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  2. Facts and figures
  3. Annual Report 2017
  4. Notes to the Consolidated Financial Statements

1. General principles

1.1. Corporate information

The TÜV NORD Group is one of the biggest technical service providers in Germany, offering a broad range of testing, certification, engineering, consulting and training services for its customers in its Industrial Services, Mobility, Training, Natural Resources, Aerospace and IT business units in all the world’s major countries.

TÜV NORD AG, with its registered office in Hanover, Germany, is the parent company of the Group, registered with the Commercial Registry of Hanover Local Court under no. HRB 200158.

The Board of Management of TÜV NORD AG completed the preparation of the Consolidated Financial Statements as of December 31 2017 and the Group Management Report for the 2017 fiscal year on February 28 2018, and authorised them for submission to the Supervisory Board.

 

1.2. Basis of presentation

Taking advantage of the right to choose pursuant to Art. 315e (3) of the German Commercial Code (HGB), TÜV NORD AG prepared its Consolidated Financial Statements as of December 31 2017 in accordance with International Financial Reporting Standards (IFRS), while at the same time complying with the German supplementary provisions pursuant to Art. 315e (1) of the HGB. All the International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) adopted by the International Accounting Standards Board (IASB) up to December 31 2017 and all the pronouncements of the International Financial Reporting Standards Interpretations Committee (IFRS IC) have been applied in relation to the 2017 fiscal year, to the extent that such standards had received the endorsement of the Commission of the European Union up to the time of publication of the Consolidated Financial Statements and that their application is mandatory. The use of the two- statement approach shows a breakdown of the expense recognised in equity and income (Income Statement) in addition to the Profit and Loss Account, the Balance Sheet and the Cash Flow Statement.

In order to achieve equivalence with consolidated financial statements prepared in accordance with the HGB, all statutory requirements of disclosure and explanation going beyond the IASB requirements have been complied with, in particular the preparation of a Group Management Report.

The Consolidated Financial Statements are presented in Euro and on the basis of original cost (costs of purchase or production), with the exception of certain financial instruments which are recognised at fair value.

Unless otherwise indicated, the amounts are stated in thousands of Euro (€ k). The use of rounded-off values and percentage may result in differences due to financial rounding. For the sake of clarity and to make the financial statements more readily understandable, certain individual items are aggregated in the Balance Sheet and the Income Statement but disclosed and explained separately in the notes.

The Consolidated Financial Statements are based on the consolidated accounts. Separate financial statements of subsidiary companies prepared in their local currencies are translated into Euro.

The reporting periods of the TÜV NORD Group and of all consolidated subsidiaries end on December 31 of each successive calendar year.

 

1.3. Accounting standards applied for the first time in the year under review

The IASB has issued the following standards and amendments to existing standards, which have received endorsement from the EU, i. e. have been adopted into European law, and whose application is mandatory in respect of the 2017 fiscal year:

Effective Application Standard/Interpretation

Mandatory application

Amendments to IAS 7 “Disclosure Initiative”

Reporting periods beginning on or after 1.1.2017

Amendments to IAS 12 “Recognition of Deferred Tax Assets for Unrealised Losses”

Reporting periods beginning on or after 1.1.2017

Amendments to IFRS “Disclosure of Interests in Other Entities”

Reporting periods beginning on or after 1.1.2017

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All the accounting standards whose application is mandatory as of the 2017 fiscal year have been applied by TÜV NORD AG; this has not, however, had any material impact on the presentation of the financial statements.

 

1.4. Newly issued accounting standards not yet applied

The following standards, interpretations and amendments to existing standards issued by the IASB have already been adopted into European law by the EU, but their application is not yet mandatory for the year under review. The company has not elected to apply this provision in advance of its becoming mandatory.

No application to choose in advance Standard/Interpretation

Mandatory application

Amendments to IFRS 4 “Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts”

Reporting periods beginning on or after 1.1.2018

IFRS 9 “Financial Instruments”

Reporting periods beginning on or after 1.1.2018

IFRS 15 “Revenue from Contracts with Customers” including changes to IFRS 15 “Effective date of IFRS 15”

Reporting periods beginning on or after 1.1.2018

Clarifications concerning IFRS 15 “Revenue from Contracts with Customers”

Reporting periods beginning on or after 1.1.2018

IFRS 16 “Leases”

Reporting periods beginning on or after 1.1.2019

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In July 2014, the IASB published the final version of IFRS 9, “Financial instruments”. The new standard includes revised guidelines for the classification and measurement of financial assets and changes to the rules on the impairment of financial assets, as well as revised regulations concerning the accounting of hedging relationships. The regulations must be applied by law to reporting periods beginning on or after January 1 2018. The TÜV NORD Group will accordingly apply IFRS 9 for the first time to the reporting period beginning on January 1 2018 but anticipates no significant impact from this first application on the consolidated financial statements.

In May 2014, the IASB published the new IFRS 15 standard entitled “Revenue from contracts with customers”. The new standard brings together a variety of rules previously contained in various standards and interpretations. A five-stage model governs when and to which extent revenues are to be recorded. Upon the conclusion of a contract, the information to be determined includes, among other things, whether the resulting revenues are to be recorded with reference to a point in time or a period. The application of IFRS 15 becomes mandatory only to reporting periods beginning on or after January 1 2018.

The TÜV NORD Group will accordingly apply IFRS 15 for the first time to the reporting period beginning on January 1 2018. Many of the orders fulfilled by the TÜV NORD Group satisfy the requirements for the period-related recording of revenues in accordance with IFRS 15.35. We do not therefore anticipate any significant impact from the initial application of IFRS 15 on the consolidated financial statements.

In January 2016, the IASB published the new IFRS 16 standard entitled “Leases”, which supersedes the previous leasing standard IAS 17. The new standard must be applied by law to reporting periods beginning on or after January 1 2019. Earlier application is permitted provided that IFRS 15 is also applied. The Group will accordingly apply IFRS 16 for the first time to the reporting period beginning on January 1 2019.

The new standard envisages a unified accounting model for the lessee: leases are to be recorded on the balance sheet as rights of use and, correspondingly, as a liability. Exempted from this obligation, where the voting rights to that effect are exercised, are low-value assets and leases with a term of less than 12 months. IFRS 16 does not essentially differ from IAS 17 when it comes to lessor accounting. For lessors, the distinction between finance and operating leases must continue to be made as before.

The TÜV NORD Group primarily enters into leases as an operating lessee. The application of IFRS 16 gives rise to the following effects on the presentation of the net asset, financial and earnings position of the Group: With regard to the minimum lease payments under Other Financial Commitments from Operating Leases, the initial application of the standard will lead to an increase in non-current assets by virtue of the inclusion in the balance sheet of rights of use. The financial liabilities will increase by virtue of the inclusion of the corresponding liabilities. Moreover, the nature of the expenses from these leases will change because, in IFRS 16, the previous linear expenses for operating leases are replaced by the depreciation of the rights of use and the interest paid on the liabilities. In addition, according to IFRS 16 the repayment portion of the lease payments must be shown as part of the cash flow from financing activities, with the effect that the cash flow from operating activities will improve.

The Group is currently in the process of implementing the new standard. It has not yet been possible to reliably identify the quantitative impact on the Consolidated Financial Statements. The current operating lease volume is shown in the annex under no. 5.16.

TÜV NORD AG is of the opinion that the application of the standards, which were issued before the reporting date but whose application is not yet mandatory, will have no material consequences for its financial position or financial performance.

The following standards and amendments to existing standards issued by the IASB or the IFRS IC have not yet received EU endorsement, with the effect that their application is not yet admissible:

Application in advance inadmissible Standard/Interpretation

Mandatory application

Annual Improvements to IFRS Standards (Cycle 2014–2016)

Reporting periods beginning on or after 1.1.2018/1.1.2017

Amendments to IAS 40 “Transfers of Investment Property”

Reporting periods beginning on or after 1.1.2018

Amendments to IFRS 2 “Classification and Measurement of Share-based Payment Transactions”

Reporting periods beginning on or after 1.1.2018

IFRIC 22 “Foreign Currency Transactions and Advance Consideration”

Reporting periods beginning on or after 1.1.2018

IFRIC 23 “Uncertainty over Income Tax Treatments”

Reporting periods beginning on or after 1.1.2019

Amendments to IFRS 9 “Prepayment Features with Negative Compensation”

Reporting periods beginning on or after 1.1.2019

Amendments to IAS 28 “Long-term Interests in Associates and Joint Ventures”

Reporting periods beginning on or after 1.1.2019

Annual Improvements to IFRS Standards (Cycle 2015–2017)

Reporting periods beginning on or after 1.1.2019

IFRS 17 “Insurance Contracts”

Reporting periods beginning on or after 1.1.2021

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TÜV NORD AG is of the opinion that the application of IFRIC 22, IFRIC 23 and IFRS 17, will have no material consequences for its financial position or financial performance.

 

2. Summary of significant accounting policies

2.1. Basis of consolidation

In addition to TÜV NORD AG, the Consolidated Financial Statements cover 38 (2016: 42) domestic and 45 (2016: 46) foreign companies in which TÜV NORD AG directly or indirectly holds a majority of the voting power, or over whose financial and operating policies it otherwise exerts control and is thus in a position to obtain benefits from their activities. In determining the situation with regard to control, potential voting rights which are currently exercisable or convertible are also taken into consideration.

In the 2017 fiscal year, the removals from the list of fully consolidated subsidiaries resulted from the merger of two subsidiaries with another fully consolidated Group company and three deconsolidations.

In addition, five companies (see under 5.3) are accounted for by the equity method.

Not included in the consolidation are companies which are of only minor significance for a true and fair view of the financial position, financial performance and earnings of the Group. This waiver of consolidation has the effect of reducing group revenue by 0.6 % (2016: 0.4 %) and of a change of consolidated earnings before tax (EBT) of 0.1 % (2016: 0.0 %).

A list of shareholdings has been prepared in which TÜV NORD Group’s affiliates and other equity investments are listed, showing the proportion of the capital held. A list of all the Group’s shareholdings is published in the Federal Gazette as part of the Notes to the Consolidated Financial Statements.

 

2.2. Consolidation policy

The annual financial statements of the subsidiaries included in consolidation are prepared in accordance with TÜV NORD AG’s accounting and valuation methods, which are applied uniformly throughout the Group.

Capital consolidation is effected using the purchase method, pursuant to IFRS 3, Business Combinations. Using the purchase method to account for business combinations assumes that, at the time of initial consolidation, all the assets, liabilities and contingent liabilities of the company acquired and also any intangible assets to be recognised in addition are measured at fair value. Any difference amounts between the cost of acquiring the interest in the company and the acquirer’s pro-rata share in the reassessed equity at the time of acquisition are allocated to the appropriate balance sheet items of the subsidiary up to the amount of their fair value. Any remaining positive difference is recognised as goodwill. If a negative difference arises, it is recognised as an expense in profit and loss for the reporting period during which the business combination takes place. Goodwill is tested for impairment at least once a year.

The earnings of subsidiary companies acquired or disposed of in the course of the fiscal year are included in the Consolidated Income Statement from the point in time when control was acquired or up to the effective time of disposal.

Significant associates and joint ventures are accounted for using the equity method. An associate is a business entity upon which the Group can exert significant influence through participation in financial and operating policy decisions, but over which it cannot exercise control. In general, such significant influence may be presumed if the Group holds 20 % or more of the voting power. The pro rata earnings from such equity holdings are recognised under the item Income from investments in associates. Should any such equity investments be subject to long-term impairment, impairment losses are recognised. Where a Group company undertakes transactions with an associate, any resulting unrealised gains or losses are eliminated pro rata to the Group’s interest in the associate or joint venture.

Receivables and payables between companies included in consolidation are netted. Profits and losses arising out of intercompany transfers of assets that are to be recognised in the Consolidated Financial Statements are eliminated unless they are immaterial. Revenue and other income between consolidated companies are offset against the corresponding expenses.

During the process of consolidation, income tax effects are taken into account and deferred taxes recognised where appropriate.

Shares in the equity of subsidiaries that are held by parties outside the Group are recognised separately within equity capital. The proportions of the earnings of subsidiary companies attributable to outside shareholders (non-controlling interests) are stated separately in the Income Statement.

 

2.3. Currency translation

Translation into the presentation currency

The annual financial statements of any foreign Group company whose functional currency is not the Euro are translated into the Group presentation currency, i. e. Euro, in accordance with the functional currency concept. In general, the functional currencies of the foreign subsidiaries are their respective local currencies.

Assets and liabilities of foreign subsidiaries are translated at the exchange rate prevailing as of the balance sheet date. Equity is translated at historical rates of exchange. Expense and income are translated into Euro at average rates for the year. Differences arising out of currency translation are recognised in Other comprehensive income. Such a translation difference recognised in comprehensive income is posted to profit and loss only if the company concerned is deconsolidated.

 

Translation into the functional currency

Foreign currency transactions are translated into the functional currency at the exchange rate prevailing at the time of the transaction. Gains and losses resulting from the fulfilment of such transactions and from the translation as at the reporting date of monetary assets and liabilities denominated in foreign currencies are recognised in the Income Statement.

The following exchange rates are among those used for the translation of the currencies of countries that are not members of the European Monetary Union:

   

Exchange rate as of the reporting date

 

Annual average rate

 

Currency

ISO Code

31.12.2017

31.12.2016

2017

2016

Brazilian real

BRL

3.9729

3.4394

3.6041

3.8273

British pound sterling

GBP

0.8872

0.8581

0.8761

0.7918

Bulgarian lev

BGN

1.9558

1.9561

1.9558

1.9558

Canadian dollar

CAD

1.5039

1.4230

1.4644

1.4665

Chinese renminbi yuan

CNY

7.8044

7.3443

7.6264

7.2058

Croatian kuna

HRK

7.4400

7.5565

7.4644

7.6037

Czech koruna

CZK

25.5350

27.0200

26.3272

27.0241

Danish krone

DKK

7,4449

7,4341

7,4387

7,4473

Egyptian pound

EGP

21.2314

19.1571

20.1086

11.7647

Hong Kong dollar

HKD

9.3720

8.1945

8.8012

8.3165

Indian rupee

INR

76.6055

71.8221

73.4981

72.0669

Indonesian rupiah

IDR

16,233.7662

14,184.3972

15,105.7402

14,705.8824

Korean Won

KRW

1,279.6069

1,276.2427

1,275.8357

1,276.6501

Malaysian ringgit

MYR

4.8536

4.7406

4.8501

4.7065

Polish zloty

PLN

4.177

4.4180

4.2563

4.3394

South African rand

ZAR

14.8054

14.4954

15.0434

15.6409

Swedish krone

SEK

9.8435

9.5657

9.6367

9.3721

Thai baht

THB

39.1210

37.8475

38.2785

38.5371

Turkish lira

TRY

4.5465

3.7288

4.1215

3.4341

US dollar

USD

1.1993

1.0568

1.1293

1.0727

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2.4. Use of estimates

The preparation of IFRS financial statements requires management to make certain estimates and assumptions which have an impact on the carrying amounts of assets and liabilities, the disclosure of contingent assets and liabilities existing as of the reporting date, and the income and expense recognised for the fiscal year. In compiling the Consolidated Financial Statements, estimates had to be made in particular with regard to the valuation of employee benefits under IAS 19, the impairment testing of goodwill, provisions from the human resources and social sector, the provision for threatened losses from pending transactions and the deferred tax assets relating to loss carryforwards.

Employee benefits relate essentially to obligations arising out of defined benefit pension commitments, which are determined on the basis of actuarial parameters. These require assumptions to be made about future wage and salary increases, trends in pension levels and the discount rate.

Changes in the parameters for determining defined benefit obligations and plan assets do not however affect consolidated earnings for the current year, since any actuarial gains or losses are recognised in Other comprehensive income.

Goodwill is subjected to an annual impairment test on the basis of the smallest cash-generating unit to which goodwill has been allocated and the management’s approved three-year operating plan.

Recognition and measurement of the provisions from the human resources and social sector and the provision for threatened losses are based on estimates of the probability of a future outflow of resources and on the basis of experience values and of the circumstances known at the reporting date. To this extent, the actual outflow of resources may vary from the amount of the provision.

Deferred tax assets relating to loss carryforwards are accounted for on the basis of estimates of the extent to which the tax advantages can be realised in future, i. e. whether adequate taxable income or reduced tax expense is to be expected. The actual tax situation in future periods, and thus the actual extent to which loss carryforwards can be utilised, may vary from the estimate made at the time when the deferred taxes were recognised.

 

2.5. Accounting policies

Accounting is undertaken in accordance with the following principles:

 

Revenue realisation

Revenue from services rendered is recognised as soon as performance is completed.

In the case of longer-term contracts, appropriation is carried out pursuant to IAS 18.20 in accordance with the percentage-of-completion method (PoC method). With this method, expenses and income are recorded according to the degree of completion of the contract. The degree of completion per contract to be applied is thereby calculated using the ratio of accrued costs to the calculated total costs (the cost-to-cost method).

 

Intangible assets

Intangible assets encompass intangible assets acquired for consideration and internally generated intangible assets and goodwill.

Intangible assets acquired for consideration, e. g. software and accreditations, are valued at historical cost. This position also includes items identified during purchase price allocations, e. g. customer relations and trade mark rights.

Internally generated intangible assets, e. g. software or research and development costs, are recognised at production cost if this meets the recognition criteria of IAS 38.

Intangible assets with a certain useful life are subject to amortisation by the straight-line method over a period of generally between 3 and 15 years, depending on the expected future economic benefits. The useful life is subject to annual review, and if necessary is adjusted in accordance with future expectations. If there is any indication of impairment, or if the recoverable amount is less than the amortised cost, an impairment loss must be recognised.

If the reasons for recognising such an impairment loss cease to apply, the impairment loss is reversed, where the resulting enhanced carrying amount may not exceed the amortised cost arrived at by normal amortisation.

Goodwill arising out of a business combination is recognised from the time when control is obtained over the company acquired (the acquisition date). It arises whenever the cost of acquiring the business exceeds the netted fair value of the identifiable assets, debts and contingent debts at the acquisition date. Goodwill is not subject to amortisation; instead, it is subjected to an impairment test at least once a year, and more frequently should any triggering events occur. The impairment test is carried out on the basis of cash-generating units, the recoverable amount of a cash-generating unit being compared with its carrying amount. Under IAS 36, an impairment loss is recognised if the carrying amount of a cash-generating unit to which goodwill has been allocated exceeds its recoverable amount. Impairment losses on goodwill, once recognised, may not be subsequently reversed.

The cash generating units correspond with the international business units Industrial Services, Mobility, Training, Natural Resources, Aerospace and IT and the Group unit Holding/Services.

The recoverable amount is the higher of the cash-generating unit’s fair value less costs to sell and its value in use. The recoverable amount of a cash-generating unit is calculated by determining its value in use, using the discounted cash flow method on the basis of the three-year plan approved by management. In determining value in use certain assumptions have to be made, relating essentially to the rate at which operating profit will grow over the planning period, the cost of capital as well as the expected sustained growth rate after the end of the three-year plan. The cost of capital is determined on the basis of the weighted average cost of capital (WACC).

 

Property, plant and equipment

Assets falling into the category of property, plant and equipment are recognised at depreciated costs (purchase or construction costs). Construction costs include not only direct costs but also attributable overheads.

The revaluation model as per IAS 16.31 is not applied. As a result, under current market conditions the carrying amounts of TÜV NORD Group`s real estate include hidden reserves.

Property, plant and equipment is normally depreciated by the straight-line method, unless in exceptional cases some other depreciation method appears more appropriate. Depreciation is based on the following useful lives:

Useful lives of property, plant and equipment

years

Office buildings

30–50

Test facilities

20–30

Machinery

5–12

Furniture, fixtures and office equipment

3–20

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Under IAS 36, “Impairment of assets”, property, plant and equipment are subject to impairment if the recoverable amount (see also under “Intangible assets” above) of the asset concerned has fallen below its carrying amount. If the reasons for recognising such an impairment loss cease to apply, the impairment loss is reversed, but only to the extent that the enhanced carrying amount does not exceed the asset’s depreciated cost. Such a reversal of an impairment loss is recognised as income.

 

Leases

Leases are classified either as operating leases or finance leases. Under IAS 17, leases under which all the substantial risks and rewards incidental to ownership of an asset are transferred to the TÜV NORD Group are to be classified as finance leases; other leases are operating leases.

In the case of finance leases, the leased item is recognised as from the time of its first use at the lower of fair value and the present value of the minimum lease payments and depreciated by the straight-line method over its estimated economic life, or, if shorter, the term of the lease. The corresponding liability to the lessor is recognised in the balance sheet as a liability from a finance lease and amortised over the subsequent period using the effective interest rate method. In the case of operating leases, the net lease payments are recognised in the income statement over the term of the lease.

 

At equity consolidated investments

Associates and joint ventures are initially recognised at cost at the time of their acquisition, and in subsequent accounting periods in accordance with the proportion of the equity held, using the equity method. The carrying amounts are increased or decreased annually by the amount of the earnings attributable pro rata, the dividends distributed or other changes in equity. Under IAS 28.33, accounting using the equity method is effected on the basis of the financial statements for the previous reporting period. Any goodwill is reviewed in connection with the impairment testing of the investment in the associate (IAS 39) or joint venture. Goodwill is not subject to amortisation.

 

Other financial assets

The item Other financial assets covers in particular investments in non-consolidated affiliates, other equity investments, loans, securities and claims arising out of the reinsurance of pension obligations.

Under IAS 39, four categories of financial asset are distinguished:

  • Financial assets at fair value through profit or loss (held for trading),
  • Available-for-sale financial assets,
  • Held-to-maturity investments,
  • Loans and receivables.

Investments in non-consolidated affiliates, other equity investments and securities that are available for sale are assigned to the “Available for sale” category. Investments in non-consolidated affiliates and associates are recognised at amortised cost, since no fair values are available and other admissible measurement procedures do not lead to reliable results. Securities that are available for sale are recognised at fair value. Changes in value are recognised in equity, making due allowance for deferred tax effects.

If the fair value of a financial asset falls below cost, the impairment loss is recognised as expense.

Loans granted fall into the category “Loans and receivables” and are recognised at amortised cost. Claims arising out of reinsurance fund shares that do not form part of the plan assets are accounted for at fair value in accordance with IAS 19.

 

Inventories

Inventories essentially cover work in progress and are measured at cost of production. This includes not only direct labour but also an allocation of proportions of material and production overheads on the basis of normal utilisation of capacity, and also depreciation. In addition, the costs of occupational pensions and of the company’s voluntary welfare benefits are included, to the extent that they are attributable to the production area. Administrative costs are recognised to the extent that they are attributable to the production area.

Inventories may be written down to an appropriate and adequate extent to take account of contract-related risks. Where necessary, they are recognised at the lower net realisable value. If the reasons for subjecting inventories to such an impairment loss cease to apply, the impairment loss is reversed.

 

Trade and other receivables, Other assets

Receivables include the company’s trade receivables, other receivables and other assets. They are measured at nominal value or at cost net of impairment. The impairments take into account the individual circumstances of the debtor and are also graded according to the number of overdue days. Non-current receivables bearing no or only low interest are discounted at a rate appropriate to the risk, to the extent that the interest effect is material. The amount discounted is recognised pro rata under interest income until the receivable becomes due.

Other receivables and other assets also include receivables from partly fulfilled contracts to render services pursuant to IAS 18.20, which are recognised by the percentage of completion method. Any advance payments received are netted against the receivables.

 

Cash and cash equivalents

Cash and cash equivalents include freely disposable cash in hand, cheques and bank credit balances with a term of up to three months. They are recognised at nominal value.

 

Deferred tax assets and liabilities

Deferred tax assets and liabilities are recognised for all temporary differences between the carrying amounts of assets and liabilities in the IFRS balance sheet and their tax bases and also for consolidation measures recognised through profit or loss and are as far as is permissible set off against one another in the balance sheet. Deferred tax assets are recognised to the extent that it is probable that there will be taxable income against which the deductible temporary difference can be offset. Deferred tax assets also include claims for reductions in amounts of tax payable arising out of the expected utilisation of existing loss carryforwards in subsequent years, to the extent that their realisation within a period of 5 years is sufficiently certain. Deferred tax assets and liabilities are also recognised where temporary differences arise in connection with business combinations (corporate acquisitions), with the exception of temporary differences relating to goodwill.

Deferred taxes are determined on the basis of the rates of taxation that apply or are expected to apply under current law in the individual countries at the time of realisation. Tax rates that will be applicable in future years are used for calculation purposes to the extent that they have already been fixed in law or that the legislative process is practically completed.

Changes in deferred tax assets and liabilities in the balance sheet generally lead to tax expense or income in the income statement; unless they relate to items recognised in comprehensive income; in this case the deferred taxes are also recognised in comprehensive income.

Deferred taxes are not recognised at the reporting date in respect of temporary differences in connection with investments in subsidiaries, associates or joint ventures (outside basis differences). It is not possible to make any reasonable estimate of the amounts of these unrecognised deferred tax liabilities.

For the calculation of domestic deferred taxes, a tax rate of 32.0 %, unchanged from the previous year, has been applied.

 

Assets held for sale

Assets held for sale are shown separately in the balance sheet if they can be sold in their existing condition and it is probable that they will be. When assets are first classified as “held for sale”, they are revalued at the lower of carrying amount and fair value less costs to sell. Impairment losses resulting from the first-time classification of the assets as being “held for sale”, and also any later impairments (or reversals of impairments), are recognised as expense (or income) in the Income Statement. Assets held for sale are not subjected to amortisation.

 

Provisions for pensions and other post-employment benefits

Post-employment benefit plans are classified as either defined benefit or defined contribution plans, depending on the economic substance of the plan as derived from its principal terms and conditions. Plans are classified as defined benefit plans if the actuarial or investment risk falls on the employer. Post-employment benefit commitments that cannot be unambiguously classified as defined benefit plans are regarded as defined contribution plans.

The requisite level of pension provisions in respect of defined benefit obligations is determined by actuarial valuation using the projected unit credit method. This valuation is carried out by actuaries as of every balance sheet date. Actuarial gains and losses arising are accounted for directly in equity without passing through the Income Statement and are recognised in the Group Statement of Comprehensive Income.

Through the transfer of claims to reinsurance to TÜV NORD PENSION TRUST e. V. of Hanover, plan assets have been formed which serve to secure the pension obligations.

The service cost included in pension expense and the included net interest expense are recognised under “Personnel expense”.

Payment obligations under defined contribution pension plans (the statutory pension funds) are recognised in the income statement for the period concerned.

 

Other provisions

Other provisions are formed if a present legal or constructive obligation exists towards third parties as a result of a past event, in respect of which it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate can be made of the amount of the provision required. The measurement of the provisions is effected using the best estimate of the amount required to settle the obligation, which is not set off against any possible claims for recourse. Non-current provisions are discounted if the interest effect is material.

 

Trade and other payables

Interest-bearing payables to banks are accounted for at the amount disbursed less directly attributable transaction costs. Financing costs are distributed as expense over the term, increasing the carrying amount of the liability in subsequent periods. Trade and other payables are recognised at amortised cost in accordance with IAS 39. Non-current liabilities that are not subject to interest are discounted using the effective interest method if the interest effect is material. Liabilities arising out of finance leases are recognised at the lower of the fair value of the leased item and the present value of the lease payments. In subsequent years, the lease payments are apportioned between the reduction of the outstanding liability and the finance charge; pursuant to IAS 17.25 this is done in such a way as to produce a constant rate of interest on the remaining balance of the liability.

 

Contingent liabilities

Contingent liabilities are possible obligations that might arise from past events and whose existence will be confirmed by future events not within the control of the TÜV NORD Group. They may also be existing obligations that cannot be recognised because an outflow of resources is improbable or the amount of the obligation cannot be estimated with sufficient reliability. Such contingent liabilities are recognised at the level of liability existing at the reporting date.

 

3. Consolidated Income Statement disclosures

3.1. Revenue

Revenue breaks down between the six business units and Holding/Services as follows:

€ k

2017

2016

Industrial Services

551,515

538,109

Mobility

366,178

333,392

Training

102,083

107,396

Natural Resources

95,991

106,873

Aerospace

45,845

47,239

IT

17,432

15,512

Holding/Services

5,711

5,080

Summe

1,184,755

1,153,601

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Revenue amounting to € 872,166 k (2016: € 843,876 k) was generated in Germany, € 190,727 k (2016: € 181,804 k) in the rest of Europe and € 121,862 k (2016: € 127,921 k) in the rest of the world.

 

Revenue includes € 12,580 k (2016: € 20,420 k) relating to partly fulfilled contracts to render services, which were recognised proportionately by the percentage of completion method as of the reporting date.

€ k

2017

2016

Cumulative costs

40,563

39,825

Prepayments received

33,049

38,651

Production orders with a gross amount due from customers as an asset

14,785

10,238

Production orders with a gross amount due to customers as a liability

313

766

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3.2. Other operating income

Other operating income amounting to € 41,106 k (2016: € 95,612 k) is made up essentially of the following components: income from the reversal of provisions € 8,346 k (2016: € 7,011 k), income from the reimbursement of remnant costs in the amount of € 5,616 k (2016: € 60,841 k), canteen takings € 2,236 k (2016: € 2,101 k), income from disposal of tangible assets € 1,957 k (2016: € 2,673 k), income from the reversal of impairment losses on trade receivables € 1,629 k (2016: € 766 k), income from tenancy agreements € 581 k (2016: € 757 k), income from the reversal of a negative difference recognised as an expense € 148 k (2016: € 345 k), income from ancillary services € 72 k (2016: € 242 k).

 

3.3. Cost of materials

€ k

2017

2016

Cost of raw materials and supplies

31,755

29,395

Cost of services bought in

166,651

162,807

Total

198,406

192,202

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3.4. Personnel expense

€ k

2017

2016

Wages and salaries

565,942

595,804

Social security contributions

101,763

106,046

Post-employment benefit expense

28,533

28,066

Other employee benefits

3,252

3,187

Total

699,490

733,103

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On average over the year, the consolidated companies had 10,485 employees (2016: 10,113) (expressed as full-time equivalents). Including the experts provided by the associations, the average number of full-time employees was 10,539 (2016: 10,172). 7,608 employees work in Germany. The number of employees abroad increased in 2017 to 2,931. The Group’s employees are for the most part salaried staff.

 

3.5. Depreciation, amortisation and impairment losses

€ k

2017

2016

Depreciation and amortisation of assets

32,895

33,653

Impairment losses

1,573

160

Total

34,468

33,813

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3.6. Other operating expenses

Other operating expenses € 216,889 k (2016: € 211,489 k) principally relate to occupancy expenses € 60,593 k (2016: € 60,233 k), travelling expenses € 42,491 k (2016: € 39,914 k), operating and administrative expenses € 21,379 k (2016: € 20,514 k), other services € 18,672 k (2016: € 17,458 k), advertising and communication expenses € 17,959 k (2016: € 16,795 k), legal and consultancy fees € 7,745 k (2016: € 6,936 k) and donations and contributions € 2,246 k (2016: € 2,275 k). Value adjustments on doubtful trade receivables amounting to € 1,874 k (2016: € 3,304 k) are also included, as are other taxes in the amount of € 2,827 k (2016: € 2,693 k).

 

3.7. Financial items

€ k

2017

2016

Income from at equity consolidated investments

729

45

Income from other equity investments

125

22

Amortisation of other financial investments and securities

-143

-69

Financial items (excluding interest)

712

-2

Other interest and similar income

2,198

1,656

Interest and similar expense

-2,194

-1,875

Net interest income/expense

4

-220

Financial items (including interest)

715

-222

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3.8. Taxes on income

The Group’s tax expense is as follows:

€ k

2017

2016

Current tax expense

-26,698

-22,545

Deferred tax expense/ income

-2,108

-3,209

Total

-28,806

-25,753

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The deferred taxes result from the formation or reversal of tax accruals in profit or loss during the fiscal year. In both fiscal years the deferred taxes are predominantly the result of temporary differences being recognised or reversed.

The following reconciliation statement summarises the individual deferred tax items determined in relation to the individual companies and applying the tax rates prevailing in the various countries, taking due account of consolidation measures. The table reconciles expected tax expense with the tax expense actually recognised.

€ k

2017

2016

Earnings before tax

76,637

68,995

Expected income tax expense (tax rate: 32.0 %; 2016: 32.0 %)

24,524

22,079

Effect of different foreign tax rates/Other differences

-171

-745

Changes in tax rates or tax legislation

-40

86

Permanent differences resulting from non-deductible expense, tax-free income etc.

1,518

1,140

Current taxes for previous periods

247

-175

Deferred taxes for previous periods

-1,206

-295

Effects of value adjustments

3,934

3,663

Recognised income tax expense

28,806

25,753

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The expected tax rate for both fiscal years was determined on the basis of a corporation tax rate of 15.0 % plus a solidarity levy of 5.5 % of the tax due and a local business tax rating of 462 %. The applicable tax rates for companies outside Germany range from 10.0 % to 35.0 %.

Deferred taxes resulting from recognition and measurement differences arose in the following balance sheet items:

 

2017

2016

€ k

Deferred
tax
assets

Deferred
tax
liabilities

Deferred
tax
assets

Deferred
tax
liabilities

Intangible assets

2,731

6,756

1,758

6,387

Property, plant and equipment

699

10,359

1,218

11,282

Inventories

0

734

0

1,773

Other assets

2,289

2,853

1,909

3,456

Pension provisions

169,627

0

163,369

0

Other provisions

9,969

467

12,505

776

Other liabilities

469

55

603

87

Tax loss carryforwards

2,407

0

2,560

0

Gross amount

188,191

21,224

183,922

23,761

Offsettings

-11,461

-11,461

-11,314

-11,314

Balance sheet recognition

176,730

9,763

172,608

12,447

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Deferred tax assets are recognised only if there is sufficient probability that these tax advantages will be realised. Any value adjustments are determined taking into account all positive and negative factors known at the present time that may influence future taxable earnings. The estimates made for this purpose may be subject to future adjustments.

Deferred taxes amounting to € 14,271 k (2016: € 18,503 k) were recognised in comprehensive income. This is essentially a result of the recognition of actuarial gains/losses relating to pension provisions.

As of the reporting date, deferred tax assets were recognised for loss carryforwards in the amount of € 14,637 k (2016: € 14,657 k) existing in the Group. In respect of further tax loss carryforwards in the amount of € 64,314 k (2016: € 70,175 k), no additional deferred tax assets have been recognised as of the reporting date, since it is not sufficiently certain that these can be realised. Under current legislation, there is no limitation, either of time or amount, on such loss carry forwards for tax purposes.

 

4. Notes on the consolidated statement of compehensive income

The deferred taxes in the amount of € 14,271 k (2016: € 18,503 k) reported in Other comprehensive income relate to the actuarial losses of € 47,894 k (2016: € 59,638 k) in the fiscal year. The actuarial losses after deferred tax amount to € 33,623 k (2016: € 41,135 k). The other comprehensive income before deferred tax amounts to €-52,803 k (2016: €-60,669 k).

 

5. Consolidated Balance Sheet Disclosures

In accordance with IAS 1, the Consolidated Balance Sheet (Statement of Financial Position) is structured to present the breakdown between current and non-current assets and liabilities. Assets and liabilities are regarded as current if it is expected that they will be recovered or settled within a year. Inventories and trade receivables are also classified as current, irrespective of their expected use or due dates, if they are to be sold, used or recovered not within one year, but within the company’s normal operating cycle. In accordance with IAS 12, deferred taxes are recognised as non-current assets or liabilities.

 

5.1. Intangible assets

The following changes in intangible assets occurred:

Changes 2017
€ k

Concessions, proprietary rights and similar rights and assets, including licences on such rights and assets

Goodwill

Payments made on account

Total

Cost (of purchase or production)
Amounts as of January 1

58,849

91,282

36

150,166

Changes in basis of consolidation

-85

0

0

-85

Additions/Current investments

1,790

0

35

1,825

Disposals

-1,048

0

-1

-1,049

Reclassifications

378

0

-30

348

Currency translation differences

-149

-171

0

-319

Amounts as of December 31

59,736

91,111

39

150,886

Accumulated amortisation and impairment losses
Amounts as of January 1

55,013

1,122

0

56,135

Changes in basis of consolidation

-85

0

0

-85

Additions

1,914

0

0

1,914

Disposals

-1,048

0

0

-1,048

Reclassifications

307

0

0

307

Currency translation differences

-140

1

0

-139

Amounts as of December 31

55,961

1,123

0

57,084

Net carrying amounts

3,775

89,988

39

93,802

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Changes 2017
€ k

 

Concessions, proprietary rights and similar rights and assets, including licences on such rights and assets

Goodwill

Payments made on account

Total

Cost (of purchase or production)

Amounts as of January 1

57,985

78,539

33

136,556

Changes in basis of consolidation

3

12,751

0

12,753

Additions/Current investments

1,663

0

49

1,712

Disposals

-804

0

-23

-827

Reclassifications

24

0

-24

0

Currency translation differences

-22

-8

1

-29

Stand 31. Dezember

58,849

91,282

36

150,166

Accumulated amortisation and impairment losses
Amounts as of January 1

53,477

1,122

0

54,599

Changes in basis of consolidation

0

0

0

0

Additions

2,181

0

0

2,181

Disposals

-635

0

0

-635

Reclassifications

0

0

0

0

Currency translation differences

-10

0

0

-10

Amounts as of December 31

55,013

1,122

0

56,135

Net carrying amounts

3,835

90,159

36

94,030

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The changes in the basis of consolidation presented under Goodwill relate to the acquisition of IBH (€ 11,027 k) and Optocap (€ 1,724 k).

Impairment testing of all the goodwill recognised in the Consolidated Balance Sheet did not lead to any additional impairment losses, since in each case the fair value less costs to sell is higher than the carrying amount recognised by the cash-generating unit concerned. The weighted average cost of capital (WACC) applied for discounting purposes is 6.00 % (2016: 5.00 %), where a growth discount of 1.0 % is applied after the end of the three-year planning period.

No change that might reasonably be anticipated in any of the basic assumptions made for the purpose of determining the value in use of the cash-generating units could lead to their carrying amounts materially exceeding the recoverable amounts.

The goodwill subjected to impairment testing is essentially shared between the Natural Resources (2017: € 35,687 k; 2016: € 35,687 k), Industrial Services (2017: € 28,804 k; 2016: € 28,892 k), Aerospace (2017: € 14,189 k; 2016: € 14,189 k) and Mobility (2017: € 11,210 k; 2016: € 11,210 k) business units.

 

5.2. Property, plant and equipment

The following changes occurred in property, plant and equipment:

Changes 2017
€ k

Land, leasehold rights and buildings, including buildings on third-party land

Machinery

Furniture and fittings, other factory and office equipment

Payments made on account and assets under construction

Total

Cost (of purchase or production)
Amounts as of January 1

281,127

141,987

215,531

9,941

648,584

Changes in basis of consolidation

-5

-112

-433

-1

-551

Additions/Current investments

3,715

8,895

20,656

7,921

41,187

Disposals

-2,513

-2,168

-12,419

-31

-17,130

Reclassifications

-10,441

5,262

95

-8,865

-13,948

Currency translation differences

-116

-316

-587

0

-1,019

Amounts as of December 31

271,768

153,548

222,844

8,964

657,124

Accumulated deprecation and impairment losses
Amounts as of January 1

152,659

101,459

168,454

192

422,765

Changes in basis of consolidation

-5

-112

-433

0

-549

Depreciation

6,628

8,655

17,262

3

32,548

Impairment

4

0

0

0

4

Disposals

-2,001

-2,005

-8,995

0

-13,001

Reclassifications

-10,262

-372

65

0

-10,569

Currency translation differences

13

-139

-378

0

-504

Amounts as of December 31

147,037

107,491

175,972

196

430,695

Net carrying amounts

124,731

46,057

46,871

8,769

226,429


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Changes 2016
€ k

Land, leasehold rights and buildings, including buildings on third-party land

 Maschinery

Furniture and fittings, other factory and office equipment

Payments made on account and assets under construction

Total

Cost (of purchase or production)
Amounts as of January 1

281,793

131,592

212,158

7,095

632,638

Changes in basis of consolidation

0

2,100

1,499

4

3,603

Additions/Current investments

3,040

10,449

19,518

5,912

38,919

Disposals

-5,475

-3,011

-18,229

-11

-26,725

Reclassifications

1,747

877

432

-3,060

-4

Currency translation differences

22

-20

152

0

154

Amounts as of December 31

281,126

141,987

215,531

9,941

648,584

Accumulated depreciation and impairment losses
Amounts as of January 1

151,731

94,263

166,301

190

412,485

Changes in basis of consolidation

0

1.711

1.054

0

2.765

Depreciation

5,883

8,457

17,289

0

31,630

Impairment

0

0

0

3

3

Disposals

-4,957

-2,860

-16,353

0

-24,170

Reclassifications

0

-91

103

0

12

Currency translation differences

3

-21

60

0

42

Amounts as of December 31

152,659

101,459

168,454

192

422,765

Net carrying amounts

128,467

40,528

47,076

9,748

225,819

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The following assets are subject to limitations on their availability:

€ k

31.12.2017

31.12.2016

Maschinery

193

140

Furniture and fittings, other factory and office equipment

733

951

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Items of property, plant and equipment to the value of € 3,053 k (2016: € 3,653 k) are pledged as collateral for debt. The liabilities secured as of December 31 2017 amount to € 296 k (2016: € 345 k).

Compensation payments by third parties in the amount of € 717 k (2016: € 448 k) are recognised as Other operating income.

The following carrying amounts of property, plant and equipment relate to assets on lease under finance leases:

Initial recognition amounts

Accumulated depreciation and impairment losses

Net carrying amounts

€ k

2017

2016

2017

2016

2017

2016

Furniture and fittings, other factory and office equipment

730

708

204

252

526

456

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The following minimum lease payments will be payable in future on the basis of existing finance leases:

 

Up to 1 year

 

1–5 years

 

Total

€ k

2017

2016

2017

2016

2017

Total minimum lease payments

248

169

376

305

624

Interest expense included

-7

-6

-5

-4

-12

Present values

241

163

371

301

612

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There are no minimum lease payments with residual terms of more than 5 years.

Obligations under finance leases are recognised under Other liabilities (see under 5.13.).

Future obligations under operating leases where the benefits of ownership do not lie with TÜV NORD Group as lessee are recognised under Other financial liabilities (see under 5.16.).

 

5.3. At equity consolidated investments

The following table shows the names and the locations of the registered offices of companies accounted for using the equity method, together with the percentage of the equity held, the company’s total equity and its total earnings after tax:

 

Name, location of registered office

Share of equity in %

Total equity 100 in % € k

EAT 100 % in € k

National Inspection and Technical Testing Company Ltd. (FAHSS), Damman, Saudi-Arabia

25.11

9,891

705

TÜV Middle East W.L.L., Manama, Bahrain

25.10

6,991

75

UAB TÜVLITA, Vilnius, Lithuania

50.00

6,202

891

EnergieAgentur.NRW GmbH, Düsseldorf, Germany

50.00

351

245

TUV NORD NTA Mobility (Shanghai) Co., Ltd. Schanghai, China

49.00

-1,447

-1,741

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For the associates that are material to TÜV NORD AG the following table show financial information as well as a reconciliation to the carrying amount of the interest in the associate.

These figures were determined on the basis of audited financial statements for the previous year (see under 2.5.).

 

€ k

2016

2015

Results from FAHSS
Revenues

25,521

29,192

Earnings after tax/total comprehensive income

705

2.418

Share of earnings after tax/total comprehensive income

102

607

Balance sheet information FAHSS

31.12.2016

31.12.2015

Current assets

17,916

19,252

Non-current assets

3,300

4,633

Current liabilities

-6,188

-5,032

Non-current liabilities

-5,143

-4,874

Equity

9,885

13,979

Share of equity

2,233

3,311

Dividend payment during the year

0

-386

Other

-362

-362

Book value of the at equity consolidated FAHSS

1,871

2,563

 

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€ k

2016

2015

Results from TÜV Middle East
Revenues

19,620

22,016

Earnings after tax/total comprehensive income

75

1,904

Share of earnings after tax/total comprehensive income

19

478

Balance sheet information TÜV Middle East

31.12.2016

31.12.2015

Current assets

11,799

13,566

Non-current assets

778

1,233

Current liabilities

-3,803

-3,721

Non-current liabilities

-1,783

-1,929

Equity

6,991

9,149

Share of equity

1,755

2,296

Dividend payment during the year

0

-180

Book value of the at equity consolidated TÜV Middle East

1,755

2,116

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Results from non-material investments accounted for using the equity method are shown in the following table:

€ k

2016

2015

Revenue

23,761

21,003

Earnings after tax

-605

-1,520

share of earnings after tax

-303

-761

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The following table shows summarised balance sheet information on the non-material investments accounted for using the equity method:

 

€ k

31.12.2016

31.12.2015

Assets

10,664

11,237

Liabilities

-5,558

-5,107

Equity

5,106

6,130

Book value of non-material associates

2,637

2,216

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5.4. Other financial assets

For TÜV NORD AG’s other equity investments please refer to the list of shareholdings (see under 7.8.).

The following changes in other financial assets occurred during the year under review:

Changes 2017

€ k

Investments in affiliates

Investments in joint ventures and associates (not equity accounted)

Other equity investments

Long-term securities

Loans granted

Shares in guarantee funds arising from reinsurance

Total

Cost (of purchase or production)

             

Amounts as of January 1

6,769

969

195

10,492

1,195

22,536

42,156

Changes in basis of consolidation

976

0

0

-40

0

-862

74

Additions

4,761

300

0

0

205

540

5,805

Disposals

0

-13

-19

-2,648

-279

-641

-3,599

Reclassifications

0

0

0

0

0

-2,651

-2,651

Currency translation differences

-69

13

0

0

0

0

-56

Amounts as of December 31

12,436

1,270

176

7,804

1,120

18,922

41,728

Accumulated amortisation and impairment losses

             

Amounts as of January 1

3,839

303

19

278

1,052

0

5,489

Changes in basis of consolidation

976

0

0

-40

0

-43

893

Additions

143

0

0

0

0

0

143

Disposals

-104

0

-19

0

-67

73

-117

Reclassifications

0

0

0

0

0

0

0

Currency translation differences

-19

0

0

0

0

0

-19

Amounts as of December 31

4,833

303

0

238

985

31

6,389

Net carrying amounts

7,604

968

176

7,566

136

18,891

35,339

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The additions/ongoing investments under the shares in affiliated companies refer to companies acquired in the 2017 fiscal year which are as yet of merely minor significance to the communication of a picture of the asset, financial and earnings position of the Group that reflects that actual circumstances.

Of the reinsurance claims on Alters- und Hinterbliebenen-Versorgungsstelle der Technischen Überwachungs-Vereine – VvaG –, Essen, (AHV), claims of € 4,766 k (2016: € 6,780 k) have been pledged as collateral to secure loan liabilities and obligations arising out of pre-retirement part-time working arrangements.

 

 

Changes 2016

€ t

Investments in affiliates

Investments in joint ventures and associates (not equity accounted)

Other equity investments

Long-term securities

Loans granted

Shares in guarantee funds arising from reinsurance

Total

Cost (of purchase or production)

             

Amounts as of January 1

5,924

1,811

303

12,992

1,316

26,280

48,624

Additions

816

572

3

0

27

3,017

4,435

Disposals

6

-1,419

0

-2,500

-148

-912

-4,973

Reclassifications

-41

6

-110

0

0

-5,849

-5,995

Currency translation differences

65

-1

0

0

0

0

64

Amounts as of December 31

6,769

969

195

10,492

1,195

22,536

42,156

Accumulated amortisation and impairment losses

             

Amounts as of January 1

3,837

303

123

208

1.151

0

5,622

Additions

0

0

0

69

0

0

69

Disposals

0

0

0

0

-100

0

-100

Reclassifications

0

0

-104

0

0

0

-104

Currency translation differences

2

0

0

0

0

0

2

Amounts as of December 31

3,839

303

19

278

1,052

0

5,489

Net carrying amounts

2,931

667

177

10,214

143

22,536

36,667

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5.5. Inventories

€ k

2017

2016

Raw materials and supplies

1,486

1,442

Work in progress

46,389

47,248

Finished products and merchandise

4,035

4,079

Payments made on account

1,567

692

Total

53,477

53,460

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As in the previous year, no write-downs are recognised under Inventories.

 

5.6. Trade and other receivables

Trade and other receivables can be disaggregated in accordance with their residual terms as follows:

   

2017

   

2016

 

€ k

Current

Non-current

Total

Current

Non-current

Total

Trade receivables...

           

...from third parties

162,724

139

162,863

158,035

662

158,697

...from partly fulfilled contracts to render services

15,090

0

15,090

10,172

66

10,238

Receivables from affiliates

774

19

793

605

18

623

Receivables from joint ventures, associates and other entities in which equity investments are held

2,589

0

2,589

3,296

0

3,296

Total

181,178

158

181,336

172,107

746

172,853

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During the period under review, value adjustments on doubtful receivables were effected in the amount of € 1,874 k (2016: € 3,304 k).

The development of specific value adjustments was as follows:

€ k

2017

2016

Carrying amount as of January 1

9,901

8,106

Changes in basis of consolidation

-105

9

Additions

1,874

3,304

Use

1,740

751

Reversals

1,629

766

Carrying amount as of December 31

8.301

9,901

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Receivables that have not been subjected to specific value adjustments can be disaggregated as follows:

€ k

2017

2016

Trade receivables from third parties, gross

171,164

168,598

a) of which neither overdue nor impaired

80,862

79,896

b) of which overdue by the following periods, but not yet impaired
1 to 30 days

49,302

47,772

31 to 60 days

15,283

14,817

61 to 90 days

5,672

6,422

91 to 180 days

6,020

6,437

more than 180 days

14,025

13,254

Value adjustments

-8,301

-9,901

Trade receivables from third parties, net

162,863

158,697

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5.7. Other assets

Other assets with a residual term of more than one year are classified as non-current, and those with a residual term of less than one year as current. The other assets recognised essentially consist of accrued items and tax reimbursement claims. The items break down as follows:

   

2017

   

2016

 

€ k

Current

Non-current

Total

Current

Non-current

Total

Other assets

12,149

4,160

16,309

11,224

3,973

15,197

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As of the reporting date there were no items more than 180 days overdue for which no impairment loss had been recognised.

 

5.8. Cash and cash equivalents

The cash and cash equivalents consist of cheques, cash in hand and balances on account with a number of different banks in various currencies. The bank balances earn interest at customary market rates.

 

5.9. Assets held for sale

Pursuant to IFRS 5, developed and undeveloped properties in respect of which disposal procedures have been initiatied are reported under the item “Assets held for sale”.

 

5.10. Equity

For further details of changes in equity between January 1 2016 and December 31 2017, see the Statement of Changes in Consolidated Equity.

TÜV NORD’s capital management policy aims not only to secure the continued existence of the business but also to achieve an adequate return in excess of the costs of capital, thereby enhancing the value of the company in the long term. The equity is monitored regularly on the basis of various indicators.

 

Subscribed capital

The subscribed capital remains unchanged at € 10,000 k, divided into 100,000 registered no-par-value shares. All the shares are fully paid.

At the time of preparation of the Consolidated Financial Statements for the 2017 fiscal year, TÜV NORD AG had neither contingent nor authorised capital. TÜV NORD AG does not grant any share-based remuneration (share option programmes) to its employees.

 

Capital reserves

The capital reserves of the TÜV NORD Group in the amount of € 114,413 k correspond to the capital reserves of TÜV NORD AG.

 

Subordinated registered debenture

As of December 31 2017, the subordinated registered debentures taken out by TÜV NORD AG amounted to € 50,000.

On December 8 2015, TÜV NORD AG took out a subordinated registered debenture without a fixed term amounting to € 10,000 k with RWTÜV e. V., Essen. The interest rate is fixed at 4.125 % until June 7 2021 and will then increase by 100 basis points for each additional 5-year period. A termination option is exclusively available to TÜV NORD AG for the first time as of June 7 2021, thereafter annually.

On October 1 2015, TÜV NORD AG took out a subordinated registered debenture without a fixed term amounting to € 11,000 k with TÜV Nord e. V., Hamburg, and amounting to € 9,000 k with TÜV Hannover/ Sachsen-Anhalt e. V., Hannover. The interest rate is fixed at 4.125 % until March 31 2021 and will then increase by 100 basis points for each additional 5-year period. A termination option is exclusively available to TÜV NORD AG for the first time as of March 31 2021, thereafter annually.

On December 22 2014, TÜV NORD AG took out a subordinated registered debenture without a fixed term with Alters- und Hinterbliebenen-Versorgungsstelle der Technischen Überwachungs-Vereine – VvaG –, Essen, (AHV). The interest rate is fixed at 4.125 % until June 30 2020 and will then increase by 100 basis points for each additional 5-year period. A termination option is exclusively available to TÜV NORD AG for the first time as of June 30 2020, thereafter annually.

Interest payments are at the discretion of TÜV NORD AG. They are also to be paid retroactively in full, for instance, in the event of the redemption of the registered debenture, distributions to the shareholders or the repayment of other liabilities of equal rank or in the case of economically similar procedures.

 

Retained earnings

The retained earnings include the earnings of the consolidated companies, to the extent that these have not been distributed as dividends. In addition, the offsetting of asset-side and liability-side differences arising out of the capital consolidation of acquisitions up to December 31 2006 and also the net amount of non-cash adjustments in connection with the first-time adoption of IFRS are recognised under this item.

 

Other equity items

The other equity items include the non-cash impacts on equity of the currency translation of foreign subsidiaries’ separate financial statements, of changes in the fair values of available-for-sale instruments, and of actuarial gains and losses arising out of post-employment benefit plans, and also the deferred taxes recognised in connection with these items.

 

Non-controlling interests

Non-controlling interests cover holdings by investors outside the TÜV NORD Group in the consolidated equity of Group companies.

The significant non-controlling interests are held in the following Group companies:

 

€ k

31.12.2017

31.12.2016

DMT Consulting Private Limited, Kolkata, India

623

580

Höntzsch GmbH, Waiblingen, Germany

0

1,203

TÜV India Private Ltd., Mumbai, India

5,395

4,841

TÜV NORD CERT GmbH, Essen, Germany

1,176

1,422

TÜV NORD Mobilität Immobilien GmbH, Essen, Germany

1,055

946

Various other companies

2,014

2,253

Total

10,263

11,245

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The voting rights of other shareholders are in proportion to their share of the equity. No further information is given due to lack of materiality on the subsidiaries in which non-controlling minority shareholders have a stake. More information can be found in the list of shareholdings in chapter 7.8.

 

5.11. Provisions for pensions and other post-employment benefits

Provisions are formed for obligations arising out of entitlements and current benefits of serving and former employees and their surviving dependents, to the extent that these arise under a defined benefit plan. These provisions are determined in accordance with actuarial valuations of existing benefit obligations, which are recalculated every year. The costs resulting from these commitments are allocated over the employee’s period of service in accordance with the actuaries’ findings and comprise current or past service cost and interest cost.

The full amount of actuarial gains and losses is recognised in Other comprehensive income, while making due allowance for deferred taxes. These actuarial gains and losses are therefore presented in the Group Statement of Comprehensive Income.

The net pension cost is shown as personnel expense.

A contractual trust agreement (CTA) was initially funded with effect from December 30 2008. Shares in reinsurance guarantee funds which serve exclusively and irrevocably to cover and fund post-employment benefit obligations were vested in TÜV NORD PENSION TRUST e. V. Under IFRS rules, the assets of the CTA are to be regarded as “plan assets”. The plan assets consist exclusively of these reinsurance guarantee fund shares. The plan assets consist exclusively of these reinsurance guarantee fund shares. The plans encumber the Group with general actuarial risks, such as, for example, longevity risk, currency risk, interest rate risk and market risk.

The level of post-employment benefit obligations (the present value, determined by actuarial valuation, of the defined benefit obligation (DBO)) was calculated by actuarial methods, a procedure in which the use of estimated values is unavoidable. 

Pursuant to IAS 19, Employee benefits, the level of post- employment benefit obligations is determined by the projected unit credit method, under which actuarial methods on the basis of best estimates of the relevant parameters are used to assess the vested future obligations existing as of the valuation date.

The post-employment benefits that are expected to become payable, including dynamic components, are distributed over the employee’s entire period of service. For the year under review, the following assumptions were made by the actuaries with regard to the variable parameters to be included in their calculations:

 

%

2017

2016

Discount rate as of 31.12.

1.55

1.90

Future pension increases

1.20

1.20

Future wage and salary increases

1.50

1.50

Employee turnover

2.00

2.00

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The actuaries review and revise their findings every year. The actuarial assumptions with regard to mortality are based (with regard to Germany) on the Heubeck mortality tables, version 2005G. The actuarial assumptions do not materially differ between Germany and other countries with the exception of the discount rate.

The Group has both defined benefit and defined contribution plans for commitments for retirement, invalidity and surviving dependants’ pensions based on works agreements and individual contractual agreements. Defined benefit pension plans were offered only to staff who joined the company up to and including December 31 1991 or, as the case may be, December 31 1993. The level of these commitments is calculated according to the eligible income and/or social insurance pension as well as length of service. The benefits are paid directly by the company which granted the pension commitment.

The following table shows changes in the present value of future post-employment benefit obligations and of the plan assets.

€ k

Benefit  obligation

Plan assets

Total

Carrying amounts as of January 1 2017    

1,201,989

-740,580

461,409

Current service cost

12,714

0

12,714

Net interest cost (interest cost/interest income)

22,892

-14,821

8,071

Net pension cost

35,606

-14,821

20,785

Actual interest on plan assets less actuarial interest income

0

-7,288

-7,288

Actuarial gains/losses from changes in financial assumptions

55,182

0

55,182

Remeasurement of defined benefit pension plans

55,182

-7,288

47,894

Pension payments

-53,670

0

-53,670

Payments from the pension plan

0

39,946

39,946

Employer’s contributions to the pension plan

0

-29,119

-29,119

Total payments

-53,670

10,827

-42,843

Transfer of obligations

926

-743

183

Changes in scope of consolidation/changes in currency translation and other effects

-900

-1,677

-2,577

Carrying amounts as of December 31 2017

1,239,133

-754,282

484,851

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€ kBenefit obligation

Plan assets

Total

Carrying amounts as of January 1 2016

1.149.196

-724.479

424.717

Current service cost

12,345

0

12,345

Net interest cost (interest cost/interest income)

27,893

-18,145

9,748

Net pension cost

40,238

-18,145

22,093

Actual interest on plan assets less actuarial interest income

0

-4,908

-4,908

Actuarial gains/losses from changes in financial assumptions

64,547

0

64,547

Remeasurement of defined benefit pension plans

64,547

-4,908

59,639

Pension payments

-53,727

0

-53,727

Payments from the pension plan

0

38,911

38,911

Employer’s contributions to the pension plan

0

-28,148

-28,148

Total payments

-53,727

10,763

-42,964

Transfer of obligations  

2,888

-2,453

435

Changes in scope of consolidation/changes in currency translation and other effects

-1,153

-1,358

-2,511

Carrying amounts as of December 31 2016

1,201,989

-740,580

461,409

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The benefit obligation in proportion to plan assets reflects the funded status of the benefit plan in question, with any excess of the benefit obligation over plan assets constituting a plan deficit. Both the benefit obligation and plan assets can vary over time, leading to an increase/decrease in the plan deficit. Reasons for such fluctuation can include changes in market interest rates and thus in the discount rate, or adjustments to actuarial assumptions.

The TÜV NORD Group’s plan assets exclusively comprise employer’s pension liability insurance policies and are subject to only limited fluctuation on account of the existing minimum returns. A price reporting on an active market does not exist for employer’s pension liability insurance policies. The recognised plan deficit is covered by cash flows from operating activities. It is the long-term goal of the TÜV NORD Group to gradually increase plan assets. The employer contributions to plan assets are expected to amount to € 29.5 million in 2017. The weighted average term of the remainder of benefit obligations is 13.5 years.

The table below shows the effects on the defined benefit obligation (DBO) of any change in the parameters. The analysis relates to parameters where a change was considered possible as of the reporting date. The values here are mean values which were weighted with the present value of the respective pension obligation. Any correlation between the parameters was not taken into account in the calculation.

Sensitivity analysis %

Change in parameter

Increase in parameter

Decrease in parameter

Interest rate

1.0 %

12.4 % DBO decrease

15.5 % DBO increase

Rate of pension progression

0.5 %

5.9 % DBO increase

5.4 % DBO decrease

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Employer contributions to mandatory pension schemes as well as contributions to other defined contribution plans were made in the amount of € 44.0 million in 2017 (2016: € 43.3 million).

 

5.12. Other non-current and current provisions

 

€ k

Provisions for the areas of personnel and welfare

Sundry other provisions

Total

Carrying amounts as of January 1 2017

48,620

44,956

93,576

Additions

30,406

7,848

38,254

Use

29,068

7,350

36,418

Reversals

1,139

3,900

5,039

Reclassifications/Transfers

433

-1,888

-1,455

Currency translation differences

-107

-143

-250

Carrying amounts as of December 31 2017

49,144

39,524

88,668

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The provisions for obligations in the areas of personnel and welfare relate essentially to pre-retirement part-time working, long-service bonuses, social plan measures and other personnel and non-wage personnel costs.

The sundry other provisions relate mainly to provisions for warranty obligations, provisions for threatened losses from pending transactions and other risks.

Of the total amount of the sundry other provisions as of December 31 2017, € 30,601 k (2016: € 37,185 k) are current and € 8,922 k (2016: € 7,771 k) are non-current. No material interest accruals have been recognised on non-current provisions.

 

5.13. Non-current and current trade and other payables

Payables can be disaggregated in accordance with their residual terms as follows:

   

2017

   

2016

 

€ k

Current

Non-current

Total

Current

Non-current

Total

Amounts payable to banks

90

197

287

118

282

400

Amounts payable under finance leases

240

370

611

162

301

463

Financial liabilities

330

567

897

280

583

863

Trade payables...

           

...to third parties

33,721

0

33,721

26,704

314

27,018

...from partly fulfilled contracts to render services

337

0

337

766

0

766

Payables to affiliates

123

2

125

207

0

207

Payables to joint ventures, associates and other entities in which equity investments are held

1.206

0

1,206

492

0

492

Outstanding invoices

24,692

0

24,692

19,869

0

19,869

Amounts payable to employees

27,789

865

28,653

29,380

852

30,232

Other payables

39,607

7,592

47,199

36,586

16,231

52,817

Trade and other payables

127,474

8,459

135,934

114,004

17,397

131,401

Payments received on account

37,450

65

37,514

40,278

17

40,295

Other taxes

19,898

0

19,898

18,318

0

18,318

Sundry payables

57,348

65

57,413

58,597

17

58,614

Total payables

185,153

9,091

194,244

172,880

17,997

190,878

             

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Amounts payable under finance leases relate to leases of capital goods and are recognised as liabilities in the amount of the future obligation.

Trade payables from partly fulfilled contracts to render services relate to contracts with regard to which the payments received from customers on account exceed the accumulated receivables from the fulfilment of the contracts concerned.

Amounts payable to employees include € 15,995 k (2016: € 14,745 k) for obligations in lieu of free time and € 7,940 k (2016: € 7,528 k) for obligations relating to holiday not yet taken.

Other payables include an accrual of TÜV NORD College GmbH in the amount of € 6,925 k (2016: € 12,715 k), arising out of the financing of the operations of the vocational training colleges.

 

5.14. Contingent liabilities

TÜV NORD AG bears liability in cases where it and its subsidiaries have given guarantees in favour of various contractual partners.

In the year under review, contingent liabilities in the amount of € 12,493 k (2016: € 7,131 k) are recognised which relate to sureties given for the most part to banks. TÜV NORD AG issues performance bonds in respect of liabilities of Group companies arising out of joint projects or consortia. If the consortium partner does not honour its contractual obligations, TÜV NORD AG may be liable to meet claims for payment up to the amount of the agreed surety. Generally, the agreed terms correspond to those of the underlying transaction.

 

5.15. Litigation

Neither TÜV NORD AG nor its Group companies are involved in litigation that could have a material impact on the economic or financial position of the companies or of the Group. In respect of other litigation, adequate provisions have been formed by the company concerned in any given case for any awards that may be made against it. As of the reporting date, these provisions amount to € 1,707 k (2016: € 950 k).

 

5.16. Other financial liabilities

As of December 31 2017, obligations exist to order items of property, plant and equipment to the value of € 384 k (2016: € 1,307 k).

The other financial liabilities relate to rental and leasing obligations for premises, furniture and fittings and factory and office equipment which are classified as operating leases pursuant to IAS 17.

The minimum lease payments fall due as follows:

 

€ k

Up to 1 year

1–5 years

More than 5 years

Total

Minimum lease payments for rented real estate

15,646

41,329

39,251

96,226

Minimum lease payments under other operating leases

3,679

6,074

4,195

13,948

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The other financial rental obligations are predominantly classified as non-current. They have terms of between five and ten years.

Expense under such contracts recognised in the Income Statement amounts to € 38,343 k (2016: € 37,571 k).

 

6. Consolidated Cash Flow Statement disclosures

The figures for cash and cash equivalents presented in the cash flow statement embrace all cash and cash equivalents recognised in the balance sheet, i. e. cash in hand, cheques and balances on account with banks. The recognised cash and cash equivalents are freely disposable and not subject to any restrictions in favour of third parties.

 

7. Other disclosures

7.1. Events after the reporting period

No events of particular significance occurred after the end of the fiscal year which are having a significant impact on the business of the Group.

 

7.2. Fees paid to the auditors of the Consolidated Financial Statements

The following fees, paid to the auditors of the Consolidated Financial Statements, BDO AG Wirtschaftsprüfungsgesellschaft, during the year under review, have been recognised as expense pursuant to Article 314 (1) No. 9 of the German Commercial Code (HGB):

€ k

2017

2016

Auditing services

735

720

Tax consultancy services

94

51

Other consultancy services 

31

35

Total

860

806

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7.3. Financial instruments

The evaluation of categories of financial instruments relevant after IFRS 7 for the reporting and the comparative period is shown in the following overview.

Financial instruments as of December 31 2017
€ k

Category as per IAS 39

Carrying amounts

Loans and receivables measured at amortised cost*

Available-for-sale financial assets recognised at fair value in comprehensive income

Financial liabilities measured at amortised cost*

ASSETS
Non-current assets
Securities

AfS

7,566

7,566

Loans

LaR

136

136

Receivables and other assets

LaR

2,787

2,787

Current assets
Trade receivables from third parties

LaR

177,815

177,815

Receivables and other assets

LaR

9,489

9,489

Cash and cash equivalents

LaR

84,708

84,708

LIABILITIES
Non-current liabilities
Financial liabilities

FLAC

197

197

Trade payables to third parties

FLAC

0

Other liabilities

FLAC

8,325

8,325

Current liabilities
Financial liabilities

FLAC

90

90

Trade payables to third parties

FLAC

34,058

34,058

Other liabilities

FLAC

122,081

122,081

Total by category as per IAS 39

274,934

7,566

164,751

of which (aggregated by category as per IAS 39):
Loans and receivables (LaR)

274,934

Available-for-sale financial assets (AfS)

7,566

Financial liabilities measured at amortised cost (FLAC)

164,751


* The carrying amount corresponds to the fair values. 
 

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Finanzinstrumente 31. Dezember 2016
T €

Category as per IAS 39

Carrying amounts

Loans and receivables measured at amortised cost*

Available-for-sale financial assets recognised at fair value in comprehensive income

Financial liabilities measured at amortised cost*

ASSETS
Non-current assets
Securities

AfS

10,214

10,214

Loans

LaR

143

143

Receivables and other assets

LaR

2,512

2,512

Current assets
Trade receivables from third parties

LaR

168,207

168,207

Receivables and other assets

LaR

9,316

9,316

Cash and cash equivalents

LaR

91,696

91,696

LIABILITIES
Non-current liabilities
Financial liabilities

FLAC

282

282

Trade payables to third parties

FLAC

314

314

Other liabilities

FLAC

8,052

8,052

Current liabilities
Financial liabilities

FLAC

118

118

Trade payables to third parties

FLAC

27,470

27,470

Other liabilities

FLAC

120,317

120,317

Total by category as per IAS 39

271,874

10,214

156,554

of which (aggregated by category as per IAS 39):
Loans and receivables (LaR)

271,874

Available-for-sale financial assets (AfS)

10,214

Financial liabilities measured at amortised cost (FLAC)

156,554

* The carrying amount corresponds to the fair values. 

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As laid down in the three stages of the valuation hierarchy in IFRS 13.72 et seq., the valuation of financial assets and liabilities is subject to the availability of the relevant information. For the first stage, quoted market prices are directly observable for identical asset values and liabilities in active markets. In the second stage, the assessment is made on the basis of valuation models which are influenced by values that are observable on the market. The third stage envisages the application of valuation models that do not rely on observable market inputs.

No financial assets are held for trading or to maturity.

In view of the predominantly short maturities of the assets and liabilities measured at amortised cost, it is assumed that their carrying amounts approximately correspond to their fair values.

For the securities classified as available for sale, the fair values are based on market prices quoted on an active market (level 1 of the fair value hierarchy).

 

Net profit or loss by category

Net profit or loss from financial instruments that is recognised in the Income Statement is allocated to the following categories:

   

2017

   

2016

 

€ k

From interest

From subsequent measurement

From disposal

From interest

From subsequent measurement

From disposal

Loans and receivables

2,198

-3,089

0

1,656

-2,828

0

Financial liabilities measured at amortised cost

-2,187

181

0

-1,750

154

0

 

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Interest on financial liabilities and impairment losses on loans granted are recognised in Financial items. Impairment losses on receivables (essentially trade receivables) and gains or losses from disposals of securities are recognised under Other losses or gains.

 

7.4. Management of financial risks

TÜV NORD Group companies are exposed to financial risks in the course of their operations. These risks consist of credit, liquidity and market risks in the form of currency and interest rate risks. The risk situation has not changed in comparison to the previous reporting period.

Through TÜV NORD AG’s centralised risk management system these risks are managed and controlled on a Group-wide basis. The principles of the risk management system are explained in greater detail in the Management Report.

 

Credit default risks

Default risks arise in particular out of day-to-day operations. The receivables of TÜV NORD Group companies are generally subject to a default risk which it may seek to counter by demanding security, depending on the type and amount of the performance rendered. Where required, credit insurance with an excess component is concluded in respect of individual counterparties. In addition, payment in advance may be required. In order to minimise the risk of default, counterparties are subjected to creditworthiness assessments in accordance with internal guidelines before contracts are concluded. Furthermore, customers’ financial standing is regularly reviewed during the term of the contract. If there is any concrete risk of default, precautionary write-downs are effected on the basis of either objective evidence in specific cases or the structure of maturities and the actual occurrence of defaults on payment.

Defaults on trade receivables, receivables based on percentage of completion and loans cannot exceed their carrying amount as of December 31 2017. The structure of due dates of trade receivables is shown under 5.6.

The maximum credit risk relating to assets held for sale and financial instruments is equivalent to their market prices as of December 31 2017.

 

Liquidity risks

Possible liquidity risks – the danger that the Group might not be able to meet its payment obligations at all times – are managed through the implementation of comprehensive short-term and long-term liquidity planning, taking into account existing credit lines. Funding requirements are for the most part covered by equity, participation in cash pooling agreements or loans from banks or from Group companies, to the extent that this is feasible and reasonable in the context of the legal and tax situation in each case. Bank balances are held exclusively with banks of impeccable standing.

A variety of financing instruments available on the market are used to cover the Group’s central funding requirements. If events should occur that lead to an unexpectedly high requirement for liquidity, both existing liquidity in the form of cash and cash equivalents and also available credit lines can be drawn upon.

A credit line up to a limit of € 100,000 k (2016: € 100,000 k) is available and can be drawn upon as required; the amount drawn down as of December 31 2017 amounted to € 0 k. Interest at the three-month EURIBOR rate plus a margin of 80 basis points, minimum 0.8 % per year, was payable on the amount drawn down from the time of disbursement.

An overview of the maturities of financial liabilities and the resulting outflows of funds can be derived from the table of residual terms of liabilities (see under 5.13.).

 

Currency risks

Currency risks result from the assets and liabilities recognised in the balance sheet that are denominated in foreign currencies, the fair values of which may be negatively influenced by fluctuations in exchange rates, and from pending foreign currency transactions whose future cash flows may develop disadvantageously as a result of exchange rate movements.

Exchange rate risk is of only minor importance, since the receivables and payables are due in local currency in the country in which the company concerned is domiciled. There are scarcely any country risks at the present time.

 

7.5. Related party disclosures

Under IAS 24, Related party disclosures, companies are subject to an obligation to disclose relationships with, on the one hand, related business entities that are not fully consolidated, and, on the other, with persons with whom a close relationship exists.

Related party entities of TÜV NORD Group are basically TÜV Nord e. V., TÜV Hannover/Sachsen-Anhalt e. V. and RWTÜV e. V. associations, “Aktaios” Verwaltungs- GmbH and RWTÜV GmbH with its subsidiaries. For further information in relation to the registered debentures taken out with the associations, see under section 5.10.

In addition, the Group maintains direct or indirect relationships in the normal course of its business activities not only with its consolidated subsidiaries, but also with non-consolidated affiliates and associates. All trading relationships entered into in the normal course of business with non-consolidated related entities are conducted on the basis of normal market conditions such as are also customary in arm’s-length transactions.

Members of the Board of Management and the Supervisory Board are also considered to be related parties.

 

7.6. Total compensation of the Board of Management and the Supervisory Board

The compensation of key management personnel whose disclosure is required pursuant to IAS 24 embraces the compensation of the serving members of Board of Management and the Supervisory Board.

During the 2017 fiscal year, the serving members of the Board of Management received total compensation amounting to € 1,542 k (2016: € 2,242 k). The present value of the overall defined benefit obligation (DBO) to the serving members of the Board of Management amounts to € 0 k (2016: € 3,973 k) as of the reporting date.

Total payments to former members of the Board of Management and their surviving dependents, consisting of pension payments and other compensation (one-off payments and payments for consultancy services), amounted to € 1,129 k (2016: € 499 k). A DBO in the amount of € 15,289 k (2016: € 10,535 k) exists towards former members of the Board of Management and their surviving dependents.

Members of the Supervisory Board were paid compensation of € 243 k (2016: € 248 k) for their services.

As in the previous year, no loans or advances were granted to members of the Board of Management or the Supervisory Board in the 2017 fiscal year. As was also the case in the previous year, no severance payments were made.

 

7.7. Proposal for the appropriation of profits

The Board of Management proposes to the Annual General Meeting that, of the net profits of TÜV NORD AG as determined in accordance with the provisions of the German Commercial code, € 1,238 k should be distributed to the shareholders as dividends.

 

7.8. List of shareholdings

Name, location of registered office

Share of equity %

Consolidated affiliates
adapt engineering GmbH & Co. KG, Nordhausen, Germany1)

100.00

ALTER TECHNOLOGY TÜV NORD S.A.U., Sevilla, Spain

100.00

Asesoría y Control en Protección Radiológica, S.L. (ACPRO), Barcelona, Spain

60.00

BRTUV AVALIAÇÕES DA QUALIDADE Ltda., São Paulo, Brazil

75.01

Cualicontrol-ACI S.A.U., Madrid, Spain

100.00

DMT Consulting Limited, Nottingham, United Kingdom

100.00

DMT Consulting Private Limited, Kolkata, India

51.00

DMT GEOSCIENCES LTD., Calgary, Canada

100.00

DMT Geosurvey spol.s.r.o., Prague, Czech Republic

100.00

DMT GmbH & Co. KG, Essen, Germany1) 2)

100.00

DMT Petrologic GmbH & Co. KG, Hanover, Germany1)

100.00

Dr.-Ing. Wesemann Gesellschaft für Ingenieurgeodäsie mbH, Herne, Germany

100.00

EE Energy Engineers GmbH, Gelsenkirchen, Germany

100.00

ENCOS GmbH & Co. KG, Hamburg, Germany1)

100.00

FS FAHRZEUG-SERVICE GmbH & Co. KG, Hanover, Germany1)

100.00

Guangzhou TÜV Industrial Technical Services Co., Ltd., Guangzhou, China

100.00

GWQ GmbH & Co. KG, Moers, Germany1)

100.00

HIREX ENGINEERING SAS, Toulouse, France

100.00

Höntzsch GmbH, Waiblingen, Germany

100.00

Ingenieurbüro Hofmann GmbH & Co. KG, Bamberg, Germany1)

65.00

MEDITÜV GmbH & Co. KG – Unternehmensgruppe TÜV NORD, Hanover, Germany1)

100.00

Nord-Kurs GmbH & Co. KG, Hamburg, Germany1)

100.00

Optocap Holding Ltd., Livingston, United Kingdom

100.00

Optocap Ltd., Livingston, United Kingdom

100.00

PT. TÜV NORD Indonesia, Jakarta, Indonesia

100.00

THE INSPECTION COMPANY OF KOREA (INCOK), Seoul, Korea

100.00

TÜ-Service Anlagentechnik GmbH & Co. KG, Potsdam, Germany1)

100.00

TÜ Service Ingenieurgesellschaft mbH & Co. KG, Potsdam, Germany1)

100.00

TÜV ASIA PACIFIC LTD., Kwun Tong, Kowloon, Hongkong

100.00

TÜV Croatia d.o.o., Slavonski Brod, Croatia

100,00

TÜV CYPRUS LTD., Nicosia, Cyprus

60.16

TÜV Eesti OÜ, Tallinn, Estonia

100.00

TÜV HELLAS (TÜV NORD) S.A., Athens, Greece

100.00

TÜV India Private Ltd., Mumbai, India

50.00

TÜV Informationstechnik GmbH Unternehmensgruppe TÜV NORD, Essen, Germany

100.00

TÜV Nederland QA B.V., Best, The Netherlands

100.00

TÜV NORD Akademie GmbH & Co. KG, Hamburg, Germany1)

100.00

TÜV NORD Austria GmbH, Vienna, Austria

100.00

TÜV Nord Baltik SIA, Riga, Latvia

100.00

TÜV NORD Bautechnik GmbH, Hamburg, Germany

100.00

TÜV NORD Bildung GmbH & Co. KG, Essen, Germany1) 2)

100.00

TÜV Nord Bulgarien GmbH, Plovdiv, Bulgaria

100.00

TÜV NORD CERT GmbH, Essen, Germany

94.00

TÜV NORD CERT UMWELTGUTACHTER Gesellschaft mbH, Hanover, Germany

100.00

TÜV NORD College GmbH, Essen, Germany

100.00

TÜV NORD Czech, s.r.o., Prague, Czech Republic

100.00

TÜV Nord Danmark ApS, Kolding, Denmark

100.00

TÜV NORD EGYPT FOR INSPECTION AND CERTIFICATION SERVICES (S.A.E.), Cairo, Egypt

60.00

TÜV NORD EnSys GmbH & Co. KG, Hamburg, Germany1) 2)

100.00

TÜV NORD Finland Oy, Vantaa, Finland

100,00

TÜV NORD Hangzhou Co., Ltd., Hangzhou, China

70.00

TÜV NORD HONG KONG LTD., Kwun Tong, Kowloon, Hongkong

100.00

TÜV NORD Immobilien GmbH & Co. KG, Essen, Germany1)

100.00

TÜV NORD InfraChem GmbH & Co. KG, Marl, Germany1)

51.00

TÜV NORD INTEGRA BVBA, Berchem, Belgium

70.00

TÜV NORD International GmbH & Co. KG, Essen, Germany1) 2)

100.00

TÜV NORD ITALIA S.r.l., Legnano, Italy

100.00

TÜV NORD Korea Ltd., Seoul, Korea

100.00

TUV NORD (Malaysia) SDN. BHD., Petaling Jaya, Malaysia

100.00

TÜV NORD Mobilität GmbH & Co. KG, Hanover, Germany1) 2)

100.00

TÜV NORD Mobilität Immobilien GmbH, Essen, Germany

94.00

TÜV NORD Mobility (Shanghai) Co., Ltd., Schanghai, China

100.00

TÜV NORD MPA Gesellschaft für Materialprüfung und Anlagensicherheit mbH & Co. KG, Leuna, Germany1)

100.00

TÜV NORD NC GmbH & Co. KG, Hanover, Germany1)

100.00

TÜV NORD Nederland Holding B.V., Rijswijk, The Netherlands

100.00

TÜV NORD Polska Sp. z o.o., Katowice, Poland

100.00

TÜV NORD Service GmbH & Co. KG, Hanover, Germany1)

100.00

TÜV NORD SLOVAKIA, s.r.o., Bratislava, Slovakia

100.00

TÜV NORD SOUTHERN AFRICA (PTY) LTD., Cape Town, South Africa

49.00

TÜV NORD Scandinavia AB (vormals TÜV NORD Sweden AB), Gothenburg/Sweden

100.00

TÜV NORD Systems GmbH & Co. KG, Hamburg, Germany1) 2)

100.00

TÜV NORD Technisches Schulungszentrum GmbH & Co. KG, Hamburg, Germany1)

100.00

TÜV NORD (Thailand) Ltd., Bangkok, Thailand

99.97

TÜV NORD Transfer GmbH & Co. KG, Essen, Germany1)

100.00

TÜV NORD Umweltschutz GmbH & Co. KG, Hamburg, Germany1)

100.00

TÜV Teknik Kontrol ve Belgelendirme A.S., Istanbul, Turkey

100.00

TÜV Thüringen Anlagentechnik GmbH & Co. KG, Erfurt, Germany1)

99.94

TÜV Thüringen Fahrzeug GmbH & Co. KG, Erfurt, Germany1)

99.50

TÜV UK Ltd., London, United Kingdom

100.00

TÜV USA, Inc., Salem, USA

100.00

Unterstützungseinrichtung des Technischen Überwachungs-Vereins Hannover/Sachsen-Anhalt GmbH, Hanover, Germany

100.00

Verebus Engineering B.V., Rijswijk, The Netherlands

100.00

Versicherungsvermittlung TÜV NORD GmbH, Essen, Germany

100.00

Unconsolidated affiliates
adapt engineering Verwaltungsgesellschaft mbH, Nordhausen, Germany

100.00

BILDUNG EmployAbility GmbH (vormals TÜV NORD Bildung Opel GmbH), Essen, Germany

100.00

British Mining Consultants Ltd., Sutton, United Kingdom

100.00

DMT-KAI BATLA (Mozambique) Limitada, Maputo Cidade, Mozambique

51.00

DMT-Kai Batla Pty. Ltd., Bordeaux, South Africa

51.00

DMT Mining Consulting Ltd., Nottingham, United Kingdom

100.00

DMT Petrologic Verwaltungsgesellschaft mbH, Hanover, Germany

100.00

DMT Verwaltungsgesellschaft mbH, Essen, Germany

100.00

ENCOS Verwaltungsgesellschaft mbH, Hamburg, Germany

100.00

FAHRZEUG-SERVICE Verwaltungsgesellschaft mbH, Hanover, Germany

100.00

FORMATION SaarLor FSL EURL, Forbach, France

100.00

GWQ Verwaltungsgesellschaft mbH, Moers, Germany

100.00

Hundt & Partner Ingenieurgesellschaft mbH & Co. KG, Hanover, Germany

100.00

IMC Group Consulting Ltd., Nottingham, United Kingdom

100.00

IMC Montan Consulting Limited, Nottingham, United Kingdom

100.00

IMC Montan Russia Limited, Nottingham, United Kingdom

100.00

Ingenieurbüro Hofmann Verwaltungsgesellschaft mbH, Bamberg, Germany

65.00

International Mining Consultants Ltd., Nottingham, United Kingdom

100.00

International Mining Consultants Pty Ltd., Brisbane, Australia

100,00

live-expert Geschäftsführungs GmbH, Schmelz, Germany

51.00

live-expert GmbH & Co. KG, Schmelz, Germany

51.00

MacKay & Schnellmann Ltd., Nottingham, United Kingdom

100.00

m.dudde hochfrequenz-technik GmbH & Co. KG, Bergisch Gladbach, Germany

100.00

m.dudde hochfrequenz-technik Verwaltungs-GmbH, Bergisch Gladbach, Germany

100.00

MEDITÜV Verwaltungsgesellschaft mbH, Hanover, Germany

100.00

Montan Consulting Limited, Nottingham, United Kingdom

100.00

MONTAN RUSSIA Ltd., Nottingham, United Kingdom

100.00

Nord-Kurs Verwaltungsgesellschaft mbH, Hamburg, Germany

100.00

PT. DMT Exploration Engineering Consulting Indonesia, Jakarta, Indonesia

74,00

RP GmbH, Essen, Germany

100.00

RWTÜV Akademie GmbH, Essen, Germany

100.00

SEIQ – Serviços de Engenharia Industrial e Qualidade Ltda., Rio de Janeiro, Brazil

100.00

TN Portugal, Unipessoal Lda, Sines, Portugal

100.00

TÜ-Service Anlagentechnik Verwaltungsgesellschaft mbH, Berlin, Germany

100.00

TÜ Service Verwaltungsgesellschaft mbH, Potsdam, Germany

100.00

TÜV GmbH Hannover Hamburg Essen Berlin, Hanover, Germany

100.00

TÜV NORD Akademie Verwaltungsgesellschaft mbH, Hamburg, Germany

100.00

TÜV NORD ARGENTINA S.A., Buenos Aires, Argentina

100.00

TÜV NORD AUTO GmbH & Co. KG, Essen, Germany

100.00

TÜV NORD AUTO Verwaltungsgesellschaft mbH, Essen, Germany

100.00

TÜV NORD Bauqualität Verwaltungsgesellschaft mbH, Hanover, Germany

100.00

TÜV NORD Bildung Verwaltungsgesellschaft mbH, Essen, Germany

100.00

TÜV NORD Certification (Tianjin) Co., Ltd., Tianjin, China

76.90

TÜV NORD EnSys Hannover Verwaltungsgesellschaft mbH, Hanover, Germany

100.00

TÜV NORD FRANCE S.A.S., La Madeleine, France

100.00

TÜV NORD Immobilien Verwaltungsgesellschaft, Essen, Germany

100.00

TÜV NORD InfraChem Verwaltungsgesellschaft mbH, Marl, Germany

51.00

TÜV NORD International Verwaltungsgesellschaft mbH, Essen, Germany

100.00

TÜV NORD Luxembourg s.a.r.l., Luxembourg, Luxembourg

100.00

TUV NORD Mobility Inc., Vancouver, Canada

100.00

TÜV NORD MEXICO S.A. DE C.V., Querétaro, Mexico

100.00

TÜV NORD Mobilität Verwaltungsgesellschaft mbH, Hanover, Germany

100.00

TÜV NORD MPA Verwaltungsgesellschaft mbH, Leuna, Germany

100.00

TÜV NORD Philippines, Inc., Manila, The Philippines

100.00

TÜV NORD ROMANIA S.R.L., Bucharest, Romania

100.00

TÜV NORD SafetyConsult GmbH & Co. KG, Hanover, Germany

100.00

TÜV NORD SafetyConsult Verwaltungsgesellschaft mbH, Hanover, Germany

100.00

TÜV NORD Service Verwaltungsgesellschaft mbH, Hanover, Germany

100.00

TÜV NORD SofortGutachten GmbH & Co. KG, Hanover, Germany

51.00

TÜV NORD SysTec Verwaltungsgesellschaft mbH, Hamburg, Germany

100.00

TÜV NORD Systems Verwaltungsgesellschaft mbH, Hamburg, Germany

100.00

TÜV NORD Transfer Verwaltungsgesellschaft mbH, Essen, Germany

100.00

TÜV NORD TS Verwaltungsgesellschaft mbH, Hamburg, Germany

100.00

TÜV NORD Ukraina GmbH, Donetsk, Ukraine

100.00

TÜV NORD Umweltschutz Verwaltungsgesellschaft mbH, Hamburg, Germany

100.00

TÜV NORD VIETNAM LTD., Hanoi, Vietnam

100.00

TÜV Thüringen Anlagentechnik Verwaltungsgesellschaft mbH, Erfurt, Germany

99.60

TÜV Thüringen Fahrzeug Verwaltungsgesellschaft mbH, Erfurt, Germany

99.50

At equity accounted associates
EnergieAgentur.NRW GmbH, Düsseldorf, Germany

50.00

National Inspection and Technical Testing Company Ltd. (FAHSS), Damman, Saudi Arabia

25.11

TÜV Middle East W.L.L., Manama, Bahrain

25.10

TUV NORD NTA Mobility (Shanghai) Co., Ltd., Schanghai, China

49.00

UAB TÜVLITA, Vilnius, Lithuania

50.00

Not at equity accounted associates (A) and joint ventures (JV)
A&K Dienstleistungs- und Servicegesellschaft mbH, Bremerhaven (A), Germany

25.10

ARGE „Technische Prüfstelle für den Kraftfahrzeugverkehr 21“ GbR, Dresden (JV), Germany

25.00

Energy Agency NRW GmbH, Düsseldorf (JV), Germany

50.00

IMC MONTAN Ltd., Nottingham, United Kingdom(JV)

50.00

Radiologic Facility Services S.A., Tarragona, Spain (A)

20.00

TÜV NORD ENGINEERING SERVICES (M) SDN. BHD. Selangor, Malaysia (A)

30.00

TÜV NORD IRAN JOINT VENTURE CO., Teheran, Iran (A)

49.00

TÜV NORD PV Science and Technology Co., Ltd., Schanghai, China (A)

40.00

Other investments
Engineering Financial Cooperative, Seoul, Korea

0.02

FSD Fahrzeugsystemdaten GmbH, Dresden, Germany

13.43

Gesellschaft für Anlagen- und Reaktorsicherheit (GRS) gGmbH, Köln, Germany

15.40

Korea Electric Engineers Association, Seoul, Korea

0.12

VIA Consult GmbH & Co. KG, Olpe, Germany

2.50

WINDTEST Grevenbroich GmbH, Grevenbroich, Germany

12.50

1) These trading partnerships take advantage of the exemption rule pursuant to Art. 264b HGB
2) These trading partnerships take advantage of the exemption rule pursuant to Art. 291 HGB

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