report for the business year 20102010 - spie · brief overview of the sag group gmbh – group...

2010201020102010201020102010201020102010201020102010201020102010201020102010Report for the Business Year

About the Company

SAG Group GmbH, Report for the Business Year | 2010 About the Company

02

The SAG Group is the leading service and system provider for electricity, gas and water networks and for systems involved in the generation, supply and application of power and utilities. Around 120 locations in Germany ensurethat area-wide services are provided to regional and municipal utilities, industrial companies, power station operators and public transport services. France as well as Central and Eastern Europe are further core markets of the SAG Group.

The use of a safe, efficient and cost-optimised energy infrastructure is a significant competitive factor. To exploit the diverse potentials in this field, SAG supports its customers in the construction and in the long-term eco-nomical operation of relevant facilities innovatively, as partners and with a service and safety orientation. Almost 100 years of experience in the con-struction and expansion of electricity transmission and distribution grids in Germany and abroad enables SAG to offer its customers and partners the highest degree of technical expertise, quality and service.

BriefoverviewoftheSAGGroupGmbH–Group Salesrevenue €million

EBITDA €million

Capitalexpenditure €million

Employees* at31.12.

*Equivalentsonthereportingdate,excludingtrainees.

2010

966

84

26

7,876

03

Contents

SAG Group GmbH, Report for the Business Year | 2010 Contents

0406

08

16

242627

2830

31

ForewordbytheManagementReportoftheSupervisoryBoard

SituationoftheIndividualBusinessUnits FactsandFiguresontheFinancialYearfrom1Januaryto31December2010

BalanceSheetIncomeStatementCashFlowStatement

ListofAffiliatedCompaniesSupervisoryBoardandManagement

Imprint

Report for the Business Year 2010

Energy knowsno bounds.With SAG.

DearLadiesandGentlemen,

The current public and political debate shows the high priority given to energy systems in Germany and around the world. At the same time, it is becoming increasingly clear that it will not be possible to fully integrate all the generation plants into the market without expanding the grids. Grid study II (“Netzstudie II”) of the German Energy Agency (dena) shows the extensive expansion needed to rapidly integrate into the transmission grid the 39 percent share of renewable energy in the power supply as required by the Federal Government. For the currently determined 3,500 kilometres, it will thus be necessary to simplify the high level of complexity of approval procedures in the federal system and create acceptance for expansion in the population. This applies not only in Germany but increasingly in a pan-European context.

SAG continued to grow and consistently develop in 2010. Due to the acquisition of Elektro vod Holding in Slovakia (today: SAG Elektrovod), Elcon Elbud in Poland (today: SAG Elbud Kraków) and Bohlen & Doyen Bauunternehmung GmbH in Germany, we have grown significantly and achieved a new position at both national and international level: We have become the undisputed market leader in Germany and have sharpened our market profile in Eastern Europe. We now intend to sustainably secure and further consolidate this market position.

For this reason SAG initiated MOVE, the extensive growth and excellence programme, in 2010. A greater penetration of existing customer accounts and the targeted acquisition of new customers were analysed from the perspective of a sales offensive. The project groups considered growth aspects in great depth, such as photovoltaics or added value services in switchgear construction.

Foreword by the Management

SAG Group GmbH, Report for the Business Year | 2010

04

For all of the topics considered, business plans were drawn up, potential revenues specified and the approaches also rolled out in foreign companies. In this context, special oppor-tunities are seen in the expansion of renewable energy. A further focus of the project is the improvement of SAG’s efficiency.

Apart from the consistent transfer into practice of the potentials developed in MOVE, we are continuing to concentrate on innovation and technology topics that create a basis for the development of new markets. We see market opportunities particularly for new services for offshore wind farms and in smart grid technologies.

To reach our ambitious goals and meet the challenges ahead of us in the energy sector, we are building on our committed and performance-orientated employees. Only thanks to their commitment was the progress in the past financial year made possible in the first place. We are convinced that we laid the foundations in 2010 for the future success of the SAG Group and are looking forward to continuing the sustainable development of the Company.

Langen, 7 March 2011

Foreword by the Management

05

Karl-Michael FuhrChief Executive Officer

Karl-Michael FuhrChief Executive Officer

SAG Group GmbH is the parent company of the SAG Group and performs the control and management as defined by IAS 27. SAG Group GmbH is a codetermined company in compli-ance with the Codetermination Act.

At three meetings in 2010, the Management described the main facts of the financial year from 1 January to 31 December 2010. The Management kept the Chairman of the Supervisory Board up-to-date on the business development, the situation of the Company and general issues concerning the business policy through regular reports. The Chairman of the Supervisory Board monitored the Management of the Company on the basis of these reports in conjunction with the Supervisory Board and discussed all significant transactions with the Management in detail.

Issues concerning the strategic reorientation of the Group were the centre of attention in these talks. In addition, subjects in connection with planned capital expenditures were discussed.

The annual financial statements, the consolidated financial statements and the Groupmanagement report for the 2010 financial year were audited by the auditors elected at the shareholders’ meeting on 31 August 2010, PricewaterhouseCoopers AG, Wirtschafts prü-fungs gesellschaft, Frankfurt/Main. The auditor’s report was handed over to the Supervisory Board. The report was included in the discussion and review of the annual financial state-ments and the consolidated financial statements by the Supervisory Board. The auditors took part in the discussions of the Supervisory Board of the annual financial statements and the consolidated financial statements, gave a report on the main results of their audit and were available for any explanations.

Report of the Supervisory Board


06

The Supervisory Board took note of and approved the results of the audit.

The Supervisory Board has audited the annual financial statements, the consolidated financial statements and the Group management report. Based on the final outcome of its audit, no objections are to be raised.

Langen, 12 May 2011The Supervisory Board

Report of the Supervisory Board

07

Dr. Manfred KrüperChairman of the Supervisory Board

Dr. Manfred KrüperChairman of the Supervisory Board

SERVICES BuSINESS uNIT

This business unit focuses on the planning, construction and maintenance of electricity, gas, water and district heating networks as well as power stations and industrial plants. Comprehensive expertise in infrastructures is provided to our customers at around 80 sites in Germany.

When implementing large-scale power station projects, uncertainties and risks are increas-ingly shaping the discussion. Due to protracted approval procedures and the increasing influence of local interest groups the prospects have deteriorated for the construction of new fossil-fuelled power stations. In spite of this, SAG is currently implementing its largest individual project in Hamm as scheduled and is continuing to increase its expertise in the field of decentralised power station units. At the power station site in Hamm, Westphalia, two new coal-fired power stations are being built for RWE with a total output of approxi-mately 1,600 MW, which are intended to start operating in 2012/13. By then SAG will have erected around 120 kilometres of cable routes with 40 tonnes of steel, laid just under 2,000 kilometres of cables and installed 17,000 lights and 7,500 light poles.

In the decentralised generation sector, expertise was gained in cogeneration plants and the injection of biogas into the natural gas grid and the first plants were realised. At present, around 30 plants inject processed biogas as a regenerative energy source into the naturalgas grid. Further plants are currently under construction or at the design stage in this expand ing market. With a reference project for E.ON Hanse in Lanken, SAG is showing itsexpertise in the construction of biogas injection plants. It assumed the complex task of plant construction and supplied the entire electrical, measurement and control technology.

Situation of the Individual Business Units


08

juwi Solar GmbH – Solar plant of the railway premises in Frankfurt

Three football pitches of solar powerOn a surface of 23,000 square metres, SAG installed 14,300 thin-film modules on behalf of juwi Solar GmbH. Services included laying cables and the erection of an inverter and medium-voltage substation.

Besides its core business, the Services business unit is intensifying its customer relations with the industry. In particular, there was an expansion in business with the Deutsche Bahn (German railways) in 2010. For the construction of three new outstations in Kastl, Pirach and Burghausen for the Mühldorf electronic control centre of DB RegioNetz Infrastruktur GmbH, the business unit assumed 7,000 metres of underground cable route, laying 76,000 metres of signal cables for 110 new signals. In addition, SAG erected four level-crossing systems on main roads and carried out civil engineering work for the construction of the new railway platforms in Altötting and Kastl.

Today, NürnbergMesse is one of the fastest growing exhibition companies in Europe and is one of the 20 largest in the world. Due to its high level of flexibility and technical perfor-mance, SAG was able to increase its business with the exhibition company in both breadth and depth.

In the field of electrical grids, the Services business unit succeeded in extending all the important framework contracts (such as with E.ON, RWE, enviaM and Süwag), some of which for higher contract volumes than in the previous year, and win some new ones. Although volumes were not called off completely under all of the framework contracts as a result of the weather, performance was increased in this segment. The long winter caused the majority of call-off orders to be postponed to the autumn. As the business unit was highly competent at managing resources, it nevertheless managed to generate an increase in results.

As a nationwide system partner, the business unit also provides extensive services for pipeline networks. The basic year for “gas“ under the incentive regulation, which many grid operators used for additional capital expenditure on their infrastructure, had a positive impact on development in this area. The consistent expansion and renewal of district heat -ing routes additionally ensure that pipeline construction work will continue to develop favourably.

Situation of the Individual Business units

09

Corus Steel IJmuiden – New bell-type annealing furnace

Hot furnaces for cold-rolled sheetsFor Corus Steel IJmuiden in the Nether-lands, SAG specialists installed a new bell-type annealing furnace for steel coils. The new plant consists of 19 bases extending over a length of 120 metres.

The business unit is continuing to expand its expertise in order to increase existing market shares and penetrate new segments. Initial success has been achieved in the upgrading of distribution grids to become smart grids.Around 200 local grid stations were retrofitted with measurement technology in the region of E.ON Bayern and SAG is exchanging 116,000 conventional meters for smart meters by December 2011 for RWE Metering GmbH.

This business unit continues to meet with great success in the field of photovoltaics. From consulting and planning right through to assembly, commissioning and maintenance, it can offer a complete service package for the generation of solar energy, which a number of customers are availing themselves of. New approaches are being adopted in decentralised generation for the installation of mini cogeneration plants that produce both heat and power at the same time. The first joint projects are being implemented in this connection, in the course of which the business unit is tapping into the growing market with partners.

The CeGIT business unit (CeGIT – Centre for Geo-Information Technology) provides advice and conducts analyses on the evaluation and use of geodata, network and systems data. The CeGIT business unit provides standardised solutions through suitable products in order to use these data in crucial company processes, e. g. for asset management, mainte-nance management or the management of incidents/breakdowns. On the basis of its own technologies, services are provided for transmission and distribution grid operators, such as technical planning, approval planning, routing line surveys and the documentation of supply networks of all utilities and power output levels.

The extensive portfolio of SAG in these areas has been fortified by Bohlen & Doyen Bauunternehmung GmbH since October 2010. Bohlen & Doyen is renowned as being an efficient and reliable partner of the energy industry. Together, the companies, whose services complement each other very well, have a network spanning the whole of Germany.


10

Software development –Preliminary planning for infrastructure

Broadband expansion

New fibre-optic networks are to provide inner-city and built-up areas with a fast infrastructure for data transmission. CeGIT developed a preliminary planning tool for project planning and documenta-tion of the tube-in-tube systems.

LINE CONSTRuCTION BuSINESS uNIT

As a manufacturer-independent turnkey supplier, SAG offers a complete service portfoliofor high-voltage overhead lines. The core competence of the Line Construction business unit is the planning, delivery, construction and assembly of high-voltage overhead lines up to 400 kV. In addition, the business unit carries out plant evaluations, including a damage analysis, and devises suitable refurbishment concepts in conjunction with SAG’s Researchand Technology Centre (VTZ). The VTZ is an accredited testing institute for complex energy supply systems. The business unit has operating units in Germany, Poland, Slovakia and Hungary.

One of the largest line construction projects of the year for SAG started in Slovakia in 2010 and will be completed there in September 2011. The construction of the new 400 kV overhead line between Košice and Lemešany also includes dismantling the existing 220 kV overhead line. SAG Elektrovod is supplying and erecting the new pylons, putting up the cables and installing the overhead earth wires. The line is part of the strategic modern isation of the supply network in Slovakia and the related substitution of the 220 kVnetwork. The new line is one of the most important in the transmission grid of eastern Slovakia and will be a part of the interconnector from Poland to Hungary.

The operating units of Line Construction abroad developed very well. In Poland, incoming orders were doubled compared to the previous year. Above all, the turnkey contract for the connection of the wind farms ustka I and II contributed to this development. It included the complete electric connection to the high-voltage grid consisting of high-voltage cables and switchgear as well as the medium-voltage cables from the switchgear to the wind turbines. Another large project is the construction of the new Kromolice switchgear for the Polish transmission grid operator Polskie Sieci Elektroenergetyczne (PSE).

In Germany, the Line Construction business unit intensified business with regional cus-tomers and implemented a demanding contract on behalf of Deutsche Bahn. During the construction of the new substitute 110 kV traction current line between Landshut and Rosenheim, it had to remain in operation at all times whilst being built, which required complex provisional solutions.


11

TenneT B.V. – Construction of overhead line

Enhanced efficiency

To increase the efficiency of the existing 380-kV high-voltage over-head line in Zwolle-Meeden, SAG installed two further circuits with a nominal voltage of 110 kV.

SWITCHGEAR CONSTRuCTION BuSINESS uNIT

Expertise in the project planning, construction, modernisation and operation of high-voltage and medium-voltage switchgear is pooled in this business unit. It has operating units in Germany, the Czech Republic and France. Projects in switchgear construction increasingly require greater overall project understanding, which is characterised by integrative project management and project implementation. The Switchgear Construction business unit also has a high level of expertise in engineering. Apart from the acquisition of tendered pro-jects, this also has a favourable eff ect on the greater orientation to new customers and new technologies. In 2010, Switchgear Construction again furnished proof of its high degree of effi ciency in the construction, conversion and expansion of new and existing plants for customers such as RWE, EnBW, E.ON Netz GmbH and various local and regional public utilities at voltage levels between 10 to 400 kV.


12

Amprion GmbH – Construction of overhead line

Giants made of steel

In the first construction phase of the new overhead line between Weissen-thurm and Bad Neuenahr SAG is setting up 27 new pylons and dismantling the old 220 kV overhead line between Neuenahr and Koblenz.

The Switchgear Construction business unit is demonstrating special turnkey expertise in the implementation of a complex project for the Deutsche Bahn (German railways). At the end of 2011, the Deutsche Bahn will commission a new static frequency converter on the premises of the Neckarwestheim power station. SAG’s scope of supplies and services includes the expansion of the 380 kV gas-insulated switchgear in the Neckarwestheim nuclear power station. In addition, a new 380 kV-50 Hz air-insulated switchgear and a 110 kV-16 2/3 Hz outdoor switchgear will be planned, installed and commissioned. Besides its basic business,the Switch gear Construction business unit increased its business activities in the fi eld of inno vative technologies. The expansion of the technological fi eld of gas-insulated switch-gear is particularly noteworthy in this connection.


13

Deutsche Bahn – New frequency converter in Neckarwestheim

One-stop solution

The new static frequency converter supplies the 110 kV-16 2/3 Hz tractioncurrent for the whole of southern Germany. SAG is demonstrating its turn-key expertise in this complex project.

POWERFuL TOGETHER IN GERMANY – BOHLEN & DOYEN AND SAG

Through the acquisition of Bohlen & Doyen Bauunternehmung GmbH, the SAG Group has grown significantly in Germany and thus become the market leader. Since October last year, the Group has had over 120 sites in Germany and now offers an even broader port-folio of services.

Bohlen & Doyen looks back at a 60-year history during which it continually faced the challenges presented by the energy industry and grew with them. With 1,600 employees at 45 sites, Bohlen & Doyen Bauunternehmung GmbH works for the energy sector in Germany both in construction and in the field of network services. In addition to expertise for electric systems, SAG now also has expertise in gas pipeline construction and can also manu facture pipelines for district heating and steam pressure lines in any kind of dimension and at any pressure level. The areas of focus of both companies’ activities are perfectly matched. SAG’s high site density in central and southern Germany is superbly complemented by the structures of Bohlen & Doyen in the north and east of Germany.

NewsalesorganisationTo optimally serve customers with the entire SAG portfolio, a decision was taken in the 2010 financial year to transform the previously function-based structure to a structure that is largely based on regional aspects. The organisation of the SAG Group is thus oriented to its customers’ grid regions and provides one person as a contact for the entire pro-duct portfolio for each region. The strategic goal of SAG is to become the leading service pro vider for technical energy infrastructures in Europe by 2015. Having a leading positi-on in its domestic market of Germany is essential for this. Bohlen & Doyen is renowned as a highly efficient and reliable partner of the energy industry. Together, the companies have a complementing nationwide network of sites in Germany and can realise a complete solution from planning and implementation through to maintenance for electricity, gas, water, waste and telecommunication networks. Bohlen & Doyen and SAG will bundle their joint expertise and apply it on the market in the best possible way.


14

EWE NETZ GmbH – Replacement ofthe high-pressure gas pipeline

Working in watts

Tidal currents and changes to the course of Riffgat have exposed the line that sup-plies natural gas to Norderney. Bohlen & Doyen replaced a part of the route using horizontal drilling methods.

GoodgrowthperspectiveThe successful European growth strategy of SAG, to which Bohlen & Doyen now also makes a significant contribution, presents the best future prospects for both companies and their employees. The expertise of Bohlen & Doyen in the offshore area is particularly noteworthy in this connection. As one of the few companies to do so in Germany, Bohlen & Doyen has extensive experience in the laying of lines in the Wadden Sea. This expertise will be consist ently developed in the future and the service portfolio for offshore wind farms thus rounded off since a significant market can develop in this connection in the fore-seeable future.

This is one of the reasons why SAG signed a preliminary contract on joint collaboration at the end of 2010 jointly with seven other firms from the area of electricity transmission.The goal is to bundle joint expertise and strengths so that SAG can become actively in -volved in the future offshore network infrastructure, particularly in the North and Baltic Sea, in the Channel and in the Irish Sea.


15

N.V. Nederlandse Gasunie – Renewal of measuring and control systems

A permanent connection

Within the next five years, Bohlen & Doyen will renew 36 measuring and control systems in the supply network of N.V. Nederlandse Gasunie. The first batch was completed on schedule.

BuSINESS DEVELOPMENT AND GENERAL CONDITIONS

EconomicdevelopmentAfter the end of the severe global recession that left its mark on many industrial countries, the global economy experienced an upswing in 2010.

Buoyed up by foreign trade, the German economy expanded at an impressive pace during 2010 despite slowing down somewhat at the end of the year. The German export industry continues to benefit from its excellent positioning, particularly in emerging countries.

At 3.6 %, the growth rate of the gross domestic product was the highest posted in the Federal Republic of Germany since Germany’s reunification.

However, this upswing continues to entail risks since the consequences of the economic crisis have not yet been managed completely.

SectordevelopmentThe German energy sector experienced 2010 as a very dynamic year. The climate change, rising energy prices and technological progress are forces driving a fundamental change in the energy system and bringing about structural changes in the sector. The power supplynetworks used today were developed at a time when a relatively small number of central power stations supplied electricity to consumers. Increasing decentralised generation is revealing bottlenecks within grids at all levels and is showing how important it is to integrate intelligent systems into grids in order to ensure load equalisation and monitor the power flow. SAG has refined its technological profile within this field and stepped up its development of innovation and technology themes through to producing marketableprod ucts. These create a basis for further favourable development of SAG’s business.

Facts and Figures on the Financial Year from 1 January to 31 December 2010


16

Steinbach – Cabling of the overhead line system

Better townscapeSAG is laying the entire infrastructure of Steinbach underground. The replacement of the overhead lines in the local grid with low and medium-voltage cables is simultaneously being used to continue the expansion of the natural gas supply and to provide local residents with rapid Internet access.

In a study published at the beginning of 2010 by McKinsey, the management consulting firm, it was established that more than 12,000 billion euros will flow into infrastructure expansion worldwide by 2030. In addition to streets, airports and railway lines, experts predict growth particularly in the expansion of the energy infrastructure. It is expected that more than 6,200 billion euros will be invested in this worldwide by 2030, most of which will be for power stations and power supply networks. On the one hand, this is chiefly because many power stations are outdated. On the other hand, the scarcity of natural resources is making the increased promotion of renewable energies necessary. In this connection, McKinsey is expecting between 30 and 50 gigawatts of additional generation capacities to be installed in Germany by 2020. In the coming decades several hundred billion euros will flow into an expansion of power supply networks worldwide to make them into intelligent, variable “smart grids“. The development of innovative technologies in this sector is opening growth opportunities and perspectives for new service products for SAG. In the CeGIT business area, the IT expertise required in this context has been bundled and closely intermeshed with other specialist areas of SAG.

In the course of the expansion of wind power, Germany’s first offshore wind farm was connected to the grid in 2010. When the wind farm was put into operation, Germany’s Federal Minister for the Environment confirmed that the use of wind power will play a crucial role in the energy mix of the future. Against this backdrop, SAG’s possibilities in the wind energy market were reassessed. Particularly the connection of offshore wind farms to the terrestrial energy network creates growth opportunities.

At the end of November 2010, the German Energy Agency (dena) presented its grid study II(“Netzstudie II“). The goal of the technical examinations of the grid is to adjust the elec-tricity transmission grids to the future structure of Germany’s power supply, especially to the development of renewable energy, notably wind energy, and to prepare inexpensive solutions for the entire electricity system. According to the latest calculations of dena, thehigh-voltage system alone has a shortage of 3,500 kilometres of lines. Due to the unex-pectedly rapid expansion of renewable energy, dena will have to revise its study from 2005 which, at the time, only showed an expansion of 850 kilometres as being necessary. To close the gaps by 2020, this will require a capital expenditure of around six billion euros. The marked increase in the installation of turnkey solar plants caused by the uncontrolled injection of solar power is leading to voltage peaks more and more frequently so that local grids now need to be replanned, calculated and converted.

Facts and Figures

17

Osnabrück public utility – Electric mobility

Recharging electricity in public In close coordination with the local authorities, the public utility of Osnabrück is pressing electric mobility ahead. SAG installed the first charging stations for electric scooters in Osnabrück, thus demon-strating its expertise in this sector.

The basis year of the incentive regulation in the gas market (2010) has set positive prior ities. Similarly positive impetus is also expected for the basis year in the electricity market in 2011.

DescriptionofBusinessDevelopmentThe SAG Group recorded revenue of € 965.9 million and income from operating activities of € 43.7 million in the 2010 financial year.

Due to its comprehensive range of services, its cross-utility expertise and its presence in the countries of significance in Central and Eastern Europe, the SAG Group has gained an outstanding position in the market for energy services. In SAG’s most importantmarket, Germany, it is the market leader. In its other core markets in France and Poland, SAG is likewise one of the large providers of energy services. Since 1 January 2010, SAG has been conducting its business in the “Services“, “Line Construction“ and the “Switchgear Construction“ segments. These business segments are broken down further into functions and regions.

The Management of the SAG Group GmbH is the executive body of the Group. The codetermined Supervisory Board advises and monitors the Management. The common goal of both bodies is to sustainably increase the value of the SAG Group as a going concern.

An extensive management information system is used for the co-ordination and man-agement of the SAG Group. Each month the separate financial statements of all fully consolidated subsidiaries are entered into this system, consolidated and made available to the Management. In addition, budgetary accounting is carried out each year based on a multi-year planning horizon.

It was not possible to fully achieve the planned goals. The planning accuracy of the SAG Group can nevertheless be described as good. This can be seen particularly by the revenues


18

E.ON Hanse – Biogas plant in Lanken

Biogas injection into the natural gas grid

Biogas treatment is increasingly becoming a key technology which will contribute to the sustainable and safe supply of energy in the future. SAG specialists set up the biogas injection station including compressor and EMSR technology.

of € 965.9 million which, when adjusted for the revenues of € 48.6 million resulting from the first-time consolidation of the Bohlen & Doyen Group, were 1.7 % below the budgeted figures. The “Services“ segment made the biggest contribution to revenue, earning € 500.3 million. The “Line Construction“ segment had a revenue share of € 252.3 million while the “Switchgear Construction” segment posted revenue of € 213.3 million.

Incoming orders are as follows:

The order book at 31 December 2010 amounts to € 533.7 million and relates to the segments as follows:

Facts and Figures

19

Town of Boppard – New lights

Energy-efficient street lighting

Conventional street lighting is to be replaced more and more by climate-friendly and less expensive alter- natives according to an EU decision. SAG realised an innovative LED lighting system in a street in Boppard.

2009

409,812

161,378

218,037

203

789,430

Incomingorders(in€thousand)

Services

Line Construction

Switchgear Construction

Other

2010

502,669

301,250

201,462

164

1,005,545

2009

147,538

76,029

163,001

386,568

Orderbook(in€thousand)

Services

LineConstruction

SwitchgearConstruction

2010

192,690

191,792

149,249

533,731

ServiceportfolioandprocurementBased on decades of experience in the erection and comprehensive maintenance of plants of public utilities and the industry, the SAG Group offers sector-specific, integrated complete solutions as well as products and systems for the technical infrastructure required for power and utilities.

In the year under review, the entire procurement volume of SAG amounted to € 488.4 mil-lion, or 50.6 %, of the revenue. In this connection, civil engineering, assembly services at home and abroad as well as components for high-voltage line construction and switchgear construction were the main emphasis.

In 2010, synergy potential was exploited and procurement processes were further enhan-ced. By pooling requirements, expanding international purchases for the export business and systematically implementing purchasing strategies, we succeeded in sustainably exploiting the potentials offered on procurement markets.

ResearchanddevelopmentThe Research and Technology Centre (VTZ) in Langen is a non-affiliated, accredited testing institute for the examination of components, subassemblies and complex systems for the supply of energy. The operating capability and safety of systems are analysed and the interplay between individual components and systems tested by fourteen employees at the VTZ.

Since its foundation in 1969, the VTZ has gathered expertise which is unique in the sector. Through tests and damage analyses, a wealth of useful experience has been gained, for example about the remaining service life of components and possible ways of extending their life.

The VTZ conducts commissioned research in co-operation with customers. Hence, no signi-ficant expenditures are incurred.


20

City of Munich – Shorter intervals of the line 2 underground train

Increase of the energy supply

The energy supply had to be increased for line 2 of the Munich undergroundtrain so it could run as frequently asthe other lines. SAG assumed the task of installing the direct current supply systems.

PersonnelandsocialareaThe number of employees in the SAG Group stood at 6,674 on average in the year under review – converted into full-time equivalents. A full-time equivalent corresponds to a full-time position. Part-time employees or fixed-term employees are included only at the ratio between the part-time work or the duration of employment to the annual period of employment. In addition, 114 employees completed vocational training on average in the year in the SAG Group.

The SAG Group offered a comprehensive training programme again in 2010. In Germany alone, 1,881 participants were trained on 2,937 days. Focal points in this connection weretechnical seminars (39 %), seminars on industrial safety (28 %) and multidisciplinary SAG seminars (26 %).

In the course of the SAG seminars, 505 employees underwent training on 763 days. The training courses focused on integration and potential development programs (e. g. FastPractice, ManagementProgramm and personnel development seminars), subjects concerning “Construction and Project Business“ (e. g. building site documentation and order execution based on contracts for work and services) and languages.

In the year under review, SAG managed to conclude a revision of the collective agree-ment valid for Germany for the Services business unit. The most important result is that the 38-hour week continues to apply until 31 December 2013 and afterwards the weekly working hours will be reduced in stages to 35 hours by 1 January 2016. During this period, there is dismissal protection and job site security.

Of the personnel expenses of € 303.3 million, € 240.6 million relates to wages and salaries. Expenses for social security contributions and support amount to € 58.5 million. Expenses for pensions stand at € 4.2 million.

Facts and Figures

21

RTE – Construction and expansion

Switchgear for industrial operations

SAG Thépault was commissioned by the French electricity grid operator Réseau de Transport d’Électricité (RTE) to build two switchgears as a general contractor. German colleagues helped to execute the complex projects.

EnvironmentprotectionandindustrialsafetyInstruction in connection with environmental protection and industrial safety aspects is provided at the SAG Group at least once a year.

No environmental protection-relevant incidents occurred in the period under review. For the continual improvement of environmental protection and industrial safety, the actions planned for Germany were carried out according to the plan of measures for 2010. This also included the implementation of internal QuAD audits (quality management, environmental protection, industrial safety and data protection) in the respective organi-sational units, the replacement of all snap hooks for personal equipment to protect against falling, the implementation of special executive training courses, the preparation of new documents and the holding of industrial safety/environmental protection conferences.

With 240 (2009: 232) accidents in the 2010 calendar year, the number of accidents subject to reporting (work and travel accidents) in the SAG Group is nearly unchanged compared to the previous year. The frequency of accidents per 1,000 employees declined from 39.8 ‰ to 36.8 ‰. The days off after accidents subject to reporting rose from 4,876 to 5,666. The frequency of accidents according to LTIF (work-related accidents with lost times per million working hours) amounts to 25.1.

The Industrial Safety Committee held 15 meetings in the year under review and con sidered the following main topics, among others: accident occurrence, occupational health and safety management systems, occupational medicine, evaluation of the Health & Safety Week, cutting down of wooden poles in sections, climbing of supporting structures, weather proof clothing, electrical equipment, work platforms, safety pass and the electronic procedure for the documentation of waste recovery.

In the 2010 calendar year, 361 construction site inspections were carried out in Germany by safety experts, 28 of which with technical supervisory officers of the German Employer’s Liability Association and 70 with representatives of works committees.


22

E.ON Česká republika – New 110-kV line

35 metres below ground

To safeguard the power supply to Brünn, a town in the Czech Republic, colleagues at SAG Elektrovod installed a new 110 kV line – in a collecting shaft running 35 metres underneath the town.

251 safety officers are deployed and 1,756 employees trained as first aiders in the organ-isational units in Germany.

The training measures carried out had the following areas of focus: training of employees in handling industrial trucks, power-driven chain saws, high rescue equipment, qualification of persons skilled in the inspection of liquefied gas systems, training of security personnel, security officers, operators of work platforms and first-aid training.

OtherimportanteventsinthefinancialyearThe acquisition of Bohlen & Doyen Bauunternehmung GmbH, Wiesmoor, was completed in the 2010 financial year. The company has been operating successfully as a construction and service company in the fields of gas, water, waste, electricity, district heating and telecommunications for six decades.

The former “Services International“ business unit was allocated to the “Switchgear Construction“ business unit while the former “CeGIT” (Centre for Geo-Information Technology) business unit was allocated to the “Services“ business unit.

Furthermore, SAG decided to transform the previously function-based structure into a structure largely based on regional aspects in the 2010 financial year.

With economic effect as per 1 January 2010, the SAG Group acquired 100 % of the shares in the Slovakian company Elektrovod Holding, a.s., headquartered in Bratislava. As a market leader, Elektrovod Holding, a.s., in the Republic of Slovakia has many years of experience in line and switchgear construction.

Facts and Figures

23

Pinneberg public utility – New transmission line

Increase of the power supply

So that the supply of drinking water in Pinneberg is secured for the future as well, SAG laid a second connection between the waterworks and the town in addition to the existing line.

Balance Sheet of the SAG Group


24

31.12.2009

534,975

88,023

87,052

2,492

18

115

14,790

727,465

6,753

580

9

1,502

108,424

71,401

7,262

4,867

45,926

798

247,522

974,987

Assets

in € thousand

Non-currentassets

Goodwill

Other intangible assets

Property, plant and equipment

Financial assets

Financial receivables

Other receivables and other assets

Deferred taxes

Currentassets

Inventories

Financial receivables due from related entities

Financial receivables due from third parties

Other receivables due from related entities

Trade receivables due from third parties

Receivables from the application of

the percentage-of-completion method

Other receivables and other assets

Recoverable income taxes

Cash and cash equivalents

Non-current assets held for sale

Totalassets

31.12.2010

562,955

88,872

132,797

1,818

25

106

16,040

802,613

17,808

2,595

38

230

150,114

97,083

10,479

7,352

35,753

0

321,452

1.124,065

25

Balance Sheet

31.12.2009

3,000

138,590

–34,823

–1,543

105,224

4,435

109,659

255,393

345,681

1,602

28,668

631,344

68,519

20,446

62,748

328

81,943

233,984

974,987

Shareholders’equityandliabilities

in € thousand

Shareholders’equity

Capitalandreservestowhichshareholdersoftheparent

companyareentitled

Subscribed capital of SAG Group GmbH

Additional paid-in capital of SAG Group GmbH

Retained earnings and distributable profits

Amounts recognised directly in equity

Non-controlling interests

Non-currentliabilities

Provisions

Financial liabilities*

Other liabilities

Deferred taxes

Currentliabilities

Provisions

Financial liabilities

Trade payables

Income tax liabilities

Other liabilities

Totalshareholders’equityandliabilities

* ofwhich:€347,947thousandinnon-currentinterest-bearingfinancialliabilities (2008:€345,681thousand)

31.12.2010

3,000

173,590

–37,007

–11,328

128,255

599

128,854

263,100

347,947

1,278

33,862

646,187

73,101

90,999

94,349

903

89,672

349,024

1,124,065

Income Statement of the SAG Groupfor the period from 1 January to 31 December 2010

SAG Group GmbH, Report for the Business Year | 2010 Income Statement

26

2009

791,014

101

17,038

369,312

270,026

25,039

99,834

43,942

0

6,465

58,635

–8,228

2,209

–10,437

1,315

–11,752

in € thousand

Revenue

Other own work capitalised

Other income

Cost of materials

Staff costs

Depreciation

Other expenses

Incomefromoperatingactivities

Income from investments

Financial income

Financial expenses

Resultbeforetax

Taxes on income

Income

Result of non-controlling interests

Netincome/incomeattributabletoshareholders

ofSAGGroupGmbH

2010

965,922

312

16,157

488,370

303,251

30,863

116,186

43,721

–869

2,839

50,788

–5,097

1,220

–6,317

832

–7,149

27

Cash Flow Statement of the SAG Groupfor the period from 1 January to 31 December 2010

Cash Flow Statement

in € thousand

Income

of which: paid operating interest (guarantee fees and working capital loans)

Interest payments from long-term credit financing

Depreciation, amortisation, impairment losses

Changes in provisions

Changes in deferred taxes

Income from the disposal of non-current assets

Other non-cash income/expenses

Changes in working capital

Cashflowsfromoperatingactivities

Intangible assets/property, plant and equipment

Capital expenditure

Proceeds from disposals of non-current assets

Proceeds from disposals of assets held for sale

Acquisitions and investments

Acquisition of investments

Increases in the shares held in investments

Cashflowsfrominvestingactivities

Proceeds from additions of shareholders’ equity

Dividends paid to other shareholders

Changes in the receivables from profit and loss transfer agreements

Raising of financial debt

Repayment of financial debt

Interest payments from long-term credit financing

Cashflowsfromfinancingactivities

Net cash change in cash and cash equivalents

Effects of changes in foreign exchange rates and other changes in value

on cash and cash equivalents

Changeincashandcashequivalents

Cash and cash equivalents at the beginning of the reporting period

Cashandcashequivalentsattheendofthereportingperiod

2010

–6,317

–2,854

23,884

30,901

10,294

–2,511

–54

6,615

–11,566

51,246

–26,414

3,071

203

–78,021

–8,809

–109,970

35,000

0

1,038

130,508

–94,496

–23,884

48,166

–10,558

385

–10,173

45,926

35,753

2009

–10,437

–2,551

24,636

25,039

7,438

59

–252

11,572

–29,495

28,560

–23,176

930

850

0

–1,964

–23,360

0

–1,212

0

16,582

–11,888

–24,636

–21,154

–15,954

25

–15,929

61,855

45,926

List of Affiliated Companies(as of: 31 December 2010)

SAG Group GmbH, Report for the Business Year | 2010 List of Affiliated Companies

28

indirect %

100

100

100

100

100

100

97.79

100

100

100

100

100

100

100

100

100

100

100

100

100

60

100

100

100

100

No.,nameandheadquarters Affiliatedcompanies– includedintheconsolidatedfinancialstatements ofSAGGroupGmbH 1. Bohlen & Doyen Bauunternehmung GmbH, Wiesmoor*

2. Bohlen & Doyen Service und Anlagentechnik GmbH, Wiesmoor*

3. Elektrovod a.s., Brno, CZ*

4. Entreprise Lestrade SARL, Dun le Palestel, FR

5. SAG Beteiligungs GmbH, Langen

6. SAG Cesko a.s., Pilsen, CZ

7. SAG Dandl GmbH, Boos

8. SAG Elbud Gdansk Holding S.A., Gdansk, PL

9. SAG Elbud Kraków sp.zo.o., Kraków, PL*

10. SAG ELV Slovensko, a.s., Bratislava, SK*

11. SAG Erwin Peters GmbH, Hamburg

12. SAG France SAS, Jouy-aux-Arches, FR

13. SAG GmbH, Langen

14. SAG Holding Kft., Budapest, HU

15. SAG Hungaria Kft., Budapest, HU

16. SAG Immobilien GmbH, Langen

17. SAG International GmbH, Langen

18. SAG Leitungsbau Service GmbH, Langen*

19. SAG Mérnökiroda Kft., Budapest, HU

20. SAG Polska S.A., Gdansk, PL*

21. SAG Thépault SAS, Jouy-aux-Arches, FR

22. SAG Vigilec SAS, Saint-Pourçain-sur-Sioule, FR

23. Strüder Rohr-, Regel- und Meßanlagen GmbH, Schneeberg

24. STT – FRANCOMAT SAS, Écrouves, FR

25. Thépault Réseaux SAS, Jouy-aux-Arches, FR

26. VIGILEC HATIER SAS, Saint-Pourçain-sur-Sioule, FR

27. VIGILEC PAULY SAS, Saint-Pourçain-sur-Sioule, FR

direct %

100

100

AmountofholdingaccordingtoSection16AktG

29

List of Affiliated Companies

indirect %

100

70

100

83.34

100

99.99

100

100

50

No.,nameandheadquarters– notincludedintheconsolidatedfinancialstatements ofSAGGroupGmbH***28. Bohlen & Doyen B.V., Groningen, NL*

29. Elektrovod Rozvádzace s.r.o., Bratislava, SK*

30. Elektrovod Stav s.r.o., Bratislava, SK*

31. ELV-SERVIS spol. s.r.o., Bratislava, SK*

32. SAG Immobilien Verwaltungs GmbH, Langen

33. SAG Ltd., Kigali, RWA

34. SEG LiPro Energietechnik GmbH, Zorbau*

35. Tamar Vermögensverwaltung GmbH, Langen

Associatedcompanies– notincludedintheconsolidatedfinancialstatements ofSAGGroupGmbH***36. ENERGOREMONT-ELV OOD, Sofia, BG */**

* Acquisitionorfoundationin2010** withoutbusinessactivities*** PursuanttoSection313(3)No.4oftheGermanCommercialCode,informationonshareholders’ equityandtheresultfromthelastannualfinancialstatementsisnotprovided

direct %

0.01

AmountofholdingaccordingtoSection16AktG

SAG Group GmbH, Report for the Business Year | 2010 Supervisory Board and Management

30

Supervisory Board and Management

SupervisoryBoard

Dr.ManfredKrüperPartner of K&S Energy Partners, Essen

Chairman of the Supervisory Board

BrunoNeumann*First Authorised Representative of IG Metall –

Administrative Office Essen, Essen

Deputy Chairman of the Supervisory Board

Dr.UlfBergPartner of BLR & Partners AG,

Thalwil, Switzerland

AndreasBöwingHead of Regulatory Management

of RWE AG, Essen

KlausEls*Chairman of the Works Council of Andernach

business establishment of SAG GmbH, Andernach

MartinFuchsChairman of the Management

of TenneT TSO GmbH, Bayreuth

RobertGrashei*First Authorised Representative of IG-Metall –

Administrative Office Landshut, Landshut

ErnstHebener*Head of Basic Issues and Labour Law

of SAG GmbH, Langen

(until 30 June 2010)

BerndMittler*Chairman of the Central Works Council

of SAG GmbH, Waldbröl

ChristophMüllerMember of the Management

of EnBW Trading GmbH, Karlsruhe

WolfgangNeldnerTechnical Director

of 50Hertz Transmission GmbH, Berlin

AndreasPietz*Chairman of the Works Council of the

Chemnitz/Dresden business establishment

of SAG GmbH, Chemnitz

JörgBauer*Head of Human Resources

of SAG GmbH, Langen

(since 4 August 2010)

* Member of the employee representatives on the Supervisory Board

Management

Karl-MichaelFuhrChief Executive Officer, Düsseldorf

ErichSöllingerChief Financial Officer, Vienna, Austria

Imprint

Imprint

SAG Group GmbH

TelephoneFax

E-mail Internet

ResponsibleE-mail

Editors

Layout

Print

Imprint

Pittlerstraße 4463225 LangenGermany

+49 6103 4858-0+49 6103 [email protected]

Robert [email protected]

Markus GoldeDr. Rainer Kaps

art’max k+d GmbH, Fulda

Grunewald GmbH, Kassel

31

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