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Annual Report 2013 – TÜV NORD GROUP: Strong market position confirmed

TÜV NORD GROUP confirmed its strong market position at home and abroad last year and has presented a solid set of figures. Testing and certification in Germany in the area of Industrial Services proved particularly successful.
  • Slight reduction in turnover to € 1,056.4 million (- 2.7 per cent)
  • Turnover achieved outside Germany maintained at 25 per cent
  • Earnings Before Interest and Taxes (EBIT) at € 43.7 million
  • Own capital increased to 16.2 per cent (from 15.7 per cent in the previous year)
  • Investment in the operative business continues at a high level
  • Pension reserves further increased

TÜV NORD GROUP confirmed its strong market position at home and abroad last year and has presented a solid set of figures. Testing and certification in Germany in the area of Industrial Services proved particularly successful. The slightly reduced Group turnover and the reduction in EBIT are basically attributable to the Training and Natural Resources Business Units. Despite the large number of new employees who have joined the company (568), the number of those working full time in the Group in Germany and abroad has fallen slightly to 9,925 (2012: 10,001). The Chairman of the Board of Management, Guido Rettig, is cautiously optimistic regarding business prospects for 2014.

On the occasion of the Annual Report Press Conference in Hanover, Rettig described the situation as follows: “Even if we have not been able to match the superb results of previous years this time, overall we can still be satisfied with the progress and development of the Group. The German industrial business with our core competences of Testing, Inspection and Certification was extremely positive last year. And the figures from the first few months of this year indicate another good year in 2014.”

Rettig attributed the slight reduction in turnover above all to the restructuring of the Training area. The subdued nature of the world economy as a whole, the weakness of the economies of Southern Europe, the volatile nature of the natural resources business and also unfavourable currency exchange markets also played a part. Rettig: “Our worldwide markets developed in very different ways in 2013. However, we have still managed to keep the proportion of our foreign business stable, at 25 per cent. We will go on actively pursuing the strategic course we have set, with the focus on growth, internationalisation and innovation. In our sector, business framework conditions change particularly fast. That is why we will continue to build even more strongly on new products and innovations in the years to come.”

Despite a reduction in turnover and earnings, the financial base of the Group has been further strengthened

The Chief Financial Officer of TÜV NORD GROUP, Elmar Legge, explained that the reduction in turnover was primarily attributable to consolidation measures in the Training Business Unit. This alone had led to a reduction in turnover of € 20 million. Legge justified the reduction in earnings with the heavy losses in the Natural Resources Business Unit, in strong contract to previous performance. Due to the weakness of global markets for natural resources, geosurvey and exploration projects have been postponed throughout the world. Legge emphasised that without exchange rate and portfolio effects, earnings were well within expectations. Legge: “The Group successfully continued its solid financial policy in 2013, and we have strengthened the financial basis of the Group. Own capital has risen to € 120.5 million, which is an increase to 16.2 per cent, following 15.7 per cent in the previous year.”

Providing for pension obligations remains a particular challenge, and counter-indemnity for pension reserves was increased again by € 11.7 million to € 718.1 million. Legge emphasised that it had also again been possible to raise investment into the operative side of the business, to € 36.1 million (2012: € 35.7 million).

New data centre “on line”

A total of € 8 million has been invested in building the new data centre. The building is one of the most modern of its kind in Germany and meets very high security standards (Trusted IT Site Level 3). Availability reached an extremely high 99.9 per cent. Currently, all the German IT systems are being brought together at the Hanover site, and migration of international TÜV NORD companies will begin in the second half of 2014. In future, this centralisation will save more than 300 tonnes of CO2 each year. The centre is already working at almost full utilisation due to use by TÜV NORD and renting of IT capacity to an insurance company. TÜV NORD GROUP intends to develop its activities in this area on an ongoing basis in the coming years.

Continuing to underpin our own innovative strength through cooperation

TÜV NORD GROUP wishes to secure its know-how advantage to the benefit of its clients through international partnerships with universities and other organisations, and also to open up new areas of activity for its business. An example of this is the joint use of laboratories for certification of cranes and offshore installations that has been agreed with Shanghai Maritime University. 40,000 merchant ships currently carry 90 per cent of goods traffic worldwide, and the importance of large ports within logistics chains will continue to grow. This cooperation is therefore extremely significant over the long term.

The year 2013 was characterised by revelations of wide-ranging penetration and espionage in the worlds of digital media and communications technology. The TÜV NORD subsidiary TÜViT has been a specialist in the prevention of cyber attacks on commercial organisations for many years now. Cooperation with the company mediaTest digital, based in Hanover, has opened the door to a new dimension here. In the “Application Security Center” (ASC) joint portal, companies can find all the solutions they need for the security of their mobile end devices and for the entire area of Enterprise Mobility. This offering, which is unique within Europe at the present time, is primarily aimed at companies and App developers.

Moderate M&A activity

In 2013, TÜV NORD GROUP again invested moderately in merger and acquisition activities. Any acquisitions must fit into the strategy of the Group and be a useful addition to the service portfolio.

With an investment of 25.1 per cent into Dutch wind energy specialist Outsmart, TÜV NORD is now offering a complete service package for wind farms, from development through operation up to maintenance and servicing. This covers onshore turbines, but also particularly offshore installations.

With the acquisition of the Frankfurt-based company INSTA Ingenieurtechnik, TÜV NORD has extended its offering for the chemical industry to include planning and instrumentation for electrical, measuring, control and regulation technology. This means that clients can receive all services for the planning of process engineering plant and equipment from one source. In addition, INSTA has programmed process control systems and developed the necessary software.

Guido Rettig: “Organic growth remains at the core, augmented by suitable acquisitions. In particular, the IT and Aerospace Business Units are involved in intensive discussions in Germany and abroad”.

Inspection of technical plant and equipment and audits of standards by independent third parties should be retained

Guido Rettig put a strong case for retention of independent inspection of technical plant and equipment. “The safety and reliability of power plants, industrial installations, filling stations and also lifts is almost taken for granted in Germany and makes a vital contribution to our export success throughout the world. On no account should this success be put at risk.” Rettig spoke in favour of retaining the basic provisions of the so-called German Ordinance on Industrial Safety and Health (BetrSichV), which is currently being recast by the Federal Government. For example, in 2012 alone, inspections identified dangerous defects in a total of 3,000 lifts, which necessitated immediate immobilisation of the machinery. Every tenth lift exhibited defects that had a considerable negative impact on safety. In the case of plant and machinery in areas at risk from explosion, a 30 per cent defect rate was established in the course of independent inspections. “Only independent inspection can provide a guarantee for the safety and reliability of technical plant and equipment going into the future”, emphasised Rettig.

Further improvement in our sights

“Our employees have every reason to look confidently towards the future”, concluded Rettig. The aim of the Board of Management was to further improve results over the coming years. Rettig: “Our clients expect us to offer our services throughout the world with the quality they have come to expect. This is why we are continuing to develop our ability to compete on world markets in our areas of core competence and expertise. But at the same time we are looking towards innovation, including digitisation of test equipment, further development and greater flexibility as regards inspection concepts, active participation in the market development of electromobility, optimisation of composite materials, for example in the aerospace industry, and the considerable opportunities offered by the fourth industrial revolution. We always want to offer the best-possible solutions to our clients.”

About TÜV NORD GROUP

With over 10,000 employees, TÜV NORD GROUP is one of the largest technical service providers, offering its advisory, service and inspection expertise in over 70 countries throughout the world. Areas of activity include Industrial Services, Mobility, IT and Training. TÜV NORD GROUP occupies a unique position in the sector based on its work in the fields of natural resources and aerospace and is firmly committed to its guiding principle and watchword: “Excellence for your business”.

Sven Ulbrich

CvD / Leiter Konzern-Kommunikation

+49 511 998-61540

sulbrich@tuev-nord.de

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