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Fundamental principles of the Group

Business activity

Since its foundation nearly 150 years ago, the TÜV NORD GROUP has been a global technical service provider which deals in safety and trust. Its independent engineers and IT security professionals provide excellent solutions for safety and security, efficiency and quality. Experts and specialists with high levels of engineering expertise have been testing machinery, equipment and products, and compiling expert reports and issuing certificates in Germany and abroad. With more than 10,000 employees, the Group offers a wide range of innovative testing, certification, engineering, consulting and training services. Its customers include global players and small and medium-sized enterprises with a regional and local focus, alongside organisations, institutions and consumers.

As a technical service provider, TÜV NORD is active in the TICET (testing, inspection, certification, engineering, training) market. The activities of the Group are concentrated in six business units and Holding/Services. The activities in the Natural Resources, Aerospace and IT business units complement the traditional TÜV work in the Industrial Services, Mobility and Training business units. This allows the TÜV NORD GROUP to offer unparalleled support and care to its customers in every aspect of their business activities.

  • The certification, service and testing portfolio of the companies in the Industrial Services business unit includes specific individual tests and the management of complex security solutions.
  • The Mobility business unit offers numerous services, such as vehicle and driving tests, vehicle assessments, solutions for used car management and development-related consulting for the automotive sector.
  • The core activities of the Training business unit are vocational education and training for specialists and managers, along with publicly funded training measures.
  • The companies in the Natural Resources business unit provide testing, consulting, planning metrological and development services in the mining, oil and gas, infrastructure and construction sectors along with plant construction.
  • The Aerospace business unit is involved in activities concerning the procurement, modification, testing and certification of electronic components for the aerospace industry.
  • The services of the IT business unit include the testing and certification of all IT products and components, as well as training in selected security and quality issues in the areas of IT security, IT quality and IT infrastructure.

As of December 31 2017, the Group, with its management company TÜV NORD AG, embraced a total of 84 fully consolidated companies, 39 of them domiciled in Germany and 45 abroad. The TÜV NORD AG consolidated financial statement includes all major companies in Germany and abroad in which TÜV NORD AG either directly or indirectly holds the majority of voting rights.

 

Economic report

General economic and sector-specific conditions

Following on from a global economic growth rate of 3.1 % in 2016, the year 2017 saw further signs of economic upturn. With an increase of approx. 3.7 %, economic growth remained at roughly the level of the previous year. In the US, Japan and the Eurozone, output grew significantly faster than the global economic trend, resulting in very high utilisation of production capacities in those markets. As a result of economic policy measures, the Chinese economy continues to be a major growth driver for the global economy, with a growth rate of 6.9 %. The upturn in the major economies, along with a slight increase in commodity prices, has also stimulated the economy in emerging markets as a whole.

The upturn in the German economy has gained in both strength and breadth. In addition to foreign business and investments, consumer spending is also contributing to its expansion. Gross domestic product grew by 2.2 % in 2017, marking an increase on the previous year (1.9 %). At the beginning of 2018, the ifo business climate index for the German economy was at an all-time high.

Security continues to be a service with strong global demand. The growth trajectory of the TICET industry is continuing accordingly. Key growth drivers will increasingly be new technologies and the digital transformation. The continued weakness of the oil and gas industry as a result of low commodity prices and low rates of growth in the domestic automotive market is reinforcing the trend towards increased investment in innovation and the internationalisation of business. Overall, the trend in the TICET industry was positive in 2017.

In the age of digitalisation, aspects of analogue and digital safety and security are now converging. This is creating opportunities for economic growth. Independent certifications and examinations are the prerequisites for security in the digital world. This is set to work in favour of the TÜV NORD GROUP, one of the world’s leading technical service groups with an innovative and diverse product portfolio, high quality standards and a global network.

 

Business Trends

The TÜV NORD GROUP held its own very well in a challenging business environment in the 2017 fiscal year. In addition to the sustained economic boom in Germany, further drivers of this growth were in particular the Group’s diversified and innovative product portfolio and its global presence.

The Group grew profitably in the fiscal year under review. The moderate increases in sales and earnings (EBIT/EBT) announced in the management report 2016 and in the forecast 2017 were achieved or exceeded. The Group improved its key performance indicators for the fourth time in a row.

Within the TÜV NORD GROUP, the Mobility and IT business units recorded the highest growth rates in percentage terms and significantly exceeded the forecasts in terms of both sales and result. In the Mobility business unit, this was due above all to the enhanced collaboration with cooperation partners and the improvement in earnings from business developments in China; the IT business unit, on the other hand, added significantly to its business activities in the IT infrastructure segment in particular.

The Industrial Services, Natural Resources and Aerospace business units did not quite achieve their sales targets, whereas the Training business unit’s sales performance was in line with the plan. In the Training and Aerospace business units, the planned result was exceeded. In the Industrial Services and Natural Resources business units, the result fell slightly short of the planned figure as a consequence of the reduction in sales revenue. Earnings in the Industrial Services and Natural Resources business units were slightly lower than planned due to lower revenues.

The number of employees of the Group grew as forecast. The Group projects that were decided upon in the context of Strategy 2020plus were continued as planned in 2017 with the aim of permanently increasing the share of new services.

The trends within the Group in the 2017 fiscal year in comparison with the previous year were as follows:

  • Turnover increased by 2.7 % from € 1,153.6 million to € 1,184.8 million. The rise in sales of € 31.2 million was essentially due to the Mobility and Industrial Service business units.
  • Before special items, earnings before interest and taxes (EBIT) rose by 11.0 % from € 69.8 million to € 77.5 million. The increase of € 7.7 million can primarily be attributed to the positive development in earnings in the Mobility unit.
  • The return on sales, measured by EBIT, was thus 6.5 % compared to 6.1 % in the previous year.
  • Earnings before tax (EBT) increased by € 7.6 million to € 76.6 million.
  • The number of employees, converted to full-time equivalent, increased from 10,113 to an average of 10,485 in 2017. Productivity also increased.

 

Earnings, assets and financial position 

Earnings

The 2017 fiscal year came to an end with a turnover of € 1,184.8 million (2016: € 1,153.6 million). The following figure shows the trend of sales in the Group (€ million):

 

 

 

 

The following figure shows the breakdown of sales by region (€ million):

 

 

 

 

The Group’s domestic revenue in 2017 amounted to € 872.2 million (2016: € 843.9 million). Turnover from the international business amounted to € 312.6 million (2016: € 309.7 million) and achieved a share of 26.4 %.

Broken down by business units and Holding/Services, the following overall picture emerged for the year 2017:

 

 

 

 

Due the heterogeneous nature of their market presence, their various product spectra and their regional alignments, the individual business units developed very differently.

The Industrial Services business unit generated a turnover of € 551.5 million (2016: € 538.1 million), where the development of foreign business was especially positive. The sales in Germany increased by € 4.8 million to € 355.8 million (2016: € 351.0 million). Sales abroad increased to € 195.8 million (2016: € 187.1 million). The companies in Europe, China and India contributed significantly to this rise. The turnover of the Mobility business unit, at € 366.2 million, was 9.8 % higher than in the previous year, € 333.4 million. The growth is primarily attributable to an increase in turnover in the car dealership and workshop segment. In the Training business unit, sales declined to € 102.1 million (2016: € 107.4 million), because of the end of the Opel contract with TÜV NORD Transfer. In the Natural Resources business unit, a turnover of € 96.0 million (2016: € 106.9 million) was generated, the decrease being mainly due to a lack, or the postponement of, major projects in the seismology field. The sales of the Aerospace business unit, at € 45.8 million, were slightly below those of the previous year (2016: € 47.2 million). The decline from the previous year was attributable to the fact that major projects were invoiced in the first quarter of 2016. The sales of the IT business unit increased to € 17.4 million (2016: € 15.5 million) due to the expansion of the service portfolio in the IT security area.

Group expenses increased by 1.8 % to € 1,149.3 million during the year under review. The cost of materials reached a peak of € 198.4 million in comparison to € 192.2 million in the previous year. This is primarily attributable to higher costs for natural resources and of auxiliary and operating materials.

Personnel expense decreased by 4.6 % to € 699.5 million because of the end of the Opel transfer contract.

Further information on expenses can be found in the Notes to the Consolidated Financial Statements, under No. 3, Consolidated Income Statement disclosures.

All the business units contributed to the positive result of the Group. Earnings before tax (EBT) amounted to € 76.6 million and were thus € 7.6 million above the previous year’s result of € 69.0 million.

Net profit, at € 47.8 million, exceeded that of the previous year by 10.6 % (2016: € 43.2 million).

 

Assets

The TÜV NORD GROUP balance sheet reveals a sound structure. Total assets increased to € 888.4 million during the year under review, as against € 876.5 million in 2016.

Non-current assets rose from € 540.7 million to € 542.9 million. This was due in particular to the rise in deferred tax assets as a result of increased pension provisions. The rate of coverage of non-current assets (equity plus pension provisions divided by non-current assets) amounts to 107.9 % (2016: 104.0 %).

Current assets, which make up 38.9 % of total assets, are recognised at € 345.5 million (2016: € 335.7 million). Cash and cash equivalents decreased to € 84.7 million (2016: € 91.7 million).

The Group has additional hidden reserves, which primarily take the form of property ownership and investments.

Equity capital, at € 101.2 million, is roughly equal to that of the previous year (2016: € 100.8 million). The equity ratio amounts to 11.4 % (2016: 11.5 %). Due to the lowering of the discounting interest rate for pension obligations, actuarial losses in the Other equity positions amounting to € 33.6 million in 2017 (2016: € 41.1 million) were offset, thereby affecting the consolidated income statement.

In the 2017 fiscal year, € 754.3 million (2016: € 740.6 million) of plan assets were netted against pension provisions. The proportion of the provisions for current and future pension obligations that is not covered by plan assets amounted to € 484.9 million (2016: € 461.4 million). The cause for this increase was the significant reduction in the discount rate of pension provisions. The provision for obligations arising out of pre-retirement part-time working amounts to € 6.7 million (2016: € 9.7 million).

Reinsurance coverage of pension provisions increased by € 10.0 million to € 773.1 million. Through this allocation of funds, the degree of coverage adjusted for the effects of a change in the discount rate was once again enhanced as compared with the previous year.

Further information on the assets situation can be found in the Notes to the Consolidated Financial Statements, under No. 5, “Consolidated Balance Sheet disclosures”.

 

Financial situation, cash flow

Despite high investments in innovation and digitalisation, the TÜV NORD Group was able to maintain its positive net financial position in 2017. Nor was the TÜV NORD Group indebted as of December 31 2017. The most important objectives of the conservative financial policy remain the further maintenance of the Group’s good rating, the safeguarding of an adequate level of liquidity and the centralised financing of the subsidiary companies by the Group at a level that meets their needs. In addition, it is fundamental to the Group’s financial policy to ensure a significant measure of financial flexibility and transparent risk and opportunity management.

The Deutsche Bundesbank, having investigated important financial metrics such as profitability, internal financing strength, liquidity and capital structure on the basis of audited financial statements, has for the eleventh year in succession awarded the TÜV NORD Group the accolade of eligibility for rediscount with the central bank. The Group thus belongs to the round of companies whose credit liabilities can be used by commercial banks as collateral with regard to the Deutsche Bundesbank. This guarantees the TÜV NORD GROUP a preferred position in terms of access to financial resources.

The cash flow (see “Consolidated Cash Flow Statement”) amounted to € 65.2 million and was essentially applied to the reinsurance of pension liabilities, investments in intangible asset and in property, plant and equipment, and equity investments. Capital expenditure excluding corporate acquisitions amounted to € 43.0 million in the year under review as against € 40.6 million in 2016. Of this, € 37.5 million was invested by the German companies, and € 5.5 million abroad. The focus was on the construction of real estate in Essen and Hamburg, physical investment in testing equipment, vehicle fleets and computer hardware and software. No material capital expenditure obligations existed as of the reporting date. The Group spent a total of € 6.7 million (2016: € 9.8 million) on the acquisition of companies and equity holdings during the year under review. All projects were assessed by value creation criteria; every potential acquisition or capital investment project was scrutinised and analysed both with regard to the return it would bring and also from the point of view of its impact on the consolidated balance sheet.

The Group’s net financial position amounted to € 32.9 million at the end of the year under review, a figure which was below that of the previous year (2016: € 38.8 million).

The existing syndicated loan for the Group in the amount of € 100.0 million had not been used as of December 31 2017.

In 2017 the Group was in the position to meet its payment obligations at all times.

 

Non-financial performance indicators

Innovation report

The current profound technological changes are having a significant impact on the business activities of the group. Driving innovation and environmental technologies is a key concern of the TÜV NORD GROUP. Innovative services are allowing the Group to tap into new market areas, to enjoy advantages over its competitors and to rise successfully to global challenges. Innovations are therefore key drivers of the growth of the TÜV NORD GROUP.

In all business units, with innovations ranging from the development of intelligent testing procedures, innovative vehicle technologies and climate-friendly transport concepts through to the use of new materials, the TÜV NORD GROUP is striking out along new paths in its quest for the solutions of the future.

For its innovation projects, the Strategy Process 2020plus, which deals with the economic development of the Group beyond 2020, is of great importance. The know-how of the TÜV NORD employees and the Group’s global presence form the ideal basis for the development of new ideas, trends and business ideas to support the success of TÜV NORD GROUP’s customers in the digital age. For this purpose, the TÜV NORD GROUP is also involved in universities and cooperates with research institutions. In addition, employees of the TÜV NORD GROUP are present in all relevant committees for the national and international development of industry-specific regulations.

2017 also saw the launch of the Digital Academy. The aim of this programme is to qualify employees for the digital age, to examine existing services for their digitalisation potential and to develop new, networked business models for customers. In a first step, digital experts from all business areas were trained. These are now acting as multipliers and influencers in the Group and are working on the operative implementation of digitalisation projects.

Within each business unit, innovation boards are responsible for the monitoring, control and coordination of the innovation process. These boards are also the context for assessments and decisions concerning the continuation of individual innovation ideas and projects from the initial idea through to market launch.

Through its established innovation controlling, the TÜV NORD GROUP conducts quarterly queries and analyses of sales, costs, investments, the number of employees and general innovation costs. The establishment of an innovation cockpit, which provides an overview of the entire innovation activities of the Group and of its most important key ratios, is scheduled for 2018.

The individual business units focused in particular on the following projects in the 2017 fiscal year:

Industrial Services: Due to the very good customer feedback, TÜV NORD EnSys is continuing the DARWIN (Database for Radioactive Waste Information) project. The system is to be extended with the addition of DARWIN 2.0, and archive data will be migrated from other systems. DARWIN provides information about waste along with a cadastre of repositories, correspondence, and conditioning campaigns in regulatory and final disposal procedures.

After the successful completion of the THERRI research project (thermal fatigue crack growth in power plants), the results are for the first time being practically applied in customer projects. The results are also the basis for further innovation projects. The ability to predict crack growth can be transferred to other industries as well as to other materials.

To take account of the rapid developments in 3-D printing (additive manufacturing), an innovation project was launched with the aim of approving components manufactured using additive processes in line with the Pressure Equipment Directive (PED). Together with other planned projects in the 3-D printing field, this allows customers to obtain information and draw on services relating to security, certification and approval issues from TÜV NORD as a one-stop shop, also with new technologies.

In the field of digital test and measurement methods, a fully digitalised strain gauge (DMS)method was developed in collaboration with customers. With the help of fibre-optic cables and digital transmission systems, a cloud-based measurement solution is now in the portfolio which permits the cost-effective real-time evaluation and condition-dependent operation of infrastructure.

Mobility: The business unit is further cementing its competitive advantages in its core services by flagging up previously identified digitalisation potential. In addition to the technological advancement of their services at sector level, the companies are implementing relevant internal digitalisation concepts for official and free-market services.

2017 witnessed the launch of the Process Design SWG project, which will result in thoroughgoing digital and harmonised applications in service and support processes in the high-volume business accounted for by damage appraisals and valuations. The special initiatives and collaborations will continue in connection with the ever more significant market for “automated and networked driving” and “CarIT – functional safety” in the manufacturing business. The increasing complexity of equipment and vehicles requires that testing be supplemented by the validation of software for security management purposes. TÜV NORD specialists have been appointed to the relevant committees and working groups, with the result that they will be guaranteed a say in the development of guidelines for type certification and test drives with the aim of approval for road use. TÜV NORD Mobilität is for instance actively participating in two projects: the subsidised research projects entitled “Diginet-PS” of the Federal Ministry for Transport and Digital Infrastructure for the validation of a framework for driving with Car2X communication in real urban traffic situations, and “AutoConstruct” for real- time-capable environment detection on building sites for the Federal Ministry for Economic Affairs and Energy (BMWi). The new requirements concerning the validation of vehicle electronics and information systems in respect of data protection and data security are giving rise to opportunities for the expansion of business activities. The developments being spearheaded by TÜV NORD Mobilität are being accompanied by close cooperation in the area of data communication with organisations including the IT business unit for the purpose of the transfer of safety and security into the automotive sector.

Training: The digitalisation trend continues apace, and numerous learning platforms underwent continuous development in 2017 in the Training business unit. TÜV NORD Bildung has been using the “proJobTraining” learning platform for training and further education for more than ten years. For in-house training, the “TÜV NORD E-Training” learning platform has been designed in such a way that all TÜV NORD GROUP employees have fast, targeted access to digital training materials.

Quantilope, a software solution for fast and efficient digital customer and trainer surveys was optimised, and interactive training systems are now up and running.

The first ever online training course for geriatric care was created in a collaboration between TÜV NORD Bildung and TÜV NORD College. It includes eleven modules supported by learning videos which, with the support of training videos, interactively communicate the content of the training in four learning areas.

At some sites, the trainers of the TÜV NORD Akademie already have digital interactive whiteboards at their disposal, offering them more creative room for manoeuvre in the design of their seminars and giving participants an optimised and innovative learning environment. With a new learning app from the TÜV NORD Akademie, participants in seminars on Quality Assurance can make use of training content, check their knowledge or look up technical terms, at any time and irrespective of where they are. The learning app provides additional training videos and all the documents relating to the face-to-face seminar via smartphone or tablet. In addition to innovative learning concepts, modern seminar contents, such as the operational use of drones, are increasingly being offered.

For the first time, the TÜV NORD Technisches Schulungszentrum has created educational materials for customers in the free market with video technology, which is made available to all participants in digital form. A driver safety training course for bus drivers was accompanied by an actioncam with the aim of documenting and illustrating the perspective of the passengers and the physical forces which act on them. This training drive was also followed and filmed by a drone to give the drivers a new perspective on the vehicles being driven by them.

Natural Resources: Once again, one of the priorities of the Natural Resources business unit in 2017 was the acquisition of research and development orders. As before, the principal focus was on the technologies that will be required in the future if the business unit is to maintain and further improve its market position as an innovative service provider.

The context for this was the innovation projects defined in the Strategy 2020plus that were launched in 2015. These projects are focused on the fields of geotechnical engineering, energy distribution and energy storage, new concepts for extraction and use in mining, nuclear waste repositories, guarantees of origin for raw materials, intelligent sensor networks, model engineering and process control in mining, and industrial process water purification.

Particularly worthy of note is the already very successful participation of DMT as a core partner in the task of establishing the Knowledge and Innovation Community EIT RawMaterials research and development consortium of the European Institute of Innovation & Technology. In the first calls for project proposals, four DMT-led innovation projects were selected for funding. Thematically, these involve the development of an automated system of shaft inspection, the creation of a network of expertise for the reactivation of former mining areas and a detailed concept for the monitoring of mining residues of former mining operations in collaboration with international partners. Work is also being done with TÜV NORD CERT on the development of a certification scheme for critical natural resources. A further 7 projects involving DMT are being funded in the EIT RawMaterials consortium, meaning that funding to the tune of over € 2.6 million was successfully secured in the very first year of the seven-year EU funding programme.

DMT is also involved in innovation projects of other funding programmes, such as Horizon2020, RFCS and projects of the German government. The projects include, for example, innovative extraction technologies, investigations into the feasibility of different energy storage technologies, safety research for the mining industry, and innovations in the field of coking technology concerning the leak-tightness and control of coke ovens.

Aerospace: 2017 also saw the implementation as planned of the Big Data project known as “Gateway” in the Aerospace business unit; one of the digital projects was the implementation of a digital library. This specialised information, ordering and service platform uses Big Data technologies to provide partners and customers in the Aerospace business unit with key technical data. Customers and suppliers are being brought together more effectively by means of technical information, design and construction plans, information to suppliers etc., thereby opening up further market prospects.

In addition, the business unit is supporting customers and manufacturers in the development of new photovoltaic and semiconductor technologies, radiation procedures, cryptography and new technologies and testing methods for the industrial and civil use of drones. The business unit is also cooperating with universities, research organisations, companies and governments.

IT: Whereas the Internet of Things (IoT) is increasingly gaining in significance in the context of digitalisation and networking, far too little attention has thus far been directed at the security of things. This has been demonstrated by the current spate of cyber-attacks on IoT products such as routers or smartphone devices. The IT business unit is for this reason actively participating in various initiatives and working groups concerned with the development of cyber-security certification for IT products and services, technical guidelines and IT quality seals that will form the basis of future innovative services. It is for this reason that the IT business unit is promoting initiatives such as the creation of a young researcher position in the field of industrial cybersecurity in the “Digital Society Institute” faculty of the European School of Management and Technology (ESMT) in Berlin.

New technological developments are the foundation of innovative business models. The IT business unit is for this reason committed to the task of examining more closely the disruptive potential of new technologies and using the insights derived to develop new business fields. The IT business unit is for this reason currently investigating the connection between blockchain technology and IT security aspects and the possibility of managing certificates within a blockchain.

2017 also saw a more intense focus on the digitalisation of internal processes. Two innovation projects were launched to this end. As an initial step, a “digital testing assistant” is to be developed to digitalise the testing of the physical security of data centres in accordance with TÜViT’s own standard. The idea is for the digital testing assistant to map the entire testing process, from the provision of support to the testers on the ground in the form of simplified data recording via a mobile application, through to the automatic generation of test reports. The application will then at a later stage also be usable for other testing catalogues and fields to enable this process innovation to make a key contribution to the digitalisation strategy of the TÜV NORD GROUP. The innovation entitled “Information-Centred Evaluation” features the transition from a document-based to a database-based common criteria test. It will in the future be possible for customers to enter specific relevant manufacturer data into a web interface, thereby significantly reducing the project duration. The interoperability of both innovation projects will be guaranteed through the creation of a shared technological basis with the aim of realising synergy effects. In the case of both innovations, the data will be stored directly in a database, making it possible to evaluate them electronically. This will pave the way to further development stages for the innovations, such as automatic preliminary testing, the use of Big Data analyses and the deployment of artificial intelligence.

The expansion of the portfolio to include new services and innovations in the telecommunications and consulting sector is one of the aims being pursued in the context of the expansion of the IT business unit. The digitalisation and increasing networking of information, products and systems through the IoT requires skills in both the telecommunications and IT security fields.

 

Employees

The compatibility of work and family life is an important issue in the TÜV NORD GROUP. TÜV NORD AG and, since 2009, many of its subsidiaries have already been certified according to the “berufundfamilie” (“work and family”) audit. The re-audit for this certification was initiated in the 2017 reporting period and will from now on be carried out for the entire TÜV NORD GROUP, concluding in the 2018 reporting period. Flexible working hours and the possibility of part-time work form part of a family-focused HR policy. If staff members are confronted with particular challenges in the care of children or elderly relatives, an external service provider is on hand to offer advice. The employees can also make use of care facilities and holiday programmes for their children.

Moreover, the TÜV NORD GROUP has now set out its Gender Balance programme with the aim of promoting equal opportunities for women and men in the Group. In the 2017 reporting period, the first measures were implemented with the aim of removing obstacles from employee career paths and providing equal opportunities for women and men in the technical professions. For example, the advertising of vacancies was reviewed with a focus on the use of gender-sensitive language and design. Moreover, training was offered to new members of staff with the aim of enhancing their ability to influence the TÜV NORD culture and to live up to their potential within it, and the requirement for mixed-sex teams to be selected for assessment and guidance centres was made mandatory. The programme will continue in the 2018 reporting period.

A further element of the Gender Balance programme is employer attractiveness. The TÜV NORD GROUP aspires to be equally attractive to good applicants of both sexes. The TÜV NORD GROUP is one of the TOP 100 employers for young professionals and students. The Group is an interesting and attractive employer in particular for engineering graduates. In the universal rankings for its professional specialism, the TÜV NORD GROUP climbed 23 places to 44th place in 2017. The TÜV NORD GROUP was also singled out by Kununu for the accolade of “Top Company” and honoured by DEUTSCHLAND TEST, which awarded the Group the accolade of provider of “Top career opportunities”.

A further testament to its attractiveness as an employer is the year-on-year increase in the number of applications that the Group receives.

As an employer, the Group is the byword for open and authentic public communication. Since 2012 the Group has been the proud bearer of the Kununu “Open Company” seal of quality, which is confirmation of the implementation of this guiding principle.

With the aim of engaging with and promoting these values, a global employee survey was once again carried out in the 2017 reporting period. The survey picked up where the first employee survey left off in the 2014 reporting period, in the wake of which specific improvement measures were implemented. The objective of the new employee survey was to review the success of the measures undertaken in 2014. It also included new questions, concerning, for example, the issues of innovation and digitalisation. The evaluation and processing of the results is planned for the first quarter of 2018.

As of December 31 2017 the domestic and foreign companies of the TÜV NORD GROUP employed an average of 10,485 staff (converted to full-time equivalent) in comparison to 10,113 in the previous year.

Including the experts provided by the associations, the average number of full-time employees was 10,539 (2016: 10,172). On the sampling date of December 31 2017, the absolute number of employees was 13,108. The proportion of women working in the Group is approximately 29 %.

7,608 employees work in Germany. The number of employees abroad increased in 2017 to 2,931. The largest business unit is Industrial Services, with 5,577 employees in Germany and abroad, followed by the Mobility business unit with 2,604 employees.

With its dual system of vocational training alongside dual courses with integrated training and practice, the TÜV NORD GROUP offers attractive opportunities for school-leavers and young professionals. Roughly 40 new recruits are currently preparing themselves for their future positions of responsibility in the TÜV NORD GROUP in the context of their dual studies. The particular focus here is on the technical/information technology field, for instance, on degrees in engineering or computer science and on courses of study in mechanical engineering, electrical engineering or computer science. Various models of the training and this dual curriculum are being offered at many sites in the Group.

With the aid of inter-regional partnerships with academic institutes, the TÜV NORD GROUP has since 2008 been sponsoring students from Germany and abroad. The awarding of grants also reflects a commitment to social responsibility by offering financial support to many climbers of the educational ladder and students on degree courses which involve responsibility for society as a whole. The partners include the Leibniz University of Hanover, University of Applied Sciences and Arts in Hanover, the Technical University of Hamburg-Harburg and the Technical University of Braunschweig. As an international group, the TÜV NORD GROUP, in cooperation with the Northern Insitute of Technology Management (NIT) at the Technical University of Hamburg-Harburg, also offers international scholarships to bachelor graduates from abroad with first professional experience.

The TÜV NORD GROUP has been sponsoring school students since 2014. With the Start scholarship we have made it possible for a grant recipient from a migrant background to prepare properly for her higher school-leaving exam. In the context of the Start Foundation programme, her individual abilities and talents are being further developed, for instance through projects and training opportunities.

It is the know-how and technical expertise of the staff that form the basis for the future success of the TÜV NORD GROUP. For this to be maintained, a comprehensive and wide-ranging portfolio of measures for the training and development of all the target groups within the Group is indispensable. This also includes the preparation of the staff and man agers for what has become known as the Digital Transformation. The task before the company is to work with the staff to initiate this process of change, to actively shape the future and, in the process, to exploit the existing opportunities and generate added value.

In 2017, € 7.0 million was spent on internal and external training events (2016: € 6.5 million). The promotion programmes to prepare staff for management tasks are being further developed and adapted to the needs of the individual target groups. For example, programmes are currently being planned that will enable managers from different business units and international companies to network more effectively. For this purpose, alternative forms of learning such as e-learning and blended learning will increasingly be offered. Regular dialogue is now taking place with the HR managers of the international companies with the aim of identifying and communicating best-practice approaches. Moreover, the talent management division is also offering the foreign companies direct on-site support in fields such as succession planning, the introduction of staff selection instruments and the organisation of promotion programmes.

A holistic concept was developed for the purpose of transforming the product-oriented corporate health and safety policy into a needs-based, Group-wide sustainable health and safety management system. This was trialled in 2017 in the form of two pilot projects in different subsidiaries. The final evaluation of the pilot projects will be decisive when it comes to the rollout of the system across the entire TÜV NORD GROUP. As before, staff across the Group can take advantage of a wide range of health promotion offers and a yearly health week. Various sporting activities are offered at many of the sites.

For our companies it is particularly important to cultivate a culture that reinforces a high level of mutual loyalty between employees and companies. One way of measuring this is length of service life. Throughout the Group this averages over ten years, a figure which is significantly higher than comparable statistics from the competition.

The Board of Management would like to thank all the staff and company managers, both at home and abroad. The success achieved in the fiscal year under review would have been impossible without their commitment and dedication to their work. Their thanks also go out to the employee representatives for their trusting and constructive cooperation.

 

Overall situation

In view of the macroeconomic situation, the TÜV NORD GROUP is satisfied with the way the year under review progressed. However, notwithstanding the good operating profit of the Group, every effort continues to be made to improve profitability and continuously enhance the company’s position in terms of its earnings, assets and finances. TÜV NORD GROUP assumes that the earnings, asset and financial positions will remain stable in the future.

 

Report on expected developments, opportunities and risks

Report on expected developments

In the light of existing economic and political risks, the outlook remains uncertain, also due to the fact that the escalation of conflicts in the Middle East and in North Korea has given rise to additional geopolitical risks.

The economic environment for German industry is currently stable. The leading German economic research institutes anticipate an annual global growth rate of roughly 3.5 % in 2018. Of all the industrial nations, it is expected that the US will make a particular contribution to this high growth rate. This assumption is based in particular on the continuation of the trend toward high consumer spending in North America. For reasons including the expansionary monetary policy of the European Central Bank, the growth rate in the Eurozone, at 2.5 %, is forecast to slightly exceed that of 2017. Major drivers of growth in the emerging markets continue to be China, India and some countries in East Asia, with growth rates of over 5 %. The German economy is expected to continue on its growth trajectory with an anticipated rate of growth of 2.5 % in 2018. The German export sector will continue to make a key contribution to this development. However, in the light of existing economic and political risks the outlook remains uncertain, partly because the escalation of conflicts in the Middle East and North Korea added further geopolitical risks.

Increased security requirements for new technologies and the digital transformation mean that the global TICET market is set for further growth. And yet, the high level of fragmentation of the sector and relatively modest rates of growth on both domestic and European markets have given rise to intense competitive pressure, which could have a negative impact on the growth of domestic market players.

The TÜV NORD GROUP thus expects a moderate increase in sales for the 2018 reporting period, with a rate of growth slightly in excess of the level achieved in 2017. This does not take into account possible effects from the acquisition and sale of companies. All business units are expected to contribute to the planned growth rates.

The Industrial Services business unit expects to see continued stable development in its business activities both domestically and abroad. In international business, the Europe, Southeast Asia and China regions are likely to make a particular contribution to the increase in sales. At the same time, a decline is expected in the nuclear business in Europe. As a result of the additional costs occasioned by future and growth projects, including digitalisation, innovation, customer-focused processes and sales development, a slight reduction in the result is planned for 2018.

The Mobility business unit anticipates a positive sales and earnings trend. Crucial factors in this trend will be enhanced cooperation with partners in the context of the strategy of market positioning throughout the whole of Germany and increases in turnover in the areas of periodic vehicle inspections, damage appraisals and valuations.

For 2018, the Training business unit anticipates an increase in sales and a result on a par with that of the previous year. The planned increase in sales will result in particular from growth in the Academy business and the further development of the nursing schools operated by TÜV NORD College.

The Natural Resources business unit is assuming that there will be a modest recovery in the international commodities markets. For 2018, a slight rise in turnover and result is anticipated, to which the Seismology and Industrial Engineering business segments are likely to make a particular contribution. At the same time, the business unit is striving to reduce its dependence on the commodities markets by shifting business activities into other markets. To this end, the intention is to develop new products and services in the context of innovation projects.

The Aerospace business unit is planning a slight increase in sales and result for 2018. It is anticipated that the “Gateway” innovation project will record its first sales as of 2018 and, in the medium term, enhance customer loyalty by offering improved added value. The recently completed integration of Optocap services into the product portfolio will make it possible to engage in more cross-selling activities. In this respect, the business unit will continue to evolve in the direction of a one-stop shop for microelectronics.

The IT business unit is planning continuous revenue increases in all service areas. For 2018, it anticipates a slight decline in result on the back of innovations and the expansion of the business.

The number of employees in the Group is expected to grow in line with turnover in 2018. The Group is seeking to stabilise the productivity of its staff, taking into account growth opportunities on both domestic and foreign markets. The increase in the workforce is accounted for by recruitment in the course of planned innovation, service, internationalisation and growth projects, principally in the Industrial Services business unit. In structural terms, thanks to the continuous growth of the workforce in other countries, staff working in the foreign companies are accounting for an ever-higher proportion of the overall workforce of the Group.

The innovation projects identified in the context of the Strategy 2020plus should contribute to the organic growth of the Group in the long term. These projects will continue in 2018 with the aim of developing new services. In their innovation projects, all the business units are engaging with global megatrends such as Industry 4.0, the Internet of Things, critical infrastructure and connected cars, with the aim of adopting these developments in innovative and profitable business models.

 

Risk and opportunity management system

For a global company group like the TÜV NORD GROUP, a responsible attitude to risks and opportunities is key to corporate success and forms an important element of company management. Early identification of both risks and opportunities and forward-looking management form the basis of a systematic risk and opportunity management policy. With its diversified services, the Group is exposed to a wide range of risks but is also ideally placed to exploit a great many opportunities.

With the additional use of market and competition data (market intelligence), opportunities are identified and analysed within the risk and opportunity management system. On this basis, sales and service activities and other measures are scrutinised in respect of their effectiveness and viability. Relevant markets are continuously observed to identify overall economic and sector-specific opportunities in good time. Wide-ranging engagement with both established and growth markets is opening up macroeconomic opportunities for the TÜV NORD GROUP. In order to reinforce its technological base and market position, every effort is being made to improve the Group’s ability to innovate. The Group is thus in the position to participate at an early stage in macroeconomic opportunities as soon as the chance arises to do so.

The recording and management of risks to the future development of TÜV NORD GROUP takes place in the context of the risk management system. The objectives of the risk management system are the complete and reliable identification throughout the Group of existing risk potentials, the comprehensive summary and evaluation of risks, the quest for and development of efficient measures to reduce risk, continuous risk monitoring and comprehensive risk reporting.

The strategy of the existing risk management system consists in the systematic identification, evaluation, aggregation, monitoring and notification of the existing risks across the Group and implementation of the corresponding measures for risk reduction or elimination in all the companies in which the TÜV NORD GROUP holds a majority stake. These risks are identified by the end of each quarter in all the business units in a standardised, IT-based, periodic process. As no single instrument is capable of identifying all the risks, the risk management system provides for a combination of different instruments and methods for risk identification. The identified risks are analysed and evaluated, taking into account the potential levels of damage and likelihood of occurrence, so that counter measures for risk mitigation or elimination can be coordinated or developed to complement existing measures. On the basis of the risks that continue to exist after the implementation of countermeasures, a report is sent to the risk management department of the TÜV NORD GROUP. Key risks that might jeopardise the very existence of the Group are reported immediately as ad-hoc notifications outside the regular reporting schedule.

The risk management system is so structured as to ensure that the individual risks and their impact on the Group are determined to accurately map the risk situation of the Group.

Where necessary, financial provision is made for individual risks. Moreover, the Group operates a centralised insurance management system to set out and implement a Group-wide insurance strategy. Suitable insurance contracts are in place to limit or eliminate the possible financial impact of potential claims or liability risks.

The Board of Management and the Supervisory Board are kept informed at regular intervals of the current risk situation of the Group. They discuss at length the causes of the risk situation and the measures taken in response to it. Additionally, the effectiveness of the risk management system is verified by the corporate audit department and external auditors. The results of these audits are also reported to the Board of Management and the Supervisory Board.

 

Risks and opportunities for the TÜV NORD GROUP

With its diversified services, the Group is exposed to a wide range of risks but also ideally placed to exploit opportunities which have not significantly changed in a year-on-year comparison.

No risks became apparent during the 2017 fiscal year which might individually or cumulatively jeopardise the company’s continued existence or materially impair its financial position, financial performance or earnings. Nor is there any threat for the foreseeable future of any risks arising that might jeopardise the company’s continued existence.

Interest rate risks can arise in connection with pension obligations. The plan assets intended to finance the pension obligations are managed in a fiduciary capacity by the TÜV NORD PENSION TRUST e. V., which was founded in 2008. Changes to the actuarial interest rates in the valuation of pension obligations can have an impact on the cash value of the discounted pension obligations and thus influence the equity capital and overall earnings.

The Group is not exposed to any material price, credit loss or liquidity risks, nor to risks arising from fluctuations in cash flow. The Group’s financial assets are invested in such a way that, as far as can be seen at present, no material risks exist.

Opportunities for the TÜV NORD GROUP are arising from its presence in growth industries and dynamic markets. Investments in innovative areas domestically and abroad offer an opportunity to respond to increasing competitive pressure and to strengthen the Group’s market position.

The individual business units report the following risks and opportunities in their business activities:

The Industrial Services business unit expects its business to continue to show a positive development in the coming years. The business unit is exposed to risks above all in its core market of Europe. Intense price competition but also equally intense competition with regard to the recruiting of staff, especially engineers, may have a negative impact on the achievement of its objectives. Moreover, there is a real risk in Germany that regulations will be amended with the effect that previously mandatory tests will no longer be required and other specialist companies will be granted permission to conduct tests alongside the experts currently charged with the responsibility for doing so. This would result in a decline in sales and earnings along with increased competition. Opportunities for the expansion of business activities are to be found in the portfolio of new services, such as the development of digital lift testing. Moreover, existing services are being expanded, and activities such as those in the areas of wind energy and food developed around the world. To realise these opportunities, we set in train the implementation of an organisational structure that focuses even more single-mindedly on the customers, by means of which all the companies within the business unit will in future be controlled using a standardised process. Furthermore, potential to improve the efficiency of the service provision process is arising out of the implementation of productivity-enhancing measures. Digitalisation offers the opportunity both to mitigate the skill shortage threat posed by demographic developments and to slim down processes.

As a result of the amendment of the Atomic Energy Act in 2011, the nuclear company is confronted with the medium- to long-term risk of declining orders in Germany. Opportunities are presented by activities in the domestic decommissioning and waste management market and, in the long term, in connection with final nuclear waste disposal, and by the ramping up of sales activities abroad.

In the certification business, changes to the statutory base mean that the possibility that individual services will become obsolete or be cut back cannot be ruled out. However, due to the high level of diversification and the heterogeneity of the customer structure, this risk is manageable. The risk remains that accreditation bodies will impose drastic sanctions, up to and including the revocation of accreditation for certain areas, in the event of violations of the rules by individual employees of the certification company. In the Industrial Services business unit, a centralised accreditation management system is being installed to minimise the risks through targeted redundancies and internal auditing. Due, on the one hand, to the growing international trade in goods and, on the other, to the increasing importance of consumer protection, the domestic and foreign markets for almost all certifications are set to undergo robust growth over the medium to long term. Opportunities will arise through process optimisation and investments in the areas of energy and consumer protection. The anticipated positive trend might be affected at any time by risks arising from changes to the local political, social and economic conditions in individual countries.

For the Mobility business unit, the previously known premises and conditions remain largely unchanged. It is for this reason that the business is expected to see stable development in the coming years. The customer-group-oriented strategy of the Mobility business unit fundamentally revolves around the recognition of sector-specific risks and changes in market conditions in the segments and regions in the context of market and competition analyses.

Intensive competition around the core services in Germany is giving rise to risks in respect of the earnings situation and the Group’s position on the market. The process of concentration in the car dealership market requires the Group to offer services throughout Germany. This trend is being countered with increasing success by the establishment of national market presence in the form of franchise partners. Long-term competitiveness will be safeguarded by the maintenance of a high level of service, the expansion of the product portfolio and the development of a standard digital process design for existing services.

The Group is courting new staff just as assiduously as it is new customers. Targeted measures are being implemented to find suitable applicants for vacant positions and to enhance the loyalty of service providers to the company.

The risk remains that the lack of evidence of calibration of the test equipment in car dealerships and workshops will make it impossible to carry out testing activities on site. The ongoing expansion of capacities for calibration services on the market will contribute to the solution of this temporary challenge. The signs are that the competent state authorities will in each case draft interim regulations making it possible to continue the testing work until sufficient capacities are in place.

No discernible risks to the Mobility business unit have arisen out of the exhaust emissions scandal that was uncovered in the 2015 reporting period. Neither a slump in sales nor a loss of reputation have been identified. The scandal has impacted on the type approval process in the form of changes to testing and measurement procedures and the increased use of appropriate measuring technology. RDE/PEMS measurements are increasing; as of 2018, tailpipe emissions measurements will be made mandatory once again for all vehicles to ensure the maximum effectiveness of the periodic exhaust emissions tests.

Technological developments in the automotive sector are resulting in changes in the requirements on data protection and data security. The increasing complexity of equipment and vehicles requires that testing be supplemented by the testing of software for security management purposes. The Group sees opportunities to expand business activities in the manufacturing business in the form of the further development of methods to test systems installed in vehicles. The offer of vehicle valuations in growing second-hand car markets around the world presents further opportunities. Penetration of the market will be facilitated here by the use of new technologies and the development of targeted corporations.

For the companies of the Training business unit, falling unemployment could give rise to risks in the coming years, as it may lead to a substantial reduction in the number of contracts for training measures financed from public funds. The companies intend to extend their portfolios of services for the free market, e. g. for the health and nursing services sector. This will give rise to good opportunities to improve the market position. Constant training and information requirements are to be expected as a result of technical developments or changes to rules and regulations, especially in the TÜV-specific areas. The “migration and refugees” issue is continuing to throw up new challenges for education and labour market policy. The educational institutes are accordingly being forced into a prominent role in the development and provision of suitable instruments. This will result in opportunities for the companies in the Training business unit.

The overall situation of the global commodities industry has not deteriorated. The Natural Resources business unit is assuming that there will be a modest recovery in the international commodities markets. As before, the focus of sales activity will increasingly turn to state-financed projects. DMT EIT raw materials activities and participation in other (sponsorship) program mes have resulted in successes in the award of projects, particularly for the medium term. Business expansion in the direction of infrastructure should offset the caution being exhibited in the commodities markets. The restructuring and process optimisation carried out in previous years has enhanced the competitiveness of Natural Resources business unit as a whole. The expansion of international representation remains a priority. Growth opportunities will arise from the implementation of innovation projects which have been elaborated in the context of the development of strategies to accompany the relevant megatrends, such as population growth, increasing urbanisation, rising demand for raw materials and convulsions in energy supply.

The companies of the Aerospace business unit are dependent upon successful partnership with the component manufacturers. In the growing market for satellite construction there is a risk that the component manufacturers may enter into direct business relationships with the builders of satellites or systems. The “Gateway” project was launched to minimise any possible negative effects. The idea behind the project is to improve the partnership with the component manufacturers and at the same time to create a marketing platform for customers. Prospects for business expansion are also offered by increased growth in emerging markets as well as the extension of existing services and the marketing of these services for the aviation sector.

For the IT business unit, risks could arise from the draft law for the creation of a central European cybersecurity agency represented by the ENISA and an annex defining “conformity assessment bodies”. This draft legislation might very quickly become mandatory for all EU member states. ENISA would be granted sovereign powers in respect of the IT security scheme in Europe and for testing procedures. Previous national procedures and schemes could thus be completely superseded. The principle of conformity assessment could replace the evaluation in which TÜViT has specialised, potentially significantly lowering the bar for testing bodies seeking to enter the market and encouraging the emergence of new competitors as well as increasing competitive pressure from established ones. And yet, this new legislation will also give rise to opportunities: the number of products to be certified could undergo a massive increase as a result of the lower security requirements, as manufacturers would not be exposed to such high risk of falling foul of stringent requirements.

Competition for the services of IT security experts will continue in the coming year. As there are no longer any trained specialists on the market, further investment will be required in the search for employees with potential and their subsequent training. This will give rise to high initial costs and a loss of productivity.

In the Western world, a trend is emerging toward the increasing consolidation of manufacturers of high-security semiconductors. Increasing competitive pressure and the entry into the market of Asian manufacturers are resulting in company takeovers that are accordingly reducing the number of product lines to be certified. Until just one year ago it was not possible to certify high-security semiconductors made by Chinese manufacturers in Germany. This has now been changed thanks to an agreement with the BSI that was initiated by TÜViT. It will accordingly be possible for the IT business unit to generate new opportunities on the Chinese market in the future.

For some years now, concerted efforts have been underway to promote innovative themes such as Industry 4.0, the Internet of Things and autonomous driving, which are between them generating an enormous potential for IT security requirements. However, the implementation of concepts in a phase in which customers will approve budgets for IT security testing is not yet on the horizon.

 

Corporate Governance

Corporate governance provides the framework for the management and supervision of the TÜV NORD GROUP and is based on the requirements imposed by the German Corporate Governance Codex on capital-market-orientated companies. The governance structure is for this reason consistently aligned with the globally recognised Three Lines of Defence (TLoD) governance model and is the byword for responsible management and control with the aim of long-term value creation. With its three connected lines of defence, of which the first is operative management, the second risk management, controlling, law, compliance etc., and the third internal auditing, the TÜV NORD GROUP guarantees the lawfulness of all its business processes and organisational structures along with the efficiency and effectiveness of its established internal control system (ICS).

The Compliance Management System (CMS) of the TÜV NORD GROUP, which was established over 10 years ago and has been awarded multiple certifications, is an essential element of corporate governance as stipulated by TLoD. Its priority is to reinforce the values of and protect the TÜV NORD GROUP. To prevent possible risks and avert damage to the TÜV NORD GROUP, the central CMS at TÜV NORD AG provides for a contact person with responsibility for compliance, whose job is to coordinate compliance issues and tasks. This point of contact is available for all employees. Appropriately conceived and clearly formulated policies and regulations, accessible to all staff at all times via the Intranet, are fundamental factors when it comes to ensuring good corporate governance. The adoption of a corporate philosophy and a binding code of conduct have given employees a concrete framework of guidelines for their actions, thus reinforcing good business practices in compliance with the law. The corporate philosophy and the code of conduct are regularly reviewed and updated. Information events and training sessions are organised to enhance staff awareness of the theme of compliance, as TÜV NORD aspires to a preventive compliance approach and a corporate culture in which heightened awareness among the staff precludes the possibility of breaches of the rules.

All corporate governance structures and processes are regularly reviewed to ensure that they are up-to-date and, if required, adapted to meet new requirements, such as the current revision of money-laundering legislation and the newly introduced transparency register.

The key principles of the TÜV NORD compliance strategy are adherence to applicable law, respect for ethical values and sustainable action. Compliance is also an important assessment criterion in the selection of its suppliers and business partners and is guaranteed by a Compliance Code for suppliers and business partners which forms the basis of existing and future business relationships. By signing the agreement on the Compliance Code, the suppliers of the Group undertake to act in the spirit of the TÜV NORD compliance standards. These include the basic requirements of human rights, equal opportunities and non-discrimination, environmental protection, product and occupational safety, the observance of the law and the extirpation of corruption.

Members of staff, business partners and customers have a further possibility in the form of an ombudsman system, bound by principles of confidentiality and anonymity, to communicate compliance issues or draw the Group’s attention to breaches of the compliance regulations of the TÜV NORD GROUP. A renowned lawyer, appointed as an external point of contact for all employees, customers and business partners, gathers information on any violations of the law or policy to which he is alerted.

Compliance with the corporate governance rules and regulations is continually monitored by the Internal Audit Department through its risk-orientated audit planning. The quality management system implemented by the Group’s internal audit department aims to guarantee the efficiency and effectiveness of its auditing work. The effectiveness of the established processes is regularly confirmed by an external and voluntary audit in accordance with the DIIR (German institute of internal auditing) standard.

The CMS was successfully audited most recently in 2015 by an external audit company on the basis of the IDW PS 980 auditing standard. The audit report deemed the implementation and orientation of the CMS to be appropriate. The verdict of the audit confirms with sufficient confidence that the compliance management system is suitable for both the identification of risks of major violations of the rules and the prevention of such violations in the first place.

Awareness and sensitivity concerning compliance at corporate management level and among the employees have been deemed exemplary across the Group over a sustained period. Regular compliance queries submitted by the employees and the recommendations for conduct issued in reply in advance of active business transactions are effective and efficient measures for the prevention of damage. Risk-based process controls, such as, for instance, a compliance check for business partners, systematically reduce potential compliance risks. The tracking, sanctioning, evaluation and documentation of breaches of compliance represent an integral part of the continuous improvement process. In addition to the continuous supply of up-to-date information, the Group’s point of contact for compliance presents a compliance report to the Board of Management. These measures will further strengthen the tried-and-tested compliance structures and permanently reinforce awareness of the mandatory nature of TÜV NORD compliance in the Group’s day-to-day business.

 

Statement on corporate governance

Findings on the promotion of the participation of women in leadership positions according to Article 76 (4) and Article 111 (5) German Stock Corporation Act

The TÜV NORD GROUP pursues a strategy of diversity and is striving to increase the percentage of women in managerial positions1.

In 2017, the Supervisory Board of TÜV NORD AG found that the targets set in 2015 in respect of the composition of the Supervisory Board and the Board of Management had been met; these did not, however, entail an increase in the number of women in the bodies concerned. For the period until June 30 2022, the Supervisory Board has once again resolved that it is not seeking to increase the number of women in the two bodies. Should any subsequent appointments become necessary, women will, as always, be offered the same opportunities as men.

The targets were either met or exceeded by June 30 2017; for the first tier of management below the Board of Management, the Board set a new target of 30 % (previous target 22 %) in 2017, and, for the second tier of management below the Board of Management, the previous target of 30 % was maintained. For both targets the deadline set for implementation was the end of June 30 2022.

For the other affected companies in the Group, the targets for the proportion of women in the Supervisory Board, the Board of Management and the next two tiers of management and implementation deadlines were set on time.

1Pursuant to the act on the equal participation of women and men in managerial positions in the private and public sectors, certain companies in Germany are committed to setting targets for the proportion of women on their supervisory boards, executive boards and in the following two management tiers and to set a date for the achievement of these targets. The TÜV NORD GROUP pursues a strategy of diversity and is striving to increase the percentage of women in managerial positions.

 

Further information

TÜV NORD AG is deemed within the meaning of Section 17 of the Stock Corporations Act (Aktiengesetz – AktG) to be directly dependent upon TÜV Nord Holding GmbH & Co. KG of Hamburg and TÜV HSA Holding GmbH & Co. KG of Hanover and indirectly dependent upon TÜV Nord e. V. and TÜV Hannover/Sachsen- Anhalt e. V. For the period from January 1 to December 31 2017 and in respect of relevant special transactions during the 2017 fiscal year, the Board of Management of TÜV NORD AG has drawn up a report pursuant to Section 312 of the AktG regarding relations between the company on the one hand and TÜV Nord Holding GmbH & Co. KG, TÜV HSA Holding GmbH & Co. KG, TÜV Nord e. V., TÜV Hannover/Sachsen-Anhalt e. V. and the affiliated companies on the other.

This report ends with the following declaration:

“We hereby declare that, in respect of every legal transaction with affiliates, TÜV NORD AG received consideration that was appropriate in the light of the circumstances known to us at the time when such transactions were performed.

Beyond the activities reported on herein, there were no further reportable transactions, measures or omissions.”

 

Hanover, February 28 2018

TÜV NORD AG
The Board of Management

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