Kapsch Group
EN
People and Technology, Technology and People. Annual Report on Fiscal Year 2012/13.
always one step ahead
Fiscal Year 2012/13 Overview. Highlights of the Fiscal Year from 1 April 2012 to 31 March 2013. Kapsch Group
Headcount at all-time high
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Increase in R&D activities
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Second-highest revenues in the history of the company Stronger international presence Successful start to new business segment
120 years of Kapsch
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n
n
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More than 5,000 employees for the first time in the company’s history. This corresponds to an increase of 9 % to 5,266 in comparison to 31 March 2012. Europe posted the strongest growth in this respect with an increase of 282 employees. The Kapsch Group invested EUR 96.6 million or more than 10 % of its revenues in research and development. Milestone in harmonizing of European road networks: successful trial run of EETS (European Electronic Toll Service) in Poland. The Kapsch Group generated consolidated revenues of EUR 928.0 million, despite the tricky overall conditions. New locations in Portugal, Morocco, Brazil and Singapore. Kapsch Smart Energy, a subsidiary of the Kapsch Group founded in 2010, has enjoyed its first successes in the field of smart energy management: smart metering was rolled out for 13,000 private households and businesses in Feldkirch, Austria, while together with Wien Energie Stromnetz, Kapsch Smart Energy is implementing a pilot project in Vienna and Lower Austria. Johann Kapsch founded the company in 1892 as a precision-mechanics workshop. 120 years later, the Kapsch Group is a globally renowned technology company.
Kapsch TrafficCom
First incident detection system in U.S.A. Contract extension in Australia
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Kapsch won its first contract to deliver an incident detection system in the U.S.A. A system facilitating video analysis and the capture of traffic data, IDS 2.0, was implemented in the Washburn Tunnel in Houston, Texas. The contract for the supply of on-board units to Australia was extended. Since 1999, Kapsch has delivered more than 6.5 million on-board units for toll routes in Melbourne and Sydney.
Kapsch CarrierCom
New business areas
World first: railway lines equipped with ETCS Level 2 but no fixed exterior signals
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In the “Public Operators” segment, Kapsch now offers communication solutions for public transportation companies. The “Machine Networks” segment implements solutions for intelligent asset management. Kapsch CarrierCom and Siemens have equipped the first stretch of newly constructed railway line in Germany with the ETCS (European Train Control System) Level 2. In what is a world first, conventional fixed exterior signals will not be used anywhere along the entire 230 km-long stretch.
Kapsch BusinessCom
Stronger CEE presence
Network outsourcing for Magna Steyr
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By integrating Data Storage s.r.o, the Czech technical specialist in the field of data archiving, migration and disaster recovery, Kapsch has expanded its service portfolio in the CEE region with yet another strategically important component. Kapsch is operating the local area network for the leading global development and production partner of car manufacturers and, in conjunction with Cisco, has created more than 11,000 LAN ports in the network infrastructure to link international locations with the headquarters in Graz.
Contents. Letter from the Management
Letter from the Management
Executive Board and Supervisory Board
6
About Us
Our Profile
8
Subsidiaries of the Kapsch Group
Subsidiaries of the Kapsch Group
10
The View Ahead
Vision
14
Mission
15
Values
15
Strategy
16
Employees
18
Sustainable Management
19
Social and Cultural Responsibility
20
Kapsch TrafficCom Group
Overview of the Fiscal Year
24
Strategy, Business Segments and Markets
25
Selected Projects
27
Executive Board at Kapsch Aktiengesellschaft
42
Supervisory Board at Kapsch Aktiengesellschaft
43
Executive Board at Kapsch TrafficCom AG
44
Executive Board at Kapsch CarrierCom AG
45
Executive Board at Kapsch BusinessCom AG
45
Group Management Report
Group Management Report
48
Consolidated Financial Statements
Consolidated Financial Statements as of 31 March 2013
74
Auditor’s Report
Auditor’s Report
128
Services
Glossary
132
Addresses
Back Cover
iKapsch
Back Cover
Kapsch CarrierCom Group
Overview of the Fiscal Year
30
Strategy, Business Segments and Markets
31
Selected Projects
33
Kapsch BusinessCom Group
Overview of the Fiscal Year
36
Strategy, Business Segments and Markets
37
Selected Projects
39
Imprint Media owner and publisher: KAPSCH-Group Beteiligungs GmbH Place of publishing: Vienna, Austria At this point we would like to thank all the photographers who have kindly allowed us to use their photos in this annual report. This annual report was created with the greatest possible care, and all data has been checked conscientiously. Nevertheless, the possibility of layout and printing errors cannot be completely excluded. Slight differences in calculations may arise due to the rounding of individual items and percentages. Disclaimer Certain statements contained in this report constitute “forward-looking statements.” These statements, which contain the words “believe”, “intend”, “expect” and words of similar meaning, reflect management’s beliefs and expectations and are subject to risks and uncertainties that may cause actual results to differ materially. As a result, readers are cautioned not to place undue reliance on such forward-looking statements. The company disclaims any obligation to publicly announce the result of any revisions to the forward-looking statements made herein, except where it would be required to do so under applicable law.
Contents | 1
Three-Year Review of Key Data. 2010/11
2011/12
2012/13
+/-
Revenues
Earnings figures
in million EUR
829.9
984.1
928.0
-6 %
EBITDA
in million EUR
90.9
99.6
58.4
-41 %
in %
11.0
10.1
6.3
in million EUR
66.6
67.0
25.5
EBITDA margin EBIT EBIT margin Profit before tax
8.0
6.8
2.7
in million EUR
in %
52.8
51.4
23.1
-62 % -55 %
Profit after tax
in million EUR
38.2
41.2
18.4
-55 %
Free cash flow
in million EUR
-3.1
-42.8
42.0
-198 %
Research & development
in million EUR
55.8
84.8
96.6
14 %
Employees
as of 31 March
4,096
4,826
5,266
9 %
31 March 2011
31 March 2012
31 March 2013
+/-
Total assets
Statement of financial position figures
in million EUR
830.6
955.8
950.1
-1 %
Total equity
in million EUR
273.1
371.9
345.1
-7 %
Equity ratio
in %
32.9
38.9
36.3
Return on equity
in %
24.4
18.0
7.4
Financial liabilities
in million EUR
203.5
221.0
215.6
-2 %
Net debt (-)/assets (+)
in million EUR
-105.6
-104.7
-90.4
-14 %
Gearing
in %
Capital employed
in million EUR
Net working capital
in million EUR
Business segments
38.7
28.1
26.2
476.6
592.8
560.8
-5 %
283.8
406.8
358.4
-12 %
2010/11
2011/12
2012/13
+/-
488.9 (53 %)
-11 %
Traffic Revenues (share in revenues)
in million EUR
388.6 (47 %)
EBIT (EBIT margin)
in million EUR
48.9 (13 %)
Employees (share in group)
as of 31 March
2,167 (53 %)
Revenues (share in revenues)
in million EUR
234.6 (28 %)
EBIT (EBIT margin)
in million EUR
Employees (share in group)
as of 31 March
549.9 (56 %) 42.2
(8 %)
2,705 (56 %)
219.3 (22 %)
15.3
(3 %)
-64 %
3,013 (57 %)
11 %
189.1 (20 %)
-14 %
Carrier 11.3
(5 %)
17.7
(8 %)
4.7
(2 %)
-73 %
743 (18 %)
736 (15 %)
715 (14 %)
-3 %
231.9 (28 %)
251.6 (26 %)
297.2 (32 %)
18 %
Enterprise Revenues (share in revenues)
in million EUR
EBIT (EBIT margin)
in million EUR
Employees (share in group)
as of 31 March
(2 %)
1,112 (27 %)
5.5
Regions
(2 %)
1,302 (27 %)
4.5
2010/11
2011/12
(2 %)
-1 %
1,438 (27 %)
4.5
10 %
2012/13
+/-
8 %
Revenues (share in revenues) Austria
in million EUR
260.5 (31 %)
252.3 (26 %)
271.5 (29 %)
Central and Eastern Europe
in million EUR
221.6 (27 %)
377.4 (38 %)
343.6 (37 %)
-9 %
Western Europe
in million EUR
143.8 (17 %)
147.7 (15 %)
120.3 (13 %)
-19 %
Americas
in million EUR
(5 %)
(7 %)
(9 %)
17 %
Rest of World
in million EUR
161.9 (20 %)
138.1 (14 %)
112.1 (12 %)
-19 %
Austria
as of 31 March
1,845 (45 %)
2,034 (42 %)
2,206 (42 %)
8 % 13 %
42.2
68.7
80.5
Employees (share in group) Central and Eastern Europe
as of 31 March
583 (14 %)
843 (17 %)
950 (18 %)
Western Europe
as of 31 March
406 (10 %)
431
(9 %)
434
(8 %)
1 %
Americas
as of 31 March
361
(9 %)
361
(7 %)
437
(8 %)
21 %
Rest of World
as of 31 March
901 (22 %)
1,157 (24 %)
1,239 (24 %)
7 %
Revenues
EBIT & EBIT margin
EBITDA & EBITDA margin
in million EUR
in million EUR/in %
in million EUR/in %
928.0
2012/13
2011/12
984.1
2010/11
829.9
2012/13
2.7%
25.5
2011/12
6.8%
67.0
2011/12
2010/11
8.0%
66.6
2010/11
R&D expense
Total equity and total assets
in million EUR/as % of revenues
in million EUR
10.4%
2012/13
2011/12
8.6%
2010/11
6.7%
96.6
84.8
55.8
Total equity 950.1
345.1
2011/12
955.8
371.9
2010/11
58.4
10.1%
11.0 %
99.6
90.9
Training costs/headcount
Total assets
2012/13
6.3%
2012/13
830.6
273.1
in million EUR/Employees
2.3
2012/13
2011/12
5,266
4,826
2010/11
1.7
2.9
4,096
Revenues & EBIT margin, Segment Traffic
Revenues & EBIT margin, Segment Carrier
Revenues & EBIT margin, Segment Enterprise
in million EUR/in %
in million EUR/in %
in million EUR/in %
3.1%
2012/13
2011/12
488.9
7.7%
2010/11
549.9
12.6%
388.6
2012/13
2.5%
189.1
2011/12
8.1%
2010/11
1.5%
2012/13
219.3
4.8%
234.6
2011/12
297.2
1.8%
2010/11
251.6
2.4%
231.9
Revenues by regions 2010/11
Revenues by regions 2011/12
Revenues by regions 2012/13
in % of revenues
in % of revenues
in % of revenues
19.5 %
7.0 %
5.1 %
Austria
17.3 % 31.4 %
Central and Eastern Europe
14.0 %
15.0 % 25.6 %
Western Europe 26.7 %
Americas Rest of World
8.7 % 12.1 % Austria Central and Eastern Europe
29.3 %
Western Europe 38.3 %
Americas Rest of World
Austria
13.0 %
Central and Eastern Europe Western Europe
37.0 %
Americas Rest of World
By generating useful mechanical energy, the steam engine allowed humanity to rise above the limitations of human and animal power or even wind and water power.
The development of the precision clock made it possible to precisely determine one’s position. The GPS systems of today are still based on high-precision clocks, which are now located on satellites.
The age of manned flight began with the first flight of a hot air balloon by Montgolfier.
The optical telegraph (semaphore) opened up the transmission of signals over long distances and is the forebear of modern telecommunications.
With the invention of photography followed by film, humanity cast off temporal restrictions of observation. It was no longer necessary for an observer to be present at the same time and place as an observed phenomenon.
Rockets, followed later by satellites, freed us from the surface of the earth. As a result, we were able to learn more about the earth, agriculture and environmental protection.
The invention of programmable computing machines – in other words the fact that the program itself can be part of the computer’s input – eliminated the restrictions of problem-specific computing machines, laying the foundation for today’s digital technology.
With X-rays and later NMR (nuclear magnetic resonance) and computer-aided tomography, doctors are now able to see the insides of living persons.
16 Milestones of Humanity’s Technological Development. Since the start of the industrial revolution, we have seen an increasing number of inventions that have changed our lives. Any selection of these is naturally a personal one. In my eyes, the inventions listed here were particularly important because every one of them opened up a new path into the future. Without these inventions, our lives would be very different. Every day, high-tech companies like the Kapsch Group employ these and many other inventions in new ways to improve our lives. Prof. Anton Zeilinger Chairman of the Institute for Experimental Physics, University of Vienna Vienna Center for Quantum Science and Technology
The ship’s propeller and the steam locomotive cleared the way for new transportation options.
The discovery of electromagnetic induction by Faraday played a key role in electric generators and electric motors. The transmission of electrical energy allowed the generation of energy to be separated from its point of use over large distances.
The telephone and typewriter opened up new possibilities for the transmission of information. Today’s wireless networks simultaneously transmit all kinds of information but are still controlled to a large extent by keyboards that still resemble typewriters.
Electromagnetic waves made radio and television possible, paving the way for today’s digital communication. Heinrich Hertz discovered it purely out of curiosity, without having any particular application in mind.
The electron scanning microscope gave humanity a mode of observation not based on light, opening up a world far smaller than was accessible to optical instruments – extending down to molecules and atoms.
The laser was long considered the ideal solution for still unknown questions. Today, it is used across a tremendous range of applications: from cash registers to CD players to medical technology.
The microchip was also initially considered an idea without practical applications. Today, it is practically impossible to imagine life without it.
Optical fibers made possible broadband communication that far outstripped the limitations of the electromagnetic spectrum.
1892 Johann Kapsch founds a precision workshop in Vienna that produces Morse telegraph devices and telephones. 1918 Kapsch begins manufacturing capacitors and dry batteries. 1923 Entry into radio manufacturing. Kapsch soon becomes a cofounder of RAVAG, the Austrian company Radio Verkehrs AG, thereby ringing in the age of radio. 1930 First television demonstration with a complete transmission and reception system in Austria – a revolutionary event at the Kapsch pavilion of the Vienna Trade Fair.
1946 In cooperation with Austrian Post, Kapsch plays a key role in the reconstruction of the telephone network after World War II. 1955 Kapsch brings the first black and white television onto the market: the model TFS-56. 1958 Capri, the first fully transistorized portable radio. 1965 The company develops a new low-noise dialing disk for telephones that remains in use up to the 1980s. 1967 Presentation of the first Kapsch color television: the Chromomatic. 1969 Development of an OHS system for semi-electronic telephone exchange system operation.
Milestones of Technology. In the Interests of Humanity. Kapsch. Since its founding in 1892, Kapsch has been dedicated to its role as an innovator and technological pioneer. From the production of the first portable radios to the spread of telephone technology within Austria to ground-breaking toll projects around the world: when it comes to technological milestones in communication and mobility, Kapsch has always been a decisive step ahead. At the same time, we remain committed to employing technological developments efficiently and responsibly in the service of our customers. We recognize and appreciate technology as an instrument for opening up possibilities and improving many aspects of our lives. This year’s theme for our annual report “People and Technology” is for us as varied as we humans ourselves. Many aspects enter into this: An artist views the topic differently than a Kapsch researcher, a child expects that adults will handle technology responsibly. Entirely personal perspectives on the topic of technology – viewed through the eyes of a diverse range of people who are involved with the Kapsch Group.
1970 Installation of train radio for Austrian Railways. 1979 The medium-range radar system Koralpe essential to aviation safety is built. 1980 Start of digital telephony in Austria with Schrack. 1984 Kapsch enters into mobile telephony and equips the Austrian army and Austrian Railways with the first – still very large – devices. 1994 Kapsch equips multiple European railways with train radio. 1995 Order for realization of an Austria-wide “ecopoint system”, the world’s first emission-based transportation management system.
1999 Implementation of the world’s first electronic toll system for multi-lane free-flow traffic on the Melbourne City Link highway. 2003 Kapsch realizes in Austria the world’s largest comprehensive electronic truck toll system. 2010 Kapsch takes over the GSM/GSM-R division of Nortel, making it a major provider in this area. 2012 Kapsch becomes a key partner to Apple in Austria. Kapsch Smart Energy starts a pilot project for integrated energy management.
Letter from the Management.
Kari Kapsch, Chief Operating Officer
Georg Kapsch, Chief Executive Officer
Franz Semmernegg, Chief Financial Officer
Ladies and gentlemen, The Kapsch Group has always been involved and taken an interest in two main areas: communication and mobility. Both are fundamental human needs. This is why we are devoting this year’s Annual Report to the relationship between people and technology. The world and particularly the industries we are active in are constantly changing. We want to play an active role in influencing this progress. In the past fiscal year we have made some important decisions that both ensure this goal will be achieved and facilitate sustained international growth: we have established new business segments, we have managed to win initial projects in strategically important markets, we have bolstered our activities in the field of research and development and, above all, we have invested in our staff. In what is a very intensive and challenging transition period for the company, we still succeeded in generating the second highest revenue figure in Kapsch’s history of EUR 928.0 million. Forward-facing approach and family business, technological innovation and tradition, global company and Austrian roots: it is these apparent contradictions that make our Group so special. Coupled with the commitment and the skills of our staff, they constitute the foundations for the success of recent years. They are also the cornerstones of our growth strategy. Solid core business. Earnings dropped in the past fiscal year due to delays in some large projects in the Traffic segment. The Carrier segment also posted lower figures, most of which involved the public operator business, since the difficult market conditions mean investments in modernizing networks are sluggish. While our revenues came in at a satisfactory level of EUR 928.0 million, we did not quite meet our targets. The profit from operating activities (EBIT) fell from the high figure of the previous year to EUR 25.5 million (EUR -41.5 million or -62 %) for the reasons mentioned above, while EBITDA dropped accordingly to EUR 58.4 million (EUR -41.2 million or -41 %). In spite of the lower contribution to earnings, we still managed to make a substantial improvement to net cash flow from operating activities in the past fiscal year from EUR -23.0 million to EUR 72.5 million. This was primarily attributable to the significant reduction in receivables. All told, business remains sound and we continue to see major future potential in the markets we are active in.
6 | Letter from the Management
Rise in headcount. The fact our strategy is still focused on growth is best illustrated by taking a look at our staff: the number of employees rose in the fiscal year 2012/13 by 9 % to 5,266. The growth in Austria totaled 172 new employees, with another 110 joining in other European countries, 76 in the U.S.A. and 82 on other continents. For the first time in our history, more than 5,000 people are working worldwide in the Kapsch Group and its subsidiary companies. All business segments growing. During the 2012/13 fiscal year we worked steadily on strengthening our international positions in all three business segments – Traffic, Carrier and Enterprise. While the year did bring many challenges with certain projects, it also produced many successes: our companies worldwide performed extremely well in particular with electronic toll systems, digital radio communications and taking over IT services. Revenues increased once again on the home market of Austria and in America. The decline in Eastern Europe as well as in the Rest of World category is largely due to significant nationwide toll projects being implemented in both regions in the previous fiscal year. The reduction in Western Europe chiefly results from the lower “Public Operators” revenues in the Carrier segment. The share of revenue realized abroad was maintained at more than 70 %. Kapsch TrafficCom managed to continue strengthening its international market position for innovative solutions in the field of intelligent transportation systems. While revenues dropped slightly after four years of sometimes very dynamic growth, falling from EUR 549.9 million in the previous year to EUR 488.9 million, there are still many successful projects that should underpin our growth strategy in the long run. Kapsch CarrierCom strengthened its position as an internationally renowned expert in digital train communications (GSM-R). In the 2012/13 fiscal year, further notable companies opted for the new 3GPP Release 4 Voice Core technology developed by Kapsch CarrierCom. The decline in revenues in the Carrier segment by 14 % to EUR 189.1 million mainly affected the public network operator business and is primarily attributable to the expected phasing out of maintenance contracts from the Nortel takeover. Yet there are new contracts in this segment too which secure our long-term market position, such as the contract awarded by the Telekom Austria Group. Kapsch BusinessCom posted very encouraging rates of growth in the Enterprise segment. The company continued to expand its position as a service partner in Austria and the CEE region and raised its revenues here by 18 % or EUR 45.6 million to EUR 297.2 million. This growth is therefore far in excess of the industry average. We would like to highlight the closer cooperation with Apple, which has made Kapsch BusinessCom a much sought-after partner for the integration of mobile devices in corporate networks. Looking ahead. Developments in our business areas in 2012/13 reveal the strong positions held by the Kapsch Group in Europe and on the global market. We are still pursuing the goal of achieving sustainable growth. To this end we shall continue down the path we have chosen, develop innovative products and services and be close to our customers in relevant markets around the world. We would like to take this opportunity to thank our employees as well as all those who have worked with us in this fiscal year for their trust and support, and we wish you, the reader of our Annual Report, an interesting and informative read.
Georg Kapsch
Kari Kapsch
Franz Semmernegg
Letter from the Management | 7
About Us. Our Profile. The Kapsch Group. A precision-mechanics workshop was founded in Vienna in 1892 by Johann Kapsch for manufacturing telegraph appliances and telephones, thereby laying the foundations for the modern-day Kapsch corporation. Since then, this family-run company has consistently adapted to the requirements of the time and has always broken new ground. 120 years ago Kapsch produced hand-made products for communication. Today, the Kapsch Group is a global technology group that plays an important role on the worldwide market in the future industries of Intelligent Transportation Systems (ITS) and telecommunication solutions for the railway, whilst also offering information and communication technology services. In its roughly 100 branches and representative offices around the world, the group employs more than 5,000 people.
Algeria Argentina Australia Austria Belarus Brazil Bulgaria
8 | About Us
Canada Chile China Croatia Czech Republic Denmark France
Germany Hungary Ireland Italy Kazakhstan Macedonia Malaysia
Mexico Morocco Netherlands New Zealand Norway Poland Portugal
Romania Russia Serbia Singapore Slovakia Slovenia South Africa
Spain Sweden Taiwan United Arab Emirates United Kingdom U.S.A.
As a family-run enterprise based in Vienna, Kapsch has stood for intensive research and development as well as the consistent use of new technologies for more than 120 years.
2010 n
n
n
cquisition of Mark IV A IVHS and major contracts in South Africa and Poland akeover of GSM-/GSM-R T business of Nortel stablishment of E Kapsch Smart Energy for solutions regarding integrated energy management
2011 n
n
elocation of the R manufacturing of GSM/ GSM-R systems from China to Vienna ales partnership S agreement between Kapsch and Google
2012 n
n
n
artnership with Apple P in Austria
2013 n
ITS contracts in the U.S.A., Australia and Brazil ooperation with C Siemens in equipping a new stretch of German railway with the European train safety system ETCS Level 2
n
ruck parking solution T in the U.S.A. and successful trial run for European Electronic Toll Service in Poland akeover of GSM-R T business from NEC in Portugal
Kapsch TrafficCom is a provider of intelligent transportation systems (ITS). Our systems employ information and communication technologies to support and optimize road transportation, including infrastructure, vehicles, users and industry. Our solutions in the application fields of road user charging, urban access and parking, road safety enforcement, commercial vehicle operations, electronic vehicle registration, traffic management and V2X cooperative systems help to provide funding for infrastructure projects, to reduce congestion as well as further environmental pollution caused by road traffic, to increase traffic safety and security as well as to enhance vehicle and fleet productivity and traveler convenience. Kapsch CarrierCom is a global systems integrator and offers end-to-end telecommunications solutions for mobile telephony and fixed-line operators, railway operators, local public transport companies and enterprises requiring real-time asset management solutions. Alongside solutions for corporate and business-critical telecommunications, Kapsch CarrierCom also offers a full range of services. With a strong focus on innovation in a total of eight research and development centers throughout Europe and Asia supported by strategically important partnerships, Kapsch CarrierCom numbers among the most reputed experts in the telecom industry. Kapsch BusinessCom is a renowned service partner for information and communication
Gerald Reischl
technology (ICT) in Austria and Central and Eastern
Chief Editor, Futurezone
Europe with three portfolio segments for customers of all sizes and sectors: ICT Facility Solutions, ICT
Technology is an integral part of my life,
Infrastructure Solutions and ICT Workspace &
which is why my motto is “live technology”.
Applications Solutions. Besides system integration
As a technology journalist I try to experience
and continuous optimization, Kapsch BusinessCom
what I write and speak about, since this is
is increasingly involved in the complete operation
what enables me to be credible and authentic.
of ICT solutions. Kapsch BusinessCom’s portfolio
Technology changes us as people and our
includes the operation of earthDATAsafe, one of the
everyday lives. For the better. Technology
largest high-security computer centers in Europe.
drives change, accelerates our lives, and facilitates our daily needs and is an integral part of our identities. Technology is the future – but we should never forget humanity.
About Us | 9
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Subsidiaries of the Kapsch Group | 11
Kapsch stands for global connectivity and openness. More than 5,000 employees work around the world to serve our customers at companies of the Kapsch Group. Dedicated, competent, responsible.
We have created interactive experiences around the themes of our annual report. With the iKapsch app for your iPhone or Android smartphone you can explore an additional multimedia dimension to our content. Read the user instructions for iKapsch on the back cover to immerse yourself in the world of Kapsch.
capture
I see technology as an integral part of our daily lives. We take it for granted when making coffee in the morning, when we talk to our colleagues around the world or when we drive back home at the end of the day. But alongside these everyday benefits I believe that technology is an enabler for human creation. This notion also guides us in delivering technology solutions tailored to the needs of and to simplify the lives of our global customers. Japjeev Kohli Vice President, Project Management Office at Kapsch TrafficCom
The View Ahead. Vision. Our vision: Always one step ahead.
For the Kapsch Group, technology primarily serves one purpose: to support people in fulfilling their communication and mobility needs. With this philosophy we generate sustained added value for society in our three business segments of Intelligent Transportation Systems, Carrier Solutions and Enterprise Solutions. Through responsible action and a permanent focus on innovation, we strive to remain a crucial step ahead to the benefit of our customers, partners and investors, and in the interests of our employees, society and the environment. Kapsch always looks to the future. Visionary thinking focused on success has been a given at the Kapsch Group for 120 years. Our Group exerts a crucial influence on technological developments and thus makes a sustained contribution to shaping the future. Kapsch is always innovative. Our desire for quality and innovation leadership is reflected in our products and solutions. In our global research and development centers, we employ new technologies in practical solutions to the benefit of our customers. Here, our employees deploy their know-how expertly and with enthusiasm, and this commitment makes us a reliable partner and pioneer for innovation in what is a dynamic market environment. Kapsch always focuses on performance. The products, services and solutions of the Kapsch Group are as diverse as our companies and markets. We always work towards long-term objectives. This fosters trust and enables us to build up long-term business relationships with our customers. Kapsch is always aware of its responsibilities. Oliver Schmerold
Business success for the Kapsch Group means
Director of the Austrian Automobile,
acting responsibly and in a sustainable manner. This
Motorcycle and Touring Club (ÖAMTC)
is why we support numerous educational and social initiatives, promote exceptional cultural projects
What is most important for me is that
and take a responsible approach to using natural
technology should be for people, not the
resources.
other way round. By taking a conscious and responsible approach, technology means development, movement and quality of life.
is assured by focusing on key technological
Technology connects and links people. Tech-
developments, significant future markets and by
nology facilitates cross-border communication
being close to our customers. This is why we have
and mobility. Technology shapes our habitat,
5,266 employees in approximately 100 companies
opens up new paths and perspectives.
on all six continents. Kapsch innovates for people.
And, technology provides security.
14 | The View Ahead
Kapsch is always close to you. Profitable growth
Mission. Our mission.
Consistent innovation, committed employees and responsible business practices all characterize the Kapsch Group. By focusing our activities on the core topics of mobility and communication we have based our fundamental business on profitable and global growth. As a modern, family-owned enterprise we act with a long-term perspective in mind, living our values and striving to be the innovation leader in attractive and rapidly growing market segments, all with the same goal of being “always one step ahead” in the future too.
Values. Creating and appreciating values.
Values are an integral part of the Kapsch corporate culture. Our activities create lasting value for the
Bettina Gneisz-Al-Ani
future and make an active contribution towards
Managing Director, FH Wien University of
responsible, socio-political development.
Applied Sciences
The employees, the management and the executive
Good technology makes our lives easier and
board members of the Kapsch Group and its
improves what we can accomplish. Excellent
subsidiary companies all live and work by these
technology achieves the same result with
values:
people who – supposedly or actually – do not like or understand technology.
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Responsibility. We act in the interests of the company, bear the consequences of our actions and take initiative.
n
Respect. Our cooperation is based on mutual recognition.
n
Performance. Each individual employee contributes to achieving our goals with their dedication and success.
n
Discipline. Adhering to rules enables us to work together in accordance with our values.
n
Transparency. We are open in dealing with information. This makes decisions traceable.
n
Freedom. Individual scopes of action broaden our personal engagement.
n
Family. We all pull in the same direction and support one another.
n
Dynamic. The determination toward continuous change enables us to achieve the set goals.
The View Ahead | 15
Strategy. Long-standing companies steeped in tradition, like the Kapsch Group, build their success on clearly-defined principles. Our Group is growing today because we have a clear vision and consistently pursue our strategy to achieve our goals. Solutions for people. We make progress as a company because we adapt flexibly to the given general conditions, influence them and seize our opportunities. We inspire our customers worldwide because we develop excellent and innovative solutions. For them, and with them. Our understanding of technology does not end with what is technologically feasible – for us, this is where it all begins. We are only satisfied when our customers are satisfied too, when they readily use our solutions and can integrate them into their everyday processes. To achieve this, we have learned to listen very attentively and to understand what Birgit Kuras
our customers and their business partners really
Member of the Management Board
need. We see ourselves as facilitators, between
of Wiener Börse AG
the needs of people and the best technologies which are available to fulfill these requirements. Our
In the age of modern stock exchange
employees endeavor again and again to look at our
technology – with its high-frequency trading
world from the perspective of partners, customers
or algorithmic trading – it seems at first
and users and to draw the right conclusions.
glance that “technology over people” applies very much in the stock market world. I am
Maximum performance from a sense of
convinced that stock exchanges require an
responsibility. We know that we bear a great
optimal combination of “people and techno-
degree of responsibility as a large company.
logy”, offering the reliability and security of
Our solutions and services contribute to safe
technical systems coupled with the ability
and efficient communication between people
of people to size up and evaluate situations
or machines, they control complex systems and
properly when unexpected events occur.
support our mobility. Our technologies are partly responsible for ensuring that traffic flows safely and that communication is possible. This is what we
bear in mind, and this is what drives us on, day after day, to reach our maximum performance in every project. We are responsible for ensuring that critical systems run smoothly. To this end we always focus on people that use the technologies, and we also work with them, not just with the technology itself. Building blocks of our success. To provide you with some insight into our world, we present to you one of the building blocks of our success in each annual report. After focusing in previous years on our products and our values, this time round we want to explore the relationship between people and technology. As a company that actively wants to shape the future of our society, we want to – or indeed have to – understand how people see us and our technologies, what they think about current trends and developments, how our solutions can support them the best and where they encounter difficulties in implementing them. Philosophy. Innovation, a forward-facing approach and the mature values of a family-run company: these are the pillars of our corporate philosophy. We feel equally responsible for our employees as we do for our customers, partners and shareholders. We want to make a contribution to shaping society with our technologies, but not by neglecting aspects of economic and ecological sustainability.
16 | The View Ahead
Sustainability. Sustainable business has long since been a significant factor of economic success and helps in today’s business climate to secure a successful position on the capital markets. In Austria, the VÖNIX (VBV Austrian Sustainability Index) tracks listed Austrian companies which play leading roles with their social and environmental commitment. Kapsch TrafficCom AG, part of the Kapsch Group, has been included in this index since 22 June 2009. We deploy resources of all kinds in a sparing and cost-efficient manner. We pay attention to the welfare and the satisfaction of our employees. This lays the foundation for constructive interaction focused on success. Risk behavior. As a technology corporation, the Kapsch Group operates in an extremely dynamic environment. Proper risk assessment is therefore an integral part of our everyday business. The primary objective of our risk management is to deal with risks in a controlled and deliberate manner as opposed to avoiding risks completely. We want to recognize and seize new opportunities in good time. This means that risk management makes a valuable contribution to the development of our Group. We only undertake larger business risks if this is justified by the prospects of the given project. We always withdraw from engagements where there is an excessive discrepancy between the risk and the potential benefit for the Kapsch Group and for our employees. Given the particular importance of the project business, this is the focal point of our risk management. Fair competition. The Kapsch Group, as a corporate enterprise, safeguards its long-term interests by conducting itself fairly, transparently and professionally on the market. The code of conduct of the Kapsch Group prohibits any restriction of free competition. Breaches of national and international anti-trust regulations or any other rules on competition would have grave financial consequences and be detrimental to the Group’s image. This is why our business transactions are based solely on legal regulations and effective guidelines on conduct. Promoting diversity. The Kapsch Group promotes and benefits from the diversity of social systems. We respect the dignity and personality of each employee. This is why we respect one another and perceive differences as chances that should be consciously fostered. We value the individuality of our employees, offer them all the same opportunities and prevent social discrimination. Encouraging diversity is a strategic goal of the Kapsch Group and embraces all of our business segments. Requirements of business partners. The Kapsch Group takes responsibility for its business and sets high standards in all organizational areas. We also demand excellent performance and integrity from our business partners, who accompany and support our sustainable growth. All of our business relationships with customers, suppliers and partners are based on high-quality standards. The products and services delivered to us must be fully compatible and price-competitive. A company and “its” people. Kapsch is and will remain a technology company. This company has enjoyed sustained success because our employees are enthusiastic and fully committed to ensuring that other people – customers, partners and shareholders – benefit in the best possible way from our services. Since we repeatedly look at our world and technology from the perspective of other people, we can provide services that meet their requirements.
The View Ahead | 17
Employees. More than 5,000 employees worldwide make a crucial contribution to the success of our Group, and with their skills, efforts and creativity they inspire us every day to break new ground. We are proud of our employees, offer them working conditions befitting of this respect and promote their talent as best we can. 9 % growth in new employees. The growth strategy of the Kapsch Group is well reflected in the headcount. The number of employees rose in the fiscal year 2012/13 from 4,826 to 5,266 – which means an increase of just over 9 %. The following table offers a comparison of the last three fiscal years: 31 March 2011
31 March 2012
31 March 2013
2,167
2,705
3,013
Employees by segment Traffic Carrier Enterprise Others Total
743
736
715
1,112
1,302
1,438
74
83
100
4,096
4,826
5,266
Employees by regions Austria
1,845
2,034
2,206
Central and Eastern Europe (excl. Austria)
583
843
950
Western Europe
406
431
434
Americas
361
361
437
Rest of World
901
1,157
1,239
4,096
4,826
5,266
Total
Values unite us and produce growth. The growth of the Kapsch Group is based on the values of dynamic, respect, responsibility, family, discipline, performance, transparency and freedom. Especially in times of global growth, our corporate culture has made a crucial contribution to helping our employees identify with Kapsch. The values of the Kapsch Group foster successful cooperation around the world that is full of respect and mutual appreciation. These common values make it easier for new employees to fit in with our organization. Comprehensive range of training and further education. Drawing on the philosophy of the Kapsch Group we offer diverse training and further education opportunities for our employees. Individual training programs are available for all employees – ranging from specific professional modules to language courses and training in interpersonal skills. Throughout a two-year trainee program, future executives learn about the different departments of the Kapsch Group, thereby consolidating their know-how in a practical manner. Commendable working conditions. Our employees play their part in developing the Kapsch Group and safeguarding its long-term success. We offer them working conditions befitting of their contribution and fair compensation, as well as conducting annual staff interviews and implementing an internal continual improvement process. Additionally, for more than 70 years the Kapsch Group has had one of the most renowned apprentice training programs in the technology industry in Austria, one that is steeped in tradition. Depending on their length of service and the success of the company we pay contributions for our employees into external pension funds in many countries. We also permit our employees to participate in the profits generated by the company through a profit participation model. Our executives as well as sales staff benefit from the variable components to their salaries as well.
18 | The View Ahead
Increasing the ratio of female employees. The Kapsch Group promotes women and has set the
Lothar Roitner
goal of raising the proportion of women in the
Managing Director of the Association of
Group. This is why we are committed to specific
Austrian Electrical and Electronics Industries,
programs such as “FIT Frauen in die Technik”,
Chairman of the University of Applied
“techNIKE” or “FemTech”. Our promotion efforts
Sciences Technikum Wien
are complemented by numerous partnerships with schools, universities of applied sciences and
Technology today is what drives modern
universities as well as the “Women in Sales” trainee
society more than ever before. It penetrates
program. A women’s representative safeguards the
all areas of our lives, from energy through
interests of all those involved.
telecommunications and transport to healthcare, and therefore enriches our lives.
In the spirit of equal opportunity, it goes without saying that parental leave is also supported in equal measure for both mothers and fathers at the Kapsch Group. Flexible working models help to achieve a work-life balance. Working models and special frameworks for re-entering the market take account of the varied requirements in day-to-day professional and personal life. Linguistic and cultural diversity. Geographical and cultural borders are non-existent in an international corporation like the Kapsch Group. Transcultural and multilingual exchanges are therefore an important part of daily life. To this end we support our employees with language courses. Awareness and appreciation of diversity is fostered and nurtured in training on coping with diversity and interculturalism.
Sustainable Management. The Kapsch Group takes a long-term and responsible approach to its business. What follows are a few examples of these sustained measures: Lower consumption of resources. We work constantly to lower the use of resources, save energy and reduce CO2 emissions within the Kapsch Group. This is why we invest in the research and development of innovative but at the same time green products. Moreover, measures are also taken to optimize energy use wherever possible. For example, Kapsch Components saves 175 tons of carbon dioxide each year after having improved the ventilation, air-conditioning and lighting in its production and logistics facilities. We have also reduced the ecological footprint of our production activities by insourcing a production facility from China to Austria. These examples show how Kapsch makes an active contribution to climate protection and the conservation of resources.
The View Ahead | 19
Synergy of economy, education and research. The declared objective of the Kapsch Group is to combine business with education and research. For example we support the “Universitäres Gründerservice Wien” (business start-up service) and the “INiTS Award”. This award recognizes theses and dissertations that can be used and implemented in business. To cover the need for highly qualified technical personnel in the long run, we primarily promote institutions and projects that focus on technology and the natural sciences. Sabine Seidler
These include the Institute for Electrical and
Rector of the Vienna University of Technology
Information Engineering at the Vienna University of Technology, the University of Applied Sciences
For me, technology represents an attitude to
Technikum Wien, the University of Applied Sciences
life in the sense of a homo sapien technicus.
FH Campus Wien and the University of Applied
I have a technical background, do research in
Sciences FH Wien with their executive management
this field and use technologies in all areas of
master’s courses. As a member of the “Knowledge
life. I am interested in what lies behind things,
Factory” (Wissensfabrik) we support education
what scientific solutions are possible and
projects in schools. For many years, we have been
whether these can lead to innovation. And I
involved with various technical colleges in Austria
take a curious joy in exploring the unknown.
too, thus promoting young talent from the very beginning.
Integration of young people. Kapsch traditionally lays great emphasis on apprenticeships: training measures and programs for apprentices working at companies of the Kapsch Group as well as on behalf of the Public Employment Service Austria and other institutions meet the highest quality standards. Hence we make a sustained contribution to combating unemployment and raising education levels in Austria. One main focal point is the systematic support of integration projects: in numerous projects the company purposefully targets the training of young people whose opportunities on the labor market are limited on account of their origin, language barriers or other factors.
Social and Cultural Responsibility. The Kapsch Group takes its social responsibility seriously and promotes selected cultural and social institutions and projects around the world. Offering artists a platform. Every year, we publish a calendar with a selected artist we support. This enables aspiring artists to reach an interested public with their works. As part of the “changing views” project, our calendar featured an international artist for the first time in 2012: Sourav Bhattacharya is an Indian living and working in Calcutta and New Delhi. In 2013 the Art Calendar comprises works by Vorarlberg artist Reinhold Ponesch. Enriching cultural partnerships. Bridging the gap between tradition and innovation is a significant tenet of the Kapsch Group. Since 1992 there has been a general partnership with the Vienna Konzerthaus. The Konzerthaus cultivates its traditions and attracts new audiences by means of its exciting and unconventional range of programs. The annual highlight of this partnership is a prestigious concert with internationally renowned orchestras and conductors, which customers, partners and investors of the Kapsch Group enjoy together.
20 | The View Ahead
The Kapsch Group sponsors “Wien Modern”, one of the world’s most renowned festivals of contemporary music, and has done so since it was founded in 1989. The series of events underlines the significance of Vienna as a modern city of culture. The composers, performers and ensembles represented here are pioneers in their fields of art. The Kapsch Group also supports the event series entitled “Culture in the Temple” at the Kobersdorf synagogue as well as the Jewish Museum Vienna; both institutions explain Jewish life and related culture to younger generations, bringing them to life and making them easier to understand. Awareness of social responsibility. The Kapsch Group values and supports the work of charity institutions such as the Institute for Cooperation in Development Projects (ICEP). This private, independent initiative – based in Austria – contributes to combating global poverty. ICEP supports projects focusing on education that improve the living standards of people in developing countries in the long run. We also support the activities of “Doctors Without Borders”, an internationally renowned organization that helps people around the world who do not have appropriate access to medical care. “Caritas Socialis” alleviates the social suffering of people in need at the start and the end of their life. We provide the employees of this charity organization with the infrastructure for their annual gathering. Since the start of this year there has been a sponsorship agreement between the St. Anna Children’s Cancer Research Institute and the Kapsch Group: the research work is supported as part of the “Next Generation Sequencing” project. The aim of this project is to obtain information about the human genome and therefore insights into genetic changes connected
Kathrin Folkendt
to how diseases progress and related therapies.
Co-founder of the community platform
Kapsch supports this complex project, firm in
“Digitalista”
the conviction that this can make a significant contribution to increasing the chances of children
Technology for me is inseparable from
recovering from cancer.
innovation, and innovation is the engine that has always driven our company. Whether it is ideas, connections, products, relationships or companies – technology helps us to achieve, manage and develop them all. Always moving. Always changing. Always full of inspiration. Daily business in the IT sector, and I’m proud to be part of it.
The View Ahead | 21
Kapsch stands for the future of mobility. Solutions from Kapsch TrafficCom keep traffic flowing, reduce CO2 emissions and enable investments in modern infrastructures.
We have created interactive experiences around the themes of our annual report. With the iKapsch app for your iPhone or Android smartphone you can explore an additional multimedia dimension to our content. Read the user instructions for iKapsch on the back cover to immerse yourself in the world of Kapsch.
capture
My vision revolves around technical developments that are easy to manage and have a positive influ ence both on us and on our environment. In research and development at Kapsch TrafficCom, I work intensively with forward-looking applications for Intelligent Transportation Systems. They make road traffic safer, more efficient, and more user-friendly. Applications that enable vehicles to exchange safety-related information between one another and with external infrastructure will become even more important in the near future. Alexander Paier R&D New Technologies at Kapsch TrafficCom
Kapsch TrafficCom Group. Overview of the Fiscal Year. Kapsch TrafficCom is a provider of intelligent transportation systems (ITS). Our systems employ information and communication technologies to support and optimize road transportation, including infrastructure, vehicles, users and industry. Our core business is to design, build and operate electronic toll collection systems for multilane free-flow traffic. With our end-to-end solutions, we cover the entire value creation chain of our customers as a one-stop shop, from components and subsystems to their integration and operation. The Kapsch TrafficCom Group achieved significant progress during this fiscal year in both existing and new projects. As of October 2012, we have also implemented our new organizational structure. Parallel to these developments and continued investments in the future, project delays nevertheless led to lower revenues alongside high expenditures. As a result, the earnings figures for this reporting year lie significantly below our target. The revenue in the fiscal year 2012/13 was EUR 488.9 million, which is 11 % below the previous Franz Gsellmann Owner and operator of the “World Machine”.
year’s value of EUR 549.9 million. Although we still assumed at the start of the fiscal year that the situation concerning our large projects would
Technology signifies the gift of a person to
improve quickly, we discovered that while some of
turn his abilities into action.
the open issues could be eliminated, the continued delays in our project in South Africa negatively impacted our revenue and earnings in the second
half of the year as well. The significant improvement of the earnings situation that set in during the third and, in particular, the fourth quarter is all the more pleasing. Existing projects and markets. In Poland, the final acceptance inspection took place at the end of the previous fiscal year for the nationwide toll collection system that we built in record time and then completed in stages. The satisfaction of the customer can also be seen in the fact that we have already been contracted to expand the system by more than 600 km. In South Africa, major decisions were made during the reporting period concerning the commissioning of the already completed toll collection system in the Gauteng province. The private lawsuit against the road operator, which resulted in multiple postponements of the system start since April 2012, has now been dismissed, and the toll introduction process is continuing. For several months, we have only been awaiting the announcement of the starting date by the government. In Belarus, the major project we received in February 2012 began in the fiscal year 2012/13. This project involves the construction of a nationwide electronic toll collection system and subsequent operation for 20 years. The progress in the first phase, which will go into operation in July 2013, supported the clear revenue and earnings improvement in the fourth quarter.
24 | Kapsch TrafficCom Group
New projects and markets. We were able to continue our international market expansion during the reporting period. Developments in the North American market, which we entered only recently, were especially positive. In the U.S.A., Kapsch TrafficCom was chosen for the first time at the end of July as a supplier for a complete system in this highly competitive market. We are currently implementing a managed lane system on two highways in northern Texas that encompasses a toll system, an intelligent transportation system and a network communication system. It will be one of the most modern transportation systems in North America. Only one month later, we received another order for an incident detection system for a tunnel in Houston. In March, we were contracted for the construction of a truck parking system in Michigan. We feel that these market successes confirm our strategy and prove that our investments in past years were correct. They also show that our competence in complete intelligent transportation system (ITS) solutions is recognized even outside the area of toll collection systems. In Mexico, we strengthened our market presence and laid the groundwork for future growth by acquiring a 33 % stake in the system integration provider SIMEX. In Brazil, a growth market for the ITS industry, we received our first order for the delivery of on-board units. In Australia, we received a contract at the end of August for a toll collection system in Sydney. In addition, the road operator Transurban once again extended our contract for the delivery of on-board units. Kapsch TrafficCom shares. The shares of Kapsch TrafficCom AG have been listed since 26 June 2007 on the Vienna Stock Exchange in the prime market. They are included in the ATX Prime Index and since 2009 also in the Austrian sustainability index, VÖNIX. In addition, Kapsch TrafficCom was included in the index “ATX Global Players”, which has been tracked by the Vienna Stock Exchange since 13 May 2013. During the reporting period, the share price exhibited a clear decline. From EUR 63.50 at the end of the previous fiscal year on 31 March 2012, the price fell – despite a recovery phase at the turn of the calendar year – by nearly 42 % to EUR 37.02 on 31 March 2013. As such, the price of Kapsch TrafficCom shares followed a course in the fiscal year 2012/13 that was contrary to that of the general international developments.
Strategy, Business Segments and Markets. Our market. We address the intelligent transportation systems (ITS) market. Our offering comprises the application fields of road user charging, urban access and parking, road safety enforcement, commercial vehicle operations, electronic vehicle registration, traffic management and V2X cooperative systems.
n
Road user charging. Our offering comprises components, subsystems and systems as well as complete end-to-end tolling solutions which are adapted to specific customer requirements. We thereby offer the complete migration path from manual to electronic tolling, from single lanes to free-flow, on highways and all other roads.
n
Urban access and parking. Our offering comprises end-to-end solutions which support a full range of charging policies, whether based on the time of the day, the length of the stay, the vehicle’s pollution class or the traffic.
Kapsch TrafficCom Group | 25
n
Road safety enforcement. Our offering comprises comprehensive and fully integrated solutions for enforcing traffic laws and for vehicle surveillance that help improve road safety and increase public security. The solutions can capture multiple types of violations such as speeding, running red lights or overweight vehicles and support the legal processing and payment collection of infringements to enable the implementation of financially viable and sustainable road safety programs for reducing fatalities and accidents.
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Commercial vehicle operations. Our offering comprises solutions for improving road safety and the productivity of fleets. Sample applications are inspection and pre-clearance by regulatory authorities at check points utilizing roadside sensors to check the vehicle weight or on-board 5.9 GHz transponders to collect status information on the driver and vehicle.
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Electronic vehicle registration. Our offering comprises solutions utilizing electronic readable tags to improve vehicle registration rates and reduce registration fraud, thereby increasing safety and improving public security. Our solutions also allow centralized management of vehicle registration data and efficient automated monitoring by regulatory authorities.
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Traffic management. Our offering comprises solutions for monitoring and controlling road traffic to help increase road safety, improve traffic flow and protect the environment. We offer complete end-to-end traffic management solutions for highway sections, networks and tunnels as well as incident detection and traveler information services to assist road authorities and operators in managing, monitoring and maintaining their roadways.
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V2X cooperative systems. Vehicle-to-vehicle (V2V) and vehicle-to-infrastructure (V2I) communication, abbreviated as V2X, is a core technology for managing and improving traffic safety and mobility in the future. Our offering in the field of V2X comprises in-vehicle components and roadside stations as well as complete solutions in combination with traffic management systems.
The top sales markets in the past three fiscal years were the Czech Republic, Poland, South Africa, the U.S.A., Austria, Australia, France, Chile and recently Belarus. The regular operation of the nationwide toll collection systems in the Czech Republic, Austria and Switzerland continued to yield stable revenue contributions during the fiscal year. Outlook. In the coming years, we expect the various ITS market segments to merge. In the future, these individual systems will increasingly develop in the direction of “connected vehicles in cooperative systems”. Kapsch TrafficCom has the potential, on one hand, to grow still further in its core business of electronic toll collection – even regionally – and, on the other, to increasingly offer other ITS applications. In the year 2012, we reorganized the Kapsch TrafficCom Group to capitalize on this potential. Since October, the entire group now shares a globally uniform organizational structure with coordinated standards, processes and interfaces. This shall improve our efficiency, which in turn supports continued growth. Additional growth prospects shall also arise through the development of complete ITS solutions. With our ITS strategy and the new company structure, we consider ourselves well positioned. The strong balance sheet structure of the Kapsch TrafficCom Group shows that we also have sufficient financial potential for upcoming projects both small and large – even running in parallel. The fiscal year 2013/14 will be marked by a continuation of our existing projects. In particular, the further developments in South Africa will influence the revenue and earnings situation. Additional tenders are expected in Belgium and the U.S.A. Extensive toll collection systems are under discussion in Bulgaria, Russia and the surrounding countries as well as in Germany. Naturally, we are following these discussions with great interest.
26 | Kapsch TrafficCom Group
Selected Projects. References in 43 countries on all continents make us a recognized supplier of electronic toll collection worldwide. In Austria, we were awarded in 1995 the contract for the realization of the Ecopoint system, the world’s first emissions-based traffic management system. On 1 January 2004, a nationwide electronic toll collection system for all vehicles above 3.5 tons was launched. This system now covers roughly 2,200 kilometers of motorways and expressways. With an average toll transaction rate of 99.8 %, the system generated toll revenues of EUR 1.1 billion in 2012. As of 31 March 2013, we have equipped some 3,000 lanes and delivered about 1.2 million on-board units. In the Czech Republic, we were responsible for the design and implementation of the nationwide electronic toll collection system for all vehicles above 3.5 tons, which now covers roughly 1,350 kilometers. The system was completed in just nine months and started commercial operation on 1 January 2007. With an average toll transaction rate of 99.6 %, the system generated toll revenues of CZK 8.7 billion (EUR 344 million) in 2012. As of 31 March 2013, we have equipped some 1,400 lanes and delivered about 0.7 million on-board units. In Poland, on 3 July 2011, we launched the electronic toll collection system viaTOLL on the existing road network of 1,565 kilometers for all vehicles above 3.5 tons after an implementation period of only eight months. Since then, we have been responsible for the technical and commercial operation of the system and have extended the system by more than 600 kilometers to roughly 2,200 kilometers. In the first year of operation, the toll system generated revenues of PLN 815 million (EUR 196 million). As of 31 March 2013, we have equipped some 3,000 lanes and delivered about 0.9 million on-board units. In Italy, we have deployed urban access solutions in Rome, Bologna, Piacenza, Genoa, Livorno, Arezzo, Ravenna, Lecce and Salerno, among other cities. In North America, the Mark IV IVHS businesses, acquired in 2010, have enabled many landmark ITS deployments such as the electronic toll collection system on highway 407 ETR in Canada, the interoperability between an electronic truck preclearance system and a toll collection system (PrePass System) in the U.S.A. as well as the E-Z-Pass system comprising 24 toll agencies in 14 U.S. states who operate the largest interoperable toll collection system in the world. As of 31 March 2013, we have equipped some 2,000 lanes and delivered about 48 million on-board units. In South America, we installed three electronic toll collection systems for all vehicles on motorways and expressways in Chile: Costanera Norte, Autopista Central and Vespucio Norte Express. All three systems include technologies for the detection, classification and registration of vehicles. As of 31 March 2013, we have equipped some 250 lanes and delivered about 2.6 million on-board units. In Australia, we implemented in 1999 the world’s first electronic toll collection system for multi-lane free-flow traffic on an urban highway in Melbourne, including systems for the detection, classification and registration of vehicles. We have also introduced other such systems in Sydney and Brisbane. As of 31 March 2013, we have equipped some 270 lanes and delivered about 7.3 million on-board units.
Kapsch TrafficCom Group | 27
Kapsch stands for innovative communication technologies. Digital train radio solutions from Kapsch CarrierCom ensure safe rail operations while supporting continued harmonization of railway communication throughout Europe.
We have created interactive experiences around the themes of our annual report. With the iKapsch app for your iPhone or Android smartphone you can explore an additional multimedia dimension to our content. Read the user instructions for iKapsch on the back cover to immerse yourself in the world of Kapsch.
capture
I am convinced that there is a strong connection between mankind and technology. Human beings create technology to support our daily lives and help us to progress. At the same time technology influences us and can create a certain dependency. In my work as product manager at Kapsch CarrierCom I am always dedicated to making sure that technology is used to satisfy and benefit our customers’ needs and develop their networks. Christine Eheim Core Product Manager at Kapsch CarrierCom
Kapsch CarrierCom Group. Overview of the Fiscal Year. Kapsch CarrierCom is a reliable partner for companies active in the dynamically developing industry of telecommunications. Kapsch CarrierCom is a global system integrator and supplier of end-to-end telecommunications solutions for public and railway operators, urban transport organizations and companies seeking real-time asset management solutions. Alongside mission- and business-critical telecommunications, Kapsch CarrierCom offers the full set of ent-to-end services. Strategic partnerships and a strong focus on innovation in eight R&D centers in Europe and Asia make Kapsch CarrierCom a market specialist in telecommunications. Kapsch CarrierCom is part of the Kapsch Group and has its headquarters in Vienna. It has 715 employees worldwide in more than 20 countries. New business segments. In the 2012/13 fiscal year, Kapsch CarrierCom expanded its portfolio with the addition of two new business segments:
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“Public Transport”: connecting smart urban public transport. Drawing on its many years of experience with GSM-R solutions, Kapsch CarrierCom is in a position to offer dedicated secure telecommunications infrastructure to public transport organizations on a countrywide scale. These end-to-end solutions are based on tried-and-tested terrestrial trunked radio technology (TETRA) and from a technical perspective are ideal for trams, underground trains and buses. They contribute both to improving security as well as to lowering operating expenditures and lay the foundations for additional services to the benefit of transportation companies and passengers.
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“Machine Networks”: Driving real-time Intelligent Asset Management. In the field of “Machine Networks”, Kapsch CarrierCom offers customized end-to-end solutions for intelligent monitoring and the professional management of various objects (so-called assets). Data on the location and behavior of these assets is collected, visualized in real time and made available for further processing. The flexible software-as-a-service (SaaS) model brings cost efficiency and short implementation times. This not only renders existing corporate processes more efficient, new business models can also be rolled out on this basis.
Enlargement of end-to-end portfolio and new locations. In the “Public Operator” business segment the company has focused on additional strategic partnerships with leading global providers of technology and has therefore managed to bolster its position as a global systems integrator. Amongst other things, Kapsch CarrierCom was commissioned by the Telekom Austria Group to implement a new IMS system and modernize the Release 4 network in several countries. Acquiring the remaining shares in TIS, a Croatian provider of mobile software solutions, helped to cement the strong position in CEE even further.
30 | Kapsch CarrierCom Group
Integrating the GSM-R business of NEC in Portugal in February 2013 was an important step towards expanding the end-to-end portfolio for clients from the “Railways” business segment. Kapsch CarrierCom can now offer customers its own GSM-R terminal devices, so-called cab radios. The company’s presence on the Iberian peninsula was bolstered by the integration of NEC in the form of two locations in Portugal – one in Aveiro and one in Lisbon. Additionally, further locations were added in Canada and in Morocco in the past fiscal year. Present at trade fairs and congresses around the world. “InnoTrans” in Berlin is one of the world’s most important trade fairs for transport technology. Kapsch CarrierCom presented its extensive range of end-to-end solutions for railway operators in Berlin, showcased ETCS Level 2 solutions using GPRS technology and explained how GSM-R can gradually be expanded towards IP along with the additional applications that can be developed using this technology. These topics were also prepared in February 2013 for the strategically important region of the Middle East, and presented at the “Middle East Rail” exhibition and conference. “Mobile World Congress” offered the chance, also in February, to showcase the wide range of systems integration products and services to telecommunications providers.
Strategy, Business Segments and Markets. The know-how and the project experience from the business segments of “Public Operators” and “Railways” provide a solid foundation for Kapsch CarrierCom to explore and develop additional areas of business with the newly established segments of “Public Transport” and “Machine Networks”. Systems for railway operators. In the “Railways” business segment, Kapsch CarrierCom is an internationally renowned specialist in communications solutions, and worldwide the company is equipping 70,000 km of railway lines with Global System for Mobile Communication – Railway technology (GSM-R). Customers include leading railway companies and operators of railway infrastructure in Austria, Germany, France, the United Kingdom, Spain, Poland, Lithuania, Algeria
Ali Mahlodji
and the Czech Republic. They trust the ability
Founder & CEO Whatchado
of Kapsch CarrierCom to design sustainable solutions and be innovative, which is evident first
As a trained software engineer, technology
and foremost in the close cooperation displayed
for me is the magic that turns ideas into
when developing new and customized solutions.
added value which makes all our lives
One particular area of emphasis is the 3GPP
easier. It’s not by accident that the motto
Release4 Voice Core network architecture. This
for progress in smart companies is “it all
standard based on the 3GPP Bearer Independent
depends on the technology”.
Core Network supports Voice over IP and also complies with every standard and regulation in the railway industry. This new voice core generation is used by Network Rail (United Kingdom), LitRail (Lithuania), ÖBB (Austria) and DB Netz AG (Germany), which operates one of the largest GSM-R networks in the world. Additionally, the infrastructure operators of the Algerian and Irish railways also employ the innovative 3GPP Release 4 Voice Core solution, thereby benefiting from smooth upgrades, lower investment and operating cost as well as new services and applications.
Kapsch CarrierCom Group | 31
Commitment to standardization and interoperability. Kapsch CarrierCom is one of the main players in the EIRENE standardization process. The objective here is to roll out the GSM-R train communications system across Europe. Kapsch CarrierCom is one of the driving forces in the following bodies:
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Technical Committee Railway Telecommunications (TC-RT) of the European Telecommunications
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GSM-R Industry Group (IG)
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International Union of Railways (UIC)
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European Railway Agency (ERA)
Standards Institute (ETSI)
All-round solutions for rail communications are made up of many individual elements – ranging from infrastructure components to end-devices. In international rail transportation, all these elements must interact perfectly together, even when they come from different manufacturers. In the 2012/13 fiscal year, Kapsch CarrierCom successfully completed interoperability tests for GSM-R. Train communication systems from Kapsch CarrierCom were successfully tested according to strict EU interoperability specifications. The European Railway Agency (ERA) confirmed the compatibility and interoperability in accordance with European Commission guidelines. This way, rail customers can rely on the fact that train safety systems meet the highest of standards in their own national railway network and can be used internationally without any additional expense or follow-up cost. As part of the ongoing TEN-TA ERTMS project, MAP 3rd Call/2011 interoperability tests are being carried out between the latest generations of GSM-R solutions to ensure compatibility with the new version of EIRENE currently being prepared. Strong solutions for telecommunication providers. In the “Public Operators” segment Kapsch CarrierCom supports well-known network operators in Europe and Asia. Kapsch CarrierCom has more than 30 years’ experience in developing and optimizing telecommunication networks. The company advises and supports its customers with a broad portfolio that covers all elements of telecommunication networks: from core networks and radio access networks to support systems (OSS/BSS). Furthermore, Kapsch CarrierCom also offers next-generation intelligent network solutions for fixed-line operators, ITS solutions, location-based services and carrier applications. Based on end-to-end analyses of all network levels and all network components, Kapsch CarrierCom provides support with optimizing networks too. The main challenges for telecommunications providers are ensuring efficient bandwidth management and network stability. As the number of mobile devices continues to rise and the range of new services on the web multiplies, the volume of data traffic on networks is constantly growing. Kapsch CarrierCom lends its support both to optimizing networks as well as to upgrading infrastructure to the latest generations of technology. Customers include more than ten of the largest international telecom providers with over 100 million users, such as the Telekom Austria Group and the Orange Group, Bouygues Telecom (France), Baikalwestcom (Russia) and Chungwha Telecom (Taiwan).
32 | Kapsch CarrierCom Group
Selected Projects. Bulgaria. Together with Thales, Kapsch CarrierCom has been contracted by Bulgarian railway infrastructure company NRIC to supply electronic signal and safety as well as telecommunications technology for the railway line between Sofia and Plovdiv. During this project, Kapsch CarrierCom will deliver the GSM-R technology as well as supply dispatcher extensions, cab radios and handhelds. Germany. Kapsch CarrierCom and Siemens are equipping the first stretch of newly constructed line in Germany with the ETCS (European Train Control System) Level 2. In what is a world first, conventional fixed exterior signals will not be used anywhere along the entire 230 km-long stretch from Ebensfeld through Erfurt to Halle. The total value of the order is around EUR 93 million, and it is planned that the project will be commissioned in two stages during 2015 and 2017. Once again this underlines the trust that Deutsche Bahn has in the GSM-R technology of Kapsch CarrierCom. United Kingdom. Back in 2010, Kapsch CarrierCom won the contract to equip the U.K.’s railway network with the latest Release 4 technology. This migration was completed in time for the Olympic Games in London. In December 2012, Network Rail, the U.K.’s railway infrastructure operator, awarded Kapsch with a service and maintenance contract for the entire GSM-R system. The multi-year agreement will see Kapsch supporting Network Rail’s control center team to ensure the highest levels of network availability, enabling a higher frequency of train services and better safety standards. Hannes Ametsreiter Austria. Kapsch CarrierCom is supporting the
Chairman, Telekom Austria Group and A1
Telekom Austria Group in upgrading its mobile core network. The current project will involve Kapsch
As the leading telecommunications provider
setting up a new Release 4 network and IMS
in Austria and the CEE region we exert
platform (IP Multimedia Subsystem) for A1 (Austria),
a direct influence on how technology is
Si.mobil (Slovenia) and mobilkom liechtenstein and
introduced into our everyday lives. Since
will make a significant contribution to implementing
the emergence of smartphones and tablets,
the convergence strategy of the telecom provider.
data volumes have been doubling every 12 to 18 months. By making the infrastructure
Poland. Kapsch has won another large contract
available for this steady growth we play a key
from Polish railway company PKP Polskie Linie
role in today’s society. We aim to continue
Kolejowe S.A. An ERTMS (European Rail Traffic
improving usability for customers with
Management System) system is to be implemented
innovative solutions because technology
along the E30 line from Legnica through Wroclaw to
should not make life more complicated,
Opole. Kapsch is to design and install the GSM-R
it should facilitate, enrich and represent an
equipment for the system and will also provide
optimal addition to our everyday routines.
technical support services for ongoing operations. Spain. After successfully equipping a high-speed line in Galicia with the latest in train safety and radio technology in the 2011/12 fiscal year, Kapsch CarrierCom has now completed another project in Spain. Eighty kilometers of the network of the state railway operator Adif in Bilbao were equipped with the newest technology based on GSM-R. The core of the system consists of a newly integrated fiber-optic cable network and the associated installation of 22 control masts.
Kapsch CarrierCom Group | 33
Kapsch stands for excellent ICT business solutions. For example, Kapsch BusinessCom offers its customers safe storage of their data in the earthDATAsafe.
We have created interactive experiences around the themes of our annual report. With the iKapsch app for your iPhone or Android smartphone you can explore an additional multimedia dimension to our content. Read the user instructions for iKapsch on the back cover to immerse yourself in the world of Kapsch.
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In my profession as HP Alliance Manager at Kapsch BusinessCom, technology is king: smartphones, notebooks and video-conferencing are just as natural in my everyday working life as complex web applications. In order to keep all those systems running we need highly available and secure server, storage and network solutions. I am very enthusiastic about which technological features and the resulting business opportunities will develop in the next ten years. Mirza Huseinovic HP Alliance Manager at Kapsch BusinessCom
Kapsch BusinessCom Group. Overview of the Fiscal Year. Kapsch BusinessCom is a leading service partner for ICT (information and communication technology) in Austria and Central and Eastern Europe. This company of the Kapsch Group works together with cutting-edge providers like Apple, Aastra, Avaya, Cisco, Google, Hitachi, HP and Microsoft, and its portfolio covers information technology and telecommunications. Kapsch BusinessCom employs more than 1,400 people worldwide. Growth strategy 2016. Kapsch BusinessCom can look back on a very successful fiscal year in 2012/13. Since 1 April 2011 the company has been pursuing its five-year 2016 growth strategy. This is aimed at ensuring the company grows at least twice as fast as the market each year and significantly increasing the proportion of the service business in total sales. Following the motto “Operating ICT – Trust Kapsch”, Kapsch BusinessCom is a “trusted advisor” in all aspects of communications and information technology. As a service partner, the company takes on the long-term responsibility for the partial or complete operation of a given client solution. In accordance with this new strategic focus, Kapsch BusinessCom built up its position as a services partner of choice in Austria and CEE during the reporting year, winning several successful operating projects – such as from Österreichische Volksbanken AG, Magna Steyr und FLAGA. Expansion in Romania. In the 2012/13 fiscal year, Kapsch BusinessCom expanded its presence in Romania by means of organic growth and also built an “international service delivery center” for the services of Kapsch BusinessCom companies in several CEE countries. Acquisition in the Czech Republic. In 2012 Thomas Geierspichler
Kapsch BusinessCom acquired Data Storage s.r.o.,
Wheelchair racer and Paralympic winner
a specialist in data management, data archiving
in 2008
and disaster recovery solutions. As a certified
I am reliant on technical assistance, and
VMware, HP and Oracle, Data Storage offers highly
partner of infrastructure providers such as EMC, in my field of competitive sport I deal
complex data management that complements
with technological developments every
Kapsch’s infrastructure solutions perfectly. In this
day. Technology is ubiquitous. That said,
way, Kapsch BusinessCom expanded its services
technology should support people’s skills
portfolio with a further strategically important
and capabilities, not control people. It
component, thereby laying down the foundations for
should always be about the person, not the
a center of competence in the Czech Republic for
equipment. I often consciously decide to
the entire CEE region.
forsake technical conveniences in order to find myself. I don’t define myself through technology – technology defines itself through me.
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Strategic partnerships. In the 2012/13 fiscal year Kapsch BusinessCom continued to develop its strategic partnerships with the stellar companies of Google and Apple. Kapsch became an Apple Authorized Systems Integrator (AASI) at the highest certification level and offers solutions that allow the latest models (such as the iPhone 5 or the iPad) to unleash their full potential as part of secure and fully-integrated mobility frameworks in enterprises.
Strategy, Business Segments and Markets. Kapsch BusinessCom is a recognized ICT service partner in Austria and Central and Eastern Europe. The company has six branches in Austria and operates companies in the Czech Republic, Slovakia, Hungary, Romania and Poland. The solutions offered embrace the fields of information technology and telecommunications. Reliable ICT partner. Besides system integration and ongoing optimization, Kapsch BusinessCom is increasingly involved in the complete operation of ICT solutions. Vendor-independent and working together with leading technological partners such as Aastra, Apple, Avaya, Cisco, EMC, Google, Hitachi, HP and Microsoft, Kapsch BusinessCom is an adviser, system supplier and services provider. Kapsch BusinessCom is a reliable, dependable, and long-standing trusted advisor for approximately 17,000 customers in a rapidly changing technological environment. The service engineers are all “Kapsch Certified” and are therefore certified in accordance with clearly defined and transparent quality standards. Kapsch BusinessCom is the only Austrian company in the ICT field to follow the ITIL®standard for IT service management. Three business areas. The services offered by Kapsch BusinessCom cover three fields: ICT Facility Solutions, ICT Infrastructure Solutions and ICT Workspace & Applications Solutions:
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ICT Facility Solutions form the basis for efficient building technology, including networks and IT. The entire infrastructure is ideally grouped together in a central management and operating system.
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ICT Infrastructure Solutions provide a stable and efficient framework for ICT infrastructure. These innovative and effective solutions are based on server, storage and network concepts, which include rolling out infrastructure and comprehensive solutions for cloud services. Economic efficiency and IT security are always priorities.
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ICT Workspace & Applications Solutions optimize interaction and communication in companies. Efficient communication processes support customer-driven cooperation in teams and therefore increase productivity in companies. This works with all end-devices and from everywhere, involving mobile enterprise solutions as well as video/web-conferencing and unified communications.
Kapsch BusinessCom Group | 37
“Operating ICT – Trust Kapsch”. Using this strategic motto, Kapsch BusinessCom offers its customers an integral and forward-facing approach. This company of the Kapsch Group offers customized solutions for the present and future challenges of Chief Information Officers at enterprises. The following “ICT challenges” have been defined:
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Cloud Computing & Virtualization – scalable services in-house or in the “cloud”: The global volume of data is growing rapidly and this year will exceed one zettabyte. The expense involved in processing, saving and transferring this volume of information is growing. However, IT departments are under increasing pressure to cut costs. Businesses are being forced to look into new technological ideas, and this is where cloud computing comes into play: these solutions help to save 30 % to 50 % on IT costs through high levels of standardization, virtualization and scaling.
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Collaboration – location-independent collaboration of flexible project teams: The pace of everyday business is steadily rising. Information has to be obtained and processed and decisions made and communicated increasingly quickly. Employees are becoming more mobile and workplaces are no longer restricted to desks in offices. Staff increasingly need to have access to information regardless of the time, where they are, and what device they are using. The challenge here is to facilitate seamless multimedia communication.
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Big data – saving and processing enormous amounts of data: Soaring amounts of data have to be saved, processed and managed securely. Information available around the world is growing by at least 60 % per year according to international studies. This represents a significant challenge for everyday business operations because the majority of information remains unstructured and is therefore difficult to find within the corporate network. Professional “Enterprise Search” solutions with intelligent information search functions resolve this problem.
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Mobility & Consumerization – mobile devices and applications in corporate networks: Ways of communicating, working, consuming and interacting are constantly changing. Promoting mobile working using appropriate end-devices and applications is becoming increasingly important for enterprises. The trend towards smartphones and social media platforms is no longer merely a feature of the consumer world, it has been part of business life for some while. And coping with this “consumerization” requires a re-think in the business world. Social media and smart consumer devices must be regulated and integrated into the IT and communications architecture of companies.
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Security – protection of sensitive corporate information: Online crime is a constant threat. IT has to be able to protect the business against attacks from the web and secure sensitive corporate data. Many networks are protected from the outside with sophisticated security mechanisms. Yet mobile devices such as smartphones or tablet PCs, which constantly exchange data with these systems, are often ignored. The challenge is to regulate these applications and devices and integrate them into IT security systems from the very beginning.
38 | Kapsch BusinessCom Group
Selected Projects. IT outsourcing at Österreichische Volksbanken AG. In 2012, Österreichische Volksbanken AG (ÖVAG) engaged Kapsch BusinessCom with operating its office IT infrastructure. The outsourcing contract includes 2,500 desktops, operation of the central IT infrastructure in redundant data centers as well as services related to the helpdesk, IT process management, network and telephony infrastructure. 26 employees in ÖVAG’s IT department were also taken on by Kapsch, and the IT systems were migrated to the “shared environment” at earthDATAsafe, Kapsch’s computer center in Kapfenberg. Network outsourcing at Magna Steyr. In 2012, Kapsch BusinessCom put the finishing touches to a network outsourcing solution at Magna Steyr, the leading global development and production partner of car manufacturers. The LAN provided as a Kapsch service facilitates the swift connection of all end-devices to the IT infrastructure at all of the company’s locations and immediately lowered the regular costs at Magna Steyr. By installing the latest components, the network infrastructure will be at the forefront of technology for at least the next five years. Roughly 11,600 LAN ports in total were implemented throughout the network infrastructure to ensure efficient coverage. Scalable
Karl-Heinz Strauss
and flexible services from Kapsch now provide a
CEO Porr AG
plug-and-play network throughout Austria and in selected locations around the world.
People are discovers by nature. Progress and technology are the central driving forces
IT outsourcing for FLAGA. A company specialized
that make our lives easier, more productive
in generating energy from liquefied gas, FLAGA
and safer. As long as we conduct research,
decided to outsource its entire IT operation to
we shall continue to develop ourselves.
Kapsch as part of a centralization process. This includes providing and running the entire office IT infrastructure of FLAGA as well as a central mail, file and print service with fixed service levels. Users can access the central infrastructure securely with all the necessary applications and data via terminal services – from all FLAGA locations spread throughout half of Europe. The migration of applications and data to a central IT platform was vital because of the extremely mixed IT structure. The FLAGA Group found a new and secure “home” for its IT in the “shared private cloud” of Kapsch’s earthDATAsafe. Special know-how for sectors. For many years, Kapsch BusinessCom has supplied telephone systems, IT infrastructure as well as network solutions. These services focus amongst others on the hotel industry and range from systems for internal hotel communication, video surveillance and access controls to solutions for bookkeeping, accounting, data security, IP-TV and digital signage or even global networking of hotel chains. Kapsch BusinessCom also has decades of experience and extensive know-how in the health-care sector. The solutions fully embrace the fields of security, communication, infrastructure, networks as well as services. The services offered by Kapsch BusinessCom include solutions for telemedicine and telecare as well. Videoconferencing systems in particular come into play here in various locations.
Kapsch BusinessCom Group | 39
Kapsch stands for diversity and creativity. The Kapsch Group promotes and benefits from the diversity of society. We respect the dignity and individuality of every employee.
We have created interactive experiences around the themes of our annual report. With the iKapsch app for your iPhone or Android smartphone you can explore an additional multimedia dimension to our content. Read the user instructions for iKapsch on the back cover to immerse yourself in the world of Kapsch.
capture
Technology makes my life easier. Technology is a means of convenience, information, entertainment and freedom in the sense of speed and mobility. How far we are dependent on it and let technology control us is a personal decision that everyone can take for themselves. The key factor for developing and creating technology is a firm sense of responsibility. Lucienne Santayana Supplier Partner Manager at Kapsch CarrierCom
Executive Board and Supervisory Board. The executive board and the supervisory board constitute the two-tier management and supervisory structure of Kapsch Aktiengesellschaft and all key companies of KAPSCH-Group Beteiligungs GmbH. While the executive board is responsible for managing the company and representing it in dealings with third parties, the supervisory board is responsible for appointing and removing the members of the executive board and supervising the business conducted by the Board.
Executive Board at Kapsch Aktiengesellschaft.
Georg Kapsch, Chief Executive Officer
Kari Kapsch, Chief Operating Officer
Franz Semmernegg, Chief Financial Officer
Georg Kapsch has been a member of the executive board of Kapsch Aktiengesellschaft since July 1989 and CEO since October 2001. Since October 2000 he has been CEO of KAPSCH-Group Beteiligungs GmbH, and he was appointed CEO of Kapsch TrafficCom AG in December 2002. Georg Kapsch, who graduated in business administration at the Vienna University of Economics and Business Administration (Wirtschaftsuniversität Wien) in 1981, is managing director of DATAX HandelsgmbH, chairman of the supervisory board of Kapsch CarrierCom AG, vice-chairman of the supervisory board of Kapsch BusinessCom AG and a member of the supervisory board of Teufelberger Holding AG. Since June 2012 Georg Kapsch has been president of the Federation of Austrian Industries (Industriellenvereinigung Österreich), prior to which, from 2002 to 2012, he was chairman of the University of Applied Sciences Technikum Wien (Fachhochschule Technikum Wien) and of the Austrian Association of the Electronics Industries (Elektronikverband), while from 2003 to 2012 he was vice-president of the Association of the Austrian Electrical and Electronics Industries (Fachverband der Elektro- und Elektronikindustrie). From December 2008 until September 2012, Georg Kapsch was president of the Vienna Regional Group of the Federation of Austrian Industries. Kari Kapsch has been a member of the executive board of Kapsch Aktiengesellschaft since March 2001 and COO since 2002. He has also been a member of the supervisory board of Kapsch TrafficCom AG since June 2002 and vice-chairman since June 2005. Kari Kapsch has been COO of KAPSCH-Group Beteiligungs GmbH since December 2005. He has been CEO of Kapsch CarrierCom AG since April 2010. Kari Kapsch obtained his doctorate in physics at the University of Vienna in 1992. Kari Kapsch also holds posts in various direct and indirect interests of Kapsch CarrierCom AG, Kapsch BusinessCom AG and Kapsch Aktiengesellschaft, he is a member of the management team of Kapsch Immobilien GmbH and of ASIMMOG Verwaltungs- und Verwertungs GmbH, whilst sitting on the managing board of the ASIMMOG Private Foundation.
42 | Executive Board and Supervisory Board
Kari Kapsch participates in various industry associations and since 2012 has been a member of the board at the University of Applied Sciences Technikum Wien (Fachhochschule Technikum Wien) and a committee member of the Association of the Austrian Electrical and Electronics Industries (Fachverband der Elektro- und Elektronikindustrie). From 1996 to 2002 he was the chairman of “Young Industry Vienna” and vice-chairman of “Young Industry Austria”. Franz Semmernegg has been CFO of Kapsch Aktiengesellschaft since October 2001 and has also been CFO of KAPSCH-Group Beteiligungs GmbH since April 2005. Franz Semmernegg has been CFO of Kapsch BusinessCom AG since March 2003 and CEO since April 2010. He has been a member of the supervisory board of Kapsch TrafficCom AG since June 2002 and chairman of the supervisory board since June 2005. Franz Semmernegg obtained his doctorate in business administration in 1997 at Karl-Franzens-University in Graz. Franz Semmernegg holds additional posts both inside and outside the Kapsch Group: as a member of the management team at Calpana Business Consulting GmbH, Kapsch Smart Energy GmbH, Kapsch Cashpooling and Hedging GmbH, Kapsch IT Services for finance and industries GmbH and a member of the advisory bodies at Kapsch Sp. z o.o., Kapsch Kft., Kapsch s.r.o. (Prague), Kapsch s.r.o. (Bratislava) and Enso GmbH and Speech Processing Solutions GmbH. Franz Semmernegg also holds posts in various direct and indirect interests of Kapsch BusinessCom AG and Kapsch Aktiengesellschaft. He was a member of the managing board at Schrack BusinessCom AG from 1999 to September 2001. In 1998 Franz Semmernegg was responsible for the successful management buy-out of Schrack BusinessCom AG from Ericsson Austria AG. Previously he carried out management functions at Ericsson Austria AG (1998) and Schrack Seconet AG (1997).
Supervisory Board at Kapsch Aktiengesellschaft. Veit Schmid-Schmidsfelden has been chairman of the supervisory board at Kapsch Aktiengesellschaft, KAPSCH-Group Beteiligungs GmbH and DATAX HandelsgmbH since September 2007. He is the managing director of Schmid-Schmidsfelden Beteiligungsgesellschaft mbH and the Fertinger Group. He is also the head of the WKO Machinery and Metalware Industry Unit in Lower Austria, deputy-head of the Industry Unit in Lower Austria, board member of the Lower Austrian
Matthias Lošek
Health Insurance Company and a member of the
Artistic Director of WIEN MODERN,
supervisory board at Austrian Airlines AG.
contemporary music festival
Christian Gassauer-Fleissner has been vice-
I use new technologies and they accompany
chairman of the supervisory board at Kapsch
me in my everyday life. I also strive to influence
Aktiengesellschaft, KAPSCH-Group Beteiligungs
minds and spirits, not to be influenced myself.
GmbH and DATAX HandelsgmbH since October 2000. He is a partner at the law firm GassauerFleissner Rechtsanwälte GmbH. His advisory activities focus on providing comprehensive advice to businesses and business owners as well as their private foundations, including company law and M&A, intellectual property rights (patents and brands), the right to fair competition and general company and contract law. He is also active as an arbitrator and party representative in national and international arbitration proceedings.
Executive Board and Supervisory Board | 43
Karl-Heinz Strauss has been a member of the supervisory board at Kapsch Aktiengesellschaft, KAPSCHGroup Beteiligungs GmbH and DATAX HandelsgmbH since September 2007. He graduated with a degree in civil engineering before going on to study at Harvard University, the Management Business School in St. Gallen and completing an MBA program at IMADEC University. Until 2000 he was engaged in various positions at Raiffeisen Zentralbank – including in the area of construction and real estate. He then set up his own real estate development business, Strauss & Partner. Since September 2010, he has been chairman of the executive board at PORR AG.
Executive Board at Kapsch TrafficCom AG. Georg Kapsch has been a member of the executive board at Kapsch Aktiengesellschaft since July 1989 and CEO since October 2001. Georg Kapsch has been CEO of KAPSCH-Group Beteiligungs GmbH since October 2000, and he was appointed CEO of Kapsch TrafficCom AG in December 2002. He also holds functions in direct and indirect subsidiaries. Erwin Toplak has been a member of the executive Christian Kern
board of Kapsch TrafficCom AG since June 2002
CEO, ÖBB Holding AG
and holds functions in some of its direct and
The modern railway companies of today are
by the Kapsch Group since 1991, first as sales
indirect subsidiaries. He has been employed high-tech companies. Technology not only
manager of the toll collection start-up business
has to function, it also has to fit in with the
of Kapsch Aktiengesellschaft (1991-1994) and
times. What smartphones are to consumers,
later as senior manager (1994-1999) as well as
railway radio communications are to trains.
director of the traffic control systems division of
At first glance this may sound like boring
Kapsch Aktiengesellschaft (1999-2002). Erwin
electronics and software, but in actual
Toplak graduated from the Graz Polytechnic
fact we use it to create tangible customer
(Höhere Technische Lehranstalt) with a degree in
benefits. Our 6,400 trains that travel each
telecommunications and electrical engineering. He
day are made safer and more punctual with
is vice president of the Austrian Electrotechnical
the use of innovative Kapsch technology. The
Association (Österreichischer Verband für
railway can look back proudly on a history
Elektrotechnik).
spanning 175 years, and based on constant technological development can rightly say:
André Laux has been part of the Kapsch TrafficCom
the future has already begun!
Group since December 2007 and a member of the executive board of Kapsch TrafficCom AG since 1 April 2010; he also holds functions in some of its
direct and indirect subsidiaries. He began his professional career in different sales and management positions both domestically and internationally (1988-1997) after completing a degree in business administration in Germany and England. In 1997 he became director of the German chip-maker ODS Landis & Gyr in Munich. In 2000, André Laux transferred within the group to become CEO of Skidata AG in Salzburg. In 2004, he took over as CEO of Winter AG in Munich. In June 2007, the executive board and supervisory board of Kapsch TrafficCom AG decided to apply the regulations of the Austrian Corporate Governance Code (hereinafter: Code) if such regulations were applicable for the given situation of the company. The current version of the Code dated July 2012 can be downloaded from www.corporate-governance.at. Compliance with the Code is evaluated on an annual basis by the Compliance Officer and the Group Audit Division.
44 | Executive Board and Supervisory Board
Executive Board at Kapsch CarrierCom AG. Kari Kapsch has been a member of the executive board of Kapsch Aktiengesellschaft since March 2001 and COO since 2002. He has also been a member of the supervisory board of Kapsch TrafficCom AG since June 2002 and vice-chairman since June 2005. Kari Kapsch has been COO of KAPSCH-Group Beteiligungs GmbH since December 2005. He has been CEO of Kapsch CarrierCom AG since April 2010. Thomas Schöpf has been a member of the executive board at Kapsch CarrierCom AG since 2002. His responsibilities as COO of Kapsch CarrierCom AG include sales as well as sales support & customer solutions. He studied at the Vienna University of Economics and Business Administration and in Fontainebleau, France. He started his career at the Kapsch Group as a trainee. For many years he was responsible for various projects in the fields of marketing, acquisitions and customer service. Michael Kleinhagauer was appointed a member of the executive board at Kapsch CarrierCom AG on 1 March 2011. As CTO of Kapsch CarrierCom AG, his responsibilities include development and product support, project management and customer operations as well as supply chain management. In addition to his training at the Technical College of Vienna, he also completed postgraduate studies in business administration in Berne. Before joining Kapsch, he held management positions at Siemens AG Munich, Siemens Schweiz AG and Nokia Siemens Networks in Switzerland. His management tasks in international projects have taken him to Latin America and Asia among other places.
Executive Board at Kapsch BusinessCom AG. Franz Semmernegg has been CFO of Kapsch Aktiengesellschaft since October 2001 and has also been CFO of KAPSCH-Group Beteiligungs GmbH since April 2005. Franz Semmernegg has been CFO of Kapsch BusinessCom AG since March 2003 and CEO since April 2010. He has been a member of the supervisory board of Kapsch TrafficCom AG since June 2002 and chairman of the supervisory board since June 2005. Jochen Borenich joined the executive board of Kapsch BusinessCom AG on 1 September 2010. In this position, he was responsible for the areas of sales, marketing and international affairs. He graduated with a commerce degree from the Vienna University of Economics and Business Administration, collected his MBA at the University of Minnesota and completed further courses at renowned business schools (Insead, Harvard, Stanford). His career path also included many years at T-Systems before joining Kapsch.
Executive Board and Supervisory Board | 45
Kapsch stands for social and cultural responsibility. As a corporate group, we promote art, education and culture and support talented young people from Austria and other European countries.
We have created interactive experiences around the themes of our annual report. With the iKapsch app for your iPhone or Android smartphone you can explore an additional multimedia dimension to our content. Read the user instructions for iKapsch on the back cover to immerse yourself in the world of Kapsch.
capture
In my paintings I am influenced by technological achievements of the last decades. Mobile phones and the internet play an influential role in private and professional communication, so much so I can barely imagine life without them. This is why for me the most essential part of technology is the power button that allows us to catch a break and get some rest. Reinhold Ponesch Painter and artist of the Kapsch Calender 2013
Group Management Report. KAPSCH-Group Beteiligungs GmbH on the Consolidated Financial Statements as of 31 March 2013. 1 General economic situation Global economy In the reporting year 2012/13, the growth of the world economy was primarily shaped by the still unresolved debt crisis in Europe: As a consequence, the eurozone slipped into a recession, with a decline in real gross domestic product (GDP) of 0.6 %. However, growth-dampening effects on the global economy came not only from the eurozone: The strong fiscal consolidation – underway throughout the OECD – is estimated to have subtracted some 1 to 1.5 percentage points from OECD-wide growth in 2012. Taking this into account, the economy of the OECD area expanded by 1.4 % in 2012, compared to 1.8 % in 2011. Additionally, the traditional growth drivers of the global economy – the Emerging Markets – saw unexpectedly sharp slowdowns in their economic performance in the reporting year, which was due, in part, to weaker export growth as well as to the restrictive course of their economic policies in the years before. All in all, global economic growth slowed to 3.2 % in 2012 from 3.9 % in 2011. U.S.A. In the United States, GDP growth slowed markedly in the fourth quarter of 2012, as global uncertainty increased and restrictive government spending dampened economic activity. The economic dynamic weakened, with GDP falling to a year-on-year rate of 1.6 % in quarter 4 2012, compared to 2.6 % in quarter 3. For the reporting year as a whole, GDP increased by 2.2 %. Some impetus came from gross fixed-capital formation, which accelerated in the reporting year, while private consumption, traditionally one of the main drivers of the economy in the U.S.A., lost steam. Looking ahead, U.S. economic growth is expected to drop to approximately 2 % in 2013 and concerns remain, especially regarding the fiscal situation: Like the eurozone, the United States needs to restore fiscal sustainability. As the White House and Congress could not reach a compromise on the federal budget, “sequestration” came into force at the beginning of March 2013, with automatic expenditure cuts totaling 1.2 trillion U.S. dollars over the next ten years, which will have a dampening effect on U.S. economic development. Japan In Japan, the recovery of the economy stalled in the second half of 2012, after strong growth in the first six months supported by reconstruction spending in response to the earthquake in March 2011. In 2012 as a whole, the economy expanded by 1.6 %. As reconstruction expenditures wane further and planned tax hikes dampen private consumption, the OECD expects that GDP growth will slow to 0.7 % in 2013. Furthermore, Japan’s fiscal situation remains critical: The budget deficit reached a level of about 10 % of GDP in 2012, and government debt rose to around 214 % of total economic output. At the beginning of April 2013, the Bank of Japan announced a massive monetary-easing program which aims to double the monetary base by the end of 2014. The bank’s primary intention is to stimulate the economy, which has been struggling with deflation for years and has grown only modestly in this time.
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Emerging Markets The reporting year witnessed a further slowdown in economic development in a number of emerging markets, although they regained some ground in the last quarter of the year 2012. Forward-looking indicators suggest that this growth momentum is spilling over into 2013. Given the substantial share of the world economy now accounted for by emerging economies, they will drive growth on a global level again. To take China, real GDP increased by 7.9 % in Q4 2012 compared with the corresponding period in 2011, and an estimated GDP growth rate of 8.2 % is expected for 2013, buoyed by the rise in domestic demand toward the end of 2012. Turning to India and Brazil, their economic performance remained subdued in 2012, with growth rates of 4.5 % (India) and 1 % (Brazil). The International Monetary Fund (IMF) expects growth in these two emerging markets to be back on track in 2013 with rates of 5.9 % and 3.5 %. The short-term outlook for the region “Emerging Markets and Developing Economies” indicates a rise in GDP of 5.5 % in 2013. Europe Just like in the previous year, the course of the European economy in 2012 was influenced primarily by the economic and sovereign-debt crisis. As a result of the persistently difficult situation in the southern periphery, the aggregate GDP of the EU-27 decreased by 0.3 %. It is worth mentioning, though, that the core of the European Union was not spared the repercussions of the crisis either. France and Great Britain, for instance, saw their economies stagnate in 2012. Even the German growth engine started to sputter towards the end of the year. Experts believe this to be the bottom of the latest recession phase. Economic performance of the EU-27 is forecast to pick up in 2013, albeit only very slowly (+0.1 %). It is nonetheless essential that austerity measures continue to be implemented throughout Europe. As far as the eurozone is concerned, concerted efforts to fight the economic crisis in the southern member states were once again at the top of the agenda. The situation in Greece proved particularly difficult, seeing as the economy of the country has been stuck in a downward spiral for five years. Meanwhile, Spain also made the headlines due to its struggling banking sector, as did Italy after the reformist government led by Mario Monti was voted out of office. Both countries faced a deep recession in 2012, just like Portugal. The only PIIGS state that seems to have overcome its severe problems is Ireland: Two consecutive years of GDP growth indicate that the economic turnaround has succeeded, not least owing to the EU rescue package. At the same time, though, Cyprus caused a new wave of uncertainty on the financial markets. Overall, the economic prospects for the eurozone remain subdued. Having decreased by about 0.5 % in quarter 4 2012, aggregate GDP is not expected to expand in the first months of 2013 either. Only for the second half of the year do experts forecast a moderate recovery in the economy. The economic slowdown in the eurozone has also had repercussions for the states in Central and South Eastern Europe. Even though GDP growth in the region as a whole was more pronounced than in Western Europe, economic performance on a national level varied markedly in 2012. In Hungary, for instance, the on-going crisis led to a GDP decrease of 1.7 %. The Slovenian economy also contracted as a result of massive problems in its banking sector (-2 %), and the future 28th EU member Croatia struggled noticeably as well (-1.8 %). In contrast, comparatively robust growth rates were reported for Russia, Poland and the Baltic states. Looking ahead, experts predict that economic activity in the region will expand only slightly faster in 2013, as both export and domestic demand are to remain fairly weak. The year after that, however, is most likely to witness stronger growth again. Austria. In 2012, Austria saw a deceleration in economic performance: GDP growth decreased from 2.7 % in the previous year to 0.8 %. The second half of 2012, in particular, was marked by a loss of momentum due to weaker stimuli from abroad.
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The latest forecasts suggest, however, that the bottom was reached at the end of the year. With several leading indicators now looking up, the Austrian economy is set to return to a growth path in 2013, albeit a flat one. Experts predict a GDP increase of about 1 %, driven first and foremost by growing business confidence. Most notably, the manufacturing industry expects order intake to pick up again.
2 Economic situation of the industry 2.1 Development of the market for intelligent transportation systems (ITS) To allow for easier comparisons, the Kapsch Group in the segment Traffic makes use of the internationally prevailing terms for the intelligent transportation systems (ITS) market. These are systems in which information and communication technologies are employed to support and optimize road transportation, including infrastructure, vehicles, users and industry. Market segmentation. The study “Intelligent Transportation Systems – A global strategic business report” from Global Industry Analysts, October 2012, describes the ITS market as a diversifying market with widely differing application and product segments. The market comprises the following product segments:
n
Electronic toll collection (ETC) enables drivers to pay toll fees without stopping at toll stations.
n
Advanced traffic management systems (ATMS) monitor traffic, optimize signal timing and regulate the flow of traffic.
n
Other intelligent transportation systems (OTH ITS) comprise in particular:
– Commercial vehicle operations (CVO) encompass systems for operating commercial vehicles in order to enhance freight carrier productivity and safety. – Public vehicle transportation management systems (PVTMS) facilitate management of both local and long-distance public transportation. – Advanced vehicle information systems (AVIS) transmit traffic-related vehicle information to travelers before or during the trip or provide navigation services. Market volume and growth. According to Global Industry Analysts (October 2012), the volume of the ITS market amounted to USD 14.2 billion in 2012 and is expected to continue growing. The largest product segment in 2012 was ATMS, accounting for almost 36 % (USD 5.2 billion). Based on a worldwide volume of about USD 3.5 billion, ETC had an ITS market share of about 25 %. The largest geographic region for ITS in 2012 was the U.S.A. at 40 % (ETC: 42 %), followed by Europe at 30 % (ETC: 27 %). The ITS market is expected to grow at an average annual rate of 8.7 % between 2009 and 2018 to reach USD 22.8 billion in 2018, of which ETC will account for USD 6.8 billion equaling a share of 30 % and thereby exhibiting the fastest growth of all product segments at an average annual rate of 11.8 %. Market situation and market drivers Funding for infrastructure projects. The worldwide increase in road traffic requires additional financing to construct new and maintain existing roads. Toll collection offers a constant source of income and thus helps governments to provide the necessary funding for infrastructure projects. Efficient toll collection systems, especially electronic ones, offer a significant, constant and sustainable source of additional funds for governments, public authorities and concessionaires that can be used for the expansion and maintenance of road infrastructure. The demand for the construction of new roads is largely generated by the worldwide increase in road traffic. Especially in Asia, an increased demand for electronic toll lanes is expected for the replacement and expansion of toll collection systems previously based on more traditional (manual) systems. Aside from general economic aspects, the worldwide increase in road
50 | Group Management Report
traffic is probably the most important driver for the ITS market. According to analysis by the EU (European Union 2010, “Energy and Transport in Figures”), commercial traffic increased by 2.3 % per year and by 33.7 % in total between 1995 and 2008. Commercial road traffic increased by 2.9 % per year and by 45.7 % in total. While the recent economic crisis triggered a fall in the volume of goods transport, this has already been largely compensated for by the subsequent upswing. Despite political pressure, goods transports could not be shifted significantly from road to rail or ship. In 2005, the trans-European road network (TEN-V) had a total length of 84,700 km and comprised one-fourth of the primary street network but carried 40 % of the total commercial traffic. It is predicted that TEN-V will be expanded by 4,800 km per year up to 2020, of which 3,500 km will consist of existing roads. Major investments will be required in the new EU member states and along the corridor routes to these countries. In the white paper “European transport policy for 2010”, the European Union estimated that investments of EUR 600 billion will be required by 2020. The long-term forecasts for traffic growth remain high. In addition to the construction of new roads, the high financing requirements for the preservation of the road infrastructure are another factor driving the ITS market. The high funding requirements in the U.S.A. (Standard & Poor’s research estimates an annual demand of USD 92 billion for the preservation of highways and bridges and a further USD 125.6 billion for their improvement up to 2020) are leading to new business models and private concessionaire models. Reducing congestion and further environmental pollution caused by road traffic. Efforts to reduce environmental pollution due to road traffic have become a market driver for the introduction of toll collection systems. Such systems encourage reduced or modified vehicle usage, thereby lowering emissions and pollution levels. Electronic toll collection systems, in particular for multi-lane free-flow traffic, have proven their ability to decrease environmental pollution and carbon dioxide emissions by reducing congestion at toll plazas without interfering with the traffic flow. In large conurbations and capital cities, in particular, there is a growing need for electronic systems to control and reduce traffic. Toll collection is largely perceived as an effective solution for reducing high levels of congestion, particularly in metropolitan areas, as mandatory payments for road usage encourage carpooling or the use of public transportation. Systems for city charging and enforcing low-emission environmental zones are deployed by cities to reduce traffic congestion and environmental pollution. Due to the politically sensitive nature of this topic, this portion of the business has developed more slowly than originally expected. Traffic safety devices to monitor compliance with traffic regulations are another field of ITS applications in cities. Examples include systems to monitor traffic violations at junctions (e.g. running red lights) as well as systems to detect speeding. The market potential of these applications is growing rapidly in cities as well as interurban areas. For municipal authorities, they often pave the way for larger and more extensive ITS solutions, such as city charging. Increasing traffic safety and security. Advanced traffic management systems lower accident rates while also helping increase the probability of surviving accidents. The addressees include governments and regional authorities as well as other organizations, such as concessionaires, that are engaged in developing transport policies utilizing ITS in order to ensure the availability and quality of traffic infrastructure in a way that improves safety, performance, security and environmental protection. Enhancing vehicle and fleet productivity. Vehicle-oriented intelligent transportation systems are aimed at in-car telematics such as remote diagnostics or advanced driver assistance systems. Their purpose is mainly to enhance vehicle productivity, particularly that of commercial vehicles (commercial vehicle operations), as well as traffic safety and security. This field includes systems for the real-time interaction between vehicles (vehicle-to-vehicle; V2V) as well as between vehicles and infrastructure (vehicle-to-infrastructure; V2I), which Kapsch believes will increasingly be based on 5.9 GHz technology.
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Industry-oriented intelligent transportation systems are commercial applications designed to reduce the costs or maximize the revenue of vehicle fleet operators, including public transportation companies (public vehicle transportation management systems). Examples include systems for fleet management and for collecting information on the logistics of large-scale vehicle operators. Addressees are also insurance companies, who see pay-as-you-drive car insurance as a promising way to attract new customers by offering fair insurance rates and ITS-based value-added mobility services. Increased comfort expectations of travelers. User-oriented intelligent transportation systems are focused mainly on convenience and efficiency for travelers. The customer in the car receives information to aid in orientation, thereby increasing traffic safety. Example applications for advanced vehicle information systems include transmitting traffic-related vehicle information to travelers before or during the trip as well as navigation services. As a communication platform, the 5.9 GHz technology will enable a variety of future applications involving connected vehicles. Technology Depending on the requirements of the specific application, systems are introduced for toll collection which are based on microwave technology (dedicated short-range communication; DSRC), satellite navigation (global navigation satellite system; GNSS), or automatic number plate recognition (ANPR). While in Europe the standardized technology is based on 5.8 GHz according to the Comite Europeen de Normalisation (CEN) standard, toll systems in North America are based on proprietary protocols in the 915 MHz band. It is expected that a new communication protocol standard based on 5.9 GHz will gradually replace the existing technology in the U.S.A. over the coming years. In addition to the toll application, the communication standard 5.9 GHz WAVE (Wireless Access in the Vehicular Environment) is intended for real-time vehicle-to-vehicle (V2V) and vehicle-to-infrastructure (V2I) communication, abbreviated as V2X, for applications that increase traffic safety as well as additional ITS solutions for traffic information, traffic management and entertainment. Convergence on the ITS market A common thread among all these forces driving the market is a convergence on the ITS market expected by Kapsch over the next five to ten years. The company is convinced that applications, platforms and technologies will become increasingly interconnected and converge over time. In the view of Kapsch, the future lies in “connected vehicles in cooperative systems”, which are V2X cooperative systems for real-time vehicle-to-vehicle (V2V) or vehicle-to-infrastructure (V2I) communication. 2.2 Telecommunications market for public network operators and railway companies In the segment Carrier, the Kapsch Group targets operators of public communication networks for fixed-line and mobile telephony as well as railway companies and their communication networks based on the GSM-R standard. Public network operators As in previous years, public network operators in Europe have been the most important target market for this segment, as the focus continues to shift from landlines to mobile telephony. Voice telephony revenues for operators are falling, but these are partially compensated for by the growing volumes of data services. Total revenues for network operators are still declining. The rapid rise in the use of smartphones and tablets coupled with the enormous bandwidth demand of new services require investments in infrastructure and new technologies such as LTE (Long Term Evolution), increasing the pressure to optimize networks and reduce costs.
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Railway companies Digital train radio for voice and data communication between vehicles, mobile devices and stationary infrastructure (GSM-R) continues to hold an important position within railway operations. GSM-R stands for Global System for Mobile Communications for Railways and is the standard for voice and data transmission on European railways. As part of the European Rail Traffic Management System (ERTMS) proposed by the European Commission, GSM-R will also become an increasingly popular topic outside of Europe to drive international harmonization and cross-border interoperability under a global standard. Public transportation companies Similarly to railway operators, public transportation companies also require telecommunication solutions for control and security measures. The TETRA trunked radio standard is ideal for developing independent communication networks in which new applications can be run; these applications increase efficiency for operators on the one hand and provide options for offering additional services to customers on the other. Machine Networks Another trend that has increasingly picked up pace in recent years involves Machine-to-Machine technologies (M2M). In this regard, we also speak of the “Internet of things”, in which telecommunication technology serves as a communication medium for the networking of machines and objects. This facilitates more efficient solutions in logistics, home monitoring in medical care and in traffic management, while valuable information can be gleaned using the data collected from sensors. However, the technical complexity and special economic aspects must not be overlooked when planning machine networks in order to handle the increased data volumes and additional subscribers when planning a new network infrastructure whilst still maintaining optimal network quality. First and foremost, however, knowledge about the applications themselves is crucial to be able to offer all-round solutions for customers. 2.3 ICT market According to international studies, the entire ICT market in Austria will grow in 2013 by just under 3 % and in 2014 by more than 3 %. For the sector of “System Integration”, the forecast for 2013 predicts a growth rate of over 2 %, while roughly 7 % growth is predicted for “Outsourcing”. The growth rates in ICT therefore exceed the forecasts for other industries. Cloud computing will remain the most important technology and market trend in Austria during 2013. 45 % of Austrian IT decision-makers revealed they use or plan to use cloud services. 80 % rely on private cloud solutions. This trend is followed by mobile apps and security solutions. IT security and the consolidation of IT infrastructure are currently the most important topics for Austria’s companies in the area of “project services & outsourcing”. Banks in particular are increasingly interested in new security technologies. The trend toward using several different outsourcing providers as opposed to one single partner also continues to progress. The need for IT services is always rising, in turn supporting market demand for alternative cloud products. Due to the intense price pressures, “near-shoring” and “off-shoring” services are of increasing interest to Austria’s companies. Market analysts have identified a strong demand for “big data” storage and backup solutions. Alongside saving data, being able to identify the right data will be a focal point of the coming years. Up to 85 % of data in companies is unstructured – providing an optimal market situation for enterprise search solutions.
Group Management Report | 53
For the CEE markets in which Kapsch is active in the Enterprise segment, higher growth rates than in Austria are generally predicted for the entire ICT market with regard to software and IT services, including hardware. For the Czech Republic, Poland, Slovakia and Hungary, growth rates for 2013 and 2014 are expected to range from just below 6 to just over 7 %. The market growth in Romania is even forecast to exceed 12 % in 2013.
3 Economic position of the Kapsch Group 3.1 Background and business development These consolidated financial statements were prepared at the level of KAPSCH-Group Beteiligungs GmbH, which itself is wholly owned by DATAX HandelsgmbH. KAPSCH-Group Beteiligungs GmbH is the sole shareholder of Kapsch Aktiengesellschaft, Kapsch CarrierCom AG, and holds the majority stake in Kapsch TrafficCom AG as well as in Kapsch BusinessCom AG. In the 2012/13 fiscal year, the Kapsch Group generated consolidated revenue of EUR 928.0 million, which although being 6 % below the previous year is still the second highest figure recorded in the history of the company. Although there were again some impressive success stories in all segments during the year and the international growth strategy pursued for years was continued, the 2012/13 fiscal year was also characterized by some challenging and less satisfactory events. Delays in large projects in Poland and South Africa in the segment Traffic for example resulted in much lower revenues than expected, which left its mark on the earnings for fiscal year 2012/13 and produced a less than satisfactory result of operations. Yet we still see significant potential in the future, as the core business remains strong and the strategic development of the group is making good progress. In this respect we are continuing down the same path, holding on to our growth opportunities and our strategy for investing in the future whilst bearing this temporary setback in earnings. In connection with this firm conviction for sustainable development, the headcount was raised further in the course of the past fiscal year and now totals 5,266 employees, more than 5,000 for the first time in the company’s history (+440 or +9 % compared to 31 March 2012) and therefore led to an increase in human resource expenditures by EUR 20.3 million or +8 % to EUR 282.0 million. Additionally, the group continued to ramp up its activities in research and development, despite the fall in revenues, investing EUR 96.6 million or more than 10 % of its revenues. Nonetheless, the group will utilize the potential to cut costs that has arisen from the rapid expansion of recent years. The group still prioritizes the company’s long-term success over maximizing short-term profits. What is more, the situation appears to be easing and the group is looking forward optimistically to the future. The earnings figures are much lower than the high results from the previous year and therefore unsatisfactory. EBIT for example came in at EUR 25.5 million and EBITDA at EUR 58.4 million, while the profit before tax totaled EUR 23.1 million and the profit after tax EUR 18.4 million. Equity fell 7 % to EUR 345.1 million, which is primarily attributable to the dividend payment for the last fiscal year exceeding the total comprehensive income of this fiscal year. While this does bring the equity ratio down slightly to 36.3 %, it again underlines the stable and satisfactory net asset position of the group.
54 | Group Management Report
The Kapsch Group operates in the following four main segments: n
segment Traffic
n
segment Carrier
n
segment Enterprise
n
segment Others
Segment Traffic This segment is represented by Kapsch TrafficCom AG as well as all direct and indirect subsidiary companies. In the segment Traffic, the group offers worldwide integral technologies, solutions and services for the Intelligent Transportation Systems (ITS) market. Significant progress has already been made in this fiscal year – both with regard to existing and new projects. In October 2012, we also rolled out the new organizational structure. In addition to these developments and ongoing investments in the future, however, delays in projects resulted in lower revenues with the same high level of expenses. This meant that the earnings figures fell way short of our expectations in the reporting year. While we assumed at the start of the fiscal year that the situation would rapidly improve, we were forced to recognize that apart from clarifying a few uncertainties, the ongoing delays in our major project in South Africa had a negative impact on revenues and earnings too. The significant improvement that took shape in the fourth quarter is much more pleasing. Besides the two major projects in South Africa and Belarus, which influenced the 2012/13 fiscal year, the following new projects in particular were added: n
On 30 July 2012, U.S. subsidiary Kapsch TrafficCom IVHS won the contract to develop, implement and integrate a so-called “managed lane system” (MLS) on two highways in northern Texas, the North Tarrant Express (NTE) and the LBJ Express in Dallas and Tarrant County. The fully integrated “managed lane” system comprises a Toll Collection System (TCS), an Intelligent Transportation System (ITS) and a Network Communication System (NCS). The contract includes more than thirty miles of “managed lanes”, which are specifically used tolled lanes administered to coordinate the traffic according to different requirements and demands – with sixty-five toll lanes and thirty-three toll zones. The value of the contract is around USD 79 million (roughly EUR 64 million). The first phase of the system shall start operation in November 2013.
n
On 10 August 2012, Kapsch received its first, if small, request for the delivery of on-board units in the strategically important
n
On 28 August 2012, Kapsch TrafficCom Australia Pty. Ltd. was contracted by Interlink Roads to supply a new electronic
market of Brazil. Brazil is one the fastest growing markets in the ITS industry. tolling system to support the increased traffic volume on the M5 South West Motorway in Sydney. The total contract value for implementing the system is approximately AUD 10 million (about EUR 8.5 million). The new tolling system comprises roadside equipment plus a back-office system, which thanks to Kapsch’s excellent image processing capability provides higher levels of accuracy and automation on image-based transactions. n
On 11 March 2013, Kapsch was selected by infrastructure solutions company HNTB and the Michigan Department of Transportation (MDOT) to deliver a Truck Parking Connected Vehicle System at five sites along the I-94 corridor in Michigan. The Kapsch solution consists of a 5.9 GHz Dedicated Short Range Communications (DSRC) in-vehicle unit and roadside equipment with customized application software that together provide drivers with real-time truck parking availability information from MDOT facilities and private parking places. This system is the first truck parking system to be deployed in North America utilizing 5.9 GHz, the chosen technology for the U.S. DOT Connected Vehicle Safety pilot program. The system will be fully delivered by December 2013. The contract has a rather low volume but a high significance in terms of implementing the strategy of the Kapsch Group.
Group Management Report | 55
Segment Carrier This segment is represented by Kapsch CarrierCom AG as well as all direct and indirect subsidiary companies. In the segment Carrier, Kapsch is a dynamic partner for companies in the constantly developing world of telecommunications. With more than 20 branches and subsidiaries, Kapsch is a global systems integrator in this segment and offers end-toend telecommunications solutions for mobile telephony and fixed-line operators, railway operators, local public transport companies and enterprises requiring real-time asset management solutions as well as M2M solutions. Kapsch positions itself for its customers around the world as a reliable and trustworthy partner, with decades of customer and supplier relationships in this segment. Kapsch covers the areas of consulting, design and product development, installation and integration, as well as maintenance and the operation of complete networks for its customers. Alongside solutions for company and business-critical telecommunications, customers are offered a complete range of end-to-end services, while in eight centers of research spread throughout Europe and Asia, applications and services for next-generation networks as well as innovative OSS/BSS solutions are developed. The 70,000 railway kilometers that have been fitted with GSM-R solutions by Kapsch have made the company an internationally renowned specialist and the strongest partner for railway companies, such as the French Railway, the German Railway and Network Rail in the U.K. Telecom clients include, amongst others, the companies of the Telekom Austria Group, Eircom in Ireland, Chunghwa Telecom in Taiwan as well as Bouygues Telecom and Orange in France. A strong partnership in the field of TETRA coupled with the emphasis placed on sales activities have created the foundations to build up the business area of public transport that is strategically important for Kapsch. In terms of M2M, Kapsch has created a new platform to provide optimal support for the revised, strategic business case. Segment Enterprise This segment is represented by Kapsch BusinessCom AG as well as all direct and indirect subsidiary companies. In this segment, Kapsch is one of the leading service partners for ICT solutions, with more than 1,400 employees and revenue of nearly EUR 300 million, and principally defines its role as supporting customers with their many current ICT challenges. The overall solution portfolio is divided into the portfolio segments of ICT Facility Solutions, ICT Infrastructure Solutions and ICT Workspace and Applications Solutions. The solutions result from the tailored combination, refinement and adjustment of our products, i.e. supplemented by Kapsch’s “value added services”. Above all, the solutions include financing alternatives and project services such as project management, transition management, professional services, installation and training, as well as the operation of outsourced IT services. Kapsch serves our customers as a consultant, system supplier and services provider but is first and foremost a reliable, dependable long-standing trusted advisor in a rapidly changing technological environment. Its many years of experience as a solution and service partner afford Kapsch an optimal understanding of the requirements of customers. The emphasis is placed on supporting business processes to facilitate the most efficient operation of solutions and generate added value for customers. Besides long-term technological support, customers are increasingly placing their trust in the comprehensive operation and ongoing optimization of their IT by Kapsch.
56 | Group Management Report
The services provided by Kapsch cover all areas of voice and data transmission as well as parts of the infrastructure in companies. From “simple” telephony, through wireless and mobile business solutions and voice over IP to IT solutions, network security, network management, integration of the internet, call center solutions, communications consulting, IPTV, video solutions, managed services, outsourcing and much more. Important in this context are the independence from manufacturers and the partnerships with cutting-edge providers, such as Aastra, Apple, Avaya, Cisco, EMC, Google, Hitachi, HP, Microsoft and many more, who support the know-how of Kapsch in the realization of communications solutions with their products. In the past fiscal year for the segment Enterprise, the record revenue from the previous year was increased once again by EUR 45.6 million to a total of EUR 297.2 million, thereby confirming in the most impressive manner that here, Kapsch is growing much faster than the market in its regions. Segment Others This segment mainly comprises the companies involved in managing the group, i.e. KAPSCH-Group Beteiligungs GmbH, Kapsch Aktiengesellschaft and Kapsch Partner Solutions GmbH as well as activities of Kapsch Smart Energy GmbH. These central companies handle the strategic and operational management of the group companies, group marketing, group legal services, group accounting and controlling as well as financial planning and financing. They also provide all personnelrelated services such as recruiting, personnel administration and personnel development for the entire group, since the middle of the year they have offered travel management services for the whole group too, while personnel training is available to external customers as well. In Kapsch Smart Energy GmbH, the group acts as a partner to energy supply companies to offer solutions for smart energy management. Smart metering and smart grids are important factors in achieving the goals of the European directive on energy efficiency and energy services. The company combines the extensive know-how of the Kapsch Group in Intelligent Transportation Systems (ITS) and Information and Communication Technology (ICT) with the competence of highly specialized providers of components such as smart meters. The core of the solutions, for which Kapsch Smart Energy can handle the entire planning, implementation and operation, is the internally developed, flexible and meter-independent system software “Meter Data Management”. In addition to numerous analysis, reporting and alarm management functions, this software also offers expansion options for energy control, smart street lighting and building automation. 3.2 Financial performance indicators a) Earnings situation In the past fiscal year 2012/13, Kapsch Group revenues fell by EUR 56.1 million or 6 % to EUR 928.0 million. The relative gross margin was raised slightly on the previous year’s level since expenses for materials and services dropped by 6 % in line with revenue. Contrary to the revenue trend, the headcount was increased by more than 9 % to 5,266 (+440 employees compared to 31 March 2012), thereby crossing the 5,000 mark for the first time and producing an increase in staff expenses of EUR 20.3 million, or +8 %, to EUR 282.0 million. This increase results mainly from the two segments of Traffic and Enterprise and stems from all of the business regions of the group.
Group Management Report | 57
Expenses for depreciation and amortization remained roughly at the level of the previous year at EUR 32.9 million (EUR +0.2 million or +1 %). Other operating expenses increased moderately to EUR 131.8 million (EUR +5.4 million or +4 %). Additional expenses mainly resulted from vehicle costs, other taxes and charges, license expenses and rentals as well as foreign exchange losses. Savings were made on the other hand under other operating expenses, such as legal and advisory expenditures, transport costs and marketing expenses. The profit from operating activities (EBIT) thus fell from the high figure of the previous year to EUR 25.5 million (EUR -41.5 million or -62 %), while EBITDA dropped accordingly to EUR 58.4 million (EUR -41.2 million or -41 %). Profit before tax at EUR 23.1 million (EUR -28.2 million or -55 %) and the profit for the period at EUR 18.4 million (EUR -22.8 million or -55 %) were thus significantly below the figures from the 2011/12 fiscal year. A breakdown by segment shows the following development in revenue and earnings: The revenue in the segment Traffic dropped slightly in the last fiscal year after four years of often dynamic growth, but it still accounts for more than half of the group revenue. Revenues declined in the segment Carrier too, as expected. In the segment Enterprise, by contrast, the steady revenue growth trend continued in the past fiscal year, partially compensating for the declines in the other two segments. Revenues by segment (share)
2011/12
2012/13
Change
Traffic
in million EUR
549.9
(56 %)
488.9
(53 %)
-61.0
-11 %
Carrier
in million EUR
219.3
(22 %)
189.1
(20 %)
-30.2
-14 %
Enterprise
in million EUR
251.6
(26 %)
297.2
(32 %)
45.6
18 %
Group
in million EUR
984.1
(100 %)
928.0
(100 %)
-56.1
-6 %
The following regional breakdown of revenues makes it clear that the Kapsch Group enjoyed success in driving its international diversity once again in the fiscal year 2012/13. Revenues increased again on the home market of Austria and in the Americas, thereby implementing the targeted growth strategy. The decline in Eastern Europe as well as in the Rest of World category is largely due to significant nationwide toll projects being implemented in both regions in the previous year. The reduction in Western Europe chiefly results from the lower “Public Operators” revenues in the segment Carrier. The share of revenue realized abroad was maintained at more than 70 %. Revenues by region (share)
2011/12
2012/13
Change
Austria
in million EUR
252.3
(26 %)
271.5
(29 %)
19.3
8 %
Eastern Europe
in million EUR
377.4
(38 %)
343.6
(37 %)
-33.7
-9 % -19 %
Western Europe
in million EUR
147.7
(15 %)
120.3
(13 %)
-27.4
Americas
in million EUR
68.7
(7 %)
80.5
(9 %)
11.8
17 %
Rest of World
in million EUR
138.1
(14 %)
112.1
(12 %)
-26.0
-19 %
Group
in million EUR
984.1
(100 %)
928.0
(100 %)
-56.1
-6 %
The lower revenues in the segments Traffic and Carrier also have an impact on the earnings figures and led to considerable reductions in EBITDA and EBIT in both segments. EBIT was maintained at the level of the previous year in the segment Enterprise while EBITDA was even increased in line with the higher revenue. EBITDA by segment (share)
2011/12
2012/13
Change
Traffic
in million EUR
60.6
(61 %)
32.9
(60 %)
-27.7
-46 %
Carrier
in million EUR
28.5
(29 %)
15.7
(27 %)
-12.8
-45 %
Enterprise
in million EUR
8.3
(8 %)
9.6
(16 %)
1.4
16 %
Group
in million EUR
99.6
(100 %)
58.4
(100 %)
-41.2
-41 %
58 | Group Management Report
EBIT by segment (share)
2011/12
2012/13
Change
Traffic
in million EUR
42.2
(63 %)
15.3
(60 %)
-27.0
-64 %
Carrier
in million EUR
17.7
(26 %)
4.7
(18 %)
-13.0
-73 %
Enterprise
in million EUR
4.5
(7 %)
4.5
(18 %)
0.0
-1 %
Group
in million EUR
67.0
(100 %)
25.5
(100 %)
-41.5
-62 %
Segment Traffic Revenue in the segment Traffic totaled EUR 488.9 million in the 2012/13 fiscal year and was therefore 11 % lower than the previous year of EUR 549.9 million. In the project business (RSP), which includes the construction of toll projects, revenues slipped 44 % to EUR 128.3 million (previous year: EUR 229.9 million). The main factor influencing this decline was the implementation of the national electronic toll system in Poland in the previous year. The project implementing an electronic toll system in the South African province of Gauteng made no comparable contribution as it is already in its final phase and the revenues originally expected until the system is rolled out were not achieved in full. The projects launched in Belarus, France, Australia and the U.S.A. as well as the system expansions in Poland were unable to compensate for this drop in revenue in the 2012/13 fiscal year. However, under Services, System Extensions, Components Sales (SEC), where recurring revenues, system expansions, component sales and the operation of toll systems are recorded, revenues were increased by 11 % to a new record of EUR 342.3 million (previous year: EUR 308.1 million). The project in Poland that was rolled out in July 2011 and therefore only influenced revenues for nine months in the previous year made a significant contribution. The technical and commercial operation of the national system in the Czech Republic and the technical operation, including maintenance, of the national systems in Austria and Switzerland generated stable revenues as before. The delays in launching the project in the South African province of Gauteng had the opposite effect, resulting in lost follow-up deliveries of on-board units. The number of on-board units sold amounted to 9.3 million (previous year: 11.2 million). The lower quantity in the past fiscal year was also connected to the Gauteng project, while the basic supplies for the national electronic toll system in Poland were delivered in the previous year. The higher unit numbers had a positive impact in North America. The levels of both EBITDA at EUR 32.9 million (EUR -27.7 million or -46 %) and EBIT at EUR 15.3 million (EUR -27.0 million or -64 %) were much lower than the previous year in the segment Traffic. The EBIT margin amounted to 3.1% (previous year: 7.7 %). The reasons for the fall in earnings are primarily found in the project business. The lower revenues compared to the previous year were insufficient to cover periodic costs, the expenses for expanding in markets like the U.S.A., Russia, Hungary, Slovenia and Singapore as well as preliminary costs for current and future tenders, while the project in South Africa weighed down earnings as well. This was caused by the delay in rolling the project out, which is political in nature, the lower than expected revenue generated until the roll-out as well as additional costs and contingency costs. For Services, System Extensions, Components Sales (SEC), however, both the earnings in absolute terms and the EBIT margin were increased markedly on the previous year. The stable flow of earnings from the technical and commercial operation of the national system in the Czech Republic, the technical operation, including maintenance, of the national system in Austria and the technical and commercial operation of the project in Poland, affecting the figures for a whole year for the first time, exerted the greatest influence. Factors having the opposite effect were the competitive pricing of on-board units as part of the contract extension with the E-ZPass Group, which has resulted in customary global margins in the U.S.A. too, as well as the lack of any real contribution to earnings from the delayed follow-up deliveries of on-board units for the system constructed in Gauteng, South Africa.
Group Management Report | 59
Segment Carrier In the segment Carrier, revenue declined by EUR 30.2 million, or 14 %, year-on-year to EUR 189.1 million. This decrease mainly affected the public network operators business and is primarily attributable to the expected phasing out of maintenance contracts from the Nortel takeover. These declines in revenue have not yet been offset by incoming orders from the adopted public operators strategy. Revenues in the railway business were increased and now account for half of the segment revenues. In the Public Operators sector, the first project was won with strategic partner ZTE in the past fiscal year in the form of the “IMS Core” project. The Telecom Operators customer portfolio acquired from Nortel was also subject to further development with regard to new solutions. This facilitated the completion of a network optimization project with Bouygues Telecom and important software upgrades with Chunghwa Telecom. The main “Public Operators” markets are Austria, Central and Eastern Europe (CEE) as well as France and Taiwan. License and know-how transfer relating to GSM accounted for 9 % of revenues. One project in the Railways sector in the 2012/13 fiscal year involved implementing an Release 4 Core with Network Rail (U.K.), which was successfully completed within a reduced time-frame on account of the Olympic Games in London – there is also a multi-year maintenance contract in effect here. Many successful projects were completed throughout the entire CEE region as well, including Phase 1 of implementing a GSM-R network in Poland for example with a geo-redundant Release 4 Core, and the expansion of additional GSM-R routes in the Czech Republic. In the Middle East and Africa (MEA) region, Kapsch took part in a whole host of tenders in the past fiscal year, most of which are still in the evaluation phase. The highlights of this region certainly include the successful acquisition of a project with Saudi Rail. The drop in revenues also meant that the profits of the segment Carrier fell in comparison to the previous year. EBITDA amounted to EUR 15.7 million (EUR -12.8 million or -45 %) while the operating profit (EBIT) totaled EUR 4.7 million (EUR -13.0 million or -73 %). The decline in EBIT can also be explained by the impairment of goodwill for the “Public Operators” sector. One further reason for the drop in earnings is that in this segment too the group is investing more in developing next generation GSM-R technology systems, thereby laying the foundation for winning future projects and increasing market share. Fortunately, the costs of materials and services used decreased, which resulted in an improvement in the gross margin. Potential for optimizing processes and raising efficiency is constantly identified within Kapsch and utilized accordingly. Segment Enterprise The segment Enterprise managed to boost revenues by EUR 45.6 million or 18 % to EUR 297.2 million. This is attributable to the strategy pursued for many years to drive the ICT business and embraced all areas of the segment. The revenue growth in the core areas of ICT Infrastructure Solutions, ICT Facility Solutions and ICT Outsourcing was the most striking. Taking a regional perspective, the revenue growth in the past fiscal year was due not only to the massive increases in Austria again, but also to the encouraging development in the Czech Republic and Romania. Although the emphasis is still placed on continuous growth – especially in the CEE area – with a strategic focus on expanding a sustainable services business in the ICT area, EBITDA in this segment was raised to EUR 9.6 million (EUR +1.4 million or 16 %) while EBIT was kept at the previous-year’s level of EUR 4.5 million (EUR -0.0 million or -1 %), which means the results were satisfactory. b) Assets and liabilities Total assets of the Kapsch Group as at the reporting date of 31 March 2013 amounted to EUR 950.1 million, down slightly by EUR 5.7 million or 1 % compared to the end of the last fiscal year of 2011/12.
60 | Group Management Report
Non-current assets came in slightly above the previous year at EUR 351.8 million. Other non-current financial assets and participating interests fell from EUR 55.4 million to EUR 42.8 million, which resulted primarily from changes in the fair value of the interest in Q-Free ASA, Norway, and sales of securities. Current assets decreased by EUR 4.7 million or 1 % to EUR 598.3 million. This was the result of a decline in trade receivables and other current assets. Inventories and liquid assets increased. Equity capital came in at EUR 345.1 million, somewhat below the figure from 31 March 2012 of EUR 371.9 million. This is primarily attributable to dividends paid in the past fiscal year amounting to EUR 29.1 million (including EUR 17.2 million to shareholders of the company). The equity ratio therefore fell just marginally to 36.3 %. Non-current liabilities rose by EUR 29.9 million or 15 % compared to the previous year to EUR 230.6 million, while current liabilities were reduced by EUR 8.9 million or 2 % to EUR 374.4 million. This facilitated a massive reduction in current financial liabilities of EUR 33.7 million due to repayments and new long-term contracts. Net debt compared to the previous year dropped by 14 % and now totals EUR 90.4 million. c) Financial position The liquidity position of the group improved again in the past fiscal year. This meant the cash flow from operating activities increased to EUR 72.5 million based on the positive EBITDA result and particularly by the reduction in receivables compared to the previous year. The cash flow from investing activities totaled EUR -23.0 million, bringing it roughly in line with the level in the previous year (EUR -17.4 million). The cash flow from financing activities totaled EUR -34.7 million and can be explained by the drop in current financial liabilities and especially by the dividend payments. Cash and cash equivalents at the end of the fiscal year amounted to EUR 119.5 million. 3.3 Non-financial performance indicators a) Employees In the fiscal year, the number of employees crossed the 5,000 mark for the first time in the company’s history. As of 31 March 2013, the group had 5,266 employees. This represents a considerable increase in comparison to the previous year (+440 employees or +9 %). The average number of employees in the Kapsch Group in the 2012/13 fiscal year totaled 4,974. This is mostly attributable to the massive increase in resources of the segment Traffic but also to growth in the segment Enterprise. Taking a regional view, this growth breaks down into +172 staff in Austria, +110 staff in other European countries, +76 staff in the U.S.A. and +82 staff on all other continents, a very balanced split.
Group Management Report | 61
Headcount on reporting date
Traffic Carrier Enterprise
2011/12
2012/13
Change
2,705
(56 %)
3,013
(57 %)
308
736
(15 %)
715
(14 %)
-21
11 % -3 %
1,302
(27 %)
1,438
(27 %)
136
10 %
Others
83
(2 %)
100
(2 %)
17
20 %
Group
4,826
(100 %)
5,266
(100 %)
440
9 %
Having committed and motivated employees and managers is a crucial factor of the company’s business success in these challenging times. The strong corporate culture, which focuses on respect, dynamic, responsibility, discipline, transparency, performance and family, was successfully transferred to the newly acquired companies. This created the basis for the successful integration of new employees and for efficient and effective collaboration across the companies. The Kapsch Group places great emphasis on the regular training and further education of its staff. A comprehensive training and employee development program has always been a central pillar of the Kapsch company philosophy. The Kapsch University offers individual training plans comprised of courses and seminars on specialized topics and interpersonal skills. To encourage the multinational movement of staff there is a job rotation program in place between our branches. A young executive program prepares selected employees for future management duties. Furthermore, a two-year internal trainee program is also offered in which the trainees can familiarize themselves with the workings of the various companies and departments. Particular emphasis is placed on ensuring fair remuneration and working hours. Some employment contracts of managers and sales staff include variable salary components. Moreover, there are bonus schemes for employees. Depending on their length of service, income and the success of the company, Kapsch pays contributions into an external pension fund for its employees. Moreover, the Kapsch Group has an employee profit-sharing scheme where the company lets employees participate in the profits of the company. Annual employee interviews and an internal continuous improvement process are additional measures used by the Kapsch Group to encourage staff to play an active role in shaping the company in order to ensure long-term business success. Kapsch has also been involved for many years in providing a very high level of education to apprentices both for companies within the group and for external firms. The health of all members of staff is a top concern for the Kapsch Group. This is why health information campaigns are organized along with vaccination days, check-ups, vision checks and fitness packages, to mention just a few. A company doctor is also on hand at the premises in Vienna. Although Kapsch does business in technological sectors, the company considers it important to increase the proportion of women employed. To achieve this objective, women are supported at Kapsch in particular with flexible working hours so they can combine a professional and family life. Kapsch has also set up many cooperation frameworks with schools, universities of applied sciences and universities. The company is involved in special programs to promote women in the workplace, such as “FIT Frauen in die Technik” or “FemTech” and offers a special trainee program for “women in sales”. In the spirit of equal opportunity, it therefore goes without saying that parental leave is supported in equal measure for both mothers and fathers.
62 | Group Management Report
b)
Environment The individual companies hold valid certifications for environmental management systems pursuant to ISO 14001, and the Kapsch Group will strive in the future to fulfill its responsibilities towards society even more extensively, particularly with regard to the efficient and responsible use of natural resources. The Kapsch Group meets its statutory obligations regarding waste disposal through its memberships in Altstoff Recycling Austria AG and Umweltforum Haushalt (UFH). There is also a defined waste disposal process. Concern for the environment is well established throughout the company, and we shall continue to meet our social responsibilities in the future and adopt an efficient approach to using environmental resources.
c) Social responsibility Living up to its socio-political responsibility, the Kapsch Group supports a number of contemporary art and cultural institutions as well as selected educational institutions, extensive integration projects and diverse social measures. Business decisions at Kapsch are made with a long-term view in mind, and this same perspective is also applied to the planning and implementation of all the group’s cultural and social activities and programs. These include: Education It is not easy to meet the need for highly qualified employees in the extremely technical working environment of the Kapsch Group. This is why Kapsch supports a range of technical institutions, including the Institute for Electrical and Information Engineering at the Vienna University of Technology, the University of Applied Sciences Technikum Wien, the University of Applied Sciences FH Campus Wien and the Executive Management master’s course at the FHWien University of Applied Sciences. The company is also involved with various technical colleges throughout Austria. Apprentices are trained at Kapsch for working at the company as well as on behalf of Public Employment Service Austria and other partnerships. Kapsch provides training in the following three professions: industrial clerk, communications technician for EDP and telecommunications, and IT technician. In all areas, the focus is on ensuring the highest quality standards. In cooperation with the Science Busters and the University of Applied Sciences Technikum Wien, Kapsch brings scientific know-how to a broader public in an entertaining manner with the Science2People initiative. Membership in Wissensfabrik (the knowledge factory) also promotes specific education projects. Integration and diversity The Kapsch Group focuses on integration projects in its apprentice training activities. Aside from statutory professional training, the company works with the LEB project (work integration) and the sprungbrett association to promote the training of young people whose opportunities on the labor market are limited for a variety of reasons. Multinational and multilingual exchanges are a daily occurrence in an international organization such as the Kapsch Group. For this reason, Kapsch offers not only various language courses but also diversity and intercultural training to encourage multicultural understanding and awareness. Different working models and special frameworks for re-entering the market also take account of the varied requirements in day-to-day professional and personal life. A women’s representative looks after the equal consideration of all interests. Furthermore, Kapsch supports the event series “Culture in the Temple” at the Kobersdorf synagogue, which addresses Jewish life and Jewish culture.
Group Management Report | 63
Promotion of art Every year, Kapsch brings out a calendar that offers young artists a suitable public platform for their works. This initiative was expanded with the project “changing views – 6 artists – 6 countries”. Here the artists had the opportunity to spend four months in a country of their choice to work as an “artist in residence”. The results are presented each year at a vernissage. Bridging the gap between tradition and innovation is a fundamental tenet of the Kapsch Group. This principle is reflected in the general partnership with the Vienna Konzerthaus since 1992. The Konzerthaus enjoys an international reputation of attracting new audiences by means of its exciting and bold range of programs as well as its active cultivation of traditions. The Kapsch Group sponsors “Wien Modern”, one of the world’s most renowned festivals of contemporary music. The aim of this series of events is to safeguard the significance of Vienna as a modern city of culture. The composers, performers and ensembles represented here are pioneers in their fields of art. Kapsch has sponsored the festival since 1989. Social Kapsch is committed to supporting selected social institutions and projects worldwide. The Institute for Cooperation in Development Projects (ICEP) was designed as a private, independent initiative to make an effective contribution from Austria to combating global poverty. ICEP supports projects that focus on education and improving the living standards of people in developing countries in the long run. The Kapsch Group supports this endeavor as a partner. Doctors Without Borders provides help for people around the world who do not have appropriate access to medical care – be it due to natural disasters or armed conflicts, fleeing or being driven out of their country or as a result of social crises. The organization has a reputation around the world of working at a very low administrative cost, and Kapsch is proud to support its activities. Towards the end of the past fiscal year, the company decided to support St. Anna Cancer Research as part of the “Next Generation Sequencing” project for the next three years. The employees of Caritas Socialis take care of old, ill or severely disabled people. Until just a few years ago, the organization could not afford to come together once a year. This is why Kapsch now provides the infrastructure for this gathering – on the day after presenting the art calendar. Star for Life is a South African non-profit organization dedicated to the fight against HIV and AIDS. The institution engages in awareness-raising and targeted campaigns to engender new perspectives among school children to help prevent their infection with HIV. One of the high points of their new experiences was the children’s choir concert at the Kapsch branch in Sweden. Through its support for all of these social and civic initiatives, Kapsch always strives above all to foster a lasting sense of purpose and meaning in people’s lives. 3.4 Risk management As a technology corporation, the Kapsch Group operates in a very dynamic environment. Risks are therefore an integral part of everyday business. For the company, risk means the possibility of deviating from company objectives, meaning that the definition of risk encompasses both positive (opportunities) as well as negative (risks) deviations from planned objectives.
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Risk management system The Kapsch Group has initiated numerous processes to make its risk management more effective and establish relevant standards. In the fiscal year 2012/13, risk management in the main group companies was consistently positioned and further developed as a separate role. The main focus of risk management is on project risk management and Enterprise Risk Management (ERM). The risk managers deploy institutionalized processes for collecting and analyzing all relevant opportunities and risks pertaining to projects and thus pave the way for the timely planning and implementation of control measures. In ERM, in addition to the risks of the group’s major customer projects, strategic, technological, organizational, financial, legal and IT risks are analyzed and reported to the management board on a semi-annual basis. The ERM approach is aimed at the early identification, assessment and control of the risks that may materially influence the achievement of the strategic and operational goals of the company. The primary objective in this context is not to avoid risks but to deal with risks in a controlled and deliberate manner and to recognize and realize opportunities as they arise over time in order to make a valuable contribution to the management of the company. The material risks of the group and the respective risk management measures are briefly explained below: Industry-specific risks Volatility of new orders. A major portion of the revenues of the Kapsch Group are generated from project business and are therefore subject to high volatility. In connection with large projects in the segment Traffic in particular, the Kapsch Group regularly participates in tenders for the implementation and operation of large electronic toll collection systems. On the one hand, there is a risk that tenders in which the Kapsch Group participates or plans to participate could be delayed or withdrawn, for instance as a result of political changes, appeals or legal actions by unsuccessful bidders. On the other hand, there is a risk that the Kapsch Group may not win with its bids for new projects due to technological, financial, formal or other reasons. Continuing revenues from maintenance agreements and from technical operations also depend on the successful participation in tenders for systems. In the past, the revenues of the segment Traffic have been heavily influenced by whether the given fiscal year had any RSP implementation projects. Significantly higher revenue figures were recorded in particular in 2003 (implementation of a national electronic truck tolling system in Austria), in 2006/07 (implementation of a national electronic truck tolling system in the Czech Republic) and in 2010/11 (implementation of an electronic tolling system in the South African province of Gauteng). In the 2011/12 fiscal year, a sizeable amount of revenue was generated from implementing a national electronic toll system in Poland, and in the 2012/13 financial year from implementing a national electronic truck toll system in Belarus. In addition, the strategy of the Kapsch Group aims at adequately counteracting volatility in incoming orders and therefore also in the sales performance, respectively, in the cash flow from operating activities. This is achieved on one hand through activities in three different business segments and, on the other, by increasing geographical diversification, broadening the customer base and product portfolio and by constantly increasing the share of revenue from technical operation, including maintenance of systems as well as the general increase of service shares. Furthermore, becoming involved in the commercial operation of toll systems, the significant growth in the components business in the segment Traffic and the increase in the services part of other segments have also contributed to increasing the share of regular and recurring revenues and cash flows.
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Risks of project execution. In connection with the execution of the projects outlined above, which very often were sophisticated and complex technical systems, product and system defects can occur due to the limited time available for implementation and testing. Unexpected project modifications, a shortage of skilled workers, quality problems, unexpected technical problems and performance problems with suppliers or consortium partners may have a negative effect on the adherence to delivery dates. If the contractual services are not fulfilled or if deadlines are exceeded, penalties usually have to be paid, often also damages, in some cases even damages for lost profits of the customer. Deadlines far exceeded are often covered by contract clauses that allow the customer to terminate the contract early. A significant delay in a project, a clear failure to meet the contractually agreed performance criteria or even failure in the implementation of a project would also reduce the chances of success for future tenders for systems. There is also the risk that Kapsch projects cannot be realized at the previously calculated costs. Additionally, the group is often contractually obliged to supply performance and deadline guarantees when implementing systems. The Kapsch Group employs project management methods and project risk management procedures based on the IPMA (International Project Management Association) standards in order to guard against risks associated with projects. Moreover, during internal project controlling, ongoing projects are subject to constant planning and analysis to minimize project risk. Additionally, given the variety of projects undertaken in the segment Enterprise, the following standards must be applied to minimize risks when executing projects: n
In the bidding phase, a comprehensive risk evaluation is carried out according to defined standards as part of the opportunity qualification process. The project execution is carried out by project managers certified according to IPMA standards.
n
The creditworthiness of the customer must be checked as part of the contract acquisition process. In cases in which there is any credit rating risk, the customer is asked to provide additional security.
Long-term contracts with public authorities. In many cases, contracts are awarded by public agencies or quasi-government companies. Framework agreements and service contracts especially in connection with toll projects may include terms and conditions that are not negotiable in a tender process and that may be disadvantageous for the Kapsch Group. Some multi-year contracts contain demanding requirements regarding the targeted performance of the implemented systems, components and processes. If these requirements are not met, this may result in substantial penalties, liability for damages or termination of contract. On the other hand, in some contracts substantial bonus payments may be earned in the case of over-performance. Moreover, in the case of long-term contracts, the margins earned can also differ from the original calculations due to changes in costs. Liabilities arising from contracts may include liabilities regarding customers’ loss of profit, product liabilities and other liabilities. While the Kapsch Group aims to include appropriate limitations to its liability in contracts, it is still impossible to guarantee that all contracts contain sufficient limitations to the group’s liability or that these limitations can be enforced under applicable law. Customer dependency risk. Although this risk has already been reduced significantly in the past years, in particular by means of regional diversification and continued growth via new customers, the sizes of the projects in the segments Traffic and Carrier mean there will always be a certain dependency on individual customers. However, since these customers are often closely associated with public authorities, there is generally also a high degree of stability and security. The Kapsch Group will continue to strive to keep this risk at a minimum by increasing the number of customers. Strategic risks Innovation leadership. The strong market position of the Kapsch Group is based to a large extent on its ability to develop state-of-the-art, efficient and reliable systems, components and products. In this context, the Kapsch Group is committed to an ongoing and consistent innovation process. In order to maintain its high technological standards, the Kapsch Group invests a considerable portion of its revenues in research and development activities. However, if the group does not succeed in developing innovative systems, components and products, this can be detrimental to the competitive position of the Kapsch
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Group. Since the striving for innovation leadership is based to a large extent on technology, internal know-how and intellectual property, the global increase in product piracy and reverse engineering may have negative effects on the Kapsch Group. In addition, any failures in protecting these technologies may have a negative impact on the competitive position of the Kapsch Group. Moreover, it is possible that systems, components, products or services could infringe on the intellectual property rights of third parties. The Kapsch Group places great importance on protecting technologies and the company’s internal know-how, such as through patents and non-disclosure agreements with contractual parties. In order to avoid legal action and court proceedings, the Kapsch Group constantly monitors potential infringements of intellectual property rights. However, the time-to-market principle always lies at the heart of all considerations. Acquisition and integration of companies as part of the group’s growth. One of the strategic objectives of the Kapsch Group is to expand internationally both through organic growth and via selected acquisitions and joint ventures. In implementing this strategy, the Kapsch Group has acquired companies around the world and integrated them into the group. However, a number of challenges remain in connection with this growth strategy in achieving the desired synergies and objectives in full with all of the future acquisitions and joint ventures. Country risk. Following the strong expansion of business activities in Eastern European countries (outside of EU) and states outside of Europe, the Kapsch Group is exposed to a heightened political risk. Significant and unforeseeable political changes can exert a major influence on the ability to implement or operate projects in these countries as well as to make funds available and/or withdraw them again. Interference with the property rights of the Kapsch Group or problems with business practices and activities may also arise. Financial risks The main instruments used to monitor and minimize risks are standardized planning and controlling processes, company-wide guidelines and regular reports. Foreign exchange risk. The Kapsch Group maintains branches, offices and subsidiaries in many countries outside the eurozone. A considerable portion of revenues and costs are denominated in the currencies of the respective foreign companies or a third currency, rather than in euros. Although the Kapsch Group aims to hedge the net currency position of the individual contracts as required, currency fluctuations may result in exchange rate losses that appear on the consolidated financial statements (transaction risk). In addition, risks arise from the conversion of separate financial statements of international companies into the group currency, the euro (translation risk). Fluctuations in exchange rates may also affect the competitive position of the Kapsch Group. In principle, only operational risks are hedged, speculative transactions are not permitted within the group. Interest rate risk. Within the framework of project financing, the group regularly agrees to variable interest rates that are tied to market interest rates (Euribor, Pribor, etc.). This exposes the Kapsch Group to interest rate risks. The Kapsch Group utilizes appropriate financial instruments to hedge against interest rate risks when these risks are significant. Liquidity risk. Sufficient financial resources have to be available for the Kapsch Group to meet its payment obligations at all times. Medium- and long-term financing must be available in order to carry out large-scale projects (such as implementing a national toll system under delayed payment terms from the client) and to acquire other companies. Additionally, implementing large-scale projects often requires the provision of significant bank guarantees to secure bid obligations (bid bonds) or to secure possible warranty claims (performance bonds).
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In financing agreements, the Kapsch Group is subject to the usual limitations of its business policy, such as, for instance, with regard to taking on additional borrowings, the use of assets as collateral or the provision of guarantees/sureties in favor of third parties. The availability of financing and bank guarantees depends on market conditions as well as the net assets and financial position of the Kapsch Group and the results of operations. A lack of liquid assets (even if the group is otherwise essentially solvent), of financing or of bank guarantees can have an extremely adverse impact on the net assets and financial position of the Kapsch Group and the results of operations. Furthermore, the liquidity risk is addressed by ongoing group-wide financial and cash planning. Potential liquidity shortages can be identified this way and adequate countermeasures can be taken in good time. Credit risk. The Kapsch Group is exposed to the risk of non-payment by customers. The credit ratings of new and existing customers are checked on a regular basis. Many of the key customers of the Kapsch Group are public authorities. There is also a risk that counterparties (including financial institutions assumed to have good credit ratings) of both original and derivative financial instruments cannot meet their payment liabilities when due. A payment default or the need to impair receivables can have an extremely adverse impact on the net assets and financial position of the Kapsch Group and the results of operations. Since the main customers are large public or formerly public network operators, the bad debt risk is considered to be very low. Nevertheless, the creditworthiness of new and existing customers is checked regularly. For some project-specific default risks and damages, insurance is taken out. Personnel risk The success of the Kapsch Group depends heavily on key personnel with many years of experience in the individual business segments. Moreover, the Kapsch Group’s ability to recruit qualified staff, integrate them into the company and retain them over the long term is crucial in the current growth phase. The loss of key personnel and difficulties in the recruitment of personnel can adversely affect the success of the group. The Kapsch Group has implemented a number of measures to deal with personnel risks, such as incentive schemes, training and further education opportunities, etc. in order to counter that risk. Legal risks In connection with participating in the tenders of public authorities, the construction of infrastructure for ITS solutions (such as toll stations) and the operation of toll systems, a number of regulations and legal requirements have to be observed. As a result of the increased expansion of the business activity into new regions and into selected new ITS fields, the risk of patent infringements or violations of intellectual property rights tends to increase. The group has implemented an active intellectual property (IP) management as a separate function. In order to avoid claims and lawsuits, the Kapsch Group regularly monitors potential violations of intellectual property rights prior to entering into new markets or regions. The various markets of the Kapsch Group are impacted by numerous legal provisions on an international and national level. In this context, the Kapsch Group is exposed to the risk that certain regulations, such as data protection laws or environmental and safety requirements, might have negative implications. Assessing and adhering to applicable legal regulations and requirements can result in considerable administrative and technical expense. If applicable regulations or official requirements cannot be met or fulfilled, this can lead to severe penalties and also reduce the possibility of (successfully) taking part in tenders or continuing with the given business activity.
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IT risks As a technology company, the Kapsch Group is exposed to common IT risks in terms of the security, confidentiality and availability of data. To this end, Kapsch has introduced an IT risk management system based on CRISAM®, the Corporate Risk and IT Security Application Method, and is also certified according to ISO/IEC 27001 (Information Security Management). With regard to the operation of toll systems, the Kapsch Group has certified “IT Service Management” according to ISO 20000 (cf. ITIL). Additionally, the introduction of a risk management system according to the Corporate Risk and IT-Security Application Method (CRISAM®) improved the management system for information security. In this context, Kapsch not only prioritizes greater IT security but also takes a holistic view of this crucial area. For example, building and infrastructure security were also increased, and measures were taken to raise employee awareness of security issues. Opportunities The Enterprise Risk Management approach of the Kapsch Group not only deals with risks but also with the regular identification, measurement and management of opportunities in its markets. Consequently, in the segment Traffic in particular significant opportunities are expected to arise from the increasing funding requirements of infrastructure projects, the worldwide growth in traffic, legislation to reduce environmental pollution from traffic, the increase in productivity of vehicles and of vehicle operation, as well as the rising demand for comfort for the travelers. In addition, numerous market opportunities arise in all segments as a result of the geographic diversification, the increasing broadening of the customer and product portfolio and from strategic partnerships. Overall assessment of the Kapsch Group’s risk position From the current perspective, no risks have been identified that could endanger the continued operations of the Kapsch Group. Increasing geographic and technological diversification, the constant broadening of the product portfolio, coupled with an increased share of recurring revenues (operation of and component supplies for toll systems and growing services in other segments) are planned to further reduce the concentration of risks in the future. Constantly striving to maintain its strong technology position, offer high-standard products and innovative solutions should ensure that our customers in all segments feel they have a partner in Kapsch that will continue to provide reliable long-term support and optimal solutions in the future. 3.5 Internal control system (ICS) Prompted by the listing of the subsidiary Kapsch TrafficCom AG, the Kapsch Group began back in the fiscal year 2009/10 to analyze and document accounting-related internal control processes in the segment Traffic. The results to date were presented to the Supervisory Board for evaluation and discussion in the quarterly meetings of the Audit Committee. The processes for group accounting and reporting are based on an accounting manual that is issued and regularly updated by KAPSCH-Group Beteiligungs GmbH. This manual sets forth the main accounting and reporting requirements for the group based on IFRS. Group guidelines, working instructions and defined procedures constitute another important cornerstone of ICS. The central elements of the ICS process include regular compliance checks according to the principle of dual control, the segregation of duties and defined actions for monitoring the effectiveness and efficiency of operating activities, the reliability of financial reporting, compliance with relevant legal regulations and safeguarding the company’s assets. The ICS guidelines follow the basic structures of the internationally recognized standards for internal control systems (COSO – Internal Control and Enterprise Risk Managing Frameworks of the Committee of Sponsoring Organizations of the Treadway Commission).
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The accounting of all group transactions is managed by a variety of software solutions. In a number of countries, the accounting has been outsourced to local tax accountants due to the size of the subsidiaries. Companies submit reporting packages to the head office on a quarterly basis containing all accounting data pertaining to the income statement, the statement of financial position, the cash flow statement and cost reports in the form of a contribution margin analysis directly through the central consolidation and reporting system (Hyperion Financial Management). The financial information is verified on a group-wide basis by the subsidiary and participation controlling department and subsequently forms the basis for the group reports issued in accordance with IFRS. The Supervisory Board is kept informed of business developments by the executive board during regular meetings by way of consolidated presentations consisting of segment reporting, earnings development analysis containing comparisons of current figures with figures from the budget and the previous period as well as selected financial figures, forecasts, group financial statements and changes in the number of employees and order intake. In keeping with the decentralized structure of the Kapsch Group, local management is responsible for implementing and monitoring the internal control system. The managing directors of the individual subsidiaries are ultimately responsible for establishing and designing internal control and risk management processes that meet the needs of the given company in view of accounting procedures as well as for ensuring compliance with the group-wide rules and guidelines in this respect. In order to provide better support to the management teams of the individual group companies, an ICS officer was established in the parent companies of the three key companies. This person is responsible for standardizing and constantly developing ICS throughout the individual company, monitoring the compliance and effectiveness of controls as well as the improvement of weaknesses identified, and reporting periodically to the Audit Committee of the Supervisory Board. To exploit synergies here throughout the entire group and share experiences, a Group Governance Committee was set up in the past fiscal year within the group, in which the ICS officers of the individual companies and Internal Audit regularly coordinate and push relevant topics and developments. The head of finance, the controlling department and the Internal Audit department monitor compliance with and the effectiveness of the ICS, and the results are regularly reported to the Audit Committee of the Supervisory Board. During the regular field reviews carried out by Internal Audit, one of the focal points is checking the reliability and functionality of the internal control system. This proven control process is gradually being extended to all areas and companies of the group. 3.6 Research and development Research and development activities are a high priority for the group in pursuing its strategic goals. Successful research is the foundation for the ongoing improvement of existing products and systems as well as the continuous reduction of production, installation, operating and maintenance costs, and for the early identification of new trends – all of which are essential for maintaining a technological and competitive advantage. The knowledge and application of entirely new technologies based on national and international standards provide the basis for successful business development and also open up opportunities to enter into new markets. To ensure the continued inventiveness of the company, all of the strategic business areas of the Kapsch Group have development departments that focus specifically on solutions for the needs of customers. The research and development activities are complemented in some areas by joint projects and close cooperation with universities, public and private institutes as well as technology and research companies. Kapsch has faced these challenges for many years and increased its investment in research and development in the 2012/13 fiscal year, despite lower revenues, in order to cement the long-term growth of the group.
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Development activities are particularly dynamic in the segments Traffic and Carrier: In the segment Traffic, the Kapsch Group has a global network of research and development centers in Vienna and Klagenfurt (Austria), Jönköping (Sweden), Bologna (Italy), Buenos Aires (Argentina), Toronto (Canada), Kingston (U.S.A.), Carlsbad (U.S.A.) and Cape Town (South Africa). As of 31 March 2013, Kapsch employed more than 500 (2011/12: approximately 400) engineers for various research and development activities in this segment. In the past fiscal year, the focus of research and development was on optimizing and deploying new roadside infrastructure that integrates all major sensor systems into a single common platform. The goal was to employ this platform in all international customer projects, ensure a high reuse of basic components and low maintenance. This sensor platform has been successfully launched in Portugal, the United States, Belarus and South Africa. Another key point was the gradual increase in the reuse and quality of centralized components, which were used for the first time in this form in Belarus. Key research activities include prototypes for ITS solutions, participation in standardizations for the European ITS-G5 and the U.S. WAVE technology regarding V2X communication (vehicle-to-vehicle and vehicle-to-infrastructure). Moreover, pilot and demonstration projects were successfully carried out regarding telematics and at the ITS World Congress 2012 in Vienna, the first 5.9 GHz Commercial Vehicle System Pilot in the U.S.A. and a 5.9 GHz Parking and Electronic Toll Collection Pilot in Singapore. The newly developed ITS transponder platform enables vehicle-to-vehicle and vehicle-to-infrastructure communication, which supplies static and dynamic vehicle information, such as size, weight, type of use, speed, direction and GPS coordinates. Research in the area of vehicle registration and classification resulted in the development of new video and sensor technologies with excellent performance. In the components business, special emphasis was again placed on the development of low-cost, low-energy and smaller generations of on-board units, which are based on the DSRC, GNSS and 5.9 GHz technology. Important organizational issues to reduce expenses and delivery times included process adjustments, product and quality improvements in the sub-systems of all research and development areas as well as the integration of development environments to cover the entire product life cycle (application lifecycle management). In the segment Carrier, the Kapsch Group has a network of research and development centers in Vienna (Austria), Paris (France), Friedrichshafen (Germany) and Zagreb (Croatia). Moreover, there has also been collaboration with outsourcing partners in Bangalore (India) and Nizhny Novgorod (Russia) and since mid-2011 in Istanbul (Turkey) and Mumbai (India). Thus, it is possible to offer customers a broader product portfolio and maintain the customer base in the long term. In the segment Carrier, the individual research and development centers are also organized as competence centers and are coordinated centrally by the product management. In addition to the basic technological developments, primarily in the GSM-R area, there are numerous customer-oriented development activities. This promotes developments that find application in products in the medium term with a broader range of customers. Many activities in research and development are performed in close cooperation with partners, be they customers or suppliers. As of 31 March 2013, the Kapsch CarrierCom Group employs more than 300 experts in its own research and development centers, including project management, quality assurance and testing, documentation and certification. If necessary, another 150 developers employed by partners in Russia, India and Turkey are available to work on Kapsch research and development projects.
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In addition to classic development services, 2nd and 3rd level support services are also provided to customers in the segment Carrier as well as in the segment Enterprise, and a training center is operated for intensive know-how transfer. Group-internal developments are on the increase in these segments as part of application solutions. Research costs are recognized as expenses. The same applies to development costs, unless the IFRS criteria for recognition as intangible assets are satisfied. Since the total-cost method is used, the research and development costs are reported within various items of the statement of comprehensive income, in particular under the costs of material and other production services, staff costs and other operating expenses. In the 2012/13 fiscal year, the Kapsch Group invested approximately EUR 96.6 million (2011/12: approximately EUR 84.8 million) in research and development, which equals an increase of EUR 11.8 million or 14 %. This means the group invests 10 % of total revenue in research and development. 3.7 Outlook In the coming fiscal year 2013/14, the Kapsch Group is still very optimistic regarding trends and developments in its markets and expects to continue following the current growth course into another successful year thanks to its strategies pursued in the individual areas and its sound balance sheet structure. The segment Traffic is well positioned with the new ITS strategy and new corporate structure for the coming developments. The 2013/14 fiscal year will initially be influenced by the continuation of existing projects, especially the ongoing progress in the large project in South Africa, which will impact on revenues and earnings. A tender has also been launched in Slovenia, while Kapsch TrafficCom expects further tenders in Belgium and the U.S.A. Extensive toll systems are being discussed in Bulgaria, in Russia and surrounding countries as well as in Germany. These discussions are followed with great interest. In the segment Carrier, strong competition accompanied by cost cutting on the part of network operators is expected to lead to a further decrease in the “Public Operators” business. Kapsch will compensate for this decline with a sound strategy based on a defined core portfolio, focusing on regional expansion in defined core markets in this field. Additionally, Kapsch wants to compensate for the lower revenues by focusing on communication solutions for railway companies (inter alia GSM-R), with additional investments in research and development as well as by expanding the portfolio – the leading market position with GSM-R provides many different and promising points of departure here. Developing and expanding new areas of business represents yet another focal segment, and Kapsch has identified major synergies between its public operators competencies and the fast growing “Machine to Machine” market. Developing existing railway competencies towards local public transport also seems to be an obvious and promising step. All in all, Kapsch intends to push forward with the new strategic focus of this segment. In the segment Enterprise, Kapsch will also continue to build on its position as an ICT service partner with an increased focus on outsourcing and operating. By focusing on current ICT challenges such as cloud computing & virtualization, mobility & consumerization, collaboration, security and big data, the group has opened up outstanding market potential that will be addressed in a targeted manner via the three portfolio segments. The know-how of staff and a network of international partners provide the possibility to “design”, implement and operate solutions that meet the demands of customers. Given this focus on services and the expected market consolidation among suppliers, Kapsch sees great opportunities to generate market share in this difficult environment and to strengthen revenue flows in the medium term.
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In all segments, Kapsch will continue to implement the strategy of expanding its market position through targeted acquisitions in existing and future areas of business. Prompt measures to optimize individual companies and enhance synergies will also be taken throughout the entire Kapsch Group. 3.8 Material events after the balance sheet date No major events occurred after the balance sheet date.
Vienna, 17 June 2013
Georg Kapsch
Kari Kapsch
Franz Semmernegg
Managing Director
Managing Director
Managing Director
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Consolidated Financial Statements as of 31 March 2013. Consolidated Statement of Comprehensive Income. All amounts in EUR
Note
2012/13
2011/12
Revenue
(1)
928,020,004
984,071,354
Other operating income
(2)
23,131,477
20,316,386
Changes in finished and unfinished goods and work in progress
(3)
4,482,508
-2,707,001
Other own work capitalized
280,792
196,825
Cost of materials and other production services
(4)
-483,741,162
-514,101,986
Staff costs
(5)
-281,996,147
-261,746,093
Amortization of intangible assets and depreciation of property, plant and equipment
(6)
-32,885,689
-32,668,779
Other operating expenses
(7)
-131,772,849
-126,385,280
25,518,932
66,975,426
Operating result Finance income
(8)
16,646,157
8,684,735
Finance costs
(8)
-19,679,183
-24,618,966
Financial result
(8)
-3,033,026
-15,934,231
(14)
647,653
313,363
23,133,559
51,354,558
Results from associates and joint ventures Profit before income taxes Income taxes
(9)
-4,724,940
-10,144,368
18,408,619
41,210,190
Available-for-sale financial assets
-10,228,801
11,489,396
Currency translation differences
-3,441,036
-2,583,620
Profit for the period Other comprehensive income for the period Gains/losses recognized directly in equity:
Income tax relating to components of other comprehensive income Other comprehensive income for the period, net of tax Total comprehensive income for the period
(10)
313,737
-51,328
-13,356,100
8,854,447
5,052,519
50,064,637
7,589,691
26,002,215
Profit attributable to: Equity holders of the company Minority interests
10,818,928
15,207,975
18,408,619
41,210,190
-114,732
30,993,216
Total comprehensive income attributable to: Equity holders of the company Minority interests
5,167,251
19,071,421
5,052,519
50,064,637
The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
74 | Consolidated Financial Statements
Consolidated Balance Sheet. All amounts in EUR
Note
31 March 2013
31 March 2012
ASSETS Non-current assets Property, plant and equipment
(12)
65,416,760
58,930,045
Intangible assets
(13)
189,345,135
191,326,900
Interests in associates and joint ventures
(14)
3,437,667
1,955,158
Other non-current financial assets and investments
(15)
42,818,231
55,418,353
Other non-current assets
(16)
3,655,293
3,980,087
Deferred tax assets
(23)
47,136,404
41,159,318
351,809,490
352,769,862
Current assets Inventories
(17)
118,378,982
99,629,058
Trade receivables and other current assets
(18)
354,708,049
387,116,348
Other current financial assets
(15)
5,677,862
10,698,967
Cash and cash equivalents
(19)
Total assets
119,536,109
105,606,578
598,301,002
603,050,952
950,110,492
955,820,813
EQUITY Capital and reserves attributable to equity holders of the company Share capital
(20)
Capital reserve Retained earnings and other reserves
726,728
726,728
66,222,590
66,222,590
174,716,458
193,094,244
241,665,776
260,043,562
Minority interests
103,436,151
111,830,332
Total equity
345,101,928
371,873,894
LIABILITIES Non-current liabilities Non-current financial liabilities
(21)
142,776,580
114,352,361
Non-current liabilities from finance lease
(22)
17,178,784
17,739,220
Liabilities from post-employment benefits to employees
(24)
46,673,502
42,359,894
Non-current provisions
(27)
4,056,613
3,567,722
Other non-current liabilities
(25)
6,049,105
4,050,457
Deferred income tax liabilities
(23)
13,857,158
18,597,878
230,591,742
200,667,531
120,325,362
90,599,536
Current liabilities Trade payables Current liabilities from finance lease
(22)
523,055
376,517
Other liabilities and deferred income
(26)
113,555,540
127,558,004
10,414,087
6,284,195
Current financial liabilities
(21)
72,872,152
106,606,160
Current provisions
(27)
Current tax payables
56,726,627
51,854,976
374,416,822
383,279,388
Total liabilities
605,008,564
583,946,919
Total equity and liabilities
950,110,492
955,820,813
The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
Consolidated Financial Statements | 75
Consolidated Statement of Changes in Equity. All amounts in EUR Minority interests
Total equity
79,239,798
273,076,797
25,944,093
62,866,772
Attributable to equity holders of the company
Carrying amount as of 31 March 2011
Share capital
Capital reserve
Other reserves
Consolidated retained earnings
726,728
66,222,590
1,972,530
124,915,152
Effects from changes in interests in subsidiaries
36,922,680
Effects from business combinations Dividends Contributions from shareholders
109,079
109,079
-1,800,000
-12,534,058
-14,334,058
26,002,215
15,207,975
41,210,190
90,667
Result for the period
90,667
Other comprehensive income for the period: Currency translation differences
-2,057,932
-525,688
-2,583,620
Fair value gains/losses on available-for-sale financial assets
7,048,933
4,389,134
11,438,067
149,117,367
111,830,332
371,873,894
-1,699,341
-2,762,395
-17,200,000
-11,862,092
-29,062,092
7,589,691
10,818,928
18,408,619
Carrying amount as of 31 March 2012
726,728
66,222,590
Effects from acquisition and sale of minority interests
43,976,877 -1,063,054
Dividends Result for the period Other comprehensive income for the period: Currency translation differences
-1,693,949
-1,747,088
-3,441,036
Fair value gains/losses on available-for-sale financial assets
-6,010,474
-3,904,589
-9,915,063
103,436,151
345,101,928
Carrying amount as of 31 March 2013
726,728
66,222,590
35,209,401
139,507,058
Share capital The registered share capital of the parent company amounts to EUR 726,728. The share capital is fully paid in. Capital reserve Capital reserve includes those reserves that have not been established from the result of prior periods. Other reserves Other reserves contain contributions from shareholders, effects of changes in the investment interest held in subsidiaries, effects from the acquisition and sale of minority interests as well as reserves from other comprehensive income, for example currency translation differences and fair value gains/losses on available-for-sale financial assets after deduction of deferred taxes. The effects from the acquisition and sale of minority interests in the fiscal year 2012/13 mainly result from the acquisition of the remaining 32 % shares in Kapsch CarrierCom d.o.o., Zagreb, Croatia, from TIS Grupa as of 30 May 2012. The effects from changes in interests in subsidiaries in the fiscal year 2011/12 result on the one hand from the sale and on the other hand from the issuance of shares in Kapsch TrafficCom AG. On 27 July 2011, new shares of 800,000 in Kapsch TrafficCom AG were issued. The placement price was fixed at EUR 61.25 per share, whereby Kapsch Group obtained gross issue proceeds of TEUR 49,000. On 2 March 2012, the company sold 300,000 shares in Kapsch TrafficCom AG. The purchase price was EUR 62.50 per share, whereby Kapsch Group received gross proceeds of TEUR 18,750. After these transactions the company holds a stake of 61.90 % in Kapsch TrafficCom AG. The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
76 | Consolidated Financial Statements
Consolidated retained earnings Retained earnings include the net profit for the fiscal year as well as past earnings of the entities included in consolidation, to the extent that these results have not been distributed as dividends. Minority interests Minority interests represent the third party shares in the equity of consolidated subsidiaries.
Consolidated Cash Flow Statement. All amounts in EUR
Note
2012/13
2011/12
25,518,932
66,975,426
Cash flow from operating activities Operating result Adjustments for non-cash items and other reconciliations: Depreciation and amortization Impairment charge Increase/decrease in obligations for post-employment benefits Increase/decrease in other non-current liabilities and provisions
(6)
29,702,090
30,231,225
(6,13)
3,183,599
2,437,555
(24)
4,313,608
2,172,504
(25, 27)
1,789,897
-2,853,350 6,059,979
Increase/decrease in trade receivables (non-current)
(16)
3,126,137
Increase/decrease in other non-current receivables
(16)
2,081,016
1,158,133
Increase/decrease in trade payables (non-current)
(25)
-2,309,596
-3,849,273
Other (net)
-5,368,056
-7,059,152
62,037,628
95,273,046
Changes in net current assets: Increase/decrease in trade receivables and other assets (excluding deferred financing costs)
(18)
33,000,089
-90,979,252
Increase/decrease in inventories
(17)
-18,666,655
-7,249,582
Increase/decrease in trade payables and other current payables
(26)
13,786,658
-69,023
Increase/decrease in current provisions
(27)
4,871,651
9,964,822
32,991,742
-88,333,035
95,029,371
6,940,011
Cash flow from operations Interest received
(8)
2,118,070
1,640,908
Interest payments
(8)
-12,381,183
-14,477,353
-12,267,426
-17,086,502
72,498,831
-22,982,936
Net payments of income taxes Net cash flow from operating activities
The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
Consolidated Financial Statements | 77
All amounts in EUR
Note
Balance brought forward
2012/13
2011/12
72,498,831
-22,982,936
Cash flow from investing activities Purchase of property, plant and equipment
(12)
-23,917,570
-17,679,734
Purchase of intangible assets
(13)
-9,844,554
-4,564,473
Purchase of securities, investments and other non-current financial assets
(15)
-149,538
-7,188,213
Payments for the acquisition of companies (net of cash acquired) and for asset-deals
(29)
-4,018,498
-540,382
Payments for the acquisition of shares in companies consolidated at equity
(14)
-1,546,833
-32,679
Payments for the acquisition of minority interests Proceeds from the disposal of property, plant and equipment and intangible assets Proceeds from the sale of securities and other financial assets Proceeds from the sale of shares in companies Dividends received from associates and joint ventures Net cash flow from investing activities
-2,400,000
0
3,260,541
2,476,788
15,307,900
9,739,407
4,300
0
317,681
388,723
-22,986,571
-17,400,563
Cash flow from financing activities Increase from shares issued, shares sold in a subsidiary and contributions from shareholders Dividends paid Dividends paid to minority shareholders
0
62,957,436
-17,200,000
-1,800,000
-11,862,092
-12,534,058
Increase in other non-current financial liabilities
(21)
60,368,117
182,837
Decrease in other non-current financial liabilities
(21)
-8,628,094
-4,094,132
Increase in current financial liabilities
(21)
14,172,592
48,051,525
Decrease in current financial liabilities
(21)
-71,121,947
-25,925,807
Decrease in liabilities from finance lease
(22)
-413,899
-482,579
-34,685,323
66,355,222
14,826,937
25,971,722
105,606,578
80,216,956
14,826,937
25,971,722
Net cash flow from financing activities Net increase/decrease in cash and cash equivalents Change in cash and cash equivalents Cash and cash equivalents at beginning of year
(19)
Net increase/decrease in cash and cash equivalents Currency translation differences on cash and cash equivalents Cash and cash equivalents at end of year
(19)
-897,406
-582,100
119,536,109
105,606,578
Notes to the Consolidated Financial Statements. General Information. The Kapsch Group operates mainly in the areas of telecommunications and traffic-control systems and related areas. It holds shares in domestic and foreign companies. The group’s main markets include Austria, Central and Eastern Europe, and in the area of traffic telematics also the European Union and all other continents. The parent company is headquartered in Vienna.
The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
78 | Consolidated Financial Statements
The business activities of the Kapsch Group are subdivided into the following four segments: n
Traffic (Intelligent Transportation Systems – ITS solutions)
n
Carrier (communication solutions for mobile and fixed network operators and railway operators)
n
Enterprise (speech, data and IT solutions for business customers including public authorities)
n
Others
The segment Traffic relates to the worldwide development, installation and operation of Intelligent Transportation Systems solutions. Furthermore, services for maintenance and operation and components in the area of ITS solutions are provided. The segment Carrier relates to operators of public communications networks and also provides communication solutions for railway operators (GSM-R) in Europe, Asia and North Africa. The range covers the complete area of modern communication networks based on our own products and integrated solutions of partners. The segment Enterprise relates to the system integration business of corporate IT and communication solutions in CEE. The segment Others relates to all tasks for managing the group as well as to solutions for intelligent energy management.
Development of the Group Structure. The parent company (reporting entity) of this group is KAPSCH-Group Beteiligungs GmbH, Vienna. The immediate parent company of the reporting entity is DATAX HandelsgmbH, Vienna, which is the sole shareholder of KAPSCH-Group Beteiligungs GmbH, Vienna. DATAX HandelsgmbH, Vienna, is the controlling entity of the reporting entity and the ultimate parent of the Kapsch Group. The group currently holds 61.90 % of the shares in Kapsch TrafficCom AG, Vienna. Since 26 June 2007, the free float shares of Kapsch TrafficCom AG, Vienna, have been listed in the Prime Market segment of the Vienna Stock Exchange.
Consolidated Group. The parent company, KAPSCH-Group Beteiligungs GmbH, is a public limited company incorporated and domiciled in Vienna, Austria. The address of its registered office is 1120 Vienna, Am Europlatz 2. The following subsidiaries are part of the consolidated group: n
KAPSCH-Group Beteiligungs GmbH, Vienna
n
Kapsch Aktiengesellschaft, Vienna
n
Kapsch Partner Solutions GmbH, Vienna
n
Austria Telecommunication International GmbH, Vienna
n
Kapsch ConnexPlus GmbH, Vienna
n
FIPOFIX GmbH, Vienna *)
n
Kapsch CarrierCom AG, Vienna
n
Kapsch CarrierCom Kft., Budapest, Hungary
n
Kapsch EOOD, Sofia, Bulgaria
n
Kapsch DOOEL, Skopje, Macedonia
n
Kapsch d.o.o. Beograd, Belgrade, Serbia
n
Kapsch CarrierCom d.o.o., Zagreb, Croatia
The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
Consolidated Financial Statements | 79
n
Kapsch d.o.o., Ljubljana, Slovenia
n
Kapsch FE, Minsk, Republic of Belarus
n
Kapsch CarrierCom France SAS, Paris, France
n
Kapsch CarrierCom Deutschland GmbH, Frankfurt am Main, Germany
n
Kapsch CarrierCom Taiwan Co., Ltd., Taipei, Taiwan
n
Kapsch CarrierCom UK Ltd., Middlesex, Great Britain
n
Kapsch CarrierCom España, S.L.U., Madrid, Spain
n
Kapsch CarrierCom Russia OOO, Moscow, Russia
n
Kapsch CarrierCom SARL, Rabat, Marocco *)
n
Kapsch CarrierCom – Unipessoal LDA, Lisbon, Portugal *)
n
Kapsch CarrierCom Canada Inc., Mississauga, Canada *)
n
Kapsch CarrierCom Hong Kong Ltd., Hong Kong, People’s Republic of China
n
Foshan Shunde Kapsch CarrierCom Consulting Ltd., Foshan, People’s Republic of China ***)
n
Kapsch CarrierCom Italia S.R.L., Rome, Italy
n
Kapsch CarrierCom Sp. z o.o., Warsaw, Poland
n
Kapsch CarrierCom s.r.o., Prague, Czech Republic
n
Kapsch (Beijing) Information and Communication Technology Co., Ltd., Beijing, People’s Republic of China
n
Kapsch BusinessCom AG, Vienna
n
Kapsch s.r.o., Bratislava, Slovakia
n
Focus Net Consulting S.A., Sibiu, Romania
n
Squario IT Solutions S.A., Bucharest, Romania
n
Kapsch BusinessCom s.r.o., Prague, Czech Republic
n
Kapsch Sp. z o.o., Warsaw, Poland
n
Kapsch S.R.L., Bucharest, Romania
n
Kapsch BusinessCom Kft., Budapest, Hungary
n
Kapsch Smart Energy GmbH, Vienna
n
Kapsch Cashpooling and Hedging GmbH, Vienna
n
Kapsch IT Services for finance and industries GmbH, Vienna
n
Kapsch BusinessCom d.o.o., Ljubljana, Slovenia *)
n
Data Storage s.r.o., Prague, Czech Republic **)
n
FUN-AGENT d.o.o., Zagreb, Croatia
n
Kapsch TrafficCom AG, Vienna
n
Kapsch TrafficCom Construction & Realization spol. s r.o., Prague, Czech Republic
n
Kapsch TrafficCom Ltd., Manchester, United Kingdom
n
Kapsch Components GmbH & Co KG, Vienna
n
Kapsch Components GmbH, Vienna
n
ArtiBrain Software Entwicklungsgesellschaft mbH, Vienna
n
Kapsch-Busi S.p.A., Bologna, Italy
n
Kapsch TrafficCom d.o.o., Ljubljana, Slovenia
n
Kapsch TrafficCom S.r.l., Milan, Italy
n
Transport Telematic Systems LLC, Abu Dhabi, United Arab Emirates
n
Kapsch TrafficCom Russia OOO, Moscow, Russia
n
Kapsch Telematik Technologies Bulgaria EAD, Sofia, Bulgaria
n
Kapsch TrafficCom Argentina S.A., Buenos Aires, Argentina
n
Kapsch TrafficCom Kazakhstan LLC, Astana, Kazakhstan
n
Kapsch Telematic Services IOOO, Minsk, Republic of Belarus
n
Jibesoev GmbH, Vienna
n
Kapsch TrafficCom AB, Jönköping, Sweden
n
Kapsch TrafficCom Australia Pty Ltd, Melbourne, Australia
The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
80 | Consolidated Financial Statements
n
Kapsch TrafficCom Chile S.A., Santiago de Chile, Chile
n
Kapsch TrafficCom do Brasil, Sao Paulo, Brazil *)
n
Kapsch TrafficCom France SAS, Paris, France
n
Kapsch TrafficCom (M) Sdn Bhd, Kuala Lumpur, Malaysia
n
Kapsch TrafficCom Limited, Auckland, New Zealand
n
Kapsch TrafficCom PTE. LTD., Tripleone Somerset, Singapore *)
n
Kapsch TrafficCom South Africa (Pty) Ltd., Johannesburg, South Africa
n
Electronic Toll Collection (Pty) Ltd., Centurion, South Africa
n
Kapsch TrafficCom South Africa Holding (Pty) Ltd., Cape Town, South Africa
n
TMT Services and Supplies (Pty) Ltd., Cape Town, South Africa
n
TMT Services and Supplies (Gauteng) (Pty) Ltd., Cape Town, South Africa
n
TMT Services and Supplies (North) (Pty) Ltd., Cape Town, South Africa
n
Berrydust 51 (Pty) Ltd., Cape Town, South Africa
n
Kapsch TrafficCom B.V., Amsterdam, Netherlands
n
Kapsch TrafficCom Holding II US Corp., McLean, U.S.A.
n
Kapsch TrafficCom IVHS Technologies Holding Corp., McLean, U.S.A.
n
Kapsch TrafficCom IVHS Holding Corp., McLean, U.S.A.
n
Kapsch TrafficCom IVHS Inc., McLean, U.S.A.
n
Kapsch TrafficCom Canada Inc., Mississauga, Canada
n
Kapsch TrafficCom IVHS, S.A. de C.V., Mexico City, Mexico
n
Kapsch TrafficCom Holding Corp., McLean, U.S.A.
n
Kapsch TrafficCom U.S. Corp., McLean, U.S.A.
n
KapschTrafficCom Inc., Carlsbad, U.S.A.
n
Kapsch Telematic Services GmbH, Vienna
n
Kapsch Telematic Services Kft., Budapest, Hungary
n
Kapsch Telematic Services spol. s r.o., Prague, Czech Republic
n
Kapsch Telematic Services GmbH Deutschland, Berlin, Germany
n
Kapsch Telematic Services Danmark ApS, Copenhagen, Denmark
n
Kapsch Telematic Services Solutions A/S, Copenhagen, Denmark
n
Kapsch Telematic Services Sp. z o.o., Warsaw, Poland
n
VTI Industrial Electronics (Proprietary Limited) (South Africa), Germiston, South Africa
In the fiscal year 2012/13, SafeTCam (Pty) Ltd., Capetown, South Africa, Traffic Software Solutions (Pty) Ltd., Capetown, South Africa, Electronic Tolling Operations (Pty) Ltd., Capetown, South Africa, Crestwave 61 (Pty) Ltd., Capetown, South Africa, Crestwave 63 (Pty) Ltd., Capetown, South Africa, as well as Kapsch CarrierCom US Corp., Dallas, U.S.A., were liquidated. The following entities are accounted for using the equity method: Associates: n
Kapsch Financial Services GmbH, Vienna
n
SIMEX, Integración de Sistemas, S.A.P.I. de C.V., Mexico **)
Kapsch TrafficCom Russia OOO, Moscow, Russia, sold the shares in the joint venture, LLC United Toll Systems OOO, Moscow, Russia, to the majority shareholder Mostotrest. Alcatel-Lucent Kapsch Telecommunication GmbH, Vienna, was liquidated in the fiscal year 2012/13. *) Companies newly established in the fiscal year 2012/13 **) Acquisition in the fiscal year 2012/13 ***) In liquidation The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
Consolidated Financial Statements | 81
Accounting Policies. The accounting policies applied in the preparation of these consolidated financial statements are set out below:
1 Basis of preparation Pursuant to Section 245a Austrian Commercial Code (UGB), the consolidated financial statements as of 31 March 2013 have been prepared in accordance with International Financial Reporting Standards (IFRS) as well as the Interpretations of the International Financial Reporting Interpretations Committee (IFRIC) as adopted by the European Union (EU). The consolidated financial statements as of 31 March 2013 are prepared under the historical cost convention, with the exception of availablefor-sale securities and derivative financial instruments, which are measured at fair value at the balance sheet date. The preparation of the consolidated financial statements in conformity with IFRS requires the use of estimates and assumptions which influence the amount and presentation of assets and liabilities reported at the balance sheet date and income and expenses recorded during the reporting period. Although these estimates are made by the executive board to the best of their knowledge and are based on current transactions, actual figures may differ from these estimates. The areas involving a higher degree of judgment or complexity as well as areas where assumptions and estimates are material to the consolidated financial statements are disclosed in note 24. For ease of presentation, amounts have been rounded and, unless indicated otherwise, are presented in thousand euro (TEUR). However, calculations are done using exact amounts, including the digits not shown, which may lead to rounding differences. a) New and amended standards and interpretations that have been adopted by the EU and applied for the first time in the fiscal year 2012/13 There are no new or amended standards and interpretations that are effective for the first time for the fiscal year 2012/13 that would have a material impact on the group. b) Standards, interpretations and amendments to published standards that are not yet effective and that have not been early adopted by the group IAS 19, ‘Employee benefits’, was amended in June 2011. The impact on the group will be as follows: to eliminate the corridor approach currently applied by the group and recognize all actuarial gains and losses in other comprehensive income as they occur; to immediately recognize all past-service costs; and to replace interest cost and expected return on plan assets with a net interest amount that is calculated by applying the discount rate to the net defined benefit liability (asset). In accordance with IAS 19R, entities have to apply this standard to annual periods beginning on or after 1 January 2013. The group will apply IAS 19R in the next fiscal year 2013/14. Had the group applied IAS 19R already in fiscal year 2012/13, the operating result would have been increased by TEUR 338 and the total comprehensive income for the period would have been reduced by TEUR 7,264. The provisions at the balance sheet date as of 31 March 2013 would have been higher by TEUR 9,721. IFRS 9, ‘Financial instruments’, addresses the classification, measurement and recognition of financial assets and financial liabilities. IFRS 9 was issued in November 2009, October 2010 and December 2011. It replaces the parts of IAS 39, ‘Financial Instruments: Recognition and Measurement’, that relate to the classification and measurement of financial instruments. IFRS 9 requires financial assets to be classified into two measurement categories: those measured at fair value and those measured at amortized cost. The determination is made at initial recognition. The classification depends on the entity´s business model for managing its financial instruments and the contractual cash flow characteristics of the instrument. For financial liabilities, the standard retains most of the IAS 39 requirements. The main change is that, in cases where the fair value option is taken for
The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
82 | Consolidated Financial Statements
financial liabilities, the part of a fair value change due to an entity´s own credit risk is recorded in other comprehensive income rather than in the statement of comprehensive income, unless this creates an accounting mismatch. The group will adopt IFRS 9 no later than the accounting period starting on 1 April 2015. Furthermore, the group will analyze the additional phase of IFRS 9 as soon as it is adopted by the IASB. IFRS 10, ‘Consolidated financial statements’, builds on existing principles and introduces a single consolidation model for all entities; this model focuses on the subsidiary’s control by the parent company. Furthermore, the standard provides additional guidance to assist in the determination of control where this is difficult to assess. The group will apply IFRS 10 no later than the accounting period beginning on 1 April 2014. At present, the group does not expect IFRS 10 to have significant impacts on the assets and liabilities, the financial position and operating results of the group as well as on the group’s presentation. IFRS 11, ‘Joint Arrangements’, changes the definition of joint ventures. In accordance with IFRS 11, a joint arrangement is defined as an agreement which gives two or more parties joint control of this arrangement. Joint control means the contractually agreed sharing of control of an arrangement and exists only when decisions about the relevant activities that significantly affect the returns of the arrangement require the unanimous consent of the parties sharing control. Each party to the joint arrangement has to account for its rights and obligations from a joint arrangement. The standard focuses on the sharing of the rights and obligations of the joint arrangement rather than on its legal form. According to IFRS 11 there are only two types of joint agreements: (i) joint operations and (ii) joint ventures. The previously applicable proportionate consolidation method will no longer be permitted for joint ventures. The parties to a joint venture have to account for the joint venture by using the equity method. IFRS 11 was adopted by European Commission Regulation dated 11 December 2012 and has to be applied for the first time retrospectively for annual periods beginning on or after 1 January 2014. The group will apply IFRS 11 in the fiscal year beginning on 1 April 2014. At present, the group does not expect IFRS 11 to have significant impacts on the assets and liabilities, the financial position and operating results of the group as well as on the group’s presentation. IFRS 12, ‘Disclosure of Interests in other Entities’, summarizes the revised disclosures with regard to IAS 27 and IFRS 10, IAS 31 and IFRS 11 and IAS 28 in one standard. The group will apply IFRS 12 in the accounting period beginning on 1 April 2014. At present, the group does not expect IFRS 12 to have significant impacts on the assets and liabilities, the financial position and operating results of the group as well as on the group’s presentation. IFRS 13, ‘Fair Value Measurement’, aims to improve consistency and reduce complexity by providing a definition of fair value and information on the disclosures to be made. The requirements, which are largely aligned between IFRS and US GAAP, do not extend the use of fair value accounting but provide guidance on how it should be applied where its use is already required or permitted by other standards within IFRS or US GAAP. The group will apply IFRS 13 in the accounting period beginning after 1 April 2013. At present, the group does not expect IFRS 13 to have significant impacts on the assets and liabilities, the financial position and operating results of the group as well as on the group’s presentation. IAS 32, ‘Financial Instruments: Presentation’, complements the principles for setting off financial assets and financial liabilities. Netting of financial assets and financial liabilities will still only be possible if an entity currently has a legally enforceable right to set off the recognized amounts, it intends either to settle on a net basis or to realize the asset and settle the liability simultaneously. Changes of this standard complement and clarify the application guidance with regard to the terms ‘present times’ and ‘simultaneousness’. The group will apply IAS 32R in the fiscal year beginning on 1 April 2014. At present, the group does not expect IAS 32R to have material impacts on the assets and liabilities, the financial position and operating results of the group as well as the group’s presentation. IFRS 7, ‘Financial Instruments: Disclosures’, will provide for additional disclosures with regard to the offsetting of financial assets and financial liabilities in the future. The group applies IFRS 7R retrospectively in the fiscal year beginning on 1 April 2013. At present, the group does not expect IFRS 7R to have material impacts on the assets and liabilities, the financial position and operating results of the group as well as the group’s presentation.
The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
Consolidated Financial Statements | 83
IAS 1, ‘Presentation of Financial Statements’, the changes aim at clarifying the presentation of the increasing number of items under other operating income. In the future, it will only be differentiated between items of other operating income that may be reclassified to the profit for the period and items that will never be reclassified. The changes do not deal with the contents of other operating income. The change was adopted on 5 June 2012 by the EU and will be applied by the group in the fiscal year beginning on 1 April 2013. IAS 27, ‘Separate Financial Statements’, will in the future only include requirements for separate financial statements in accordance with IFRS and be applied by the group in the fiscal year beginning on 1 April 2014. At present, the group does not expect IAS 27 to have material impacts on the assets and liabilities, the financial position and operating results of the group as well as the group’s presentation. IAS 28, ‘Investments in Associates and Joint Ventures’, extends the compulsory application of the equity method to joint ventures. The change will be applied in the fiscal year beginning on 1 April 2014. At present, the group does not expect IAS 28 to have material impacts on the assets and liabilities, the financial position and operating results of the group as well as the group’s presentation. IFRS 1, ‘First-time Adoption of International Financial Reporting Standards’ (Revised), contains exemptions in the event of severe hyperinflation and eliminates fixed dates for first-time adopters. EU entities have to apply the new requirements for the first time in the fiscal year beginning on or after 1 January 2013. This change does not affect the group, since the group already prepares the consolidated financial statements in accordance with IFRS. IFRIC 20, ‘Stripping Costs in the Production Phase of a Surface Mine’, treats questions relating to the recognition and measurement of waste removal costs incurred in surface mining activities. In accordance with the interpretation, entities have to derecognize capitalized stripping assets through revenue reserves in the opening balance, if applicable, provided that these assets cannot be associated with an identifiable part of a mining asset. IFRIC 20 applies to annual periods on or after 1 January 2013 and does not affect the group. There are no other standards or interpretations that are not yet effective that would be expected to have a material impact on the group. The consolidated financial statements were prepared by the executive board on the undersigned date and released for publication. The entity financial statements of the parent company, which have been included in the consolidated financial statements after transition to the applicable accounting standards, have not yet been approved by the supervisory board on the undersigned date.
2 Consolidation a) Subsidiaries Subsidiaries are all entities (including special purpose entities) over which the group has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the group controls another entity. Subsidiaries are fully consolidated (full consolidation) from the date on which control is transferred to the group. They are deconsolidated from the date that control ceases.
The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
84 | Consolidated Financial Statements
Inter-company transactions, balances as well as unrealized gains and losses on transactions between group companies are eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the group. b) Transactions with non-controlling interests The group treats transactions with non-controlling interests as transactions with equity owners of the group. For purchases of non-controlling interests, the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals of non-controlling interests are also recorded in equity. When the group ceases to have control or significant influence, any retained interest in the entity is re-measured to its fair value, with the change in carrying amount recognized in the profit for the period. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognized in other comprehensive income in respect of that entity are accounted for as if the group had directly disposed of the related assets or liabilities. This means that amounts previously recognized in other comprehensive income are reclassified from equity to the profit for the period. c) Joint ventures Joint ventures are entities where two or more ventures are bound by a contractual arrangement and this contractual arrangement establishes joint control. The group accounts for joint ventures using the equity method. d)
Associates Associates are entities in which the group has significant influence but no control, generally accompanied by a shareholding of between 20 % and 50 % of the voting rights. Associates are accounted for using the equity method. From the date of acquisition, the group’s share of its associates’ post-acquisition profits or losses is recognized in the statement of comprehensive income, and its share of post-acquisition movements in reserves is recognized in reserves. Goodwill on acquisition of associates is included in the investment in associates, net of any impairment losses. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the group does not recognize further losses unless it has incurred obligations or made payments on behalf of the associate. If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognized in other comprehensive income are reclassified to the profit for the period where appropriate. Significant unrealized gains from transactions between the group and associates are eliminated to the extent of the group’s interest in the associates. Unrealized losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
Consolidated Financial Statements | 85
3 Business combinations The group uses the acquisition method of accounting to account for business combinations as at the acquisition date. The acquisition date relates to the date of transfer of control to the group. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, the group takes into consideration potential voting rights that are currently exercisable. The consideration transferred for the acquisition is the fair values of the assets transferred, the equity interests issued by the group and the liabilities incurred or assumed as at the acquisition date. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Costs related to acquisitions are expensed in full as incurred. In accordance with IFRS 3, any assets acquired and liabilities (including contingent liabilities) assumed in a business combination are measured at their full fair values, irrespective of the extent of any non-controlling interests. Intangible assets are recognized separately from goodwill if they are separable from the entity or result from statutory, contractual or other legal rights. No new restructuring provisions may be recognized within the scope of the purchase price allocation. Any remaining positive differences, which compensate the seller with market opportunities that cannot be identified any closer and with development potential, are capitalized as goodwill in the respective cash generating unit (CGU). Any contingent consideration to be transferred by the group is recognized at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is measured in accordance with IAS 39 and a resulting profit or loss recognized in the statement of comprehensive income. Contingent consideration that is classified as equity is not remeasured, and its subsequent settlement is accounted for within equity. Any contingent consideration included in the financial statements resulting from business combinations prior to the application of IFRS 3 (2008) is still treated in accordance with the requirements of IFRS 3 (2004). Any hidden reserves and liabilities uncovered are carried forward in line with the corresponding assets and liabilities. The determination of the fair values requires certain estimates and assumptions, in particular of the acquired intangible assets and property, plant and equipment, of the liabilities assumed as well as the useful lives of the acquired intangible assets and property, plant and equipment. The group recognizes any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the recognized amounts of the acquiree’s net assets. The group measures the goodwill at the acquisition date as: n
The fair value of the consideration transferred – if necessary plus
n
The value recognized of all recognized non-controlling interests over the acquiree – plus
n
The fair value of the acquirer’s previously held equity interest in the acquiree if the combination is achieved in stages – less
n
The net amount (in general of the fair values) of the identifiable assets acquired and liabilities assumed.
If the excess is negative, a gain on a bargain purchase is recognized directly in the profit for the period.
The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
86 | Consolidated Financial Statements
4 Foreign currency translation Items included in the financial statements of each of the group’s entities are measured using the currency of the primary economic environment in which the entity operates (functional currency). The consolidated financial statements are presented in euros, which is the Kapsch Group’s presentation currency. a) Translation of financial statements in foreign currencies In accordance with IAS 21, financial statements of foreign subsidiaries which are included in the consolidated financial statements are translated as follows: The statement of comprehensive income of foreign entities (except for foreign entities in hyper-inflationary countries) that have a functional currency different from the euro are translated into the group’s presentation currency at average exchange rates of the fiscal year, balance sheets at the prevailing mean exchange rate at the balance sheet date. The reference rates of the European Central Bank (ECB) and Deutsche Bundesbank, which are accessible via Österreichische Nationalbank’s website, serve as the basis for the translation. Exchange differences arising from the translation of the net investment subsidiaries are recognized in shareholders’ equity under “Currency translation differences”. When a foreign entity is sold, such exchange differences are recognized in the statement of comprehensive income as part of the gain or loss on disposal of shares in associates. Goodwill and fair value write-ups arising on the acquisition of a foreign entity are treated as assets and liabilities of the respective foreign entity and translated at the closing rate. The main exchange rates used during the fiscal year are shown below: Average exchange rate EUR
Exchange rate at the closing date
2012/13
2011/12
2012/13
2011/12
AUD
1.251
1.319
1.231
1.284
CAD
1.296
1.371
1.302
1.331
CZK
25.277
24.722
25.740
24.730
PLN
4.168
4.174
4.180
4.152
SEK
8.612
9.002
8.355
8.846
USD
1.292
1.388
1.281
1.336
ZAR
10.946
10.210
11.820
10.232
In the fiscal year 2011/12, Kapsch Telematic Services IOOO, Minsk, Republic of Belarus, was founded. As of the balance sheet date of 31 March 2013, the Republic of Belarus is still classified as a hyperinflationary economy. The group analyzed if IAS 29 (Financial Reporting in Hyperinflationary Economies) had to be applied to the subsidiary. Since the euro is the functional currency and not the Belorussian ruble (BYR), the classification of the Republic of Belarus as a hyperinflationary economy has no impact on accounting for the Belorussian subsidiary and thus also does not affect the present consolidated financial statements. IAS 29 will not be applied. b) Foreign currency transactions Foreign currency transactions are translated into the presentation currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies are recognized in the statement of comprehensive income. Non-monetary items in the balance sheet are translated at historical exchange rates; non-monetary items which were recognized at their lower net realizable value are translated at the exchange rate prevailing at the time of measurement.
The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
Consolidated Financial Statements | 87
Foreign exchange gains and losses that relate to cash and cash equivalents and borrowings are presented in the statement of comprehensive income within finance income or cost. All other foreign exchange gains and losses are presented in the statement of comprehensive income in other operating income or other operating expenses.
5 Financial instruments and risk management Primary financial instruments presented in the balance sheet include ‘cash and cash equivalents’, ‘securities’, ‘financial assets and investments’, ‘receivables and payables’ and ‘loans’. For the accounting policies applicable to these items, refer to the explanation of the respective balance sheet item. The group’s activities expose it to a variety of financial risks, particularly foreign exchange risk, interest rate risk and credit risk. The group’s risk management focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the group’s financial performance. The group does not employ hedge accounting as stated in by IAS 39. a) Foreign exchange risk Foreign exchange risk is the risk arising from fluctuations in the currency of financial instruments. In particular, foreign exchange risk exists where business transactions are made or could arise in the normal course of business in a currency other than the group’s functional currency (referred to as foreign currency below). The group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the Czech koruna, Polish zloty, South African rand and the U.S. dollar. Due to the terms of agreement in euros, no foreign exchange risk arises with regard to the Belorussian ruble. Customer orders are mainly invoiced in the local currencies of the group companies. Only in cases in which the group expects to be exposed to significant foreign exchange risk, major orders denominated in foreign currencies are hedged by forward foreign exchange contracts. If the exchange rate of the stated currencies (resulting from current and non-current receivables and payables) as of 31 March 2013 (31 March 2012) had changed by the percentage rate (‘volatility’) stated below, the profits before tax, provided all other variables had remained unchanged, would have been higher or lower, respectively, by the following amounts. Currency
AUD
Volatility
Impact on the result for the period and on equity in TEUR 2012/13
2011/12
10 %
364
496 2,054
CAD
10 %
1,987
CZK
10 %
337
3,332
EUR
10 %
-4,097
-2,556
PLN
10 %
933
10,043
SEK
10 %
533
2,623
USD
10 %
2,869
3,570
ZAR
10 %
2,506
3,782
The effects for the Polish zloty in the fiscal year 2011/12 result from the implementation of the toll collection system project in Poland.
The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
88 | Consolidated Financial Statements
b) Interest rate risk Interest rate risk is the risk arising from fluctuations in the value of financial instruments, other balance sheet items (e.g. receivables and payables) and/or cash flows due to fluctuations in the market interest rates. For fixed interest balance sheet items, the risk comprises the present value risk. In case the market interest rate for the financial instrument fluctuates, either a profit or a loss may result if the financial instrument is sold prior to maturity. For variable interest balance sheet items, the risk relates to the cash flow. With variable interest financial instruments, adjustments in the interest rates may result from changes in the market interest rates. Such changes would entail changes in interest payments. Variable interest (both current and non-current) financial liabilities account for approximately one third of financial interest balance sheet items. If the market interest rate had been 100 basis points higher (lower) as of 31 March 2013, this, as in the prior year, would not have had a material impact on the result of the group. At the balance sheet date, interest rate swaps and caps exist in the group to minimize interest rate risk of financial liabilities as well as finance lease contracts which are based on a variable interest rate (see note 22). c) Credit risk As part of the group’s risk management policy, the group only engages in business relationships with third parties recognized as creditworthy and implements policies to ensure that the group sells to customers with appropriate credit histories. In addition, the group monitors its receivables balances on an ongoing basis in order to limit its exposure to bad debts. Certain of the group’s policies limit the amount of its credit exposure to any financial institution, depending on the rating of the institution. There is usually a credit risk in the implementation phase of large toll collection projects. With the exception of the toll collection projects in the Czech Republic, South Africa, Poland and the Republic of Belarus (see note 18), there is no concentration of credit risk relating to trade receivables, since the group generally has a large number of customers worldwide. Based on the group’s experiences, the default risk for trade receivables can be considered low. The maximum credit risk is similar to book values: All amounts in TEUR
2012/13
2011/12
42,818
55,418
3,655
3,980
Trade receivables and other current assets
354,708
387,116
Cash and cash equivalents
119,536
105,607
520,718
552,121
Other non-current financial assets and investments Other non-current assets
d)
Liquidity risk Cash flow forecasting is performed in the operating entities of the group and aggregated at the group level. The management monitors the rolling forecasts of the group liquidity reserves to ensure that it has sufficient cash to meet operational needs and also to secure an adequate scope of unutilized credit lines at any time so that the group will neither exceed the credit lines nor injure the credit agreements.
e) Equity price risk The group is exposed to equity price risk resulting from a material investment, since a Norwegian investment held (Q-Free ASA), the net equity of which is subject to changes in exchange rates, is classified as available for sale in the consolidated balance sheet. The investment in Q-Free ASA is traded on the stock exchange.
The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
Consolidated Financial Statements | 89
The table below summarizes the impact of increases/decreases of the equity index of Q-Free ASA on the other comprehensive income for the period net of tax. The analysis is based on the assumption that the equity index increases/decreases by 10 % with all other variables held constant. ISIN
NO0003103103
Volatility
Impact on other comprehensive income and equity in TEUR
10 %
2012/13
2011/12
3,200
4,098
f) Commodity price risk The group is not exposed to any material commodity price risk.
6 Capital management Capital management is carried out in line with value-driven and sustainable corporate governance on the basis of the profit and loss accounts of the individual business segments. Accounting ratios and other economic criteria as well as the noncurrent development of the group are also monitored and taken into account with regard to corporate governance. A crucial ratio for the capital structure is the gearing ratio calculated as ratio of net debt to equity. Net debt (net assets) comprises current and non-current borrowings less cash on hand, bank balances and current securities. The Kapsch Group’s capital management strategy aims amongst others to ensure that the group companies’ capital resources comply with local requirements. Furthermore, the group focuses on maintaining the gearing ratio on an annual average within a range from 25 % to 35 % in order to be still able to borrow at reasonable cost. The group also continuously monitors if all covenants comply with credit agreements. The highly volatile project business may, nonetheless, be responsible that under certain circumstances the gearing ratio strategy and/or the required covenants may not be complied with. In the reporting year, all external capital requirements resulting from the project financing of the nationwide truck toll collection systems in the Republic of Belarus and Poland as well as from acquisition financing on the level of KAPSCH-Group Beteiligungs GmbH were fulfilled. The objective of this measure is to safeguard the ability to continue as a long-term going concern in order to show to shareholders and other stakeholders that their requirements can be fulfilled in a qualitative and sustainable way and that returns for shareholders and benefits for other stakeholders can be provided. Other essential objectives of the group’s capital management include the financing of the envisaged growth path and the maintenance of an optimal capital structure. All amounts in TEUR
Non-current financial liabilities
2012/13
2011/12
142,777
114,352
72,872
106,606
Total financial liabilities
215,649
220,959
Cash and cash equivalents
119,536
105,607
Current financial liabilities
Other current financial assets
5,678
10,699
Net assets/net debt
-90,435
-104,653
Equity
345,102
371,874
26 %
28 %
Net gearing
The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
90 | Consolidated Financial Statements
7 Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets are added to the cost of those assets until the assets are substantially ready for their intended use or sale. A qualifying asset is an asset (inventories, manufacturing plants, toll collection system projects, power generation facilities, intangible assets and investment in properties) that necessarily takes a substantial period of time (with regard to the group at least 12 months) to get ready for its intended use or sale. Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization. In the fiscal year 2012/13 under review, the group did not meet the requirements of a qualifying asset for any capitalized asset and, therefore, no borrowing costs were capitalized. For the toll collection system project in the Republic of Belarus, which fulfills the criteria of IAS 23, borrowing costs were considered in the project calculation. All other borrowing costs are expensed in the period in which they have incurred.
8 Property, plant and equipment Property, plant and equipment is stated at cost less accumulated depreciation. Depreciation is charged on a straight-line basis over the expected useful lives of the assets in accordance with the group policies: The useful lives range between 3 to 26 years for plants and buildings on leasehold land, 4 to 20 years for technical equipment and machinery and 3 to 10 years for other equipment, factory and office equipment. The assets’ useful lives and residual values are reviewed and adjusted, if appropriate, at the end of each reporting period. An asset’s carrying amount is written down to its recoverable amount if the asset’s carrying amount is higher than its estimated recoverable amount. The difference between the proceeds from the disposal of property, plant and equipment and carrying amount is recognized as profit or loss in the result from operating activities.
9 Intangible assets a) Goodwill Goodwill arises on the acquisition of subsidiaries, associates and joint ventures and represents the excess of the consideration transferred over the group’s interest in net fair value of the identifiable assets, liabilities and contingent liabilities of the acquiree and the fair value of the non-controlling interest in the acquiree at the acquisition date. If the acquisition costs are less than the net assets of the acquired subsidiary valued at fair value, the difference is recognized directly in the statement of comprehensive income. Goodwill impairment reviews are undertaken at least annually or more frequently if events or changes in circumstances indicate a potential impairment. As a rule, the group carries out the annual goodwill impairment review in the fourth quarter. In addition, if a triggering event occurs, the group carries out impairment tests during the year which could lead to an impairment of the asset. For the purpose of impairment testing, goodwill is allocated to each of the cash generating units, or groups of cash generating units, that is expected to benefit from the synergies of the business combination and reported the goodwill. Each unit or group of units to which the goodwill is allocated in that way represents the lowest level within the entity at which the goodwill is monitored for internal management purposes.
The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
Consolidated Financial Statements | 91
The carrying value of goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs to sell. If an impairment requirement is identified, goodwill will be reduced immediately by the amount of the impairment. The value in use of a cash generating unit corresponds to the present value calculated using the discount cash flow method of the future cash flows which the entity will receive from the cash generating unit. In order to determine the value in use, the expected future cash flows plus taxes based on the post-tax discount rate that reflects the current market expectations with regard to the interest effect and the specific risks of the cash generating units are written down to their present values. In doing so, the current planning covering a period of four years (detailed forecast period) and approved by management is used as the basis with subsequent transition to perpetuity. The growth rates according to the detailed forecast period are based on historical growth data on external studies on the future medium-term market development. The fair value less selling cost is determined using an appropriate valuation model which is based on the medium-term planning of the respective cash generating unit. The valuation is made in line with the discounted cash flow calculations and verified through suitable multiples, if available. Write-ups on goodwill are not made. b) Concessions and rights Computer software, trademarks and similar rights are capitalized on the basis of the costs incurred for acquisition and amortized over their estimated useful lives of 4 to 30 years. Acquired customer agreements (toll contracts, maintenance agreements) are amortized over the estimated useful lives that generally range between 2 and 10 years. c) Research and development costs Research expenditures are recognized as an expense. Costs incurred on development projects (relating to the design and testing of new or improved products) are recognized as intangible assets when the following criteria are fulfilled: a) it is technically feasible to complete the intangible asset so that it will be available for use or sale; b) management intends to complete the intangible asset and use or sell it; c) there is an ability to use or sell the intangible asset; d) it can be demonstrated how the intangible asset will generate probable future economic benefits; e) adequate technical, financial and other resources to complete the development and to use or sell the intangible asset are available; and f) t he expenditure attributable to the intangible asset during its development can be reliably measured. Other development expenditures that do not meet these criteria are recognized as an expense. Development costs previously recognized as an expense are not recognized as an asset in subsequent periods. Capitalized development costs are recorded as intangible assets and amortized from the point at which the asset is ready for use on a straight-line basis over its useful life, not exceeding three years. Development assets are tested for impairment annually in accordance with IAS 36.
The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
92 | Consolidated Financial Statements
10 Impairment of non-financial assets Assets that have an indefinite useful life – for example, goodwill or intangible assets not ready for use – are not subject to amortization and are tested annually for impairment. Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the asset should be impaired. An impairment loss is recognized for the amount by which the asset’s carrying value exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows. Assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date. The difference between the net disposal proceeds and the carrying amount are recognized as income or expense in the result from operating activities. Gains are not classified as revenue. The residual carrying values and useful lives are reviewed at each balance sheet date and adjusted as necessary.
11 Financial assets a) Securities Financial assets recognized under non-current assets and other current financial assets include available-for-sale securities and financial assets at fair value through profit and loss. Available-for-sale securities and financial assets at fair value through profit and loss are carried at fair value. Unrealized gains and losses arising from the changes in fair value of available-for-sale securities are recognized in equity under a separate item; unrealized gains and losses arising from the changes in fair value of financial assets at fair value through profit and loss are recognized immediately in the statement of comprehensive income. The difference arising on the sale of financial assets between the proceeds and the carrying amounts is taken through profit or loss in the statement of comprehensive income. Additionally, the amount recognized in equity is taken through profit or loss in the statement of comprehensive income. All acquisitions and sales are recognized at the respective date of the transaction, transaction costs are included in acquisition costs (except for financial assets at fair value taken through profit and loss). At each balance sheet date, the group assesses whether there is objective evidence of impairment of each significant individual financial asset or group of financial assets. If such evidence exists, the group accounts for that impairment and the amounts previously recognized in equity are removed from equity and recognized through profit or loss in the statement of comprehensive income. The amount of the impairment is recognized as the difference between the carrying amount and the present value of the estimated future cash flows. If, in subsequent periods, the fair value of the impaired financial instrument increases and that increase can be directly related to an event occurring after the impairment was recognized through profit or loss in the statement of comprehensive income, the group reverses the impairment loss. In the case of debt instruments (for available-for-sale financial instruments), the reversal is recognized in the profit for the period in the statement of comprehensive income; in the case of equity instruments, it is recognized directly in equity.
The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
Consolidated Financial Statements | 93
b)
Other Investments Other available-for-sale investments that do not have a quoted market price in an active market and whose fair value cannot be reliably measured are carried at cost less impairment. At each balance sheet date, the group assesses whether there is objective evidence that a financial asset or a group of financial assets is impaired. If, in a subsequent period, the reason for the impairment is no longer valid, no reversal of the impairment is recognized.
c) Derivative financial instruments For accounting purposes, derivative financial instruments are treated as standalone derivates (i.e. as independent transactions and not as hedging transactions) and thus classify as held-for-trading financial instruments and are valued at fair value through profit or loss. The fair value corresponds to the value which the relevant entity would receive or have to pay upon liquidation of the deal on the balance sheet date. Positive market values at the balance sheet date are recognized under financial assets and negative market values under other liabilities. Changes in the fair value of these derivative financial instruments are recognized immediately in the statement of comprehensive income within other income or expense or in financial result, depending on the derivative financial instrument’s purpose. The group does not employ hedge accounting as envisaged by IAS 39.
12 Leases a) Finance leases – Accounting for agreements from the lessee’s perspective Leasing agreements by which the group as lessee has to take substantially all the risks and rewards associated with the use of an asset are accounted for as finance leases. The respective assets are capitalized under non-current assets at the net present value of minimum lease payments or the fair value of the leased asset, whichever is lower, and are depreciated over their expected useful lives or shorter lease term, if applicable. A liability with regard to finance leases is recognized at the same amount. The difference between the minimum lease payments and the accrued net present value is recognized as deferred interest expense. The interest component is spread over the agreed term of the lease using the effective interest rate method. b) Operating leases – Accounting for agreements from the lessee’s perspective Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are taken to the statement of comprehensive income on a straight-line basis over the period of the lease.
13 Government grants Government grants with regard to purchased non-current assets (technical equipment) are deferred and taken through profit or loss over the estimated useful life of the respective asset. Government grants are recognized at their fair value where there is a reasonable assurance that the group will comply with all attached conditions and the grant will be received.
The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
94 | Consolidated Financial Statements
Other government grants received as compensation for expenses or losses already incurred are immediately taken through profit or loss.
14 Inventories Inventories are stated at cost or, if lower, the net realizable value. Cost is determined using the moving average price method. Production cost includes all directly attributable expenses and fixed and variable overheads (based on normal operating capacity) incurred in connection with the production. It excludes, however, borrowing costs as they cannot be allocated to a qualifying asset. Net realizable value is the estimated selling price in the ordinary course of business less applicable variable selling expenses.
15 Construction contracts The group accounts for construction contracts in accordance with IAS 11. When the outcome of a construction contract can be estimated reliably and it is probable that the contract will be profitable, contract revenue is recognized over the period of the contract. When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognized as an expense immediately. The construction progress is represented by the ratio of costs incurred on the balance sheet date and the estimated total costs for the respective project. The carrying amount results from comparing the total of accumulated costs incurred on the balance sheet date plus the profit calculated according to the percentage of completion method (prorated) or loss (in full) on the respective construction contract to the invoiced amounts. The balance is recognized either under current assets (amounts due from customers for contract work) or under current liabilities (amounts due to customers for contract work).
16 Trade receivables Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less allowance for bad debts. An allowance for bad debts is established when there is objective evidence that the group will not be able to collect all amounts due according to the original terms of receivables. The amount of the allowance is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The amount of the allowance is recognized in the statement of comprehensive income. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related to an event occurring after the impairment was initially recognized, the reversal of the previously recognized impairment loss is recognized through profit or loss.
17 Cash and cash equivalents For the presentation of the cash flow statement, cash and cash equivalents include cash on hand, deposits held at call and other cash at banks. Overdrafts are recognized in the balance sheet under current financial liabilities.
18 Provisions Provisions are set up if the group has a present legal or constructive obligation to third parties as a result of past events, and if it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be made. If such a reliable estimate is not possible, no provisions are set up. Provisions are measured based on the estimated settlement amount. The settlement amount is the best possible estimate of an expense on the basis of which a current obligation might be settled at the balance sheet date or transferred to a third party. This estimate takes into account future cost increases that are foreseeable and likely to occur on the balance sheet date.
The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
Consolidated Financial Statements | 95
Provisions for warranties and liabilities for construction flaws, serial and systems problems mainly serve as coverage for obligations for free repairs and replacement deliveries, in accordance with the general sales and delivery conditions or due to individual agreements, and are measured using rates based on past experience regarding direct labor and material costs incurred, overheads, replacement deliveries or rebates. A provision is recognized for the best estimate of the costs of defects to be rectified under the warranty for products sold before the balance sheet date. Provisions for onerous contracts are recognized if the expected benefit to be derived from the contract is less than the unavoidable costs of meeting the obligations under the contract. The provision is measured at the present value of the amount from the fulfillment of the contract or any compensation payments in case of nonperformance, whichever is lower. The recognition of impairment losses on assets dedicated to that “onerous” contract is, however, established prior to the recognition of the provisions for onerous contracts.
19 Employee benefits The group provides various post-employment benefits to employees and other long-term benefits either based on individual agreements or in accordance with local labor law provisions. For the calculation of liabilities arising from pension obligations and termination benefits in accordance with IAS 19, the projected unit credit method is used. According to this method, post-employment costs for employee benefits are recognized in the statement of comprehensive income in such a way that scheduled costs are spread over the employees’ years of service on the basis of an expert opinion by a qualified actuary, who completely re-measures the schemes annually. The obligations for pension payments are calculated as the present value of future benefits using interest rates of government bonds whose term roughly equals the term of the liability. Actuarial gains and losses exceeding the corridor (= up to 10 % of benefit
obligation or 10 % of plan assets, if any, at beginning of period) are charged to the statement of comprehensive income over the average remaining service period of the active staff entitled to the employee benefits. The group applies IAS 19R in the fiscal year beginning on 1 April 2013. Future actuarial adjustments are recognized through other comprehensive income. Contributions paid by the group under a defined contribution pension scheme are charged to the statement of comprehensive income under staff costs in the period in which they occur. For the calculation of liabilities arising from obligations for anniversary bonuses in accordance with IAS 19, the projected unit credit method is used. Anniversary bonuses are special lump-sum payments stipulated in the Collective Agreement and dependent on compensation and years of service. Eligibility is determined by a certain number of service years. The calculation of liabilities arising from obligations for anniversary bonuses is performed in the same way as the calculation for liabilities arising from termination benefits, however, without taking the corridor method into consideration.
20 Current and deferred income tax The tax expense for the period comprises current and deferred tax. Tax is generally recognized in the statement of comprehensive income. Only taxes that relate to items recognized under equity are recognized under other comprehensive income. The current income tax charge is calculated on the basis of the tax laws applicable at the balance sheet date in the countries where the subsidiaries and associates operate and generate taxable income.
The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
96 | Consolidated Financial Statements
Deferred income tax assets/liabilities are provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, if the deferred income tax assets/liabilities arise from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither IFRS profit or loss nor taxable profit or loss, it is not accounted for. Deferred income tax assets/liabilities are determined using tax rates (and laws) that have been enacted or substantially enacted on the balance sheet date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled. Deferred income tax assets are recognized to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. Temporary differences mainly arise in connection with depreciation (amortization) periods of non-current assets, provisions for pension benefits, other post-employment benefits, differences regarding the measurement of receivables and payables and tax loss carry-forwards. Deferred income tax assets/liabilities are provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the group and it is probable that the temporary difference will not be reversed in the foreseeable future. Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on the same taxable entity.
21 Liabilities Liabilities are recognized at amortized cost using the effective interest rate method. Liabilities denominated in foreign currencies are measured at the current rate at the balance sheet date. Borrowings are recognized initially at fair value, net of transaction costs incurred, and subsequently measured at amortized cost. Borrowing costs are charged to the statement of comprehensive income in the period in which they are incurred.
22 Contingent liabilities Contingent liabilities occur for two reasons. On the one hand, they comprise possible obligations that arise from past events and whose existence will be confirmed by uncertain future events that are at least partly beyond an entity’s control. On the other hand, they comprise present obligations that fail to meet general or special recognition standards (i.e. the amount of settlement of an obligation cannot be measured with sufficient reliability or an outflow of resources to settle the obligations is not deemed probable). The group discloses contingent liabilities unless the possibility of an outflow of resources embodying economic benefits is unlikely and a liability does not have to be recognized pursuant to IFRS.
The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
Consolidated Financial Statements | 97
23 Revenue recognition In accordance with IAS 18, revenue is recognized at fair value in the statement of comprehensive income upon delivery and once the significant risks and rewards of ownership of the goods are transferred to the customer, net of discounts and eliminating sales within the group. Sales of services are recognized in the reporting period in which the services are rendered, by reference to completion of the specific transaction assessed on the basis of the actual service provided as a proportion of the total services to be provided. Revenue for construction contracts (mainly toll collection projects) is recognized in accordance with the percentage-ofcompletion method provided the conditions under IAS 11 are met. Other revenue is recognized by the group as follows: n
Revenue from expenses recharged is recognized on the basis of the accumulated amounts in accordance with the
n
Interest income is recognized on a time-proportion basis using the effective interest method
n
Dividend income is recognized when the right to receive payment is established
respective agreements
24 Material accounting estimates and assumptions with regard to accounting policies The group makes estimates and assumptions concerning the future development. The resulting accounting estimates will, by definition, rarely equal the related actual results. In particular, estimates and assumptions regarding revenue recognition have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next fiscal year. The group uses the percentage-of-completion method in accounting for its construction contracts. Use of the percentage-ofcompletion method requires the group to estimate the expected profit mark-up for the construction contract. Sensitivity analysis on assumptions made by management indicates that no material effect is to be expected if the actual final results should deviate by 10 % from estimates. The analysis of assumptions made in the past as well as of actual profit mark-ups showed that the estimates had been reliable up to now. Further areas where assumptions and estimates are significant to the consolidated financial statements include capitalized goodwill, inventories, deferred income tax assets/liabilities, liabilities from post-employment benefits to employees and provisions for warranties, project risks and losses from pending transactions. Sensitivity analysis of the assumptions made by management in connection with inventories, deferred taxes and provisions indicates that no material effect will arise if the actual final outcomes differ by 10 % from the estimates made. Sensitivities for the acquired goodwill (break-even interest rate) are detailed in note 13. The sensitivities for obligations for post-employment benefits and anniversary bonus obligations are described in note 24 and 27.
25 Segment information Operating segments are reported consistently with the internal reporting provided to the chief operating decision-maker. The chief operating decision maker is responsible for allocating resources to the operating segments and assessing their performance. The executive board has been identified as the chief operating decision maker.
The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
98 | Consolidated Financial Statements
Notes to the Consolidated Financial Statements. Figures in the notes are presented in euro thousands (TEUR) unless otherwise stated.
1 Segment Information As of 31 March 2013, the group has four main operating segments (see section “General information”): n
Traffic (Intelligent Transportation Systems – ITS solutions)
n
Carrier (communication solutions for mobile and fixed network operators and railway operators)
n
Enterprise (speech, data and IT solutions for business customers including public authorities)
n
Others
The segment information follows the same principles and same accounting policies as applied in these consolidated financial statements. The segment results for the fiscal year ended 31 March 2013 are as follows (in EUR million): Traffic
Carrier
Enterprise
Total segment revenue
488.9
189.1
Inter-segment revenue
-13.9
-3.8
Revenue from external customers
475.1 15.3
Operating result
Others
Group
297.2
16.4
991.6
-33.2
-12.7
-63.5
185.4
263.9
3.7
928.0
4.7
4.5
1.1
25.5
Others
Group
1,036.9
The segment results for the fiscal year ended 31 March 2012 are as follows (in EUR million): Traffic
Carrier
Enterprise
Total segment revenue
549.9
219.3
251.6
16.2
Inter-segment revenue
-8.8
-5.2
-25.7
-13.2
-52.9
541.1
214.1
225.9
2.9
984.0
42.2
17.7
4.5
2.6
67.0
Revenue from external customers Operating result
Transfers and transactions between segments are recorded at the same conditions offered to third parties. The segment assets and liabilities as of 31 March 2013 as well as capital expenditure, depreciation and amortization and other non-cash-effective positions for the period then ended are as follows (in EUR million):
Assets Investments in associates and joint ventures
Traffic
Carrier
Enterprise
Others
Elimination
Group
565.5
172.1
146.9
265.2
-203.1
946.7
1.7
0.0
1.7
0.0
0.0
3.4
Total assets
567.2
172.1
148.7
265.2
-203.1
950.1
Total liabilities
326.5
131.7
136.2
73.7
-63.1
605.0
Capital expenditure
20.2
2.5
10.6
0.4
0.0
33.8
Depreciation and amortization
17.7
11.0
5.1
0.4
-1.3
32.9
1.0
0.1
0.2
1.3
0.0
2.5
Other non-cash-effective positions
The eliminations result from consolidation effects (mainly from capital consolidation and the consolidation of receivables and payables between the segments). The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
Consolidated Financial Statements | 99
The segment assets and liabilities as of 31 March 2012 as well as capital expenditure, depreciation and amortization and other non-cash-effective positions for the period then ended are as follows (in EUR million): Traffic
Carrier
Enterprise
Others
Elimination
Group
557.7
195.5
119.8
275.5
-194.7
953.9
0.0
0.2
1.7
0.0
0.0
2.0
Total assets
557.7
195.7
121.6
275.5
-194.7
955.8
Total liabilities
301.4
150.1
110.8
80.0
-58.4
583.9
Capital expenditure
13.1
10.8
3.5
0.2
0.0
27.6
Depreciation and amortization
18.4
10.9
3.8
0.4
-0.7
32.7
0.3
0.0
0.6
0.7
0.0
1.6
Assets Investments in associates and joint ventures
Other non-cash-effective positions
In the fiscal year 2012/13, no costumer contributed more than 10 % of the group revenue for the year. In the fiscal year 2011/12, one customer from the segment Traffic contributed more than 10 % of the group revenue (EUR 205.1 million). Information by region Revenue is segmented by the location of the customer and balance sheet figures by the location of the company. The figures for the fiscal year ended 31 March 2013 are as follows (in EUR million):
Austria
CEE
Western Europe
Rest of World
Group
Revenue
271.5
343.6
120.3
192.6
928.0
Non-current non-financial assets
153.7
14.6
62.9
27.1
258.2
The figures for the fiscal year ended 31 March 2012 are as follows (in EUR million):
Austria
CEE
Western Europe
Rest of World
Group
Revenue
252.3
377.4
147.7
206.8
984.1
Non-current non-financial assets
144.6
9.1
72.0
26.6
252.2
Revenues by category Revenues are classified into the following categories (in EUR million): 2012/13
2011/12
Sales of goods
372
389
Sales of services
357
395
Sales of maintenance
131
132
Accrued/deferred sales, license sales and discounts on invoiced sales
67
68
928
984
The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
100 | Consolidated Financial Statements
2 Other operating income 2012/13
2011/12
Income from costs recharged
826
585
Income from sales of non-current assets
305
84
Exchange rate gains on operative activities Sundry operating income
7,960
6,632
14,041
13,015
23,131
20,316
Sundry operating income mainly relates to research funding awards received and to the assumption of costs of transactions billed for the nationwide electronic truck toll collection system in the Czech Republic as well as a bonus of Kapsch TrafficCom AG, Vienna, for waiving the right to terminate the rental agreement of the property Am Europlatz 2.
3 Change in finished and unfinished goods and work in progress 2012/13
2011/12
Change in unfinished goods and work in progress
1,322
6,967
Change in finished goods
3,161
-9,674
4,483
-2,707
2012/13
2011/12
Cost of materials
246,124
260,226
Cost of purchased services
237,617
253,876
483,741
514,102
4 Cost of materials and other production services
5 Staff costs
Wages, salaries and other remunerations Expenses for social security and payroll-related taxes and contributions
2012/13
2011/12
218,842
203,731
53,134
48,765
Expenses for termination benefits (see note 24)
3,127
4,092
Expenses for pensions (see note 24)
3,157
1,449
Contributions to pension funds and other external funds (see note 24) Fringe benefits
850
883
2,887
2,827
281,996
261,746
As of 31 March 2013, the number of staff amounted to 5,266 persons (31 March 2012: 4,826 persons) and averaged 4,974 persons in the fiscal year 2012/13 (2011/12: 4,613).
6 Amortization of intangible assets and depreciation of property, plant and equipment 2012/13
2011/12
Depreciation of property, plant and equipment
14,334
11,980
Amortization of intangible assets
15,368
18,251
Impairment charge
3,184
2,438
32,886
32,669
The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
Consolidated Financial Statements | 101
Low-value assets are capitalized as property, plant and equipment or intangible assets and written off in the year of acquisition, if similar assets are not material. Regarding the impairment charge, see note 13.
7 Other operating expenses 2012/13
2011/12
Rental expenses
20,528
18,587
Automobile expenses
14,622
12,395
Legal and consulting fees
14,405
17,454
Travel expenses
13,467
13,498
Marketing and advertising expenses
12,982
14,001
Exchange rate losses on operative acitivities
11,032
7,428
Communication and IT expenses
9,259
8,285
Maintenance
5,567
6,018
Insurance costs
4,594
3,911
License and patent expenses
4,014
2,226
Taxes and charges
3,876
2,085
Office expenses
3,119
4,114
Allowances and write-offs of receivables
2,415
1,385
Training costs
2,231
2,913
Commissions and other fees
1,814
1,431
Transport costs
1,704
3,153
Adjustment of provision for warranties
405
-149
Losses on disposal of non-current assets
132
130
0
3,103
5,607
4,417
131,773
126,385
Restructuring costs Other
The item “Other” includes membership fees and bank charges as well as other administrative and selling expenses.
8 Financial result 2012/13
2011/12
1,956
1,488
Interest and similar income: Interest income Income from securities
162
153
Income from interest accretion of non-current receivables
647
463
9,184
122
Gains from the disposal of financial assets and investments Gains from changes of the fair value of derivative financial instruments Currency translation gains
21
27
4,676
6,431
16,646
8,685
-12,381
-14,477
Interest and similar expense: Interest expense Expense from interest accretion of non-current payables
-501
-251
Losses from changes of the fair value of derivative financial instruments
-321
-1,090
Expenses from the disposal of investments Currency translation gains
-201
0
-6,275
-8,801
-19,679
-24,619
-3,033
-15,934
The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
102 | Consolidated Financial Statements
9 Income taxes
Current taxes Deferred taxes (see note 23)
2012/13
2011/12
-15,990
-9,358
11,265
-787
-4,725
-10,144
For the fiscal year 2012/13, the Austrian corporate income tax rate is at 25 % (2011/12: 25 %). In March 2005, KAPSCH-Group Beteiligungs GmbH and various subsidiaries in Austria act as group members. The group taxation regime applies to the respective entities effective from the tax year 2005 (i.e. fiscal year 2004/05). Within the tax group, the taxable incomes of the group members are generally taxed at the level of the tax group leader. Therefore tax losses incurred by a member of the tax group can be set off by taxable earnings of other group members. The reasons for the difference between the arithmetic tax expense/income based on the Austrian corporate income tax rate of 25 % and the recognized tax expense/income are as follows: 2012/13
2011/12
Profit before income taxes
23,134
51,355
Arithmetic tax expense based on a tax rate of 25 % (2010/11: 25 %)
-5,783
-12,839
Unrecognized deferred tax assets on current losses
-3,303
-1,680
De-recognition of deferred tax assets recognized on prior-year losses Utilization of previously unrecognized tax losses
0
-130
1,941
1,165
Different foreign tax rates
979
933
Tax allowances claimed and other permanent tax differences
701
869
1,765
1,538
Adjustment in respect to prior year
Income and expenses not subject to tax and other differences
-1,024
0
Recognized tax expense
-4,725
-10,145
The adjustment in respect to the prior year mainly results from an amended profit allocation for tax purposes in the Polish subsidiary in connection with the toll collection project completed in the previous year and affects both current and deferred taxes. For further information on deferred tax assets and liabilities, see note 23.
The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
Consolidated Financial Statements | 103
10 Other comprehensive income Before taxes
Tax expense/ income
Unrealized gains/losses in the current period
-7,789
-296
-8,085
Gains/losses recognized in the profit for the period
-2,440
610
-1,830
-13,670
314
-13,356
Before taxes
Tax expense/ income
After taxes
11,489
-51
11,438
2012/13
After taxes
Fair value gains/losses on available-for-sale financial assets:
Currency translation differences Fair value changes recognized in equity
2011/12
-3,441
-3,441
Fair value gains/losses on available-for-sale financial assets: Unrealized gains/losses in the current period Currency translation differences Fair value changes recognized in equity
-2,584 8,906
-2,584 -51
8,854
2012/13
2011/12
11 Additional disclosures on financial instruments by category
Financial assets at fair value through profit or loss Other current financial assets
93
160
93
160
40,425
55,418
Available-for-sale financial assets Other non-current financial assets and investments Other current financial assets
4,505
8,213
44,930
63,631
Other non-current assets
6,049
3,980
Other current assets
1,080
2,327
Trade receivables
153,052
160,334
Cash and cash equivalents
119,536
105,607
279,717
272,247
142,777
114,352
Liabilities from finance lease
17,702
18,116
Other non-current liabilities
6,049
4,050
120,325
90,600
72,872
106,606
359,725
333,724
Loans and receivables
Financial liabilities at (amortized) cost Non-current financial liabilities
Trade payables Current financial liabilities
Financial instruments are recognized in the statement of comprehensive income with the following net results included in the profit for the period: 2012/13
Financial assets at fair value through profit or loss
2011/12
-67
3
Available-for-sale financial assets
9,167
303
Loans and receivables
7,278
8,382
Financial liabilities at (amortized) cost
-19,412
-24,622
-3,033
-15,934
The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
104 | Consolidated Financial Statements
12 Property, plant and equipment Land and buildings
Technical equipment and machinery
Other equipment, factory and office equipment
Construction in progress
Total
29,738
8,724
15,854
1,154
55,470
Currency translation differences
-1
53
-53
31
31
Addition resulting from company acquisition
0
5
0
0
5
1,793
6,004
7,711
2,172
17,680
Carrying amount as of 31 March 2011
Additions
-292
-42
-229
-1,713
-2,276
Scheduled depreciation
Disposals
-2,226
-4,237
-5,518
0
-11,980
Carrying amount as of 31 March 2012
29,013
10,508
17,765
1,644
58,930
Acquisition/production cost Accumulated depreciation Carrying amount as of 31 March 2012 Currency translation differences Reclassification Addition resulting from company acquisition Additions Disposals
39,789
46,225
65,706
1,644
153,365
-10,776
-35,717
-47,941
0
-94,435
29,013
10,508
17,765
1,644
58,930
-3
53
-181
7
-125
4
496
199
-698
1
0
0
107
0
107
1,625
6,515
11,605
4,173
23,918
0
-60
-217
-2,804
-3,080
Scheduled depreciation
-2,205
-5,196
-6,933
0
-14,334
Carrying amount as of 31 March 2013
28,433
12,316
22,345
2,323
65,417
Acquisition/production cost Accumulated depreciation Carrying amount as of 31 March 2013
41,401
53,762
72,656
2,323
170,143
-12,968
-41,447
-50,311
0
-104,726
28,433
12,316
22,345
2,323
65,417
The carrying amount of capitalized leases (land and buildings) as of 31 March 2013 amounts to EUR 17,160,534 (31 March 2012: EUR 17,527,600). With regard to the additions resulting from company acquisition, see note 29.
13 Intangible assets
Carrying amount as of 31 March 2011
Capitalized development costs
Concessions and rights
Goodwill
Prepayments
Total
205,124
122
61,737
143,264
0
Currency translation differences
0
6
819
0
825
Addition resulting from company acquisition
0
1,523
0
0
1,523
Additions
0
3,966
598
0
4,564
Disposals
0
-20
0
0
-20
Impairment charge Scheduled amortization Carrying amount as of 31 March 2012
0
-2,438
0
0
-2,438
-60
-18,191
0
0
-18,251
63
46,583
144,681
0
191,327
Acquisition/production cost
8,743
98,438
144,681
0
251,863
Accumulated amortization
-8,681
-51,855
0
0
-60,536
63
46,583
144,681
0
191,327
Currency translation differences
0
-5
601
0
596
Reclassification
0
-1
0
0
-1
Addition resulting from company acquisition
0
5,049
1,384
0
6,433
Additions
0
5,801
483
3,264
9,548
Disposals
0
-7
0
0
-7
0
0
-3,184
0
-3,184
-60
-15,308
0
0
-15,368
Carrying amount as of 31 March 2012
Impairment charge Scheduled amortization Carrying amount as of 31 March 2013 Acquisition/production cost Accumulated amortization Carrying amount as of 31 March 2013
3
42,113
143,966
3,264
189,345
9,199
108,084
143,966
3,264
264,513
-9,196
-65,971
0
0
-75,168
3
42,113
143,966
3,264
189,345
The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
Consolidated Financial Statements | 105
Development costs relate to expenses in the area of traffic-control systems, which in accordance with IAS 38 are capitalized and amortized over three years once the assets are available for commercial use. Additional research and development costs of the group in the fiscal year 2012/13 amounted to EUR 96.6 million (2011/12: EUR 84.8 million) since the criteria for their capitalization in accordance with IAS 38 have not been fulfilled. The impairment charge in the fiscal year 2012/13 relates to an impairment of goodwill in the segment Carrier for the CGU “Public Operators”. The addition to the goodwill in the fiscal year 2012/13 results from subsequent earn-out payments for the acquisition of Kapsch TrafficCom Argentina S.A., Buenos Aires, Argentina, which are accounted for under the rules of IFRS 3 (2004). Earn-out payments related to the acquisition of Kapsch TrafficCom Argentina S.A., Buenos Aires, Argentina, amounting to TEUR 746 are still outstanding. For the purpose of impairment testing, goodwill of the segment “Traffic” was allocated to four cash-generating units (CGU) (“Road Solution Projects, Electronic Toll Collection”, “Road Solution Projects, Intelligent Transportation Systems”, “Services, System Extensions, Components Sales, Electronic Toll Collection” as well as “Services, System Extensions, Components Sales, Intelligent Transportation Systems”). In the segment “Carrier” goodwill is allocated to four cashgenerating units (CGU) (“Railways”,“Public Operators”,“Professional Mobile Radio” and “Machine to Machine”). The cash-generating unit (CGU) “Enterprise” equals the segment. The following assumptions were made pursuant to IAS 36 paragraph 134: The carrying amount of goodwill allocated to the CGU 2012/13
2011/12
50,228
49,729
0
0
40,567
40,084
Traffic Road Solution Projects, Electronic Toll Collection Road Solution Projects, Intelligent Transportation Systems Services, System Extensions, Components Sales, Electronic Toll Collection Services, System Extensions, Components Sales, Intelligent Transportation Systems
501
501
91,296
90,314
Railways
11,336
11,345
Public Operators
Carrier 24,464
27,536
Professional Mobile Radio
0
0
Machine to Machine
0
0
35,800
38,882
16,869
15,486
143,966
144,681
Enterprise Total
The carrying amount of intangible assets with indefinite useful lives allocated to cash-generating units is respectively zero. The value in use was taken for the determination of the recoverable amount for cash-generating units. Cash-generating unit “Road Solution Projects, Electronic Toll Collection”: Key assumptions for determining expected cash flows of the CGU: n
Management has based its determination on the assumption that after the successful implementation of road toll collection systems, in particular in Austria, the Czech Republic, Switzerland, Australia, South America, South Africa and Poland, demand for toll collection systems will increase, in particular as a result of tight public budgets.
The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
106 | Consolidated Financial Statements
n
The planning for the “Road Solution Projects, Electronic Toll Collection” segment is based on projects in the Republic of Belarus, U.S.A., France, Australia and Poland as well as the fact that public tenders in several countries are already in progress.
n
4 years of detailed planning
n
11.6 % (2011/12: 12.2 %) discount rate before tax
n
Due to growth potential of this business unit, the cash flows beyond the four-year period of detailed planning were accounted for at a continuous growth rate of 2.0 % (2011/12: 3.0 %) in the determination of value.
Effects of changes in key assumptions on the recoverable amount: n
Management has based its determination on the assumption that realistically possible changes in key assumptions on which the recoverable amount is based will not result in the carrying amount of goodwill of the CGU exceeding the recoverable amount of the CGU. The interest rate at which the value in use corresponds to the carrying amount is 16.0 % (2011/12: 64.3 %).
Cash-generating unit “Services, System Extensions, Components Sales, Electronic Toll Collection”: Key assumptions for determining expected cash flows of the CGU: n
Management has based its determination on the assumption that the group will remain the preferred supplier for operation,
n
The planning for the “Services, System Extensions, Components Sales, Electronic Toll Collection” segment is based on
maintenance and supply of components for toll collection projects installed in previous years. ongoing maintenance for existing tolling systems in Austria, Switzerland, the Czech Republic, Australia, South America, South Africa and Poland, and the commercial operation in the Czech Republic, South Africa and Poland. With the completion of the nationwide electronic truck toll collection system in the Republic of Belarus, the ongoing technical maintenance and the commercial operation is contracted as well. Furthermore, expansions of completed nationwide electronic toll collection systems of Kapsch and long-term customer contracts for supply of components, especially to North America, Australia, Spain, Portugal, Denmark, France, Greece, Chile, Thailand, South Africa and Poland are included. n
4 years of detailed planning
n
11.6 % (2011/12: 12.2 %) discount rate before tax
n
Due to the growth potential of this business unit, the cash flows beyond the four-year period of detailed planning were accounted for at a continuous growth rate of 2.0 % (2011/12: 3.0 %) in the determination of value.
Effects of changes in key assumptions on the recoverable amount: n
Management has based its determination on the assumption that realistically possible changes in key assumptions on which the recoverable amount is based will not result in the carrying amount of goodwill of the CGU exceeding the recoverable amount of the CGU. The interest rate at which the value in use corresponds to the carrying amount is 48.4 % (2011/12: 38.0 %).
Cash-generating unit “Services, System Extensions, Components Sales, Intelligent Transportation Systems”: Key assumptions for determining expected cash flows of the CGU: n
Management has based its determination on the assumption that Kapsch will perform the technical maintenance and commercial operation after implementation of nationwide Intelligent Transportation Systems. Expansions of these systems and the supply of specific components are included here.
n
The planning for the “Services, System Extensions, Components Sales, Intelligent Transportation Systems” segment is based especially on road safety and traffic monitoring systems in South Africa, the Czech Republic and Poland.
n
4 years of detailed planning
n
11.6 % (2011/12: 12.2 %) discount rate before tax
n
Due to the growth potential of this business unit, the cash flows beyond the four-year period of detailed planning were accounted for at a continuous growth rate of 2.0 % (2011/12: 3.0 %) in the determination of value.
The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
Consolidated Financial Statements | 107
Effects of changes in key assumptions on the recoverable amount: n
Management has based its determination on the assumption that realistically possible changes in key assumptions on which the recoverable amount is based will not result in the carrying amount of goodwill of the CGU exceeding the recoverable amount of the CGU. The interest rate at which the value in use corresponds to the carrying amount is 82.7 % (2011/12: 38.0 %).
Cash-generating unit “Railways”: Key assumptions for determining expected cash flows of the CGU: n
Management has based its determination on the assumption that further expansion of the market leadership in the GSM-R area will play a dominating role. In the past fiscal year, the position as a sound partner to existing costumers was consolidated as well as new customer relationships established. Important projects in the Czech Republic, Poland, Great Britain, Algeria, Spain and Bulgaria as well as France and Germany have been continued and realized. In the coming years, the focus will be on the markets Central and Eastern Europe as well as Saudi Arabia, Morocco, Brazil and the Asian region. Furthermore, the existing Kapsch GSM-R networks is expected to further expand in many West European countries.
n
4 years of detailed planning
n
12.8 % (2011/12: 13.5 %) discount rate before tax
n
The cash flows beyond the four-year period of detailed planning were accounted for at a continuous growth rate of 1.5 % (2011/12: 1.5 %) in the determination of value.
Effects of changes in key assumptions on the recoverable amount: n
Management has based its determination on the assumption that realistically possible changes in key assumptions on which the recoverable amount is based will not result in the carrying amount of goodwill of the CGU exceeding the recoverable amount of the CGU. The interest rate at which the value in use corresponds to the carrying amount is 27.2 % (2011/12: 15.6 %).
Cash-generating unit “Public Operators”: Key assumptions for determining expected cash flows of the CGU: n
Management has based its determination on the assumption that in the public operator sector a slight decline in global business is expected. Therefore, the preparation of consolidated financial statements requires an impairment of goodwill in the area of “Public Operators”. The focus, however, will not only be on the maintenance of existing networks but on new solutions and on innovations of professional services, which offer significant value-added to existing customers. In addition to the core markets in Austria, France, Taiwan and Russia, management continues to focus on the entities in Germany, Belgium, Slovenia, Croatia, Serbia, Macedonia, Bulgaria and the Republic of Belarus.
n
4 years of detailed planning
n
12.8 % (2011/12: 13.5 %) discount rate before tax
n
The cash flows beyond the four-year period of detailed planning were accounted for at a continuous growth rate of 1.5 % (2011/12: 1.5 %) in the determination of value.
Effects of changes in key assumptions on the recoverable amount: n
Management has based its determination on the assumption that realistically possible changes in key assumptions on which the recoverable amount is based will not result in the carrying amount of goodwill of the CGU exceeding the recoverable amount of the CGU. The interest rate at which the value in use corresponds to the carrying amount is 12.8 % (2011/12: 15.6 %).
The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
108 | Consolidated Financial Statements
Cash-generating unit “Enterprise”: Key assumptions for determining expected cash flows of the CGU: n
In the segment Enterprise, it is assumed that the company will be able to increase business with existing customers and expand in the segments ICT Facility, ICT Infrastructure and ICT Workspace and Applications. In Austria, the market position in ICT Infrastructure was extended, and management assumes to strengthen this position further.
n
Based on its more clearly defined IT strategy, Kapsch plans to strengthen its position as an innovative and reliable service partner for ICT solutions. Continuing improvements in the past years are taking effect – Kapsch is beginning to utilize the newly created sales potential in this area. Management assumes that sales in the IT segment will grow further. Target customers are small and medium-sized companies with 50 to 500 users, some of them already belonging to the customer base of the segment Enterprise. For management, outsourcing and outtasking are potential growth areas.
n
The solutions offered cover all areas of voice and data transmission as well as parts of the infrastructure of companies, starting from basic telecommunication, wireless and mobile business solutions and voice over IP to IT solutions, network security, network management, integration of the internet, call center solutions, communication consulting, IP-TV, video solutions, managed services and much more.
n
Ongoing cost optimizations result in improvements in efficiency but also in underproportional increases in cost (especially staff costs) compared to revenue increases.
n
4 years of detailed planning
n
10.9 % (2011/12: 13.5 %) discount rate before tax
n
The cash flows beyond the four-year period of detailed planning were accounted for at a continuous growth rate of 1.5 % (2011/12: 1.5 %) in the determination of value.
Effects of changes in key assumptions on the recoverable amount: n
Management has based its determination on the assumption that realistically possible changes in key assumptions on which the recoverable amount is based will not result in the carrying amount of goodwill of the CGU exceeding the recoverable amount of the CGU. The interest rate at which the value in use corresponds to the carrying amount is 17.6 % (2011/12: 19.5 %).
14 Interests in associates and joint ventures 2012/13
2011/12
Carrying amount as of 31 March of prior year
1,955
1,998
Addition from foundation and acquisition
1,547
33
-704
-389
648
313
Disposal through sale of shares and dividend payments Proportionate profit (after tax) Currency translation differences Carrying amount as of 31 March of fiscal year thereof shares in associates thereof interests in joint ventures
-8
0
3,438
1,955
3,438
1,955
0
0
Shares in associated companies: The group holds a 26 % interest in Kapsch Financial Services GmbH, Vienna. As of 30 September 2012 (latest balance sheet date), total assets amounted to TEUR 37,901, liabilities amounted to TEUR 34,704, revenue amounted to TEUR 42,123 and the profit for the year amounted to TEUR 1,222.
The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
Consolidated Financial Statements | 109
On 31 July 2012, the group acquired 33 % of the shares in SIMEX, Integración de Sistemas, S.A.P.I. de C.V., Mexico. Taking potential voting rights into account (options for purchase of the remaining shares) the group has the majority of the shares. As the potential voting rights are not assessed to be substantial, the presumption of control was rebutted. As significant influence over the financial and business policies exists, the investment is accounted for using the equity method. At the latest balance sheet date as of 31 December 2012, total assets of SIMEX, Integración de Sistemas, S.A.P.I. de C.V., Mexico, amounted to TEUR 9,987, liabilities amounted to TEUR 5,895, revenue amounted to TEUR 10,878 and the profit for the year amounted to TEUR 738. As of 23 August 2012, the agreement of liquidation regarding 40 % of the shares in Alcatel-Lucent Kapsch Telecommunication GmbH, Vienna, was signed by Kapsch CarrierCom AG, Vienna, and Alcatel-Lucent Austria AG, Vienna. Interests in joint ventures: The group founded, on 17 May 2011, together with two partners the joint venture LLC United Toll Systems, Moscow, Russia. The group held a 33.3 % interest in this company. On 9 November 2012, the joint venture was sold by Kapsch TrafficCom Russia OOO, Moscow, to the majority shareholder Mostotrest for the amount of EUR 6 million.
15 Other current and non-current financial assets 2012/13
Other non-current financial assets and investments Other current financial assets
2011/12
42,818
55,418
5,678
10,699
48,496
66,117
Available-for-sale securities
Available-for-sale investments
Other non-current financial assets
Total
7,587
25,263
7,653
40,504
0
0
63
63
Additions
72
4,781
1,706
6,560
Disposals
-235
0
-467
-702
0
0
-2,327
-2,327
Other non-current financial assets and investments
Carrying amount as of 31 March 2011 Currency translation differences
Reclassification to current financial assets Change in fair value Carrying amount as of 31 March 2012 Currency translation differences
36
11,284
0
11,320
7,461
41,328
6,629
55,418 202
0
0
202
Additions
149
0
47
197
Disposals
-20
0
-4,485
-4,505
Change in fair value
480
-8,974
0
-8,494
8,070
32,355
2,394
42,818
Available-for-sale securities
Other current financial assets
Total
17,695
Carrying amount as of 31 March 2013
Other current financial assets
8,037
9,658
Additions
Carrying amount as of 31 March 2011
0
22
22
Reclassification of non-current financial assets
0
2,327
2,327
Disposals
0
-9,523
-9,523
Change in fair value Carrying amount as of 31 March 2012 Disposals Change in fair value Carrying amount as of 31 March 2013
176
3
179
8,213
2,486
10,699
-4,413
-1,247
-5,660
705
-67
639
4,505
1,173
5,678
The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
110 | Consolidated Financial Statements
As of 31 March 2013, available-for-sale securities relate to government and bank bonds as well as shares in investment funds. The other investments classified as available-for-sale mainly relate to a 19.76 % investment in the listed company Q-Free ASA, Trondheim, Norway. Unrealized gains and losses are recognized in other comprehensive income of the period (see note 10). In the fiscal year 2012/13, same as in the prior year, other non-current financial assets relate to a fixed-term investment in the amount of TEUR 2,394 (2011/12: TEUR 5,653). This fixed-term investment is pledged as collateral for guarantees issued by the group. Other securities held for trading mainly relate to a listed money market fund. Fair value hierarchies and determination of fair value: Financial assets and liabilities have to be classified in one of the three following fair value hierarchies according to IFRS 7.27 A: Level 1. There are quoted prices in active markets for identical assets and liabilities. In the group, the investment in Q-Free ASA, Trondheim, Norway, as well as listed equity instruments are attributed to Level 1. Level 2. The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques based on observable direct or indirect market data. This category comprises available-for-sale securities, such as government and other bonds, which are quoted, however not regularly traded, on a stock market. Level 3. Financial instruments are included in level 3 if the valuation information is not based on observable market data.
Fair value-hierarchies according to IFRS 7.27 A
2012/13
Level 1 Quoted prices
Level 2 Observable market data
Level 3 Not based on observable market data
0
Non-current financial assets Available-for-sale securities Available-for-sale investments
8,070
7,317
753
32,003
32,003
0
0
40,073
39,320
753
0
4,505
4,505
0
0
93
93
0
0
4,598
4,598
0
0
44,671
43,918
753
0
Current financial assets Available-for-sale securities Shares (Kapsch TrafficCom) – Held for trading Total
In the fiscal year 2012/13, other non-current financial assets amounting to TEUR 3,825 are recognized at amortized cost.
The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
Consolidated Financial Statements | 111
Fair value hierarchies according to IFRS 7.27 A
2011/12
Level 1 Quoted prices
Level 2 Observable market data
Level 3 Not based on observable market data
0
Non-current financial assets Available-for-sale securities Available-for-sale investments
7,461
0
7,461
40,977
40,977
0
0
48,438
40,977
7,461
0
8,213
8,213
0
0
160
160
0
0
8,372
8,372
0
0
56,810
49,349
7,461
0
Current financial assets Available-for-sale securities Shares (Kapsch TrafficCom) – Held for trading Total
In the fiscal year 2011/12, other non-current financial assets amounting to TEUR 9,307 are recognized at amortized cost.
16 Other non-current assets
Truck toll collection system Czech Republic Other
2012/13
2011/12
940
3,420
2,715
560
3,655
3,980
Sundry other non-current assets relate to trade receivables (non-current) that are due from the Czech Ministry of Transport for the installation of the Czech truck toll collection system. As in the prior year, they fall due between 1 and 5 years from the balance sheet date. Other non-current assets mainly relate to a deposit (2012/13: TEUR 1,325, 2011/12: TEUR 0) as well as an insurance cover for pension commitments (2012/13: TEUR 585, 2011/12: TEUR 0). Non-current receivables were discounted on the basis of cash flows using an interest rate of 1.90 – 6.00 % (for that part which was funded by external loans) and an interest rate for alternative investments of 2.89 % (for that part which was funded by internal cash flows of the group). Thus, the fair values approximate the carrying amounts. Gross cash flows of other non-current assets are as follows:
Up to 2 years Between 2 and 3 years More than 3 years
2012/13
2011/12
1,457
3,239
209
655
2,220
305
3,887
4,199
2012/13
2011/12
17 Inventories
Purchased parts and merchandise, at acquisition cost
46,296
33,861
Unfinished goods and work in progress, at production cost
44,602
43,281
Finished goods, at production cost
25,589
22,428
Prepayments on inventory
1,892
59
118,379
99,629
The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
112 | Consolidated Financial Statements
Individual inventory items were written down, where necessary, to their net realizable values. The write-downs of inventories amount to TEUR 17,068 (2011/12: TEUR 15,158). In the reporting period, TEUR 1,910 was recognized in the statement of comprehensive income (2011/12: TEUR 2,260).
18 Trade receivables and other current assets
Trade receivables Allowance for bad debts Trade receivables – net
2012/13
2011/12
157,022
164,839
-3,969
-4,505
153,052
160,334
Amounts due from customers for contract work
96,709
141,592
Amounts due from customers for service and maintenance contracts
31,296
18,829
Receivables from tax authorities (other than income tax)
21,438
17,744
Other receivables and prepaid expenses
52,213
48,618
354,708
387,116
2012/13
2011/12
Balance as of 31 March of the prior year
4,505
4,058
Addition
1,711
1,400
-1,905
-242
-310
-707
Allowances for bad debts developed as follows:
Utilization Disposal Currency translation differences Balance as of 31 March of the fiscal year
-32
-4
3,969
4,505
2012/13
2011/12
317,602
351,000
Maturity structure of trade receivables and other current assets:
Not yet due Overdue, but not impaired: Less than 60 days
25,870
29,935
More than 60 days
15,205
10,686
358,677
391,621
Given the short maturities of these financial instruments, it is assumed that the fair values correspond to the carrying amounts. There is no concentration of credit risk with respect to trade receivables (except for the toll collection projects in the Czech Republic, South Africa and Poland) as the group generally has a large number of customers worldwide. Trade receivables (current) relating to the installation of the truck toll system of the Czech Republic amounting to TEUR 983 (2011/12: TEUR 3,010) and to the operation and maintenance of the system amounting to TEUR 22,312 (2011/12: TEUR 30,009) are due from Ředitelstvím silnic a dálnic ČR (RSD), a company of the Czech Republic. Trade receivables from the toll collection project in Poland due from GDDKiA (Generalna Dyrekcja Dróg Krajowych i Autostrad) amount to TEUR 9,042 (2011/12: TEUR 2,944). Trade receivables amounting to TEUR 15,387 (2011/12: TEUR 6,840) were pledged as collateral to banks (see note 21).
The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
Consolidated Financial Statements | 113
Amounts due from customers for contract work detail as follows: 2012/13
2011/12
Construction costs incurred plus recognized gains
166,706
347,600
Less amounts billed and prepayments received
-69,997
-206,008
96,709
141,592
As of 31 March 2013, amounts due from customers for contract work mainly relate to the toll collection project in the Republic of Belarus amounting to TEUR 68,717 (2011/12: TEUR 0) as well as extensions to the toll collection project in Poland amounting to TEUR 11,136 (2011/12: TEUR 107,253). Revenues from construction contracts amount to TEUR 92,702 in 2012/13 (2011/12: TEUR 199,273).
19 Cash and cash equivalents 2012/13
Cash on hand Deposits held with banks
2011/12
172
158
119,364
105,448
119,536
105,607
The carrying amounts of this item also represent cash and cash equivalents at the end of the reporting period as presented in the cash flow statement.
20 Share capital 2012/13
2011/12
727
727
2012/13
2011/12
Carrying amount as of 31 March of fiscal year The registered share capital of the company amounts to EUR 726,728. The share capital is fully paid in.
21 Current and non-current financial liabilities
Current Loans for acquisitions
2,750
0
Loans for project financing
5,833
34,000
7,000
13,000
Jouissance right Other current loans
57,289
59,606
72,872
106,606
6,150
12,250
Non-current Loans for acquisitions Loans for project financing
49,167
0
Capital expenditure loan
11,680
17,510
Jouissance right
0
7,000
Corporate bond
74,125
73,957
1,655
3,635
142,777
114,352
215,649
220,959
Other non-current loans
Total
The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
114 | Consolidated Financial Statements
In November 2010, Kapsch TrafficCom AG, Vienna, issued a corporate bond with a volume of EUR 75 million, a maturity of 7 years and an interest rate of 4.25 %. The effective interest rate is 4.54 %. All other non-current financial liabilities mature in 1 to 5 years. The fair values and the gross cash flows of non-current and current financial liabilities are as follows: 2012/13
2011/12
Carrying amount
215,649
220,959
Fair value
215,778
215,152
Up to 1 year
77,748
106,606
Between 1 and 3 years
43,694
42,566
Between 3 and 5 years
110,154
16,940
Gross cash flow
More than 5 years
0
75,529
231,597
241,641
2012/13
2011/12
149,924
183,430
Interest rates on current and non-current financial liabilities are as follows:
Total financial liabilities: Carrying fixed interest rates Carrying variable interest rates
65,725
37,529
215,649
220,959
Current loans
1.10 – 7.39 %
1.25 – 6.33 %
Loans for acquisitions
2.00 – 2.88 %
2.00 – 2.55 %
Loans for project financing
1.37 – 5.23 %
1.37 – 1.95 %
Jouissance right
6.90 – 7.80 %
6.90 – 7.80 %
2.88 %
4.01 – 4.91 %
Average interest rates:
Capital expenditure loan Corporate bond Other
4.54 %
4.54 %
2.00 – 3.10 %
1.25 – 14.50 %
Trade receivables (current) amounting to TEUR 15,387 (2011/12: TEUR 6,840) were pledged as collateral for bank guarantees and loans. For project financing of the Belorussian toll collection system, with an outstanding amount of TEUR 35,000 as of 31 March 2013 (31 March 2012: TEUR 0), Kapsch TrafficCom AG obtained a guarantee of a bill of exchange of the Oesterreichische Kontrollbank Aktiengesellschaft (OeKB) as well as a participation guarantee G4 of OeKB with a value up to TEUR 61,000 (maximum amount of the loan commitment). The claims of the participation guarantee G4 have been assigned as security to the lending banks. Liabilities to banks in the amount of TEUR 23,000 (2011/12: TEUR 0) are pledged with shares in Kapsch Financial Services GmbH, Vienna. The capital expenditure loan of KAPSCH-Group Beteiligungs GmbH, Vienna, with a total liability of TEUR 17,510 as at 31 March 2013 (31 March 2012: TEUR 27,949) is secured by collateral pledges of shares held in Kapsch TrafficCom AG, Vienna. The maximum amount of pledge is limited to TEUR 40,000. A bill of exchange amounting to TEUR 1,425 (2011/12: TEUR 1,425) was issued for an export promotion credit.
The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
Consolidated Financial Statements | 115
22 Liabilities from finance lease Finance lease mainly concerns two lease contracts for buildings entered into by Kapsch BusinessCom AG, Vienna. The duration of the contracts are 18 and 20 years and include a purchase option to buy the buildings at their carrying amount at the end of the lease period. For the calculation of the present value, an interest rate of 3.96 % was applied. 2012/13
Up to 1 year Between 1 and 5 years
2011/12
690
751
2,761
3,372
More than 5 years
15,409
16,672
Minimum lease payments (purchase option included)
18,860
20,795
Accrued interest
-1,158
-2,679
Present value of the lease liabilities
17,702
18,116
thereof disclosure as non-current liabilities
17,179
17,739
thereof disclosure as current liabilities
523
377
17,702
18,116
2012/13
2011/12
The fair values approximate the carrying amounts. The maturity of finance lease liabilities is as follows:
Up to 1 year Between 1 and 5 years More than 5 years
523
377
2,092
1,508
15,087
16,231
17,702
18,116
Finance lease liabilities are collateralized in a way that in case of delayed payments the ownership of the leased property is transferred back to the lessor.
23 Deferred tax assets/liabilities 2012/13
2011/12
Deferred tax assets to be recovered after more than 12 months
35,003
38,398
Deferred tax assets to be recovered within 12 months
12,133
2,761
47,136
41,159
5,246
8,096
Deferred tax assets
Deferred tax liabilities Deferred tax liabilities to be recovered after more than 12 months Deferred tax liabilities to be recovered within 12 months
Deferred tax assets net (+)/deferred tax liabilities net (-)
8,611
10,502
13,857
18,598
33,279
22,561
Deferred taxes due to tax loss carry-forwards and other temporary differences deductible in the future are recognized only to the extent of their potential realization. In these consolidated financial statements, tax loss carry-forwards in the amount of EUR 26.8 million (2011/12: EUR 18.4 million) have not been recognized because it is uncertain whether there will be sufficient taxable profits available against which to offset them. These tax loss carry-forwards originate on the one hand from Austrian companies which do not expire and on the other hand from foreign subsidiaries with the predominant part not expiring before 2030. All other deferred tax assets have been recognized in the respective group companies as future deductible items. The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
116 | Consolidated Financial Statements
Deferred income tax assets and liabilities are offset, taking maturities into account, when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income tax assets and liabilities relate to income taxes levied by the same taxation authority on the same taxable entity. Deferred tax assets/liabilities are attributable to the following positions:
31 March 2011
Addition resulting from company acquisition
Taken through the profit of the period
Taken through equity
Currency translation differences
31 March 2012
Deferred tax assets Tax loss carry-forwards
30,104
0
6,262
0
31
36,397
Provisions disallowed for tax purposes
2,840
0
7,775
0
35
10,650
Depreciation disallowed for tax purposes
1,290
0
325
0
4
1,619
Other (accrued income)
4,487
0
5,048
-51
-8
9,476
38,722
0
19,411
-51
62
58,143
14
0
327
0
10
351
0
0
23,465
0
118
23,583
11,720
244
-3,164
0
0
8,800
3,280
0
-432
0
-2
2,846
15,014
244
20,198
0
126
35,581
23,707
-244
-787
-51
-64
22,561
31 March 2012
Addition resulting from company acquisition
Taken through the profit of the period
Taken through equity
Currency translation differences
31 March 2013
Tax loss carry-forwards
36,397
0
-7,750
0
-177
28,470
Provisions disallowed for tax purposes
10,650
0
244
0
-79
10,815
Deferred tax liabilities Special depreciation/amortization of non-current assets Construction contracts Gains from recognition at fair value Other (deferred expense) Total
Deferred tax assets
Depreciation disallowed for tax purposes
1,619
0
344
0
3
1,966
Other (accrued income)
9,476
0
900
314
-22
10,668
58,143
0
-6,261
314
-276
51,920
Deferred tax liabilities Special depreciation/amortization of non-current assets
351
0
98
0
7
456
23,583
0
-16,538
0
-91
6,955
Gains from recognition at fair value
8,800
674
-2,231
0
0
7,244
Other (deferred expense)
2,846
0
1,145
0
-6
3,986
35,581
674
-17,526
0
-89
18,641
22,561
-674
11,265
314
-186
33,279
Construction contracts
Total
24 Liabilities from post-employment benefits to employees Amounts recognized in the balance sheet: 2012/13
2011/12
Termination benefits
28,927
26,764
Pension benefits
17,747
15,596
46,674
42,360
Termination benefits The obligation to set up a provision for termination benefits is based on the respective labor law. The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
Consolidated Financial Statements | 117
Retirement benefits Liabilities for retirement benefits recognized at the balance sheet date relate to retirees only. All pension agreements are based on past service cost and are not covered by external plan assets (funds). In addition, contributions are paid to an external pension fund for employees of the group (see note 5). Termination benefits and pension benefit obligations were valued based on an interest rate of 3.75 % (2011/12: 5.0 %) and compensation increases based on a rate of 2.0 % (2011/12: 3.0 %). In addition, the calculation was based on the earliest possible statutory retirement age including transition provisions and using the mortality tables AVÖ 2008-P (2011/12: AVÖ 2008-P) by Pagler & Pagler. Pension increases were estimated at 2.0 – 3.0 % (2011/12: 2.0 – 3.0 %). The following amounts are recognized in the statement of comprehensive income as expenses for termination benefits: 2012/13
2011/12
Current service cost
1,085
1,700
Interest expense
1,740
1,519
Actuarial gains/losses Total, included in staff costs (note 5)
301
873
3,127
4,092
26,764
25,064
Change in liabilities recognized in the balance sheet: Carrying amount as of 31 March of prior year Total expense according to the table above
3,127
4,092
-963
-2,392
Carrying amount as of 31 March of fiscal year
28,927
26,764
Actuarial present value of obligations (defined benefit obligation)
34,955
33,040
Payments
Unrecognized actuarial gains/losses
-6,028
-6,276
Amount recognized in the balance sheet
28,927
26,764
In the following sensitivity analysis for termination benefit obligations, the impacts resulting from changes in significant actuarial assumptions were changed, whereas the other impacting factors were kept constant. However, in reality it will be rather likely that several of these assumptions will change. Changes in assumption
Decrease in assumption
Increase in assumption
Defined benefit obligation (DBO)
+/- 0.5 %
1,450
-1,356
Expected annual interest expenses (IC)
+/- 0.5 %
-125
114
Expected annual service costs (CSC)
+/- 0.5 %
45
-41
Defined benefit obligation (DBO)
+/- 0.5 %
-1,306
1,383
Expected annual interest expenses (IC)
+/- 0.5 %
-49
52
Expected annual service costs (CSC)
+/- 0.5 %
-44
48
Defined benefit obligation (DBO)
+/- 0.5 %
99
-92
Expected annual interest expenses (IC)
+/- 0.5 %
4
-3
Expected annual service costs (CSC)
+/- 0.5 %
5
-5
Impact of changes in the discount rate
Impact of changes in salary increases
Impact of changes in fluctuation
The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
118 | Consolidated Financial Statements
Amounts for the reporting period and the four prior years are as follows: 2012/13
2011/12
2010/11
2009/10
2008/09
Present value of obligations (defined benefit obligation)
34,955
33,040
30,431
28,217
27,150
Unrecognized actuarial gains/losses
-6,028
-6,276
-5,367
-5,191
-4,604
Liability in the balance sheet
28,927
26,764
25,064
23,026
22,546
The amounts recognized in the balance sheet for retirement benefits are determined as follows:
Present value of funded obligations
2012/13
2011/12
4,984
3,294
Fair value of plan asset
-1,076
-883
Deficit of funded plans
3,908
2,412
Present value of unfunded obligations
17,532
14,736
Unrecognized actuarial gains/losses
-3,693
-1,552
13,839
13,184
17,747
15,596
Liability in the balance sheet Change in defined benefit obligation:
Carrying amount as of 31 March of prior year Current service costs
2012/13
2011/12
16,479
16,107
545
410
Interest expense
1,405
930
Actuarial adjustments
1,262
98
-908
-1,136
Payments Currency translation differences
40
70
18,823
16,479
2012/13
2011/12
883
983
Actuarial adjustments
14
-11
Expected return on plan assets
40
0
15
124
Carrying amount as of 31 March of fiscal year Change in fair value of plan assets:
Carrying amount as of 31 March of prior year
Employer contribution Benefits paid Disposal Currency translation differences Carrying amount as of 31 March of fiscal year
123
0
0
-214
0
1
1,076
883
The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
Consolidated Financial Statements | 119
The following amounts are recognized in the statement of comprehensive income as expenses for retirement benefits: 2012/13
2011/12
545
410
Interest expense
1,405
930
Actuarial gains/losses
1,248
109
Current service costs
Expected return on plan asset Total, included in staff costs (note 5)
-40
0
3,157
1,449
Amounts for the reporting period and the four prior years are as follows:
Present value of funded obligations Unrecognized actuarial gains/losses
2012/13
2011/12
2010/11
2009/10
2008/09
22,516
18,031
17,585
14,394
13,546
-3,693
-1,552
-1,478
-861
-1,642
18,823
16,479
16,107
13,533
11,903
Fair value of plan assets
-1,076
-883
-983
-635
-504
Liability in the balance sheet
17,747
15,596
15,124
12,898
11,399
3,355
1,000
140
421
1,009
14
-11
33
28
-45
Experience adjustments on plan liabilities Experience adjustments on plan assets Plan assets are comprised as follows:
2012/13
2011/12
Equity instruments
28 %
28 %
Debt instruments
66 %
64 %
Property
0 %
0 %
Other
7 %
8 %
100 %
100 %
In the following sensitivity analysis for pension obligations, the impacts resulting from changes in significant actuarial assumptions were changed, whereas the other impacting factors were kept constant. However, in reality it will be rather likely that several of these assumptions will change. Changes in assumption
Decrease in assumption
Increase in assumption
Defined benefit obligation (DBO)
+/- 0.5 %
1,710
-1,519
Expected annual interest expenses (IC)
+/- 0.5 %
-50
43
Expected annual service costs (CSC)
+/- 0.5 %
48
-42
Defined benefit obligation (DBO)
+/- 0.5 %
-786
856
Expected annual interest expenses (IC)
+/- 0.5 %
-29
32
Expected annual service costs (CSC)
+/- 0.5 %
-3
3
Impact of changes in the discount rate
Impact of changes in salary increases
The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
120 | Consolidated Financial Statements
25 Other non-current liabilities
Truck tolling collection system Czech Republic Liabilities resulting from earn-out clauses Other
2012/13
2011/12
778
2,587
2,848
1,221
2,424
243
6,049
4,050
Other non-current liabilities relate to trade payables (non-current) amounting to TEUR 778 (2011/12: TEUR 2,587) due to subcontractors for the installation of the Czech truck tolling collection system. As in the prior year, these liabilities are due in more than one year and less than five years as of the balance sheet date. These non-current liabilities were discounted on the basis of cash flows using discount rates that correspond to those rates applied in discounting non-current receivables from the Czech truck toll collection system (see note 16). Thus, the fair values approximate the carrying amounts. Other non-current liabilities mainly relate to liabilities from financial instruments. The gross cash flows of other non-current liabilities are as follows: 2012/13
2011/12
Up to 2 years
3,057
1,957
Between 2 and 3 years
1,484
1,583
More than 3 years
2,338
857
6,879
4,397
2012/13
2011/12
26 Other liabilities and deferred income
Amounts due to customers for contract work Prepayments received
12,333
0
5,933
12,557
Non-current employee liabilities
41,216
43,393
Liabilities to tax authorities (other than income tax)
14,833
13,349
Other liabilities and deferred income
39,239
58,259
113,556
127,558
2012/13
2011/12
Amounts due to customers for contract work relate to the segment Traffic and detail as follows:
Construction costs incurred plus recognized gains Less amounts billed and prepayments received
-139,101
0
151,434
0
12,333
0
As of 31 March 2013, amounts due to customers for contract work mainly relate to the toll collection system project in South Africa.
The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
Consolidated Financial Statements | 121
27 Provisions 2012/13
Non-current provisions Current provisions
2011/12
4,057
3,568
56,727
51,855
60,783
55,423
The provisions changed as follows:
Obligations from anniversary bonuses Other Non-current provisions, total Warranties Losses from pending transactions and rework Legal fees, costs of litigation and contract risks
31 March 2011
Addition resulting from company acquisition
Addition
Utilization
Disposal
Currency translation differences
31 March 2012
2,839
0
572
0
-104
0
3,307
106
0
224
-81
5
7
260
2,945
0
796
-81
-99
7
3,568
10,197
0
674
-959
-938
29
9,003
32
0
17,906
-32
0
63
17,968
13,405
21
3,252
-1,539
-3,419
2
11,721
Other
18,256
6
11,851
-11,299
-5,519
-133
13,162
Current provisions, total
41,890
26
33,683
-13,829
-9,876
-40
51,855
Total
44,835
26
34,479
-13,910
-9,975
-32
55,423
31 March 2012
Addition resulting from company acquisition
Addition
Utilization
Disposal
Currency translation differences
31 March 2013
3,307
0
843
0
-346
-1
3,803
260
0
103
-58
-57
5
254
Non-current provisions, total
3,568
0
946
-58
-403
4
4,057
Warranties
9,003
0
2,381
-573
-1,592
67
9,286
8,303
-3,693
0
-100
22,479
Obligations from anniversary bonuses Other
Losses from pending transactions and rework
17,968
0
Legal fees, costs of litigation and contract risks
11,721
0
6,046
-3,433
-1,787
-5
12,543
Other
13,162
0
12,260
-10,361
-2,681
39
12,419
Current provisions, total
51,855
0
28,990
-18,060
-6,059
0
56,727
Total
55,423
0
29,936
-18,118
-6,462
5
60,783
The provision for anniversary bonuses relates to non-current entitlements of employees based on the Collective Agreement. The valuation was based on an interest rate of 3.75 % (2011/12: 5.0 %), the earliest possible statutory retirement age including transitional provisions and using the mortality tables AVÖ 2008-P (2011/12: AVÖ 2008-P) by Pagler & Pagler; increases in salary were considered at 2.0 % (2011/12: 3.0 %). In the position “Addition”, interest effects amounting to TEUR 155 (2011/12: TEUR 136) are included.
The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
122 | Consolidated Financial Statements
In the following sensitivity analysis for anniversary bonuses, the impacts resulting from changes in significant actuarial assumptions were changed, whereas the other impacting factors were kept constant. However, in reality it will be rather likely that several of these assumtions will change. Changes in assumption
Decrease in assumption
Increase in assumption
Defined benefit obligation (DBO)
+/- 0.5 %
138
-129
Expected annual interest expenses (IC)
+/- 0.5 %
-13
12
Expected annual service costs (CSC)
+/- 0.5 %
9
-8
Defined benefit obligation (DBO)
+/- 0.5 %
-124
132
Expected annual interest expenses (IC)
+/- 0.5 %
-5
5
Expected annual service costs (CSC)
+/- 0.5 %
-9
10
Defined benefit obligation (DBO)
+/- 0.5 %
116
-107
Expected annual interest expenses (IC)
+/- 0.5 %
4
-4
Expected annual service costs (CSC)
+/- 0.5 %
9
-8
Impact of changes in the discount rate
Impact of changes in salary increases
Impact of changes in fluctuation
As manufacturer, dealer and service provider, the group issues product warranties at the time of sale to its customers. Usually, under the terms of the warranty contract, the goup has the obligation to repair or replace manufacturing or software defects that become apparent within the period under guarantee. When the group expects warranty claims on products sold or services rendered during the period under guarantee, a corresponding provision is set up in the financial statements. Based on the expectation that the majority of the expenditure will be incurred in the short or medium term, the best estimate for the cost of warranty is used for the recognition of the provision. Likewise, historical data is taken into account in the calculation of the provision amount. According to past experience, it is probable that there will be claims under the warranties. The provision for losses from pending transactions and rework was set up for expected losses from construction contracts not yet completed at the balance sheet date. Other provisions mainly include provisions for commissions and bonuses, credits receivable and project costs, discounts granted to customers and legal and consulting fees.
28 Contingent liabilities, other commitments and operating lease commitments The group’s contingent liabilities primarily result from large-scale projects in the segment Traffic. Other commitments mainly relate to contract and warranty bonds, bank guarantees, performance and bid bonds, sureties and acceptance of guarantees for subsidiaries vis-à-vis third parties.
The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
Consolidated Financial Statements | 123
Details of contingent liabilities and other commitments are as follows: 2012/13
2011/12
Gauteng Open Road Tolling, South Africa
98,202
114,113
Toll collection system North America
Contract, warranty, performance and bid bonds 21,225
0
Toll collection system Poland
9,194
43,501 8,500
Truck toll collection system Austria
8,500
Truck toll collection system Czech Republic
2,494
4,471
City Highway Sydney and Melbourne
2,775
1,811
Tender Slovenia
2,000
0
Toll collection system Portugal
1,820
1,820
Other
Bank guarantees Sureties Acceptance of guarantees for subsidiaries vis-à-vis third parties
8,122
5,544
154,332
179,760
13,203
16,385
1,569
555
39,993
35,347
54,765
52,287
209,096
232,047
For details of securities for above-mentioned contingent liabilities and other commitments, see note 15 and note 21. Further assets of Kapsch TrafficCom AB, Jönköping, Sweden, amounting to TEUR 10,772 (2011/12: TEUR 8,796) are pledged in favor of a Swedish bank in order to secure contingent liabilities, as well as assets of Kapsch CarrierCom France SAS, Paris, France, amounting to TEUR 2,373 (2011/12: TEUR 0) are pledged in favor of a French bank in order to secure contingent liabilities. Financial obligation from lease contracts The future payments from non-cancellable obligations from rental and operating lease contracts are presented below: 2012/13
2011/12
Up to 1 year
15,493
10,821
Between 1 and 5 years
36,570
27,000
Over 5 years
23,351
5,113
75,413
42,934
The increase in future payments from rental and operating lease contracts mainly results from the prolongation of the rental agreement of the property Am Europlatz 2.
29 Business combination Data Storage s.r.o., Prague Effective 17 July 2012, the group acquired all shares in Data Storage s.r.o., Prague, Czech Republic. The purchase price is comprised of a fixed component in the amount of TEUR 3,400 and a performance-related variable component. This contingent purchase price component was recognized at its fair value (present value) as a non-current liability, taking maturities into account.
The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
124 | Consolidated Financial Statements
As a specialist for solutions in the area of data archiving, migration and disaster recovery, the company extends the service portfolio of the group in the segment Enterprise and strengthens the presence in the CEE.
Consideration paid
3,400
Contingent elements of purchase price
2,506
Less fair value of net assets acquired
4,448
Goodwill
1,458
Less minority interests
75
Goodwill attributable to equity holders
1,384
Assets and liabilities resulting from the acquisition are shown as follows (provisionally determined):
Property, plant and equipment Intangible assets Inventories
Fair value
Carrying amount of the seller
107
107
3,549
0
62
62
Receivables and other assets
2,012
2,012
Cash and cash equivalents
1,084
1,084
Deferred tax liabilities Liabilities, other liabilities and deferred income Net asset acquired
-674
0
-1,692
-1,692
4,448
1,573
The acquired company contributed revenues of TEUR 8,027 and a net income of TEUR 343 to the group’s result for the period from 17 July 2012 to 31 March 2013. If the acquisition had occurred on 1 April 2012, there would not have been a significant change in revenue or profit of the group. NEC Portugal Effective 20 March 2013, the group acquired by means of an asset deal the railway business of NEC Portugal, thereby taking over several contracts with railway operators in Portugal, Spain, Saudi Arabia and Finland as well as all the employees of NEC Portugal.
Consideration paid
1,702
Less fair value of net assets acquired
1,702
Goodwill
0
Assets and liabilities resulting from the acquisition are shown as follows (provisionally determined):
Fair value
Intangible assets Inventories Receivables and other assets Liabilities, other liabilities and deferred income Net asset acquired
Carrying amount of the seller
1,500
0
21
21
426
426
-245
-245
1,702
202
If the acquisition had occurred on 1 April 2012, there would not have been a significant change in the revenue or profit of the group.
The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
Consolidated Financial Statements | 125
30 Related parties The following transactions were performed with related parties: Kapsch Immobilien GmbH, Vienna The managing directors of Kapsch Immobilien GmbH are also members of the supervisory board of several subsidiaries. In addition, one managing director is also managing director of KAPSCH-Group Beteiligungs GmbH and member of the executive board of two subsidiaries. The subsidiaries Kapsch BusinessCom AG, Kapsch TrafficCom AG, Kapsch Aktiengesellschaft and Kapsch Partner Solutions GmbH entered into lease contracts with Kapsch Immobilien GmbH as lessor regarding buildings in Vienna. The lease contract regarding the building in Vienna, Johann-Hoffmann-Platz 9, with Kapsch Partner Solutions GmbH was signed on 1 December 2004 and agreed for an indefinite period of time. In the fiscal year 2012/13, Kapsch Immobilien GmbH sold the property Am Europlatz 2 on 31 August 2012. Lease expenses incurred in the period from April to August 2012 by the group amounted to TEUR 1,742 (2011/12: EUR 3.5 million). Since that time, further lease expenses have not to be shown as related parties. For waiving the right to terminate the rental agreement, a bonus of TEUR 1,340 was agreed. On 19 December 2008, a lease contract regarding the location Wagenseilgasse 14 was signed. Furthermore, the company invoiced other deliveries and services in the year 2012/13 in the amount of TEUR 160 (2011/12: TEUR 112) to the group. Kapsch Financial Services GmbH, Vienna The company leases equipment for speech, data and IT solutions of Kapsch BusinessCom AG to business customers. Intra-group lease revenues and other revenues of Kapsch Financial Services GmbH, Vienna, amounted to EUR 6.8 million in the fiscal year 2012/13 (2011/12: EUR 5.5 million). Sales of hardware and maintenance services as well as other deliveries and services of Kapsch BusinessCom AG, Vienna, to Kapsch Financial Services GmbH, Vienna, amounted to EUR 42.3 million in the fiscal year 2012/13 (2011/12: EUR 38.4 million). As of 31 March 2013, receivables due to related parties amount to TEUR 3,400 (2011/12: TEUR 3,206).
31 Events after the balance sheet date No major events occured after balance sheet date.
32 Supplementary disclosures The consolidated group companies are listed in the notes to the consolidated financial statements under the item “consolidated group”. With regard to additional disclosures in accordance with § 265 (2) UGB for subsidiaries where the group directly or indirectly holds less than 100 % of the shares, the protection-of-interest clause pursuant to § 265 (3) UGB is applied. With regard to additional disclosures for group companies accounted for using the equity method, see note 14.
The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
126 | Consolidated Financial Statements
The average number of staff in the fiscal year 2012/13 was 4,974, thereof 4,757 salaried employees and 217 waged workers (2011/12: 4,613 total, thereof 4,432 salaried employees and 181 waged workers). Expenses for the auditor The expenses for the auditor amount to TEUR 58 (2011/12: TEUR 57) and are broken down as follows: 2012/13
2011/12
46
46
Other assurance services
6
5
Tax consulting services
0
0
Other services
7
6
58
57
Audit of the consolidated financial statements
Disclosures on members of the executive board and the supervisory board Total remuneration of the members of the executive board of KAPSCH-Group Beteiligungs GmbH for their activities in the parent company and in other group companies amounted to TEUR 3,158 in the fiscal year 2012/13 (2011/12: TEUR 3,641). Expenses for termination benefits and pensions for the executive board in the fiscal year 2012/13 amounted to TEUR 1,698 (2011/12: TEUR 1,149). Total compensation of the members of the supervisory board amounted to TEUR 48 in the fiscal year 2012/13 (2011/12: TEUR 48). As in the previous years, neither advances nor loans were granted to members of the executive and supervisory board nor any guarantees issued in their favor. In the fiscal year 2012/13, the following persons served on the executive board: Georg Kapsch Kari Kapsch Franz Semmernegg In the fiscal year 2012/13, the following persons served on the supervisory board: Veit Schmid-Schmidsfelden (Chairman) Christian Gassauer-Fleissner (Deputy Chairman) Karl-Heinz Strauss Authorized for issue: Vienna, 17 June 2013
Georg Kapsch
Kari Kapsch
Franz Semmernegg
Managing Director
Managing Director
Managing Director
The consolidated financial statements of KAPSCH-Group Beteiligungs GmbH as of 31 March 2013 prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and with section 245a (2) of the Austrian Commercial Code (UGB) have been translated into English. In case of different interpretations, the German original is valid.
Consolidated Financial Statements | 127
Auditor’s Report. Report on the Consolidated Financial Statements. We have audited the accompanying consolidated financial statements of KAPSCH-Group Beteiligungs GmbH, Vienna, for the fiscal year from 1 April 2012 to 31 March 2013. These consolidated financial statements comprise the consolidated balance sheet as of 31 March 2013, the consolidated statement of comprehensive income, the consolidated cash flow statement and the consolidated statement of changes in equity for the fiscal year ended 31 March 2013, and the notes to the consolidated financial statements. Management’s Responsibility for the Consolidated Financial Statements and for the Accounting System The Company’s management is responsible for the group accounting system and for the preparation and fair presentation of the consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU and in accordance with the statutory provisions of Section 245a UGB. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; making accounting estimates that are reasonable in the circumstances. Auditor’s Responsibility and Description of Type and Scope of the Statutory Audit Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with laws and regulations applicable in Austria and Austrian Standards on Auditing as well as in accordance with International Standards on Auditing (ISA) issued by the International Auditing and Assurance Standards Board (IAASB) of the International Federation of Accountants (IFAC). Those standards require that we comply with professional guidelines and that we plan and perform the audit to obtain reasonable assurance of whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the a uditor considers internal control relevant to the group’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the group’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a reasonable basis for our audit opinion.
128 | Auditor’s Report
Opinion Our audit did not give rise to any objections. In our opinion, which is based on the results of our audit, the consolidated financial statements comply with legal requirements and give a true and fair view of the financial position of the group as of 31 March 2013 and of its financial performance and its cash flows for the fiscal year from 1 April 2012 to 31 March 2013 in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU.
Comments on the Management Report for the Group. Pursuant to statutory provisions, the management report for the group is to be audited as to whether it is consistent with the consolidated financial statements and as to whether the other disclosures are not misleading with respect to the Company’s position. The auditor’s report also has to contain a statement as to whether the management report for the group is consistent with the consolidated financial statements. In our opinion, the management report for the group is consistent with the consolidated financial statements. Vienna, 17 June 2013
PwC Wirtschaftsprüfung GmbH Wirtschaftsprüfungs- und Steuerberatungsgesellschaft
signed: Felix Wirth Austrian Certified Public Accountant
Auditor’s Report | 129
Kapsch stands for sustainability and responsibility. We are committed to doing business responsibly and with a long-term perspective, to sustainable innovation and environmentally friendly products.
We have created interactive experiences around the themes of our annual report. With the iKapsch app for your iPhone or Android smartphone you can explore an additional multimedia dimension to our content. Read the user instructions for iKapsch on the back cover to immerse yourself in the world of Kapsch.
capture
I imagine the future like this: When we ride together in the car, I can watch TV and play fun games in the back seat with Mom, Dad and my sister Marlene because the car is driving itself. Also my phone pays attention and answers me. Things that aren’t much fun are simply done for me. Then I have more time for me, my friends and my family. I think everything should be much simpler in the future. Paula Hanle Kapsch’s Future
Services. Glossary. 3GPP
3GPP – 3rd Generation Partnership Project is a global collaboration of standardization bodies aiming to achieve standardization in mobile telephony
3GPP Release 4
Specifications helping the Technical Committee for Railway Telecommunications accomplish international standards for implementing digital train communications and move towards IP
AASI
Apple Authorized Systems Integrator – description for systems integrators that have achieved the highest level of certification in cooperating with Apple
ANPR
Automatic Number Plate Recognition – automatic number plate recognition for the computer evaluation of digital images, where number plates are captured using optical character recognition technology (OCR)
ATMS
Advanced Traffic Management Systems to monitor traffic, optimize signal timing, and regulate the flow of traffic
AVIS
Systems for transmitting traffic-related vehicle information to travelers before or during the trip as well as for providing navigation services
Big Data
Big data describes corporate data volumes growing exponentially. They must be saved and structured and be trackable at a later date with the help of intelligent searches
CEN
Comité Européen de Normalisation (European Committee for Standardization) – responsible for defining common legislative procedures for toll systems in Europe
CVO
Commercial Vehicle Operations – systems for operating commercial vehicles in order to enhance freight carrier productivity and safety
DSRC
Dedicated Short-Range Communication – microwave communication; semi-passive transponder technology with a very small communication zone, which in Europe is the de-facto norm for electronic toll collection
EIRENE
European Integrated Railway Radio Enhanced Network – working group of the international railway association
ERA
European Railway Agency – the main task of the European Railway Agency is to strengthen the safety and interoperability of rail traffic in Europe
ERTMS
The European Rail Traffic Management System is a project of the European Union designed to make rail traffic safer and more competitive
ETC
Electronic Toll Collection, enabling vehicle drivers to pay for tolls without having to stop at the toll booth
ETCS
European Train Control System – one component of the ERTMS. The ETCS is designed to replace and standardize the variety of train safety systems in place throughout the European Union
ETSI
European Telecommunications Standards Institute – an officially recognized standards body that is engaged in globally applicable ICT standards
GDP
Gross Domestic Product is the market value of all officially recognized final goods and services produced within a country in a given period of time
GHz
One gigahertz is a billion hertz. Hertz is the unit of frequency
GNSS
Global Navigation Satellite System – system to determine positions and facilitate navigation on earth and in the sky by receiving signals from navigation satellites and pseudolites
GPRS
General Packet Radio Service – description for packet-based service transmitting data in GSM and UMTS networks
GPS
Global Positioning System – a global navigation satellite system used to pinpoint positions and measure time
GSM
Global System for Mobile Communication – standard for fully digital mobile telephony networks
GSM-R
GSM for Railways – a mobile telephony system built on the leading global radio standard, which was adapted specifically for use in the rail industry
ICT
Information and Communication Technology signifies technologies in the field of information and communication
IDS
Intrusion Detection System – an intrusion detection system can complement a firewall and helps to detect attacks which are directed at a computer system or computer network
IG
GSM-R Industry Group – established to promote GSM-R technology and its successful deployment in projects throughout Europe
IMF
International Monetary Fund, headquartered in Washington, D.C., United States, is a special organization of the United Nations to promote international economic cooperation, international trade, employment, and exchange rate stability
IMS
The IP Multimedia Subsystem aims to create standardized access to services from different networks
132 | Services
Addresses. IP
IP stands for internet protocol that facilitates the exchange of data across the boundaries of local networks
Kapsch Aktiengesellschaft
IP TV
Internet Protocol Television describes the channel of the Internet for transmitting TV programs and films. This can take on various forms from simple IP TV via a computer to special consumer devices
Am Europlatz 2
ISO
International Organization for Standardization
Phone: +43 50 811 0
ITIL
The IT Infrastructure Library (ITIL) is a collection of best practices describing the possible implementation of IT service management, which is taken as the de facto international standard in this field
Fax: +43 50 811 9999
ITS
Intelligent Transportation Systems – systems employing information and communication technologies, which support and optimize transport, including infrastructure, vehicles and users
www.kapsch.net
1120 Vienna | Austria
Email:
[email protected]
IVR
Interactive Voice Response – automated dialog system controlled by the natural voice of the caller or by touch tones
LAN
A Local Area Network is a computer network. Without any additions, a LAN is limited in size to 500 meters and is employed in small companies for example
MHz
One megahertz is a million hertz. Hertz is the unit of frequency
1120 Vienna | Austria
OECD
The Organisation for Economic Co-operation and Development is an international economic organization of 34 countries founded in 1961 to stimulate economic progress and world trade
Phone: +43 50 811 0
OHS
Coordinate switchboard – electromagnetic switching equipment for analog switched telephony; was used to connect voice communication in a telephone exchange or in remote equipment
On-board unit
An on-board unit (OBU) is an electronic device readable and writeable via wireless communication. An OBU identifies a vehicle and/or serves as a payment means and/or as data memory for vehicle and/or personal data
OSS/BSS
Operation Support System/Business Support System – a network management system supporting automated service processes
PVTMS
Public Vehicle Transportation Management Systems to facilitate management of both local and long-distance public transportation
1120 Vienna | Austria
SaaS
Software as a Service model – part of cloud computing. The essence of the model is that both the IT infrastructure and the software of a provider are made available and used by customers as a service
Fax: +43 50 811 3303
TCRT
Technical Committee Railway Telecommunications – a committee of the European Telecommunications Standards Institute
TETRA
Terrestrial Trunked Radio – standard for digital trunked radio, which facilitates the construction of universal networks
TEUR
Thousand euros
Kapsch TrafficCom AG
UIC
Union Internationale des Chemins de Fer – the International Union of Railways acts as a global association for the rail industry and comprises almost 200 members throughout the world
Am Europlatz 2
UMTS
Universal Mobile Telecommunications System – third-generation mobile telephony standard. Facilitates much faster data transmission rates than previous systems
Phone: +43 50 811 0
V2X
Vehicle-to-X is the abbreviation for vehicle-to-vehicle (V2V) and vehicle-to-infrastructure (V2I) communication, a core technology for managing and improving future traffic safety and mobility
Email:
[email protected]
Voice over IP
IP telephony, also known as internet telephony or voice-over-IP, describes the act of telephoning over computer networks constructed in accordance with internet standards
VÖNIX
The VBV Austrian Sustainability Index is a stock index comprising listed Austrian companies that play a leading role in terms of their social and environmental performance
VPN
A Virtual Private Network is an encrypted interface in a network. By means of a VPN, participants in a network can access another network without the networks having to be compatible
WAVE
Wireless Access in Vehicular Environments – solution to facilitate safe communication between vehicles as well as between vehicles and the surrounding infrastructure
Zettabyte
A zettabyte is one thousand trillion bytes (or 1021 bytes). Byte is the unit of measurement for digital information
Services | 133
Kapsch BusinessCom AG Wienerbergstraße 53
Fax: +43 50 811 9999 Email:
[email protected] www.kapschbusiness.com
Kapsch CarrierCom AG Am Europlatz 5 Phone: +43 50 811 0 Email:
[email protected] www.kapschcarrier.com
1120 Vienna | Austria Fax: +43 50 811 2109 www.kapschtraffic.com
iKapsch
iKapsch. We have created interactive experiences around the themes of our annual report. With the iKapsch app for your iPhone or Android smartphone you can explore an additional multimedia dimension to our content. How it works: 1. Download the iKapsch app from the Apple App Store or the Google Play Store and install it on your smartphone. 2. Start iKapsch.
capture
Explore an Additional Multimedia Dimension to Our Content.
1. Look for the ‘iKapsch capture’ symbol on the graphic pages of this annual report. 2. Select the function ‘iKapsch capture’ in your iKapsch app. 3. Hold your smartphone as level and steady as possible over the page in the annual report that is designated with the ‘iKapsch capture’ symbol. 4. As soon as you can see the entire page, take a photo and you will soon be immersed into the world of Kapsch.
print
Annual Report of Kapsch Group 2012/13 as a Download or Digital Print.
With the iKapsch app for your iPhone or Android smartphone, you can view the Kapsch Group annual report in digital form. Use the Apple App Store or the Google Play Store on your smartphone to install the iKapsch app, then start the ‘iKapsch print’ module in the iKapsch app. You will receive the annual report in digital form for reading or for printing out from your smartphone or PC.
Kapsch Group. The Kapsch Group is one of the most successful technology firms in Austria that also plays a key global role. The company was founded 120 years ago, and today it sets benchmarks in the promising future markets of Intelligent Transportation Systems (ITS), Railway and Public Operator Telecommunications as well as Information and Communication Technology (ICT). The Kapsch Group comprises the three key companies of Kapsch TrafficCom, Kapsch CarrierCom and Kapsch BusinessCom. A family-run company headquartered in Vienna, Kapsch develops and implements new technologies to the commercial benefit of its customers. The Kapsch Group offers a variety of innovative solutions, systems and services, thus making a significant contribution to the responsible and sustained creation of a mobile and networked world. The companies of the Kapsch Group employ more than 5,000 people in about 100 branches and representation offices around the globe.
Kapsch Group | Am Europlatz 2 | 1120 Vienna | Austria | www.kapsch.net Corporate Marketing | Alf Netek | Phone +43 50 811 1700 | Fax +43 50 811 99 1700 | Email
[email protected]
