annual report - hms bergbau ag · annual report 2013 of hms bergbau ag these activities are also...

Annual Report 2013

The English version of the annual report and the consolidated financial statements 2012 of HMS Bergbau AG is a one-to-one translation. The English version is not audited; in the event of variances, the German version shall take precedence over the English translation.

2

Annual Report 2013 of HMS Bergbau AG

Group key figures

Finance Calendar

Expected

publication date

Annual Report 2013 27 June 2014

Annual General Meeting 19 August 2014

Interim Report 2014 September 2014

31 Dec 2013 31 Dec 2012 31 Dec 2011

Balance sheet figures TEUR TEUR TEUR

Total assets 15,461 19,324 14,591

Non-current assets 223 5,467 6,041

Current assets 15,173 13,800 8,490

Shareholders' equity 2,703 6,679 4,185

Provisions 3,225 2,049 1,728

Liabilities 9,389 10,593 8,678

2013 2012 2011

Cash flow figures TEUR TEUR TEUR

Cash flow from operating activities -1,551 -6,017 4,002

Cash flow from investment activities 3,951 1,466 67

Cash flow from financing activities 0 1,497 -2,392

Cash and cash equivalents at the end of

the period 3,470 796 3,963

2013 2012 2011

Income statement figures TEUR TEUR TEUR

Revenues 118,283 89,846 106,669

Operating profit -4,838 560 -805

Net profit -5,074 209 -1,038

3


Index

Letter to the Shareholders

Report of the Supervisory Board

Investor Relations

Group Management Report

Consolidated Financial Statements

Consolidated Balance Sheet as of 31 December 2012

Consolidated Income Statement 2012

Consolidated Cash Flow Statement 2012

Consolidated Statement of Changes in Shareholders’ Equity 2012

Statement of Changes in Non-Current Assets as of 31 December 2012

Notes to the Consolidated Financial Statement

Auditor’s report

Imprint

4

8

12

16

36

36

38

39

40

42

44

52

54

4


Foreword from the Management Board

Dear Shareholders,

Financial year 2013, now behind us, was characterised by a series of events that will be of key

importance for the future business development of HMS Bergbau AG. On the one hand, the strategic

focus continued to be on strengthening HMS’ trading and sales business in the Asian and African coal

markets. The conclusion of an exclusive agreement between HMS Bergbau AG and Ichor Coal AG, or

rather with its subsidiary Vunene Mining, on the sale of up to 600,000 tonnes of African steam coal was

with certainty a noteworthy milestone in this regard. As part of this agreement, HMS Bergbau was able

to handle the shipping of a direct trading transaction between South Africa’s Vunene Mining and an

Asian customer by sea for the first time in December 2013. Both the transaction’s direct route, without

the involvement of an international wholesaler, and its processing via the Richards Bay Coal Terminal

(RBCT), which is considered to be the world’s largest coal export terminal, underscore our strong

international market position.

However, we also continued to work consistently towards strengthening our presence in the European

market. In keeping with this, we concluded a cooperation agreement with FCC-Franke in September

2013, which is also in the coal business. HMS Bergbau AG holds 51% of the new enterprise,

HMS Coal & Coke Trading GmbH, which pools both companies’ operating trading expertise and also

plans to consolidate and expand its market share in Europe through innovative business ideas.

On the other hand, we implemented a series of structural changes aimed at ensuring the sustainable

growth of HMS Bergbau AG in future that saw the founding Schernikau family buy back around 90% of

the shares in HMS Bergbau AG from the parent company, IchorCoal, at the end of 2013. These

changes were motivated by the intensified focus on HMS Bergbau AG’s core competences: coal

trading and coal mining. In particular, the management of HMS places great emphasis on the direct

access to coal resources through the development of own coal projects as part of its growth strategy.

At the same time, the potential offered by marketing cooperation remains unaffected by the mutually

agreed legal unbundling. As part of the focus on core competences, the harbour operations in

Indonesia were also sold. The significant cash inflow ensures HMS Bergbau AG first and foremost

a high degree of flexibility in concluding exclusive marketing agreements with coal producers.

With access to coal resources in mind, HMS Bergbau AG was able to secure geological resources of

around 1 billion tonnes in early February 2014 by taking over 100% of Poland’s Silesian Coal Sp. Z.o.o

(known at the time of takeover as Slaski Wegiel Zory - Suszec Sp. Z.o.o.). The company currently

holds two exploration licenses for the Orzesze and Studzionka-Mizerów regions located in Silesia. The

first project is already in development. Until the mining licence is acquired in approximately 8 to

12 months’ time, HMS Bergbau AG will invest a total of up to EUR 3.6 million. In addition to mining

activities, HMS Bergbau AG will take over responsibility for marketing the high-quality steam and

coking coal through its coal-trading structures.

5


These activities are also reflected in the figures for 2013. In particular, the significant increase in the

coal quantity traded in Asia and Africa led to a marked rise in revenues from EUR 89.9 million in 2012

to EUR 118.3 million in 2013. Approximately 88% of the Group’s traded volume was sold in Asia and

Africa, more than compensating for the decline in the European trading business. We are not satisfied

with the results of operations, even though these were characterised by a series of one-off effects,

such as depreciation and amortisation, consulting expenses and one-off impairments as part of the

aforementioned transactions. Nevertheless, these measures have allowed us to build a solid

foundation for financial year 2014. The net loss amounted to EUR 5.1 million after a net profit of

EUR 209 thousand in financial year 2012.

Our high liquidity of EUR 3.5 million and our more-than positive prospects are the main reasons why

we take an optimistic view of the future. The year 2014 has also got off to a promising start, with

revenues of EUR 36.3 million (pY: EUR 14.5 million). During the same period, EBITDA also rose

significantly by EUR 0.6 million to EUR 0.9 million. Despite the low prices in Asia and the cautious

customer markets that result, management continues to see considerable growth potential for overseas

trade in Asia. At the same time, the first shipments as a result of marketing agreements have begun in

Africa. This agreement will result in future in significant shipments and the generation of sales and

margins. Correspondingly, management expects sales revenues to rise in the next two financial years

and anticipates a slight improvement in margins as a result of the further vertical integration of the

trading business. HMS Bergbau AG forecasts positive EBITDA and a positive annual result for 2014

owing to the estimated positive trend and the absence of the one-off effects the Group was subject to

in 2013.

We would like to thank all our employees and business partners for the trust they have shown in us this

past year and look forward to a continued positive and successful working relationship.

Heinz Schernikau Bernd Sagemann

CEO CFO

6


Heinz Schernikau, CEO

Heinz Schernikau established HMD Bergbau AG in 1995 in Berlin. He has

been in the international coal trade for more than 40 years and his positions

include advisor to the Board of leading coal producers in Asia and Europe.

He has established extensive international contacts and places particular

importance on achieving long-term business relationships, mutual trust and

reliability.

Bernd Sagemann, CFO

Bernd Sagemann was appointed to the Management Board with effect from

April 2014. As a member of the Management Board, Bernd Sagemann is

responsible for the company’s finance department. Bernd Sagemann started

his career at an international auditing company, where his last position was

that of manager/authorised signatory in Corporate Finance. He went on to

hold senior management positions in the financial departments at

international real estate and project development companies. Prior to joining

HMS Bergbau AG, Bernd Sagemann was head of controlling and reporting at

the German holding of an international mechanical engineering group.

7


8


Report of the Supervisory Board of HMS Bergbau AG for

financial year 2013

Dear Shareholders,

In financial year 2013, the Supervisory Board of HMS Bergbau AG carried out its tasks as stipulated by

law and its Articles of Association and continuously monitored and advised the Management Board in

its work. We regularly obtained comprehensive information on the current economic and financial

position of the Group, its business performance, financial, investment and personnel planning as well

as its strategic development at our regular meetings and through additional verbal and written reports

submitted to us by the Management Board. This report pertains to the current earning situation,

opportunities and risks, and risk management. The Supervisory Board discussed all fundamentally

important decisions in depth with the Management Board. We assessed in detail any business

transactions requiring our approval. The Supervisory Board voted on reports and proposals put forward

by the Management Board if and when required by law or the Articles of Association.

Focal points of the meetings

The Supervisory Board of HMS Bergbau AG held six meetings in financial year 2013. Subjects that

were regularly discussed included the current business performance of the company and its

subsidiaries as well as its liquidity, net assets and financial position. All resolutions required by law and

the Articles of Association were passed. The Management Board informed the Supervisory Board

promptly about important matters between meetings. If necessary, resolutions were passed by circular

resolution.

The strategic focus of the Group, company planning and the organisational structure, which has to be

adjusted accordingly, including all resulting personnel changes in the Company and its subsidiaries,

were again at the centre of the Supervisory Board’s meetings in financial year 2013. We continued to

successfully expand our international operations in Asia and Southern Africa during the year under

review. This was associated with issues relating to the financing of local subsidiaries’ commercial

transactions, including the provision of the necessary guarantees by HMS Bergbau AG. In addition, the

growth prospects of various investment projects in Poland and Africa were reviewed and corresponding

acquisitions were approved if financially viable. In order to reinforce national business and gain a

greater market share in the European coal trading sector, the acquisition by HMS Bergbau AG of a

majority holding in FCC Coal & Coke GmbH, Woltersdorf (now HMS Coal & Coke Trading GmbH) of

51% was approved. After reviewing the Management Board’s proposal to sell the harbour operations of

HMS Indonesia, the Supervisory Board granted its approval.

9


The Management Board regularly informed us about the general market performance, price and

earnings forecasts as well as intended measures. The Management Board also presented to and

discussed with us potential future projects. Important transactions approved by the Supervisory Board

are described in the company and group management report. Furthermore, the Supervisory Board also

substantiated existing pension commitments for the Chief Executive Officer.

Personnel changes

The members of the Supervisory Board did not change in financial year 2013. The actions of

Dr. Hans-Dieter Harig, Dr. h. c. Michael Bärlein and Michaela Schernikau in financial year 2012 were

approved by the statutory shareholders’ meeting on 22 August 2013.

Annual financial statements 2013

The annual financial statements and consolidated financial statements of HMS Bergbau AG for

financial year 2013 were prepared in accordance with the German Commercial Code

(Handelsgesetzbuch – HGB). The Company’s auditor in 2013, Ernst & Young GmbH

Wirtschaftsprüfungsgesellschaft, Berlin, was appointed to audit the annual financial statements of

HMS Bergbau AG and the consolidated financial statements, the company and group management

report and the report of the Management Board on relationships with associated companies

(“dependent company report”) in financial year 2013.

The auditor audited the annual financial statements of HMS Bergbau AG as well as the consolidated

financial statements and the company and group management report, including the accounting system,

in accordance with the generally accepted German standards for auditing financial statements

promulgated by the Institute of Public Auditors in Germany (Institut der Wirtschaftsprüfer – IDW) and

issued an unqualified audit opinion. The internal control system was also deemed to be effective.

All Supervisory Board members had access to the annual and consolidated financial statements, the

company and group management report, the dependent company report and the corresponding audit

reports in good time. We examined the documents and discussed them in detail at our meeting on

25 June 2014. Both the Management Board and auditor were present at the meeting and provided

detailed answers to all questions placed by the Supervisory Board. The auditor also reported on the

key points of the audit. Our own examination of the annual and consolidated financial statements as

well as the company and group management report did not lead to any objections and we approved

the audit results. After its final inspection of all documents, the Supervisory Board did not raise any

objections and approved the annual financial statements of HMS Bergbau AG as at 31 December 2013

and the consolidated financial statements as at 31 December 2013, as prepared by the Management

Board, at its meeting on 25 June 2014. The 2013 annual financial statements have therefore been

prepared and approved in accordance with Section 172 of the German Stock Corporation Act (AktG).

10


On 25 June 2014, the Management Board proposed to carry HMS Bergbau AG’s net loss of

EUR 1,872,732.62 forward to a new account. We also examined and approved this proposal.

The dependent company report prepared by the Management Board indicates that HMS Bergbau AG

did not incur any disadvantage from the legal transactions with associated companies stated therein

and received appropriate compensation. This report was also audited by the auditor, who issued the

following audit opinion:

“After dutifully examining and assessing the dependent company report, we confirm that

1. the actual information provided therein is correct, and

2. that the services provided by the company were appropriate for the legal transactions

stated therein.”

Our own audit of the dependent company report also did not lead to any objections and we therefore

approved the auditor’s audit. After finalising our own audit, we therefore did not raise any objections

against the Management Board’s declarations at the end of the dependent company report.

There were no conflicts of interest between the members of the Supervisory Board during the reporting

period.

The Supervisory Board would like to thank the Management Board and all employees for their

commitment in financial year 2013.

Berlin, June 2014

Dr. Hans-Dieter Harig

Chairman

Mitglieder des Aufsichtsrats im Berichtszeitraum

Dr. Hans-Dieter Harig, Chairman

Dr. h. c. Michael Bärlein, Deputy Chairman

Michaela Schernikau, Member

11


12


Investor Relations

General developments in the capital markets

In 2013, the German DAX once again performed very well. Although the benchmark index only rose by

4.6% in the first half of the year from 7,612 points to 7,959 points, the second half of the year saw the

index perform much better, closing the year up 25.5% or 1,940 points at 9,552 points.

The Entry All Share Index, on which HMS Bergbau AG shares are also traded, was not able to fully

match the DAX’s performance. This is also due to the subdued interest from investors in small caps.

The secondary index rose by 4.2% over the course of the year from 358 points to 373 points.

HMS share performance

In financial year 2013, the HMS Bergbau AG share was unable to match the performance of the entry

standard. Over the year, the share price fell by 22.7% from EUR 4.53 to EUR 3.50. Xetra trading

volume in 2013 stood at 159,441 shares (previous year: 57,458 shares).

In early 2014, the share price was able to recover considerably. As at the end of January 2014, shares

were trading at EUR 4.00, a rise of 14.3% on the end of 2013. The share price has continued to rise

over the course of 2014 and, on 19 June 2014, reached its highest ever level on Xetra at EUR 7.02.

HMS share performance in 2013

Source: Ariva.de, HMS Bergbau AG

0,00

20,00

40,00

60,00

80,00

100,00

120,00

140,00

28-Dec-12 28-Mar-13 28-Jun-13 28-Sep-13 28-Dec-13

DAX Entry All Share Index HMS Bergbau AG

140.00

120.00

100.00

80.00

60.00

40.00

20.00

0.00

13


Shareholder structure

The share capital of HMS Bergbau AG is comprised of 4,370,000 shares with a nominal value of EUR

1.00 each and as such amounts to EUR 4,370,000. After the bulk of the HMS shares were in the

possession of Ichor Coal N.V. at the end of 2011, they were purchased back by CEO Heinz

Schernikau’s founding family in financial year 2013. This resulted in a major change in the shareholder

structure. As at 31 December 2013, around 90% of shares were held by the Schernikau family. The

remaining 10% of HMS Bergbau AG is in free float.

As at 31 December 2013, HMS Bergbau AG held 248,307 own shares. The basis for the acquisition of

own shares was the share buyback programme resolved at the statutory shareholders’ meeting on 12

October 2009 for the creation of additional flexibility – independent of the capital market – of up to 10%

of the share capital.

Shareholder structure as at 31 December 2013

Investor relations activities

HMS Bergbau AG published all capital market-relevant information in both English and German and

once again exceeded the requirements of the Entry Standards in 2013. Aside from the publication of

financial reports, the company’s Management Board also regularly informed shareholders promptly and

comprehensively of important matters by means of corporate news. In addition, the regularly updated

company website also ensured transparency in shareholder communications. Moreover, the

Management Board met with institutional investors and industry analysts on a regular basis to discuss

the company’s business model and future prospects as well as other relevant capital market issues.

> 90%

< 10%

Schernikau Family

Free float

14


Annual General Meeting 2013

The 2013 Annual General Meeting was held on 22 August 2013 at the business premises of HMS

Bergbau AG in Berlin. Items on the agenda included the approval of the Management Board’s and

Supervisory Board’s actions, a resolution concerning the appropriation of profit and the selection of an

auditor for the 2013 financial year. The shareholders approved all points on the agenda with 100% or

almost 100% consent.

The 2014 statutory shareholders’ meeting will be held on 19 August 2014.

Key share figures as at 31 December 2013

Basic Information

ISIN / WKN DE0006061104 / 606110

Stock Symbol HMU

Bloomberg Symbol HMU GY

Reuters Symbol HMUG.DE

Market Segment / Transparency Level Open Market / Entry Standard

Designated Sponsor / Listing Partner Close Brothers Seydler Bank AG

Investor Relations GFEI Aktiengesellschaft

Share capital in EUR 4,370,000

Number of Shares 4,370,000

Free float (in percent) < 10

Performance data at 31 December 2013 (in EUR)

Share price on 30 December 2012 (Xetra closing price) 4.76

Share price on 23 December 2012 (Xetra closing price) 3.50

Peak price in 2013 (31 January 2013) 5.53

Low in 2013 (23 December 2013) 3.50

Market capitalization at 31 December 2013 15,295,000

15


16


Group Management Report

HMS Bergbau AG, Berlin

Summary of Group Management Report

Financial Year 2013

1. Overview

HMS Bergbau AG trades in coal and energy raw materials worldwide, and supplies steam coal, coking

coal and coking coal products to major European and international power plants, cement

manufacturers and industrial consumers.

HMS Bergbau AG focuses on building long-term, profitable business relationships with international

producers and consumers. By founding the subsidiaries HMS Africa (Pty) Ltd. and HMS Bergbau

Singapore Pte Ltd., HMS Bergbau AG is continuing to expand its international operations, particularly

with regard to the Asian and African markets. In view of its European business, HMS Bergbau AG

acquired 51% of the shares in FCC Franke Coal & Coke Trading GmbH (now called:

HMS Coal & Coke Trading GmbH) in 2013.

The following table shows the HMS Group structure and its subsidiaries as of 31 December 2013:

Berlin, Germany

Singapore

Jakarta, Indonesia

Johannesburg, South Africa

Woltersdorf, Germany

100 %

100 %

100 %

51 %

17


Our strategy of paying particular attention to long-term developments on the global commodity markets

without losing sight of current trends continues to be based on the following factors:

1.1 Price developments

Highly volatile prices can result in fluctuating margins along the entire value chain. Vertical integration

of mining, handling and transport helps to create long-term competitive advantages, particularly when

taking into account current and future continued price increases. This can also effectively counteract

market fluctuations.

1.2 Internationalisation of the markets

The commodities markets are continuing to grow closer together as a result of international trade and

improved logistics. At the same time, market transparency is increasing thanks to trading platforms and

index-based trading activities. This also increases competition.

1.3 Vertical integration

Investing in our own resources is essential in order to push forward vertical integration within the value

chain from mining through to logistics and delivery, as well as to ensure that future supply covers the

growing demand for energy. In this context, it makes particular sense for HMS to enter into exclusive

marketing agreements.

Our long-term strategy of vertical integration therefore rests on the following foundations:

Strong trade business

The cornerstone for our future growth and success as a business is the further expansion of our

trading activities based on solid, long-term customer and supplier relationships and stable

contributions to value.

Growth

We aim to generate adequate growth, which will result from sustainable increases in earnings,

by means of vertical integration and the competitive advantages arising from it. Entering into

exclusive marketing agreements such as with Vunene Mining (Pty) Ltd., South Africa, or the

cooperation in the European coal market with HMS Coal & Coke Trading GmbH, Woltersdorf, in

financial year 2013 represent a key element of our growth strategy.

Company culture

Our business embodies a performance-focused, international corporate culture across all Group

companies; this helps to increase our attractiveness as an employer and hence our successful

recruitment of qualified international employees to put our strategies successfully into practice.

18


2. Business and economic environment

2.1 Global economy

In its 2013 World Economic Outlook report, which was published in October 2013, the International

Monetary Fund (IMF) predicted global economic growth of 2.9% for 2013, down from 3.2% in 2012.

However, the IMF forecasts that global economic developments will accelerate in 2014. Experts are

currently predicting GDP growth of 3.6%.

The IMF indicated that a shifting growth outlook between the developed industrial nations and the

emerging markets and developing countries is characteristic of future economic developments. While

the latter saw growth slow, focus has now returned to the established industrial nations. However,

growth here continues to be far outpaced by that of the emerging markets and developing countries.

These are expected to see growth of between 4.5% and 5% in 2013 and 2014, while growth in the

USA is likely to only amount to 1.6% in 2013 and 2.6% in 2014, and 2.0% and 1.2% respectively in

Japan.

The IMF even anticipates that the eurozone’s aggregate economic output declined by 0.4% in 2013.

However, experts expect a 1.0% rise in GDP for 2014. Germany is expected to do much better than

average in 2014; its growth is forecasted at 1.4%.

2.2 Germany

As the German Federal Statistical Office (Destatis) reported in January 2014, the German economy

turned out to be stable on an annual average in 2013. The price-adjusted gross domestic product

(GDP) was 0.4% higher than in the previous year. In the previous two years, GDP grew more strongly

(0.7% in 2012 and even 3.3% in 2011). The German economy suffered from the continuing recession

in some European countries and from restrained growth of the global economy. The strong domestic

demand could offset those factors only to a limited extent.

Final consumption expenditure was the main driving force for German economic growth. Household

final consumption expenditure rose a price-adjusted 0.9%, while government final consumption

expenditure was up 1.1%. Gross fixed capital formation, however, decreased. In the domestic territory,

gross fixed capital formation in machinery and equipment as well as vehicles was down 2.2% on the

year. Price-adjusted gross fixed capital formation in construction decreased, too, though only by 0.3%.

German foreign trade, which generally is very robust, was less dynamic on an annual average in 2013,

which was due to a continuing difficult external economic environment.

In price-adjusted terms, German exports of goods and services were up a total of 0.6% year on year.

At the same time, however, imports rose by 1.3%. The balance of exports and imports thus reduced

GDP growth in 2013 by making a negative contribution of –0.3 percentage points.

On the production side of gross domestic product, most service branches increased their output in

2013. The economic sector recording a particularly large growth rate was business services (+3.4%).

In construction, however, price-adjusted gross value added was down again, although the decrease in

2013 (–1.2%) was just half that of 2012. Industry (excluding construction), which accounts for a good

quarter of total gross value added, roughly maintained previous year’s level.

19


The number of persons in employment reached a record level for the seventh consecutive year in 2013

(41.8 million). However, growth in employment (+0.6%) slowed down. Labour productivity (price-

adjusted gross domestic product per person in employment) was down 0.2% in 2013. When measured

per hour worked by persons in employment, however, labour productivity increased by 0.2% because

the increase in the total number of hours worked by all persons in employment was smaller than the

increase in the gross domestic product.

According to provisional calculations, general government – comprising central, state and local

government and social security funds – recorded minor net borrowing of EUR 1.7 billion at the end of

the year. Both central government and state government again reduced their deficits markedly from the

previous year, whereas local government and social security funds achieved a large surplus. When

measured as a percentage of gross domestic product at current prices, the deficit ratio of general

government was –0.1%. General government thus showed a nearly balanced budget for 2013.

2.3 Primary energy consumption in Germany in 2013

According to provisional figures issued by the Working Group on Energy Balances

(Arbeitsgemeinschaft Energiebilanzen e.V. – AG Energiebilanzen), energy consumption in Germany in

2013 has increased by approximately 2.6% year on year. Accordingly, energy consumption in

Germany totalled 14,005 petajoules (PJ), or 477.7 million tonnes hard coal units (HCU). This

development was mainly impacted by the cool weather in the first half of the year. Taking into account

the temperature effect, energy consumption was only up some 1%. The comparatively weak economic

developments did not result in much of a rise in consumption. Mineral oil and coal also profited from

low global market prices.

20


Development of primary energy consumption in Germany

At 4,637 PJ (158 million tonnes HCU), the approximately 2% rise in the consumption of mineral oil was

lower than the average increase for all fuels. Increases were also seen with light heating oil (+6%),

diesel fuel (+2%) as well as petroleum (+3%) and liquefied natural gas (+7%). Petrol sales stagnated.

Sales of heavy heating oil fell (-7%). The proportion of mineral oil in total energy consumption

amounted to 33.0% (previous year: 33.2%). The cold weather in the first six months of 2013 resulted in

sharp rise in natural gas for heat generation. This development was then lessened by the mild weather

in the second half of the year as well as the decline in the amount of natural gas used in power plants.

Overall, the domestic consumption of natural gas increased by almost 7% to 3,152 PJ, or

107.5 million tonnes HCU, in 2013. The proportion of natural gas in total energy consumption

increased from 21.6% to 22.5%. Consumption of coal increased by around 4% to 1,779 PJ, or

60.7 million tonnes HCU. This development is mainly due to an almost 7% increase in the use of coal

to for electricity and heating generation.

In contrast, demand in the steel industry for coke and coal fell by almost 2%. The proportion of coal in

total energy consumption increased slightly to 12.7% (previous year: 12.5%). Consumption of lignite

decreased by a good 1% to 1,625 PJ, or 55.4 million tonnes HCU. The commissioning of new power

plants and the decommissioning of old facilities in the previous year resulted in higher average lignite-

fired power generation efficiency. Together with the reduction in the use of fuel, the rise in efficiency led

to a 1% or so increase in the amount of coal-generated electricity generation. The proportion of coal in

total energy consumption amounted to 11.6% in 2013 (previous year: 12.1%). The share of nuclear

power in the total energy balance fell by 2.5% due to reduced availability; the share of nuclear power in

the global energy balance also fell, to 7.6%. Renewable energies increased by nearly 6% in 2013,

taking their share in total consumption slightly to 11.8% (previous year: 11.5%). While wind and hydro

power (excluding pump storage) recorded year-on-year drops of 2% and 2.5% respectively, the use of

photovoltaics and biomass increased significantly by almost 7% and approximately 11% respectively.

The use of other fuels, particularly urban and industrial waste, fell by nearly 5%. Preliminary estimates

indicate that the electricity trading balance closed with a substantially boosted export surplus.

Source: AG Energiebilanzen, HMS Bergbau AG

14.905

14.26914.401

14.558 14.217

13.412

13.512

14.005

12.500

13.000

13.500

14.000

14.500

15.000

15.500

1990 1995 2000 2005 2010 2015

PJ15,500

15,000

14,500

14,000

13,500

13,000

12,500

14,905

14,269 14,401

14,558 14,217

13,412

13,512

14,005

21


2.4 Increase in carbon dioxide emissions

The weather-related rise in the consumption of thermal energy and the increased use of coal in power

plants will probably lead to an increase in CO2 emissions in Germany. However, adjusted for the

effects of temperature, CO2 emissions have only increased slightly.

Primary energy mix in Germany in 2012

2.5 Developments in crude oil prices

Prices for the various types of crude oil displayed varying trends in 2013. WTI crude oil traded at

USD 91.80 a barrel at the beginning of the year and USD 98.70 at the end of the year, an increase of

approximately 7.6%. Whereas Brent crude saw a decline of about 3.14%, from USD 111.3 a barrel at

the start of the year to USD 107.8 a barrel by the year’s conclusion.

Quelle: AG Energiebilanzen, HMS Bergbau AG

33.0%

22.5%

12.7%

11.6%

7.6%

11.8%0.8%

Mineral oil Natural gas Hard coal

Lignite Nuclear energy Renewable energies

Other

22


Development of WTI and Brent crude prices in 2013

2.6 Coal prices

Coal prices again declined in 2013. This is clearly reflected in the two main coal price indices API 2 and

API 4. Accordingly, the API 2 index recorded a 4.4% drop in coal prices, from USD 87.70 per tonne at

the beginning of the year to USD 83.85 per tonne at the end of 2013. The coal price index API 4

started with a price of USD 90.16 per tonne and ended 2013 with a price of USD 82.84 per tonne,

a decline of 8.1%.

API-2 and API-4 weekly for 2013 (%)

Source: Ariva.de; HMS Bergbau AG

Source: Argusmedia.com; HMS Bergbau AG

70%

80%

90%

100%

110%

120%

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

WTI Oil NYMEX Brent Crude Oil ICE

0.0

40.0

80.0

120.0

API4 API2

23


2.7 Trade

HMS Bergbau AG’s international trading in coal is characterised by relationships of trust with

customers and suppliers. Bergbau Group’s principal customers include power plant operators and

cement manufacturers. We also supply coal to steel manufacturers and industrial companies such as

glassworks and paper factories.

HMS Bergbau Group serves both the private and public sectors.

We purchase coal from reliable major-name production and sales companies, largely based in

Indonesia, South Africa, Russia, Poland, and North and South America. In addition to this, we

represent some international coal production companies exclusively, i.e. we handle all their coal

marketing in particular markets.

HMS Bergbau AG has since acquired 51% of the shares in company, which now trades under the

name HMS Coal & Coke Trading GmbH. The remaining 49% of the shares are held by Franke, the

former founding family. This cooperations aims to expand European coal trading market shares.

2.8 Vertical integration

We intend to secure a reliable supply for consumers in the long term by accessing exclusive

relationships with suppliers. We pushed ahead with this strategy in 2013 as well, and continued to gain

and secure access to coal deposits through exclusive marketing, largely by means of exclusive

marketing rights for smaller producers which do not have their own international sales organisations.

HMS has concluded a sales agreement for up to 600,000 tonnes of African steam coal. This

agreement for the sale of such a significant volume of steam coal brings HMS one step closer to its

strategic goal of increasing our presence on the thriving coal market in southern Africa. This

guarantees the Company a long-term competitive advantage in southern Africa, while, at the same

time, generating substantial, projectable sales revenues with higher margins.

Furthermore, HMS Bergbau AG acquired 100% of the shares in Polish company Slaski Wegiel Zory -

Suszec Sp. Z.o.o. in early February 2014; this company now trades under the name HMS Silesian

Coal Sp. Z.o.o. The acquired company currency holds exploration licenses for the Orzesze and

Studzionka-Mizerów regions. With over 1 billion tonnes of geological coal resources, these two regions

located in Silesia offer high potential in terms of mining. The development phase of the first project will

be initiated immediately. Until the mining licence is acquired in approximately 12 months’ time,

HMS Bergbau AG will invest approximately EUR 3.6 million, which includes costs related to the

acquisition of the company.

24


2.9 Logistics

As a one-stop provider, HMS Bergbau Group not only ensures that its customers are supplied with the

raw materials they need on time, but also takes care of the entire transport and logistics process. The

professional team charters shipping on demand, organises domestic store by water, rail or road, takes

care of harbour procedures, warehousing management, coal processing and technical monitoring.

As the harbour operations in South Kalimantan, Indonesia, which were acquired in 2010, failed to meet

the own trading operations expectations placed at the time of acquisition, the strategic realignment of

HMS Group to a trading and marketing company was completed in the first half of financial year 2013

with the sale of harbour operations in Indonesia. The Company’s focus on the most important growth

markets in the coal industry in the Asian regions and on southern African markets will be further

intensified in the future. The Company will continue to adapt its corporate structure to global goods

flows and the resulting requirements in order to consistently increase the involvement of subsidiaries

and representative offices in Singapore, Indonesia, Pakistan and India in Asia’s booming coal export

industry.

2.10 Research and development

The global effort to reduce greenhouse gases in order to minimise climate change continues to pose a

long-term challenge to the energy industry. HMS Bergbau AG’s management remains convinced that

introducing a marketable form of CCS technology and adapting power plants accordingly could enable

German coal-fired power plants to cut CO2 emissions by approximately 80% by the year 2050.

However, in the current and anticipated medium-term legal environment, there is no way to store CO2

in an economically feasible way. For this reason, in financial year 2012 HMS Bergbau AG sold its

shares in the HMS Bergbau AG Oil & Gas Division, which had already embarked upon a project to

investigate an appropriate aquifer structure.

2.11 Employees

HMS Group continues to participate intensively in international competition for qualified employees.

The Company’s management therefore aims for long-term employment relationships between staff and

HMS Group. Company management continues to focus on ongoing employee development, together

with highly specialised and continuing training, in order to achieve the Company’s strategic goals.

In keeping with this strategy, we have hired additional employees, particularly in the Asian and

South African market, and are planning to continue hiring. Risks resulting from employee fluctuation

are accounted for with succession and substitute planning. We conducted training for employees,

particularly for those new to the Company.

25


3. Results of Group operations

Results of operations of HMS Group in financial year 2013 compared to the previous year were as

follows:

The rise in sales is due to the significant year-on-year increase in traded volumes in Asia and Africa,

which more than offset the decline in the European trading business. Approximately 88% of the

Group’s volumes were traded in Asia and Africa in 2013. The strategic cooperation was expanded by

acquiring 51% of the shares in HMS Coal & Coke Trading GmbH – which sold its first volumes for the

Group in the last quarter – to gain market shares in the European sales market. The materials usage

ratio fell slightly once again, reflecting the fact that the coal trade in Asia, in particular, is of lesser

quality and the margin per tonne is lower than than that of the coal traded in Europe.

Personnel costs increased year on year due to new hires and the acquisition. Personnel levels in Africa

were adjusted in line with positive business developments. New personnel also had to be hired in

Germany following the split from former parent company Ichor Coal N. V. Additions to pension

provisions also rose. The significant increase in depreciation and amortisation was the result of the

book value write down of the harbour operations in Indonesia, which was made prior to the sale.

Furthermore, the residual purchase price receivable had to be impaired by EUR 160 thousand as at

31 December 2013. Other expenses, less other income, resulted primarily from legal and consulting

expenses, vehicle and travel expenses, delivery costs, occupancy costs as well as money transfer

costs. The significant year-on-year rise was due to the various special effects, some of

which counteracted each other, and relate mainly to one-off impairments and risk provisions

(EUR 427 thousand) and some associated legal consulting expenses (EUR 460 thousand).

EUR thousand % EUR thousand % EUR thousand %

Revenues

(= Total performance) 55,372 100.0 84,518 100.0 -29,146 -34.5

Cost of materials 53,779 97.1 82,252 97.3 -28,473 -34.6

Personnel costs 1,238 2.3 1,296 1.6 -58 -4.5

Depreciation and amortisation 18 0.0 24 0.0 -6 -25.0

Other operating expenses

./. other operating earnings 1,775 3.2 916 1.1 859 93.8

Taxes (excluding income taxes) 2 0.0 6 0.0 -4 -66.7

Operating costs 56,812 103 84,494 100.0 -27,682 -32.8

Operating result -1,440 -2.6 24 0.0 -1,464 <-100,0

Earnings from investment and

financial result -1,333 122 -1,455

Earnings before income taxes -2,773 146 -2,919

Extraordinary expenses 223 223 0

Income taxes 0 122 -122

Annual result -2,996 -199 -2,797

2013 2012 Change

26


Management costs incurred for the former parent company amounted to EUR 318 thousand. In

addition, the financial result includes the net balance, amounting to EUR 399 thousand, of interest

expenses on pension obligations and income from the pledged plan assets. On the other hand, income

from the sale of the HMS Niwka Coal Production Company Sp. z.o.o. and the HMS Bergbau AG Oil &

Gas Division, were recognised in other operating earnings in the previous year.

4. Group net assets

Net assets of HMS Group compared to the previous year were as follows:

The decline in non-current assets was due to the disposal of the harbour operations in Indonesia,

which also resulted in a rise in cash and cash equivalents. Inventories resulted from stocks of coal, for

which a sale had already been agreed prior to the reporting date, and were realised in early 2014.

Receivables relate to trade receivables from power plant operators in Germany and customers in Asia.

The year-on-year increase is substantially related to the balance sheet date. Other assets are mainly

comprised of receivables from a hedge, a current loan to the minority shareholder of a subsidiary and

VAT.

Non-current liabilities include pension obligations. Current liabilities are mainly comprised of liabilities to

suppliers as well as a hedge.


Assets

Fixed assets 223 1 5,467 28 -5,244 -96

Inventories 295 2 4,213 22 -3,918 -93

Receivables 9,207 60 8,475 44 732 9

Cash and cash equivalents 3,469 22 796 4 2,673 -100.0

Other assets 2,267 15 373 2 1,894 -100.0

15,461 100 19,324 100 -3,863 -20

Capital

Shareholders’ equity 5,095 33 9,071 47 -3,976 -44

Own shares -2,392 -16 -2,392 -12 0 0

Difference from

capital consolidation 144 1 0 0 144 –

Non-current liabilities 2,778 18 1,871 10 907 49

Current liabilities 9,836 64 10,774 56 -938 -9

15,461 100 19,324 100 -3,863 -20

31 Dec 2013 31 Dec 2012 Change

27


5. Group financial position

Cash and cash equivalents developed as follows in financial year 2013:

The cash outflow from current operating activities is primarily a reflection of the negative annual result.

The cash inflow from investment activities resulted from the sale of the harbour operations in

Indonesia.

2013 2012

EUR thousand EUR thousand

1. Cash flow from current operating activities -1,552 -6,017

2. Cash flow from investment activities 3,950 1,466

3. Cash flow from financing activities 0 1,497

4. Cash and cash equivalents at the end of the period

Change in cash and cash equivalents affecting payment 2,399 -3,054

Other changes in cash and cash equivalents 274 -113

Cash and cash equivalents at the beginning of the period 796 3,963

Cash and cash equivalents at the end of the period 3,469 796

5. Composition of cash and cash equivalents

Cash and cash equivalents 3,469 796

28


6. Information on the consolidated financial statements of

HMS Bergbau AG

HMS Bergbau AG is the parent company of HMS Group. HMS Bergbau AG remains responsible for

the central control functions – strategy, finance, accounting/controlling – and all important trading

activities. A significant share of trade agreements are conducted via this company. In other words, the

activities of HMS Bergbau AG largely determine the situation of the entire HMS Group. The annual

financial statements of HMS Bergbau AG are prepared in accordance with German Commercial Law

(HGB) and the German Stock Corporation Act (AktG). The following table provides an overview:

6.1 Results of operations

Ordinary trading activities are a major influence on results of operations of HMS Bergbau AG. The

decline in sales revenues is price- and margin-related. The European trading business now only makes

up approximately 12% of business operations. Local companies are increasingly trading in the strongly

developing markets in Asia and Africa. Personnel costs remained stable year on year. Other expenses

less other income are mainly due to delivery costs, the recharging of other Group company services,

vehicle and travel expenses, legal and consulting expenses, as well as money transfer costs. The

significant year-on-year rise was the result of special effects, some of which counteracted each other.

One-off impairment losses, risk provisions and some associated legal consulting expenses amounted

to EUR 220 thousand. Management costs incurred for the former parent company amounted to

EUR 318 thousand; these will not be incurred in the future. In addition, the financial result includes the

net balance, amounting to EUR 399 thousand, of interest expenses on pension obligations and income

from the pledged plan assets as well as impairment losses on the loans to the Indonesia HMS

company (EUR 1,362 thousand). On the other hand, the previous year’s other operating earnings


Revenues

(= Total performance) 118,283 100.0 89,846 100.0 28,437 31.7

Cost of materials 114,864 97.1 86,316 96.1 28,548 33.1

Personnel costs 2,156 1.8 1,753 2.0 403 23.0

Depreciation and amortisation 1,263 1.1 476 0.5 787 165.3

Other operating expenses

./. other operating earnings 4,368 3.7 301 0.3 4,067 >100.0

Taxes (excluding income taxes) 2 0.0 6 0.0 -4 -66.7

Operating costs 122,653 103.7 88,852 98.9 33,801 38.3

Operating result -4,370 -3.7 994 1.1 -5,364 <-100.0

Earnings from investment and

financial result -470 -440 -30

Earnings before income taxes -4,840 554 -5,394

Extraordinary expenses 223 223 0

Income taxes 11 122 -111

Annual result -5,074 209 -5,283

2013 2012 Change

29


included the income from the sale of the HMS Niwka Coal Production Company Sp. z.o.o. and the

HMS Bergbau AG Oil & Gas Division.

6.2 Net assets

As HMS Bergbau AG engages in trading activities, its net assets are mainly influenced by receivables

from customers as well as current trade payables and liabilities to banks. Changes are largely related

to the balance sheet date. Furthermore, net assets are influenced by the loan to the Indonesian HMS

company, which was impaired by EUR 1,362 thousand following the sale of the harbour operation in

Indonesia. Current liabilities comprise liabilities to suppliers as well as a hedge.

6.3 Financial position

The financial position of HMS Group is significantly influenced by HMS Bergbau AG; please refer to the

details we have provided in this context.

6.4. General statement

Our financial performance indicators, the Executive Board uses these to manage the Company, are

sales, gross margin and EBITDA; these are monitored constantly. We significantly implemented the

sales increase forecasted in the previous year in terms of the entire HMS Group; sales revenues were

increased from EUR 89,846 thousand to EUR 118,283 thousand. HMS AG sales revenues on the other

hand fell from EUR 84,518 thousand to EUR 55,372 thousand. The Group’s gross margin fell slightly,

from 3.9% in 2012 to 2.9% in 2013. HMS AG’s gross margin remained more or less unchanged at

2.9%. One-off impairment losses, risk provisions and some associated legal consulting expenses

impacted Group EBITDA by EUR 1,205 thousand. In total, Group EBITDA in 2013 declined by

EUR 4,581 thousand from EUR 1,476 thousand to EUR –3,105 thousand. HMS AG’s EBITDA was

impacted by the impairment losses on the loans to the Indonesia HMS company (EUR 1,362 thousand)

as well as other one-off effects (EUR 538 thousand), declining by EUR1,511 thousand from


Assets

Fixed assets 4,076 29 8,189 40 -4,113 -50

Inventories 0 0 4,213 20 -4,213 -100

Receivables 6,750 48 7,344 36 -594 -8

Cash and cash equivalents 1,949 14 629 3 1,320 -100.0

Other assets 1,311 9 262 1 1,049 -100.0

14,085 100 20,637 100 -6,552 -32

Capital

Shareholders’ equity 7,929 56 10,925 53 -2,996 -27

Own shares -2,392 -17 -2,392 -12 0 0

Non-current liabilities 2,778 20 1,871 9 907 49

Current liabilities 5,771 41 10,233 50 -4,462 -44

14,085 100 20,637 100 -6,552 -32

31 Dec 2013 31 Dec 2012 Change

30


EUR 55 thousand to EUR –1,456 thousand. All told, we did not achieve the earnings target forecasted

in the previous year.

7. Events after the balance sheet date

After the end of the financial year, HMS Bergbau AG acquired all of the shares in Polish company

Slaski Wegiel Zory - Suszec Sp. Z.o.o. in early February 2014; this company now trades under the

name HMS Silesian Coal Sp. Z.o.o. The acquired company currency holds exploration licenses for the

Orzesze and Studzionka-Mizerów regions. With over 1 billion tonnes of geological coal resources,

these two regions located in Silesia offer high potential in terms of mining. The development phase of

the first project will be initiated immediately. Until the mining licence is acquired in approximately

12 months’ time, HMS Bergbau AG will invest approximately EUR 3.6 million, which includes costs

related to the acquisition of the Company. Other events of particular significance for the net assets,

financial position and results situation, which occurred after the close of the financial year, have not

been identified.

8. Risks and opportunities

The Management Board of HMS Bergbau AG is responsible for Group risk management, which is

integrated into all operational processes at HMS Group. Future opportunities and risks are identified,

classified, evaluated, controlled and monitored as part of business operations. It is and remains our

policy to only enter into risks if they also bring with them significant opportunities for generating

earnings. If possible, risks should be minimised or transferred to third parties. Opportunities are

assessed for their earnings potential. The following sections describe opportunities and risks that could

have a significant impact on the Company’s net assets, financial position and results of operations:

8.1 Price fluctuations

In the HMS Group’s traditional business – trade in coal using back-to-back contracts and index- or

fixed-price-based purchasing and sales agreements – there are no effects on contractually agreed

margins for the individual transactions. Where the back-to-back principle is deviated from, as is the

case in relation to the purchase and sale side for heating value calculation, price risks may arise. We

evaluate such risks on a daily basis as part of our risk management system, taking into account current

forward prices and expected volatility. In the context of the expansion of our trading activities in Asia,

we continue to hold to the principle of avoiding significant risk positions in purchasing and sales and

excluding these risks at the contract stage. The management of HMS Bergbau AG will not alter its

policy of aiming to realise solely back-to-back transactions.

31


8.2 Financial risks

Exchange rate and interest rate fluctuations can have a significant impact on HMS Group’s earnings.

The Company’s financial risk management therefore aims primarily to hedge currency risks via

currency forwards without entering into speculative transactions. Furthermore, we attempt to eliminate

currency differences in financing, purchasing and sales. All Group companies are obliged to assess

and, where necessary, hedge all exchange rate risks. Changes to interest rates, or in other words risks

from interest-bearing liabilities, as well as a risk premium and currency-specific differences are

accounted for as financing costs and included in the assessment of each transaction. If deemed

appropriate in the long term in a risk management context, and after evaluation of all possible

scenarios, we exchange variable interest rates for fixed interest rates.

8.3 Credit rating of business partners and counterparty risk

Credit risks arise from our business relationships with customers, and increase on account of the

ongoing growth in the proportion of our business partners located in Asia. In this context, the

implemented risk management aims to obtain adequate collateral for vulnerable transactions or to

insure receivables where financially practicable. Furthermore, we secure payment promises in advance

of deliveries by using letters of credit. Failure or partial failure to deliver on the part of suppliers may

also give rise to risks which cannot be transferred completely to the purchaser. Our risk management

policies attempt to address these risks appropriately by deploying staff in the regions to examine

individual terms and specifications of contracts in detail.

8.4 Political risks

The expansion of our business to the Asian market exposes us to a higher level of legal and political

risk from, for example, attempts to exert political influence, disruptions to the supply chain, civil

disturbances or economic policy strategies that may have detrimental effects on business. We include

risks from environmental and other geographical influences in these considerations. Furthermore,

uncertainties arise from the existing legal framework, which is and will remain subject to ongoing

change. In the Asian market in particular, the excellent opportunities for business go hand in hand with

an increased level of risk. The Company’s risk management responds to individual risks by attempting

to draw up corresponding contractual arrangements or eliminate the risks by consulting with

experienced local partners. Realistically, it is never possible to completely eliminate such risks.

8.5 Investment risks

The Company’s risk management attempts to identify potential negative impacts on its business at an

early stage by means of continuous monitoring of the marketing strategy and of the status of its

implementation in order to respond to such risks accordingly by adjustments to the strategy.

32


8.6 Risks and opportunities resulting from Company strategy

As they carry considerable opportunities and risks, decisions on investments and acquisitions are

examined on the basis of an assessment and approval process. Experts are also consulted in certain

cases. The Management Board of HMS Bergbau AG makes the final decision and, to the extent that

these are significant, obtains the approval of the Supervisory Board. We take particular care to

exhaustively investigate and weigh up risks and opportunities when entering into long-term

agreements. The main factors to examine are the size of the reserve, logistics infrastructure, the

financial situation, legal requirements, management and the political landscape. Our risk management

system includes measures such as obtaining expert advice and reports. In the Trade division, we are

able to identify opportunities and risks at the earliest possible stage by intensively monitoring and

analysing markets and competitors. Overall, the risk management system puts HMS Group in a

position to mitigate the above risks and utilise any resulting opportunities.

9. Forecast report

Compared to other energy sources, coal continues to have the largest reserves and resources in the

world. Figures compiled by the German Federal Institute for Geosciences and Natural Resources

(BGR) indicate that reserves are sufficient to last a further 120 to 200 years, depending on the type of

coal and global economic developments. It is an established fact that the remaining coal reserves are

sufficient to cover expected demand for many decades to come. Scientific and market analyses show

that the percentage of coal in global energy production will continue to rise at an above-average rate.

According to the IEA (International Energy Agency), hard coal is set to remain the most commonly

used commodity for the industrial production of electricity. The chart below illustrates how the growth of

industry in China and India is compensating the global decline in coal-generated electricity. The largest

driver of this development is the growing world population, which is set to reach 8.2 billion by 2030, and

certainly lead to rising energy consumption. The share of coal in global electricity production will rise

from 40% today to 45% in 2030. Over the next 50 years, a primary energy matrix without coal is

unimaginable.

Source: International Energy Agency “World Energy Outlook 2010”

OECD

Other non-OECD

China

India

TWh

12,000

10,000

8,000

6,000

4,000

2,000

2000 2010 2020 2030 203519900

33


The steady rise in global energy consumption seen in recent years, with coal being the primary

energy source, will continue in the years ahead. Coal prices are likely to proceed on an upward trend,

driven by the exponential growth in industrial demand from the Pacific region and current

developments in public opinion on nuclear power. The management of HMS Bergbau AG expects the

Pacific region to continue growing in importance as a large sales market. HMS Group is therefore

increasingly focusing its strategic orientation on Asia. It is the opinion of management that Indonesia

will become one of the most important mining markets besides South Africa in the coming years as it

has excellent resources, favourable mining conditions and a central location in the Pacific region. We

see significant growth potential here, particularly for securing large coal resources in order to remain a

reliable partner in volatile markets. By securing our own resources, we are aiming to guarantee supply

in the long term for our end customers in the Asian market. We anticipate rising prices in the global

market. Securing our own resources, and consequently expanding the value chain to include all steps

from production to end customer sales, therefore both play an essential part in strengthening our

market position in the long term. The steep price increases we anticipate taking place in the years to

come are reflected in the future prices for the API 2 index (CIF ARA) at the European Energy

Exchange AG’s Leipzig trading centre for energy and energy-related products. Especially in the light of

the German government’s decision to switch off the country’s nuclear power plants and the current

difficulties in realising the transition to renewable energies, we do not expect demand for fossil fuels to

decline in Europe. Coal-generated electricity is a flexible form of energy supply and will retain its

significance, in Europe and elsewhere. Our efforts in Europe continue to focus on renewing expired

contracts and concluding new contracts with European power plant operators as well as expanding and

consolidating our market position in niche products, such as coking coal and coke products. In Africa

and Asia, we are focussing on building long-term relationships with suppliers and customers in order to

share in the increasing importance of both regions in the world coal trade. In financial years 2014 and

2015 in particular, our principal task remains to regain market share in Europe while pushing ahead

with the expansion of our business in Asia and Africa. At the same time, we need to adhere to our

strategy of expanding the value chain, particularly by means of entering into and realising exclusive

marketing and cooperation agreements as well as developing internal capabilities.

The beginning of financial year 2014 has progressed with very little change from developments in the

last quarter of the previous year. As anticipated, incoming orders in the European market have

remained low. However, there are opportunities for marketing American coking coal and coke products.

Due to weak prices in Asia in recent months, customer markets are behaving with a high degree of

caution. Management continues to see considerable growth potential for overseas trade in Asia. In

Africa, we commenced the first shipments in the last quarter of the financial year as a result of the

marketing agreement. Management expects this agreement to generate significant deliveries in the

future in order to increase sales revenues and margins. In this context, we expect a significant

improvement over the next two financial years compared to 2013. Management anticipates a slight

increase in sales revenues and also expect vertical integration in our commercial transactions to lead

to marginally higher gross margins. The gauged positive trend and without the one-off effects for both

the Group and HMS AG in 2013 mean that the EBITDA and annual results of both the Group and HMS

AG are expected to be positive once again.

34


10. Main features of the remuneration system

The Supervisory Board decides upon the remuneration system for the Management Board of

HMS Bergbau AG, including all material contractual elements, and reviews it regularly. It also

determines remuneration for individual Management Board members. Management Board

remuneration comprises fixed elements along with variable, performance-related components. Fixed

remuneration is paid as a monthly salary, regardless of performance. Management Board members

also receive additional non-cash benefits, which mainly consist of the private use of a company car and

are taxable. Performance-related remuneration is dependent on the Company’s annual result and the

personal performance of the Management Board member in question. The remuneration of the

Chief Executive Officer also includes pension commitments.

11. Hedges

In order to hedge a supply contract, HMS AG concluded a hedge to avoid the risk a fluctuating market

and stock market prices. No valuation unit was reported although this is a financial hedge.

12. Closing statement in accordance with Section 312 (3) of the

German Stock Corporation Act (AktG)

According to the knowledge available to HMS Bergbau AG at the time of carrying out a legal

transaction with an associated company, it received appropriate compensation for each legal

transaction and neither implemented measures nor refrained from implementing measures neither on

behalf of nor in the interest of the controlling company or an associated company during the reporting

period.

34

35


13. Forward-looking statements

The management report includes forward-looking statements that reflect the current opinion of

HMS Group’s management with regard to future events. Any statement contained in this report

reflecting or building upon intentions, assumptions, expectations, forecasts and underlying

assumptions is a forward-looking statement. These statements are based upon plans, estimates and

forecasts that are currently available to HMS Group’s management. They therefore only refer to the

point in time at which they were made. Forward-looking statements are naturally subject to risks and

uncertain-ties, which could result in actual developments differing significantly from these forward-

looking statements or events implied or expressed therein. HMS Group does not assume any

responsibility for such statements and does not intend to update such statements in view of new

information or future events.

Berlin, 31 March 2014

Heinz Schernikau

CEO

35

36


Consolidated Balance Sheet as of 31 December 2013

Assets 31 Dec 2013 31 Dec 2012

EUR EUR EUR

A. Non-current assets

I. Intangible assets

1. Licences, industrial property rights, similar rights

and values and licences in such rights and values 15,902.00 4,174,352.35

15,902.00 4,174,352.35

II. Property, plant and equipment

1. Technical equipment and machinery 0.00 1,115,444.57

2. Other equipment, office and

factory equipment 206,829.20 177,434.76

206,829.20 1,292,879.33

222,731.20 5,467,231.68

B. Current assets

I. Inventories

1. Goods 295,180.50 0.00

2. Advance payments 0.00 4,212,572.44

295,180.50 4,212,572.44

II. Receivables and other assets

1. Trade receivables 9,206,832.80 8,474,540.48

2. Other assets 2,201,671.02 317,179.38

11,408,503.82 8,791,719.86

III. Cash-in-hand and bank deposits 3,468,924.95 796,142.81

15,172,609.27 13,800,435.11

C. Accruals and deferrals 65,683.22 56,437.89

15,461,023.69 19,324,104.68

Assets 31 Dec 2013 31 Dec 2012

EUR EUR EUR

A. Non-current assets


1. Licences, industrial property rights, similar rights

and values and licences in such rights and values 15,902.00 4,174,352.35

15,902.00 4,174,352.35

II. Property, plant and equipment

1. Technical equipment and machinery 0.00 1,115,444.57

2. Other equipment, office and

factory equipment 206,829.20 177,434.76

206,829.20 1,292,879.33

222,731.20 5,467,231.68

B. Current assets

I. Inventories

1. Goods 295,180.50 0.00

2. Advance payments 0.00 4,212,572.44

295,180.50 4,212,572.44

II. Receivables and other assets

1. Trade receivables 9,206,832.80 8,474,540.48

2. Other assets 2,201,671.02 317,179.38

11,408,503.82 8,791,719.86

III. Cash-in-hand and bank deposits 3,468,924.95 796,142.81

15,172,609.27 13,800,435.11

C. Accruals and deferrals 65,683.22 56,437.89

15,461,023.69 19,324,104.68

37


Shareholders' equity and liabilities 31 Dec 2013 31 Dec 2012

EUR EUR EUR

A. Shareholders' equity

I. Issued capital

1. Subscribed capital 4,370,000.00 4,370,000.00

2. Own shares -248,307.00 -248,307.00

4,121,693.00 4,121,693.00

II. Capital reserve 3,375,014.97 3,375,014.97

III. Profit reserves

1. Statutory reserve 5,112.92 5,112.92

2. Other profit reserves 273,158.45 273,158.45

IV. Consolidated met loss -5,470,248.94 -469,487.69

V. Difference in equity due

to currency conversion 332,916.35 -626,858.68

VI. Minority interests 65,136.78 0.00

2,702,783.53 6,678,632.97

B. Difference from capital consolidation 144,303.04 0.00

C. Provisions

1. Pension provisions and similar obligations 2,777,524.36 1,870,596.04

2. Tax provisions 4,849.88 0.00

3. Other provisions 442,637.82 178,262.81

3,225,012.06 2,048,858.85

D. Liabilities

1. Liabilities to banks 21,204.12 490,910.24

2. Trade payables 8,746,683.84 7,308,448.22

3. Liabilities against shareholders 0.00 2,504,660.83

5. Other liabilities

of which taxes EUR 407,069.34

(pY. EUR 147,503.61) 621,037.10 288,879.68

9,388,925.06 10,592,898.97

E. Accruals and deferrals 0.00 3,713.89

15,461,023.69 19,324,104.68

38


Consolidated Income Statement 2013

2013 2012

EUR EUR EUR

1. Revenues 118,282,754.82 89,846,178.15

2. Other operating earnings 416,515.39 1,889,278.45

- of which for currency conversion

kEUR 166 (pY. kEUR 81)

118,699,270.21 91,735,456.60

3. Cost of materials

a) Costs for raw materials and

supplies and for goods purchased 114,727,848.20 86,182,502.15

b) Cost for services purchased 135,788.97 133,043.16

114,863,637.17 86,315,545.31

4. Personalaufwand

a) Löhne und Gehälter 1,671,114.32 1,350,080.53

b) Social security costs and

costs for pensions and support 485,014.44 402,816.97

- of which for pensions


2,156,128.76 1,752,897.50

5.

depreciation of property, plant and equipment 1,262,904.54 476,325.03

6. Other operating expenses 4,784,383.62 2,190,558.02

- of which for currency conversion


7. Other interest and similar earnings 285,721.73 54,432.31

- of which for affiliated companies

kEUR 3 (pY. kEUR 2)

8. Interest and similar expenses 755,798.31 494,274.33

- of which for affiliated companies


- of which for discounting of pension obligations


-470,076.58 -439,842.02

9. Earnings from ordinary activities -4,837,860.46 560,288.72

10. Extraordinary expenses 222,748.32 222,748.32

11. Income taxes 11,358.09 121,945.44

12. Other taxes 2,302.66 6,538.12

13. Net loss (pY. profit) 5,074,269.53 209,056.84

14. Loss carried forward from the previous year 469,487.69 680,080.45

15. Loss attributable to minority interests for the period 73,508.28 1,535.92

16. Consolidated net loss 5,470,248.94 469,487.69

Amortisation of intangible non-current assets and

39


Consolidated Cash Flow Statement 2013

2013 2012

TEUR TEUR

1. Cash flow from current operating activities

-5,074 211

1,263 476

1,176 321

0 -1,724

963 -443

782 -8,815

-1,199 3,421

538 536

Cash flow from current operating activities -1,551 -6,017

2. Cash flow from investment activities

-103 -917

692 0

3,362 0

Cash inflow from the sale of consolidated companies 0 2,383

Cash flow from investment activities 3,951 1,466

3. Cash flow from financing activities

0 2,997

Cash outflow from the repayment of other financial liabilities 0 -1,500

Cash flow from financing activities 0 1,497

4. Cash and cash equivalents at the end of the period

2,400 -3,054

274 -113

Cash and cash equivalents at the start of the period 796 3,963


5. Composition of cash and cash equivalents

Cash and cash equivalents 3,469 796


Cash inflow from additions to shareholders' equity

Changes of cash and cash equivalents

affecting payment (sub totals 1 to 3)

Changes of cash and cash equivalents from changes in

exchange rates, basis of consolidation and measurement

Net earnings for the period (including minority interests)

Decrease (pY. increase) in inventories, trade receivables and

other assets

Decrease (pY. increase) in trade payables and other liabilities

Other non-payment related expenses (+)/earnings (-)

Increase in provisions

Depreciation and amortisation on non-current assets

Cash outflow for investments in property, plant and equipment

Earnings from the disposal of consolidated subsidiaries and

other business units as well as non-current assets

Other

Cash inflow from the disposal of property, plant and equipment

Cash inflow from the disposal of intangible assets

40


Consolidated Statement of Changes in Shareholders’ Equity 2013

Subscribed Capital Generated Accumulated Group's

capital reserve consolidated other share

common shares shareholders' consolidated

equity net earnings

Balancing item

from currency

conversion

EUR EUR EUR EUR EUR

31 Dec 2011 3,751,693.00 748,014.97 -401,809.08 40,025.18 4,137,924.07

370,000.00 2,627,000.00 0.00 0.00 2,997,000.00

0.00 0.00 0.00 0.00 0.00

Other changes 0.00 0.00 0.00 -666,883.86 -666,883.86

370,000.00 2,627,000.00 0.00 -666,883.86 2,330,116.14

0.00 0.00 210,592.76 0.00 210,592.76

31 Dec 2012 4,121,693.00 3,375,014.97 -191,216.32 -626,858.68 6,678,632.97

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 959,775.03 959,775.03

0.00 0.00 0.00 959,775.03 959,775.03

0.00 0.00 -5,000,761.25 0.00 -5,000,761.25

31 Dec 2013 4,121,693.00 3,375,014.97 -5,191,977.57 332,916.35 2,637,646.75

Total consolidated

net earnings

Parent company

Issue of shares

Changes in the basis of

consolidation

Total consolidated

net earnings

Issue of shares

Other changes

41


Consolidated

shareholders'

Minority interest equity

Minority Shareholders'

interests equity

EUR EUR EUR

47,370.92 47,370.92 4,185,294.99

0.00 0.00 2,997,000.00

-45,835.00 -45,835.00 -45,835.00

0.00 0.00 -666,883.86

-45,835.00 -45,835.00 2,284,281.14

-1,535.92 -1,535.92 209,056.84

0.00 0.00 6,678,632.97

138,645.06 138,645.06 138,645.06

0.00 0.00 959,775.03

138,645.06 138,645.06 1,098,420.09

-73,508.28 -73,508.28 -5,074,269.53

65,136.78 65,136.78 2,702,783.53

Subscribed Capital Generated Accumulated Group's

capital reserve consolidated other share

common shares shareholders' consolidated

equity net earnings

Balancing item

from currency

conversion

EUR EUR EUR EUR EUR

31 Dec 2011 3,751,693.00 748,014.97 -401,809.08 40,025.18 4,137,924.07

370,000.00 2,627,000.00 0.00 0.00 2,997,000.00

0.00 0.00 0.00 0.00 0.00

Other changes 0.00 0.00 0.00 -666,883.86 -666,883.86

370,000.00 2,627,000.00 0.00 -666,883.86 2,330,116.14

0.00 0.00 210,592.76 0.00 210,592.76

31 Dec 2012 4,121,693.00 3,375,014.97 -191,216.32 -626,858.68 6,678,632.97

0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 959,775.03 959,775.03

0.00 0.00 0.00 959,775.03 959,775.03

0.00 0.00 -5,000,761.25 0.00 -5,000,761.25

31 Dec 2013 4,121,693.00 3,375,014.97 -5,191,977.57 332,916.35 2,637,646.75

Total consolidated

net earnings

Parent company

Issue of shares

Changes in the basis of

consolidation

Total consolidated

net earnings

Issue of shares

Other changes

42


Statement of Changes in Non-Current Assets as of 31 December 2013

01 Jan 2013 Currency Change in Additions Disposals 31 Dec 2013

conversion basis of

consolidation

EUR EUR EUR EUR EUR EUR


4,821,259.40 -1,136,433.40 22,393.08 3,537.21 3,680,127.00 30,629.29

II. Property, plant and

equipment

1.1,550,013.52 -365,714.74 0.00 52,991.17 1,237,289.95 0.00

2.447,405.81 -28,440.99 58,544.85 46,891.73 37,936.51 486,464.89

1,997,419.33 -394,155.73 58,544.85 99,882.90 1,275,226.46 486,464.89

III. Financial assets

Investments 38,347.89 0.00 0.00 0.00 0.00 38,347.89

6,857,026.62 -1,530,589.13 80,937.93 103,420.11 4,955,353.46 555,442.07

Other equipment, office and

factory equipment

Cost

Licences, industrial property

rights, similar rights and values

and licences in such rights and

values

Technical equipment and

machinery

43


01 Jan 2013 Currency Change in Additions Disposals 31 Dec 2013 31 Dec 2013 31 Dec 2012

conversion basis of

consolidation

EUR EUR EUR EUR EUR EUR EUR EUR

646,907.05 -792,139.05 0.00 727,312.20 567,352.91 14,727.29 15,902.00 4,174,352.35

434,568.95 -500,370.31 0.00 480,433.20 414,631.84 0.00 0.00 1,115,444.57

269,971.05 -9,250.99 0.00 55,159.14 36,243.51 279,635.69 206,829.20 177,434.76

704,540.00 -509,621.30 0.00 535,592.34 450,875.35 279,635.69 206,829.20 1,292,879.33

38,347.89 0.00 0.00 0.00 0.00 38,347.89 0.00 0.00

1,389,794.94 -1,301,760.35 0.00 1,262,904.54 1,018,228.26 332,710.87 222,731.20 5,467,231.68

Accumulated amortisation and depreciation Book values

44


Notes to the Consolidated Financial Statement

HMS Bergbau AG, Berlin

Financial Year 2013

I. General information

The consolidated financial statements of HMS Bergbau AG for financial year 1 January to

31 December 2013 were prepared in accordance with German commercial law and the additional

regulations of the German Stock Corporation Act (AktG), applying the relevant regulations of the

German Accounting Law Modernisation Act (BilMoG).

The financial year of the Group and all companies included in the consolidated financial statements

corresponds to the calendar year.

In accordance with Section 297 (1) of the German Commercial Code (HGB), the balance sheet,

income statement, notes as well as cash flow statement and statement of changes in shareholders’

equity were presented separately.

The income statement was prepared using the total cost method.

II. Basis of consolidation

1. Information on all Group companies

All German and foreign associated subsidiaries were included in the consolidated financial statements.

The shares in HMS Coal & Coke Trading GmbH were acquired in 2013.

Shareholders’

Share equity Annual result

Name Headquarter % EUR thousand EUR thousand

HMS Bergbau AG Coal Division Berlin 100 33 -1

HMS Bergbau AG Iron Ore Division Berlin 100 14 -1

HMS Bergbau Africa (Pty) Ltd. Johannesburg 100 -1 12

HMS Bergbau Singapore (Pte) Ltd. Singapore 100 460 56

PT. HMS Bergbau Indonesia Jakarta 100 -4,685 -3,121

HMS Coal & Coke Trading GmbH Woltersdorf 51 132 -150

45


2. Investments

The parent company holds shares in the following investments:

Carbo-KH, Kemerovo, Russia (inactive)

III. Consolidation principles

The annual financial statements of the consolidated subsidiaries were prepared on 31 December 2013,

the same balance sheet date as the parent company.

The annual financial statements of the German subsidiaries were all prepared in accordance with

German commercial law and the accounting and valuation principles of HMS Bergbau AG.

The annual financial statements of the foreign subsidiaries were prepared in accordance with the

applicable laws of each country. They were reconciled with the financial reporting standards of the

parent company. The balance sheet and income statement structure was adjusted to match that of the

parent company.

The consolidated financial statements were prepared on the balance sheet date of the parent

company.

1. Capital consolidation method

Pursuant to Section 301 (1) no. 1 HGB (old version), the capital of the fully consolidated companies for

subsidiaries acquired prior to 1 January 2010 was consolidated on the date of acquisition according

to the book value method by offsetting acquisition costs with the subsidiary’s equity share at the time

of acquisition or its initial consolidation. For subsidiaries acquired after 1 January 2010, the capital

was consolidated on the date of acquisition according to the revaluation method pursuant to

Section 301 (1) HGB. Shareholders’ equity is measured at an amount equivalent to the present value

of the assets, liabilities, accruals and deferrals, and special items included in the consolidated financial

statements; this amount is to be reported at the time of acquisition.

2. Date of initial consolidation

The date on which capital, within the meaning of Section 301 (2) HGB, must be consolidated is always

the date of foundation by the parent company. The capital of subsidiaries established before the

financial year is therefore also consolidated according to the value of the Company at the time it was

founded. Any profit and loss generated by the subsidiaries before 1 January 2010 was included in and

offset against the profit reserve of the parent company. This did not result in a difference within the

meaning of Section 301 (1) HGB (old version) for these companies.

Companies acquired after 1 January 2010 are included pursuant to Section 301 (2) HGB at the time

the company became a subsidiary.

46


3. Company acquisitions

51% of the shares in HMS Coal & Coke Trading GmbH were acquired in September 2013; the

company was then included in the consolidated financial statements of HMS AG as a subsidiary. The

company’s business activities compromise the domestic trading of various domestic and international

fuels and the mediation of related procurement and logistics tasks. The fair value of the acquired

shareholders’ equity after offsetting the minority interests (EUR 139 thousand) amounted

to EUR 144 thousand. A purchase price of EUR 1.00 was agreed for the acquisition of 51% of the

shares. Consequently, badwill of EUR 144 thousand resulting from capital consolidation was

recognised on the consolidated balance sheet. The badwill from capital consolidation will be released

to income in subsequent years depending on the development of the material assets assumed. Since

being founded on 1 June 2013, HMS Coal & Coke Trading GmbH has generated sales of

EUR 5,458 thousand and a net loss of EUR 131 thousand as at 31 December 2013.

4. Debt consolidation

Mutual receivables and liabilities between the consolidated companies are offset and eliminated when

consolidating the Company’s debt. Potential differences from the consolidation of intragroup

receivables and liabilities denominated in foreign currencies are recognised in equity without affecting

income.

5. Consolidation of costs and earnings, elimination of intercompany profits

Intragroup sales are offset against corresponding intragroup expenses.

Expenses and earnings from other business transactions between consolidated companies are also

offset.

Intercompany profits from intragroup deliveries and services did not arise.

IV. Currency conversion principles

The consolidated financial statements are prepared in euros, the functional and reporting currency of

the parent company.

In accordance with Section 308a sentence 1 HGB, the balance sheets of foreign subsidiaries are

converted at the spot exchange rate prevailing on the balance sheet date and their income statements

at the average annual rate in accordance with Section 308a sentence 2 HGB. Shareholders’ equity is

converted at the historical rate.

Differences arising from currency conversion for assets and liabilities are recognised in equity without

affecting income.

Differences from the conversion of income statement items were reported under consolidated net

earnings as costs or earnings.

47


V. Accounting and valuation principles

Accounting and valuation

The consolidated financial statements comply with the applicable regulations of Section 298 HGB.

Intangible assets are valued at cost less scheduled amortisation.

Items of property, plant and equipment are recognised at cost less straight-line depreciation over

their expected useful lives.

Goods and Prepayments made on inventories are recognised at cost subject to the strict principle of

lower of cost or market.

Receivables and other assets are recognised at nominal value or fair value as at the balance sheet

date.

Defined benefit obligations are calculated according to the projected unit credit method, using the

“2005 G” mortality tables compiled by Prof. Klaus Heubeck, assuming a fluctuation and salary trend of

0%, a discount rate of 4.88% (previous year: 5.04%) and a pension trend of 2.0% (previous

year: 2.0%). In financial year 2010, due to the first-time application of the German Accounting Law

Modernisation Act (BilMoG), the amount allocated for pension provisions, calculated in accordance

with actuarial principles, came to EUR 3,341 thousand, which will be spread over a period of 15 years

pursuant to Article 67 (1), sentence 1, of the Introductory Act to the German Commercial Code

(EGHGB). EUR 892 thousand of this sum was allocated as at 31 December 2013. The remaining

amount, which comes to EUR 2,449 thousand, will be recorded to pension obligations, in an annual

amount of EUR 223 thousand until the year 2024.

Tax provisions and other provisions take into account all discernible risks and contingent liabilities

and are recognised to the amount of the settlement value, i.e. including expected increases in prices

and costs.

Liabilities are recognised at their settlement value.

The conversion of business transactions concluded in foreign currencies is carried out using the

spot exchange rate in accordance with Section 256a HGB.

VI. Notes on the consolidated balance sheet

The statement of changes in non-current assets shows the development of individual non-current

assets.

As in the previous year, all receivables and liabilities have remaining terms of less than one year.

After offsetting against the claims from the assets serving purely for settling obligations, which had a

fair value of EUR 1,411 thousand as at the balance sheet date, pension obligations amounted to

EUR 2,778 thousand.

Deferred taxes arise largely from the difference in valuation of the provision for pensions and from the

48


valuation of the loss carry-forward assessed as utilisable in the future. The calculation of the temporary

differences uses the corporation and business tax rates for the financial year of 30.18%. Calculation of

taxes as at 31 December 2013 once again, as on the previous year’s balance sheet date, resulted in a

deferred tax asset surplus. The Company has exercised the option in Section 274 HGB not to

capitalise the tax relief calculated.

The subscribed capital in the amount of EUR 4,370,000.00 is comprised of 4,370,000 common

bearer shares with a nominal value of EUR 1.00 each.

The capital reserve is attributable to the difference between the nominal value and the issue price.

Liabilities to banks amounted to EUR 21 thousand as at the balance sheet date (previous year: EUR

491 thousand) and all had terms of less than one year.

VII. Notes on the consolidated income statement

Revenues of EUR 118,283 thousand were generated in the financial year, mainly from the trade in

coal products such as steam coal, coking coal and anthracite. Broken down by region, sales were

generated in Asia (72 %) and Europe (12%).

Material costs are attributable to the global purchase of steam coal, coking coal and anthracite.

Other operating earnings primarily include currency conversion gains (EUR 166 thousand) and

earnings from charging on costs incurred (EUR 187 thousand).

Other operating expenses result primarily from legal and consulting expenses (EUR 748 thousand),

vehicle and travel expenses (EUR 642 thousand), delivery costs (EUR 409 thousand), occupancy

costs (EUR 254 thousand), and money transfer costs (EUR 183 thousand) as well as the impairment

loss from the sale of the harbour operation in Indonesia.

The financial result includes the net balance, amounting to EUR 399 thousand, of interest expenses

on pension obligations and income from the pledged plan assets. It also takes into account expenses

from the measurement of hedges of EUR 311 thousand (previous year: EUR 0 thousand).

Extraordinary expenses include 1/15th of the addition of pension provisions resulting from the change

in valuation pursuant to Section 253 (1) sentence 2 HGB.

49


VIII. Other information

1. Members of the Management Board and Supervisory Board

During the last financial year, the Company’s transactions were conducted by the Management

Board, whose members are as follows:

Heinz Schernikau, CEO,

Sebastian Giese, CFO (until 31 December 2013).

The total remuneration of the Management Board in financial year 2013 – excluding additions to

pension provisions – was EUR 387 thousand (previous year: EUR 478 thousand).

During the financial year, the Supervisory Board was composed of the following members:

Dr. Hans-Dieter Harig; engineer, retired, Chairman

Dr. h.c. Michael Bärlein; lawyer, Berlin, Deputy Chairman

Michaela Schernikau; businesswoman, Managing Director, Berlin.

In the financial year, Dr. Hans-Dieter Harig was also a member of the Supervisory Boards of the

following companies: E.ON Generation GmbH, Hanover, Rheinkalk GmbH, Wülfrath as well as

Bilfinger Power Systems GmbH, Oberhausen.

In the financial year, Michaela Schernikau was also a member of the Supervisory Boards of the

following companies: HMS Bergbau AG Iron Ore & Metals Division, Berlin; HMS Bergbau AG Coal

Division, Berlin; and S+O Mineral Industries AG, Frankfurt am Main.

2. Remuneration of members of the Supervisory Board

The Supervisory Board received no remuneration in 2013. A corresponding allocation to provisions of

EUR 50 thousand was taken into account.

3. Other financial obligations

On 31 December 2013, the Group’s purchase obligations from traded contracts amounted to

EUR 38,988 thousand, all relating to 2014.

Additional other financial liabilities largely arise from rental and leasing agreements. The maturities of

liabilities are as follows:

Up to 1 year EUR 460 thousand

Between 1 and 5 years EUR 621 thousand

More than 5 years EUR 0 thousand

50


4. Contingent liabilities

The Group had no contingent liabilities within the meaning of Section 251 HGB as at the balance sheet

date.

5. Hedges

In order to hedge a supply contract, HMS AG concluded a hedge to avoid the risk a fluctuating market

and stock market prices. The agreed quantity to be supplied is 600,000 tonnes; this is to be supplied

over a period of twelve months. A total of ten delivery months remained as at the reporting date. The

option is question is a European put option. The underlying asset is the API4 coal index. The agreed

exercise price is USD 77 per tonne; the hedge will be settled in cash. The cost to the option provider

amounted to USD 600 thousand. The valuation as at the reporting date on the basis of an option price

model pursuant to the trinomial model is EUR 125 thousand. As with the original option provider, HMS

AG passed on this option to the supplier contracted to conduct this transaction, a liability to the supplier

was recognised in the corresponding amount.

6. Auditor’s fee

The fee for the audit of the annual financial statements was EUR 60 thousand (previous year:

EUR 60 thousand). The auditing firm did not carry out any other services for the Company.

7. Annual average number of employees

The average number of people employed during the financial year from 1 January to

31 December 2013 was 33.

50

51


8. Types of shares

HMS Bergbau AG has share capital worth EUR 4,370,000.00, divided into:

4,370,000 common bearer shares at a nominal value of EUR 1.00 each.

9. Authorised capital

On the balance sheet date, HMS Bergbau AG still had EUR 1,630,000.00 in authorised capital.

Berlin, 31 March 2014

Heinz Schernikau

CEO

51

52


Auditor’s report

We issued the following opinion on the consolidated financial statements and the group management

report:

“We have audited the consolidated financial statements prepared by HMS Bergbau AG, Berlin,

comprising the balance sheet, the income statement, the notes to the consolidated financial

statements, the cash flow statement, and the statement of changes in equity, together with the group

management report for the financial year from 1st January to 31st December 2013. The preparation of

the consolidated financial statements and the group management report in accordance with German

commercial law is the responsibility of the company’s management. Our responsibility is to express an

opinion on the consolidated financial statements and the group management report based on our audit.

We conducted our audit of the consolidated financial statements in accordance with Sec. 317 HGB

(“Handelsgesetzbuch”: German Commercial Code) and German generally accepted standards for the

audit of financial statements promulgated by the Institut der Wirtschaftsprüfer [Institute of Public

Auditors in Germany] (IDW). Those standards require that we plan and perform the audit such that

misstatements materially affecting the presentation of the net assets, financial position and results of

operations in the consolidated financial statements in accordance with [German] principles of proper

accounting and in the group management report are detected with reasonable assurance. Knowledge

of the business activities and the economic and legal environment of the group and expectations as to

possible misstatements are taken into account in the determination of audit procedures. The

effectiveness of the accounting-related internal control system and the evidence supporting the

disclosures in the consolidated financial statements and the group management report are examined

primarily on a test basis within the framework of the audit. The audit includes assessing the annual

financial statements of those entities included in consolidation, the determination of entities to be

included in consolidation, the accounting and consolidation principles used and significant estimates

made by management, as well as evaluating the overall presentation of the consolidated financial

statements and the group management report. We believe that our audit provides a reasonable basis

for our opinion.

Our audit has not led to any reservations.

53


In our opinion, based on the findings of our audit, the consolidated financial statements comply with the

legal requirements [and supplementary provisions of the partnership agreement/articles of

incorporation and bylaws] and give a true and fair view of the net assets, financial position and results

of operations of the group in accordance with [German] principles of proper accounting. The group

management report is consistent with the consolidated financial statements and as a whole provides

a suitable view of the group’s position and suitably presents the opportunities and risks relating to

future development.”

Berlin, 16 June 2014

Ernst & Young GmbH

Wirtschaftsprüfungsgesellschaft

Plett Ottenhus

Auditor Auditor

54


Imprint

Publisher:

HMS Bergbau AG

An der Wuhlheide 232

12459 Berlin

Germany

Phone: +49 (0) 30-65 66 81-0

Fax: +49 (0) 30-65 66 81-15

E-mail: [email protected]

www.hms-ag.com

Concept, editorial, design:

GFEI Aktiengesellschaft

Am Hauptbahnhof 6

60329 Frankfurt

Germany

Phone: +49 (0) 69-743 037-00

Fax: +49 (0) 69-743 037-22


www.gfei.de

55


HMS Bergbau AG

An der Wuhlheide 232

D - 12459 Berlin

Germany

Phone: +49 (30)-65 66 81-0

Fax: +49 (30)-65 66 81-15


Internet: www.hms-ag.com

annual report - hms bergbau ag · annual report 2013 of hms bergbau ag these activities are also...

Documents