Download - IFRS Consolidated Financial Statements of Xella ... · Consolidated Statement of Cash Flows ..... 11 Notes to the Consolidated Financial Statements 2014 A. Background ... B. Notes

Xella International S.A.

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IFRS Consolidated Financial Statements of


for 2014


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Table of contents

Consolidated Financial Statements 2014

Consolidated Statement of Financial Position ............................................................................ 6

Consolidated Statement of Income – by nature of expense ........................................................ 7

Consolidated Statement of Comprehensive Income ................................................................... 8

Consolidated Statement of Changes in Equity ............................................................................ 9

Consolidated Statement of Cash Flows .................................................................................... 11

Notes to the Consolidated Financial Statements 2014

A. Background .......................................................................................................................... 12

B. Notes to the Consolidated Statement of Financial Position .................................................. 28

1 . Property, Plant and Equipment ........................................................................................ 28

2 . Intangible Assets ............................................................................................................. 30

3 . Investments in Associates (At Equity) .............................................................................. 31

4 . Financial Assets ............................................................................................................... 32

5 . Deferred Taxes ................................................................................................................ 34

6 . Inventories ....................................................................................................................... 36

7 . Trade and Other Receivables .......................................................................................... 36

8 . Cash and Cash Equivalents ............................................................................................. 38

9 . Equity ............................................................................................................................... 39

10 . Financial Liabilities ......................................................................................................... 43

11 . Pension Provisions ........................................................................................................ 46

12 . Other Provisions ............................................................................................................ 52

13 . Deferred Income ............................................................................................................ 54

14 . Trade and Other Accounts Payable ............................................................................... 55

C. Notes to the Consolidated Statement of Income – By Nature of Expense ............................ 55

15 . Sales .............................................................................................................................. 55

16 . Other Income ................................................................................................................. 56

17 . Staff Expenses ............................................................................................................... 56

18 . Other Expenses ............................................................................................................. 57

19 . Result from Other Investments ....................................................................................... 58

20 . Finance Costs ................................................................................................................ 59

21 . Other Financial Result.................................................................................................... 59

22 . Income Taxes ................................................................................................................ 60

D. Other Notes to the Consolidated Financial Statements ........................................................ 61

23 . Financial Risk Management ........................................................................................... 61

24 . Contingencies ................................................................................................................ 67


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25 . Corporate Acquisitions and Divestments ........................................................................ 68

26 . Consolidated Statement of Cash Flows ......................................................................... 69

27 . Segment Reporting ........................................................................................................ 71

28 . Related Parties .............................................................................................................. 74

29 . List of shareholdings ...................................................................................................... 77

30 . Significant Events After the End of the Financial Year ................................................... 80


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Consolidated Statement of Financial Position

Dec. 31, 2014 Dec. 31, 2013

k€ k€

Property, plant & equipment (1) 1,019,296 1,091,485Intangible assets (2) 580,965 584,173Investments in associates (at equity) (3) 18,823 15,961Financial assets (4) 55,019 77,303Trade and other receivables 2,206 2,180Tax assets 690 867Deferred tax assets (5) 15,019 7,641Non-current assets 1,692,018 1,779,610

Inventories (6) 145,739 145,102Trade and other receivables (7) 136,862 142,255Tax assets 13,751 8,790Financial assets (4) 18,893 41,430Cash and cash equivalents (8) 122,765 107,200Deferred expenses 2,673 2,942Current assets 440,683 447,719

Total assets 2,132,701 2,227,329

Dec. 31, 2014 Dec. 31, 2013

k€ k€

Shareholders' equity (286,907) (152,983)Non-controlling interests 22,162 19,353Total equity (9) (264,745) (133,630)

Financial liabilities (10) 1,652,745 1,596,198Deferred tax liabilities (5) 105,971 118,563Pension provisions (11) 204,340 162,132Other provisions (12) 81,267 94,017Trade and other accounts payable (non-current) 162 172Deferred income (13) 6,387 6,194Non-current liabilities 2,050,872 1,977,276

Financial liabilities (10) 37,881 43,365Tax liabilities 8,373 8,651Other provisions (12) 67,820 83,919Trade and other accounts payable (14) 232,358 247,364Deferred income 142 384Current liabilities 346,574 383,683

Total equity and liabilities 2,132,701 2,227,329

NoteAssets

Equity and Liabilities Note

The accompanying notes are an integral part of these Consolidated Financial Statements.


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Consolidated Statement of Income – By Nature of Expense

Jan. 1st -

Dec. 31, 2014

Jan. 1st -

Dec. 31, 2013

k€ k€

Sales (15) 1,272,935 1,254,095Change in finished goods & work in progress 1,592 (6,615)Own work capitalised 3,970 3,000Total output 1,278,497 1,250,480

Materials expenses (604,145) (593,168)Gross profit 674,352 657,312

Other income (16) 16,571 26,608Total income 690,923 683,920

Staff expenses (17) (318,356) (309,944)Other expenses (18) (185,794) (180,046)EBITDA 186,773 193,930

Depreciation & amortisation expenses (127,573) (115,609)Impairment of goodwill (1,065)EBIT 59,200 77,256

Result from associates (at equity) 3,872 2,934Result from other investments (19) 708 3,513Finance costs (20) (146,368) (116,445)Other financial result (21) (15,048) (3,308)Financial result (156,836) (113,306)

Profit/ loss before tax (97,636) (36,050)

Current income taxes (10,579) (14,135)Deferred taxes 6,967 9,703Income taxes (22) (3,612) (4,432)

Net income/ loss (101,248) (40,482)

Net income/ loss attributable to shareholders (105,190) (43,707)Net income/ loss attributable to non-controlling interests 3,942 3,225

NoteConsolidated Statement of Income



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Consolidated Statement of Comprehensive Income

Consolidated Statement of Comprehensive Income Jan 1st - Dec

31, 2014

Jan 1st - Dec

31, 2013

k€ k€

Net income / loss (101,248) (40,482)

Other comprehensive income with potential subsequent

reclassification to the income statement

Currency adjustment 2,287 (10,399)

Share of other comprehensive income of investments in associates (at equity)

399 (1,578)

Remeasurement of available for sale investments * 104 16

Income taxes on items in other comprehensive income * (36) 23

Other comprehensive income without potential subsequent

reclassification to the income statement

Remeasurements from defined benefit liability * (44,153) 20,933

Income taxes on items in other comprehensive income 12,793 (5,894)

Other comprehensive income (28,606) 3,101

Total comprehensive income (129,854) (37,381)

Total comprehensive income attributable to shareholders (133,918) (39,842)

Total comprehensive income attributable to non-controlling interests 4,064 2,461

* In 2013 minor reclassifications mainly due to new line items.



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Consolidated Statement of Changes in Equity

Consolidated Statement of Changes in

Equity for the period

Jan 1st - Dec 31, 2014

Other comprehensive income

Available for

sale invest-

ments and

investments in

associates

Hedge of net

investment in

foreign

operations

Remeasure-

ment defined

benefit liability

Translation

reserves

k€ k€ k€ k€ k€ k€ k€ k€ k€ k€ k€

As at Jan 1st, 2014 31 98,382 (1,546) 2,688 (24,772) (920) (24,550) (226,846) (152,983) 19,353 (133,630)

Dividends (2,132) (2,132)

Subsequent Acquisition with existing control (6) (6) 2 (4)

Capital increase/ decrease 875 875

Currency adjustment 399 1,876 2,275 2,275 411 2,686

Addition to/ release of OCI(not affecting consolidated income statement)

58 (31,061) (31,003) (31,003) (289) (31,292)

Net income/ loss (105,190) (105,190) 3,942 (101,248)

Total comprehensive income 457 (31,061) 1,876 (28,728) (105,190) (133,918) 4,064 (129,854)

Book value as at Dec 31, 2014 31 98,382 (1,089) 2,688 (55,833) 956 (53,278) (332,042) (286,907) 22,162 (264,745)

Retained

earnings

Non-

controlling

interests

Total equityShareholders'

equity

Subscribed

capital

Capital

reserves

Revaluation

reserves

The accompanying notes are an integral part of these Consolidated Financial Statements. Please refer to note 25 for information about

corporate acquisitions and divestments in the year under review.


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Consolidated Statement of Changes in

Equity for the period

Jan 1st - Dec 31, 2013

Other comprehensive income

Available for

sale invest-

ments and

investments in

associates

Hedge of net

investment in

foreign

operations

Remeasure-

ment defined

benefit liability

Translation

reserves

k€ k€ k€ k€ k€ k€ k€ k€ k€ k€ k€

As at Jan 1st, 2013 31 98,382 (5) 2,688 (39,642) 8,544 (28,415) (180,439) (110,441) 30,330 (80,111)

Dividends (2,300) (2,300)

Subsequent Acquisition with existing control (2,700) (2,700) (11,763) (14,463)

Capital increase/ decrease 625 625

Currency adjustment (1,578) (9,464) (11,042) (11,042) (935) (11,977)

Addition to/ release of OCI *(not affecting consolidated income statement)

37 14,870 14,907 14,907 171 15,078

Net income/ loss (43,707) (43,707) 3,225 (40,482)

Total comprehensive income* (1,541) 14,870 (9,464) 3,865 (43,707) (39,842) 2,461 (37,381)

Book value as at Dec 31, 2013 * 31 98,382 (1,546) 2,688 (24,772) (920) (24,550) (226,846) (152,983) 19,353 (133,630)

* Minor reclassifications, see footnote to Consolidated Statement of Comprehensive Income.

Retained

earnings

Shareholders'

equity

Non-

controlling

interests

Total equitySubscribed

capital

Capital

reserves

Revaluation

reserves

The accompanying notes are an integral part of these Consolidated Financial Statements. Please refer to note 25 for information about

corporate acquisitions and divestments in the year under review.


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Consolidated Statement of Cash Flows

Jan 1st -

Dec 31,

2014

Jan 1st -

Dec 31,

2013

k€ k€

Net loss for the period including non-controlling interests (101,248) (40,482)

Depreciation, amortization and impairment of property, plant and equipment as well as of intangible assets

127,573 116,674

Income and expenses from changes in deferred taxes (6,967) (9,703)Income and expenses from income taxes 10,579 14,135Financial result 156,836 113,306EBITDA 186,773 193,930

Changes in inventories (3,591) 3,464Changes in trade receivables 3,302 (11,142)Changes in trade payables (536) 7,842Change of trade working capital (825) 164

Changes in pension provisions (8,380) (7,081)Changes in other non-current provisions and liabilities 2,010 (9,117)Changes in other current assets 865 1,269Changes in current provisions (2,238) (3,183)Changes in other current liabilities (14,573) 2,865Change in other working capital (22,316) (15,247)

Income taxes (15,669) (18,198)Other non-cash income and expenses 4,554 307Income and expenses from the disposal of non-current assets (778) (1,178)Cash flow from operating activities 151,739 159,778

Cash paid for investments in property, plant and equipment and intangible assets (68,725) (78,450)Cash received from the disposal of property, plant and equipment and intangible assets

1,810 1,916

Cash paid for the acquisition of consolidated entities and other business units (80)Cash paid for / received from the disposal of consolidated entities and other business units

1,506 (10)

Cash paid for additions to investments in associated entities at equity and other financial assets

(824) (591)

Cash received from disposals of investments in associated entities at equity and other financial assets

9,552 6,485

Cash received from interest and investment income 2,326 2,051Cash flow from investing activities (54,355) (68,679)

Cash received from equity contributions 105Payments made to non-controlling interests (2,132) (2,300)Payments made for the acquisition of shares in subsidiaries without change of control

(3) (7,930)

Cash received from the issue of non-current financial liabilities 325,000 58Cash received from the issue of current financial liabilities 143 80Cash paid for the scheduled repayment of financial liabilities (1,598) (2,483)Cash paid for interest expenses and fees (40,860) (46,943)Cash paid for the unscheduled repayment of financial liabilities including prepayment costs

(360,140) (47,748)

Cash received from derivative financial instruments 28Cash flow from financing activities (79,590) (107,133)

Cash and cash equivalents at the beginning of the period 107,200 124,512

Net change in cash and cash equivalents 17,794 (16,034)Net foreign exchange difference (2,229) (1,278)Cash and cash equivalents at the end of the period 122,765 107,200

Consolidated Statement of Cash Flows


Please see note 26 for more information on the Statement of Cash Flows.


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Notes to the 2014 Consolidated Financial Statements

A. Background

The registered office of Xella International S.A. is 43-45 Allée Scheffer L-2520 Luxembourg.

Xella International S.A. holds Xella Group which is a leading player in the European market for

building materials. The Group manufactures and markets building materials and supplies lime

under the umbrella of Xella (Ytong, Silka, Hebel, Multipor, Fermacell and Fels trademarks). The

company is in turn a subsidiary of Xella International Holdings S.à r.l., which is jointly managed

by representatives from Goldman Sachs Capital Partners and PAI Partners. Besides, selected

managers of Xella International S.A., Luxembourg, and other employees and their close family

members have acquired shares in Xella International S.A., Luxembourg, via XI Management

Beteiligungs GmbH & Co KG, Duisburg / Germany within the framework of the management

participation program.

The financial year of the Xella Group commenced on January 1, 2014 and ended on

December 31, 2014.

These Consolidated Financial Statements have been prepared in accordance with International

Financial Reporting Standards as adopted by the European Union and in accordance with the

Luxembourg legal and regulatory requirements.

The Consolidated Financial Statements have been prepared in euro (€) and the figures are

generally stated in thousand Euros (k€). For calculatory reasons, some of the tables may

include rounding differences of up to one unit. For additional clarity, a number of items have

been summarized both in the Consolidated Statement of Financial Position and in the

Consolidated Statement of Income. These are discussed in detail in the Notes to the

Consolidated Financial Statements. The items in the Consolidated Statement of Financial

Position have been classified as current or non-current items in line with IAS 1. The

Consolidated Statement of Income has been prepared using the nature of expense method.

The Consolidated Financial Statements were authorized for issue by the board of directors at

March 26, 2015 and were signed on its behalf.

Consolidation Principles

Subsidiaries over which Xella International S.A., Luxembourg, has either direct or indirect

control as defined by IFRS 10 have been fully consolidated in the Consolidated Financial

Statements. The group controls an entity when the group is exposed to, or has rights to,

variable returns from its involvement with the entity and has the ability to affect those returns


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through its power over the entity. Subsidiaries are fully consolidated from the date on which

control is transferred to the group. They are deconsolidated from the date that control ceases.

Associates are valued using the equity method pursuant to IAS 28. Other equity investments

are recognized at fair value in accordance with IAS 39 or, if no market value is available and fair

value cannot be reliably determined, at acquisition cost.

All consolidated companies have the same reporting date as the balance sheet reporting date of

the Consolidated Financial Statements of December 31, 2014. The Financial Statements of

Luxembourgish, German and other foreign subsidiaries included in the Consolidated Financial

Statements have all been prepared using uniform accounting policies.

Business combinations are recognized using the purchase method and measured at their

acquisition-date with fair values (IFRS 3). That portion of the purchase price which is made in

anticipation of expected future economic benefits from the acquisition and cannot be allocated

to defined or identifiable assets in the course of purchase price allocation is reported as goodwill

under intangible assets. Two immaterial subsidiaries were not consolidated (PY: two).

Pursuant to IFRS 3, goodwill is not amortized. Rather, the cash-generating unit (CGU) to which

goodwill has been allocated is tested for impairment annually or during the year if there is

indication of an impairment. If impaired book value of goodwill is written down to recoverable

amount which corresponds to the higher of value in use or fair value less cost of disposal. In

principle, any impairments of goodwill are posted through profit or loss. A cash-generating unit

is the smallest identifiable group of assets that generates cash inflows that are largely

independent of the cash inflows from other assets or group of assets.

IFRS 3 and IFRS 10 prescribe the mandatory application of the economic entity approach for

accounting for transactions involving acquisitions and disposals of shares resulting in a

controlling interest being obtained or retained. Non-controlling transactions are viewed as

transactions with shareholders and recognized in equity. Disposals of shares which result in the

loss of a controlling interest are reported as a gain or loss on disposal in the Consolidated

Statement of Income.

If an interest is still held after the disposal of the controlling interest, the remaining investment is

measured at fair value. The difference between the former carrying amount of the remaining

investment and its fair value is recognized in income as a gain or loss on disposal and

presented separately with the fair value of the remaining investment. Parents acquiring an

additional stake in a subsidiary resulting in control being obtained (“step acquisition”) must

remeasure the initially held interest at fair value with differences to book value recognized in the

Consolidated Statement of Income.


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Intercompany profits and losses, sales, income and expenses as well as all receivables and

liabilities between consolidated companies are offset against each other. Intercompany profits

contained in non-current assets and inventories originated by intercompany transactions are

eliminated unless they are immaterial.

Consolidated Entities and Changes in the Consolidated Group

The changes in the number of consolidated entities were as follows:

Consolidated entities and changes in the consolidated group 2014 2013

As at January 1st 103 102Addition from formation 2Disposal from sale of shares 1Disposal from merger and liquidation 2 1As at December 31 100 103

Foreign Currency Translation

The presentation currency of Xella International S.A., Luxembourg, is the Euro. Currency

translation of subsidiaries reporting in a country with a currency other than Euro is performed in

accordance with IAS 21 using the functional currency method. Due to the fact that all

subsidiaries operate financially, economically and also organizationally in their primary

economic environment, their respective local currency is their functional currency. Transactions

in foreign currency in the separate financial statements are translated to the functional currency

at the spot rate prevailing on the transaction date. Gains and losses from the settlement of such

business transactions and from the translation of monetary assets and liabilities are recognized

in the Consolidated Statement of Income. The assets and liabilities reported in the financial

statements of companies based in a country which does not have the Euro as currency are

translated at the closing rate, whereas the line items in the Consolidated Statement of Income

are translated at the annual average exchange rate for the period. Goodwill arising from

purchase accounting and any hidden reserves and liabilities uncovered in the course of

applying the purchase method are allocated to the acquired entity and translated using the

closing rate.

Any foreign exchange differences are posted to other comprehensive income (OCI) without

affecting earnings. Such differences arise when the assets and liabilities of Group entities

whose functional currency is not the Euro are translated to the presentation currency and the

exchange rate differs from the one applied in the prior year. They also arise when the Statement

of Income and the Statement of Financial Position are translated and the average exchange

rate differs from the closing rate.


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9The relevant exchange rates for non-Euro countries (1 € = x local currency) are:

Dec. 31, 2014 Dec. 31, 2013 2014 2013

Bosnia 1,9558 1,9558 1,9558 1,9558Bulgaria 1,9558 1,9558 1,9558 1,9558China 7,5358 8,3491 8,1707 8,1622Croatia 7,6580 7,6265 7,6343 7,5783Czech Republic 27,7350 27,4270 27,5352 25,9664Denmark 7,4453 7,4593 7,4548 7,4579Hungary 315,5400 297,0400 308,6554 296,8229Mexico 17,8679 18,0731 17,6437 16,9372Norway 9,0420 8,3630 8,3485 7,7932Poland 4,2732 4,1543 4,1840 4,1968Romania 4,4828 4,4710 4,4433 4,4185Russia 72,3370 45,3246 50,2647 42,2631Serbia 121,3500 114,5000 117,1448 112,9815Sweden 9,3930 8,8591 9,0951 8,6481Switzerland 1,2024 1,2276 1,2146 1,2310USA 1,2141 1,3791 1,3264 1,3276Ukraine 18,8921 11,1831 15,2745 10,8168

Country Closing rate Average rate

Accounting Policies

The Consolidated Financial Statements are prepared in accordance with the historical cost

convention with the exception of certain financial assets, financial liabilities and derivative

financial instruments, which are measured at fair value.

Property, plant and equipment is measured at acquisition or production cost less depreciation

and any impairment losses according to IAS 36.58 et seqq. If the reasons for an impairment no

longer apply in future, the assets are written up accordingly. In addition to direct costs, the cost

of internally constructed property, plant and equipment includes an appropriate portion of

overheads that can be directly allocated to the production of the asset. Borrowing costs that are

directly attributable to the construction or production of a qualifying asset are recognized by the

Xella Group as part of the cost of that asset. This practice is also applicable for intangible

assets.

Property, plant and equipment are depreciated over their economic life using the straight-line

method. Depreciation is based on the following useful lives:

Buildings 8 to 50 years

Plant and machinery 4 to 25 years

Vehicles and equipment 2 to 15 years


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Items such as spare parts, stand-by equipment and servicing equipment are recognized in

accordance with IAS 16 when they meet the definition of property, plant and equipment.

Otherwise, such items are classified as inventory.

The quarries acquired are recognized as property, plant and equipment (land for exploitation).

The Group applies the depletion method of depreciation based on the exploitation of the lime

and of other reserves. The depreciation starts from the time of the first-time extraction of raw

materials.

The criteria of IAS 17 for classification as finance lease are met where the Group bears the

significant risks and rewards incidental to ownership within the framework of a lease

transaction, and is therefore deemed to have economic title to the asset. In these cases, the

respective property, plant and equipment is recognized at fair value or the lower net present

value of the minimum lease payments and depreciated over the economic life of the asset or

over the shorter term of the lease respectively, using the straight-line method. A lease liability in

the amount of the resulting net present value of future minimum lease payments is recognized

under current and non-current financial liabilities respectively. Buildings and plant and

machinery acquired under finance leases generally have customary purchase options attached

for the end of the lease. The leases are all based on market interest rates at the time the leases

were entered into.

In addition to the finance leases, the Group entered into rental agreements under which the

economic title to the assets remains with the lessor (operating leases). The payments on these

leases are posted to profit and loss. Depending on the type of assets, the leases contain the

customary rental conditions and right of first refusal.

Intangible assets purchased for a consideration are recognized at cost less straight-line

amortization and any impairment losses. Intangible assets are amortized over the contractual

term or the estimated useful life of the asset. Licenses including software licenses and similar

rights are amortized over two to ten years. Customer lists are amortized over five to ten years.

Xella is not planning to cease use of the trademarks reported in the Consolidated Statement of

Financial Position. Moreover, there is no indication that the useful life of the trademarks is finite.

The trademarks reported in the Consolidated Statement of Financial Position therefore have an

indefinite useful life. This also applies for certain CO2-certificates and goodwill. All other useful

lives are finite. Development expenses from which future benefits are likely to flow to the Group

and whose cost can be reliably measured are recognized at the cost of production and

amortized over two to ten years. The cost of production includes all costs directly allocable to

development as well as an appropriate portion of allocable overheads.


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Research costs are expensed as incurred and not capitalized. Development costs are

capitalized, if the criteria of IAS 38 are met. Any amortization of intangible assets is included in

net income/loss in the consolidated statement of income.

Goodwill, trademarks and certain CO2-certificates with an indefinite useful life are subject to an

impairment test (impairment-only approach). The recoverability of the goodwill recognized in the

Consolidated Statement of Financial Position is reviewed once a year on the basis of cash-

generating units pursuant to IAS 36 (or during the year if there is an indication of impairment).

Within the framework of the impairment test, the carrying amounts of the individual or groups of

cash-generating units are compared to the recoverable amount which is defined as the higher of

fair value less costs of disposal and value in use. The fair value reflects the best possible

estimate of the amount that an independent third party would pay to acquire the cash-

generating units on the balance sheet date. The costs incurred to make such a sale are

deducted from this amount. In most of the CGU of the Xella Group, the recoverable amount is

generally based on its value in use.

The value in use for the CGUs with goodwill or intangible assets with indefinite useful lives is

determined by discounting future estimated pre-tax cash flows based on CGU-specific weighted

average cost of capital. The cash flows are derived from a detailed plan and a subsequent

terminal value. The detailed plan, approved by management, is based on historical

developments as well as on future market estimations and generally covers a period of five

years. Management’s key assumptions are generally consistent with external information

sources. In the detailed plan key assumptions for each CGU include, among others, expected

selling and procurement prices, investments and market growth rates. The detailed plan is

based on economic assumptions derived from external sources, e.g. external market studies, as

well as from internal assumptions.

The terminal value considers CGU-specific long-term growth rates which are estimated by Xella

to be consistent with publicly available information about the long-term average growth rates for

the markets in which the CGU operates.

Key assumptions of significant CGUs in

2014 (in %)

Weighted

average

cost of

capital

Long-term

growth rate

Building Materials Business Unit

CGU North West Europe 7.9 1.7CGU Middle West Europe/Scandinavia 8.7 1.7CGU South West Europe 9.6 1.7CGU Central East Europe 8.1 1.9CGU North East Europe 8.5 2.0CGU Dry Lining 8.0 1.7CGU Lime 8.1 1.9


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In 2013 the weighted average cost of capital before tax in the individual CGUs ranged between

9.4% and 10.2% and the terminal value considered an average long-term growth rate of 2%.

If the recoverable amount of the cash-generating unit or group of cash-generating units is less

than the carrying amount an impairment loss is recognized on goodwill and, if necessary, of the

remaining assets as well. In 2014 the recoverable amount exceeded the carrying amount in

each CGU.

A sensitivity analysis was performed simulating a variation of the following significant

assumptions: an increase of the weighted average cost of capital before taxes by one percent, a

reduction of the long-term growth rates by one percent and a reduction of EBITDA by five

percent. A modification of each of these assumptions would not lead to any impairment loss.

At balance sheet date the following goodwill and trademarks existed for the CGUs with

significant amount of goodwill or intangible assets with indefinite useful lives:

Dec 31, 2014 Dec 31, 2013 Dec 31, 2014 Dec 31, 2013

k€ k€ k€ k€

Building Materials Business Unit

CGU North West Europe 91,500 91,500 39,000 39,000CGU Middle West Europe/Scandinavia 42,804 42,774 61,105 61,100CGU South West Europe 19,399 19,399 20,700 20,700CGU Central East Europe 67,527 68,068 29,471 29,752CGU North East Europe 5,216 5,323 25,093 25,811CGU Dry Lining 40,670 40,670 12,700 12,700

CGU Lime 65,752 65,870

Others ** 497 799 37,174 37,444

Total 333,365 334,403 225,243 226,507

* 2013 adjusted for Scandinavia

** All in Building Materials business unit. 2013 adjusted for Scandinavia

Selected intangible assets of

significant CGUs

Goodwill Trademarks

Associates are valued using the equity method pursuant to IAS 28. Beginning with the

historical cost at the time of acquisition of the shares, the respective carrying amount of the

investment is increased or decreased by any changes in the attributable equity of the

investment, regardless of their impact on profit or loss. The goodwill included in the carrying

amounts of the investments, determined in accordance with the policies applying to fully

consolidated subsidiaries, is not subject to amortization. An impairment test is carried out if

there is any indication that the total carrying amount of the investment may be impaired.

In addition to loans, financial assets consist of investments and securities.

Non-current and current financial assets include claims against Xella’s former shareholder

Haniel which were agreed on by the buyer and seller during the acquisition of the Xella Group in

2008. These claims against Haniel relate to hold-harmless agreements. Therefore Xella can

expect that expenditures required to settle the respective provisions will be settled by the former


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shareholder. According to IFRS 3 / IAS 37 the potential reimbursements are treated as separate

assets.

Upon initial recognition, loans are recognized at fair value plus the incidental costs of the

transaction and subsequently at amortized cost by applying the effective interest rate method.

Pursuant to IAS 39, investments and securities are categorized as those that are available for

sale, those that are valued at fair value through profit or loss and those that are held to maturity.

The relevant category is determined upon acquisition and reviewed on each balance sheet

date. Purchases and sales of investments and securities in all categories of financial assets are

recognized on their settlement date.

Financial assets in the category available for sale are initially measured at fair value plus

transaction costs and subsequently at their respective fair value on balance sheet date. The

resulting unrealized gains and losses are recorded directly in equity taking deferred taxes into

account. If there is no listed market price and fair value cannot be reliably determined, the

assets are recognized at cost. If there are indications of an impairment, they are written down

through profit or loss. If the reasons for an impairment no longer exist, the asset is written up to

fair value. For equity instruments, the adjustment is posted to other comprehensive income

without affecting earnings. For debt instruments, the adjustment is posted to profit or loss,

provided the criteria in IAS 39 are met. When the asset is sold, the adjustments previously

recorded in equity are released to profit or loss.

Financial assets in the category of fair value through profit or loss are valued using the mark-to-

market method on balance sheet date. Any transaction costs are charged to profit and loss

when posted. Fluctuations in fair value are recognized directly in the Consolidated Statement of

Income.

Financial assets in the held to maturity category are initially measured at fair value plus

transaction costs and subsequently at amortized costs on balance sheet date using the effective

interest rate method. If there are objective indications of an impairment, the assets may be

written down to their lower present value on the basis of the original effective interest rate.

The following cash and cash equivalents are recorded in the Consolidated Statement of

Financial Position: cash on hand, checks, bank deposits and funds in transit.

Inventories are recognized at cost. In addition to materials and direct production costs,

production-related portions of the necessary materials and production overheads as well as the

depreciation expense attributable to property, plant and equipment is included. If historical cost

is higher on closing date than net realizable value, inventories are written down to the latter.

Depending on the circumstances of the industry, different cost methods are applied to measure


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the consumption of inventories. The weighted average method is most commonly used by the

Xella Group.

CO2 emission certificates which are purchased as well as allowances allocated free of charge

are stated at lower of cost or fair value. A provision is recognized to cover the obligation to

deliver CO2 emission allowances to the respective authorities; this provision is measured at the

carrying amount of the CO2 allowances capitalized for this purpose. If a portion of the obligation

is not covered with the available allowances, the provision for this portion is measured using the

market price of the emission allowances on the balance sheet date.

Trade receivables, receivables from investments and other assets that qualify as loans and

receivables are measured at fair value upon initial recognition and thereafter measured at

amortized cost. Appropriate allowances are established for any existing risks.

Long-term construction contracts are measured in accordance with the percentage-of-

completion method. This involves recognizing sales and expenses associated with long-term

construction contracts on the basis of the degree to which the contract has been completed.

The degree of completion is measured as the ratio of the costs already incurred by the balance

sheet date in proportion to the total estimated costs of the contract (“cost to cost method”). If the

result of a long-term construction contract cannot be determined reliably, sales are only

recognized at the amount of the contract costs incurred (“zero profit method”). Losses on

customer-specific long-term construction contracts are posted immediately in the period in

which the loss becomes apparent regardless of the percentage of completion. Borrowing costs

that are directly attributable to the production of a qualifying asset are recognized as part of the

cost of that asset by the Xella Group.

Tax receivables and tax liabilities are measured at the amount expected to be received or paid

to the tax authorities. Long-term tax receivables are recognized at net present value.

Derivative financial instruments such as forward contracts, options and swaps are used

solely to hedge foreign currency exposure and interest exposure.

Financial instruments are accounted for as of the settlement date for both sales and purchases.

Pursuant to IAS 39, all derivative financial instruments are accounted for at fair value

irrespective of the purpose or intention for which they were concluded. Changes in the fair value

of the derivative financial instruments for which hedge accounting is used are either disclosed in

net interest (fair value hedge) or, in the case of a cash flow hedge or net investment hedge, in

equity under other comprehensive income, taking deferred taxes into account.

Derivatives are currently solely used in order to hedge against future cash flow risks originating

from existing underlying or planned transactions. None of the existing derivative transactions


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are accounted for under IFRS hedge accounting. All changes in the market value of derivative

financial instruments are posted immediately in full to profit or loss.

Non-current assets and groups of assets are categorized as held for sale when the carrying

amount of an operation will be recovered principally through a sales transaction and not through

continuing use. This condition is deemed to have been fulfilled if sale is highly probable, the

asset or disposal group is available for immediate sale and it is expected that sale will occur

within one year of allocation to the category. Assets and disposal groups which are classified as

held for sale are no longer written off systematically but are carried at the lower of carrying

amount and fair value less the costs to sell. The assets and disposal groups categorized as held

for sale and their related liabilities (disposal groups) are reported in the Consolidated Statement

of Financial Position separately from other assets and liabilities, each in a separate item under

current items. If the disposal group is a significant operation, the result of the discontinued

operation is reported separately in the Statement of Income. The result of such discontinued

operations consists of the result of the valuation mentioned above, the current result of the

operation and the gain or loss upon sale. The Statement of Income from the prior year is

adjusted accordingly. The main groups of assets and liabilities that are classified as held for

sale and the result from discontinued operations are explained separately in the notes if the

criteria are met.

Deferred tax assets and deferred tax liabilities are recognized for all temporary differences

between the tax base of the individual entities in the Group and the IFRS Consolidated

Statement of Financial Position – with the exception of goodwill that cannot be recognized for

tax purposes – and for tax losses carried forward. Deferred tax assets were only recognized for

the unused tax losses to the extent that their utilization is sufficiently certain. Deferred taxes are

determined on the basis of the tax rates which, under the current legislation, will apply in future.

Deferred taxes are netted in accordance with IAS 12.

Provisions for pensions and similar obligations are determined using the actuarial projected

unit credit method in accordance with IAS 19 revised. This method involves considering the

biometric parameters and the respective long-term interest rates on the capital markets as well

as the latest assumptions on future salary and pension increases. Plan assets established to

cover the pension obligations are deducted from pension provisions. Remeasurements are

posted to other comprehensive income. Past service costs including curtailments are to be

recognized immediately within staff expenses as they occur. Service costs are also shown

within staff expenses. A uniform, market-based discount rate is applied to both the defined

benefit liability as well as any corresponding plan asset (‘net interest approach’). The net

interest expenses are reported within the financial result.


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In accordance with IAS 19.83 the discount rate should be determined with reference to the

market yield on high quality corporate bonds. As at December 31, 2013, Xella used the “Mercer

Yield Curve” as a reference. As at December 31, 2014 Xella used the “Mercer Yield Curve”

enlarged by AA collateralized bonds as a more reliable point of reference for the market yield on

high quality corporate bonds for the Euro area.

This change of accounting estimate is also considered appropriate in order to fulfil the

requirement of a deep market in accordance with IAS 19.86. Therefore, the “Mercer Yield

Curve” applied as at December 31, 2013 enlarged by AA collateralized bonds as at

December 31, 2014 is used. For the relevant durations the discount rate increased by approx.

0.1% on average due to the application of the new approach. This results in a defined benefit

liability as at December 31, 2014 which is 5,686 k€ lower compared to the previous approach.

We do not expect significant effects on the service cost and net interest cost.

With the exception of the other employee-related provisions calculated in accordance with IAS

19, all other provisions are recognized in accordance with IAS 37 where there is a legal or

constructive obligation to a third party based on a past event. The flow of economic benefits

required to settle the obligation must be probable and reliably measurable. Significant

provisions with a residual term of more than one year are discounted at market interest rates

which reflect the risk and period until the obligation is met.

With the exception of derivative financial instruments, liabilities are initially recognized at fair

value less transaction costs and subsequently measured at amortized cost using the effective

interest rate method. Changes in contractual stipulations regarding repayments, considerations,

and interest rates lead to a recalculation of the carrying amount. The restated carrying amount

is equal to the present value computed at the original effective interest rate. The respective

present value changes are recognized in profit or loss as income or expense. There are no

liabilities held for trading according to IAS 39 except for the market value of derivative financial

instruments. Liabilities from finance leases are measured at the net present value of the future

minimum lease payments using the interest rate implicit in the lease and taking account of any

repayments made in the meantime.

Foreign currency liabilities are translated using the closing rate.

Sales comprise the proceeds from the sale of goods and services, less discounts and rebates.

Sales are recognized upon the transfer of risk to the customer unless they are recognized using

the percentage of completion method or zero-profit method under IAS 11. Service sales mainly

include the construction business of the Dutch entities in the Building Materials Business Unit.

Other income is recorded if it is likely that there will be a flow of economic resources to the

entity and this amount can be reliably determined.


23 of 81

Pursuant to IAS 20, government grants are only recognized at their fair value if there is

reasonable assurance that the conditions attached to them will be met and they will be

collected. Grants to cover expenses are posted through profit or loss and offset in the period in

which the expenses are incurred for which the grants were made. Investment grants relating to

property, plant and equipment are deducted from the acquisition cost of the corresponding

assets. Government tax grants are shown as non-current deferred income and are credited to

the Statement of Income on a straight-line basis over the expected useful lives of the related

assets.

The preparation of financial statements in accordance with IFRS requires the use of estimates

and assumptions that affect the reported amounts of assets and liabilities, the disclosure of

contingent assets and liabilities at the date of the financial statements and the reported amounts

of sales, income and expenses during the relevant period. Although these estimates and

assumptions are based on management’s best knowledge of current events and circumstances,

the actual results ultimately may differ from those estimates and assumptions. We evaluate

such estimates and assumptions on an ongoing basis based upon historical results and

experience, in consultation with experts and using other methods we consider reasonable in the

particular circumstances, as well as our forecasts regarding future changes. Estimates and

assumptions are particularly necessary for the measurement of property, plant and equipment,

lime quarries and intangible assets, such as trademarks and goodwill as well as for the

measurement of deferred taxes and warranty provisions. The Group is subject to income taxes

in numerous jurisdictions. Significant judgment is required in determining the worldwide

provision for income taxes. There are many transactions and calculations for which the ultimate

tax determination is uncertain. The Group recognizes liabilities for anticipated tax audit issues

based on estimates of whether additional taxes will be due. Where the final outcome of these

matters is different from the amounts that were originally recorded, such differences will impact

the current and deferred income tax assets and liabilities in the period in which such

determination is made. Contingencies in respect of legal matters are subject to many

uncertainties and the outcome of individual matters is not predictable with assurance.

Significant judgment is required in assessing probability and making estimates in respect of

contingencies, and the Group’s final liability may ultimately be materially different. The Group’s

total liability in respect of litigation is determined on a case-by-case basis and represents an

estimate of probable losses after considering, among other factors, the nature of the claim and

its underlying facts, the progress of each case, the Group’s experience and the experience of

others in similar cases, and the opinions and views of legal counsel. Predicting the outcome of

the Group’s litigation matters is inherently difficult.


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Purchase price allocations are an integral part for the accounting of business combinations in

accordance with IFRS which require significant management judgment and the use of

estimates. Beyond the determination of fair values and useful lives for property, plant and

equipment, the measurement of provisions for pensions, other provisions and an

indemnification receivable against the former shareholder, particularly the measurement of

intangible assets and deferred taxes require a substantial degree of management estimates and

assumptions.

Upon the acquisition of the Xella Group in 2008, certain brands were identified with indefinite

lives and the difference between the purchase price and net assets acquired measured at fair

value was recorded as goodwill. In subsequent periods, brands and goodwill are tested for

impairment on an annual basis or whenever events or changes in circumstances indicate that

brands or goodwill might be impaired. An impairment charge is recognized if the carrying

amounts of brands or goodwill exceed the recoverable amounts. The future cash flows used to

determine the recoverable amounts of brand and goodwill are based on current business

expectations. Changes in future projected cash flows and discount rates applied may lead to

impairment charges in future periods.

Deferred tax assets and liabilities under IFRS are recognized for temporary differences between

the carrying amounts in the consolidated balance sheet and the tax base of respective assets

and liabilities as well as on tax losses carried forward. Significant assumptions may include the

probability of sufficient future taxable income being available to realize deferred tax assets

recognized. If actual tax laws that would impose restrictions on the realization of the deferred

tax assets should occur or there would not be sufficient taxable income available in the future,

an adjustment to the recorded amount of deferred tax assets would affect the Consolidated

Statement of Income.

Shares in assets and liabilities whose residual terms are less than one year are reported under

current assets on principle.

New International Financial Reporting Standards and Interpretations

Application of issued and effective IAS/IFRS and IFRIC in financial year 2014

These Consolidated Financial Statements have been prepared in accordance with International

Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board

(IASB) and accompanying interpretations issued by the IFRS Interpretations Committee (IFRS-

IC) as adopted by the EU.

The following standards have been adopted by the group for the first time for the financial year

beginning on 1 January 2014 and have a material impact on the group:


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IFRS 10, Consolidated Financial Statements, establishes a new definition of control as the

determining factor in whether an entity should be included within the consolidated financial

statements of the parent company. The standard provides additional guidance to assist in the

determination of control where this is difficult to assess, inter alia by providing detailed

prescriptive guidance on substantial rights. IFRS 10 supersedes the existing IAS 27 and SIC-12

requirements for consolidation, though without significantly changing the overall rationale.

IFRS 11, Joint Arrangements, sets out requirements for the classification and accounting of

joint ventures and joint operations by introducing new criteria. IFRS 11 supersedes IAS 31

based on which application of the proportionate consolidation of legal entity joint ventures will

no longer be permitted. However, classification of certain arrangements as joint operations may

lead to the recognition of rights and obligations and corresponding income and expenses in the

consolidated financial statements of the venture.

IFRS 12, Disclosures of Interests in other Entities, includes disclosure requirements for all

forms of interests in other entities, including joint arrangements, associates, special purpose

entities and other off balance sheet vehicles.

IFRS 10, 11 and 12 were amended subsequently (Transition Guidance). In connection with the

new IFRS 10, 11 and 12 IAS 28, ‘Associates and Joint Ventures’ was revised.

Amendment to IAS 19, ‘Defined benefit plans: Employee contributions’, clarifying how an entity

should account for contributions made by employees or third parties that are linked to services

to defined benefit plans, based on whether these contributions are dependent on the number of

years of service provided by the employee. The amendment did not have a significant effect on

the group financial statements.

Amendment to IAS 32, ‘Financial instruments: Presentation’, on offsetting financial assets and

financial liabilities. This amendment clarifies that the right of set-off must not be contingent on a

future event. It must also be legally enforceable for all counterparties in the normal course of

business, as well as in the event of default, insolvency or bankruptcy. The amendment also

considers settlement mechanisms. The amendment did not have a significant effect on the

group financial statements.

Amendment to IAS 36, ‘Impairment of assets’, on the recoverable amount disclosures for non-

financial assets. This amendment removed certain disclosures of the recoverable amount of

CGUs which had been included in IAS 36 by the issue of IFRS 13.

Amendment to IAS 39, ‘Financial instruments: Recognition and measurement on the novation

of derivatives and the continuation of hedge accounting. This amendment considers legislative

changes to ‘over-the-counter’ derivatives and the establishment of central counterparties. Under

IAS 39 novation of derivatives to central counterparties would result in discontinuance of hedge


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accounting. The amendment provides relief from discontinuing hedge accounting when novation

of a hedging instrument meets specified criteria. The group has applied the amendment and

there has been no significant impact on the group financial statements as a result.

Other standards, amendments and interpretations which are effective for the financial year

beginning on 1 January 2014 are not material to the group.

Issued but not yet effective IFRS

A number of new standards and amendments to standards and interpretations are effective for

annual periods beginning after 1 January 2014, and have not been applied in preparing these

consolidated financial statements:

IFRS 9, ‘Financial instruments’, addresses the classification, measurement and recognition of

financial assets and financial liabilities. The complete version of IFRS 9 was issued in July

2014. It replaces the guidance in IAS 39 that relates to the classification and measurement of

financial instruments. IFRS 9 retains but simplifies the mixed measurement model and

establishes three primary measurement categories for financial assets: amortized cost, fair

value through OCI and fair value through P&L. The basis of classification depends on the

entity’s business model and the contractual cash flow characteristics of the financial asset.

Investments in equity instruments are required to be measured at fair value through profit or

loss with the irrevocable option at inception to present changes in fair value in OCI not

recycling. There is now a new expected credit losses model that replaces the incurred loss

impairment model used in IAS 39. For financial liabilities there were no changes to classification

and measurement except for the recognition of changes in own credit risk in other

comprehensive income, for liabilities designated at fair value through profit or loss. IFRS 9

relaxes the requirements for hedge effectiveness by replacing the bright line hedge

effectiveness tests. It requires an economic relationship between the hedged item and hedging

instrument and for the ‘hedged ratio’ to be the same as the one management actually use for

risk management purposes. Contemporaneous documentation is still required but is different to

that currently prepared under IAS 39. The standard is effective for accounting periods beginning

on or after 1 January 2018. Early adoption is permitted. The group is yet to assess IFRS 9’s full

impact.

IFRS 15, ‘Revenue from contracts with customers’, deals with revenue recognition and

establishes principles for reporting useful information to users of financial statements about the

nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s

contracts with customers. Revenue is recognized when a customer obtains control of a good or

service and thus has the ability to direct the use and obtain the benefits from the good or

service. The standard replaces IAS 18 ‘Revenue’ and IAS 11 ‘Construction contracts’ and


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related interpretations. The standard is effective for reporting periods beginning on or after 1

January 2017. Earlier application is permitted. The group is assessing the impact of IFRS 15.


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B. Notes to the Consolidated Statement of Financial Position

1. Property, Plant and Equipment

Property, plant and equipment developed as follows:

Land & buildings Land for

exploitation

Plant &

machinery

Vehicles &

equipment

Assets under

construction &

prepayments

Property, plant &

equipment

k€ k€ k€ k€ k€ k€

As at January 1st 443,802 223,511 854,712 46,563 25,590 1,594,178

Currency adjustment (10,521) (1) (5,057) (793) (1,792) (18,164)

Addition 1,609 35,085 4,890 22,831 64,415

Disposal (2,122) (212) (3,524) (1,460) (1) (7,319)

Acquisitions/ Divestures of businesses (1,337) (292) (16) (1) (1,646)Transfer 2,946 41 15,811 1,958 (20,940) (182)

Accumulated costs as at December 31 434,377 223,339 896,735 51,142 25,689 1,631,282

As at January 1st (88,295) (11,307) (375,921) (26,225) (945) (502,693)

Currency adjustment 1,465 2,726 513 55 4,759

Depreciation/ Amortisation (15,401) (2,348) (84,395) (6,062) 1 (108,205)

Impairment (4,024) (8,338) (130) (59) (12,551)

Reversal of impairment 6 25 31

Disposal 1,554 185 3,095 1,304 1 6,139

Acquisitions/ Divestures of businesses 377 245 4 626Transfer 100 129 (59) (262) (92)

Accumulated depreciation as at December 31 (104,218) (13,470) (462,434) (30,655) (1,208) (611,986)

Net book value as at January 1st 355,507 212,204 478,791 20,338 24,645 1,091,485

Net book value as at December 31 330,159 209,869 434,301 20,487 24,480 1,019,296

Thereof finance lease assets: 3,479 1,508 165 5,152

Land & buildings Land for

exploitation

Plant &

machinery

Vehicles &

equipment

Assets under

construction &

prepayments

Property, plant &

equipment

k€ k€ k€ k€ k€ k€

As at January 1st 441,307 223,546 761,831 42,118 49,019 1,517,821

Currency adjustment (7,273) (7,771) (765) (400) (16,209)

Addition 2,389 46,059 4,057 19,923 72,428

Disposal (595) (72) (1,379) (1,668) (22) (3,736)

Acquisitions/ Divestures of businesses (190) (190)

Transfer 7,974 37 32,348 2,821 (42,930) 250Reclassification spare parts from inventories 23,814 23,814

Accumulated costs as at December 31 443,802 223,511 854,712 46,563 25,590 1,594,178

As at January 1st (74,048) (8,679) (296,522) (21,532) (740) (401,521)

Currency adjustment 1,486 3,150 473 30 5,139

Depreciation/ Amortisation (16,229) (2,639) (83,015) (6,151) (108,034)

Impairment (641) (6) (647)

Reversal of impairment 6 373 379

Disposal 336 41 1,174 1,531 3,082

Divestures of businesses 190 190

Transfer 154 (30) 60 (540) (235) (591)Reclassification spare parts from inventories (690) (690)

Accumulated depreciation as at December 31 (88,295) (11,307) (375,921) (26,225) (944) (502,693)

Net book value as at January 1st 367,259 214,867 465,309 20,586 48,279 1,116,300

Net book value as at December 31 355,507 212,204 478,791 20,338 24,645 1,091,485

Thereof finance lease assets: 3,637 1,942 121 5,700

Statement of Property, Plant and Equipment 2014

Statement of Property, Plant and Equipment 2013

In 2014 there were no material additions or disposals due to finance leases. The accumulated

depreciation on assets recognized under finance leases amounts to 6,362 k€ (PY: 5,691 k€).

The carrying amount of property, plant and equipment used to secure the financial liabilities of

the Group amounts to 399,326 k€ (PY: 416,928 k€).

The purchase obligations for property, plant and equipment amount to 5,753 k€ (PY: 3,439 k€).

Substantial additions to property, plant and equipment mainly result from plant & equipment,

particularly with regard to further investments in the Ecoloop reactor (2,278 k€), to an addition to


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capacity in the Russian Building Materials plant (613 k€), and to the acquisition of heavy wheel

loaders and other large vehicles (1,879 k€) in the Lime segment.

The total carrying amount shown in assets under construction and prepayments as at

December 31, 2014 refers to several smaller items. An amount of 3,172 k€ relates to various

replacement capital expenditure for the Fermacell Münchehof plant. Furthermore, after the

refitting of a new burner system last year, the integration of the block-type thermal power station

and further replacement capital expenditures for Fermacell GmbH in the amount of 1,162 k€

were performed.

Impairments on property, plant & equipment (in total 12,551 k€) mainly refer to land and

buildings as well as plant and machinery (BU Building Materials). The weak market

development in France led to a partial closure of a French plant resulting in an impairment of

plant, machinery, vehicles and equipment of 3,969 k€. Negative impacts on our business in

Mexico led to an impairment of property, plant & equipment in the amount of 7,308 k€. Due to

lower fair value for a closed plant in the Czech Republic an impairment of 850 k€ was

necessary. Remaining impairments for property, plant & equipment of 424 k€ are allocated to

several companies within BU Building Materials. All impairment charges are shown as

depreciation & amortization expenses in the Consolidated Statement of Income. All impairments

were based on fair values less costs of disposal with the exemption of the impairment on the

Mexican production facilities based on a value-in-use calculation. Fair values less costs of

disposal were calculated based on inputs that were derived principally from observable data of

other markets. The discount rate used for the valuation of the Mexican plant according to IAS

36.130 (g) was 8.4% after tax.

In the reporting period, no borrowing costs were capitalized (PY: 534 k€). Due to the fact that no

direct financing is allocable to the investments the respective interest rates derived from the

Group’s average borrowing interest rate of the current period. In the prior year, this rate

amounted to 6.4%.


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2. Intangible Assets

Intangible assets developed as follows:

Goodwill Customer lists/

contracts

Development

expenses

Trademarks Software

licences

Other

intangible

assets

Prepayments

on intangible

assets

Intangible

assets

k€ k€ k€ k€ k€ k€ k€ k€

As at January 1st 344,152 14,825 8,368 226,507 34,761 7,464 80 636,157

Currency adjustment (1,026) (212) (5) (1,264) (276) 7 (1) (2,777)

Addition 4,811 782 38 4 5,635

Disposal (38) (14) (52)

Acquisitions/ Divestures of businesses (1,293) (31) 1 (1,323)

Transfer 366 (2) 364

Accumulated costs as at December 31 341,833 14,613 13,174 225,243 35,564 7,496 81 638,004

As at January 1st (9,749) (8,762) (2,002) (30,867) (529) (75) (51,984)

Currency adjustment 216 178 5 229 (9) 619

Depreciation/ Amortisation (1,295) (489) (2,149) (94) (4,027)

Impairment (65) (2,722) (2,787)

Disposal 37 7 44

Acquisitions/ Divestures of businesses 1,065 31 1,096

Accumulated depreciation as at December 31 (8,468) (9,879) (2,486) (32,784) (3,347) (75) (57,039)

Net book value as at January 1st 334,403 6,063 6,366 226,507 3,894 6,935 5 584,173

Net book value as at December 31 333,365 4,734 10,688 225,243 2,780 4,149 6 580,965

Statement of Intangible Assets 2014

Goodwill Customer lists/

contracts

Development

expenses

Trademarks Software

licences

Other

intangible

assets

Prepayments

on intangible

assets

Intangible

assets

k€ k€ k€ k€ k€ k€ k€ k€

As at January 1st 349,733 15,365 1,635 229,738 33,725 7,405 1,835 639,436

Currency adjustment (5,545) (540) (6) (3,231) (303) (8) (3) (9,636)

Addition 5,096 1,380 66 14 6,556

Disposal (476) (476)

Acquisitions/ Divestures of businesses (36) (3) (39)

Transfer 1,643 438 1 (1,766) 316

Accumulated costs as at December 31 344,152 14,825 8,368 226,507 34,761 7,464 80 636,157

As at January 1st (8,755) (7,372) (1,119) (27,275) (404) (75) (45,000)

Currency adjustment 71 188 7 234 7 507

Depreciation/ Amortisation (1,388) (148) (5,068) (132) (6,736)

Impairment (1,065) (190) (1,255)

Disposal 472 472

Acquisitions/ Divestures of businesses 3 3

Transfer (742) 767 25

Accumulated depreciation as at December 31 (9,749) (8,762) (2,002) (30,867) (529) (75) (51,984)

Net book value as at January 1st 340,978 7,993 516 229,738 6,450 7,001 1,760 594,436

Net book value as at December 31 334,403 6,063 6,366 226,507 3,894 6,935 5 584,173

Statement of Intangible Assets 2013

A disposal of goodwill (1,293 k€ net of 1,065 k€ prior year impairment) results mainly from the

deconsolidation of Baoding Xella Xiangfeng Calcium Silicate New Building Materials Co., Ltd.,

Baoding/ China in 2014 which was part of the Building Materials segment.

In 2014 the addition to development expenses mainly refers to a project to standardize the ERP

systems and processes in the Building Materials Business Unit.

As in the prior year, there were no purchase obligations for intangible assets.

Intangible assets that serve as collateral for certain financial liabilities of the Group amounted to

64,235 k€ (PY: 65,451 k€).

Other intangible assets include non-current CO2-certificates of 4,026 k€ (PY: 6,733 k€).

Following lower fair values less costs to sell CO2-certificates were impaired in the amount of

2,707 k€ based on quoted market prices. Remaining impairments for intangible assets of 80 k€

derive from several companies within BU Building Materials.


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3. Investments in Associates (At Equity)

2014 2013

k€ k€

As at January 1st 15,961 15,753Reversals of impairments 857Proportional share of net income/ loss 3,872 2,076Dividends (1,409) (1,147)Proportional share of Other Comprehensive Income 399 (1,578)Net book value as at December 31 18,823 15,961

Investments in associates (at equity)

Other Comprehensive Income represents the reduction of the at-equity book value of Türk

Ytong Sanayi A. Ş., Istanbul /Turkey due to foreign exchange effects on the statements of

financial position and of income of the company.

The following entities are valued using the equity method pursuant to IAS 28.

Dec 31, 2014 Dec 31, 2013

Türk Ytong Sanayi A.Ş., Istanbul, TurkeyBuilding Materials

25.41 25.41

Kalksandsteinwerk Rückersdorf GmbH & Co. KG, Rückersdorf, Germany

Building Materials

50.00 50.00

Kalksandsteinwerk Wendeburg, Radmacher GmbH & Co. KG, Wendeburg, Germany

Building Materials

28.00 28.00

Shandong Xella Gather Calcium Silicate New Building Materials Co., Ltd., Tengzhou, China

Building Materials

40.00 40.00

Proportion of

ownership

held

Proportion of

ownership

held

Business unitName of investment, principal place of business /

country of incorporation of the investment

All investments in associates (at equity) manufacture or market building materials.

The carrying amounts of their non-current and current assets and liabilities, sales, net results

and other comprehensive income were as follows:

k€ k€ k€ k€ k€ k€ k€ k€

Türk Ytong Sanayi A.Ş. 30,467 38,844 3,228 20,695 60,196 11,382 393 11,775Kalksandsteinwerk Rückersdorf GmbH & Co. KG 1,415 1,991 28 1,431 4,812 1,202 1,202Kalksandsteinwerk Wendeburg, Radmacher GmbH & Co. KG

5,869 5,673 4,476 12,916 216 216

Shandong Xella Gather Calcium Silicate New Building Materials Co.

8,520 8,033 13,057 10,990 (1,286) (1,286)

k€ k€ k€ k€ k€ k€ k€ k€

Türk Ytong Sanayi A.Ş. 20,411 30,029 2,698 12,961 66,451 12,323 (1,555) 10,768Kalksandsteinwerk Rückersdorf GmbH & Co. KG 1,523 1,863 605 1,344 4,812 743 743Kalksandsteinwerk Wendeburg, Radmacher GmbH & Co. KG

4,973 4,723 2,666 12,805 575 575


7,990 5,274 8,762 8,605 (1,979) (1,979)

Dec 31, 2013

Non-current

liabilities

Non-current

assets

Other

comprehen-

sive income

(+/-)

Total

comprehen-

sive income

(+/-)

Current

liabilitiesSales

Net income

(+) / loss (-)

from

continuing

operations

Dec 31, 2014

Name of investment

Current

assets

Name of investment

Non-current

assets

Current

assets

Non-current

liabilities

Current

liabilitiesSales

Net income

(+) / loss (-)

from

continuing

operations

Other

comprehen-

sive income

(+/-)

Total

comprehen-

sive income

(+/-)

The figures in the table above show the companies’ total numbers rather than Xella’s share.


32 of 81

The following table shows the dividends received from the companies and the reconciliation of

the companies’ net equity to their book values.

k€ k€ k€ k€ k€ k€ k€ k€

Türk Ytong Sanayi A.Ş. 1,012 45,388 11,533 (326) 11,207Kalksandsteinwerk Rückersdorf GmbH & Co. KG 346 1,947 974 3,030 4,004Kalksandsteinwerk Wendeburg, Radmacher GmbH & Co. KG

51 7,066 1,978 1,634 3,612


3,496 1,398 (1,398) 0 514 514

1,409 18,823

k€ k€ k€ k€ k€ k€ k€ k€

Türk Ytong Sanayi A.Ş. 664 34,781 8,837 (228) 8,609Kalksandsteinwerk Rückersdorf GmbH & Co. KG 363 1,437 720 3,030 3,750Kalksandsteinwerk Wendeburg, Radmacher GmbH & Co. KG

120 7,030 1,968 1,634 3,602


4,502 1,801 (1,801) (0)

1,147 15,961

Dec 31, 2014

Dec 31, 2013

Unrecog-

nized share

of loss for

the period

Cumulative

unrecog-

nized share

of loss

Other

adjustments

Name of investment

Dividends

receivedNet assets

Share in net

assets

Name of investment

Dividends

receivedNet assets

Share in net

assetsBook value

Cumulative

unrecog-

nized share

of loss

GoodwillOther

adjustmentsBook value

Unrecog-

nized share

of loss for

the period

Goodwill

2013 numbers are final while 2014 figures are preliminary. For Kalksandsteinwerk Wendeburg,

Radmacher GmbH & Co. KG no preliminary figures were yet available; therefore, 2014 data are

based on the 2013 financial statements. In the reporting year, the proportional loss of Shandong

Xella Gather Calcium Silicate New Building Materials Co., Ltd., Tengzhou /China was not

recognized as Xella is not obliged to bear such losses and no additional contribution

requirement exists. Other adjustments of the company include the difference between the

proportional share of net equity and the impaired book value. Other adjustments of Türk Ytong

Sanayi A. Ş., Istanbul /Turkey include dividends not proportional to the proportion of ownership

held as well as foreign exchange differences between dividends received and the proportional

share in net income.

Currently, no restrictions to pay dividends to the Group or to repay loans or advances made by

the Group are apparent.

4. Financial Assets

Dec 31, 2014 Dec. 31, 2013

k€ k€

Loans 4,321 3,476Other investments 12,101 12,442Claims against former shareholder 38,597 61,385Total 55,019 77,303

Financial assets (non-current)

Non-current financial assets include the non-current part of a receivable carried by XI (BM)

Holdings GmbH, Duisburg / Germany against the former shareholder, Franz Haniel & Cie.

GmbH (“Haniel”), Duisburg / Germany of 38,597 k€ (PY: 61,385 k€). This receivable represents

a number of potential claims against Haniel which were agreed on by the buyer and seller


33 of 81

during the sale of the Xella Group. They relate to hold-harmless agreements for certain tax

obligations, warranty obligations and other risks. The reduction is mainly due to a release of

corresponding provisions. Regarding the receivables attributable to warranty claims for possibly

damaged buildings please refer to note B. 12.

Apart from the non-current portion of the potential claims against former shareholder

representing indemnity receivables from Franz Haniel & Cie. GmbH the non-current financial

assets mainly consist of shares in entities where no significant influence can be exercised.

These assets classified as available-for-sale financial assets amount to 12,101 k€

(PY: 12,442 k€). The fair value of these unquoted equity instruments could not be reliably

measured. Therefore they were recognized at cost. The available-for-sale financial assets

primarily consist of shares in Baustoffwerke Münster-Osnabrück GmbH & Co. KG, Osnabrück /

Germany in the amount of 7,400 k€ (PY: 7,400 k€). Contractual requirements prevent a

significant influence on this investment. In the BU Lime the investment in “DSZ” OOO (BSW),

Tovarkovo /Russia was impaired by 398 k€ (PY: 1,424 k€) due to lower net results of the

company. The net book value of this investment amounted to 1,725 k€ as at December 31,

2014. In 2012 this investment was reclassified from investments in associates (at equity) to

available-for-sale investments due to a lack of significant influence.

The current financial assets are as follows:

Dec 31, 2014 Dec. 31, 2013

k€ k€

Derivatives 780 1,825Receivables from associates (at equity) (current) 488 485Receivables from other investments (current) 8 6Receivables from shareholders and non-controlling interests (current) 1,418 1,321Claims against former shareholder 15,427 36,823Other financial assets 772 970Total 18,893 41,430

Financial assets (current)

The decrease of derivatives relates to foreign exchange forwards (1,036 k€). In the prior year

there was an increase of derivatives of 1,631 k€ related to foreign exchange forwards.

Receivables from associates (at equity) are receivables from unpaid dividends.

Receivables from shareholders and non-controlling interests refer to Xella International

Holdings S.à r.l., Luxembourg (196 k€, PY: 274 k€) and from non-controlling interests in

Kalksandsteinwerke Thörl & Meyer GmbH & Co. KG, Seevetal /Germany as well as Xella

Kalksandsteinwerk Griedel GmbH & Co KG, Butzbach-Griedel /Germany, Ecoloop GmbH,

Goslar /Germany and Xefin Lux S.C.A., Luxembourg (1,222 k€, PY: 1,047 k€).


34 of 81

Potential claims against the former shareholder represent indemnity receivables from Franz

Haniel & Cie. GmbH of 15,427 k€ (PY: 36,823 k€). This reduction is mainly due to a release of

corresponding provisions and payments received.

The allowance on financial assets remained unchanged to the prior year (888 k€).

5. Deferred Taxes

Deferred taxes are calculated at the respective local tax rates. Deferred taxes recognized on

temporary differences arising from consolidation entries are calculated using the Group’s tax

rate of 29.9 % (PY: 29.4 %).

The changes to the tax rates enacted at the balance sheet date have already been considered.

The income tax rates in the individual countries range between 10.0% and 37.9%.

The following table shows the deferred tax assets and liabilities derived from recognition and

measurement of differences of individual IFRS versus tax balance sheet items and from tax

losses carried forward:

Tax assets Tax liabilities Tax assets Tax liabilities

k€ k€ k€ k€

Non-current assets 7,668 168,294 2,998 174,753

Property, plant & equipment 6,532 125,725 2,863 130,149Intangible assets 29 42,196 43 44,317Investments in associates (at equity) 18 125 45 98Financial assets 1,038 248 47 189Trade and other receivables 51Current assets 2,445 3,963 2,794 4,193

Inventories 1,159 562 918 416Trade and other receivables 1,168 2,752 1,739 3,174Financial assets 18 649 14 603Deferred expenses 100 123Non-current liabilities 38,219 2,950 29,966 7,423

Financial liabilities 598 2,443 513 4,954Pension provisions and other provisions 37,532 464 29,358 2,417Deferred income 89 43 95 52Current liabilities 11,136 2,046 8,253 434

Financial liabilities 2,820 2,030 2,733 391Other provisions 7,779 11 4,932 36Acrued expenses 516 3 432 4Deferred income 21 2 156 3Deferred tax assets on losses carried forward 26,833 31,870

Offsetting (71,282) (71,282) (68,240) (68,240)

Book value 15,019 105,971 7,641 118,563

Deferred taxes Dec. 31, 2014 Dec. 31, 2013

Of these totals, deferred tax assets of 14,721 k€ (PY: 11,821 k€) and deferred tax liabilities of

15,897 k€ (PY: 18,177 k€) are likely to be realized within one year.

The relatively high deferred tax liabilities in comparison to deferred tax assets are generally due

to fair value adjustments of non-current assets associated with the acquisition of the Xella

Group at the end of August 2008.


35 of 81

Deferred tax assets on temporary differences were written down by allowances of 4,402 k€

(PY: 3,848 k€).

In the financial year 2014 deferred tax assets of 14,226 k€ (PY: 17,036 k€) were recognized for

14 (PY: 14) entities having made losses in the period under review. However, these unused tax

losses are expected to be utilized.

The maximum deferred tax that can be capitalized on tax losses carried forward is the

respective loss carry-forward multiplied by the applicable tax rate. The amount capitalized,

however, is further limited by the higher of the net liability from taxable temporary differences

and the taxable profit expected within a plan period of five years. The five-year period

corresponds to the business planning horizon of the Xella Group. Deferred taxes on tax loss

carry-forwards are calculated per company (or tax group), kind of income tax and competent

authority. A discount is made for risks inherent in estimating the tax bases of the plan years.

The expiry of tax loss carry-forwards in various countries is taken into account to the extent the

respective entity is not expected to have sufficient taxable profits (or sufficient taxable

temporary differences) before the unused tax losses expire.

The Group also carries unused tax losses for which no deferred tax assets were recognized as

it is not highly probable, from today’s perspective, that they will be realized.

< 5 years 5 - 10 years 11 - 15 years 15 - 20 years unlimited

k€ k€ k€ k€ k€ k€

Tax losses carried forward 13,765 12,148 577 31,948 170,894 229,332

Interest capping rule 309,623 309,623

< 5 years 5 - 10 years 11 - 15 years 15 - 20 years unlimited

k€ k€ k€ k€ k€ k€

Tax losses carried forward 16,808 24,582 34,490 134,995 210,875

Interest capping rule 246,752 246,752

Expiry date TotalDec. 31, 2014

Dec. 31, 2013 Expiry date Total

No deferred tax liabilities are recognized for profits retained by subsidiaries and other

comprehensive income from hedges of a net investment. Tax liabilities of 4,066 k€

(PY: 2,977 k€) would arise in the event of future profit distributions or a sale of the investment.


36 of 81

6. Inventories

Dec 31, 2014 Dec 31, 2013

k€ k€

Raw materials & supplies 38,718 39,898Work in progress 1,068 1,075Finished goods 92,612 91,873Merchandise 12,273 11,514Prepayments on inventories 675 742Total 145,739 145,102

Inventories

The allowances recognized on inventories developed as follows:

2014 2013

k€ k€

As at January 1st (2,567) (3,605)Currency adjustments (24) 52Additions (1,789) (1,435)Disposals 3Utilization 213 1,001Releases 646 730Transfers 93 690Book value as at December 31 (3,425) (2,567)

Allowance on Inventories

Raw materials and supplies include CO2 emission certificates. As of December 31, 2014, CO2

emission certificates amount to 393 k€ (PY: 203 k€).

Additions to allowances on inventories include additions posted by Xella Thermopierre S.A.

(1,226 k€; PY: 541 k€) as well as by other entities.

At the balance sheet date, inventories of 16,244 k€ (PY: 18,393 k€) were assigned as collateral

for certain financial liabilities.

7. Trade and Other Receivables

The balance of current trade and other receivables as at December 31, 2014 is shown in the

following table:

Dec 31, 2014 Dec 31, 2013

k€ k€

Trade receivables (current) 117,123 121,028Receivables from construction contracts 1,225 368Other receivables (current) 18,514 20,859Total 136,862 142,255

Trade and other receivables


37 of 81

Trade and other receivables of 56,267 k€ (PY: 55,200 k€) were assigned as collateral for

certain financial liabilities of the Group.

The current trade receivables slightly decreased by 3,905 k€ as compared to prior year.

The receivables from construction contracts refer to construction services in the Netherlands.

The increase by 857 k€ relates to construction sales not yet invoiced in the last weeks of the

year 2014.

Other receivables include, among others, VAT reimbursement claims in the amount of 5,838 k€

(PY: 6,787 k€) as well as mineral oil and energy tax reimbursement claims in the amount of

4,699 k€ (PY: 5,594 k€).

Allowances on current trade and other receivables developed as follows over the period:

2014 2013

k€ k€

As at January 1st (8,910) (9,156)Currency adjustments (57) 126Additions (2,731) (3,051)Disposals 9Utilization 1,758 2,066Releases 1,054 1,105Book value as at December 31 (8,877) (8,910)

Allowance on trade and other receivables

The bad debt allowances contain specific valuation allowances and portfolio-based allowances

for specific categories of receivables. As soon as a receivable becomes uncollectable, the

allowance account is utilized to write it off. Subsequent collections of bad debts are posted to

profit or loss.

Additions to allowances mainly derive from Germany, Czech Republic and Italy.

Releases of allowances predominantly derive from China, Belgium and the Netherlands.

Additions to allowances are reported under other operating and administrative expenses

(see note 18). The releases of allowances are posted to other operating income (see note 16).


38 of 81

The aging structure of trade receivables at the balance sheet date is presented below:

Total 0-3

months

3-6

months

6-12

months

>12

months

k€ k€ k€ k€ k€ k€ k€ k€

117,123 5,784 97,087 14,252 12,253 1,302 425 272

Total 0-3

months

3-6

months

6-12

months

>12

months

k€ k€ k€ k€ k€ k€ k€ k€

121,028 5,042 98,807 17,179 15,042 702 391 1,044

Total book value

of trade

receivables as at

Dec. 31, 2014

Receivables

reduced by

allowances

(overdue and

not overdue)

Receivables

not

reduced by

allowances

and

not overdue

Receivables not reduced by allowances but

overdue

Total book value

of trade

receivables as at

Dec. 31, 2013

Receivables

reduced by

allowances

(overdue and

not overdue)

Receivables

not

reduced by

allowances

and

not overdue

Receivables not reduced by allowances but

overdue

With regard to trade receivables not written down but overdue there is no indication that the

respective debtors will not be able to meet their payment obligations.

8. Cash and Cash Equivalents

The following table shows the composition of cash and cash equivalents:

Dec. 31, 2014 Dec. 31, 2013

k€ k€

Cash in hand 2,259 1,224Bank balances 120,506 105,976Total 122,765 107,200

Cash and cash equivalents

Cash and cash equivalents comprised cash in hand and bank balances with a short maturity.

At the balance sheet date, cash and cash equivalents of 86,439 k€ (PY: 73,231 k€) were

assigned as collateral for certain financial liabilities. Nevertheless, these pledged cash balances

are not restricted and available for operational purposes of the respective Xella Group

companies. Only an amount of 787 k€ was restricted for the use of the Group (PY: 1,299 k€).

In addition to the above mentioned cash balances as at December 31, 2014 the Xella Group

has committed and unutilized credit facilities from a bank syndicate amounting to 53,870 k€

(PY: 53,870 k€).


39 of 81

9. Equity

The subscribed capital was paid in cash and consists of 3,100,000 shares with a nominal value

of 0.01 € each.

Capital reserves include the premium paid by shareholders for share issues and other additional

paid-in capital. By resolution of the Management Board of March 5, 2009, Xella International

S.A., Luxembourg, decided to repay the non-interest bearing Preferred Equity Certificates

(PECs) of 97,346 k€ which were reported under liabilities as at December 31, 2008. According

to the redemption agreement dated March 5, 2009, Xella International Holdings S.à r.l.,

Luxembourg, Xella International S.A., Luxembourg and XI Management Beteiligungs GmbH &

Co. KG, Duisburg/ Germany agreed to increase the capital reserves of Xella International S.A.

by 97,346 k€. The capital increase was carried out at book value of the liability.

The translation reserves report the differences arising from translating assets and liabilities

carried by Group companies whose functional currency is not euro. In 2014 positive currency

adjustments of the equity related in particular to China amounting to 3,854 k€, Poland

amounting to 1,456 k€, Russia amounting to 1,094 k€ and other countries amounting to 575 k€.

Negative currency adjustments related to the Czech Republic amounting to 1,267 k€, Hungary

amounting to 1,421 k€, and the United States amounting to 1,458 k€ and other countries of 147

k€ led to a reduced Group equity.

The revaluation reserves also include changes in the fair value of available-for-sale financial

assets and of investments in associates due to foreign exchange effects. In addition, the

revaluation reserves include the fair value of prior net investment hedges and remeasurements

of defined benefit liabilities especially resulting from actuarial gains and losses.

The at-equity book value of Türk Ytong Sanayi A. Ş., Istanbul /Turkey was increased by 398 k€

(PY: -1,578 k€) due to foreign exchange effects which has been posted to Other

Comprehensive Income (OCI).

As at December 31, 2014 an amount of 2,688 k€ (PY: 2,688 k€) was posted to OCI related to a

net investment hedge which was concluded in 2009.

In 2014 OCI decreased in an amount of 31,360 k€ net as a result of remeasurements on

pension provisions due to a decrease of discount rates in that period. During the financial year

2013 remeasurements of defined benefit liabilities of 15,039 k€ led to an increase of OCI mainly

as a result of higher discount rates.


40 of 81

The total non-controlling interest for the period is 22,162 k€ (PY: 19,353 k€). For summarized

financial information for each subsidiary with non-controlling interests material to the Group

please refer to note 29. See also note 28 for transactions with non-controlling interests.

In the following entities material non-controlling interests are held:

Name and domicile of consolidated company with

significant non-controlling interests

Dec 31, 2014 Dec 31, 2013

Xefin Lux S.C.A., Luxembourg, LuxembourgShanghai Ytong Co., Ltd., Shanghai, China Building Materials 79.00 79.00Xella Baustoffwerke Rhein-Ruhr GmbH, Duisburg, Germany Building Materials 61.50 61.50Porenbetonwerk EUROPOR GmbH, Boxberg, Germany Building Materials 51.00 51.00VÁPENKA - VITOŠOV, s.r.o., Zabreh, Czech Republic Lime 75.00 75.00

Proportion of shares held

by the groupBusiness unit

Set out below is the summarized financial information for each subsidiary with non-controlling

interests significant to the group.

Name of consolidated company with significant non-controlling

interests

Non-current

assetsCurrent assets

Non-current

liabilities

Current

liabilities

Accumulated

non-controlling

interests

k€ k€ k€ k€ k€

Xefin Lux S.C.A., Luxembourg, Luxembourg 325,000 1,310 325,000 1,135 175Shanghai Ytong Co., Ltd., Shanghai, China 14,154 8,315 1,500 4,885 3,377Xella Baustoffwerke Rhein-Ruhr GmbH, Duisburg, Germany 20,674 11,292 4,742 8,555 7,187Porenbetonwerk EUROPOR GmbH, Boxberg, Germany 7,391 2,320 6,171 1,806 850VÁPENKA - VITOŠOV, s.r.o., Zabreh, Czech Republic 13,118 19,461 1,664 3,752 6,791

The information above is the amount before intercompany elimination according to IFRS year end financial statements.


interests

Non-current

assetsCurrent assets

Non-current

liabilities

Current

liabilities

Accumulated

non-controlling

interests

k€ k€ k€ k€ k€

Xefin Lux S.C.A., Luxembourg, Luxembourg 300,000 2,225 300,000 2,086 139Shanghai Ytong Co., Ltd., Shanghai, China 14,213 7,432 1,500 3,463 3,503Xella Baustoffwerke Rhein-Ruhr GmbH, Duisburg, Germany 25,386 11,721 4,556 18,264 5,500Porenbetonwerk EUROPOR GmbH, Boxberg, Germany 8,127 2,475 7,474 1,631 734VÁPENKA - VITOŠOV, s.r.o., Zabreh, Czech Republic 13,602 17,146 1,932 2,019 6,699


Dec 31, 2014

Dec 31, 2013


41 of 81


interestsSales Net income / loss

Other

comprehensive

income

Total

comprehensive

income

Net income / loss

allocated to non-

controlling

interests

Other

comprehensive

income allocated

to non-controlling

interests

Total

comprehensive

income allocated

to non-controlling

interests

k€ k€ k€ k€ k€ k€ k€

Xefin Lux S.C.A., Luxembourg, Luxembourg 0 36 0 36 36 0 36

Shanghai Ytong Co., Ltd., Shanghai, China 12,601 (1,766) 1,168 (598) (371) 245 (126)

Xella Baustoffwerke Rhein-Ruhr GmbH, Duisburg, Germany 55,380 6,452 (570) 5,882 2,484 (219) 2,264

Porenbetonwerk EUROPOR GmbH, Boxberg, Germany 9,693 306 (69) 237 150 (34) 116

VÁPENKA - VITOŠOV, s.r.o., Zabreh, Czech Republic 30,358 5,156 667 5,823 1,289 167 1,456



interestsSales Net income / loss

Other

comprehensive

income

Total

comprehensive

income

Net income / loss

allocated to non-

controlling

interests

Other

comprehensive

income allocated

to non-controlling

interests

Total

comprehensive

income allocated

to non-controlling

interests

k€ k€ k€ k€ k€ k€ k€

Xefin Lux S.C.A., Luxembourg, Luxembourg 0 42 0 42 42 0 42

Shanghai Ytong Co., Ltd., Shanghai, China 16,679 (395) (258) (653) (83) (54) (137)

Xella Baustoffwerke Rhein-Ruhr GmbH, Duisburg, Germany 56,153 4,071 401 4,472 1,567 154 1,722

Porenbetonwerk EUROPOR GmbH, Boxberg, Germany 9,697 451 48 499 221 23 245

VÁPENKA - VITOŠOV, s.r.o., Zabreh, Czech Republic 29,887 4,479 (3,523) 956 1,120 (881) 239


Dec 31, 2014

Dec 31, 2013


interests

Dividends

paid to non-

controlling

interests

cash flow

from

operating

activities

cash flow

from investing

activities

cash flow

from

financing

activities

Cash and cash

equivalents at

the begining

of the period

Net foreign

exchange

difference

Cash and cash

equivalents at

the end of the

period

k€ k€ k€ k€ k€ k€ k€

Xefin Lux S.C.A., Luxembourg, Luxembourg 0 10 10,592 (10,742) 143 0 3Shanghai Ytong Co., Ltd., Shanghai, China 0 90 (107) 75 820 89 967Xella Baustoffwerke Rhein-Ruhr GmbH, Duisburg, Germany 578 7,626 5,113 (11,883) 3 0 859Porenbetonwerk EUROPOR GmbH, Boxberg, Germany 0 2,180 (306) (1,720) 833 0 987VÁPENKA - VITOŠOV, s.r.o., Zabreh, Czech Republic 1,363 8,610 (1,094) (5,434) 1,873 (21) 3,934



interests

Dividends

paid to non-

contrlling

interests

cash flow

from

operating

activities

cash flow

from investing

activities

cash flow

from

financing

activities

Cash and cash

equivalents at

the begining

of the period

Net foreign

exchange

difference

Cash and cash

equivalents at

the end of the

period

k€ k€ k€ k€ k€ k€ k€

Xefin Lux S.C.A., Luxembourg, Luxembourg 0 0 24,168 (24,025) 0 0 143Shanghai Ytong Co., Ltd., Shanghai, China 0 (282) (336) (1,044) 2,521 (39) 820Xella Baustoffwerke Rhein-Ruhr GmbH, Duisburg, Germany 693 6,750 (4,259) (2,492) 4 0 3Porenbetonwerk EUROPOR GmbH, Boxberg, Germany 0 1,670 (98) (1,700) 961 0 833VÁPENKA - VITOŠOV, s.r.o., Zabreh, Czech Republic 1,362 7,628 (1,324) (6,220) 1,950 (162) 1,873


Dec 31, 2014

Dec 31, 2013

Consolidated Structured Entities

Xefin Lux S.C.A. is a corporate partnership limited by shares (société en commandite par

actions) which was established as a structured financing vehicle for the purpose of issuing the

2011 Senior Secured Notes. In 2014, this vehicle was used for offering k€ 325,000 aggregate

principal amount of its senior secured floating rate notes to fund the Facility D2 Loan under the

Senior Facilities Agreement (SFA) and to pay related fees and expenses. Xefin Lux S.C.A. has

no subsidiaries and no significant business activities other than the issuance of Notes. The

Issuer has no significant income other than from amounts received under the Facility D2 Loan,

its only material asset available to meet the claims of the holders of the Notes. Consequently,

the Issuer’s ability to service the Notes will be dependent on payments received from Xella

International S.A. and its subsidiaries under the Facility D2 Loan. Xefin Lux S.C.A. entered into


42 of 81

a Covenant Agreements with the Xella Group in order to apply the obligations resulting from the

Notes indenture to the Xella Group. For details please refer to “Capital Management” below.

Further, the Xella Group has entered into a Service Agreement with Xefin Lux S.C.A. in order to

compensate the company for all costs incurred related to the Notes in addition to a flat fee for

own administrative expenses. As a lender under the SFA, Xefin Lux S.C.A. is also entitled to the

same collateral as the other SFA lenders.

Capital Management

Efficient capital structure management is one of the Xella Group’s priority objectives, whereby

the composition of this structure is closely linked with the capital-intensive nature of the Building

Materials business.

Within the framework of the sale of the Xella Group in 2008, a Secured Facilities Agreement

(SFA) was entered into by Xella and a syndicate of banks to finance the transaction.

The SFA includes financial covenants (such as the ratio of EBITDA to Net Cash Interest, Cash

Flow to Total Debt Service, Net Debt to EBITDA as well as the amount of capital expenditures)

which the Xella Group is obliged to comply with. No equity-based financial covenants are

included in the SFA.

The liabilities in the Consolidated Statement of Financial Position related to the SFA amounted

to 312,340 k€ (PY: 353,004 k€) as at December 31, 2014.

In 2011 the Xella Group drew an additional loan under the existing SFA (Facility D Loan). This

loan was funded from the issuance of Senior Secured Notes in the amount of 300,000 k€,

issued by a structured entity, Xefin Lux S.C.A.. These Senior Secured Notes were replaced by

floating rate Senior Secured Notes issued June 3, 2014.

According to the bond indenture and the respective covenant agreement the Xella Group is

obliged to fulfill certain covenants. The covenants under the bond indenture are defined as so

called incurrence based covenants. The compliance with such covenants needs to be proven in

case of the occurrence of certain defined events, whereas the financial covenants under the

SFA are defined as maintenance covenants. Compliance with these maintenance covenants

must be reviewed at the end of every quarter by means of defined tests and confirmation of

compliance provided to the banks.

Xella has a special focus on the compliance with the covenants. KPI for financial performance is

Normalized EBITDA. Xella’s management has maintained its strong focus on cost and capital

expenditure management.

As in prior years, in 2014 all covenant tests confirmed compliance with the financial covenants.


43 of 81

From the SFA syndicate’s as well as from the bond investor’s point of view, the shareholder

loans granted by Xella International Holdings S.à r.l., Luxembourg, are subordinated in relation

to the SFA and bond debt and therefore treated as equity substitutes by the banks involved in

the SFA.

10. Financial Liabilities

Financial liabilities include derivatives of 818 k€ (PY: 372 k€). The change of derivatives was

almost entirely due to fair value changes related to interest rate and FX rate changes.

The underlying FX forwards and interest caps are recognized at Xella International GmbH,

Duisburg / Germany for itself and for other subsidiaries.

The various categories and terms of current and non-current financial liabilities are shown in the

following table:

Dec 31, 2014

0-1 year 1-5 years >5 years

k€ k€ k€ k€

Bank liabilities 312,405 33,111 279,294Bond liabilities 319,313 319,313Finance lease liabilities 6,204 1,770 4,178 256Liabilities to shareholders and non-controlling interests 1,046,035 180 950 1,044,905Other financial liabilities 5,851 2,002 3,764 85Total 1,689,808 37,063 607,499 1,045,246

Book value

Financial liabilities

(without derivatives) Maturity

Dec. 31, 2013


k€ k€ k€ k€

Bank liabilities 353,108 38,852 314,256Bond liabilities 291,218 291,218Finance lease liabilities 7,619 1,590 5,773 256Liabilities to shareholders and non-controlling interests 981,374 522 950 979,902Other financial liabilities 5,873 2,029 3,748 96Total 1,639,192 42,993 615,945 980,254

Book value


(without derivatives) Maturity

Bank liabilities mainly consist of loans in the amount of 312,340 k€ (PY: 353,004 k€) which were

incurred in the course of the acquisition of the Xella Group. Bond liabilities amounted to

319,313 k€ (PY: 291,218 k€). The combined SFA / Bond liabilities decreased by 12,608 k€.

Repayments on SFA liabilities amounting to 42,517 k€ overcompensated the fact that the new

bond issued in 2014 was higher than the 2011 bond by 25,000 k€. The reduction of the SFA

liabilities is increased by currency translation effects of 2,184 k€ and decreased by the accrued

borrowing costs in the amount of 4,088 k€.


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The maturity of the financial liabilities shown above is based on the maturity date of the

underlying credit facilities.

There is one significant finance lease of non-current assets of the Europor aerated concrete

facility with a lease liability of 4,655 k€ (PY: 5,986 k€) expiring December 31, 2017.

The future minimum lease payments due to finance leases and their net present values are

summarized in the following table:

0-1 year 1-5 years > 5 years

k€ k€ k€ k€

Minimum lease payments 6,867 2,031 4,554 282Interest (663) (261) (376) (26)

Present value 6,204 1,770 4,178 256

0-1 year 1-5 years > 5 years

k€ k€ k€ k€

Minimum lease payments 8,526 1,923 6,321 282Interest (907) (333) (548) (26)

Present value 7,619 1,590 5,773 256

Dec. 31, 2013

Maturity

Present value of future

minimum

lease paymentsTotal

Dec 31, 2014

Present value of future

minimum

lease paymentsTotal

Maturity

Liabilities to shareholders and non-controlling interests consist of shareholder loans of

1,040,452 k€ (PY: 975,449 k€) granted by Xella International Holdings S.à r.l., Luxembourg,

and XI Management Beteiligungs GmbH & Co. KG, Germany, to Xella International S.A.,

Luxembourg, within the framework of the acquisition of the Xella Group. The shareholder loans

are subordinated in relation to the bond liabilities as well as to the SFA loans. The increase is

due to the accrual of interest amounting to 65,003 k€.

Liabilities to shareholders and non-controlling interests also include a portion attributable to

certain minority shareholders which are classified as liabilities in accordance with IAS 32 in the

amount of 4,453 k€ (PY: 4,453 k€).

Other financial liabilities include purchase price liabilities from acquisitions of 3,368 k€

(PY: 3,368 k€).


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The following table contains an analysis of all financial liabilities on the basis of the respective

interest hedges.


(without derivatives)

Fixed

interest

period

Book value as

at Dec. 31, 2013

in k€

Type

of

interest

Weighted average

interest rate on the

basis of carrying

amount in %

1.952 fixed 4,9428.870 floating 2,627.525 fixed 5,24

535.875 floating 3,701.045.246 fixed 6,62

EUR liabilities 1.619.468

thereof covered by interest hedges6.213 floating 4,58

64.100 floating 5,83PLN liabilties 70.312

thereof covered by interest hedges29 floating 7,50

Other foreign currency liabilities 29

thereof covered by interest hedgesTotal financial liabilities (without derivatives) 1.689.809

Carrying amount of fixed interest financial liabilities 1.054.723

0- 1 year

1-5 years

> 5 years

0- 1 year1-5 years

0- 1 year


(without derivatives)

Fixed

interest

period

Book value as

at Dec. 31, 2013

in k€

Type

of

interest

Weighted average

interest rate on the

basis of carrying

amount in %

2,142 fixed 5.05

34,880 floating 2.81

300,321 fixed 7.91243,186 floating 3.82980,254 fixed 6.67

EUR liabilities 1,560,783

thereof covered by interest hedges5,885 floating 5.36

72,437 floating 6.49PLN liabilties 78,322

thereof covered by interest hedges87 floating 8.00

Other foreign currency liabilities 87

thereof covered by interest hedgesTotal financial liabilities (without derivatives) 1,639,192

Carrying amount of fixed interest financial liabilities 1,282,717

0- 1 year1-5 years

0- 1 year

0- 1 year

1-5 years

> 5 years

The carrying amounts of the floating rate financial liabilities generally correspond to their

respective fair values. The carrying amounts of fixed-interest financial liabilities relate to market

value of 1,121,926 k€ (PY: 1,511,211 k€).

The bank liabilities are secured by liens of 622,511 k€ (PY: 629,202 k€) in connection with the

SFA. The bond investors also indirectly benefit from the SFA security package. For further

information of the pledged assets please refer to the notes to the diverse asset categories. The

carrying amounts of investments in affiliates as well as intercompany receivables as shown in

the single entity financial statements are not considered in the determination of pledged assets,


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although they are also pledged as collateral. Following the concept of the economic entity

intercompany assets were eliminated.

11. Pension Provisions

Pension provisions are recognized to cover the liabilities resulting from current benefits and

benefit plans for old age, disability and surviving dependants’ pensions. The Group’s benefits

vary according to the prevailing local legal, tax and economic conditions in the respective

country. The post-employment benefits of the Xella Group include both defined contribution

plans and defined benefit plans.

Under defined contribution plans the Group’s legal or constructive obligation is limited to the

amount agreed to contribute to the fund. Other than the required premiums and contributions,

defined contribution plans do not lead to any further commitment should the fund not hold

sufficient assets to pay all employees the benefits relating to employee service in the current

and prior periods. The contributions are reported under staff expenses and amounted to

1,020 k€ (PY: 1,236 k€) in 2014. Furthermore, employer contributions to state plans amounted

to 12,744 k€ (PY: 12,712 k€), which mainly consist of Xella’s contributions to “Deutsche

Rentenversicherung” in Germany.

Defined benefit plans are post-employment benefit plans other than defined contribution plans.

Pension provisions for defined benefit plans are calculated on the basis of actuarial principles

using the projected unit credit method. The pension provision is the present value of the defined

benefit obligation at the end of the reporting period less the fair value of the plan assets taking

into account any effects resulting from the application of asset ceiling. The Group operates

various defined benefit plans. Most of these plans (nearly 95% of DBO) are located in Germany

and the Netherlands.

The German entities provide various pension benefits. Most plans are final salary plans. Apart

from this, there are also benefits where fixed amounts are agreed. Alongside lifelong retirement

payments Xella also provides disability and survivors’ benefits. The amount of benefits depends

on the period of service. In Germany almost all plans are closed to new entrants. Thus, the

majority of benefits are for current pensioners as well as vested benefits of former employees.

For managers, contribution-based models with a minimum interest rate are still open for new

entrants. Besides, the pension payment there is an option between a lump-sum payment and

payment in instalments. In Germany, the legal framework is provided by the

“Betriebsrentengesetz”. According to this law, the recipients of benefits need to be

compensated for the loss of purchasing power, unless a fixed annual adjustment is agreed.


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In the Netherlands the majority of benefits provided is based on an average salary scheme with

conditional indexation (Xella Nederland Regeling, including a dotation agreement). There is also

a final salary scheme with unconditional indexation in place (Hebel-Cellenbetonregeling,

including a dotation agreement). This scheme is closed and has no active participants. Both

plans are funded outside of the company and the rights are guaranteed by an international

insurance company which is in charge of the asset management. Furthermore, in 2006 a

conditional arrangement was agreed among the social partners (15-jaarsfinanciering, without

dotation agreement). Participants only have rights if they are working at Xella Netherlands on

their retirement date. Financing takes place within the company at first but external funding

needs to be in place by 2020 or by the time the employee retires, whatever event occurs earlier.

The framework is based on the Dutch pension law, the collective labour agreement and the

agreement (uitvoeringsovereenkomst) with an international insurance company and the Dutch

entities.

The following significant assumptions were applied in the actuarial calculations:

Actuarial assumptions (in %)

Germany Netherlands Germany Netherlands

Discount rate 2.1 2.3 3.6 3.8Rate of pension progression 1.8 0.9 - 1.5 1.8 1.5 - 1.6Rate of salary-/ career increase 2.5 1.9 - 2.0 2.5 2.0 - 2.1

Dec. 31, 2014 Dec. 31, 2013

The most significant mortality tables used are “Heubeck Richttafeln 2005G” in Germany and

“AG Prognosetafel 2014” in the Netherlands.


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Net pension provisions developed as follows:

2014 2013

k€ k€

DBL as at January 1st 162,132 184,185

Transfer from current staff provisions 683 604Currency adjustment 22 (71)Total neutral entries 705 533

Current service cost 4,151 5,209Past service cost (incl. curtailments) (856) (702)Gain/Loss on settlements 76 (66)Service Cost 3,371 4,440

Interest expense on DBO 9,463 8,760Interest income on plan assets for the reporting period (3,732) (3,332)Net interest expense 5,731 5,428

Experience adjustments of DBO (723) 665Effects from changes in demographic assumptions (13) (1)Effects from changes in financial assumptions 72,891 (27,620)Total actuarial gains (-)/ losses (+) 72,155 (26,956)

Experience adjustments of plan assets (23,607) 1,627Effects from changes in asset ceiling (4,395) 4,395Total effects from remeasurements 44,153 (20,933)

Pension payments from pension provisions (9,118) (8,506)Employers contribution to plan assets (2,633) (3,016)Employee contribution to DBO 1,140 1,364Employee contribution to plan assets (1,140) (1,364)Pension payments and fund allocation (11,751) (11,522)

Other changes (1)DBL as at December 31 204,340 162,132

Development of provision (DBL)

In 2014 past service cost mainly result from changes to the benefits payable by the defined

benefit plan in the Netherlands and curtailments in connection with a restructuring program in

France. In 2013 past service cost mainly relate to a restructuring program in the Netherlands.

The defined benefit cost consists of the following components:

2014 2013

k€ k€

Service Cost (staff expenses) 3,371 4,440Net interest expense (financial result) 5,731 5,428Remeasurements (other comprehensive income) 44,153 (20,933)Defined benefit cost 53,255 (11,064)

Components of defined benefit cost


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The defined benefit obligation developed as follows:

2014 2013

k€ k€

DBO as at January 1st 263,747 288,920

Transfer from current staff provisions 683 604Currency adjustment 22 (71)Total neutral entries 705 533

Experience adjustments of DBO (723) 665Effects from changes in demographic assumptions (13) (1)Effects from changes in financial assumptions 72,891 (27,620)Total actuarial gains (-)/ losses (+) 72,155 (26,956)

Current service cost 4,151 5,209Past service cost (incl. curtailments) (856) (702)Gain/Loss on settlements 28 (66)Interest expenses on DBO 9,463 8,760Employee contributions to DBO 1,140 1,364Current payments (12,322) (13,270)Other changes (2) (46)DBO as at December 31 338,209 263,747

Development of obligation (DBO)

In 2014 the increase in the defined benefit obligation is mainly attributable to actuarial losses

which result to a large part from decreased interest rates during the financial year.

In 2013 the benefit obligation decreased primarily due to actuarial gains based on increased

interest rates.

The sensitivity of the defined benefit obligations with regard to changes in the major actuarial

assumptions is as follows:

Other disclosures for DBO 2014 2013

DBO as at December 31 using a discount rate + 0.5 % (8.5)% (7.1)%DBO as at December 31 using an discount rate ./. 0.5 % 8.3 % 7.5 %DBO as at December 31 using a rate of pension progression + 0.5 % 5.7 % 5.7 %DBO as at December 31 using a rate of pension progression ./. 0.5 % (7.2)% (3.6)%DBO as at December 31 using a rate of salary-/ career increase + 0.5 % 0.4 % 0.7 %DBO as at December 31 using a rate of salary-/ career increase ./. 0.5 % (1.7)% (1.0)%Average duration of the DBO (in years) 17 16

The effects are determined by changing one assumption while holding all other assumptions

constant. In reality, however, assumptions may be correlated and not independent. In order to

calculate the sensitivities, the same actuarial valuation methods have been applied than in

calculating the pension liability recognized in the statement of financial position.

In 2014, a one year increase or decrease, respectively, in life expectancy would lead to a 3.4%

increase or 3.7% decrease, respectively, in the defined benefit obligation.


50 of 81

The development of the plan assets were derived as follows:

2014 2013

k€ k€

Fair value of plan assets as at January 1 106,002 104,728

Interest income on plan assets for the reporting period 3,732 3,332Experience adjustments of plan assets 23,607 (1,627)Employee contribution to plan assets 1,140 1,364Employer contribution to plan assets 2,633 3,016Payments out of plan assets (3,204) (4,764)Gain/Loss on settlements (48)Other changes (1) (46)Fair value of plan assets as at December 31 133,861 106,002

Development of plan assets

The plan assets do not contain any financial instruments issued by the Xella Group or property

or other assets used by the Group.

The composition of plan assets is shown in the following table:

Composition of plan assets

Quoted Unquoted Total Quoted Unquoted Total

Cash and cash equivalents 2,241 2,241 1,490 1,490

Qualifying insurance policies 17,768 110,510 128,278 526 100,822 101,348

Other components 220 3,122 3,342 211 2,953 3,164

Total 20,229 113,632 133,861 2,227 103,775 106,002

2014 2013

The net pension provisions were derived as follows:

2014 2,013

k€ k€

DBO, unfunded 195,714 159,211DBO, funded 142,495 104,536DBO as at December 31 338,209 263,747

Fair value of plan assets as at December 31 (133,861) (106,002)Funded Status as at December 31 204,348 157,745

Effects from asset ceiling as at January 1 4,395Effects from changes in asset ceiling for the reporting period (4,395) 4,395Total effects from asset ceiling 4,395

Others (8) (8)DBL as at December 31 204,340 162,132

Reconciliation of DBO to DBL

The plans in Germany represent 185,329 k€ of the DBO and 327 k€ of the plan assets. The

plans in the Netherlands represent 141,359 k€ of the DBO and 129,773 k€ of the plan assets.

In 2013 one of the plans had a surplus. According to IAS 19 this had not been recognized as an

asset in the statement of financial position, since economic benefits were not available to the

entity in the form of a reduction of future contributions or a cash refund.

There are some risks to which the Xella Group is exposed resulting from the pension plans. The

obligation is determined using standard assumptions concerning life expectancies in the

respective countries. The majority of our beneficiaries will receive lifelong pension payments

after retirement. An increase in the life expectancy would lead to an increase in the liabilities of

the plan. Furthermore, there is an inflation risk related to some of our plans. The majority of the


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benefits which are in the payment stage are dependent on the inflation rate. Thus, higher

inflation rates result in higher obligations. In Germany the plans for managers which are still

open to new entrants are not affected by that because they include a fixed annual increase of

1.5%. The German obligations are subject to an interest risk. In case of a future decline of

discount rates Xella would be exposed to higher present values of the obligations. However, this

would not affect the current pension payments. The Dutch plans also contain an interest risk.

However, due to an agreement between Xella and an international insurance company this risk

is limited. This agreement ends on December 31, 2016. There is a risk in this context, since the

conditions of a new agreement are not known today. For one plan in the Netherlands, which is

currently funded within the Group, there is a requirement to fund the plan externally by 2020.

However, this funding requirement does not represent a material risk for the Group.

We have significant funded plans in the Netherlands. The plan assets are managed using an

asset-liability matching strategy. The goal is to match the maturities of the invested assets with

the benefit payments as they fall due. The plan assets consist of qualifying insurance policies.

According to an agreement our insurance company invests the assets using a strategic asset

mix of 25% equity instruments and 75% fixed-income securities. It also includes the use of a

“long duration overlay” in order to minimize the duration interest risk between the obligation and

the respective assets.

In order to give information about the amount and timing of future cash flows in the following we

provide an estimate of future (undiscounted) pension benefit payments for the next 10 years:

thereof benefits from

pension provisions

thereof benefits from

plan assets Total

k€ k€ k€

2015 9,171 3,701 12,872

2016 9,000 3,492 12,492

2017 8,983 3,615 12,598

2018 8,991 3,776 12,768

2019 9,033 3,953 12,986

2020-2024 43,839 23,730 67,569

Expected benefit payments

Expected employer contributions to the plan assets for the reporting period ending

December 31, 2015 amount to 3,023 k€ (PY: 3,133 k€).


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12. Other Provisions

Other provisions developed as follows:

Statement of Provisions 2014 As of January

1st

Currency

adjustment

Discount effect Addition Transfer Release Utilization Book value as

at Dec. 31,

2014

k€ k€ k€ k€ k€ k€ k€ k€

Staff 29,671 (63) 43 22,876 (682) (3,611) (16,967) 31,267

Environment 27,053 (15) 8,393 1,964 1,571 (529) (807) 37,630

Warranty 92,478 3 660 2,447 50 (27,012) (9,831) 58,795

Restructuring 4,534 7,243 (885) (2,348) 8,544

CO2 - Certificate 26 139 (22) 139

Other 24,174 (9) 4,427 (1,622) (11,985) (2,277) 12,712

Total other provisions 177,936 (84) 9,096 39,096 (683) (44,022) (32,252) 149,087

Statement of Provisions 2013 As of January

1st

Currency

adjustment

Discount effect Addition Transfer Release Utilization Book value as

at Dec. 31,

2013

k€ k€ k€ k€ k€ k€ k€ k€

Staff 33,238 (187) 5 20,213 (386) (3,806) (19,406) 29,671

Environment 32,006 (38) (2,845) 2,008 (800) (2,663) (615) 27,053

Warranty 94,894 (5) (603) 3,786 (1,382) (4,212) 92,478

Restructuring 3,621 (19) 2,396 (219) (63) (1,182) 4,534

CO2 Certificates 511 22 (507) 26

Other * 28,358 (78) 116 2,613 675 (5,302) (2,208) 24,174

Total other provisions * 192,628 (327) (3,327) 31,038 (730) (13,216) (28,130) 177,936

* Minor adjustments to certain previous year figures

Staff provisions particularly include bonuses and obligations for jubilee benefits. Besides, the

staff provisions include obligations from social (redundancy) plans and severance payments as

well as obligations for the early retirement.

Provisions for environmental obligations relate to recultivation and restoration obligations to

cover the cost of restoring quarries to an environmentally acceptable condition once exploitation

is finished. The provision is created in installments over the prospective operating life of the

respective quarry in keeping with the scope of the quarry’s annual output. The provision is

measured on the basis of the estimated costs for removing the conveying equipment and

recultivating the sites on the basis of the actual output to date in relation to the total estimated

resources at the site. The increase of environmental provisions mainly results from discounting

effects due to a decrease of interest rates.

In principle, warranty provisions include provisions to remedy possible damages to buildings

where there is a legal, contractual or constructive obligation.

Xella is currently facing potential warranty, product liability and damage claims by several

building owners in connection with the delivery of building materials by former Haniel

Baustoffwerke from three plants in North Rhine-Westphalia, Germany, between end of 1987

and the beginning of 1996, which have been closed down in the meantime. Calcium silicate

units had been produced in the relevant period applying an alternative production method,

which substituted another product for lime. Although the relevant calcium silicate units displayed

the required compressive strength immediately after production, over the years some of the

calcium silicate units lost their compressive strength after being exposed to permanent moisture

with cracks resulting in the finished masonry.


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The Xella successor companies do not perceive a general liability to pay damages.

Nevertheless, taking account of the situation of each specific case, Xella generally agreed to

absorb the actual costs of the damages in the structure of the buildings. On balance sheet date,

the (constructive) provision amounted to 48,452 k€ (PY: 69,241 k€). The decrease resulted from

utilizations (8,449 k€) and a release of 13,000 k€ based on new appraisals by external experts.

Court cases were brought against Xella in which building owners sought damages also in

addition to the cost of repairs for the alleged fall in the resale value of their buildings. These

cases are still pending.

In the course of selling the Xella Group in 2008, the vendor, Haniel, agreed to hold the Xella

Group harmless for all costs, expenses and liabilities directly related to these cases. Please

refer to note 4. Due to the fact that Haniel is liable under the purchase agreement for any

losses, Haniel and Xella have agreed that Haniel will be solely responsible within the internal

relation for processing all potential claims in future. Due to ongoing legal proceedings instituted

by some home owners Haniel has stopped goodwill refurbishment since April 8, 2013 of objects

not reported by that date. Once definite legal certainty is established Haniel will re-evaluate the

situation.

Warranty provisions also included a provision recognized at Fels-Werke GmbH, Goslar

/Germany due to a potential contamination of a French gravel pit which was sold in 2004. As the

claims were time-barred the provision was fully released in 2014 (12,456 k€).

The restructuring provisions cover all estimated costs for restructuring selected entities and

industries on the basis of restructuring plans. Expenses for the closure of business locations

over the past years (IAS 37.70 (b)) are considered first and foremost by recording impairment

losses on the assets concerned.

Other provisions were released in the amount 10,719 k€: Xella was obliged to pay potential

taxes related to an acquisition and was covered for such risk under the hold-harmless

agreement with the former shareholder, Haniel. In 2014 a settlement was agreed whereby

Haniel directly paid to the third party. Xella therefore released the provision and the

corresponding receivable from Haniel.

As there have been transfers from staff provisions to pension provisions, transfers do not add

up to zero.


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According to current information the expected utilization of the provisions can be summarized

as follows:

Maturity


Staff 31,267 25,065 2,271 3,932Environment 37,630 2,986 5,388 29,256Warranty 58,795 21,744 37,051Restructuring 8,544 8,007 537

CO2 Certificates 139 139

Other 12,712 9,879 2,833Total 149,087 67,820 48,079 33,188

Other provisions Book value

as at Dec

31, 2014

Maturity


Staff 29,671 23,410 2,734 3,527Environment 27,053 1,241 5,579 20,233Warranty 92,478 33,238 59,240Restructuring 4,534 4,534

CO2 Certificates 26 26

Other 24,174 21,470 2,704Total 177,936 83,919 70,257 23,760

Other provisions Book value

as at Dec

31, 2013

Warranty provisions in this table represent an estimation of possible future cash outflows that

would partly lead to cash inflows for Xella because certain risks are covered by the hold-

harmless agreement with Haniel.

13. Deferred Income

Non-current deferred income in the amount of 6,387 k€ (PY: 6,194 k€) mainly includes

government tax grants related to the purchase of property, plant and equipment. In order to

fulfill all the conditions attached to grants there is usually a binding period during which the

assets need to remain part of the entity’s property, plant and equipment. For any grant shown

as deferred income there is no indication that any conditions attached to the grants will not be

fulfilled.


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14. Trade and Other Accounts Payable

Dec. 31, 2014 Dec. 31, 2013

k€ k€

Trade liabilities (current) 103,839 103,882Accrued expenses for invoices not yet received 32,455 40,458Customers with credit balances 2,847 2,705Subtotal 139,141 147,045

Advance payments by customers 4,366 2,429Liabilities from construction contracts 1,425 1,862Accrued expenses for customer bonuses 45,929 44,897Accrued expenses for overtime 3,648 3,828Accrued expenses for holidays not yet taken 7,392 7,738Accrued audit fees 1,660 1,548Interest payable 2,627 3,380Sundry liabilities 26,170 34,637Total 232,358 247,364

Trade and other accounts payable (current)

Liabilities from construction contracts decreased mainly due to higher invoicing of completed

construction projects than in the year before.

Sundry liabilities include, among others, tax liabilities in the amount of 3,954 k€ (PY: 10,479 k€),

social security liabilities amounting to 5,669 k€ (PY: 5,929 k€), VAT liabilities in the amount of

2,546 k€ (PY: 2,964 k€) and payroll liabilities in the amount of 2,921 k€ (PY: 2,988 k€).

C. Notes to the Consolidated Statement of Income – By Nature of Expense

The Statement of Income has been prepared using the nature of expense method.

15. Sales

The composition of sales (trade and service sales) is shown in the following table:

Jan. 1st -

Dec. 31,

2014

Jan. 1st -

Dec. 31,

2013

k€ k€

Trade sales 1,242,919 1,225,398Service sales 30,016 28,697Total 1,272,935 1,254,095

Sales

Sales in the Xella Group increased despite the challenging market situation in several markets.

In the Building Materials Business Unit sales benefited from positive business trends in selected

markets, e.g. Poland, Belgium including UK exports, whereas other key markets remain caught

in recession, especially in France. Sales growth was supported by positive weather conditions


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in Europe in the first quarter of 2014, especially in Germany. The Dry Lining Business Unit could

improve sales compared to previous year driven by the ongoing growth strategy. The Lime

Business Unit achieved sales on prior year level burdened by a difficult business situation in

Russia.

Please refer to note 27 for the allocation of sales to segments.

16. Other Income

Jan. 1st -

Dec. 31,

2014

Jan. 1st -

Dec. 31,

2013

k€ k€

Rental and similar income 2,054 2,046Income from disposal of non-current assets 1,208 1,416Income from refund of electricity and mineral oil tax 17 598Other operating income 13,292 22,548Total 16,571 26,608

Other income

Other operating income comprises many diverse items, such as income from the amortization of

government grants and income from licenses.

The decrease of other income particularly results from declined other operating income. Lower

other operating income in 2014 was driven by transactions in 2013 (e.g. sale of CO2-certificates

and income from the amortization of government grants predominantly for Ecoloop) not

repeated in 2014, and other developments.

17. Staff Expenses

Jan. 1st -

Dec. 31,

2014

Jan. 1st -

Dec. 31,

2013

k€ k€

Wages & salaries (w/o release of staff provisions) (259,267) (250,182)Social security expenses (53,071) (52,352)Other employee benefits (5,238) (5,540)Pension expenses (4,391) (5,676)Release of staff provisions 3,611 3,806Total (318,356) (309,944)

Staff expenses

Pension expenses include service costs for defined benefit plans of 3,371 k€ (PY: 4,440 k€)

(see note 11).

With respect to the release of staff provisions please refer to note 12.

Staff expenses increased mainly due to labor agreement increases.

At the balance sheet date the Xella Group had a staff of 7,091 (headcount) (PY: 7,227).


57 of 81

The Group employed 6,686 full-time equivalents (PY: 6,806) broken down by category

as follows: production 4,513 (PY: 4,564), sales 1,515 (PY: 1,551) and administration 658

(PY: 691).

18. Other Expenses

The composition of other expenses is shown in the following table:

Jan 1st -

Dec 31,

2014

Jan. 1st -

Dec 31,

2013

k€ k€

Other taxes (1,677) (7,142)Impairment of receivables (2,731) (3,051)Loss from disposal of non-current assets (430) (238)Legal and consulting fees (14,716) (11,527)Repairs & maintenance (25,164) (24,861)Advertising & marketing expenses (21,246) (20,046)Labour leasing & freelancer (12,321) (10,849)Insurance (5,226) (4,865)Travelling expenses (9,515) (10,549)Data and telecommunication expenses (3,180) (3,423)Expenses for IT service providers (9,140) (8,881)Expenses for human resource development and recruitment (3,277) (3,230)Material testing, examination & monitoring (4,129) (4,271)Waste disposal expenses (2,478) (2,577)Cleaning expenses (3,887) (3,723)Additions to warranty provisions (2,447) (3,786)Leasing expenses (third parties & associates-at equity) (17,709) (18,495)Other operating and administrative expenses (46,521) (38,532)Total (185,794) (180,046)

Other expenses

Higher other expenses mainly resulted from higher sales and production volume leading to

higher repairs & maintenance, advertising & marketing expenses and additional labour leasing

& freelancers. Additionally a major cost savings project drove higher legal and consulting fees.

Other expenses were positively influenced by a decrease of other taxes mainly due to the

release of a real estate transfer tax liability. Cost savings measures led to lower travelling

expenses.

Other operating and administrative expenses comprise various items, such as energy expenses

(non-production), audit fees, charges and contributions, commissions and expenses for office

supplies. Increase of other operating and administrative expenses mainly related to higher

restructuring expenses partly offset by the release of other provisions.

Other expenses were further affected by the release of a receivable against Franz Haniel & Cie.

GmbH, Duisburg/Germany as well as by the release of corresponding provisions. The

receivable mainly represents a number of potential claims which were agreed on by the buyer


58 of 81

and seller during the sale of the Xella Group. They relate to hold-harmless agreements for

certain tax obligations, warranty obligations and other risks. Please refer to note 4.

Impairments of receivables include impairments of trade and other receivables of 2,701 k€

(PY: 3,051 k€). Please refer to note 7.

According to current information, the expected future minimum payments for operating leases in

the coming years amount to:

Maturity

Total 0-1 year 1-5 years > 5 years Total 0-1 year 1-5 years > 5 years

k€ k€ k€ k€ k€ k€ k€ k€

50,087 9,738 16,501 23,848 53,314 10,294 17,253 25,767

2013Total future

minimum

lease

payments

2014

The operating leases relate primarily to real estate (plants as well as the Axel-Erikson office

building in Duisburg / Germany), vehicles and other leasing items, e.g. fork lifts.

Centralized in Xella Technologie- und Forschungsgesellschaft mbH, Emstal / Germany, the

Group’s expenses for research and development amounted to 3.923 k€ (PY: 3,886 k€). These

research and development expenses are not only shown under other expenses. Staff expenses

in the amount of 2,424 k€ were included (PY: 2,397 k€), whereas depreciation is excluded.

19. Result from Other Investments

Jan. 1st -

Dec. 31,

2014

Jan. 1st -

Dec. 31,

2013

k€ k€

Income from available-for-sale investments 1,121 1,077Impairment of available-for-sale investments (398) (1,533)Profit from disposal of available-for-sale investments 3,969Loss from disposal of available-for-sale investments (15)Total 708 3,513

Result from other investments

Income from available-for-sale investments in the amount of 1,121 k€ (PY: 1,077 k€) mainly

pertained to dividends from investments accounted for at cost. The impairment of the available-

for-sale investments predominantly referred to the Russian investment “DSZ” OOO (BSW),

Tovarkovo. Profit from disposal of available-for-sale investments in the previous year related to

the disposal of the shares in Anker Kalkzandsteenfabriek B.V., Kloosterhaar / The Netherlands

in the course of the acquisition of the residual shares in Van Herwaarden Beheer B.V., Hillegom

/The Netherlands.


59 of 81

20. Finance Costs

Jan. 1st -

Dec. 31,

2014

Jan. 1st -

Dec. 31,

2013

k€ k€

Interest expenses (third parties) (28,869) (22,706)Interest expenses (shareholders) (65,003) (60,725)Interest expenses for debentures & other bonds (17,701) (24,000)Prepayment costs (17,100)Interest expenses for net pension provisions (5,731) (5,428)Interest expenses for other provisions (10,134) (1,449)Others (1,830) (2,137)Total (146,368) (116,445)

Finance Costs

Interest expenses included an amount of 65,003 k€ (PY: 60,725 k€) pertaining to the

accumulation of accrued interest for shareholder loans. Further major effects related to interest

on bank liabilities borrowed in the course of the sale of the Xella Group. Interest expenses for

debentures and other bonds related to Senior Secured Notes issued June 1, 2011 replaced by

Senior Secured Notes issued June 3, 2014. For both effects please refer to note 10. Interest

expenses also included the unscheduled release of deferred financing fees pertaining to the

Senior Secured Notes issued June 3, 2011. Prepayment costs referred to the same notes.

The increase of the interest expenses for other provisions relates to decreasing interest rates in

2014 compared to the prior year.

Please refer to the explanations in notes 11 and 12 with regard to interest expenses for pension

and other provisions.

21. Other Financial Result

Jan. 1st -

Dec. 31,

2014

Jan. 1st -

Dec. 31,

2013

k€ k€

Interest income 895 1,098Result from non-hedge derivatives (financial activities) (1,492) 2,702Profit from foreign exchange transactions (financial activities) 8,235 3,541Loss from foreign exchange transactions (financial activities) (24,384) (14,822)Others 1,698 4,173Total (15,048) (3,308)

Other financial result

The result from derivatives mainly relates to fair value changes of currency instruments as well

as to currency instruments which expired in 2014 and which were accounted for with positive or

negative market values. Profits and losses from foreign exchange transactions incurred in

connection with financial activities related to cross-border/cross-currency intercompany

financing transactions and were affected by less favorable or disadvantageous currency rate

developments.


60 of 81

22. Income Taxes

In 2014 deferred tax assets on tax losses carried forward of 5,085 k€ were released while in

prior year a total of 9,875 k€ were set up. In 2014 impairments on deferred tax assets of 498 k€

(PY: 548 k€) were posted.

The expected tax rate for the Xella Group is 29.9 % (PY: 29.4 %). It aggregates the tax rate

applied for German taxes with the rates applied for any local taxes which are computed on a

substantially similar level of taxable profit.

The reported current tax burden is reconciled to the imputed tax burden based on a tax rate of

29.9 % (PY: 29.4 %) in the table below:

Jan 1st -

Dec 31,

2014

Jan. 1st -

Dec 31,

2013

k€ k€

Profit/ loss before tax (97,636) (36,050)Expected income taxes 29,193 10,599

Foreign tax rate differential (2,501) (1,267)Tax effect from non-deductible expenses (5,755) (2,271)Tax effect from tax-exempt income 1,572 1,873Addition to/ release of allowances (498) (549)Effects from tax rate and tax law changes (1,756) (137)Deferred tax asset not recognized on taxable loss of the current year (8,011)Effects resulting from the use of loss carryforwards previously not recognized as tax assets 465Taxes for prior years 3,767 3,822Tax effect from interest capping rules including effects from interest deduction carryforwards (18,210) (14,562)Special tax effects Germany (888) (1,015)Special tax effects other countries (73) (27)Other tax effects (917) (898)Reported income taxes (3,612) (4,432)

Group income tax rate for the reporting year (%) 29.9 29.4

Tax rate reconciliation

On a net basis, reported income tax expenses decreased by 820 k€. Tax effects from non-

deductible expenses include the net impact from development of provisions for expenses

indemnified by Haniel and the corresponding indemnity payments and development of accounts

receivable. In the reporting period, deferred tax assets on tax loss carry-forwards of the financial

year were not recognized with an effect of 8,011 k€. This was largely due to the decline of net

deferred tax liabilities (excluding tax losses) mainly not affecting the Consolidated Statement of

Income based on the application of IAS 19 (revised). In the previous year deferred tax assets on

tax losses of the period were capitalized fully. The impact of interest capping rules increased by

3,648 k€.

Income taxes include corporate income tax, the solidarity surcharge and trade tax, to the extent

that German companies are required to pay them.


61 of 81

D. Other Notes to the Consolidated Financial Statements

23. Financial Risk Management

In the course of its operating activities the Xella Group is exposed to financial risks. These

chiefly relate to liquidity risks, credit risks, risks from changes of interest rates and exchange

rates as well as other market risks such as price movements on the commodity markets. The

goal of financial risk management is to reduce financial risks.

The management sets the general guidelines for financial risk management and determines the

general procedure for hedging against financial risks. The Xella Group has its own treasury

department which, after identifying, analyzing and assessing the financial risks, takes action to

avoid or mitigate such risks. It advises subsidiaries and, in addition to its own hedging activities,

also enters into hedge relationships for the subsidiaries.

Liquidity Risk

Liquidity risk is understood as the risk of the Xella Group not being in the position to meet its

ongoing payment obligations at any time. The liquidity risk is managed by means of centralized

financial planning which provides the information on required funding for operations and capital

expenditures. Within the framework of the acquisition of the Xella Group, the owners agreed on

a Secured Facilities Agreement with a large number of banks to secure financing. The credit

facilities provided under the agreement have terms of up to 2017. In 2015, the repayment

obligations from these lines of credit are moderate in scope. For example, only 36,457 k€

(PY: 42,700 k€) is scheduled for 2015. In addition, the high amount of unused credit lines

(53,870 k€) as well as the available cash secures adequate financing to fund operating

business and other investments.

Credit Risk

Credit risk is understood as the risk that a debtor of the Xella Group is not in the position to

meet its payment obligations. Xella is exposed to credit risks from both its operating business,

from the use of financial instruments and from deposited cash.

Based on the Group’s internal assessment of the risks, loans and other financial assets (in the

current year mainly consisting of the non-current portion of the indemnity receivable from Franz

Haniel & Cie. GmbH, Duisburg / Germany) of 38,597 k€ (PY: 61,385 k€) are exposed to a low

level of credit risk.

The diversification of the Xella Group and the number of existing customers with low individual

receivables results in no concentration of credit risks associated with trade receivables and

similar receivables. For this reason, the Group considers credit risk exposure to be immaterial.


62 of 81

At worst case the maximum credit risk from such receivables amounts to total receivables less

existing trade credit insurances.

The credit risk associated with derivative financial instruments does not exceed the fair value of

the positive market values of the derivatives entered into. Due to the fact that derivative financial

instruments are only entered into with banks with solid credit ratings, these risks are considered

being low. The same applies to credit balances held with banks. Due to the fact that credit

balances are split between numerous banks there is no risk concentration. There are also no

identifiable concentrations of credit risk from business relationships with single debtors or

groups of debtors.

Interest Risk

Interest risks are understood as the negative impact of fluctuating interest rates on the net profit

of the Group. In general, derivative financial instruments are used to limit the interest risk. The

decision on whether to use derivative financial instruments is based on the projected debt and

the expected interest rates. The interest hedging strategy is reviewed at regular intervals and

new targets are defined. As at December 31, 2014 there are no interest rate hedges in place.

Given the relatively large portion of fixed rate debt provided in form of shareholder loans by our

private equity investors we consider the interest rate risk as being sufficiently covered.

The interest sensitivity analysis presented below shows the hypothetical effects which a change

in the market interest rate at the balance sheet date would have had on the pre-tax profit and on

equity. It is assumed here that the exposure at the balance sheet date is representative of the

year as a whole and that the assumed change in the market interest rate at the balance sheet

date was possible.

Hypothetical increases/decreases of one percentage point in the market interest rate would

have had the following impact on the profit/loss before tax or on equity (without P&L effect):

Profit/ loss

before taxEquity

Profit/ loss

before taxEquity

k€ k€ k€ k€

(6,465) (4,532) 6,465 4,532

Effect of change in interest rate 2014

Increase Decrease

Profit/ loss

before taxEquity

Profit/ loss

before taxEquity

k€ k€ k€ k€

(3,531) (2,493) 3,531 2,493

Increase Decrease

Effect of change in interest rate 2013


63 of 81

Currency Risk

Currency risks arise from investing and financing activities conducted in foreign currency as well

as from operating activities due to the purchase and sale of merchandise in foreign currency. In

general, forward exchange contracts and currency options are used to hedge against currency

risks.

Foreign exchange exposure is mainly secured by micro-hedges. This involves a direct hedge of

the underlying transaction by means of a foreign exchange derivative, generally a forward

exchange contract. In addition, currency derivatives are used to hedge forward transactions in

foreign currency. This involves selecting the currency derivative (or a combination of several

derivatives) which best reflects the likelihood of occurrence and timing of the forward

transaction.

The sensitivity analysis of foreign exchange exposure shows the theoretical impact of a change

in the key exchange rates for the Xella Group on the pre-tax result and equity. This foreign

exchange sensitivity analysis is based on the primary and derivative financial instruments on the

balance sheet date. It is assumed that the exchange rates on the balance sheet date change by

the percentage stated. Movements over time and the changes in other market parameters

observed in reality are not considered in this analysis.

Hypothetical increases/decreases of 10% in the relevant exchange rates at Xella (CZK, PLN

and RUB) would have had the following impact on the profit/loss before tax or on equity (without

P&L effect):

Profit/ loss

before taxEquity

Profit/ loss

before taxEquity

k€ k€ k€ k€

CZK 42 34 (51) (42)PLN 2,710 2,195 (3,322) (2,691)RUB 827 661 (1,011) (808)

Effect of changes in exchange rates 2014

Currency

Increase Decrease

Profit/ loss

before taxEquity

Profit/ loss

before taxEquity

k€ k€ k€ k€

CZK (14) (11) 17 14PLN 2,486 2,013 (3,038) (2,461)RUB 2,359 1,887 (2,883) (2,306)

Currency

Increase Decrease

Effect of changes in exchange rates 2013


64 of 81

Other Market Risks

Other market risks relate to the risk of price fluctuations in the commodities markets which are

partly secured against by means of long-term supply agreements entered into with physical

suppliers as well as by derivative transaction entered into with banks.

Derivative Financial Instruments

A breakdown of derivative financial instruments in accordance with the hedging strategy

pursued by Xella is provided below:

Derivative financial instruments Dec. 31,

2014

Dec. 31,

2013

Fair value Fair value

k€ k€

Currency instruments with a positive market value 780 1,816Other derivatives with a positive market value 9Total 780 1,825

Currency instruments with a negative market value 52 371Other derivatives with a negative market value 766Total 818 371

The fair values are accounted for on the basis of the discounted cash flow method.

The next table shows the contractually agreed, undiscounted debt service payments due on the

primary financial liabilities and derivative financial assets and liabilities over time:

Debt service payments* 2015 2016 2017-2019 2020-2024 2025 and

thereafter

k€ k€ k€ k€ k€

Bank liabilities (48.286) (201.416) (90.828)Bond liabilities (12.773) (12.752) (358.979)Finance lease liabilities (1.856) (1.856) (2.717) (250)Liabilities to shareholders and non-controlling interests (67) (1.184.322) (1.018) (7.975)Other financial liabilities (2.000) (1.368) (3.220) (85)Financial liabilities (without derivatives) (64.983) (1.401.714) (456.763) (250) (8.060)

(50.614)51.106

(11.354)11.296

Derivative financial instruments 434

* (-) payments made/ (+) payments received

Derivative financial assets

Derivative financial liabilities


65 of 81

Debt service payments* 2014 2015 2016-2018 2019-2023 2024 and

thereafter

k€ k€ k€ k€ k€

Bank liabilities (57.882) (50.270) (303.900)Bond liabilities (24.000) (24.000) (358.000)Finance lease liabilities (1.923) (1.923) (4.398) (282)Liabilities to shareholders and non-controlling interests (589) (1.111.816) (1.085) (7.975)Other financial liabilities (2.000) (1.368) (3.203) (96)Financial liabilities (without derivatives) (86.395) (1.189.377) (670.588) (8.353)

(55.407)56.142

(42.377)41.737

Derivative financial instruments 96

* (-) payments made/ (+) payments received

Derivative financial liabilities

Derivative financial assets

Cash flows related to liabilities to shareholders and non-controlling interests taken in relation to

the sale of the Xella Group in 2008 have been calculated based on the assumption that full

repayment will occur on December 31, 2016 (i.e. diverging from the contractually agreed

maturity date which is December 31, 2058). The contractually agreed cash flows on these

shareholder loans would be 21,487,650 k€ in 2058 (instead of 1,184,322 k€ in 2016).

On call liabilities have been allocated to the earliest possible period in the table.

Reconciliation of Financial Instruments to IAS 39 Categories / IFRS 13 Valuations Levels

– Assets

Book value as

at Dec. 31,

2014

Financial assets

at fair value

through profit

and loss

Financial

assets held for

trading

Loans and

receivables

Available-for-

sale

investments

No IAS 39

category/

Outside the

scope of IFRS 7

Fair value IFRS 13 fair-

value hierarchy

level

k€ k€ k€ k€ k€ k€

Loans 4,321 4,321 4,321 level 2Other investments 12,101 9 12,092 12,101 level 1+2Other financial assets (non-current) 38,597 38,597 38,597 level 2Financial assets (non-current) 55,019 9 4,321 12,092 38,597 55,019

Trade and other receivables (non-current) 2,206 2,206 2,206

Trade receivables (current) 117,123 117,123 117,123 level 2Receivables from construction contracts 1,225 1,225 1,225 level 2Other receivables (current) 18,514 5,900 12,614 18,514 level 2Trade and other receivables (current) 136,862 124,248 12,614 136,862

Derivatives 780 780 780 level 2Receivables from associates (at equity) (current) 488 488 488 level 2Receivables from other investments (current) 8 8 8 level 2Receivables from shareholders and non-controlling interests (current) 1,418 1,418 1,418 level 2Other financial assets (current) 16,199 772 15,427 16,199 level 2Financial assets (current) 18,893 780 2,686 15,427 18,893

Cash and cash equivalents 122,765 122,765 122,765 level 2

Reconciliation of financial assets

to IAS 39 categories / IFRS 13 Valuation Levels

Book value as

at Dec. 31,

2013

Financial assets

at fair value

through profit

and loss

Financial

assets held for

trading

Loans and

receivables

Available-for-

sale

investments

No IAS 39

category/

Outside the

scope of IFRS 7

Fair value IFRS 13

fair-value

hierarchy level

k€ k€ k€ k€ k€ k€ k€

Loans 3,476 3,476 3,476 level 2Other investments 12,442 9 12,433 12,442 level 1+ 2Other financial assets (non-current) 61,385 61,385 61,385 level 2Financial assets (non-current) 77,303 9 3,476 12,433 61,385 77,303

Trade and other receivables (non-current) 2,180 2,180 2,180

Trade receivables (current) 121,028 121,028 121,028 level 2Receivables from construction contracts 368 368 368 level 2Other receivables (current) 20,859 6,514 14,345 20,859 level 2Trade and other receivables (current) 142,255 127,910 14,345 142,255

Derivatives 1,825 1,816 9 1,825 level 2Receivables from associates (at equity) (current) 485 485 485 level 2Receivables from other investments (current) 6 6 6 level 2Receivables from shareholders and non-controlling interests (current) 1,321 1,321 1,321 level 2Other financial assets (current) 37,793 970 36,823 37,793 level 2Financial assets (current) 41,430 1,816 2,782 36,832 41,430

Cash and cash equivalents 107,200 107,200 107,200 level 2

Reconciliation of financial assets

to IAS 39 categories / IFRS 13 fair-value-hierarchy levels


66 of 81

The fair value of financial instruments traded on an active market is based on the market price

on balance sheet date. As at December 31, 2014 other investments include investments valued

at stock market prices of 1,247 k€ (PY: 1,142 k€) (IFRS 13 valuation level 1).

The above listed derivatives are valued on the basis of observable market data such as interest

rates and foreign exchange rates (level 2 of the IFRS 13 valuation categories).

The fair value of financial instruments that are not based on observable market data

(unobservable inputs) is determined with the aid of valuation techniques, primarily the

discounted cash flow method (IFRS 13 valuation level 3).

Reconciliation of Financial Instruments to IAS 39 Categories / IFRS 13 Valuations Levels

– Liabilities

Book value as

at Dec. 31,

2014

Financial

liabilties held

for trading

Other financial

liabilities

No IAS 39

category/

Outside the

scope of IFRS 7

Fair value IFRS 13

fair-value

hierarchy level

k€ k€ k€ k€ k€

Bank liabilities (non-current) 279,294 279,294 279,294 level 2Bond liabilities (non-current) 319,313 319,313 331,962 level 2Finance lease liabilities (non-current) 4,434 4,434 4,449 level 2Liabilities to shareholders and non-controlling interests (non-current) 1,045,855 1,045,855 1,112,595 level 2Other financial liabilities (non-current) 3,849 3,849 4,399 level 2Financial liabilities (non-current) 1,652,745 1,648,311 4,434 1,732,698

Trade and other liabilities (non-current) 162 162 162 level 2

Trade liabilities (current) 103,840 103,840 103,840 level 2Advance payments by customers 4,366 4,366 4,366 level 2Liabilities from construction contracts 1,425 1,425 1,425 level 2Other liabilities (current) 25,306 8,841 16,466 25,306 level 2Trade and other liabilities (current) 134,937 112,681 22,257 134,937

Bank liabilities (current) 33,111 33,111 33,111 level 2Finance lease liabilities (current) 1,770 1,770 1,770 level 2Liabilities to shareholders and non-controlling interests (current) 180 180 180 level 2Derivatives 818 818 818 level 2Other financial liabilities (current) 2,002 2,002 2,002 level 2Financial liabilities (current) 37,881 818 35,293 1,770 37,881

Reconciliation of financial liabilities


Book value as

at Dec. 31,

2013

Financial

liabilties held

for trading

Other financial

liabilities

No IAS 39

category/

Outside the

scope of IFRS 7

Fair value IFRS 13

fair-value

hierarchy level

k€ k€ k€ k€ k€

Bank liabilities (non-current) 314,256 314,256 314,256 level 2Bond liabilities (non-current) 291,218 291,218 326,150 level 2Finance lease liabilities (non-current) 6,029 6,029 5,850 level 2Liabilities to shareholders and non-controlling interests (non-current) 980,852 980,852 1,006,952 level 2Other financial liabilities (non-current) 3,843 3,843 4,082 level 2Financial liabilities (non-current) 1,596,198 1,590,169 6,029 1,657,290

Trade and other liabilities (non-current) 172 172 172 level 2

Trade liabilities (current) 103,882 103,882 103,882 level 2Advance payments by customers 2,429 2,429 2,429 level 2Liabilities from construction contracts 1,862 1,862 1,862 level 2Other liabilities (current) 32,802 8,827 23,976 32,802 level 2Trade and other liabilities (current) 140,975 112,709 28,267 140,975

Bank liabilities (current) 38,852 38,852 38,852 level 2Finance lease liabilities (current) 1,590 1,590 1,590 level 2Liabilities to investments (current) level 2Liabilities to shareholders and non-controlling interests (current) 522 522 522 level 2Derivatives 371 371 371 level 2Other financial liabilities (current) 2,030 2,030 2,030 level 2Financial liabilities (current) 43,365 371 41,404 1,590 43,365

Reconciliation of financial liabilities



67 of 81

The fair values of the non-current financial liabilities are generally determined by discounting

future contractually agreed cash flows at the current market rate. The fair value for non-current

liabilities to shareholders and non-controlling interests stated above has been calculated based

on the assumption that full repayment will occur on December 31, 2016 (i.e. diverging from the

contractually agreed maturity date which is December 31, 2058). The fair value based on

contractually agreed maturity date would be 2,500,428 k€ instead of 1,112,595 k€. Bond

liabilities and liabilities to shareholders and non-controlling interests are accounted for at

amortized cost. For both financial instruments the deviation between book value and fair value

is based on the contractually agreed fixed interest rate which is fixed on a higher level than the

corresponding actual market interest rate as per year-end 2014.

Due to their short terms, the fair value of current trade and other liabilities and current financial

liabilities correspond to their carrying amounts.

The net result of IAS 39 categories breaks down as follows:

Jan. 1st -

Dec. 31,

2014

Jan. 1st -

Dec. 31,

2013

k€ k€

Result from financial assets held-for-trading (1,492) 2,702Result from available-for-sale investments 708 3,513Result from loans and receivables (607) (862)Result from other financial liabilities (144,954) (117,210)Total (146,345) (111,857)

Net result of IAS 39 categories

The net result of the above categories under IAS 39 is distributed among the following line items

of the Statement of Income: other income, other expenses, result from other investments,

financial expenditure, other financial result. Result from other financial liabilities mainly consists

of interest expenses to third parties of 80,382 k€ (PY: 78,721 k€), fees for financial activities of

18,588 k€ interest expenses on bond liabilities of 17,701 k€ (PY: 24,000 k€) and 13,490 k€ (PY:

5,245 k€) amortization of financing fees incurred in connection with the SFA financing in 2008.

In principle, result from IAS 39 categories mainly consists of interest, dividends and changes of

market prices.

24. Contingencies

As far as figures can be estimated, as at December 31, 2014 there are contingent liabilities of

18,833 k€ (PY: 5,138 k€). No contingent liabilities to associated companies accounted for at-

equity exist at year-end 2014 (PY: 0 k€). As at December 31, 2014 there are no contingent

assets (PY: 3,540 k€).


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Because of the long useful life of certain of the products, it is possible that latent defects might

not appear for several years. In isolated cases this may lead to obligations which cannot be

estimated at present in terms of amount or their impact on the net assets, financial position and

results of earnings.

Xella is currently facing potential warranty, product liability and damage claims by several

building owners in connection with the delivery of building materials by former Haniel

Baustoffwerke from three plants in North Rhine-Westphalia, Germany, between end of 1987

and the beginning of 1996. Calcium silicate units had been produced in the relevant period

applying an alternative production method which substituted another product for lime. Although

the relevant calcium silicate units displayed the required compressive strength immediately after

production, over the years some of the calcium silicate units lost their compressive strength

after being exposed to permanent moisture with cracks resulting in the finished masonry. All

identifiable risks are covered by appropriate provisions such as the (constructive) provisions for

possible building damages (see note 12) in connection with the delivery of these calcium silicate

units. In this special case, payments exceeded the provision may (according to the SPA) be

claimed back by XI (BM) Holdings GmbH, Duisburg / Germany from Franz Haniel & Cie. GmbH,

Duisburg / Germany as it is covered by respective hold-harmless agreements (see note 4).

In connection with the supply and installation of building materials for the construction of a

Mexican hotel in the years 2007 and 2008 the two Mexican customers have filed a claim against

our 100%-owned subsidiary Xella Mexicana S.A. de C.V. and other involved parties which do

not belong with the Xella Group. At first instance, Xella Mexicana and the other parties were

sentenced to indemnify the claimants with the equivalent of 18,833 k€ mainly for consequential

damages and losses. The judgement was issued and released for publication on September 30

/ October 2, 2014. Xella Mexicana has filed an appeal on October 16, 2014. After consultation

with the engaged lawyers the claim asserted against Xella Mexicana appears unfounded.

Compliance of work performed by Xella Mexicana with the supply and installation agreement

was confirmed by the claimants themselves in written form in the second quarter of 2008 as well

as by the release of a performance bond in June 2009. Any warranty claims under the contract

are in any case time-barred.

25. Corporate Acquisitions and Divestments

No corporate acquisitions occurred in the reporting period.

In the Building Materials segment, 100% of the shares in Baoding Xella Xiangfeng Calcium

Silicate New Building Materials Co., Ltd., Baoding, China were sold for a cash compensation of

1,542 k€ on 20 February, 2014.


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In the period under review, the company did not report sales or a stand-alone profit or loss after

taxes. Profit from divestment was 188 k€.

In 2014, assets and liabilities disposed of were as follows:

Assets and liabilities disposed of in connection

with business divestments

Carrying

amount

k€

Property, plant and equipment 1,020

Non-current assets 1,020

Inventories 180Trade and other receivables 25Cash and cash equivalents 36

Current assets 241

Total assets 1,261

Non-current liabilities

Trade and other accounts payable 135

Current liabilities 135

Total liabilities 135

The Group’s Building Materials segment acquired additional shares in Siporex dd, Tuzla,

Bosnia-Herzegovina increasing interest held from 94.28% to 94.45% by means of transactions

not leading to changes of control.

Cash compensation for additional shares in Siporex dd, Tuzla, Bosnia-Herzegovina was 3 k€ for

shares held by owners of non-controlling interest in the negative amount of 2 k€. The resulting

balance was allocated to profit reserves.

26. Consolidated Statement of Cash Flows

The Consolidated Statement of Cash Flows pursuant to IAS 7 presents the changes in cash

and cash equivalents of the Group in the course of the reporting period due to cash inflows and

cash outflows. It is classified by cash flows from operating, investing, and financing activities.

The cash flows from operating activities are derived using the indirect method from the

consolidated net profit or loss for the year. Cash Flows from investing and financing activities

are mainly determined using the direct method.

The balance of cash and cash equivalents reported on balance sheet date is the sum of cash

in hand and bank balances with a short maturity and checks.

Changes of trade working capital and changes in other working capital are largely included in

the notes to the Consolidated Statement of Financial Position and to the Statement of Income.

Foreign exchange effects, non-cash changes of CO2 certificates, interest components of

pension liabilities and other non-current provisions as well as other non-cash effects are

eliminated. Also eliminated are the non-cash effects of the changes of non-current and current


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receivables from the indemnity by Franz Haniel & Cie. GmbH, Duisburg / Germany, and of the

provisions related thereto.

The cash flow from operating activities contained taxes paid on income of 15,669 k€

(PY: 18,198 k€). Other non-cash income and expenses in the cash flow from operating activities

mainly include foreign exchange effects not affecting payment, additions to and releases of

impairments of current assets, and releases of government grants.

Cash flow from investing activities mainly contained investments in property plant and

equipment, spare parts included.

Cash flow from investing activities of 2014 included cash received of 1,506 k€ (net of cash

disposed) from the divestment of Baoding Xella Xiangfeng Calcium Silicate New Building

Materials Co., Ltd., Baoding, China.

The acquisition of additional shares in consolidated subsidiaries without change of control is

shown under financing activities as stipulated by IAS 7.

Additions to other non-current and current financial assets (824 k€, PY: 591 k€); mainly

consisting of loans, also include additions to available-for-sale investments (0 k€, PY: 71k€).

Disposals of other non-current and current financial assets (9,552 k€, PY: 6,485 k€) mainly

related to the repayment of various loans and other financial receivables as well as dividends

received from associated companies at equity in the amount of 1,409 k€ (PY: 1,147 k€).

Cash flow from investing activities contained interest received of 1,210 k€ (PY: 1,026 k€) and

dividends received of 1,116 k€ (PY: 1,025 k€). Non-cash investments in non-current property,

plant and equipment in the form of finance leases amounted to 176 k€ (PY: 5 k€).

Cash paid and received from financing activities in the reporting year includes payments

made to non-controlling interests comprise dividends of corporations (2,132 k€, PY: 2,300 k€).

In 2014 Xella acquired additional shares in a Bosnian Building Materials company paid in cash

(3 k€).

In 2013 acquisitions of additional shares in a Bosnian and of the residual shares in two German

Building Materials companies were paid in cash (6,678 k€). Of the acquisition of the residual

shares in a Dutch Building Materials company 1,252 k€ were paid in cash while 1,368 k€ were

yet unpaid as at December 31, 2014. In total, the cash purchase prices of acquisitions of

additional shares in the prior year in companies already consolidated in the Building Materials

segment amounted to 7,930 k€.

Cash interest payments amounted to 40,860 k€ (PY: 46,943 k€) including financing fees

(5,212 k€, PY: 4,834 k€). 0 k€ was capitalized as part of capital expenditure (PY: 534 k€).


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Currently, the Xella Group is not required to pay accrued interest on shareholder loans under

the Shareholder Loan Agreements.

The negative cash flow from financing activities overall decreased by 27,543 k€ mainly due to

the decrease of net repayments by 13,498 k€ including the repayment of the fixed rate Senior

Secured Note of 300,000 k€ and the issuance of a floating rate Senior Note of 325,000 k€, the

decrease of interest and fees paid by 6,083 k€ mainly pertaining to reduced interest rates

related to the Senior Secured Note issuance June 3, 2014, and the decrease of payments for

the acquisition of shares without control by 7,927 k€.

Unscheduled repayments of financial debt in total amounted to 360,140 k€ (PY: 47,748 k€)

including repayment costs (17,100 k€, PY: 0) and minority shares in the profit distribution of

limited partnerships of 0 k€ (PY: 980 k€) in accordance with IAS 32.

27. Segment Reporting

IFRS 8 requires the management approach for segment reporting. Accordingly, the operating

segment information is reported based on the internal organization and management structure,

which is the internal financial reporting to the Chief Operating Decision Makers, and is

represented by the Management Board of Xella.

Xella identified four reportable segments (Building Materials, Lime, Dry Lining, Ecoloop), which

are mainly separately organized and managed according to the products sold and services

provided, the trademarks, the production processes, the sales channels and the customer

profiles. The segment directors, responsible for the segment operating result, report directly to

the chief decision makers of Xella.

Xella mainly produces and markets building materials (calcium silicate units, autoclaved aerated

concrete and mineral insulation), gypsum fiber boards and cement-bonded boards as well as

lime. The product trademarks in the Building Materials segment are Silka, Ytong, Hebel and

Multipor, for the Dry Lining segment Fermacell and for the Lime segment Fels.

Since 2013 Ecoloop has been a new segment in the Xella Group. The innovative Ecoloop

process allows carbon-bearing carriers, such as biomass or plastic, to be converted into high

grade synthetic gas. This method will allow energy-intensive industries to reduce their reliance

on fossil fuels and thus improve the carbon footprint over the long term. Ecoloop is still a start-

up.

The Holding mainly contains the Group holding company Xella International S.A., Luxembourg,

which is responsible for strategic management decisions with respect to the segments. In

addition the Holding segment includes Xefin Lux S.C.A., Luxembourg, a structured financing

entity established for the primary purpose of facilitating the offering of Senior Secured Notes.


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Xella assesses the performance of the operating segments based on a measure of normalized

earnings before interest, income taxes, depreciation, amortization and impairment losses

(Normalized EBITDA). This measurement basis excludes the effects of unusual or non-

recurring income and expenses, e.g. restructuring costs or expenses for attempted acquisitions

or divestments.

The inter-segment transactions are concluded at arm’s length. The sales from external parties

reported to the Management Board of Xella are measured in a manner consistent with that in

the Consolidated Statement of Income.

The segment information for the reportable segments is as follows:

Building

Materials BU

Lime BU Dry Lining BU Ecoloop BU Holding Total

k€ k€ k€ k€ k€ k€ k€

Sales from external customers and associates 808,724 239,937 224,274 1,272,935Inter-segment sales 14,212 41,252 7 1,249 (56,720)Segment sales 822,936 281,189 224,281 1,249 (56,720) 1,272,935Material income / expense items from

Inventory write-down* (307) (10) (317)Impairment of property, plant & equipment* (12,591) (12,591)

Profit / loss (-) from disposal of property, plant & equipment* 825 (15) (8) 802

Reversals of provisions* 4,707 123 993 86 5,909

EBITDA* 105,304 69,102 27,859 (1,110) (477) 200,678

Building

Materials BU

Lime BU Dry Lining BU Ecoloop BU Holding Total

k€ k€ k€ k€ k€ k€ k€

Sales from external customers and associates 803,316 240,849 209,930 1,254,095Inter-segment sales 13,766 40,180 14 571 (54,531)Segment sales 817,082 281,029 209,944 571 (54,531) 1,254,095Material income / expense items from

Inventory write-down* (658) (2) (15) (675)Impairment of property, plant & equipment* (641) (641)

Profit / loss (-) from disposal of property, plant & equipment* 468 223 34 725

Reversals of provisions* 5,002 1,360 527 6,889

EBITDA* 103,914 69,158 25,191 (1,518) (277) 196,468

Consoli-

dation

Segment information - Jan 1st - Dec 31, 2014

*) after normalization

*) after normalization

Segment information - Jan 1st - Dec 31, 2013 Consoli-

dation

Despite the persistently challenging economic environment the Xella Group improved sales by

18,841 k€ compared to the prior year. While the Building Materials Business Unit enjoyed

positive business trends in Belgium including UK export, in Poland and in Germany during the

year under review, other key markets in Europe remain caught in recession. France and Italy

could not achieve prior year sales due to a persisting difficult business environment. Russia was

negatively impacted by a capacity extension realized in Q1/2014. Strong sales growth in the Dry

Lining Business Unit was based on the ongoing implementation of a growth strategy with

increased sales volumes in most markets and especially notable for cement bonded boards.

Material non-cash items are explained in note 26.


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Profit/loss before tax was derived as follows:

Jan. 1st -

Dec. 31,

2014

Jan. 1st -

Dec. 31,

2013

k€ k€

Normalized EBITDA 200,678 196,468

Normalization (13,905) (2,538)EBITDA Group 186,773 193,930

Depreciation, amortisation and impairment of property, plant and equipment and intangible assets (excluding goodwill) (127,573) (115,609)Impairment of goodwill 0 (1,065)Financial result (156,836) (113,306)Profit / Loss before tax (97,636) (36,050)

Reconciliation from Normalized EBITDA

to Profit / Loss before tax

In the year under review normalizations mainly included restructuring and severance costs of

17,640 k€ (PY: 5,368 k€), income from the release of real estate transfer taxes in the amount of

5,420 k€ (PY: 0 k€), costs relating to M&A activities of 424 k€ (PY: 393 k€) as well as expenses

for warranty provisions in the amount of 218 k€ (PY: income of 3,670 k€).

Basis of accounting for transactions between reportable segments is IFRS. IFRS is also the

basis for the measurements of segment profit and loss, segment assets and liabilities for each

reportable segment.

In 2014 sales from external customers can be broken down to the following product categories:

Calcium silicate units of 160,452 k€ (PY: 156,842 k€), autoclaved aerated concrete of 466,918

k€ (PY: 471,684 k€), gypsum fiber boards of 144,622 k€ (PY: 139,498 k€), cement-bonded

boards of 26, 884 k€ (PY: 21,574 k€), burnt lime products of 162,377 k€ (PY: 163,914 k€),

limestone of 18,397 k€ (PY: 17,758 k€), limestone powder of 19,858 k€ (PY: 19,191 k€) as well

as services and other sales of 273,426 k€ (PY: 263,635 k€).


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Selected financial information by geographic regions is as follows:

Dec 31, 2013 Jan 1st - Dec

31, 2013

k€ k€

Germany 865,274 884,478 608,583 597,894Netherlands 186,091 188,103 94,203 94,225Belgium 39,096 41,302 75,183 67,037Czech Republic 114,711 120,218 65,255 64,513France 43,020 48,649 64,824 69,689Poland 64,574 68,049 59,489 55,262Switzerland 1,486 1,463 45,933 44,157Russia 29,474 48,239 35,268 41,988China 59,215 57,276 31,363 34,132Other countries 219,039 236,889 192,834 185,198Total 1,621,980 1,694,666 1,272,935 1,254,095

Sales to external customers

Dec 31, 2014 Jan 1st - Dec

31, 2014

k€

Selected financial information by

geographic regions

Non-current assets

k€

Non-current assets include intangible assets, property, plant and equipment, investments in

associates and the non-current portion of other assets. In the Building Materials and Lime

Business Units sales were allocated according to the domicile of the invoicing unit. As in the Dry

Lining Business Unit longer transportation distances are possible sales were allocated

according to the domicile of the customer.

Due to the structure of the customer base and the diversity of Xella’s business activities, there

was no concentration of risk relating to one single customer, region or segment in the years

reported.

28. Related Parties

Selected managers of Xella International S.A., Luxembourg, and other employees and their

close family members have acquired shares in Xella International S.A., Luxembourg, via

XI Management Beteiligungs GmbH & Co KG, Duisburg / Germany within the framework of the

management participation program. The shares were acquired at market value.

The management participation plan is governed by the “Shareholders and Co-Investment

Agreement regarding the Implementation of Management Partnership Plan for the Xella Group“

that was concluded between Xella International Holdings S.à r.l., Luxembourg, XI Management

Beteiligungs GmbH & Co. KG, Duisburg / Germany, XI MPP Verwaltungs GmbH, Duisburg/

Germany, the participants of the program and Xella International S.A., Luxembourg, and

notarized on November 17, 2008. Within the framework of the management participation

program, Goldman Sachs Capital Partners and PAI partners offered the employees listed above

the chance to participate in the Xella Group. This investment leads to a far-reaching

harmonization of the interests of employees and the investors. In principle, the shares can be


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acquired subject to the same terms and conditions under which the shareholders acquired the

shares.

Notwithstanding other provisions in the articles of incorporation and bylaws, Xella International

S.A., Luxembourg, has the right (option) to demand that any employee participating in the

program who leaves an entity of the Xella Group prior to a defined “exit event”, sells and

transfers all indirectly held shares to Xella International S.A., Luxembourg. If this option is

exercised, the leaver has the right to compensation which, depending on the reason for his

departure, can vary in relation to the amount paid in and the market value of the shares, which

can lie below the amount paid in. In the case of a “leaver event”, there is a basic commitment on

the part of Xella International Holdings S.à r.l, Luxembourg, to pay the respective amount.

In the case of an “exit event”, the compensation for the shares held depends on their current

market value, whereby the employee can generally sell the shares held directly to the market.

This means that the program, together with the “leaver” and “exit events”, is treated in

accordance with the standards for equity-settled plans. In this case, the date on which the

benefit was granted has to be determined and the benefit distributed over the time terminating

with the occurrence of an “exit event”. Due to the fact that the employee acquires the shares at

market value, the fair value of the grant is zero, implying that the management incentive

program does not trigger any expense at any time.

Other related parties of the Xella Group are its associates and non-consolidated subsidiaries.

As at December 31, 2014 current receivables from associates amounted to 488 k€ (PY 485 k€)

(see note 4). This relates primarily to unpaid dividends of Kalksandsteinwerk Rückersdorf

GmbH & Co. KG, Rückersdorf / Germany. All business relations with non-consolidated entities

and associates are transacted at arm’s length.

As at December 31, 2014 the Group carried current receivables from non-controlling interests of

1,222 k€ (PY: 1,047 k€) (see note 4).

Liabilities to shareholders and non-controlling interests (see note 10) include liabilities to non-

controlling interests of 5,583 k€ (PY: 5,925 k€). Furthermore, with regard to various contracts

the Xella Group reports liabilities to XI Management Beteiligungs GmbH & Co. KG of 7,238 k€

(PY: 6,829 k€) and liabilities due to Xella International Holdings S.à r.l., Luxembourg, of

1,033,214 k€ (PY: 968,621 k€). These liabilities are based on the following Subscription

Agreements dated August 28, 2008 and later:

� 552,600 k€ (nominal value) from the issue of Tranche 1 PECs Series A (Preferred Equity Certificates Series A Subscription Agreement with Xella International Holdings S.à r.l., Luxembourg, dated August 28, 2008)

� 5,000 k€ (nominal value) from the issue of Tranche 2 PECs Series A (Preferred Equity Certificates Series A Subscription Agreement with Xella International Holdings S.à r.l.,


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Luxembourg, dated August 28, 2008 / subsequently sold to XI Management Beteiligungs GmbH & Co. KG)

� 164,000 k€ (nominal value) from the issue of PECs Series B (Preferred Equity Certificates Series B Subscription Agreement with Xella International Holdings S.à r.l., Luxembourg, dated August 28, 2008)

� 10,000 k€ (nominal value) from the issue of Tranche 2 PECs Series B (Preferred Equity Certificates Series B Subscription Agreement with Xella International Holdings S.à r.l., Luxembourg, dated March 4, 2010)

As at December 31, 2014 receivables against Xella International Holdings S.à r.l. totalled

196 k€ (PY: 274 k€).

Interest of 64,593 k€ (PY: 60,338 k€) was incurred in the reporting period on the interest-

bearing portion of these liabilities against Xella International Holdings S.à r.l. Interest of 410 k€

(PY: 387 k€) was incurred on the liabilities against XI Management Beteiligungs GmbH & Co.

KG.

Liabilities against Goldman Sachs International, London / Great Britain and PAI partners SAS,

Paris/ France mainly refer to Monitoring Service Agreements in the total amount of 3,800 k€

(PY: 3,200 k€) for the period August 29, 2008 to December 31, 2014 and were shown in the

Consolidated Statement of Financial Position as trade liabilities.

All transactions with shareholders and non-controlling interests are made at arm’s length.

Otherwise, no transactions requiring disclosure were conducted by the Xella Group with

members of the management or with entities in whose executive or supervisory board any such

persons are represented. The same applies for members of these persons’ close families.

Persons in key positions at Xella International S.A., Luxembourg, are the members of the

Management Board in the reporting year. The remuneration paid to this group of persons in the

current year amounted to 2,362 k€ (PY: 2,485 k€). Of this total amount, 2,278 k€ (PY: 2,349 k€)

was attributable to benefits falling due in the short-term, 84 k€ (PY: 136 k€) to post-retirement

benefits and 492 k€ (PY: 0 k€) to benefits on account of a termination of the employment

relationship. The present benefit obligation of this group of persons comes to 2,651 k€ (2,353

k€) as of balance sheet date. The current service cost of pensions, added to pension provisions,

for members of the management amounted to 84 k€ (PY: 136 k€) in the reporting period.

.


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29. List of shareholdings


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79 of 81


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30. Significant Events After the End of the Financial Year

In the first quarter 2015 Xella sold its minority shares in Baustoffwerke Münster-Osnabrück

GmbH & Co. KG, Osnabrück / Germany for a purchase price of 15,900 k€. Also in the first

quarter, Xella acquired the residual shares of Xella Kalksandsteinwerk Griedel GmbH & Co KG,

Butzbach-Griedel /Germany and Kalksandsteinwerk Griedel Verwaltungsgesellschaft mbH,

Butzbach-Griedel /Germany (both already fully consolidated) for a cash compensation of 4,653

k€.

In March 2015, Xella announced and commenced the implementation of a 60+ program in order

to reduce production costs and improve the Group’s competitive position. This volunteers

program is offered to appr. 220 production workers aged 60 years or older of Xella’s German

production facilities who wish to retire early at their own request. Participants will receive an

individually calculated one-off compensation. End of application period is March 31, 2015.

There were no other events subsequent to balance sheet date that would have had a significant

impact on the net assets, financial position and results of operations of the Group.


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Luxembourg, March 26, 2015

The Management Board

Jan Buck-Emden Dr. Joachim Fabritius Hans-Jürgen Wiecha

Boudewijn van den Brink Peter Steiner

Marielle Stijger David Richy