Half-Year Interim Report

Transcription

Half-Year Interim Report
to June 30, 2014
2
GROUP KEY FIGURES – 1ST HALF 2014
IFRS in EUR million
06/2013 *
06/2014
Change
12/2013 *
Total Group revenues
721.3
749.2
3.9 %
1,504.2
of which
Germany
212.7
234.6
10.3 %
410.4
International
508.6
514.6
1.2 %
1,093.8
70.5
68.7
n/a
72.7
Construction
346.1
351.4
1.5 %
731.3
Equipment
309.8
321.3
3.7 %
628.7
Resources
93.6
101.0
7.9 %
199.2
-28.2
-24.5
n/a
-55.0
Consolidated revenues
679.1
732.1
7.8 %
1,447.5
Sales revenues
607.3
645.5
6.3 %
1,402.2
Orders received
804.9
757.6
-5.9 %
1,484.5
Orders in hand
868.6
773.7
-10.9 %
765.2
50.3
57.6
14.6 %
124.0
EBITDA margin in % (of sales revenues)
8.3
8.9
n/a
8.8
EBIT
7.4
13.6
83.1 %
30.1
EBIT margin in % (of sales revenues)
1.2
2.1
n/a
2.1
Net profit or loss
-7.9
-11.0
n/a
-19.4
Capital investment in property, plant and equipment
45.7
22.8
-50.1 %
91.9
444.5
400.2
-10.0 %
419.4
26.5
24.2
n/a
26.5
1,677.8
1,652.3
-1.5 %
1,585.2
-0.45
-0.66
n/a
-0.99
n/a
n/a
n/a
-4.6
10,388
10,406
0.2 %
10,264
Germany
4,112
4,154
1.0 %
4,144
International
6,276
6,252
-0.4 %
6,120
International in %
of which
Other/Elimination/Consolidation
EBITDA
Shareholders' equity
Equity ratio in %
Net assets
Earnings per share
Return on equity after tax in %
Employees (on average over the year)
of which
* Previous year's figures amended; see p. 24f. and 2013 Annual Report p. 106f.
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.
Percentages are calculated on the basis of unrounded starting values (EUR thousand).
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Summary
Total revenues of the BAUER Group at the end of first half 2014 were EUR 749.2 million, 3.9 percent above the previous
year comparative (EUR 721.3 million). The Group's net loss for the period of EUR 11.0 million was EUR 3.1 million down
against the previous year comparative. The first-half result thus once again illustrates the many disturbances on global markets
impacting on our business. The loss made on our dam project in the USA also continues to burden Group's earnings. We
additionally had to make provision for an expected fine of over EUR 3 million arising from proceedings against one of our
subsidiaries.
In our business, the year normally begins with a loss-making quarter which is balanced out in the subsequent quarters. We
were unable to achieve this by the end of the first half, although revenues have generally progressed in line with our planning.
Business continued to be impacted by the uncertainty linked to a wide range of political problems. Order receipts in our
Equipment segment in particular are very inconsistent. They nevertheless remained around the previous year's level.
In the Construction segment, the large-scale projects of the previous year have for the most part been completed. Business
is again dominated by medium-scale contracts. In the Resources segment, the Environment area made positive progress,
while the reorganization of the Materials area is well under way. Exploration & Mining continues to make losses, however,
and is demanding major efforts on our part.
Group orders in hand of EUR 773.7 million are 10.9 percent down against the previous year comparative. The decrease
reflects the fact that last year we had a number of very large orders on our books which were mostly completed. We still
have reasonable levels of orders in hand for medium to large-scale projects in all regions, which will keep us quite busy over
the period ahead. Our Equipment segment continues to operate on the basis of short delivery lead times. Demand is very
volatile, owing to the political situation in a number of regions.
As set forth in the 2013 Annual Report, we forecast total Group revenues for the full year 2014 of around EUR 1.55 billion
and EBIT of around EUR 75 million. We adjust our after-tax profit forecast slightly in view of the issues described and the
most recent developments in relation to Russia. We now predict full-year profit after tax of around EUR 15 to 20 million.
Course of Business and Background Conditions
GENERAL ECONOMIC CLIMATE
The global economy generally remains on a positive trend. However, increasing political and social turbulence in many
countries around the world is spreading uncertainty ever more widely, endangering the stability of global relations and the
associated economic opportunities.
The positive ongoing trends in the Far East and on the American continent are of course bright spots. And in Europe, too,
there are gradual signs of an upturn. But there are many other changes which are giving cause for concern.
The situation in the Middle East has generally not stabilized. While some countries, such as the United Arab Emirates, Qatar
and Saudi Arabia, have returned to a normal growth curve, the conflict in Iraq has become much more severe. The country
has for weeks now been suffering a renewed civil war, with absolutely no sign of any resolution to it in the near future. The
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COURSE OF BUSINESS AND BACKGROUND CONDITIONS
newly inflamed conflict between Israel and the Palestinians has again become a flashpoint of international tensions. The impact is being felt by other countries in the region too. Nor are there any signs of an early normalization in Libya. The Arabian
peninsula has become a region of great uncertainty as a result of the wide-ranging events of recent years. Consequently,
further ongoing disturbance must be expected.
From a European viewpoint, the conflict in Ukraine between the West and Russia is the biggest cause for concern. The
problems of recent months have pushed Ukraine even closer to the verge of economic catastrophe. Russia is coming under
increasing international pressure as a result of its conduct, and the threat of sanctions is hindering prospects for economic
growth. Trade has already been significantly reduced, and no solution is in sight.
All of these uncertainties are toxic in their impact on global economic development. The weakness of the Russian economy
will doubtless also impact on the Western countries which rely on it as a key trading partner.
The BAUER Group has been operating in Russia and Ukraine for many years. Business in the region has declined in recent
months. We expect to see further deterioration if calm is not restored to the conflict. We see more positive prospects in
Arabia, as the economies of the countries where we are most strongly represented in that region are improving.
Global construction markets are nevertheless generally making positive progress, aside from current crisis points. There has
been far too little investment in construction in western economies over recent decades, while in the emerging economies
there is still a significant backlog in terms of renewal of infrastructure to meet the needs of the modern world. Increasing
urbanization, especially, is creating enormous demand for construction works, as major infrastructure improvements are
needed in order to enhance people's lives and grow the economy. Those works, including underground railway systems,
bridges and underground parking garages, will entail increased demand for specialist foundation engineering services. The
world will face further challenges in the years ahead with regard to water, the environment and energy production – all areas
in which we offer solutions, and which will become increasingly important as time goes on. We therefore believe we are
essentially very well set to meet a wide range of demands through our products and services.
A pleasing factor is that trends in the major economic regions are positive. The US economy is back on the road to stable,
if slow, growth, and as such can act as a motor to drive progress in other countries. In some regions in the Far East, such
as China, growth is slowing. But a number of countries, such as Indonesia, are in fact developing much better than could
have been imagined years ago. Europe is slowly returning to growth, and in the Arab region the situation in some countries at
least appears to be improving, so increasing demand for construction is evident there too. Eastern Europe is still struggling to
recover its growth trend however. By contrast, a number of countries in Africa are exploiting their natural resources effectively
to drive their economies.
In the machinery business, the shifts among market players following on from the major changes seen in previous years
continue apace. Overcapacity among Chinese manufacturers has led many of them to move into international markets.
Western companies are in a strong position to defend their customer base, however, so the situation is slowly beginning
to stabilize. It is good to see that no new players are emerging on markets at present, so the supply side is quite stable.
In the past year we were able to increase our machinery sales in the face of complex market conditions. We are sure that
customers value the major efforts we have made in recent years in terms of product development, quality and service, and
as a result trust in our products is not only holding up well, but is increasing. We therefore expect to see sustained small
growth in this segment in future. In relation to deep drilling rigs, we achieved a success with the cooperation agreement
with Saxon Energy Services Inc. for the development of a new rig model.
Our Resources segment continues to see interesting prospects worldwide, particularly in the field of environmental technology
and for our products and services relating to water. As a result, that segment will likewise be able once again to achieve
reasonable growth.
OVERVIEW OF INTERNATIONAL MARKETS
Germany
Trends on the German construction market are positive, and will remain healthy over the years ahead. The mild weather in
the early months of 2014 meant that construction companies had a much better start to the year than last year, though that
improvement will be dampened somewhat over the full year. Housing construction remains the main driver of growth, thanks
to low interest rates acting as a major incentive for developers to invest. The commercial property construction sector is
profiting from the general upturn in the global economy. Only the public sector is lagging somewhat, because federal budgets were delayed due to last year's election. Moreover, the additional budget funding for transport infrastructure at federal
level is in no way adequate to meet the country's needs. It is to be expected that more will be done in this respect in future,
however, as all politicians have recognized the problem of under-financing in the transport sector. That will bring additional
opportunities for us.
The widely anticipated positive effects of the turnaround of energy policy in Germany have unfortunately not yet been realized.
Only the onshore wind power sector is generating healthy orders. The necessary power lines from northern to southern
Germany have not yet been realized, and little progress is being made in the development of offshore wind power. Even the
urgently required growth in conventional power station capacity is not happening due to a lack of clear policy framing.
Europe
Eastern Europe continues to suffer the after-effects of the financial crisis. Investment in construction remains at very low
levels in almost all the countries in the region. A more positive trend is to be expected as a result of this stagnation over the
years ahead. The situation in Russia is fundamentally somewhat better. The country's oil and gas wealth makes it easier to
provide funding for infrastructure projects. The consequences of the conflict in Ukraine are severe, though the further course
of developments is unpredictable.
We predict that growth on construction markets in Western Europe will continue to 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 nevertheless a number of opportunities for us around the region, including in Switzerland. In France, major funding
will be needed in the coming years to improve the traffic situation in and around Paris.
Middle East and Central Asia
The countries of the Middle East have plenty of funds at their disposal thanks to their sales of oil and gas. Construction
markets across the region – especially in Saudi Arabia, Qatar and the United Arab Emirates – should actually be growing
rapidly. Unfortunately, progress is being hindered, among other factors, by protracted decision-making processes. Some
major projects are in urgent need of execution, such as the underground railway lines in Riyadh and Qatar and the facilities
for the football World Cup, but they have all recently been subject to repeated delays. Activities relating to the projects have
intensified however.
The situation in Egypt is remarkably positive for our business. Although the country is still struggling with major political and
economic problems overall, some large-scale construction projects have been instigated, financed in particular by other
Arab nations. There are now also concrete plans once again for development of the underground railway system in Cairo.
Our local presence is enabling us to acquire some interesting contracts. In Libya, trends on the construction market remain
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6
very subdued. Trends in Lebanon are pleasing, as a number of interesting projects are being carried out there. The market
is at risk of being weakened due to the Israeli-Palestinian conflict however.
Asia-Pacific, Far East and 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. Economies such as Indonesia and the Philippines are also seeing
healthy growth. By contrast, the Australian economy is not doing as well. Construction activity in the country has slowed.
America
The situation in North America is improving steadily after a number of weak years. It is in the USA that there is the highest
level of backlogged demand in many areas of infrastructure, arising from 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 market situation as stable, and offering good opportunities for
further growth in both our Construction and Equipment segments. Trends on the construction market in Canada are likewise
sound. Interesting projects are regularly arising in Central America.
Africa
In Africa, it will be worthwhile actively pursuing new business, even though the economic weakness of the countries concerned
means the business generated will not make a major contribution to our total Group revenues overall.
In general terms, our Equipment segment has similar opportunities to those of the Construction segment, as demand for
machinery is dependent on construction markets.
The Resources segment has a number of interesting environmental projects in the pipeline, on the Arabian Peninsula especially, which will soon be entering the contract award phase. Enquiries from the mining sector have fallen back significantly due
to the weakness of commodity markets. A slight recovery is being seen in some isolated instances. Demand for water-related
products and services is increasing worldwide.
PERFORMANCE OF THE BAUER GROUP
The adoption of IFRS 11 (Joint Arrangements) has entailed minor changes to the recognition of construction joint ventures
in the income statement. These were also adjusted for the previous year, but they are of lesser importance. All explanatory
notes relate to changes to the adjusted previous year figures.
In the first half of 2014, the total Group revenues of the BAUER Group increased by 3.9 percent relative to the same period
last year, to EUR 749.2 million. The Group's net loss for the period of EUR 11.0 million represented a EUR 3.1 million deterioration against the previous year comparative (EUR 7.9 million).
Earnings were hampered in particular by a EUR 5.0 million increase in income tax expense, and by the need to make provision for a fine of over EUR 3 million expected to be imposed on one of our subsidiaries. The earnings of the Equipment
segment were substantially better than in the same period last year. By contrast, the earnings of the Resources segment
declined.
Group orders in hand decreased against the previous year comparative period by 10.9 percent to EUR 773.7 million. This
is in line with our expectations, as a number of large-scale Construction segment projects were completed in the course of
the year. Orders in hand in the Equipment segment are slightly down against the previous year comparative. This illustrates
how difficult it still is to fill up production capacities in advance. Orders in the environmental technology, underground mining
and materials business of the Resources segment are in line with our planning, though in Exploration & Mining order receipts
are insufficient.
All in all, the levels of orders in hand and the opportunities offered by the market provide an appropriate foundation for further
growth in our business.
7
BREAKDOWN OF TOTAL GROUP REVENUES BY SEGMENT
06/2013 *
Revenues
in EUR million
06/2014
Revenues
Share
2014
Change against
previous year
Orders
in hand
71.9
9.6 %
28.6 %
+
Equipment
Construction
BAUER Spezialtiefbau GmbH (BST)
BST, Germany
55.9
Subsidiaries, Germany
30.4
5.0
0.7 %
-83.6 %
•
BST, international
29.8
35.8
4.8 %
20.1 %
•
Subsidiaries, international
249.0
252.9
33.7 %
1.6 %
•
365.1
365.6
48.8 %
0.1 %
•
24.9
29.3
3.9 %
17.7 %
•
less intra-Group revenues and IFRS adjustments
-43.9
-43.5
-5.8 %
Construction total
346.1
351.4
46.9 %
1.5 %
•
BAUER Maschinen GmbH (BMA)
179.1
195.6
26.1 %
9.2 %
•
Equipment subsidiaries
199.3
205.7
27.5 %
3.2 %
•
BMA Group total
378.4
401.3
53.6 %
6.1 %
•
-1.3 %
•
3.7 %
•
BST Group total
SCHACHTBAU NORDHAUSEN GmbH
incl. subsidiaries (SBN)
SBN
30.9
30.5
4.1 %
-99.5
-110.5
-14.8 %
Equipment total
309.8
321.3
42.9 %
Resources
BAUER Resources GmbH (BRE)
2.8
9.4
1.3 %
n/a
90.9
96.3
12.8 %
5.9 %
BRE Group total
93.7
105.7
14.1 %
12.8 %
-
SBN
12.3
15.0
2.0 %
22.8 %
++
7.9 %
•
Resources subsidiaries
Other
8
-12.4
-19.7
-2.6 %
Resources total
93.6
101.0
13.5 %
BAUER Aktiengesellschaft (BAG)
15.4
15.0
2.0 %
-2.6 %
1.2
1.1
0.1 %
-8.3 %
-3.0 %
Other subsidiaries
Total Other/services
16.6
16.1
2.1 %
-44.8
-40.6
-5.4 %
Group total (including minority interests)
721.3
749.2
100.0 %
3.9 %
of which: Germany
212.7
234.6
31.3 %
10.3 %
508.6
514.6
68.7 %
1.2 %
International
-
•
* See footnote on page 2
Notes on the table:
List also includes non-consolidated holdings
Valuation of orders in hand relative to budgeted sales:
-- 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.
9
Trends in our Business Segments
CONSTRUCTION SEGMENT
CONSTRUCTION SEGMENT KEY FIGURES
in EUR '000
06/2013 *
06/2014
Change
12/2013 *
346,099
351,448
1.5 %
731,274
Sales revenues
292,085
328,609
12.5 %
657,920
Orders received
364,351
323,136
-11.3 %
716,888
Orders in hand
531,339
470,389
-11.5 %
498,701
2,928
7,418
n/a
21,827
204
-1,661
n/a
5,472
5,531
5,677
2.6 %
5,531
EBIT
Net profit or loss
The total Group revenues of the Construction segment amounting to EUR 351.4 million were 1.5 percent up on the previous
year. We made a good start to the year following on from a weak previous year. The second quarter of 2013 was very strong
after the planned large-scale projects had started. Consequently, the weaker second quarter of this year adversely affects
the half-year comparison. EBIT (earnings before interest and taxes) increased by EUR 4.5 million over the previous year
comparative period to EUR 7.4 million. By contrast, the net profit for the period deteriorated from EUR 0.2 million last year
to EUR -1.7 million as a result of a substantial increase in income tax expense.
Orders in hand in our Construction segment fell to EUR 470.4 million (previous year: EUR 531.3 million) owing to the completion of large-scale projects. The orders are spread evenly across the various regions of the world, which provides a sound
foundation for us to achieve our revenue targets in the current year. Nevertheless, we need to make determined efforts in
order to establish a sound foundation for next year too.
The course of our business in Germany was particularly positive. Revenues increased by 28.6 percent over the previous
year comparative. While revenues in the UK and in Saudi Arabia declined significantly because of a shortage of projects, a
substantial improvement was seen in Switzerland, the United Arab Emirates, Hong Kong and Indonesia. Revenues in Russia
were again healthy thanks to follow-up contracts from the large-scale project in St. Petersburg. Our dam project in Tennessee,
USA, unfortunately continues to cause us problems, with the resultant losses impacting on segment earnings.
Our other German construction companies in the Group have healthy order levels. SCHACHTBAU NORDHAUSEN GmbH
is continuing to see healthy levels of capacity utilization in its mining business, which is assigned to the Resources segment.
An appraisal of ongoing market trends in the construction sector was presented in the "Overview of international markets"
section above.
Full-year outlook
All in all, we expect our Construction segment's revenues to be around the same level as last year. We expect that earnings
will improve slightly relative to 2013.
10
TRENDS IN OUR BUSINESS SEGMENTS
EQUIPMENT SEGMENT
EQUIPMENT SEGMENT KEY FIGURES
in EUR '000
06/2013 *
06/2014
Change
12/2013 *
309,782
321,340
3.7 %
628,661
Sales revenues
229,521
223,567
-2.6 %
561,615
Orders received
350,713
339,031
-3.3 %
632,102
Orders in hand
154,015
134,216
-12.9 %
116,525
5,771
13,174
n/a
32,223
EBIT
Net profit or loss
-5,303
-93
n/a
5,055
2,991
3,057
2.2 %
2,998
Total Group revenues in the Equipment segment in the first half of the year rose by 3.7 percent against the previous year
comparative to EUR 321.3 million. Sales revenues decreased slightly, falling by 2.6 percent to EUR 223.6 million. EBIT
increased from the previous year comparative EUR 5.8 million to EUR 13.2 million. A number of complex machines were
delivered in the first half of the year, resulting in an improvement in margins.
The net loss for the period improved from EUR 5.3 million last year to EUR 0.1 million this year. Orders in hand in the
Equipment segment declined to EUR 134.2 million (previous year: EUR 154.0 million). Order receipts remain very volatile.
Some of our markets are repeatedly being subjected to new political uncertainty, hampering the willingness of our customers
to invest. No major growth has been achieved since the recovery in markets following on from the financial crisis in 2010.
Business continues to be very short-term in nature. Specialist foundation engineering machinery customers expect immediate
delivery after ordering. Demand is nevertheless lively, leading us to forecast a generally stable trend in sales growth.
Our Equipment segment needs to increase revenues by more than 10 percent over the years ahead in order to achieve sustained earnings growth. This would provide much better utilization of our capacities, and so improve coverage of fixed costs.
We aim to deliver that increase based on new products in the specialist foundation engineering sector, by sales of the newly
developed BG 11, and through our range of deep drilling rigs. The cooperation contract with Saxon Energy Services Inc. to
develop a large-sized deep drilling rig is an example of the increased opportunities on what are new markets for us. We are
confident that we will be able to improve our revenues in those segments.
On the other hand, the sanctions imposed on Russia are a matter of concern to us. We hope that they will not entail too
severe a decline in our sales.
Full-year outlook
We forecast that sales in our Equipment segment will increase in the current financial year, enabling us also to improve
earnings.
TRENDS IN OUR BUSINESS SEGMENTS
RESOURCES SEGMENT
RESOURCES SEGMENT KEY FIGURES
in EUR '000
06/2013 *
93,604
06/2014
Change
12/2013 *
100,956
7.9 %
199,211
Sales revenues
85,372
93,166
9.1 %
182,115
Orders received
117,999
120,006
1.7 %
190,404
Orders in hand
183,222
169,070
-7.7 %
150,020
EBIT
-2,506
-3,281
n/a
-24,582
Net profit or loss
-4,513
-6,653
n/a
-31,444
1,587
1,383
-12.9 %
1,449
Our Resources segment increased its total Group revenues by 7.9 percent to EUR 101.0 million in the first half of 2014,
primarily thanks to its Materials and Environment areas. Segment EBIT of EUR -3.3 million was somewhat lower than the
previous year comparative (EUR -2.5 million). The net loss for the period of EUR 6.7 million was likewise down against the
previous year.
Major efforts to reorganize the Resources segment continue. Operations in the field of environmental technology and relating
to water are especially pleasing. Our healthy levels of orders in hand in those areas will help us to achieve growth. The management of the Materials area has been changed, and intensive optimization efforts are under way. The successes achieved
to date are highly promising. The segment had a better than expected start to this year thanks to the mild weather in the
early months, among other factors.
Our deep drilling operations to extract water and for mining exploration are yet to meet expectations. We have not yet been
able to acquire sufficient orders to cover our capacities in Jordan owing to the problems in the region. Weak mining markets
worldwide are additionally having a negative impact on us in this context. We are nevertheless optimistic that we will soon
be able to make the necessary progress in this area as in others. The current problems are unfortunately continuing to cause
losses.
Our Resources segment will be closing a number of minor locations in order to focus fully on core opportunities in future.
The segment has healthy levels of orders in hand totalling EUR 169.1 million, though that figure in the core business is
somewhat down against the peaks seen in the past. The Mining division of SCHACHTBAU NORDHAUSEN GmbH accounts
for much of the total, at EUR 40.7 million. Operations in this field in particular include shaft driving for a mine in Kazakhstan.
There are also a number of interesting large-scale environmental projects in the pipeline, on the Arabian Peninsula in particular,
which we are working hard to realize.
Full-year outlook
We see further encouraging development opportunities over the coming years in the Resources segment. In 2014, we will
increase our revenues again. We will still make an after-tax loss for the period however.
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12
EARNINGS, FINANCIAL AND NET ASSET POSITION
OTHER SEGMENT
The performance of the Other segment was substantially at variance from the same period last year. Segment EBIT is EUR
4.9 million down against the previous year comparative. This was due to special factors: the expected fine of over EUR 3
million arising from proceedings against one of our subsidiaries, costs linked to our syndicated loan, and losses from foreign
exchange forward contracts of BAUER AG to hedge against foreign receivables which were not cashed. Based on current
forecasts, these items will not impact on business any further this year.
Earnings, financial and net asset position
Our consolidated balance sheet and income statement continue to bear the marks of the years following the financial crisis,
which entailed the need for significantly higher funding of our business. Up-front financing of our works additionally rose
substantially in relation to a number of major construction projects. Our Equipment segment, too, is still clearly showing the
impact of its increased up-front financing requirements, resulting from the need to hold more stocks due to shortened delivery
lead times. The loss made last year and the adjustments to provisions for defined benefit plans necessitated by IFRS have
had a negative impact on our balance sheet, and especially on the equity ratio. Those changes will continue to affect us,
though we will be working in the years ahead to improve the equity ratio again.
It is normal in the specialist foundation engineering and related equipment business that the financing needs of the companies
concerned increase substantially in the early months and only decrease again towards the end of the year. This effect is attributable firstly to the payment practices of our customers, but also stems from the seasonal nature of the business and the
necessity to boost production at the start of the year in order to make deliveries in the summer when sales rise. This results
in a significant in-year rise in working capital. The same factors will have an opposite effect at the year-end.
Net assets at the end of the first half-year 2014 had increased by 4.2 percent against the 2013 year-end. They had decreased
by 1.5 percent against the figure shown on the balance sheet at the end of June last year. The trend in net assets is thus
very substantially below the rate of rise in revenues (+7.8 percent year-on-year). Our medium-term target is a substantial
reduction in net assets relative to total Group revenues.
EARNINGS
The consolidated revenues shown in the Group's earnings statement increased by 7.8 percent against the previous year
comparative period to EUR 732.1 million. The changes in inventories item increased to EUR 69.3 million. The other capitalized goods and services for own account item, which mainly relates to the equipment required for our own in-house
construction operations as well as development costs, amounted to EUR 6.0 million in the first six months of the year. Other
income decreased by EUR 1.3 million to EUR 11.3 million. Sales revenues in themselves totalled EUR 645.5 million, 6.3
percent up on the previous year comparative.
The cost of materials, staff costs, depreciation and amortization and other operating expenses items in the income
statement rose somewhat less than the revenues overall, so also contributing to the slight improvement in EBIT.
Cost of materials increased by 8.0 percent – slightly more than the rate of rise in consolidated revenues. In the Construction
segment's service business, the distribution of costs between years often varies considerably owing to the order structure.
The small change is therefore insignificant. Staff costs increased by 6.1 percent – significantly less than the rate of rise in
revenues.
Depreciation of fixed assets decreased by 2.0 percent. Write-downs of inventories due to use increased by EUR 1.9
million, because more machines were hired out than in the previous year comparative period.
Financial expenses changed only very slightly compared to the same period last year. Financial income of EUR 2.6 million
was well down against the previous year comparative. No year-on-year comparison is possible in this respect, as the previous
year period was subject to special influencing factors.
Income tax expense of EUR 5.8 million was EUR 5.0 million above the previous year comparative figure. Losses in the
USA, among other factors, had produced tax income last year. This year significant levels of taxation were incurred in spite
of the reported loss. The reason is that tax breaks in countries where a loss is made cannot be set off against taxation in
other countries where a profit is made owing to the national autonomy of tax laws. We expect that full-year income tax
expense will ultimately be around that of last year. However, the tax rate will be higher than the approximately 30 percent
commonly seen in previous years.
The net loss for the period deteriorated against the previous year comparative from EUR 7.9 million to EUR 11.0 million.
Key factors in this were the higher tax charge and the provision of over EUR 3 million.
FINANCIAL POSITION
Our financial position is developing in line with our plans. On April 17, 2014, we agreed a three-year syndicated loan providing a EUR 450 million credit facility with a consortium of the company's main bankers. This provided the business with
a new financing structure which will form the basis of planning for the years ahead. The syndicated loan also replaces the
loans affected by the breaking of covenants. The new financing structure will increase the Group's finance costs.
NET ASSET POSITION
The net assets shown on the balance sheet increased by 4.2 percent against the 2013 year-end and decreased by 1.5 percent
relative to June of last year. An in-year increase is normal in our business, for the reasons already outlined. According to our
planning, the increase in net assets at the year-end will be markedly less than the rate of rise in revenues.
Fixed assets have decreased slightly relative to the 2013 year-end. Property, plant and equipment assets, in particular,
decreased by 3.7 percent. This reflects our efforts to be economical in our investment activities. Non-current assets decreased by 2.6 percent overall. The inventories (particularly finished goods and work in progress and stock for trade) and
the receivables reflect the annual recurring seasonal effect. The level of up-front financing for our projects and inventories
has therefore risen accordingly. Cash and cash equivalents decreased by EUR 10.0 million against the year-end figure,
and by EUR 6.8 million against the half-year period last year. Current assets increased by 1.0 percent overall against the
previous year comparative period.
On the Equity and Liabilities side, shareholders' equity decreased by EUR 19.2 million against the end of last year. The
main changes, alongside the loss made (EUR 11.0 million), are foreign currency exchange variations of EUR +1.3 million,
effects of changes in interest rates on the valuation of pension commitments totalling EUR -8.6 million (after deducting
deferred taxes), dividend payments to minority shareholders totalling EUR 2.3 million, and the EUR 0.9 million increase
in minority interests.
13
14
The usual seasonal additional financing requirement was mainly covered by borrowings. The split between non-current and
current financial liabilities was significantly affected by the syndicated loan. Most of the syndicated loan has been allocated
to current financial liabilities, as the company will be able to utilize those portions of it in a highly flexible way. Borrowings
under these items increased against the year-end by EUR 93.7 million in line with seasonal trends. Against the previous year
comparative half-year period they decreased by EUR 7.6 million.
DEVELOPMENT OF THE BAUER AG SHARE
The Bauer share began the year on a positive trading note. From its opening price of EUR 18.75, by January 17 it had risen
to its high for the year to date of EUR 20.04. Stock markets declined generally over the ensuing period. The company's
share price followed that trend, and at the end of January was back at its year opening level. By mid-April, following the
trend of the DAX and SDAX indices, the share price had recovered to around mid-January's level. Following publication
of the 2013 Annual Report on April 11, it fell to EUR 18.27. Stock markets subsequently underwent a period of growth.
The Bauer share failed to follow that trend, however, remaining around the same level before falling back to EUR 18.12 by
May 20. By the end of the second quarter it had recovered again to EUR 18.87. In July stock markets again came under
pressure. The Bauer share fell significantly during that time. At the end of July the share was quoted at EUR 16.26.
HUMAN RESOURCES
The number of employees has increased only slightly since June of last year (10,388), climbing to 10,406 on average over
the year. Changes were seen only in lower-pay countries, linked to specific projects. This is in line with our efforts to improve
revenues without increasing staffing levels.
FOLLOW-UP REPORT
No matters of special note which we would expect to have a material influence on the net asset, financial and earnings
position of the BAUER Group occurred after June 30, 2014.
OPPORTUNITIES AND RISKS
Major opportunities and risks are set out in the individual sections of this Interim Report. There has been no material change
in risks since the Annual Report to December 31, 2013. Consequently, we refer back to the Combined Management Report
for financial 2013.
FULL-YEAR OUTLOOK
The year to date has been marked by many different developments on our markets – both positive and negative. The in
part dramatic political disturbances in relation to Russia, Ukraine, Israel and Iraq were particularly unpredictable. They are
having a negative impact on our business – and not just in the countries concerned. However, they will not materially alter
the opportunities open to our businesses overall.
All in all, we are pleased that we have been able to maintain our revenue growth within the target corridor in spite of such
developments. Our after-tax earnings are somewhat below expectations owing to the changes in our operating environment
and linked to a number of special influencing factors. A pleasing aspect is the trend on our home market in Germany. The
positive expectations arising from the order receipts in our Equipment segment during the first quarter have unfortunately
not been fulfilled. As a consequence, order receipts were again very volatile. We have nevertheless managed to sustain last
year's levels.
There are unfortunately few very large-scale construction projects on markets at present, so our orders in hand are slightly in
decline. We nevertheless expect to achieve our full-year revenue targets based on large numbers of small and medium-sized
projects. Our Resources segment has opportunities to acquire some large-scale projects, though they are still in the early
stages.
15
16
The latest sanctions imposed on Russia might impact on our business, thereby further restricting earnings.
The new financing structure will slightly increase our interest costs, which we will offset by cost savings. The cost-saving
programme which we have already launched to that end is progressing in line with our planning.
We must continue working hard to resolve some of the special problems we face and deal with the many uncertainties of
our times. Some very good opportunities will also arise from specific business openings.
Overall, however, because of the disturbances we must recognize that – despite the unchanged outlook in terms of total Group
revenues and EBIT – we will no longer be able to fully achieve our forecast after-tax earnings. We now predict:
•
Total Group revenues of around EUR 1.55 billion and EBIT of around EUR 75 million
•
Profit after tax of around EUR 15 to 20 million
As in previous years, we must again point out that – contrary to earlier boom years – the forecast revenues and earnings of
the BAUER Group are subject to a much greater degree of uncertainty. The main reason for this is the persisting uncertainty
regarding developments in many parts of the world.
It is not easy for our management and staff to accept that problems beyond our control arising in our operating environment
should repeatedly be hampering us in achieving planned goals. But we are not discouraged by such developments, and will
continue devoting all our efforts to ensure that the Group is restored to a strong growth course.
17
Interim Financial Statements
of the BAUER Group
INCOME STATEMENT
in EUR '000
1. Sales revenues
2. Changes in inventories
3. Other capitalized goods and services for own account
4. Other income
CONSOLIDATED REVENUES
5. Cost of materials
6. Staff costs
01.04. - 30.06.2013 * 01.04. - 30.06.2014 01.01. - 30.06.2013 * 01.01. - 30.06.2014
344,670
332,190
607,266
645,541
16,918
20,702
52,878
69,304
4,393
2,515
6,411
5,961
3,613
5,518
12,589
11,266
369,594
360,925
679,144
732,072
-208,380
-196,062
-366,156
-395,371
-85,252
-89,098
-164,794
-174,856
-19,636
-18,243
-38,053
-37,300
-2,437
-3,180
-4,796
-6,716
-48,800
-45,657
-97,917
-104,226
5,089
8,685
7,428
13,603
7. Depreciation and amortization
a) Depreciation of fixed assets
b) Write-downs of inventories due to use
8. Other operating expenses
OPERATING RESULT
9. Financial income
5,389
1,670
6,277
2,641
-10,090
-8,888
-21,637
-21,519
11. Share of the profit or loss of associated companies
accounted for using the equity method
1,006
64
787
66
PROFIT BEFORE TAX
1,394
1,531
-7,145
-5,209
12. Income tax expense
238
-5,145
-789
-5,755
10. Financial expenses
NET PROFIT OR LOSS
of which attributable to shareholders of BAUER AG
of which attributable to minority interests
in EUR / share
1,632
-3,614
-7,934
-10,964
1,603
-3,571
-7,716
-11,346
29
-43
-218
382
01.04. - 30.06.2013 * 01.04. - 30.06.2014 01.01. - 30.06.2013 * 01.01. - 30.06.2014
Basic earnings per share
0.09
-0.21
-0.45
-0.66
Diluted earnings per share
0.09
-0.21
-0.45
-0.66
Average number of shares in circulation (basic)
17,131,000
17,131,000
17,131,000
17,131,000
Average number of shares in circulation (diluted)
17,131,000
17,131,000
17,131,000
17,131,000
STATEMENT OF COMPREHENSIVE INCOME OF THE BAUER GROUP
in EUR '000
Net profit or loss
01.04. - 30.06.2013 01.04. - 30.06.2014 01.01. - 30.06.2013 01.01. - 30.06.2014
1,632
-3,614
-7,934
-10,964
Revaluation of commitments arising from employee
benefits after termination of employment
-1,417
-6,259
-1,417
-12,060
Deferred taxes on that revaluation with no effect on
profit and loss
398
1,757
398
3,387
85
-70
698
82
0
566
0
573
-184
6
-487
-37
-5,874
1,993
-2,024
1,268
Other comprehensive income after tax
-6,992
-2,007
-2,832
-6,787
Total comprehensive income
-5,360
-5,621
-10,766
-17,751
-4,603
-5,302
-9,738
-17,715
-757
-319
-1,028
-36
Income and expenses not transferred to profit and loss
Income and expenses transferred to profit and loss
Market valuation of derivative financial instruments
Included in profit and loss
Deferred taxes on financial instruments with no effect
on profit and loss
Differences from currency translation
of which attributable to shareholders of BAUER AG
of which attributable to minority interests
18
INTERIM FINANCIAL STATEMENTS OF THE GROUP
BALANCE SHEET OF THE BAUER GROUP
ASSETS in EUR '000
30.06.2013 *
31.12.2013 *
30.06.2014
A. NON-CURRENT ASSETS
I.
Intangible assets
II.
Property, plant and equipment and investment property
III. Investments accounted for using the equity method
IV. Participations
V.
Deferred tax assets
VI. Receivables from concession arrangements
VII. Other non-current assets
VIII. Other non-current financial assets
34,021
35,388
34,656
469,933
459,537
442,415
12,259
12,651
12,507
3,613
3,613
3,613
32,757
26,299
28,456
38,934
36,762
36,964
8,374
7,564
7,859
8,507
5,420
5,382
608,398
587,234
571,852
B. CURRENT ASSETS
I.
Inventories
472,730
419,352
479,333
II.
Receivables and other assets
537,125
517,978
549,674
III. Effective income tax refund claims
IV. Cash and cash equivalents
EQUITY AND LIABILITIES in EUR '000
5,549
3,437
4,245
54,015
57,217
47,219
1,069,419
997,984
1,080,471
1,677,817
1,585,218
1,652,323
30.06.2013 *
31.12.2013 *
30.06.2014
A. SHAREHOLDERS' EQUITY
I.
Equity of BAUER AG shareholders
II.
Minority interests
412,443
396,602
378,936
32,011
22,809
21,299
444,454
419,411
400,235
82,801
81,637
95,110
438,407
279,437
394,255
7,680
6,483
5,701
B. NON-CURRENT LIABILITIES
I.
Defined benefit plans
II.
Financial liabilities
III. Other liabilities
IV. Deferred tax liabilities
19,271
14,788
13,218
548,159
382,345
508,284
C. CURRENT LIABILITIES
I.
Financial liabilities
392,236
449,876
428,793
II.
Other liabilities
271,204
307,203
291,906
III. Effective income tax obligations
IV. Provisions
5,037
9,606
6,166
16,727
16,777
16,939
685,204
783,462
743,804
1,677,817
1,585,218
1,652,323
CASH FLOW STATEMENT OF THE BAUER GROUP
in EUR '000
30.06.2013
Cash flows from operating activities
-116,934
-61,597
Cash flows from investing activities
-32,738
-16,339
Cash flows from financing activities
157,150
67,896
7,478
-10,040
Changes in liquid funds affecting payments
30.06.2014
Influence of exchange rate movements on cash
1,305
42
Total change in liquid funds
8,783
-9,998
Cash and cash equivalents at beginning of reporting period
45,232
57,217
Cash and cash equivalents at end of reporting period
54,015
47,219
8,783
-9,998
Change in cash and cash equivalents
19
20
STATEMENT OF CHANGES IN EQUITY OF THE BAUER GROUP
Other revenue reserves and
net earnings available for distribution
in EUR '000
Subscribed
capital
As at 01.01.2013
Capital
reserve
Revenue
reserves
Foreign
currency
translation
Reconciling
item, IFRS
Hedging
transactions
reserve
Minority
interests
Total
73,001
38,404
303,892
7,373
10,387
-3,722
33,205
462,540
Net profit or loss
0
0
-7,716
0
0
0
-218
-7,934
Differences from
currency translation
0
0
0
-1,223
0
0
-801
-2,024
Revaluation of commitments arising from
employee benefits after
termination of employment
0
0
-1,404
0
0
0
-13
-1,417
Market valuation of
derivative financial
instruments
0
0
0
0
0
698
0
698
Deferred taxes with no
effect on profit and loss
0
0
394
0
0
-487
4
-89
0
0
-8,726
-1,223
0
211
-1,028
-10,766
Changes in scope
of consolidation
0
0
-2,015
0
0
0
0
-2,015
Dividend payments
0
0
-5,139
0
0
0
-166
-5,305
Other changes
0
0
0
0
0
0
0
0
As at 30.06.2013 *
73,001
38,404
288,012
6,150
10,387
-3,511
32,011
444,454
As at 01.01.2014
73,001
38,404
283,895
-6,492
10,387
-2,593
22,809
419,411
Net profit or loss
0
0
-11,346
0
0
0
382
-10,964
Differences from
currency translation
0
0
0
1,620
0
0
-352
1,268
Revaluation of commitments arising from
employee benefits after
termination of employment
0
0
-11,955
0
0
0
-105
-12,060
Market valuation of
derivative financial
instruments
0
0
0
0
0
644
11
655
Deferred taxes with no
effect on profit and loss
0
0
3,357
0
0
-35
28
3,350
0
0
-19,944
1,620
0
609
-36
-17,751
Changes in scope
of consolidation
0
0
0
0
0
0
0
0
Dividend payments
0
0
0
0
0
0
-2,325
-2,325
Other changes
0
0
49
0
0
0
851
900
73,001
38,404
264,000
-4,872
10,387
-1,984
21,299
400,235
As at 30.06.2014
SEGMENT REPORTING OF THE BAUER GROUP
in EUR '000
Construction
Equipment
Resources
2013 *
2014
2013 *
2014
2013 *
2014
Total revenues (Group)
346,099
351,448
309,782
321,340
93,604
100,956
16,676
16,105
Sales revenues with third parties
292,085
328,609
229,521
223,567
85,372
93,166
288
199
7,861
6,933
22,542
18,364
617
1,326
15,447
15,086
378
-67
50,096
67,584
2,404
1,787
0
0
01.01. - 30.06.
Sales revenues between
business segments
Changes in inventories
Other capitalized goods and
services for own account
2013 *
Other
2014
295
80
2,137
2,316
150
98
0
0
6,330
4,593
5,087
4,765
1,438
1,826
384
309
306,949
340,148
309,383
316,596
89,981
98,203
16,119
15,594
OPERATING RESULT
2,928
7,418
5,771
13,174
-2,506
-3,281
814
-4,065
Financial income
3,212
1,154
1,968
703
1,147
996
3,135
3,526
-7,813
-6,935
-10,202
-11,141
-4,730
-4,928
-2,077
-2,253
Other income
Financial expenses
Share of the profit or loss of
associated companies accounted
for using the equity method
Income tax expense
NET PROFIT OR LOSS
15
-140
5
-57
767
263
0
0
1,862
-3,158
-2,845
-2,772
809
297
-493
-43
204
-1,661
-5,303
-93
-4,513
-6,653
1,379
-2,835
-1,529
ADDITIONAL INFORMATION ON THE INCOME STATEMENT
Depreciation and amortization
Depreciation of fixed assets
-23,556
-22,330
-7,884
-9,008
-5,161
-4,675
-1,644
0
0
-4,796
-6,716
0
0
0
Write-downs of inventories due to use
SEGMENT ASSETS
30.06.2014
31.12.2013
30.06.2014
31.12.2013
30.06.2014
31.12.2013
30.06.2014
566,266
599,004
803,467
782,643
265,613
273,453
303,121
293,718
SEGMENT REPORTING OF THE BAUER GROUP
in EUR '000
01.01. - 30.06.
Total revenues (Group)
Consolidation
Group
2013
2014
2013 *
2014
-44,812
-40,634
721,349
749,215
607,266
645,541
Sales revenues with third parties
Sales revenues between
business segments
Changes in inventories
Other capitalized goods and
services for own account
Other income
OPERATING RESULT
Financial income
Financial expenses
Share of the profit or loss of
associated companies accounted
for using the equity method
Income tax expense
NET PROFIT OR LOSS
-46,467
-41,709
0
0
0
0
52,878
69,304
3,829
3,467
6,411
5,961
-650
-227
12,589
11,266
-43,288
-38,469
679,144
732,072
13,603
421
357
7,428
-3,185
-3,738
6,277
2,641
3,185
3,738
-21,637
-21,519
0
0
787
66
-122
-79
-789
-5,755
299
278
-7,934
-10,964
-37,300
ADDITIONAL INFORMATION ON THE INCOME STATEMENT
Depreciation and amortization
Depreciation of fixed assets
Write-downs of inventories due to use
SEGMENT ASSETS
0
31.12.2013
192
242
-38,053
0
0
-4,796
-6,716
31.12.2013
30.06.2014
31.12.2013
30.06.2014
-353,249
-296,495
1,585,218
1,652,323
21
22
Notes to the Financial Statements
1. GENERAL DISCLOSURES RELATING TO 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 (HRB 101375).
The BAUER Group is a provider of services, machinery and ancillary products for ground and groundwater. The Group markets
its products and services all over the world. Its business is divided into three segments: Construction, Equipment and Resources.
BAUER AG is listed on the SDAX index.
These condensed consolidated financial statements were released for publication on August 11, 2014.
Auditing
These condensed interim consolidated financial statements and the interim Group Management Report have not been
audited in accordance with section 317 of the German Commercial Code (HGB), nor have they been subjected to any
review by an auditor.
2. BASES FOR COMPILING THE CONSOLIDATED FINANCIAL STATEMENTS
BAUER AG compiles its condensed interim consolidated financial statements in accordance with International Financial
Reporting Standards (IFRS), the requirements of the International Accounting Standards Board (IASB), London, and the
Interpretations of the International Financial Reporting Interpretations Committee (IFRIC), as applicable on the accounting
reference date and recognized by the European Union. Only IASB Standards and Interpretations adopted by the Commission
and duly published in the Official Journal of the EU by the accounting reference date are applied.
The Half-Year Interim Report to June 30, 2014 was prepared in condensed form on the basis of IAS 34, "Interim Financial
Reporting", and as such does not include all the disclosures mandatory for full-year consolidated financial statements.
These condensed interim consolidated financial statements are based on the Group's consolidated financial statements to
December 31, 2013, and as such should be read in conjunction with the consolidated financial statements of BAUER AG
to December 31, 2013.
3. 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 percent. When assessing whether control is exerted, the existence and effect of potential voting rights currently exercisable or convertible are considered.
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 percent of their voting rights. This is the result of state restrictions which stipulate that foreign
investors may not hold more than 50 percent of the voting rights in domestic companies. In such cases BAUER AG makes
use of so-called agency constructions, whereby more than 50 percent of the voting rights are commercially held in the
company concerned, thus allowing for full consolidation.
NOTES TO THE FINANCIAL STATEMENTS
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. Joint ventures are
likewise consolidated according to the equity method.
Changes at subsidiaries:
Equipment segment
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 percent, 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 geological 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
Assets
0
900
Non-current assets
0
Current assets
0
Equity and liabilities
0
Net worth
900
Minority interests
900
Goodwill
0
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.
No changes have occurred to the scope of consolidation since December 31, 2013.
23
24
4. KEY ASSUMPTIONS AND ESTIMATES
In this context we refer to our 2013 Annual Report, page 103.
5. ACCOUNTING AND VALUATION METHODS
The accounting and valuation methods applied as from January 1, 2014 correspond to those applied to the consolidated
financial statements to December 31, 2013, with the following exceptions:
• 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: Presentation
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 dependent
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 amendment to IAS 32 has no effect on the interim 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.
• IAS 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.
• 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 IAS 10 have no effect on the interim 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 recognition on the balance sheet and in the income statement.
Pro rata results are no longer stated as receivables from joint ventures and sales revenues through joint ventures, but
under "Investments accounted for using the equity method" as well as in the net result from investments accounted for
using the equity method. The previous year's figures have been adjusted for greater comparability.
Apart from the change in recognition, IFRS 11 has no effects on the interim consolidated financial statements of BAUER AG.
• 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 have no effect on the interim 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".
These changes have no effect on the interim consolidated financial statements of BAUER AG.
• 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 have no effect on the interim consolidated financial statements of BAUER AG.
6. DISCLOSURES REGARDING FINANCIAL INSTRUMENTS
6.1 Financial risk factors
In its business operations and financing activities, the BAUER Group is subject to a wide range of market risks (foreign
exchange rate, interest rate, raw material and liquidity risks, risk of default).
These condensed interim consolidated financial statements do not include all disclosures and information relating to financial
risk management, so they should be read in conjunction with the consolidated financial statements to December 31, 2013.
No changes to the management of financial risks have been made since the end of the financial year.
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26
6.2 Carrying amounts and fair values
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)
The financial instruments measured at fair value are assignable to the following levels:
ASSETS in EUR '000
Securities
Derivatives not in hedge accounting
Derivatives in hedge accounting
IAS 39 category
Securities
0
FAHfT
675
0
675
664
0
664
1,339
0
1,339
n/a
IAS 39 category
30.06.2014
Level 1
Level 2
FLHfT
4,356
0
4,356
n/a
2,456
0
2,456
6,812
0
6,812
IAS 39 category
31.12.2013
Level 1
Level 2
AfS
0
0
0
FAHfT
1,326
0
1,326
n/a
1,980
0
1,980
3,306
0
3,306
Total
Level 2
0
Total
ASSETS in EUR '000
Level 1
0
Total
30.06.2014
AfS
IAS 39 category
31.12.2013
Level 1
Level 2
FLHfT
4,591
0
4,591
n/a
2,940
0
2,940
7,531
0
7,531
Total
In the first six months of the year, no reclassification was undertaken between level 1 and 2 financial instruments measured
at fair value.
6.3 Methods for determining level 2 fair values
Level 2 derivatives comprise foreign exchange forward contracts, foreign exchange forward options, interest rate swaps and
cross-currency swaps.
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 price 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 assets and non-current financial assets and of non-current liabilities and 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.
Investments are valued at cost, as no fair value can be reliably determined owing to the lack of an active market.
6.4 Fair value disclosures
The principles and methods of calculating fair value have essentially remained unchanged from the previous year. Detailed
explanatory notes on the measurement principles and methods are set out in the 2013 Annual Report.
The financial assets and liabilities of which the fair values differ from their carrying amounts are as follows:
Receivables from concession arrangements
Other non-current financial assets
30.06.2014
31.12.2013 *
in EUR '000
Carrying amount
Fair value
Carrying amount
Fair value
36,762
40,449
36,964
42,101
5,420
5,309
5,382
5,306
Trade receivables
320,329
319,482
318,148
317,649
Liabilities to banks
247,775
256,361
360,468
372,231
Other non-current financial liabilities
Total
14,397
15,396
16,679
17,842
624,683
636,997
737,641
755,129
The carrying amounts of all other financial assets and liabilities correspond to their fair value.
In other respects we refer to pages 154ff. of the 2013 Annual Report.
7. SEASONALITY
Our Construction segment undertakes many projects in regions where winter and other hostile weather conditions impact
severely on site results in the first quarter of the year and at the start of the second quarter. The first quarter is also weak in
terms of the performance of our Equipment segment, because customers only buy machines when they actually need them
to carry out their construction works. For our Resources segment, wintry conditions at the start of the year mean that sales
of well engineering materials are very weak.
Since most costs are fixed, significant losses are made in the first quarter of each year. Beginning with the second quarter,
those losses are balanced out as contribution margins improve. Break-even has normally not yet been achieved by the end
of the second quarter. Most profit is generated in the third and fourth quarters. This annually recurring business cycle allows
performance, sales and earnings in the various quarters to be compared against the corresponding reference periods,
ignoring special factors.
27
28
8. NOTES ON SEGMENT REPORTING
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.
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.
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.
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.
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 percent 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.
9. EVENTS AFTER JUNE 30, 2014
No events subject to mandatory reporting in accordance with IAS 10 occurred after June 30, 2014.
10. MATERIAL TRANSACTIONS WITH RELATED PARTIES
The relationships between fully consolidated Group companies and related companies and persons relate mainly to associated
and joint-venture companies. Transactions with the said companies are transacted at standard market terms. In the period
under review no material transactions were undertaken with related parties.
11. CONTINGENT LIABILITIES
Contingent liabilities arising from guarantees to third parties exist in an amount of EUR 4,507 thousand (December 31, 2013:
EUR 4,386 thousand). In addition, we are subject to joint and several liability in respect of all joint ventures in which we
participate.
ASSURANCE BY THE LEGAL REPRESENTATIVES
We hereby assure that, to the best of our knowledge, the condensed interim 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 interim reporting, and that the interim Group 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 over the remaining course of the financial year are set out.
Schrobenhausen, August 11, 2014
The Management Board
Prof. Thomas Bauer
Chairman of the Management Board
Dipl.-Betriebswirt (FH) Hartmut Beutler
Dipl.-Ing. Heinz Kaltenecker
29
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FUTURE-RELATED STATEMENTS
This Interim Report contains future-related statements. Future-related statements are any statements which do not relate
to historical facts and events, such as forecasts of future financial earning power and indications of plans and expectations
with regard to the development of the business of the BAUER Group and relating to the general economic climate or other
factors to which the BAUER Group is subject. The use of words such as "believe", "expect", "predict", "forecast", "intend",
"plan", "estimate", "aim", "likely", "assume" and similar formulations indicates that the statements in question are futurerelated. Future-related statements are subject to risks and many uncertainties which may mean that actual developments,
earnings or levels of performance differ widely from those explicitly or implicitly assumed in the future-related statements.
Readers are advised that, in view of the said risks and uncertainties, no inappropriately high degree of confidence should
be placed in the likelihood of such statements proving to be accurate in the future. BAUER Aktiengesellschaft does not
intend to, and assumes no obligation to, publish updates of such future-related statements in order to incorporate events
or circumstances beyond the date of publication of this Interim Report.
DATES 2014
April 11, 2014
Publication of 2013 Annual Report
Annual Press Conference
Analysts' Conference
May 14, 2014
Interim Report to March 31, 2014
June 26, 2014
Annual General Meeting
August 14, 2014
Half-Year Interim Report to June 30, 2014
November 14, 2014
Interim Report to September 30, 2014
You will find more information on the BAUER Group on the Internet at www.bauer.de.
PUBLISHED BY
BAUER Aktiengesellschaft
BAUER-Strasse 1
86529 Schrobenhausen, Germany
Office of the Management Board:
Phone: +49 08252 97-1215
Fax:
+49 08252 97-2900
E-mail: [email protected]
Registered place of business:
86529 Schrobenhausen, Germany
Registered at the District Court of
® Registered trademark
Ingolstadt under HRB 101375
of Deutsche Börse AG

Half-Year Interim Report

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