GROUP STRUCTURE AND FOCUS OF BUSINESS

  • New organisation since 1 January 2010
  • 51 operating companies worldwide
  • Sales in more than 100 countries

PURPOSE AND ORGANISATION OF THE GROUP

The KSB Group’s mission is to supply customers around the world with top-quality pumps and valves as well as related systems. We also provide a wide range of services to users of these products.

In the year under review, 51 operating companies in 33 countries were dedicated to achieving this mission. Eight Group companies exercised a holding company function.

KSB AG, Frankenthal, Germany, as the parent company, directly or indirectly holds the shares in the companies belonging to the Group. Besides KSB AG itself, the companies in the KSB Group with the highest sales revenue are

  • KSB S.A.S., Gennevilliers (Paris), France
  • KSB Service GmbH, Frankenthal, Germany
  • KSB Bombas Hidráulicas S.A., Várzea Paulista, Brazil
  • KSB Shanghai Pump Co. Ltd., Shanghai, China
  • KSB Pumps Limited, Pune, India
  • GIW Industries, Inc., Grovetown, Georgia, USA

DISCLOSURES PURSUANT TO SECTION 315(4) OF THE HGB AND THE EXPLANATORY REPORT

A summary of the disclosures required by section 315(4) of the HGB [Handelsgesetzbuch – German Commercial Code] is given below and explanatory information is provided pursuant to sections 175(2) and 176(1) of the AktG [Aktiengesetz – German Public Companies Act]. Information is disclosed only to the extent that it applies to KSB AG.

KSB AG’s share capital amounts to € 44.8 million, of which € 22.7 million is represented by 886,615 no-par value ordinary shares and € 22.1 million by 864,712 no-par value preference shares. Each no-par value share represents an equal notional amount of the share capital. All shares are bearer shares. They are listed for trading on the regulated market and are traded in the General Standard segment of the Frankfurt Stock Exchange.

Each ordinary share authorises the holder to one vote at KSB AG’s Annual General Meeting. Klein Pumpen GmbH, Frankenthal, holds approximately 80 % of the ordinary shares; the KSB Stiftung (KSB Foundation), Stuttgart, holds the majority of the shares of Klein Pumpen GmbH. The preference shares carry separate cumulative preferred dividend rights and progressive additional dividend rights. Detailed information on the share capital and shareholders holding an interest of more than 10 % is provided in the Notes*. Holders of preference shares are entitled to voting rights in the cases prescribed by law. The issue of additional ordinary shares does not require the consent of the preference shareholders. Similarly, the issue of additional preference shares does not require the consent of the preference shareholders unless the subscription rights exclude newly issued senior or pari passu preference shares.

The company is authorised by a resolution passed at the Annual General Meeting on 19 May 2010 to purchase company shares totalling up to € 4,477,196 of the registered share capital by 18 May 2015. The Board of Management shall be entitled to: (1) Sell company shares purchased on the basis of this authorisation either on the stock exchange or by another means that safeguards the rule of equal treatment of all shareholders; (2) Sell the shares with the consent of the Supervisory Board, excluding shareholders’ subscription rights, if the shares are sold for cash and at a price that is not materially lower than the market price for company shares of the same type and with the same features at the time of the sale. This authorisation is limited to the sale of shares which overall represent no more than 10 % of the existing share capital at the date on which such authorisation becomes effective or, if the amount is lower, the date this authorisation is used (where the 10 % limit shall include the proportional amount for shares issued within the scope of a capital increase during the term of the authorisation excluding subscription rights or for the maximum number of shares that can be issued for the purpose of servicing warrants and convertible bonds); (3) Sell the shares with the consent of the Supervisory Board, excluding shareholders’ subscription rights, to third parties for the purpose of acquiring companies, parts thereof and / or financial interests in companies as well as within the scope of corporate mergers or (4) Redeem the shares. KSB AG has not yet made use of this authorisation to purchase treasury shares.

There are no resolutions by the Annual General Meeting authorising the company’s Board of Management to increase the share capital (authorised capital).

KSB AG is managed by a Board of Management that, in accordance with its Articles of Association, must consist of at least two persons and currently comprises four persons. The Supervisory Board decides on the appointment and termination of the mandate of members of the Board of Management in accordance with the statutory provisions.

Amendments to the company’s Articles of Association are resolved by the Annual General Meeting. If the amendments only affect the wording of the Articles, they can be approved by the Supervisory Board.

ORGANISATION, MANAGEMENT AND CONTROL

Management is monitored by a Supervisory Board consisting of twelve members. The Annual General Meeting of shareholders appoints six members of the Supervisory Board, with the remaining six being delegated by the employees under the terms of the Mitbestimmungsgesetz [German Co-determination Act].

KSB AG’s Board of Management manages and controls the KSB Group. The strategy and instructions formulated by the Board of Management are implemented within an organisation that since 1 January 2010 has been divided into three areas of responsibility: pumps, valves and service. At the centre of this organisation are the Business Units with their areas of focus, which act as interfaces between Sales and Operations.

All organisational units base their activities on the new Group strategy*, which was presented in the 2009 Annual Report. The strategy aims to ensure sustainable, profitable growth that will secure both KSB’s financial independence and medium- and long-term future, in order to achieve and defend a leading competitive position in attractive markets.

MARKETS AND LOCATIONS

The main products of the KSB Group are centrifugal pumps, which account for almost 70 % of sales revenue. These pumps, as well as shut-off valves, are sold to engineering contractors, OEMs and end users or, in some cases, distributed via dealers. The same applies to control and monitoring systems, and to package units with pumps and valves.

The best developed sales market for these products is Europe, where KSB operates its main manufacturing facilities in Germany and France. KSB AG’s main plant in Frankenthal is its largest in Europe, ahead of those in Pegnitz (Bavaria) and Halle (Saxony-Anhalt), in Germany, and La Roche Chalais, in France.

The second-largest market for KSB products is currently in the Region Asia / Pacific, followed by the Americas and the Region Middle East / Africa. Outside Europe, KSB’s biggest manufacturing facilities are in Brazil, China, India and the USA.

KSB manufactures products and components in a total of 19 countries; they are sold through the Group’s own companies or agents in more than 100 countries. The Group’s companies supply its products to customers from industry and building services, the energy industry, mining and the public sector. KSB is world leader in pumps deployed in power plants and process engineering, and the Group ranks among the leading manufacturers in other areas of application as well.

The market generating the highest sales revenue for our products in 2010 was once again industry, where the KSB Group has established itself as the second-largest pump manufacturer in the world.

MANAGEMENT PARAMETERS WITHIN THE KSB GROUP

The current target variables for managing the Group are the development of order intake and sales revenue, as well as profitability, which we measure on the basis of pre-tax return on sales.

When setting our targets, we are guided on the one hand by developments in the market, and on the other by the performance of our key competitors.

In future, value-based management will play a larger role at KSB. We will use the EVA* (Economic Value Added) performance indicator for this.