Annual Report 2010 Hitachi Zosen Inova AG
Transcription
Annual Report 2010 Hitachi Zosen Inova AG
Annual Report 2010 Hitachi Zosen Inova AG Key Figures at a Glance AE&E Inova AG, Switzerland (in kCHF) Order intake Order backlog Revenues EBITDA EBIT Net income Investments in property, plant and equipment and intangible assets Share capital Net assets Total assets Equity ratio Workforce as of December 31 Audit Certification: The figures stated herein refer to AE&E Inova AG according to IFRS standards and were audited as such by BDO. 20102009 20082007 21,974244,432 837,382 677,591 245,258 632,7881,061,048 800,485 404,935659,699 565,963 415,189 (86,529)33,900 36,387 30,144 (116,061)32,790 35,390 29,193 (113,867) 21,159 39,99823,824 7,6018,258 9,1459,265 40,00040,000 40,00040,000 16,430100,904 89,907 83,079 291,092616,450 593,743 519,320 6 % 16 % 15 % 16 % 338 382 377 327 Hitachi Zosen Inova AG Annual Report 2010 Contents 2Overview Business Year 2010 Hitachi Zosen Inova AG Insolvency of AE&E Group A New Owner and a New Name Overview of Impact and Financial Performance 2010 6 Hitachi Zosen 12 Company Profile Corporation Hitachi Zosen Inova AG Profile and Philosophy History Statement of CEO Organisation Energy from Waste Segments and Products Statement of President of Hitachi Zosen Corporation Key Figures 2007 – 2010 Partner for Sustainable Solutions Services and Products 25 Outlook and Strategy 2011 Hitachi Zosen Inova AG Market Strategy 29 Annual Financial Statements 2010 Hitachi Zosen Inova AG 1 2 Overview Business Year 2010 Hitachi Zosen Inova AG Legal Structure Hitachi Zosen Inova AG before take-over by Hitachi Zosen Corporation Filed for insolvency on 03.12.2010 AE&E Inova Holding AG (“provisorische Nachlassstundung”) Switzerland Finance Holding Sold to Hitachi Zosen Corporation AE&E Inova AG Switzerland on 20.12.2010 Operating Company 100% Included in sale of AE&E Inova AG AE&E KRB AG Switzerland Operating Company 100% AE&E Nanjing Boiler Co. Ltd. PR of China Sold to Altawest SAS, closing 27.01.2011 Operating Company 100% AE&E Maintenance France S.A.S France Holding Included in sale of AE&E Inova France SA to Altawest SAS Hitachi Zosen Inova AG Switzerland * Operating Company 100% Hitachi Zosen KRB AG Switzerland Operating Company 100% Filed for insolvency on 08.02.2011 Operating Company 100% HITZ HOLDINGS U.S.A. INC. USA Holding 100% Legal Entity to be closed in 2011, branch office of Hitachi Sales Company 100% Zosen Inova AG will remain Hitachi Zosen Inova U.S.A. LLC USA Operating Company 100% Legal Entity closed in February 2011 Licencee 100% * The former US-subsidiary, located in Georgia, has been taken over Continuous business AE&E Inova UK Ltd. UK Japan U.S.A. LLC on 12.05.2011 AE&E Inova Ltd. Japan Hitachi Zosen Corporation Operating Company 100% AE&E Inova AB Sweden Legal Structure Hitachi Zosen Inova AG after take-over by Hitachi Zosen Corporation Taken over by Hitachi Zosen Inova AE&E Mechanical Installations International Ltd. UK France SA to Altawest SAS Operating Company 100% AE&E Inc. USA Included in sale of AE&E Inova Operating Company 100% AE&E Inova France Operations S.A.S France Holding AG on 17.12.2010 Operating Company 90% AE&E Inova France SA France Shares transferred to AE&E Inova Changes in AE&E Group Structure Due to excessive indebtedness and an absence of a positive outlook, AE&E Inova Holding AG’s mother company, AE&E Group GmbH, filed for reorganisation proceedings in accordance with Austrian legislation on November 24th 2010 at Vienna Commercial Court. AE&E Inova AG had to depreciate its loan to AE&E Group GmbH and as a consequence AE&E Inova Holding AG filed for insolvency (provisorische Nachlassstundung) on December 3rd in Zurich under Swiss law. On December 20th 2010 AE&E Inova AG, together with its subsidiary AE&E KRB AG, became a company of Hitachi Zosen Corporation, one of the world’s leading groups in the fields of environmental protection, industrial plants, precision and industrial machinery, marine disaster prevention, steel structures and construction machinery. The renaming to Hitachi Zosen Inova AG took place as of February 16th 2011. Project Support Office 100% by Hitachi Zosen Inova U.S.A. LLC. and is together with Hitachi Zosen Inova AG responsible for the Energy-from-Waste business in the United States. The company is owned by Hitz Holdings U.S.A. Inc. and is operationally attributed to Hitachi Zosen Inova AG. Hitachi Zosen Inova AG Annual Report 2010 Take-over of leading company Technology know-how and the Intellectual Property Rights, R&D, skill and people, management, market coverage and the capability to execute turn key projects have been concentrated at AE&E Inova AG, the entity taken over by Hitachi Zosen Corporation and now named Hitachi Zosen Inova AG. Hitachi Zosen Inova AG will grant Inova France SA an exclusive licence for France and other Frenchspeaking countries. Safeguarding the strong market position In 2010, AE&E Inova AG was nominated as preferred bidder for three major turnkey projects in the UK and paved the way for three other European contracts for which it was selected in the first quarter of 2011. Thus Hitachi Zosen Inova AG has secured its strong market position in Europe. Handover and progress of major projects During the year under review, AE&E Inova AG successfully completed the following projects. • In Moerdijk (NL), line #4 was handed over to our customer AZN after one year of efficient operation with an availability of 92%. • 34 months after the project was awarded, AE&E Inova, commissioned as general contractor, successfully handed over line #2 of the Energy-from-Waste plant in Bergen (NO), to the customer. • The construction of the Energy-from-Waste plant in Leudelange (LU), for which AE&E Inova was commissioned as the general contractor, has been completed and PAC has been achieved on schedule. • In Mallorca (ES) the construction of the two-line Energy-from-Waste plant was completed and handed over (PAC) successfully. • Two flue gas cleaning trains were handed over on time at the Energy-from-Waste plant in Giubiasco (CH). Other noteworthy events were the various successfully completed pressure tests in Roosendaal (NL), Riverside (UK), New Haven (UK) and Oslo (NO). All these projects will be ready for handover during 2011. 3 Nevertheless the insolvency situation of AE&E Group GmbH in the last quarter of 2010 resulted in project delays. Immediately after the take-over by Hitachi Zosen Corporation, actions were initiated to accelerate the project execution in order to achieve a timely handover of the projects. At the end of the first quarter 2011 Hitachi Zosen Inova AG managed to successfully catch up any project delays. R&D Development efforts in 2010 were focused on improving both the economic and energy efficiency of Energy-from-Waste plants. Several aspects have been combined to create a more compact plant which achieves higher availability and generates more electric and heat energy for sale. These features, which are currently being offered in the market as a combined package, include an innovative and highly efficient combustion process, improved NOx reduction and latest technologies for flue gas cleaning. The R&D budget for 2011 will be significantly increased in order to further develop these features and strengthen the leading market position of the company. 4 Order intake In 2010 the continuing global economic crisis had still an impact on capital spending. The plant engineering and construction industry was strongly hit with potential clients and banks acting reluctantly with the public hand also cutting back on expenses. This led to a delay of several project awards in our key markets. Beside the difficult market environment, AE&E Inova AG’s ability to get new contracts awarded was strongly affected by the insolvency situation of AE&E Group GmbH. As a result, new orders received by AE&E Inova AG dropped significantly, by 92% (to CHF 21 million down from CHF 244 million in 2009). However AE&E Inova AG was nominated preferred bidder for three major turnkey projects which are expected to be booked within a period of 15 months. Order intake 20102009 Change (in kCHF) in % AE&E Inova AG, ZH 21,974 244,432(91) Revenues The decrease in sales by 39% from CHF 660 million in 2009 to CHF 405 million in 2010 reflects the reduced order intake in 2009/2010 as well as the difficult economic situation AE&E Inova AG was confronted with during the last quarter of 2010. Having been well on track with all major projects in execution until October 2010, AE&E Inova AG suddenly had to face a significant decrease in turnover over the last two months of the year as a consequence of delayed progress on site. Revenues 20102009 Change (in kCHF) in % AE&E Inova AG, ZH 404,935 659,699(39) Order backlog The order backlog decreased by 61% to CHF 245 million compared to the all-time record of CHF 633 million in 2009. As noted above, this decline is due to the difficult market environment in general and the specific economic situation at AE&E Inova AG. Order backlog 20102009 Change (in kCHF) in % AE&E Inova AG, ZH 245,258 632,788(61) Profitability In 2010, the earnings before interest and tax declined from CHF 33 million in 2009 to CHF -116 million. As a result of the insolvency procedures within AE&E Group, AE&E Inova AG had to re-evaluate its intercompany relationships and consequently write off CHF 125 million of bad debts against affiliated companies. Furthermore, the delayed project progress in the last quarter of 2010, combined with the need to increase provisions for acceleration costs and liquidated damages, had a negative impact on the profitability of the company. Hitachi Zosen Inova AG Annual Report 2010 5 Profitability EBIT EBIT EBIT EBIT Change (in kCHF) 2010 margin2009 margin EBIT AE&E Inova AG, ZH (116,061) (29%) 32,790 5%(148,851) Financial situation The cash situation of AE&E Inova at the end of 2010 reflected the economic difficulties of AE&E Group and its affiliated companies. Cash and cash equivalents decreased by 66% mainly due to write- offs of intercompany loans and bad debts combined with decreasing trade payables and receivables resulting from the reduced business volume. Key data of cash flow 20102009 Change (in kCHF) in % Cash flow from operating activities (72,844) 9,715(850) Cash flow from investing activities (61,914) (11,211)452 Cash flow from financing activities 34,181 (27,625)(224) Cash and cash equivalents as of December 31 54,015 158,289(66) Assets and liabilities The balance sheet decreased by 53% in 2010, with total assets going down to CHF 291 million by the end of the period, resulting in an equity ratio of 8%. Besides the aforementioned write-offs resulting from the financial crisis of AE&E Group, the key factor leading to the lower balance sheet totals is the successful completion of five running projects in 2010. Balance sheet summary In % of (in kCHF) 31.12.2010 total assets 31.12.2009 In % of total assets Assets Non-current assets58,194 20 81,580 Current assets232,898 80 534,870 Total assets 291,092 100616,450 Total equity16,430 6 100,904 Non-current debts 29,764 10 39,657 Current debts244,898 84 475,889 Total equity and liabilities 291,092 100616,450 Recapitalisation In order to strengthen the cash and equity position of Hitachi Zosen Inova AG and to regain the necessary financial stability of the company, Hitachi Zosen Corporation agreed to provide the necessary financial support to Hitachi Zosen Inova AG, with a first contribution in early 2011. 13 87 100 16 7 77 100 6 Longtime business partner From 1960 until recently, Hitachi Zosen Corporation was a licensing partner of Hitachi Zosen Inova AG. With this take-over, the joint expertise and years of experience will now be available to all customers in the global market. The long-time partnership forms a solid foundation for the start-up of Hitachi Zosen Inova AG. Successful global player Its headquarters being in Osaka, Hitachi Zosen Corporation has offices and workshops in nearly all regions of Japan. It also has local presence in Singapore, Great Britain, the USA, China, Thailand, UAE, Taiwan, Korea, Vietnam – and, as of 2011, in Switzerland also. With over 8,000 employees, Hitachi Zosen Corporation brings its vast industry know-how to clients all over the world. State-of-the-art solutions Plants and solutions over the world demonstrate Hitachi Zosen Corporation’s competence as a technology and business innovator for integrated products and services. Founded in 1881, Hitachi Zosen Corporation’s aim has always been to provide state-of-the-art solutions giving more comfort today and creating a more affluent tomorrow. 50 Years of Partnership. Hitachi Zosen Inova AG Annual Report 2010 Hitachi Zosen Corporation New Chapter in a 50-Year-Old Partnership Hitachi Zosen Corporation is an internationally operating Japanese industrial enterprise specialising in environmental protection, industrial plants, precision and industrial machinery, marine disaster prevention, steel structures and construction machinery. Segments of Hitachi Zosen Corporation Environmental Systems Plants Machinery Process Equipment Infrastructure Precision Machinery Energy-from-Waste plants Recycling and sorting plants O&M business PFI projects Biomass utilisation plants Water treatment systems Soil environment restoration systems Desalination plants Chemical plants Oil and gas plants SCR NOx removal plants Power generation facilities (gas turbine and gas engine) Co-generation systems New energy (wind power and fuel cells) Marine diesel engines Press machines Boilers Process equipments Nuclear fuel cyclingrelated equipments Shield tunneling machines Bridges Hydraulic gates Marine civil engineering Marine disaster prevention systems FPD manufacturingrelated systems Food and pharmaceutical machinery Plastic machinery OELD production systems Vacuum equipments Laser patterning equipments Polishing machines Compound electrolytic polishing machines 7 8 Energy from Waste as a Core Business of Hitachi Zosen Corporation References As a former licensing partner, Hitachi Zosen Corporation has implemented Hitachi Zosen Inova’s core technology in more than 200 Energyfrom-Waste plants in Japan, China and other countries throughout East Asia. Business in China Over the last three years, Hitachi Zosen Coporation has developed a dominant market position for thermal waste treatment plants in China. One example is the Energy-from-Waste contracts won by Hitachi Zosen Corporation, which include the installation of Hitachi Zosen Inova’s cutting-edge combustion technology at one of the world’s largest Energy-from-Waste plants, in Laogang near Shanghai. The facility’s four lines will have a combined capacity of 1 million tonnes (t) per year. O&M, PFI and REMON In order to ensure that refuse incineration facilities and other environmental plants and equipment are used to their fullest capacity, Hitachi Zosen Corporation provides total support for their maintenance and management, which makes it the market leader in the Japanese O&M (Operation & Maintenance) business. The group’s flexible responses and finely tuned services include the dispatch of skilled engineers and workers, remote operations, technical support and emergency response. In addition to O&M, the group is actively engaged in business that offers solutions to various environmental problems through PFI (Private Financial Initiatives) which are involved in long-term facility management. Furthermore, the company’s REMON system (remote monitoring system), which was developed as an environmental IT solution technology, offers total support for a new form of daily operation and long-term management of refuse incineration facilities. Hitachi Zosen Inova AG Annual Report 2010 9 Statement of Mr. Furukawa, President of Hitachi Zosen Corporation First of all, we would like to express our sincere appreciation for the warm message and assistance for us after the Great East Japan earthquake. With whole hearted encouragement, the affected region and people of Japan have started the united efforts for the restoration of the disaster area. Fortunately, the factories and offices of Hitachi Zosen Group experienced no major damage from the earthquake and tsunami. As a company specialized in social infrastructure and optimum processing of waste and debris, we are determined to contribute to the reconstruction of the stricken area with our know-how and technology. We are not a financial investor Hitachi Zosen, primarily named as “Osaka Iron Works”, was founded in Osaka, Japan, in 1881 as a shipbuilding company. Subsequently, the company has successfully diversified its business into manufacture of steel structures, machinery, process equipment, and also plant engineering. As of March 2011, our consolidated sales reached to Yen 287 billion (CHF 25 billion) with 8,528 workforces in head office and 63 consolidated subsidiaries. In essence, we are a major heavy machinery manufacturing and engineering company in Japan, and not a financial investor. Satisfactory relationship with Inova Since 1960, our company has worked jointly with Von Roll (present name: Hitachi Zosen Inova AG) in designing and construction of Energy-from-Waste, and has developed the satisfactory working relationship for the last 50 years. We built more than 200 Energyfrom-Waste plants in Japan, China, Korea and Taiwan in the last 50 years under the license of Von Roll and subsequent AE&E Inova AG (present name: Hitachi Zosen Inova AG). Bankruptcy of AE&E News from Austria regarding the bankruptcy of AE&E Group GmbH, the former parent company of AE&E Inova AG, came to my attention in the latter part of 2010, and I immediately dispatched our staffs to the senior management of AE&E Inova. Upon receipt of the report from our staffs in Zurich, we came to the conclusion that AE&E Inova was financially affected by the bankruptcy of its parent company, yet its technology and presence in Europe remained intact being supported by dedicated engineers and staffs in Zurich. After the formal due diligence, we decided to acquire AE&E Inova as our new group company on December 20th, 2010. Rationale behind our acquisition is Inova’s proven technology, firm presence in European Energy-from-Waste market, skilled engineers, and our knowledge and potential synergy in global Energy-from-Waste business. To be No. 1 in global Energy-from-Waste market After the acquisition of Inova, our group is well positioned to seek No. 1 share in global Energy-from-Waste market, combining North American and European market developed by Inova and Japanese and Chinese market cultivated by Hitachi Zosen. On the top of it, we decided to develop the emerging markets such as Asia jointly with Inova. Our medium-term management plan and commitment to Inova Aiming at the substantial growth of our group in the next five years, the new medium-term management plan called “Hitz 2016 Vision” was cited in this May, which entails the ambitious target of Yen 500 billion (CHF 43 billion) on a consolidated sales in FY 2016 including Yen 180 billion (CHF 15 billion) in the segment of Environmental Systems. We are planning to achieve the new target through the enhancement of global business while trying to attain No. 1 position in the respective products segments. Needless to say, social infrastructure and environmental protection are expected to be major contributor, thus Inova should play a vital role in our group strategy. Inova is not a new name to Hitachi Zosen. Given the satisfactory long-term relationship, integration of Inova has been carried out smoothly. In the first five months in this year, Inova successfully obtained major Energy-from-Waste contracts from European customers. As the new parent company of Inova, we are fully committed to support the long-term growth of Inova and expansion of the global Energy-from-Waste business. Minoru Furukawa Chairman & President of Hitachi Zosen Corporation To be No. 1 in Global Energy-from-Waste Market. 10 Key Figures Hitachi Zosen Corporation Financial Highlights FY 2007 – 2010 2010 2009 20082007 Hitachi Zosen Corporation FY ending FY ending FY endingFY ending and consolidated subsidiaries March 2011March 2010 March 2009 March 2008 in mJPY in kCHF in mJPY in kCHF in mJPY in k CHF in mJPY in kCHF Operating results Order intake 246,067 2,818,960 337,271 3,863,787 253,1412,900,000 337,701 3,868,725 Order backlog 356,987 4,089,655 376,8014,318,055 313,179 3,588,945 358,7444,116,462 Revenues 287,196 3,290,136 273,526 3,133,532 298,605 3,420,839 295,5033,385,290 Operating income 13,359 153,030 13,557 155,310 11,678 133,784 10,826124,023 Net income 9,675 110,826 7,906 90,572 1,448 16,588 15,695179,803 Cash flows Cash flow from operating activities 17,136 196,311 5,508 63,100 2,348 26,899 (730)(8,363) Cash flow from investing activities (3,217) (36,843) (12,659)(145,022) (7,492) (85,829) 26,970 308,970 Cash flow from financing activities (9,630) (110,310) 8,755 100,298 1,169 13,392 (10,714)(122,740) Cash and cash equivalents as of fiscal year end 55,915640,566 51,690 592,164 50,095 573,892 54,229 621,251 Financial position Net assets 101,969 1,168,152 93,2001,067,694 85,843 983,423 85,595 980,571 Total assets 380,249 4,356,146 349,3314,001,948 367,473 4,209,783 365,537 4,187,605 Investments in property, plant and equipment and intangible assets (account balance) 132,154 1,513,965 133,7341,532,066 134,899 1,545,412 132,338 1,516,073 Financial indicators Shareholder’s equity ratio (%) 22.9 22.5 19.319.4 ROIC (%) 7.3 7.6 6.86.8 Debt-equity ratio (times) 1.2 1.4 1.51.4 Workforce as at fiscal year end 8,528 8,004 7,989 7,820 Fiscal year starts on April 1 and ends on March 31 of the following year. Distribution of shareholding by shareholder category Individuals, etc. 49.0% 1 CHF= JPY 87.29 Financial 30.4% institutions Securities 3.1% firms Other domestic Non-residents 13.3% 4.2% corporations Corporate data Hitachi Zosen Corporation Date of establishment April 1, 1881 Paid-in capital 45,442 mJPY Number of employees 8,528 Consolidated subsidiaries 63 Number of shares authorized 2,000,000,000 Number of shares issued 796,073,282 Headquarter offices Osaka & Tokyo Stock listingTokyo Stock Exchange, Osaka Securities Exchange Hitachi Zosen Inova AG Annual Report 2010 Order intake (bnJPY) Order backlog (bnJPY) 11 Revenues (bnJPY ) Export ratio (%) 17.3% 15.9% 16.6% 15.6% 338 337 253 359 Operating income (bnJPY) Operating margin (%) 5.0% 4.7% 11 3.9% 14 12 07080910 Net income (bnJPY) Net income per share ( JPY) 19.7 13 10.0 16 07080910 Revenues by segment 3.2% Others Precision Machinery 13.5% 296 299 274 287 Enviromental 1.8 1 8 12.2 Middle East 1.4% Total assets (bnJPY) Shareholder’s equity ratio (%) 19.4% 19.3% 22.5% 22.9% 380 366 367 349 10 07080910 Revenues by region Europe 0.7% 07080910 07080910 2.0% North America 1.0% Others Asia 12.2% 32.4% Systems Infrastructure 13.4% neuer Inhalt 82.7% Japan Process Equipment 6.0% Machinery 21.2% 313 357 246 07080910 3.7% 377 10.3% Plants 12 Company Profile Hitachi Zosen Inova AG History of Hitachi Zosen Inova AG 1823 Ludwig von Roll was the founder of the “Company of Ludwig von Roll’s ironworks” 1933 Establishment of “L. von Roll Aktiengesellschaft für kommunale Anlagen” ( today Hitachi Zosen Inova ) 1960 Beginning of long-term license partnership between Von Roll and Hitachi Zosen Corporation 1937 / 39 Construction of first waste treatment plant in Dordrecht, Netherlands 2003 Integration into AE&E Group through take-over of Von Roll Inova Holding by Austrian Energy & Environment For more than 70 years, Hitachi Zosen Inova has been forging the global development of thermal waste treatment and energy recovery from waste. With crucial innovations to its credit, it is among the pioneers that have defined the state of the art in waste management, furthering progress with advanced technologies. 2010 December 20th AE&E Inova AG together with its subsidiary AE&E KRB became a company of Hitachi Zosen Corporation Pioneer in thermal waste treatment Hitachi Zosen Inova was founded in 1933 as “L. von Roll Aktiengesellschaft für kommunale Anlagen”. It was originally a department of “Gesellschaft der Ludwig von Roll’schen Eisenwerke”, a steel mill and foundry that dates back to 1823. The purpose of the new department was to focus on thermal waste treatment. Four years later, it built the first turnkey plant for the Dutch city of Dordrecht. Emphasis on technology In its first few years, the company relied on several licenses, as with Hitachi Zosen Corporation to construct plants with technologies that were then state of the art. But from the very beginning, it also developed proprietary and improved technologies. Subsequently, with its own designs, it repeatedly established milestones in the domain of thermal waste treatment, including the reciprocating grate, advanced methods for flue gas purification, and processes for the treatment of residues. Hitachi Zosen Inova AG Annual Report 2010 13 In 2003, the Von Roll Inova Group was acquired by the AE&E Group, a member of A-Tec Industries AG. AE&E was an industrial group with a global reach in thermal energy generation and environmental technologies. By the end of 2010 AE&E Inova AG together with its subsidiary AE&E KRB AG have been sold to Hitachi Zosen Corporation which brought the company a new name and new partnerships. Tradition as a commitment Hitachi Zosen Corporation has been a licensing associate of Hitachi Zosen Inova AG for more than 50 years, using the former Von Roll Technology. During this time, Hitachi Zosen Corporation has implemented its partner’s core technology in more than 200 Energy-from-Waste plants in Japan, China and other countries throughout East Asia. Hitachi Zosen Inova AG and Hitachi Zosen Corporation combine the competencies of two strong partners in the Energy-from-Waste sector. After all, tradition is a commitment. Yesterday, today, and tomorrow. Global expansion In 1960 Von Roll opened its first offices in Germany and Japan, core markets at that time. In 1966, subsidiaries were founded in France and Sweden, and in 1975, the company established a presence in the USA where it built some of the world’s largest plants. This group, consisting of Von Roll Environmental Ltd in Zurich and its affiliated companies, was always at the forefront of the industry known as the “Von Roll Inova Group”. Hitachi Zosen Inova – your partner for sustainable solutions Hitachi Zosen Inova is committed to a balanced synthesis of tradition and innovation. The company’s plants rely on many decades of experience and reflect the determination to always be a step ahead in technology. The customer’s benefit is thoroughly engineered solutions that combine tried and tested technologies with innovative processes. 14 Statement of Mr. Silbermann, CEO of Hitachi Zosen Inova AG There is no denying it: 2010 was not an easy year for our company. And yet, 2010 also was a year that most impressively demonstrated the exceptional strengths and the international standing of our company. Despite the big turmoil created by the bankruptcy of the AE&E Group, our company in Zurich managed to keep its leading market position. New name It was this strong, dominating position that made the Hitachi Zosen Corporation decide to acquire our company when our former mother company filed for insolvency. The acquisition actually marks the last logical step in a close technical cooperation of more than 50 years during which time Hitachi Zosen had been our licensing partner for the Asian market. As a subsidiary of the internationally operating Japanese industrial enterprise, we are now doing business under the name of Hitachi Zosen Inova AG. New perspectives Being part of the Hitachi Zosen Corporation puts us in a favorable position to face the challenges of a market that has recovered after a recent downturn. The Energy-from-Waste market shows clear signs of recovery and, as an immediate consequence, so does our order intake. We have completed and commissioned various large scale projects in the last year, in some of the most important markets. On top of these projects in Riverside (UK), Roosendaal (NL), Mallorca (ES) and Bergen (NO), we have just recently been selected as the preferred bidder for international projects worth over CHF 800 million. New organization Under the new ownership we have implemented a new organizational structure with 4 business units and streamlined our processes according to the scopes offered, from system supplies (combustion/ boiler or flue gas treatment) to full turnkey plants. For our company in Zurich the largest growth potential in the Energy-from-Waste business remains Europe, while Japan and China are the major growth markets for our parent organization. New objectives As for the outlook in 2011, cost improvement and technology development will be key objectives for us. On the operational level, we have taken specific measures to further improve efficiency within the company. Concerning technological progress, we have significantly increased our R&D budget in order to provide cuttingedge technology which allows higher energy efficiency and a higher usage of investment. Customers of both Hitachi Zosen Inova and Hitachi Zosen Corporation will benefit from this in future projects. New strength With the objectives defined, we pursue two main business goals for 2011: to regain a strong financial position, based on consolidation and increase in earnings, and to strengthen our market position in Western and Eastern Europe as our main growth markets. I am convinced that our technological strengths and the dedication of our employees will help us reach our ambitious goals. First reactions from the market are positive and point in the direction of a promising business year under our new name and ownership. Georg Silbermann CEO Hitachi Zosen Inova AG A time of Change. And of Changes. Hitachi Zosen Inova AG Annual Report 2010 Supervisory Board (Verwaltungsrat) Hitachi Zosen Inova AG Michi Kuwahara Seiji Shimoda Koichiro Anzai Georg Silbermann Member Member Chairman Member 15 16 Executive Board (Geschäftsführung) Hitachi Zosen Inova AG Seiji Shimoda Georg Silbermann Axel Greschitz CTO CEO CFO Hitachi Zosen Inova AG Annual Report 2010 Organisation Executive Board CEO G. Silbermann CFO A. Greschitz CTO S. Shimoda Business Development Research & Development Risk & Quality Management Health & Safety Shared Services Human Resources Business Unit Plants Business Unit CSP Business Unit FGT Business Unit Service Planning & Conceptioning of Energy-from-Waste Turnkey Plants Planning, Engineering & Building complete CSP Systems Planning, Engineering & Building complete FGT Systems Service, Modernisation & Operation Hitachi Zosen KRB AG 17 18 Hitachi Zosen Inova AG Annual Report 2010 Energy from Waste The Indispensable Approach to Sustainable Waste Management Thermal waste treatment is not only the most sensible and environmentally friendly method of processing non-recyclable materials; it also uses the least resources. Because energy is extracted from waste in thermal waste treatment, it is an important component of an integrated energy and climate concept. Hitachi Zosen Inova can offer the right solutions to make a project work. Apart from avoidance and recycling, the thermal treatment of residual waste is the final and indispensable stage of a modern and sustainable waste management concept. As has been proven over decades, it reduces waste volumes by over 90 per cent, generating the highest possible energy yield while maximising the reduction of pollutants and toxins. The chemically inert residues contain recoverable recyclates such as zinc, gypsum, hydrochloric acid, and iron. The residual substances can readily be used for construction purposes without hesitation. Alleviating the greenhouse effect The utilisation of the energy trapped in waste reduces the consumption of crucial primary sources of fossil energy such as coal, petroleum, and gas. And because over 60 per cent of the waste-borne energy comes from renewable resources, Energy from Waste is largely CO2 neutral. Waste does not need to be land-filled, and this eliminates methane emissions, which are extremely climate disruptive. The other minimal-level emissions produced in Energy- from-Waste facilities are up to 4 times lower than in conventional power generation plants. The bottom line: The recovery of Energy from Waste results in an over proportionate reduction of greenhouse gases. It alleviates the greenhouse effect and thus makes a valuable contribution to climate-neutral energy generation. 1,000 kg Waste 2 MWh Heat 0.7 MWh Electric Power Thermal energy can be transformed into electricity or extracted as steam or hot water. 19 20 30 12 13 16 3 14 1 4 2 17 5 29 6 15 11 25 7 © hz-inova.com 8 10 26 9 27 28 Waste receiving and storage Grate combustion and steam generator Flue gas treatment Energy from Waste Consumables and residues 1 Unloading area 2 Waste pit 3 Waste crane 4 Feed hopper 5 Ram feeder 6 Reciprocating incineration grate 13 Electrostatic filter 14 Economiser precipitator 1 15 Quench 16 Wet scrubber (4 stops) 17 Flue gas reheater 1 18 Gas/gas heat exchanger 19 Flue gas reheater 2 20 SCR-Catalyst 21 ID-Fan 22 Economiser 2 23 Stack 24 District heating system 25 Extraction condensation turbine 27 Waste water tanks 28 Waste water treatment 29 Ash conveying 30 Ash silo 7 Bottom ash discharger 8 Primary air fan 9 Primary air distribution 10 Secondary air fan 11 Flue gas recirculation 12 4-pass steam generator 26 Hot water condenser Hitachi Zosen Inova AG Annual Report 2010 Partner for Sustainable Solutions All-in-One Solutions Designed for Maximum Safety and Efficiency Thanks to Hitachi Zosen Inova’s in-depth know-how related to all relevant processes, customers can always expect carefully engineered, feasible solutions. From subsystems to turnkey plants, the company designs and delivers tailor-made solutions with maximised energy recovery. Hitachi Zosen Inova’s streamlined, environmentally friendly, and costeffective operations are backed by a guarantee of maximum safety and high efficiency. 23 20 19 18 21 22 24 Typical Energy-from-Waste plant (Oslo, Norway) Overall competence and international experience Well versed in project management, the thoroughly trained staff members at Hitachi Zosen Inova master any challenge, even in the most strictly regulated international markets. Armed with the latest-generation resources and vast experience in a broad spectrum of different projects, they assure smooth progress, maximum safety of all personnel, and compliance with all legal aspects. Customers can rely on the first-class implementation of their project from planning to on-schedule handover, and beyond. This includes comprehensive training and documentation for the operating staff, giving them the ability to run the plant under optimised conditions. The company’s specialists remain permanently at the operator’s disposal once the plant goes on stream. Customised efficiency Hitachi Zosen Inova’s all-in-one solutions are developed according to the specific operational and technological needs, guaranteeing maximum efficiency in: Thermal waste treatment Regardless of the fuel, our processes guarantee high availability and maximised energy recovery. Flue gas treatment Different flue gas cleaning concepts guarantee the reliable extraction of all pollutants as well as minimised emissions. 21 22 Services and Products Grate Combustion Dependable technology – continually refined and optimised Grate combustion is the best-proven thermal waste treatment technology. For more than 100 years, this process has been successfully deployed in well over 1,000 plants. The systems have been continuously optimised, perfected, and adjusted to changing baseline conditions and stricter requirements. Today, grate combustion is still the most advanced technology with regard to environmental friendliness, operating reliability, flexibility, and cost-effectiveness. Precise control of the entire process chain assures optimised burnout. Completely modulariced reciprocating grate – proven, safe, and efficient. Valuable experience With some 500 facilities to its credit, Hitachi Zosen Inova is one of the world’s leading specialists in grate combustion. The company’s ongoing commitment to research and development has contributed significantly to the advanced state of today’s technologies. The combustion systems are tailored to the needs of waste management and characterised by their extensive flexibility with respect to widely varying fuel mixes. High flexibility One of the outstanding features of grate combustion is its flexibility with regard to fuels. The rugged construction of the Hitachi Zosen Inova’s grates allows them to recover energy from domestic and industrial wastes without pretreatment and to make use of RDF. Safe and proven technology • Suitable for untreated and pretreated municipal waste (except for hazardous waste) • Sturdy, reliable construction • Various configurations for the reliable burnout of all kinds of waste • Air or water cooled for optimal burnout and longevity • Optimised combustion profile for maximum burnout and extensive pollutant reduction • High energy recovery efficiency • Precise control for safe, economical operation • Extensive pool of experience acquired from more than 500 projects Hitachi Zosen Inova AG Annual Report 2010 Flue Gas Treatment Reliable pollution reduction with customised concepts Flue gas treatment processes developed by Hitachi Zosen Inova remove all pollutants in an efficient, sustainable, and reliable way. Customised concepts guarantee emission levels that fall well below those of the world’s toughest pollution standards. 23 The following is a summary of the key processes: Multistage wet scrubbing – pollutant-free, step-by-step Scrubbing is an effective method for removing pollutants and heavy metals from flue gas. The multistage wet scrubber reliably cleans even heavily burdened flue gases. Consumable usage rates and residue quantities are minimised. Inova Semi Dry System flue gas treatment – effluent-free and effective The Inova Semi Dry System process removes acidic pollutants from flue gas by absorption on hydrated lime and recovers heavy metals and organic pollutant species (dioxins, furans) by adsorption on metallurgical coke. No wastewater is discharged. The process is characterised by its compact design, reliable operation, and compliance with the strictest emission standards. We design flue gas treatment systems optimised for each customer’s requirements. The Hitachi Zosen Inova Semi Dry System Dry sorption – for efficiency and low residue levels The sodium bicarbonate process is used wherever residue quantities must be kept as small as possible. Due to the very high reactivity of sodium bicarbonate, only a small amount of it is required. The process is virtually independent of temperature and thus enables maximum energy recovery. assures compliance with strict emission standards. Innovation from experience With a portfolio of about 300 references, Hitachi Zosen Inova ranks among the world’s market leaders. Using tested and innovative components, the company designs flue gas treatment control systems optimised for each customer’s requirements. The highly advanced flue gas treatment systems are based on interdisciplinary expertise, the spirit of innovation, and decades of experience. Denitrification – for conversion of toxic gases Hitachi Zosen Inova offers two proven approaches for the removal of nitrogen oxides (NOx) produced in combustion: SNCR (selective non-catalytic reduction) and SCR (selective catalytic reduction). In both processes, ammonia is used to reduce the nitrogen oxides down to the natural air constituents: nitrogen and water vapour. While the SCR process takes place in a catalyst, the ammonia solution is injected directly into the combustion chamber for SNCR. The efficiency of the new DyNor SNCR approach results in extremely low NOx concentrations of less than 80 mg/m3. 24 Energy Recovery Waste to energy – economical, reliable, and efficient Recovery of the energy content of waste is a key aspect of thermal waste treatment. Energy from Waste is economically crucial to any sustainable energy mix. As this process is low in emissions and renewable to a great extent, it contributes to the reduction of greenhouse gases. Service Professional support for a smooth operation With Hitachi Zosen Inova’s expertise in servicing, maintaining, modernising, and operating thermal waste treatment facilities, they are on hand even after the plant has been commissioned: whenever needed, around the clock if necessary. Recovery: an economical, environmentally save power source for household and industries. Maximum efficiency and customised energy The Energy-from-Waste process releases the energy content of waste and transfers it into usable energy forms such as • Electricity • Process steam • District heating • District cooling Based on a comprehensive understanding of the local requirements, Hitachi Zosen Inova’s engineers design the most energy-efficient process. The staff on plants get project-specific training to operate the plant safely and to maintain the equipment properly. Full service commitment The company’s commitment does not end after the start-up of a plant. As a genuine partner, Hitachi Zosen Inova continues to be at its customers’ complete disposal whenever assistance is required. The range of services extends over the full life cycle of the facility. With the overall aim of reducing downtime to a minimum, Hitachi Zosen Inova delivers on-site support whether it is in the form of service and maintenance interventions or the modernisation of the plant. Hitachi Zosen Inova AG Annual Report 2010 Outlook and Strategy 2011 Hitachi Zosen Inova AG 25 26 A Good Start into a New Era Market outlook Incoming orders ensured for 2011 The markets for Energy from Waste began to recover in Europe in the second half of 2010. • With various partners, Hitachi Zosen Inova was selected as preferred bidder for three major projects in the UK at the end of 2010. The year 2011 also started very positively for the company, as three additional customers decided in favour of the solutions they offered. • In this way the foundations have been laid to anticipate healthy incoming orders in 2011, as – given the total of projects won – the company has already reached its planned level of incoming orders. • In the first quarter Hitachi Zosen Inova was able to take two orders for the modernisation of older plants. In Barcelona they will replace three of the furnaces supplied by the company 35 years ago, and for the plant at KEZO Hinwil Hitachi Zosen Inova has received a contract to replace the exhaust gas treatment plant. Both orders (in the low double-digit millions) clearly show that the customers rely on being able to optimise their operations thanks to Hitachi Zosen Inova’s technology. • With its references in the UK Hitachi Zosen Inova was able to impress both, direct customers (waste management companies) and financial institutions and authorities with their reliable and on-schedule project handling, proven and tested and efficient technology, and prices that are in line with the market. The company has been selected as supplier for the turnkey plant for three projects with an order value of more than CHF 200 million each. The project in Cleveland for South Tyne and Wear Waste Management Partnership started in May. For the two other projects in Buckinghamshire and Norfolk the contracts will be completed over the next months, while the actual projects are expected to start early 2012. • I n the second quarter of 2011 Hitachi Zosen Inova anticipates the start of the engineering phase for the construction of the first Energyfrom-Waste plant in the Basque country. Together with Ros Roca as partner, the company will deliver the complete technology for the plant in Gipuzkoa province, after having already won the competition for this project with an order value for the company of more than CHF 100 million. • Hitachi Zosen Inova has signed the contract with Vantaa Energia that the company has been selected as supplier for the incinerator equipment and steam generator of their plant in Helsinki, Finland. With the award of this project and therefore with the delivery of the two biggest plants in Finland – Vaasa and Vantaa – Hitachi Zosen Inova regained the position as clear market leader in Finland. • With these projects already won, Hitachi Zosen Inova has already ensured incoming orders for this year and can work intensively on developing additional projects and markets. Further market development • The greatest potential for additional projects continues to be expected in Europe, now and in the next few years. In the UK, the market that is currently the strongest, there is a movement away from government-planned PFI projects to privately developed Energy-from-Waste plants which are able to solicit various quantities of waste independently on the market (merchant plants). Hitachi Zosen Inova is tendering with partners for the development of various plants. • The momentum in Eastern Europe comes primarily from Poland and the Czech Republic. Various projects are being developed in both countries. Hitachi Zosen Inova is following this development closely and has already prepared for various projects with partners in order to achieve optimum results. • The Energy-from-Waste market in North America is developing very slowly. Land filling waste is still accepted, which means that new recycling plants are in direct competition with landfills. Accordingly, Hitachi Zosen Inova assumes slow market development. Hitachi Zosen Inova AG Annual Report 2010 27 Strategy for further development of the company The measures to further enhance Hitachi Zosen Inova’s market position comprise two strategic approaches: Turnkey competency On the one hand, the company intends to further expand its competency as a turnkey contractor. The project management today has available international, highly trained teams who work with modern tools to be able to handle the most complex projects safely and on schedule. Hitachi Zosen Inova needs to continue to expand these capabilities and use them to develop further UK and international projects. For example, in close collaboration with the parent company Hitachi Zosen, the Swiss company has presented themselves in a consortium for a large project in Asia. For this plant, which – with a capacity of more than 1 million tonnes per year – will be among the world’s largest, Hitachi Zosen Inova will submit a bid to supply all the technology. Operation in USA As already reported last year, the company has been selected as supplier in the US state of Maryland. This project is continuing to develop as planned, so that approval and the beginning of execution can be anticipated in 2012. Cooperation in France The French market has been dominated by the French subsidiary which now belongs to Altawest SAS and operates under the name of Inova SA. Hitachi Zosen Inova and Inova have agreed to extend their cooperation into the future. Technological leadership On the other hand, Hitachi Zosen Inova is steadily developing its market-leading technology further. The technological leadership is particularly decisive in the competition among individual systems, as the company’s success in Vantaa and Hinwil shows. The R&D department is working on programmes to increase energy efficiency and to be able to prolong their plants’ uninterrupted operations. Furthermore, Hitachi Zosen Inova is optimising its systems together with its engineering and design departments to be able to manufacture them more cheaply and install them more quickly. 28 Hitachi Zosen Inova AG Annual Report 2010 Annual Financial Statements 2010 Hitachi Zosen Inova AG 29 30 Balance Sheet as of December 31, 2010 and 2009 / AE&E Inova AG, Switzerland Assets 2010 2009 (in kCHF) Non-current assets Property, plant and equipment 7,4267,887 Intangible assets 175371 Investments in subsidiaries 3,52132,109 Financial assets 011,000 Deferred tax assets 5,7690 Other non-current assets 41,30330,213 Total non-current assets 58,19481,580 Current assets Cash and cash equivalents 54,015158,289 Inventories 3,5492,876 Trade and other receivables 165,719368,574 Trade receivables 61,423204,137 Receivables from construction contracts 83,012122,686 Other receivables 21,28441,751 Financial asset 7,1372,688 Other current assets 2,4782,443 Total current assets 232,898534,870 Total assets 291,092616,450 Hitachi Zosen Inova AG Annual Report 2010 31 Balance Sheet as of December 31, 2010 and 2009 / AE&E Inova AG, Switzerland Equity and liabilities 20102009 (in kCHF) Capital and reserves Share capital 40,00040,000 Hedging reserves, net of taxes 4,145(5,930) Capital reserves 19,3190 Earnings reserves 11,46910,768 Retained earnings (58,503) 56,066 Total capital and reserves 16,430100,904 Non-current liabilities 19,98913,867 Non-current provisions Non-current financial liabilities 017,046 Deferred tax liabilities 9,7758,744 Total non-current liabilities 29,76439,657 Current liabilities Trade and other payables 198,872 413,287 Trade accounts payables 185,120230,668 Liabilities from construction contracts 13,478 181,253 Other accounts payables 274 1,366 63412,028 Current financial liabilities Current provisions 6,50310,115 Other current liabilities 38,88940,459 Total current liabilities 244,898475,889 Total equity and liabilities 291,092616,450 32 Income Statement for the financial years ended December 31, 2010 and 2009 / AE&E Inova AG, Switzerland (Total cost format) 2010 2009 (in kCHF) Revenues 404,935659,699 Cost of material and purchased services (341,751)(533,584) Personnel costs (41,542)(55,502) Depreciation of intangible assets and tangible assets (29,532)(1,100) Other operation expenses (144,095)(41,448) Other operating income 35,9244,735 Result from operating activities (116,061)32,790 Financial costs (18,378)(17,655) Financial income 15,22613,077 Financial result (3,152)(4,578) Income before taxes Income taxes Net income Attributable to Shareholders of the company (119,213)28,212 5,346(7,053) (113,867)21,159 (113,867)21,159 Hitachi Zosen Inova AG Annual Report 2010 33 Comprehensive Income Statement for the financial years ended December 31, 2010 and 2009 / AE&E Inova AG, Switzerland 20102009 (in kCHF) (113,867)21,159 Net income Other comprehensive income Cash flow hedges 10,612(5,365) Income tax effects (537)(565) Net other comprehensive income 10,075(5,930) Total net comprehensive income (103,792)15,229 Attributable to Shareholders of the company (103,792)15,229 34 Cash Flow Statement for the financial years ended December 31, 2010 and 2009 / AE&E Inova AG, Switzerland Cash flow statement 2010 2009 (in kCHF) Cash flow from operating activities Income before tax (119,213)28,212 Adjustments for: Depreciation and amortisation 9441,110 Bad debt write-offs and impairment of investments 125,3540 Other non-cash expenses / income (32,837)(13) Finance expenses / income 4,2094,578 Changes in inventories (673)(582) Changes in trade and other receivables 164,793(11,203) Changes in provisions 2,509(2,006) Changes in trade and other payables (212,244)(11,541) Derivative financial instruments 1,6025,639 Financial income received 1,7741,927 Financial expenses paid (5,291)(6,250) Income taxes paid (3,771)(156) Net cash generated from operating activities (72,844)9,715 Net cash flow from investing activities Purchase of non-current tangible and intangible assets (287)(236) Proceeds from sale of non-current tangible and intangible assets 025 Loans granted (61,627)(11,000) Net cash from investing activities (61,914)(11,211) Cash flow from financing activities Capital contribution 19,3190 Repayments of borrowings (4,302)(2,625) Lenders payments 19,1640 Dividends paid to group shareholders 0(25,000) Net cash from financing activities 34,181(27,625) Increase in cash and cash equivalents Increase/decrease in cash and cash equivalents (100,577)(29,121) Effects of exchange rate change (3,697)(1,207) Net increase/decrease in cash and cash equivalents (104,274)(30,328) Cash and cash equivalents at beginning of year 158,289188,617 Net increase in cash and cash equivalents (104,274)(30,328) Cash and cash equivalents as of December 31 54,015158,289 Hitachi Zosen Inova AG Annual Report 2010 35 Shareholder’s Equity Statement for the financial years ended December 31, 2010 and 2009 / AE&E Inova AG, Switzerland Share Hedging Legal CapitalRetained capital reserves reservesreserves earnings total (in kCHF) Balance as of January 1, 2009 40,000 0 6,980 042,927 89,907 Prior period corrections, net of tax20,768 20,768 Dividend payment to shareholders(25,000) (25,000) Appropriation to legal reserves 3,788(3,788) 0 Total comprehensive income for the year recognized in equity(5,930) (5,930) Annual result21,159 21,159 Balance as of December 31, 2009 40,000 (5,930) 10,768 056,066 100,904 Balance as of January 1, 2010 40,000(5,930) 10,768 056,066 100,904 Appropriation to legal reserves 701(701) 0 Capital increase 19,31919,319 Total comprehensive income for the year recognized in equity 10,075 10,075 Annual result(113,867) (113,867) Balance as of December 31, 2010 40,000 4,145 11,469 19,319 (58,503) 16,430 36 Contact For further information, please contact: Hitachi Zosen Inova AG Hardturmstrasse 127 PO Box 680 8037 Zurich Switzerland Phone +41 44 277 11 11 Fax +41 44 277 13 13 info@hz-inova.com www.hz-inova.com