immenstadt, Germany 12.3 11.8
PRAKLA Bohrtechnik GmbH, Peine, Germany 27.9 13.0
Olbersdorfer Guß GmbH, Olbersdorf, Germany 7.4 7.9
SPANTEC Spann- & Ankertechnik GmbH, Schrobenhausen, Germany 18.5 21.5
BAUER Deep Drilling GmbH, Schrobenhausen, Germany 0.0 1.3
TracMec Srl, Mordano, Italy 12.1 11.4
BAUER EQUIPMENT UK LIMITED Rotherham, UK 7.9 7.4
BAUER Macchine Italia Srl, Mordano, Italy 8.3 13.1
OOO BAUER Maschinen Russland, Moscow, Russian Federation 15.5 7.8
OOO BAUER Maschinen - Kurgan, Kurgan, Russian Federation 7.8 5.6
OOO BG-TOOLS-MSI, Lyubertsy, Russian Federation 2.9 1.6
BAUER Equipment Gulf FZE, Dubai, United Arab Emirates 5.5 8.4
BAUER Casings Makina Sanayi ve Ticaret Limited Sirketi, Ankara, Turkey 5.5 3.9
BAUER-DE WET EQUIPMENT (PROPRIETARY) LIMITED, Rasesa, Botswana 2.6 2.1
BAUER Technologies Far East Pte. Ltd., Singapore, Singapore - (sub-group consolidated financial statements) 120.9 152.9
NIPPON BAUER Y.K., Tokyo, Japan 7.9 7.3
BAUER-Pileco Inc., Conroe, Texas, United States of America 68.9 76.3
BAUER Manufacturing Inc., Conroe, United States of America 22.9 22.2
Other BMA participations 17.1 11.5
Intra-Group sales -229.2 -220.5
BMA Group total 615.8 631.5
BAUER Resources GmbH - Group
BAUER Resources GmbH, Schrobenhausen, Germany (BRE) 9.6 29.6
GWE pumpenboese GmbH, Peine, Germany 51.0 56.0
GWE Prakla Services GmbH - merged with GWE pumpenboese GmbH 2.2 0,0
BAUER Umwelt GmbH, Schrobenhausen, Germany (BMU) 42.7 54.8
BAUER Water GmbH, Dunningen, Germany 13.5 13.5
Esau & Hueber GmbH, Schrobenhausen, Germany 11.5 15.4
BAUER Foralith GmbH, Schrobenhausen, Germany 5.9 5.1
GWE POL-Bud Sp.z.o.o, Lodz, Poland 2.9 3.1
FORALITH Drilling Support AG, St. Gallen, Switzerland 2.9 5.1
BAUER Ambiente S.r.l., Milan, Italy 1.4 1.4
GWE Budafilter Kft., Mezöfalva, Hungary 3.1 3.2
BAUER Resources GmbH / Jordan Ltd. Co., Amman, Jordan - (sub-group consolidated financial statements) 20.7 29.9
BAUER Nimr LLC, Maskat-Al Mina, Sultanate of Oman 11.8 17.4
BAUER Emirates Environment Technologies & Services LLC, Abu Dhabi, United Arab Emirates 3.3 4.8
BAUER Technologies South Africa (PTY) Ltd., Johannesburg, South Africa -
(sub-group consolidated financial statements)4.2 2.4
BAUER RESOURCES GHANA LIMITED, Accra, Ghana 1.4 2.5
GWE Tubomin S.A., City of Santiago, Chile 3.5 3.3
BAUER Resources Canada Ltd., Edmonton, Canada - (sub-group financial statements) 3.1 1.2
Other participations of BRE 8.1 7.3
Joint ventures BAUER Umwelt GmbH - (BMU share only) 0.0 4.6
Intra-Group sales -27.9 -34.9
BRE Group total 174.9 225.7
BAUER Aktiengesellschaft, Schrobenhausen, Germany (BAG) 37.0 37.1
Other participations of BAG 2.3 2.3
Intra-Group sales -94.2 -96.8
GROUP TOTAL 1,504.2 1,560.2
* Previous year adjusted; see notes on page 106
45
Our customer Bachy Soletanche sunk piles with a diameter of 1,050 mm to a depth of over 20 m using a BG 46 in double-head
mode for the Puddington Mill London train station.
COMBINED MANAGEMENT REPORTEarnings, fi nancial and net asset position
IV. EARNINGS, FINANCIAL AND NET ASSET POSITION
Orders in hand in the international specialist foundation
engineering business fell by 24.8 percent to EUR 271.0
million owing to the completion of large-scale projects. The
foundations of the bridge between Hong Kong and Macau,
and further work on the building complexes adjoining what
will soon be Europe’s tallest building, the Lakhta Tower in
St. Petersburg, Russia, have been completed successfully.
The diaphragm walling works on the Center Hill dam in
the USA will be completed in the second quarter of 2015.
A major diaphragm walling project on Mauritius has reached
a very advanced stage, and it will be possible to complete
it towards the middle of 2015. A particularly positive aspect
is the situation of our subsidiary in Egypt which, despite
the difficult situation in the country, has been able to attract
some very interesting, large-scale projects, enabling us to
predict an increase in its revenues.
The Construction and Environmental Technology divisions of
SCHACHTBAU NORDHAUSEN GmbH have orders in hand
totaling EUR 47.5 million, 10.5 percent up on the previous
year’s level. Business operations are currently benefiting from
the generally favorable development in the construction market
in Germany.
Orders in hand in the Equipment segment of EUR 158.7 mil-
lion are 36.2 percent up on the previous year’s level of EUR
116.5 million. BAUER Maschinen GmbH itself produces and
sells large machines, and delivered a large proportion of its
orders by the end of the year; orders in hand fell from EUR
50.1 million to EUR 37.2 million in consequence of this. The
business remains very short-term in nature. The majority of
TREND IN ORDERS
At the end of 2014, the BAUER Group held orders in hand
totaling EUR 762.7 million, which is approximately at the
previous year’s level of EUR 765.2 million. On the whole,
orders in hand remain at a good level overall but some
events in 2014 have also had a negative effect on this. There
would have been more orders in hand by the end of the year
had it not been for the crisis involving Russia and Ukraine,
uncertainties in Iraq resulting from the Islamic State terror
organization and the drop in the oil price.
The Construction segment had orders of big projects on
its books last year. These have now been finished. Conse-
quently, orders in hand declined significantly by 9.6 percent
from EUR 498.7 million to EUR 450.9 million. In 2014, there
were hardly any major orders on the market, whereas many
small and medium projects were picked up in all regions of
the world. The homogeneous regional distribution over the
world is positive, and so this represents a good basis for
reaching the objectives for 2015.
In Germany, specialist foundation engineering business
has experienced a significant decline in its orders in hand
following processing of the major project for the bypass rail
link between Hanau and Nantenbach. At present, there are
hardly any major projects on the market even in Germany.
Nevertheless, the overall environment continues to be
positive, as a result of which it has been possible to occupy
capacity with a large number of small and medium projects.
Total orders in hand in this area have fallen by 34.5 percent
to EUR 62.2 million.
in EUR '000 2013 2014 Backlog of orders in hand in
months in relation to total
Group revenues 2014In hand Received In hand Received
Construction 498,701 727,287 450,940 665,244 7.6
Equipment 116,525 632,053 158,720 693,967 2.9
Resources 150,020 180,054 153,027 255,837 7.3
Intra-Group revenues and
IFRS adjustments 0 -54,915 0 -57,387 ---
Total 765,246 1,484,479 762,687 1,557,661 5.9
Orders in hand/orders received by segment
46COMBINED MANAGEMENT REPORTEarnings, fi nancial and net asset position
With regard to the Group as a whole, orders in hand are in
line with our forecast for slight growth in the current year.
GROUP EARNINGS POSITION
The Group earnings position in 2014 was influenced by
contradictory developments compared to the previous year.
Our construction subsidiary, BAUER Foundation Corp. in the
USA, recorded significant losses amounting to EUR 19.0 mil-
lion. These arose from the major Center Hill dam project
and due to the lack of capacity utilization, because that
project meant it was not possible to process sufficient other
orders. Furthermore, weak order levels in the UK as well as
inadequate utilization of our drilling capacity in the Resources
segment – especially in Jordan – negatively influenced the
earnings position. Furthermore, our worldwide activities were
burdened by restructuring measures in many areas. How-
ever, there were also many positive developments, especially
the construction business in Germany, Russia, the United
Arab Emirates, Saudi Arabia, Indonesia and Thailand. In the
Equipment segment, we were able to achieve better margins
once again due to increased sales of large and special rigs.
The Environment area was also highly positive.
Overall, the positive overall result could only be posted
because we compensated for special losses during the
year by means of a one-off income item amounting to EUR
36.5 million. The one-off income item was derived from the
sale of 21 percent of the shares in our subsidiary in Oman.
As a result of the sale, our holding fell to 49 percent; this
triggered de-consolidation and the investment therefore had
to be posted at the year end at-equity in relation to the fair
value. The company had undergone excellent development
in recent years, and its future prospects are very bright.
The reduction to a 49 percent shareholding is a sensible
measure, because majority locally owned companies in
Oman have better chances of winning orders.
As a result of the one-off income item, it was possible to im-
prove the results figures compared to 2013. In consequence,
the net profit for the period increased compared to the
previous year from EUR -19.4 million to EUR 15.7 million.
EBIT increased from EUR 30.1 million to EUR 76.4 million.
EBITDA increased by 37.9 percent from EUR 124.0 million
machines are delivered within one month of being ordered.
As a result, it is necessary to keep a stock of machines
available, so as to meet customers’ expectations for rapid
delivery.
However, the subsidiaries in the segment recorded significant
growth. BAUER Deep Drilling GmbH sells deep drilling rigs
and succeeded in growing its orders in hand by EUR 53.7 mil-
lion thanks to orders received in December. It is very pleasing
that we have managed to make a significant breakthrough
here. In spite of turbulence in the oil markets, we are assuming
that we will be able to build on this success in coming years.
Overall, the many efforts by our company to improve and
specialize products and services are being welcomed by our
customers, so we are confident of achieving the necessary
order intake for the current year.
In the Resources segment, orders in hand increased
slightly, by 2.0 percent, from EUR 150.0 million to EUR
153.0 million. Of that total, a significant proportion – worth
EUR 40.9 million – was held by the Mining division of
SCHACHTBAU NORDHAUSEN GmbH. We have interesting
projects, in both Kazakhstan and Germany, which can
provide us with work for years to come.
The orders in hand of the BAUER Resources Group itself
have increased by 7.3 percent to EUR 112.1 million. In
Environmental Technology, in particular, our levels of orders
in hand are very healthy. We are still involved in our large-
scale project of operating the reed-bed treatment plant in
Oman, and it will provide us with plenty of work for years to
come. Our capacities are also being well utilized in Germany.
Conversely, the well-engineering materials business is very
short-term in nature, so there are never high levels of orders
in hand. We expect these levels to remain consistent. The
exploration and mining business for our customers remains
problematic in many different countries around the world.
Mine operators are faced with economic problems, as a
result of which very few contracts are being awarded. That
business accounts for only a very small proportion of our
total revenues however. Major projects are continually arising
around the world for the Resources segment to target. We
therefore remain convinced that this business especially will
continue to provide us with interesting opportunities in future.
47COMBINED MANAGEMENT REPORT
Earnings, fi nancial and net asset position
Other income rose very significantly against the previous
year, from EUR 30.6 million to EUR 89.0 million. The main
change in other income is due to the overall effect of selling
21 percent of the shares in BAUER Nimr LLC amounting to
EUR 36.5 million and the associated fair-value reporting of
the remaining shares. Other key changes to this item related
to realized and unrealized foreign currency gains as well as
gains from foreign exchange forward contracts, which overall
increased by EUR 23.1 million to EUR 34.6 million compared
to the previous year. Realized and unrealized foreign
currency gains and losses as well as gains and losses from
foreign exchange forward contracts result from our currency
hedge management activities. Fluctuations in hedged and
unhedged currencies can cause the corresponding income
statement items to vary widely over the years depending on
trends. The unbalanced statement of exchange rate shifts
results from the situation that exchange rate hedging cannot
always be set exactly against the underlying transactions,
even though in operational reality they are aligned as closely
as possible to each other. The Group’s objective is to under-
take exchange rate hedging which rules out the possibility
of foreign currency gains or losses as far as possible. The
countering item in an amount of EUR 29.8 million (realized
and unrealized foreign currency losses and losses from
foreign exchange forward contracts) is entered under “Other
operating expenses”. The difference between the gains and
losses shows that we experienced overall foreign currency
gains of EUR 4.8 million in the year under review. The
considerable fluctuations in exchange rates towards the end
of the year were the main cause of this positive result. The
other major items under “Other income” are income from
insurance refunds (EUR 1.8 million), book profits on asset
disposals (EUR 5.4 million) and other operating income
distributed amongst the companies.
to EUR 171.0 million, representing 11.4 percent (previous
year: 8.6 percent) of consolidated revenues.
The pre-tax return on equity as the ratio of pre-tax profit
to shareholders’ equity (equity at the start of the period)
improved against the previous year from -1.3 percent to
9.0 percent. The return on equity after tax was 3.7 percent
(previous year: -4.2 percent). The return on sales after tax
(relative to the consolidated income statement revenues)
improved from -1.3 percent to 1.0 percent year-on-year.
We expect to be able to improve our returns further in the
coming years.
There have been substantial changes to some income
statement items in the year under review. This is largely a
consequence of the negative result in the previous year and
the special influences in the financial year.
The individual income statement items are summarized in
the following.
Consolidated revenues rose by 4.0 percent against the
previous year (EUR 1,447.5 million) to EUR 1,506.0 million.
This includes a sale and consolidation income from the at-
equity balancing of BAUER Nimr LLC in Oman with EUR 36.5
million. Without this special effect, consolidated revenues
would have grown by 1.5 percent.
Sales revenues were down slightly by 1.9 percent
compared to the previous year (EUR 1,402.2 million) at
EUR 1,375.7 million.
The other capitalized goods and services for own
account item decreased by 23.4 percent from EUR
19.2 million to EUR 14.7 million. The reduction is due to
our restrained investment policy in 2014.
in EUR million Q1 2014 Q2 2014 Q3 2014 Q4 2014 Full year 2014
BAUER Group 378.076 371.139 413.948 397.057 1,560.220
Construction 176.504 174.944 181.805 179.752 713.005
Equipment 165.806 155.534 186.148 144.284 651.772
Resources 48.409 52.547 59.615 92.259 252.830
Other/Consolidation -12.643 -11.886 -13.620 -19.238 -57.387
Trend in total Group revenues by quarter
48
described under “Other income”, which contributed to an
increase in the item at EUR 8.6 million.
Financial income fell by 8.2 percent from EUR 7.7 million
to EUR 7.1 million. Financial expenses fell by 0.9 percent
from EUR 45.5 million to EUR 45.1 million. The slightly higher
conditions from the syndicated loan concluded in April 2014
were able to be compensated by slightly lower utilization of
the other lines during the course of the year, as well as by
some interest rate reductions.
The share of the profit or loss of associated companies
accounted for using the equity method is EUR 2.3 mil-
lion below the previous year at EUR -0.6 million, largely due
to a write-down of the investment in Spain (EUR -2.3 million).
Income tax expense of EUR 22.1 million was EUR 8.6 mil-
lion above the previous year’s level. The main reason for
the significant rise is a consequence of the loss incurred on
the Center Hill dam project in the USA. In this case, it was
not possible to report corresponding deferred tax assets,
because from the current perspective there is no reason to
expect that the loss can be compensated within a reason-
able period of time by profits earned locally. Negative result
contributions from subsidiaries in individual countries only
have the effect of reducing the tax burden on the Group if
it has been possible to establish deferred tax assets on the
basis of positive tax-related earnings planning. In future, we
once again expect an income tax burden of between 30 and
40 percent.
The non-controlling interests in profit/loss item was EUR
1.2 million (previous year: EUR -2.5 million). The companies in
Oman and Egypt contributed significantly.
The profit attributable to BAUER AG shareholders was
EUR 14.5 million.
Costs of materials hardly changed during the year under
review at EUR 749.2 million. Costs of materials on projects
in the Construction segment vary widely, so comparisons
between individual years are only possible to a very limited
extent.
Personnel expenses increased by 3.6 percent to EUR
355.3 million – a slightly lower rate than the consolidated
revenues. The rise is largely explained by higher personnel
expenses for our major projects in Hong Kong, the USA and
Switzerland.
The decline in depreciation of fixed assets by 1.2 percent
to EUR 78.8 million is due to the absence of write-downs of
goodwill and a slight increase in write-downs of development
costs and properties and buildings.
Write-downs of inventories due to use reflect the use of
rental equipment made available to our customers. This equip-
ment does not form part of the fixed assets, but is recognized
under inventories. The reason for this approach is that most of
this equipment remains within the company only for a relatively
short time. The aim of the rental operation is to subsequently
sell the equipment under a rental-purchase agreement. As
the equipment has to be financed correspondingly on the
Equity and Liabilities side of the balance sheet, its depreciation
forms part of the company’s EBITDA. As a consequence of
the changes in the market following the financial crisis, our
customers are increasingly entering into these rental transac-
tions. The write-downs due to use increased by 11.2 percent
to EUR 15.8 million during the year under review.
Other operating expenses rose by 2.5 percent to EUR
230.5 million. The many individual components of this item
develop in very different ways depending on the course
of business and the mix of the order portfolio. This item
includes the realized and unrealized foreign currency losses
in EUR million Q1 2014 Q2 2014 Q3 2014 Q4 2014 Full year 2014
BAUER Group 4.919 8.684 24.689 38.134 76.426
Construction 1.418 6.000 12.900 4.750 25.068
Equipment 5.647 7.527 12.720 11.023 36.917
Resources -2.118 -1.163 -2.378 21.591 15.932
Other/Consolidation -0.028 -3.680 1.447 0.770 -1.491
EBIT trend by quarter
COMBINED MANAGEMENT REPORTEarnings, fi nancial and net asset position
49
require financing across the Group’s many construction
sites corresponding to roughly three months’ sales of
the Construction segment. So we are always billing after
carrying out the works. Moreover, we also have to finance
retentions of payment as safety.
The situation in the Equipment segment is similar. Produc-
tion lead times for our specialist machinery are around
12 months. Since customers usually only order equipment
once they have an actual contract to fulfil, and so expect
short delivery lead times from us, we are forced to hold
stocks of finished machinery. And since we also offer a
very wide product range – as is likewise demanded by the
market – our financing needs are increased correspondingly.
The working capital also covers the machines we rent out
to customers, or which are only bought by customers after
a certain rental period based on a rental-purchase agree-
ment. With worldwide inventories now extending to several
thousand Bauer machines, many of our locations have to
hold considerable stocks of spare parts in order to provide
customers with the necessary service backup.
Nevertheless, we judge that the working capital of the
BAUER Group is currently too high in relation to our busi-
ness volumes. Our levels of inventories, finished goods and
receivables have increased beyond the normal bounds.
This is not good, but on the other hand is explainable,
because we are aware of the reasons why it is so: they
reflect market trends as well as a number of special effects.
Furthermore, substantial amounts are imposing a burden,
as claims in respect of supplementary work on completed
international construction projects are having to be asserted
by legal action. Even though the amounts are recognized
with due commercial caution in the accounts, they are
nevertheless imposing a burden in terms of the indebted-
ness of the business.
GROUP FINANCIAL AND NET ASSET POSITION
With consolidated revenues up 4.0 percent on the previous
year, the Group’s net assets fell 0.7 percent from EUR
1,585.8 million to EUR 1,575.1 million. The equity ratio of
26.6 percent was slightly up on the previous year (25.5 per-
cent). The loss in 2013 meant that the equity ratio fell below
30 percent in the previous year. The significant effects from
the interest-related increase in defined benefit plans impacted
equity and meant we were unable to increase our equity
ratio further in 2014. We are aiming to achieve a value in
excess of 30 percent in coming years. All investment and
growth plans of the business are aligned to this target.
The net debt of our business decreased by 3.9 percent in
the year under review. In the coming years, we will continue
to work intensively on reducing net debt in relation to net
assets. We must stress, however, that in view of the nature
of our business and the current economic climate, that
is only possible to a certain extent. The reasons for the
considerable rise over recent years following the financial
crisis are detailed below:
The level of net debt within the Group depends essentially
on the working capital, as the intangible assets as well
as the property, plant and equipment and the investment
property are very largely covered by the shareholders’
equity and defined benefit plans. The working capital
of our businesses is inevitably relatively high due to the
nature of our business model and the special market in
which we operate. Our construction projects run for only
comparatively short periods of time. As opposed to build-
ing construction contractors, who work on longer-running
projects, we only sometimes receive advance payments for
the construction project in question to generate a positive
cash flow over the term of the project. Short-running
construction contracts – such as we mostly carry out –
1 EUR corresponds to Average rate
2013
Q1 2014 Q2 2014 Q3 2014 Q4 2014 Average rate
2014
USD 1.3301 1.3782 1.3692 1.2632 1.2166 1.3219
GBP 0.8497 0.8266 0.8008 0.7792 0.7818 0.8028
RUB 42.5912 48.4270 46.5654 50.0110 67.5895 51.5000
CNY 8.1686 8.5735 8.4918 7.7596 7.5550 8.1575
Exchange rate trend 2014
COMBINED MANAGEMENT REPORTEarnings, fi nancial and net asset position
50
On the Assets side:
• Intangible assets declined by EUR 0.9 million. At the
same time, concessions and industrial property rights fell
by EUR 0.9 million.
• Land, land rights and buildings declined by EUR
5.0 million to EUR 206.6 million. Only small building
projects were undertaken during the financial year. In
the USA, the premises of BAUER-Pileco Inc. were sold
and the company relocated to the works of BAUER
Manufacturing Inc. in Conroe near Houston. A hall and an
office were set up there for this purpose.
• Payments on account and assets in course of
construction increased by EUR 2.9 million. The increase
should be seen in connection with the land, land rights
and buildings item, because some of the structures had
not been finished at the year-end.
• Technical equipment and machinery decreased
by EUR 8.3 million to EUR 206.2 million. This is a
consequence of the cautious investment strategy we are
currently pursuing. Basically, however, the shift in demand
on international construction markets means that our
construction works require increasingly large machinery
and equipment. Consequently, small equipment is
increasingly being replaced by much larger machinery,
leading to a general increase in fixed assets. They were
nevertheless reduced in the past financial year.
• Other equipment, factory and office equipment
decreased by EUR 2.2 million to EUR 25.1 million.
Property, plant and equipment and investment
property were reduced overall by EUR 12.6 million to
EUR 446.9 million.
• Investments accounted for using the equity method
increased by EUR 29.7 million to EUR 42.9 million. The
main changes involved the increase in investments in
joint ventures by EUR 0.9 million, the write-down on a
Spanish investment amounting to EUR 2.3 million and the
new at-equity balancing of BAUER Nimr LLC in Oman at
EUR 31.1 million.
We are aware that the Group’s higher financing requirements
place greater weight on the question of our in-house financing
capabilities. Following the loss made in 2013, the equity ratio
has fallen too low, so it will have to be increased again in the
years ahead. It would be much higher if the hidden reserves
were included. Since changing over to IFRS we have used
the historical cost model to value land and buildings. With a
carrying amount for the land and buildings of EUR 206.6 million,
there is a considerable reserve here.
The net debt to EBITDA and EBITDA to net interest coverage
ratios agreed with lenders as covenants have worsened
since the financial crisis, and especially as a result of the loss
made in the 2013 financial year. In 2014, it was possible to
move the net debt to EBITDA ratio to an acceptable level
at 3.78, representing a significant improvement compared
to the previous year (5.42). The two other agreed covenant
ratios – EBITDA to net interest coverage and equity ratio –
are adequately within the agreed thresholds. The Group has
entered into covenants in respect of a number of long-term
loans, which were valued as per the 2014 year-end at EUR
156.0 million. The covenants on them stipulate net debt to
EBITDA ratio thresholds between 4.0 and 5.0.
In April 2014, we agreed a three-year syndicated loan with a
consortium of the company's main banks providing a EUR
450 million credit facility. This also includes threshold values
for the net debt to EBITDA and the EBITDA to net interest
coverage ratios and for the equity ratio. This provided the
firm a new financing structure which will form the basis for
planning going forward. The syndicated loan also replaced
loans affected by the breaking of covenants in the previous
year. The new financing structure imposes slightly higher
financing costs on the Group.
With regard to the individual items on the balance sheet, the
following material changes should be noted:
2013 2014
Net debt/EBITDA 5.42 3.78
EBITDA/net interest coverage 3.28 4.49
Equity ratio in % 26.5 26.6
Covenants trend
COMBINED MANAGEMENT REPORTEarnings, fi nancial and net asset position
51
• Deferred tax assets increased by EUR 4.7 million to
EUR 31.0 million. The greatest change in this context
arose from the interest-related revaluation of defined
benefit plans, leading to additional deferred tax assets
amounting to EUR 9.0 million.
• Receivables from concession arrangements have
been omitted due to the explained sale of shares in
BAUER Nimr LLC as at 31 December 2014.
• Other non-current financial assets increased by EUR
23.0 million to EUR 28.4 million. The main change here
concerns a loan by BAUER Resources GmbH to BAUER
Nimr LLC amounting to EUR 9.4 million for financing the
water treatment plant in Oman as well as the outstanding
purchase price receivable from the sale of the shares in
BAUER Nimr LLC amounting to EUR 13.3 million.
• Raw materials and supplies increased 5.9 percent
compared to the previous year, by EUR 8.7 million to
EUR 155.3 million. Around 40 percent of this item relates
to the Construction and Resources segments.
• Work in progress and finished goods and merchan-
dise increased 4.1 percent from EUR 272.7 million to
EUR 283.9 million. During the financial year, it was not
possible to reduce inventories further in the Equipment
segment, due among other factors to a somewhat weaker
year-end business in the Equipment segment. However,
we will continue to work diligently on reducing this item.
• Receivables from construction contracts (PoC) de-
creased by EUR 11.0 million to EUR 132.2 million. Changes
in this item result from the percentage of completion of our
projects at the year-end closing date.
• Trade receivables increased by EUR 8.9 million to
EUR 311.4 million.
• Other current assets decreased by EUR 2.1 million to
EUR 28.6 million.
• Other current financial assets increased by EUR
0.5 million to EUR 20.1 million.
• Cash and cash equivalents decreased by EUR 15.4 mil-
lion to EUR 41.8 million. Attempts are made to minimize
this figure at the year-end by appropriate liquidity manage-
ment.
In assessing the Assets side of the consolidated balance
sheet, it is important to note that this is composed of a
Construction element (relating to the Construction and
Resources segments) and an Equipment element (relating to
COMBINED MANAGEMENT REPORTEarnings, fi nancial and net asset position
Assets Equity and liabilities
Non-current assets
EUR 594.8 million (37.8 %)
(2013: EUR 587.8 million (37.1 %))
Current assets
EUR 938.5 million (59.6 %)
(2013: EUR 940.8 million (59.3 %))
Liquid funds
EUR 41.8 million (2.6 %)
(2013: EUR 57.2 million (3.6 %))
EUR 1,575.1 million EUR 1,575.1 million
Shareholders’ equity
EUR 418.9 million (26.6 %)
(2013: EUR 419.8 million (26.5 %))
Non-current liabilities
EUR 523.3 million (33.2 %)
(2013: EUR 382.5 million (24.1 %))
Current liabilities
EUR 632.9 million (40.2 %)
(2013: EUR 783.5 million (49.4 %))
52
netted against the associated deferred tax assets (EUR
-23.2 million).
• Non-controlling interests decreased by EUR 3.2 million
to EUR 19.6 million, chiefly due to the de-consolidation of
BAUER Nimr LLC.
• The non-current portion of liabilities to banks in-
creased from EUR 247.8 million to EUR 364.8 million.
The increase is largely due to drawings on the agreed
syndicated loan.
• Non-current defined benefit plans increased by EUR
34.7 million to EUR 116.4 million. The increase is largely
due to the lower discount rate, which is now 2.0 percent.
The annual injection from ongoing pension commitments
only contributed to the increase to a small extent. Overall,
this has a negative effect on the equity ratio.
• Deferred tax liabilities decreased by EUR 1.8 million.
• The current portion of liabilities to banks declined
from EUR 427.6 million to EUR 266.5 million as a result
of the increase in non-current financing and the lower
utilization of financing overall. Financing decreased
by EUR 44.1 million overall in terms of current and
non-current liabilities to banks. Taking into account the
decrease in the “Cash and cash equivalents” item (EUR
15.4 million), the decrease was EUR 28.7 million. It was
possible to reduce indebtedness in spite of the difficult
market environment.
• Liabilities from construction contracts relate primarily
to construction projects on which the payments received
surpass the work carried out. They increased by EUR
15.6 million to EUR 48.5 million.
• Trade payables decreased by EUR 25.5 million to EUR
169.0 million. By this practice we are able to make use of
all discounting opportunities.
• Other current liabilities decreased by EUR 1.2 million to
EUR 68.6 million.
machinery manufacturing operations). Some specific items
relate primarily to the Construction element, while others, in
contrast, relate to the Equipment element. The main items of
such kinds are listed in the following:
• Within property, plant and equipment, well over two
thirds of the land, land rights and buildings item relates to
the Equipment segment. On the other hand, about three
quarters of the technical equipment and machinery item is
attributable to the Construction segment.
• Some 60 percent of the raw materials and supplies
item is linked to the machinery manufacturing operations
of the Equipment segment.
• Some 90 percent of the work in progress and finished
goods and merchandise item relates to the Equipment
segment, with a small percentage attributable to the
Construction and Resources segments. In the Equipment
segment, it is essential to successful selling operations
to maintain stocks of rental equipment as part of current
assets, so that customers can try out the machinery
before making their final purchasing decision. Equipment
can also be drawn from the pool to cover short-term
capacity bottlenecks on construction sites. The machinery
in production at the balance sheet date also represents a
very substantial capital tie-up.
• Receivables from construction contracts (PoC) are
attributable to the Construction and Resources segments.
The trade receivables item is broken down according to
the respective segments’ shares of total Group revenues.
These different weightings are barely relevant to inter-period
balance sheet comparisons when the rate of growth – either
positive or negative – of the business areas is roughly the
same.
On the Equity and Liabilities side:
• Shareholders’ equity decreased slightly by EUR
0.9 million to EUR 418.9 million. Factors contributing
to this change were the net profit for the period (EUR
15.7 million), currency fluctuations (EUR 10.5 million) and
the interest-related adaptation in defined benefit plans
COMBINED MANAGEMENT REPORTEarnings, fi nancial and net asset position
53
• The decrease in trade receivables and in receivables
from construction contracts resulted in a release of funds
totaling EUR 44.9 million in contrast to a capital tie-up of
EUR 87.3 million in total in the previous year.
• The increase in inventories impacted on operating cash
flow in the amount of EUR 37.3 million.
Cash flow from investment activities totaled EUR -47.5 mil-
lion, decreasing by EUR 19.7 million below last year’s figure,
especially due to the reduced investment activity.
The outflow of funds from financing activities was EUR
-86.9 million. The main factors influencing this were loan
repayments amounting to EUR 237.8 million and interest
payments of EUR 43.0 as well as new indebtedness to
banks in the amount of EUR 202.3 million.
• Other current financial liabilities increased by EUR
13.6 million to EUR 25.7 million. This is chiefly due to
liabilities from forward exchange transactions, an increas-
ing number of which were concluded at the year-end as a
result of currency fluctuations.
The ratio of net assets to consolidated revenues decreased
from 109.6 percent to 104.6 percent.
Net cash from operating activities shown in the cash flow
statement increased substantially from EUR 38.4 million to
EUR 115.4 million. The following factors contributed to this
change:
• Owing to the effects set out under “Earnings”, a pre-tax
profit of EUR 37.8 million was made compared to a loss of
EUR 6.0 million in the previous year.
• Depreciation on fixed assets decreased slightly by EUR
0.9 million, and contributed EUR 78.8 million to the inflow
of funds from ongoing business activity.
COMBINED MANAGEMENT REPORTEarnings, fi nancial and net asset position
54
V. FINANCIAL STATEMENTS OF BAUER AKTIENGESELLSCHAFT
COMBINED MANAGEMENT REPORTFinancial Statements of BAUER Aktiengesellschaft
• The operating result improved by EUR 0.5 million to
EUR -0.2 million.
• The net profit for the year is EUR 5.9 million, EUR
0.8 million up on the previous year. No dividend was paid
in the 2014 financial year, as a result of which the net
earnings available for distribution increased significantly
from EUR 27.4 million to EUR 33.3 million.
The payment of dividends to shareholders is based on the
net earnings of BAUER AG as the parent company, taking
into account the Group’s consolidated earnings. The divi-
dend policy of BAUER AG is one of continuity, meaning that
in principle a dividend should be paid even in difficult years,
where financially justifiable. As the Group’s holding company,
BAUER AG is dependent on the earnings of its subsidiaries,
and additionally provides financing to them.
Following a difficult financial year, the planned after-tax result
in the Group could only be achieved by means of a one-off
income. We believe it is appropriate to allow our sharehold-
ers to participate in this, so we intend to pay a small dividend
again. At the same time, we are still intensively pursuing the
objective of improving the equity ratio. The Management
Board will therefore recommend to the Supervisory Board
that it propose to the Annual General Meeting that a dividend
of EUR 0.15 be paid to shareholders on the net earnings
available for distribution totaling EUR 33,349,700.22.
An amount of EUR 30,780,050.22 should therefore be
carried forward.
As the Group’s holding company, BAUER AG receives
earnings in particular from its subsidiaries. In 2015, dividend
payments from the subsidiaries will be somewhat lower
than in the year under review. The intention is to reduce the
burden on the subsidiaries’ capital base. For this reason,
the result in the financial statements for BAUER AG will be
somewhat decreased.
The annual report combines the Group management report
and the management report of BAUER AG as the parent
company. Consequently, notes on the balance sheet and
income statement of BAUER AG (acc. to German Commer-
cial Code, HGB) are presented at this point. They changed
materially in the following items in the past financial year
relative to the previous year.
Main changes to the balance sheet:
• Receivables and other assets increased by EUR
31.9 million. This is primarily down to the EUR 32.0 million
increase in receivables from affiliated companies, which
results from the issue of more loans to subsidiaries.
• Shareholders’ equity increased from EUR 155.3 million
to EUR 161.2 million. The reason for this was the net
earnings available for distribution, being EUR 5.9 million
higher than in the previous year.
• Liabilities increased from EUR 137.1 million to EUR
161.9 million. The main factor responsible for this was the
growth in liabilities to banks by EUR 43.5 million, which
chiefly resulted from the new syndicated loan. On the
other hand, liabilities to affiliated companies declined by
EUR 18.9 million.
Main changes to the income statement:
• Sales revenues, primarily related to charging of adminis-
trative services to subsidiaries, decreased slightly by EUR
0.5 million. On the other hand, other income increased
markedly by EUR 3.6 million, chiefly due to income from
forward exchange transactions.
• Other operating expenses rose by EUR 2.9 million.
Significantly higher expenses were incurred during the
financial year in currency management. In addition, there
were special expenses as a result of the syndicated loan.
55COMBINED MANAGEMENT REPORT
Sustainability
VI. SUSTAINABILITY
of the holding companies have the main responsibility for the
long-term development of the company as well as its direc-
tion with regard to quality, safety, health and environmental
protection. These topics are also discussed during monthly
group meetings.
At the meeting of the Corporate Social Responsibility (CSR)
Committee, the Executive Board and representatives of
Human Resources, HSE, Training and Corporate Commu-
nications departments of BAUER AG come together once a
year to discuss current developments and define actions and
goals. The annually published Sustainability Report, which
since 2011 meets the requirements of the Global Reporting
Initiative (GRI), provides in-depth information about these
actions and goals.
EMPLOYEES
Every single employee is extremely important in reaching
the common goals of the BAUER Group. Thanks to their
commitment and experience, in 2015 we can look back on
a successful history that spans 225 years. That’s precisely
why developing and supporting our staff is our top priority.
Employee-related data
The companies of the BAUER Group worldwide employed
10,405 people (previous year: 10,264) on average over the
year. They are broken down as follows:
SUSTAINABILITY WITHIN THE BAUER GROUP
The BAUER Group has combined its most important action
areas under the maxim “BAUER’s Triple A”. The slogan is
based on the highest grade given by rating agencies when
evaluating the strength of a company. It is used to reflect
the areas of utmost concern with the Group. The first of
these is Health, Safety and Environment, which has grown
significantly in recent years through various measures and
should continue to be expanded. The second area is Quality
and Ethics. We want to offer our customers the highest
quality possible and treat our stakeholders with fairness. The
third A stands for performance thus the company’s financial
success. The goal is to earn the highest grades – all A’s –
in each area.
The actions areas defined under BAUER’s Triple A also
represent the core aspects of sustainability management.
The Group Management Board and the Managing Directors
Value added 2014
in EUR million Value added
439
Other expenses
231
Depreciation and amortization
95
Cost of materials
749
Profit
(in the
company)
14
Share-
holders
2
Interest
expenses
45
Employees
355
Minority interests
1
Public purse
22
HealthSafety
Environment
Performance
56COMBINED MANAGEMENT REPORTSustainability
workforce of the companies in Germany decreased slightly.
One of our key goals is to retain the loyalty of our core
permanent workforce, which we again succeeded in doing in
the past year.
The workforce of the Resources segment was reduced
due to some restructuring measures, the reorganization and
as a result of weakness in the mining sector. The subsidiaries
in Jordan (35 employees) and South Africa (30 employees)
played a significant part in the reduction during the year
under review.
Education
At Bauer, we care about inspiring young people to work
for our company and maximize their potential. That’s why
we offer a variety of opportunities for getting to know the
company better as a potential employer and gaining insight
into our business activities. In 2014, Bauer employed 248
apprentices in Germany. Most of them were learning to
become industrial mechanics, construction machinery
operators, or clerical staff.
For higher education students, we offer dual-study courses
in engineering and information technology in cooperation
with the Hochschule Ingolstadt technical college. Students
can also establish initial links with our business through
internships or by undertaking their Bachelor’s or Master’s
thesis with us.
Construction segment: 5,675 (previous year: 5,531)
Equipment segment: 3,038 (previous year: 2,998)
Resources segment: 1,400 (previous year: 1,449)
BAUER AG and subsidiaries: 292 (previous year: 286)
The trend in workforce numbers within the Group was in line
with our expectations. Changes to subsidiaries’ workforce
numbers were primarily recorded outside of Germany, linked
to international construction projects. Individual contracts
often facilitate major changes.
By the nature of its operations, the workforce of the Con-
struction segment is subject to the greatest fluctuation
dependent on the number of major projects being handled
in specific countries. Consequently, the biggest growth was
achieved by the subsidiaries in Egypt (124 employees),
Indonesia (104 employees) and the United Arab Emirates
(44 employees). In some countries, such as Malaysia or
Algeria, fewer people were employed in the year under
review than in the previous year owing to the weaker state
of the market. The good overall level of orders in hand
led to a slight increase in workforce in Construction, while
the growth above all related to staff recruited for specific
projects.
Workforce numbers in the Equipment segment increased
only slightly. Most of the small rise was attributable to recruit-
ment of new staff at the production facilities in the Far East
(17 employees) and Botswana (12 employees). In total, the
Industrial Salaried staff Apprentices
3,371
2489,646
6,027
3,664
23910,253
6,350
3,835 3,948
240 24810,264 10,405
6,189 6,209
12,000
10,000
8,000
6,000
4,000
2,000
02011 2012 2013 2014
Construction Equipment Resources Others
12,000
10,000
8,000
6,000
4,000
2,000
02011 2012 2013 2014
2,915
1,367
2519,646
5,113
2,952
1,578
26910,253
5,454
2,998 3,038
1,449 1,400
286 29210,264 10,405
5,531 5,675
Employees by employment typeEmployees by segment
57COMBINED MANAGEMENT REPORT
Sustainability
personality and skills-based assessment. With this in mind,
we work specifically to attract more young women and girls
to technical professions and promote their advancement in
this area.
In 2014, approximately 11 percent of the Group’s workforce
were women – a figure which essentially reflects the techni-
cal nature of our business and the small numbers of women
who apply for such careers.
CAPITAL INVESTMENTS
In view of the general economic climate, we reduced our
capital investments compared to previous years in 2014.
For the first time in years, they were once again below
the level of amortizations. This was possible thanks to
extensive investments made in our plants over previous
years. The pace of technological progress in our business
has become faster, however, so it will only be possible to
improve performance in the future by increasing invest-
ments again.
For Equipment, our US plant in Conroe near Houston was
expanded in 2014 to allow our subsidiary BAUER-Pileco Inc.
to move there with all its activities in the areas of service,
sales and spare parts supply. The old site in Houston was
sold, thereby allowing the new construction to be financed
from the proceeds of the sale. Furthermore, the production
capacity for our anchor production in Edelshausen was
expanded in response to the urgent need for greater capac-
ity as a result of very good development in the business. All
further investments were chiefly channeled into modernizing
the equipment available to the production sites.
Investments in the Resources segment in 2014 were also
at a low level. A small hall was built in Schrobenhausen for
stainless steel production to be used in water treatment
and brewery systems. Further investments went into the
modernization of existing production systems.
Further investments were made in equipment, specifically
in the Construction segment, in order to meet the market
demand for ever more powerful machinery to handle special-
ist projects. We have for years now been seeing a trend
towards ever larger volumes in international infrastructure
projects, and we are increasingly needing ever larger
Training and development
The BAUER Training Center GmbH is the Group’s in-house
training facility, providing specially tailored courses both for
our own staff and for external target groups. Its extensive
program of seminars and courses in a wide variety of fields
covers many different subjects. In 2014 the BAUER Training
Center GmbH had a budget of around EUR 2.1 million
(previous year: EUR 2.3 million) for employee training and
development. Almost 2,717 in-house staff (previous year:
2,948) attended the seminars. A total of 475 (previous year:
599) internal and external seminars and external conferences
were attended.
We support our employees’ career development through a
system of reviews, coaching sessions and various mentoring
programs. We also conduct international training courses.
Diversity
In 2014, the BAUER Group employed people from 76 dif-
ferent nations. Our presence on worldwide markets has
brought together people from a wide variety of cultures as
part of our company. Our cooperation is characterized by
mutual respect. Discrimination, particularly on grounds of
religion, age, gender, race or sexual orientation, has no place
in our company. That’s why promoting diversity is an integral
part of our corporate culture.
We offer all our employees the same opportunities. In
both hiring and development, we place great emphasis on
Employees by region
12,000
10,000
8,000
6,000
4,000
2,000
02011 2012 2013 2014
1,891
1,658
630
478
924
9,646
4,065
2,061
542
965
10,253
4,090
726
1,869
2,212 2,290
612 586
950 1,018
10,264 10,405
4,144 4,158
762 752
1,584 1,601
Germany Europe (other) Middle East & Central Asia
Far East & Australia Americas Africa
58COMBINED MANAGEMENT REPORTSustainability
effects are derived with regard to their further development.
These central components include the hydraulics and drive
technology, electronics and machine software as well as
gearboxes. Basic research work is also situated in the
central development department.
Development work at the subsidiaries of BAUER Maschinen
GmbH comes under the described system, in which case
each subsidiary is individually responsible for its specific
product group. Our international production sites also have
development areas which concentrate on the needs of our
customers locally, as well as on special machines that are
manufactured in that location. A development office in India
provides support for all development groups if required.
Our construction areas also have their own development
capacities. Specifically, BAUER Spezialtiefbau GmbH
operates a department for construction technology which
develops new methods and conducts fundamental research.
With regard to research activities that might be of Group-
wide importance, internal and external orders are placed
for research work via the BAUER Forschungsgemeinschaft
(research community). This gives a chance for blue-skies
thinking to be investigated with regard to its practical
applicability. Sometimes, this gives rise to outstanding new
techniques that help our companies to achieve technological
advances.
This type of overall organization for research and develop-
ment work has proven highly effective. Rapid decisions and
great flexibility allow all products to be kept at the cutting
edge, while new ideas and market requirements can be
implemented quickly.
There were some outstanding development projects in 2014
as well. For example, Deep Drilling developed a completely
new deep drilling rig in the 375 metric ton class together with
our client, Saxon Energy Services Inc. Two rigs were ordered
at the end of the year. Our underwater drilling machines for
the foundations of wind turbines and underwater turbines
also underwent intensive further development. Unfortunately,
we are still waiting for orders to be placed for equipment of
this kind because of sluggish development in the projects
in question. However, we are convinced that the significant
machinery to carry out the associated specialist foundation
engineering works. This demands higher levels of individual
investment, but also opens up new market opportunities for
us.
In financial 2014 the BAUER Group invested a total of EUR
72.7 million (previous year: EUR 103.4 million) in intangible
assets and property, plant and equipment. Depreciation of
fixed assets across the Group totaled EUR 78.8 million
(previous year: EUR 79.7 million). Write-downs of inventories
due to use Group-wide totaled EUR 15.8 million (previous
year: EUR 14.2 million).
Additions to the property, plant and equipment assets of
BAUER AG in the 2014 financial year totaled EUR 2.3 million
(previous year: EUR 3.5 million), against depreciation of EUR
2.9 million (previous year: EUR 3.3 million).
Ongoing capital investments were funded primarily by cash
and cash equivalents from business operations and from
financing. In 2015 too, we will keep investments in balance
with amortizations.
RESEARCH AND DEVELOPMENT
The BAUER Group invested substantial sums in developing
new construction methods and machinery in financial 2014.
Key areas of focus were heavy-duty rotary drilling rigs, cranes
for specialist foundation engineering applications, drilling tool
technology, small boring equipment in the field of anchoring
and high-pressure injection, diaphragm wall technology,
deep drilling, underwater drilling, and measuring technology
for quality control purposes. Many electronic applications
and techniques have been created or enhanced in order
to optimize on-site processes.
Research and development work in the BAUER Group is
organized on a decentralized basis. In the companies that
belong to BAUER Maschinen GmbH, there is a separate
development area in each major product group which
concentrates entirely on the corresponding equipment such
as rotary drilling rigs or cranes. The central development
department develops the technologies and components of
a machine that are used in several product groups. Thus, on
the one hand, the greatest level of standardization amongst
components is achieved, while on the other hand synergy
59COMBINED MANAGEMENT REPORT
Sustainability
variety of methods, and to produce modern materials for use
in geotechnical applications. A state-of-the-art system of
innovation management is practiced with great intensity by
all Group units.
In the Equipment segment we invest a good 3.8 percent
(including internal and project-related expenditure) of the
corresponding portion of total Group revenues in research
and development. A staff of 183 people are involved in this
field, as well as outside consulting engineers and interns.
Research and development activities are routinely reviewed
and maintained at a high level to keep pace with the ever
increasing rate of change in market demands. We are also
continuing to expand our development departments outside
of Germany, such as in India and China. This will enable us
to benefit from the large numbers of highly trained engineers
available on local labor markets.
Research and development expenditure in the Construction
segment is 0.4 percent of total Group revenues, and in the
Resources segment 0.8 percent. We invest further significant
resources in the preparation and design of construction sites.
Profitable construction contracts are very often obtained
on the basis of special proposals on the market. Drawing
up such special proposals is development work, and also
provides a competitive edge for future projects on which
the costs cannot be recorded separately from the general
construction works.
Of the total research and development costs for 2014 of EUR
27.9 million, an amount of EUR 6.2 million was capitalized
(capitalization rate: 22.2 percent). Depreciation of capitalized
development costs and patents totaled EUR 6.5 million.
advantages offered by our machines, particularly with regard
to noise emissions and their ability to work under the influence
of powerful currents, mean they have excellent chances.
In the area of Premium and ValueLine drilling rigs, parts of the
equipment range have been relaunched and a new uppercar-
riage platform developed. Consistent modularization of the
products meant that significant advantages were achieved
with regard to production, scheduling and streamlined global
spare parts stocking.
Insights gained from a research project bore fruit during the
previous year in an optional energy efficiency package for
our rotary drilling rigs which reached market readiness. This
is highly appreciated by customers all over the world.
Further developments during the year concerned new well
drilling rigs, components for deep drilling rigs, improvements
to diaphragm wall machines, machines and processes
for soil remediation work with restricted overhead height,
improvements to the duty-cycle cranes to reduce noise levels
and a hydraulic hammer for ramming in piles with increased
frequency.
For many years now, our products and services have
extended well beyond the bounds of specialist foundation
engineering. The BAUER Group today is a machinery manu-
facturer and service provider in all fields dealing with ground
and groundwater. Pursuing that strategy, many units within the
Group have been undertaking additional development work,
such as to design new pipes for underground engineering
installations, to advance water purification based on a wide
2013 2014
Construction Equipment Resources BAUER
Group
Construction Equipment Resources BAUER
Group
Total Group Revenues (in EUR million) 717.3 590.5 196.4 1,504.2 699.0 612.6 248.6 1,560.2
Expenses for R&D (in EUR million) 3.1 26.0 3.7 32.8 2.9 23.1 1.9 27.9
as % of total Group revenues 0.4 4.4 1.9 2.2 0.4 3.8 0.8 1.8
Group employees 5,531 2,998 1,449 10,264 5,675 3,038 1,400 10,405
R&D employees 45 190 33 268 41 183 22 246
Patent series - - - 259 - - - 260
Patent applications, registered patents, etc. - - - 1,473 - - - 1,480
Research and development in the BAUER Group
60COMBINED MANAGEMENT REPORTSustainability
BAUER Spezialtiefbau GmbH was the first member of the
BAUER Group to participate in the “Umweltpakt Bayern”
eco-pact, an environmental initiative between the Bavarian
state government and businesses in the state.
QUALITY
Quality is one of the fundamental concerns of top management
in our companies. We must do everything in our power to
maintain and, where possible, further develop our customers’
trust in our companies and the quality of our products, services
and equipment, earned over many years. We work hard to
understand the needs and expectations of our customers so
we can then meet them quickly, reliably and cost-effectively.
Ethics, health and safety, environmental friendliness, efficiency
and sustainability are all very important factors in meeting these
needs.
Bauer has had a traditional staff suggestion system in place
for decades. Recently, an intensively expanded system in the
Continuous Improvement Process (CIP) has also been a
source of new ideas.
Our quality management system is based on ISO 9001 as
well other applicable government and industry standards.
We conduct regular audits and benchmark reviews to
make sure we are meeting our planned quality goals. The
findings from these audits and reviews are incorporated
into our regular training programs. We motivate our staff by
demonstrating our own commitment to quality, setting chal-
lenging goals for them, giving them adequate responsibility
and recognizing good performance. Active cooperation is
essential to meeting our goals in a timely manner.
Our policy is to implement other management systems in the
various Group companies alongside quality management to
ISO 9001. We aim to assure customer satisfaction, in new
business fields especially, by implementing industry-specific
management systems, such as in conformance to API stan-
dards for companies with customers operating in the gas and
oil sector.
Our expenditure on research and development is reflected
in 244 (previous year: 259) current patent series, including
1,392 (previous year: 1,473) patent applications, registered
patents and utility models worldwide.
HEALTH SAFETY ENVIRONMENT (HSE)
For the BAUER Group, HSE is an integral element of
everything we do in creating and developing all our products,
specialist services, and business processes. In 2011, we
introduced global standards in the area of Health, Safety &
Environment (HSE), thus creating a uniform HSE management
system for all companies of the BAUER Group. By constantly
reviewing our performance and comparing it against our set
goals and parameters, we seek to continuously improve our
HSE system and thus consistently minimize our accident and
damage rates. The managerial staff is primarily responsible for
compliance and execution of the guidelines.
We take great care to educate our staff on the topic of
workplace safety. That’s why we conduct regular training on
HSE. Weekly safety meetings are held at our construction
sites and all our production facilities. This ensures a better
understanding and greater acceptance of safety guidelines
among our staff.
Regular reviews and audits confirm the consistent implemen-
tation of our safety standards. Through certifications such
as OHRIS, OHSAS, AMS-Bau and SCC, we ensure that our
safety policies meet the requirements of the International
Labour Organization (ILO). We are working on obtaining
certification for other companies in the Group.
Environmental management is integrated within the overarching
HSE policy. Here, standards and guidelines have been defined
which apply to all companies in the Group; we continuously
check that they are being implemented and complied with.
Some Group locations and companies – including the home
base Schrobenhausen – already operate environmental
management systems certified to standards such as EMAS.
61COMBINED MANAGEMENT REPORT
Legal disclosures
VII. LEGAL DISCLOSURES
performance is exceptionally good, the said levels may be
surpassed by up to 1.8 times.
The short-term criteria applied in setting the variable
remuneration elements are the performance of the respective
Management Board members in the past financial year and
the economic position of the Group in respect of attainment
of budget targets in the year under review, particularly the
attainment of profit and revenue targets, taking into account
general economic trends.
The long-term criteria applied in setting the variable
remuneration elements are the success and future prospects
of the Group and the performance of the Management
Board in respect of these criteria. This assessment judges
the decision-making of the Management Board in terms
of sustainable business development over the past three
financial years and the effects of this decision-making in
achieving long-term stability for the business. Criteria applied
here are long-term profit and revenue prospects, sustainable
personnel development in accordance with the future
prospects of the Group, the development of the corporate
culture, the development of intra-Group collaboration, the
safeguarding of corporate harmony, strategic market and
product development, risk and security management,
long-term financial stability, and the quality of key financial
indicators relative to the prevailing economic conditions.
In assessing the appropriateness of the remuneration paid to
the Management Board, the variable remuneration is set and
compared in proportion to the fixed basic salary. Further-
more, the fixed and variable portions respectively, and the
overall remuneration paid, are compared against the normal
levels of remuneration received by management board
members of other stock market quoted companies, and
other companies operating in the same sector, or companies
similar in other ways, in Germany (horizontal comparison).
A vertical comparison is carried out on two levels: firstly, the
salaries of the Management Board members are compared
against those of the directors of the major BAUER Group
subsidiaries; secondly, they are assessed relative to salary
grade A VIII stipulated in the collective pay agreement ap-
plicable within the Group within the industry-wide framework
of salary and training remuneration to salaried staff and
foremen in the construction sector.
REMUNERATION REPORT
The Remuneration Report sets forth the system of remuner-
ation paid to the members of the Management Board and
the total amounts paid to them, and explains the underlying
principles and amount with regard to the remuneration paid
to the Supervisory Board.
Remuneration of the Management Board
The Management Board of BAUER AG, as previously,
comprised three members in the year under review. The
Supervisory Board sets the overall levels of remuneration paid
to the individual members of the Management Board based
on proposals submitted by the Presidial and Personnel Com-
mittee. The plenary Supervisory Board reviews and approves
the remuneration system for the members of the Management
Board following prior consultations in the Presidial and Person-
nel Committee.
The system of remuneration paid to the members of the
Management Board did not change from the previous year.
The overall levels of remuneration paid to the individual
members are set on the basis of a performance assessment.
This process assures that the overall remuneration is appropri-
ate to the duties and performance of the Management Board
member concerned and to the situation of the company. The
remuneration paid to each Management Board member is
composed of non-performance-related components, chiefly
a fixed basic salary, paid in equal monthly installments, and
a performance-related component in the form of a variable
annual bonus. This is set by the Supervisory Board on the
basis of short and long-term evaluation criteria, in which case
the short-term evaluation criteria are equally weighted with the
long-term ones when setting the variable remuneration.
The criteria for setting the fixed remuneration to members
of the Management Board are the assignment of duties, the
performance of the respective Management Board member,
the economic position of the Group and its profitability and
ongoing future prospects.
Maximum limits are imposed on the total remuneration
paid. The variable remuneration paid to each member of
the Management Board is limited by an individually defined
maximum bonus level. This maximum is the upper limit of
potential bonus payment in the normal course of business,
and is paid in full if all set goals are attained. If business
62COMBINED MANAGEMENT REPORTLegal disclosures
Remuneration of the Supervisory Board
The Supervisory Board of BAUER AG comprises 12 mem-
bers. Calculation of the remuneration paid to the members of
the Supervisory Board is specified in detail in the Articles of
Association of BAUER AG. Each member of the Supervisory
Board receives a basic annual fee of EUR 18 thousand, pay-
able in December of each financial year, plus reimbursement
of out-of-pocket expenses and any sales tax (VAT) liability
incurred in performing the duties of a Supervisory Board
member. The Chairman of the Supervisory Board receives
twice that amount of remuneration, and the Deputy Chair-
man 1.5 times the amount. The basic remuneration amounts
are increased by 10 percent for each membership of a
Supervisory Board committee, provided that the committee
in question was convened at least twice in the financial year.
Membership of the Mediation Committee is excluded from
these remuneration provisions. Changes to the Supervisory
Board and/or its committees are taken into account in the
remuneration proportionate to the respective member’s time
in office, and rounded up or down to full months based on
the standard commercial rule. The members of the Supervi-
sory Board receive no performance-related pay.
The net remuneration paid to all the members of the
Supervisory Board in the 2014 financial year totaled EUR
254 thousand (previous year: EUR 254 thousand).
Other
No loans or advances were paid to members of executive
bodies of the company in the year under review, nor were
any liabilities entered into in their favor. As a matter of
principle, no securities-oriented incentive systems exist for
members of the Management Board or Supervisory Board
of BAUER AG, or for Group employees in Germany. BAUER
AG provides D&O (Directors and Officers) group insurance
cover in respect of liability for economic loss to the members
of executive bodies of BAUER AG and of all affiliates in
Germany and internationally in which a majority share is
held. The D&O policy includes an appropriate excess for
the insured parties. For the members of the Management
Board, the minimum excess stipulated by law of 10 percent
of the loss up to at least an amount representing one and a
half times the fixed annual remuneration of the Management
Board member concerned was agreed in the D&O insurance
policy in the year under review.
The remuneration is further set so as to remain competitive
with that generally paid to highly qualified management staff
on the market as a whole.
The Annual General Meeting held on June 30, 2011 resolved
that the BAUER AG financial statements and the Group
consolidated financial statements for the financial years 2011
to 2015 would contain no disclosures of the remuneration
paid to individual Management Board members, thereby
applying the legal authority assigned to it by section 286,
subsection 5 and section 314, subsection 2 of the German
Commercial Code (HGB).
The total remuneration paid to members of the Management
Board in the year under review, excluding allocations to
provisions for defined benefit plans, was EUR 1,150 thousand
(previous year: EUR 1,361 thousand). Of that total, EUR
1,090 thousand (previous year: 1,056 thousand) was not
performance-related and EUR 60 thousand (previous year:
305 thousand) was performance-related. The total remunera-
tion includes benefits in kind arising from the private use of
a company car and reimbursement of expenses for each
member of the Management Board, as well as group accident
insurance premiums and employer’s liability insurance associa-
tion contributions.
The company pension scheme for Management Board
members incurred pension service costs totaling EUR
159 thousand (previous year: EUR 118 thousand). The
baseline salary defined for calculating retirement benefits
is significantly lower in all contracts than the basic salary.
Calculated in accordance with IAS 19, the defined benefit
obligation entailed by all pension commitments to members
of the Management Board at the year-end was EUR 5,531
thousand (previous year: EUR 3,868 thousand).
The contracts of Management Board members include
individual severance clauses regulating the specific terms
of premature termination, with settlements oriented to
the length of service of the Management Board member
concerned and gauged so as not to exceed an amount of
two years’ remuneration for any one Management Board
member. No provisions for compensation in the event of
a takeover offer being made have been agreed with the
members of the Management Board.
63COMBINED MANAGEMENT REPORT
Legal disclosures
Composition of subscribed capital
The subscribed capital (share capital) of BAUER AG remains
unchanged at EUR 73,001,420.45 and is divided into
17,131,000 no-nominal-value bearer shares, representing
a pro rata amount of approximately EUR 4.26 per share
of the total share capital. Each share entails equal rights,
and entitles the holder to one vote at the Annual General
Meeting, with the exception of share categories precluded
from voting by law pursuant to section 136 of the German
Stock Corporation Act (AktG) and section 28 of the German
Securities Trading Act (WpHG).
As in the previous year, 51.81 percent of the shares were
in free float. The members of the Bauer family and the
BAUER Stiftung, Schrobenhausen, own a total of 8,256,246
no-nominal-value shares in BAUER AG on the basis of a
pool agreement, representing a 48.19 percent share in the
company. The pool agreement provisions include binding
voting commitments as well as restrictions on the transfer-
ability of pool members’ shares. No other direct or indirect
holdings of BAUER AG share capital exceeding 10 percent
The members of the Management Board are required to
limit the extent to which they take on Supervisory Board
mandates and other administrative or voluntary functions
outside of the company. The members of the Management
Board may not, without the consent of the Supervisory
Board, carry out any trade or business or conduct, on their
own or a third-party’s account, any dealings in the sector
in which the company operates. Further, they may not,
without the consent of the Supervisory Board, become a
management board member, director or personally liable
shareholder of any other trading company. This ensures that
no conflict arises with the assigned duties of the Manage-
ment Board member either in relation to time commitment or
to remuneration received. No separate remuneration is paid
for the assumption of executive or supervisory mandates on
the boards of Group companies.
STATUTORY DISCLOSURES REGARDING TAKEOVERS
The following disclosures are made pursuant to section 315,
subsection 4 and section 289, subsection 4 of the German
Commercial Code (HGB) as per December 31, 2014.
in EUR '000 2013 2014
Chairman
Dr. Klaus Reinhardt 38 38
Deputy chairman
Robert Feiger 27 27
Employer representatives
Dr.-Ing. Johannes Bauer 20 20
Dipl.-Ing. (FH) Rainer Schuster 18 18
Dipl.-Ing. (FH) Elisabeth Teschemacher 18 18
Gerardus N. G. Wirken 20 20
Prof. Dr. Manfred Nussbaumer 20 20
Employee representatives
Dipl.-Volkswirt Norbert Ewald 20 20
Dipl.-Kfm. (FH) Stefan Reindl 9 18
Regina Andel 18 18
Dipl.-Ing. Gerold Schwab 20 20
Dipl.-Ing. (FH) Walter Sigl 9 0
Reinhard Irrenhauser 18 18
Total * 254 254
* As a result of rounding to EUR thousands, there was a rounding difference of EUR thousand in 2013 and 2014.
Remuneration Supervisory Board (not including sales tax proportion and reimbursement of expenses)
64COMBINED MANAGEMENT REPORTLegal disclosures
stock market, the acquisition price (excluding ancillary costs)
may be no more than 10 percent above or 20 percent below
the price determined by the opening auction on the trading
day for shares in the company in Xetra trading (or a compa-
rable successor system) on the Frankfurt Stock Exchange.
If the acquisition is effected by means of a public tender
offer, the purchase price or the limits of the purchase price
span per share (excluding ancillary costs) may be no more
than 10 percent above or 20 percent below the average of
the closing prices per share in the company in Xetra trading
(or a comparable successor system) on the three trading
days prior to the day of issue of the public tender offer. If not
insignificant variations of the decisive share price occur after
the day of issue of the public tender offer, the purchase price
may be adjusted.
The Management Board shall be authorized to appropriate
shares in the company acquired pursuant to the above au-
thorizations for all legally admissible purposes. Consequently,
the acquired shares may also in particular be sold by means
other than by way of the stock market or by means of an
offer to the shareholders, if the shares are sold for cash at a
price (excluding ancillary costs) not materially below the stock
market price of shares of the company carrying the same
rights at the time of the sale in Xetra trading (or a comparable
successor system). The shares may also be sold in return for
non-cash payment, provided this is done for the purpose of
effecting company mergers or acquiring companies, parts
of companies, shareholdings in companies or other assets.
The aforementioned shares may be redeemed without need
of a further Annual General Meeting in order to approve the
redemption or its execution. With regard to use of the bought-
back shares, the authorization provides, in specific cases, for
legal rights of subscription of shareholders to be excluded. The
facility to acquire treasury stock has not been utilized to date.
Appointment and termination of appointment of
Management Board members, amendments of the
Articles of Association
The appointment and termination of appointment of
members of the Management Board of BAUER AG is
regulated by sections 84 and 85 of the German Stock
Corporation Act (AktG) and sections 30 ff. of the German
Co-determination Act (MitbestG) in conjunction with Articles
5 and 6 of the company’s Articles of Association. Pursuant
to the company’s Articles of Association, the Management
of the voting rights are known to the company. None of the
shareholders have special rights entailing controlling powers.
Nor does any voting rights control exist on the part of the
employees holding shares in the capital.
Authority of the Management Board to issue or buy
back shares
Article 4, paragraph 4 of the company’s Articles of Association
Board states that the Man-agement Board is authorized, with
the consent of the Supervisory Board, to increase the share
capital once or more than once up to June 27, 2017 by up
to a total of EUR 7.3 million by the issue of new no-nominal-
value bearer shares against cash and/or non-cash contribu-
tions. To that end, the Management Board is authorized,
with the consent of the Supervisory Board, to exclude the
legal subscription rights of shareholders in the following
cases:
• in the event of capital increases against non-cash contri-
butions,
• in the event of capital increases against cash contributions
where the issue amount of the new shares issued is not
materially below the market price of the already quoted
shares at the time of definitive setting of the issue price
and the shares issued excluding shareholders’ subscrip-
tion rights pursuant to section 186, subsection 3, clause
4 AktG do not in total exceed 10 percent of the existing
share capital either at the time this authority takes effect or
at the time of exercising this authority. Shares which have
been or are to be sold or issued in direct or corresponding
application of section 186, subsection 3, clause 4 AktG
while this authority is in place until such time as it is exer-
cised, pursuant to other authorities, excluding subscription
rights, are to be set off against the said 10 percent limit,
• to balance out fractional amounts.
By resolution of the Ordinary Annual General Meeting held
on June 26, 2014, the company was authorized to acquire
treasury stock, over a limited period up to June 25, 2019,
representing up to a total of 10 percent of the company’s
share capital at the time the resolution was passed. The
shares shall be acquired at the discretion of the Manage-
ment Board by means of a public tender offer or by way of
the stock market. If the acquisition is effected by way of the
65COMBINED MANAGEMENT REPORT
Follow-up Report
lender to terminate its loan commitments in the event of a
change of control or if control is gained by a third party. As
defined by this syndicated loan agreement, a change of
control is defined as a situation in which the total sharehold-
ing held by the pooled members of the Bauer family directly
amounts to less than 40 percent of the capital shares or
voting rights in BAUER AG. A third party gains control if,
overall, more than 50 percent of the capital shares or voting
rights in BAUER AG is held directly or indirectly by one or
more persons acting jointly (with the exception of the pooled
members of the Bauer family).
Furthermore, several long-term loans with balances totaling
EUR 146.0 million as per the balance sheet date, agreed
by BAUER AG together with other Group companies as the
borrower and guarantor, provide for a right of termination
for cause by the lender in the event of a change of control
in BAUER AG. A change of control is considered to have
taken place where a third party, not forming part of the circle
of existing main shareholders, directly or indirectly acquires
control of at least 30 percent or the majority of voting shares
in BAUER AG. Any loaned amounts would have to be repaid
in the event of termination. The terminated credit line would
no longer be available for new borrowing.
Additional short- and long-term loan agreements also exist
within the Group which provide for a right of termination for
cause, at market terms, in the event of a change of control.
VIII. FOLLOW-UP REPORT
No matters of special note occurred after the end of the
financial year.
Board comprises at least two persons, who are appointed
by the Supervisory Board for a maximum term of office of
five years. At present the Management Board comprises
three members appointed by the Supervisory Board and
a Chairman of the Management Board, as well as a Labor
Director. It is permissible to re-appoint or extend the appoint-
ment of a member of the Management Board for a further
maximum term of office of five years. Any appointment
or re-appointment requires a decision by the Supervisory
Board, which may be taken no earlier than one year prior to
the end of the relevant term of office. The Supervisory Board
may rescind an appointment to the Management Board or
an appointment as Chairman for good cause. The Presidial
and Personnel Committee of the Supervisory Board prepares
the Supervisory Board’s decisions on the appointment and
termination of appointment of Management Board members
and concerns itself with the long-term planning of successor
members for appointment to the Management Board.
In accordance with section 119, subsection 1 clause 5 and
with section 179 AktG, the amendment of the Articles of
Association is passed by the Annual General Meeting with
a majority of at least three quarters of the share capital
represented at the vote. Pursuant to Article 12 of the Articles
of Association, the Supervisory Board is authorized to pass
amendments to the Articles of Association which relate only
to its wording. The Supervisory Board is further authorized to
adapt the wording of Article 4 of the Articles of Association
(amount and division of the share capital) following full or
partial execution of the increase in share capital or on expira-
tion of the authorization period according to the respective
utilization of the authorized capital.
Change of control
BAUER AG, together with other Group companies, has
concluded a syndicated loan agreement providing a credit
line of up to EUR 450 million; this contains provision for the
67
Our customer Jafec – Japan Foundation Engineering Co., Ltd. – produced 120 piles for the construction of a 14-story hospital with
two basement levels. A BG 28 and a BG 30 were used for the work.
improve its efficacy. Moreover, our auditors review on an
annual basis the extent to which our existential risk early-
warning system is fit for purpose. Their suggestions are
incorporated in order to improve the system. The process
steps involved in risk management are: identification, as-
sessment, control of measures and monitoring.
For the identification of risk, risk categories are defined
and assigned to specific areas of risk. This defines areas of
focus. Risk categories defined by the BAUER Group are:
strategic risks; market risks; financial market risks; political
and legal risks; organizational and governance risks; risks
arising from the value creation chain; and risks of the sup-
porting processes. These risks are grouped as latent risks
and managed in a unified process within the framework of
our risk management system. Conversely, project risks are
managed according to their nature and significance by an
additional, independent process.
The process of identifying and assessing latent risks is
reviewed once yearly at management meetings within the
relevant Group companies, and is implemented jointly by
departmental and central function heads as well as through
individual specialists. This process ensures that potential
new risks and opportunities are submitted for review at
management level, and are included in follow-up reporting if
considered relevant. Structured risk identification is followed
by risk assessment based on a scale of relevance.
Relevant risks above a certain threshold value are quantified
based on scenarios. Planning risks are estimated on the
basis of empirical values, applying standard deviations. Risks
from within the subgroups are consolidated at Group level.
BASIC PRINCIPLE OF RISK MANAGEMENT
As part of our business activities, we are exposed to risks
inherent to our operations. Running a business requires
taking risks. True risks result from unforeseeable events
that can bring both hazards and opportunities along
with them. Therefore, at Bauer, risk management means
not just reducing the hazards but also knowing how to
take advantage of the opportunities. The purpose of risk
management is to protect our business objectives, increase
the value of our company and reduce the costs of risk. Risk
management involves identifying, analyzing, evaluation and
monitoring existing and anticipated risks along the entire
value chain and devising actions to deal with them. This
involves assessing external risks potentially impacting on our
businesses, as well as risks arising internally. Our system of
risk management is based on a fundamentally risk-averse
approach, meaning that we aim primarily to safeguard
against impending risks rather than to exploit opportunities
for short-term gain. As a general rule, we do not take risks
that threaten the existence of the company.
Risk management system
Our risk management system is based on the risk policy
defined by the Management Board, and regulates the
handling of risks within the BAUER Group. It defines a unified
methodology applicable to all segments and their member
companies. It is continually reviewed and adjusted as
required.
Our risk management system is an integral element of our
overall management system and, like all our management
systems, serves as an instrument of value- and success-
oriented corporate governance. Audits routinely verify its
implementation, and management reviews continuously
COMBINED MANAGEMENT REPORTRisk and Opportunity Report
IX. RISK AND OPPORTUNITY REPORT
RISK REPORT
Relevance Extent of losses
(in EUR '000)
Definition Identified risks
1 up to 8,000 Insignificant to low risk Risks with this relevance are identified
in our business2 up to 20,000 Medium risk
3 up to 50,000 Significant risk
We do not see risks with this relevance
in our business4 up to 100,000 Serious risk
5 above 100,000 Critical risk
Relevance scale of the BAUER Group
68COMBINED MANAGEMENT REPORTRisk and Opportunity Report
class. Secondly, it is based on potential harm identified in
relation to the project, with the worst-case outcome serving as
the decisive factor. The risk classes defined by this process
are taken into account at fixed cost surcharges to cover the
identified risks.
The system has been developed over a number of years
across the corporate units faced by the relevant project risks
and expanded to apply to the relevant operations.
Risks
In the following we set forth risks which may have a significant
impact on our financial and earnings position and on our
reputation, and assess the relevance to our business. The
breakdown follows the same risk categories as we apply
in our risk management system. The areas of risk are
aggregated. Unless otherwise specified, all risks set out
in the following relate to all our segments.
STRATEGIC RISKS
Segmental structure
We counter the strategic risks arising from the segmental
structure of the Group by dividing it into separate Construc-
tion, Equipment and Resources segments, thereby pursuing
the aim of greater independence from the economic cycles
of the construction industry.
Frequent acquisitions and new company start-ups in
the Resources segment entail the risk of misjudgment of
partners as well as difficulties in integrating the companies
concerned into the BAUER Group. We counter this risk by
employing thorough due diligence and intensive monitoring
during the integration phase.
The Equipment segment’s move into deep drilling and the
manufacture of machinery for mining applications will also
further reduce its dependence on the Construction segment.
We class the risks associated with the structure of our
business as medium.
Strategy development and implementation
The goals for the various strategic areas of action and the
implementation of the resultant measures are reviewed at
regular intervals. Consequently, we regard the risks relating
to strategy development and implementation as low.
Following assessment, risk-specific management measures
are defined. Where possible and useful, we have taken out
appropriate insurance cover in respect of potential damage
and liability risk, in order to reduce our risk exposure and
avoid, or at least minimize, potential losses. Responsibility
for monitoring risk lies with the risk managers.
The effects of individual risks are aggregated in the context
of corporate planning by means of risk simulation. This
means that the income statement for a given financial
year is played through several thousand times in indepen-
dent simulations based on random figures (Monte Carlo
simulation).
Risk analysis is conducted on at least a yearly basis. Yearly
reports are submitted to the Management Board and
Supervisory Board. The system is continually being updated
and continuously improved both qualitatively and structurally
in terms of the integration of more Group companies. To
communicate acute risks, the routine risk analysis is supple-
mented by immediate reporting. Our risk management
system covers both risks and opportunities.
Handling of project risks
Project risks are the principal performance risks, and thus
are an integral element in the work of the Construction and
Resources segments, wherever construction work or plant
assembly is carried out on the customer’s premises. Associ-
ated risks, such as in relation to the ground and resulting
from the individual character of each individual project –
including contract, timetable and damage risks – can thus
accumulate detrimentally in specific cases in such a way
that they may threaten the existence, if not of the Group as
a whole, at least potentially of smaller subsidiary companies.
In respect of all relevant projects above low threshold
values, prior to submission of quotes all conceivable risks
and opportunities are systematically identified, analyzed
and assessed, and appropriate measures are defined to
minimize risks and track opportunities.
Each project is assigned to a risk class and organizationally
escalated according to its risk class, and is thus subject to
a strict approval process. Risk classification is based, firstly,
on defined checklists applying the K.O. principle, in order to
prevent inadvertent assignment to an inappropriately low risk
69COMBINED MANAGEMENT REPORT
Risk and Opportunity Report
Despite the overcapacity and associated pressure on
margins in China, we have been able to maintain our
market position based on the recognized high quality and
still clear technical edge of our machinery. The lack of
market experience of Chinese manufacturers, combined
with the facts that the quality of their products remains
significantly lower and their after-sales service is generally
of a less developed nature, has to date impeded exports
of Chinese construction machinery on a grand scale to the
markets of relevance to us. A number of smaller Chinese
competitors have already been forced out of market as
a result. This risk is rated as low in the short term, but
medium in the medium term.
Macro-economic risks
High levels of public sector debt in the USA, as well as in
some EU member-states, significant interventions by some
central banks as well as uncertainty as to the stability of
markets in specific countries and the phases of significant
downturn on the market in China and the other BRIC nations
influence our appraisals of the macro-economic situation.
Ongoing political unrest in the Middle East is impeding
willingness to invest in the countries immediately affected,
and often beyond.
The significant drop in the oil price may well be easing
pressure on importing countries’ balances of trade, but
in the long term it will restrict the purchasing power and
investment appetite of the oil producing countries in the
Middle East and Russia. If the oil price remains low for a long
period, this could have a negative effect on demand for deep
drilling rigs and services for the oil industry. As a result of the
significantly reduced oil price and the tense situation in the
east of Ukraine, leading to sanctions against Russia, there
was a significant drop in value of the Russian ruble against
the euro towards the end of 2014. This creates obstacles
for our equipment sales business to Russia, and is currently
regarded as a medium risk.
These issues entail both exchange rate risks and demand-
related risks in the markets concerned. By contrast, the
overall positive macro-economic situation in the Far East is
creating a structurally greater dependence of the Group on
that region.
MARKET RISKS
Selling market risks
It has always been one of our key strategic principles
to counter risks on our selling markets by means of a
multi-segment organization. Whereas our machinery
manufacturing business is still heavily influenced – if at a
delay – by economic trends in the construction sector, the
establishment of the Resources segment has enabled us to
isolate part of our business from the effects of construction
cycles much more effectively. Our strategy of spreading
business in each segment across a large number of mar-
kets worldwide further reduces the overall risk, so that no
serious risk is posed to the Group as a whole in the event
of any weakening or collapse of individual regional markets.
Moreover, in the event of a regional market downturn our
network strategy in the Construction segment enables us
to relocate our capacities rapidly to another country and
continue operations at the new location. This strategy has
proven effective during various regional crisis situations in
the past, in which it compensated for or cushioned nega-
tive impacts on the overall result. Our Resources segment
has also already expanded on a broad international scale.
We rate risks associated with our selling markets as
medium.
Competitive environment
In the Equipment segment especially, we operate in highly
competitive, price-sensitive markets. The Chinese construc-
tion market – and to an even greater extent in its wake, the
Chinese construction machinery market – have seen highly
dynamic growth in the past as a result of government policy.
As a consequence, major production capacities for construc-
tion machinery were created. The repeated stagnation of the
Chinese construction market since 2012 has seen demand for
new machinery decline, in some cases disproportionately dra-
matically. The resultant overcapacity in the country has placed
prices and margins under heavy pressure at times. We have
implemented intensive cost-cutting measures in order to
lastingly improve our competitiveness in China. For example,
production above all as well as sourcing has been localized to
a significant extent, and the level of professionalism increased
while retaining the familiar high quality standards. Furthermore,
the after-sales service has been expanded further in all
markets as a stabilizing factor for new business.
70
Interest rate risks
We reduce the risks arising from fluctuations in interest rates
to a low level by fixing rates and rate derivatives for as long
as possible.
Foreign exchange risks
Where possible and available, we counter foreign exchange
risks by financing our international holdings in their respective
local currency. Transaction risks (foreign currency risks arising
from the current cash flow) are minimized in all business
divisions by means of suitable rate hedging instruments. The
remaining currency risks are evaluated as low.
POLITICAL AND LEGAL RISKS
Compliance
For the BAUER Group, acting responsibly and in keeping
with the law is a fundamental principle underpinning our
commercial success, the quality of our products and services
and our sustainable ongoing development. We place the
utmost value in upholding social conventions and in comply-
ing with applicable laws and business standards, so as to
minimize the risk of non-compliance. For us, compliance
means observing all applicable laws, rules and regulations.
Legally compliant, ethical and socially sustainable action is
the cornerstone of our values management system. This
will be applied to ensure staff are aware of our fundamental
values as soon as they are hired. Special training courses
enable them to extend their knowledge. A special software
program ensures that we do not do business with any
companies cited on an EU or US sanctions list.
In summary, we are of the opinion that our existing values
management system provides us with an efficient means of
keeping our compliance risk to a low level.
Political and legal environment
However, owing to the broad spread of the Group’s opera-
tions, and its restraint in investing in potentially unstable
countries, the political risks in individual countries pose little
risk to the Group as a whole. We therefore rate the risk as
low.
The Group Management Board and the directors of the three
operating segments routinely consider projections based
on specific scenarios of the impact of any given risks on
the company in question and on the Group as a whole. Any
necessary and relevant measures are derived from these
analyses and implemented in full. However, we rate the
overall macro-economic risks as low.
Procurement market risks
We counter fluctuations on the procurement market by enter-
ing into long-term contracts. This risk is rated as insignificant.
FINANCIAL MARKET RISKS
Covenant risks
Several long-term loans are covered by covenants linked to
pre-determined financial variables. These are primarily the
ratio of net debt to EBITDA, the ratio of EBITDA to net inter-
est coverage, and the equity ratio. The key figures agreed for
the promissory notes and the syndicated loan concluded in
2014 were met by the year end.
In addition to the earnings situation of the Group as a whole,
higher financing requirements in particular may pose an
increased covenant risk. This applies, for example, to changes
in inventories in the Equipment segment. In order to reduce
that risk, active selling of surplus stocks is initiated and
production volumes are reduced as necessary. A high level of
outstanding receivables can likewise result in the inability to
meet agreed covenants.
Based on forward-thinking planning and sound financial
controlling, we are making every effort to keep within the
agreed limits. This risk is classed as medium.
Financial stability and liquidity
The risk of financial instability and supply shortages on
international financial markets was countered last year by
concluding a syndicated loan agreement. This agreement,
with a three-year term, ensures the medium-term liquidity
supply for the Group of companies, and is an important tool
for alleviating major risks on the financial markets.
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71
Production and order fulfillment
Technical failures arising from design errors or miscalcula-
tions of statics in the project business can result in significant
delays, both on the company’s own construction projects
and on our customers’ projects. In the BAUER Group, the
risks resulting from this represent an inherent component
of our project business. Consequently, designs and statics
are predominantly produced in our own design bureaus by
experienced employees. Consequently, we can assess the
risks resulting from this as low.
A further risk in order fulfillment is entailed by the selection
and application of drilling techniques. Misjudging ground
conditions can likewise result in increased risk costs.
Disturbances to the project timetable must be identified
by the project manager and communicated at an early
stage. The management is aware of these risks, and relies
on experienced project and production managers in all
segments. All the listed risks are subjected to a threat and
opportunity analysis at project level in the Construction and
Resources segments.
A further risk in relation to production and order fulfillment is
the rising cost of production in China, resulting among other
factors from increasing rates of pay. The new plant in Tianjin
is intended to generate synergies in production and optimize
machine capacity utilization in future. The risks in production
and order fulfillment are rated as medium.
Project risks
Project risks are essentially the principal performance risks
in the Construction and Resources segments, especially as
each project has its own individual characteristics. Although
we work on the assumption that our projects are costed
with due diligence, the possibility cannot be definitively ruled
out that, on finally billing the customer, lower earnings will
ultimately be generated. As a result of the trend for projects
to increase in size and complexity, the resulting risks must be
evaluated as of a medium level.
Supplements and claims management
Especially in respect of complex construction works, we
are increasingly seeing parties resort to legal action when
disputes arise in relation to contract interpretation as well as
Contract risks
Our Construction and Resources segments primarily provide
construction, drilling and environmental services. The under-
lying projects are almost always prototypes executed in each
case on the basis of customized contracts. The resultant
risks are subject to stringent management routines, and
so can be rated as low.
Current legal cases
Legal disputes arise almost exclusively from our provision
of services, in particular in the project business. Judicial
disputes exist with regard to clients, suppliers and business
partners, and in the majority of cases relate to remuneration,
claimed deficiencies in performance or delays in completing
a project. By their very nature, it is impossible to say for
certain how the court or arbitration proceedings we are
involved in will turn out. Nevertheless, following careful
examination, we assume that adequate provision has been
made in the balance sheet for all legal disputes.
VALUE CREATION RISKS
Research and development risks
As a technology leader, particularly in our Equipment segment,
we counter any possible weakening of our market position by
means of continuous research and development. Although
the booming markets in the Far East and the resultant new
competitors are sharpening the innovative pressures, we have
to date succeeded in maintaining the necessary edge as a
technology leader.
Nevertheless, we are well aware that these pressures will
continue to grow. That is one reason why we are also
increasingly utilizing low-cost local development resources
in India and China to provide a rapid, cost-effective boost
to our rate of innovation.
Moreover, there is a risk of incurring additional costs in this
context due to development and design mistakes necessitating
modifications. This risk is minimized by a structured, multi-
stage product creation process.
Thanks to our great innovative strength and transparent
product creation process, we rate the risks in relation to
research and development as being currently medium.
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72
Personnel development and structure; key personnel
Our procedures for providing assistance and support
to our employees, from the selection and recruitment
stage, through induction, qualification and training, and
incorporating ongoing support in personal development,
have been continuously improved. Fluctuation rates have
been very low for many years, and represent an affirmation
of our personnel policy. We rate risks relating to personnel
as insignificant.
IT
Security to prevent data loss or unauthorized access, as
well as to safeguard system and data availability, is ensured
by means of state-of-the-art hardware and software and
building services technology, so IT risks are classed as
insignificant.
Accounting-related system of internal controls and
risk management
Consolidated accounting risks comprise risks in respect of
accounting, valuation and recognition. To counteract them,
the accounting functions for the major subsidiaries in Ger-
many are mainly managed centrally at Group headquarters
in Schrobenhausen. This permits specialization in certain
kinds of business operations, such as joint ventures, and
means that transactions are all treated uniformly.
The accounting functions for the other subsidiaries –
practically all international subsidiary companies outside of
Germany and the main German subsidiaries – are usually
managed by decentralized in-house commercial depart-
ments. In this, our international subsidiaries are assisted
by external accountants and auditors as well as by our
investment controllers, so as to ensure properly qualified
financial reporting in accordance with local laws or conform-
ing to International Financial Reporting Standards (IFRS).
The financial statements of the major Group companies are
additionally audited in accordance with IFRS. Audits are
conducted in accordance with the International Standards
on Auditing (ISA).
The procedures for monthly Group reporting, preparation of
quarterly and annual financial statements and consolidation
additional works and supplements. Clients’ representatives
are increasingly rarely authorized to resolve conflicts by
mutual consent. As a result, final project settlement is
increasingly being delayed by legal action, and additional
costs are being incurred. We manage this risk by profes-
sional management of supplemental requirements in the
course of the construction project, and based on full
documentation of the work carried out. Despite all efforts,
the outcomes of some negotiations on supplemental require-
ments pose a residual risk to the company. The risks arising
from supplemental requirements are rated as medium.
Acquisition, sales and contract negotiations
The risks of miscalculating quotations and of warranting
technical characteristics which cannot be fulfilled are mini-
mized by the strict application of the dual-control principle,
and can basically be regarded as low.
Materials management and procurement
Thanks to our long-standing and successful policy in our
machinery manufacturing operations of planning well ahead
to safeguard supplies of components which may be subject
to bottlenecks, and based on additional measures we have
taken and on our ability to have time-critical components
made within the Group in the event of a bottleneck, the risks
in terms of procurement currently remain classed as low.
RISKS OF SUPPORTING PROCESSES
Debtor management
To limit our exposure to risk of payment default, in Germany
we have at our disposal a tried and tested system compris-
ing credit insurance, payment default guarantees, advance
payments and – in special cases – also guarantees as security
in respect of contracted works, so we rate this risk as low.
Quality risks
Great attention is paid to the quality of work done in all
areas of the business. This is safeguarded by employing
well-trained staff and by means of a long-established
quality management system, which has been in place for
many years. All major Group companies are certified, and
are audited on a regular basis. We therefore rate quality
risks as low.
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73
of the individual financial statements in accordance with
IFRS are implemented using a Group-wide accounting
guideline on the basis of a unified schedule of accounts by
the subsidiaries, and by the Group Accounting function for the
consolidated financial statements. Appropriate adjustments
are made to adapt local accounts to IFRS.
At the major Group companies, the success of each individual
department is mapped as a central management instrument
by means of an expense distribution sheet. This reveals
any non-conformance to annual budgets. At project level,
a monthly reconciliation is carried out to cross-check the
actual figures against the cost accounting and site manage-
ment budgets. Our judgment and experience tells us that
self-monitoring allied to mutual monitoring are the effective
elements of our system of internal controls.
The individual Group companies and departments are
monitored and controlled on a monthly basis by the central
commercial departments in the respective segments and
are then reviewed by Group Accounting further reducing the
accounting, valuation and reporting risks.
The consolidated figures are in turn checked on a monthly
basis against the figures from the annual Group-wide
planning process and analyzed on the basis of Group key
performance indicators (KPIs). Any necessary correction of
non-conformance to plan is implemented promptly by the
managers of the units concerned.
The major Group company annual financial statements and
the year-end consolidated financial statements are audited
by auditors in accordance with the applicable legal require-
ments and standards, and are reviewed by the Supervisory
Boards established in the various business units as part
of their duty of supervision. The key figures and related
information reports are submitted to the Management Board
and the Supervisory Board of BAUER AG from the central
accounting function on a monthly basis.
The IT systems employed in these procedures are protected
by appropriate security systems against unauthorized
access and data loss. Based on the systematic multi-
segment structuring of the Group’s accounting process, with
its redundant control instances, we are able to classify the
resultant risks as low.
OVERALL RISK
At present, no individual or aggregated risks can be detected
that could threaten the existence of the BAUER Group in the
2015 financial year. The management sees no change in the
overall risk situation, in view of future business prospects
among other factors.
COMBINED MANAGEMENT REPORTRisk and Opportunity Report
74
expanded its portfolio with deep drilling rigs capable of
operating down to depths of 6,000 meters for geothermal
energy, oil and gas exploration and for production drilling.
Opportunities in Deep Drilling have improved further with the
signature of the contract between our subsidiary BAUER
Deep Drilling GmbH and Saxon Energy Services Inc. for
delivery of two 375 metric ton rigs. There is an opportunity
for Deep Drilling to make an important overall positive contri-
bution to our results in future. We are capable of successfully
carrying out exploration and production drilling for water,
oil and gas, as well as for coal-gas and geothermal energy.
Extensive areas across Australia, Africa and Indonesia are
being staked out as claims for the extraction of coal-gas.
Their seriousness in terms of mass extraction is being
reinforced by the planning and construction of large gas
liquefaction plants.
The nuclear accident in Fukushima sparked a new debate
on energy production which is bringing about far-reaching
changes to energy policy. The most suitable future-proof
alternatives to nuclear power are currently being sought.
The BAUER Group has been contributing to this search by
developing underwater drilling rigs that can be operated from
on-board a ship, to sink foundations for tidal or wind tur-
bines. This opens up an entirely new product area, with great
prospects for long-term success, for both our Construction
and Equipment segments.
By establishing new subsidiaries in the Resources segment,
our environmental business has succeeded in moving out
of its traditional, and limited, sphere of pollution remediation
into industrial process water treatment, and thus into the oil
and gas industry. The large quantities of industrial process
waters occurring in oil production, against a background of
ever more stringent environmental standards, offer additional
outstanding market opportunities for our environmental
business.
Dam remediations are much in demand worldwide, due to
the fact that dam structures have been neglected for years.
Our depth of experience in this area, which we have been
able to acquire in various dam remediation projects, means
that we regard this as an outstanding market opportunity for
our Construction segment.
The opportunities arising are classified in parallel with the
detailing of risks. In this context, too, the areas of opportunity
have been aggregated. Unless otherwise specified, all op-
portunities set out in the following relate to all our segments.
STRATEGIC OPPORTUNITIES
Over the years, our Group has repeatedly worked on single
projects in marginal markets. This has led to the establishment
of independently operating business units. One example of
this is in our activities relating to environmental technology
which, having begun over 20 years ago, have grown to
become an international business area forming part of our
Resources segment.
A similar development grew out of the first deployment of
specialist foundation engineering equipment for diamond
exploration, which has since become the competence center
Drilling Technologies within the Resources segment.
Together with the 2007 acquisition of the GWE Group,
specializing in the development, manufacture and sale
of high-grade well engineering products and in close-to-
the-surface geothermal energy extraction, we were able
to merge the three businesses to create the Resources
segment. This core business unit, established in 2007, is
focused on areas relating to water, environment and natural
resources – some of the major issues of the 21st century.
Moreover, the Resources segment is less dependent on
the economic cycles of our traditional Construction and
Equipment segments.
In order to bring about a rapid internationalization of the
Resources segment, we are utilizing the experience of our
long-standing organizational units in the other two segments.
MARKET OPPORTUNITIES
Thanks to the rapid growth being seen in some emerging
economies, and the expected increase in oil and gas extraction
based on new techniques such as fracking, a trend can be
observed for even difficult-to-access deposits, demanding
intensive drilling operations, to be exploited. This is a trend
that will continue, even if it is exposed to the influences of oil
price fluctuations over and over again. Demand for modern
deep drilling rigs will thus continue to rise in the medium
and long-term. Consequently, the Equipment segment has
COMBINED MANAGEMENT REPORTRisk and Opportunity Report
OPPORTUNITY REPORT
75
VALUE CREATION OPPORTUNITIES
Development and innovation
Development and innovation are systematically integrated
into many standard processes within the Group. Their
efficiency is monitored as part of the quality management
system and by way of the corporate controlling function. It is
also ensured that customers’ wishes are understood as be-
ing opportunities, and are translated into innovations for our
products and services in a timely manner. The capacities of
our engineering offices are systematically being strengthened
by resources from countries with high levels of education
allied to low labor costs, such as India.
Innovation is possible at practically every point within our
business processes. Our employees are best placed to
know where improvements are achievable in their particular
sphere of work. In order to collate and make use of the
many good suggestions which our employees submit, we
have devised a system for the unbureaucratic recording,
evaluation, implementation and rewarding of suggested
improvements, which has been in turn rewarded by a
number of good ideas.
Project opportunities
Regardless of national and global market cycles, projects
often arise in otherwise weak markets which we as a
corporation are extremely well equipped to handle thanks to
the mix of our products and services portfolio. Examples of
this are processes for retrofitting of core seals in earthwork
dams, or for the long-term, environmentally compatible
treatment and disposal of industrial process water from the
oil industry.
The resultant projects in some cases entail very large lot units.
When contracted, we are able to manage them successfully
by converging our global resources and based on our many
years of experience in handling large-scale projects.
Supplements and claims management
The assertion of requirements and supplements does not
only entails risks, but also the opportunity to achieve better
earnings than originally specified in the contract based on
changes to the ordered construction services or supple-
mental work ordered by the client. On projects involving high
potential for changes, this can result in a substantial improve-
ment in earnings. We attempt to exploit such opportunities
by professional management of supplemental requirements
in the course of the construction project.
OPPORTUNITIES BASED ON SUPPORTING PROCESSES
The Group has initiated a worldwide cost-cutting program
in response to the displeasing loss recorded at the end
of 2013. As well as abandoning some smaller, financially
problematical businesses in 2014, this included in particular
the sustained implementation of numerous individual projects
such as reducing personnel costs by process optimization,
reducing material costs by specific negotiations with A-sup-
pliers, reducing wear costs by technical improvements and
cost reductions through changes of rules and behavior. The
projects are defined in the course of planning and subjected
to monthly checks. The object of the cost-cutting program is
to lastingly improve the cost structures of the BAUER Group
and so improve the contribution margin.
OVERALL OPPORTUNITIES
We are seeing a steady improvement in our opportunities
on global markets as our Resources segment becomes
increasingly well established. This is also being boosted
by new, innovative products. Our strategy of systematically
interlinking our mainly small and medium-sized globally operat-
ing units to create efficient networks is enabling us more and
more effectively to generate speed and cost benefits from
the associated economies of scale. All in all, we see the
opportunities for our Group’s worldwide business increasing
further in 2015.
COMBINED MANAGEMENT REPORTRisk and Opportunity Report
77
Bauer drilled 252 diaphragm panels over a stretch of 1.6 km to a depth of 19.5 m for the port's 26.5 km² cargo handling facilities
in Doha, Qatar. A MC 64 was used for this purpose.
COMBINED MANAGEMENT REPORTForecast Report
X. FORECAST REPORT
A number of factors are of key importance to our companies
and their future development, as detailed in the following.
Markets
As set out at the beginning in the Business Report, the
markets for specialist foundation engineering services and
the associated machinery can generally be rated as positive.
There is substantial backlog demand for construction works
all over the world. The infrastructure, especially, must be
updated to meet the new needs of people and the demands
of a globalized industrial society. Increasing urbanization in
many countries is necessitating major efforts to upgrade city
transport infrastructures. Underground construction, especially,
provides a solution to the challenges we face. Many inquiries
from all markets, and our healthy levels of orders in hand in the
Construction segment in the regions of the world, affirm that
judgment.
The work of our Resources segment meets the essential
needs of our world, for which issues surrounding the environ-
ment and water will become key over the decades ahead.
The availability of resources essential to industry will likewise
remain a permanent and pressing challenge.
Competition
Competition in the construction industry has changed little
overall in recent years. The construction market is, and will
remain, a market with very large numbers of players. Our
worldwide companies have established themselves firmly
within that competitive environment, and on some markets –
such as in Egypt – we have attained an outstanding position.
On some markets, conversely, other construction companies
play a predominant role. We regard this mix as positive,
because it provides us with the opportunity to respond stra-
tegically to changes. Very many companies – including in the
specialist foundation engineering sector – have withdrawn from
the German market over the last two decades. As a result,
there are today relatively few specialist foundation engineering
contractors capable of handling large-scale projects. This
opens up additional opportunities for our business in Germany.
The competitive situation in the machinery business has
changed significantly over the past ten years. The enormous
growth in construction in China made that country’s market
more important than all the others in the world put together
for a number of years. Many Chinese companies started
manufacturing specialist foundation engineering equipment,
creating capacities to fully serve the needs of the Chinese
market. Once the growth of the Chinese construction market
had come to an end, machinery markets fell back dramati-
cally too. As a consequence, competition has intensified
markedly. Other European manufacturers of construction
machinery are now also coming under pressure in their
standard equipment sales, and so are trying to make up for
them in the specialist foundation engineering business. This is
not feasible, because the market is not big enough. However,
the trend will additionally impact on the competitive situation
to which our business is subject for some time to come.
In this new competitive situation, our business will only be
able to maintain its leading position by providing high-quality
products and outstanding services. Concerted efforts have
enabled us to build further on our competitive edge in that
respect over recent years, as the increased revenues for
2014 demonstrate. We are convinced that we will continue
in future to achieve success and growth. We will also be in
a position to improve our margins again, which will also be
based on improved capacity utilization.
Bauer has to date played only a minor role on markets for
deep drilling rigs. We have nevertheless succeeded in arous-
ing customers’ interest with our fully hydraulic rigs featuring
state-of-the-art electronic control. The successes achieved
in 2014 deliver precisely the confirmation we are looking for
with regard to the efforts we have made.
In the Resources segment, we have numerous competitors
on the various markets. We regard it as a major advantage
that we are the only company offering a full portfolio relating
to water and other resources bundled within one business
segment, meaning that we are able to offer our customers a
very wide range of products and services. This will pay off in
future.
78
the dynamic process of product development. We have
intensively utilized the possibilities of state-of-the-art elec-
tronic control to make our equipment even more versatile
and reliable. Specifically, we have made great efforts to
provide comprehensive performance verification based on
the acquisition and evaluation of large volumes of data.
The product of machinery business is not just the machine
itself. For our customers, supplies of replacement and
wearing parts, and service backup for their equipment, are of
increasing importance. We have greatly expanded our offer in
those areas through wide-ranging measures. All our worldwide
warehouse facilities are electronically linked, allowing us to
achieve a high level of parts availability. We have established
service centers in all regions of the world. The rapid-response
backup they ensure is much appreciated by our customers.
Products
By concentrating on products and services relating to ground
and groundwater, we have the capability to be a technology
leader in both our Construction and Equipment segments.
The interaction between construction and machinery manu-
facture – the application of high-tech construction engineering
techniques on the one hand, and the design and manufacture
of high-grade machinery with state-of-the-art technology on
the other – allows us to exploit wide-ranging synergies in our
development work. This enables us to assume a pioneering
role with our methods and techniques.
We have had to commit major efforts to our Equipment seg-
ment in recent years in response to changes on the market.
The decentralized organization of our development activities
close to the plant floor has enabled us to considerably boost
COMBINED MANAGEMENT REPORTForecast Report
Demler Spezialtiefbau located in Netphen in North Rhine-Westphalia sunk 158 foundation piles and a piled wall in Halle with three different drilling rigs in an extremely restricted space.
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79
detailed preliminary ground surveys, some factors which
were not detectable will occur on a regular basis. They can
impede construction works in a wide variety of ways, and
in some cases also cause significant financial losses. We
are working hard to optimize even further our behavior with
regard to risk, in order to avoid issues such as we have
encountered in the last two years in future.
Of course, an opportunity can also arise if the ground has
been assessed too negatively prior to starting construction
works. Our construction sites can then also generate ad-
ditional profit.
Achieving success within a major corporation is also heavily
linked to its basic organizational structure. We have been
working hard on that aspect in recent years, and we are
convinced that we are now very well positioned. We have
focused closely on international networking, so that today
almost all subsidiaries worldwide are interconnected via a
centralized IT network and share software platforms. This
provides us with close control, delivering massive benefits
in terms of logistics and parts supply especially. All major
locations are equipped with state-of-the-art videoconferencing
systems, saving on travel expenses. We have also made
great progress with regard to our management systems.
Lots of positive changes have been made in relation to HSE
(Health, Safety & Environment), and thanks to the global IT
network, our efforts to internationalize the company have
been successful.
All in all, we therefore believe that we are well set to meet the
challenges of the future. We are continuing to work hard on
our cost-cutting program, and cost ratios will also improve
as our capacity utilization grows. Although we still have some
overcapacity, we need it in order to drive the new business
fields in deep drilling and underwater drilling forward. In those
areas especially, we will soon be in a position to provide a
good contribution to future growth.
We see no need to change our strategic objectives at
present. The strategy comprising the Construction, Equip-
ment and Resources segments will continue to dictate
the direction of the Group over the coming years. We are
not planning any major acquisitions at present, as we are
intending to strengthen our capital base especially over the
years ahead.
The excellent sales successes we have recorded despite
difficult market conditions are strongly linked to these efforts.
We are convinced that we have an outstanding product offer,
and that it provides us with a sound basis for future success
on the market.
In our Resources segment, we have repeatedly demonstrat-
ed over recent years that we offer a portfolio which attracts
great interest on the market. Our environmental technology
solutions especially, such as the reed-bed treatment plant
for the treatment of oil-contaminated water in Oman, have
attracted widespread public acclaim.
Once again, 2015 will be a year with many challenges. The
world’s construction markets are fundamentally on course
for growth. We are also expecting the Chinese competitors
of our Equipment segment to behave more reasonably than
in the past, since they will also be obliged to fall in line with
the rules of the market.
In spite of the overall positive expectations, the risks posed
in the markets should not be overlooked. They can influence
our companies to differing extents, depending on how the
issues pan out. This includes the current problems in Russia
and Ukraine as well as the Islamic State terror organization
in Syria and in Iraq. It is also very difficult to predict whether
the efforts made to achieve political stability in the countries
of North Africa will bear fruit, or if new unrest will confront
the markets with further challenges. The economic problems
facing some countries, such as Greece, are by no means
resolved either.
In view of the general conditions, it is our opinion that our
business model will prove robust in 2015 as well. In our
planning, we have attempted to evaluate all known threats
and opportunities, thinking through both positive and nega-
tive scenarios as effectively as possible. Ultimately, we are
convinced that our planning for 2015 is realistic. This applies
to all segments and to the Group overall.
Nevertheless, we are obliged to point out that specialist
foundation engineering and our other businesses are exposed
to greater risk than the business activities undertaken by most
other companies. Our activity always contains a factor that
cannot be perfectly analyzed in advance – the subsoil or the
ground itself. Even after conducting the most extensive and
COMBINED MANAGEMENT REPORTForecast Report
80
following quarters. The trend over the full year will thus be in
line with patterns in our business seen in earlier times. The
reason for this is that fewer machines can be invoiced at
the start of the year, because customers do not start buying
equipment until the construction season gets underway.
In the Construction segment, despite the good weather
conditions in some countries, the winter period has a heavy
impact on a number of our markets.
Our balance sheet ratios have changed markedly over recent
years. This is illustrated most clearly by the increase in working
capital, which also resulted in a substantial increase in net
debt. This trend was largely attributable to the normalization
of our machinery business, in which inventories increased
significantly due to the return of shorter lead times. No
significant change to the balance sheet structure is to be
Based on the information available to us at the time of
completing this report, we forecast that total Group
revenues for the 2015 financial year will be around EUR
1.6 billion. We forecast profit after tax of around EUR
18 to 23 million. In accounting terms, this will mean EBIT
of around EUR 75 million.
We still expect to make a loss in the first quarter, in line with
seasonal norms, though it will be balanced out over the
in EUR million Actual 2014 Forecast 2015
Total Group revenues 1,560 ~ 1,600
EBIT 76.4 ~ 75
Net profit or loss 15.7 ~ 18 - 23
Comparison: 2014 actual/2015 forecast
COMBINED MANAGEMENT REPORTForecast Report
In the Kingdom of Bhutan, approximately 80 km east of the capital city Thimphu, a 1.200 MW diversion hydroelectric power plant, the “Punatsangchhu-I” is being built. To lower the water level, Bauer is sealing the upstream cofferdam with a cut diaphragm wall that is up to 90 m deep.
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81
could only be achieved by means of a one-time income, we
nevertheless intend for our shareholders to participate in this.
As a result, we would like to pay a dividend again – although
admittedly at a low level. In the medium term, the dividend
quota should be about 25 to 30 percent of the reported
profit after tax.
We do not see any existential risk or relevant risk to future
progress in our trading environment. The global economy
remains marked by great change, however, which may also
have a negative impact on our situation again. We should
point out that future forecasts are based on assumptions
and estimates of the company management. Such assump-
tions and estimates always entail a degree of uncertainty and
risk, which may mean that actual performance differs from
that forecast.
expected in the coming year, as our business model is tied
to high levels of up-front financing. With stronger demand for
machinery, however, the ratios will improve again. Over the
coming years, we will be making great efforts to increase our
equity ratio back to more than 30 percent.
We expect the Group to enjoy positive development through
2015 and 2016. We are planning for growth of between
3 and 8 percent, in line with our long-term plans. We also
predict that we can achieve an increase in earnings. The
Group has largely adjusted to the changed market condi-
tions, meaning it is able to return to a positive trend overall.
The Management Board will recommend to the Supervisory
Board that it propose to the Annual General Meeting that
a dividend of EUR 0.15 per share should be paid for the
2014 financial year. Despite the fact that the result in 2014
COMBINED MANAGEMENT REPORTForecast Report
Schrobenhausen, 31 March 2015
BAUER Aktiengesellschaft
Prof. Thomas Bauer
Chairman of the Management Board Dipl.-Betriebswirt (FH) Hartmut Beutler Dipl.-Ing. Heinz Kaltenecker
82
Falling interests rates and new crisis areas
Although many problems remain in 2014 – the situation
in Spain, Portugal or Greece has hardly changed – the
Eurozone economy did return to slight growth with 0.8 %.
The European Central Bank cut its key interest rate, first in
June 2014 from 0.25 % to 0.15 % and then again in Septem-
ber to a mere 0.05 %, in an effort to stave off deflation. The
ECB introduced penalty interest rates on bank deposits in
order to motivate the banks to increase lending. This policy
boosted in particular the stock markets in 2014. In January
2015, the ECB decided to purchase government bonds
(quantitative easing) as a further measure against the low
inflation rate.
Overall, the global economy improved in 2014. The gross
domestic product of the USA grew by 2.2 %. China, on the
other hand, missed its own growth target with 7.4 %.
The German economy managed growth of 1.4 %. The good
level of employment, growth in incomes and low inflation
meant that economic growth was promoted by domestic
demand in particular.
However, problematic areas also developed in 2014 again.
In spring, the Russia/Ukraine conflict intensified. Europe
introduced sanctions which had an effect on the European
and the Russian economies. The ruble lost one third of its
value against the euro over the course of the year. In addition,
the oil price collapsed by about 50 % during the year. It is
probable that the definitive outcomes of these developments
will only come to light in 2015.
The Bauer Share lost significantly in value
The Bauer share underwent a marked drop in value in 2014.
Whereas the benchmark indexes, the DAX (+5.1 %) and
SDAX (+4.3 %), grew, the Bauer share lost 28.8 % of its
value by the end of the year.
The first days of trading in 2014 were positive, and saw the
share increase from its opening price of EUR 18.81 to its
high-point for the year in mid-January, at EUR 20.04. As the
first quarter continued, the share price continued relatively
unchanged in line with the German indexes, with slight
upward and downward movements.
Following publication of the annual report on April 11 as well
as the interim report on the first quarter on May 14, the share
price dropped to EUR 18.12, while the markets recorded
modest growth.
The Bauer share was able to recover slightly by the end
of June before dropping markedly in relation to the slightly
downward trend of the stock markets. An initial interim low
point was reached on August 8, at EUR 14.44.
The Bauer share came under significant pressure following
publication of the first half-year’s figures on August 14 with
the associated slight downgrade to the earnings forecast
for the complete year, combined with further stock market
The Bauer Share
Performance of the Bauer Share 2014
in % Bauer DAX MDAX SDAX
40
30
20
10
0
(10)
(20)
(30)
(40)
01.01.2014 01.04.2014 01.07.2014 01.10.2014 31.12.2014 31.03.2015
83
weakness; by October 16, it had reached the low for the year
at EUR 11.75.
As the markets recovered, the price rose slightly and topped
the EUR 14 mark for a period in November. On the last
trading day of the year, the share price was EUR 13.35.
During the first quarter of 2015, the share price increased
significantly, reaching EUR 17.91 by the end of March.
Continuous dialog with shareholders
It is the objective of the Management Board and Investor Rela-
tions to keep shareholders comprehensively and continuously
informed about the course of business. In addition to the
financial reports, the BAUERcompact newsletter offers news
and topics relating to the BAUER Group. With the BAUER
app, it is possible to call up all messages, the share price and
much else besides on a mobile device.
The Management Board uses roadshows in Scandinavia,
the USA or Germany as well as participating in capital
market conferences to inform German and international
investors alike about the position of the business.
Furthermore, there is an intensive exchange with analysts.
Overall, seven analysts reported on BAUER AG in 2014 with
their research. At the end of the year, there were six neutral
and one negative share recommendations. The average
target share price quoted was EUR 14.36.
The Annual General Meeting in June was attended by about
450 shareholders and guests who came to the headquarters
in Schrobenhausen to be informed by Prof. Bauer about the
course of business.
Dividend policy
Our dividend strategy is fundamentally oriented to the
goals of providing shareholders with an appropriate and fair
participation in the success of the business, maintaining
continuity, and safeguarding the equity ratio.
Following a difficult financial year, the planned after-tax
result could only be achieved by means of a one-off gain.
We believe it is appropriate to allow our shareholders to
participate in this, so we intend to pay a small dividend
again. At the same time, we are still intensively pursuing
the objective of improving the equity ratio.
Consequently, the Management Board and Supervisory
Board will propose to the Annual General Meeting on
June 25, 2015 that a dividend of EUR 0.15 should be
paid per share.
THE BAUER SHARE
KEY FIGURES 2011 2012 2013 2014
Earnings per share (in EUR) 1.86 1.44 -0.99 0.85
Dividend per share (in EUR) 0.50 0.30 0 0.15 *
Dividend total (in EUR ’000) 8,566 5,139 0 2,570 *
Year-end price (in EUR) 21.10 19.32 18.81 13.35
Annual high (in EUR) 38.49 26.50 23.05 20.04
Annual low (in EUR) 16.04 16.13 17.33 11.75
Market capitalization at year-end (in EUR ’000) 361,464 330,971 322,234 228,699
Average daily trading volume (units) 65,885 48,584 39,017 26,984
ISIN / WKN DE0005168108 / 516810
Trading symbol B5A
Trading segment Frankfurt, Prime Standard
Share indexes
SDAX, CDAX, GEX, DAXPlus Family
Classic All Share, Prime All Share
Class of share No-nominal-value individual bearer shares
Share capital EUR 73,001,420.45
Number of shares 17,131,000
Shareholder structure Bauer family 48.19 %, free float 51.81 %
* Proposed; subject to the consent of the Annual General Meeting to be held on June 25, 2015
Share information
More information:
http://ir.bauer.de
84
The Management Board, also on behalf of the Supervisory
Board, submits the following report on the company’s
Corporate Governance in accordance with Article 3.10 of
the German Corporate Governance Code. The Corporate
Governance Report also includes the Declaration on
Corporate Governance pursuant to Article 289a of the
German Commercial Code (HGB), which forms part of
the Management Report for the 2014 financial year.
Declaration of Conformity 2014
In the year under review, based on preliminary work by the
Presidial and Personnel Committee, the Management Board
and Supervisory Board reviewed the company’s compliance
with the German Corporate Governance Code. On Decem-
ber 5, 2014 the Management Board and Supervisory Board
passed the following declaration of conformity:
“Since the last declaration in December 2013 the company
has complied with, and currently complies with, each of
the recommendations of the “Government Commission of
the German Corporate Governance Code” as published by
the German Federal Ministry of Justice in the official section
of the electronic version of the German Federal Gazette
(“Bundesanzeiger”), with the following exceptions:
1. Contrary to Article 3.8 an excess of at least 10 percent of
the loss up to at least an amount representing one and a half
times the fixed annual remuneration of Supervisory Board
members is not agreed for D&O insurance for the Supervisory
Board. As a result of the moderate remuneration provisions
for the Supervisory Board in the Articles of Association,
a corresponding excess for the Supervisory Board is not
approved. Even without a corresponding excess, the Super-
visory Board members will perform their duties responsibly.
2. Contrary to Article 4.1.5, Article 5.1.2 and Article 5.4.1
there is no appropriate inclusion or participation of women
arranged for in the filling of management positions or
in the composition of the Management Board and the
Supervisory Board. In particular, the introduction of a
quota for women is not supported in order to ensure
equal opportunities. These positions should be filled
regardless of gender so that neither the female gender
nor the male gender is favored or discriminated against. In
addition, a candidate should not suffer any disadvantage
on the grounds of racial or ethnic origin, religion or belief.
3. The individualized disclosures of the benefits, the remuner-
ation and the pension benefits awarded to each member
of the Management Board are not individualized for each
member of the Management Board in the remuneration
report as the General Meeting dated June 30, 2011
resolved on the omission of the disclosures according to
section 285, no. 9, letter a, sentences 5 to 8, section 315a
subsection 1 and section 314, subsection 1, no. 6, letter a,
sentences 5 to 8 of the German Commercial Code (HGB)
and therefore the disclosures required under Article 4.2.5
would contradict such Shareholder resolution.
4. Contrary to Articles 5.1.2 and 5.4.1, no age limit is specified
for members of the Management Board or Supervisory
Board. Expertise and performance cannot be determined
on the basis of rigid age limits. Upon the appointment of
new Management Board and Supervisory Board members,
the persons who bear responsibility for selecting suitable
members will take account of the age of the chosen person
when reaching their decision, alongside assessing their
skills. If a Management Board or Supervisory Board member
should become no longer sufficiently capable of holding
office on the grounds of age during their term of office, the
common sense of the persons involved is to be trusted.
5. Contrary to Article 7.1.2, the consolidated financial
statements at December 31, 2013 were made public within
101 days rather than 90 days of the end of the financial
year. As a result of the international structure of the Group,
the completion and consolidation of the separate financial
statements takes a considerable amount of time. In the
interests of conscientious accounting processes, efforts to
improve the accounting procedures continue.
BAUER AG already conforms largely to the suggestions of the
German Corporate Governance Code Commission.”
Roles of the Management Board and Supervisory Board
German company law prescribes a dual system of manage-
ment for BAUER AG, characterized by a strict separation of
personnel between the Management Board as the executive
management body and the Supervisory Board as the super -
vising body. Moreover, the company’s Articles of Association
and the rules of procedure governing the work of the Super-
visory Board and of the Management Board also lay down
the basic structures of their collaboration.
Corporate Governance ReportAND DECLARATION ON CORPORATE GOVERNANCE
85
appropriation of net earnings available for distribution. The
Chairman of the Supervisory Board coordinates the work of
the Supervisory Board, chairs its meetings and represents the
Supervisory Board externally. The Supervisory Board regularly
reviews the efficacy of its activities.
Composition of the Supervisory Board
The Supervisory Board of BAUER AG comprises a total
of 12 members. Six of its members are elected by the
employees at the Group’s locations in Germany, with the
other six members being elected by the Annual General
Meeting to represent the shareholders. The Supervisory
Board includes a sufficient number of independent members
who have no business or personal links to the company, to
its executive bodies, to any controlling shareholder or to any
company associated with any such shareholder which may
give grounds for a material and not merely temporary conflict
of interests. Moreover, all members of the Supervisory Board
are obligated to immediately disclose to the Supervisory
Board any conflicts of interest as and when they arise. No
conflicts of interest were disclosed to the Supervisory Board
by any of its members during the year under review.
Objectives of the Supervisory Board with regard to its
composition
The following objectives must be taken into account by the
Nominations Committee and by the Supervisory Board when
proposing candidates for election to the Supervisory Board
at the Annual General Meeting:
• The Supervisory Board shall be composed such that
its members collectively possess the necessary skills,
knowledge and professional experience to carry out its
assigned role in a correct and proper manner.
• The appointment of shareholders’ representatives to the
Supervisory Board shall take due account of the Group’s
fundamental character as a family business, giving due
consideration to the implications of that character in terms
of the corporate culture, whereby two members shall be
appointed from the Bauer family, provided the candidates
are suitable.
• At least two of the shareholders’ representatives on the
Supervisory Board shall have substantial experience in
The Management Board of BAUER AG currently comprises
three members. They are assigned independent responsibility
for managing the company. The members of the Management
Board work together on a collegiate basis. Notwithstanding
the joint overall responsibility of the Management Board, each
member of the Board Management acts on his or her own
responsibility within his or her assigned portfolio of functions.
Measures and transactions of a division of the Management
Board that are of extraordinary importance for the company or
a business unit, or which are associated with an extraordinary
financial risk, require the prior approval of the entire Manage-
ment Board. The Chairman of the Management Board
coordinates the work of the Management Board. The Man-
agement Board members report on a regular basis to the
Chairman of the Management Board in respect of all material
matters and on the course of business within their assigned
functions. A member of the Management Board has been
appointed Labor Director, and is responsible to an increased
extent for human resources and social policy topics in the
company. The Management Board defines the corporate
strategy, agrees it in consultation with the Supervisory Board,
and ensures that it is implemented. The Management Board
provides the Supervisory Board and its subcommittees with
regular, detailed information, in written form by way of monthly
reports, by conference calls and at routine meetings, as well
as at extraordinary meetings held as and when required, in
respect of all matters of planning, business development,
finance and earnings, risk, risk management, internal auditing
and compliance of relevance to the company.
The Supervisory Board appoints the Management Board.
In doing so, it considers not only the relevant professional
qualification of its members but also – given the international
nature of the business – the diversity of its composition. The
Supervisory Board also sets the overall level of remuneration
paid to the Management Board, regularly reviews remuner-
ation levels, and specifies the remuneration paid to individual
members of the Management Board. It appoints, supervises
and advises the Management Board, and participates in
decisions of fundamental significance to the company. The
company’s Articles of Association stipulate relevant trans-
actions and undertakings which require the consent of the
Supervisory Board. Duties of the Supervisory Board include
reviewing the annual financial statements of the company, the
consolidated financial statements and the parent company
and Group Management Report, as well as proposals for the
CORPORATE GOVERNANCE REPORT
86 CORPORATE GOVERNANCE REPORT
system for the Management Board in general, as well as
responsibility for establishing, amending and terminating
service contracts with the members of the Management
Board. Furthermore, it deals with questions of corporate
governance and is authorized to pass amendments to the
Articles of Association which relate only to its wording.
The Audit Committee comprises three members elected by
the Supervisory Board by a majority of the votes cast, with two
members proposed by the Supervisory Board members of the
shareholders and one member proposed by the Supervisory
Board member of the employees. The Chairman of the Audit
Committee is elected by the Supervisory Board at the sug-
gestion of the shareholders’ representatives. The Chairman of
this committee possesses specific knowledge and experience
in the application of accounting policies and internal control
procedures, and is neither a former member of the company’s
Management Board nor the Chairman of the Supervisory Board.
The role of the Audit Committee is in particular to monitor
accounting procedures and to review the efficiency of the
system of internal controls, the risk management system and
the internal auditing system including compliance. The Audit
Committee prepares the proposal of the Supervisory Board to
the Annual General Meeting concerning the appointment of
auditors, obtaining an Independence Confirmation from the au-
ditors in advance of each Annual General Meeting. It undertakes
a preliminary review of the annual financial statements of the
parent company and the consolidated financial statements of
the Group together with the Combined Management Report, as
well as preparing the proposal on appropriation of net earnings
available for distribution and consulting on the audit reports with
the auditors. It also reviews the quarterly financial reports.
The Nominations Committee comprises three shareholder
representative members of the Supervisory Board. The Chair-
man and the Deputy Chairman of the Nominations Committee
are proposed and elected by the Supervisory Board members
of the shareholders. The task of the Nominations Committee
is to submit to the Supervisory Board proposals of suitable
candidates to be put forward to the Annual General Meeting
for election to the Supervisory Board.
The Mediation Committee, constituted pursuant to the
German Co-determination Act, comprises two shareholder
representative and two employee representative members
the management of construction and/or construction
machinery manufacturing companies.
• At least one of the shareholders’ representatives on the
Supervisory Board shall possess specialist skills and ex-
perience in the application of financial reporting standards
and the implementation of internal control procedures.
• The employees’ representatives on the Supervisory Board
will be elected in accordance with the provisions of the
German Employees’ Co-determination Act.
• The Supervisory Board shall include not more than four
members in total who have business or personal links
to BAUER AG, to its executive bodies, to any controlling
shareholder or to any company associated with any such
shareholder which may give grounds for a material and not
merely temporary conflict of interests.
• Supervisory Board posts shall be filled on merit, regardless
of gender so that neither men nor women are preferred or
disadvantaged. Moreover, when appointments are made to
the Supervisory Board, a candidate shall not be disadvan-
taged for reason of race, ethnic origin, religion or world view.
The objectives are fully embodied in the current composition
of the Supervisory Board.
Composition and roles of the subcommittees
The Supervisory Board has established four standing
committees constituted from among its members in order to
support its plenary work. The Supervisory Board subcom-
mittees and their roles and procedures are laid down in the
rules of procedure governing the Supervisory Board. The
committee chairmen report to the plenary Supervisory Board
on a regular basis with regard to the work of their respective
committees, and prepare the way for plenary Supervisory
Board decisions within their specific remits.
The Presidial and Personnel Committee comprises the
Chairman of the Supervisory Board as well as one Supervisory
Board member elected by the shareholder representatives
and one by the employee representatives respectively. Its role
includes preparing the way for Supervisory Board decisions
relating to the setting of overall remuneration to individual
Management Board members and to the remuneration
87CORPORATE GOVERNANCE REPORT
SHAREHOLDERS AND TRANSPARENCY
All documents and information resources relating to the
Annual General Meeting are made available to shareholders
on the company’s website well in advance. The shareholders
were assisted in exercising their voting rights by the facility to
assign power of attorney to nominees and by the appointment
of a company proxy to vote in accordance with the sharehold-
ers’ instructions. An electronic transfer facility is also provided
for the submission of powers of attorney. No company share
option schemes or similar stock incentive programs existed
during the past financial year.
The company provides regular and timely information relating
to the position of the company and in respect of material
changes to the business. Extensive documentation and infor-
mation resources are provided on the company’s website.
In addition, electronic distribution systems and the electronic
version of the German Federal Gazette (“Bundesanzeiger”) are
used to ensure timely communication with our shareholders
and with the public at large.
Four times a year, BAUER AG publishes updates on the
course of its business in the form of quarterly interim financial
reports, the half-year interim financial report and the annual
financial statements. Notifications relating to voting rights
as well as items of insider information relating directly to
the company are disclosed by the Management Board
immediately. The Annual General Meeting passed a resolution,
with the necessary three-quarters majority, stipulating that
the remuneration paid to members of the Management
Board shall not be disclosed individually. Consequently, as
has been the policy to date, only the remuneration paid
to the Management Board in total and the structure of the
remuneration system are disclosed in the Remuneration
Report on pages 61 to 63 of the company’s Annual Report.
SHAREHOLDINGS OF THE MANAGEMENT BOARD
AND SUPERVISORY BOARD
Members of the Management Board at the year-end held
a total of 1,742,022 (previous year: 1,741,022) shares in the
company as per December 31, 2014. This corresponded
to 10.17 % (previous year: 10.16 %) of the share capital of
BAUER AG. At the same date members of the Supervisory
Board held a total of 1,310,531 (previous year: 1,310,431)
Bauer shares, corresponding to 7.65 % (previous year:
7.65 %) of the company’s share capital.
respectively. The Mediation Committee is only convened
if a proposed candidate for appointment as a member of
the Management Board has not obtained the majority vote
required by the German Co-determination Act.
In his report to the Annual General Meeting, the Chairman
of the Supervisory Board summarizes the work of the
Supervisory Board and its subcommittees over the past
financial year. The Report of the Supervisory Board for the
2014 financial year is published in the company’s Annual
Report on pages 88 to 89. This report is thereby quoted by
way of reference.
Corporate Governance and Compliance
The company’s system of corporate governance is based
on German law, specifically on legislation governing public
limited companies, corporate co-determination and capital
markets, as well as on the company’s Articles of Associa-
tion. The company’s Articles of Association are published
on the company website at www.bauer.de, in the “Investor
Relations” section under “Corporate Governance”. The Man-
agement Board employs the Corporate Management Manual
implemented throughout the Group as its central instrument of
management. The Corporate Management Manual also sets
out framework policy guidelines covering the entire Group,
and lays down the principles of corporate governance and
the program of basic values which dictate the ethical and
moral conduct of the company’s employees in carrying out
the business of the company. A Code of Conduct defining
correct behavior of employees in the BAUER Group, dealing
in particular with the topics of anti-corruption, competition
and cartel law, health, safety & environment (HSE) as well
as dealing with business partners, has additionally been
published on the company’s website.
An appropriate system of risk management and of internal
controls is established within the company. The essential
features of the risk management and control system are set
out in the Risk Report forming part of the Combined Man-
agement Report. The established risk management system
supports Group-wide control and monitoring procedures.
Internal auditing systems monitor compliance with laws
and standards across the Group. The Management Board
regularly updates the Supervisory Board on existing risks
and risk trends, as well as on internal auditing procedures.
88
The Supervisory Board regularly monitored the work of the
Management Board during the 2014 financial year on the
basis of the detailed reports provided by the Management
Board in written and verbal form, and provided support
in the form of advice. The Management Board discharged
its duties to provide the Supervisory Board with regular,
prompt and comprehensive information about all questions of
strategy, planning, company development, risk development
and compliance that are relevant to the company and the
Group. Between the meetings, the Management Board
submitted monthly written reports on all important business
transactions and financial indicators of the Group and the
company. The Chairman of the Supervisory Board was
also in regular contact with the Management Board, and
gathered information as appropriate relating to the course
of business and key transactions.
In their subcommittees and plenary sessions, the Supervisory
Board members always had the opportunity to scrutinize
the reports and proposals submitted by the Management
Board and to set forth their own suggestions. In particular,
the Supervisory Board intensively discussed all business
transactions important for the company on the basis of
written and verbal reports from the Management Board,
and examined them with regard to plausibility.
There were no indications of conflicts of interest among
members of the Management Board or Supervisory Board
requiring immediate notification of the Supervisory Board and
disclosure to the Annual General Meeting. There were no
changes of personnel on the Supervisory Board in the past
financial year.
Main focus of consultations in Supervisory Board
meetings
Four regular plenary meetings were held during the reporting
year. Apart from two meetings at which one member was
absent in each instance, the meetings of the Supervisory
Board were attended by all members.
The Supervisory Board reviewed performance trends on
large-scale projects on several occasions in the course of
the past year, and also gave consideration to the status of a
cost-cutting program and assessed the liquidity planning. The
Supervisory Board reviewed the actions of the Management
Board in dealing with the aforementioned issues as well
as the strategy being pursued by the Group, providing the
Management Board with advice and support to ensure that an
appropriate approach was employed. The current business
development in the Construction, Equipment and Resources
segments was discussed in all Supervisory Board meetings.
At the annual accounts review meeting in April relating to
the annual parent company and Group consolidated finan-
cial statements for the 2013 financial year, also attended
by the auditors, a detailed review was undertaken of the
respective financial statements and associated management
and audit reports, taking into due consideration the report
from the Audit Committee, and the proposal of the Manage-
ment Board with regard to the appropriation of earnings.
Furthermore, the Supervisory Board dealt with compliance
with the financing covenants in this meeting, as well as the
preparations for a syndicated loan. Current legal cases,
the remuneration of the Management Board and extension
of the term in office for the member of Management Board
Heinz Kaltenecker were discussed
In the second meeting of the financial year, the Supervisory
Board dealt with, amongst other matters, the interim report
for the first quarter of 2014, the Group’s financing situation
including the cost-cutting program and the segments’ order
situation.
In conjunction with the September meeting, the Super-
visory Board obtained information about the handling of a
construction site at a major project. The meeting focused on
the expected development of earnings, the liquidity required
in major projects, the debt situation in the Group as well as
compliance topics. It also approved the medium-term plan
with regard to the consolidated balance sheet.
In the last meeting of the Supervisory Board in December
of the year under review, the expected development of
earnings and planning for the 2015 financial year were
discussed in particular. An updated declaration of conformity
to the German Corporate Governance Code was passed,
and approval was given to the employee bonus framework.
Report of the Supervisory Board 2014
89REPORT OF THE SUPERVISORY BOARD
Work carried out by the subcommittees
In the 2014 financial year there were four committees of
the Supervisory Board. The Mediation Committee and the
Nominations Committee were not required to convene. The
chairpersons submitted regular reports on the main content
of the subcommittee meetings to the plenary Supervisory
Board meetings. The meetings of the various subcommittees
of the Supervisory Board in the financial year were attended
by all the respective members.
Two meetings of the Presidial and Personnel Committee
were convened. At those meetings, preparations were
made for the decision of the Supervisory Board relating to
the setting of the salaries and performance bonuses of the
members of the Management Board and to the structuring of
its remuneration system, as well as to the performance bonus
framework. Consideration was also given to the declaration
of conformity to the German Corporate Governance Code,
as well as to the extension of the contract of service of
Management Board member Heinz Kaltenecker.
The Audit Committee held one conference call and four
meetings in the financial year. The committee reviewed
the audit of the interim reports and, in the presence of the
auditors, the audit of the annual financial statements of the
parent company and the consolidated financial statements
of the Group. It also prepared the appointment of the auditor,
taking account of the examination into the latter’s impartiality.
Furthermore, the forecast reporting, liquidity commitment
and enforcement of supplements in major projects were
examined, as were the financing of the Group of companies
and the sale of a participation. A dedicated meeting
reviewed the risk management system’s compliance with
applicable laws and standards, as well as the audit activities
of the Internal Auditing function.
Auditing of 2014 annual and consolidated financial
statements
The annual financial statements of BAUER AG to December 31,
2014 and the consolidated financial statements of the Group,
as well as the Combined Management Report, including
the Group accounts, were audited by the auditors elected
by the Annual General Meeting and duly appointed by
the Supervisory Board, PricewaterhouseCoopers AG und
Wirtschaftsprüfungsgesellschaft, Stuttgart. The accounts
were certified by the auditors without reservation. The Audit
Committee subjected the audit documentation and reports
to thorough scrutiny. The Committee reported on its review
to the Supervisory Board. The auditors attended the relevant
meetings of the Audit Committee as well as the annual
financial review meeting of the plenary Supervisory Board.
The audit documentation and reports from the auditors
were provided to all members of the Supervisory Board in
good time for scrutiny. The Supervisory Board duly noted
and concurred with the findings of the auditors’ review
of the parent company and Group consolidated financial
statements and the Combined Management Report. On
conclusion of the Supervisory Board’s review, no objections
were raised. The financial statements of BAUER AG and the
consolidated financial statements of the Group were approved
by the Supervisory Board at its annual review meeting on
April 8, 2015. The annual financial statements of BAUER AG
were thereby confirmed. Following prior consultations by the
Audit Committee, the Supervisory Board concurred with the
proposal of the Management Board regarding the appropria-
tion of net profit available for distribution.
On behalf of the Supervisory Board, I would like to thank
the members of the Management Board, all the Group’s
employees and the employee representatives within all
Group companies for their great commitment throughout
the past financial year.
Schrobenhausen, April 2015
The Supervisory Board
Dr. Klaus Reinhardt
Chairman of the Supervisory Board
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Our customer Stefanutti Stocks Geotechnical employed a BG 28 in the construction work on the Simon Vermooten Bridge in
Pretoria, South Africa. Drilling cased piles with a diameter of 1,250 mm were produced in depths of up to 30 m, including 3 m
rock socketing.
Income Statement of BAUER Aktiengesellschaft
Balance sheet of BAUER Aktiengesellschaft as at December 31, 2014
92
93
Balance Sheet and Income Statement of BAUER Aktiengesellschaft in accordance with HGB
92
Income Statement of BAUER Aktiengesellschaft
in EUR '000 01.01. - 31.12.2013 01.01. - 31.12.2014
1. Sales revenues 30,495 30,046
2. Other capitalized goods and services for own account 0 8
3. Other operating income 2,124 5,749
32,619 35,803
4. Cost of materials -1,733 -1,052
5. Staff costs -14,613 -15,450
6. Amortization of intangible assets and depreciation of property, plant and equipment -3,191 -2,874
7. Other operating expenses -13,776 -16,667
-33,313 -36,043
Operating result -694 -240
8. Income from participations 4,356 4,950
9. Other interest and similar income 7,029 7,950
10. Interest and similar expenses -4,804 -5,914
Financial result 6,581 6,986
Result from operating activities 5,887 6,746
11. Extraordinary expenses -141 -141
12. Income tax expense -609 -666
13. Other taxes -17 -18
14. Net profit for the year 5,120 5,921
15. Profit carryforward 22,309 27,429
16. Net earnings available for distribution 27,429 33,350
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Balance sheet of BAUER Aktiengesellschaft as at December 31, 2014
Assets
in EUR '000 31.12.2013 31.12.2014
A. Fixed assets
I. Intangible assets 2,982 2,616
II. Property, plant and equipment 3,822 3,557
III. Financial assets 115,696 116,646
122,500 122,819
B. Current assets
I. Inventories
Raw materials and supplies 74 71
II. Receivables and other assets
(of which receivables from affiliated companies)
174,049
(172,622)
205,920
(204,598)
III. Cash at banks 1,517 960
175,640 206,951
C. Prepayments and deferred charges 586 641
D. Deferred tax assets 352 603
299,078 331,014
Equity and liabilities
in EUR '000 31.12.2013 31.12.2014
A. Shareholders’ equity
I. Subscribed capital 73,001 73,001
II. Capital reserve 39,781 39,781
III. Revenue reserves 15,100 15,100
IV. Net earnings available for distribution
(off which profit carryforward EUR 27,429 thousand; previous year EUR 22,309 thousand) 27,429 33,350
155,311 161,232
B. Provisions
(of which provisions for defined benefit plans)
6,716
(5,575)
7,841
(6,600)
C. Liabilities
(of which liabilities payable to affiliated companies)
137,051
(53,830)
161,941
(34,942)
299,078 331,014
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Consolidated statement of profit or loss
Consolidated statement of comprehensive income
Consolidated cash flow statement
Consolidated balance sheet as at December 31, 2014
Consolidated statement of chances in equity
Notes of the consolidated financial statement
Assurance by the Legal Representatives
Auditor’s Report
96
96
97
98
100
101
180
181
Consolidated Financial Statements in accordance with IFRS
After over 375 years, the Paulaner Brauerei in Munich left its brewery facility at Nockherberg and dug new wells on the outskirts
of the city near Langwied. GWE Pumpenboese GmbH supplied materials for this.
96
Consolidated statement of profit or loss and Consolidated statement of comprehensive income
Income Statement
in EUR '000 Appendix 01.01. - 31.12.2013 * 01.01. - 31.12.2014
1. Sales revenues (6) 1,402,173 1,375,679
2. Changes in inventories -4,423 26,622
3. Other capitalized goods and services for own account (7) 19,196 14,696
4. Other income (8) 30,579 89,022
CONSOLIDATED REVENUES 1,447,525 1,506,019
5. Cost of materials (9) -755,906 -749,247
6. Staff costs (10) -342,815 -355,250
7. Depreciation and amortization
a) Depreciation of fixed assets (11) -79,696 -78,781
b) Write-downs of inventories due to use (12) -14,196 -15,789
8. Other operating expenses (13) -224,827 -230,526
OPERATING RESULT 30,085 76,426
9. Financial income (14) 7,729 7,096
10. Financial expenses (15) -45,541 -45,149
11. Share of the profit or loss of associated companies accounted for using the equity method 1,770 -572
PROFIT BEFORE TAX -5,957 37,801
12. Income tax expense (16) -13,474 -22,075
NET PROFIT OR LOSS -19,431 15,726
of which attributable to shareholders of BAUER AG -16,927 14,481
of which attributable to non-controlling interests -2,504 1,245
in EUR 01.01. - 31.12.2013 01.01. - 31.12.2014
Basic earnings per share (17) -0.99 0.85
Diluted earnings per share (17) -0.99 0.85
Average number of shares in circulation (basic) 17,131,000 17,131,000
Average number of shares in circulation (diluted) 17,131,000 17,131,000
Statement of Comprehensive Income
in EUR '000 01.01. - 31.12.2013 01.01. - 31.12.2014
Net profit or loss -19,431 15,726
Income and expenses which will not be subsequently reclassified to profit and loss
Revaluation of commitments arising from employee benefits after termination of employment970 -32,264
Deferred taxes on that revaluation with no effect on profit and loss -226 9,046
Income and expenses which will not be subsequently reclassified to profit and loss
Market valuation of derivative financial instruments 2,094 -5,323
Included in profit and loss -310 6,497
Deferred taxes on financial instruments with no effect on profit and loss -642 54
Differences from currency translation -15,678 10,545
Other result after tax -13,792 -11,445
Total Comprehensive income for the year -33,223 4,281
of which attributable to shareholders of BAUER AG -28,924 2,360
of which attributable to non-controlling interests -4,299 1,921
* Previous year adjusted; see notes on page 106
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Consolidated cash flow statement
in EUR '000 01.01. - 31.12.2013 * 01.01. - 31.12.2014
Cash flows from operational activities:
Profit before tax -5,957 37,801
Depreciation of fixed assets 79,696 78,781
Write-downs of inventories due to use 14,196 15,789
Financial income received -4,610 -4,463
Financial expenses paid 39,358 40,567
Other non-cash transactions 6,088 -49,476
Dividends received 2,951 450
Result from the disposal of fixed assets -3,175 -4,773
Change in provisions -3,029 314
Change in trade receivables -55,342 20,634
Change in receivables from construction contracts -31,950 24,309
Change in receivables from concession arrangements 2,279 2,309
Change in other assets and in prepayments and deferred charges 7,717 -10,506
Change in inventories -22,687 -37,316
Change in trade payables 20,451 -21,114
Change in liabilities from construction contracts 4,424 18,551
Change in other current and non-current liabilities -4,968 22,776
Cash and cash equivalents generated from day-to-day business operations 45,442 134,633
Income tax paid -7,026 -19,235
Net cash from operating activities 38,416 115,398
Cash flows from investment activities:
Acquisition of property, plant and equipment and intangible assets -89,240 -69,119
Proceeds from sale of fixed assets 22,053 26,854
Consolidation scope-related change in financial resources 34 -5,187
Net cash used in investing activities -67,153 -47,452
Cash flows from financing activities:
Raising of loans and liabilities to banks 111,650 202,306
Repayment of loans and liabilities to banks -17,317 -237,761
Repayment of liabilities from finance lease agreements -11,012 -11,074
Dividends paid -6,589 -2,872
Interest paid -39,342 -42,952
Interest received 6,186 5,462
Net cash used in financing activities 43,576 -86,891
Changes in liquid funds affecting payments 14,839 -18,945
Influence of exchange rate movements on cash -2,854 3,563
Total change in liquid funds 11,985 -15,382
Cash and cash equivalents at beginning of reporting period 45,232 57,217
Cash and cash equivalents at end of reporting period 57,217 41,835
Change in cash and cash equivalents 11,985 -15,382
* Previous year adjusted; see notes on page 106
98
Consolidated balance sheet as at December 31, 2014
Assets
in EUR '000 Appendix 31.12.2013 * 31.12.2014
A. NON-CURRENT ASSETS
I. Intangible assets (18)
1. Concessions, industrial property rights and similar rights and values as well
as licenses to such rights and values 11,038 10,156
2. Capitalized software costs 90 39
3. Capitalized development costs 24,260 24,245
35,388 34,440
II. Property, plant and equipment and investment property (18)
1. Land, land rights and buildings 211,577 206,576
2. Investment property 863 804
3. Technical equipment and machinery 214,496 206,209
4. Other equipment, factory and office equipment 27,319 25,107
5. Payments on account and assets in course of construction 5,282 8,213
459,537 446,909
III. Investments accounted for using the equity method 13,249 42,906
IV. Participations 3,613 3,613
V. Deferred tax assets (19) 26,299 30,973
VI. Receivables from concession arrangements (20) 36,762 0
VII. Other non-current assets (21) 7,564 7,492
VIII. Other non-current financial assets (22) 5,420 28,420
587,832 594,753
B. CURRENT ASSETS
I. Inventories (23)
1. Raw materials and supplies 146,666 155,334
2. Finished goods and work in progress and stock for trade 272,686 283,850
419,352 439,184
II. Receivables and other assets (24)
1. Receivables from construction contracts (PoC) 143,234 132,159
2. Trade receivables 320,301 311,417
3. Receivables from enterprises in which the company has participating interests 444 67
4. Payments on account 3,725 4,304
5. Other current assets 30,695 28,603
6. Other current financial assets 19,551 20,100
517,950 496,650
III. Effective income tax refund claims 3,437 2,661
IV. Cash and cash equivalents (25) 57,217 41,835
997,956 980,330
1,585,788 1,575,083
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Equity and liabilities
in EUR '000 Appendix 31.12.2013 * 31.12.2014
A. SHAREHOLDERS’ EQUITY (26)
I. Subscribed capital 73,001 73,001
II. Capital reserve 38,404 38,404
III. Other revenue reserves and net earnings available for distribution 285,601 287,903
Equity of BAUER AG shareholders 397,006 399,308
IV. Non-controlling interests 22,809 19,617
419,815 418,925
B. NON-CURRENT LIABILITIES (27)
I. Liabilities to banks 247,775 364,771
II. Liabilities from finance lease agreements 17,265 13,032
III. Defined benefit plans (28) 81,637 116,358
IV. Other non-current liabilities 6,483 5,959
V. Other non-current financial liabilities 14,397 10,013
VI. Deferred tax liabilities (19) 14,954 13,123
382,511 523,256
C. CURRENT LIABILITIES (29)
I. Liabilities
1. Liabilities to banks 427,589 266,533
2. Liabilities from finance lease agreements 10,185 7,453
3. Advances received for orders 9,801 19,579
4. Liabilities from construction contracts (PoC) 32,839 48,471
5. Trade payables 194,471 168,974
6. Receivables from enterprises in which the company has participating interests 219 205
7. Other current liabilities 69,873 68,632
8. Other current financial liabilities 12,102 25,712
757,079 605,559
II. Provisions
1. Effective income tax obligations 9,606 9,317
2. Provisions (30) 14,809 15,880
3. Current portion of defined benefit plans (28) 1,968 2,146
26,383 27,343
783,462 632,902
1,585,788 1,575,083
* Previous year adjusted; see notes on page 106
100
Consolidated statement of chances in equity
in EUR '000Other revenue reserves and net earnings
available for distribution
Subscribed
capital
Capital
reserve
Revenue
reserves
Currency
translation
reserve
Reconciling
item,
IFRS
Hedging
transactions
reserve
Non-
controlling
interests Total
As at 01.01.2013 73,001 38,404 303,892 7,373 10,387 -3,722 33,205 462,540
Net profit or loss 0 0 -16,927 0 0 0 -2,504 -19,431
Differences from currency
translation 0 0 0 -13,865 0 0 -1,813 -15,678
Revaluation of commitments
arising from employee benefits
after termination of employ-
ment 0 0 964 0 0 0 6 970
Market valuation of derivative
financial instruments 0 0 0 0 0 1,767 17 1,784
Deferred taxes with no effect
on profit and loss 0 0 -225 0 0 -638 -5 -868
Total Comprehensive income
for the year 0 0 -16,188 -13,865 0 1,129 -4,299 -33,223
Changes in scope of consolidation 0 0 -2,887 0 0 0 0 -2,887
Dividend payments 0 0 -5,139 0 0 0 -1,450 -6,589
Other changes * 0 0 4,621 0 0 0 -4,647 -26
As at 31.12.2013 73,001 38,404 284,299 -6,492 10,387 -2,593 22,809 419,815
As at 01.01.2014 73,001 38,404 284,299 -6,492 10,387 -2,593 22,809 419,815
Net profit or loss 0 0 14,481 0 0 0 1,245 15,726
Differences from currency
translation 0 0 0 9,641 0 0 904 10,545
Revaluation of commitments
arising from employee benefits
after termination of employ-
ment 0 0 -31,956 0 0 0 -308 -32,264
Market valuation of derivative
financial instruments 0 0 0 0 0 1,184 -10 1,174
Deferred taxes with no effect
on profit and loss 0 0 8,959 0 0 51 90 9,100
Total Comprehensive income
for the year 0 0 -8,516 9,641 0 1,235 1,921 4,281
Changes in scope of consolidation 0 0 0 0 0 0 -3,199 -3,199
Dividend payments 0 0 0 0 0 0 -2,872 -2,872
Other changes 0 0 -58 0 0 0 958 900
As at 31.12.2014 73,001 38,404 275,725 3,149 10,387 -1,358 19,617 418,925
* Previous year adjusted; there was a non-signifi cant change in value in the course of calculating the share of joint ventures according to IFRS 11 and the retrospectively
changed balance sheet disclosure (see page 106)
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Notes of the consolidated financial statementGENERAL NOTES
GENERAL INFORMATION ABOUT THE GROUP
BAUER Aktiengesellschaft, Schrobenhausen (referred to in the following as BAUER AG) is a stock corporation under German law.
Its registered office is at BAUER-Strasse in Schrobenhausen, and the company is entered in the Register of Companies of
Ingolstadt under file reference (HRB 101375).
The BAUER Group is a provider of services, equipment and products dealing with ground and groundwater. The Group
markets its products and services all over the world. The operations of the Group are divided into three segments:
Construction, Equipment and Resources.
BAUER AG has been listed on the SDAX stock market index since September 2006. Between September 2008 and
September 2010, BAUER AG was also listed on the MDAX index.
1. BASES FOR COMPILING THE CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements of BAUER AG were prepared applying section 315a of the German Commercial Code
(HGB) in accordance with International Financial Reporting Standards (IFRS), as applicable in the EU. The consolidated
financial statements were prepared on the basis of historical cost, limited by the market-value valuation of available-for-sale
financial assets and by the fair-value valuation of financial assets and liabilities (including derivative financial instruments)
affecting net income. The previous year’s figures have been determined according to the same principles.
The BAUER Group’s financial year is the calendar year.
The consolidated financial statements were prepared in euros. Unless otherwise specified, all amounts are quoted in thousands
of euros (EUR '000).
The income statement was prepared according to the nature of expenses method.
2. SCOPE OF CONSOLIDATION AND CONSOLIDATION PRINCIPLES
Scope of consolidation
The scope of consolidation includes BAUER AG and all major subsidiaries. Subsidiaries are all companies over which the parent
has control in terms of financial and corporate policy. This is routinely accompanied by a voting share of over 50 %. When
assessing whether control is exerted, the existence and effect of potential voting rights currently exercisable or convertible
are considered.
The consolidated financial statements 2014 include 120 companies (previous year: 122). Of these, 0 (previous year: 3)
were included in the scope of consolidation for the first time. Since the start of 2014, 4 (previous year: 2) companies have
been removed from the scope of consolidation due to merger and sale. Consortia have not been included in the number of
companies included in the scope of consolidation, because of the short-term nature of the projects involved. Also, non-significant
joint ventures have not been considered in the stated number of included companies.
102 NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
The following overview shows the number of subsidiaries broken down by segment:
Subsidiary companies are not included in the consolidated financial statements if they are not material from the viewpoint of
an operating segment or of the Group based on the following assessment:
If the sum of all subsidiaries not included in the consolidated financial statements accounts for more than 1 % of the Group’s
total net assets, consolidated revenues or net profit for the period, an assessment is undertaken as to which company should
be included in the consolidated financial statements taking into account sustainability and consolidation effects. The as-
sessment criteria for materiality in respect of associated companies are restricted to annual earnings. Alongside quantitative
criteria, qualitative criteria are also applied in assessing the materiality of a company with regard to its inclusion in the scope of
consolidation. Consequently, the non-inclusion of any one company must not result in material changes to segment or Group
annual earnings, nor must it mask any other materially relevant trends.
In a small number of cases, companies are fully consolidated into the financial statements of BAUER AG even though that
company holds less than 50 % of their voting rights. This is the result of state restrictions which stipulate that foreign investors
may not hold more than 50 % of the voting rights in domestic companies. In such cases BAUER AG makes use of so-called
agency constructions, whereby more than 50 % of the voting rights are commercially held in the company concerned, thus
allowing for full consolidation.
Subsidiaries are included in the consolidated financial statements (fully consolidated) from the point at which control is
transferred to the Group. They are de-consolidated at the point when control ends. Companies of which BAUER AG is
able, directly or indirectly, to exercise a significant influence on the said companies’ financial and operating policy decisions
(associated companies) are consolidated according to the equity method. 16 (previous year: 15) companies were affected by
this as at 31 December. The consolidated subgroup of Wöhr + Bauer GmbH was disclosed as one company in the previous
year. All companies of the subgroup were listed in the financial year. The previous year’s figure was changed accordingly.
Joint ventures were also consolidated according to the equity method.
The main subgroups and companies included in the consolidated financial statements are listed in the Major Participations
section. The disclosures in accordance with Section 313, Subsection 2 HGB are grouped in a separate list of holdings. This
will be published as part of the Notes to the financial statements of BAUER Aktiengesellschaft in the electronic version of
the official Gazette (“Bundesanzeiger”) of the Federal Republic of Germany. Subsidiaries with differing balance sheet dates
compile interim financial statements as per the consolidated balance sheet date. NuBa Equipment Ltd., Canada, prepares its
annual financial statements as at 30 September, because Nuna Logistics Limited, Edmonton, Canada, as another share-
holder, also prepares its annual financial statements as at 30 September. BAUER Corporate Services Private Limited, India,
prepares its financial statements as at 31 March due to local statutory requirements.
Main businessHead-
quartersNumber of
wholly-owned
subsidiaries
Number of
non-wholly-owned
subsidiaries
Number of
associated
companies
Total
31.12.
2013
31.12.
2014
31.12.
2013
31.12.
2014
31.12.
2013
31.12.
2014
31.12.
2013
31.12.
2014
Construction
segment
Special foundation engineering,
mining, project developmentWorldwide 30 30 5 5 11 12 46 47
Equipment
segment
Machine manufacturing
and saleWorldwide 26 25 8 9 1 1 35 35
Resources
segment
Environment and
environmental technologyWorldwide 28 26 9 7 1 2 38 35
‘Other’
segmentCentral services Worldwide 3 3 0 0 0 0 3 3
Total 87 84 22 21 13 15 122 120
103NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
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Changes at subsidiaries
Equipment segment
Purchases
With effect from April 30, 2014, Celler Brunnenbau Holding GmbH, Celle, contributed assets with a fair value of
EUR 900 thousand to PRAKLA Bohrtechnik GmbH as part of an asset deal. The fair value was certified by an external auditor.
In return, linked to a capital increase by PRAKLA Bohrtechnik GmbH, Peine, a capital share (10 %, or EUR 114 thousand)
determined by the DCF method was allotted. The asset deal also entailed a premium of EUR 786 thousand.
The assets contributed are linked to the business unit involved in the production of drilling rigs, casing oscillators and grip
heads, as well as spare parts in particular for water extraction, subgrade and constructional engineering works, and geologi-
cal drilling and exploration.
Amounts recorded at time of acquisition:
in EUR '000
Cash and cash equivalents 0
Equity portions 900
Total acquisition cost 900
Non-current assets 900
Current assets 0
Assets 900
Non-current liabilities 0
Current liabilities 0
Equity and liabilities 0
Net worth 900
Non-controlling interests 900
As this is a change in equity at a subsidiary as a result of which the Group’s share in equity is reduced or increased without
loss of control, the change is recognized as a transaction between equity investors not affecting profit and loss.
No goodwill was created by the asset deal.
Resources segment
Mergers
On August 25, 2014, GWE Prakla Services GmbH, Peine, Germany and on August 29, 2014, GWE GF-Tec GmbH, Rödermark,
Germany were merged into GWE pumpenboese GmbH, Peine, Germany retrospectively with effect from January 1, 2014.
On October 30, 2014, PESA ENGINEERING S.A., Madrid, Spain and BAUER Ingeneria Medioambiental S.A., Madrid, Spain
were merged and the company name changed to BAUER RESOURCES SPAIN S.A., Madrid, Spain.
104 NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
Divestments
BAUER Resources GmbH sold 21 % of its shares in BAUER Nimr LLC on November 19, 2014.
The effects of the divestment are presented below:
a) Consideration received
in EUR '000 19.11.2014
Consideration received 13,324
in EUR '000 19.11.2014
Considerations received 13,324
Relinquished net assets −11,081
Non-controlling interests 3,199
Fair value of retained at-equity interest of 49 % 31,089
Overall effect of the proportional sale 36,531
in EUR '000 19.11.2014
Non-current assets
Intangible assets 11
Property, plant and equipment and investment property 2,042
Receivables from concession arrangements 38,290
Other non-current assets 11
Current assets
Receivables and other assets 7.997
Cash and cash equivalents 5,187
Non-current liabilities
Liabilities to banks −24,103
Other non-current liabilities −435
Other non-current financial liabilities −12,290
Deferred tax liabilities −200
Current liabilities
Liabilities to banks 0
Liabilities from construction contracts (PoC) −2,046
Trade payables −2,937
Other current liabilities −265
Effective income tax obligations −181
Divested net assets 11,081
b) Assets and liabilities disposed of due to the loss of control
c) Overall effect of the proportional sale of BAUER Nimr LLC
The overall effect is included in Other income and is stated separately in item 8.
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in EUR '000 19.11.2014
Selling price settled with cash and cash equivalents 0
Net of cash or cash equivalents divested as part of the transaction -5,187
The net cash outflow from the sale -5,187
d) Net cash outflow from the proportional sale of BAUER Nimr LLC
The retained at-equity interest was valued at its fair value as a result of the proportional sale of BAUER Nimr LLC. The fair
value was calculated from the discounted transaction price for the sold shares at the time of the divestment. This procedure
falls within Level 3 of the IFRS 13 measurement hierarchy. The complete effect of this measurement is explained on page 104.
Consolidation principles
The assets and liabilities of the German and foreign companies included in the consolidated financial statements are stated
according to the uniform accounting and valuation methods applicable throughout the BAUER Group. Mutual receivables
and liabilities as well as expenses and income between consolidated companies are eliminated. Consolidated inventories and
fixed assets are adjusted by existing intra-Group balances. Consolidation affecting net income is subject to deferral of taxes,
with deferred tax assets and liabilities being offset against each other provided the payment period and tax creditor are the
same. In respect of subsidiaries consolidated for the first time, the identifiable assets, liabilities and contingent liabilities of
the acquired companies were recorded at their applicable fair values at the time of acquisition. Goodwill occurring on initial
consolidation is capitalized and subjected to a yearly impairment test; an excess of the net fair value of the acquired net
assets over cost is recognized in the income statement immediately at the time of initial consolidation in accordance with
IFRS 3. Consolidation according to the equity method is subject to the same principles. If the pro rata loss in an associated
company is equal to or greater than the carrying amount of the participating interest, no further losses are recognized, unless
a consolidated Group company has entered into obligations or made payments on behalf of the associated company.
Non-controlling interests represent the proportion of the result and the net worth which is not to be attributed to the Group.
The result attributable to these interests is stated in the income statement as follows, separately from the proportion of the
result to be allocated to the shareholders of the parent company. It is stated in the balance sheet within shareholders’ equity,
separately from the shareholders’ equity attributable to shareholders of the parent company. The purchase of non-controlling
investments and changes in the investment quota of the parent company in a subsidiary which do not lead to a loss of control
are stated in the balance sheet as equity transactions.
3. KEY ASSUMPTIONS AND ESTIMATES
In the consolidated financial statements, assumptions and estimates must be made which influence the amounts and
recognition of assets and liabilities, income and expenses recorded, as well as contingent liabilities. The main areas of
application of assumptions and estimates are in specifying the useful lives of fixed assets, determining discounted cash flows
within the framework of impairment tests, assessing the realizability of deferred tax assets and the collectability of receivables,
estimating the percentage of completion of construction contracts, establishing the fair value of some financial instruments
and in creating provisions for legal actions, pensions and other benefit commitments, taxes, warranties and guarantees.
The actual values may differ from the estimates made.
106 NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
4. GENERAL ACCOUNTING AND VALUATION METHODS
4.1. General changes to accounting and valuation methods
Application of the following standards and interpretations was mandatory for the first time in the financial year:
• IFRS 10 – Consolidated Financial Statements
IFRS 10 modifies the term “control” such that the same criteria are applied to all entities in assessing a control relationship.
This definition is backed by wide-ranging application examples illustrating various kinds of control.
The effects of IFRS 10 do not have any significant influence on the consolidated financial statements of BAUER AG.
• IFRS 11 – Joint Arrangements
As a result of the changes to definitions in IFRS 11, there are now two kinds of joint arrangement: joint operation and joint
venture. Moreover, the option of proportionate consolidation of jointly controlled entities has been abolished. Parties to a
joint venture are obligated to recognize their share on the balance sheet applying the equity method in accordance with
IAS 28, “Investments in Associates and Joint Ventures”. Parties to a joint operation recognize their shares proportionate to
their share of the assets and liabilities of the joint operation. Consequently, a party to a joint operation includes the following
items in its consolidated financial statements:
- Its assets, including its share in jointly held assets
- Its liabilities, including its share in jointly incurred liabilities
- Its income from the sale of its share in the products of the joint operation
- Its share in income from the sale of products by the joint operation
- Its expenses, including its share in any jointly incurred expenses
The Accounting and Auditing Board of the Institute of German Certified Public Accountants (IDW) takes the view that the
typical German construction consortium meets the preconditions for classification as a joint venture.
As previously mentioned, IFRS 11 stipulates that shares in joint ventures are to be valued according to the equity method.
In the BAUER Group, the changes relate to the statement in the balance sheet and the income statement.
Proportionate results are no longer stated under receivables from joint ventures and sales revenues with consortia as used
to be the case, but under investments accounted for using the equity method as well as in the result from investments
accounted for using the equity method. The previous year’s figures have been adjusted for greater comparability.
The effects of IFRS 11 do not have any significant influence on the consolidated financial statements of BAUER AG, with the
exception of changes in recognition of items.
• IFRS 12 – Disclosure of Interests in Other Entities
IFRS 12 requires disclosures which enable readers of financial statements to assess the nature, risks and financial effects
linked to interests in subsidiaries, associated companies, joint arrangements and non-consolidated structured entities
(special-purpose entities).
The effects of IFRS 12 are presented in the notes to the consolidated financial statements of BAUER AG.
• IAS 27 – financial statements (revised 2011)
The new regulations included in IFRS 10, consolidated financial statements, have replaced the consolidation guidelines
contained in the former IAS 27, consolidated and financial statements, as well as SIC-12, consolidation – special purpose
107NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
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vehicles. Now, IAS 27 only contains the regulations that are to be applied to separate financial statements, as a result of
which the standard has been renamed as IAS 27, financial statements (revised 2011).
The effects of IAS 27 (revised 2011) do not have any significant influence on the consolidated financial statements of
BAUER AG.
• IAS 28 – Investments in Associates and Joint Ventures
This amendment replaces IAS 28 - Investments in Associates - and stipulates the preconditions for application of the equity
method by associates and joint ventures.
• IAS 32 – Financial Instruments: Representation
The amendment essentially involves clarification of a number of rules for the offsetting of financial assets and liabilities.
A financial asset may only be set off against a financial liability if the claim is current - that is to say, it must not be depend-
ent on a future event. Additionally, the amendments clarify that gross offsetting mechanisms (such as through clearing),
which both eliminate credit and liquidity risks and process receivables and liabilities in a single accounting process, must
be treated as equivalent to net offsetting.
The effects of IAS 32 do not have any significant influence on the consolidated financial statements of BAUER AG.
• IAS 36 – Impairment of Assets
Pursuant to the amendment to IFRS 13 Fair Value Measurement, a number of disclosure rules in IAS 36 Impairment of
Assets regarding measurement of the achievable amount of asset impairment have been changed.
The effects of IAS 36 do not have any significant influence on the consolidated financial statements of BAUER AG.
• IFRS 39 – Financial Instruments: Recognition and Measurement
With the amendment to IAS 39, it is possible to retain hedge accounting for derivatives if the contract party changes.
This possibility is only allowable under certain preconditions.
The effects of IAS 39 do not have any significant influence on the consolidated financial statements of BAUER AG.
• Amendments to IFRS 10, IFRS 12 and IAS 27
The IASB project resulting in the amendments to IFRS 10, IFRS 12 and IAS 27 emerged from the consultation process
relating to the publication of IFRS 10 Consolidated Financial Statements.
The effects of this do not have any significant influence on the consolidated financial statements of BAUER AG.
• Amendments to IFRS 10, IFRS 11 and IFRS 12
The collective amendment to IFRS 10, IFRS 11 and IFRS 12 clarifies their transitional provisions. Early adoption is allowable
only in respect of all standards together.
• IFRIC 21 – Levies
IFRIC 21 regulates accounting for government levies not covered by IAS 12. It stipulates when such an obligation is to be
recognized as a liability.
The effects of IFRIC 21 do not have any significant influence on the consolidated financial statements of BAUER AG.
Moreover, the IASB and the IFRIC have adopted further standards, interpretations and amendments, as listed below, which
were not yet bindingly applicable, or had not yet been recognized by the EU, in financial 2014. The BAUER Group had not
implemented early application of these standards by December 31, 2014.
108 NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
Initial application of the standards is planned as from the point they are recognized and adopted by the EU.
Standard/interpretation/amendments Applicable
from the
financial year
Adoption
by EU
Amendment to IAS 19, defined benefit plans: employee contributions 2015 Yes
Annual improvements in IFRS (cycle 2010 - 2012) 2015 Yes
Annual improvements in IFRS (cycle 2011 - 2013) 2015 Yes
Amendment to IFRS 11, purchase of interests in a joint activity 2016 No
Amendment to IAS 16 and IAS 38, clarification of acceptable depreciation methods 2016 No
Amendment to IAS 16 and IAS 41, agriculture: producing plants 2016 No
IFRS 15, sales revenues from customer contracts 2017 No
Amendment to IAS 27, financial statements (equity method) 2016 No
Amendment to IFRS 10 and IAS 28, disposal of an investor’s assets in or application
to the investor’s associated company or joint venture 2016 No
Annual improvements in IFRS (cycle 2012-2014) - No
Amendment to IFRS 10, IFRS 12 and IAS 28, investment companies −
application of the consolidation exception 2016 No
Amendment to IAS 1, disclosure initiative 2016 No
IFRS 14, regulatory deferrals and accruals 2016 No
IFRS 9, financial instruments 2018 No
Possible effects of the first use of IFRS 15, sales revenues from customer contracts, cannot be ultimately assessed at the
present time. BAUER AG does not expect any significant effect on the consolidated financial statements to result from any of
the other standards.
4.2. Accounting and valuation methods within the Group
Currency translation reserve
Currency translation reserve are translated in the financial statements of BAUER AG and the consolidated subsidiaries at the
rates applying on the dates of the transactions. The financial statements of the foreign companies belonging to the BAUER
Group are translated into euros according to the functional currency concept. Accordingly, assets and liabilities are translated
at the rate applying on the balance sheet date and the income statement items at the average rate. The differences arising
from currency translation are recognized in the currency translation reserve as part of the shareholders’ equity, without
affecting net income.
109NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
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The rates used for translation are based on the following table:
1 EUR corresponds to Yearly average value Balance sheet date
2013 2014 2013 2014
Singapore SGD 1.6661 1.6778 1.7392 1.6074
Thailand THB 41.0558 42.9860 45.2177 40.0245
Mexico MXP 17.1181 17.6560 18.0282 17.9234
Chile CLP 664.3491 757.8911 724.4884 736.1344
Argentina ARS 7.3833 10.8648 8.9744 10.4039
Peru PEN 3.6211 3.7598 3.8506 3.6351
Japan JPY 130.3063 140.5059 144.5122 145,2439
United States of America USD 1.3301 1.3219 1.3767 1.2166
South Africa ZAR 12.9709 14.3577 14.5035 14.0575
UK GBP 0.8497 0.8028 0.8331 0.7818
Malaysia MYR 4.2178 4.3329 4.5204 4.2622
Saudi Arabia SAR 4.9982 4.9585 5.1632 4.5653
Lebanon LBP 2,005.2622 1,995.3273 2,068.4917 1,838.8153
Egypt EGP 9.1766 9.3713 9.5661 8.6984
Indonesia IDR 14,047.7904 15,669.6389 16,754.4389 15,139.9647
Hungary HUF 298.0405 309.9893 297.0230 314.9587
Romania RON 4.4164 4.4386 4.4739 4.4845
United Arab Emirates AED 4.8855 4.8553 5.0565 4.4685
Philippines PHP 56.7348 58.7377 61.1186 54.4041
New Zealand NZD 1.6295 1.6001 1.6747 1.5506
Taiwan TWD 39.6265 40.1344 41.0539 38.5999
Hong Kong HKD 10.3173 10.2525 10.6753 9.4373
China CNY 8.1686 8.1575 8.3314 7.5550
Switzerland CHF 1.2288 1.2124 1.2267 1.2024
Australia AUD 1.3937 1.4708 1.5396 1.4841
Canada CAD 1.3759 1.4634 1.4636 1.4117
Russia RUB 42.5912 51.5000 45.2582 67.5895
India INR 78.5205 80.7777 85.2246 77.4729
Bulgaria BGL 1.9558 1.9559 1.9560 1.9559
Sweden SEK 8.6664 9.1184 8.8263 9.4275
Poland PLN 4.2159 4.1955 4.1508 4.2902
Panama PAB 1.3301 1.3219 1.3767 1.2166
Qatar QAR 4.8418 4.8133 5.0133 4.4307
Turkey TRY 2.5646 2.8937 2.9450 2.8327
Vietnam VND 27,999.3993 28,039.4804 29,062.1368 26,031.7369
Jordan JOD 0.9421 0.9357 0.9753 0.8611
Oman OMR 0.5121 0.5090 0.5301 0.4684
Ghana GHS 2.7791 4.0594 3.2559 3.9112
Georgia GEL 2.2134 2.3352 2.3887 2.2604
110 NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
Intangible assets
Intangible assets are capitalized at cost and amortized according to the straight-line method over the projected useful life of
3 to 10 years.
Assets which have an indefinite useful life, such as goodwill, are not subjected to scheduled amortization but are impairment-
tested each year, or when relevant indications arise. The goodwill is the amount by which the acquisition cost of the acquisi-
tion exceeds the fair value of the Group’s shares in the net assets of the acquired entity at the date of acquisition. Goodwill
created by acquisition is recognized under “Intangible assets”. Goodwill resulting from the acquisition of an associated
company is included in the carrying amount of investments in associated companies and consequently is not impairment-
tested separately, but within the overall carrying amount. The recognized goodwill is subjected to an annual value retention
test and valued at its original acquisition cost less cumulative impairment. Value recovery adjustments are not permitted.
Gains and losses from the disposal of an entity include the carrying amount of the goodwill assigned to the entity being sold.
Assets which are subject to scheduled amortization are impairment-tested if relevant events or changes in circumstances
indicate that the carrying amount may no longer be attainable.
Impairment in the amount of the carrying amount exceeding the attainable amount is recognized. The attainable amount is the
higher amount of the applicable fair value of the asset less selling costs and the value in use. For the impairment test, assets
are grouped at the lowest level for which cash flows can be separately identified (cash-generating units). With the exception
of goodwill, a test is performed on each balance sheet date in respect of non-cash assets for which in the past an impairment
was recognized as to whether a value recovery adjustment is required.
Research and development costs are generally charged as expenditure in the financial year in which they occurred, in accord-
ance with IAS 38. Exceptions to this are certain development costs which are capitalized where it is probable that a future
economic benefit will be drawn from the development project and the costs incurred can be measured reliably. In addition,
the following criteria in accordance with IAS 38.57 must be met:
• Technical feasibility of completion of the intangible asset so that it will be available for use or sale
• Intention to complete the intangible asset and to use or sell it
• Ability to use or sell the intangible asset
• Evidence of how the intangible asset will generate probable future economic benefits
• The availability of adequate technical, financial and other resources to complete the development and to use or sell the
intangible asset
• The ability to measure reliably the expenditure attributable to the intangible asset during its development
The cost of manufacture includes all costs directly attributable to the development process as well as appropriate portions of
development-related overheads. The assets in development are subjected to an annual impairment test and valued at their
original cost less cumulative depreciation. Amortization is undertaken according to the straight-line method as from start of
production over the intended term of the developed models. The projected useful life is between 3 and 6 years. Impairment
losses on intangible assets are recognized to the higher of the value in use or net realizable value. If the preconditions for an
impairment no longer exist, reversals of impairment – except for goodwill – are undertaken.
111NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
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Property, plant and equipment
According to IAS 16, property, plant and equipment is valued at cost, less scheduled straight-line depreciation based on the
pro rata temporis method, unless in exceptional cases some other method of depreciation more effectively reflects the usage.
The following table provides an overview of the useful lives:
Impairment losses on property, plant and equipment are recognized in accordance with IAS 36 where the value in use or
fair value less cost to sell of the asset concerned has fallen below the carrying amount. If the reasons for an impairment
recognized in previous years no longer exist, a corresponding reversal of impairment is applied.
Both impairment losses and scheduled depreciation are recognized under the “Depreciation of fixed assets” item. The level of
impairment losses is explained in accordance with IAS 36 under “Non-current assets”.
Leasing
The BAUER Group acts as both a lessee and a lessor. Leasing relationships are classified according to IAS 17 based on the
distribution of opportunity and risk between the lessor and lessee.
Leasing relationships in which most of the opportunity and risk linked to ownership of the leased item remains with the lessor
are classified as operating leases. Where the lessee has most of the opportunity and risk, the agreement is classified as a
finance lease.
a) Accounting for lessee transactions
Payments made in connection with an operating lease (net after taking into account incentive payments by the lessor) are
recognized in the income statement by straight-line depreciation over the term of the lease.
Assets from finance leases are capitalized at the start of the lease term at the lower of the fair value of the leased item and the
present value of the minimum lease payments. A leasing liability is recognized under “Current and non-current liabilities”. Each
lease installment is split into an interest and a repayment portion, so that the leasing liability is subject to a consistent interest
rate. The interest portion of the lease installment is recognized as affecting expenditure in the income statement. The property,
plant and equipment asset held under a finance lease is written down over the shorter of the economic life of the asset or the
lease term.
b) Accounting for lessor transactions
A lease is an agreement whereby the lessor assigns to the lessee the right to use an asset for a specific period of time against
a payment or series of payments.
Assets leased by the customer in the form of operating leases are assigned on the balance sheet according to their nature.
Income from leases is recognized by the straight-line method over the term of the agreement.
In the BAUER Group, mainly operating leases are entered into as the lessor.
Asset object Economic life
Buildings and other structures 3 to 60 years
Technical equipment and machinery 3 to 21 years
Other equipment, factory and office equipment 2 to 21 years
112 NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
Government grants
Government grants for assets including non-monetary benefits at fair value are recognized on the balance sheet as accruals
on the Equity and Liabilities side (Investment allowance) or, on determining the carrying amount of the asset, are deducted
from the Assets side (Invest subsidy).
Business combinations
Acquisitions of subsidiaries are accounted for in accordance with IFRS 3 based on the acquisition method. The cost of the
acquisition corresponds to the fair value of the assets contributed, the equity instruments issued and the liabilities created
and/or transferred at the transaction date. Assets, liabilities and contingent liabilities identifiable in the course of a business
combination are measured on initial consolidation at their fair values at the acquisition date. The amount by which the acquisi-
tion cost exceeds the Group’s share of the net assets measured at their fair value is stated as goodwill. The non-controlling
interests are valued either at cost (Partial Goodwill method) or at fair value (Full Goodwill method). The available option can be
exercised on a case-by-case basis. BAUER Group policy is to apply the Partial Goodwill method. If the acquisition cost is less
than the net assets of the acquired subsidiary measured at their fair value, the difference is recognized directly in the income
statement. Transaction costs directly linked to a business combination are recognized in the income statement. In the event
of successive acquisitions, the differences between the carrying amount and the applicable fair value of the shares previously
held are recognized as affecting net income at the time of acquisition. Existing contracts with the acquired entity at the time of
acquisition, except those under the terms of IAS 17 and IFRIC 4, are analyzed and reclassified where appropriate.
Borrowing costs
Borrowing costs linked directly to the acquisition, construction or production of qualifying assets in accordance with IAS
23 are included in the cost of the asset in question for the period until start of use of the asset. No borrowing costs were
capitalized in the financial year. The finance cost rate in the previous year was between 6.76 and 8.0 percent. Testing as to
whether an asset is a qualifying asset is carried out according to internally stipulated materiality limits for projects and installations.
If the said materiality limits are exceeded, borrowing costs for qualified assets are capitalized. Other financing costs are recognized
as ongoing expenditure under “Financial expenses”.
Investment property
Land and buildings maintained in order to generate rental income are accounted for at amortized cost in accordance with
IAS 40, with the useful lives applied for depreciation (straight-line according to the pro rata temporis method) corresponding to
those of the property, plant and equipment used by the company itself. The valuation takes place by deriving current market
prices of comparable real estate. This procedure falls within Level 2 of the IFRS 13 measurement hierarchy.
Investments accounted for using the equity method
Associated companies
According to IAS 28, an associated company is any entity over which the investor has significant influence, though not
control. This routinely means voting shares of between 20 and 50 percent.
Shares in associated companies are valued at-equity and recognized initially at cost. The Group’s shares in associated
companies include the goodwill created by the acquisition (less cumulative impairment).
The Group’s share in the profits and losses of associated companies is reported in the income statement as from the time of
acquisition. The share in changes in reserves is recorded in the Group reserves. The cumulative changes after acquisition are
set off against the carrying amount of the investment. If the Group’s share in the losses of an associated company is equal
to or more than the Group’s shareholding in the said associate, including other unsecured claims, the Group recognizes no
additional losses, unless it has entered into obligations or made payments on behalf of the associated company.
113NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
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Non-realized gains from transactions between Group companies and associated companies are eliminated according to
the Group’s share in the associated company. Non-realized losses are likewise eliminated, unless the transaction implies an
impairment of the transferred asset.
Joint ventures
Joint ventures are joint arrangements in which the parties with shared controlling interests hold rights to the net assets of the
agreement. Joint control is the contractually agreed, jointly exercised management of the agreement. This is only provided if
decisions relating to significant activities require the unanimous approval of the parties involved in the joint control.
Joint ventures stated in the balance sheet using the at-equity method also include the consortia which are typical features of
the German economy, in which case provision consortia should be distinguished from umbrella consortia.
In provision consortia, assets are provided to the consortium in the form of personnel, material or equipment, and are
invoiced. Results earned by the consortium are stated according to the equity method in accordance with IAS 28.
Accordingly, this is disclosed in the balance sheet under investments accounted for using the equity method and in the
income statement under the share of the profit or loss of associated companies accounted for using the equity method.
The BAUER Group accounts for consortia in compliance with IFRS 11 as follows: BAUER as a partner in a consortium
accounts for the assets at its disposal and the liabilities it itself incurs, as well as its own expenditures, and recognizes the
income from such activities on a pro rata basis in its sales revenues. The umbrella consortium, on the other hand, always
operates without effect on net income. The remuneration claims between the umbrella consortium and the client are identical
to the remuneration claims of the individual lots towards the umbrella consortium. All payments received from the client are
passed onto the individual lots in full by the umbrella consortium.
Current settlements of and towards consortia are stated under the receivable from or liabilities to consortia.
Joint operations
Joint operations are joint arrangements in which the parties exercising joint control possess rights to the assets and liabilities
for the debts of the arrangement. Joint control is the contractually agreed, jointly exercised control of the arrangement. This
is only provided if decisions relating to significant activities require the unanimous approval of the parties involved in the joint
control.
If the BAUER Group carries out activities in the course of a joint operation, the Group discloses the following items as a joint
operator in conjunction with its share of the joint operation:
- Its assets, including its share in jointly held assets
- Its liabilities, including its share in jointly incurred liabilities
- Its income from the sale of its share in the products or services of the joint operation
- Its share of the income from the sale of the products or services of the joint operation and
- Its expenses, including its share in any expenses jointly entered into
In transactions such as the purchase of assets by a Group company, profits and losses are stated to the extent of the Group’s
share in the joint operation only when assets are sold on to third parties.
114 NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
Financial instruments
a) Primary financial instruments
In the BAUER Group, primary financial instruments are assigned as financial assets to the following categories:
• Loans and Receivables (LaR)
• Available-for-Sale (AfS)
The “Loans and Receivables” category includes current and non-current financial assets.
The “Available-for-Sale” category includes marketable securities as well as equity portions which are not consolidated or
not recognized by the equity method. For those equity portions there is no active market, and no fair value can be reliably
determined for them, so the shares are valued at cost. We have no intention of selling them.
Available-for-sale financial assets are non-derivative financial assets which are classified as available for sale and are not al-
located to one of the other categories of financial asset specified. They are recognized at fair value both when initially entered
and in the subsequent periods.
Assets classified as held for sale are impairment-tested at each balance sheet date in relation to objective criteria (such as
significant financial difficulties of the debtor, high probability of insolvency proceedings being initiated against the debtor, loss
of an active market in the financial assets). Any impairment expenditure incurred because a fair value is less than the carrying
amount is recognized affecting net income. Where impairment of the fair values of assets held for sale was previously stated
not affecting net profit in the shareholders’ equity, it must be eliminated from the shareholders’ equity up to the amount of
the measured impairment and recognized in the income statement. If subsequent valuation reveals that the fair value has
objectively increased due to events occurring after entry, the impairment is reversed in the corresponding amount. Recovery in
the value of debt instruments is recognized in the income statement. Impairment affecting equity instruments held for sale and
recognized at cost must not be reversed.
Primary financial instruments as financial liabilities are assigned to the following category:
• Financial Liabilities Measured at Amortized Cost (FLAC) or Other Financial Liabilities
The “Financial Liabilities Measured at Amortized Cost” category includes liabilities to banks, trade payables as well as other
current and non-current liabilities and current and non-current financial liabilities.
Receivables and liabilities in the “Financial Liabilities Measured at Amortized Cost” and “Loans and Receivables” categories
are initially recognized at the applicable fair value, including transaction costs directly attributable to acquisition of the financial
asset or incurring of the financial liability, and subsequently measured at amortized cost, applying the effective interest rate
method. The amortized cost of a financial asset or liability is calculated, applying the effective interest rate method, from the
historical cost less the repayments made, plus or less the cumulative amortization of any difference between the original
amount and the amount repayable at the final due date, and also less depreciation and impairment or plus appreciation and
value recovery adjustment.
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In the case of current receivables and liabilities, the amortized cost always corresponds to the nominal amount, or the amount
repayable. Cash and cash equivalents comprise credit balances with banks as well as petty cash stocks, and are valued at
amortized cost.
In the case of financial assets or liabilities recognized in the income statement at fair value, the initial fair value valuation ex-
cludes the transaction costs. Financial liabilities are derecognized when they are repaid or if the obligation has expired. Items
are initially recorded on the performance date. In the case of financial assets, derecognition of potential default risks is effected
by value adjustments in separate value adjustment accounts. Financial assets are derecognized if the rights to payments from
the financial assets have expired or been transferred, and the Group has essentially transferred all risks and opportunities
associated with ownership, or the essential opportunities and risks have neither been transferred nor retained, but right of
disposal has been transferred. If there are doubts as to the collectability of receivables, they are valued at amortized cost less
appropriate single valuation allowances or a flat-rate allowance. Impairment of trade receivables is recognized when there
are objective signs (such as disputed contract variations, missed payments or insolvencies) indicating that the amounts due
will not be collectable in full. The impairment is recognized in the income statement by way of a value adjustment account.
All other impairments are written off directly and likewise recognized in the income statement. Group directives stipulate that
impairment of receivables must always be recorded in separate value adjustment accounts. They are derecognized at the
same time as the corresponding impaired receivable. The fair value option provided by IAS 39 was not exercised.
b) Derivative financial instruments
A derivative is a financial instrument or a contract in the area of application of IAS 39 which cumulatively fulfills the following
three criteria:
• which varies in value based on changes in a specific interest rate, price of a financial instrument, commodity price,
exchange rate, price or interest rate index, credit rating or credit index, or some similar variable, provided in the case of a
non-financial variable the variable is not specific to one party to the contract;
• which requires no payment in return for acquisition, or one which, compared to other forms of contract expected to react
similarly to changes in market conditions, is lower;
• or which is settled at a later date.
In the BAUER Group, free-standing derivative financial instruments are assigned as financial assets to the following category:
• Financial Assets Held for Trading (FAHfT)
Free-standing derivative financial instruments as financial liabilities are assigned to the following category:
• Financial Liabilities Held for Trading (FLHfT)
Changes in value of derivatives not forming part of a cash flow hedge are stated under other operating income or expenses in
the case of foreign exchange forward contracts or options or, in the case of interest rate swaps, are recognized in the income
statement under financial expenses or income. The applicable fair values of the level 2 financial instruments are calculated on
the basis of the conditions prevailing at the balance sheet date, such as interest or exchange rates, and applying recognized
models, such as discount cash flow or option price models.
116 NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
The free-standing derivative financial instruments of the “Financial Assets Held for Trading” and “Financial Liabilities Held for
Trading” categories include fair values of interest rate swaps, foreign exchange options, cross-currency swaps and foreign
exchange forward contracts not included in hedge accounting or not meeting the hedge accounting conditions.
In the BAUER Group, derivative financial instruments (interest rate swaps, foreign exchange options, cross-currency swaps
and foreign exchange forward contracts) are entered into solely to hedge against interest rate and currency risks. No deals are
made without an underlying transaction.
In the case of derivatives included in hedge accounting, when hedging expected future transactions (cash flow hedges) the
effective portion of the gain or loss from a hedging instrument is initially recognized in the shareholders’ equity, taking into
account deferred taxes, and is only recognized in the income statement when the underlying hedged transaction is realized.
The ineffective portion of the hedge transaction is recognized in the income statement immediately. The derivative financial
instruments are stated at their fair values as assets or liabilities. The fair values of the foreign exchange forward contracts
are defined on the basis of current reference prices, taking into account forward premiums and discounts. The fair values of
the interest rate swaps are determined on the basis of discounted future payment flows, applying the market interest rates ap-
plicable to the respective residual terms of the derivatives. Items are initially recorded on the trading date. Hedge accounting
was applied in financial 2014.
Inventories
Inventories of finished goods and work in progress as well as merchandise and raw materials and supplies, are measured
at acquisition cost or cost of manufacture or at the lower net realizable value on the balance sheet date, in accordance
with IAS 2.
The net realizable value is the estimated achievable selling price in the ordinary course of business less the estimated costs
through to completion and the estimated necessary selling costs.
Raw materials and supplies are valued mainly at floating average cost.
Where the machinery and accessories classified as finished goods and stock for trade and primarily held for sale, are hired
out for a short period as a secondary sales promotion measure, the following factors are considered in determining their net
realizable values:
• Hire period
• Useful life of the machines
• Damage and inoperability
Where the net realizable value of previously written-down inventories has increased, corresponding value recovery adjust-
ments are made. The cost of manufacture includes all direct costs of the manufacturing process. The level of impairment
losses on inventories is explained in accordance with IAS 2 under “Inventories”.
Construction contracts
Construction contracts are accounted for by the percentage of completion method in accordance with IAS 11. The sales are
recognized according to the progress of work based on the percentage of completion method. The applicable percentage
of completion is determined according to the costs incurred (cost-to-cost method). Where the cumulative return (contract
costs and pro rata result) exceeds the payments on account in individual cases, the construction contracts are recognized as
assets under “Receivables from construction contracts (PoC)”. If a negative balance remains after deduction of the payments
on account, it is recognized as a liability under “Liabilities from construction contracts (PoC)”. Expected losses on a contract
are accounted for in full at the time they are identified, by adjustments to the valuation of any existing receivables or by
the creation of a provision. Construction contracts undertaken in joint ventures are valued according to the percentage of
completion method.
117NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
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Receivables from joint ventures also include the pro rata result from the contract. Expected losses are covered by write-
downs or liabilities as appropriate, and are taken into account in the contract result.
Service concession arrangements
Service concession arrangements entailing an unconditional contractual right to receive a payment in accordance with
IFRIC 12 are recognized separately under “Receivables from concession arrangements”. The short-term portions of the
receivables from concession arrangements are stated under “Other current financial assets”. The receivables are allocated to
the “Loans and Receivables” category and recognized at the present value of the remuneration payable. The annual interest
due according to the effective interest rate method is recorded in the financial income.
Cash and cash equivalents
Cash and cash equivalents comprise cash and sight deposits with an original term of no more than three months.
Deferred taxes
In accordance with IAS 12, deferred taxes are taken into account in respect of variations between the valuations of assets
and liabilities according to IFRS and their corresponding tax bases in the amount of the projected future tax charge or relief.
In addition, deferred tax assets are recognized for future advantages arising from tax losses carryforward, provided it is
probable that they will be realized.
Deferred taxes arising from temporary differences in connection with investments in subsidiaries and associated companies
are recognized, unless the date of reversal of the temporary differences can be determined by the Group and it is likely that
the temporary differences will not be reversed again in the foreseeable future because of this effect.
According to IAS 12.74, deferred tax assets and liabilities are to be offset if a legally enforceable right to set off current tax
assets against current tax liabilities exists. Offsetting should also be carried out if the deferred tax assets and liabilities relate to
income taxes levied by the same tax authority in respect of:
• either the same taxable entity or
• different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realize the assets
and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets
are expected to be settled or recovered.
The tax expenditure for the period comprises current and deferred taxes. Taxes are reported in the income statement, unless
they relate to items recognized directly in the shareholders’ equity or in the other result. In this case; the taxes are likewise
recognized in the shareholders’ equity or in the other result.
In Germany, deferred taxes are stated on the basis of corporation tax, the “solidarity surcharge” and trade tax, in a range of
27.82 to 30.92 % (previous year: 27.82 % and 30.92 %). Outside Germany, tax rates of between 0.00 % and 38.15 % are
applied (previous year: 0.00 % and 39.00 %).
Provisions
a) Defined benefit plans
The BAUER Group operates a number of defined benefit plans in Germany and internationally.
Typically, such plans define an amount of pension benefit which employees will receive on retirement and which is normally
dependent on one or more factors (such as age, years of service and salary).
118 NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
The provision for defined benefit plans on the balance sheet corresponds to the cash value of the defined benefit obligation
(DBO) at the balance sheet date, less the fair value of the plan assets. The DBO is calculated annually by an independent
actuary applying the projected unit credit method. The cash value of the DBO is calculated by discounting the expected future
inflow of funds at the interest rate of industrial bonds of the highest credit rating. The industrial bonds are denominated in the
currency of the disbursements and allocate corresponding terms to the pension commitments. In countries where the market
in such bonds is insufficiently developed, government bonds are applied.
Actuarial gains and losses based on experience-related adjustments to actuarial assumptions are recognized in the “Other
result” in the shareholders’ equity in the period in which they occur. Post-employment expenditure is recognized in the staff
costs, and the interest expenses of the allocation to provisions in the financial expenses.
Under the contribution-based defined benefit plans, the entity concerned makes payments to pension institutions which are
stated in the staff costs.
b) Provisions for tax purposes
Tax provisions include liabilities from current income taxes. Income tax provisions are balanced against corresponding tax
refund claims, provided they arise in the same tax territory and are identical in nature and in terms of due date.
c) Other provisions
The other provisions are created in accordance with IAS 37 where a present obligation arises from a past event, a relevant
claim is more likely than unlikely, and the amount of the claim can be reliably estimated. The provisions are stated at their
performance amount, and are not netted against profit contributions. Long-term provisions are recognized at present value.
Provisions are created only for legal or constructive obligations to third parties.
Income and expenses
Sales revenues and other incomes are realized in accordance with IAS 18 on performance of the supply or service or on
transfer of risk to the customer, as appropriate.
Dividend income is recognized at the date on which the right to receipt of payment is created. Dividends received are
recognized as income from operating investments under “Financial income”. Operating expenses are recognized as affecting
net income when the supply or service is claimed or at the time they are caused, as appropriate. Financial income and
expenses are recognized when incurred.
Income from service contracts is recognized according to the degree of completion.
5. CONSOLIDATED SEGMENT REPORTING
Reporting on the segments of the BAUER Group was implemented in accordance with IFRS 8, as in the previous year.
The internal organizational and management structure and the internal system of reporting to the Management Board and
Supervisory Board dictate the segmentation employed by the BAUER Group.
The BAUER Group comprises the Construction, Equipment and Resources segments. Transactions between the segments
are conducted at market prices.
SCHACHTBAU NORDHAUSEN GmbH is the only Group company to operate in all three segments. The assets and liabilities
and income statement items of SCHACHTBAU NORDHAUSEN GmbH are assigned to the relevant segments.
119NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
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Construction
The core business of the Construction segment is specialist foundation engineering. Complete excavation pits and foundation
works, often in difficult subgrade conditions, are carried out for major infrastructure projects and buildings. In order to offer
customers a full range of services, the companies of the BAUER Group additionally offer other construction services, often involving
a major specialist foundation engineering element. Examples of this include bridges, environmental engineering, remediation and
building renovation projects. The Construction segment is founded on the close interlinking of all construction activities.
Equipment
In the Equipment segment, machinery for all specialist foundation engineering processes and for deep drilling is developed
and manufactured for worldwide distribution. The specialist foundation engineering equipment can be employed to produce
large-diameter and small-diameter bores for piles, diaphragm walls, anchors, injections and wells. The deep drilling equipment
can be employed to drill for geothermal energy, oil and gas. Equipment for ramming and ground improvement is also
manufactured. The range is supplemented by a wide selection of add-on units and ancillary equipment, covering all the
processes involved in specialist foundation engineering.
Resources
The Resources segment brings together all the Group companies providing products and services relating to the remediation
and extraction of natural resources essential to human life. They include environmental technology companies involved in the
treatment of ground and groundwater as well as companies involved in exploratory drilling and mining of raw materials and
drilling of wells and geothermal energy sources. This segment also includes companies which manufacture and sell materials
for the engineering of bore holes, specifically for wells and geothermal energy sources.
Other
The Other segment comprises the central services (accounting, human resources, IT etc.) provided by BAUER AG to the
Group companies as well as other units not assignable to the separately listed segments, providing services such as in-house
and external education and training and centralized research and development.
Consolidation
The intersegmental consolidation effects are grouped here under Consolidation. This includes offsetting of intra-Group sales
between the segments as well as income and expenses and interim results. The intersegmental consolidation effects are
adjusted within the respective segments.
The segment result for the period reflects the financial income and expenses as well as the net earnings of shares valued at-
equity and the income tax expenditure. The segments’ assets and liabilities incorporate all the assets and liabilities of the Group.
The non-current assets stated in the segment report by region comprise intangible assets, property, plant and equipment and
investment property.
Total Group revenues, consolidated revenues and sales revenues with third parties
The consolidated revenues reflect the performance of all the companies included in the scope of consolidation. The total
Group revenues represent the revenues of all the companies forming part of our Group. The difference between the
consolidated revenues and the total Group revenues is derived from the revenues of the associated companies, from our
subcontractor shares in joint ventures, and from the revenues of non-consolidated companies.
The sales revenues with third parties are allocated to the business segments according to the customer’s location.
No one customer accounts for more than 10 % of total sales.
No breakdown of sales revenues by product and service, or by groups of comparable products and services, was available as
per the balance sheet date.
120
SEGMENT REPORT BY BUSINESS SEGMENTS
in EUR '000
Construction Equipment
2013 * 2014 2013 2014
Total revenues (Group) 741,673 713,005 628,612 651,772
Sales revenues with third parties 657,456 634,096 561,615 545,223
Sales revenues between business segments 15,660 16,327 47,928 42,831
Changes in inventories -172 -105 -4,184 27,898
Other capitalized goods and services for own account 486 407 6,955 6,234
Other income 16,809 24,861 10,117 21.724
CONSOLIDATED REVENUES 690,239 675,586 622,431 643,910
OPERATING RESULT 21,209 25,068 32,223 36,917
Financial income 2,989 2,993 2,562 1,882
Financial expenses -13,389 -15,875 -22,196 -21,153
Share of the profit or loss of associated companies accounted
for using the equity method 1,132 -1,330 1 -57
Income tax expense -6,469 -8,998 -7,535 -8,076
NET PROFIT OR LOSS 5,472 1,858 5,055 9,513
ADDITIONAL INFORMATION ON THE INCOME STATEMENT
Depreciation and amortization
Depreciation of fixed assets -47,504 -46,098 -17,266 -19,259
of which impairment losses on fixed assets -526 0 -996 -1,768
Write-downs of inventories due to use 0 0 -14,196 -15,789
Major non-cash segment items
Impairment losses on financial assets -40 -631 0 -9
Impairment losses on inventories -112 -282 -3,808 -8,052
Allocation of impairment of receivables -26,876 -10,597 -4,671 -4,611
Reversal of impairment of receivables 31,227 14,726 3,396 3,881
SEGMENT REPORT BY REGIONS
in EUR '000
Germany Europe (other) Europe excluding EU
2013 * 2014 2013 * 2014 2013 2014
Total revenues (Group) 410,390 440,205 167,830 151,958 155,028 124,886
Sales revenues with third parties 355,289 367,779 163,143 140,534 145,381 127,782
Non-current assets 31.12. 255,613 244,151 21,414 18,132 19,578 16,383
Consolidated segment reporting
ADDITIONAL INFORMATION ON THE BALANCE SHEET
SEGMENT ASSETS 31.12. 566,816 577,401 803,467 768,487
of which shares in associated companies
accounted for using the equity method 10,898 10,687 99 42
of which investments in fixed assets 48,168 40,837 40,166 20,904
SEGMENT LIABILITIES 31.12. 444,775 450,582 579,077 551,054
* Previous year adjusted; see notes on page 106
121NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
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Resources Other Consolidation Group
2013 * 2014 2013 2014 2013 2014 2013 * 2014
188,861 252,830 39,319 39,407 -94,234 -96,794 1,504,231 1,560,220
182,579 195,860 523 500 0 0 1,402,173 1,375,679
2,413 3,141 31,146 30,729 -97,147 -93,028 0 0
-67 -1,171 0 0 0 0 -4,423 26,622
1,548 1,606 0 9 10,207 6,440 19,196 14,696
2,910 41,968 6,624 7,028 -5,881 -6,559 30,579 89,022
189,383 241,404 38,293 38,266 -92,821 -93,147 1,447,525 1,506,019
-23,965 15,932 5,117 3,326 -4,499 -4,817 30,085 76,426
2,268 2,159 7,044 13,702 -7,134 -13,640 7,729 7,096
-11,885 -10,518 -5,205 -11,243 7,134 13,640 -45,541 -45,149
637 815 0 0 0 0 1,770 -572
1,501 -4,041 -961 -886 -10 -74 -13,474 -22,075
-31,444 4,347 5,995 4,899 -4,509 -4,891 -19,431 15,726
-11,940 -10,885 -3,371 -3,023 385 484 -79,696 -78,781
-2,191 -7 0 0 0 0 -3,713 -1,775
0 0 0 0 0 0 -14,196 -15,789
-2,546 -65 0 0 0 0 -2,586 -705
-4,329 -263 0 0 0 0 -8,249 -8,597
-6,651 -5,360 0 0 0 0 -38,198 -20,568
495 950 0 0 0 0 35,118 19,557
Middle East
and Central Asia
Asia-Pacific
Far East and Australia
America Africa Group
2013 2014 2013 2014 2013 2014 2013 2014 2013 * 2014
163,036 232,037 363,305 376,645 186,392 172,288 58,250 62,201 1,504,231 1,560,220
158,749 180,313 356,877 337,587 170,648 158,411 52,086 63,273 1,402,173 1,375,679
52,630 56,025 82,364 86,106 56,751 53,259 6,575 7,293 494,925 481,349
265,633 264,276 303,121 338,993 -353,249 -374,074 1,585,788 1,575,083
2,252 32,177 0 0 0 0 13,249 42,906
11,539 8,885 13,552 2,555 -10,000 -485 103,425 72,696
226,675 226,217 149,980 182,939 -234,700 -254,634 1,165,807 1,156,158
122 NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
6. SALES REVENUES
The sales revenue totaling EUR 1,375,679 thousand (previous year: 1,402,173 thousand) include revenues based on applica-
tion of the percentage of completion method, trade revenues from consortia, as well as pro rata earnings from consortia and
revenues from the sale and hire of equipment and accessories
Sales revenues based on application of the percentage of completion method in the financial year totaled EUR 649,625 thousand
(previous year: 680,963 thousand).
Sales revenues from the hire of equipment and accessories in the financial year totaled EUR 29,428 thousand (previous year:
26,031 thousand).
With regard to the presentation and breakdown of sales revenues by operating segment and region, please refer to the notes
on segment reporting (see item 5).
The sales revenues include a net value adjustment of EUR 5,381 thousand (previous year: 7,393 thousand). The net value
adjustment is attributable to the Construction segment, where final invoices, for example, may include supplementary items
which have not yet been finally negotiated with the customer and ordered. These may prove uncertain. Value adjustments
(reductions for impairment) are made in respect of uncertain receivables and recorded under “Sales revenues”. If the uncertain
receivable is realized, the reduction for impairment is reversed. The reversal is likewise recorded under “Sales revenues”.
The net balance of the application and reversal of reductions for impairment in respect of uncertain receivables produces the
aforementioned net value adjustment.
The application and reversal of reductions for impairment by the other segments is stated under “Other operating expenses”.
7. OTHER CAPITALIZED GOODS AND SERVICES FOR OWN ACCOUNT
NOTES ON THE CONSOLIDATED STATEMENT OF PROFIT OR LOSS
in EUR '000 2013 2014
Income from other capitalized goods and services for own account 19,196 14,696
in EUR '000 2013 2014
Income from disposal of property, plant and equipment 4,435 5,447
Realized and unrealized foreign currency gains 8,682 32,097
Income from insurance refunds 2,958 1,849
Other income from rentals 373 272
Income from changes in fair values of foreign exchange forward contracts 2,818 2,548
Overall effect of the proportional sale 0 36,531
Other operating income 11,313 10,278
Total 30,579 89,022
8. OTHER INCOME
The realized and unrealized foreign currency gains as well as gains from foreign exchange forward contracts stated under
“Other income” totaling EUR 34,645 thousand (previous year: 11,500 thousand) arose in connection with the global currency
hedging strategy and the underlying currency postings. In this context, the income is countered by realized and unrealized
foreign currency losses as well as losses from foreign exchange forward contracts totaling EUR 29,767 thousand (previous
year: 21,194 thousand), stated under “Other operating expenses”.
Additionally, the other operating income mainly comprises income from benefits in money’s worth, other reimbursements of
expenditure as well as other income spread across the consolidated companies which is of minor importance in the individual
instances.
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9. COST OF MATERIALS
The employer’s pension contributions in the financial year totaled EUR 20,653 thousand (previous year: 18,926 thousand).
These are contribution-based schemes, as explained under 4.2 Accounting and valuation methods in the consolidated
financial statements. Of that total, EUR 17,411 thousand (previous year: 16,801 thousand) relate to Germany and
EUR 3,242 thousand (previous year: 2,125 thousand) to Group companies outside of Germany. The wages and salaries
include severance payments in the amount of EUR 735 thousand (previous year: 1,019 thousand).
11. DEPRECIATION OF FIXED ASSETS
The depreciation is broken down as follows:
The impairment losses on fixed assets are explained under item 18.2, Property, plant and equipment and investment property.
12. WRITE-DOWNS OF INVENTORIES DUE TO USE
Write-downs of inventories due to use Group-wide totaled EUR 15,789 thousand in the financial year (previous year:
14,196 thousand). This related to write-downs of used machinery temporarily hired out to customers as sales promotion
measures. Write-downs of used machinery disposed of in the 2014 financial year are included in these figures.
in EUR '000 2013 2014
Expenses for raw materials and supplies and purchased goods 511,419 504,877
Expenses for purchased services 244,487 244,370
Total 755,906 749,247
in EUR '000 2013 2014
Depreciation of intangible assets 11,290 9,956
Depreciation of property, plant and equipment 68,406 68,825
Total 79,696 78,781
in EUR '000 2013 2014
Wages and salaries 289,944 299,785
Social security contributions 47,654 49,632
Expenses for retirement benefits 5,217 5,833
Total 342,815 355,250
10. STAFF COSTS
The expenses for retirement benefits include the expenditure on benefits as well as the allocations to provisions for defined
benefit plans excluding the interest portion, which is stated under “Interest and similar expenses”.
124 NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
13. OTHER OPERATING EXPENSES
The “Additional other operating expenses” mainly comprise allocations to and reversal of provisions affecting net income,
losses from foreign exchange forward contracts as well as additional other operating expenses spread across the consoli-
dated companies which are of minor importance in the individual instances. The other employee-related expenses include
education and training costs, grants and gifts, travel and relocation expenses, and other project-specific personnel costs.
FINANCIAL RESULT
14. FINANCIAL INCOME
The financial income is broken down as follows:
in EUR '000 2013 2014
Losses from disposal of property, plant and equipment 1,260 675
Rents and leases 18,187 21,360
Energy, heating, water 8,295 6,291
Vehicle costs 6,360 6,755
Property, motor and transport insurance 9,658 10,096
Other operating expenses 34,675 35,766
Administrative expenses 40,991 41,513
Distribution costs 37,221 33,304
Other employee-related expenses 17,396 17,208
Realized and unrealized foreign currency losses 18,941 19,948
Impairment of receivables -794 6,392
Bank charges 2,827 3,284
Duties 3,930 3,411
Additional other operating expenses 25,880 24,523
Total 224,827 230,526
in EUR '000 2013 2014
Income from operating investments 26 14
Other interest and similar income 5,418 5,287
Income from changes in fair values of interest rate swaps 2,285 1,795
Total 7,729 7,096
125NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
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15. FINANCIAL EXPENSES
The financial expenses are broken down as follows:
in EUR '000 2013 2014
Interest and similar expenses 41,944 41,273
Losses from changes in fair values of interest rate swaps 656 796
Interest portions of allocations to provisions for defined benefit plans and similar obligations 2,941 3,080
Total 45,541 45,149
The interest from finance leases included under “Interest and similar expenses” in the financial year totaled EUR 988 thousand
(previous year: 1,122 thousand). The financial result includes interest income from financial assets in an amount of
EUR 5,278 thousand (previous year: 5,410 thousand) and interest expenses from financial liabilities in an amount of
EUR 40,285 thousand (previous year: 40,822 thousand) which were not measured at fair value affecting profit and loss.
The interest and similar expenses include impairment losses on financial assets held for sale in an amount of EUR 705 thousand
(previous year: 2,586 thousand). Of that total, EUR 631 thousand (previous year: 40 thousand) is attributable to the
Construction segment, EUR 9 thousand (previous year: 0) to the Equipment segment and EUR 65 thousand (previous year:
2,546 thousand) to the Resources segment.
16. INCOME TAX EXPENSE
The income tax expense is broken down as follows:
The theoretical tax rate is 28.08 % (previous year: 28.08 %).
Reconciliation from expected to actual income tax expenditure
The expected tax expenditure is below (previous year: below) the recorded tax expenditure. The reasons for the difference
between the expected and recorded tax expenditure are as follows:
in EUR '000 2013 2014
Actual taxes 15,705 19,721
Deferred taxes -2,231 2,354
Total 13,474 22,075
in EUR '000 2013 2014
Profit before income tax -5,957 37,801
Theoretical tax expenditure 28.08 % (previous year: 28.08 %) -1,673 10,615
Differences in tax rate 714 -1,534
Taxation effects of non-deductible expenses and tax-free income 10,022 -4,869
Effects of variations in the tax calculation base 2,054 2,000
At-equity valuation of associated companies -63 160
Out-of-period tax payments/refunds for previous years -273 -68
Effects of deferred tax assets in respect of losses carryforward and temporary differences 2,675 15,701
Other 18 70
Income tax expense 13,474 22,075
126 NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
17. EARNINGS PER SHARE
The earnings per share are calculated by dividing the profit attributable to the shareholders of BAUER AG by the weighted
average number of ordinary shares outstanding. The earnings per share amount to the following values:
2013 2014
Profit attributable to the shareholders of BAUER AG, in EUR '000 -16,927 14,481
Number of shares from 01.01. to 31.12. 17,131,000 17,131,000
Weighted average number of shares in circulation in financial year (basic) 17,131,000 17,131,000
Weighted average number of shares in circulation in financial year (diluted) 17,131,000 17,131,000
Basic earnings per share in EUR -0.99 0.85
Diluted earnings per share in EUR -0.99 0.85
Internal disbursements result in taxation effects after December 31, 2014 totaling EUR 39 thousand (previous year: 34 thousand).
127NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
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The breakdown of the fixed asset items summarized on the balance sheet and their development is presented in the fixed
asset movement schedule on the following pages.
NON-CURRENT ASSETS
18. FIXED ASSETS
18.1 Intangible assets
NOTES ON THE CONSOLIDATED BALANCE SHEET
in EUR '000
Licenses, software
and similar rights
and values Goodwill
Internally generated
intangible assets
TotalCost of purchase/cost of manufacturingCapitalized
software costs
Capitalized
development costs
01.01.2013 * 30,725 2,203 589 30,148 63,665
Change in scope of consolidation 220 0 0 377 597
Additions 3,124 0 0 8,395 11,519
Disposals 453 0 232 72 757
Transfers -9 0 0 516 507
Currency adjustment -529 -17 0 -10 -556
31.12.2013 33,078 2,186 357 39,354 74,975
in EUR '000
Licenses, software
and similar rights
and values Goodwill
Internally generated
intangible assets
TotalCost of purchase/cost of manufacturingCapitalized
software costs
Capitalized
development costs
01.01.2014 33,078 2,186 357 39,354 74,975
Change in scope of consolidation -17 0 0 0 -17
Additions 2,422 0 0 6,186 8,608
Disposals 2,392 0 68 0 2,460
Transfers -6 0 0 22 16
Currency adjustment 452 0 0 6 458
31.12.2014 33,537 2,186 289 45,568 81,580
in EUR '000
Licenses, software
and similar rights
and values Goodwill
Internally generated
intangible assets
TotalAccumulated depreciationCapitalized
software costs
Capitalized
development costs
01.01.2013 * 18,474 0 415 10,209 29,098
Change in scope of consolidation 100 0 0 14 114
Additions 4,046 2,186 84 4,974 11,290
Disposals 442 0 232 72 746
Transfers 21 0 0 -21 0
Currency adjustment -159 0 0 -10 -169
31.12.2013 22,040 2,186 267 15,094 39,587
Carrying amount 31.12.2013 11,038 0 90 24,260 35,388
* Previous year’s fi gures changed; this involves a correction to the balances carryforward due to the system
128 NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
Of the total research and development costs and patent costs incurred in 2014, EUR 6,247 thousand (previous year:
8,594 thousand) met the IFRS capitalization criteria. The following amounts were recognized in net income:
in EUR '000
Licenses, software
and similar rights
and values Goodwill
Internally generated
intangible assets
TotalAccumulated depreciationCapitalized
software costs
Capitalized
development costs
01.01.2014 22,040 2,186 267 15,094 39,587
Change in scope of consolidation -6 0 0 0 -6
Additions 3,681 0 51 6,224 9,956
Disposals 2,619 0 68 0 2,687
Transfers 4 0 0 0 4
Currency adjustment 281 0 0 5 286
31.12.2014 23,381 2,186 250 21,323 47,140
Carrying amount 31.12.2014 10,156 0 39 24,245 34,440
in EUR '000 2013 2014
Research costs and uncapitalized development costs 20,900 18,567
Amortization of development costs and patents 5,212 6,473
Research and development costs recognized in net income 26,202 25,040
129NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
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18.2 Property, plant and equipment and investment property
in EUR '000
Land and
buildings
Investment
property
Technical
equipment and
machinery
Other
equipment,
factory and
office equipment
Payments on
account and
assets in course
of construction Total
Cost of purchase/
cost of manufacturing
01.01.2013 * 287,311 1,882 468,428 68,995 23,014 849,630
Change in scope of consolidation 0 0 9,689 376 42 10,107
Additions 3,179 13 65,050 10,565 13,099 91,906
Disposals 2,853 118 41,512 5,248 557 50,288
Transfers 17,692 0 11,319 142 -29,661 -508
Currency adjustment -3,045 -14 -24,119 -1,798 -655 -29,631
31.12.2013 302,284 1,763 488,855 73,032 5,282 871,216
in EUR '000
Land and
buildings
Investment
property
Technical
equipment and
machinery
Other
equipment,
factory and
office equipment
Payments on
account and
assets in course
of construction Total
Cost of purchase/
cost of manufacturing
01.01.2014 302,284 1,763 488,855 73,032 5,282 871,216
Change in scope of consolidation -563 0 -2,063 -678 0 -3,304
Additions 3,926 6 43,524 7,310 9,322 64,088
Disposals 6,022 0 49,712 6,374 193 62,301
Transfers 765 -35 5,255 -112 -5,889 -16
Currency adjustment 5,802 0 27,331 2,119 -309 34,943
31.12.2014 306,192 1,734 513,190 75,297 8,213 904,626
in EUR '000
Land and
buildings
Investment
property
Technical
equipment and
machinery
Other
equipment,
factory and
office equipment
Payments on
account and
assets in course
of construction TotalAccumulated depreciation
01.01.2013 * 84,396 921 257,736 41,261 0 384,314
Change in scope of consolidation 0 0 4,235 225 0 4,460
Additions 9,080 40 49,440 9,846 0 68,406
Disposals 2,399 54 22,491 4,372 0 29,316
Transfers 0 0 -11 11 0 0
Currency adjustment -370 -7 -14,550 -1,258 0 -16,185
31.12.2013 90,707 900 274,359 45,713 0 411,679
Carrying amount 31.12.2013 211,577 863 214,496 27,319 5,282 459,537
of which financing leasing
Carrying amount 31.12.2013 3,194 0 22,574 5,246 0 31,014
* Previous year’s fi gures changed; this involves a correction to the balances carryforward due to the system
130 NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
The changes to the scope of consolidation comprise assets arising from the deconsolidation of BAUER Nimr LLC, Muscat –
Al Mina. Of these, EUR −2,041 thousand relate exclusively to property, plant and equipment.
In respect of buildings and equipment leased by way of finance lease agreements purchase options exist for the most part,
which will be exercised. The interest rates applied to the leases vary, according to the market and date of signing, between
2.38 % and 7.89 % (previous year: 2.31 % and 8.13 %). The future lease payments due at their present values are shown in
the following table:
The investment property has a fair value of EUR 804 thousand (previous year: 1,143 thousand) and in 2014 were all rented
out. This relates to a hotel owned by SCHACHTBAU NORDHAUSEN GmbH which is rented out to third parties and is being
written down over a period of 48 years. SCHACHTBAU NORDHAUSEN GmbH is also committed to a maintenance contract
in respect of the property. The valuation was derived from current market prices. This procedure falls within Level 2 of the
IFRS 13 measurement hierarchy.
In the period under review rental income in the amount of EUR 60 thousand (previous year: 62 thousand) was generated, to
which direct operating expenses totaling EUR 23 thousand (previous year: 19 thousand) are attributable.
Property, plant and equipment with a carrying amount of EUR 105,811 thousand (previous year: 133,191 thousand) is subject
to charges in the form of land charges and assignment. In addition, the usual commercial restrictions on right of disposal
existing respect of leased assets, attributable to the Group in accordance with IAS 17 (finance lease agreements), totaling
EUR 27,207 thousand (previous year: 31,014 thousand).
In the financial year, investment grants for the extension of manufacturing facilities were awarded to Olbersdorfer Guß GmbH
in an amount of EUR 13 thousand (previous year: 42 thousand). All conditions necessary for allocation of the investment
subsidies were met on the balance sheet date.
No borrowing costs were capitalized in the financial year (previous year: 520). The finance cost rate in the previous year was
between 6.76 and 8.0 %.
in EUR '000
Land and
buildings
Investment
property
Technical
equipment and
machinery
Other
equipment,
factory and
office equipment
Payments on
account and
assets in course
of construction TotalAccumulated depreciation
01.01.2014 90,707 900 274,359 45,713 0 411,679
Change in scope of consolidation -5 0 -773 -485 0 -1,263
Additions 10,042 36 49,829 8,918 0 68,825
Disposals 2,000 0 32,386 5,366 0 39,752
Transfers 6 -6 168 -172 0 -4
Currency adjustment 866 0 15,784 1,582 0 18,232
31.12.2014 99,616 930 306,981 50,190 0 457,717
Carrying amount 31.12.2014 206,576 804 206,209 25,107 8,213 446,909
of which financing leasing
Carrying amount 31.12.2014 2,935 0 19,150 5,122 0 27,207
in EUR '000 Remaining term 2013 Remaining term 2014
under 1 year 1 to 5 years over 5 years Total under 1 year 1 to 5 years over 5 years Total
Minimum lease payments 11,182 18,779 0 29,961 8,470 13,707 0 22,177
Interest portions 997 1,514 0 2,511 1,017 675 0 1,692
Present value 10,185 17,265 0 27,450 7,453 13,032 0 20,485
131NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
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Total impairment losses on fixed assets in the financial year were EUR 1,775 thousand (previous year: 3,713 thousand).
Of that figure, EUR 0 thousand (previous year: 526 thousand) was attributable to the Construction segment, EUR 1,768 thou-
sand (previous year: 996 thousand) to the Equipment segment and EUR 7 thousand (previous year: 2,191 thousand) to
the Resources segment. Of the total, intangible assets accounted for EUR 942 thousand (previous year: 3,184 thousand)
and property, plant and equipment accounted for EUR 833 thousand (previous year: 529 thousand). Most of the impair-
ment losses on intangible assets relate to capitalized development costs amounting to EUR 520 thousand at Klemm
Bohrtechnik GmbH in the Equipment segment. Future expected market development for various machines developed
in-house was decisive in this respect. Also in the Equipment segment, the carrying amounts of BAUER Pileco Inc., Houston,
Texas in land and buildings amounting to EUR 794 thousand were written down to their fair value. Impairment losses were
realized on the basis of the achievable amount. In the regular way, these corresponded to the fair value less costs of sale. This
procedure falls within Level 1 of the IFRS 13 measurement hierarchy.
18.3 Investments accounted for using the equity method and participations
The balance sheet valuations of the joint ventures and associated companies have developed as follows:
in EUR '000 31.12.2013 31.12.2014
Shares in joint ventures measured at equity * 3,302 4,175
Shares in associated companies measured at equity 9,947 38,731
Total 13,249 42,906
in EUR '000 Associated companies Joint ventures
Cost of purchase/cost of manufacturing 2013 2014 2013 * 2014
01.01. 13,133 9,947 3,277 3,302
Additions 0 31,089 17 662
Disposals 1 0 0 479
Profit share −234 330 8 690
Dividend payments −2,951 −450 0 0
Transfers 0 0 0 0
Currency adjustment 0 0 0 0
31.12. 9,947 40,916 3,302 4,175
in EUR '000 Associated companies Joint ventures
Accumulated depreciation 2013 2014 2013 2014
01.01. 0 0 0 0
Additions 0 2,185 0 0
Disposals 0 0 0 0
Transfers 0 0 0 0
Currency adjustment 0 0 0 0
31.12. 0 2,185 0 0
Carrying amount 31.12. 9,947 38,731 3,302 4,175
The following table provides an overview of the change in the shares measured at equity:
* Previous year adjusted, see notes on page 106
132 NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
a) Joint ventures
The financial information presented for the joint ventures are amounts that are derived from financial statements prepared
according to local legislation, corrected to take account of any adaptations to IFRS.
Combined financial information about the immaterial joint ventures (before consolidations):
The non-current and current financial liabilities do not contain any trade liabilities and provisions.
Reconciliation of the combined financial information for joint ventures
The pro rata carrying value of the joint ventures can be reconciled as follows:
BALANCE SHEET
in EUR '000
Joint ventures
31.12.2013 31.12.2014
Non-current assets 180 317
Current assets 65,022 63,796
of which cash and cash equivalents 3.089 2,445
Total assets 65,202 64,113
Non-current liabilities 0 0
of which non-current financial liabilities 0 0
Current liabilities 58,758 55,646
of which current financial liabilities 33,782 43,607
Total liabilities 58,758 55,646
INCOME STATEMENT
in EUR '000
Joint ventures
31.12.2013 31.12.2014
Sales revenues 48,996 41,008
Scheduled depreciation -234 -373
Operating result 2,700 3,529
Interest income 40 1
Interest expenditure -3 -4
Income tax expense 0 0
Net profit or loss 2,737 3,526
Dividends paid to the BAUER Group 10 0
in EUR '000 31.12.2013 31.12.2014
Net assets of joint ventures 6,444 8,467
Interest in joint venture according to investment quota 3,302 4,175
Goodwill and other adaptations 0 0
Carrying value disclosed within the balance sheet 3,302 4,175
The fair value has not been stated, because there is no quoted market price available for our joint ventures (generally construction
consortia).
133NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
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The risk arising from joint and several liability on failure of a partner is hedged within the joint venture by mutual guarantees.
There are no further obligations and significant restrictions beyond that.
b) Associated companies
The financial information presented for the associated companies are amounts that are derived from financial statements
prepared according to local legislation, corrected to take account of any adaptations to IFRS.
The main associated companies are as follows:
2013 financial year:
Name Activity
of the company
Headquarters Capital share in %
Wöhr + Bauer GmbH Project development Munich, Germany 33.33 %
NDH Entsorgungsbetreibergesellschaft mbH Disposal Bleicherode, Germany 25.00 %
TERRABAUER S. L. Specialist foundation engineering Madrid, Spain 30.00 %
2014 financial year:
Name Activity
of the company
Headquarters Capital share in %
Wöhr + Bauer GmbH Project development Munich, Germany 33.33 %
NDH Entsorgungsbetreibergesellschaft mbH Disposal Bleicherode, Germany 25.00 %
TERRABAUER S. L. Specialist foundation engineering Madrid, Spain 30.00 %
BAUER Nimr LLCWater treatment and
soil remediation
Muscat – Al Mina,
Sultanate of Oman49.00 %
Combined financial information for each significant associated company (amounts before consolidations):
BALANCE SHEET
in EUR '000
Wöhr + Bauer GmbH NDH Entsorgungsbetreiber-
gesellschaft mbH
TERRABAUER S. L. BAUER Nimr LLC
31.12.2013 31.12.2014 31.12.2013 31.12.2014 31.12.2013 31.12.2014 31.12.2013 31.12.2014
Non-current assets 60,472 60,132 19,090 18,288 5,338 - 0 41,102
Current assets 43,209 48,073 25,869 26,857 7,357 - 0 13,187
of which cash and
cash equivalents8,309 526 21,936 23,060 125 - 0 5,019
Total assets 103,681 108,205 44,959 45,145 12,695 - 0 54,289
Non-current liabilities 10,816 22,279 0 0 1,800 - 0 35,421
of which non-current
financial liabilities 10,685 21,897 0 0 665 - 0 34,968
Current liabilities 74,556 66,775 40,065 40,225 3,327 - 0 7,299
of which current
financial liabilities 8,803 0 3,375 3,225 1,390 - 0 2,327
Total liabilities 85,372 89,054 40,065 40,225 5,127 - 0 42,720
* These are extrapolated values; fi nancial information was not available at the balance sheet date
134 NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
Combined financial information for associated companies that are, taken individually, non-significant (amounts before consolidations):
BALANCE SHEET
in EUR '000
Associated companies
31.12.2013 31.12.2014
Non-current assets 90 67
Current assets 245 239
of which cash and cash equivalents 47 33
Total assets 335 306
Non-current liabilities 26 22
of which non-current financial liabilities 26 22
Current liabilities 135 132
of which current financial liabilities 0 0
Total liabilities 161 154
INCOME STATEMENT
in EUR '000
Associated companies
31.12.2013 31.12.2014
Sales revenues 853 825
Scheduled depreciation -33 -29
Operating result 6 -22
Interest income 0 0
Interest expenditure -1 -1
Income tax expense -2 0
Net profit or loss 3 -23
Net profit or loss according to interest 1 -7
Dividends paid to the BAUER Group 10 0
INCOME STATEMENT
in EUR '000
Wöhr + Bauer GmbH NDH Entsorgungsbetreiber-
gesellschaft mbH
TERRABAUER S. L. BAUER Nimr LLC
2013 2014 2013 2014 2013 2014 * 2013 2014
Sales revenues 50,865 21,531 22,952 22,736 3,452 - 0 1,528
Scheduled depreciation -1,170 -1,774 -2,744 -2,956 -676 - 0 -367
Operating result 1,330 2,550 1,624 1,522 -1,832 - 0 281
Interest income 261 15 98 238 0 - 0 6
Interest expenditure -503 -414 -287 -262 -310 - 0 -244
Income tax expense -587 -667 -474 -509 0 - 0 0
Net profit or loss 501 1,484 961 989 -2,142 -1,090 0 43
Net profit or loss
according to interest 167 494 240 247 -643 -327 0 21
Dividends paid
to the BAUER Group 2,640 210 135 240 166 0 0 4,598
* These are extrapolated values; fi nancial information was not available at the balance sheet date
135NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
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in EUR '000 31.12.2013 31.12.2014
Net assets of associated companies 30,945 35,792
Interest in associated companies according to investment quota 9,651 13,331
Goodwill and other adaptations 296 16,908
Cash value of the concession agreement 0 8,709
Currency adjustment 0 -217
Carrying value disclosed within the balance sheet 9,947 38,731
Reconciliation of the combined financial information for associated companies
The pro rata carrying value of the associated companies can be reconciled as follows:
The other adaptations relate to temporary posting differences.
The market value of BAUER Nimr LLC as at December 31, 2014 is EUR 63,447 thousand. The market values of the other
significant associated companies were not available as at the balance sheet date.
There were no obligations, significant restrictions or risks relating to the shares in associated companies as at the balance
sheet date.
136 NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
c) Participations
19. DEFERRED TAXES
The deferred tax assets and liabilities are distributed across the following balance sheet items:
in EUR '000 Participations
Cost of purchase/cost of manufacturing 2013 2014
01.01. 4,454 4,429
Additions 0 0
Disposals 25 0
Profit share 0 0
Dividend payments 0 0
Transfers 0 0
Currency adjustment 0 0
31.12. 4,429 4,429
in EUR '000 Participations
Accumulated depreciation 2013 2014
01.01. 816 816
Additions 0 0
Disposals 0 0
Transfers 0 0
Currency adjustment 0 0
31.12. 816 816
Carrying amount 31.12. 3,613 3,613
in EUR '000 31.12.2013 31.12.2014 31.12.2013 * 31.12.2014
Deferred tax assets Deferred tax liabilities
Intangible assets 33 401 6,437 7,202
Property, plant and equipment 324 119 9,468 13,926
Inventories 2,509 3,763 2,424 2,498
Receivables and other assets 1,228 1,474 2,093 1,410
Defined benefit plans 10,275 19,652 4 208
Liabilities 9,811 10,201 5,937 4,800
Tax losses carryforward 14,560 12,559 0 0
Consolidation 4,841 3,999 5,873 4,274
Offsetting -17,282 -21,195 -17,282 -21,195
Net amount 26,299 30,973 14,954 13,123
In the above table, the liabilities include deferred tax assets totaling EUR 2,025 thousand (previous year: 835 thousand) and
deferred tax liabilities totaling EUR 1,708 thousand (previous year: 8 thousand) which are part of the hedge accounting.
Also, the provisions for defined benefit plans include deferred tax assets totaling EUR 16,772 thousand (previous year:
7,889 thousand) and deferred tax liabilities totaling EUR 4 thousand (previous year: 4) in respect of the actuarial gains and
losses recognized in the shareholders’ equity.
* Previous year adjusted; see notes on page 106
137NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
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Current deferred tax assets excluding losses carryforward totaled EUR 10,039 thousand (previous year: 9,080 thousand);
deferred tax liabilities totaled EUR 7,280 thousand (previous year: 9,585 thousand).
The tax losses carryforward at the year-end are broken down as follows:
in EUR '000 31.12.2013 31.12.2014
Domestic losses (corporation tax) 76,262 75,553
Foreign losses 31,758 46,953
Total 108,020 122,506
Of which losses carryforward deductible for limited periods 21,069 25,461
Based on our medium-term earnings planning, losses carryforward totaling EUR 78,059 thousand (previous year:
47,672 thousand) were not usable for tax purposes.
Current deferred tax assets against losses carryforward in the financial year totaled EUR 1,028 thousand (previous year: 1,708
thousand).
In connection with interests in subsidiaries, temporary differences totaling EUR 1,170 thousand (previous year:
1,172 thousand) exist for which no deferred tax liabilities were recognized.
20. RECEIVABLES FROM CONCESSION ARRANGEMENTS
BAUER Nimr LLC (“Bauer”) signed a contract with Petroleum Development Oman LLC (“the customer”) on November 28,
2008 relating to water treatment (“the service”). In performance of the service, Bauer is constructing a plant which it will
subsequently operate. Bauer will receive a fixed agreed unit price per cbm for operation of the plant. This price includes a
variable component to compensate for price rises during the contract term. According to the agreement, Bauer is obligated
to comply with the general standards applicable in the oil and gas industry in constructing and operating the plant, unless
otherwise stipulated in the contract.
Bauer is further obligated to allow the customer to conduct any necessary inspection and testing. The costs of this are to be
borne by the customer.
At the end of the service performance period, Bauer is required by the customer to dismantle the plant and recultivate the site
(for a fee). The agreement also provides the customer with a purchase option at a price yet to be agreed.
The contract runs for a term of 20 years, with an option to extend by a further 5 years. Bauer is entitled to cancel the contract
at any time by means of written notice to the customer. If the contract is canceled by the customer before the agreed term ex-
pires – provided the cancellation is not as a result of bad or failed performance, or insolvency of the operator – the customer
is obligated to pay compensation.
The customer undertakes to supply Bauer with a daily minimum of 45,000 m³ of water for treatment. If the customer supplies
less water, Bauer receives a compensation payment, which may be offset by over-supply quantities in the subsequent
months.
On May 10, 2011, Bauer signed a contract extension with the customer providing for an increase in the customer’s supplies
of water for treatment by 45,000 m³.
138 NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
The receivables from concession arrangements developed as follows:
21 % of the shares in BAUER Nimr LLC were sold on November 19, 2014. Refer to page 104 in this regard.
The short-term portion of the receivables from concession arrangements is EUR 0 (previous year: 2,280 thousand) following
the divestment. The short-term portion was previously stated under “Other current financial assets”.
The financial income from concession arrangements in the financial year totaled EUR 1,721 thousand (previous year:
1,931 thousand). The discount rate in the past financial year was 4.26 % (previous year: 4.67 %).
The financial income is included in the interest income from financial assets.
21. OTHER NON-CURRENT ASSETS
The other non-current assets comprise the following items:
in EUR '000 31.12.2013 31.12.2014
As at 01.01. 40,770 36,762
Interest income from financial assets 1,931 1,721
Currency adjustment -1,581 3,886
Payment of contract costs -4,358 -4,079
Disposal 0 -38,290
As at 31.12. 36,762 0
of which with a remaining term of 1 to 5 years 9,122 0
of which with a remaining term of over 5 years 27,640 0
in EUR '000 31.12.2013 31.12.2014
Claims from backup insurance 4,743 4,787
Sundry other non-current assets 2,821 2,705
Total 7,564 7,492
The sundry other non-current assets were not subject to interest in the past financial year, as in the previous year. The previous
year’s figure has been adapted.
They also include assets arising from continuing involvements totaling EUR 1,068 thousand (previous year: 1,170 thousand).
As in the previous year, the other non-current assets were neither impaired nor overdue in the year under review.
The BAUER Group sold trade receivables as well as services totaling EUR 18,425 thousand (previous year: 17,378 thousand)
to third parties as part of receivables sale agreements. It comprises the maximum amount of the remaining risks which the
BAUER Group would have to pay to the buyer.
The corresponding liability amounts to EUR 1,175 thousand (previous year: 1,287), and is stated under “Other non-current
liabilities”. The difference reflects the fair value of the guarantees resulting from the remaining risk and the servicing, and is
recognized in net income.
139NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
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22. OTHER NON-CURRENT FINANCIAL ASSETS
The other non-current financial assets comprise the following:
in EUR '000 Remaining term 31.12.2013 Remaining term 31.12.2014
1 to 5 years over 5 years 1 to 5 years over 5 years
Sundry other non-current financial assets 5,420 0 28,420 0
Total 5,420 0 28,420 0
in EUR '000 31.12.2013 31.12.2014
Raw materials and supplies 146,666 155,334
Finished goods and work in progress and stock for trade 272,866 283,850
Total 419,352 439,184
in EUR '000 31.12.2013 31.12.2014
Write-downs of inventories due to use 14,196 15,789
Impairment losses on inventories 8,249 8,597
Total 22,445 24.386
The sundry other non-current assets contain receivables from derivatives as well as other non-current financial assets.
The derivatives are presented in item 36 under “Other disclosures”. Financial 2014 also includes a receivable item from the
purchase price payment and loan to BAUER Nimr LLC amounting to EUR 20,059 thousand (previous year: 0). As in the
previous year, the other non-current financial assets were neither impaired nor overdue in the year under review.
CURRENT ASSETS
23. INVENTORIES
The inventories comprise the following items:
Of the inventories, EUR 121,319 thousand (previous year: 116,787 thousand) are stated at net realizable value.
The impairment losses on inventories against the net realizable value affecting net expenditure in the financial year totaled
EUR 24,386 thousand (previous year: 22,445 thousand).
They are broken down as follows:
The rate of hire was higher than last year, above all at BAUER Maschinen GmbH. Write-downs of used machinery due to use
therefore increased from EUR 14,196 thousand to EUR 15,789 thousand.
The impairment losses on inventories include both impairment losses on new and used machinery (stated under “Changes
in inventories”) and on warehouse inventories (stated under “Cost of materials”). Most of the impairment losses relate to the
machinery which was not hired out, and are attributable to the Equipment segment. Impairment losses were realized on the
basis of the achievable amount. In the regular way, these corresponded to the fair value less costs of sale.
The finished goods and merchandise include machinery and accessories produced internally by the Equipment segment and
intended primarily for sale.
140 NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
We differentiate essentially between two forms of machinery and accessories (referred to in the following as “machinery”):
New machines
These are machines manufactured in the financial year or in earlier years which are available for sale but have not yet been
hired out. These machines are valued at manufacturing cost or at the lower net realizable value on the balance sheet date.
Used machines
Used machines are machines which are primarily up for sale and which have been temporarily hired out as a secondary sales
promotion measure during the financial year or in earlier years. New machines automatically become used machines the first
time they are hired out.
When hiring out machinery, the net realizable value is determined from the manufacturing cost less the write-downs due to
use and impairment losses on inventories.
In the case of a new machine, or a used machine which has not been hired out, the reduction in value against the net
realizable value is recognized by means of an impairment loss.
The sale and hire of machinery relates solely to the Equipment segment.
The following chart sets out the carrying amount before impairment of the used machinery and accessories along with the
rate of hire status on the balance sheet date:
In the financial year, apart from the usual retentions of title, inventories totaling EUR 119 thousand (previous year: 2,507 thou-
sand) were provided as security for loans with a term until 2016. The securities provided can only be claimed by the lending
banks in the event of definitive failure to fulfill contractual obligations, such as defaulting on interest and loan payments or
failure to meet agreed financial targets. No claims on securities provided are foreseeable.
24. RECEIVABLES AND OTHER ASSETS
Construction contracts
The construction contracts measured according to the percentage of completion method developed as follows:
in EUR '000 31.12.2013 31.12.2014
Carrying value of the used machine 94,392 86,744
of which hired out 33,588 32,236
of which not hired out 60,804 54,508
in EUR '000 31.12.2013 31.12.2014
Contract costs incurred (plus profits, less losses) for projects not yet completed 493,944 674,169
less down-payments 383,549 590,481
Balance 110,395 83,688
of which: Receivables from construction contracts (PoC) 143,234 132,159
of which: Liabilities from construction contracts (PoC) 32,839 48,471
141NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
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Development of receivables and other assets
The receivables and other assets comprise the following:
The “Trade receivables” balance sheet item includes long-term receivables totaling EUR 10,504 thousand (previous year:
15,077 thousand).
The following table presents the changes in value adjustments to current receivables:
in EUR '000 31.12.2013 31.12.2014
Receivables from construction contracts (PoC) 143,234 132,159
Trade receivables * 320,301 311,417
Receivables from enterprises in which the company has participating interests 444 67
Payments on account 3,725 4,304
Other current assets 30,695 28,603
Other current financial assets 19,551 20,100
Total * 517,950 496,650
The value adjustment for foreseeably uncollectable trade receivables of EUR 53,976 thousand (previous year: 59,938 thou-
sand) was calculated taking into account individual risks and on the basis of past experience in relation to payment default.
Value adjustments were applied in respect of individual claims as well as on a portfolio flat-rate basis. The individual value
adjustments were translated into flat-rate percentages spread across the age structure of the receivables. Within the individual
value adjustments, 100 % of the claim receivable was usually adjusted. The calculation of value adjustments in respect of
uncertain receivables is based to a large extent on estimates and assessments of individual claims, incorporating considera-
tions of the creditworthiness and late-payment record of the customer concerned as well as current economic trends and
historical experience in relation to default.
In the financial year, receivables from construction contracts totaling EUR 3,993 thousand (previous year: 2,998 thousand)
and other current assets totaling EUR 0 thousand (previous year: 2,993) were subject to impairment.
in EUR '000 31.12.2013 31.12.2014
Value adjustments at start of financial year 63,504 59,938
Change in scope of consolidation 14 0
Currency adjustment −353 842
Allocation 32,207 20,568
Reversal 34,003 19,557
Consumption 1,431 7,815
Value adjustments at end of financial year 59,938 53,976
* Previous year adjusted; see notes on page 106
142 NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
The following table presents an analysis of the due dates of gross carrying amounts of trade receivables:
in EUR '000 Carrying
amount
31.12.2013 *
Carrying
amount
31.12.2014
Trade receivables (gross carrying amount) 382,946 365,393
Value adjustments in respect of trade receivables 59,938 53,976
Trade receivables (net carrying amount)
of which neither impaired nor overdue at closing date
of which not impaired at closing date and overdue in the following time bands:
320,301
114,938
205,363
311,417
110,640
200,777
- less than 30 days 68,462 75,046
- between 30 and 60 days 27,881 13,599
- between 60 and 90 days 10,627 10,886
- more than 90 days 98,393 101,246
The above table includes trade receivables as well as receivables from joint ventures. With regard to the trade receivables
which were neither impaired nor delayed in payment, there were no indications at the balance sheet date that the debtors
concerned will not fulfill their payment obligations. Credit ratings are derived from an active system of claims management
with reference to the relevant credit history and from continuous monitoring of the creditworthiness of our customers based
on information obtained from both internal and external sources.
As in the previous year, the other current assets were neither impaired nor overdue in the year under review (previous
year: EUR 2,993 thousand). The other current assets mainly comprise miscellaneous tax refund claims and claims against
employees and against welfare benefit funds as well as accrued interest and insurance premiums and other prepayments and
deferred charges.
A total of EUR 6,846 thousand (previous year: 15,400 thousand) in monetary assets were pledged as securities for potential
future guarantees during the financial year. The current portion of the receivables from foreign exchange forward contracts
included in the current financial assets in the financial year totaled EUR 141 thousand (previous year: 3,169 thousand).
The payments on account for intangible assets shown under “Other current assets” totaled EUR 0 (previous year: 4 thousand)
in the year under review. In the 2014 financial year, impairment totaled EUR 20,568 thousand (previous year: 38,198 thousand).
* Previous year adapted; part of the overdue receivables of SCHACHTBAU NORDHAUSEN GmbH has not been included
143NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
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in EUR '000 31.12.2013 31.12.2014
% EUR '000 % EUR '000
Bauer family 48.19 35,182 48.19 35,182
Free float 51.81 37,819 51.81 37,819
Total 100.00 73,001 100.00 73,001
25. CASH AND CASH EQUIVALENTS
The cash and cash equivalents totaling EUR 41,835 thousand (previous year: 57,217 thousand) include credit balances at
banks and petty cash stocks.
26. SHAREHOLDERS’ EQUITY
The shareholder structure of BAUER AG is as follows:
With regard to the disclosures relating to shares held in BAUER AG, refer to the Notes to the annual financial statements of
BAUER AG as per December 31, 2014 published in the German Federal Gazette (“Bundesanzeiger”).
Composition of subscribed capital
The subscribed and fully paid-up capital (share capital) of BAUER AG remains unchanged at EUR 73,001,420.45 and is
divided into 17,131,000 no-nominal-value bearer shares, representing a pro rata amount of approximately EUR 4.26 per share
of the total share capital. The shares have no nominal value. Each share entails equal rights, and entitles the holder to one
vote at the Annual General Meeting, with the exception of share categories precluded from voting by law pursuant to section
136 of the German Stock Corporation Act (AktG) and section 28 of the German Securities Trading Act (WpHG).
As in the previous year, 51.81 % of the shares were in free float. The members of the Bauer family and a charitable foundation
own a total of 8,256,246 no-nominal-value shares in BAUER AG on the basis of a pool agreement, representing a 48.19 %
share in the company. The pool agreement provisions include binding voting commitments as well as a right of pre-emption
of pool participants if any member of the pool sells shares to third parties. No other direct or indirect holdings of BAUER AG
share capital exceeding 10 % of the voting rights are known to the company.
None of the shareholders have special rights entailing controlling powers. Nor does any voting rights control exist on the part
of the employees holding shares in the capital.
Authority of the Management Board to issue or buy back shares
Article 4, paragraph 4 of the company’s Articles of Association Board states that the Management Board is authorized, with
the consent of the Supervisory Board, to increase the share capital once or more than once up to June 27, 2017 by up to
a total of EUR 7.3 million by the issue of new no-nominal-value bearer shares against cash and/or non-cash contributions
(2012 authorized capital). To that end, the Management Board is authorized, with the consent of the Supervisory Board, to
exclude the legal subscription rights of shareholders in the following cases:
• in the event of capital increases against non-cash contributions;
• in the event of capital increases against cash contributions where the issue amount of the new shares issued is not
materially below the market price of the already quoted shares at the time of definitive setting of the issue price and the
shares issued excluding shareholders’ subscription rights pursuant to section 186, subsection 3, clause 4 AktG do not
in total exceed 10 % of the existing share capital either at the time this authority takes effect or at the time of exercising
144 NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
this authority. Shares which have been or are to be sold or issued in direct or corresponding application of section 186,
subsection 3, clause 4 AktG while this authority is in place until such time as it is exercised, pursuant to other authorities,
excluding subscription rights, are to be set off against the said 10 % limit;
• to balance out fractional amounts.
By resolution of the Ordinary Annual General Meeting held on June 26, 2014, the company was authorized to acquire treasury
stock, over a limited period up to June 25, 2019, representing up to a total of 10 % of the company’s share capital at the time
the resolution was passed. The shares shall be acquired at the discretion of the Management Board by means of a public
tender offer or by way of the stock market. If the acquisition is effected by way of the stock market, the acquisition price
(excluding ancillary costs) may be no more than 10 % above or 20 % below the price determined by the opening auction
on the trading day for shares in the company in Xetra trading (or a comparable successor system) on the Frankfurt Stock
Exchange. that if the acquisition is effected by means of a public tender offer, the purchase price or the limits of the purchase
price span per share (excluding ancillary costs) may be no more than 10 % above or 20 % below the average of the closing
prices per share in the company in Xetra trading (or a comparable successor system) on the Frankfurt Stock Exchange on the
three trading days prior to the day of issue of the public tender offer. If not insignificant variations of the decisive share price
occur after the day of issue of the public tender offer, the purchase price may be adjusted.
The Management Board shall be authorized to appropriate shares in the company acquired pursuant to the above authoriza-
tions for all legally admissible purposes. Consequently, the acquired shares may also in particular be sold by means other than
by way of the stock market or by means of an offer to the shareholders, if the shares are sold for cash at a price (excluding
ancillary costs) not materially below the stock market price of shares of the company carrying the same rights at the time
of the sale in Xetra trading (or a comparable successor system) on the Frankfurt Stock Exchange. The shares may also be
sold to third parties, provided this is done for the purpose of effecting company mergers or acquiring companies, parts of
companies, shareholdings in companies or other assets. The aforementioned shares may be redeemed without need of a
further Annual General Meeting. With regard to use of the bought-back shares, the authorization provides, in specific cases,
for legal rights of subscription of shareholders to be excluded. The facility to acquire treasury stock has not been utilized to
date.
145NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
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The Supervisory Board is authorized to amend Article 4 of the Articles of Association accordingly following complete or partial
execution of the increase in share capital or on expiration of the period of authority.
The remaining shareholders’ equity of the BAUER Group developed as follows:
in EUR '000 31.12.2013 31.12.2014
I. Capital reserve 38,404 38,404
II. Other revenue reserves and net earnings available for distribution 285,601 287,903
324,005 326,307
III. Non-controlling interests 22,809 19,617
Total 346,814 345,924
In the financial year, a dividend amounting to EUR 0.00 (previous year: EUR 0.30) per share was paid to the shareholders.
146 NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
26.1 Non-controlling interests
a) Details of the non-wholly-owned subsidiaries in which significant non-controlling interests exist
The non-controlling interests which are significant in the BAUER Group are as follows:
in EUR '000
Non-controlling
interests
31.12.2013 31.12.2014
Group company
Capital
share
in
%
Capital
share
in
EUR '000
Profit
share
in
EUR '000
Capital
share
in
%
Capital
share
in
EUR '000
Profit
share
in
EUR '000
BAUER Maschinen GmbH, Schrobenhausen,
GermanyBAUER Anteilspool GbR 1.00 1,855 74 1.00 2,014 122
BAUER EGYPT S.A.E, Cairo, Egypt Various natural persons 44.25 9,827 671 44.25 11,268 939
OOO BAUER Maschinen – Kurgan,
Russian Federation
Paryscheva Valentina,
Kokota Ivan35.00 1,556 37 35.00 841 -372
BAUER Casings Makina Sanayi ve Ticaret
Limited Sirketi, Ankara, TurkeyEmiroglu Makina 40.00 1,102 359 40.00 1,185 184
BAUER Nimr LLC, Muscat – Al Mina,
Sultanate of Oman *
Synergy Petroleum
International LLC, Merit
International LLC
30.00 4,201 852 - - 939
Site Group for Services and Well Drilling Ltd.
Co., Amman, JordanOweis family 16.70 -558 -4,048 16.70 -183 104
Individual non-significant subsidiaries with
non-controlling interests4,826 -449 4,492 -671
Total 22,809 -2,504 19,617 1,245
BALANCE SHEET
in EUR '000
BAUER Maschinen GmbH BAUER EGYPT S.A.E OOO BAUER Maschinen –
Kurgan
31.12.2013 31.12.2014 31.12.2013 31.12.2014 31.12.2013 31.12.2014
Non-current assets 144,774 156,332 2,776 4,339 1,961 3,089
Current assets 290,197 317,141 23,673 26,326 7,636 5,732
Non-current liabilities 118,848 198,527 144 0 3,314 4,967
Current liabilities 172,740 133,321 6,192 6,827 2,549 2,164
BALANCE SHEET
in EUR '000
BAUER Casings BAUER Nimr LLC Site Group
31.12.2013 31.12.2014 31.12.2013 31.12.2014 31.12.2013 31.12.2014
Non-current assets 598 579 38,396 0 35,238 38,003
Current assets 3,306 3,052 15,783 0 48,737 50,833
Non-current liabilities 19 4 33,460 0 0 0
Current liabilities 1,115 649 6,585 0 86,022 90,767
* up to November 19, 2014; see notes on page 104
Combined financial information is presented below for each Group company with significant non-controlling interests, and
corresponds to the amounts before intra-Group eliminations:
147NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
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INCOME STATEMENT
in EUR '000
BAUER Maschinen GmbH BAUER EGYPT S.A.E OOO BAUER Maschinen –
Kurgan
31.12.2013 31.12.2014 31.12.2013 31.12.2014 31.12.2013 31.12.2014
Sales revenues 393,011 357,925 20,084 22,758 6,663 7,567
Operating result 19,129 23,788 2,468 3,064 564 -818
Profit before tax 9,759 15,819 2,773 3,559 161 -1,316
Net profit or loss 7,426 12,165 1,696 2,122 105 -1,063
Profit share of non-controlling interests 74 122 671 939 37 372
Profit share of shareholders of BAUER AG 7,352 12,043 1,025 1,183 68 -691
Dividends paid to minority shareholders -40 -50 -69 -227 0 0
CASH FLOW STATEMENT
in EUR '000
BAUER Maschinen GmbH BAUER EGYPT S.A.E OOO BAUER Maschinen –
Kurgan
2013 2014 2013 2014 2013 2014
Cash flows from operational activities 5,614 15,001 3,007 4,636 3,354 1,968
Cash flows from investment activities -9,398 -16,205 -406 -2,929 -1,097 -1,607
Cash flows from financing activities 6,995 -1,631 144 -19 -2,396 -478
Influence of exchange rate movements on cash 0 0 -993 1,117 -61 155
Net change in liquid funds 3,211 -2,835 1,752 2,805 -200 38
INCOME STATEMENT
in EUR '000
BAUER Casings BAUER Nimr LLC Site Group
31.12.2013 31.12.2014 31.12.2013 31.12.2014 31.12.2013 31.12.2014
Sales revenues 5,250 3,687 11,745 16,616 20,750 11,224
Operating result 1,122 575 3,514 3,819 -20,314 5,027
Profit before tax 1,123 575 2,840 3,131 -23,908 503
Net profit or loss 898 460 2,840 3,131 -24,007 355
Profit share of non-controlling interests 359 184 852 939 -4,048 104
Profit share of shareholders of BAUER AG 539 276 1,988 2,192 -19,959 251
Dividends paid to minority shareholders 0 -146 -1,182 -2,364 0 0
CASH FLOW STATEMENT
in EUR '000
BAUER Casings BAUER Nimr LLC Site Group
2013 2014 2013 2014 * 2013 2014
Cash flows from operational activities 438 537 11,114 10,352 -8,890 11,519
Cash flows from investment activities -242 -74 -376 -607 8,878 -4,191
Cash flows from financing activities 33 -375 -6,373 -9,735 -2,349 -7,791
Influence of exchange rate movements on cash -145 12 49 26 443 516
Net change in liquid funds 84 100 4,414 36 -1,918 53
* up to November 19, 2014; see notes on page 104
148 NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
b) Changes to the investment quota of subsidiaries of the Group
In financial 2013, BAUER Resources GmbH/Jordan Ltd. Co. purchased 23.3 % of the shares in Site Group for Services and
Well Drilling Ltd. Co., Amman, Jordan for a purchase price of USD 1. As a result, the proportion increased to 83.30 %. In this,
proportions totaling EUR 4,647 thousand in value (proportion of the carrying value of the net assets of the Site Group) have
been transferred to BAUER Resources GmbH/Jordan Ltd. Co. The transferred proportions have been reported under revenue
reserves.
With effect from April 30, 2014, Celler Brunnenbau Holding GmbH, Celle, contributed assets with a fair value of
EUR 900 thousand to PRAKLA Bohrtechnik GmbH as part of an asset deal. The fair value was certified by an external auditor.
In return, linked to a capital increase by PRAKLA Bohrtechnik GmbH, Peine, a capital share (10 %, or EUR 114 thousand)
determined by the DCF method was allotted. The asset deal also entailed a premium of EUR 786 thousand.
The asset deal reduced the investment in PRAKLA Bohrtechnik GmbH to 90 %, while the proportion of the minority share-
holders increased by EUR 900 thousand due to the asset deal.
149NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
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ADDITIONAL INFORMATION ABOUT CAPITAL MANAGEMENT
The object of Bauer’s capital management is to safeguard a strong financial profile. In particular, capital servicing is to be as-
sured for suitable dividend payments for the shareholders as well as for the external capital providers. We also aim to provide
ourselves with adequate financial resources to sustain our growth strategy. The risk profile is actively managed and monitored.
This is focused primarily on key indicators such as the equity ratio, net debt and net profit or loss for the period.
The key indicators are presented below:
in EUR '000 Remaining term 31.12.2013 Remaining term 31.12.2014
1 to 5 years over 5 years 1 to 5 years over 5 years
Liabilities to banks 247,775 0 364,771 0
Liabilities from finance lease agreements 17,265 0 13,032 0
Other non-current liabilities 6,483 0 5,959 0
Other non-current financial liabilities 14,397 0 10,013 0
Total 285,920 0 393,775 0
in EUR '000 Fair value Interest rate margin
31.12.2013 31.12.2014 31.12.2013 31.12.2014
Liabilities to banks 256,361 378,016 0.50 - 9.12 % 0.50 - 11.2 %
Liabilities from finance lease agreements 17,265 13,032 2.38 - 7.75 % 2.38 - 7.89 %
Other non-current financial liabilities 15,396 9,904 1.59 - 9.21 % 0.85 - 12.5 %
Total 289,022 400,952 - -
As part of the capital management strategy covering the subsidiaries of the BAUER Group, it is ensured that member
companies are provided with an equity base in line with local requirements. Our aim in doing this is to provide the necessary
flexibility in terms of finance and liquidity. All externally imposed capital requirements (covenants) were complied with during
the year under review.
NON-CURRENT LIABILITIES
27. NON-CURRENT LIABILITIES
The non-current portions of the liabilities comprise the following:
in EUR '000 31.12.2013 31.12.2014
Shareholders’ equity * 419,815 418,925
Equity ratio 26.5 % 26.6 %
Net profit or loss -19,431 15,726
Net debt 672,096 645,679
Financial indebtedness 729,313 687,514
Liquid funds 57,217 41,835
Net debt / EBITDA * 5.42 3.78
EBITDA / net interest coverage * 3.28 4.49
* Previous year adjusted; there was a non-signifi cant change in value in the course of calculating the share of joint ventures according to IFRS 11 and the retrospectively
changed balance sheet disclosure (see page 106)
150 NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
The other non-current liabilities include non-current portions of liabilities from obligations in respect of part-time retirement and
service anniversary payments, trade payables, and liabilities from continuing involvements.
The other non-current financial liabilities mainly comprise the fair values of the derivatives as well as other liabilities to finance
companies and convertible bonds (see the Notes to the financial instruments in section 36).
28. PROVISIONS FOR DEFINED BENEFIT PLANS
The BAUER Group operates a number of defined benefit plans in Germany and internationally. The provisions for defined
benefit plans of the companies in Schrobenhausen recognized on the consolidated balance sheet cover most (96 %) of the
balance sheet value. Those companies are governed by the occupational pension scheme of BAUER Spezialtiefbau GmbH
constituted on July 1, 1992 as amended by the in-company agreement dated November 18, 1998. In it, the company grants
all employees who joined by March 31, 1998 and their surviving dependents a retirement pension and invalidity benefit as well
as a widow’s/widower’s pension. Employees qualify for the retirement pension on reaching the standard retirement age, or on
prior qualification for a pension from the statutory pension fund. The pension payable amounts to 0.225 % of the employee’s
pensionable earnings for each pensionable year of service, plus 0.075 % of pensionable earnings for each pensionable year
of service completed before January 1, 1999; plus, for the portion of pensionable earnings above the contribution assess-
ment limit in the statutory pension fund, 0.375 % plus 0.125 % for each pensionable year of service completed before
January 1, 1999. In the case of scheme members who are not members of the Zusatzversorgungskasse des Baugewerbes
(construction industry ancillary benefits fund): The pension payable amounts to 0.3 % of the employee’s pensionable earnings
for each pensionable year of service, plus 0.1 % of pensionable earnings for each pensionable year of service completed
before January 1, 1999; plus, for the portion of pensionable earnings above the contribution assessment limit in the statutory
pension fund, 0.3 % plus 0.1 % for each pensionable year of service completed before January 1, 1999.
The widow’s/widower’s pension amounts to 50 % of the attained entitlement. Benefits are also promised to surviving depend-
ent children in various forms.
Vesting and transitional arrangements are also in place.
The risks entailed by the pension schemes are mainly those commonly associated with defined benefit plans in terms of
potential variations in the discount interest rate and, to a lesser extent, inflation trends as well as longevity.
The calculations are based on the following actuarial assumptions:
in % 31.12.2013
Germany Indonesia Philippines Taiwan
Interest rate 3.7 8.8 4.7 2.0
Future salary increases 3.0 10.0 3.0 3.0
Future pension increases 2.0 - - -
in % 31.12.2014
Germany Indonesia Philippines Taiwan
Interest rate 2.0 8.0 7.8 2.0
Future salary increases 3.0 10.0 3.0 3.0
Future pension increases 2.0 - - -
151NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
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Defined benefit plans in Germany are calculated biometrically applying the 2005 G Graduated Life Tables compiled by Klaus
Heubeck. The discount interest rate applied to future pension payment commitments by most Group companies is derived
from the Mercer Yield Curve.
Outside of Germany, the underlying biometric probability of death is based on published national statistics and empirical data.
The amount of the provisions recognized on the balance sheet for pensions and similar obligations was determined as follows:
in EUR '000 31.12.2013 31.12.2014
Present value of commitments financed by a fund 2,688 3,801
Fair value of plan assets -504 -657
Plan deficit 2,184 3,144
Present value of commitments not financed by a fund 81.421 115,360
Total deficit of define benefit pension plans 83,605 118,504
Effect of asset ceiling - -
Recognized provision 83,605 118,504
152 NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
The defined benefit obligation and the plan assets developed as follows during the previous year:
in EUR '000 Present value
of commitment
Fair value
of plan assets Total
Effect
of asset ceiling Total
As at: January 1, 2013 82,825 -502 82,323 - 82,323
Current service costs 1,850 - 1,850 - 1,850
Interest expense/income 2,933 -21 2,912 - 2,912
Post-employment expenditure, gains
and losses from payment in lieu - - - - -
Total 87,608 -523 87,085 - 87,085
Revaluation:
Return on plan assets excluding amounts included
in the above interest - 35 35 - 35
Actuarial gains and losses arising from adjustments
to demographic assumptions - - - - -
Actuarial gains and losses arising from adjustments
to financial assumptions -1,410 - -1,410 - -1,410
Empirical value-based adjustments 405 - 405 - 405
Changes in asset ceiling, excluding amounts
included in the interest - - - - -
Total -1,005 35 -970 - -970
Exchange rate movements -272 61 -211 - -211
Contributions:
Employer - -88 -88 - -88
Beneficiary employee - - - - -
Payments from the plan:
Ongoing payments - 11 11 - 11
Benefits (not fund-financed) -2,222 - -2,222 - -2,222
Other effects - - - - -
As at: December 31, 2013 84,109 -504 83,605 - 83,605
153NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
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The defined benefit obligation and the plan assets developed as follows during the financial year:
in EUR '000 Present value
of commitment
Fair value
of plan assets Total
Effect
of asset ceiling Total
As at: January 1, 2014 84,109 -504 83,605 - 83,605
Current service costs 1,817 - 1,817 - 1,817
Interest expense/income 3,080 -32 3,048 - 3,048
Post-employment expenditure, gains
and losses from payment in lieu - - - - -
Total 89,006 -536 88,470 - 88,470
Revaluation:
Return on plan assets excluding amounts included
in the above interest - 18 18 - 18
Actuarial gains and losses arising from adjustments
to demographic assumptions - - - - -
Actuarial gains and losses arising from adjustments
to financial assumptions 32,274 - 32,274 - 32,274
Empirical value-based adjustments -6 - -6 - -6
Changes in asset ceiling, excluding amounts
included in the interest - - - - -
Total 32,268 18 32,286 - 32,286
Exchange rate movements 140 -52 88 - 88
Contributions:
Employer - -89 -89 - -89
Beneficiary employee - - - - -
Payments from the plan:
Ongoing payments - 2 2 - 2
Benefits (not fund-financed) -2,253 - -2,253 - -2,253
Other effects - - - - -
As at: December 31, 2014 119,161 -657 118,504 - 118,504
154 NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
The fair value of the plan assets can be allocated to the following categories:
No market price quotations exist for the qualifying insurance contracts.
The key actuarial assumptions applied in determining the defined benefit plan commitment are the discount interest rate,
expected salary increases and expected pension increases.
The sensitivity of the overall pension commitment to variations in the weighted primary assumptions is:
in EUR '000 31.12.2013 31.12.2014
Qualifying insurance contracts 223 235
Money market fund and pension fund 252 390
Cash and cash equivalents 29 32
Total 504 657
The above sensitivity analysis is based on a variation in one assumption while all other assumptions remain constant. It is
unlikely that this will occur in reality, and variations in some assumptions may correlate. In calculating the sensitivity of the
defined benefit plan obligation to variations in actuarial assumptions, the same method was applied as that used to measure
the provisions for defined benefit plans on the balance sheet. The present value of the defined benefit plan obligations was
calculated by the projected unit credit method as at the end of the reporting period.
The methods and categories of assumption applied in preparing the sensitivity analysis have not changed relative to the prior
period except for the probability of death.
in EUR '000 Effect on obligation
Variation
in assumption
Increase
in assumption
Decrease
in assumption
Discount interest rate +/- 0.5 % 107,354 131,121
Future salary increases +/- 0.5 % 122,313 114,726
Future pension increase +/- 0.5 % 125,835 110,971
Increase
in assumption
by 1 year
Decrease
in assumption
by 1 year
Probability of death 124,321 114,007
155NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
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The defined benefit plan commitments and plan assets by country are as follows:
in EUR '000 31.12.2013
Germany Indonesia Philippines Taiwan Total
Present value of commitments 83,062 708 175 164 84,109
Fair value of plan assets -223 -252 0 -29 -504
Total 82,839 456 175 135 83,605
Effect of asset ceiling - - - - -
Total 82,839 456 175 135 83,605
in EUR '000 31.12.2014
Germany Indonesia Philippines Taiwan Total
Present value of commitments 117,773 1,027 223 138 119,161
Fair value of plan assets -235 -390 0 -32 -657
Total 117,538 637 223 106 118,504
Effect of asset ceiling - - - - -
Total 117,538 637 223 106 118,504
in EUR '000 Under
1 year
1 to 5 years 6 to 10 years 31.12.2014
Total
Pension payments 2,314 11,736 26,181 40,231
in EUR '000 31.12.2013 31.12.2014
Active scheme members 49,949 75,169
Deferred beneficiaries 4,630 6,522
Pensioners 29,530 37,470
Total 84,109 119,161
The present value of the defined benefit plan commitment is distributed as follows among the plan members:
The weighted average term of the defined benefit plans is 20.2 years.
For the 2015 financial year, pension payments totaling EUR 2,314 thousand (previous year: 2,242 thousand) are expected.
Of that total, EUR 2,314 thousand (previous year: 2,242 thousand) is projected to be contributed by the employer. Contribu-
tions to the external plan assets totaling EUR 89 thousand (previous year: 84 thousand) are expected for 2015.
The following table provides an overview of the due dates of the undiscounted pension payments:
156 NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
CURRENT LIABILITIES
29. CURRENT LIABILITIES
The “Trade liabilities” balance sheet item includes long-term liabilities totaling EUR 979 thousand (previous year: 949 thousand).
The other current liabilities mainly comprise obligations in respect of outstanding invoices, flexitime and holiday credits,
employer’s liability insurance associations, the compensation levy for the shortfall in handicapped employees, performance
bonuses as well as other tax liabilities and liabilities in respect of social security.
The other current financial liabilities mainly comprise obligations to leasing and finance companies. The fair values virtually
match the carrying amounts. The interest rate margin on current liabilities to banks is 0.75 to 11.20 % (previous year:
1.10 to 9.60 %).
30. OTHER PROVISIONS
The other provisions have developed as follows in the financial year:
in EUR '000 31.12.2013 31.12.2014
Liabilities to banks 427,589 266,533
Liabilities from finance lease agreements 10,185 7,453
Advances received for orders 9,801 19,579
Liabilities from construction contracts (PoC) 32,839 48,471
Trade payables 194,471 168,974
Liabilities to enterprises in which the company has participating interests 219 205
Other current liabilities 69,873 68,632
Other current financial liabilities 12,102 25,712
Total 757,079 605,559
in EUR '000 31.12.2013 31.12.2014
As at 01.01. 14,893 14,809
Change in scope of consolidation 0 0
Currency adjustment -33 153
Allocation 6,461 6,633
Reversal 3,454 3,432
Consumption 3,058 2,283
As at 31.12. 14,809 15,880
The other provisions comprise the following:
in EUR '000 31.12.2013 31.12.2014
Risk from contract processing and warranties 14,605 14,670
Litigation 204 1,210
Total 14,809 15,880
157NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
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in EUR '000 31.12.2013 31.12.2014
Liabilities from guarantees 4,386 5,112
in EUR '000 Remaining term
under 1 year 1 to 5 years over 5 years
31.12.2013 31.12.2014 31.12.2013 31.12.2014 31.12.2013 31.12.2014
Minimum lease payments from operating leases 15,139 9,663 15,688 22,048 89 77
Other financial obligations 8,616 6,715 4,893 3,677 5,724 6,749
The provisions for risk from contract processing and warranties include all risks arising from carrying out specialist founda-
tion engineering work and from the sale of machinery, equipment and tools for specialist foundation engineering, with the
associated services. These primarily relate to warranty obligations and to other uncertain commitments. The risk from contract
processing and warranties is determined specific to project/construction site.
The majority of the provisions for risks arising from contract processing and warranties and provisions for litigation are
predicted to be used up during 2015. Provisions for litigation amounting to EUR 427 thousand (previous year: 0) is predicted
to be used up during 2017.
31. CONTINGENT LIABILITIES
Contingent liabilities are liabilities not yet recognized in the financial statements, which are recognized in the amount of the
maximum possible exposure on the balance sheet date.
In the construction industry, it is common and essential practice to issue various guarantees to secure obligations arising
from construction contracts. These guarantees are usually issued by banks or credit insurance companies (guarantors), and
essentially guarantee quotations, contract performance, prepayments and warranty commitments. In the event of a guarantee
being given, the guarantors have a right of recourse against the Group. A risk of a guarantee being implemented exists only
when the underlying contractual obligations are not duly met.
The contingent liabilities were mainly in relation to the securing of contract performance, to warranty obligations and to
advance payments. Liabilities from guarantees exist to third parties. In addition, we are subject to joint and several liability in
respect of all joint ventures in which we participate.
For reasons of practicality, no information has been provided about the due dates of outflows from contingent liabilities.
32. OTHER FINANCIAL OBLIGATIONS
The operating leases relate mainly to mutual agreements about factory and office equipment, as well as to technical equip-
ment and machinery which were added in the financial year and are classified as operating leases. The BAUER Group is
committed to rental agreements of unlimited term totaling monthly EUR 685 thousand (previous year: 1,686 thousand).
The other financial obligations mainly include limited-term property rentals and leases.
33. DISCONTINUED OPERATIONS
There no plans to discontinue business operations under the terms of IFRS 5.
34. EVENTS AFTER THE BALANCE SHEET DATE
No events subject to mandatory reporting in accordance with IAS 10 occurred after December 31, 2014.
158 NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
35. CASH FLOW STATEMENT
The funds shown in the cash flow statement comprise only the cash and cash equivalents stated on the balance sheet.
The cash flow statement details payment flows, broken down by inflow and outflow of funds from operating activities and
from investing and financing activities.
The cash flow from operating activities is derived indirectly from the pre-tax profit. The pre-tax profit is adjusted by non-cash
transactions. The cash flow from operating activities is produced taking account of the changes in working capital.
Investing activities include additions to property, plant and equipment and to financial assets and intangible assets, as well
as income from the sale of assets. Financing activities include outflows of cash and cash equivalents arising from dividend
payments as well as the change in other financial indebtedness.
The changes in balance sheet items applied for the preparation of the cash flow statement are not directly derivable from the
balance sheet, as the effects of currency translation and changes in the scope of consolidation, as well as the allocation and
elimination of value adjustments on trade receivables, do not affect payments and are stripped out.
36. FINANCIAL INSTRUMENTS
In its business operations and financing activities the BAUER Group is subject in particular to fluctuations in exchange rates
and interest rates. It is the company’s policy to exclude, or at least limit, these risks by entering into hedge transactions.
All hedging measures are managed centrally by BAUER AG.
Application of the segregation-of-duties approach ensures that there is an adequate split between the trading and execution
functions. The segregation-of-duties approach is implemented by spreading functions across the Management Board
(financial reporting) and the corporate departments (operational handling). All derivatives transactions are entered into only
with banks of the highest credit rating.
MARKET RISKS
Foreign exchange rate risks
Foreign exchange rate risks under the terms of IFRS 7 are created by financial instruments which are denominated in a
currency different to the functional currency and are of a monetary nature. Exchange rate-related differences when converting
financial statements into the Group currency are ignored. All non-functional currencies in which the BAUER Group enters into
financial instruments are classed, as a matter of principle, as relevant risk variables.
The existing foreign exchange forward contracts, foreign exchange options and cross-currency swaps safeguard our currency
hedging strategy. Within the BAUER Group, the primary monetary financial instruments are either denominated directly in
functional currency or are largely transferred into the functional currency by means of derivatives. In view of the usually short-
term maturity of the instruments too, possible changes in exchange rates have only very minor effects on earnings or equity.
For the purposes of sensitivity analysis, foreign exchange rate risks arising from monetary financial instruments which were not
concluded in the functional currencies of the individual member companies of the BAUER Group are included in the analysis.
OTHER DISCLOSURES
159NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
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Quantification of foreign exchange risk in case of exchange rate shifts of +/- 10 %:
In EUR '000 As at 31.12.2013 USD RUB CAD
Overall effect of +10 % on OCI 5,572 255 0
Overall effect of −10 % on OCI -6,838 -309 0
Overall effect of +10 % on income statement 2,713 49 -367
Overall effect of −10 % on income statement -2,654 -58 449
In EUR '000 As at 31.12.2014 USD RUB CAD
Overall effect of +10 % on OCI 10,653 137 0
Overall effect of −10 % on OCI -13,021 -167 0
Overall effect of +10 % on income statement 8,055 64 -99
Overall effect of −10 % on income statement -6,181 -78 122
in EUR '000 31.12.2013 31.12.2014
Overall effect of +100 base points on OCI 2,076 732
Overall effect of −100 base points on OCI -1,806 -393
Overall effect of +100 base points on income statement 2,494 4,080
Overall effect of −100 base points on income statement -2,298 -3,474
In 2014, the sensitivity effects mainly related to the US Dollar, Russian Ruble and Canadian Dollar. No concentrations of risk
exist.
Interest rate risks
The existing interest rate swaps serve to safeguard our financing and interest rate hedging strategy. Agreements exist in
respect of swaps from variable to fixed interest rates in order to exclude the risk of fluctuation in market interest rates.
Changes in market interest rates affect the interest results of variable-rate primary financial instruments of which the interest
payments are not hedged by derivatives, and consequently are included in the calculation of earnings-related sensitivity.
Changes in market interest rates of interest rate derivatives (interest rate swaps, interest rate/currency swaps) which are not
embedded in a hedging relationship pursuant to IAS 39 have effects on financial income and expenses (net valuation based
on adjustment of financial assets to applicable fair value) and so are included in the calculation of earnings-related sensitivity.
The effects of changes in market interest rates of interest rate derivatives to which hedge accounting is applied are recognized
in the OCI.
Quantification of risk of change in interest rate in case of interest rate shifts of +/- 100 base points:
A drop in the variable interest rate below 0 % was ruled out when calculating the interest sensitivity.
Raw material risks
Raw material risks to which the BAUER Group is exposed in respect of availability and potential fluctuations in price on the
market are excluded, or limited, by means of supply promises and fixed pricing agreements entered into with suppliers prior to
execution of contracts. The raw material risk relates mainly to steel.
160 NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
Liquidity risks
The liquidity risk is managed by means of business planning, which ensures that the necessary funds to finance operating
activities and current and future capital investments are made available at the appropriate time, in the required currency, and at
optimum cost, in all Group companies. In liquidity risk management, the liquidity requirement arising from operating activities,
from investment activities and from other
financial measures is determined in the form of a banking report and a liquidity plan.
Liquidity is guaranteed at all times by means of a liquidity forecast focused on a fixed planning horizon and by unused lines of
credit and guarantee facilities.
The following tables present the contractually agreed and discounted interest payments and capital repayments in respect of
primary financial liabilities and derivative financial instruments of the BAUER Group:
in EUR '000 Carrying amount
31.12.2013
Cash flows
2014
Cash flows
2015 to 2018
Cash flows
2019 ff.
Liabilities to banks 675,364 443,095 239,939 30,423
Liabilities from finance lease agreements 27,450 11,070 18,324 0
Other liabilities 76,356 69,873 6,483 0
Other financial liabilities (without derivatives) 18,968 11,088 6,416 3,537
Liabilities from construction contracts (PoC) 32,839 32,839 0 0
Trade payables 194,471 193,522 949 0
Liabilities to enterprises in which the company has participating interests 219 219 0 0
in EUR '000 Carrying amount
31.12.2014
Cash flows
2015
Cash flows
2016 to 2019
Cash flows
2020 ff.
Liabilities to banks 631,304 276,146 393,705 10,816
Liabilities from finance lease agreements 20,485 8,201 13,712 20
Other liabilities 74,591 68,632 2,898 3,062
Other financial liabilities (without derivatives) 17,623 11,981 5,997 0
Liabilities from construction contracts (PoC) 48,471 48,471 0 0
Trade payables 168,974 167,995 979 0
Liabilities to enterprises in which the company has participating interests 205 205 0 0
There were no instances of defaulting on interest payments or capital repayments in the period under review. Furthermore,
all externally imposed capital requirements (covenants) for the loan agreements were met, see also page 148 “Additional
information about capital management”. No concentrations of risk exist. It is not to be expected that liabilities arising from
sureties (contingent liabilities) will result in significant actual liabilities, and thus in significant cash flows, for which no provisions
have yet been made.
161NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
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The due dates of derivative financial instruments based on outflow and inflow of cash and cash equivalents are as follows:
In EUR '000 As at 31.12.2013 Carrying amount 2014 2015 to 2018 from 2019
Liabilities from foreign exchange forward contracts 491 -382 -150 0
Outflow of cash and cash equivalents * - -41,399 -9.159 0
Inflow of cash and cash equivalents * - 41,017 9,009 0
Liabilities from interest rate swaps 6,846 -3,132 -4,513 -190
Outflow of cash and cash equivalents - -3,132 -4,513 -190
Inflow of cash and cash equivalents - 0 0 0
Liabilities from cross currency swaps 194 -122 -95 0
Outflow of cash and cash equivalents - -239 -186 0
Inflow of cash and cash equivalents - 117 91 0
In EUR '000 As at 31.12.2014 Carrying amount 2015 2016 to 2019 from 2020
Liabilities from foreign exchange forward contracts 12,926 -12,804 -279 0
Outflow of cash and cash equivalents - -228,410 -8,220 0
Inflow of cash and cash equivalents - 215,606 7,941 0
Liabilities from interest rate swaps 5,176 -2,598 -2,341 -29
Outflow of cash and cash equivalents - -2,598 -2,341 -29
Inflow of cash and cash equivalents - 0 0 0
Liabilities from cross currency swaps 0 0 0 0
Outflow of cash and cash equivalents - 0 0 0
Inflow of cash and cash equivalents - 0 0 0
To calculate the cash inflows from interest rate swaps the conditions as per December 31, 2014 were applied.
Risk of default
The risk of default is managed at Group level. Default risks arise from cash and cash equivalents, derivative financial instru-
ments and deposits at banks and financial service companies. Only banks and financial services companies with high credit
ratings are selected as partners. No credit limit was exceeded in the reporting period. The management expects no defaults
on the part of these business partners.
The risk of default on financial assets exists in terms of the risk of failure of a contract party and thus to a maximum in the
amount of the carrying amount of the exposure to the said party. A presentation of the carrying amounts and the resultant
maximum risk of default per category is given in the table starting on page 166. The risk arising from primary financial instru-
ments is countered by means of value adjustments for bad debt, and in Germany also by means of credit insurance cover.
As derivative financial instruments are entered into only with banks with high credit ratings, and the risk management system
sets limits for each party, the actual risk of default is negligible. No concentrations of risk exist.
* Previous year’s fi gure adapted
162 NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
Other disclosures relating to financial instruments
On October 2, 2001, BAUER EGYPT S.A.E. issued an 11 % convertible bond with a face value of EGP 10,000,000. The term
of the convertible bond was originally 6 years, and was again extended for a further 3 years in 2010. On expiry of the
convertible bond, the holder did not exercise the option to exchange it for 200,000 shares at EGP 50 each. Repayment of
the convertible bond was agreed in three installments. The first two installments were paid in 2013, in the amount of EGP
3,000,000, and in 2014, in the amount of EGP 4,000,000; the remaining installment of EGP 3,000,000 will be paid in 2015.
The applicable fair value of the liability component and of the equity conversion component was set as per the issue date of
the convertible bond. The applicable fair value of the debt component recognized in the non-current financial liabilities as at
December 31, 2014 amounts to EUR 0 (previous year: 144 thousand).
The applicable fair value of the equity component recognized in the non-controlling interests as at December 31, 2014
EUR 116 thousand (previous year: 324 thousand).
The Group has taken up loans with variable interest rates and hedged against its interest rate-related cash flow risk by means
of swaps. Such interest rate swaps have the commercial effect of converting variable-interest loans into fixed-interest loans.
In these interest rate swaps, the Group agrees with other parties to swap the difference between the fixed and variable
interest rates derived from the agreed nominal amounts at regular intervals.
The nominal volumes and market values of the derivative financial instruments are as follows:
Net result by valuation category
The following table sets out the net profits and losses (before tax) on financial instruments stated in the income statement,
broken down by valuation category as per IAS 39:
in EUR '000 31.12.2013 31.12.2014
Loans and receivables 8,471 982
Financial liabilities measured at amortized cost -38,691 -39,075
Available-for-sale financial assets -2,586 -705
Held for Trading 2,465 -7,875
Total -30,341 -46,673
in EUR '000 Nominal volume Fair value
31.12.2013 31.12.2014 31.12.2013 31.12.2014
Positive Negative Positive Negative
Interest rate swaps
of which in hedge accounting 125,464 64,571 0 −2,765 0 −1,354
of which not in hedge accounting 45,550 67,350 0 −4,081 0 −3,822
Foreign exchange forward contracts
of which in hedge accounting 74,931 119,546 1,980 −133 988 −7,640
of which not in hedge accounting 84,712 145,022 1,211 −358 426 −5,286
Foreign exchange forward options
of which in hedge accounting 0 0 0 0 0 0
of which not in hedge accounting 6,556 0 115 0 0 0
Cross-currency swaps
of which in hedge accounting 1,605 1,419 0 −42 69 0
of which not in hedge accounting 3,314 2,578 0 −152 60 0
163NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
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The net result of the “Loans and Receivables” category includes results from the creation and reversal of value adjustments in
respect of trade receivables as well as interest income. Furthermore, the valuation category of “Loans and Receivables” was
extended in 2014 to include the results from bank fees amounting to EUR −3,284 thousand (previous year: −2,827 thousand)
and value reductions on irrecoverable receivables in the amount of EUR −411 thousand (previous year: −72 thousand).
The net result of the “Financial Liabilities Measured at Amortized Cost” category includes the result from interest expenditure
to third parties, for current and non-current loans as well as guaranty commissions.
The net result of the “Available-for-Sale Financial Assets” category includes impairment of financial assets. Equity shares in
companies are valued at cost and are not included.
The net result of the “Financial Assets and Liabilities Held for Trading” category includes results from foreign exchange forward
contracts and options, as well as results from changes to the fair values of interest rate swaps.
Carrying amounts and fair values
The fair value of a financial instrument is the consideration for which an asset might be exchanged, or a debt paid, between
informed, willing and mutually independent parties. Where financial instruments are quoted on an active market – such as
in particular shares held and bonds issued – the price quoted on the market in question is the fair value. If no active market
exists, the fair value is determined by financial valuation methods. For securities (AfS) the BAUER Group has at its disposal the
prices quoted on an active market.
The fair values of foreign exchange forward contracts and cross-currency swaps are measured separately at their respective
forward prices and discounted to the reference date based on the corresponding interest rate curve. The market prices of
foreign exchange forward options are determined by recognized option models.
The fair values of the interest rate swaps correspond to the respective market value as determined by appropriate financial
valuation methods, such as by discounting expected future cash flows.
For cash and cash equivalents, current trade receivables and other current assets, current trade payables and other current
liabilities, owing to their short remaining terms the carrying amount should be adopted as a realistic estimate of the fair value.
The fair values of non-current financial assets and of other non-current financial liabilities correspond to the cash values of the
payment flows linked to the assets, taking into account the applicable interest rate parameters, which reflect changes in the
terms and expectations of the market and of the respective parties.
The fair values of financial instruments are determined on the basis of one of the methods set out on the three following levels:
• Level 1: Quoted prices (adopted unchanged) on active markets for identical assets and liabilities
• Level 2: Directly or indirectly observable input data for the asset or liability other than quoted prices as per level 1
• Level 3: Applied input data which does not originate from observable market data for measurement of the asset and liability
(non-observable input data)
There were no transfers between the levels during the year. If circumstances arise necessitating a reclassification, it is
undertaken at the end of the reporting period.
164 NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
Other disclosures relating to hedging transactions
In the 2014 financial year, changes in shareholders’ equity from cash flow hedges in an amount of EUR 1,184 thousand (previous
year: 1,767 thousand) before tax and EUR 1,235 thousand (previous year: 1,129 thousand) after tax were recognized in the
shareholders’ equity as a hedge reserve with no effect on profit and loss. An amount of EUR 6,497 thousand (previous
year: 310) was recognized as affecting expenditure from the hedge reserve created with no effect on net income in the
shareholders’ equity. Fair value changes in the shareholders’ equity (reducing equity) amounting to EUR -5,313 thousand were
reported from the derivative financial instruments held as at December 31, 2014. Moreover, the changes in deferred taxes in
the amount of EUR 51 thousand were reported in the shareholders’ equity with no effect on net income. Future transactions
in foreign currencies secured by hedging and hedged changes in market interest rates are expected to be realized by 2020
at the latest. Gains and losses on future contracts in foreign currency and interest rates at December 31, 2014 included in
the hedge reserve in the OCI are recognized in the income statement in the period in which the hedged planned transaction
impacts on the income statement.
The prospective effectiveness is measured according to the Critical Term Match method and the retrospective effectiveness
according to the Dollar Offset method based on the Hypothetical Derivatives method.
Offsetting Financial Assets and Financial Liabilities
a) Financial assets
The following financial assets are subject to offsetting, enforceable master-netting arrangements or similar arrangements.
in EUR '000 Related amounts not offset
on the balance sheet
Gross amount
of recognized
financial liabilities
Gross amount
of recognized
financial assets
offset on the
balance sheet
Net amount of
financial liabilities
recognized on the
financial
balance sheet
Financial
instruments
Cash
securities paid Net amount
Status: December 31, 2013
Derivative financial assets 3,306 0 3,306 -859 - 2,447
Cash and cash equivalents 57,217 0 57,217 -3,400 - 53,817
Total 60,523 0 60,523 -4,259 - 56,264
Status: December 31, 2014
Derivative financial assets 1,543 0 1,543 -1,484 - 59
Cash and cash equivalents 41,835 0 41,835 -4,402 - 37,433
Total 43,378 0 43,378 -5,886 - 37,492
165NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
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b) Financial liabilities
The following financial liabilities are subject to offsetting, enforceable master-netting arrangements or similar arrangements.
in EUR '000 Related amounts not offset
on the balance sheet
Gross amount
of recognized
financial liabilities
Gross amount
of recognized
financial assets
offset on the
balance sheet
Net amount of
financial liabilities
recognized on the
financial
balance sheet
Financial
instruments
Cash
securities paid Net amount
As at: December 31, 2013
Derivative financial liabilities 7,531 0 7,531 -859 - 6,672
Current-account overdrafts 255,605 0 255,605 -3,400 - 252,205
Total 263,136 0 263,136 -4,259 - 258,877
As at: December 31, 2014
Derivative financial liabilities 18,102 0 18,102 -1,484 - 16,618
Current-account overdrafts 188,709 0 188,709 -4,402 - 184,307
Total 206,811 0 206,811 -5,886 - 200,925
The “Financial instruments” column lists the amounts which are subject to master-netting arrangements but are not netted
on the balance sheet because the preconditions for offsetting are not met. The “Cash securities received” column lists the
amounts of cash and financial instrument securities received relative to the sum total of assets and liabilities which do not
meet the criteria for netting on the balance sheet.
166 NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
Within the Group, financial instruments are classified in the same way as the respective balance sheet items. No fair value is
stated for current financial instruments or financial instruments reported at acquisition cost in the balance sheet, according to
IFRS 7.29. The following table presents a progression of the classes to the categories of IAS 39 and the respective market
values:
in EUR '000
Valuation standard Carrying amount Loans and receivables/
other financial liabilities
31.12.2013 31.12.2014 31.12.2013 31.12.2014
NON-CURRENT ASSETS
Participations at cost 3,613 3,613 0 0
Receivables from concession arrangements at amortized cost 36,762 0 36,762 0
Other non-current financial assets 5,420 28,420
at fair value 137 1,402 0 0
at amortized cost 1,325 22,671 1,325 22,671
at cost 3,958 4,347 0 0
CURRENT ASSETS
Receivables from construction contracts at amortized cost 143,234 132,159 143,234 132,159
Trade receivables at amortized cost 320,301 311,417 320,301 311,417
Receivables from enterprises
in which the company has participating interests at amortized cost 444 67 444 67
Other current financial assets 19,551 20,100
at fair value 3,169 141 0 0
at amortized cost 16,382 19,959 16,382 19,959
Cash and cash equivalents 57,217 41,835 57,217 41,835
Total financial assets 586,542 537,611 575,665 528,108
167NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
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Balance sheet valuation as per IAS 39 Not assigned to any IAS 39 category
Valuation
level
according to
IFRS 13
Available for sale Financial assets and
liabilities held for trading
Derivatives in
hedge accounting
Balance sheet valuation
as per IAS 17
Fair Value as per IFRS 7
and IFRS 13
31.12.2013 31.12.2014 31.12.2013 31.12.2014 31.12.2013 31.12.2014 31.12.2013 31.12.2014 31.12.2013 31.12.2014
3,613 3,613 0 0 0 0 0 0 n/a n/a
0 0 0 0 0 0 0 0 40,449 0 2
0 0 127 349 10 1,053 0 0 137 1,402 2
0 0 0 0 0 0 0 0 1,214 22,224 2
3,958 4,347 0 0 0 0 0 0 n/a n/a n/a
0 0 0 0 0 0 0 0 n/a n/a n/a
0 0 0 0 0 0 0 0 319,454 310,972 2
0 0 0 0 0 0 0 0 n/a n/a n/a
0 0 1,199 136 1,970 5 0 0 3,169 141 2
0 0 0 0 0 0 0 0 n/a n/a n/a
0 0 0 0 0 0 0 0 n/a n/a n/a
7,571 7,960 1,326 485 1,980 1,058 0 0 364,423 334,739
168 NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
in EUR '000
Valuation standard Carrying amount Loans and receivables/
other financial liabilities
31.12.2013 31.12.2014 31.12.2013 31.12.2014
NON-CURRENT LIABILITIES
Liabilities to banks at amortized cost 247,775 364,771 247,775 364,771
Liabilities from finance lease agreements at fair value 17,265 13,032 0 0
Other non-current financial liabilities 14,397 10,013
at fair value 6,516 4,371 0 0
at amortized cost 7,881 5,642 7,881 5,642
CURRENT LIABILITIES
Liabilities to banks at amortized cost 427,589 266,533 427,589 266,533
Liabilities from finance lease agreements at fair value 10,185 7,453 0 0
Liabilities from construction contracts at amortized cost 32,839 48,471 32,839 48,471
Trade payables at amortized cost 194,471 168,974 194,471 168,974
Liabilities to enterprises
in which the company has participating interests at amortized cost 219 205 219 205
Other current financial liabilities 12,102 25,712
at fair value 1,015 13,731 0 0
at amortized cost 11,087 11,981 11,087 11,981
Total financial liabilities 956,842 905,164 921,861 866,577
169NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
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Balance sheet valuation as per IAS 39 Not allocated to any IAS 39 category
Valuation
level
according to
IFRS 13
Available for Sale Financial assets and
liabilities held for trading
Derivatives in
hedge accounting
Balance sheet valuation
as per IAS 17
Fair Value as per IFRS 7
and IFRS 13
31.12.2013 31.12.2014 31.12.2013 31.12.2014 31.12.2013 31.12.2014 31.12.2013 31.12.2014 31.12.2013 31.12.2014
0 0 0 0 0 0 0 0 256,361 378,016 2
0 0 0 0 0 0 17,265 13,032 17,265 13,032 n/a
0 0 4,270 3,648 2,246 723 0 0 6,516 4,371 2
0 0 0 0 0 0 0 0 8,880 5,533 2
0 0 0 0 0 0 0 0 n/a n/a n/a
0 0 0 0 0 0 10,185 7,453 10,185 7,453 n/a
0 0 0 0 0 0 0 0 n/a n/a n/a
0 0 0 0 0 0 0 0 n/a n/a n/a
0 0 0 0 0 0 0 0 n/a n/a n/a
0 0 321 5,460 694 8,271 0 0 1,015 13,731 2
0 0 0 0 0 0 0 0 n/a n/a n/a
0 0 4,591 9,108 2,940 8,994 27,450 20,485 300,222 422,136
170 NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
37. EXECUTIVE BODIES
In the year under review the Supervisory Board comprised the following members:
Chairman
• Dr. Klaus Reinhardt, General (retd.), Starnberg
Deputy Chairman
• Robert Feiger, Neusäss
Chairman of the Federal Executive Committee of the IG Bauen-Agrar-Umwelt trade union, Frankfurt am Main
Supervisory Board, HeidelbergCement AG, Heidelberg, Member (up to May 7, 2014)
Supervisory Board, Zusatzversorgungskasse des Baugewerbes AG, Wiesbaden, Member
Supervisory Board, Zusatzversorgungskasse Gerüstbaugewerbe VVaG, Wiesbaden, Chairman
Employer representatives
• Dr.-Ing. Johannes Bauer, Schrobenhausen
Construction engineer with BAUER Designware GmbH, Schrobenhausen
• Dipl.-Ing. (FH) Rainer Schuster
Retired construction engineer
• Dipl.-Ing. (FH) Elisabeth Teschemacher, née Bauer, Schrobenhausen
1st Chair of Caritasverband Neuburg-Schrobenhausen e.V.
• Gerardus N. G. Wirken, Breda, Netherlands
Freelance consultant on strategy, controlling and accounting
Supervisory Board, Vendor Beheer B.V., Tilburg/Netherlands, Chairman
Supervisory Board, Winters Bouw- en Ontwikkeling B.V., Breda/Netherlands, Chairman
Supervisory Board, Rabobank Breda, Breda/Netherlands, Chairman (to July 1, 2014)
Supervisory Board, Egeria Investments B.V., Amsterdam/Netherlands, Chairman (to July 1, 2014)
Member of the Board of Rabobank Pensioenfonds, Utrecht/Netherlands (to 1 July 1, 2014)
• Prof. Dr.-Ing. E.h. Manfred Nußbaumer M.Sc, Munich
Retired construction engineer
Supervisory Board, Leonhardt, Andrä und Partner Beratende Ingenieure VBI AG, Stuttgart, Member
Employee representatives
• Regina Andel, Ellrich
Chair of the Works Council, SCHACHTBAU NORDHAUSEN GmbH, Nordhausen
• Dipl.-Volkswirt Norbert Ewald, Bad Vilbel
Member of the Management Board, Zusatzversorgungskasse des Steinmetz- und Steinbildhauerhandwerks VVaG,
Wiesbaden
• Reinhard Irrenhauser, Schrobenhausen
Chairman of the Works Council, BAUER Maschinen GmbH, Schrobenhausen
• Dipl.-Kfm. (FH) Stefan Reindl, Schrobenhausen
Human Resources Director of BAUER Aktiengesellschaft, Schrobenhausen
Advisory Board, BAUER Training Center GmbH, Schrobenhausen, Chairman
• Dipl.-Ing. Gerold Schwab, Kernen
Construction Engineer in the Technical Division of BAUER Spezialtiefbau GmbH, Schrobenhausen
171NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
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Management Board
• Prof. Dr.-Ing. E.h. Dipl.-Kfm. Thomas Bauer, Schrobenhausen, Chairman, Functions: Participations in Subsidiaries,
Accounting, Planning, Advertising, Controlling
Supervisory Board, BAUER Spezialtiefbau GmbH, Schrobenhausen, Chairman
Supervisory Board, BAUER Maschinen GmbH, Schrobenhausen, Chairman
Supervisory Board, BAUER Resources GmbH, Schrobenhausen, Deputy Chairman
Supervisory Board, SCHACHTBAU NORDHAUSEN GmbH, Nordhausen, Chairman
Supervisory Board BAUER EGYPT S.A.E., Cairo, Chairman
• Dipl.-Betriebswirt (FH) Hartmut Beutler, Schrobenhausen, Functions: Finance, Legal Affairs and Insurance, Investor Relations,
Facility management
Supervisory Board, BAUER Resources GmbH, Schrobenhausen, Member
Supervisory Board, Schrobenhausener Bank e.G., Schrobenhausen, Chairman
• Dipl.-Ing. Heinz Kaltenecker, Schrobenhausen, Functions: Participations in Subsidiaries, Information Technology,
Human Resources, Quality
Management, Risk Management, Health Safety Environment
Supervisory Board, BAUER Spezialtiefbau GmbH, Schrobenhausen, Deputy Chairman
Supervisory Board, BAUER Maschinen GmbH, Schrobenhausen, Deputy Chairman
Supervisory Board, BAUER Resources GmbH, Schrobenhausen, Chairman
Supervisory Board, SCHACHTBAU NORDHAUSEN GmbH, Nordhausen, Deputy Chairman
The total remuneration paid to members of the Management Board in the year under review, excluding allocations to provi-
sions for defined benefit plans, was EUR 1,150 thousand (previous year: EUR 1,361 thousand). Of that total, EUR 1,090 thou-
sand (previous year: 1,056 thousand) was not performance-related and EUR 60 thousand (previous year: 305 thousand)
was performance-related. The total remuneration includes benefits in kind arising from the private use of a company car and
reimbursement of travel expenses for each member of the Management Board, as well as pro rata group accident insurance
premiums and employer’s liability insurance association contributions. The company pension scheme for Management Board
members incurred pension service costs totaling EUR 159 thousand (previous year: 118 thousand). The pensionable earnings
serving as the basis for calculating pension levels are significantly lower than the basic salary in all contracts. Calculated in
accordance with IAS 19, the defined benefit obligation entailed by all pension commitments to members of the Management
Board at the year-end was EUR 5,531 thousand (previous year: EUR 3,868 thousand). Former members of the management
bodies of the parent company received total remuneration of EUR 0 thousand (previous year: 0) in return for duties performed
on behalf of the parent company.
172 NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
The remuneration paid to the Supervisory Board for the 2014 financial year totaled EUR 254 thousand (previous year:
254 thousand) and was distributed as follows:
38. RELATED PARTY DISCLOSURES
Related parties under the terms of IAS 24 are parties that the reporting enterprise has the ability to control or exercise signifi-
cant influence over, or parties that have the ability to control or exercise significant influence over the reporting enterprise.
Transactions with related parties are defined as the transfer of resources, services or obligations between the reporting entity
and a related party, regardless of whether an invoice is issued in respect of the transaction or not.
Members of the Management Board of BAUER AG are members of Supervisory Boards and Management Boards of other
companies with which BAUER AG maintains relations in the course of its ordinary business operations. Supervisory Board
received pensions totaling EUR 55 thousand (previous year: 54 thousand) in respect of former employment within the BAUER
Group. The members of the Supervisory Board, by virtue of their role as employees, received remuneration totaling EUR 468
thousand (previous year: 503 thousand). Lease and service contracts and contracts of employment (except for the remunera-
tion to members of the Management Board disclosed) exist with members of the Management Board, including close family,
in respect of which remuneration to an amount of EUR 879 thousand (previous year: 945 thousand) was paid.
in EUR '000 2013 2014
Chairman
Dr. Klaus Reinhardt 38 38
Deputy CEO
Robert Feiger 27 27
Employer representatives
Dr.-Ing. Johannes Bauer 20 20
Dipl.-Ing. (FH) Rainer Schuster 18 18
Dipl.-Ing. (FH) Elisabeth Teschemacher 18 18
Gerardus N. G. Wirken 20 20
Prof. Dr. Manfred Nußbaumer 20 20
Employee representatives
Dipl.-Volkswirt Norbert Ewald 20 20
Dipl.-Kfm. (FH) Stefan Reindl 9 18
Regina Andel 18 18
Dipl.-Ing. Gerold Schwab 20 20
Dipl.-Ing. (FH) Walter Sigl 9 0
Reinhard Irrenhauser 18 18
Total * 254 254
* As a result of rounding to the nearest thousand euros, there was a rounding difference of EUR 1,000 in 2013 and 2014
173NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
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Loan commitments to the BAUER Foundation existed totaling EUR 1,000 thousand (previous year: 1,000 thousand), for
which interest amounting to EUR 55 thousand (previous year: 55 thousand) was paid.
At the end of the financial year no loan commitments existed to shareholders of BAUER AG.
The key relationships between fully consolidated Group companies and related parties are set out in the following table:
in EUR '000 Associated companies Non-consolidated companies Joint ventures
2013 2014 2013 2014 2013 2014
Income 2,063 1,990 16,457 14,651 9,965 11,812
Purchased services 312 172 6,915 2,875 0 0
Receivables and other assets (31.12.) 444 0 25,893 18,863 31,661 24,738
Liabilities (31.12.) 133 125 1,775 2,538 0 0
Impairment of receivables 0 0 4,035 891 21,802 16,790
Project Activity
of the companyHeadquarters Shareholding
Bangaroo ProjectSpecialist foundation
engineeringSydney, Australia 60 %
Sebuku IslandSpecialist foundation
engineeringSouth Kalimantan, Indonesia 35 %
Deep-Bauer Foundation Inc.Specialist foundation
engineeringCalgary, Canada 50 %
Project Activity
of the companyHeadquarters Shareholding
Bangaroo ProjectSpecialist foundation
engineeringSydney, Australia 60 %
Sebuku IslandSpecialist foundation
engineeringSouth Kalimantan, Indonesia 35 %
Deep-Bauer Foundation Inc.Specialist foundation
engineeringCalgary, Canada 50 %
The purchased services essentially comprise all expenses incurred with related parties during the financial year.
Transactions with related parties are conducted at standard market terms.
The receivables and other assets include uncollectable receivables as well as financial assets in respect of related parties.
39. JOINT OPERATIONS
The main joint operations are listed below:
2013 financial year:
2014 financial year:
174 NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
40. FEES AND SERVICES OF THE AUDITORS
The fee paid to the auditors and recorded as expenditure in the financial year is broken down as follows:
PricewaterhouseCoopers AG:
In addition, Roland Jehle GmbH Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft was engaged to audit the
major German capital corporations included in the Group’s consolidated financial statements.
The fees for this recognized in the financial year are broken down in accordance with Section 285, Paragraph 17 and Section 314,
Subsection 1, Paragraph 9 HGB as follows:
41. DECLARATION OF CONFORMITY TO THE GERMAN CORPORATE GOVERNANCE CODE
The Management Board and Supervisory Board of BAUER AG issued their declaration in accordance with Section 161 of the
German Stock Corporation Act (AktG) on December 5, 2014 and published it in a form permanently accessible to sharehold-
ers on the company’s website at www.bauer.de.
42. AVERAGE NUMBER OF EMPLOYEES
43. AUTHORIZATION FOR ISSUE OF THE CONSOLIDATED FINANCIAL STATEMENTS
The Management Board has submitted the consolidated financial statements to the Supervisory Board for authorization for
issue (the Supervisory Board meeting is scheduled for April 8, 2015).
in EUR '000 2013 2014
Fees for auditing services 593 668
Fees for other certification 2 5
Fees for tax advice 74 21
Fees for other services 76 45
Total 745 739
in EUR '000 2013 2014
Auditing fees 34 37
Fees for other certification 0 0
Fees for tax advice 7 7
Fees for other services 0 0
Total 41 44
2013 2014
Salaried staff 3,835 3,948
Germany 1,957 1,984
International 1,878 1,964
Industrial & trades 6,189 6,209
Germany 1,947 1,926
International 4,242 4,283
Apprentices 240 248
Total number of employees 10,264 10,405
175NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
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44. PROPOSAL ON APPROPRIATION OF NET EARNINGS AVAILABLE FOR DISTRIBUTION
The Management Board and Supervisory Board submit the proposal for decision that a dividend should be paid from the net
earnings available for distribution of BAUER Aktiengesellschaft for the 2014 financial year, amounting to EUR 33,349,700.22 EUR;
it is proposed that the dividend should be EUR 0.15 per bearer share entitled to participate in the dividend, which given
17,131,000 bearer shares entitled to the dividend, represents an amount of EUR 2,569,650, leaving the remaining net earnings
available for distribution, namely EUR 30,780,050.22, to be carryforward as profit. Any apportionment to bearer shares not
entitled to participate in the dividend will also be carryforward to the next accounting period.
Schrobenhausen, March 31, 2015
The Management Board
Prof. Thomas Bauer Dipl.-Betriebswirt (FH) Hartmut Beutler Dipl.-Ing. Heinz Kaltenecker
Chairman of the Management Board
176
Principal investments of the BAUER Group as at December 31, 2014
NAME OF COMPANY AND REGISTERED PLACE OF BUSINESS Currency Capital share
in %
1. Fully consolidated companies
BAUER Aktiengesellschaft EUR
A. Germany
BAUER Spezialtiefbau GmbH, Schrobenhausen, Germany EUR 99.00
BAUER Maschinen GmbH, Schrobenhausen, Germany EUR 99.00
SCHACHTBAU NORDHAUSEN GmbH, Nordhausen, Germany EUR 99.00
SPESA Spezialbau und Sanierung GmbH, Schrobenhausen, Germany EUR 99.00
BAUER Resources GmbH, Schrobenhausen, Germany EUR 99.00
BAUER Training Center GmbH, Schrobenhausen, Germany EUR 100.00
BAUER Designware GmbH, Schrobenhausen, Germany EUR 100.00
BAUER Umwelt GmbH, Schrobenhausen, Germany EUR 100.00
KLEMM Bohrtechnik GmbH, Drolshagen, Germany EUR 100.00
EURODRILL GmbH, Drolshagen, Germany EUR 100.00
BAUER Mietpool GmbH, Schrobenhausen, Germany EUR 100.00
RTG Rammtechnik GmbH, Schrobenhausen, Germany EUR 100.00
MAT Mischanlagentechnik GmbH, Immenstadt, Germany EUR 90.00
PRAKLA Bohrtechnik GmbH, Peine, Germany EUR 90.00
Olbersdorfer Guß GmbH, Olbersdorf, Germany EUR 75.00
SPANTEC Spann- & Ankertechnik GmbH, Schrobenhausen, Germany EUR 90.00
SCHACHTBAU NORDHAUSEN Bau GmbH, Nordhausen, Germany EUR 100.00
MMG Mitteldeutsche MONTAN GmbH, Nordhausen, Germany EUR 100.00
HGC Hydro-Geo-Consult GmbH, Freiberg, Germany EUR 100.00
BAUER Water GmbH, Dunningen, Germany EUR 100.00
PURE Umwelttechnik GmbH, Schrobenhausen, Germany EUR 100.00
BAUER Foralith GmbH, Schrobenhausen, Germany EUR 100.00
GWE pumpenboese GmbH, Peine, Germany EUR 100.00
Esau & Hueber GmbH, Schrobenhausen, Germany EUR 75.50
hydesco24 GmbH, Hamburg, Germany EUR 60.00
BAUER Deep Drilling GmbH, Schrobenhausen, Germany EUR 100.00
177NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
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NAME OF COMPANY AND REGISTERED PLACE OF BUSINESS Currency Capital share
in %
B. EU excluding Germany
BAUER Resources Hungary Kft., Budapest, Hungary HUF 100.00
GWE Budafilter Kft., Mezöfalva, Hungary HUF 100.00
BAUER Ambiente S.r.l., Milan, Italy EUR 100.00
BAUER SPEZIALTIEFBAU Gesellschaft m.b.H., Vienna, Austria EUR 100.00
BAUER Technologies Limited, Bishops Stortford, UK GBP 100.00
BAUER RENEWABLES LIMITED, Bishops Stortford, UK GBP 100.00
BAUER EQUIPMENT UK LIMITED, Rotherham, Great Britain GBP 100.00
BAUER Magyarország Speciális Mélyépítö Kft., Budapest, Hungary HUF 100.00
BAUER ROMANIA S.R.L., Bucarest, Rumania RON 100.00
BAUER BULGARIA EOOD, Sofia, Bulgaria BGN 100.00
BAUER Funderingstechniek B.V., Mijdrecht, Netherlands EUR 100.00
BAUER Foundations (IRL) Ltd., Dublin, Ireland EUR 100.00
GWE France S.A.S., Aspiran, France EUR 100.00
BAUER Cimentaciones Y Equipos S.A., Madrid, Spain EUR 100.00
TracMec Srl, Mordano, Italy EUR 100.00
BAUER Macchine Italia Srl, Mordano, Italy EUR 100.00
FAMBO Sweden AB, Eslöv, Sweden SEK 100.00
GWE Pol-Bud Sp.z.o.o, Łódz, Poland PLN 100.00
BAUER RESOURCES SPAIN S.A., Leganes, Spain EUR 100.00
BAUER Resources UK Ltd., Wigan, Great Britain GBP 100.00
C. Europe (other)
BAUER Spezialtiefbau Schweiz AG, Baden-Dättwil, Switzerland CHF 100.00
FORALITH Drilling Support AG, St. Gallen, Switzerland CHF 100.00
OOO BAUER Maschinen - Kurgan, Kurgan, Russian Federation RUB 65.00
OOO BAUER Maschinen SPb, St. Petersburg, Russian Federation RUB 100.00
OOO BG-TOOLS-MSI, Ljuberzy, Russian Federation RUB 55.00
OOO BAUER Maschinen Russia, Moscow, Russian Federation RUB 100.00
OOO BAUER Technologie, Moscow, Russian Federation RUB 100.00
BAUER Georgia Foundation Specialists LCC, Batumi, Georgia GEL 100.00
D. Middle East & Central Asia
Saudi BAUER Foundation Contractors Ltd., Jeddah, Saudi Arabia SAR 100.00
BAUER LEBANON FOUNDATION SPECIALISTS S.a.r.L., Beirut, Lebanon USD 100.00
BAUER International FZE, Dubai, United Arab Emirates AED 100.00
BAUER International Qatar LLC, Doha, Qatar QAR 49.00 *
BAUER Equipment Gulf FZE, Dubai, United Arab Emirates AED 100.00
BAUER Emirates Environment Technologies & Services LLC,
Abu Dhabi, United Arab Emirates AED 49.00 *
178
NAME OF COMPANY AND REGISTERED PLACE OF BUSINESS Currency Capital share
in %
Middle East & Central Asia (continued)
BAUER Resources GmbH / Jordan Ltd. Co. – (sub-group consolidated financial statements),
Amman, Jordan USD 100.00
Site Group for Services and Well Drilling Ltd. Co., Amman, Jordan USD 83.30
Site Group for Services and Well Drilling Ltd. Co., Ramallah, Palestine USD 100.00
Site Drilling Ltd. Co., Limassol, Cyprus USD 100.00
BAUER Casings Makina Sanayi ve Ticaret Limited Sirketi, Ankara, Turkey TRY 60.00
BAUER Corporate Services Private Limited, Mumbai, India INR 100.00
BAUER Geotechnical Specialized Foundation LLC, Abu Dhabi, United Arab Emirates AED 100.00
E. Asia-Pacific, Far East and Australia
BAUER (MALAYSIA) SDN. BHD. – (sub-group consolidated financial statements),
Petaling Jaya, Malaysia MYR 100.00
BAUER Foundations Australia Pty Ltd, Brisbane, Australia AUD 100.00
BAUER (NEW ZEALAND) LIMITED, Auckland, New Zealand NZD 100.00
BAUER Resources Australia Pty Ltd., Sydney, Australia AUD 100.00
P.T. BAUER Pratama Indonesia, Jakarta, Indonesia IDR 100.00
BAUER Services Singapore Pte Ltd, Singapore, Singapore EUR 100.00
BAUER Hong Kong Limited, Hong Kong, People’s Republic of China HKD 100.00
BAUER Vietnam Ltd., Ho Chi Minh City, Vietnam VND 100.00
BAUER Foundations Philippines, Inc., Quezon City, Philippines PHP 100.00
BAUER Technologies Far East Pte. Ltd. – (sub-group financial statements), Singapore,
Singapore EUR 100.00
BAUER EQUIPMENT SOUTH ASIA PTE. LTD., Singapore EUR 100.00
BAUER Technologies Taiwan Ltd., Taipei, Taiwan TWD 99.88
BAUER Tianjin Technologies Co. Ltd., Tianjin, People’s Republic of China CNY 100.00
BAUER Equipment Hong Kong Ltd., Hong Kong, People’s Republic of China HKD 100.00
BAUER Equipment (Malaysia) Sdn. Bhd., Shah Alam, Malaysia MYR 100.00
Shanghai BAUER Technologies Co. Ltd., Shanghai, People’s Republic of China CNY 100.00
BAUER Equipment (Shanghai) Co. Ltd., Shanghai, People’s Republic of China CNY 100.00
NIPPON BAUER Y.K., Tokyo, Japan JPY 100.00
Inner City (Thailand) Company Limited, Bangkok, Thailand THB 49.00 %
Thai BAUER Co. Ltd., Bangkok, Thailand THB 73.99
F. Americas
BAUER FUNDACIONES PANAMÁ S.A., Panama City, Panama USD 100.00
BAUER MEXICO, S.A. DE C.V., Mexico City, Mexico MXP 100.00
BAUER Resources Canada Ltd., Edmonton, Canada CAD 100.00
BAUER Foundations Canada Inc., Calgary, Canada CAD 100.00
BAUER-Pileco Inc., Conroe, Texas, USA USD 100.00
BAUER Manufacturing Inc., Conroe, United States of America USD 100.00
BAUER FOUNDATION CORP., Odessa, Florida, USA USD 100.00
BAUER Resources Chile Limitada – (sub-group financial statements), Santiago de Chile, Chile CLP 100.00
GWE Tubomin S.A., Santiago de Chile, Chile CLP 60.00
CONSOLIDATED NOTES 2014
179NOTES OF THE CONSOLIDATED FINANCIAL STATEMENT 2014
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NAME OF COMPANY AND REGISTERED PLACE OF BUSINESS Currency Capital share
in %
G. Africa
BAUER EGYPT S.A.E. Specialised Foundation Contractors, Cairo, Egypt EGP 55.75
BAUER Technologies South Africa (PTY) Ltd – (sub-group financial statements),
Johannesburg, South Africa ZAR 100.00
MINERAL BULK SAMPLING NAMIBIA (PTY) LTD, Windhoek, Namibia NAD 100.00
MINERAL BULK SAMPLING SOUTH AFRICA (PTY) LTD, Cape Town, South Africa ZAR 100.00
BAUER RESOURCES GHANA LIMITED, Accra, Ghana GHS 100.00
BAUER-DE WET EQUIPMENT (PROPRIETARY) LIMITED, Rasesa, Botswana BWP 51.00
2. Associates and joint ventures
A. Germany
Wöhr + Bauer GmbH – (sub-group financial statements), Munich, Germany EUR 33.33
Wöhr + Bauer Angerhof GmbH & Co. KG, Munich, Germany EUR 100.00
Wöhr + Bauer Angerhof Verwaltungs GmbH, Munich, Germany EUR 100.00
WÖHR + BAUER PARKING GmbH, Munich, Germany EUR 100.00
Wöhr + Bauer H2O Verwaltungs GmbH, Munich, Germany EUR 100.00
Wöhr + Bauer H2O GmbH & Co. KG, Munich, Germany EUR 100.00
Wöhr + Bauer Projekt HTW Verwaltungs GmbH, Munich, Germany EUR 100.00
Wöhr + Bauer Projekt HTW GmbH & Co. KG, Munich, Germany EUR 100.00
WÖHR + BAUER Tower Riem Verwaltungs GmbH,
Munich, Germany EUR 100.00
WÖHR + BAUER Tower Riem GmbH & Co. KG, Munich, Germany EUR 100.00
Riem Vermietungs GmbH, Munich, Germany EUR 100.00
NDH Entsorgungsbetreibergesellschaft mbH, Bleicherode, Germany EUR 25.00
Grunau und Schröder Maschinentechnik GmbH, Drolshagen, Germany EUR 30.00
B. International
TERRABAUER S. L., Madrid, Spain EUR 30.00
NuBa Equipment Ltd., Edmonton, Canada CAD 50.00
Bauer + Moosleitner Entsorgungstechnik GmbH, Salzburg, Austria EUR 50.00
BAUER Nimr LLC, Muscat – Al Mina, Sultanate of Oman OMR 49.00
3. Enterprises in which the company has participating interests
A. Germany
TMG Tiefbaumaterial GmbH, Emmering, Germany EUR 33.33
Nordhäuser Bauprüfinstitut GmbH, Nordhausen, Germany EUR 20.00
Harz Hotel Grimmelallee Nordhausen Beteiligungsgesellschaft mbH,
Nordhausen, Germany EUR 20.00
Harz Hotel Grimmelallee Nordhausen GmbH & Co. KG,
Nordhausen, Germany EUR 20.00
Stadtmarketing Schrobenhausen e.G., Schrobenhausen, Germany EUR 4.18
B. International
OAO Mostostrojindustria, Moscow, Russian Federation RUB 15.00
* Benefi cial ownership is 100 %
180
We hereby assure that, to the best of our knowledge, the consolidated financial statements give a true and fair view of the net
assets, financial position and earnings of the company in accordance with the accounting principles applicable to financial
reporting, and that the Combined Management Report depicts the course of business, including the earnings and overall
situation of the Group, in such a way that a true and fair view is conveyed and the material opportunities and risks of the
foreseeable development of the Group are set out.
Schrobenhausen, March 31, 2015
The Management Board
Prof. Thomas Bauer Dipl.-Betriebswirt (FH) Hartmut Beutler Dipl.-Ing. Heinz Kaltenecker
Chairman of the Management Board
Assurance by the Legal Representatives
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“We have audited the consolidated financial statements prepared by BAUER Aktiengesellschaft, Schrobenhausen, comprising
the balance sheet, the income statement and statement of comprehensive income, statement of changes in equity, cash
flow statement and the notes to the consolidated financial statements, together with the Group management report, which is
combined with the company management report, for the business year from January 1 to December 31, 2014. The prepara-
tion of the consolidated financial statements and the combined management report in accordance with the IFRS, as adopted
by the EU, and the additional requirements of German commercial law pursuant to § (Article) 315a, Abs. (paragraph) 1 HGB
(“Handelsgesetzbuch” – German Commercial Code) are the responsibility of the parent company’s Management Board.
Our responsibility is to express an opinion on the consolidated financial statements and the combined management report,
based on our audit.
We conducted our audit of the consolidated financial statements in accordance with § 317 HGB and the generally accepted
German 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 consolidated financial statements
in accordance with the applicable financial reporting framework and in the combined 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 combined 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
the entities to be included in consolidation, the accounting and consolidation principles used and significant estimates made
by the company’s Management Board, as well as evaluating the overall presentation of the consolidated financial statements
and the combined management report. We believe that our audit provides a reasonable basis for our opinion.
Our audit has not led to any reservations.
In our opinion, based on the findings of our audit, the consolidated financial statements comply with the IFRS as adopted by
the EU and the additional requirements of German commercial law pursuant to § 315a, Section 1 HGB, and give a true and
fair view of the net assets, financial position and results of operations of the Group in accordance with these requirements.
The combined 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, March 31, 2015
Klaus Neubarth ppa. Dagmar Liphardt
Auditor Auditor
Auditor’s Report
182
A
ASSOCIATED COMPANIES | Associated companies are
those over which a major but not controlling influence can be
exerted. The shareholding is usually between 20 and 50 %.
Such holdings are valued at equity.
AT EQUITY | “At equity” is the method by which shares in
associated companies are valued in the Group’s financial
statements. The carrying amount of the investment is
adjusted according to the trend of the percentage equity
held in the entity concerned.
C
CASH FLOW | This figure indicates the amount of money
which a business entity generates by its own efforts and is
able to use for its own purposes. It essentially comprises
profit, depreciation and amortization and increases in
provisions.
CONSOLIDATED REVENUES | Consolidated revenues
are disclosed in the income statement. They comprise the
output of the companies fully consolidated into the Group’s
consolidated annual financial statements.
D
DEEP DRILLING RIG (TBA) | This equipment series was
developed specially to drill for particularly deep-lying raw
material resources. The rigs can drill down to depths of more
than 5,000 meters, and are used to extract oil, gas, water
and geothermal energy.
E
EBITDA | Earnings before interest, taxes, depreciation
and amortization (on property, plant and equipment and
intangible assets).
EBIT MARGIN | The EBIT margin is a profitability indicator,
describing the ratio of EBIT to the entity’s sales revenues.
EBIT | Earnings before interest and taxes.
F
FINANCIAL COVENANTS | Some loan agreements
include clauses stipulating adherence to threshold values for
predefined key financial performance indicators.
FINANCIAL INSTRUMENT | Any transaction which results
in a financial asset for one entity and a financial liability (or an
equity instrument) for the other.
G
GROSS DOMESTIC PRODUCT (GDP) | Gross domestic
product corresponds to the total value of all goods and
services for consumption produced by an economy in one
year. GDP is a measure of the performance (output) of an
economy.
H
HGB FINANCIAL STATEMENTS | The German Com-
mercial Code (Handelsgesetzbuch; HGB) imposes financial
reporting rules on incorporated entities in Germany.
I
IFRS FINANCIAL STATEMENTS | International Financial
Reporting Standards (IFRS) are applicable to stock market
listed companies. The standards are issued by the Interna-
tional Accounting Standards Board (IASB). Their aim is to
ensure the international comparability of corporate financial
reporting. The BAUER Group has been preparing financial
statements in accordance with IFRS since 2004.
N
NET PROFIT OR LOSS FOR THE PERIOD | The net profit
or loss for the period – also referred to as the profit after
tax – is the profit earned or loss made in a given period.
Glossary
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O
ORDERS IN HAND | Indicates the volume of orders held by
a business entity at the reporting date.
ORDERS RECEIVED | Corresponds to the sum of all orders
received in a specific reporting period. Orders received are
an indicator of future order volumes.
P
PERCENTAGE OF COMPLETION METHOD (POC) |
This method is applied to measure and report the profit
realized on contracts extending over a protracted period of
time according to their degree of completion based on the
associated costs and revenues (actual and forecast).
PREMIUMLINE | The PremiumLine comprises the
multifunction rotary drilling rigs of the BG series designed to
handle a wide variety of foundation engineering applications.
Deep vibrators or trench cutters can also be mounted on
them.
R
ROTARY DRILLING RIG (BG) | BAUER Maschinen GmbH
specializes in the development and manufacture of rotary
drilling rigs. The machines are produced and marketed in
two product lines: Premium and Value. They are able to carry
out a wide variety of foundation engineering tasks.
S
SALES REVENUES | As opposed to the output, which
comprises the value of all goods produced, the sales
revenues disclosed in the income statement relate to all
products and services definitively sold and billed within a
period. The difference between the two values essentially
stems from changes in work in progress, inventories and
other income.
SEGMENTS | The BAUER Group’s segments are its operat-
ing divisions: Construction, Equipment and Resources. Each
segment comprises a holding company with subsidiaries
beneath it, all of which have the same portfolio of products
and services. Within the Group, only SCHACHTBAU
NORDHAUSEN GmbH operates in all three segments.
SINKING | The term describes the execution of shafts or
bore holes to mine mineral deposits or to extract resources.
STAKEHOLDERS | The term refers to individuals or groups
who have a justified interest in the fortunes of a business
entity. The interests of the various stakeholders may vary
widely.
T
TOTAL GROUP REVENUES | In addition to the output of
the consolidated companies, total Group revenues include
the proportionate outputs of associated companies as well
as the outputs of non-consolidated subsidiaries and joint
ventures.
V
VALUE ADDED | Value added is the contribution made by
a business entity to the wider society at large. Value added
reflects how the output of a business is distributed across
the wide variety of stakeholder groups.
VALUELINE | The ValueLine includes the rotary drilling rigs
of the BG series which are optimized for the kelly drilling
process.
W
WORKING CAPITAL | The working capital is the portion
of the current assets which is tied up by the operational
production process and by the process of selling products
and services (such as receivables).
GLOSSARY
IMPRINT
Published by
BAUER Aktiengesellschaft
BAUER-Strasse 1
86529 Schrobenhausen, Germany
www.bauer.de
Photos
BAUER Group
HOW TO CONTACT US
Contact
Investor Relations
BAUER Aktiengesellschaft
BAUER-Strasse 1
86529 Schrobenhausen, Germany
Tel.: +49 8252 97-1215
Fax: +49 8252 97-2900
Registered place of business
86529 Schrobenhausen, Germany
Registered at the District Court of
Ingolstadt under HRB 101375
Kastner AG – das medienhaus,
Wolnzach
http://ir.bauer.de
http://www.youtube.com/
BAUERGroup
This Annual Report is published in German and English.
The 2014 Annual Report is printed on environmentally friendly paper
conforming to the standards of the Forest Stewardship Council (FSC).
184
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Construction Equipment Resources
The Resources segment is focused on
products and services in the areas of
water, environment and natural resources.
BAUER Resources GmbH is the holding
company, under the umbrella of which the
subsidiaries operate as full-service providers.
The competence centers of Water Treatment,
Process and Biotechnology, Environmental
Rehabilitation and Waste Management, Drilling
Technologies as well as Well Drilling and Geo-
thermal pool their expertise and support the
subsidiaries in carrying out projects.
BAUER Spezialtiefbau GmbH, the original
parent company of the BAUER Group, has
been a major driving force in the development
of specialist foundation engineering, and
carries out projects all over the world. Bauer
Spezialtiefbau is organized on a regional basis
in Germany, and operates on all the world's
continents with over 50 subsidiaries and
branch offices. Market trends have meant that
most of the company’s revenues are now gen-
erated outside of Germany. Bauer has major
subsidiaries and branch offices in the United
Arab Emirates, Malaysia, Egypt and the USA
among other locations. Bauer Spezialtiefbau
has built up networks in numerous regions
across the world, enabling it to acquire and
execute contracts both in the countries in
which it is represented and in neighbouring
countries, using its own machinery and in-
house engineering consultancy. In addition to
the predominant field of specialist foundation
engineering, Group companies SCHACHTBAU
NORDHAUSEN GmbH, SPESA Spezialbau
und Sanierung GmbH and Wöhr + Bauer
GmbH also carry out general construction ac-
tivities such as civil engineering, environmental
engineering and project development.
The BAUER Maschinen Group is the world
market leader in the development and man-
ufacture of specialist foundation engineering
equipment. BAUER Maschinen GmbH – the
holding company for a number of subsidiaries
– designs and builds heavy-duty drilling rigs,
trench cutters, grab systems, vibrators and
deep drilling rigs, as well as the related tool-
ing, at its plants in Schrobenhausen, Aresing
and Edelshausen. The company also operates
manufacturing facilities in the USA, Russia,
China, Malaysia, Italy, Singapore and Turkey.
It is supplied with components from within the
BAUER Group by Schachtbau Nordhausen
and Olbersdorfer Guß. The BAUER Maschinen
Group operates a global sales and service
network.
Income statement of the BAUER Group
in EUR '000 2013 * 2014 Change
SALES REVENUES 1,402,173 1,375,679 -1.89 %
Changes in inventories -4,423 26,622 n/a
Other capitalized goods and services for own account 19,196 14,696 -23.44 %
Other income 30,579 89,022 n/a
CONSOLIDATED REVENUES 1,447,525 1,506,019 4.04 %
Cost of materials -755,906 -749,247 -0.88 %
Staff costs -342,815 -355,250 3.63 %
Depreciation of fixed assets -79,696 -78,781 -1.15 %
Write-downs of inventories due to use -14,196 -15,789 11.22 %
Other operating expenses -224,827 -230,526 2.53 %
OPERATING RESULT 30,085 76,426 n/a
Financial income 7,729 7,096 -8.19 %
Financial expenses -45,541 -45,149 -0.86 %
Share of the profit or loss of associated companies accounted for
using the equity method 1,770 -572 n/a
PROFIT BEFORE TAX -5,957 37.801 n/a
Income tax expense -13,474 -22,075 63.84 %
NET PROFIT OR LOSS -19,431 15,726 n/a
Balance Sheet of the BAUER Group
ASSETS in EUR '000 31.12.2013 * 31.12.2014 Change
NON-CURRENT ASSETS
Intangible assets 35,388 34,440 -2.68 %
Property, plant and equipment and investment property 459,537 446,909 -2.75 %
Investments accounted for using the equity method 13,249 42,906 n/a
Participations 3,613 3,613 0.00 %
Deferred tax assets 26,299 30,973 17.77 %
Receivables from concession arrangements 36,762 0 -100.00 %
Other non-current assets 7,564 7,492 -0.95 %
Other non-current financial assets 5,420 28,420 n/a
587,832 594,753 1.18 %
CURRENT ASSETS
Inventories 419,352 439,184 4.73 %
Receivables and other assets 517,950 496,650 -4.11 %
Effective income tax refund claims 3,437 2,661 -22.58 %
Cash and cash equivalents 57,217 41,835 -26.88 %
997,956 980,330 -1.77 %
1,585,788 1,575,083 -0.68 %
EQUITY AND LIABILITIES in EUR '000 31.12.2013 * 31.12.2014 Change
SHAREHOLDERS’ EQUITY
Group shares 397,006 399,308 0.58 %
Minority interests 22,809 19,617 -13.99 %
419,815 418,925 -0.21 %
NON-CURRENT LIABILITIES
Defined benefit plans 81,637 116,358 42.53 %
Financial liabilities 279,437 387,816 38.78 %
Other liabilities 6,483 5,959 -8.08 %
Deferred tax liabilities 14,954 13,123 -12.24 %
382,511 523,256 36.80 %
CURRENT LIABILITIES
Financial liabilities 449,876 299,698 -33.38 %
Other liabilities 307,203 305,861 -0.44 %
Effective income tax obligations 9,606 9,317 -3.01 %
Provisions 16,777 18,026 7.44 %
783,462 632,902 -19.22 %
1,585,788 1,575,083 -0.68 %
In the “Change” column, there may be differences from the Group key figures as a result of roundings and a different representation between
thousands of EUR and millions of EUR.
* Previous year adjusted; see notes on page 106
April 10, 2015 Publication of Annual Report 2014
Annual Press Conference
Analysts' Conference
May 13, 2015 Interim Report March 31, 2015
June 25, 2015 Annual General Meeting
August 14, 2015 Half-Year Interim Report June 30, 2015
November 13, 2015 Interim Report September 30, 2015
Financial calendar 2015
BAUER AktiengesellschaftBAUER-Strasse 1
86529 Schrobenhausen, Germanywww.bauer.de