Annual Report 1997/98
Preussag has changed to a services
and technology group. The new tourism
business will determine its profile in
the future. The Group structure with
the divisions
Energy and Commodities
Technology
Logistics and Tourism
is paying off already. The key figures
of the financial year 1997/98 are
proof of the success which will be
the basis for further growth.
Preussag Aktiengesellschaft
Financial Year 1997/98
Table of Contents
Page
2
1998 – The Year of the New Preussag
4
Message to our Shareholders
Management Report
6
Economic Situation
17
Financial Review
20
Research and Development
23
Prospects
Further Information
29
The Preussag Share
32
Personnel
35
Environmental Protection
Divisions
38
Energy and Commodities
40
Energy
43
Trading
46
Technology
48
Plant Engineering
50
Shipbuilding
51
Building Engineering
54
Logistics and Tourism
56
Logistics
59
Transport and Tourism
Consolidated Financial Statements and
Financial Statements of Preussag AG
62
Boards
91
Report of the Supervisory Board
93
Supervisory Board
95
Executive Board
Preussag in Figures
97
Major Shareholdings
101
Financial Year 1997/98
1998
1998 was a year that, with its structural changes, is extraordinary
in the eventful 75-year history of Preussag. Preussag, which was
raw material-oriented since its founding in the year 1923, has
changed into a services and technology group.
This change started as early as September 1997, when Preussag
purchased nearly all shares of Hapag-Lloyd AG. With the approval of the
Acquisition of
Federal Cartel Office this acquisition was accomplished in March 1998.
Hapag-Lloyd
Hapag-Lloyd brings a new division of strong growth, tourism, to the
completed
Group and its liner shipping complements the logistic activities well.
With the next step, Hapag-Lloyd increased its shareholding in Touristik
Union International from 30% to 50.1%; this ensured the management
control of the TUI Group. The subsequent concentration of the tourism
Majority of
activities of Hapag-Lloyd and the TUI Group under the roof of Hapag
TUI acquired
Touristik Union has created the largest integrated tourism group in Europe.
In the logistics sector, concentration of the activities of VTG and
Lehnkering in VTG-Lehnkering AG enhanced the competence of the
Logistics business
Group in special logistics and created a strong unit offering complete
concentrated
logistic service packages.
With the sale of steel production in spring 1998, Preussag separated
from a business which, as a result of the process of concentration in
European steel industries, did not have an adequate medium-term perspective in our Group. The US steel service companies, which have a
Steel production
good position in their markets, have remained in the Group and are
sold
integrated in the trading sector.
Coal mining inte-
4
Coal mining of Preussag Anthrazit GmbH will be integrated in the
grated in Deutsche
Deutsche Steinkohle AG from 1st January, 1999. By these means the coal
Steinkohle AG
sector is assured a long-term future outside the Preussag Group.
– The Year of the New Preussag
The new business structure of Preussag
The new Preussag is based on three divisions which provide stability
and the basis for further growth of the Group. The crude oil and natural
gas activities along with trading companies are combined in the energy
and commodities division. The technology division involves plant engineering, shipbuilding and building technology with the sectors building
materials, heating technology and fire protection. VTG-Lehnkering and
Energy and Commodities
Algeco make up the logistics sector, while further parts of logistics and
Technology
tourism division are the Hapag-Lloyd liner shipping and the tourism acti-
Logistics and Tourism
vities of Hapag Touristik Union.
The new management structure of Preussag
Along with the new business structure, Preussag has introduced a new
two-tier management structure. The executive board heads the Group,
with overall responsibility according to the Companies’ Act. Responsibilities are divided according to function and it concentrates on the strategic
directing and control of the Group. In running the Group it is supported
by divisional executives, who are responsible for the management of the
business sectors.
Dr. Michael Frenzel, Chairman
Rainer Feuerhake, Finance and Accounting
Dr. Wolfgang Schultze, Personnel and Legal Affairs
Executive Board
Dr. Helmut Stodieck, Controlling
Energy and Commodities Division
Günter Krallmann, Energy
Harold Sher, Trading
Technology Division
Klaus Linnebach, Plant Engineering and Shipbuilding
Jens Schneider, Building Engineering
Logistics and Tourism Division
Dr. Klaus-Jürgen Juhnke, Logistics
Bernd Wrede, Transport
Divisional Executives
Claus Wülfers, Tourism
5
Financial Year 1997/98
To our Shareholders
Our Way of Changing to a Services Group
Dear Shareholders,
This report documents the change of Preussag and signifies the start
of our company into a new era. During the financial year 1997/98 we
completed the realignment of our activities.
With the decline of the traditional raw material markets in Europe,
the realignment of Preussag from raw materials and commodities to services and technology was indispensable if the Group was to retain medium- and long-term prospects and, not least, opportunities of growth.
And there was a further reason for restructuring the Group: Although
we have been taking significant steps into interesting growth markets in
the logistics and building engineering sectors since 1994, it could not be
ignored that the development of the Group was determined by the strong
cyclical fluctuations of both the non-ferrous metal and steel branches,
and this hindered a sustainable increase in the value of the Preussag
share.
Tightening the Group's portfolio through withdrawal from activities
in steel, non-ferrous metals and coal mining, concentration on growth
areas in our traditional sectors energy and building engineering, and the
resolute move to services in logistics and tourism were our answer to
the question of Preussag's future.
The new Preussag is presented to you today in the form
of three divisions: Energy and commodities, technology, logistics and
tourism. We have successful products and good positions in the relevant
markets in every division.
This demonstrates the criteria by which our decisions are taken: Leading market positions, high earnings power, strong growth potential and
successful management.
Against the background of our strategic aim, the extensive modernisation of Preussag, entry into tourism, as one of the service areas with
the most persistently strong growth, was the obvious choice. We have attained this aim with the acquisition of Hapag-Lloyd and a majority shareholding in TUI in a very short time. Tourism activities have now been
combined in the Hapag Touristik Union. As a result the largest
integrated tourism group in Europe, with a turnover of over DM10 billion
and about 15,000 employees, has been created in the Preussag Group.
4
To our Shareholders
In the logistics sector, concentration of the activities of VTG and
Lehnkering will contribute to a strengthening of business. The new VTGLehnkering AG, with a turnover of about DM2 billion and about 3,500
employees, becomes one of the leading European suppliers of logistic
systems to the chemical industry. It combines the various components
of transport and storage to offer complete logistic chains in one enterprise.
By disposing of peripheral activities, we have concentrated, and thereby strengthened, the business of the individual divisions and sectors
again. We can now use our resources more purposively for the development of our core activities.
The new structure of the Group has already paid off. The economic
key figures of the new Preussag are on a markedly higher level. With a
turnover of over DM35 billion and more than 66,500 employees, the
Group has grown considerably. The annual profit for this financial year
has risen by 36%, to DM539 million. On the one hand, these figures represent the highest level in the history of our company, on the other we
regard them as the starting point for development of the new Preussag.
We want you, our shareholders, to participate not only through the
increase in value of the Preussag share, but also through an adequate return on your investment. We therefore propose the payment of a dividend of DM12.00 and a bonus of DM3.00 per share for the financial year
1997/98. The total payment of DM15.00 per share reflects Preussag's
extraordinarily good result in the 75th year of its existence.
In a short time we have given Preussag a clear, new profile with emphasis on the services sector. This will shape the Group for the next
years. However, there will be no stagnation, even though the basic change has been accomplished. We will continue to work on the optimisation and development of our three divisions. The earnings potential of our
divisions puts us in a strong enough position to be able to make use of
further opportunities for growth should these be offered. With your support we will take advantage of these chances.
5
Management Report 1997/98
Economic Situation
Economic Situation
New business structure pays off – Group profits increase strongly
The acquisition of Hapag-Lloyd AG and the majority stake in Touristik Union International as well as
the sale of the steel activities have fundamentally changed the business structure of Preussag.
The Group completed the first financial year in its new structure – with the three divisions energy
and commodities, technology and logistics and tourism – very successfully. Group profits increased
to DM539 million.
The economic conditions of the important markets for the Group were
favourable on the whole and played a role in the development of positive
results. They offered additional opportunites for the expansion of business
and ensured good utilisation of the capacities.
Economic trends varied by region. The total production worldwide
grew noticeably more slowly than in previous years. This was primarily
due to the economic crises in Japan and the emerging industrial countries
of South East Asia. Russia experienced a severe setback on its path to a
free market economy. However, the effects of these crises on the economic
situations in Western industrial countries were limited, as domestic demand
increased. This was true for both North America and West Europe, where
economic growth continued, albeit more slowly than last year.
The Group turnover in its new structure rose to DM35.2 billion, of
which DM12.9 billion or 37% were attributable to Hapag-Lloyd and the
Group turnover
TUI Group, which were included in the consolidated financial statements
at DM35.2 billion
of Preussag for the first time.
In the three divisions almost all sectors achieved a higher turnover
than last year. In the energy sector the increase amounted to approximately 13%, due to internal and external growth. Due to good business
the turnover in trading increased in spite of low commodity prices. In
plant engineering, fewer orders were settled than last year, mainly as a
result of the realignment of activities. The turnover in shipbuilding remained
constant. In building engineering, the turnover rose by 6%. Further growth
6
Growth in almost
was also noted in the logistics sector where the increase in turnover
all sectors
amounted to 16%.
Management Report 1997/98
Economic Situation
Compared to the past, the regional distribution of Group turnover has
changed as a result of the new activities. Foreign business, with DM23.3
billion, accounts now for 66% of the turnover; with the old Group structure this was 55% last year. At 56%, the largest portion of foreign turnover
is still achieved in the countries of the European Union. The share from
Two thirds of turnover
North and South America amounted to 20%, while it was 8% for Central
achieved abroad
and East Europe. In Asia 16% of the turnover was transacted.
1995/96
1996/97
1997/98
Energy and commodities
39
39
35
Technology
28
30
21
7
7
43
Logistics and tourism
Consolidated turnover
Other companies
by division
Steel and non-ferrous metals activities
(in %)
2
2
1
24
22
–
100
100
100
The new business structure has paid off in the first financial year.
Group profits rose to DM539.5 million. The earnings power of the new
Preussag was also clearly reflected in the profit from ordinary business
activities of DM803.5 million, an increase of 14% compared to last year.
The extraordinary result amounted to DM51.8 million. This comprises
Strong increase in
both the book profit from the sale of the steel sector and the expenditures
Group profits
on restructuring of business.
1997/98
Energy and commodities
288.5
Energy
190.5
Trading
98.0
Technology
88.2
Plant engineering
- 196.0
Shipbuilding
61.3
Building engineering
222.9
Logistics and tourism
576.3
Logistics
127.7
Transport and tourism
448.6
Other companies
-
25.9
Results by sector
927.1
Depreciation on goodwill
123.6
Profit from ordinary business activities
803.5
Extraordinary profit
+
51.8
Results by sector
Taxes
315.8
(DM million)
Group profit for the year
539.5
7
Management Report 1997/98
Economic Situation
On 30th September, 1998, the Preussag Group employed 66,563 people
worldwide, approximately 6% more than in the old structure. German
companies employed about 65%, or 43,428, of the workforce, while
23,135 people worked for companies abroad.
Structural changes in the Group
On 18th February, 1998, Preussag sold all its shares in Preussag Stahl
AG, held by its subsidiary Salzgitter Hüttenwerk GmbH, to Hannover
Beteiligungs-GmbH, which is 100% owned by the State of Lower Saxony,
and the Norddeutsche Landesbank. The total price amounted to DM1.06
billion. The buyers acquired 51% of the subscribed capital, equally
divided, with effect of 1st October, 1997, as well as a further 24.38% of
the subscribed capital on both 1st February and 31st December, 1999,
with the option of acquiring these shares at an earlier date. The buyers
exercised this option on 19th and 31st March, 1998, so that all the
shares sold were transferred to the new shareholders with effect from
Sale of steel activities
1st October, 1997.
On 2nd March, 1998, the Federal Cartel Office, after completing its
assessment concerning merger control, approved the acquisition of 99.2%
of Hapag-Lloyd AG shares by Preussag AG. Thereby Hapag-Lloyd became
a part of the Preussag Group with effect from 1st October, 1997. In the
Acquisition of
course of a public purchase offer, Preussag AG had acquired a further 0.4%
Hapag-Lloyd completed
of Hapag-Lloyd shares by 31st July, 1998.
At the beginning of March 1998, Hapag-Lloyd reached an agreement
with the Schickedanz Group concerning acquisition of their 20% shareholding in Touristik Union International GmbH & Co. KG. After Deutsche
Bahn and, as a consequence, Westdeutsche Landesbank had exercised
their pre-emption right in May 1998, Hapag-Lloyd acquired a 7.5% share
of the subscribed capital of TUI from this agreement. On 31st August,
1998, Hapag-Lloyd AG took over a further 12.6% of the subscribed capital of
Hapag-Lloyd acquires
TUI from Westdeutsche Landesbank, thereby increasing its shareholding
a majority in TUI
of 30% to 50.1% with effect of 1st November, 1997.
A decision to merge the logistic activities of VTG Vereinigte Tanklager
und Transportmittel GmbH and Lehnkering AG was taken in May, 1998.
8
Logistics activities of
The formation of VTG-Lehnkering AG will be completed in spring 1999
VTG and Lehnkering
following the appropriate resolutions of the Annual General Meeting of
combined
Lehnkering AG.
Management Report 1997/98
Economic Situation
At the end of October, 1998, an agreement was reached with the RAG
Aktiengesellschaft concerning the inclusion of Preussag Anthrazit GmbH
in the newly founded Deutsche Steinkohle AG. The transfer will take place
on 1st January, 1999; this means that all German coal mines will be jointly
managed from the beginning of the new year. By these means the aim of
Coal mining inte-
ensuring a long-term future for the coal mine in Ibbenbüren, which ranks
grated in Deutsche
among the most productive German mines, has been achieved within the
Steinkohle AG
framework of the 1997 political agreement on coal mining.
In April 1998, a further step was taken towards tightening the activities
in the energy sector. The Uranerzbergbau-GmbH, in which Preussag Energie
GmbH has a 50% shareholding, reached an agreement with the Canadian
Mining and Energy Corporation concerning the sale of its North American
Shareholding in
uranium activities. On completion of the negotiations the sale became
uranium activities sold
effective as of 1st January, 1998.
Economic situation in the divisions
Energy and commodities
1995/96
1996/97
1997/98
Preussag Energie GmbH
377
461
555
Deutag Group
667
836
998
KBB Group
Deilmann-Haniel Group
Preussag Anthrazit GmbH
Total turnover
Turnover of energy
Internal turnover
(DM million)
Consolidated turnover
84
76
64
818
557
729
508
530
458
2,454
2,460
2,804
237
272
327
2,217
2,188
2,477
The demand for oil and gas declined due to a comparatively mild winter
and the effects of the economic crisis in Asia. The persistent exceeding of
production quotas within OPEC effectively upset the balance of supply
and demand. As, in addition, the consumers’ stocks were well filled, a
drop in prices was unavoidable. At the lowest point of the trend the price
of crude oil was nearly halved compared to that at the beginning of the
financial year. Limits on production in the oil producing countries then
brought about a short-lived rise in prices. The exchange rate of the US
dollar, which remained steady for a long time, had a stabilising effect on
the DM earnings, but it could not compensate for the decline in prices.
Natural gas prices held at the level of the previous year at first, however
Crude oil
they also fell with a timelag as a consequence of the declining heating oil
prices dropped
quotations.
9
Management Report 1997/98
Economic Situation
Preussag Energie GmbH further expanded its international position in oil
production. Successful exploration and prospective drillings in Ecuador
and Tunisia played an important role here. Having taken over the operating of the Venezuelan oil field Cabimas, Preussag Energie introduced the
planned measures to increase production here, as in the Boquéron field.
Through this, but also through increased volumes in other areas, the
quantities of crude oil produced rose by about 5% to 2.16 million tons.
With stable domestic production, foreign fields accounted for almost
Preussag Energie
67% of the total production. The natural gas production, for which there
increases oil production
are long-term delivery contracts, attained the levels of the previous year.
Deutag Group drilling services continued to be in good demand in the
crude oil and natural gas regions where they are primarily active, despite
falling oil prices. This applied especially for Southwest Asia and Africa, but
also for South America. Activities in Europe were stabilised by long-term
Drilling rigs
orders in Great Britain and the Netherlands. On the whole, Deutag's drill-
well utilised
ing and workover rigs were well utilised.
For the Deilmann-Haniel Group, the process of adjustment of its domestic
core business, special mining work, continued in line with the declining
demand from the German coal mining industry. Increased acquisition of
contracts and participations abroad represent steps to establish an alternative for the future.
1995/96
1996/97
1997/98
AMC Group
4,153
4,933
6,075
W. & O. Bergmann Group
2,322
2,187
1,944
US Steel Service Companies
1,174
1,454
1,919
Total turnover
7,649
8,574
9,938
Turnover of trading
Internal turnover
(DM million)
Consolidated turnover
215
242
222
7,434
8,332
9,716
The AMC Group performed well again overall, although market conditions in various regions and economic sectors became more difficult.
Due to the volatility of the markets resulting from the Asian crisis LME
trading in non-ferrous metals weakened. The steel service business in
Canada and trading in fine chemicals progressed satisfactorily. The production sector developed remarkably well again; in particular the metal
10
AMC performs
processing companies in Canada improved yet again compared to last
well again
year's good business.
Management Report 1997/98
Economic Situation
The large fluctuations in prices on the non-ferrous metal markets and the
shortage of copper and lead scrap considerably hampered trading conditions for the Bergmann Group. Nevertheless, a large trading volume
could be transacted, especially in the core business of trading in copper
and copper alloys.
The US steel service companies had a good year. They benefited
primarily from continuing economic growth in the United States, which
assured high employment in the steel processing branches. In addition,
the expansion of service business proved positive, so that the companies
Good year for
in trading and processing sold about 15% more steel than last year, with
US steel service
better margins.
Technology
1995/96
1996/97
1997/98
Preussag Noell Group
2,121
2,924
1,938
Preussag Wasser und Rohrtechnik Group
1,154
1,197
1,314
Turnover of
Shipbuilding
1,796
1,206
1,118
plant engineering
Total turnover
5,071
5,327
4,370
and shipbuilding
Internal turnover
(DM million)
Consolidated turnover
428
519
249
4,643
4,808
4,121
In the plant engineering sector, the domestic market remained weak
again as a result of the limited public budget. More than two thirds of the
orders for the German plant engineering industry came from abroad this
year. Here competition came from strong international companies and,
increasingly, new competitors from the emerging industrial countries. New
Plant engineering sector
business strategies, innovative products and comprehensive service
remains difficult
offers are necessary to perform well in this field.
Against this background, the Preussag Noell Group continued the
restructuring of its business activities and concentration on particular
core areas of business. Withdrawal from peripheral activities – such as
waste treatment – progressed as part of this. Emphasis was placed on
activities in the systems and mechanical engineering sector. The capacities
here were well utilised due to a large number of orders on hand and good
incoming orders for container handling systems. With the opening of
the production facility in China, a significant step was taken towards the
establishment of an international system of production together with the
existing locations in Würzburg, Kaliningrad and Abu Dhabi. In the energy
and environmental technology sector, the reduction of areas of activities
proved positive; the business and earnings situation improved markedly.
Restructuring activities in the process technology sector also progressed.
Water technology was included in the Preussag Wasser und Rohrtechnik
Group and the necessary realignment of business structure in the gas
11
Management Report 1997/98
Economic Situation
technology sector introduced. Altogether the financial year 1997/98 was a
Preussag Noell
year through which the Preussag Noell Group faces better development in
extensively restructured
the future as a result of firm concentration on promising areas of business.
For the Preussag Wasser und Rohrtechnik Group the concentration on
the core businesses pipe refurbishment, pipeline systems and pipeline
inspection began to pay off. Much of the performance and results were
achieved abroad, particularly in East Europe and South America. In the
pipe refurbishment sector comprehensive orders in Russia contributed to
successful business again; in the pipeline system sector participation in
Pipe technology
the construction of natural gas pipelines for supplying West Europe with
business expands abroad
Russian gas and pipeline projects in the Amazon region were significant.
In international merchant shipbuilding demand in the different market
segments was varied. Orders for cargo ships declined and, as a result the
prices came under considerable pressure – particularly for container ships
and technically simple ships. On the other hand, demand was brisk for
cruise ships and ferries – an attractive market segment also in terms of
price, where Howaldtswerke-Deutsche Werft AG has concentrated its
acquisition. The shipyard had an order backlog of about DM5.7 billion,
which provided for good capacity utilisation. Of the four merchant ships
delivered, the cruise ship 'Deutschland' is of special importance; with its
construction HDW re-entered the market of passenger ships. In naval
Shipbuilding with
shipbuilding, submarine construction with the supply of two material
high order backlog
packages was the key element of business.
1995/96
1996/97
1997/98
Fels Group
665
748
780
Wolf Group
724
1,533
1,592
Kermi GmbH
383
416
452
Minimax Group
812
902
908
Turnover of
Total turnover
2,584
3,599
3,732
building engineering
Internal turnover
156
379
319
(DM million)
Consolidated turnover
2,428
3,220
3,413
In the building engineering sector, the companies stood their ground
well in an environment characterised by the persistently weak economic
situation in the building industry. They took advantage of the strong position of their products in the areas of refurbishment and renovation, which
showed further growth.
12
Management Report 1997/98
Economic Situation
Demand for building materials declined. The Fels Group secured its market
position through quality optimisation, intensive marketing and additional
services. Sales reached a good level – especially for Fermacell plasterboards – however, for some products they did not achieve the quantities
of last year. The growth in sales of Harz-Kalk products continued. Beside
strong demand from the energy sector, where lime products are used in
Sales of building material
flue gas purification, and the environmental protection sector, the good
on a good level
economic situation in the steel industry contributed to brisk business.
In heating technology, demand varied according to region and product.
The economic impetus was missing in Germany and Switzerland for
another year, while the French market showed slight growth again. The
Wolf Group, with its brands Wolf, Elco-Klöckner, Cuenod, Brennwald and
Chaffoteaux et Maury, achieved a strong competitive position in the
European market. The trend towards gas-fired heating installations continued, so that sales of gas heaters increased considerably, whereby
units with condensation technology were especially in demand. Sales for
burners also grew on account of an increasing need for replacements. By
contrast, the market volume, and consequently sale, of oil-fired floor-
Heating technology
mounted boilers decreased further. Intensification of service had a positive
business varies
effect on the course of business.
Kermi GmbH expanded its business in heating and sanitary products
against the general market trend. Exports of flat radiators more than compensated for the weakness of the domestic market. Design radiators were
Kermi expands
again in good demand, so that sales increased. More shower screens,
business
too, were sold than last year.
The economic situation in the fire protection sector remained difficult.
Nevertheless, in stationary fire protection the engineering and production
capacities of the Minimax Group were well utilised. The situation for mobile
fire protection improved, although the strong competition continued.
Business in European countries varied according to region. Particularly the
Minimax
companies in France, Spain and the Netherlands contributed significantly
maintains position
to the group's successful business.
13
Management Report 1997/98
Economic Situation
Logistics and tourism
1995/96
1996/97
1997/98
VTG Group
656
683
646
Lehnkering Group
992
995
1,119
Algeco Group
Total turnover
Turnover of logistics
Internal turnover
(DM million)
Consolidated turnover
356
396
546
2,004
2,074
2,311
254
242
183
1,750
1,832
2,128
In the logistics sector, the amalgamation of the activities of VTG and
Lehnkering dominated the financial year. The first step, the transfer
of shareholdings in subsidiaries, has been accomplished. The transfer of
the tank container and rail logistics business will follow in two stages.
The business organisation is complete, so that the newly formed VTGLogistics business
Lehnkering Group, with its core areas bulk and special logistics as well as
newly structured
rail and tank container logistics, starts into the new financial year.
In the completed financial year, the VTG Group benefited from good
economic conditions in the chemical industry. Utilisation of the tank
wagon park ranged at last year's high level. Due to the favourable market
situation and customers' increasing requirements for high quality, stainless
steel and special wagons for gas transportation were in particular demand.
In the tank farm sector the capacities were well hired. Business in chemical
and special tank space was especially brisk. Continuing the policy of
concentrating tank farm activities on attractive regions and products, the
seaport tank farm in Amsterdam was sold to an American investor. In the
tank container sector the joint venture with Van Ommeren successfully
VTG benefits from
completed its first business year. As a result of the broader base of activities,
booming chemical industry
the number of transports increased markedly on all links.
Last year's positive trend continued for the Lehnkering Group. Business
could be further expanded in all areas. In the industrial logistics sector,
the high level of activities in road haulage and seaport logistics was
maintained; this was also true for the marine shipping sector with its tugs
in both tugging operations and sea trips. In inland waterway shipping,
particularly the gas tankers transported a large volume of cargo. The
14
Lehnkering continued
chemical services sector performed satisfactorily, although business in
good performance
the individual product areas varied.
Management Report 1997/98
Economic Situation
The upswing in the mobile buildings hire business persisted. In France,
Spain and Portugal, the Algeco Group took advantage of the good demand,
from both the building industry and the industrial sector, and expanded
substantially. In Germany, business was stimulated through hiring in the
industrial sector. Utilisation of the capacities, which were increased by
about 9%, was high again. In its first complete financial year, the pallet
Algeco continues
logistics business progressed well and extended its activities to the Benelux
expansion
countries.
1995/96
1996/97
1997/98
Hapag-Lloyd Group
–
–
6,016
TUI Group
–
–
8,745
Turnover of transport
Total turnover
–
–
14,761
and tourism
Internal turnover
–
–
1,872
(DM million)
Consolidated turnover
–
–
12,889
The Hapag-Lloyd Group became a part of the Preussag Group with effect
from 1st October, 1997. To adjust its financial year to that of Preussag,
it filed a nine-months abbreviated financial year for 1998 running from 1st
January to 30th September, 1998. In addition, the fourth quarter of the
Hapag-Lloyd Group’s financial year 1997 for the period from 1st October
1997 to 31st December, 1997, was included in the Preussag Group accounts
Hapag-Lloyd included
for the financial year 1997/98. Comparison with previous years is limited
in consolidation
as a consequence of this adjustment.
The Hapag-Lloyd Group had a good start as a member of the Preussag
Group. Operational business grew in all sectors: tourism, liner shipping
and freight forwarding.
In the liner shipping sector, which includes Hapag-Lloyd Container
Linie as well as the Rickmers Linie, the increase in transports was above
market growth. In spite of the effects of the Asian crisis on freight
volume and increasing lack of parity in the flow of cargo between regions,
Hapag-Lloyd shipped about 18% more standard containers worldwide
than in the same period last year. All three regions – Europe, America and
Asia/Australia – contributed to this growth with increased business.
Freight rates came under pressure as a result of an oversupply in cargo
Liner shipping still
space on some routes. The costs per unit were stabilised at last year's
on growth course
level through increases in productivity.
In the forwarding sector, Pracht Spedition + Logistik maintained its
position in the market, which was characterised by strong price competition and concentration processes.
15
Management Report 1997/98
Economic Situation
The tourism sector, with Hapag-Lloyd Flug, Hapag-Lloyd Geschäftsreise,
Hapag-Lloyd Reisebüro and Hapag-Lloyd Seetouristik, performed well.
The airline increased its market position for the destinations Spain, Portugal and the Canary Islands, and its business in flights to Greece showed a
positive trend. Overall, 7.6% more passengers flew on the 28 aircraft
of the Hapag-Lloyd fleet than in the same period last year. In the travel
agency sector, Hapag-Lloyd Geschäftsreise grew faster than the market
and Hapag-Lloyd Reisebüro sold more holiday trips. The turnover recorded
Tourism sector of
in both companies increased. Hapag-Lloyd Seetouristik strengthened its
Hapag-Lloyd performs well
position in the German cruises market.
In May and August 1998, Hapag-Lloyd increased its shareholding
in Touristik Union International from the previous 30% to a majority of
50.1% in two stages. TUI was therefore included in the Preussag Group
accounts with effect from 1st November, 1997. To adjust its accounting
to the Preussag financial year, TUI filed an eleven-months abbreviated
financial year, running from 1st November, 1997 to 30th September, 1998.
TUI consolidated
As a result of the abbreviated financial year and the associated deviation
with an abbreviated
from the tourism year, comparisons with previous years are only pos-
financial year
sible to a limited extent.
The tourism year 1997/98, which was characterised by far-reaching
changes in the structure of the competition in home markets particularly
in Germany, was successful for the companies of the TUI Group. In the
tour operator sector, the number of guests increased again. Both quality
brands such as 'TUI Schöne Ferien' as well as the new brand '1-2-Fly',
contributed to this. Destinations in Spain were again the most popular
and considerable growth was registered for this region. On the other
TUI Group increases
hand, tourists were more restrained in booking holiday trips to Islamic
number of guests again
Mediterranean countries this year.
The hotel companies sector, a significant element of quality assurance
in TUI business policies, expanded in the main destinations on the Mediterranean. The most important step was a joint venture with the hotel
chain Grupotel on Mallorca. The incoming agencies, especially those in
the Spanish holiday areas, performed well and contributed significantly to
the business success of the TUI Group.
16
Management Report 1997/98
Financial Review
Annual financial statements and appropriation of profit
The consolidated financial statements and the financial statements of Preussag AG were prepared in
accordance with the German Commercial Code. The Preussag Group achieved a profit from ordinary
business activities of DM803 million compared to DM704 million in the previous year. Including an
extraordinary profit and after deducting taxes, the profit for the year is DM539 million.
The Group‘s earnings, calculated according to the DVFA/SG method
DVFA/SG profit at
which requires addition and deduction of specific items, reached DM32
DM32 per share
per share compared to DM24 last year.
The first time consolidation of the Hapag-Lloyd Group and the TUI
Group as well as the removal of the steel activities from consolidation
Balance sheet structure
changed both the value of several items and the structure of the balance
changed significantly
sheet significantly.
The balance sheet total of the Group increased by 10.5% to DM16.5
billion. Therefore, the fixed assets rose by 49.8% to DM9.9 billion. The
short-term assets dropped by 20.9% totalling DM6.6 billion. Inventories
Balance sheet total
were reduced to DM0.5 billion, as were funds to DM1.6 billion. Receiv-
increased to DM16.5 billion
ables went up DM4.5 billion.
The equity was recorded at DM2.9 billion, somewhat lower than in the
previous year. Provisons, at DM7.3 billion, changed only slightly in total.
The decrease in provisions for pensions to DM1.8 billion was nearly compensated by higher other provisions, amounting to DM5.5 billion. Liabilities went up, totalling DM6.3 billion, mainly due to the financing of the
acquisitions. Based on the current balance sheet structure, the equity
Equity ratio
ratio reached 17.5%. Equity and long-term liabilities covered the fixed
at 17.5%
assets by 75.3%.
Assets
Long-term
Assets
Balance sheet structure
(DM million)
30.9.1997 30.9.1998
30.9.1998 30.9.1997
Liabilities
2,898
3,135
Shareholders’
Equity
Long-term
Liabilities
6,643
9,948
4,596
4,766
8,299
6,563
9,017
7,041
Current
Assets
Short-term
Liabilities
14,942
16,511
16,511
14,942
17
Management Report 1997/98
Financial Review
Preussag AG showed a net profit of DM288.8 million for the financial year
1997/98. Taking into account the profit carried forward of DM1.2 million
and after allocation of DM60.0 million to revenue reserves, this gives a
balance sheet profit of DM230.0 million available for paying a dividend of
DM12 and a bonus of DM3, totalling DM15 per share of DM50 par value.
With a dividend entitlement on capital of DM764.3 million, the dividend
Appropriation of profit
payment amounts to DM229.3 million, whilst the remaining DM0.7 million
of Preussag AG
will be carried forward to the new year.
The value added of the Preussag Group in its new structure increased
by about 7% to DM6.8 billion for the financial year 1997/98. The proportion of personnel costs, at 83.1%, dropped. The tax ratio increased to
4.6% as a result of the good earnings position. Shareholders also participated in the good earnings receiving, at 3.4%, an increasing share of the
Value added
value added. Creditors share was 4.4%. This financial year, 4.5% were re-
increased by 7%
tained in the Group in order to strengthen the balance sheet.
1997/98
1996/97
DM mill.
%
DM mill.
%
38,258
100.0
Origin
Group gross income
Costs
– 29,824
Gross value added
8,434
Extraordinary expenses
–
Depreciation
– 1,278
Net value added
312
6,844
28,356
100.0
78.0 – 20,879
73.6
22.0
7,477
26.4
0.8 –
33
0.1
3.3 –
1,054
3.7
6,390
22.6
17.9
Distribution
Employees
5,687
83.1
5,534
86.6
(4,534)
(66.3)
(4,335)
(67.9)
Social security
(926)
(13.5)
(922)
(14.4)
Pensions and benefits
(227)
(3.3)
(277)
(4.3)
Public authorities
316
4.6
273
4.3
Creditors
301
4.4
186
2.9
Shareholders
229
3.4
183
2.9
Group
311
4.5
214
3.3
6,844
100.0
6,390
100.0
Wages and salaries
Calculation of value added
Net value added
On the balance sheet date, the Preussag Group had a liquidity of
DM1.6 billion, consisting of funds of DM1.4 billion and securities worth
DM146 million. The cash flow calculated according to the DVFA/SG
method was DM1.9 billion.
18
Management Report 1997/98
Financial Review
Cash flow from business activities
Use of funds for investments
1997/98
1996/97
Change
1,258.1
923.5
+ 334.6
–3,119.6 – 1,220.7
Change in funds from finance
Change in funds
Cash flow calculation
(DM million)
463.2 –
–1,398.3 –
124.7
–1,898.9
+ 587.9
421.9
– 976.4
Funds at 30.9.
1,586.4
2,137.4
– 551.0
Cash flow according to DVFA / SG
1,905.7
1,570.6
+ 335.1
5.4
5.9
in % of turnover
–
0.5
(complete version on page 126)
Preussag has established a foreign exchange and interest management system on Group level. The aim is to reduce risks from fluctuations
of foreign exchange rates and interest rates for the basic business. To
achieve this, financial futures will be used which are not reflected in the
balance sheet. Transactions in futures are concluded within fixed limits
Management of foreign
and controlled continuously. Futures are contracted only with first class
exchange and interest
banks.
Investments of the Preussag Group were significantly determined by
the acquisition of the Hapag-Lloyd Group and the TUI Group. Additions to
tangible and intangible assetes, at DM4.1 billion, exceeded depreciation
considerably, which reached DM1.3 billion including depreciation on
goodwill. Intangible assets consisting mainly of the goodwill resulting
from the acquisition of Hapag-Lloyd and TUI increased by DM2.4 billion,
Acquisitions determine
while additions to tangible asssets accounted for DM1.4 billion and addi-
investment level
tions to financial assets were DM0.3 billion.
About 90% of capital expenditure was used for increasing capacity as
well as rationalisation and substitution of existing production facilities.
With 43%, the new sector transport and tourism had a major share in the
total figure. Here, the core area of investment was capacity expansion in
aircraft, ships and container. Allocation of funds was also concentrated
on the energy sector, which continued to increase its crude oil reserves as
well as in logistics and building engineering. These sectors prepared for
further growth by investing in new equipment.
Energy and commodities
1996/97
1997/98
14
36
21
Technology
33
26
18
Logistics and tourism
14
13
57
Capital expenditure
Other companies
by division
Steel and non-ferrous metals activities
(in %)
1995/96
3
3
4
36
22
–
100
100
100
19
Management Report 1997/98
Research and Development
Innovation ensures market success
Research and development is the basis for assuring the future of our companies and the first step
in the process of innovation. However, the new structure of the Group has altered the direction and
distinction of its innovation activities. Beside the development of new products and manufacturing
processes, emphasis is now also placed on the area of information management as a result of the
expansion of the services sector.
Expenditure on research and development projects amounted to about
DM140 million for this financial year. However, this represents only a part
of the total amount spent on innovations in the Group – from research via
realisation of the product idea to introduction on the market.
Energy
1995/96
1996/97
1997/98
40
50
59
R & D expenditure
Plant engineering and shipbuilding
32
22
16
by sector
Building engineering
28
28
25
100
100
100
(in %)
The development as well as the protection of brands, trademarks and
technical protective rights insure the investment in innovations and
strengthen the market position. The Preussag Group's innovative abilities
are also demonstrated by its ownership of technical protective rights.
During the completed financial year, this number increased again to 1,450
Large number of
patents and registered designs at home and abroad, although the
protective rights
emphasis in the Group has shifted from the industrial sector to services.
This realignment of the Group is also expressed in the increasing
number of trademarks, which – like the protective rights – represent a
considerable asset. Worldwide, with the majority in European countries,
more than 130 new trademarks rights have been established. The number
of trademarks in the Group has increased to more than 1,600. For the first
20
Trademarks
time this figure includes the trademarks with which Hapag-Lloyd and TUI
increased
operate successfully in their markets.
Management Report 1997/98
Research and Development
In the following, some examples of research and development projects
are described which have made considerable progress or have reached
marketability in this financial year.
A subject of special importance was the installation of a central energy
data bank for the Group. This provides an instrument which registers all
demand and consumption of energy and takes advantage of synergies
through their application and procurement. One result of this is that the
Data bank reduces
central co-ordination of the purchase of electricity and gas has already
energy costs
significantly reduced energy costs.
In the energy division, the majority of research and development
expenditure was used for exploration. In exploration and development of
new oil reserves, activities were mainly in fields abroad. Natural gas
exploration was concentrated in Germany. Here programmes, undertaken
together with university research departments, were directed at investi-
Crude oil exploration
gating the gas potential of the deeper strata in North Germany and there-
concentrated abroad
by providing indications of further possible reservoirs.
In plant engineering, the research of the Preussag-Noell Group was
concentrated on its core business area, container and harbour technology.
A test plant for container transport using linear handling technology
successfully completed its trial run in the port of Hamburg under real
operating conditions and demonstrated the economic efficiency of this
Innovative handling
innovative handling technology compared to conventional container
technology for containers
transport systems.
Preussag Rohrsanierung GmbH extended its range of services with a
process for the refurbishment of long-distance heating pipelines. This
new process was employed for the first time in the refurbishment of a
more than 1 kilometre long part of the long-distance heating system in
Bucharest.
The Pipetronix Group concentrated development work on its test pigs
for ultrasonic testing of pipelines with the goal of strengthening its
leading position in this sector. A new project here is an ultrasonic pig,
New test pig
to be used in gas pipelines, which needs no supporting fluids for its
for gas pipelines
propulsion.
Preussag Noell Wassertechnik GmbH, together with the Gesellschaft
für Biotechnologische Forschung, completed the development of a process
for the extraction of mercury compounds from water. It is now being
tested on a large scale technically in the electrolysis plant of ElektroChemie Ibbenbüren GmbH, in which Preussag has a 50% shareholding.
21
Management Report 1997/98
Research and Development
At Howaldtswerke-Deutsche Werft AG, further development of the fuel
cell technology for ship propulsion continued to be an important part of
development work. There are also new progammes to investigate the use
of synthetic material strengthened with fibreglass in naval shipbuilding,
with the goal of reducing construction costs. In merchant shipbuilding,
technical concepts for passenger ships, ferries and large container ships
for refrigerated goods were developed further, whereby particular attenNew technical concepts
tion was paid to the feasibility of lightweight construction and innovative
for merchant ships
propulsion systems.
Product development had priority in the research work of the Fels
Group. Good progress was made in tests for increased use of recycling
gypsum from flue gas purification in plasterboard production; this applied
also to the reuse of remains from production and processing in this area.
Both research areas, therefore, also contribute to the conservation of raw
material reserves.
In the Wolf Group, the cost-reducing method of modular construction
was promoted and the product range of gas heaters in the low power
range was completed. The increase in effectivity of the boilers and
manufacture of products with recyclable materials were further subjects
Product development
of research work which have already been incorporated in the production
in heating technology
process.
At Minimax, the recent research concerning the water atomisation
technique for stationary fire protection made further progress. Through the
admixture of extinguishing agents it was possible to reduce the quantity
of water and simultaneously increase the extinguishing effect.
In the tourism sector, information systems are of special importance
for the business: its efficiency, e.g. in the booking system, is a significant
factor in competition. In its development strategy, therefore, TUI emphasised the expansion of the data system network of its companies and
agencies at home and in the foreign destinations. The introduction of a
22
Information systems –
‘data warehouse’ presents an essential new component in the information
a key development
supply system and should help in speeding and easing operational and
in tourism
strategic decision making processes.
Management Report 1997/98
Prospects
Growth through expansion of the services sector
Preussag enters the financial year 1998/99 with a new business structure. The established business
activities complement the new services well. Both areas have considerable growth and earnings
potential. The emphasis of activities will now be placed on the sectors logistics and tourism, which
will expand further.
Economic conditions are not favourable in all the important areas of
business for the new financial year. Nevertheless, it is expected that
worldwide economic growth, though weaker, will continue and the effects
of the crises in Asia, Russia and South America will be limited in other
regions.
The economic climate in West Europe will change only slightly on the
whole. In Germany, where an economic growth of 2.3% is forecast, a
stable course is expected. Steady demand through capital expenditure on
equipment has a positive effect, but private consumption also contributes
Moderate economic
increasingly to growth. Furthermore the prospects of increasing numbers
growth in Europe
of contracts are an improvement for the building industry.
In North America, following several years of strong growth, there are
signs of a reduction in the pace of expansion. However, the starting level
is high, so the lower growth rate rather means consolidation. In South East
Development of
Asia and Japan, a process of adjustment has started which will last several
economies abroad varies
years and considerably dampen growth expectations.
1998
1999
Germany
+ 2.7
+ 2.3
European Union
+ 2.8
+ 2.5
North America
+ 3.3
+ 2.0
Gross national product
Central and Eastern Europe
- 0.4
- 0.5
(change in %)
Asiatic Threshold Countries
- 5.0
- 0.2
Source: Annual Report 1998/99 of the
German “Sachverständigenrat zur
Begutachtung der gesamtwirtschaftlichen Entwicklung”
The economic conditions in the important markets are mostly
favourable for the activities of the new Preussag. This is especially true for
the growth areas tourism, transport and logistics but also for building
engineering.
23
Management Report 1997/98
Prospects
Energy and commodities
In the new financial year, Preussag Energie GmbH will concentrate on
developing foreign business, especially in the core regions South America
and North Africa with the oil fields in Venezuela and Tunisia acquired
last year. This will lead to a further considerable increase in oil production.
Within Germany, beside the optimisation of techniques and operations in
production, the purchase of oil field shares will be continued in order to
assure economic efficiency of production. Natural gas production will rise
Oil production
through expansion of existing strikes in Germany. Sales of the additional
increases further
production are assured with contracts.
The Deutag Group expects continuing good international demand for
drilling services and therefore high utilisation of their drilling and workover
rigs. Continued modernisation of its equipment park will maintain its
world market position and expand its presence in specific areas of
regional markets, such as Africa and Asia. Deutag has strengthened its
Position in platform
market position as a platform operator in the North Sea by acquiring the
operating strengthened
platform business of the Smedvig Group in Great Britain.
In the course of concentrating the activities of the energy sector,
Preussag Energie GmbH sold its 50.2% shareholding in Deilmann-Haniel
GmbH in January 1999, effective 1st October, 1998.
The trading sector expects moderate growth overall in its relevant
markets. The AMC Group anticipates an improvement in market conditions
for basic materials for the non-ferrous metal processing industry following
a year, which was difficult at times for both commission business and
principal trading. The metal processing branch will continue its positive
trend of business. The Canadian steel service centres invested in additional
Trading business
processing facilities and plan to use these capacities to improve their market
grows steadily
position.
The US steel service companies have also prepared themselves for an
extension of job processing by further investments in their processing
capacities. This business has better margins than straight trading and will
contribute towards stabilising the level of business achieved even with a
flagging steel market in North America.
The Bergmann Group expects an improvement in the overall situation
in the non-ferrous metal markets in the new financial year. Beside the
strengthening of its good position in copper trading, expansion of trading
in aluminium and zinc should contribute to a successful business year.
24
Management Report 1997/98
Prospects
Technology
The remaining restructuring work necessary at the Preussag Noell
Group will be resolutely continued. Strengthening of the business activities
is most important at this point. Costs should be further reduced, project
management improved and competitiveness of the products assured
through further development. In the new financial year, Preussag Noell will
concentrate on only three areas of business. In the systems and mechanical
engineering sector, container cranes and storage technology will have precedence, whereby more emphasis will be placed on services. The progress
achieved with the optimisation of the international, integrated production of
the locations Würzburg, Abu Dhabi, Xiamen and Kaliningrad are important
for economic success. Restructuring in the energy and environmental technology sector has mostly been put into practice. Here business must be
placed on a sound basis, internationally too, which can also be achieved in
partnerships. In the process technology sector – and especially in gas techPreussag Noell
nology – further adjustment of the business structure and capacities must
concentrates on three
be undertaken in the new financial year. Overall, Preussag Noell Group's
business sectors
situation will improve markedly compared to the previous years.
The Preussag Wasser und Rohrtechnik Group has achieved a stable
basis for future business in its core area pipeline construction through
rationalisation and expansion abroad. Pipe refurbishment and pipeline
services will also expand considerably abroad with their processes of high
international standard. The water treatment sector was reorganised in the
last financial year. Making use of synergies and optimisation of resources
take priority in this sector.
Howaldtswerke-Deutsche Werft AG starts into the new financial year
with a strong order book. This gives the construction and processing capacities, particularly in naval shipbuilding, long-term employment. Such
innovations as the air-independent fuel cell propulsion system and new
developments in submarine building have effectively contributed to this.
In merchant shipbuilding, the decline in the value of Asian currencies increased the competitive pressure so that the successful implementation
of current programmes for improvement in production processes is of
special importance. There are still good opportunities in the market for
technically high quality ships, e.g. cruise ships, fast-going ferries or
Shipyard starts with
specialised container ships for refrigerated goods: market segments
strong order book
where the shipyard has established a good position.
25
Management Report 1997/98
Prospects
The building engineering sector continues last year's positive trend and is
growing further. The Fels Group assumes that the economic climate for
the building industry in Germany will continue to improve, at least in some
sectors. Fermacell plasterboards remain the most important product in the
building materials sector; their sales will increase further, helped by a strong
rise in exports. Among others, long-term delivery contracts in flue gas
desulphurisation provide a basis for a steady increase of the business
volume of Harz-Kalk products.
The Wolf Group is expecting additional demand for heating installations in Germany, based particularly on a growing need to replace those
units which do not meet the standards of the established emission laws.
In Switzerland the consolidation of the Group's market position with its
brands Elco, Cuenod and Brennwald has priority. Chaffoteaux et Maury
aims at further expansion of its business volume in France and exports
should rise considerably, too. Baymak, acquired during the last financial
year, is the leading distribution company for heating products in Turkey.
Heating technology
Baymak will open new outlets for Wolf products in this fast growing market
grows abroad
and the neighbouring Central Asian countries.
In the new financial year, Kermi anticipates growth through the further
development of its successful range of design radiators and its leading
position in the market segment of flat radiators. The new products, heating
walls and convectors, are in good demand. Supported by new products,
expansion in the shower screen segment will continue, both at home and in
foreign markets.
The Minimax Group aims at safeguarding its market position as
European supplier of complete fire protection systems. Cost-reducing
potentials were realised in stationary fire protection in order to prepare for
Fire protection
stronger competition. The market for mobile fire protection has picked up,
business stable
so business in this sector will be stimulated.
Logistics and tourism
With the amalgamation of VTG and Lehnkering, the new VTG-Lehnkering
AG concentrates on railway and tank container logistics as well as bulk
and special logistics with emphasis on the chemical industry as a main
customer. The tank wagon business is growing at a moderate rate. On the
other hand, tank container activities are expanding stronger; here the
joint venture with Van Ommeren has progressed well. Europe-wide traffic
will be expanded in the bulk logistics sector. Inland waterway shipping
is continuing to specialise in the transport of gases, acids and caustic
solutions. Concentrating on profitable products and locations, the tank
26
VTG-Lehnkering
farms and warehouses for hazardous goods will continue last year's
expands business
positive trend.
Management Report 1997/98
Prospects
The Algeco Group profits from the good economic conditions in its core
business mobile building hiring. Especially in France, the main market, a
further increase in the utilisation of its capacities is anticipated. Algeco
will continue to expand on the Iberian peninsula. In addition, East European
markets, initially Poland and the Czech Republic, shall be increasingly
Algeco profits from
opened up. The pallet hiring business, which Algeco entered last year, will
good market conditions
continue its above average growth.
The transport sector consists of Hapad-Lloyd Container Linie, Rickmers
Linie and the forwarding company Pracht. Hapag-Lloyd Container Linie, as
a member of the Grand Alliance, the largest co-operation in liner shipping,
is well positioned in the global market of container liner shipping. Last
year, the transport volume grew faster than the market. In the new financial
year, too, an above average rise in the transport volume is expected. A
considerable part of growth will be the result of expansion of intra-regional
routes. After a difficult year in Asian traffic, the Rickmers Linie presumes
that the freight situation for its multi-purpose ships will return to normal.
In Germany, Pracht forwarders are counting on an improved economic
Liner shipping
trend for consumer goods in the distribution sector. In European haulage
expects increase in
its fully developed logistics system offers a sound basis for further growth
transport volume
in business.
In the tourism sector, the newly founded Hapag Touristik Union with
its shareholdings in the TUI Group, in Hapag-Lloyd Flug, in Hapag-Lloyd
Reisebüro, in Hapag-Lloyd Geschäftsreise and in Hapag-Lloyd Seetouristik is entering its first financial year.
The tour operators of the TUI Group hold leading positions in the main
European markets. These will be stabilised while aiming at growth above
the average for the market again. Involvement in hotels plays an important role in this development; high quality hotels under the brand names
RIU, Grupotel, Grecotel, Dorfhotel and Robinson in attractive popular
Further growth
locations are significant here. Offers in South European destinations will
in holiday tours
be extended in particular, thus providing additional volume of business.
As part of the current investment programme, Hapag-Lloyd Flug is
renewing its aircraft fleet and, thereby, will increase its seating capacity
in conformity with market conditions. Along with the larger number of
More passengers
passengers, as a result of combining airline and tour operator to form
to fly Hapag-Lloyd
an integrated tourism group, utilisation of the aircraft also increases.
27
Management Report 1997/98
Prospects
Hapag-Lloyd Reisebüro and Hapag-Lloyd Geschäftsreise aim to expand
their volume of business by extending their locations, in other European
countries too. Hapag-Lloyd Seetouristik, as leader in terms of both quality
and market in Germany, has a good position in the relevant market
segments with their cruise ships. The target is to improve the position
further. Construction of a new MV ‘Europa’, which will start to its maiden
voyage in autumn 1999, is a step in this direction.
In the first quarter of the financial year 1998/99, important steps for
the expansion of the tourism sector were taken which strengthened its
leading position in the European tourism market significantly.
On 23rd December, 1998, Preussag acquired a 24.9% shareholding
in the British tourism and financial services group Thomas Cook from the
Westdeutsche Landesbank Group. A general agreement with Westdeutsche
Landesbank provides that Preussag – in particular subject to the approval
of the Federal Cartel Office – will acquire a further stake of 25.2% by
30th September, 1999, thereby increasing the shareholding in Thomas Cook
to a majority of 50.1%. Not affected by this acquisition, current merger
Shareholding in
talks about the amalgamation of Thomas Cook and the tourism activities
Thomas Cook acquired
of the American Carlson Companies, Inc. in Great Britain will continue.
On 29th December, 1999, the shareholders of BS&K Travel DT Reisen
GmbH, in which the limited partners of First Reisebüro Management
GmbH & Co. KG have pooled their interests, accepted the offer of Hapag
Touristik Union to acquire their shareholding in First. The respective
HTU acquires
agreements for the acquisition of this important German travel agency
First travel agencies
chain were signed subject to approval by the Federal Cartel Office.
Investments and financing
Capital expenditure in fixed assets will be at the same level as in the
last years. The majority will be invested in expansion and rationalisation in
the transport, tourism and energy sectors. Sufficient cash flow is available
to finance these measures. Furthermore the Group's financial facilities
can also support other external growth.
Good prospects for the new fincancial year
The new Preussag has started well into the financial year 1998/99. The
three divisions energy and commodities, technology, and logistics and
tourism consist of future-oriented activities with considerable growth
potential. We will take advantage of these. We therefore anticipate that
the new Preussag will consolidate the level of earnings achieved and that
profits will steadily increase further.
28
Further Information
The Preussag Share
Stock markets volatile – Decline follows bullish trend
During the first nine months of the financial year 1997/98 the German stock market was in an extraordinarily positive mood. Prices rose on a broad front and the German Stock Index (DAX) reached
record highs at about 6,200 index points. A change of mood occurred in the summer, with a resulting
drop in the DAX to a level of 4,500 index points.
The main reasons for the boom were a historically low level of interest,
increasing company profits and repeated new positive signals from the
New York Stock Exchange. In late summer, the financial and economic crises
in Asia and Russia and weakening US dollar exchanges rates negatively
High volatility on
affected the climate of stock exchanges worldwide. This led to a decline
stock markets
which gathered momentum through prospects of weaker economic growth.
Starting at DM495 at the beginning of the financial year, the Preussag
share rose considerably with the DAX and reached a historic high of
DM769 at the start of July. During the rest of the financial year, the Preussag
share was unable to remove from the influence of worldwide turbulences
in share prices, but remained relatively stable compared to the market
and closed at DM578 on 30th September, 1998. This represents a rise in
value of almost 17%. The Preussag share, therefore, performed considerably better than the DAX, which rose by only 7% in the same period. This
development also shows that the stock exchange appreciates Preussag's
Preussag share
change to a services and technology group with the increased earnings
outperforms market
potential involved.
Oct Nov Dec Jan Feb Mar Apr May Jun
Jul Aug Sep
800
Highest, lowest and
closing prices of the
Preussag share in the
financial year 1997/98
700
600
500
400
IV/97
I/98
II/98
III/98
29
Further Information
The Preussag Share
The Preussag share is one of the 30 DAX securities and officially quoted
on all eight German stock exchanges. In addition, it can be traded in the
computer system ‘Xetra’. Preussag shares remained of great interest to
investors in the financial year 1997/98. 54.8 million shares changed
hands; they therefore rank again among the very liquid securities on the
German stock market. Foreign investors also have the possibility of dealing
on the outside market via the London SEAQ system. In trading at home
Brisk trading
and abroad the subscribed capital of Preussag changed hands more than
in Preussag shares
three times during the course of the year.
The number of options traded on Preussag shares increased markedly.
With an average volume of over 10,000 contracts per month, a total of
about 125,000 Preussag options were traded, more than double last year's
figure. In addition, 35 issues of covered warrants – share options issued by
Trading in options
banks and covered by share portfolios – were in circulation at the end of
increased
the financial year.
For the financial year 1997/98, Preussag AG showed a higher profit
at DM289 million, than in the previous year as a result of the positive trend
in Group earnings. This allowed for payment of a bonus over and above
the dividend. Therefore the proposal to the Annual General Meeting is to
pay a dividend of DM12 per share of DM50 par value and – in the year of
Preussag's 75th anniversary – a bonus of DM3 per share. Domestic tax-
Dividend plus bonus –
paying shareholders receive a tax credit of DM5.14 per share on the
shareholders receive
dividend. The bonus will be paid from profits earned abroad which have
a total of DM15
not yet been taxed in Germany, therefore no tax credit can be given here.
The German tax-paying shareholder therefore receives a total of
DM20.14 per share. Based on the share price at the beginning of the
financial year, the dividend yield is 4.1%. An investor who decided to buy
Preussag shares in the course of the privatisation in 1959 and subscribed
to all increases in capital has gained an average yield of 26.4% on his
investment.
1993/94
30
1994/95 1995/96 1996/97
1997/98
Earnings (DVFA/SG)
18.00
28.00
17.00
24.00
32.00
Dividend
10.00
12.00
12.00
12.00
12.00
–
–
–
–
3.00
4.29
2.57
2.57
5.14
5.14
Development in earnings
Bonus
of the Preussag share (DM)
Tax credit
Further Information
The Preussag Share
The subscribed capital of Preussag AG was increased by DM26,100 from
the exercise of 522 option rights from the bond issue initiated in May
1996 and running till the year 2001 as well as by DM1,359,550 from an
issue of employee shares to a total of DM764,259,650. As in previous
years, in October 1998, employee shares on preferential terms were offered
to those eligible from the authorised capital of DM10 million. 33% of the
workforce took advantage of this opportunity for long-term capital formation,
Further employee
so that the subscribed capital qualifying for a dividend in the financial
shares issued
year 1998/99 rose by DM1,366,350.
With Preussag's change to a services and technology group, international
interest in Preussag shares has further increased. Approximately a quarter
of the shares are owned by foreign investors, mainly in Great Britain,
USA and Switzerland. As the major shareholder, GEV Gesellschaft für
Energie und Versorgungswerte mbH, a subsidiary of Westdeutsche
Landesbank, owns about a third of the subscribed capital. Niedersachsen
Holding GmbH, the second largest shareholder last year, has sold its shares.
Shareholders
At least 50% of the subscribed capital is owned by institutional investors,
structure consolidated
while approximately 15% are in private hands.
Preussag is committed to value-oriented management. With the
PREMIUM concept (Preussag management information system for
maximisation of the value of the Group), a system for strategic and operational control has been introduced which places the risk-oriented interest
yield for the capital invested at the centre of strategies. The key figures
‘return on equity before taxes’ and ‘return on cash flow’ as well as the
values of the companies are determined from a common data pool. We
have adjusted our objectives according to the increased earnings
potential of the new Group: A return on equity before taxes of 30% and
Value-oriented
a return on cash flow of 15% for the Group – both being average figures
management
for an economic cycle of several years.
We understand our investor relations work as a link between Preussag
and investors and analysts. We have explained and discussed the new
Group structure at numerous presentations in Germany and abroad. We
answered questions concerning the realignment of Preussag and its course
of business at an analyst conference and conference calls. Transparency
was greatly increased with the disclosure of profits by sectors. Current in-
Investor relations –
formation on the Preussag share, interim reports or the annual report are
dialogue with the
available at all times on the web at http://www.preussag.de. We will
financial community
continue our open dialogue with the financial community in the future.
31
Further Information
Personnel
Workforce structure reflects change of the Group
Preussag's change to an internationally active services and technology group along with its withdrawal
from the steel industry has led to considerable alterations in the workforce structure. On balance the
workforce increased as a result of the new activities in logistics and tourism. At the end of the financial
year, 66,563 people were employed worldwide, approximately 6% more than last year.
The expansion of the logistics activities and the move into tourism
brought 18,700 new employees into the Group. Of these, 9,220 worked
for the Hapag-Lloyd Group and 9,480 in the companies of the TUI Group.
Approximately 12,600 employees left the Group as a result of the sale of
New activities result
the steel activities. Further changes in the workforce are largely due to
in more employees
advanced restructuring in plant engineering.
German companies, with 43,428 employees, employed about twothirds of the total workforce of the Group. The share of foreign employees
here remained nearly the same at 7%. The largest group – as in previous
years – was Turkish with about 40% of the total. 30% came from European
Union countries. In foreign companies, 23,135 people were employed.
The workforce abroad increased by 10,097, or 77% – largely due to the
new activities in logistics and tourism. The main regions of employment
Increase in foreign
abroad were still the countries of the European Union, with 50%, and
workforce
North America accounting for 15% of our employees abroad.
1995/96
1996/97
1997/98
Energy and commodities
22
22
20
Technology
43
47
43
Logistics and tourism
7
7
35
Personnel
Other companies
4
4
2
by division
Steel and non-ferrous metals activities
(in %)
24
20
–
100
100
100
Personnel costs increased to DM5,687 million. The primary reason for
this was the change in Group structure. Wages and salaries accounted for
DM4,534 million, while contributions to social security and payments for
pensions and assistance, totalling DM1,153 million, remained at the same
32
Personnel costs
level as last year. The employees received a share of 83% of the net value
increased
added of the Group.
Further Information
Personnel
About 20,000 former employees or their dependants received pensions from
Group companies. In addition, more than 35,000 employees have vested
pension rights; DM227 million has been provided for this programme.
Not only the increase in international business but also the changes in
the structure of the Group set high standards for its employees and
demand continuous development of their skills. As a consequence, technical
and language courses were again very popular. More than 3,200 employees
participated in the 280 seminars offered in our seminar and services
programmes. On the management level individual advancement through
personnel development schemes had priority. The change management
Personnel development,
circles eased preparation for the new demands made by the changes in
further education and training
the Group's structure.
The Preussag Group enlarged its training programme once again and
offered approximately 10% more training places than last year. About
1,900 young people are now receiving professional training in the Group
companies. Not only the traditional training locations in the Group, plant
engineering and shipbuilding as well as building technology, have contributed to this positive development, but also the new companies – especially
the Hapag-Lloyd Group. The high performance of our trainees is evidenced
by the more than 500 who attained their certificates this year, many with
Training places
very good results. Nearly all those passing could be given positions in the
increased again
Group.
The company suggestion scheme is evolving from its traditional role in
companies towards an integrated idea management and, thereby, to a
significant aspect of management. The aim is to include all levels of
Company suggestion
employees in the further development of the Group, its products, services
scheme changing
and work processes. We have progressed further in this direction.
Many employees participated in the company suggestion scheme
during the completed financial year. The commitment to their companies
was illustrated by about 1,500 proposed improvements in the areas of
improved products, services, processing procedures and safety at work.
Their good ideas were also worth it for the employees; premiums totalling
DM600,000 were paid out.
33
Further Information
Personnel
The area of health and safety programmes is undergoing extensive changes at present made necessary by new legal obligations. One result will
be that management systems which are integrated in the Group management, will ensure and furnish proof of the maintenance of standards. Our
Group guiding principles on health and safety programmes were already
aimed in this direction. Our safety engineers have now developed a system
whereby safety at work and health protection are incorperated in the companies’ organisation and decision making structures. Parallel to this, on the
company level, the programmes have been intensified which are designed
to improve working conditions further and promote the health of the employees. Another reduction in the number of accidents at and on the way
to work and markedly less downtime are signs of the success of this
Health and safety
work. Economically the efficiency of our health and safety programmes is
programmes prove
reflected in lower premiums for accident insurance and in the quality of
their value
products and services.
The number of participants in the Preussag medical insurance scheme
increased again. It takes care of 48,000 members, 2,000 more than last
year. Although the increase in expenditures was moderate, contributions
had to be raised by 0.8 percent points regionally from 1st October, 1997.
It is now 12.8% or 11%, according to region. The increased contributions
were necessary because of markedly higher obligations from the risk
structure adjustment for economically weaker medical insurance schemes.
Even with the new level of contribution the Preussag scheme offers its
members and the participating companies a favourably priced and attractive form of medical insurance. In promoting health the Preussag scheme
has extended its programme in line with new guidelines from the legis-
Membership of
lature. Here particular attention is paid to preventive measures for ensuring
medical insurance
health and the promotion of treatment methods leading to a reduction in
scheme increased
hospital costs.
Preussag looks back on a successful financial year 1997/98. The positive
development of business in the phase of Group restructuring is also a
result of the high commitment and motivation as well as the willingness
to integrate of all the old and newly added employees and managerial
staff. For this, we wish to express our sincere thanks. We would also
like to thank the elected employee representatives in the companies and
Acknowledgement
34
at Group level for their objective and conscientious cooperation.
Further Information
Environmental Protection
Environmental protection – Contributions to sustainable development
On both national and international levels the traditional understanding of environmental protection is
being gradually replaced by the model of ‘sustainable development’. Preussag, as an internationally
active enterprise supports this model, developed at the United Nations Conference for Environment and
Development in Rio de Janeiro in 1992, as the central guideline for environmentally oriented actions.
The model of sustainable development is directed at bringing together
economic efficiency, social responsibility and traditional environmental
protection. To achieve this, the Preussag Group is aiming particularly
at innovative solutions of the tasks in hand. This applies to both environmental protection within the companies and the provision of environInnovations aim at
mentally oriented goods and services. This year work was concentrated
environmental protection
on achieving high energy efficiency.
Expenditures for environmental protection remained at a high level,
even though – particularly due to the Group's withdrawal from raw material
industries and the expansion of the service sector – last year's figures
could not be met. In addition, our companies – while maintaining the high
standards achieved – are aiming at reducing costs in the area of environmental protection, too. An example of this is the expenditure for waste
management. Here, in the course of implementing the recycling and
waste laws, competition among recycling and disposal companies has
intensified which, in turn, has made a reduction in costs possible in some
areas. The processing of waste within the companies themselves and
Efficient environmental
improved recycling of waste which was previously disposed of has also
protection reduces costs
led to reduced expenditure.
Among the activities concerned with environment, certification processes which are designed to make high technological and ecological
standards transparent, are still considered highly important. The achievements were more than was required by law in many cases. For example,
all the workshops of Fels-Werke GmbH in Sachsen-Anhalt and Lower
Saxony voluntarily underwent environmental inspection according to the
EU Eco Audit regulation. Other Group companies have been awarded the
DIN ISO 14001 certificate. Thereby they fulfil the aims of the Group manage-
Eco audits keep
ment to establish an integrated and future-oriented understanding of en-
standards high
vironmental protection in their companies.
35
Further Information
Environmental Protection
Energy and commodities
In this sector, Preussag Energie GmbH provides several examples of
precautions for sustainable environmental protection. When building the
underground gas storage plant Fronhofen, which it also operates for GVS
Gasversorgung Süddeutschland GmbH, the company took various measures
to meet important environmental interests. There were discussions concerning the intended construction work at various public meetings in
order to ensure that the buildings above ground fitted into the landscape.
Special emphasis was placed on minimising emission. Environmental
studies and expert opinions on e.g. noise immission in the neighbourPrecautionary environmental
hood, air pollution control and hydrogeology were gathered for this
protection for an underground
purpose. With the commissioning of the extraction plant, the gas storage
gas storage plant
plant went into operation in time for the 1997/98 winter heating period.
Another example of the principle of sustainability was provided by
nature protection measures. In the ‘Trockenes Moor’ near Nienburg,
Preussag Energie financed moor recultivation as overall compensation
for the natural gas drilling in the Schneerener Moor area. During the
reporting period, copses were removed from a part of the region and remoistening of the whole area begun. Large quantities of peat moss are
growing on the former peat banks. The area has now been registered as a
valuable ‘Flora-Fauna Habitat’ at the ministry for the environment of the
Federal Government.
Technology
Through the introduction of innovative product developments, Preussag
Wasser und Rohrtechnik GmbH has lowered the pollution level of its services, especially in the area of pipe refurbishment. Pipe cleaning was
increasingly undertaken using maximum pressure water milling procedures,
for example, instead of mechanical cleaning. For this, three new mortisers
were acquired for projects in Berlin, St. Petersburg and Moscow, as well
as two mobile filter installations. The new procedure has the advantage
that there is no air pollution through dust, as with mechanical cleaning. In
New process improves
addition, there is greater health protection for the workers and their work
environmental compatibility
is more effective both technically and economically.
Howaldtswerke-Deutsche Werft AG put into effect the energy saving
measures developed during the previous year. As a result of a variety of
individual measures, energy efficiency was improved in many parts of the
shipyard and, thereby, a substantial contribution to the preservation of
36
Energy savings
resources was achieved. The savings covered the costs of the measures
preserve resources
introduced.
Further Information
Environmental Protection
Last year, Wolf GmbH brought several ecologically and economically motivated innovative products onto the market. An increase in the efficiency
of heating boilers was achieved in the first place, but also the construction
of a product consisting of recyclable materials was of importance. The
new gas condensing boilers provide an example of product innovation as
Gas condensing boilers –
a contribution to sustainable development. They achieve a standard effi-
a contribution to
ciency of 108%, thereby underbidding the strict regulations of the Federal
environmental protection
Immission Protection Law.
Logistics and tourism
In the logistics sector, measures for soil and water protection have
complemented existing projects in immission protection in the VTG
Group and Lehnkering AG. The Federal Law for Soil Protection has set a
new national standard which essentially regulates future dealings in the
areas of both prevention and rehabilitation of abandoned polluted areas.
Pracht Spedition + Logistik GmbH presents itself as an ecologically oriented forwarding company on the market. Employing thermal insulation
measures, Pracht has reduced energy costs in its warehouses by more
than 50%. The use of biodiesel for its vehicles and regenerative energy in
Regenerative energies
its offices has led not only to savings in the use of resources, but also to a
in the forwarding sector
lasting stabilisation of its position in the market.
The demand for sustainable environmentally friendly tourism has
led Hapag-Lloyd AG and Touristik Union International GmbH & Co. KG to
integrate environmental aspects into their range of offers at an early date.
In the period of reporting, Hapag-Lloyd airlines have primarily aimed at
further reducing the use of unrenewable resources. To achieve this, a new
landing procedure will be introduced with which the fuel consumption as
well as noise and pollutant emission are reduced. The investment in new
Boeing 737-800 aircraft is directed towards this aim.
Touristik Union International raised environmental protection as a
central topic for the whole Group last year. Activities in this area are
concentrated on the development of a programme for quality of the
environment in the Group companies at home and abroad. The 160
hotels and clubs, with about 80,000 beds, were at the centre of the
Various contributions to a
measures for product ecology. Own activities as well as involvement in
sustainable development
national and international committees – especially in host countries –
in tourism
achieve a significant contribution to sustainable development in tourism.
37
Division
Energy and Commodities
Energy
The price for crude oil dropped
Preussag Energie GmbH
Deutag Group
Energy and Trading
the end of the financial year.
markedly on the international
Comparing the annual averages
markets during the year. Starting
it improved by about 5%, thereby
at about US$20 per barrel at the
compensating partially the influ-
beginning of the financial year, the
ence of the declining crude oil
price decreased continuously,
quotations on the DM earnings.
mainly as a result of expanded
Natural gas prices, which follow
Kavernen Bau- und
production in the OPEC. Expec-
heating oil prices with a timelag,
Betriebs-GmbH
tations of lowered demand due to
could not avoid being affected
the economic crisis in Asia forced
by the development of the oil
down prices to about US$10 per
price; they also decreased
barrel at times. Only towards the
during the year.
Deilmann-Haniel Group
end of the financial year they re-
2217
2188
2477 DM million
Preussag Anthrazit GmbH in the
average price of North Sea oil
Deutsche Steinkohle AG as of 1st
Brent for the financial year was
January, 1999, and the sale of
US$14.60 per barrel, 29% less
exploration and production of
than last year.
uranium, the activities of the
In contrast, the US dollar ex‘96
‘97
Turnover
‘98
With the decision to incorporate
covered to US$14 per barrel. The
change rate remained stable for
38
Sectors
a long time and only weakened at
energy sector were streamlined
with a view to the future.
Energy and Commodities
The financial year 1997/98 was
again successful for the energy
and commodities division. The
production of crude oil and sales
Energy and Commodities
Turnover (DM million)
Capital expenditure (DM million)
Personnel
1995/96
1996/97
1997/98
9,651
10,520
12,193
151
376
307
14,524
13,675
13,447
of natural gas ranged above
those of last year; capacities in
the energy-related services
sector were well utilised. The
trading companies performed
well under sometimes difficult
market conditions.
Trading
The economic environment of
For the US steel trading sector,
the trading companies, which are
the economic situation remained
active worldwide, varied by region
largely good. Steel consumption
AMC Group
and sector.
was high up to the end of summer.
W.&O. Bergmann Group
tional financial markets and the eco-
year signs for a slowdown of
nomic crises in Asia and Russia
growth rates increased.
The turbulences on the interna-
US Steel Service
made trading more difficult espe-
Companies
cially in the second half of the finan-
Only at the end of the financial
cial year.
A slackening demand for commodities was a significant consequence of the economic downturn in the Asian region.
7434
8332
9716 DM million
The international non-ferrous
metal markets were particularly
affected. Here, the quotations on
the London Metal Exchange
dropped drastically at times as a
‘96
‘97
‘98
result of oversupply in virgin metal.
Turnover
39
Sector
Energy
Energy
Preussag Energie GmbH
In the completed financial year
exploration in a very promising
crude oil production rose again
concession. Oil production in
and reached 2.16 million tons, an
Qatar was further increased
increase of almost 5%. Domestic
through development of the field.
production, at 0.72 million tons,
In Tunisia, a rich exploratory well
was a good 1% higher than last
led to a rise in oil production. The
year's volume. Production abroad
drilling campaign started last year
increased by more than 6%, to
in the Kerkennah-West concession
1.43 million tons. Here the portion
confirmed the natural gas discov-
from the direct foreign interests in
ery at Chergui, which will be de-
Ecuador, Venezuela, Tunisia, Qatar
veloped at the beginning of 1999
and Albania rose overproportional-
after successful tests.
ly to 0.43 million tons. Further in-
In addition, Preussag Energie
creases in production are also
was closely involved in Deminex
expected from these fields in the
projects at six paying exploratory
future.
drillings in the Norwegian North
3
At 1.46 billion m (Vn), natural
Sea and Argentina.
gas production was slightly below
In Germany, too, two exploratory
last year's volume. Of this about
drillings successfully located natu-
20% was produced abroad, the
ral gas. The programme for optimi-
same portion as last year.
sation of crude oil production was
Preussag Energie has further
expanded its international oil pro-
and measures for production
duction; at the same time important
techniques.
successes in exploration were
In the area of storage activities,
achieved both in Germany and
expansion of the natural gas stor-
abroad.
age facility Fronhofen has been
In spring 1998 the company took
377
461
555
DM million
Süddeutschland GmbH. Construc-
the oilfield Cabimas in Venezuela.
tion of the Lehrte gas storage
In the Boquerón field, the planned
facility proceeded according to
measures to increase production
plan.
Preussag Energie achieved a
In Jemen, Preussag Energie
‘97
‘98
agreed with GVS Gasversorgung
over operational management of
have been initiated.
‘96
continued with diverted drillings
took over responsiblity for further
total turnover of DM555 million
and a good result again.
Turnover
Crude oil production
Production and sales
40
t
1995/96
1996/97
1997/98
1,994,100
2,060,400
2,155,300
Domestic
t
681,200
712,500
722,300
Abroad
t
1,312,900
1,347,900
1,433,000
of crude oil and
Natural gas production
mill. m 3 (Vn)
1,472
1,477
1,455
natural gas
Natural gas sales
kWh million
14,263
13,390
13,588
Sector
Energy
Deutag Group
There was constant demand for
The capacities of the subsidiary
drilling services on the international
Bentec GmbH Drilling & Oilfield
market. The companies of the
Systems was well utilised with
Deutag Group were able to take
orders for new construction and
advantage of the favourable mar-
repair work. Several drilling and
ket conditions, especially in Bang-
workover rigs were delivered to in-
ladesh and Thailand, where they
ternational customers. The first of
could increase the number of
two platform drilling rigs to be
drilling rigs employed. Activities in
operated in the Norwegian North
Africa were also markedly higher
Sea was nearly completed.
than last year. There is a good
chance of further orders.
Following acquisition of the first
The total turnover of the Deutag
Group amounted to DM998
million. The result was burdened
orders in the Caspian Sea region
by extraordinary influences and
last year, work was started in
thereby negative.
South America this year. Meanwhile there are four drilling and
workover rigs operating in Venezuela – among others, at the
Cabimas oilfield of Preussag
Energie.
In Europe activities developed
satisfactorily on the whole. The
long-term partnerships with Shell
Expro and Nederlandse Aardolie
Maatschappij (NAM) provide some
667
836
998
DM million
stability here. Deutag is operating
four drilling rigs as the leading
contractor on Shell Expro platforms
in the British Brent field. In the
Netherlands up to seven drilling
‘96
‘97
‘98
rigs were active for NAM.
Turnover
41
Sector
Energy
Kavernen Bau- und Betriebs-GmbH
The engineering and services
84
‘96
76
‘97
64
DM million
‘98
Foreign business received impe-
capacities of the KBB Group were
tus through orders for geological
satisfactorily utilised on the whole.
exploration in Spain, Abu Dhabi
In Germany most of the work
and Ethiopia. Moreover, storage
involved extensions of caverns for
and brine extraction projects in
the storage of natural gas. Brine
Portugal, Thailand and USA were
work and the initial filling with
supervised. In the Middle East ex-
natural gas was carried out at
ploratory drillings for a gas storage
various locations in North and East
facility were successful.
Germany. In addition, KBB under-
The KBB Group completed the
took planning work for the storage
financial year with a total turnover
facility project in Lehrte.
of DM64 million and a profit.
Turnover
Deilmann-Haniel Group
As a result of the advancing pro-
realigned last year, developed
mining, the demand for specialist
satisfactorily.
mining work has weakened further.
557
729
DM million
company Frontier Kemper Construc-
financial year, in its core business,
tors, Inc. was also successful in
underground mining work, the
its markets.
‘97
Turnover
42
‘98
Deilmann-Haniel countered the
enced a decline in business in the
expected continuing decline in
second half. Although the capa-
activities in Germany with expan-
cities of the shaft construction
sion of its international business.
business were adequately utilised
In this connection, it acquired a
on the whole with work in potash
75% shareholding in the Canadian
and landfill mining, demand was
Redpath Group, an internationally
sluggish. Mining-related mechani-
active service provider for the
cal and structural steel engieering
metal mining industries.
was reorganised to form the
‘96
In North America, the associated
Following a positive start of the
Deilmann-Haniel Group experi-
818
The special construction branch,
cess of adjustment in German coal
With a total turnover of DM729
Deilmann-Haniel Maschinen- und
million, the Deilmann-Haniel Group
Stahlbau GmbH.
achieved a satisfactory profit.
Sector
Trading
Trading
AMC Group
Business varied for the different
from the good economic situation
the individual markets. Nevertheless
in the Southern states. TR-Metro
the group, whose total turnover in-
could more than compensate the
creased to DM6.07 billion, achiev-
poor market on the East coast
ed a good result again.
through increased exports.
In the trading sector, the volatility
land improved trading with commo-
markets determined the year. Price
dities for the metal processing
fluctuations, often speculative and
industry despite declining domestic
with little fundamental background,
demand, while the low prices of
rendered trading conditions diffi-
non-ferrous metals affected the
cult for Amalgamated Metal Trad-
business of Mountstar Metal.
ing Ltd. (AMT), ring dealing mem-
In the production sector,
ber of the London Metal Exchange.
Exchanger Industries had another
Income from commissions remain-
successful year, mainly due to
ed stable due to the company's
brisk demand from the natural gas
large base of customers, while
industry. National Concrete Acces-
earnings from principal trading
sories used the upturn of the build-
were poor.
ing industry in Canada, selling
In international metal trading,
and Singapore, business with non-
4933
6075 DM million
In Great Britain, William Row-
of the international commodity
operated from London, New York
4153
In USA, Cron Chemical benefited
companies of the AMC Group in
more industrial building materials
than last year.
Keeling & Walker, the British tin
ferrous metal proceeded steadily.
oxide producer, expanded to Ger-
Trading in fine and industrial
many with the founding of Thermox
chemicals developed satisfactorily.
GmbH. The Asian crisis clearly
In the distribution and service
affected the Australian and New
areas, Wilkinson Steel experienced
Zealand economies. As a conse-
six months of healthy sales in West
quence, the business of the Con-
Canada. Thereafter demand was
solidated Alloys Group in lead pro-
noticeably slacker due to the drop
ducts remained below that of last
in oil prices and the Asian crisis. In
year.
East Canada Debro Steel strength-
In Malaysia, as planned, Escoy
ened its market position by investing
Smelting ceased tin production at
in new processing installations.
its smelter in March. On the other
On the whole the steel service
hand, the throughput of the smelt-
business developed satisfactorily.
er at Thaisarco was increased. The
In trading in pure chemicals
tin price was higher compared to
Debro Chemicals in Canada ex-
last year. The Thai smelters also
panded once more. Through the ac-
profited from sales of metalliferous
quisition of Atlantic Chemicals and
residues.
Pharmaceuticals their base of busi‘96
‘97
‘98
ness was purposefully broadened.
Turnover
43
Sector
Trading
W. & O. Bergmann Group
In addition to its core business
with copper and copper alloys, the
Bergmann Group further increased
good storage infrastructure, expan-
conditions difficult, good trading
sion of the procurement basis to
volumes in copper, aluminium,
East Europe and an extended pro-
nickel and zinc were realized. The
gramme in services assured Berg-
Bergmann Group thus achieved
mann the leading position on the
a total turnover of DM1.94 billion.
German market.
The result was noticeably burdenend of the financial year and re-
cessing industries, mechanical
structuring of subsidiaries.
dustry and its suppliers was also
strong. On the other hand, business with the building industry
remained restrained.
The trend in non-ferrous metal
prices was considerably influenced
by the effects of the Asian crisis,
changes in the dollar exchange
rate and the speculative behaviour
of investors. The copper price on
a Deutschmark basis lost about
28% during the course of the year.
Due to the low price level it was
difficult to obtain sufficient supplies of scrap copper. The prices
‘96
‘97
Turnover
44
‘98
ed by inventory valuation at the
was varied. Within the metal pro-
growth. Demand from the car in-
1944 DM million
Although considerable fluctuations in prices rendered trading
engineering experienced marked
2187
followed the downward trend.
trading in aluminium and zinc. The
Demand in the different branches
2322
basically sound state of the market,
of aluminium and zinc, despite a
Sector
Trading
US Steel Service Companies
The lasting, even if slowing, eco-
volume. Its Infra-Metals Division,
provided the basis for another good
one of the largest steel service
year for steel. Steel consumption
centres for steel sections on the
increased again by about 3% com-
East coast, markedly increased its
pared to last year.
turnover.
Supply and demand were well
Smith Pipe & Steel Division are
utilisation of the capacities of the
active in markets in the Southern
American steel producers and
states Texas, Arizona, Arkansas
prices remained stable. Towards
and Oklahoma. Beside strong
the end of the year growing quan-
demand from the oil and building
tities of cheaper imports from Asia
industries, expansion of the pro-
and Russia had a negative effect
cessing branch and improved mar-
on price levels.
gins in exports contributed to the
primarily active in the North West,
1454
1919 DM million
Delta Steel, Inc. as well as its
balanced for a long time with high
The US steel service companies,
1174
sales had more or less the same
nomic growth in the United States
successful trend in business.
The Feralloy Group, with several
on the East coast and in Southern
companies and divisions, is active
states, took advantage of the brisk
in the large industrial regions in
demand and extended their busi-
the North West of the United
ness considerably. With 2.48 million
States. The main customers are the
tons in trading and processing
capital goods industry, as well as
business, they sold approximately
the steel and car industries. As a
15% more steel than last year.
result of the strike at General Mo-
The total turnover rose over-
tors, the increase in sales was
proportionally to DM1.92 billion;
smaller than for the other US steel
profits also increased markedly.
service companies.
Preussag International Steel
Corp. traded more steel than last
‘96
‘97
‘98
year. Storage business and direct
Turnover
45
Division
Technology
Plant Engineering
Sectors
Plant Engineering, Shipbuilding, Building Engineering
The situation for international
Shipbuilding
plant engineering continued to be
affected by strong competition. In
Preussag Noell Group
addition, the economic crisis in
Howaldtswerke-Deutsche
Asia put pressure on the market.
Werft AG
Preussag Wasser und
As a result the awarding of con-
Rohrtechnik Group
tracts in this region were delayed
in some branches. However, export demand, which were good on
the whole, provided the strongest
impetus for the plant engineering
business.
2883
3638
3035 DM million
1760
1170
1086 DM million
‘96
‘97
‘98
In Germany demand continued
to be restrained despite a slight
upward tendency. One important
cause for this were the limited
public funds available, which left
‘96
‘97
Turnover
46
‘98
little room for investment.
Turnover
Technology
In the technology division, the
sectors shipbuilding and building
engineering achieved good
results. The financial year in
Technology
Turnover (DM million)
Capital expenditure (DM million)
Personnel
1995/96
1996/97
1997/98
7,071
8,028
7,534
368
269
261
28,772
29,437
28,497
plant engineering developed
different. The order situation was
largely satisfactory. However, the
settlement of old contracts and
expenditure on the restructuring
of activities and locations affected the result considerably.
The economic crisis in Asia also
Building
Engineering
affected the shipbuilding markets.
In merchant shipping, orders for
cargo ships were still at a high
uniform. In Germany the building
Fels Group
volume decreased again. Here the
level, however they showed a
downward tendency. In particular
decline slowed down in West
Wolf Group
Germany, while it accelerated in
the shipyards in the Far East
sought to utilise their capacities
the Eastern part. In contrast, an
Kermi GmbH
upward trend began in most neigh-
with massive allowances on prices
for technically simple ships. On the
Economic conditions in the building industries of Europe were not
bouring European countries, which
Minimax Group
provided sales possibilities for
other hand, demand for special-
German building material manu-
ised ships, such as cruise ships,
facturers, too.
increased further.
2428
3220
3413 DM million
In naval shipbuilding the eco-
With a limited volume of new
construction work, renovation
nomic difficulties in the Far East
and refurbishment continued to
caused delays in expected in-
be an important market sector,
coming orders.
which also grew further in this
‘96
‘97
‘98
financial year.
Turnover
47
Sector
Plant Engineering
Plant
Engineering
Preussag Noell Group
Incoming orders of the Preussag
the first orders for construction
billion. This was primarily the re-
of container cranes are on hand.
sult of the concentration of busi-
This together with the locations
ness on core activities. Furthermore,
Würzburg and Abu Dhabi provide
the award of several promising
Preussag Noell with an international
contracts for large projects was
system of production facilities to
postponed. The export share ex-
cover the significant markets of
panded further through increased
Europe and Asia.
acquisition abroad.
In the system and mechanical
for products in the areas of crane
gas purification plants, one in Den-
construction and harbour techno-
mark and another in Italy, were
logy was maintained. Important
worth to mention.
profited from further licensing.
container terminal operators in
In future, business in the conver-
Europe and America, as well as
sion of old plants will gain in im-
from India and Far East. The order
portance here.
process, water technology was
East was also significant. Incom-
separated from the process tech-
ing orders and many orders on
nology sector and became part of
hand ensured satisfactory utilisa-
the Preussag Wasser und Rohr-
tion of capacities in this sector.
technik Group. The engineering
the construction of polyethylene
turnkey distribution centres and
plants in France and Russia. Busi-
narrow aisle storage systems has
ness with large projects did not
stood the test on the market. Two
fulfil expectations in gas techno-
orders were transacted for air
logy; the sector will concentrate
cargo centres and a new order for
on medium-sized projects in future.
narrow aisle storage systems was
As a consequence of concen-
end of the financial year. The main
activities were the pyrolysis of
world fair ‘Expo 2000’ in Hanover.
hazardous waste and the recycling
By constructing these bridges,
of electronic scrap.
The production facility to be
48
treatment sector was sold at the
building of four bridges for the
of a global partner of Expo.
Turnover
tration on core activities, the waste
was awarded an order for the
Preussag has acquired the status
‘98
sector won two large orders for
and storage technology sector on
The steel construction sector
‘97
As part of the restructuring
aluminium smelter in the Near
acquired.
‘96
The waste incineration sector
cranes and gantry stackers from
The concentration of the systems
1938 DM million
and environmental technology
sector improved. Orders for flue
for feeder crane installations for an
2924
Market conditions in the energy
engineering sector, good demand
orders were several ship-to-shore
2121
China Merchants was completed;
Noell Group decreased to DM1.5
operated as a joint venture with
The total turnover of the Preussag
Noell Group amounted to DM1.94
billion. Significant losses arose
from current business and restruc-
Sector
Plant Engineering
Preussag Wasser und Rohrtechnik Group
In the Preussag Wasser und
Long-term licencing and delivery
orders, totalling DM1.4 billion, clear-
contracts with Rib Loc Group Ltd.
ly surpassed those of the previous
and NordiTube Technologies AB,
year. Here the extensive develop-
secured through participation in
ment of foreign business during
these companies, consolidated the
the last few years proved to have
market position. In Abu Dhabi, the
been worthwhile. Likewise, the
Rib Loc system is being installed
majority of performance and earn-
in the largest sewage system re-
ings were achieved abroad; by
furbishment project worldwide.
comparison domestic business
Several large orders were also
remained slack on the whole.
settled in Russia this year.
In the pipe technology sector,
The Pipetronix Group used its
the German market was character-
position as technological leader in
ized by restrained demand and
the market for testing technology
intensified competition for another
and pipeline service to expand its
year. Nevertheless, capacities in
business. Particularly the service
the branches were utilised to a
area increased markedly. The
large extent. Industrial pipe con-
testing technology sector acquired
struction was well employed
a large order for the supply of
through system offers and acqui-
three crack monitoring pigs to
sition in market niches such as
Russia, which will utilise produc-
combined heat and power genera-
tion capacities for a longer period.
tion plants and airfield refuelling
installations.
The pipeline construction sector
1197
1314 DM million
As a consequence of the realignment of the plant engineering
business of the Group, water tech-
successfully acquired orders in
nology was concentrated in the
East Europe and South America,
Preussag Wasser und Rohrtechnik
and also consolidated its market
Group. The newly established sec-
position in Great Britain and North
tor is involved in the planning, con-
Africa. The large contract for the
struction and operation of water
construction of onshore and off-
treatment plants, covering the whole
shore pipeline systems in Lithuania
range from drinking, industrial and
was largely completed. In South
processing water to waste water.
America, Conduto continued the
1154
tinued to progress successfully.
Rohrtechnik Group, the incoming
The Preussag Wasser und Rohr-
success of the previous year.
technik Group settled a total turn-
Follow-up orders in Ecuador and
over of DM1.31 billion. Profits
the Amazon area of Brazil ensure
were above the previous year’s
future employment.
figure.
In the pipe refurbishment sector,
‘96
‘97
‘98
foreign business, especially, con-
Turnover
49
Sector
Shipbuilding
Shipbuilding
Howaldtswerke-Deutsche Werft AG (HDW)
The order situation of the ship-
Naval shipbuilding settled two
yard was good in the completed
orders of material packages for
financial year. The 22 orders on
submarines for foreign customers.
hand were worth DM5.7 billion.
An increase in orders on hand
These orders ensure the employ-
was brought about by further
ment of engineering and production
participation in the frigate building
capacities into the year 2000; in
programme for the German navy.
naval shipbuilding many of the
HDW is supplying components for
orders are only due to be delivered
the construction of two Class 212
in the years thereafter.
submarines for the Italian navy.
Four merchant ships were
HDW-Nobiskrug continued the
handed over to their German and
positive trend in the shipbuilding
foreign customers. Especially the
business of the previous year. The
cruise ship ‘Deutschland’ should
construction of a large yacht play-
be mentioned here. This luxury
ed an important role here. The non-
class ship provided HDW with a
shipbuilding sector concentrated
re-entry into the attractive passen-
on light metal production as well
ger ship market. The shipyard also
as engineering services in steel
delivered the last of a series of
construction.
eight large container ships to the
HDW-Hagenuk Schiffstechnik
Israeli shipping line ZIM. Two fast-
further expanded ist business in
going feeder ships for container
communication and navigational
services were handed over to the
systems as well as energy distri-
Norasia shipping line.
bution installations for merchant
In merchant shipbuilding, new
ships.
orders were acquired for the con-
The shipyard and its subsidiaries
struction of the two biggest con-
achieved a total turnover of DM1.12
tainer ships for refrigerated goods
billion and closed with a good
worldwide as well as two fast-
result.
going ferries for a Greek shipping
line which was followed by an
order of two further ferries a short
time after balance sheet date.
1995/96
1996/97
1997/98
Merchant shipbuilding
598
549
475
Naval shipbuilding
951
405
450
52
70
40
Ship repairs
Turnover of HDW
(DM million)
50
Other production
65
56
40
1,666
1,080
1,005
Sector
Building Engineering
Building
Engineering
Fels Group
The Fels-Werke GmbH and its
lime products – fostered by strong
declining economic conditions in
demand from the steel industry. In
the building industry. Despite in-
addition, the increasing use of
tensifying competition, prices
calcined products in environmental
could be maintained to a great ex-
protection, such as in flue gas
tent. Although the sales of some
purification and the reclamation
building materials did not reach
of abandoned polluted areas, con-
the volumes of the previous year,
tributed to the rise in sales. In busi-
Harz-Kalk products achieved a
ness with uncalcined products, re-
growth in turnover again.
duced demand from the building
Fermacell plasterboards per-
for by growth in other areas of
for building materials, despite an
industry.
demand picked up again. The
tion sector, building with wood,
factories were adequately utilised
especially widespread in the South,
through innovative products for
again contributed to the positive
the construction of detached and
trend in sales. Sales in the refurbish-
town houses.
DM million
Salith dry mortar systems main-
although the East German market
tained their position in an intensely
showed a declining trend.
competitive field. In the higher
In the Netherlands and Spain,
780
In the porous concrete sector,
ing boards. In the new construc-
ment sector were satisfactory,
748
sector was more than compensated
formed well in the German market
overall decline in demand for build-
665
Growth continued in the area of
subsidiaries performed well under
value product segments, sales in-
where the Fels Group operates
creased – assisted by an expansion
own factories, sales profited from
in distribution activities.
the improved economic situation
The Fels Group achieved a total
in the building industry. In Switzer-
turnover of DM780 million, closing
land, increasing use of Fermacell
with satisfactory profits.
in wooden buildings led to rising
sales figures. Business increased
‘96
‘97
‘98
in France, too.
Turnover
51
Sector
Building Engineering
Wolf Group
With the integration of the ElcoCuenod companies and Chaffoteaux
ments. In the industrial sector,
distribution, Wolf attained a strong
intensified acquisition proved its
position in the market during the
success in the growth of service
completed financial year.
business.
The heating technology market
In France, demand for heating
remained difficult for another year.
technology increased on the whole;
In Germany, the new regulations
nevertheless, competition remained
on emission did not boost demand
very strong. Chaffoteaux et Maury
as expected. Consequently the
gained a further share of the French
market volume, especially for floor
market with successful product
mounted boilers, remained in de-
innovations, particularly in gas
cline. By contrast, Wolf succeeded
heaters. However, more than half
in expanding the business in space-
of its products were sold abroad
saving wall gas heaters. Here high
via the strong distribution network.
quality units with condensation
The Elco-Cuenod companies con-
technology were particularly in
tinued to lead the market in the
demand.
business of oil and gas burners.
1592 DM million
Group is well represented by Elco-
market for heating boilers. Here,
Oskamp and Rendamax with two
too, the trend to condensation
well established trademarks in the
technology was established
business of both burners and gas
through good sales of the new
heaters.
Wolf acquired a majority stake in
panded, in contrast to the market
the Turkish Baymak A.S., which
trend. With overall weak demand
primarily distributes, but also
in the industrial furnace engineer-
manufactures, heating products.
ing sector, the range of products
Through Baymak, the Wolf Group
was optimised and exports inten-
is expanding into the fast growing
sified.
Turkish market and those of the
Swiss heating technology market
continued to decline. In domestic
‘97
Turnover
52
‘98
At the end of the financial year,
Business in burners could be ex-
Due to economic conditions, the
‘96
In the Netherlands, the Wolf
share of the domestic engineering
‘Ultron’ and ‘Quadron’ series.
1533
increases in the sales of replace-
et Maury in joint production and
Elco-Klöckner maintained its
724
reduction in new business through
neighbouring Southwest Asian
countries.
The Wolf Group achieved a total
engineering, Elco Energiesysteme
turnover of DM1.59 billion, closing
could almost compensate for the
with satisfactory profits.
Sector
Building Engineering
Kermi GmbH
The tight situation in the building
sector was reflected in the heating
416
452
DM million
creased again.
and sanitary engineering market,
The sanitary sector also perfor-
too. Promotion measures for de-
med well. Sales in shower screens
tached and two-family house build-
could be further increased as a
ing provided only a slight impetus.
result of innovations and a trend
However, Kermi achieved satisfac-
to high quality products. Ongoing
tory sales figures, in contrast to
further development of the estab-
the market trend.
lished range of products provided
In the heating sector, business in
383
for flat radiators. Export sales in-
design radiators progressed well.
Along with the attractive design,
the basis for expansion in domestic
and foreign markets.
Kermi GmbH achieved a total
the high technical quality of the
turnover of DM452 million; the
product was the decisive factor.
result was satisfactory.
In Germany, Kermi consolidated
‘96
‘97
‘98
its strong position in the market
Turnover
Minimax Group
In public and commercial building
812
902
908
DM million
The economic situation in the
construction – sectors of importance
European markets of Minimax
for the fire protection business –
was more favourable. Particularly
demand in Germany remained
the companies in France, Spain
behind the general economic
and the Netherlands continued the
development. Nevertheless,
positive trend of the previous year.
Minimax achieved a larger volume
The foundation of a company in
of incoming orders than in the
Hungary was a further step into
previous year.
the growing markets of East Europe.
In stationary fire protection the
The Minimax Group achieved
engineering, assembly and produc-
a total turnover of DM908 million
tion capacities were well utilised.
and the profit was higher than
Business in mobile fire protection
last year.
still suffered from intense competition. Restructuring measures have
improved the situation of the sec‘96
‘97
‘98
tor considerably.
Turnover
53
Division
Logistics and Tourism
Logistics
Sectors
Logistics, Transport and Tourism
The large volume of business in
Transport
the chemical industry supported
demand for the specialised transVTG Group
port and services of the logistics
Hapag-Lloyd Group
sector. Business with the mineral
Lehnkering Group
oil industry remained restrained, as
domestic oil consumption during
Algeco Group
the year stagnated after a mild
winter.
Logistic activities were little influenced by world economic deve-
1750
1832
2128 DM million
4499* 5030* 4756 DM million
lopments.
The mobile buildings hire business profited from favourable economic conditions and particular
events in the main markets France
‘96
‘97
Turnover
54
‘98
and the Iberian peninsula.
‘96
‘97
‘98
Turnover
* before consolidation
Logistics and Tourism
The companies in the logistics
sector continued their positive
trend and achieved a better
Logistics and Tourism
Turnover (DM million)
Capital expenditure (DM million)
Personnel
1995/96*
1996/97*
1,750
1997/98
1,832
15,017
154
139
3,197
4,382
4,326
23,196
overall result than last year.
Hapag-Lloyd and TUI were
included in the Group accounts
for the first time. Both performed
* excluding Hapag-Lloyd and TUI
very well in their fields and
together made an important
contribution to Group profits.
Shipping was clearly influenced
Tourism
The tourism industry also contin-
by the variations in economic
ued the positive trend in the touris-
development in the main industrial
regions of the world.
Whereas the growth rate in the
tic year 1997/98. The number of
Touristik Union
guests and turnover increased
International
again, although there were set-
world market of container shipping
backs in some regions.
was at least 6% in previous years,
Holiday destinations in the
in 1998 it was only 2%. The Asian
western Mediterranean area, Canary
crisis was the main trigger of this
Islands and Greece continued to
weakened growth. A decline in ex-
be especially popular, with the
ports from Europe and America to
this region was a result as well as
Caribbean for long-distance trips. In
7701* 8511* 8133 DM million
contrast, demand for holidays in
stagnation in traffic within Asia. As
predominantly Islamic countries
a consequence freight rates on a
was restrained; this was also true
number of routes also came under
for Asia, which suffered from the
increased pressure.
effects of the economic crisis even
‘96
‘97
‘98
as a destination for tourists.
Turnover
* before consolidation
55
Sector
Logistics
Logistics
VTG Vereinigte Tanklager und Transportmittel GmbH
Demand for the logistic services
VTG had over 20,000 tank and
whole.
special wagons at its disposal
In the tank wagon sector, thanks
to the positive economic situation
industries, hiring of chemical and
satisfactory business with mineral
pressurised gas tank wagons was
oil despite seasonal fluctuations.
at a high level; utilisation of stain-
As a result of brisk demand for
less steel wagons, particularly,
chemical and special tank space,
increased further. Special wagons
these capacities were well utilised,
for chemical gases were constantly
particularly at the Duisburg loca-
in demand, with a resulting further
tion. Dupeg, in Hamburg, was also
increase in revenues. By contrast,
well able to hire out the tank
demand in the mineral oil business
space of its chemical and special
stagnated. The mandatory with-
products tank farm, particularly
drawal from service of mineral oil
stainless steel tanks.
tank wagons with 5mm wall thick-
The Amsterdam seaport tank
ness reduced the overcapacity on
farm Comos-Tank B.V. was sold to
the market, with a resulting shor-
an American investment group
tage at year's end and slackening
with effect from 1st January, 1998.
DM million
expanded through a joint venture
Ommeren. The joint companies
with DB Cargo (Deutsche Bahn).
VOTG in forwarding and Peacock
The first joint project is the opera-
in the hire business performed
tion of branch lines in the chemi-
well in their first year. Based on
cal region around Schkopau and
Van Ommeren's worldwide
Böhlen.
distribution network, new customer
Turnover
56
‘98
contacts were established and
fited from the good economic
internationalisation advanced.
situation in the car industry. Strong
With an expanded container park
demand for specialised large
the number of transports rose on
volume goods wagons and flat
the European continental and
wagons exceeded the capacity of
short sea links. Overseas business
available wagons at times.
to the USA and the Far East
modernised and adjusted to meet
‘97
into the new financial year with a
joint venture of VTG and Van
The tank wagon park was
‘96
The tank container sector started
petrol performed well. Business
The Transwaggon Group bene-
646
In the tank farm sector, the VTG
and OmniTank inland tank farms did
The rail forwarding agency Trans-
683
throughout Europe.
in chemical and petrochemical
of the pressure on prices.
656
At the end of the financial year
of the VTG Group was good on the
increased considerably.
With a total turnover of DM646
market requirements with a re-
million, the VTG group achieved a
newal and conversion programme
good result again.
and withdrawal of older wagons.
Sector
Logistics
Lehnkering Group
The Lehnkering Group continued
Activities in the chemical services
the business trend of the previous
sector were variable in trend. The
successful years.
Dr. Schirm Group plants for the
With its special services, such
formulation, preparation and syn-
as road haulage and transport and
thesis of chemical products were
storage of hazardous goods, the
well utilised. The raw materials
industrial logistics sector grew. In
service also did good business. By
road haulage the situation was
contrast, the Hago Group suffered
marked by steady demand and
from a decline in prices of chemi-
activities at all locations. Business
cals for the building industry and
at Leuna, a new site where Lehn-
harder competition in this sector.
kering is involved as production
With an increased total turnover
forwarder for special chemicals,
of DM1.12 billion, the Lehnkering
started well. The seaport logistics
Group achieved a good result once
branches in Hamburg, Bremen,
more.
Antwerp and Rotterdam benefited
from the strong export activities of
the European economy.
In marine shipping, business of
Montan Shipping was lively in both
freight and ship clearance activities.
The tug fleets of both Unterweser
Reederei and Lütgens & Reimers
were well utilised. In addition to
tugging operations in the North
German ports, employment by sea
trips played an increasing role here.
The inland waterway shipping
sector improved on its good position in the market. Despite a longer
period of low water at the begin992
995
1119 DM million
ning of the financial year, the transport volume increased. Particularly
gas tankers were well utilised.
The integration of inland waterway
shipping into the chain of logistic
‘96
‘97
‘98
transport has progressed further.
Turnover
57
Sector
Logistics
Algeco Group
In the mobile buildings hire busi-
modular buildings in which, e.g.,
on a successful financial year. Capa-
schools or administrative offices
city utilisation was considerably
could be housed temporarily, were
raised due to strong demand,
of benefit to Alquimodul and
especially in France and the Iberian
Algeco. In Portugal the World Fair
peninsula. In response to the
in Lisbon brought additional busi-
favourable market trend, Algeco
ness.
increased its mobile buildings park.
from the building industry also
group had more than 63,300 units
affected the level of hiring of MBM
at its disposal, approximately 9%
Mietsystem für Bau und Industrie
more than last year.
and HADA during the course of
sector contributed towards stabilis-
Algeco and SOMI were well utilised.
ing the utilisation of capacities.
included with the acquisition of
World Cup. Revenues also increas-
LPR Logistic Packaging Return last
ed, although the market was in-
year, strongly expanded. New cus-
Home System S.A., which proDM million
stock increased fourfold this year.
industrial buildings sector, fulfilled
The Algeco Group increased its
expectations with a good trend in
turnover to DM546 million, achiev-
business in its first year within the
ing higher profits than last year.
Business in Spain and Portugal
‘97
Turnover
58
‘98
tomers were won particularly in
the beverage industry. The pallet
duces high quality products in the
Algeco Group.
‘96
The pallet logistics sector, newly
extensive hiring for the Football
tensely competitive.
546
the year. Orders from the industrial
all sectors and the capacities of
Additional business came from
396
In Germany, the poor demand
At the end of the financial year the
In France, demand increased in
356
sion of the product range to include
ness, the Algeco Group looks back
also progressed well. Here exten-
Sector
Transport
Transport
Hapag-Lloyd Group
The Hapag-Lloyd Group was in-
particularly for traffic from Europe
cluded in the Preussag financial
and America to Asia. However, the
statements for the first time. For
results of Hapag-Lloyd Container
this, it adjusted its financial year
Linie were satisfactory.
and filed an abbreviated nine-
Such a result was only possible
months financial year, running from
because an increased productivity
1st January to 30th September,
was realised once more whereby –
1998. Details concerning the course
despite the unusually high disposi-
of business refer to this period.
tion costs for empty containers –
The Hapag-Lloyd Group achieved
the cost per unit could be main-
a performance of DM4.2 billion in
tained at last year's level. With per-
the abbreviated financial year. Of
sistent pressure on freight rates,
this, 54% was earned in the ship-
continuously rising productivity is
ping sector, 39% through tourism
the basis for ensuring the earnings
and 7% from freight forwarding. The
potential of Hapag-Lloyd Container
profit for the year was well above
Linie.
that of the previous year, so that
The result for Rickmers-Linie
Hapag-Lloyd made a significant
was substantially influenced by
contribution to Group profits.
the crisis in Asia. Especially the
The liner shipping sector con-
export of project cargo, the core
sists of Hapag-Lloyd Container
business of the shipping line, de-
Linie, with the three profit centres
creased and this caused a decline
Europe, America and Asia/Austra-
in demand for transport capacity
lia, as well as the Rickmers-Linie.
on the profitable routes to Asia
With its worldwide shipping
from Europe and North America.
services, Hapag-Lloyd Container
Both turnover and result were
Linie transported 970,000 standard
therefore lower than in the pre-
containers in the period of report-
vious year.
ing, exceeding last year's volume
Although the situation on the
by 18%. With this performance
market in freight forwarding re-
it achieved a turnover of DM2.1
mained difficult, the haulage and
billion in the nine-months of the
parcel service branches of Pracht
financial year.
Spedition + Logistik, which are a
The increase in exports from
franchise partner of German
Asian countries with a decrease in
Parcel, grew in two-digit figures.
imports at the same time caused
By these means losses in the
serious logistic problems in the
storage and distribution branches
organisation of containers in Asia
could be more than compensated
for all shipping lines. The result
for, so that turnover as well as
was high disposition costs. In
results were higher than last year.
addition, freight rates declined due
to the limited utilisation of ships,
59
Sector
Tourism
Tourism
The tourism sector includes
cesses were improved further to
Hapag-Lloyd Flug, Hapag-Lloyd
ensure earnings potential, conse-
Geschäftsreise, Hapag-Lloyd Reise-
quently a higher result was achieved.
büro and Hapag-Lloyd Seetouristik.
Hapag-Lloyd Seetouristik could
The turnover in tourism amounted
consolidate its leading position in
to DM1.6 billion for the abbreviated
the German market for cruises. With
financial year 1998. A good result
DM270 million, the turnover was
was achieved, with the major con-
higher than in the previous year.
tribution from Hapag-Lloyd Flug.
Operating profits, which were
During the nine months of the
financial year Hapag-Lloyd Flug
dened by restructuring measures.
transported 4.2 million passengers,
In September 1999 the new cruise
this is 7.6% more than for the same
ship ‘Europa’ will undertake its
period in the previous year. A total
maiden voyage. At present, the
of 28 aircraft were in service, thereof
ship is under construction and will
seven Airbus A310 and 21 Boeing
be the sixth to bear the name
737, including the first five Boeing
'Europa'. With this cruise ship,
737-800. Hapag-Lloyd has contri-
Hapag-Lloyd will set new standards
buted to the development of this
in cruises.
new generation of aircraft with its
experience as a charter airline.
With a turnover of DM1.0 billion,
profit exceeded the comparable
figure of last year.
Hapag-Lloyd Geschäftsreise grew
faster than the market again and
recorded a gross turnover of DM1.9
billion in the nine months of the
financial year 1998.
In the light of increasingly difficult market conditions, the sector
achieved a satisfactory result,
although this was below last year's
figure due to a reduction in com4499* 5030* 4756 DM million
missions from airlines.
Hapag-Lloyd Reisebüro, active as
a tourist travel agent, achieved a
gross turnover of DM540 million,
slightly more than in the same
‘96
‘97
‘98
Turnover
* before consolidation
60
better than expected, are still bur-
period last year. Organisational pro-
Sector
Tourism
Tourism
TUI Group
The positive trend for the tourism
Europe, including the source
day season 1997/98. The TUI Group
markets Germany, Switzerland and
recorded growth rates in all market
Austria, the growth rate was above
segments and achieved a good re-
the market average despite increas-
sult again. At the beginning of the
ing competition.
financial year the business sectors
– Central Europe tour operators
market, above all 'TUI Schöne
– Hotel companies
Ferien', performed better than the
– Incoming agencies, hotel
market overall. The increase in
– Information technology
were created. The companies of the
In the source markets of the
Netherlands and Belgium, included
in the West European business
are undertaken by Touristik Union
sector, growth in the volume of
business was above average.
The business sector hotel com-
International GmbH & Co. KG as a
panies consists of six brands in
holding.
which TUI has shareholdings: Dorf-
Due to the inclusion in the
hotel, Grupotel, Iberotel, Grecotel,
Preussag financial statements for
RIU and Robinson. With about
the first time, the TUI Group adju-
80,000 beds at its disposal, TUI has
sted its balance sheet date, bring-
a considerable advantage over its
ing it forward to 30th September.
competitors in organising its pro-
In the resulting abbreviated
financial year of eleven months, the
‘98
participants rose by 4.0%.
ing to business and regional criteria.
Co-ordination of the business
‘97
turnover was 5.1%, the number of
Group are allotted to them accord-
sectors and central group functions
‘96
The domestic tour operators with
the brands of the German source
– West Europe tour operators
procurement
7701* 8511* 8133 DM million
In the business sector Central
industry continued during the holi-
gramme and assuring its quality
standards.
TUI Group achieved a consolidated
The business sector incoming
turnover of DM8.13 billion, thereby
agencies and hotel procurement
almost reaching last year's figure of
has been set up as a new central
DM8.5 billion for the complete
sector. TUI's own incoming agenc-
financial year. Compared to a
ies looked after 4.7 million holiday
respective eleven-months period of
guests in 13 countries, 8% more
the previous year, the turnover rose
than in the same period last year.
by 6%.
Destination logistics as well as the
In the preceding touristic year,
care and transfer of guests repre-
7.7 million people in Europe book-
sent a further important aspect of
ed their holidays with a tour opera-
TUI's understanding of quality
tor of the TUI Group.
assurance.
Turnover
* before consolidation
61
Financial Statements
Table of Contents
Consolidated Financial Statements and
Financial Statements of Preussag AG
Financial Year from 1st October 1997 to 30th September 1998
Page
63
Consolidated Balance Sheet
64
Consolidated Profit and Loss Statement
65
Balance Sheet of Preussag AG
66
Profit and Loss Statement of Preussag AG
67
Development of Fixed Assets
69
Notes on the Financial Statements
90
Auditors’ Statements
Boards
91
Report of the Supervisory Board
93
Supervisory Board
95
Executive Board
97
Flow of Funds of the Group
98
Key Figures
Preussag in Figures
101
Major Shareholdings
62
Financial Statements
Consolidated Balance Sheet*
Assets
Notes
Fixed assets
30 Sept. 1998 30 Sept. 1997
(1)
Intangible assets
2,485,938
201,559
Tangible assets
6,305,939
5,513,899
Investments
1,155,746
927,227
9,947,623
6,642,685
Current assets
Inventories
(2)
./. less advance payments received
5,708,177
6,210,624
5,215,623
4,315,275
492,554
Receivables and other current assets
(3)
Trade accounts receivable
3,029,788
3,314,825
Other receivables and current assets
1,338,596
905,950
4,368,384
4,220,775
Securities
(4)
145,906
49,461
Cheques, cash-in-hand and bank deposits
(5)
1,440,508
2,087,899
6,447,352
8,253,484
Prepaid expenses
Shareholders’ Equity
and Liabilities
1,895,349
(6)
Notes
116,509
46,273
16,511,484
14,942,442
30 Sept. 1998
30 Sept. 1997
Shareholders’ equity
Subscribed capital
(7)
764,260
762,874
Capital reserves
(8)
1,575,451
1,567,940
Revenue reserves
(9)
1,120
386,456
(10)
230,000
184,290
(Conditional capital: 44,947)
Profit available for distribution
Minority interests
326,838
233,586
2,897,669
3,135,146
Provisions
Provisions for pensions and similar obligations
Other provisions
(12)
1,806,305
2,519,261
5,524,068
4,932,938
7,330,373
Liabilities
Bonds
63
(13)
300,000
300,000
Liabilities to banks
2,237,169
1,365,380
Trade accounts payable
2,148,757
1,432,815
Other liabilities
1,528,814
Deferred income
* in DM 1,000,
unless otherwise stated
7,452,199
1,181,846
6,214,740
4,280,041
68,702
75,056
16,511,484
14,942,442
Financial Statements
for the period
from 1 Oct. 1997
to 30 Sept. 1998
Consolidated Profit and Loss Statement*
Notes
1997/98
1996/97
Turnover
(16)
Change in stocks and own work capitalised
(17)
35,150,749
Other operating income
(18)
1,939,389
Cost of materials
(19)
24,722,731
17,271,942
Personnel costs
(20)
5,687,018
5,534,386
Depreciation
(21)
1,154,065
1,054,049
Other operating expenses
(22)
5,064,519
+
26,657,960
336,462
–
114,686
1,529,764
37,426,600
28,073,038
3,589,603
– 36,628,333 – 27,449,980
Net income from investments
(23)
Depreciation on investments
and marketable securities
(24)
Net interest
(25)
Depreciation on goodwill
(26)
Profit on ordinary activities
Extraordinary result
(27)
Taxes
(28)
Group profit for the year
+
244,589 +
36,782
–
78,947 +
123,640
92,456
17,061
5,228
–
+
803,487 +
703,681
+
51,800 –
33,500
315,831
272,984
539,456
397,197
* in DM 1,000,
unless otherwise stated
64
Financial Statements
Balance Sheet of Preussag AG*
Assets
Notes
Fixed assets
30 Sept. 1998
30 Sept.1997
(1)
Intangible assets
Tangible assets
133
131
152,512
159,217
Investments
Shares in Group companies
Other investments
7,266,725
4,124,696
350,446
458,014
7,617,171
4,582,710
7,769,816
4,742,058
Current assets
Inventories
(2)
105
168
Receivables and other current assets
(3)
1,262,998
2,274,883
Securities
(4)
317
1,717
Cheques, cash-in-hand and bank deposits
(5)
Prepaid expenses
Shareholders’ Equity
and Liabilities
(6)
Notes
609,308
1,545,112
1,872,728
3,821,880
1,590
2,063
9,644,134
8,566,001
30 Sept. 1998
30 Sept. 1997
Shareholders’ equity
Subscribed capital
(7)
764,260
762,874
Capital reserves
(8)
1,575,451
1,567,940
Revenue reserves
(9)
540,000
480,000
Net profit available for distribution
(10)
230,000
184,290
Special non-taxed items
(11)
(Conditional capital: 44,947)
3,109,711
2,995,104
152,869
171,761
Provisions
Provisions for pensions and similar obligations
Other provisions
(12)
261,944
260,047
775,012
940,895
1,036,956
Liabilities
300,000
300,000
Liabilities to banks
480,366
4,485
6,075
2,834
Other liabilities
65
(13)
Bonds
Trade accounts payable
* in DM 1,000,
unless otherwise stated
1,200,942
4,558,157
3,890,875
5,344,598
4,198,194
9,644,134
8,566,001
Financial Statements
Profit and Loss Statement of Preussag AG*
for the period
from 1 Oct. 1997
to 30 Sept. 1998
Notes
1997/98
1996/97
Other operating income
(18)
Personnel costs
(20)
98,321
102,850
Depreciation
(21)
8,863
8,963
Other operating expenses
(22)
495,409
Net income from investments
331,881
339,068
–
602,593
–
450,881
(23)
+
812,605
+
656,541
(25)
–
111,452
+
4,976
+
351,078
+
410,228
Depreciation on investments and marketable securities
Net interest
79,363
Profit on ordinary activities
Taxes
Net profit for the year
199,592
(28)
–
62,278
147,188
288,800
263,040
* in DM 1,000,
unless otherwise stated
66
Financial Statements
Cost of Acquisition or Manufacturing Costs
Balance
1 Oct.1997
Preussag Group
Currency
Changes in
Adjustment Consolidation
Additions
Disposals1)
Intangible assets
Exploration and drilling licences
0
0
7
3,676
370,613
-
3,462
90,786
38,017
119,375
Goodwill
2,986
-
20
35,102
2,374,237
209
Payments on account
6,760
0
1,475
3,892
6,098
411,140
- 3,482
127,363
2,416,153
129,358
91,352
0
0
0
335
4,588,059
- 21,873
792,807
123,356
1,405,234
667,669
0
0
29,605
8,525
Machinery and fixtures
9,438,598
- 22,493
76,385
238,371
5,408,972
Ships and wagons
1,509,596
- 19,346
2,946,990
76,209
415,456
386,479
28
964,193
166,281
52,675
2
1,658,393
247,525
59,313
- 14,236
717,667
249,173
650,395
Concessions, patents and licenses
Total
30,781
Tangible assets
Mineral rights
Real estate, land rights and buildings
including buildings on third-party property
Pits, mines and boreholes
Mobile buildings, containers and container trailers
Aircraft
Other plants and office equipment
Work in progress
32,597
1,505,689
-
172,140
-
497
4,722
105,382
76,084
38,701
-
45
344,921
165,809
13,791
18,430,880
- 78,464
7,506,078
1,401,711
8,090,780
Shares in Group companies
314,847
- 10,282
40,662
73,274
127,336
Loans to Group companies
33,916
9
597
0
25,361
3,027
326,993
173,332
181,199
151
26,941
40,075
99,962
2,313
Payments on account
Total
Investments
Shares in associated companies
373,420
Other shareholdings
189,268
Loans to other companies in which
shareholdings are held
1,401
Securities
8,356
Other investments
Total
Fixed assets of the Preussag Group
Preussag AG
77,063
-
-
-
47
55,806
4,515
19
827
742
38
370
24,976
36,550
28,230
998,271
- 13,547
476,802
328,488
464,439
19,840,291
- 95,493
8,110,243
4,146,352
8,684,577
Intangible assets
Concessions, patents and licences
1,426
115
112
1,426
115
112
335
0
335
199,680
0
37,163
1,570
0
1,570
11,558
0
8,815
Wagons
24,122
14,393
0
Aircraft
12,761
0
0
Plant and office equipment
31,709
2,151
5,578
281,735
16,544
53,461
Shares in Group companies
4,697,553
3,192,031
30,002
Loans to Group companies
222,402
10,000
51,679
Other shareholdings
279,450
20
7,173
0
0
0
11,590
353
1,217
Total
5,210,995
3,202,404
90,071
Fixed assets of Preussag AG
5,494,156
3,219,063
143,644
Total
Tangible assets
Mineral rights
Real estate, land rights and buildings
including buildings on third-party property
Pits and mines
1)
Including disposals relating
to changes in structure of
consolidated companies:
a. Intangible assets: 76,558
b. Tangible assets: 6,928,918
c. Investments:
215,799
2)
Including disposals relating
to changes in structure of
consolidated companies:
a. Intangible assets:
58,713
b. Tangible assets: 5,066,055
c. Investments:
3,593
* in DM 1,000,
unless otherwise stated
67
Machinery and fixtures
Total
Investments
Securities
Other investments
Development of Fixed Assets*
Depreciation
Balance
Transfers 30 Sept.1998
Balance
1 Oct. 1997
Net Book Values
Currency Changes in
Adjustment Consolidation
Depreciation
for the Year
Balance
Balance
Balance
Transfers 30 Sept.1998 30 Sept.1998 30 Sept.1997
Disposals2)
0
27,112
30,781
0
0
7
3,676
0
27,112
0
0
5,129
381,708
178,185
-
1,493
69,331
45,424
107,276
338
184,509
197,199
192,428
-
94
2,974
123,963
209
0
127,249
2,284,847
2,371
0
0
0
0
0
0
3,892
6,760
1,587
72,305
169,394
111,161
338
338,870
2,485,938
201,559
0
0
8
335
0
18,686
72,331
72,339
356
1,786,908
2,303,724
2,295,422
0
548,787
141,233
150,296
1,926
3,420,315
967,239
2,151,679
0
2,412,096
615
2,137
3,892
0
2,992
2,824,808
209,581
0
91,017
19,013
13,517
4,090,632
2,292,637
8,321
262,251
134,106
893,409
1,271
690,020
517,373
0
0
39,939
8,525
65,665
4,387,554
7,286,919
- 20,266
47,541
279,379
4,171,296
258,183
4,356,176
1,290,732
- 14,393
1,998,175
171,039
378,724
101,759
3,168,588
1,187,588
218,864
640
1,464,946
286,211
9
764,082
136,354
48,160
513
1,139,009
325,937
100,268
37,469
1,916,669
29,967
4
1,324,182
121,687
51,900
0
1,423,932
492,737
2,630
11,369
1,819,267
1,192,428
- 10,917
499,285
225,699
553,053
827
1,354,269
464,998
313,261
75,493
130,170
1,700
0
0
0
1,651
49
0
130,170
170,440
- 315,613
219,982
1
0
100,969
100
0
- 101,070
0
219,982
38,700
2,992 19,166,433 12,916,981
- 53,892
4,996,485
1,108,311
6,107,053
338 12,860,494
6,305,939
5,513,899
278,268
-
-
-
-
-
-
-
-
-
-
-
-
321
290,844
36,579
668
25,595
26,628
19,865
0
69,605
221,239
0
9,161
4,419
5
0
15
0
0
4,439
4,722
29,497
8,470
681,049
0
0
24,543
10,808
328
2,259
32,764
648,285
373,420
8,791
165,264
16,274
-
41
10,598
3,958
12,463
2,259
20,585
144,679
172,994
0
59,362
0
0
19,565
4,313
111
0
23,767
35,595
1,401
0
9,906
141
-
5
59
0
5
0
190
9,716
8,215
0
109,989
13,631
52
7,567
244
3,015
0
18,479
91,510
63,432
0
1,325,575
71,044
679
87,927
45,966
35,787
0
169,829
1,155,746
927,227
0 23,316,816 13,197,606
- 54,800
5,156,717
1,323,671
6,254,001
0 13,369,193
9,947,623
6,642,685
-
0
1,429
1,295
113
112
0
1,296
133
131
0
1,429
1295
113
112
0
1,296
133
131
0
0
335
0
335
0
0
0
0
142,553
0
162,517
57,127
3,066
22,942
0
37,251
125,266
0
0
1,570
0
1,570
0
0
0
0
0
2,743
11,452
34
8,800
0
2,686
57
106
0
38,515
20,101
2,886
0
0
22,987
15,528
4,021
0
12,761
10,616
643
0
0
11,259
1,502
2,145
0
28,282
21,317
2,121
5,315
0
18,123
10,159
10,392
0
244,818
122,518
8,750
38,962
0
92,306
152,512
159,217
0
7,859,582
572,857
20,000
0
0
592,857
7,266,725
4,124,696
0
180,723
0
0
0
0
0
180,723
222,402
0
272,297
54,969
57,963
0
0
112,932
159,365
224,481
0
0
0
0
0
0
0
0
0
0
10,726
459
0
91
0
368
10,358
11,131
0
8,323,328
628,285
77,963
91
0
706,157
7,617,171
4,582,710
0
8,569,575
752,098
86,826
39,165
0
799,759
7,769,816
4,742,058
68
Financial Statements
Notes on the
consolidated financial
statements of the
Preussag Group and
on the financial statements of Preussag AG
for the financial
year 1997/98
Notes
The consolidated financial statements of the Preussag Group and the financial
statements of Preussag AG were prepared in accordance with the provisions of
the Commercial Code, with due consideration of the supplementary regulations of
the Companies' Act. In the balance sheets and profit and loss statements of the
Preussag Group and of Preussag AG, individual items have been grouped together
for clarity of presentation; these items are referred to separately in these notes,
together with the necessary explanations. The notes relating to the consolidated
financial statements and to the financial statements of Preussag AG are presented
jointly.
The financial year of Preussag AG and the Group covers the period of time from
1st October in any one year to 30th September of the following year.
Accounting and
valuation methods
The same accounting and valuation methods as stipulated by Preussag AG as
well as previous year's figures were retained. Use was made of tax-related valuation
options as in previous years.
Purchased intangible assets were valued at cost of acquisition and depreciated
on a straight-line basis for the period of the expected economic life. Tangible assets
were valued at cost of acquisition or manufacture based on German tax regulations,
less depreciation. For own work capitalised, cost of manufacture was calculated on
the basis of direct costs, adequate indirect costs and depreciation.
For buildings and other real estate, depreciation was either calculated on a
straight-line basis, or, where permitted by tax regulations, on a declining balance
basis.
Successful crude oil and natural gas wells were generally depreciated on a
declining balance basis, in accordance with the provisions of the State Ordinance
(letter from the Federal Ministry of Finance dated 20th May, 1980), whereas older
wells were depreciated at rates according the accelerated method of depreciation
in line with the so-called ‘Hanover Guidelines’. Dry wholes were written off in full,
drilling equipment was written off according to deployment.
Scheduled depreciation on ships and aircraft, which are purchased until the
end of 1997, is calculated according to the straight-line method based on the shortest economic life permitted by tax regulation. Aircraft which are purchased in 1998
are depreciated using the declining balance method and observing the respective
highest rates permitted by tax regulations. The individual financial statements
include special depreciation, especially according to Section no. 82 f of the implementation clauses of the Income Tax Lax and Section no. 6b of the Income Tax Law.
Other tangible assets with an economic life of more than three years were
depreciated in Germany on the basis of the declining balance method and in accordance with the tax simplification regulations. According to schedule, straight-line
depreciation was then applied when the calculated amount based on this method
69
Financial Statements
Notes
exceeded that obtained by using the declining balance method. If use was made of
tax-related extraordinary depreciation, assets were depreciated on the declining
balance method. Abroad, other tangible assets were mainly depreciated on a
straight-line basis. Low value assets were written off in full in the year of acquisition
and shown as disposal.
Scheduled depreciation was largely calculated on the basis of the following economic lives:
Tangible assets
Buildings
of which hotels
Boreholes
Machinery and fixtures
of which tank farms and docks
Ships and wagons
Container (8 years for additions since 1st July, 1998)
Aircraft
Plant and office equipment
Economic lives
10 to 50 years
25 years
8 to 33 years
5 to 20 years
4 to 15 years
3 to 16 years
5 resp. 8 years
10 years
3 to 10 years
Within the group, fixed values have been established mainly for particular items
of the underground inventory in coal mining and for rail installations. Concerning
the underground machinery and equipment as well as the rail installations in coal
mining, the fixed value is determined on the basis of the current tax valuation rules.
Investment allowances and subsidies received were absorbed without affecting
results.
If, at the financial year-end, the fixed asset was given a lower value, which was
expected to be permanent, then the difference was offset by way of extraordinary
depreciation expenses.
Shares in Group companies and participations as well as other investments
were valued at the cost of acquisition, or at the lower appropriate value. Non-interest
or low-interest loans were discounted to their present values.
Raw materials and supplies as well as merchandise were valued on the basis of
cost of acquisition or the market value, if lower.
Unfinished and finished goods as well as work in progress and tourist and
transportation services not yet fully performed were valued on the basis of manufacturing costs, while observing the principle of the lower of cost or market value.
They comprise direct material and production costs, special individual costs of production as well as proportions of indirect costs as required by German tax laws and
depreciation, and appropriate indirect cost surcharges for companies abroad.
Financing for the production period and pension costs and social benefits were not
included. As a matter of principle, similar inventories were dealt with on the basis of
70
Financial Statements
Notes
the valuation simplification method (lifo-method). If inventories did not comply with
the conditions for this method, they were valued on the basis of the average valuation method.
Coal stocks have been shown at the lower of production costs or the values
determined in accordance with the guidelines of the Ruhr Mining Enterprises'
Association.
Individual reduction in stock valuation was undertaken for all stocks to allow for
risks from storage, and non-utility other foreseeable risks. For raw material and supplies, the current purchase price was quoted as the lower market value whilst the
lower of cost or market value of unfinished and finished goods as well as supplies
was calculated either on the basis of reproduction costs or on expected proceeds of
sale which have been reduced by sales costs and a profit margin.
In the balance sheet, receivables and other current assets were reported at their
respective principal value and/or net present value, if lower. Concerning these
items, all identifiable individual risks and, as a matter of principal, the general credit
risk were taken into consideration by means of an appropriate provision.
Securities were shown at the rate of acquisition or the market rate as of the
financial year-end, if lower.
The creation of special non-taxed items was based on the use of tax-related
depreciation allowances and the opportunity to carry forward book profits. The special non-taxed items of Preussag AG comprise tax-related reserves and the difference between tax-related depreciation and ordinary depreciation.
In the consolidated financial statements, no special non-taxed items were
shown. Expenses and income from the creation of special non-taxed items were eliminated in the consolidated financial statements and posted to revenue reserves
and minority interests respectively, taking into account deferred taxation. When
reporting anticipated tax charges as liabilities, for the first time prospective tax
benefits anticipated were included in the assessment of the reserves required under
this item, in as far as they were based on differences in the reporting of the
accounts prepared for financial reporting purposes and the accounts prepared for
tax purposes, being limited in time.
Provisions for pensions, which also included coal-supply rights, early retirement
and bridging payment rights, were itemised at the allowable value as per Section 6a
of the Income Tax Law, calculated on actuarial principles based on an interest rate
of 6%. Modified statistical fundamentals for the determination of the expected mortality considered in actuarial calculations, that were published upon the completion
of the financial year and that have resulted in an increase of the contributions to
pensions, still had been allowed for on a proportional basis in the assessment of the
pension obligations of Preussag AG. In the case of personnel of foreign companies,
the respective guidelines provided by national legislation have been observed.
71
Financial Statements
Notes
Tax provisions and other provisions were valued in accordance with sound business
principles. Provisions for deferred taxes were calculated on the basis of the respective, currently applicable tax rates. In principle, this financial year the interest rate
for accounting purposes on which the determination of reserves for anniversary
bonuses was based was cut to 5.5% from 6%.
For orders which do not cover costs, provisions were calculated on the basis of
the full cost principle, as a matter of principle. Provisions for tourist services not
fully provided as per balance sheet date were set up on a variable-costing basis.
Discounts on provisions were only calculated if the basic liability was bearing
interest.
In other provisions, all identifiable risks and doubtful obligations were reflected.
Liabilities were shown at the repayable amount.
Companies included
in the consolidation
In the consolidated financial statements were included Preussag AG and all subsidiaries which are under their direction or in which Preussag AG had directly or
indirectly the majority of the voting rights.
Including Preussag AG, a total of 361 companies was combined in the Group,
out of these 164 were domestic subsidiaries and 197 were based abroad.
Not included in the consolidated financial statements were 99 domestic and 168
foreign subsidiaries, because the inclusion of these companies would have been
immaterial to the Group's assets, financial position and results, even if viewed as a
whole.
Compared with the previous year, 37 companies were removed from the group
of consolidated companies. A total of 182 companies joined the group of consolidated companies for the first time, 82 were domestic companies and 100 foreign
companies.
Retirements involved mainly the companies of the former Preussag Stahl Group,
that was disposed of in the financial year 1997/98, and other companies that were
not included anymore as a result of sales, mergers and reduced and/or discontinued
business activities due to restructuring measures.
Main additions to the group of consolidated companies consist in the acquisition
of the Hapag-Lloyd Group and the TUI Group. They are in particular also due to the
expansion of business activities by subsidiaries. The Hapag-Lloyd Group was included as of 1st October, 1997 and the TUI Group as of 1st November, 1997.
72
Financial Statements
Notes
The main effects on the Preussag Group's balance sheet as well as on its profit and
loss statements due to the consolidation of the Hapag-Lloyd Group and the TUI
Group are as follows, irrespective of financing costs involved in the acquisition of
the Hapag-Lloyd Group and the TUI Group and prior to goodwill depreciation:
in DM million
before
after
Consolidation of the
Hapag-Lloyd Group and the TUI Group
Change
Balance sheet per 30.9.1998
Tangible assets
3,768.0
6,305.9
+ 2,537.9
Current assets
5,009.4
6,447.3
+ 1,437.9
Equity
2,420.4
2,897.7
+
477.3
Provisions
5,415.0
7,330.4
+ 1,915.4
Liabilities
4,496.8
6,214.7
+ 1,717.9
Profit and loss statement 1997/98
Turnover
22,262.3
35,150.7
+ 12,888.4
Cost of materials
15,538.3
24,722.7
+ 9,184.4
2,944.8
5,064.5
+ 2,119.7
Other operating expenses
Net income from associated companies
–
6.8
+
68.4
+
75.2
Profit on ordinary activities
before depreciation on goodwill
+
478.5
+
927.1
+
448.6
Changes in all major items of the balance sheet as well as in the profit and loss
statement of the previous year resulting from the disposal of the steel activities are
ranging between some 20% to 30%, unless otherwise reported in the individual
items. Out of last year's provisions for pension some 40% were to be allotted the
former Preussag Stahl sector.
In terms of consolidated turnover and with reference to the balance sheet total,
the changes caused by the other disposals of and additions to the group of consolidated companies in 1997/98 amounted to nearly one per cent.
In addition, the profit and loss statement of the Preussag Group for the previous
year included the values of the companies of the Metaleurop Group for the period
from 1st October, 1996 to 31st March, 1997.
Using the equity method, 15 domestic and 50 foreign Group companies or associated companies which have been important for the Group were included. Compared with the previous year, the number of associated companies included in the
consolidated financial statements increased to 65 from 18 companies. With the TUI
Group being included in the consolidated financial statement of the Preussag Group
for the first time, the number of companies forming part of the group that were
valued by equity method increased by 7 domestic and 44 foreign companies, compared to last year. Due to disposal, three domestic and one foreign company are no
longer part of the group.
73
Financial Statements
Notes
The complete list of shareholdings has been deposited with the Commercial Registries of the District Courts in Berlin-Charlottenburg and Hanover. Use was made of
the exemption of Sections 286, no. 3 and 313, no. 3 of the Commercial Code.
Principles of
consolidation
Within the course of the realignment of the Preussag Group and for the purpose
of adjusting the methods of consolidation to the internationally regulated procedures, unlike in previous years, differences arising from capital consolidation and the
application of the equity method as of the financial year 1997/98 were capitalised
and were depreciated, affecting the net operating result. In addition, the financial
statements of foreign subsidiaries as of 1st October 1997 were translated in accordance with the current rate method. The impacts of the adjustment of consolidation
methods on the income and financial situation of the Preussag Group were shown
under the individual items of the balance sheet and of the profit and loss statement.
The book value method was adopted for capital consolidation, according to
which acquisition costs were proportionally offset against the equity at the date of
acquisition, or upon the first-time inclusion of the subsidiary in the consolidated
financial statements. Following the allocation of hidden reserves, remaining net
equity under cost of acquisition, if any, from first time consolidation of subsidiaries
during the financial year 1997/98 was carried at goodwill. Goodwill was depreciated
on a straight-line method over a period of 5 up to a maximum of 20 years, allowing
for the strategic value of the acquisition and further factors determining the economic life. Acquisitions during the financial year were depreciated proportionately. The
goodwill depreciations are shown separately in the profit and loss statements. In
general, equity over cost from capital consolidation continued to be assigned to liability reserves.
In previous years an acquisition was in principle openly offset against revenue
reserves. Equity under cost of acquisition resulting from acquisitions in 1997/98 of
additional shares of companies already included in the consolidation in previous
years continued to be openly transferred to revenue reserves.
When there was a retirement of goodwill due to the associated companies
acquired prior to 1st October 1997 being removed from the group of consolidated
companies, the offsetting neutral in its effects on profits made in the past including
revenue reserves was cancelled. In the course of the deconsolidation affecting the
operating result, the subsidiaries' results allowed for in the consolidated income
during the period of consolidation were adjusted to the results of the individual
financial statement of the parent company.
74
Financial Statements
Notes
In the consolidated financial statement the major associated companies were in
general valued on the basis of their pro rata net equity as per date of acquisition
(equity method), applying the book value method, and were shown in the development fixed-asset schedule under the item shares in associated companies. The
treatment of equity over and/or under cost in capital consolidation was also applied
for the equity of the participations with the goodwill being included in the equity
valuation of the associated company. The share of these companies in the results
for the year including goodwill depreciations was shown in the group's equity
income. Other consolidation and valuation methods contained in the individual and
group financial statements of the associated companies were retained, provided
they complied with German statutory reporting rules.
Receivables and liabilities and/or provisions among consolidated companies
were offset against each other. Use was made of the consolidation of third-party
debts, if eligible.
Inter-company turnover and other revenues generated within the Group as well
as the related expenses were omitted as far as they had not to be itemised as a
change in inventory or as own work capitalised. In general, profits and losses resulting from inter-company supplies of goods and provision of services were excluded
from the profit and loss statement, taking into account deferred taxes. As a rule,
inter-company supplies and services were based on market conditions.
In the consolidated balance sheet, deferred tax debits were the result of dissolution of special non-taxed items diminished by deferred tax credits resulting from
other consolidation measures. In as far as deferred tax debits resulted from these
consolidation measures they were offset up to the value of deferred tax credits
which were not accounted for in the individual financial statements.
Foreign currency
conversion
In the individual financial statements, hedged foreign currency receivables and
liabilities were valued at the rate of exchange of the forward transaction date. As a
matter of principle, short-term unhedged items were valued at the foreign exchange
rate at the financial year-end. Long-term foreign currency receivables were converted at the buying rate on the transaction date or at financial year-end, if lower. Longterm foreign currency liabilities were valued at the selling rate on the transaction
date or at the financial year-end, if higher.
For the purpose of hedging currency exposure and interest exposure, currency
futures contracts and interest rate hedging transactions were concluded. These
contracts and transactions were contracted only with banks of excellent credit
ratings and have been subject to stringent internal controls.
75
Financial Statements
Notes
In the financial year 1997/98, the current rate method was applied for the first time
for translating the financial statements of foreign subsidiaries. After that all items of
property, equity and debt capital as well as the balance sheet notes were translated
at the respective mean rate as per balance sheet date. In the profit and loss statements, depreciations and other revenues and expenditures were translated at the
respective annual average rate. The exchange rate on reporting date was applied for
the conversion of the net profit for the year, allocation to reserves and minority
shareholders’ interests.
In the case of balance sheet items, differences arising from foreign currency
translation in this financial year and the translation of the previous year were set off
against revenue reserves, not affecting the net operating result, and in case of items
of the profit and loss statement, they were included as other expense.
In the financial year, the effects from currency translation concerning the net
profit of the year and revenue reserves were not material.
The individual financial statements of Group companies being based in countries
with high inflation rates were converted upon inflation adjustment.
76
Financial Statements
Notes on the Balance Sheets*
1
Assets
The development of the various fixed assets items of the financial year 1997/98
is shown in a separate table on pages 96/97. Major shareholdings are listed on
page 130.
Goodwill acquired in the financial year 1997/98 was in particular due to the
first-time inclusion of subsidiaries purchased in 1997/98 in the consolidated financial statement.
In the consolidated balance sheet, tangible assets included additions totalling
DM1.2 million and investments included additions of DM3.3 million. In general,
additions to tangible assets comprise technical equipment and machinery as well as
real estate and buildings whereas loans and shares in Group companies constitute
additions to investments. For associated companies, changes in equity which affect
the results are shown under additions and disposals, in addition, goodwill depreciations are shown under valuation adjustments. As a result of the first-time appraisal
of participations in associated companies valued according to equity method, the
goodwill of the financial year 1997/98 totalled DM21.3 million.
Due to the readjustment of the currency translation method applied for financial
statements obtained by foreign subsidiaries, the book value of fixed assets at the
beginning of the financial year, valued at last year’s market price on reporting date,
increased from last year’s book value as of 30th September 1997, valued at historic
rates, by DM3.1 million. This development was caused by the exchange rates of the
US dollar and the British pound as of 30th September 1997 being higher than in
previous years.
2
Group
Inventories
Preussag AG
30 Sept.1998
30 Sept.1997
30 Sept.1998
30 Sept.1997
396,605
567,809
28
25
3,617,027
3,505,355
–
1,932
(138,847)
(–)
(–)
(–)
Finished goods and merchandise
961,826
1,307,953
77
91
Advance payments made
732,719
829,507
–
–
Raw materials and supplies
Work in progress
of which touristic services not invoiced
./. less advance payments received
5,708,177
6,210,624
105
2,048
5,215,623
4,315,275
–
1,880
492,554
1,895,349
105
168
Some 42% of last year’s inventories were to be allocated to the former Preussag
Stahl Group.
A possible reinstatement of original values according to section 280, no. 2, of
the German Commercial Code, amounting to DM1.6 million for the item finished
goods was not effected due to tax reasons.
* in DM 1,000,
unless otherwise stated
77
Financial Statements
Notes on the Balance Sheets*
3
Receivables and
other current assets
Group
Preussag AG
30 Sept.1998 30 Sept.1997
Trade accounts receivable
3,029,788
3,314,825
30 Sept.1998
30 Sept.1997
–
–
with a remaining term of
more than 1 year
(49,261)
(32,440)
(–)
(–)
Other receivables and assets
1,338,596
905,950
1,262,998
2,274,883
with a remaining term of
more than 1 year
(195,446)
(70,800)
(54,024)
(2,450)
161,576
139,138
1,131,548
2,219,689
(1,146)
(4,116)
(42,681)
(1,666)
199,059
157,436
6,546
8,756
Receivables from Group companies
with a remaining term of
more than 1 year
Receivables from companies in which
shareholdings are held
with a remaining term of
more than 1 year
Other current assets
with a remaining term of
more than 1 year
with pending legal demand
(10,040)
(1,829)
(510)
(496)
977,961
609,376
124,904
46,438
(184,260)
(64,855)
(10,833)
(288)
(43,113)
(59,624)
(–)
(–)
4,368,384
4,220,775
1,262,998
2,274,883
In the Group, a share of DM61.5 million (previous year: DM88.3 million) of receivables from Group companies is attributable to supplies of goods and provision of
services. As far as receivables from companies in which shareholdings are held are
concerned, a total of DM149.0 million (previous year: DM73.8 million) of supplies of
goods and provision of services is included in the Group.
4
Securities
Securities of the Group comprise mainly fixed-interest securities whilst securities of Preussag AG comprise fixed-interest securities only.
5
Liquid funds
Of the liquid funds, the sum which was held as cash in banks was DM1.4 billion
in the Group and DM0.6 billion at Preussag AG.
6
Group
Prepaid expenses
30 Sept.1998
Discount
Other prepaid expenses
Preussag AG
30 Sept.1997
30 Sept.1998
30 Sept.1997
472
940
–
–
116,037
45,333
1,590
2,063
116,509
46,273
1,590
2,063
* in DM 1,000,
unless otherwise stated
78
Financial Statements
Notes on the Balance Sheets*
7
Subscribed capital
The subscribed capital of Preussag AG amounts to DM764,259,650, equivalent to
a total of 3,100,000 shares with a nominal value of DM100 and 9,085,193 shares
with a nominal value of DM50. Based on the authorisation of the Annual General
Meeting of 24th March, 1994 to issue bonds attached with warrants on equity,
a conditional capital of DM45 million was created. Due to the exercise of 522 rights
of the warrants on equity attached with the bonds issue of April 1996, the subscribed capital increased by DM26,100 (previous year: DM23,700). The conditional
capital decreased accordingly. 898,946 options, representing conditional capital
of DM44.9 million, have not been exercised.
By authorisation of the Annual General Meeting of 21st March, 1996 an authorised capital of DM60 million was created, DM10 million were available for the
distribution out of these of employee shares to employees of the Company and
Group companies respectively. In this financial year 27,191 employee shares were
subscribed. Thus, the subscribed capital increased by DM1,359,550 and authorised capital decreased accordingly to DM57,369,000.
GEV Gesellschaft für Energie- und Versorgungswerte mbH, Dortmund, a subsidiary of Westdeutsche Landesbank Girozentrale, Düsseldorf/Münster, holds more
than 25% of the shares of Preussag AG.
8
Capital reserves
Capital reserves of Preussag AG exclusively include share premiums. In this
financial year, DM169,650 resulting from the exercise of rights of the warrants on
equity attached with the bonds issue and DM7,341,830 resulting from the subscription of employee shares were added to capital reserves.
9
Revenue reserves
Revenue reserves of Preussag AG consist solely of other revenue reserves. Revenue reserves of the Group developed as follows in the financial year 1997/98:
Revenue reserves of the Group as of 30 Sept.1997
386,456
Transfers to reserves from Group profit for the year
263,884
Differences arising from the acquisition of further shares
in companies which have been consolidated
for the first time in previous years
Net result of all other consolidation operations
Revenue reserves of the Group as of 30 Sept.1998
3,724
–
652,944
1,120
The decrease in the Group’s revenue reserves is mainly due to the disposal of the
steel activities.
* in DM 1,000,
unless otherwise stated
79
Financial Statements
Notes on the Balance Sheets*
10
Proposed appropriation
of profit of Preussag AG
The net profit of Preussag AG amounted to DM288,800,000. Including profit
carried forward of DM1,200,000 and attributing DM60,000,000 to revenue reserves
the profit available for distribution totalled DM230,000,000. It will be proposed to
the Annual General Meeting to use this profit available for payment of a dividend
of DM12 and a bonus of DM3 per share of DM50 nominal value. After the
deduction of dividends of the amount of DM229,277,895 the remaining amount
of DM722,105 will be carried forward.
11
Special non-taxed items
Preussag AG has tax-related reserves amounting to DM18.7 million, in conformity with the regulations of Section 6b of the Income Tax Law.
Tax-related depreciation of fixed assets of Preussag AG totalling DM134.2 million was made in accordance with Sections 6b, 7b, 7d of the Income Tax Law and
Section 14 of the Berlin Promotion Law. Accordingly, special non-taxed items
amounted to DM152.9 million. Taxes due in the event of dissolution of the special
non-taxed items are spread on a long-term basis, and, therefore, have a minor effect
on the results of the respective financial years.
No special non-taxed items were shown in the consolidated financial statements. These amounts were transferred to the revenue reserves or minority interests, taking into account deferred taxation, as far as required.
12
Group
Other provisions
Tax provisions
of which provisions for deferred taxes
Other provisions
Preussag AG
30 Sept.1998
30 Sept.1997
30 Sept.1998
30 Sept.1997
1,245,758
1,201,927
300,490
334,508
(628,430)
(448,519)
(–)
(–)
4,278,310
3,731,011
474,522
606,387
5,524,068
4,932,938
775,012
940,895
In general, the other provisions of the Group cover personnel costs, typical operating risks and risks resulting from share holdings as well as risks from pending
invoices and from agency commissions. In addition, provisions pursuant to Section
249, no. 2 of the Commercial Code were included in the Group accounts.
Other provisions of Preussag AG relate to shareholdings, personnel costs,
restructuring measures and other risks. The provisions referring to the Salzgitter
Hüttenwerk GmbH, which were created in connection with the reorganisation of the
Group launched in previous years, remained unchanged.
Concerning other provisions, 52.5% of the Group’s provisions and 4.2% of the
provisions of Preussag AG have been due within one year.
* in DM 1,000,
unless otherwise stated
80
Financial Statements
Notes on the Balance Sheets*
13
Liabilities of the Group
Total
30 Sept.1998
Remaining term
30 Sept.1997
up to 1 year
Bonds
remaining term up to 1 year
–
1– 5 years
300,000
more than 5 years
–
–
300,000
300,000
of which convertible
remaining term up to 1 year
(–)
1– 5 years
(300,000)
more than 5 years
(–)
(–)
(300,000)
(300,000)
Liabilities to banks
remaining term up to 1 year
1,275,741
1– 5 years
767,449
more than 5 years
193,979
803,301
2,237,169
1,365,380
Trade accounts payable
remaining term up to 1 year
2,117,447
1– 5 years
27,177
more than 5 years
4,133
1,397,749
2,148,757
1,432,815
Miscellaneous liabilities
remaining term up to 1 year
1,269,805
1– 5 years
169,575
more than 5 years
89,434
993,417
1,528,814
1,181,846
Liabilities on bills accepted and drawn
remaining term up to 1 year
58,449
1– 5 years
5,854
more than 5 years
–
40,496
64,303
52,824
Liabilities to Group companies
remaining term up to 1 year
162,957
1– 5 years
19,184
more than 5 years
667
208,438
182,808
239,733
Liabilities to companies
in which shareholdings are held
remaining term up to 1 year
232,662
1– 5 years
92,166
more than 5 years
39,531
46,859
364,359
91,537
Other liabilities
remaining term up to 1 year
815,737
1– 5 years
52,371
more than 5 years
49,236
697,624
917,344
797,752
of which taxes
remaining term up to 1 year
(201,516)
1– 5 years
(400)
more than 5 years
(–)
(150,948)
(201,916)
(150,957)
of which relating to social security
* in DM 1,000,
unless otherwise stated
81
remaining term up to 1 year
(134,304)
1– 5 years
(256)
more than 5 years
(–)
(132,198)
(134,560)
(134,120)
6,214,740
4,280,041
Financial Statements
Notes on the Balance Sheets*
13
Liabilities of
Preussag AG
Total
30 Sept.1998
Remaining term
30 Sept.1997
up to 1 year
Bonds1)
remaining term up to 1 year
–
1–5 years
300,000
more than 5 years
–
–
300,000
300,000
of which convertible
remaining term up to 1 year
(–)
1–5 years
(300,000)
more than 5 years
(–)
(–)
(300,000)
(300,000)
Liabilities to banks
remaining term up to 1 year
244,993
1–5 years
235,373
more than 5 years
–
1,503
480,366
4,485
Trade accounts payable
remaining term up to 1 year
6,075
1–5 years
–
more than 5 years
–
2,834
6,075
2,834
Miscellaneous liabilities
remaining term up to 1 year
3,969,795
1–5 years
460,781
more than 5 years
127,581
2,843,301
4,558,157
3,890,875
Liabilities to Group companies
remaining term up to 1 year
3,816,074
1–5 years
419,779
more than 5 years
125,000
2,779,809
4,360,853
3,824,613
Liabilities to companies
in which shareholdings are held
remaining term up to 1 year
35,702
1–5 years
38,937
more than 5 years
2,031
15,403
76,670
15,403
Other liabilities
remaining term up to 1 year
118,019
1–5 years
2,065
more than 5 years
550
48,089
120,634
50,859
of which taxes
remaining term up to 1 year
(86,317)
1–5 years
(–)
more than 5 years
(–)
(40,121)
(86,317)
(40,121)
of which relating to social security
1)
refer to the explanations
of the similar item
of the Group
remaining term up to 1 year
(1,378)
1–5 years
(–)
more than 5 years
(–)
(1,537)
(1,378)
(1,537)
5,344,598
4,198,194
* in DM 1,000,
unless otherwise stated
82
Financial Statements
Liabilities of the Group
Notes on the Balance Sheets*
Bonds include the issue of bonds attached with warrants on equity of Preussag AG
of 1996, which has an issue volume of DM300.0 million, maturing on 17th May,
2001. The outstanding warrants entitle to buy 898,946 ordinary shares of Preussag
AG with a nominal value of DM50 at an option price of DM375. For the exercise of
these option rights a conditional capital exists at Preussag AG.
Total liabilities of the Group with a remaining term up to 1 year amount to
DM8,540.0 million and those with a remaining term of more than 5 years amount to
DM492.0 million. Of these sums DM3,877.0 million with a remaining term of 1 year
and DM204.4 million with a remaining term of more than 5 years are applicable to
advance payments received which are offset against inventories.
At financial year-end, DM257.6 million of liabilities to banks and DM49.8 million
of other liabilities were secured by mortgages and assignment of other collateral
and similar rights.
A share of DM33.5 million (previous year: DM80.3 million) of liabilities to Group
companies and DM27.0 million (previous year: DM4.1 million) of liabilities to companies in which shareholdings are held were attributable to supplies of goods and
provision of services.
From total liabilities as of 30th September, 1997, approximately 11% were attributable to companies of the former Preussag Stahl Group.
Liabilities of
Preussag AG
Liabilities to banks of Preussag AG totalling DM0.3 million are secured by mortgages.
Total liabilities with a remaining term of up to 1 year amount to DM4,220.9 million and DM127.6 million have a remaining term of more than 5 years.
14
Group
Contingent liabilities
Liabilities on bills
Liabilities under guarantees,
bill and cheque guarantees
of which to Group companies
Liabilities under warranties
of which to Group companies
Contingent liabilities connected with the
provision of collateral for third-party liabilities
* in DM 1,000,
unless otherwise stated
83
Preussag AG
30 Sept.1998
30 Sept.1997
30 Sept.1998
30 Sept.1997
76,762
109,311
38
15,425
451,068
384,919
3,698,754
3,817,701
(–)
(14,978)
(–)
(–)
53,088
77,347
72,062
70,254
(5,523)
(–)
(–)
(–)
2,416
14,021
–
–
Financial Statements
Notes on the Balance Sheets*
Preussag AG and other Group companies have taken over guarantees and warranties on behalf of other Group companies, that mainly serve the settlement of
ongoing business transactions and loan collateralisation.
15
Other financial
commitments
Total commitments, which were based on nominal values, could be allocated as
follows:
Group
Preussag AG
30 Sept.1998
30 Sept.1997
30 Sept.1998
30 Sept.1997
2,471,185
219,434
–
–
20,500
5,000
–
–
75
Order commitment in respect
of capital expenditure
Statutorily required anti-pollution measures
Other financial commitments
449,207
134,648
75
Short-, medium- and long-term other obligations
2,940,892
359,082
75
75
Lease, tenancy and leasing contracts
1,774,713
819,826
3,835
3,947
Other financial commitments of the Group amounted to a total of DM4,715.6
million. They included obligations from leasing, tenancy and leasing contracts of
DM1,774.7 million as well as other obligations to the amount of DM2,940.9 million.
Out of the total, DM1,578.4 million (last year DM515.0 million) have been due within 1 year, DM2,673.2 million (DM388.8 million by 30th September, 1997) would
have been due within 2 to 5 years respectively and DM464.0 million (previous year:
DM275.1 million) would have matured after 5 years. Out of these a total of DM0.1
million have been with Group companies. The increase in current purchase commitments was mainly due to future investments of the Hapag-Lloyd Group, predominantly in aircraft, ships and containers.
Furthermore, the TUI Group has commitments by 30th September, 1998 resulting from forward exchange transactions (DM2,127.5 million), which were almost
exclusively contracted by tour operators for hedging purposes.
The other financial commitments of Preussag AG included a total of DM2.6 million for expenditures of the subsequent year. The remaining other commitments
have been due within 2 to 5 years.
The remaining other financial commitments include mainly amounts covering
obligations from orders already placed, commitments in connection with leased
land clean-up and renovation, payment obligations and other obligations in connection with shareholdings.
We are jointly and severally liable for participations incivil law associations in
which profit and loss tranfer agreements exist with subsidiary companies as well as
for participations in joint ventures and for participations as general partner in partnerships.
* in DM 1,000,
unless otherwise stated
84
Financial Statements
Notes on the Profit and Loss Statements *
16
Turnover
Turnover per division and sector as well as per region is as follows:
Group
1997/98
1996/97
12,193
10,520
Turnover per division and sector (in DM million)
Energy and commodities
Energy
2,477
Trading
9,716
2,188
8,332
Technology
7,534
Plant engineering
3,035
3,638
Shipbuilding
1,086
1,170
Building engineering
3,413
3,220
Logistics and tourism
15,017
Logistics
Transport and tourism
refer to explanations
on page 101f
1,832
2,128
1)
1,832
12,889
–
Other subsidiaries
1)2)
8,028
Steel and non-ferrous metals activities
407
2)
490
–
5,788
35,151
26,658
1997/98
1996/97
Germany
11,847
12,139
EU (excluding Germany)
12,940
7,836
Rest of Europe
1,854
1,731
America
4,771
2,571
Remaining regions
3,739
2,381
35,151
26,658
Group
Turnover per region (in DM million)
Allocation of turnover by region according to customer location.
17
Changes in stocks and
own work capitalised
Group
Change in stocks of finished goods
and work in progress
1997/98
+
Own work capitalised
258,385
1996/97
–
78,077
+
336,462
176,524
61,838
–
114,686
18
Other operating income
In the Group, the amounts shown in this category relate mainly to the release of
provisions, disposal of assets, insurance compensation, ancillary operating revenue
and revenue from the passing on of costs. In the case of Preussag AG, other operating income includes income from the dissolution of special non-taxed items, totalling DM33.6 million.
* in DM 1,000,
unless otherwise stated
85
Financial Statements
Notes on the Profit and Loss Statements *
19
Cost of materials
1997/98
1996/97
Cost of raw materials, consumables and
supplies and of purchased merchandise
Group
12,763,790
13,717,949
Cost of purchased services
11,958,941
3,553,993
of which touristic services
(6,411,769)
(–)
24,722,731
17,271,942
The outside services in tourism mainly consisted of expenses incurred for hotel
and transportation.
20
Group
Personnel costs
Preussag AG
1997/98
1996/97
1997/98
1996/97
Wages and salaries
4,533,997
4,334,600
62,004
63,828
Social security contributions,
pension costs and benefits
1,153,021
1,199,786
36,317
39,022
(227,123)
(277,383)
(28,029)
(30,212)
5,687,018
5,534,386
98,321
102,850
1997/98
1996/97
1997/98
1996/97
on intangible assets and tangible assets
(except depreciation on goodwill)
1,154,065
1,054,049
8,863
8,963
of which unscheduled depreciation
(36,361)
(46,140)
(–)
(–)
1,154,065
1,054,049
8,863
8,963
of which pension costs
21
Group
Depreciation
Preussag AG
In the financial year 1997/98, undisclosed reserves itemised in the consolidated
financial statement were offset against depreciations totalling DM46.3 million.
22
Other operating
expenses
They included sales costs, inclusive of costs of commissions and fees, costs of
accrual of reserves as well as administrative, maintenance and third-party costs and
rental and lease expenses. For Preussag AG, this item also includes transfers to special
non-taxed items amounting to DM14.8 million and expenses for Group companies.
Following the same procedure as last year, utilisation of provisions created and
charged to other operating expenses is shown under the respective cost account.
The reversal of amounts left over from these provisions has been offset against
additions to provisions in the current year.
* in DM 1,000,
unless otherwise stated
86
Financial Statements
Notes on the Profit and Loss Statements *
23
Net income from
investments
Group
Income from participations
of which from Group companies
Income from profit transfer agreements
of which from Group companies
Results from associated companies
of which from Group companies
Preussag AG
1997/98
1996/97
1997/98
1996/97
160,971
63,734
102,022
54,131
(97,122)
(17,273)
(99,021)
(50,487)
18,349
11,019
853,275
715,181
(4,232)
(2,710)
(853,275)
(715,181)
68,395
20,187
–
–
(–
4,637)
(2,801)
(–)
Expenses relating to losses taken over
–
3,126
–
2,484
– 142,692
–
112,771
of which to Group companies
(–
2,973)
(–
2,479)
(– 142,692)
(–
112,769)
+ 244,589
+
+ 812,605
+ 656,541
92,456
(–)
In the Group, income from profit and loss transfer agreements includes profit
and loss transfers from associated companies and in the accounts of Preussag AG
allocated taxes are included.
In the course of the reorganisation of the logistics sector, the shares of Algeco
S.A., Paris/Mâcon are transferred from VTG Vereinigte Tanklager und Transportmittel GmbH, Hamburg, to Preussag Logistik GmbH, Hanover, at market value. The
high book profit from this transaction was transferred to Preussag AG according
to the existing profit transfer agreement and was eliminated in the consolidated
financial statements.
24
Depreciation on
investments and
marketable securities
Unscheduled depreciation on investments totalled DM32.1 million and were
mostly related to distribution payments.
25
Group
Net interest
Income from other securities and loans
comprised in investments
of which from Group companies
Other interest and similar earnings
of which from Group companies
Interest and similar expenses
of which to Group companies
Preussag AG
1997/98
1996/97
1997/98
1996/97
12,410
9,384
10,494
17,165
(538)
(990)
(9,687)
(15,265)
209,970
181,620
153,049
192,274
(10,116)
(8,073)
(64,830)
(85,127)
– 274,995
–
204,463
(–
– 301,327
9,544)
(–
– 185,776
7,525)
(– 147,216)
(–
158,030)
–
78,947
+
5,228
– 111,452
+
4,976
26
Depreciation on
goodwill
The depreciation refers to goodwill which is mainly created in the course of the
first-time consolidation of subsidiaries acquired in the year 1997/98. These depreciation have no impact on taxes of the Group.
* in DM 1,000,
unless otherwise stated
87
Financial Statements
Notes on the Profit and Loss Statements *
27
Extraordinary result
The extraordinary income of the Group of DM364.2 million are equivalent to the
profit from the sale of the steel activities.
The extraordinary expenses of the Group of DM312.4 million are the result
of restructuring measures, dissolution of product areas and closure of locations
as well as of the sale of subsidiaries. They refer to the waste treatment sector, other
activities in plant engineering as well as, inter alia, the sectors logistics, energy
and trading.
28
Group
Taxes
Taxes on income
Other taxes
Preussag AG
1997/98
1996/97
251,332
190,853
64,499
82,131
315,831
272,984
1997/98
1996/97
63,033
–
755
151,163
–
62,278
3,975
147,188
The Group’s taxes on income relate to profits from ordinary activities on the
whole. For Preussag AG, income tax of DM -14.2 million were charged to Group
companies. The decrease of income tax results from lower expenditure in this year
and the release of provisions for business tax.
Results attributable
to minority interests
Group
Profit due to minority interests
1997/98
–
Loss attributable to minority interests
89,445
1996/97
–
42,673
–
46,772
54,935
19,666
–
35,269
Results attributable to minority interests relate particularly to the TUI Group.
Expenses and income
attributable to
other periods
In the Group, expenses of DM827.5 million and a related tax debit of DM153.4
million are attributable to other financial years. The Group has income of DM940.4
million accordingly. Expenses as well as income are predominantly included in other
operating expenses and other operating income respectively.
Expenses and income relating to other periods are practically balanced at
Preussag AG, so that there are no significant effects on the results relating to prior
or future periods.
* in DM 1,000,
unless otherwise stated
88
Financial Statements
Other Disclosures
Group
Personnel on an
annual average
(excluding apprentices)
*) This figure does not include
42 employees according to
Section 249 h AFG
(Work Promotion Law)
Preussag AG
1997/98
1996/97
1997/98
1996/97
26,715
36,319
41
63
Employees
37,387
26,702
412
443
Total personnel
64,102
63,021*)
453
506
Industrial workers
The average number of employees of the Hapag-Lloyd Group and the TUI Group
was 17,209 during 1997/98. The companies of the former Preussag Stahl Group had
a total of 11,952 employees.
Other disclosures
Remuneration granted to the Executive Board of Preussag AG in the financial
year 1997/98 amounted to DM9,657,802 for the Company and DM10,233,570 for
the Group. Remuneration granted to the Supervisory Board amounted to
DM2,221,080.
The pension provisions for former members of the Executive Board and their
dependants amounted to DM65,421,454 as of 30th September, 1998. During the
past financial year, these persons received a total of DM5,000,548.
The members of the Supervisory Board and the Executive Board are listed separately.
Hanover, January 1999
The Executive Board
Frenzel
Feuerhake
89
Schultze
Stodieck
Financial Statements
Auditors’ Statements
"Based on audit performed in accordance with our professional duties, the accounting records, the annual financial statements and the consolidated financial statements comply with legal regulations. The annual financial statements and the consolidated financial statements present, in compliance with generally accepted
accounting principles, a true and fair view of the net worth, financial position and
results of the Company and the Group. The management report on the Company
and on the Group corresponds to the annual financial statements and the consolidated financial statements."
Hanover, 12th January, 1999
C & L Deutsche Revision
Aktiengesellschaft
Wirtschaftsprüfungsgesellschaft
Eichner
Schilling
Wirtschaftsprüfer
Wirtschaftsprüfer
90
Supervisory Board
Report of the
Supervisory Board
Report of the Supervisory Board
During the financial year 1997/98, the Supervisory Board supervised and advised
the management of the Company. The Supervisory Board was kept informed regularly about current business development and the position of the Company by the
Executive Board on the basis of written and verbal reports.
In the course of four regular meetings the Supervisory Board was involved in all
important company affairs and discussed these with the Executive Board. The consultation processes concentrated on the economic situation of the Company, the
short-term and medium-term budget and also the further development of the
Group, in particular the acquisitions in the logistics and tourism division and the
disinvestment of the shareholding in Preussag Stahl AG to the State of Lower
Saxony and to Norddeutsche Landesbank. In a further meeting the Supervisory
Board dealt with the plans concerning the expansion of the tourism business
through the majority shareholding of Hapag-Lloyd AG in Touristik Union International GmbH & Co KG. Further more the new management structure for Preussag AG
und the Group were important topics of the consultations. Those business transactions requiring the consent of the Supervisory Board according to the law or the
Articles of Association, or which were of particular importance were discussed in
detail before resolutions were passed. The Presiding Committee of the Supervisory
Board met to prepare decisions to be taken by the Supervisory Board.
The financial statements of Preussag AG and the consolidated financial statements for the financial year ending on the 30th September, 1998, and also the joint
management report relating to both Preussag AG and the Group for the financial
year 1997/98 submitted by the Executive Board were audited by C&L Deutsche
Revision Aktiengesellschaft Wirtschaftsprüfungsgesellschaft, Hanover, having been
elected by the Annual General Meeting on the 26th March, 1998. The auditors
found that the legal requirements had been complied with and they confirmed their
unqualified approval.
The financial statements, management report and also the auditors´ reports
were presented to all members of the Supervisory Board. Representatives of the
auditors attended the balance sheet meetings of the Presiding Committee and the
Supervisory Board and provided information.
The Supervisory Board approves, after examination, the results of the audit as
well as the management report submitted by the Executive Board and the financial
statements of Preussag AG as of 30th September, 1998, which were hereby adopted. After examination, the Supervisory Board concurs with the Executive Board´s
proposal for the appropriation of distributable profit. The Supervisory Board
acknowledged the management report for the Group and the consolidated financial
statements as of 30th September, 1998.
91
Supervisory Board
Report of the Supervisory Board
On 20th March, 1998, Mr. Walter Skiba retired from the Supervisory Board. The
Supervisory Board wishes to thank Mr. Skiba for his constructive assistance.
Mr. Uwe Klein was appointed member of the Supervisory Board by decree of the
district court of Hanover dated 22nd April, 1998.
Mr. Norbert Schmidt retired from the Presiding Committee with effect from 10th
November, 1998. In its meeting held on 11th November, 1998, the Supervisory
Board elected Mr. Herbert Baresel as member of the Presiding Committee.
After resolution of the Supervisory Board concerning the new management
concept for the Preussag Group on 2nd July, 1998, the Preussag AG is managed by
a Central Executive Board of four members. Members of the Executive Board of
Preussag AG are Dr. Michael Frenzel (Chairman), Rainer Feuerhake, Dr. Wolfgang
Schultze and Dr. Helmut Stodieck. On Group level, Divisional Executives manage
the business sectors in the three divisions energy and commodities, technology as
well as logistics and tourism. These measures are Preussag´s response to the
changed demands on management arising in large part from the change of the
Group structure.
In the course of the realization of the new management concept Mr. Günter
Krallmann and Mr. Klaus Linnebach retired from the Executive Board of Preussag
AG with effect from 2nd July, 1998. They will continue their business as Divisional
Executives of the Preussag Group. Also with effect from 2nd July, 1998,
Dr. Klaus-Jürgen Juhnke, Mr. Jens Schneider, Mr. Harold Sher, Mr. Bernd Wrede
and Mr. Claus Wülfers took office as Divisional Executives.
Dr. Hansgeorg Schmitz-Eckert retired from the Executive Board with effect from
31st May, 1998 because he reached the retirement age. The Supervisory Board
wishes to thank Dr. Schmitz-Eckert for his deserving many years of service for the
Preussag Group.
The Supervisory Board
Hanover, February 1999
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Dr. Friedel Neuber, Chairman
92
Boards
Members of the
Supervisory Board
Supervisory Board
Presiding Committee
Dr. Friedel Neuber
Martina Kirchhof-Harloff
Chairman of the Executive Board
Director of Preussag Noell GmbH,
of Westdeutsche Landesbank
Würzburg
Girozentrale, Düsseldorf,
Chairman
Uwe Klein
Clerk, Hamburg
Dipl.-Soziologe
(since 22nd April, 1998)
Horst Schmitthenner
Member of the Management Board of
Fritz Kollorz
the Trade Union for the Metal Industry,
Member of the Executive Board of the
Frankfurt/Main, Deputy Chairman
Trade Union for Mining, Energy and
Chemical Industries, Hanover
Herbert Baresel
Shipbuilder, Kiel,
Dr. Jürgen Krumnow
(Member of the Presiding Committee
Member of the Executive Board
since 11th November, 1998)
of Deutsche Bank AG, Frankfurt/Main
Peter Ermlich
Joachim Lossack
Miner, Recklinghausen
Foreman, Boxberg
Dr. Dietmar Kuhnt
Dipl.-Kfm. Hans Henning Offen
Chairman of the Executive Board
Deputy Chairman of the Executive Board
of RWE AG, Essen
of Westdeutsche Landesbank
Girozentrale, Düsseldorf
Dr. Klaus Liesen
Chairman of the Supervisory Board
Dr. Günther Saßmannshausen
of Ruhrgas AG, Essen
Hanover
Norbert Schmidt
Rainer Barcikowski
Managing Director of Hermania
Head of Administration of the Managing
Dr. Schirm GmbH, Schönebeck
Board of the Trade Union for the Metal
(Member of the Presiding Committee
Industry, Branch Office Düsseldorf
until 10th November, 1998)
Dr. Gerold Bezzenberger
Walter Skiba
Solicitor and Notary Public,
Clerk, Gladbeck
Member of the Executive Board
(until 20th March, 1998)
of Deutsche Schutzvereinigung für
Wertpapierbesitz e. V., Berlin
Werner Stegmaier
Senior Service Engineer, Stuttgart
Dr. Jürgen Deilmann
Managing Director of Deilmann
Dr. Bernd W. Voss
Montan GmbH, Bad Bentheim
Member of the Executive Board
of Dresdner Bank AG,
Dr. Heinz Dürr
Chairman of the Supervisory Board
of Deutsche Bahn AG, Berlin
93
Frankfurt/Main
Boards
Other board memberships of the
Supervisory Board
Supervisory Board
Dr. Friedel Neuber
(Chairman)
a) Deutsche Babcock AG 1)
Deutsche Bahn AG
Douglas Holding AG
Hapag-Lloyd AG
Friedr. Krupp AG Hoesch-Krupp
RWE AG1)
b) AXA-UAP S.A.
Bank Austria AG
Dipl.-Soziologe
Horst Schmitthenner
(Deputy Chairman)
a) Salzgitter AG 2)
Rainer Barcikowski
a) EKO Stahl GmbH2)
Mannesmann AG
Herbert Baresel
a) Howaldtswerke-Deutsche Werft AG
Dr. Gerold Bezzenberger
a) IVG Holding AG
Lahmeyer AG
Dr. Jürgen Deilmann
a) Braunschweigische Maschinenbauanstalt AG 1)
Preussag Energie GmbH
Dr. Heinz Dürr
a) Alp Transit Gotthard AG 2)
Bankgesellschaft Berlin AG
Benteler AG
Deutsche Bahn AG 1)
Dürr AG 1)
Mannesmann AG
Stinnes AG
Peter Ermlich
a) Deilmann-Haniel GmbH
Martina Kirchhof-Harloff
a) Preussag Noell GmbH
Uwe Klein
a) –
Fritz Kollorz
a) Preussag Anthrazit GmbH2)
Ruhrkohle AG2)
STEAG AG2)
STEAG Walsum Immobilien AG 2)
Vereinigte Elektrizitätswerke AG 2)
Dr. Jürgen Krumnow
a) Metallgesellschaft AG
Mobil Oil AG 1)
Phoenix AG
Schering AG
Schmalbach-Lubeca AG
VIAG AG
Volkswagen AG
b) Peek & Cloppenburg KG
Schiffshypothekenbank zu Lübeck AG 1)
1)
Chairman
Deputy Chairman
a) Membership in Supervisory
Boards required by law
b) Membership in comparable
Supervisory Boards of
domestic and foreign
companies
2)
Dr. Dietmar Kuhnt
a) Allianz Versicherungs-AG
Dresdner Bank AG
Hapag-Lloyd AG
Heidelberger Druckmaschinen AG 1)
HOCHTIEF AG 1)
Lahmeyer AG 1)
Metallgesellschaft AG
Rheinbraun AG 1)
RWE-DEA AG für Mineraloel
und Chemie1)
RWE Energie AG 1)
RWE Umwelt AG 1)
Dr. Klaus Liesen
a) Allianz AG 1)
Deutsche Bank AG
Mannesmann AG
Ruhrgas AG 1)
Veba AG
Volkswagen AG 1)
b) Beck GmbH & Co. KG
Joachim Lossack
a) –
Dipl.-Kfm. Hans Henning Offen
a) Deutsche Shell AG
Gildemeister AG
Kaufhof Warenhaus AG
Kaufring AG 2)
Rheinische Energie AG
Thyssen Handelsunion AG
Trienekens AG
WestLB (Europa) Holding AG 2)
b) AKA Ausfuhrkreditgesellschaft mbH
Banque d’Orsay
West KA Westdeutsche Kapitalanlageges. mbH1)
Dr. Günter Saßmannshausen
a) Braunschweigische Maschinenbauanstalt AG
Continental AG
Deutsche Shell AG
Heraeus Holding GmbH1)
Norddeutsche Landesbank Girozentrale
Preussag Energie GmbH
VAW Aluminium AG
Volkswagen AG
Norbert Schmidt
a) –
Walter Skiba
a) Salzgitter Handel GmbH
Werner Stegmaier
a) Minimax GmbH2)
Dr. Bernd W. Voss
a) Continental AG
Deutsche Hypothekenbank FrankfurtHamburg AG 2)
Deutsche Schiffsbank2)
Dresdner Bauspar AG 2)
Karstadt AG
Oldenburgische Landesbank AG 1)
Stinnes AG
Unternehmensbeteiligungsgesellschaft
für die deutsche Wirtschaft AG 2)
Varta AG
Veba AG
Volkswagen AG
94
Boards
Members of the
Executive Board
Executive Board
Executive Board of Preussag AG
Responsibilities
Dr. Michael Frenzel
Chairman
Rainer Feuerhake
Finance and Accounting
Dr. Wolfgang Schultze
Personnel and Legal Affairs
Dr. Helmut Stodieck
Controlling
Dr. Hansgeorg Schmitz-Eckert
(until 31st May, 1998)
Dr. Hans-Joachim Selenz
(until 4th February, 1998)
Divisional Executives
Günter Krallmann
Energy
Dr. Klaus-Jürgen Juhnke
(until 2nd July, 1998, member of the
Executive Board of Preussag AG)
(since 2nd July, 1998)
Logistics
Klaus Linnebach
Plant Engineering and
(until 2nd July, 1998, member of the
Executive Board of Preussag AG)
Shipbuilding
Jens Schneider
(since 2nd July, 1998)
Building Engineering
Harold Sher
(since 2nd July, 1998)
Trading
Bernd Wrede
(since 2nd July, 1998)
Transport
Claus Wülfers
Tourism
95
(since 2nd July, 1998)
Boards
Other board memberships of the
Executive Board
Executive Board
Dr. Michael Frenzel (Chairman)
a) Deutsche Hypothekenbank AG
Hapag-Lloyd AG 1)
Howaldtswerke-Deutsche Werft AG 1)
IVG Holding AG
Kreditanstalt für Wiederaufbau
Lehnkering AG 1)
PreussenElektra AG
Preussag North America, Inc.1)
TU Holding GmbH1)
VTG Vereinigte Tanklager und
Transportmittel GmbH1)
b) Algeco S.A.2)
Creditanstalt AG
Expo 2000 Hannover GmbH
Hamburgische Landesbank
Rainer Feuerhake
a) Hapag-Lloyd AG
Preussag Energie GmbH
Preussag Noell GmbH2)
Wolf GmbH
b) AMC Amalgamated Metal Corp. PLC
Metaleurop S.A.1)
Preussag Finance B.V. 1)
Preussag North America, Inc.
Westdeutsche Immobilienbank
Günter Krallmann
a) Deutsche Pfandbrief- und
Hypothekenbank AG
Deilmann-Haniel GmbH
Deutsche Tiefbohr-AG 2)
Fels-Werke GmbH2)
Howaldtswerke-Deutsche Werft AG
Preussag Anthrazit GmbH1)
Preussag Energie GmbH1)
b) Elektro-Chemie Ibbenbüren GmbH1)
Metaleurop S.A.
Uranerzbergbau-GmbH
Dr. Hansgeorg Schmitz-Eckert
a) Fels-Werke GmbH1)
Kermi GmbH1)
Lehnkering AG
Minimax GmbH1)
VTG Vereinigte Tanklager und
Transportmittel GmbH
Wolf GmbH1)
b) Algeco S.A.
Orga Kartensysteme GmbH1)
Preussag Finance B.V.
Uniqa Chipkartensysteme GmbH1)
Dr. Wolfgang Schultze
a) Fels-Werke GmbH
Preussag Anthrazit GmbH
Preussag Wasser und Rohrtechnik
GmbH
b) Elektro-Chemie Ibbenbüren GmbH
Dr. Hans-Joachim Selenz
a) DEUMU Deutsche Erz- und MetallUnion GmbH1)
MAN Nutzfahrzeuge GmbH
PPS Personal-, Produktions- und
Servicegesellschaft mbH1)
Salzgitter Handel GmbH1)
Verkehrsbetriebe Peine-Salzgitter GmbH 1)
b) Braunschweiger Zeitungs Verlag GmbH
Ferngas Salzgitter GmbH
Hansaport Hafenbetriebsgesellschaft mbH
Iron Dynamics, Inc.
Dr. Helmut Stodieck
a) Preussag Anthrazit GmbH
Preussag Energie GmbH
b) AMC Amalgamated Metal Corp. PLC 1)
Preussag North America, Inc.
Klaus Linnebach
a) Deutsche Babcock AG
Howaldtswerke-Deutsche Werft AG 1)
Preussag Noell GmbH1)
Preussag Wasser und Rohrtechnik
GmbH1)
b) Deutsche Gesellschaft zum Bau
und Betrieb von Endlagern
für Abfallstoffe mbH
Niedersächsische Gesellschaft zur
Endablagerung von Sonderabfall mbH
Joint-venture Preussag Noell China
Merchants1)
1)
Chairman
Deputy Chairman
a) Membership in Supervisory
Boards required by law
b) Membership in comparable
Supervisory Boards of
domestic and foreign
companies
2)
96
Preussag in Figures
Flow of funds
of the Group
(in DM million)
Flow of Funds
1997/98
1996/97*
Change
Business activities
Group net profit for the year
Depreciation(+)/additions(–) to fixed assets
Increase(+)/decrease(–) in long-term provisions
Other non-cash expenditure(+)/earnings(–)
–
Cash flow according to the DVFA/SG method
539.5
397.2
+
142.3
1,319.2
1,063.9
+
255.4
323.5
71.7
+
251.8
276.5
37.8
–
314.4
1,905.7
1,570.6
+
335.1
Profit(–)/loss(+) from disposals of fixed assets
–
513.1
Increase(–)/decrease(+) in inventories
–
187.2
Increase(–)/decrease(+) in receivables
and other current assets
–
127.5
Increase(+)/decrease(–) in short-term provisions
–
501.3
Increase(+)/decrease(–) in liabilities
(excluding liabilities to banks)
681.5
Cash flow from business activities
–
–
–
371.7
–
141.4
136.4
–
323.6
193.6
+
66.1
162.1
–
663.4
380.3
+ 1,061.8
1,258.1
923.5
+
334.6
Investments
Payments received from disposals of intangible
and tangible assets
565.3
152.6
+
412.7
1,157.5
232.0
+
925.5
Payments made for investments in intangible
and tangible assets
– 1,353.0
– 1,014.0
–
339.0
Payments made for investments in financial assets
– 3,489.4
–
–
2,898.1
Payments received from disposals of financial assets
Cash flow from investment activities
591.3
– 3,119.6
– 1,220.7
– 1,898.9
9.3
34.0
–
24.7
182.8
31.3
–
–
0.3
18.5
667.7
+
892.9
612.3
–
Finance
Payments received from capital increases
and allowances by shareholders
Dividend payments of
– Preussag AG
– Subsidiaries to other Group shareholders
–
–
Payments received from the issue of loans
and the raising of (financial) liabilities
Payments made for the redemption of loans
and (financial) liabilities
–
–
1,560.6
–
Cash flow from finance activities
Change in funds with cash effects
183.1
49.8
873.8
–
–
124.7
+
587.9
– 1,398.3
–
421.9
–
976.4
Flow of funds
Funds at the beginning of the period
Change in funds due to changes in the group
of consolidated companies
* Previous year’s figures
adjusted (refer to page 127)
97
2,137.4
2,536.2
863.2
14.0
Change in funds due to exchange rate
fluctuations and other change in value
–
Change in funds with cash effects
– 1,398.3
Funds at the end of the period
261.5
463.2
15.9
1,586.4
9.1
–
421.9
2,137.4
Preussag in Figures
Flow of funds
of the Group
Key Figures by Sector
The flow of funds calculation for the financial year 1997/98 as well as for the previous year is based on the joint declaration of the ‘Hauptfachausschuss des Instituts
der Wirtschaftsprüfer’ (German Auditors Association) and ‘Schmalenbach-Gesellschaft/Deutsche Gesellschaft für Betriebswirtschaft e.V.’. In accordance with international guidelines, the flow of funds calculation of the Group shows the increase
and decrease of cash flow separated by business activities, investments and
finance. The effects resulting from changes in the group of consolidated companies
have been adjusted.
The increase of funds from business activities includes net interest. Payment for
investments in intangible and tangible assets do not equal the additions shown in
the development of fixed assets schedule, because those figures include also
investments for which payments are pending and goodwill from consolidation of
equity. The decrease of funds used for financial investments comprises payments
for the acquisition of shareholdings, which are, in the course of consolidation, included in the Group balance sheet in particular as goodwill and assets as well as liabilities. Liquid funds comprise cash-in-hand, cheques, bank deposits and marketable
securities, which can be turned into cash in a short-term. The effects on funds resulting from changes in the group of consolidated companies as well as changes in
funds due to foreign exchange rate fluctuations are shown separately.
Capital expenditure
in tangible assets
(in DM million)
1995/96
1996/97
1997/98
Energy and commodities
Energy
Trading
151
129
22
376
322
54
307
241
66
Technology
Plant engineering
Shipbuilding
Building engineering
368
144
73
151
269
65
20
184
261
53
26
182
Logistics and tourism
Logistics
Transport and tourism
154
154
–
139
139
–
3,197
199
2,998*
37
34
Other subsidiaries
* incl. additions to goodwill
Steel and non-ferrous metals activities
Total
Depreciation on
tangible assets
(in DM million)
402
235
–
1,112
1,053
3,818
1995/96
1996/97
1997/98
Energy and commodities
Energy
Trading
163
139
24
152
137
15
194
161
33
Technology
Plant engineering
Shipbuilding
Building engineering
304
79
57
168
345
98
56
191
316
73
51
192
Logistics and tourism
Logistics
Transport and tourism
132
132
–
138
138
–
721
150
571*
Other subsidiaries
* incl. depreciation
on goodwill
53
Steel and non-ferrous metals activities
Total
63
51
47
357
368
–
1,019
1,054
1,278
98
Preussag in Figures
Turnover by sector
(in DM million)
Key Figures by Sector
1995/96
1996/97
1997/98
Energy and commodities
Energy
Trading
9,651
2,217
7,434
10,520
2,188
8,332
12,193
2,477
9,716
Technology
Plant engineering
Shipbuilding
Building engineering
7,071
2,883
1,760
2,428
8,028
3,638
1,170
3,220
7,534
3,035
1,086
3,413
Logistics and tourism
Logistics
Transport and tourism
1,750
1,750
–
1,832
1,832
–
15,017
2,128
12,889
483
490
407
Other subsidiaries
Steel and non-ferrous metals activities
6,089
5,788
–
25,044
26,658
35,151
1995/96
1996/97
1997/98
12,981
12,139
11,847
7,063
7,836
12,940
942
1,731
1,854
America
2,150
2,571
4,771
Remaining regions
1,908
2,381
3,739
25,044
26,658
35,151
Total
Turnover by region
(in DM million)
Germany
EU (excluding Germany)
Rest of Europe
Total
Personnel
at year-end
1995/96
1996/97
1997/98
Energy and commodities
Energy
Trading
14,524
10,827
3,697
13,675
10,077
3,598
13,447
10,066
3,381
Technology
Plant engineering
Shipbuilding
Building engineering
28,772
12,977
3,890
11,905
29,437
12,218
3,823
13,396
28,497
11,439
3,789
13,269
Logistics and tourism
Logistics
Transport and tourism
4,382
4,382
–
4,326
4,326
–
23,196
4,489
18,707
Other subsidiaries
99
2,682
2,581
1,423
Steel and non-ferrous metals activities
15,866
12,582
–
Total
66,226
62,601
66,563
Domestic
53,603
49,563
43,428
Abroad
12,623
13,038
23,135
Preussag in Figures
Key Figures
Preussag Group
1993/94
Companies included
in the consolidation
1994/95
1995/96
1996/97
1997/98
246
210
226
216
361
Total turnover
DM million
26,488
29,598
28,327
30,451
38,467
Consolidated turnover
DM million
23,210
26,353
25,044
26,658
35,151
Foreign turnover
%
46
48
48
55
66
Profit before tax
DM million
504
561
430
670
855
Tax
DM million
259
212
156
273
316
Net profit for the year
DM million
245
349
274
397
539
Earnings (DVFA/SG)
DM/share
18
28
17
24
32
Cash flow
DM million
1,373
1,536
1,159
1,571
1,906
Cash flow per share
DM
90
101
76
103
125
Internal financing
%
104.6
119.0
85.3
131.1
46.0
Fixed assets
DM million
6,760
6,916
7,039
6,643
9,948
6,563
Current assets
DM million
7,695
8,140
8,154
8,299
Shareholders’ equity
DM million
3,378
3,345
3,171
3,135
2,898
Liabilities
DM million
11,077
11,711
12,022
11,807
13,613
DM million
4,273
4,538
4,979
4,766
4,596
short- and medium-term DM million
6,804
7,173
7,043
7,041
9,017
14,455
15,056
15,193
14,942
16,511
long-term
Balance sheet total
DM million
Equity ratio
%
23.4
22.2
20.9
21.0
17.5
Capital expenditure
DM million
1,312
1,291
1,359
1,198
4,146
Tangible assets
DM million
1,127
1,107
1,112
1,053
3,818
Investments
DM million
185
184
247
145
328
DM million
1,038
974
1,044
1,071
1,324
on tangible assets
DM million
981
971
1,019
1,054
1,278
on investments
DM million
Depreciation
Equity/assets ratio
%
57
3
25
17
46
113.2
114.0
115.8
118.9
75.3
Fixed assets ratio
%
38.5
36.7
39.6
38.2
53.2
Total employees
(30 Sept.)
69,712
65,227
66,226
62,601
66,563
Personnel costs
DM million
5,432
5,481
5,441
5,534
5,687
1993/94
1994/95
1995/96
1996/97
1997/98
Subscribed capital
DM million
762
762
762
763
764
351
Preussag AG
Profit before tax
DM million
292
300
308
410
Tax
DM million
141
86
125
147
62
Net profit for the year
DM million
151
214
183
263
289
Number of shares
million
15.2
15.2
15.2
15.3
15.3
Dividend per share
DM
10.00
12.00
12.00
12.00
12.00
Bonus per share
DM
–
–
–
–
3.00
Tax credit per share
DM
4.29
2.57
2.57
5.14
5.14
Total dividend
DM million
152
183
183
183
229
Highest share price
DM
498
471
442
576
769
Lowest share price
DM
401
388
340
342
453
Share price at 30 Sept.
DM
443
424
383
495
578
100
Major Shareholdings
Nominal
Share Capital
in 1,000
Companies
Energy and Commodities
indirect
DM
150,000
*
100.0
–
DM
63,400
- 9,443
100.0
100.0
Deilmann-Haniel GmbH, Dortmund
DM
65,000
8,844
50.2
50.2
Preussag Anthrazit GmbH, Ibbenbüren
DM
40,000
432
100.0
100.0
Amalgamated Metal Corporation PLC,
London
£
16,908
7,510
99.3
–
Amalgamated Metal Trading Ltd., London
£
6,000
- 738
99.3
99.3
Can.$
21
11,942
99.3
99.3
DM
60,000
2)
100.0
–
Feralloy Corporation, Chicago
$
2,000
6,023
100.0
100.0
Delta Steel, Inc., Houston
$
2,000
7,680
100.0
100.0
Preussag Noell GmbH, Würzburg
DM
125,000
*
100.0
–
Preussag Wasser und Rohrtechnik GmbH,
Hannover
DM
60,000
*
100.0
–
Howaldtswerke-Deutsche Werft AG, Kiel
DM
140,000
*
100.0
–
FELS-WERKE GmbH, Goslar
DM
40,000
*
100.0
–
Wolf GmbH, Mainburg
DM
80,000
13,516
100.0
–
Elco Energiesysteme AG, Vilters
sfr
25,000
8,272
100.0
100.0
Chaffoteaux et Maury S.A., Chatou
FF
78,347
33,065
100.0
100.0
Kermi GmbH, Plattling
DM
30,000
*
100.0
–
Minimax GmbH, Bad Oldesloe
DM
40,700
*
100.0
–
VTG Vereinigte Tanklager und Transportmittel GmbH, Hamburg
DM
130,000
*
100.0
–
Lehnkering AG, Duisburg
DM
60,000
19,200
66.3
66.3
FF
47,783
144,625
67.0
67.0
ALGECO S.A., Paris/Mâcon
Hapag-Lloyd AG, Hamburg
3)
DM
135,000
119,534
99.6
–
Hapag-Lloyd Container Linie GmbH,
Hamburg 1)
DM
50,000
*
99.6
99.6
Hapag-Lloyd Fluggesellschaft mbH,
Langenhagen 3)
DM
85,000
*
99.6
99.6
Hapag-Lloyd Geschäftsreise GmbH, Bremen 3) DM
20,000
*
99.6
99.6
264,000
2)
49.9
49.9
TUI Deutschland GmbH & Co. KG, Hannover DM
50,000
2)
49.9
49.9
Travel Unie International Nederlande N.V.,
Rijswijk 3)
hfl
20,000
35,641
45.4
45.4
DM
10,050
1,073
49.9
49.9
Salzgitter Grundstücks- und
Beteiligungsgesellschaft mbH, Salzgitter
DM
139,700
*
100.0
–
Preussag Immobilien GmbH, Salzgitter
DM
48,050
*
100.0
100.0
TUI Touristik Union International
GmbH & Co. KG, Hannover 3)
DM
3)
Robinson Club GmbH, Hannover
Other Companies
total
Deutsche Tiefbohr-AG, Bad Bentheim
W. & O. Bergmann GmbH & Co. KG,
Düsseldorf
Logistics and Tourism
Shareholding (%)
Preussag Energie GmbH, Lingen
Premetalco, Inc., Rexdale
Technology
Result for
the Year
in 1,000
3)
Preussag AG Metall, Goslar, is a branch of Preussag AG, which has no active
* Profit transfer agreement
1)
Divergent financial year
2)
Result is distributed
to shareholder
3)
Abbreviated financial year
101
business.