ANNUAL REPORT
2019
Fina ncial Figure s 2 01 9
Order situation
Order book (Dec 31)
Income statement
Revenue
Adjusted gross profit 2
Adjusted EBITA 2
Adjusted EBITA margin 2
EBITA
EBITA margin
Adjusted profit for the period 2
Adjusted earnings per share 2
Profit for the period
Earnings per share
NORMA Value Added (NOVA)
Return on Capital Employed (ROCE)
Cash flow
Cash flow from operating activities
Cash flow from investing activities
Cash flow from financing activities
Net operating cash flow
Balance sheet
Total assets
Equity
Equity ratio
Net debt
Employees
Core workforce
Share data
IPO
Stock exchange & market segment
ISIN
Security identification number / Ticker symbol
Highest price / Lowest price 2019 3
Year-end share price as of Dec 31, 2019 3
Market capitalization as of Dec 31, 2019 3
Number of shares
1_Including the effects of the first-time application of IFRS 16.
2_The adjustments are described in the Notes to the Consolidated Financial Statements.
3_Xetra price.
NOTES, P. 148
EUR million
EUR million
EUR million
EUR million
%
EUR million
EUR million
EUR million
EUR
EUR million
EUR
EUR million
%
EUR million
EUR million
EUR million
EUR million
EUR million
EUR million
%
EUR million
20191
358.3
1,100.1
630.6
144.8
13.2
127.9
11.6
87.8
2.76
58.4
1.83
17.3
13.4
137.1
– 57.6
– 92.7
122.9
Dec 31, 2019
1,514.3
629.5
41.6
420.8
6,523
2018
379.2
1,084.1
626.6
173.2
16.0
164.8
15.2
114.8
3.61
91.8
2.88
60.8
17.5
130.8
– 129.5
31.3
124.4
Dec 31, 2018
1,471.7
602.4
40.9
400.3
6,901
T001
Change in %
– 5.5
1.5
0.6
– 16.4
n/a
– 22.4
n/a
– 23.5
– 23.6
– 36.3
– 36.5
– 71.5
n/a
4.8
– 55.5
n/a
– 1.2
Change in %
2.9
4.5
n/a
5.1
– 5.5
April 2011
Frankfurt Stock Exchange, Regulated Market (Prime Standard), SDAX
DE000A1H8BV3
A1H8BV / NOEJ
EUR 49.26 / 26.36
EUR 38.00
EUR million 1,211
31,862,400
2
3 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATIONNORMA Group SE – Annual Report 20191 INTRODUCTION2 TIMES ARE CHANGING Table of
Con tents
1
2
3
Introduction
Times are Changing
To Our Shareholders
Financial Figures 2019
Table of Contents
NORMA Group
2
3
4
Guiding Theme 2019
6
The Management Board
Our Answers to the Questions of Our Time 7
Letter from the Management Board
NORMA Group on the capital market
Supervisory Board Report
Corporate Governance Report
25
26
28
33
37
4Consolidated
Management Report
Principles of the Group
Economic Report
Forecast Report
Risk and Opportunity Report
Remuneration Report
Other Legally Required Disclosures
Report on Transactions with
Related Parties
46
58
82
89
102
110
112
5Consolidated Financial
Statements
Consolidated Statement of
Comprehensive Income
Consolidated Statement of
Financial Position
114
115
Consolidated Statement of Cash Flows 116
Consolidated Statement of Changes
in Equity
Notes to the Consolidated Financial
Statements
Appendix to the Notes to the
Consolidated Financial Statements
Responsibility Statement
Independent Auditor’s Report
117
118
203
205
206
6
Further Information
Glossary
List of Graphics
List of Tables
Overview by Quarter
Multi-Year Overview
212
216
217
220
221
Financial Calendar, Contact and Imprint
223
3
3 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATIONNORMA Group SE – Annual Report 20191 INTRODUCTION2 TIMES ARE CHANGING NORMA Group
Two strong distr i-
b ut ion ch ann els
NORMA Group is an international market and technology leader
in Engineered Joining Technology (joining, connecting and fluid
handling technology) and offers more than 40,000 high-quality
products and solutions to around 10,000 customers in more than
100 countries. NORMA Group’s joining products are used in
various industries and can be found in vehicles, ships, trains,
aircraft, domestic appliances, engines and plumbing systems as
well as in applications for the pharmaceutical and biotechnology
industry. From its headquarters in Maintal near Frankfurt,
Germany, the Company coordinates a global network consisting
of 29 production facilities as well as numerous sales and
distribution sites across Europe, the Americas, and Asia Pacific.
61%
EJT
Engineered Joining Technology (EJT)
The business area of EJT focuses on customized, engineered
solutions which meet the specific requirements of original equip-
ment manufacturers (OEM). For these customers, NORMA Group
develops innovative, value-adding solutions for a wide range of
application areas and various industries in the area of mobility
and new energy. No matter whether it’s a single component, a
multi-component unit or a complex system, all products are indi-
vidually tailored to the exact requirements of the industrial cus-
tomers while simultaneously guaranteeing the highest quality
standards, efficiency and assembly safety. NORMA Group’s EJT
products are built on the Company’s extensive engineering exper-
tise and proven leadership in this field.
Distribution Services (DS)
In the area of DS, NORMA Group sells a wide range of high-
quality, standardized joining technology products for various
applications through different distribution channels. Among its
customers are distributors, OEM aftermarket customers, technical
wholesalers and hardware stores. In the DS business area,
NORMA Group benefits not only from its extensive geographic
presence and global manufacturing, distribution and sales
capacities, but also from its well-known brands, its customized
packaging and the high availability of its products at the point of
sale. NORMA Group markets its joining technology products under
its well-known brand names:
39%
DS
B
R
A
N
D
4
3 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATIONNORMA Group SE – Annual Report 20191 INTRODUCTION2 TIMES ARE CHANGING MARKET LEADER IN CONNECTING AND
FLUID HANDLING TECHNOLOGY FOR
EXISTING AND FUTURE MARKETS
INCREASE
IN VALUE
Ove ral l
ob je c ti ves
PROFITABLE
GROWTH
SELECTIVE VALUE-ADDING
ACQUISITIONS TO SUPPLEMENT
ORGANIC GROWTH
Stra tegi c
me asure s
to ac h ieve
ob je c ti ves
INCREASE OF MARKET
SHARE THROUGH FURTHER
LOCALIZATION
SELECTIVE PRODUCT
PORTFOLIO
SUSTAINABLE ACTIONS
IN ALL BUSINESS AREAS
NEW PRODUCT DEVELOPMENTS
FOR STRONG FUTURE MARKETS
STRONG PERFORMANCE
AND CONTINUOUS
EFFICIENCY IMPROVEMENTS
HIGHEST
QUALITY REQUIREMENTS
AND STRONG
BRAND IMAGE
CLIMATE CHANGE AND SCARCITY OF RESOURCES
ARE GLOBAL MEGATRENDS WHICH FORM THE BASIS FOR
NORMA GROUP’S BUSINESS MODEL
5
3 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATIONNORMA Group SE – Annual Report 20191 INTRODUCTION2 TIMES ARE CHANGING The market environment in which NORMA Group operates is
undergoing radical change. We recognized this early on and
subsequently began to adapt to the changed conditions.
Every change is driven by a multitude of different factors,
which in turn have a profound impact on patterns of action
and decision-making.
On the following pages, you will learn what significance the
changed framework conditions have for NORMA Group. We
present an overview of the main drivers and factors behind the
developments in fiscal year 2019 in a significantly changing
environment. “Times are changing” – we have the answers to
the questions of our time.
6
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING 8 Questions
Q 01
Q 02
Q 03
Q 04
The 2019 Annual Report
is entitled “Times are
changing.” What does
this mean?
Which developments
affected NORMA Group’s
business in 2019?
How can NORMA Group
increase its profitability?
What does the new
“Get on Track” change
program include?
P A G E 8
P A G E 1 0
P A G E 1 2
Q 05
Q 06
Q 07
Q 08
What were the positive
developments in fiscal
year 2019?
How will the key markets
for NORMA Group develop
in 2020?
What growth areas does
NORMA Group see in the
coming years?
How does
NORMA Group
ensure its ability
to innovate?
7
PAGE 14PAGE 16PAGE 18PAGE 20PAGE 22NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Q
01
The 2019 Annual Report
is entitled “Times are
changing.” What does
this mean?
3 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Markets and
technologies are
changing – and
NORMA Group
is right in the
middle of it.
The title of our 2019 Annual Report describes the current situation
very appropriately: We are experiencing challenging times – times
of change. Looking back on 2019, we can conclude that change
is ever-present. This is exemplified by how the automotive industry
is developing. The industry is experiencing profound techno logical
upheaval. Electromobility, including hybrid drives, and autonomous
driving are the key factors here.
At the same time, we are repeatedly confronted with geopolitical
issues such as the never-ending discussion about Brexit and the
trade disputes between the two superpowers US and China. This
difficult and changing market environment presents us with
additional challenges. We started to tackle the hurdles early on
and are responding consistently to the changing conditions. For
example, we announced our rightsizing program in February 2019
and began optimizing our production landscape and organizational
structures, which had grown rapidly in recent years, and we are
harmonizing our processes and systems worldwide. We also
started to align our business model even more closely with the
requirements of our strategic growth fields – water management
and electromobility.
We see an opportunity for NORMA Group in this changing
environment. We want to seize the opportunity and open our
eyes to the essentials. For this reason, we are systematically
analyzing how current developments affect us and are making
adjustments where necessary. We are adapting to the new
framework conditions, becoming more agile, more structured and
even more efficient in terms of our processes. In doing so, we are
clearly relying on our strengths: As an expert on joining technology,
we are further expanding our position as one of the market leaders
in the area of engineered and standardized joining technology
(connecting, fastening and fluid handling technology) for current
and future markets.
9
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Q
02
What develop-
ments affected
NORMA Group’s
business in 2019?
3 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING The US market for passen-
ger vehicles and trucks
collapsed significantly in
fiscal year 2019.
We have clearly
felt the market
weaknesses and
changes.
The continued weakness of the global automotive market played
a major role in our difficult fiscal year 2019. Technological upheav-
als, geopolitical risks and the global impact of the trade dispute
between the US and China and related sanctions have severely
impacted the global automotive industry. The reluctance to invest
that this has caused was reflected in significant market weakness,
especially in the EMEA and Asia-Pacific regions and China and
India, in particular. Demand from important customer segments
dropped, and business continued to decline. In addition, the US
market, among others, has experienced a sharp decline.
Against this backdrop, we realized that we would not be able to
achieve the targets we had set for ourselves at the beginning of
2019. For this reason, we revised our forecast for the adjusted
EBITA margin in April 2019. After the first half of the year, it also
became apparent that the situation on the international
automotive markets would not ease significantly in the second
half of the year either.
In view of the global development in the automotive market and
on the basis of the expected sales development for the second
half of 2019, we revised both the sales forecast at Group level
and the forecast for the adjusted EBITA margin and operating net
cash flow for the full year 2019 in July 2019. The slump in the US
automotive business at the beginning of the fourth quarter of
2019, due to strikes at key customers in the passenger car and
truck sectors, among other factors, led to yet another revision of
the sales forecast in all regions in October.
11
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Q
03
How can
NORMA Group
increase its
profitability?
3 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING We are identifying
potentials for
optimization.
Rihard Sörös and Nemanja
Stanisic have been partici-
pating in the dual training
program in Serbia since
September 2019
Times are changing – in times of change, it is extremely import-
ant to set up structures and processes within the Company in
such a way that they allow the greatest possible flexibility in order
to be able to adapt quickly to changing market conditions. The
starting point here is a comprehensive review of the initial
situation, in particular an analysis that enables internal processes
and Company structures to be optimized. We know that we can
only improve if we take a holistic view of every element of the
Company and analyze the underlying structures for optimization
potential. This must include both fundamental aspects and details.
In previous years, we have grown very strongly and rapidly
worldwide, not least through several acquisitions. This has also
resulted in structures and processes that now have to be adapted
and optimized to take future developments into account. The
harmonization and integration of these processes and structures
plays a key role. One first step in this direction was the
announcement of the rightsizing program in February 2019, when
we approved a package of measures. Since then, we have
continuously worked to optimize our production landscape and
organizational structures in a targeted manner and to harmonize
processes and systems worldwide. In order to identify further
potential, we continuously take a critical look at all internal
processes. In addition, we concentrate on bundling and sharing
processes and important existing know-how across regions and
locations. The first successes of the measures implemented could
already be seen in fiscal year 2019. At the end of September, we
closed a production site in Russia and relocated activities to our
plant in Subotica, Serbia. Furthermore, a distribution center in the
Netherlands was integrated into an existing distribution center.
In addition to the rightsizing program, we publicly announced the
“Get on Track” change program in November 2019. The program
goes beyond the measures of the rightsizing program. The
measures included in this program optimize site capacities in all
regions and streamline the product portfolio, in particular through
active portfolio management and improvement of the purchasing
processes. “Get on Track” will make us more flexible and profitable.
This will enable us to respond to market changes even better and
faster in the future.
We are actively implementing the defined measures so that we
can increase our profitability and achieve sustainable growth.
13
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Q
04
What does the new
change program
“Get on Track”
include?
3 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING There is always potential for improvement. In order to make the
best possible use of this potential, the Supervisory Board of
NORMA Group approved the “Get on Track” change program pro-
posed by the Management Board at the beginning of November
2019. This program is intended to lay the foundations for the fur-
ther strategic development and profitable growth of NORMA Group.
“Get on Track” comprises three overarching fields of action.
Our strategy focuses on
increasing value, growth,
profitability and generating
cash flow.
OBJECTIVE OF “GET ON TRACK”
FIELDS OF ACTION
EXAMPLES
I
G
N
N
O
T
S
O
P
I
I
LOCATIONS
Optimization of locational capacities in all regions
PRODUCT PORTFOLIO
Streamlining of product portfolio through active portfolio management
STRUCTURES
Improvement of structures and processes along the entire value chain
MARKET INTELLIGENCE
Comprehensive information on products and markets as the basis for active portfolio management
PEOPLE AND CULTURE
Qualification and training of personnel
The objective is initially to design the production landscape as
efficiently as possible and at the same time to reduce complexity.
Here, we are also taking a close look at our many products and
improving and bundling our structures and processes. In short:
All internal processes and structures are being comprehensively
put to the test. By implementing targeted measures, we are
focusing on increasing the efficiency of NORMA Group in the
defined fields of action and aligning the entire organization along
the lines of profitability and cash flow generation. In summary,
“Get on Track” can thus be described as a comprehensive
performance program. From 2020 on, it is expected to lead to
cost savings that will rise to between EUR 40 million and
EUR 45 million annually by 2023.
Once the programs have been successfully implemented,
NORMA Group is to emerge from the change process in a stron-
ger, leaner and more effective position – as a Company that is
ideally adapted to the economic environment and able to act in
an agile manner.
Intensive work on operational improvement is a major feat of
strength that will require our full concentration. We will succeed
in this if we work together because a company is only as good
as the entirety of its employees. We therefore attach great
importance to our employees’ qualifications and motivation
through targeted “on-the-job” training and education. This is how
we are implementing the “Get on Track” program together with
our employees and gradually preparing NORMA Group for the
future. In spite of all this change, we cannot afford to lose sight
of what makes us what we are: a technology leader in the field
of advanced joining technology and we will continue to build on
this strength.
15
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Q
05
What were the
positive develop-
ments in fiscal
year 2019?
3 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Successes in our future markets water
management and electro mobility as
well as improved financing terms and
conditions.
The eM compact quick connector
has been developed especially for
use in electric and hybrid cars.
Despite the many challenges in the past fiscal year, we were also
able to achieve important successes in our future markets water
management and electromobility.
In light of the increasing water scarcity worldwide, there is a
growing need for efficient, environmentally friendly water
management and infrastructure solutions. NORMA Group is taking
advantage of this trend by continuously developing and improving
its water management portfolio to meet the growing global
demand for an efficient water supply.
NORMA Group’s comprehensive product portfolio and joining
technology ensure that water is transported to where it is needed
without any leakages. The product portfolio includes products
and solutions in the fields of gardening and landscaping. This
also includes durable and efficient drip irrigation systems that use
up to 60 percent less water than conventional systems on the
market. NORMA Group’s many efficient products are also widely
used in the construction industry. These include, for example, the
“Pro-Span Repair Coupling” product that enables private
homeowners to repair damaged water pipes quickly and cost-
effectively.
2019 repeatedly showed that leading automotive manufacturers
rely on NORMA Group’s development expertise for challenging
projects in the field of electromobility. For instance, we won major
new orders in the past fiscal year. These included a large order
that we received in May 2019 to equip around 1.8 million vehicles
from a British carmaker with cooling water pipe systems for cars
with combustion engines and electric motors. In addition,
NORMA Group won two further major orders for thermal
management pipeline systems for electric and hybrid vehicles.
NORMA Group’s pipeline systems are known for their optimal
compactness and efficient line routing, which means that they
can be installed inside the battery in a very space-saving manner.
The temperature sensors integrated into them ensure that the
battery cells have the correct operating temperature and thus
make a significant contribution to increasing the range of the
vehicles – still one of the key challenges in the field of electro-
mobility. We also came up with new innovations in this area of
electromobility, which is becoming increasingly important for us,
in 2019. A new quick connector that has been developed
especially for use in electric and hybrid vehicles is only one
example. NORMA Group’s new E-mobility connector provides
more space in the vehicle battery, allowing more battery cells to
be installed per battery pack and increasing the performance per
battery.
The fact that automotive manufacturers appreciate the quality
and reliability of our products is also demonstrated by the awards
we have received from our customers, such as the Jaguar Land
Rover Quality (JLRQ) Award, which we received in China last year.
But we are not only successful in the area of product develop-
ment. We also made further progress in the area of our financial
and liquidity management in fiscal year 2019: Group financing
was successfully restructured at even more attractive terms. In
addition, a “green” financing component was included for the first
time, thus reflecting our sustainability strategy in the area of
financing as well. We are very proud of this. We want to build on
this success and continue to improve.
17
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Q
06
How will
NORMA Group’s
key markets
develop in 2020?
3 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Dr. Michael Schneider,
CEO of NORMA Group
since November 2019, and
Dr. Friedrich Klein (COO)
holding a discussion
We do not expect the situation on the international automotive
markets to improve significantly in 2020 following an already
difficult previous year. According to LMC Automotive, one of the
world’s leading providers of market information for the automotive
industry, the automotive market will decline in the Asia-Pacific,
EMEA and, above all, Americas regions. A noticeable decline can
be expected in the commercial vehicle sector, in particular, in 2020.
This is a market in which NORMA Group is strongly represented,
particularly in the US. On the other hand, the Water Management
division is expected to continue to perform well, albeit at a
somewhat slower pace compared to last year. This means the
situation in some of NORMA Group’s key sales markets will remain
challenging.
We will focus above all on careful planning in light of these
expected developments: Comprehensive market analysis that
tracks all conceivable developments is indispensable in times of
high market uncertainty. This will enable us to evaluate possible
opportunities and risks for our business in a targeted manner in
order to be able to react promptly and appropriately to any
changes that arise.
The water manage ment
market is growing, the
automotive market is
changing. We focus on the
opportunities and risks.
19
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Q
07
What growth areas
does NORMA Group
see in the coming
years?
3 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Climate change and
scarcity of resources are
global megatrends for
which we have innovative
solutions.
The technological requirements placed on our customers and thus
also on our products are changing ever more rapidly. This
development is being driven by two global megatrends: climate
change and scarcity of resources. They will play a decisive role
in shaping the field in which NORMA Group operates in the
coming decades. For this reason, they form the foundation of our
business model and our corporate strategy.
Consistent protection of the environment, more efficient use of
energy and the economical use of vital raw materials such as
water are becoming increasingly important. Our two key future
markets are water management and electromobility. We have
solutions for these areas and view the changes as an opportunity.
As a technology leader, we will play a key role in shaping these
areas. We are making our contribution here in particular by
reducing emissions from combustion engines and hybrid drives
and by optimizing the performance of electric drives. And our
potential is far from being exhausted.
Water management
Water is a valuable commodity. NORMA Group’s product portfolio
in the field of water management focuses on the targeted control
and optimization of water volumes. Due to the increasing scarcity
of water, the demand for tailor-made, reliable joining products
and solutions that enable our customers to enjoy an efficient,
sustainable water supply, and thus to use water resources
sparingly, is increasing. The focus here is on preventing leaks at
tapping points and thus making an important contribution to the
efficient water supply of households. With our products, we also
support the implementation of statutory regulations aimed at
sustainably reducing water consumption. In this context, we also
understand how efficient systems for landscape irrigation work.
Drip irrigation systems in particular are becoming increasingly
important. The focus here is on innovative technologies that aim
to reduce water consumption in general. For example, intelligent
drip irrigation systems can reduce water consumption by up to
60 percent compared to conventional sprinkler systems. On the
other hand, the management of larger volumes of water, which
can arise due to extreme weather conditions, is also becoming
increasingly important. Our expertise in this area goes beyond
classic piping and joining technology. An important starting point
here is the collection of rainwater and the discharge of wastewater
into the urban sewage system. We are very well positioned in
these areas and are able to offer our customers reliable products
for effective storm water and wastewater management.
We have steadily expanded our water management business in
recent years through targeted acquisitions, thus contributing to
the diversification of our business. In fiscal year 2019, water
management accounted for around 20 percent of our annual
sales. By comparison, this figure was only four percent in fiscal
year 2013, prior to the acquisition of NDS.
E-mobility
Electromobility is NORMA Group’s second key market of the future
and an important focus of its research and development activities.
NORMA Group already has plenty of solutions and key products
in its portfolio to address the future trend of e-mobility in a
targeted manner. Most of these products are manufactured using
existing technical equipment and on our existing machines. The
product range comprises both optimized and particularly
lightweight connectors as well as complete line systems for the
thermal management of battery packs in electric vehicles. These
products ensure a correct operating temperature of the battery
cells and thus an increased range and an extended service life of
the battery. Thanks to our broad product portfolio, we believe we
are optimally positioned to benefit from the positive developments
forecast in the field of e-mobility.
21
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Q
08
How does
NORMA Group
ensure its ability
to innovate?
3 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING 5%
of EJT sales is planned
for investments in R&D
annually.
For us, innovation is
an ambition shared by
all employees. In doing
so, we always keep an
eye on the concrete
application.
Times are changing. New issues require new solutions. To ensure
that we can continue to be pioneers and knowledge carriers in
our markets in the future, we are constantly expanding our
technological leadership and invest around five percent of the
sales of our Engineered Joining Technology division in research
and development each year. After all, innovations are a decisive
success factor.
Due to our close cooperation with OEMs, we always develop and
work at the pulse of time. We solve the challenges our customers
face, due to the ever-stricter legal requirements, for example.
These force automotive manufacturers to adapt their current
systems, but also necessitate the development of new technologies
and innovative solutions. This is where we come into play. We
accompany these developments intensively: Some of our
employees work as resident engineers on site on the customer’s
premises and are therefore very familiar with the problems and
challenges facing the industry.
As a partner to our customers, we have been developing
sustainable solutions on this basis for several decades.
At NORMA Group, we do not consider innovations to be solely a
task for the Research and Development department, however.
Rather, a company’s success is defined by the totality of its
employees’ ideas. For this reason, we cultivate an open company
culture and stand for a cross-functional and constructive
exchange. Each of our employees is thus given the opportunity
to submit invention reports to the Research and Development
department and to incorporate ideas into our innovation process.
Particularly good ideas are recognized every year by the Man-
agement Board.
23
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING To O ur
Shareh ol de rs
25
26
28
33
37
The Management Board
Letter from the Management Board
NORMA Group on the capital market
Supervisory Board Report
Corporate Governance Report
To Our Shareholders
The Management Board
Dr. Friedrich Klein
Chief Operating Officer (COO)
Dr. Michael Schneider
Chief Executive Officer (CEO)
25
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Letter from the Management Board
“Times are changing” is the title of this year’s Annual Report, and
this title describes the current situation for NORMA Group quite
well in many ways. We live in a constantly changing world and
only those who are able to adapt to the changing conditions will
be successful in the long run.
Change is currently omnipresent for NORMA Group: Some of the
markets we are active in are affected by extensive technological
changes. This is particularly evident in the automotive industry,
which is currently undergoing enormous technological and
structural upheaval against the backdrop of climate change and
the ongoing demand for lower-emission drive technologies. For
car manufacturers, this means having to rethink everything and
prepare for the future. OEMs are therefore increasingly focusing
on alternative drive technologies. In some cases, these require a
high level of advance development work, however. Combined
with the growing pressure on margins and declining production
and sales figures, the pressure on the automotive industry is
increasing considerably.
We also clearly felt this in fiscal year 2019. Our automotive
business was hit hard by the global decline in production figures
and the unexpectedly severe slump in the US car and truck
business as a result of strikes at key customers. In addition,
geopolitical factors such as the ongoing discussion over Brexit as
well as the trade disputes between the super powers US and
China further exacerbated the situation and created a challenging
environment in the past fiscal year. Like many other companies
in the industry, we too unfortunately had no choice but to revise
our sales and earnings expectations downwards over the course
of the year.
Despite this environment, we managed to generate sales of EUR
1,100.1 million in fiscal year 2019. This represents a slight increase
of 1.5 percent over the previous year. Positive sales contributions
mainly came from our DS business – particularly the water busi-
ness in the US – and from Kimplas and Statek, the two companies
we acquired in fiscal year 2018. This shows, that we have taken
the right path in the past years by systematically building up our
DS business. Currency effects also provided tailwind. On the other
hand, organic sales declined by 2.0 percent, mainly due to the
difficult conditions in the automotive sector and the resulting
losses in our EJT business.
Our operating result (adjusted EBITA) and the adjusted EBITA
margin also declined sharply in fiscal year 2019. Adjusted EBITA
fell by 16.4 percent to EUR 144. 8 million and the adjusted EBITA
margin was at 13.2 percent and thus significantly below our own
target figure. At EUR 87.8 million and EUR 2.76, respectively,
adjusted net profit for the period and adjusted earnings per share
also declined year-on-year and we thus also failed to meet the
expectations we had communicated at the beginning of 2019.
year in which the course for the future will be set, for a sustainable
improvement in profitability, in particular.
Despite all the changes that lie ahead of us, we are sticking to
our long-term strategy that emphasizes value enhancement,
profitable growth and strong cash flow generation. By focusing
on future markets such as water management and electromobility
and by concentrating on a selective product portfolio and targeted
acquisitions, we intend to secure and further increase our market
share and grow more profitably in the future. The highest
standards of quality, efficiency and sustainability determine our
actions, as does our focus on innovations. After all, only those
who think and act innovatively will be able to gain long-term
competitive advantages. The development of product and system
solutions for water management and electromobility is a particular
focus of our R&D activities. The area of thermal management
plays a particularly important role in the latter. This involves reg-
ulating the temperature of batteries in hybrid and electric vehicles
so that they can deliver their best possible performance. Here,
we are already delivering individual solutions for various OEMs.
The experience gained over the past year has shown that it is
also time for additional changes to be made throughout
NORMA Group. We must improve our flexibility in order to be able
to react more quickly and more efficiently to changing conditions
in the future. This is why we launched the “Get on Track” change
program in November 2019, which includes further far-reaching
measures aimed at optimizing internal Group processes and
structures. The program is aimed at increasing NORMA Group’s
profitability and earnings, but also our flexibility and agility. The
focus of these activities is on optimizing our site capacities in all
regions, streamlining the product portfolio and improving our
processes. We have already implemented the first measures from
the “Get on Track” program, and more will follow this fiscal year.
In light of this, we basically consider 2020 an important transition
This is how we make an important contribution to greater
sustainability with our product portfolio, but our sustainability
strategy is much more diverse than this. We report on our
understanding of doing business sustainably and our Corporate
Responsibility and objectives in various areas of the Company in
more detail in our CR Report, which was published together with
this Annual Report.
Dear shareholders, fiscal year 2019 was a turbulent year indeed
and the NORMA Group share price was adversely affected by
the developments of the past year. Consequently, the
NORMA Group share was quoted at EUR 38.00 at the close of
the year, 12 percent lower than at the beginning of the year.
Despite the weaker fiscal year 2019, we will propose an
26
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING unchanged dividend compared to the previous year of EUR 1.10
per share at this year’s Annual General Meeting in Frankfurt / Main
on May 14, 2020, and will thus pay out around 40% of our
adjusted net profit for the period. In doing so, we want to express
the continuity of our dividend strategy and, at the same time,
strengthen our shareholders’ trust in NORMA Group.
We are currently facing difficult times and the implementation of
the measures planned from the “Get on Track” program will also
have a major impact on developments in the current fiscal year.
We will use 2020 to position ourselves more flexibly and to
improve our processes and structures even further so that we can
shape our growth path from a much stronger position. We are
confident that we can achieve this if we all work together. With
this in mind, we would like to conclude by thanking our nearly
8,500 employees worldwide for their tireless efforts even in these
challenging times. We would also like to thank our long-standing
customers and business partners as well as you, our shareholders,
for your trust. “Times are changing” – and the year 2020 is pre-
senting us with new challenges. Let’s tackle them together!
Sincerely yours,
Dr. Michael Schneider
Chief Executive Officer
(CEO)
Dr. Friedrich Klein
Chief Operating Officer
(COO)
27
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING NORMA Group on the capital
market
• Dividend of EUR 1.10 resolved at the Annual General
Meeting 2019
Successful stock market year 2019 –
indices worldwide reach new historic highs
• 2018 Annual Report and Investor Relations work receive
awards again
• NORMA Group share price falls 12.0% in fiscal year 2019
Following a difficult stock market year in 2018, the global indices
were able to gain momentum at the beginning of the year and
also ended the year 2019 with a strong rally. Concerns about
declining economic indicators, the weakness of the Chinese
economy and the global automotive sector had only a short-term
impact on share prices. By contrast, the continuing expansive
policies of central banks all over the world, the phase-one trade
deal between the United States and China and an increasingly
unlikely “hard” Brexit had a positive effect on the uncertainty. In
this environment, the majority of the international indices reached
new multi-year highs and, in some cases, new all-time highs. The
leading German index DAX closed the 2019 stock market year at
13,249 points, equaling an increase of 25.5%. The MDAX and
SDAX also ended the year with significant gains of 31.2% and
31.6%, respectively. The U.S. indices left a similar positive impres-
sion, ,with the leading U.S. Index Dow Jones ending the 2019
stock market year 22.3% higher to exceed 28,000 points for the
first time. The NASDAQ Composite technology index developed
even more positively, and exceeding 9,000 points and rising by
35.2% over the year. The MSCI World Index, which is regarded
as a trend indicator for the global market, also showed a positive
annual performance by posting an increase of 25.2%.
Index-based comparison of NORMA Group’s share price performance in 2019 with DAX, MDAX, SDAX and MSCI World Automobiles
G001
in %
140
120
100
80
60
40
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
NORMA Group SE
DAX
MDAX
SDAX
MSCI World Automobiles
28
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Performance of the NORMA Group share
For the NORMA Group share, as for many other companies in the
automotive industry, the 2019 stock market year was character-
ized by price losses and high volatility. The share price ranged
between EUR 43 and EUR 49 in the first four months of the year,
reaching its all-year high of EUR 49.26 at the beginning of March.
Subsequently, the share price fell as a result of the profit warnings
in the spring, summer and fall, leading to the all-year low of
EUR 26.36 in mid-August. The resulting decline in market
capitalization led to the company’s move from the MDAX to the
SDAX in September 2019. In the further course of the year, the
situation for the NORMA Group share eased somewhat,
whereupon the price losses of the first eight months of fiscal year
2019 were partially recovered. On December 31, 2019, the share
ended the year at a closing price of EUR 38.00, or 12.0% below
the closing price at the end of 2018.
Market capitalization amounted to EUR 1.21 billion on December
31, 2019 (2018: EUR 1.38 billion). This is based on an unchanged
number of 31,862,400 shares compared to the previous year.
Measured by the market capitalization of the free float relevant
for determining the index membership, which has been at 100%
since 2013, the NORMA Group share ranked 12th out of 70 shares
in the SDAX in December 2019 (Dec 2018: 54th out of 60 in the
MDAX).
Trading volume increased
The average daily XETRA trading volume of the NORMA Group
share rose in 2019 compared to the previous year and amounted
to an average of 97,960 shares per day (2018: 95,624 shares).
In December 2019, the NORMA Group share thus ranked 25th
Distribution of trading activity in 2019
G002
Free float by region
34%
Block trades
31%
Alternative
trading platforms
35%
9%
Official trading
France
15%
USA
30%
United Kingdom
as of December 31, 2019
G003
19%
Germany
7%
Scandinavia
20%
Rest of World
out of 70 in terms of trading volume in the SDAX (2018: 59th out
of 60 in the MDAX). The average daily trading volume in contrast
decreased to EUR 3.6 million (2018: EUR 5.4 million).
The total average number of shares traded per day was 277,693
(2018: 268,862) in 2019. Trading was distributed among the
various trading venues as follows:
Compared to the previous year, the proportion of shares traded
on the official market fell slightly from 36% to 35% and the shares
traded via block trades also fell to 34% (2018: 38%). By contrast,
the share of trading activity on alternative platforms rose
significantly from 26% in 2018 to 31%.
Broadly diversified shareholder structure
The NORMA Group share has gained greater international
recognition in recent years due to active Investor Relations work.
As a result, foreign investors have become increasingly important.
Today, NORMA Group has a regionally highly diversified
shareholder base with a high share of international investors
mainly from the UK, Germany, the US, France and Scandinavia.
At the end of the reporting year, 0.03% of NORMA Group shares
were held by the Management Board in its current composition
(2018: 0.6%). A further 3.9% (2018: 3.7%) is owned by private
investors. The remaining shares were held by institutional
investors. The number of private investors increased to 4,553 in
the course of fiscal year 2019. At the end of December 2018, the
number of private investors was 3,671.
29
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Voting rights notifications in 2019
approved by a clear majority. The voting results are available on
WWW.NORMAGROUP.COM/CORP/EN/INVESTORS /AGM/
the website.
Analysts covering NORMA Group
T003
Based on the voting rights notifications received by the end of
2019, shares of NORMA Group designated as free floating and
exceeding 3% are held by the following institutional investors:
Directors’ Dealings
Overview of the voting rights notifications
T002
in %
Allianz Global Investors GmbH, Frankfurt / Main,
Germany
Ameriprise Financial Inc., Wilmington, DE, USA
Impax Asset Management Group Plc, London, UK
Mondrian Investment Partners Limited, London, UK
BNP Paribas Asset Management S.A., Paris, France
14.99%
8.35%
5.08%
3.10%
4.91%
Three transactions were reported as Directors’ Dealings in fiscal
year 2019. These can be found in the Corporate Governance
Report.
CORPORATE GOVERNANCE REPORT, P. 43
Analysts covering NORMA Group
18 analysts from various banks and research firms currently fol-
low NORMA Group. As of December 31, 2019, eight analysts
recommended buying the share, nine advised holding the share
and one recommended selling the share. The average target price
was EUR 37.89 (2018: EUR 54.71)
Baader Bank
Peter Rothenaicher
Bankhaus Lampe
Christian Ludwig
Bankhaus Metzler
Jürgen Pieper
Bank of America Merrill Lynch
Kai Müller
Berenberg Bank
Philippe Lorrain
Commerzbank AG
Ingo-Martin Schachel
Deutsche Bank AG
Tim Rokossa
DZ Bank AG
Thorsten Reigber
Pareto Bank ASA
Tim Schuldt
Hauck & Aufhäuser
Christian Glowa
HSBC
Jörg-André Finke
As of December 31, 2019. Please refer to the
NOT ES ON P. 2 03 for further information on the voting rights notifications
received. All voting rights notifications are published on the Company’s
website.
WWW.NORM AG ROUP.COM/COR P/E N/IN VESTORS /
APPE NDIX TO THE
2019 Annual General Meeting
The Annual General Meeting of NORMA Group SE was held on
the premises of the German National Library in Frankfurt / Main
on May 21, 2019. 21,788,954 of the 31,862,400 shares with
voting rights, i.e. 68.4% of the share capital was represented. The
participating shareholders resolved a dividend of EUR 1.10 per
share. This equates to a distribution rate of 30.5% based on
NORMA Group’s adjusted net profit for fiscal year 2018 of
EUR 114.8 million and was therefore within the scope of the
dividend strategy with an annual distribution rate of approxi-
mately 30% to 35% of adjusted net profit. With the exception of
the approval of the system for the remuneration of the members
of the Management Board, all other items on the agenda were
Analyst recommendations
8
Buy
1
Sell
Kepler Cheuvreux
Dr. Hans-Joachim Heimbürger
G004
9
Hold
MainFirst Bank AG
Alexander Wahl
NordLB
ODDO BHF
Frank Schwope
Harald Eggeling
Quirin Privatbank
Daniel Kukalj
Société Générale
Sebastian Ubert
Warburg Research GmbH
Franz Schall
as of December 31, 2019
Sustainable Investor Relations activities
NORMA Group’s Investor Relations activities seek to further
increase awareness of the Company on the capital market,
strengthen long-term confidence in its share and achieve a
realistic and fair valuation. For this reason, Management and
Investor Relations hold many discussions with institutional
investors, financial analysts and private shareholders over the
course of the year.
30
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING
The Management Board and Investor Relations team of
NORMA Group conducted 27 roadshows in the world’s most
important financial centers in fiscal year 2019. Furthermore,
NORMA Group attended the following conferences:
• BAADER Investment Conference, Munich
• BAADER Bank Tag der Fondmanager, Munich
• BAADER Bank German Corporate Day, Toronto
• Bankhaus Lampe Deutschlandkonferenz, Baden-Baden
• Bankhaus Lampe German Equity Forum, London
• Commerzbank German Investment Seminar, New York
• Commerzbank Sector Conference, Frankfurt / Main
• dbAccess Conference, Berlin
• DZ BANK Equity Conference, Frankfurt / Main
• KeplerCheuvreux German Corporate Conference,
Frankfurt / Main
• Mandarine Gestion International Investment Conference,
Munich
• Oddo BHF Forum, Lyon
• Oddo BHF German Conference, Frankfurt / Main
• Quirin Bank Conference French Family Offices,
Frankfurt / Main
• Quirin Champions Conference, Frankfurt / Main
• Quirin Konferenz, Geneva
• The Société Général Nice Conference, Nizza
• Mizuho Tokyo Conference, Tokyo
NORMA Group receives award
for its IR work again
NORMA Group’s IR activities and the 2018 Annual Report were
once again honored in fiscal year 2019. In the ‘Investors’ Darling’
competition, NORMA Group came in third place in the MDAX seg-
ment. In the overall ranking of all 160 companies assessed,
NORMA Group ranked 5th. In addition, the annual report was
recognitioned with the “Silver” award at the FOX Finance Awards.
Share price development of the NORMA Group share since the IPO compared to the SDAX
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0
Service for shareholders
The Investor Relations website contains extensive information
about NORMA Group and the NORMA Group share. In addition
to financial reports and presentations, which are available for
download, all important financial market dates can be found there.
The telephone conferences on the Quarterly and Annual Reports
are recorded and offered in audio format. Shareholders and inter-
ested parties can register for the distribution list by e-mail. The
contact details of the IR team are also available on the website.
WWW.NORMAGROUP.COM/CO RP/EN/INVESTORS /
G005
80
60
40
20
0
2011
2012
2013
2014
2015
2016
2017
2018
2019
NORMA Group SE (RHS)
SDAX (LHS)
31
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Key figures for the NORMA Group share since the IPO in 2011
T004
Closing price on Dec 31 (in EUR)
Highest price (in EUR)
Lowest price (in EUR)
2019
38.00
49.26
26.36
2018
2017
2016
2015
2014
2013
2012
2011 Apr. 8, 2011 1
43.18
70.15
40.44
55.97
63.79
39.95
40.55
51.54
35.20
51.15
53.30
38.82
39.64
43.59
30.76
36.09
39.95
21.00
21.00
23.10
15.85
16.00
21.58
11.41
21.00 2
n/a
n/a
Score of the comparison index 3 as of Dec 31
12,511.89
21,588.09
26,200.77
22,188.94
20,774.62
16,934.85
16,574.45
11,914.37
8,897.81
10,539.60
Number of unweighted shares as of Dec 31
31,862,400
31,862,400
31,862,400
31,862,400
31,862,400
31,862,400
31,862,400
31,862,400
31,862,400
31,862,400
Market capitalization (in EUR million)
1,211
1,376
1,783
1,292
1,630
1,263
1,150
669
510
669
Average daily Xetra volume
Shares
EUR million
Earnings per share (in EUR)
Adjusted earnings per share (in EUR)
Dividend per share (in EUR)
Dividend yield (in %)
Distribution rate (in %)
Price-earnings ratio
Selected indices
97,960
95,624
96,906
73,571
88,888
73,932
86,570
54,432
46,393
3.64
1.83
2.76
0 4
0
0 4
20.8 5
5.38
2.88
3.61
1.10
2.5
30.5
15.0
4.74
3.76
3.29
1.05
1.9
31.9
14.9
3.20
2.38
2.96
0.95
2.3
32.0
17.0
4.10
2.31
2.78
0.90
1.8
32.3
22.1
2.80
1.72
2.24
0.75
1.9
33.4
23.0
2.53
1.74
1.95
0.70
1.9
35.9
20.7
1.04
1.78
1.94
0.65
3.1
33.5
11.8
1.45
1.19
1.92
0.60
3.8
33.2
13.4
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
SDAX, CDAX, Classic All Share, Prime All Share, DAX International 100, DAXsector Industrial, DAXsubsector Products & Services, MIDCAP MKT PR, STXE
TM Automobiles & Parts Index, STXE TM Small Index, STXE Total Market Index
1_IPO and first trading day of the NORMA Group share.
2_Issuing price.
3_Until 2018 MDAX score, since 2019 SDAX score, as the move to the SDAX took place in September 2019.
4_In accordance with the Management Board’s proposal for the appropriation of adjusted net profit, subject to approval by the Annual General Meeting on June 30, 2020.
5_Related to the unadjusted earnings per share. The price-earnings ratio related to the adjusted earnings per share is 13.8.
32
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING
Supervisory Board Report
Collaboration between the Supervisory Board and
the Management Board
The Supervisory Board of NORMA Group SE monitored and
advised on the activities of the Management Board in fiscal year
2019 in accordance with the legal regulations, the German
Corporate Governance Code and NORMA Group SE’s Articles of
Association.
The Management Board reports on a regular monthly basis to
the Supervisory Board on how business is developing at
NORMA Group SE and the Group and issues a forecast for the
current fiscal year. The development of sales and earnings, incom-
ing orders and the order backlog are described in detail compared
to the previous year and as compared to planning. Besides
monthly reporting and Supervisory Board meetings, the Chairman
of the Management Board and the Chairman of the Supervisory
Board engaged in regular exchanges on matters of importance
in fiscal year 2019.
The Management Board begins each Supervisory Board meeting
by reporting on the overall economic situation and sector-specific
economic expectations. It reports on business performance of
NORMA Group and explains the earnings situation based on key
indicators and their development compared to the previous year,
the budget and guidance. The Management Board presents sales
and orders by region and by the two distribution channels EJT
and DS. Accidents at work and countermeasures that have been
introduced to improve work safety as well as quality and delivery
reliability and the status of the introduction of the Microsoft AX
software are also discussed regularly. The Supervisory Board and
Management Board also discussed NORMA Group’s long-term
strategy.
At each regular meeting of the Supervisory Board and the Audit
Committee, the Management Board presents a detailed risk report
in which the probability of occurrence and potential effects of all
relevant risks, including any countermeasures, are assessed. This
regular risk reporting provides the Supervisory Board and the
Audit Committee with a clear picture of which possible risks could
have a negative impact on the Company’s asset, financial and
earnings positions. Moreover, compliance topics are also discussed
regularly. The respective Chairmen report to the Supervisory
Board at the committee meetings.
In fiscal year 2019, the Supervisory Board dealt in detail with the
personnel changes in the Management Board and the remuner-
ation of the Management Board. Other key topics included the
weakening economy and the decline in NORMA Group’s sales
and profit margins that this has caused, as well as the measures
introduced to counteract this as part of the “Rightsizing” and
“Get on Track” programs.
In addition, the Supervisory Board dealt with the following issues
in particular at its four regular meetings in fiscal year 2019:
Supervisory Board meeting held in Maintal
on March 18, 2019
The main topics at this meeting were the 2018 Annual Financial
Statements and the 2018 Group Non-financial Report, the
guidance for 2019, the invitation to the 2019 Annual General
Meeting and the proposal for the appropriation of profits.
Furthermore, the Management Board presented its plans on an
organizational adjustment, which is intended to improve
collaboration at the functional level and across regions, as well
as the R&D organization and foresight management.
Lars Magnus Berg
Chairman of the Supervisory Board
33
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Supervisory Board meeting held in Frankfurt /Main
on May 21, 2019
topics in particular. Afterwards, the Supervisory Board and
Management Board discussed the new Declaration of Compliance
with the German Corporate Governance Code.
Changes in the Supervisory Board, establishment
of the Strategy Committee and realignment of
committee memberships
At the meeting that took place after the 2019 Annual General
Meeting, the Supervisory Board resolved to establish a Strategy
Committee and to restructure the memberships in the committees.
At the meeting with the Management Board, the participants
discussed the course of the Annual General Meeting and criticism
of the remuneration system, which had been rejected by the
Annual General Meeting. The Management Board also informed
the Supervisory Board about the negative development of a
pension fund in the US. Furthermore, the President of the EMEA
region introduced himself to the Supervisory Board and talked
about how the region is developing. In addition, the Management
Board and Supervisory Board discussed personnel issues at the
level below the Management Board.
Supervisory Board meeting held in Maintal
on September 13, 2019
In addition to the usual agenda items and detailed information on
the status of the “Rightsizing” program and the introduction of a
new ERP system at another plant, the Management Board
explained to the Supervisory Board how inventories were
developing and presented the new financing concept, among other
topics.
Supervisory Board meeting held in Maintal
on November 29, 2019
The Supervisory Board and Management Board discussed the
budget for fiscal year 2020 and the medium-term planning.
Among other matters, the Management Board explained how
inventories were developing. The Executive Vice President of
Human Resources also presented her area of responsibility, with
the Supervisory Board showing interest in the status of
organizational and executive development as well as diversity
Besides the four meetings, six conference calls and one closed
meeting of the Supervisory Board took place in 2019. The changes
in the Management Board and the “Get on Track” change program,
which, in addition to the aforementioned “Rightsizing” program,
are intended to improve the future viability of NORMA Group,
were discussed mainly during the conference calls, while
fundamental strategic issues were addressed during the closed
meeting. Furthermore, the Chairman of the Supervisory Board
spoke with investors and, together with Dr. Knut Michelberger
and CFO Dr. Michael Schneider, with a voting rights advisor.
Change on the Management Board
Bernd Kleinhens stepped down from the Management Board by
mutual agreement with the Supervisory Board with effect from
the end of July 31, 2019, and resigned from his offices at
NORMA Group. Dr. Michael Schneider initially assumed the rights
and responsibilities of the CEO on an interim basis. In order to
ensure an objective selection procedure for deciding on the
permanent chairmanship of the Management Board, the
Supervisory Board commissioned an external personnel consulting
firm to search for other qualified candidates for the chairmanship
of the Management Board and spoke with several individuals
who were subsequently introduced. The Supervisory Board then
decided to appoint Dr. Michael Schneider the permanent Chairman
of the Management Board. The Supervisory Board is currently
looking for a qualified candidate to serve as CFO, again with the
help of external personnel consultants. In doing so, the Board is
placing particular importance on presenting just as many qualified
female as male candidates.
At its meeting on May 21, 2019, the Supervisory Board resolved
to establish a Strategy Committee and change the membership
of the Audit Committee. The Strategy Committee advises the
Management Board on NORMA Group’s strategy, restructuring,
organic growth, mergers and divestitures, and new technologies.
The focus is on the water segment, on which NORMA Group is
particularly focused, NORMA Group’s applications in alternative
drives in the context of the transformation of the automotive
industry, and the sustainability of its products. The members of
this committee are Günter Hauptmann (Chairman), Rita Forst and
Erika Schulte. At the same time, Rita Forst resigned from the Audit
Committee; while Mark Wilhelms was named a new member of
this committee, so that the members of the Audit Committee since
then have been Dr. Knut Michelberger (still the Chairman), Erika
Schulte (still a member) and Mark Wilhelms (a new member). The
changes took effect on May 22, 2019.
There were no other changes in memberships and offices. Lars
Berg continues to serve as Chairman of the Supervisory Board,
while Erika Schulte remains Deputy Chairwoman of the
Supervisory Board. Memberships of the General and Nomination
Committee also remained unchanged. Therefore, Lars Berg
(Chairman), Günter Hauptmann and Dr. Knut Michelberger
continue to be its members.
Mark Wilhelms, who was appointed a member of the Supervisory
Board by court order on August 29, 2018, was elected to serve
a five-year term by the 2019 Annual General Meeting.
Main topics of the Audit Committee in 2019
The Audit Committee of NORMA Group convened three times in
2019. It also held four additional telephone conferences.
Dr. Michael Schneider took part in every meeting and telephone
34
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING conference. Other participants included departmental managers
of the second management level to advise on technical issues in
their respective areas of responsibility, particularly Accounting &
Reporting, Treasury, Compliance and Internal Auditing. The Audit
Committee also discussed the quarterly reporting with the CFO.
as well as the focus of the work of the Audit Committee in fiscal
year 2020.
Activities of the General and Nomination Committee
The Audit Committee discussed the main topics, procedure and
results of the audit of the individual and Consolidated Financial
Statements of NORMA Group SE with the auditors and prepared
recommendations for the Supervisory Board’s resolutions.
At the beginning of each meeting, the Audit Committee was
informed in detail about the current business situation and
financial position of NORMA Group. The Audit Committee
monitored the effectiveness of the internal control system, the risk
management system, the internal auditing system and the
compliance management system. The Audit Committee approved
the audit plan for internal auditing in 2019. Other topics discussed
by the Audit Committee included budget planning for 2020 and
medium-term planning. Furthermore, in 2019, the Audit Committee
dealt with the first-time adoption of the IFRS 16 standard, the
development and assessment of inventories, personnel costs and
the profit margin, prevention of money laundering and the status
and implications of introducing the new ERP system Microsoft AX
2012, among other matters. The adjustment of the financing
agreements was another important topic. The Audit Committee
also prepared the invitation to tender for the audit of the financial
statements.
Furthermore, the Audit Committee approved certain individual
allowable non-audit services that may be provided by the
statutory auditors (at PwC).
The General and Nomination Committee held four meetings and
seven telephone conferences in 2019. It initially focused on the
remuneration system for the Management Board, which had been
criticized by voting rights advisors and was rejected by the 2019
Annual General Meeting, and the Remuneration Report. The
General and Nomination Committee developed a new
remuneration system together with external consultants. The
General and Nomination Committee prepared the Supervisory
Board’s resolution on Bernd Kleinhens’ departure and its terms
as well as the interim assumption of the rights and responsibili-
ties of the Chairman of the Management Board by Dr. Michael
Schneider, and subsequently led the search for an alternative
candidate for the position of Chairman of the Management Board
and the preparations for the search for a new CFO.
Activities of the Strategy Committee
The newly established Strategy Committee met twice in 2019.
At its first meeting, it initially defined the topics and structures of
the committee. In terms of its content, the committee dealt, among
other matters, with the structure of the industry segments, the
markets of relevance to NORMA Group and the long-term stra-
tegic planning based on an analysis of changing environmental
conditions, NORMA Group’s foresight management and the
effects of climate change on NORMA Group’s business
Attendance of meetings, no conflicts of interest
calls, Dr. Knut Michelberger and Mark Wilhelms were both excused
from two calls each and Lars Berg, Rita Forst and Erika Schulte
from one call each. Günter Hauptmann participated in all six con-
ference calls. Members of the Supervisory Board who were unable
to participate directly in a telephone conference subsequently
approved the resolutions adopted or were represented in the
resolution. All members of the Audit Committee, Dr. Knut
Michelberger ( Chairman) and Erika Schulte as well as Rita Forst
(until May 21, 2019) and Mark Wilhelms (since May 22, 2019)
participated in the three meetings and four conference calls held
by the Audit Committee in 2019.
The four meetings and seven telephone conferences of the
General and Nomination Committee in 2019 were each attended
by all members, Lars Berg (Chairman), Günter Hauptmann and
Dr. Knut Michelberger.
All members of the Strategy Committee, Günter Hauptmann
(Chairman), Rita Forst and Erika Schulte, also attended the two
meetings of the Strategy Committee in 2019.
There were no conflicts of interest between members of the
Supervisory Board and the Company in fiscal year 2019. Dr. Knut
Michelberger and Günter Hauptmann are members of an advisory
board of a company that competed insignificantly with
NORMA Group. The Chairman of the Supervisory Board, the two
members of the Supervisory Board and the Management Board
had already discussed whether conflicts of interest could arise
from this activity and how they should be dealt with in such a
case. No conflicts of interest arose from these positions; from
today’s perspective, no competitive situation currently exists.
Information on the auditor
in addition to of the Audit Committee meetings, the Chairman of
the Audit Committee was in regular personal and telephone
contact with the CFO and the auditors to discuss possible areas
of emphasis for the audit of the 2019 Annual Financial Statements
All members of the Supervisory Board attended the four
Supervisory Board meetings and one closed meeting in 2019.
Due to the urgency of decisions, many conference calls had to be
arranged at very short notice, so that not all members of the
Supervisory Board were able to participate. Of the six conference
The 2019 Annual Financial Statements for NORMA Group SE
presented by the Management Board along with the Management
Report and the corresponding Consolidated Financial Statements
and Consolidated Management Report were audited by the
35
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING auditing firm PricewaterhouseCoopers GmbH Wirtschaftsprü-
fungsgesellschaft. The audit mandate for the 2019 financial state-
ments was issued on November 29, 2019.
The auditors Thomas Tilgner and Benjamin Hessel attended the
Supervisory Board meeting on the approval of the 2019 Financial
Statements on March 19, 2019, and the preparatory meeting of
the Audit Committee. They were succeeded by Stefan Hartwig
and Richard Gudd (from March 2019), who attended two Audit
Committee meetings on the respective agenda items relating to
the audit.
Approval of the 2019 Annual Financial Statements
and the Separate Non-Financial Statement for the
Group
The Consolidated Financial Statements of NORMA Group SE were
prepared in accordance with Section 315e of the German
Commercial Code (Handelsgesetzbuch, HGB) on the basis of
International Financial Reporting Standards (IFRS) as adopted in
the EU. The auditor issued an unqualified opinion for the 2019
Annual Financial Statements and Management Report of
NORMA Group SE as well as for the Consolidated Financial
Statements and Consolidated Management Report. The
documents pertaining to the financial statements, the
Management Board’s proposal for the appropriation of net profit
and both auditors’ reports were submitted to the Supervisory
Board. The Audit Committee and the Supervisory Board in its
entirety thoroughly examined the reports and discussed and
scrutinized them in detail together with the auditor. The
Supervisory Board accepted the auditor’s findings and had no
objections.
Reports at its meeting on March 24, 2020. The Supervisory Board
approved the proposal on the appropriation of profits by the
Management Board. NORMA Group SE’s Annual Financial
Statements are thereby adopted in accordance with Section 172
of the German Law on Stock Corporations (Aktiengesetz, AktG).
in fiscal year 2019. The Supervisory Board is confident that
NORMA Group will continue to develop positively in fiscal year
2020 and wishes the Management Board and its employees all
the best.
Maintal, March 24, 2020
Lars Magnus Berg
Chairman of the Supervisory Board
The Audit Committee and Supervisory Board also dealt with the
separate Group Non-Financial Report for NORMA Group prepared
by the Management Board as of December 31, 2019. The auditing
firm PricewaterhouseCoopers GmbH has conducted a limited
assurance test and issued an unqualified audit opinion. The
Management Board explained the documents in detail during the
meetings, while the representatives of the auditor reported on
the main findings of their audit and answered further questions
from the members of the Supervisory Board. The Supervisory
Board had no objections after reviewing these results.
Declaration of Conformity with the German
Corporate Governance Code
The Supervisory Board and Management Board dealt with the
requirements of the German Corporate Governance Code and
ratified the following Declaration on December 20, 2019:
“NORMA Group SE has complied with the recommendations of
the German Corporate Governance Code as amended on February
7, 2017 (published on April 24, 2017), by the German Federal
Ministry of Justice in the official section of the German Federal
Gazette (‘Bundesanzeiger’) since its last Declaration was sub-
mitted and will continue to comply with the recommendations.”
The Corporate Governance Declarations made by
NORMA Group SE are available on the Company’s website at
WWW.NORMAGROUP.COM/CORP/EN/I NVESTORS /.
The Supervisory Board then approved the 2019 Annual Financial
Statements of NORMA Group SE and the 2019 Consolidated
Financial Statements together with their respective Management
The Supervisory Board would like to thank all employees of
NORMA Group all over the world along with the Management
Board for their personal efforts and successful work once again
36
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Corporate Governance Report
The following is the Management Board’s and Supervisory
Board’s Declaration of Conformity in accordance with Section
289f of the German Commercial Code (Handelsgesetzbuch, HGB)
and the rules of the German Corporate Governance Code. The
management of NORMA Group is dedicated to achieving sus-
tained economic success while complying with the Company’s
social responsibility. Transparency, responsibility and sustainabil-
ity are the principles that determine its actions.
1.
Declaration of Conformity with the German
Corporate Governance Code (GCGC)
The Supervisory Board and Management Board of NORMA Group
SE have thoroughly examined which of the German Corporate
Governance Code’s recommendations and suggestions
NORMA Group SE should follow and explains deviations from the
recommendations and the reasons for deviating from the Code.
The current Declaration dated December 20, 2019, as well as all
the other Declarations are published on NORMA Group’s website.
2.
WWW. N ORM AG ROUP.COM/COR P/E N/IN VESTORS /
The Declaration dated December 20, 2019, is presented below:
With the following exceptions, NORMA Group SE has complied
since its last declaration was submitted, and will continue to
comply, with the recommendations of the German Corporate
Governance Code as amended on February 7, 2017 (published
on April 24, 2017, by the German Federal Ministry of Justice in the
official section of the German Federal Gazette) (‘Bundesanzeiger’):
With respect to the compensation of the members of
the Management Board, the Supervisory Board does
not take into account the compensation of the upper
management or the workforce as a whole (Section 4.2.2
para. 2 GCGC).
When determining the compensation of the Management
Board, the Supervisory Board, advised by an external
remuneration expert, also took into account the compensation
structure of the Company as well as the entire NORMA Group.
Due to NORMA Group’s dynamic development, the Supervisory
Board has so far not explicitly defined the upper management
or the workforce as a whole and, therefore, does not take
these groups or their development over time into account.
Under service agreements with members of the
Management Board, the remuneration of the Manage-
ment Board is not capped, either in total or in terms of
its variable compensation elements (Section 4.2.3 para.
2 sentence 7 GCGC).
The Supervisory Board may grant in its sole discretion a
special bonus for extraordinary achievements that is not lim-
ited by a maximum amount. The Supervisory Board does not
believe such a maximum amount to be required because the
Supervisory Board can ensure by specifically exercising its
discretion that the requirement of adequacy under Section
87 para. 1 of the German law on stock corporations is
complied with. To this day, the Supervisory Board has never
granted such a special bonus before.
Apart from that, the agreements with all current members of
the Management Board that were entered into since 2015
comply with the recommendations pursuant to Section 4.2.3
para. 2 sentence 7 of the GCGC.
In addition, the management service agreements that were
entered into prior to 2015 depart from the recommendations
pursuant to Section 4.2.3 para. 2 GCGC as follows:
The maximum gross option profit from the Matching Stock
Program (MSP) for the Management Board is limited in total
to a percentage of the average annual (adjusted) EBITA during
the vesting period; so, a relative maximum limit that is
dependent on the Company’s success is applied rather than
a maximum monetary amount.
The maximum amount of the long-term variable remuneration
under the Long-Term Incentive Program is limited to 250% of
the amount that results based on the three-year average
value of the (adjusted) annual EBITA or the free cash flow
that the Company has budgeted multiplied by the respective
bonus percentages set in the employment contract.
Under these programs, payments are still made to former
members of the Management Board.
3.
Two members of the Supervisory Board have already
reached the regular age limit (Section 5.4.1 para. 2
sentence 2 half sentence 4 GCGC).
The tenure of a Supervisory Board member shall not be
extended beyond his or her 70th birthday. Mr. Berg and Dr.
Michelberger are already older than 70. The Supervisory
Board is of the opinion that there is currently no reason to
prematurely end these mandates prior to the end of the
tenure. Membership in the Supervisory Board should mainly
depend on abilities and actual capacities.
37
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Publication of information in accordance with the
Section 289f of the German Commercial Code
The Remuneration Report for the last fiscal year, the auditor’s
report, the applicable remuneration system and the last remu-
neration resolution are publicly available on the website
W W W. N O R M AG R O U P.C O M / C O R P/ E N / I N V E S TO R S / O N L I N E - A N N U A L-
REPORT/
In addition, the rules of procedure of the Management Board and
the website
Supervisory Board are available on
WWW. NORMAGROUP.COM /COR P/E N/IN VESTORS /
Allocation of competences between the Management
and the Supervisory Board
NORMA Group SE uses a similar type of dual management system
that German stock corporations use. Here, the Supervisory and
Management Boards are separate bodies that have different
functions and powers. The Management Board manages the
Company under its own responsibility. The Supervisory Board
appoints, advises, monitors and dismisses members of the
Management Board.
The Management Board provides the Supervisory Board with
regular updates about its business policies, how the business is
developing, the position of the Company and any transactions
that could have a significant impact on profitability or liquidity.
The Management Board reports the key figures of the Group and
the current course of business to the Supervisory Board on a
monthly basis, in particular with regard to the published guidance
on the expected development of the Company. Based on the
written documents that were submitted to the Supervisory Board
in advance, the members of the Management Board report in
great detail on business developments and provide an outlook
on the expected future development of NORMA Group at the
Supervisory Board meetings. Other recurring topics at all meetings
include the monthly and quarterly figures, risk analysis and
measures aimed at minimizing any risks that had been detected,
reports by the respective Committee Chairmen on the previous
meetings held and strategic projects. All Management Board
members participate in the Supervisory Board meetings. The
Supervisory Board convenes separately before or after meeting
with the Management Board.
The Chairman of the Supervisory Board and the Chairman of the
Management Board coordinate the collaboration of the two
Boards. They also remain in regular contact between Supervisory
Board meetings and discuss current corporate governance issues.
The Chairman of the Audit Committee and the CFO also confer
on these matters.
In accordance with the legal requirements, the bylaws of the
Management Board and NORMA Group’s Articles of Association,
the Supervisory Board must approve certain important
transactions before they can be executed by the Management
Board and the Company’s employees. This applies not only to
measures at NORMA Group SE, but also to measures at its
subsidiaries. In order to ensure that the Management Board is
promptly informed of corresponding matters involving subsidiaries
so that it can request the approval of the Supervisory Board, a
hierarchical system of approval requirements organized by
functional areas, levels of responsibility and countries applies
worldwide at NORMA Group.
Management Board and regional management
The Management Board of NORMA Group SE is comprised of
two members: Dr. Michael Schneider (Chairman of the
Management Board and until further notice Chief Financial
Officer) and Dr. Friedrich Klein (Chief Operating Officer).
Responsibilities of the
Management Board
Dr. Michael Schneider,
Chairman (CEO, until further
notice also CFO)
Dr. Friedrich Klein,
Member of the Management
Board (COO)
T005
Legal and M&A
Risk Management
Compliance & Internal Auditing
Corporate Responsibility
Personnel
Group Development
Group Communications
Sales
Price Development
Product Management
Marketing
Regional Organization
Finance & Reporting
Controlling
Insurances
Treasury
Investor Relations
Production
Purchasing
Supply Chain Management
Global Excellence
Information & Communication
Technology (ICT)
Quality Assurance
ESG (Environment, Social, Gov-
ernance)
EHS (Environment, Health and
Safety)
Research and Development
Product Development
Product Management
Product Design
Technology Development
Project Management
38
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Bernd Kleinhens was responsible for Human Resources, Group
Development, Group Communications, Business Development,
including Sales, Marketing, Research and Development, Product
Development, Price Development and Product Management
before he left the Company on July 31, 2019.
The Supervisory Board must approve any transactions between
NORMA Group companies on the one hand and a member of the
Management Board, related parties or businesses on the other
hand. No such transactions took place in 2019.
engineering teams and project management primarily work
together on a cross-regional basis.
Supervisory Board: members, election and independence
In general, Management Board resolutions are passed by simple
majority. The Chairman has the deciding vote if the vote is tied.
However, the members of the Management Board are obliged to
make an effort to reach unanimous decisions. If a member of the
Management Board cannot participate in a vote, his vote will be
obtained at a later date. The entire Management Board is
responsible for matters of particular importance. In accordance
with the Management Board bylaws, these include the following
matters: producing the Management Board reports for the
purpose of informing the Supervisory Board and the quarterly
and half-yearly reports, fundamental organizational measures,
including the acquisition or disposal of significant parts of
companies and strategic and business planning issues, measures
related to the implementation and supervision of a monitoring
system pursuant to Section 91 (2) of the German law on stock
corporations, issuing the Declaration of Conformity pursuant to
Section 161 (1) of the German law on stock corporations, preparing
the Consolidated and Annual Financial Statements and similar
reports, convening the Annual General Meeting and inquiries and
recommendations by the Management Board that will be handled
and resolved by the Annual General Meeting. In addition, every
Management Board member may request that a specific issue
be dealt with by the entire Management Board. The Management
Board did not form any committees. Board meetings are usually
held at least once a month.
The Supervisory Board must also approve any secondary activities
by a member of the Management Board. It had already agreed
that CEO Dr. Schneider may continue to be a member of the
Supervisory Boards of two German companies. Dr. Klein does not
perform any secondary activities that are subject to approval.
The rules of procedure of the Supervisory Board provide that the
term of office of a member of the Management Board should not
be extended beyond his or her 65th birthday. Both members of
the Management Board are under 65 years of age and will not
reach 65 years of age during the term of their contracts.
The Supervisory Board has not yet decided on any long-term
succession planning for the Management Board.
Local Presidents in the three regions EMEA, Americas and APAC
are responsible for carrying out business on a daily basis. These
three Presidents report directly to the Chairman of the Management
Board. The entire Management Board of NORMA Group SE meets
at least once a year with the Presidents and their managers at
the local headquarters – Singapore for the Asia-Pacific region,
Auburn Hills, Michigan, for the Americas, and Maintal for the EMEA
region. In addition, individual members of the Management Board
meet regularly with the local teams. The managers at
NORMA Group work in a matrix structure in which they have both
a disciplinary as well as a technical supervisor.
Every Board member is obliged to inform the Supervisory Board
immediately, but also the other members of the Management
Board, of any conflicts of interest. No such conflicts of interest
arose for a Board member in 2019.
In order to improve cross-regional cooperation, Product
Management, Product Design, Technology Development and
Project Management were created as new global functions in
2019. In this complementary structure, employees from
The Supervisory Board of NORMA Group SE is comprised of the
following six members:
• Lars M. Berg (Chairman of the Supervisory Board)
• Erika Schulte (Vice Chairwoman of the Supervisory Board)
• Günter Hauptmann
• Rita Forst
• Dr. Knut J. Michelberger
• Mark Wilhelms
They are all representatives of the shareholders. NORMA Group
SE is not a codetermined Company; therefore, employee
representatives are not represented on its Supervisory Board.
The members of the Supervisory Board are elected by the Annual
General Meeting. As the Supervisory Board had only five mem-
bers after the 2018 Annual General Meeting, Mark Wilhelms was
appointed by the court to serve as the sixth member in August
2018. Mark Wilhelms was then elected to the Supervisory Board
at the 2019 Annual General Meeting. His term of office ends at
the Annual General Meeting that resolves on the discharge of the
Supervisory Board for fiscal year 2023, but for no longer than six
years. The appointment of the other current Supervisory Board
members took place upon their election at the Annual General
Meeting on May 17, 2018, and ends with the conclusion of the
Annual General Meeting that resolves on the discharge of the
Supervisory Board for fiscal year 2022, but for no longer than six
years.
All members of the Supervisory Board are independent as defined
in Section C7/No. 5.4.2 of the GCGC. No member of the Supervisory
Board or close family member was previously a member of the
Management Board of NORMA Group SE or a member of the
39
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING management of one of its predecessor companies, or had a
material business relationship with NORMA Group SE or any of
its dependent companies, either directly or indirectly as a
shareholder or in a responsible capacity of a company outside
the Group, or is a close family member of a member of the
Management Board in the year preceding his or her appointment.
Three of the six members, Lars Berg, Günter Hauptmann and Dr.
Knut Michelberger, have been members of the Supervisory Board
of NORMA Group SE (or, prior to the conversion of NORMA Group
AG into NORMA Group SE in 2013, the Supervisory Board of
NORMA Group AG) since 2011, Erika Schulte has been a mem-
ber of the Supervisory Board since 2012, while Rita Forst and
Mark Wilhelms have been members of the Supervisory Board
since 2018, so that all members have been on the Supervisory
Board for less than twelve years.
There are no contracts for consulting or other services or work
between NORMA Group companies and a member of the
Supervisory Board.
The rules of procedure of the Supervisory Board stipulate that the
term of office of a Supervisory Board member should not extend
beyond his or her 70th birthday. Lars Berg and Dr. Knut
Michelberger have already exceeded this age limit.
All members of the Supervisory Board are obligated to report any
conflicts of interest. Significant and not merely temporary conflicts
of interest for members of the Supervisory Board should lead to
the termination of the mandate. No such conflicts of interest arose
in 2019.
The Chairman of the Supervisory Board represents the Supervisory
Board externally. He organizes the work of the Supervisory Board
and chairs its meetings. The Supervisory Board can pass
resolutions by simple majority, whereby the Chairman has the
deciding vote if a vote is tied.
The Supervisory Board evaluates its work annually as part of an
efficiency review, most recently in the spring of 2019. This was
carried out on the basis of a questionnaire and without the
involvement of other external consultants.
In fiscal year 2019, four ordinary meetings were held with the
Management Board and there was one closed meeting of the
Supervisory Board. All members of the Supervisory Board
attended these meetings. In addition, six telephone conferences
were held. Many of these conference calls had to be arranged at
very short notice due to the urgency of the decisions, so that not
all members of the Supervisory Board were able to participate.
Dr. Knut Michelberger and Mark Wilhelms were therefore excused
on two calls each, Lars Berg, Rita Forst and Erika Schulte on one
conference call each. Where they were unable to participate
directly in telephone conferences, they subsequently approved
the resolutions adopted or were represented in the resolution.
Günter Hauptmann participated in all six conference calls.
The Supervisory Board has three committees: the Audit
Committee, the General and Nomination Committee and the
Strategy Committee, which was newly established in May 2019.
The Audit Committee deals in particular with monitoring the
accounting process and the effectiveness of the internal control
and risk management systems as well as the audit of the Annual
Financial Statements, in particular through the independence of
the auditor, the additional services rendered by the auditor,
engaging the auditor, determining areas of audit emphasis and
agreeing to the auditor’s fees. The Audit Committee accompanies
the collaboration between NORMA Group SE and the auditors
and ensures that opportunities for improvement identified during
the audit are promptly implemented. It is responsible for preparing
the accounting documents and adopting the Supervisory Board’s
resolution on the consolidated and separate financial statements.
Moreover, it is responsible for compliance and reviews the
compliance with statutory provisions and the internal guidelines.
Dr. Knut Michelberger is the Chairman of the Audit Committee.
Its other members are Erika Schulte and, up until the 2019 Annual
General Meeting, Rita Forst, and Mark Wilhelms since
May 22, 2019. Mark Wilhelms and Dr. Knut Michelberger are inde-
pendent financial experts within the meaning of Section 100 para.
5 of the German Stock Corporation Act (AktG). Due in particular
to their many years of experience as a Chief Financial Officer and
Managing Director, they have special knowledge and experience
in the application of accounting principles and internal control
procedures.
Three meetings of the Audit Committee and four telephone
conferences were held in fiscal year 2019. All Audit Committee
members took part in the meetings and telephone conferences.
The General and Nomination Committee prepares personnel-
related decisions for the Supervisory Board with regard to the
composition of the Management Board and the Supervisory
Board. This committee has the following specific responsibilities:
preparing Supervisory Board resolutions regarding the formation,
amendment and termination of employment contracts with
members of the Management Board in accordance with the remu-
neration system approved by the Supervisory Board, preparing
Supervisory Board resolutions regarding legal applications to
reduce the remuneration of a Management Board member
pursuant to Section 87 (2) AktG, preparing Supervisory Board
resolutions regarding the structure of the remuneration system
for the Management Board, acting as representatives of the
Company to Management Board members who have left the
Company pursuant to Section 112 AktG, approving secondary
employment and external activities for Management Board
members pursuant to Section 88 AktG, granting loans to the
persons specified in Section 89 AktG (loans to members of the
Management Board) and Section 115 AktG (loans to members
of the Supervisory Board), approving contracts with members of
the Supervisory Board pursuant to Section 114 AktG and
proposing suitable candidates to the Annual General Meeting
when there is a vote on Supervisory Board members.
40
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Other mandates of the Supervisory Board members
T006
Supervisory Board member, exercised office
Other mandates on Supervisory Boards and comparable committees
Lars M. Berg (Chairman),
Consultant
Chairman of the Supervisory Board of Greater Than AB, Stockholm,
Sweden (listed on the stock exchange)
Erika Schulte, (Vice-Chairwoman),
Managing Director of Hanau Wirtschaftsförderung GmbH
No seats on other boards or comparable committees
The General and Nomination Committee is comprised of the
Chairman of the Supervisory Board, Lars Berg (Chairman of the
General and Nomination Committee), Günter Hauptmann and
Dr. Knut Michelberger. The committee held four meetings and
seven telephone conferences in 2019 that all members partici-
pated in.
The Supervisory Board established a Strategy Committee with
effect from May 22, 2019. The Strategy Committee advises the
Management Board on NORMA Group SE’s strategy, restructur-
ing, organic growth, mergers and divestitures and new
technologies.
Günter Hauptmann (Chairman), Rita Forst and Erika Schulte are
the members of the Strategy Committee. This committee held
two meetings in 2019, both of which were attended by all
members.
D&O insurance
Rita Forst,
Consultant
The company has also taken out D&O insurance for the members
of the Supervisory Board and the Management Board. The
deductible amounts to 10% of the loss up to an amount of 150%
of the fixed annual remuneration of the member of the
Management Board or Supervisory Board.
Günter Hauptmann,
Consultant
Dr. Knut J. Michelberger,
Consultant
Other mandates of the Supervisory Board members
Exercised professions and other mandates on Supervisory Boards
or comparable Supervisory Bodies of the members of
NORMA Group’s Supervisory Board in fiscal year 2019 are shown
in
TA BL E 0 06.
Mark Wilhelms,
Chief Financial Officer at Stabilus S.A.
Member of the Supervisory Board (Non-Executive Director) of AerCap
Holdings N.V., Dublin, Ireland (listed on the stock exchange) – since April
2019
Member of the Advisory Board of Joh. Winklhofer Beteiligungs GmbH & Co.
KG, Munich, Germany (not listed on the stock exchange)
Member of the Supervisory Board of ElringKlinger AG, Dettingen an der
Erms, Germany (listed on the stock exchange)
Member of the Advisory Board of Westport Fuel Systems Inc., Vancouver,
Canada (listed on the stock exchange)
Member of the Advisory Board of Metalsa, S.A. de C.V., Monterrey, Mexico
(not listed on the stock exchange) – until May 2019
Member of the Advisory Board of Moon TopCo GmbH, Poing, Germany
(not listed on the stock exchange)
Member of the Supervisory Board of Weener Plastics Group, Ede, The
Netherlands (not listed on the stock exchange)
Member of the Advisory Board (Deputy Chairman) of Racing TopCo GmbH,
Troisdorf, Germany (not listed on the stock exchange)
Member of the Advisory Board of Kaffee Partner Holding GmbH,
Osnabrück, Germany (not listed on the stock exchange)
Member of the Advisory Board of Tegimus Holding GmbH, Frankfurt,
Germany (not listed on the stock exchange)
Member of the Advisory Board of Moon TopCo GmbH, Poing, Germany
(not listed on the stock exchange)
No seats on other boards or comparable committees
41
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Targets for the share of women
As early as 2015, the Supervisory Board of NORMA Group SE
had set targets for the Supervisory Board and Management Board
of NORMA Group SE and the Management Board for the
management level of NORMA Group SE below the Management
Board as well as a time limit for implementing them. These targets
were adjusted as follows in 2017:
management level at at least 25%. This neither meant a reduction
in the share of women nor ruled out the possibility that the share
of women would rise to over 50%. In fact, the share of women
rose from 50% to 60%. Among the total of five persons (previously
four) who now form the first management level below the
Management Board, there are now three women. The target figure
of 25% was thus exceeded. NORMA Group SE does not have a
second management level for which the Management Board
would also have had to set targets.
The target figure for the share of women on the Supervisory Board
is two female members (out of a total of six). For the Management
Board, the target is zero. For the top management level of
NORMA Group SE, the target figure is a 25% share of women.
The aforementioned new targets are expected to apply until June
30, 2022. They were all achieved or exceeded in fiscal year 2019.
At NORMA Group, targets for the Management Board, the
Supervisory Board and the top two levels of management were
also set for another company, NORMA Germany GmbH. This
company is not listed, but codetermined, and is headed by a
Managing Director.
The Management Board is currently comprised solely of men. The
target figure for the share of women on the Management Board
was set at zero in 2017 because the Supervisory Board assumed
at the time that no new members would be appointed to the
Management Board before 2022 and it would therefore be
impossible to appoint a woman. The Board did not want to set a
target figure that, from the perspective of that time, could not
have been met. According to the rules of procedure of the
Supervisory Board, the Supervisory Board is to pay attention to
diversity in the composition of the Management Board. In the
context of the current search for a new member of the Management
Board, the Supervisory Board is ensuring that female candidates
are also explicitly included in the selection process. The outcome
of this search is still open.
At NORMA Group SE, the first management level comprises all
persons who are Executive Vice Presidents or Vice Presidents,
report directly to the Management Board, assume management
responsibilities and bear personnel responsibility. Although the
share of women in the first management level was 50% when
the resolution was passed in 2017 (as in 2015), the Management
Board had set the target figure for the share of women in the first
Competence profile, no separate diversity concept
The objectives for the composition of the Supervisory Board
include that all members be independent, no member works for
a competitor of NORMA Group, no member who is on the
Management Board of a listed company has more than two
Supervisory Board mandates in listed companies, no member of
the Supervisory Board has significant conflicts of interest and
each member complies with a statutory limit of 15 years for the
term of office. These goals have all been met. In addition, the
Supervisory Board should pay attention to international activities
and diversity in proposals for the election of new members. The
Supervisory Board has one Swedish member while the other
members are German citizens. The current members satisfy the
competence profile for the Supervisory Board as a whole. Some
members have special knowledge of the industry and
NORMA Group’s markets, in particular the automotive industry,
and NORMA Group’s business model. Several members have
experience as executives or members of Supervisory Boards as
well as international experience. At least one member has
expertise in accounting, auditing and controlling. Other areas in
which members of the Supervisory Board have special knowledge
include risk management, internal control systems and compliance,
capital market experience and knowledge of IT systems, including
ERP systems. The members of the Supervisory Board also have
sufficient time to perform their duties.
No separate diversity concept within the meaning of Section 289f
(2) No. 6 HGB has been prepared for the Supervisory and
Management Boards of NORMA Group SE. The rules of procedure
of the Supervisory Board already stipulate that certain aspects,
which the law cites as an example of a concept of diversity, should
be taken into consideration in the case of nominations for the
elections to the Supervisory Board and the appointment of
Management Board members. Diversity should be taken into
account in the composition of the Management Board as well as
in election proposals for the election of Supervisory Board
members. Further requirements for the Supervisory Board already
arise from the goals and rules of the procedure described above.
The Management Board also has an age limit of 65, which is met
by all members.
Shareholders and Annual General Meeting
The shareholders of a Societas Europaea decide on the Company’s
important and fundamental matters. The shareholders exercise
their voting rights at the Annual General Meeting, which takes
place at least once every year. The Annual General Meeting
decides on how earnings will be distributed, the discharge of the
Management Board and the Supervisory Board, the election of
the auditor, but also on amendments to the Articles of Association
and other topics.
Shareholders are entitled to vote if they are registered in the
shareholders’ register of NORMA Group SE and provide
NORMA Group SE or another location specified in the invitation
with written notice, in German or English, at least six days before
the Annual General Meeting that they will be attending. Each
share entitles the bearer to one vote.
42
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING 43
NORMA Group SE publishes the invitation and all documents that must be made available at the Annual General Meeting promptly on its website. Information regarding the number of attendees and the voting results are published there following the Annual General Meeting. WWW.NORMAGROUP.COM/CORP/EN/INVESTORS/AGM/Shareholdings of the Management and Supervisory Board Of the total of 31,862,400 shares in NORMA Group SE, the current members of the Management Board held together 0.03% of the shares on December 31, 2019. The current members of the Supervisory Board held no shares. Directors’ DealingsMembers of the Management Board and the Supervisory Board and related parties are obliged to disclose Directors’ Dealings in NORMA Group SE shares if the value of these transactions reaches or exceeds EUR 5,000 or EUR 20,000 from January 1, 2020, on. The following transactions were reported as Directors’ Dealings in 2019: Directors’ DealingsT007Buyer / SellerType of financial instrumentType of trans-actionDate of transactionPlace of transactionAverage price per shareVolumeTotal valueBernd Kleinhens, CEO 1Share (DE000A1H8BV3)PurchaseMay 13, 2019Tradegate ExchangeEUR 38.541,300 sharesEUR 50,102.00Dr. Michael Schneider, CEO 2Share (DE000A1H8BV3)PurchaseMay 14, 2019Tradegate ExchangeEUR 38.30722,650 sharesEUR 101,514.08Dr. Friedrich Klein, COOShare (DE000A1H8BV3)PurchaseJune 11, 2019Stuttgart Stock Exchange – Sparkasse ALKEUR 36.94500 sharesEUR 18,470.001_CEO until the end of July 31, 2019.2_CEO since November 2019, formerly CFO.Stock option plans and equity-based incentive programs The principles of management remuneration are described in the Remuneration Report which is part of the Management Report. REMUNERATION REPORT, P. 102A Long-Term Incentive Program (LTI) was introduced in fiscal year 2013 for the second management level that allows employees to participate in NORMA Group’s success over the medium term. ComplianceNORMA Group’s compliance organization seeks to prevent violations of laws and other rules, in particular through preventive measures. Nevertheless, if there is evidence of violations, these matters are investigated promptly and thoroughly and the necessary consequences are taken. Findings will be used to take steps to reduce the risk of future violations. Group-wide compliance activities are managed by the Chief Compliance Officer of NORMA Group, who reports to the CEO. In addition to the Compliance Department in place at Group level, there are compliance officers at the regional and company levels. The three regional Compliance Officers for the EMEA, Americas and Asia-Pacific regions report to the Chief Compliance Officer. In addition, each operating Group company has its own local Compliance Officer, who reports to the respective Regional Com-pliance Officer. The Supervisory Board monitors compliance with the compliance rules vis-à-vis the Management Board. The compliance organization conducts risk analyzes together with the relevant units, functions and departments in order to determine and monitor the risk profile of countries, Group companies and functions. On this basis, it identifies the need for action and initi-ates corresponding measures. Specific employee training courses are held regularly on selected risk areas and important current topics or developments. In 2019, for example, the Compliance Department coordinated a global data protection training course and conducted on-site training sessions at select locations NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING focusing on corruption prevention. Besides training on specific
focus topics, all employees worldwide are trained on the basic
compliance rules and important contents of the compliance guide-
lines (in personal or online training sessions), and participation in
these training courses is monitored. In fiscal year 2019, the global
training concept was also revised and the content of the online
training courses updated. The updated training courses will be
available to employees in the new fiscal year 2020. In addition,
employees regularly receive relevant, up-to-date compliance
information on a case-by-case basis via various information
channels such as the intranet site, brochures, e-mails or notices.
The compliance guidelines of NORMA Group are an important
means of communicating to employees the compliance
understanding of NORMA Group and of demonstrating their
ethical and legal obligations. All compliance documents are
reviewed regularly and, if necessary, adapted to new legal or
social requirements and thus always kept up to date. Such a
comprehensive review and update of the guidelines was carried
out in fiscal year 2019. Particular attention was paid to updating
the content as well as to practice-oriented and easily understand-
able presentation of the contents. The updated guidelines will be
made available to employees in the coming fiscal year. Suppliers
have their own ‘Supplier Code of Conduct.’ It is intended to help
ensure that laws and ethical rules are observed within the
NORMA Group supply chain. This was also reviewed and updated
in fiscal year 2019 and will be made available in fiscal year 2020.
A compliance manual also defines in detail the specific areas of
responsibility and regulatory areas, describes basic compliance
processes, and provides a summary of key compliance issues
related to the corresponding compliance guidelines. The compli-
ance manual, as well as the compliance guidelines, are reviewed
regularly for changes and updated, if necessary.
NORMA Group encourages its employees to report breaches of
regulations and internal policies for all hierarchies. Besides directly
approaching superiors, the personnel department or Compliance
Officers, an Internet-based ‘whistleblower system’ is available for
this purpose. With this whistleblower system, company-internal
and external parties can report suspicious cases to the compliance
organization of NORMA Group and, if necessary, preserve their
anonymity. The electronic whistleblowing system currently in use
was also subjected to a comprehensive conceptual review in fiscal
year 2019. In the future, the system will be expanded to include
supplementary functionalities that provide the compliance
function with an integrated compliance tool. This will not only
further improve the procedure of processing reports, but will also
successively map additional compliance processes with system
support. This is intended to increase the effectiveness and
efficiency of the processes as well as the user-friendliness for
employees.
The members of the compliance organization always follow up
on references to compliance violations. If violations of compliance
rules are discovered or weaknesses in the organization are
identified, management takes the necessary action promptly in
cooperation with the compliance organization. Depending on the
individual case, these measures range from targeted additional
training and changes in organizational processes to disciplinary
means, including termination of employment.
Corporate Responsibility and ESG
As Corporate Responsibility and ESG issues become more import-
ant, the Supervisory Board, Management Board and employees
are paying more attention than ever to the resulting aspects. For
example, NORMA Group is focusing on water management and
the transformation to more environmentally friendly drive
systems. The strategy and specific goals of Corporate
Responsibility are explained in particular in the separate
non-financial Group Report. On the Management Board,
Dr. Michael Schneider is responsible for Corporate Responsibility
and Dr Friedrich Klein for ESG.
Information on the auditor and internal rotation
PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft
(PwC), Frankfurt/Main, audited the financial statements of
NORMA Group SE and its predecessor companies as well as the
Consolidated Financial Statements for the fiscal years 2010 to
2019. Furthermore, PwC retroactively audited the years 2009
and 2010 for the prospectus as part of the IPO in 2011.
Following the internal rotation at PwC, Mr. Stefan Hartwig acted
as the auditor signing on the left and Richard Gudd as the auditor
signing on the right for fiscal year 2019. Mr. Hartwig held the
position of the responsible auditor for the first time in 2019,
Mr. Gudd already acted as the auditor signing on the right for
fiscal years 2016 and 2017.
44
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Con sol idated
Man a geme nt R epor t
46
58
82
89
102
110
112
Principles of the Group
Economic Report
Forecast Report
Risk and Opportunity Report
Remuneration Report
Other Legally Required Disclosures
Report on Transactions with Related Parties
Con solidated Ma nage me nt R ep o r t
Principles of the Group
Business model
NORMA Group is an international market and technology leader
in the area of advanced and standardized connecting technology
With its 29 production sites and numerous sales offices, the Group
has a global network with which it supplies more than 10,000
customers in more than 100 countries. NORMA Group’s product
portfolio includes more than 40,000 high-quality joining products
and solutions in the following three product categories: water
management (WATER), fluid systems and connectors (FLUID)
and clamps and joining elements (FASTEN). The products
NORMA Group offers are used across industries in a wide range
of applications, whereby the product specifications differ
depending on the application and customer requirements.
High customer satisfaction forms the foundation of NORMA Group’s
continued success. The main factors here are the customized
system solutions, the global availability of products in consistently
high quality, delivery reliability and a strong brand image.
Organizational structure
Corporate legal structure
NORMA Group SE is the parent company of NORMA Group. It
has its headquarters in Maintal near Frankfurt / Main, Germany.
NORMA Group SE serves as the formal legal holding of the Group.
It is responsible for the strategic management of business
activities. In addition, it is also responsible for communicating with
the Company’s most important target audiences as well as Legal
and M&A, Compliance, Risk Management and Internal Revision.
Group-wide central management responsibilities such as IT,
Treasury, Group Accounting and Group Controlling, for example,
are all based at the 100% subsidiary NORMA Group Holding
GmbH which is also located in Maintal. Three regional management
teams located in Auburn Hills (USA), Maintal (Germany) and
Singapore steer the specific holding activities for the three regions
Americas (North, Central and South America), EMEA (Europe,
Middle East and Africa) and Asia-Pacific (APAC).
addition to his role as Chief Financial Officer. In November 2019,
the Supervisory Board appointed Dr. Schneider as the new
Chairman of the Management Board of NORMA Group. Dr.
Schneider will also continue to serve as Chief Financial Officer
until further notice in addition to his position as Chairman. The
Management Board of NORMA Group SE thus currently consists
of two members. Dr. Friedrich Klein, Chief Operating Officer (COO),
is the other member of the Management Board. In November
2019, the Supervisory Board initiated the search for a suitable
candidate for the position of Chief Financial Officer and will most
likely decide on the position in the months to come.
As of December 31, 2019, NORMA Group SE holds shares in 51
companies that belong to NORMA Group either directly or indi-
rectly and are fully consolidated. In fiscal year 2019, there were
NOTES, P. 139
no changes of the legal structure of the Group.
Group management
NORMA Group SE has a dual management system that consists
of a Management Board and a Supervisory Board. The
Management Board manages the Company under its own
responsibility, while the Supervisory Board advises and monitors
the Management Board. In fiscal year 2019, the following
personnel changes took place in the Management Board:
In accordance with the Articles of Association, the Supervisory
Board of NORMA Group SE consists of six independent members
elected by the shareholders at the Annual General Meeting. Lars
Magnus Berg is the Chairman of the Supervisory Board. Erika
Schulte is the Deputy Chairwoman. Mark Wilhelms was elected
a member of the Supervisory Board by the Annual General
Meeting on May 21, 2019. Mark Wilhelms had already been
appointed a member of the Supervisory Board of NORMA Group
SE by court order in August 2018 after the Supervisory Board
temporarily consisted of only five members following the dismissal
of Dr. Stefan Wolf, who had served as Chairman of the Supervisory
Board for many years.
Bernd Kleinhens, Chairman of the Management Board of
NORMA Group, resigned from the Management Board by mutual
agreement effective July 31, 2019. Dr. Michael Schneider then
took over the duties of Chairman of the Management Board in
Mark Wilhelms has been a member of management of Stabilus
S.A., Luxembourg, since 2009. In 2014, he was appointed Chief
Financial Officer (CFO) of Stabilus S.A. and Managing Director of
Stabilus GmbH. Mark Wilhelms has many years of experience
and expertise in both finance and information technology (IT), for
46
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING which he was responsible at management level in the interna-
tional automotive industry.
clamps and joining elements (FASTEN). These functions have been
established globally and inter-regional in fiscal year 2019 to
improve the supraregional collaboration.
Detailed information on the composition of the Management
Board and the Supervisory Board, as well as the distribution of
responsibilities among themselves, can be found in the Corporate
Governance Report, which forms part of the Annual Report. The
Statement of Corporate Governance pursuant to Section 289f
HGB, including the Declaration of Conformity pursuant to Section
161 AktG, a description of the procedures of the Management
Board and the Supervisory Board, relevant information on
corporate governance practices and a declaration regarding the
concept of diversity to be disclosed under the CSR Directive
Implementation Act are also part of the Corporate Governance
Report.
CORPORATE GOVE RN ANCE R E PO RT, P. 3 7
Operative segmentation by regions
NORMA Group’s strategy is based, among other considerations,
on regional growth targets. In order to achieve these, the opera-
tive business is managed by the three regional segments EMEA,
the Americas and Asia-Pacific. All three regions have networked
regional and cross-company organizations with different
functions. The internal Group reporting and control system that
Management uses is also therefore quite regional in nature.
Distribution Services is based on regional and local priorities.
Products and end markets
Product portfolio
The products that NORMA Group offers can for the most part
technologically be divided into the three product categories water
management (WATER), fluid systems and connectors (FLUID) and
The WATER product portfolio includes solutions for applications
in the sectors of storm water management and landscape
irrigation, but also joining components for infrastructure solutions
in the area of water.
The FLUID products are single or multiple layer thermoplastic
plug-in connectors and fluid systems that reduce installation
times, ensure reliable flow of liquids or gases and occasionally
replace conventional products such as elastomer hoses.
NORMA Group’s fluid products are used in thermal management
systems in hybrid and electric vehicles, among other applications.
The product group FASTEN includes a wide range of clamp
products and connecting elements that are made from standard
or stainless steel and are mainly used to clamp and seal hoses
as well as to connect and to fix metal and thermoplastic pipes.
NORMA Group’s advanced Engineered Joining Technology is used
in all applications in which pipelines, tubes and other systems
need to be connected together. Because joining technology plays
a role in nearly all industries, NORMA Group serves many different
end markets. Besides the automotive, commercial vehicle, and
aviation industry, NORMA Group is also active in the construction
and mechanical engineering industry, the pharmaceutical and
biotechnology fields, agriculture and the drinking water supply
and irrigation industry. NORMA Group products are also used in
consumer products such as home appliances.
Two complementary distribution channels
NORMA Group supplies its customers via two different sales
channels,
Engineered Joining Technology – EJT
and
Distribution Services – DS.
The two distribution channels differ in terms of the degree of
specification of the products, while having intersections in
production and development. This enables cost benefits and
ensures the highest quality standards.
The area of EJT includes sophisticated, individually customized
joining technology and is particularly characterized by close
development partnerships with OEMs (original equipment
manufacturers). NORMA Group’s central development
departments and resident engineers work together with the
customer on developing solutions for specific industrial challenges.
Due to the constant proximity to customers in the area of EJT,
NORMA Group’s engineers gain comprehensive knowledge and
a deep understanding of the various challenges their end markets
and customers face. As a result, they generate substantial added
value for the customers and contribute to their economic success.
Such development partnerships result in high-technology products
that are designed not only to meet the needs of customers with
respect to efficiency and performance, but that also take aspects
such as weight reduction and quick installation into consideration.
47
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING NORMA Group (simplified structure) 1
G006
NORMA Group SE
NORMA Group
Holding GmbH
(Germany)
NORMA Group
Asia Pacific Pte. Ltd.
(Singapore)
NORMA
Pennsylvania,
Inc. (USA)
NORMA
Germany
NORMA
Serbia
NORMA
Distribution
Germany
NORMA Group
DS Polska
Groen BV
(The Nether lands)
NORMA
Czech
NORMA
Turkey
NORMA
Sweden
NORMA
France
NORMA
UK
NORMA
Distribution
France
Connectors
Verbindungs -
technik AG
(Switzerland)
NORMA
China 2
NORMA
Autoline France
Lifial
(Portugal)
NORMA
Polska
NORMA
Italy
NORMA
Spain
NORMA
Russia
Kimplas
(UK)
Statek
(Germany)
Craig Assembly
(USA)
NORMA
Michigan (USA)
NORMA EJT
(Wuxi)
NORMA
Thailand
NORMA
Australia
NORMA EJT
(China)
R. G. Ray
(USA)
NORMA Group
Mexico
National
Diversified
Sales (USA)
NORMA
Brazil
NORMA DS
Mexico
NORMA
Manufacturing
(USA)
Fengfan
(China)
NORMA Products
Malaysia
NORMA
Korea
NORMA
India
NORMA
Japan
Kimplas
(India)
1_ The graph gives an overview of the operating companies
of NORMA Group. The company names correspond to the internally used
company names. A complete list of the Group companies and
NORMA Group’s shareholdings as of December 31, 2019, can be found in
the corresponding
NOTES ON P. 139.
2_ NORMA China is organizationally assigned to the Asia- Pacific segment. In
terms of company law, it belongs to NORMA Group Holding GmbH.
48
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Market and competitive environment
Goals and strategy
Organizational structure of NORMA Group
G007
Parent company under
company law
Segments
NORMA Group SE
Asia-Pacific
Distribution
channels
Americas
Distribution
Services (DS)
EMEA
Engineered
Joining Technology
(EJT)
Via its Distribution Services (DS), NORMA Group markets a
broad range of high-quality, standardized brand products. In
addition to its own global distribution network, the Company also
relies on multipliers such as sales representatives, retailers and
importers. Its customers include, among others, distributors,
specialized wholesalers, OEM customers in the aftermarket seg-
ment, do-it-yourself stores and applications in smaller industries.
The brands ABA®, Breeze®, Clamp-All®, CONNECTORS®, FISH®,
Five Star®, Gemi®, NDS®, NORMA®, Raindrip®, R.G.RAY®, Serflex®,
TORCA® and TRUSTLENE® exemplify technological know-how,
high quality and reliability and meet the technical standards of
the countries in which they are sold.
NORMA Group combines its expertise in developing tailor-made
solutions for industrial customers (EJT) with its global sales of
high-quality standardized brand products (DS) to realize not only
cross-selling effects, but also numerous synergies in production,
logistics and sales. The Company also benefits from significant
economies of scale and scope thanks to the diversity and high
volumes of its product offerings, a clear distinction from its smaller,
generally more specialized competitors.
With its products, NORMA Group provides solutions for numerous
industrial applications. Its expertise covers thermoplastic materials
(WATER and FLUID) as well as metal-based connection solutions
and products (FASTEN). Thanks to the unique combination of
expertise in both metal and plastics processing and the broad
diversification of its product portfolio, NORMA Group can offer its
customers a wide range of solutions to different problems from
a single source and thus distinguishes itself from its competitors
who mainly specialize in individual product segments.
In the area of Engineered Joining Technology, especially in the
area of FASTEN and FLUID, NORMA Group operates in a highly
fragmented market, which is characterized by a very heteroge-
neous structure due to the abundance of specialized industrial
companies. In this environment, NORMA Group sees itself as a
provider of tailor-made, value-creating solutions that are geared
to the specific needs of the customer and are the result of long-
term development partnerships. With its international business
alignment and its cross-industry customer base, NORMA Group
distinguishes itself from its mostly regional competitors. Thanks
to its strong focus on innovation, NORMA Group offers its
customers especially temperature and pressure resistant products,
as well as weight and assembly time optimized products that
clearly stand out from the competition.
In the much more standardized sales channel Distribution
Services, NORMA Group operates in mass markets and competes
primarily with providers of similar standardized products. It
differentiates itself from them particularly through its strong
brands that are the result of a deliberate brand policy that focuses
on the regional needs of its customers. In addition, customers
appreciate the high quality of service. NORMA Group offers its
trade customers a complete range of products that meets all of
their end users’ needs as well as short delivery times and
permanent availability.
Increase in value
The long-term strategy of NORMA Group is based on the ‘Vision
2025’, which was launched by the Management Board in 2018.
The Vision 2025 includes increasing the value creation of
NORMA Group as its central objective, building on NORMA Group’s
successful entrepreneurial development and focusing on sus-
tained sales growth, profitability above the industry average and
the efficient deployment of capital. On its way to achieving these
goals, NORMA Group is pursuing a stakeholder-oriented approach
that is geared both toward the demands of its customers for
innovative and value-creating solutions and to the interests of its
shareholders and suppliers. In order to achieve these goals,
NORMA Group seeks to offer its employees an environment
geared toward continuous improvement, thereby strengthening
its position as the employer of choice. At the same time,
NORMA Group regards it as a central component of its corporate
responsibility to reconcile the effects of its business activities with
the expectations and needs of society. For this reason, the
Management Board`s goal is to base all entrepreneurial decisions
on the principles of responsible corporate management and
sustainable action. Corporate Responsibility (CR), NORMA Group’s
responsibility towards people and the environment, is therefore
regarded as an integral part of the Company strategy.
2019 CR
REPORT
NORMA Groups’ strategy for the long-term increase in value is
based on the following key objectives and strategic measures:
49
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Profitable growth
Increasing the Company’s value is the primary objective of
NORMA Group. In each regional segment and in both sales
divisions (EJT and DS), the focus is on the ongoing profitable
expansion of business activities and increasing market share. At
the heart of NORMA Group’s growth strategy is the expansion of
its product portfolio and regional presence, as well as the opening
up of new end markets. The continuous expansion of application
solutions for current EJT customers, the identification and
acquisition of new EJT customers, the deepening of the customer
base in Distribution Services (DS) and the identification of new
markets with attractive growth potential will all be used to expand
business activities and further strengthen the Group’s international
presence. In identifying new end markets, NORMA Group places
a strategic focus on niche markets with attractive margins,
advanced products, strongly growing sales potential and a
fragmented competitive structure. The goal is to achieve broad
diversification in the end markets through the targeted transfer
of knowledge to new, high-growth industries. This will strengthen
the sustainable earnings profile, the independence from economic
influences and the stability of the business. Global megatrends
such as climate change and resource scarcity offer NORMA Group
attractive growth potential. The strategic focus is therefore on
future-oriented applications in the fields of water management
and electromobility.
PRODUCTS A ND END M ARKETS, P. 47
Sales by distribution channel 1
G008
61% (63%)
EJT
39% (37%)
DS
1_Previous year’s values in brackets.
Selective product portfolio
The technological requirements placed on the end products of
NORMA Group customers are constantly changing. Increasing
environmental awareness, scarcity of resources and growing cost
pressures play a major role in almost every sector of industry.
Furthermore, the automotive and commercial vehicle industries,
in particular, are subject to stricter emission regulations and
special requirements for the materials used. This is also
accompanied by increasing technological change, away from
conventional combustion engines towards alternative powertrain
techniques such as hybrid or electromobility.
REGULATORY INFLUENC ING ASPECTS, P. 60 These form the starting
point for the development of new products. NORMA Group
focuses on value-enhancing solutions that support its customers
in reducing emissions, leaks, weight, space and assembly time.
Furthermore, NORMA Group helps its customers to optimize the
use of scarce resources, for example in water management.
Innovations play an important role in meeting the increasing
customer demands that accompany each new production cycle.
This is why NORMA Group’s more than 300 engineers and
developers are constantly working on developing new products
and optimizing the currently used processes and systems. An
L E G A L A N D
important focus here is on the development of solutions for
electromobility. This offers NORMA Group numerous opportunities,
particularly in the field of vehicle thermal management. In order
to sustainably strengthen its innovative strength, the Group plans
to invest around 5% of its EJT sales in research and development
activities each year.
RESEARCH AND DEVELOPMENT, P. 55
Although the joining products that NORMA Group sells make up
a relatively small value proportion of the final product, they are
often mission-critical. Sticking to the highest quality standards
and stringent quality management throughout the entire Group
Q U A L I T Y M A N AG E M E N T, P. 7 5 A
therefore play a crucial role.
strong brand strategy geared toward regional growth targets, as
well as ensuring first-class service quality and product
availability at all times, are also important success parameters.
NORMA Group ensures this through its worldwide sales network.
Selective acquisitions to
supplement organic growth
By making select acquisitions, NORMA Group contributes to the
diversification of its business and strengthens its growth.
Acquisitions are therefore an integral part of the Company’s long-
term growth strategy. NORMA Group observes the joining
technology market continously and contributes to its consolida-
tion through targeted acquisitions. In total, NORMA Group has
acquired 14 companies since the IPO in 2011 and integrated them
into the Group. The main focus of M&A activities is always on
companies that help to realize the diversification objectives of
NORMA Group, to strengthen its competitive position and / or to
generate synergies. The preservation of growth and high
profitability also play an important role. The search for suitable
companies focuses on the automotive and water management
sectors. Since acquiring the US water specialist National
Diversified Sales (NDS) in fiscal year 2014, NORMA Group has
built up an established market position in the fast-growing water
industry, which is to be expanded through further acquisitions in
this area.
50
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Strategic goals of NORMA Group
MARKET LEADER IN CONNECTING
AND FLUID HANDLING TECHNOLOGY
FOR EXISTING AND FUTURE MARKETS
G009
INCREASE
IN VALUE
Ove ral l
ob je c ti ves
PROFITABLE
GROWTH
SELECTIVE VALUE-ADDING
ACQUISITIONS TO SUPPLEMENT
ORGANIC GROWTH
Stra tegi c
me asure s
to ac h ieve
ob je c ti ves
INCREASE OF MARKET
SHARE THROUGH FURTHER
LOCALIZATION
SELECTIVE PRODUCT
PORTFOLIO
SUSTAINABLE ACTIONS
IN ALL BUSINESS AREAS
NEW PRODUCT DEVELOPMENTS
FOR STRONG FUTURE MARKETS
STRONG PERFORMANCE
AND CONTINUOUS
EFFICIENCY IMPROVEMENTS
HIGHEST
QUALITY REQUIREMENTS
AND STRONG
BRAND IMAGE
CLIMATE CHANGE AND SCARCITY OF RESOURCES
ARE GLOBAL MEGATRENDS WHICH FORM THE BASIS FOR
NORMA GROUP’S BUSINESS MODEL
51
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Control system and control parameters
The consistent focus on the Group objectives mentioned is also
reflected in the internal control system at NORMA Group, which
relies on both financial and non-financial control parameters.
Important financial control parameters
G010
Profitability
Important financial control parameters
Growth
Liquidity
The following value-based indicators, which have a direct impact
on value creation at NORMA Group, are among the Company’s
most important financial performance indicators: organic Group
sales growth, profitability (adjusted EBITA margin) and net
operating cash flow. These key figures form NORMA Value Added
(NOVA), a central strategic target figure. Since NOVA is also a
reference value for the long-term remuneration of the Management
Board, it was added to the control system in fiscal year 2018.
REM UNE RAT ION R EPORT, P. 1 0 2
Organic Group
sales growth
(adjusted for
acquisitions and
currency effects)
Capital Efficiency
Adjusted
EBITA margin
Adjusted EBITA
in relation to
Group sales
Net operating
cash flow
Adjusted EBITDA
+ Δ working
capital
– investments
NOVA
Adjusted EBIT
– Taxes
– Capital costs
(WACC x capital
employed)
Organic sales growth
As a growth-oriented Company, NORMA Group attaches
particular importance to profitable sales growth. The Group seeks
to achieve short- and medium-term growth above the market
average. This refers to internal growth excluding currency effects.
In addition, sales revenues from newly acquired companies are
reported separately within the first 12 months of initial
consolidation (sales revenues from acquisitions).
Due to the broad market structure in the area of joining technol-
ogy, the Management Board is guided by internal analyses as
well as studies by leading economic research institutes on the
development of the gross domestic product of the respective
regions and on the production and sales figures of the relevant
customer industries in developing the forecast on the expected
development of sales. In addition, the Management Board
observes certain early indicators, such as customer order patterns
in the retail business (Distribution Services) and the order book
in the area of Engineered Joining Technology (EJT).
Adjusted EBITA and adjusted EBITA margin
The adjusted EBITA (EBITA before special influences) is the most
important internal and external performance indicator for ongoing
operations. In order to be able to make a long-term comparison
and for a better understanding of how the business is
developing, NORMA Group adjusts the operating result by certain
expenses, for example those that are related to acquisitions.
NOTES, P. 148
Adjusted EBITA margin (EBITA as a percentage of sales) as
another key indicator for the NORMA Group provides information
on the profitability of its business activities. In order to maintain
the adjusted EBITA margin and thus the Group’s profitability at
its high level, NORMA Group continuously works on optimizing
its business processes and structures.
To determine the EBITA target margin, both the historic perfor-
mance and the planning of individual business units are taken
into consideration. The target margin for the Group is determined
as the weighted average of the divisions. Price development of
the raw materials that are most important to the NORMA Group
serves as an early indicator of changes in major cost items, such
as material costs. For this reason, the respective markets and raw
material prices are constantly monitored and the prices of key
materials are contractually fixed.
Net operating cash flow
In order to maintain the Group’s financial independence and
solvency at all times, NORMA Group is guided by net operating
cash flow in addition to the aforementioned key figures. Net
operating cash flow includes the most important cash-effective
items that can be influenced by the individual business units and
provides information on whether NORMA Group can finance its
operating business out of its cash flow. It is calculated on the basis
of the adjusted EBITDA plus changes in working capital minus
capital expenditures. The key approaches to improving net
operating cash flow are therefore to increase sales, to improve
the adjusted operating result (adjusted EBITDA) and to engage
in sustained value-enhancing investment activity. In addition,
consistent management of working capital also has a positive
effect on net operating cash flow.
52
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING NORMA Value Added (NOVA)
NORMA Group’s goal is to use the capital provided by its
shareholders and lenders as efficiently as possible in order to
secure the Group’s long-term positive development. In order to
manage this, NORMA Group determines the annual value creation
in the form of NORMA Value Added (NOVA), which is calculated
on the basis of adjusted EBIT, the tax rate and the cost of capital.
The cost of capital is defined by the weighted average cost of
capital (WACC) and capital employed (equity plus net debt).
NOVA =
(adjusted EBIT x (1 – t)) – (WACC x capital employed)
Capital employed as of beginning of the
year (Jan 1) 1
Equity (in EUR million)
Net debt (in EUR million)
2019
602.4
400.3
Capital employed (in EUR million)
1,002.8
T009
2018
534.3
344.9
879.2
Adjusted EBIT after taxes 1
Adjusted EBIT (in EUR million)
Group tax rate (in %)
Taxes (in EUR million)
Adjusted EBIT after taxes
(in EUR million)
– WACC x capital employed
NOVA (in EUR million)
2019
135.0
27.1
36.7
98.4
81.1
17.3
The cost of capital rate is calculated on the basis of the following
assumptions and calculations:
Assumptions for the calculation
of the WACC 1
T010
in %
2019
2018
T008
2018
164.5
24.9
41.0
Risk-free interest rate
Market risk premium
123.5
62.8
60.8
Beta factor of NORMA Group
Cost of equity rate
Borrowing cost rate after taxes
WACC after taxes
0.20
7.50
1.33
11.01
1.79
8.09
0.39
6.50
1.28
9.41
1.85
7.14
The base interest rate is derived from the interest rate structure
data of Deutsche Bundesbank (three-month average: October 1
to December 31). The market risk premium represents the
difference between the expected return of a risky market portfolio
and the risk-free interest rate. NORMA Group uses the
recommendation of the Institut der Wirtschaftsprüfer (IDW) to
determine this risk premium. The betafactor represents the
individual risk of a share compared to a market index. It is first
determined as the average value of the unindebted beta factors
of the peer group and then adjusted to NORMA Group’s individ-
ual capital structure. The cost of equity is calculated by adding
the risk-free interest rate and the weighted country risk of
NORMA Group with the product of the market risk premium and
the indebted beta factor of the peer group. The credit spread used
to calculate the cost of debt was determined on the basis of the
terms of the current external financing of NORMA Group. Invested
capital is calculated from consolidated equity plus net financial
liabilities as of January 1 of the fiscal year.
The financial control parameters are planned and continuously
monitored in the Group, but also for the most part at the segment
and Group company levels. Deviations between planned and
actually achieved values are tracked in the local companies and
aggregated at the regional segment level as part of the monthly
analysis. Business development is regularly forecast on the basis
of available monthly and quarterly results and under the
assumption of various scenarios.
Important non-financial control parameters
The most important non-financial control parameters for
NORMA Group include the extent of market penetration, the
Group’s power of innovation, the problem-solving behavior of its
employees and the sustainable overall development of
NORMA Group as a whole.
The values considered for the calculation of NOVA are shown without the effects of IFRS 16 as these are relevant for the management remuneration.
53
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING
Market penetration
NORMA Group always pursues the objective to sustainably
expand its business and achieve sales growth and profitability
that are higher than average by industry comparison. Particularly
by offering innovative solutions, NORMA Group is able to create
value creation potential in various areas of application and
numerous industries. The Group’s organic growth is thus a sign
of NORMA Group’s market penetration.
Invention applications
The Group considers ensuring an environment of sustainable
innovation a key driver of future growth. NORMA Group therefore
measures the number of annual invention applications.
NORMA Group employees submit invention applications as part
of an internal formalized process upstream of the external process
of new patent applications. By establishing targeted internal
incentive systems, NORMA Group promotes its employees’
innovative thinking.
Quality KPIs
NORMA Group stands for the highest possible reliability and
quality of service. The reputation of its brands and reliability of
its products are key factors in the Company’s success. In
developing and manufacturing products, the Group therefore relies
on the highest quality standards. In order to minimize production
losses and maximize customer satisfaction, NORMA Group
measures and manages the problem solving behavior of its
employees by using two performance indicators: the average
number of customer complaints per month and defective parts
per million of manufactured parts (parts per million / PPM). The
two metrics are collected and aggregated at Group level on a
QUALIT Y MANAGEME NT, P. 75
monthly basis.
Other non-financial performance indicators
Other non-financial performance indicators include employee and
environmental indicators and indicators on occupational safety
and healthcare within the Group. More information can be found
in the
2019 CR REPORT.
The target figures for the financial and non-financial control
parameters for 2020 and the assumptions underlying the forecast
are presented in the
FORECAST REPORT, P. 82
Financial control parameters
2019
(excl. IFRS 16
effects)
2019
2018
2017
1,100.1
1,100.1
1,084.1
1,017.1
2016
894.9
2015
889.6
2014
694.7
T011
2013
635.5
13.2
13.1
16.0
17.2
17.6
17.6
17.5
17.7
122.9
111.6
124.4
132.9
148.5
134.7
109.2
103.9
17.3
17.3
60.8
54.9
53.1
48.3
n/a
n/a
Group sales (in EUR million)
Adjusted EBITA margin
(in %) 1
Net operating cash flow
(in EUR million)
NORMA Value Added
(in EUR million)
1_The adjustments are shown in the
NOTES, P. 148
Non-financial control parameters
Number of invention
applications 1
Defective parts per million
(PMP) 2
Quality-related customer
complaints per month 2
2019
2018
2017
2016
2015
2014
22
6
6
32
7
7
33
16
9
n/a
32
8
n/a
21
8
n/a
17
8
T012
2013
n/a
24
9
1_ The number of invention applications has served as a key control parameter for measuring the Group’s innovative ability since mid-2016, replacing the
number of patent applications, a figure that had lost significance in light of changes in the patent strategy. Since the number of invention applications was
recorded for the first time for fiscal year 2017, there are no comparative figures for the previous years.
2_Statek, which was acquired in 2018 and the newly established plant in Tijuana are not yet included here.
54
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING
Goals regarding finance and liquidity management
II. Limiting financial risks
NORMA Group’s objectives with respect to central finance and
liquidity management have not changed since the previous year
and are as follows:
I. Ensuring solvency at all times
The main financial objectives are maintaining the necessary
liquidity for the Group’s operating business at all times,
maintaining sufficient strategic liquidity reserves and thus
ensuring NORMA Group’s long-term solvency. This also
includes maintaining sufficient liquid funds for short- to
medium-term acquisitions.
Rolling, regular, currency-differentiated liquidity planning
for all major Group companies, which is analyzed and
aggregated by the centrally organized Group Treasury,
forms the main strategic cornerstone of NORMA Group’s
financial management.
Financing flexibility is ensured by maintaining the appropri-
ate credit lines. These are negotiated loan commitments,
which can be utilized within a very short period of time and
thus can compensate for liquidity peaks. NORMA Group has
a revolving credit line within its syndicated bank loan. This
credit lines can be used in different currencies and terms.
NORMA Group uses Asset Backed Securities (ABS), factoring
and reverse factoring programs to manage liquidity, optimize
working capital and make its cash flows more predictable.
The financing measures conducted in fiscal year 2019 are
described in detail in the notes to the financial position.
FIN A NCIA L POS ITION, P. 69
The Group Treasury division constantly identifies and assesses
interest rate and currency risks and selects suitable hedging
instruments to reduce these risks. Here, not only derivatives,
but also the appropriate foreign currency financing, are used
to reduce currency risks. The overall goal is to optimize the
assets and liabilities side of the balance sheet with regard
to currency risks. In addition, operating currency risks are
reduced by using derivative financial instruments in the Group
companies as of a defined threshold. Here, Group-wide,
currency-differentiated liquidity planning is crucial to
identifying and managing such risks.
To limit interest rate risks, NORMA Group’s objective is to
devise a relatively high proportion of financing measures in
such a way that they are subject to interest rates on a fixed-
interest basis or use interest rate swaps. On December 31,
2019, around 41% of all debt instruments had variable inter-
est rates and were not hedged by interest rate swaps. In
addition, existing risk positions are monitored regularly by
Group Treasury and assessed for their risk-bearing capacity.
Group Treasury initiates appropriate countermeasures if the
defined risk parameters are exceeded.
Key elements of the policy on limiting financial risks are the
clear definition of process responsibilities, multi-stage
approval processes and regular risk assessments.
III. Optimizing the Group’s internal liquidity
NORMA Group Holding GmbH assumes central liquidity man-
agement and is responsible in particular for investing surplus
liquidity as well as for intra-Group financing. The Group
Treasury of NORMA Group constantly works on improving
internal financing opportunities and bundling the Group’s
liquidity in order to make it available for a wide variety of
funding purposes. This is achieved by optimizing the alloca-
tion of cash and cash equivalents in NORMA Group Holding
and at the same time ensuring that the respective individual
companies are solvent at all times. This is done by using a
professional treasury management system that provides a
daily overview of the cash holdings of the most important
subsidiaries. Regional cash pools have been installed to
enable the technical implementation of liquidity centralization.
Further cash concentrations are carried out at regular
intervals. Manually pooling funds makes it possible to
guarantee an optimized cash balance for all Group companies,
whereby the local terms for international payments must be
taken into account here, in particular.
Research and development
Research and development activities at NORMA Group are aimed
at further expanding the Group’s power of innovation and detect-
ing and addressing technological trends, such as electromobility
and digitalization, as early as possible. The focus is on opening
up new markets, winning new customers and developing new
products and system solutions. That includes evaluating new
technologies, especially in terms of their ability to optimize existing
processes, minimizing the use of materials and improve the
functionality of end products. Research is mainly focused on
finding solutions for the global industrial challenges of the
respective end markets. By concentrating on the megatrends of
importance to its customers, particularly reflected in increasing
environmental awareness and the economical use of resources,
NORMA Group is able to initiate technology developments at an
early stage and serve the market by offering appropriate product
solutions and services. Another strategic focus is also on water
management.
In the context of the implemented reorganization of the product
group structure (WATER / FLUID / FASTEN) in fiscal year 2019,
smaller organizational restructurings in the R&D department as
well as adjustments within the idea evaluation process and the
team composition were undertaken.
55
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Focus on innovations
and is specifically supported by internal incentive systems such
as the annual Innovation Excellence Award.
Development focuses in 2019
The focus of NORMA Group’s R&D department is on
strengthening the Company’s power of innovation. The focus is
therefore on early identification of new technological trends and
the systematic planning and implementation of product
developments. The Foresight Manager is responsible for observing
the relevant end markets, bundling the knowledge acquired and
integrating it into the internal innovation management process.
In addition, NORMA Group makes use of new methods and
innovation management processes, such as ‘Innovation
Roadmapping’ and employs so-called ‘Innovation Scouts.’ As part
of ‘Innovation Roadmapping,’ long-term technology development
schedules are drawn up that take into account the industrial
megatrends that have been identified as well as their impact on
the relevant markets and resulting requirements for potential new
products. ‘Innovation Councils’ are driving the implementation of
the projects identified. For example, the Innovation Council
‘E-Mobility’ is responsible for coordinating all information and
global activities on electromobility, developing a strategy geared
to all regions and business sectors, and pressing ahead with its
implementation. Another Innovation Council is also working on
the subject of digitalization. Innovation Scouts – dedicated
NORMA Group employees who collect ideas on future trends
across the Group and evaluate their feasibility – are intensively
involved in the innovation process.
In an effort to promote innovative thinking within the Group,
NORMA Group measures the number of invention applications
submitted by its employees. An invention application takes place
as part of a formalized internal process in which NORMA Group
employees are given the opportunity to submit their ideas to the
R&D department. The process of reporting an invention is
upstream of the external process of applying for a new patent
Thanks to these measures, NORMA Group expects to not only be
able to focus on innovations better in the years to come, but also
to increase its efficiency in the areas of product and customer
development.
Strategic collaboration with customers
and research institutes
In the area of EJT, NORMA Group works closely with its end
customers, but also with research and development institutes,
suppliers and other external partners. This allows for customer
demands to be identified immediately and seamlessly turned into
new technologies and product ideas. This, in turn, allows for fast
marketing of product innovations. For competitive reasons,
however, the Company does not disclose the specific nature of
these research partnerships.
As the Distribution Services division is purely a commercial unit,
the market does not demand the same level of technological
research from it. Moreover, customers of NORMA Group in this
business division expect a strong brand image, constant
availability of products, and the most complete product range.
Therefore, the focus in the DS area lies on making useful additions
to the product range and targeted marketing activities.
R&D activities in fiscal year 2019 were again dominated by the
three major trend themes of electromobility, digitalization and
water management. In electromobility, the thermal management
of batteries is currently a key topic. To this end, NORMA Group is
developing special fluid systems that ensure even temperature
distribution inside the battery and maintain the optimal operating
condition of the cells. Factors such as flow cross-sections, flow
resistance and heat transfer play a key role in optimized thermal
management. In fiscal year 2019, NORMA Group successfully
supported several customer projects in finding individual solutions.
In addition, the R&D department is currently working on concepts
for the development of intelligent fluid systems that are capable
of automatically and wirelessly recording, evaluating and
communicating assembly conditions and operating parameters.
The first concepts on this have already been developed.
NORMA Group has also been active in the area of fuel cells since
2018 and is already supplying line systems for a fuel cell vehicle
in series production. This activity resulted in a fundamental
project as well as follow-up projects for further vehicle platforms
from the same manufacturer in fiscal year 2019. In addition, a
project involving a major supplier of hydrogen vehicles was also
initiated in 2019.
MARKETING, P. 80
Know-how protected by patents
The Company’s specific know-how in the area of joining technol-
ogy represents a key success factor for NORMA Group. For this
reason, the Group protects its innovations with patents. As of
December 31, 2019, 1,094 patents and utility models (2018:
1,038) were held. In 2019, 46 new patent rights (2018: 65) were
filed.
56
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING R&D expenses
R&D employees
EJT research and development expenditure in 2019 amounted to
EUR 31.2 million (2018: EUR 30.5 million), representing
approximately 4.7% (2018: 4.5%) of EJT revenue. The capitalization
ratio, which is the proportion of own work capitalized in relation
to R&D expenses, during the reporting year amounted to 9.0%
(EUR 2.8 million).
As of December 31, 2019, 345 employees (2018: 365) worldwide
worked for NORMA Group in the R&D department, which rep-
resents unchanged to the prior year approximately 5.3% of all
permanent employees of the Group. Most of the employees who
work in R&D are engineers, technicians and technical draftsmen.
R&D key figures ¹
T013
2019
2018
2017
2016
2015
2014
2013
2012
2011
Inspired by nature
Number of R&D employees
345
365
344
305
271
250
205
190
174
R&D employee ratio in relation to permanent
staff (in %)
5.3
5.3
5.6
5.6
5.3
5.2
5.0
5.1
5.1
R&D expenses in the area of EJT
(in EUR million)
R&D ratio in relation to EJT sales (in %)
31.2
4.7
30.5
29.4
28.8
25.4
25.7
21.9
22.1
16.8
4.5
4.6
5.4
4.7
5.3
4.9
5.1
4.1
1_The multi-period overview shows the development of the most important R&D indicators since NORMA Group’s IPO. No data was collected prior to the IPO.
The loss in pressure inside the cooling systems that is
caused by the many coils and constricted areas inside
these systems poses one of the biggest challenges in
the thermal management of batteries in electric vehicles.
To solve this problem, NORMA Group uses the
findings from the field of bionics and is oriented
towards existing role models in nature, such as
shark skin. Its special grooved structure with movable
scales along the shark’s entire body significantly
reduces flow resistance. This ‘shark skin effect’ is to
be applied to thermal management systems in the
future, by giving the interiors of the lines longitudinal
grooves, for example. This will allow liquids to flow
through them more quickly and easily to maintain the
pressure and improve the battery’s performance and
range. The flow shapes of rivers have also inspired us
to take new approaches. Read more about it at
BLOG.NORMAGROUP.COM
The information in the above box is not part of the Consolidated
Management Report and therefore is not subject to the audit.
57
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING
Economic Report
External factors of influence
Economic factors
NORMA Group is active in many different industries and regions.
Seasonal and economic fluctuations in individual countries or
industries can have varying effects on customer demand and the
order situation at NORMA Group. At the same time, NORMA Group
is less vulnerable to temporary declines in demand in individual
industries or countries thanks to its diversified product portfolio
and broad customer base. Temporary production peaks can be
absorbed due to flexible production structures and the use of
temporary workers.
Trade conflicts put the global economy under
considerable pressure in 2019
After a slight downturn just a year earlier, the global economy
began a sharp descent in 2019. The main negative factors were
the escalation of the trade conflict between the superpowers USA
and China as well as the outcome of the Brexit negotiations, which
could not be predicted for a long time. As a result, both global
trade and investment activity weakened noticeably. By contrast,
strong domestic demand and the continued easing of monetary
policy by the world’s central banks supported the economy. These
measures included the turnaround in interest rates initiated by
the US Federal Reserve (FED) at the end of July 2019 and the
European Central Bank’s (ECB) continued zero-interest policy and
related bond repurchases. Overall, according to the International
Monetary Fund (IMF), the global economy grew by 2.9% in 2019
(2018: + 3.6%).
At country level, growth momentum flattened further in 2019,
especially in China, as a result of US restrictions and subdued
international trade. Although industrial production grew relatively
strongly by 5.7% (2018: 6.2%), the production of automobiles and
industrial robots declined significantly overall. According to offi-
cial figures, economic growth in China was 6.1% in 2019 (previous
year: 6.6%). In the emerging markets of Southeast Asia
(ASEAN-5), the gross domestic product fell to 4.7% (2018: 5.2%).
In India as well, the economy came to a standstill due to massive
liquidity problems in the financial sector and managed to grow
by only 4.8%, following a strong performance the previous year
(2018: + 6.8%). Brazil (+ 1.2%) and Russia (+ 1.1%) also showed
only moderate growth. Against this backdrop, the expansion rate
of the emerging and developing countries declined to 3.7% in
2019 (2018: 4.5%).
The difficult environment also became clearly evident in the US.
The domestic economy there lost momentum in 2019, although
private consumption remained buoyant and government
consumption increased. The main reason for this was the lack of
follow-up impetus following the 2019 tax reform, even despite
several key interest rate cuts by the US Federal Reserve (FED).
Although US industrial production was supported by the energy
sector and in particular the high-tech industries (communications
equipment, semiconductors), it remained weak overall in 2019
(– 0.8%), with capacity utilization falling by an average of 90 basis
points to 77.8%. Production also declined significantly in the
automotive and consumer goods sectors. In contrast, the economy
in Japan, for example, grew moderately by 1.0% (2018: 0.3%)
according to the IMF, and economic growth in the United Kingdom
also increased by another 1.3% despite the Brexit negotiations
that continued throughout the year
GDP growth rates (real)
in %
World 1
USA 2
China 3
Euro zone 4
Germany 5
2019
2018
+ 2.9
+ 2.3
+ 6.1
+ 1.2
+ 0.6
+ 3.6
+ 2.9
+ 6.6
+ 1.9
+ 1.5
T014
2017
+ 3.8
+ 2.4
+ 6.9
+ 2.4
+ 2.5
Sources: 1_IMF; 2_US Trade Ministry; 3_National Bureau of Statistics (NBS);
4_Eurostat, 5_German Federal Statistical Office (Destatis)
Noticeable economic slowdown in the euro zone,
domestic demand remained strong in 2019
The negative international environment in 2019 was also reflected
in a further economic slump in Europe. This had a particularly
negative impact on the export-oriented industrial sectors in the
euro zone. Nevertheless, domestic demand remained stable,
primarily supported by low inflation, attractive interest rates, high
employment figures and, to some extent, fiscal policy stimuli. As
a result, consumer-related and service sectors as well as the
construction industry proved to be quite strong. According to the
statistical office Eurostat, the euro zone economy grew by 1.2%
overall in 2019 (2018: 1.9%). Ireland and the Eastern European
countries again recorded the strongest growth. The economy also
developed strongly in Scandinavia, the Netherlands and Belgium.
In France and Spain, economic momentum remained largely
stable, especially as industry is heavily geared towards consumer
goods, whereas the economy in Italy stagnated, particularly due
to structural deficits.
58
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Industrial production in the euro zone declined in 2019, with the
downward trend intensifying from June 2019 onwards and
leading to a noticeable slump. This is attributable on the one hand
to weak exports and subdued domestic demand in Europe and
on the other to a declining willingness to invest. The effects of
this were felt above all by manufacturers of intermediate goods,
energy and capital goods, whereas the production of durable and
non-durable goods increased. All in all, capacity utilization in the
euro zone deteriorated significantly within a year. It fell by 230
basis points to 81.3% in the final quarter of 2019.
German economy showed a mixed picture in 2019:
lively domestic demand combined with weak industry
Due to its close ties to the economies of other world markets,
Germany was hit harder than other euro zone countries by the
global weakness in demand and uncertainties that repeatedly
flared up. Particular pressure was felt in the capital goods,
intermediate goods and the automotive sector. In this environ-
ment, the German economy grew only very weakly at 0.6%
according to the Federal Statistical Office (Destatis) (2018:
+ 1.5%). Economic development was divided: On the one hand,
domestic demand proved lively and resilient, so that with an
average of 45.3 million people (+ 0.9%) in 2019, a new record in
employment was achieved, which meant that private consumption,
but also government consumption and construction investments
regained momentum compared to the previous year. On the other
hand, investments in equipment lost considerable momentum
compared to the previous year by posting growth of only + 0.4%
(2018: + 4.4%), and exports lost considerable momentum at
+ 0.9% (2018: + 2.1%).
Industrial production also continued to decline at an accelerated
pace in 2019, after a significant decline at the end of the previous
year, and slid into a deep recession. Thus, production output in
each month was up to 6.0% (June) below the level of the respec-
tive month of the previous year. As a result, according to Eurostat,
capacity utilization declined noticeably in the fourth quarter to
82.7% (Q4 2018: 87.1%).
Currency rate effects
Due to NORMA Group’s international activities, exchange rate
fluctuations also influence its business. While fluctuations
between non-euro currencies have only little impact on the
operating result of the NORMA Group as a result of regional
production, exchange rate fluctuations against the euro as the
reporting currency may have a greater impact on its results. Due
to high US dollar exposure, fluctuations in the EUR / USD exchange
rate in particular affect earnings.
R I S K A N D O P P O RT U N I T Y
REPORT, P. 89
In fiscal year 2019, NORMA Group generated around 44% of its
sales in US dollars. The development of the US dollar against the
euro resulted in a positive sales effect in fiscal year 2019.
Furthermore, changes in the exchange rates of the following
currencies had a negative effect on sales development: British
pound, Swiss franc, Indian rupee, Chinese renminbi, Malaysian
ringgit, Thai baht and Russian rubel.
Industry-specific factors
Mechanical engineering in a recession almost worldwide,
China also clearly in a downturn
The global mechanical engineering industry is experiencing a
cyclical downturn which, according to the German Engineering
Federation (VDMA), is being exacerbated and overshadowed by
a variety of obstacles and structural changes. Examples of these
changes include the upheaval within the automotive industry,
China’s economic reorientation and increasing protectionism. As
a result, global machinery sales stagnated in 2019 (2019: + 5%;
2018: + 5%). China was also hit by global obstacles. In fact,
industrial growth declined by half to around + 4%. Excluding
China, the world market shrank by 2% in real terms in 2019 and
was thus in a recession. The sales trend in the ASEAN-5 countries
was weak and, in some cases, declined even further. Development
was also negative in Japan (– 6%) and South Korea (– 3%). The
picture in Latin America was noticeably hetero geneous: Sales in
Argentina collapsed massively due to the recession, while the
market in Chile grew at double-digit rates. The economies of Brazil
and Mexico improved slightly. In the US, the headwind became
stronger due to weak industrial growth, with industrial sales
dropping by a total of 1% after two strong years.
In Europe, the strongly export-oriented mechanical engineering
sector also came under noticeable pressure in 2019, with indus-
try sales shrinking by 1% in both Europe as a whole and the euro
zone according to the VDMA. Italy (– 1%), Spain (– 2%), Portugal
(– 15%) and the United Kingdom (– 4%) suffered losses, some of
which were substantial. This contrasted with positive trends in
Scandinavia and the EU countries in Eastern Europe. In Germany,
the order situation for mechanical engineering companies was
significantly worse in 2019, with orders down by around 9%
(domestic – 9%, foreign – 9%). According to VDMA estimates, this
resulted in a 2% decline in both German mechanical engineering
output and sales in 2019.
Automotive industry 2019 with massive production losses
for cars and trucks in some areas
The profound technological upheaval has continued at an even
faster pace. The pressure on vehicle original equipment
manufacturers (OEMs) and suppliers is noticeable, particularly as
high development input is required in conjunction with growing
pressure on margins and falling sales. In addition, the merger of
PSA and FCA initiated in 2019 further drove market concentration.
According to LMC Automotive (LMCA), global sales of light
vehicles (LV, up to 6 t) fell by around 4.5% to just under 90.2 mil-
lion vehicles in 2019. According to the Association of German
Automobile Manufacturers, a total of 80.1 million passenger cars
were sold in the smaller global passenger car market. The resulting
market decline of 5% reached a new high and was thus more
59
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING pronounced than the decline during the financial and economic
crisis ten years ago. As a result, LV production was cut by 5.0%
worldwide. With the exception of Japan (+ 0.1%), all major regions
recorded significant losses, including China (– 7.7%), the US
(– 3.9%), Mexico (– 3.3%) and India (– 10.6%). Due to the economic
situation, truck and bus manufacturers also felt the effects of
headwinds in many regions, especially in Asia. According to the
latest data from LMCA, 3.2% fewer trucks were manufactured
worldwide than in the previous year, with the US (+ 6.7%) and
Japan (+ 4.9%) increasing their truck production against the
prevailing negative trend.
In Europe (EU28 + EFTA), sales increased by 1.2% to 15.8 million
passenger cars (West: + 0.7%, East: + 6.2%), according to the
European Automobile Manufacturers Association ACEA
(Association des Constructeurs Européens d’Automobiles), despite
continuing market pressure. The most significant increase was
recorded in Germany (+ 5.0%). Sales also rose in France (+ 1.9%)
and Italy (+ 0.3%), while demand declined noticeably in the United
Kingdom (– 2.4%) and Spain (– 4.8%). In contrast, according to
the LMCA, production in Europe’s export-oriented automotive
industry was cut back by 3.3% to just under 21.4 million LV due
to global market weakness. Production of light vehicles in Ger-
many dropped by as much as 7.2%. Production figures also
declined in the UK, France and Italy, in some cases massively. Due
to the lower export figures, the production of commercial vehicles
in Europe also declined slightly by 1.7% according to the LMCA.
According to the ACEA, around 2.6 million trucks were sold in the
truck segment in Europe (+ 2.5%), with sales in Western Europe
increasing (+ 2.8%) and stagnating in Eastern Europe. In contrast,
demand was lively in Germany (+ 6.1%), France (+ 4.3%) and the
UK (+ 3.0%). More trucks were also shipped in Italy (+ 1.9%) and
Spain (+ 0.3%). Demand was particularly strong for light trucks
(up to 3.5 t) and especially for buses, while sales of heavy trucks
(>16 t) stagnated.
Construction industry in Asia and Europe experiences strong
tailwind in 2019, Germany booming
US construction industry and water management
experience tailwind in 2019 for infrastructure and renovation
The construction industry in China, India and Southeast Asia is
benefiting strongly from urbanization and political impulses,
including infrastructure expansion. According to the statistics
office NBS, China’s investments in buildings grew nominally by
9.9% (of which residential construction: + 13.9%), and investments
in the water industry by 1.4%. The construction industry in Europe
continued its upswing thanks to a high demand for new
construction and renovation as well as the favorable financing
environment. According to estimates by the industry network
Euroconstruct (including the ifo Institute), construction output in
Europe rose by 2.3% in real terms in 2019 (2018: 3.2%). Nearly
all of the 19 key individual markets for the sector recorded growth,
with construction activity in Ireland and Hungary even showing
double-digit increases. Finland and Sweden were the only
exceptions. Construction output in Western Europe thus increased
by 2.0% in real terms (2018: 2.6%), while Eastern Europe’s
construction industry even grew by 7.3% in 2019 (2018: 12.8%).
In Germany, construction investments in 2019 rose by 3.8% in
real terms, after an increase of 2.5% the previous year (Destatis).
According to the German Institute for Economic Research (DIW),
the volume of residential construction grew by a total of 7.6% to
EUR 247 billion (2018: + 8.6%). The volume of new construction
grew by 7.4%. Construction work on existing buildings (exten-
sion / conversion, modernization, maintenance), which accounts
for roughly two-thirds of the construction volume of apartments,
increased by 7.7% (2018: + 7.9%). The construction volume of
other building construction (excluding dwellings) rose by 6.6%
(2018: + 6.2%). In civil engineering, too, construction output grew
vigorously by posting an 8.0% increase (2018: + 8.7%), driven in
particular by a positive development in public civil engineering
(+ 9.0%).
In 2019, a total of 5.6% more private residential units were
completed in the US than in the previous year. Nevertheless, the
picture for the construction industry was mixed: private
construction spending shrank by 2.5% in nominal terms, with a
very significant decline in the sub-segment of private residential
construction (– 4.7%), while public construction spending rose
sharply (+ 7.1%). The increase mainly concerned the highways
and roads segment (+ 8.8%) and the water supply sector (7.2%)
and was mainly driven by a high demand for renovation and
modernization. Investments in the infrastructure of sewage and
rainwater plants also benefited from this development. Supported
by lower mortgage interest rates, demand for irrigation systems
for agriculture, sports facilities, parks and gardens also benefited.
According to the industry experts at JBREC (John Burns Real
Estate Consulting), demand in the market segments relevant to
NORMA Group’s NDS activities increased by 6.5% overall.
Legal and regulatory influencing aspects
In the context of the international focus of its business and against
the backdrop of its acquisition strategy, various legal and tax-
related regulations are relevant to NORMA Group, which include
product safety and product liability laws, construction, environ-
mental and employment-related regulations as well as foreign
trade and patent laws.
RISK AND OPPORTU NIT Y REPORT, P. 89
60
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING In addition, NORMA Group’s product strategy is influenced by
increasing density of regulations in environmental law and ongo-
ing discussion on emission-reducing drive technologies in the
automotive industry. New regulations on emissions and fleet man-
agement provisions, as well as the strong trend towards hybrid
and fully electric drive models have a positive impact on
NORMA Group’s business. After all, the increasing complexity of
systems in vehicles – due to downsizing or hybrid vehicles, for
example – also increases the number of interfaces and thus the
demand for reliable joining technology. In addition, the increasing
electrification of the automotive industry presents OEMs with new
challenges and opens up new opportunities and business fields
for NORMA Group, especially in the area of thermal management.
RES EARC H AND DEVELOPME N T, P. 55
With the acquisition of National Diversified Sales (NDS) in 2014
and the acquisition of the Indian water company Kimplas in 2018,
the various regulatory initiatives in the field of water management
as well as public measures to improve the supply of water to the
population have also gained considerable influence for
NORMA Group.
Significant developments in fiscal year 2019
Personnel changes in the Management Board
Bernd Kleinhens, Chairman of the Management Board of
NORMA Group, resigned from the Management Board by mutual
agreement effective July 31, 2019. Dr. Michael Schneider then
took over the duties of Chairman of the Management Board in
addition to his role as Chief Financial Officer.
The Supervisory Board appointed Dr. Schneider new Chairman
of the Management Board of NORMA Group SE in November
2019. Besides serving as Chairman of the Management Board,
Dr. Michael Schneider will retain his role as Chief Financial Officer
until further notice. In November 2019, the Supervisory Board
initiated the search for a suitable candidate for the position of
Chief Financial Officer and will most likely decide on the position
in the months to come.
Strategic measures aimed at optimizing
Group structures
NORMA Group has grown rapidly in recent years, both organically
and through acquisitions. This has also been accompanied by
rapid growth in the production landscape and organizational
structures. These will be optimized in order to enable the Company
to respond promptly and flexibly to changing conditions. In order
to further streamline processes and systems within the Group
and thus lay the foundations for further growth levels, the
Management Board of NORMA Group announced the
implementation of a rightsizing program back in February 2019
aimed at the long-term optimization of Group structures. The
program includes optimization measures in all regions – EMEA,
the Americas and Asia-Pacific – and is designed to focus
NORMA Group’s business model on the demands of the future
strategic growth fields of electromobility and water management.
The measures that have either already been implemented or are
planned are expected to make a positive contribution to annual
earnings (adjusted EBITA) of around EUR 10 million to EUR 15
million from 2021 on. Total costs of the project are currently
EUR 15 million.
In light of the persistently difficult market environment and as a
consequence of NORMA Group’s – weaker than expected – sales
and earnings performance in fiscal year 2019, the Management
Board in its new composition also launched the “Get on Track”
change program in November 2019 that was approved by the
Supervisory Board. This program includes extensive improvement
measures and addresses the following three main aspects in
particular: optimizing site capacities in all regions, streamlining
the product portfolio, mainly through more active portfolio
management, and improving structures and processes along the
entire value chain.
The change program is expected to lead to cost savings from
2020 on that are expected to increase to between EUR 40 million
and EUR 45 million annually by 2023. A cumulative total cost
volume of around EUR 45 million to EUR 50 million is expected
for the implementation and realization of the measures by 2023.
The costs of this project will not be adjusted.
Optimiziation of Group financing
NORMA Group managed to refinance its credit lines in fiscal year
2019, thereby creating financial security and flexibility for the
future. The new credit agreement has an initial volume of EUR 250
million. Furthermore, a revolving facility of EUR 50 million and an
accordion facility were also concluded, whereas the accordion
facility does not have a maximum threshold. In addition, for the
first time, the financing agreements also include a sustainability
component that links the financing terms to NORMA Group’s
activities in the area of Corporate Responsibility. By further
improving its sustainability rating, the Company now has the
chance to reduce the interest burden of its financing. The credit
agreement was concluded for a term of five years and includes
the option to extend it twice for a further year each time. The
financing is comprised of tranches denominated in euros and US
dollars.
FINANCIAL POSITIONS, P. 69
Comparison of target and actual values
NORMA Group published a forecast in its 2018 Annual Report
on the development of the Group’s most important financial
figures in fiscal year 2019. In the course of the fiscal year under
review, the Management Board was forced several times to
concretize or adjust its forecast for Group sales growth, the
adjusted EBITA margin and the net operating cash flow due to
changes in the general economic conditions. The following
explanations provide an overview of the forecast adjustments
and a comparison of the projected values with the Group’s actual
results.
61
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Adjustments to the forecast during the year
The Management Board of NORMA Group concretized the fore-
cast for the Group’s adjusted EBITA margin in April 2019 on the
basis of sales in the first quarter of 2019 and the expected results
for the full year. At that time, the Management Board still expected
the adjusted EBITA margin to be within the range of 15% to 17%
as forecasted in March 2019, although this figure was expected
to be at the lower end of the range. This was due to the difficult
economic and political environment, which proved to be much
more volatile than expected, especially in the EMEA and Asia-
Pacific regions.
The market environment in the global automotive business
continued to deteriorate in the summer of 2019. The negative
impact from the global trade disputes and sanctions and the
resulting reluctance to invest were reflected in a continued decline
in business, particularly in the EMEA and Asia-Pacific regions. In
addition, the costs for the introduction of an ERP system at a site
in Latin America also had a negative impact on Group earnings.
These developments prompted the Management Board to revise
its forecast for organic sales growth, earnings development and
net operating cash flow downwards in July 2019. Instead of
organic growth of around 1% to 3%, the Management Board now
expected organic growth within a corridor of around – 1% to
around 1%, an adjusted EBITA margin of over 13% (previous
forecast: at the lower end of the corridor between 15% and 17%)
and net operating cash flow of EUR 90 million (previous forecast:
EUR 100 million). In the course of the reporting on the second
quarter of 2019, the Management Board also revised its forecast
for NOVA and adjusted earnings per share and now assumed
NOVA of EUR 30 million to EUR 40 million (previous forecast:
EUR 50 million to EUR 60 million) and a sharp decline in adjusted
earnings per share (previous forecast: moderate increase).
In October 2019, the Management Board lowered its forecast for
organic sales growth for the regions and the Group and has since
then expected an organic decline in Group sales of around 4% to
2%. The main reason for this was the sharp downturn in the EJT
business in the US, which was partly due to strikes at key
customers in the passenger car and truck industries. In addition,
the EMEA and Asia-Pacific regions also fell slightly short of
expectations. With regard to NORMA Value Added (NOVA), the
Management Board now expected a bandwidth of between EUR
20 million and EUR 30 million for the full year 2019.
TABLE 015 on P. 63 provides an overview of the target and
The
actual values as well as the forecast adjustments during the year.
Deviations from the target values
NORMA Group’s organic growth in Group sales of – 2.0% is within
the range of – 4% to – 2%, which was revised downwards in
October 2019, but significantly below the original forecast of
around 1% to 3% published in March 2019.
Development was mixed with regard to cost factors. While
adjusted cost of materials ratio and adjusted other operating
income and expenses as a percentage of sales improved, the
adjusted personnel cost ratio deteriorated significantly due to the
increased number of employees, severance payments to a former
member of the Management Board and lower sales revenues.
Among other factors, other operating expenses positively reflect
the effects of the first-time application of IFRS 16.
The adjusted EBITA margin for fiscal year 2019 was at 13.2%
(excluding IFRS 16: 13.1%), which was also significantly below
the initially forecast range of 15% to 17%, but within the forecast
of over 13% that was revised downwards in July 2019.
This development was also reflected in adjusted earnings per
share, which, at EUR 2.76, were within the range of the forecast
adjusted over the course of the year (sharp decline), but thus
contrary to the original expectations (moderate increase).
Net operating cash flow amounted to EUR 122.9 million (without
IFRS 16: EUR 111.6 million) in fiscal year 2019 and was thus
above the original forecast of around EUR 100 million (without
IFRS 16), whereas this was also revised downwards to around
EUR 90 million (without IFRS 16) in fiscal year 2019.
NOVA amounted to EUR 17.3 million (without IFRS 16: EUR 17.3
million) in fiscal year 2019 and clearly failed to meet the original
forecast of EUR 50 million to EUR 60 million as well as the forecast
adjusted in October 2019 to EUR 20 million to EUR 30 million.
One of the reasons for this was the increase in the market risk
premium that was given exogenously on the recommendation of
the German Institute of Public Auditors (IDW).
The other key financial figures were in line with the forecast
published in the 2018 Annual Report.
62
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Actual business development compared to the forecast 1
Group sales
Organic growth of Group sales
Organic sales growth EMEA
Organic sales growth Americas
Organic sales growth Asia-Pacific
Sales growth EJT
Sales growth DS
Adjusted cost of materials ratio
Adjusted personnel expense ratio
Adjusted EBITA margin
NOVA
Financial result
Adjusted tax ratio
Earnings per share
Results in 2018 1
March 2019 2
April 2019
July / Aug. 2019
Oct. / Nov. 2019
EUR 1,084.1 million
7.7% organic growth,
additionally EUR 16.5
million from acquisitions
2.0%
12.4%
14.9%
7.3%
5.8%
43.6%
25.9%
16.0%
between EUR 50 million
and
EUR 60 million
EUR – 11.7 million
24.9%
EUR 3.61 (adjusted)
EUR 2.88 (reported)
n/a
moderate organic growth of
around 1% to 3%, additionally
around EUR 13 million from
acquisitions
moderate organic growth
moderate organic growth
strong organic growth
moderate growth
moderate growth
roughly at the same level as in pre-
vious years
roughly at the same level as in pre-
vious years
between 15% and 17%
n/a
no adjustment
no adjustment
no adjustment
no adjustment
no adjustment
no adjustment
no adjustment
n/a
organic growth of – 1% to
1%
n/a
organic decline of around
– 4% to – 2%
moderate organic decline
no adjustment
moderate organic decline
noticable organic decline
moderate organic growth moderate organic decline
noticable decline
no adjustment
no adjustment
no adjustment
no adjustment
moderate decline
no adjustment
moderate increase
noticable increase
the lower end of the range
of 15% to 17%
moren than 13%
no adjustment
no adjustment
no adjustment
between EUR 30 million
and EUR 40 million.
between EUR 20 million
and EUR 30 million.
up to EUR – 15.0 million
no adjustment
no adjustment
no adjustment
around 25% to 27%
moderate increase
no adjustment
no adjustment
no adjustment
strong decline
no adjustment
no adjustment
Net operating cash flow
EUR 124.4 million
around EUR 100 million
no adjustment
around EUR 90 million
no adjustment
Investments in R&D (related to EJT sales)
Investment rate (without acquisitions)
4.5%
5.8%
Dividend /
Payout ratio
EUR 1.10 2
30.5%
Number of invention applications
Number of defective parts per million (PMP)
Average number of quality- related customer com-
plaints per month
32
7
7
around 5% of EJT sales
operational investments of around
5% of Group sales
approx. 30% to 35% of adjusted
annual Group earnings
no adjustment
no adjustment
no adjustment
no adjustment
no adjustment
no adjustment
no adjustment
no adjustment
no adjustment
more than 20
less than 20
less than 8
no adjustment
no adjustment
no adjustment
no adjustment
no adjustment
no adjustment
no adjustment
no adjustment
no adjustment
1_The adjustments relate to adjustments for acquisitions as well as the initiated “Rightsizing” program announced in February 2019.
2_ Changes in key figures resulting from the first-time application of IFRS 16 were not taken into account in the forecast for the 2019 fiscal year. The deviations in the key figures due to the first application of
NOTES, P. 148
IFRS 16 is shown in brackets in the table.
3_In accordance with the Management Board‘s proposal for the appropriation of net profit, subject to the approval by the Annual General Meeting on June 30, 2020.
T015
Results in 2019
(without IFRS 16) 2
EUR 1,100.1 million.
– 2.0% organic growth,
additionally EUR 13.3
million from acquisitions
– 2.3%
– 3.1%
2.3%
– 2.8%
9.2%
43.4%
27.5%
13.2%
(13.1%)
EUR 17.3 million.
(EUR 17.3 million)
EUR – 15.5 million
(EUR – 14.2 million)
27.1%
EUR 2.76 (adjusted)
EUR 1.83 (reported)
EUR 122.9 million
(EUR 111.6 million)
4.7%
5.0%
EUR 0 3
0 3
22
6
6
63
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING
General statement by the Management Board on
the course of business and economic situation
Earnings, assets and financial position
Adjustments
For NORMA Group, fiscal year 2019 was a year with many
unforeseeable challenges, which had a negative impact on some
parts of the Group and thus a negative impact on the Group’s
sales and earnings in the past year. These contrary developments
affected the automotive industry in particular, which suffered
significant production and sales losses worldwide in fiscal year
2019. This development had a particularly negative impact on
NORMA Group’s EJT business, which consequently showed an
organic decline in sales of 4.5%. Despite the relatively good
development of the DS business – and in particular of the water
business – this could not be compensated for by organic sales
growth of 2.7%. With the additional sales revenues from the
acquisitions of Kimplas and Statek, which contributed 1.2% to
total sales growth and positive currency effects of 2.3%, Group
sales growth in fiscal year 2019 amounted to 1.5%. In addition
to this sales growth that was significantly lower than initially
expected, additional cost increases in the areas of personnel and
materials had a negative impact on earnings. These circumstances
led to an adjusted EBITA margin of 13.2% (2018: 16.0%) and
adjusted earnings per share of EUR 2.76 (2018: EUR 3.61). This
development was significantly below the Management Board’s
expectations and meant the forecast needed to be revised over
the course of the year.
The Management Board is cautious for the current year due to
the continuing risks and difficult conditions in some of the
industries that are important to NORMA Group and expects a
noticeable decline in organic sales for fiscal year 2020. In addition,
the Management Board expects an adjusted EBITA margin of
more than 13% as a result of the change program that has been
introduced.
FORECAST R EPORT, P. 8 2
Notional income taxes resulting from the adjustments are
calculated using the tax rates of the respective local companies
concerned and included in adjusted earnings after taxes.
The following table shows the result adjusted for these effects:
NORMA Group adjusts certain expenses for the operational
management of the Company. The following adjusted results
shown reflect the Management Board‘s view.
In fiscal year 2019, net expenses of EUR 13.4 million in total were
adjusted within EBITDA (2018: EUR 4.4 million). These relate
primarily to other operating expenses (EUR 2.9 million) and
employee benefit expenses (EUR 9.9 million) as well as to the cost
of materials (EUR 0.2 million) from the “Rightsizing” project
initiated in the fourth quarter of 2018 in order to optimize the
Group’s structures. The adjustments within expenses for employee
benefits relate to costs for project hours of internal employees of
the core workforce, costs for project employees who were hired
temporarily and costs for severance payments. The adjustments
in fiscal year 2018 are described in the Notes to the Consolidated
Financial Statements.
NOTES, P. 148
Adjustments 1
in EUR million
Group sales
EBITDA
EBITDA margin
(in %)
EBITA
EBITA margin
(in %)
EBIT
Furthermore, expenses for integration in connection with the
acquisitions of Kimplas and Statek were adjusted within other
operating expenses (EUR 0.3 million) and within employee
benefits (EUR 0.1 million).
Financial income
Profit for the period
EPS (in EUR)
2019
adjusted
Adjustments
T016
2019
reported
1,100.1
187.2
0
1,100.1
13.4
173.8
17.0
144.8
13.2
136.1
– 15.5
87.8
2.76
15.8
127.9
11.6
96.7
– 15.5
58.4
1.83
16.9
39.4
0
29.4
0.93
1_Deviations may occur due to commercial rounding.
In addition to the adjustments described above, depreciation on
property, plant and equipment from purchase price allocations of
EUR 3.4 million (2018: EUR 3.9 million) was shown as adjusted
within EBITA and amortization of intangible assets from purchase
price allocations of EUR 22.5 million (2018: EUR 21.1 million) was
shown as adjusted within EBIT. An impairment loss of EUR 1.4
million in the area of capitalized customer relationships was
adjusted in fiscal year 2018 within amortization of intangible
assets. This related to the Chinese company Fengfan.
64
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Effects from the first-time application of IFRS 16
Earnings position
The effects of the first-time application of IFRS 16 on the
Consolidated Statement of Financial Position as of Janu-
ary 1, 2019 and the effects on the Consolidated Statement of
Comprehensive Income and the Consolidated Statement of Cash
Flows for the period from January 1 to December 31, 2019 are
presented in the Notes to the Consolidated Financial Statements.
NOT ES, P. 119 FF.
The following table shows the effects on key performance
indicators of NORMA Group.
Effects from the first-time adoption of IFRS 16
on key financial control parameters 1
T017
The development described below explains the changes in the
main items of the income statement in the year under review,
adjusted for the above-mentioned special effects.
NOTES, P. 148
Sales development
Slight growth in Group sales, organic sales down
In fiscal year 2019, NORMA Group’s sales increased by 1.5% to
EUR 1,100.1 million (2018: EUR 1,084.1 million). This figure
includes a 2.0% decline in organic sales (2018: + 7.7%) and
acquisition-related growth of 1.2% (2018: 1.6%). Currency effects
in connection with exchange rate changes had a positive effect
of 2.3% (2018: – 2.8%).
in EUR million
2019
adjusted
Effects of
IFRS 16
Adjusted EBITA
144.8
Adjusted EBITA
margin (in %)
13.2
1.0
0.1
2019
adjusted
without
IFRS 16
143.8
13.1
The decline in organic sales growth is mainly due to the weak
development of the global automotive industry and the resulting
drop in demand for joining technology. The main reasons for this
were the WLTP issue in Europe, which still persisted at the
beginning of the year, the ongoing trade dispute between the US
and China and the restructuring in the industry caused by the
technological changes. In addition, the negative development of
the truck business in the US towards the end of the past fiscal
year also had a dampening effect.
Net operating
cash flow
in % related to
sales
NORMA Value
Added (NOVA)
122.9
11.3
111.6
11.2
1.1
10.1
The Distribution Services (DS) business unit was the main growth
driver in fiscal year 2019, which was positively influenced in
particular by the good development of the US water business. In
addition, the companies Kimplas and Statek, which were acquired
in fiscal year 2018, made a positive contribution to sales growth.
17.3
0
17.3
1_ Deviations may occur due to commercial rounding.
Development of sales 2019
in EUR million
H1: 564.7
H2: 535.4
2019
2018
G011
1,100.1
1,084.1
H1: 549.0
H2: 535.1
200
400
600
800
1.000
Effects on Group sales 1
T018
in EUR million
Share in %
Group sales 2018
Organic growth
Acquisitions
Currency effects
Group sales 2019
1,084.1
– 21.6
13.3
24.4
1,100.1
– 2.0
1.2
2.3
1.5
1_ Deviations may occur due to commercial rounding.
Heterogeneous growth in the three regional segments
Growth in the individual regional segments varied greatly in fiscal
year 2019.
The Asia-Pacific region recorded the strongest growth in fiscal
year 2019, with sales of EUR 163.4 million (2018: EUR 147.8 mil-
lion), an increase in sales of 10.5% and organic growth of 2.3%.
This was primarily due to the strong growth in the second half of
the year, which was characterized by a revival of business and
obtaining new orders in China. Additional revenues from the
acquisition of Kimplas (EUR 10.3 million) and positive currency
effects also contributed to growth in the region.
65
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING
The Americas region achieved slight growth of 2.1% year-on-
year by posting sales of EUR 450.8 million (2018: EUR 441.5 mil-
lion). This was driven in particular by the good development of
the NDS water business in the US as well as positive currency
effects in connection with the development of the US dollar.
The EMEA region recorded a 1.8% decline in sales to EUR 486.0
million (2018: EUR 494.8 million) in fiscal year 2019 due to the
weak development in both the European automotive business
and stagnation in the DS segment.
SEGM ENT RE PORT ING, P. 71
EJT business affected by weakness in the automotive sector,
DS business grows significantly
Sales in the EJT segment amounted to EUR 665.5 million in fiscal
year 2019 (2018: EUR 684.6 million), down 2.8% on the previous
year. The main reason for this was the poor conditions in the
automotive sector with declining production and sales figures in
all three regional segments. While the EJT business in the Asia-
Pacific region recovered noticeably in the second half of the year
and showed organic growth for the year as a whole, the situation
in the EMEA and Americas regions essentially remained
unchanged in the third and fourth quarters. The collapse of the
US market for commercial vehicles and strikes by key customers
in the passenger car and truck sectors placed additional pressure
on the business.
Distribution Services revenues amounted to EUR 430.2 million in
2019, an increase of 9.2% over the previous year (2018: EUR 393.8
million). The strong US water business as well as the companies
Kimplas and Statek acquired in fiscal year 2018 contributed to
DS sales growth. Acquisition-related sales growth in the DS
segment amounted to 3.3%.
Development of sales channels
T019
Adjusted cost of materials and cost of materials ratio G012
EJT
DS
2019
2018
2019
2018
Group sales
(in EUR million)
665.5
684.6
430.2
393.8
Growth (in %)
– 2.8
7.3
9.2
Share of sales
(in %)
61
63
39
5.8
37
600
400
200
473.1
477.4
43.4
43.6
100
80
60
40
20
Development of earnings
Adjusted cost of materials ratio slightly improved
Adjusted cost of materials amounted to EUR 477.4 million in fiscal
year 2019, up 0.9% year-on-year (2018: EUR 473.1 million). The
adjusted cost of materials ratio (cost of materials in relation to
sales) was 43.4%, a slight improvement over the previous year
(2018: 43.6%). Taking into account the change in inventories of
finished goods and work in progress (2019: EUR 3.0 million; 2018:
EUR 10.4 million), the cost of materials ratio was 43.1%,
representing a year-on-year increase (2018: 42.7%).
Adjusted gross margin decreased
Adjusted gross profit amounted to EUR 630.6 million in fiscal year
2019, an increase of 0.6% from EUR 626.6 million the previous
year. At 57.3%, the adjusted gross margin was 50 basis points
below the level of the previous year (2018: 57.8%).
2018
2019
(Adjusted) Cost of materials (in EUR million, LHS)
(Adjusted) Material cost ratio (in %, RHS)
Adjusted personnel cost ratio increased
Adjusted personnel expenses amounted to EUR 302.4 million in
fiscal year 2019, a 7.7% increase over the previous year (2018:
EUR 280.8 million). Besides an increase in the number of
employees, severance payments to a former member of the
Management Board also contributed to the increase in personnel
expenses compared to the previous year. Furthermore, the
reduced allocations to provisions for bonus payments for employ-
ees in fiscal year 2018 led to a lower basis of comparison in the
previous year. The adjusted personnel cost ratio resulting from
the ratio of adjusted personnel expenses to sales amounted to
27.5% in fiscal year 2019 and was thus significantly higher than
in the previous year (2018: 25.9%).
66
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING
Adjusted other operating income and expenses decreased
compared to sales
The balance of adjusted other operating income and expenses
amounted to EUR – 141.0 million in fiscal year 2019, represent-
ing a decline of 2.3% over the previous year (2018: EUR – 144.4
million). This was due in particular to the effects of the first-time
application of IFRS 16. In relation to sales, the balance of adjusted
other operating income and expenses fell to 12.8% (2018: 13.3%)
compared to the previous year.
Other operating income includes in particular currency gains from
operating activities of EUR 6.1 million (2018: EUR 7.6 million) as
well as income from the release of liabilities and provisions in the
amount of EUR 4.0 million (2018: EUR 3.9 million).
OT H E R
OPERATIN G INCOM E , P. 15 2
Other operating expenses include currency losses from operating
activities of EUR 6.3 million (2018: EUR 8.5 million). In addition,
IT and telecommunications costs (+ 9.7%) and freight costs
(+ 7.7%) in particular increased compared to the previous year,
while expenses for rents and building costs fell by 57.2% due to
the first-time application of IFRS 16.
OT H E R O P E R AT I N G
EXPENSES, P. 1 52
Adjusted operating earnings impacted by weak sales
growth and a high personnel cost ratio
Adjusted operating earnings before interest, taxes, depreciation
and amortization (adjusted EBITDA) amounted to EUR 187.2 mil-
lion in fiscal year 2019 and were thus 7.0% below the previous
year’s level of EUR 201.4 million, despite the positive effects of
IFRS 16 (EUR 11.4 million). The weaker sales growth and the
higher personnel cost ratio had a negative effect on the adjusted
EBITDA. The adjusted EBITDA margin resulting from the ratio to
sales amounted to 17.0% and was thus significantly below the
level of the previous year (2018: 18.6%).
Return on capital employed (ROCE)
in EUR million
2019
2019
(without
IFRS 16)
T020
2018
Adjusted EBIT
136.1
135.0
164.5
Average capital
employed
1,043.8
1,008.3
13.0%
13.4%
941.0
17.5%
Adjusted EBITA amounted to EUR 144.8 million in 2019, a
decrease of 16.4% compared to the previous year (2018:
EUR 173.2 million). The resulting underlying EBITA margin was
13.2% (16.0%).
Return on capital employed (ROCE)
The return on capital employed (ROCE), which is calculated by
dividing adjusted EBIT by the average capital employed during
the year, amounted to 13.4% in fiscal year 2019 and thus
decreased compared to the previous year (2018: 17.5%).
Adjusted EBITA and adjusted EBITA margin
G013
250
200
150
100
50
173.2
16.0
2018
100
80
60
40
20
144.8
13.2
2019
Adjusted EBITA (in EUR million, LHS)
Adjusted EBITA margin (in %, RHS)
NORMA Value Added significantly lower
NORMA Value Added (NOVA), the relevant benchmark for the
long-term remuneration of the Management Board, amounted to
EUR 17.3 million in fiscal year 2019, a significant decrease com-
pared to the previous year (2018: EUR 60.8 million). The reasons
for this were the weak operating result (adjusted EBIT), higher
invested capital than in the previous year due to the acquisitions
of Kimplas and Statek, and a higher tax rate. In addition, the
calculation of NOVA is based, among other factors, on a higher
weighted average cost of capital (WACC) of 8.1% in fiscal year
2019 (2018: 7.1%) as a result of an increased market risk premium.
CONTROL SYSTEM AND CONTROL PARAMETERS, P. 52
Financial result impacted by the effects of IFRS 16
The financial result was down on the previous year at EUR – 15.5
million (2018: EUR –11.7 million) in fiscal year 2019, mainly influ-
enced by the first-time application of IFRS 16 and the associated
increase in interest expense from leasing liabilities by EUR 1.3
million. In addition, the financial result includes net currency
gains / losses (including income / expenses from the measurement
67
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING of currency hedging derivatives) of EUR – 0.2 million (2018:
EUR 0.7 million), as a result of the hedging of the financial liabilities
denominated in US dollars and the year-on-year development of
this currency. At EUR 13.3 million, the net interest expense was
at the the prioryear‘s level (2018: EUR – 13.3 million).
NOTES,
P. 152
Higher revised and adjusted income tax rate
Revised income taxes amounted to EUR 32.7 million in fiscal year
2019 (2018: EUR 38.0 million), resulting in a revised and adjusted
tax rate of 27.1% (2018: 24.9%). The increase in the tax rate
compared to the previous year is mainly due to additional income
taxes (“state taxes”) to be paid in some US states as well as taxes
paid retroactively for previous years in the US and non-creditable
withholding taxes in Singapore.
Lower adjusted profit for the period
Adjusted profit for the period after taxes amounted to EUR 87.8
million in fiscal year 2019 and thus decreased by 23.5% compared
to the previous year (2018: EUR 114.8 million). Based on the
unchanged number of shares of 31,862,400 compared to the
previous year, adjusted earnings per share after deduction of the
profit for the period for non-controlling interests amounted to
EUR 2.76 (2018: EUR 3.61).
Asset position
Higher total assets
Total assets as of December 31, 2019 amounted to EUR 1,514.3
million and were thus 2.9% higher compared to the previous year
(Dec 31, 2018: EUR 1,471.7 million). A major reason for this was
the first-time application of IFRS 16, which led to an extension of
the balance sheet due to the rights of use from operating leases
that had to be capitalized for the first time and the corresponding
lease liability.
Asset and capital structure 1
in EUR million
Assets
Non-current assets
2019
2018
963
928
The share of non-current assets to total assets amounted to
63.6% as of the balance sheet date (Dec 31, 2018: 63.1%).
G014
NOTES, P. 157
Current
assets
Liquid
assets
372
179
1,514
353
191
1,472
Current assets amounted to EUR 551.5 million as of the balance
sheet date, up 1.5% on the previous year (Dec 31, 2018: EUR 543.4
million). Trade receivables (including other receivables) increased
by EUR 19.2 million to EUR 162.4 million. This increase is partly
due to the reduction of ABS and factoring programs compared
to the previous year’s reporting date.
250
500
750
1,000
1,250
1,500
1,750
Liabilities
Equity
2019
2018
629
603
Non-current
liabilities
Current
liabilities
620
265
1,514
552
317
1,472
250
500
750
1,000
1,250
1,500
1,750
1_Deviations may occur due to commercial rounding.
Assets increased
NORMA Group’s non-current assets amounted to EUR 962.8 mil-
lion as of December 31, 2019, up 3.7% on the previous year
(Dec 31, 2018: EUR 928.3 million). In particular, the effect of the
first-time application of IFRS 16 was reflected in an increase in
property, plant and equipment.
A total of EUR 54.8 million was invested in fixed assets in fiscal
year 2019 (2018: EUR 63.3 million). Moreover, EUR 31.4 million
were additionally recorded to fixed assets for the capitalization
of the rights of use from leased assets for leased land and
buildings.
In contrast, cash and cash equivalents declined by EUR 10.7 mil-
lion or 5.6% to EUR 179.7 million. At 36.4%, the share of current
assets in total assets remained nearly unchanged from the
previous year’s reporting date (Dec 31, 2018: 36.9%).
Working capital increased
(Trade) working capital (inventories plus receivables less liabilities,
both primarily from trade payables and trade receivables)
amounted to EUR 192.5 million as of December 31, 2019, which
was 7.4% higher than in the previous year (Dec 31, 2018:
EUR 179.2 million). It was mainly influenced by a disproportion-
ately high increase in trade receivables as a result of the ABS and
factoring programs that were scaled back in fiscal year 2019.
The working capital ratio in relation to sales was 17.5% as of
December 31, 2019 (Dec 31, 2018: 16.5%).
Increased equity ratio
Consolidated equity amounted to EUR 629.5 million as of
December 31, 2019, an increase of 4.5% compared to the previous
year (2018: EUR 602.4 million). The increase in equity was largely
due to the result for the period of EUR 58.4 million, but also positive
currency translation differences of EUR 9.0 million. The dividend
payment of EUR 35.0 million in the second quarter of 2019
reduced equity. The first-time application of IFRS 16 resulted in
a reduction of EUR 2.0 million in the opening balance sheet value
68
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING of equity. The equity ratio was 41.6% (2018: 40.9%) at the end
of fiscal year 2019, an increase over the previous year.
Higher net debt
Net debt (financial liabilities, including derivative hedging
instruments in the amount of EUR 0.9 million, less cash and cash
equivalents) amounted to EUR 420.8 million at the end of the
reporting period and thus rose by 5.1% compared to the previous
year (Dec 31, 2018: EUR 400.3 million).
This was mainly due to the first-time application of IFRS 16, while
the cash neutral currency effects on foreign currency loans and
current interest expenses increased net debt in the first six months
of 2019.
Financial liabilities
Financial liabilities increased by 1.7% to EUR 600.5 million
(Dec 31, 2018: EUR 590.7 million). In the area of financial liabili-
ties, loan liabilities declined to EUR 541.9 million (Dec 31, 2018:
EUR 569.1 million). This decline is mainly due to the net repayment
in connection with the refinancing in December 2019. Leasing
liabilities increased by EUR 38.6 million due to the liabilities from
capitalized leases recognized for the first time in 2019 in
accordance with IFRS 16.
NOTES, P. 17 1 F F.
Gearing (net debt in relation to equity) as of the 2019 balance
sheet date was 0.7 and thus unchanged from the previous year.
Leverage (net debt without hedging derivatives in relation to
adjusted EBITDA of the last twelve months) increased to 2.2
compared to the previous year (Dec 31, 2018: 1.9).
Unrecognized assets
NORMA Group’s rights to its brands and patents on the brands it
owns, but customer relationships, if acquired externally, are also
recognized in the balance sheet as intangible assets. However, the
reputation of these brands and how well known they are among
the NORMA Group’s customers also play important roles in the
success of its business. Well-established customer relationships
that are based on NORMA Group’s long-standing distribution
network are equally important. The know-how and experience of
NORMA Group employees also play important roles in the
Company’s success. The many years of research and development
expertise and project management know-how are also seen as
competitive advantages for NORMA Group. These values are not
recognized in the balance sheet.
Financial position
Financing measures
The refinancing was concluded with a bank consortium consisting
of ten international banks. A sustainability component links the
financing conditions to NORMA Group’s commitment to corporate
responsibility. The new financing was used to repay maturing
promissory note tranches and refinance the existing bank loan
agreement, significantly reducing NORMA Group’s overall gross
debt (liabilities to financial institutions). In addition, a commercial
paper program was established that can be used for short-term
liquidity management. As of December 31, 2019, EUR 15 million
of this program had been utilized.
As of the reporting date December 31, 2019, the revolving line of
credit in the amount of EUR 50 million in the syndicated loan had
not been used. The accordion facility that was negotiated as part
of this loan agreement had also not been drawn as of the report-
ing date of December 31, 2019. Both instruments are available
to NORMA Group at least until 2024, which ensures a maximum
of financing flexibility.
NORMA Group monitors risks from changes in exchange and
interest rates on a regular basis and aims to limit them by using
derivative hedging instruments among other tools. Furthermore,
NORMA Group generally strives to achieve a diversification of its
financing instruments in order to reduce risks. These also include
prolongation of repayment obligations and an even distribution
of the maturity profile. Most of the supply and service relationships
between individual currencies are simultaneously hedged over
the course of the year.
NORMA Group successfully refinanced its bank credit lines in
fiscal year 2019, thereby creating additional financial security
and even greater flexibility for the future. The new credit agreement
has an initial total volume of EUR 300 million. This includes a
revolving facility of EUR 50 million and a flexible accordion facility.
NORMA Group uses interest rate hedges to reduce interest rate
risks that could result from the external financing components.
As of December 31, 2019, the average interest rate on total gross
debt was 2.1%. NORMA Group’s maturity profile for all three
promissory notes I (2013), II (2014) and III (2016) and the
syndicated credit line (2019) on December 31, 2019, are shown
in the
GRAPHICS 015 AND 016 ON P. 70.
As of the balance sheet date in 2019, NORMA Group complied
with all of the conditions contained in the loan contracts (financial
covenants: debt in relation to consolidated EBITA).
Future concrete financing steps will depend on the current
changes in the financing markets and acquisition potential.
69
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Maturity profile by currency
G015
in EUR million
300
250
200
150
100
50
0
109
184
51
49
44
11
52
41
2020
2021
2022
2023
2024
2025
2026
Euro
US dollars
Maturity profile by financial instrument
G016
in EUR million
300
250
200
150
100
50
0
45
248
15
29
65
35
42
21
41
2020
2021
2022
2023
2024
2025
2026
Bank borrowings
Promissiory Note I
CP program
Promissiory Note II
Promissiory Note III
Development of cash flow
Net operating cash flow declined slightly
In fiscal year 2019, NORMA Group generated net operating cash
flow (adjusted EBITDA less changes in working capital and oper-
ating expenses) of EUR 122.9 million (2018: EUR 124.4 million).
This includes a positive effect of EUR 11.3 million from the first-
time application of IFRS 16. Without this effect, net operating
cash flow would have been EUR 111.6 million. In contrast, the
reduction of factoring activities in the amount of EUR 10.4 million
had a negative effect.
Cash flow from operating activities
Cash flow from operating activities, which is derived indirectly
from the net profit for the period, amounted to EUR 137.1 million
in fiscal year 2019 (2018: EUR 130.8 million) and is thus higher
than in the previous year. Among other factors, this is due to the
first-time application of IFRS 16, which resulted in a change in
the presentation of the cash flows attributable to capitalized
leases from cash flow from operating activities to cash flow from
financing activities. The total effect of the first-time application
of IFRS 16 on cash flow from operating activities amounted to
EUR 11.3 million.
NOTES, P. 195
NORMA Group participates in a reverse factoring program, a
factoring program and an ABS program. The corresponding cash
flows are presented under cash flow from operating activities as
this reflects the economic substance of the transactions. Liabilities
under the reverse factoring program are reported under trade
payables and similar liabilities.
As of December 31, 2019, liabilities of EUR 21.3 million
(Dec 31, 2018: EUR 19.2 million) from reverse factoring programs
were recognized. The total amount of cash flow relevant trade
receivables sold under the factoring and ABS programs
amounted to EUR 48.7 million as of December 31, 2019
(2018: EUR 61.2 million).
NOTES, P. 169 FF.
The cash inflow from operating activities also includes payments
for share-based payments of EUR 1.0 million (2018: EUR 3.5 mil-
lion) resulting from the cash remuneration under the Long-Term
Incentive plan (LTI) for employees of NORMA Group (2018: cash
remuneration of the 2014 tranche of the MSP and LTI for
employees of NORMA Group).
Cash flow from investing activities
Net cash used in investing activities was EUR 57.0 million in 2019
(2018: EUR 129.5 million). Cash flow from investing activities in
2019 was particularly influenced by the outflow of funds for the
procurement of non-current assets in the amount of EUR 57.8
million (2018: EUR 60.8 million). This includes expenses for the
expansion (2019: EUR 33.0 million; 2018: EUR 42.8 million) and
expenses for the maintenance and improvement of operating
capacities (2019: EUR 21.8 million; 2018: EUR 20.5 million). In the
previous year, the cash flow from investing activities was mainly
impacted by net payments for acquisitions (Kimplas and Statek)
amounting to EUR 69.8 million.
NORMA Group’s investing activities in fiscal year 2019 (tangible
and intangible assets) in the amount of EUR 54.8 million (2018:
EUR 63.3 million) represents a reduced investment ratio of 5.0%
(2018: 5.8%) of sales.
70
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING NORMA Group is investing the funds from the operating cash
flow in further growth, among other areas. The investments made
in the 2019 reporting year related to production facilities and
capacity expansion, mainly in the US, Mexico, Poland, Serbia, the
Czech Republic, France and China.
PRODUCTION AND LOGISTICS,
P. 74
Cash flow from financing activities
Cash flow from financing activities was EUR – 93.2 million in 2019
(2018: EUR 31.3 million). It mainly includes net loan payments
(EUR – 32.9 million), dividend payments to the shareholders of
NORMA Group SE (EUR – 35.0 million) and interest payments
(EUR – 15.1 million). Furthermore, due to the firsttime application
of IFRS 16, payments for leasing liabilities (EUR – 10.1 million) are
reported under cash flow from financing activities.
Breakdown of sales by segments 1
G017
15% (13%)
Asia-Pacific
41% (41%)
Americas
1_Previous year’s figures in brackets.
44% (46%)
EMEA
Segment reporting
EMEA
As a result of acquisitions and developing new markets in line
with NORMA Group’s continuing strategy of internationalization,
the share of sales realized internationally increased from 81.2%
to 83.0%.
Due to the fact that financing as a whole is controlled centrally
and exclusively made available through approved external credit
facilities by the central functions of NORMA Group, the Company
forgoes publishing a separate list of financing by segment. In
every segment, the aim is to achieve an investment ratio and cash
generation that is in line with the Group average in the
medium-term.
GOALS AND STRATEGIES REGARDING FINANCE AND
LI QUID IT Y MA NAGEM ENT, P. 55
Effects from the first-time application of
IFRS 16 in EMEA 1
in EUR million
Adjusted EBITDA
Adjusted EBITDA
margin (in %)
Adjusted EBITA
Adjusted EBITA
margin (in %)
Assets
(Dec 31, 2019)
Liabilities
(Dec 31, 2019)
CAPEX
2019
adjusted
Effects of
IFRS 16
90.8
17.4
73.6
14.1
632.0
204.6
25.0
3.8
0.7
0.2
0.1
8.3
8.8
1.6
T021
2019
adjusted
without
IFRS 16
87.0
16.7
73.4
14.0
623.7
195.8
23.4
External sales in the EMEA region amounted to EUR 486.0 million
in 2019, down 1.8% compared to the previous year (2018:
EUR 494.8 million). Organic sales decreased by 2.3%, which is
mainly due to the poor conditions in the European automotive
industry with declining production and sales figures. Acquisition-
related revenues from the acquisition of Statek contributed 0.6%
(EUR 3.0 million) to growth, while currency effects had a slightly
negative impact of – 0.1% on sales growth.
The EMEA region accounted for 44% of total sales in fiscal year
2019 (2018: 46%).
Adjusted EBITDA in the EMEA region declined by 4.9% to
EUR 90.8 million in fiscal year 2019 (2018: EUR 95.5 million). At
17.4%, the adjusted EBITDA margin was slightly below the level
of the previous year (2018: 17.6%). The main reason for the
decline is the higher personnel cost ratio in relation to sales, but
this was nearly offset by the effect of the first-time application of
IFRS 16 and is reflected negatively in adjusted EBITA only.
Adjusted EBITA amounted to EUR 73.6 million (2018: EUR 82.4
million), a decrease of 10.6% compared to the previous year. The
adjusted EBITA margin was 14.1% (2018: 15.2%).
Assets increased slightly by 1.2% to EUR 632.0 million compared
to the previous year (Dec 31, 2018: EUR 624.4 million). Capital
expenditure amounted to EUR 25.0 million (Dec 31, 2018:
EUR 28.3 million) and mainly related to investments in new
machinery and production facilities in the Czech Republic, Serbia,
Poland and France. Debt increased by 3.2% to EUR 204.6 million
in 2019 (Dec 31, 2018: EUR 198.3 million).
1_Deviations may occur due to commercial rounding.
71
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Adjusted EBITDA for the Americas region amounted to
EUR 79.6 million in 2019, down 8.7% year-on-year (2018:
EUR 87.2 million). The adjusted EBITDA margin amounted to
17.3% (2018: 19.3%). Adjusted EBITA declined by 18.2% to EUR
64.0 million (2018: EUR 78.3 million), while the adjusted EBITA
margin was 13.9% (2018: 17.4%). The margin in the Americas
region was negatively impacted, among other factors, by the
unplanned additional extraordinary costs resulting from the
introduction of an ERP system at a Latin American site. The effects
of the first-time application of IFRS 16 had a positive impact on
adjusted EBITDA (EUR 5.8 million) and adjusted EBITA
(EUR 0.7 million).
Assets increased by 0.9% year-on-year to EUR 655.3 million
(Dec 31, 2018: EUR 649.8 million).
Investments in the region amounted to EUR 18.0 million, down
14.5% on the previous year (Dec 31, 2018: EUR 21.1 million).
Investment focused on the plants in the US and Mexico.
PRODUCTION AND LOGISTICS, P. 74
Liabilities in the Americas region amounted to EUR 271.9 million,
down 6.6% compared to the previous year (Dec 31, 2018:
EUR 291.2 million).
Americas
Effects from the first-time application of
IFRS 16 in Americas 1
in EUR million
2019
adjusted
Effects of
IFRS 16
T022
2019
adjusted
without
IFRS 16
Adjusted EBITDA
79.6
5.8
73.8
Adjusted
EBITDA margin
(in %)
Adjusted EBITA
Adjusted EBITA
margin (in %)
Assets
(Dec 31, 2019)
Liabilities
(Dec 31, 2019)
CAPEX
17.3
64.0
13.9
1.3
0.7
0.1
16.0
63.3
13.8
655.3
23.4
631.9
271.9
18.0
25.5
0.1
246.4
17.9
1_ Deviations may occur due to commercial rounding.
External sales in the Americas segment rose by 2.1% to EUR 450.8
million in 2019 (2018: EUR 441.5 million). Organic sales declined
by 3.1%. This was due to the generally weak development in the
US car and truck market with declining production and sales
figures and strikes at key NORMA Group customers. Growth
impulses came mainly from the US water business of the
subsidiary National Diversified Sales (NDS). Currency effects in
connection with the development of the US dollar also had a
positive effect on sales growth (5.2%).
Asia-Pacific
Effects from the first-time application of
IFRS 16 in Asia-Pacific 1
in EUR million
2019
adjusted
Effects of
IFRS 16
T023
2019
adjusted
without
IFRS 16
Adjusted EBITDA
28.0
1.6
26.4
Adjusted
EBITDA margin
(in %)
Adjusted EBITA
Adjusted EBITA
margin (in %)
Assets
(Dec 31, 2019)
Liabilities
(Dec 31, 2019)
CAPEX
16.8
20.1
12.1
258.9
53.7
12.4
1.0
0.1
0.1
3.8
4.1
0.3
15.8
20.0
12.0
255.1
49.6
12.1
1_ Deviations may occur due to commercial rounding.
External sales in the Asia-Pacific region amounted to EUR 163.4
million in 2019, an increase of 10.5% over the previous year (2018:
EUR 147.8 million). Organic growth amounted to 2.3% and was
positively influenced in particular by the resurgence of demand
in China in the second half of 2019, despite continued market
weakness. Reasons for this included the start of several series
production runs and effects from the early introduction of the
China 6a standard in some Chinese provinces. In addition, the
recent acquisition of the Indian water specialist Kimplas contrib-
uted 7.0% or EUR 10.3 million to sales growth. Currency effects
had an additional positive impact of 1.2% on sales growth.
72
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING
Adjusted EBITDA in the Asia-Pacific region increased by 21.9%
to EUR 28.0 million (2018: EUR 23.0 million). The adjusted EBITDA
margin was 16.8% (2018: 15.2%), exceeding the previous year’s
figure. Adjusted EBITA increased by 10.1% to EUR 20.1 million
(2018: EUR 18.3 million), resulting in a constant adjusted EBITA
margin of 12.1% compared to the previous year. The first-time
application of IFRS 16 had a positive effect on adjusted EBITDA
(EUR 1.6 million) and adjusted EBITA (EUR 0.1 million).
Assets increased by 3.4% to EUR 258.9 million in the reporting
year (Dec 31, 2018: EUR 250.4 million). Investments, which
amounted to EUR 12.4 million in 2019 (Dec 31, 2018: EUR 11.7
million), were mainly used to expand the sites in China.
PROD UCT ION AND LOG IST ICS, P. 74
Liabilities in the Asia-Pacific region were EUR 53.7 million, down
2.0% compared to the previous year (Dec 31, 2018: EUR 54.8
million).
Development of segments
T024
in EUR million
2019 3
2018
Δ in %
2019 3
2018
Δ in %
2019 3
2018
Δ in %
EMEA
Americas
Asia-Pacific
Total segment sales
External sales
523.2
486.0
543.1
494.8
– 3.7
460.3
– 1.8
450.8
451.2
441.5
2.0
2.1
166.6
163.4
151.3
147.8
Contribution to consolidated
sales (in %)
Adjusted EBITDA 1
Adjusted EBITDA margin
(in %) 2
Adjusted EBITA 1
Adjusted EBITA margin (in %) 2
44
90.8
17.4
73.6
14.1
46
95.5
17.6
82.4
15.2
41
– 4.9
79.6
– 10.6
17.3
64.0
13.9
41
87.2
19.3
78.3
17.4
15
– 8.7
28.0
– 18.2
16.8
20.1
12.1
13
23.0
15.2
18.3
12.1
10.1
10.5
21.9
10.1
1_The adjustments are described in the Notes.
2_In relation to segment sales.
3_Including the effects of the first time adoption of IFRS 16.
NOTES, P. 148
73
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Production and logistics
Strategic investment highlights 2019
T025
NORMA Group manufactures and markets more than 40,000
different products and has 29 production sites all over the world.
Furthermore, the Company has a network consisting of numerous
distribution, sales and competence centers that supply to its
customers in the respective regions.
Region
EMEA
Czech Republic
Hustopece
Serbia
Subotica
Country
City
Investment
Production and capacity utilization
The capacity utilization of NORMA Group’s manufacturing and
distribution facilities varies from site to site. In markets such as
the emerging countries, where NORMA Group’s business is still
being developed, the area-related utilization of production plants
is still relatively low. This can be attributed to the fact that
investment decisions are planned in advance to ensure that
sufficient production space is available to be able to expand
production capacity in a flexible manner. In industrial nations and
the markets in which NORMA Group already has a long-term
market position and the plants are largely working to capacity,
an attempt is made to avoid investing in additional manufactur-
ing space whenever possible. Instead, the goal is to optimize the
current manufacturing processes by improving efficiency in order
to be able to use the existing space to create additional capacity.
The capacity utilization of manufacturing plants can be ramped
up flexibly to suit customer demand and the order situation. Within
each product category, a wide variety of different products with
different specifications can be manufactured at the existing plants
by performing only minor conversion measures. Thus, production
can be optimally adapted to suit customer demand.
France
Poland
Guichen
Pilica
Americas
USA
Lindsey, California
Mexico
Monterrey
Saltsburg, Pennsylvania
Completion of the full automation of the CTH product line
Investment in a new transfer press system to increase
capacity for V-profile clamps
Further expansion of new production capacities for a newly
developed SCR system to fill additional large orders from
leading European automobile manufacturers
Modernization of how tools are designed in component
production in the area of fluid systems
Installation of manufacturing capacities to expand the
product range with respect to corrugated pipes
Automation in the area of connector assembly
Expansion of manufacturing capacities in the area of fluid
systems for the e-mobility sector to manage new customer
orders
Significant expansion of production capacities in the area of
water management
Investment in the in-house production of clamp components
Setup and localization of manufacturing facilities for the
production of PS3 connectors for an international customer
Expansion of assembly and heat treatment capacities as
a result of several major orders from major international cus-
tomers
Installation of a new multilayer extrusion line for the manu-
facture of new products in the fluid and e-mobility sector
Investment in two new transfer press systems to increase
capacity for V-profile clamps
Investment in capacity expansion
Asia-Pacific
China
Changzhou
NORMA Group once again invested in expanding its capacity
during the reporting year. The most important strategic
investments are shown in the following table.
Wuxi
Continuation of the structural expansion of the
manufacturing site for fluid components
74
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Continuous optimization of the entire value chain
At NORMA Group, all internal processing steps in the value chain
are constantly analyzed for optimization potential. The Global
Operational Excellence Management System represents an
essential tool here that helps to analyze existing processes,
identify potential for improvements, introduce the appropriate
measures for implementation and realize cost saving projects. As
a result, many processes have already been automated and
standardized in recent years, so that significant economies of
scale have been achieved.
NORMA Group is introducing the NORMA Group Production Sys-
tem (NPS) in all of its plants since 2014. The goal of the NPS is
to increase operational performance, safety, delivery reliability
and quality in the plants and to identify and realize further cost
savings. NORMA Group uses a “toolbox” of lean methods. These
include the 5S methodology, the daily Gemba walk, setup time
optimization using SMED (Single Minute Exchange of Die) and
TPM (Total Productive Maintenance). In addition, a standardized
problem-solving process ensures that internal and external
customer complaints are processed faster and more effectively.
As a result of the rightsizing program initiated in the first quarter
of 2019 to harmonize processes and systems within the Group,
production and logistics were relocated in various regions in fis-
cal year 2019. Against this backdrop, the warehouse in Moscow
and the production and logistics activities at the production facil-
ity in Togliatti, Russia, were closed in October 2019. Customers
in Russia are now supplied directly from the production plants in
Europe or from the distribution center in Poland. In addition, the
Groen distribution center in the Netherlands was closed and the
logistics activities were transferred to the warehouse and
distribution center in Marsberg, Germany. The business develop-
ment and sales organization will remain in place in both the
Netherlands and Russia in order to remain close to the market
and customers. The measures are intended to help bundle existing
structures, streamline internal processes in a targeted manner
and thus increase efficiency.
Customer focus and secure supply chain
In order to optimize its logistics costs, NORMA Group always
strives to keep the geographical distances in the value chain as
short as possible and avoid non value-adding intermediate steps
via other NORMA Group sites. The goal is therefore to always
manufacture in the regions that its customers are based in. This
not only optimizes working capital and lowers logistics costs, but
also minimizes delivery risks, reduces negative impacts on the
environment and ensures the higher level of flexibility that is being
increasingly demanded.
Despite these efforts, cross-border deliveries are indispensable
for NORMA Group in many places in order to be able to respond
flexibly to customer requirements. Optimized and secure customs
processes are therefore indispensable. For this reason,
NORMA Group participates in various customs trade partnership
programs in the US, China and the EU, for example. NORMA Group
ensures a fully compliant supply chain through the Supply Chain
Security programs, especially Authorized Economic Operator
(AEO) and Customs Trade Partnership against Terrorism (C-TPAT),
which are part of the worldwide compliance program. By regularly
reviewing all its business partners, NORMA Group excludes the
supply of legally sanctioned third parties. In addition, internal
organizational instructions and regular reviews ensure compliance
with the relevant statutory export control regulations.
Quality management
The NORMA Group products are ‘mission-critical’ with regard to
the end products of the customer. Any quality defects or functional
failures could have a significant impact on customers or end users.
Thus, it is a clear business imperative that NORMA Group
consistently delivers products that meet and surpass all customers’
quality needs and expectations.
To support this objective and ensure a global and standardized
approach to quality, all NORMA Group manufacturing locations
(acquisitions have a nominal 12-month target for accreditation)
are accredited in accordance with either ISO 9001 or IATF 16949.
In addition, two manufacturing sites that supply the aerospace
industry are accredited in accordance with EN 9100. Compliance
with these industry-recognized standards ensures that
NORMA Group continuously strives for improvement in every
aspect of business and puts its customers at the center of all its
activities.
NORMA Group has a global operating footprint. One key challenge
refers to the recognizing and understanding customer diversity
along with many different standards and market requirements.
This is met by NORMA Group via localized manufacturing
solutions and the application of standardized tools, such as the
Quality Management software, which forms an integral part of
the new Microsoft ERP system currently being rolled out across
the entire Group.
NORMA Group uses several metrics to measure customer qual-
ity, satisfaction and delivery performance. The most important
key performance indicators are the number of defective parts
shipped, expressed in parts per million (PPM), and the average
number of quality-related complaints reported by the customer.
The number of defective parts per million (PPM) recorded in 2019
was six (2018: seven). This continues the year on year improve-
ment trend and supports the customers’ ever more challenging
75
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING targets. Additionally, the average number of quality – related
customer complaints could be improved further to an average of
six claims per month in fiscal year 2019 (2018: seven).
Purchasing and supplier management
This capable purchasing organization is to be further optimized
as part of the “Get on Track” program. The goal is to leverage
further savings potential through increased global cooperation
within the product categories and across regional boundaries.
One of the focal points is on inter-regional standardizing of local
processes.
The procurement costs of materials, goods and services have a
significant impact on the earnings position of NORMA Group. By
managing all procurement activities and the selection of suppliers,
Purchasing can make an important contribution to the success
of the Group. The central task here is to optimize the services
purchased and minimize costs, taking into account Group-wide
economies of scale.
Global purchasing organization
The purchasing activities of NORMA Group are divided into four
main product groups:
• Steel and metal components (FASTEN)
• Technical granulates, plastic and rubber products (FLUID)
• Standard plastics, components and commodities (WATER)
• Capital goods, non-production materials and services (MRO)
The global purchasing organization is set up in a matrix structure.
In addition to the product groups mentioned above, there is a
subdivision into the regional segments EMEA, Asia-Pacific and
the Americas. This organizational structure enables centralized
control by the respective experts from the product groups and
the integration of the knowledge of the regional or local purchasing
teams about special local market conditions. NORMA Group thus
ensures professional purchasing management and the
achievement of competitive prices for goods and services.
E-procurement solutions support the global organization in its
work and enable efficient reporting.
Development of material prices
Adjusted costs of materials amounted to EUR 477 million (2018:
EUR 473.1 million) or 43.4% (2018: 43.6%) of sales revenue in
fiscal year 2019. As a result, the adjusted cost of materials ratio
is thus nearly at the previous year’s level.
P. 65 The purchasing volume, which is used for internal manage-
ment purposes and adjusted for currency effects, amounted to
around EUR 490 million (2018: EUR 498 million). Of this amount,
EUR 335 million (68%) was attributable to sales of production
materials.
EARNINGS POSITION,
Steel and metal components
For the stainless steel product group, the most important product
group for NORMA Group, slight reductions in the base prices (basic
purchase price for stainless steel excluding alloy surcharges) were
achieved in the annual price negotiations for the EMEA and
Asia-Pacific regions. The Americas region showed a different
picture. The 25% penalty tariffs imposed by the US government
in March 2018 on nearly all steel imports and fixed import quotas
led to massive increases in the price of goods purchased in the
region. In some cases, NORMA Group was confronted with price
increases of up to 30% compared to the previous year. As a con-
sequence, a contract term of only six months was chosen for some
of the goods purchased, in order to be able to renegotiate flexibly
in the event of a lifting of the tariffs. Due to the fact that the general
conditions remained unchanged during the course of the year,
however, high market prices had to be paid in the second half of
2019 as well. In addition, the punitive tariffs to be paid for goods
purchased (steel, wire and metal components) from countries
subject to the tariffs represented an additional financial burden
for the entire Americas region.
Besides the market distortions in the steel sector caused by US
customs policy, the prices for the alloy surcharges recurrently fixed
on a monthly basis (market prices for nickel, scrap metal and
ferrochrome, among other metals) also increased significantly in
fiscal year 2019 and reached their peak in November 2019. In
particular, the alloy metal nickel, used in all austenitic steels, acted
as a price driver.
G 18: DEVELOPMENT OF NICKEL PRICES AND THE
ALLOY SURCHARGE 1.4301
Development of nickel prices and
G018
the alloy surcharge 1.4301
20,000
18,000
16,000
14,000
12,000
10,000
8,000
1,800
1,700
1,600
1,500
1,400
1,300
1,200
Jan 2019
Apr 2019
Aug 2019
Dec. 2019
Nickel LME 3M EUR (from USD, LHS)
Alloy surcharges of flat products 1.4301 X5CrNi18-10 Europe
(Outokumpu) Cash EUR (from EUR, RHS)
76
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING
Purchasing turnover in 2019 by material groups
G019
chasing department. The current supplier base is structured as
follows: The share of the top 10 suppliers accounted for
approximately 28% in fiscal year 2019. The top 50 suppliers
accounted for around 53% of the total purchasing volume of
production material, amounting to EUR 335 million.
15%
Employees
In the product group of surface-refined non-stainless steel, lower
purchase prices were agreed in the price negotiations for European
needs in both the first and second half of the year.
Technical granulates, plastic and rubber products
NORMA Group also recorded further price increases of up to more
than 10 percent in the technical plastics product group in fiscal
year 2019. The reason for this was the initially sustained high
global demand for technical plastics, which led to further
allocations by producers at the beginning of the year. However,
thanks to many years of trustful cooperation with important
suppliers and internal countermeasures, impending bottlenecks
were successfully averted.
The market situation eased somewhat in the course of the year
as the economy weakened, driven by the global automotive indus-
try and other factors, so that the purchase prices of important
technical plastics could be renegotiated in the fourth quarter.
However, the annual average price level for this product group
was significantly higher than in the previous year.
32%
Indirect material
(MRO)
6%
Alloy surcharges
3%
Electronic
components
4%
Others
13%
Metal components
Steel, wire
13%
Granules
9%
Plastic parts
6%
Rubber moulded parts
Supplier management
Standard plastics, components and commodities
The prices for granulates were stable in 2019 compared to the
previous year, benefiting from the macro-political situation and
a weaker economy. Prices for granulates used in water manage-
ment were even at a historically low level in 2019 due to the ban
on imports of recycled plastics to China and the resulting increased
supply in the Americas region. NORMA Group was able to take
advantage of this situation and recorded price reductions.
The purchasing organization continuously monitors the perfor-
mance of suppliers. A key instrument in this respect is the annual
implementation of detailed supplier evaluations. This involves the
use of globally uniform criteria from the areas of quality, logistics,
sustainability and commercial aspects. The relevant departments
are involved in the assessments at local level. The evaluation
process is mapped using e-procurement software.
2 0 1 9 C R
REPORT
Supplier structure
The focus of NORMA Group’s supplier selection is a balance of
supplier consolidation to reduce complexity and avoid strong
dependencies. This balance is continuously optimized by the pur-
Decentralized organization,
common corporate culture that is lived
The employees of NORMA Group make an important contribution
to its success. Human resource management and personnel
development therefore play a major role.
HR management at NORMA Group is organized in a decentralized
manner to take the international nature of the business and the
rapid growth of NORMA Group into account. The decentralized
organization allows the individual sites to adapt flexibly to the
local conditions and to contribute their specifications, particularly
with regard to regional expertise in personnel development and
recruiting.
In order to promote a uniform corporate culture, NORMA Group
has formulated key guiding principles that reflect the fundamental
convictions of the Company. These guiding principles are taught
and lived at all sites.
2019 CR REPORT
Development of personnel figures
As of December 31, 2019, NORMA Group employed 8,521
employees (core workforce including temporary staff) and thus
around 4% fewer than in the previous year (December 31, 2018:
8,865). The number of temporary employees at the end of Decem-
ber was 1,998 (December 31, 2018: 1,964). This corresponds to
around 23% of the total workforce.
77
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Stable share of employee groups
Well-trained and qualified workforce
Development of personnel figures at NORMA Group G020
12,000
10,000
8,000
6,000
4,000
2,000
8,865 8,521
1,964
1,998
7,667
1,552
5,975
1,147
6,306
1,185
6,664
1,214
4,947
813
4,485
726
4,252
837
3,415
3,759
4,134
4,828
5,121
5,450
6,115
6,901
6,523
The total number of employees (permanent and temporary) in
the current reporting period was 4,672 direct employees (2018:
4,951), 1,630 indirect employees (2018: 1,626) and 2,219 sala-
ried employees (2018: 2,289). While direct employees are indi-
viduals who are involved in the manufacturing process, indirect
employees are persons who work in production-related areas
such as the quality department, for example. The group of sala-
ried employees is mainly assigned to administrative functions.
2011 2012 2013 2014 2015 2016 2017 2018 2019
Core workforce
Temporary staff
26%
Salaried employees
Breakdown of employees by group
G021
55%
Direct employees
In the Americas region in particular, the number of employees
was significantly lower than in the previous year. The core
workforce in this region decreased by around 13% to 1,601
employees. This corresponds, in particular, to an adjustment
of personnel structres in the context of sales losses in the
EJT business.
In the EMEA region, the number of employees also declined by
around 5% compared to the previous year, whereas the number
of employees in the Asia-Pacific region rose by 4%.
19%
Indirect employees
Core workforce by segments
2019
In %
2018
EMEA
Americas
Asia-Pacific
Total
3,549
1,601
1,373
6,523
54
25
21
3,744
1,842
1,315
6,901
T026
In %
54
27
19
The employees of NORMA Group are well trained and obtain their
qualifications by earning school and university degrees and by
participating in professional and supplementary training courses.
In order to maintain the high degree of employee qualification
and ensure the successful development of the Group in the future,
NORMA Group believes it is important to invest in the training
and further education of its employees. The goal is to recruit as
many specialized employees as possible from one’s own junior
staff, thereby becoming more independent of the external labor
market. NORMA Group also cooperates closely with renowned
universities.
Focus on uniform global talent promotion
In order to identify, retain and develop talents within the Group,
NORMA Group set up the ‘Learning & Development’ competence
center a couple of years ago. The competence center acts as an
internal consultant to the local HR departments, executives and
employees. The focus of the initiative is on the conception and
supply of development processes and programs that can be used
worldwide, which are aligned with NORMA Group’s Company
values and growth targets. In order to promote learning at the
workplace and the individual development of its employees in a
targeted manner, direct supervisors as well as internal mentors
and coaches are made available. As part of the project, various
local and regional human resource development methods have
been integrated into a global portfolio. This ensures uniform global
talent promotion for all NORMA Group employees.
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Numerous training opportunities for career entrants
Good performance is rewarded
Besides accompanying courses of studies in the areas of business
engineering, mechanical engineering, mechatronics and business
administration, NORMA Group also offers internships for students
in all departments and regions. Furthermore, quite a few young
people are trained in various technical and commercial areas at
NORMA Group each year.
Exchanges of personnel:
more communication, better understanding
NORMA Group will seek to continue to grow internationally in the
future both organically as well as through targeted acquisitions.
In order to be able to integrate new parts of the Group, the
individual sites need to work together efficiently. Thus,
communication that functions well is essential. To encourage this,
NORMA Group offers several exchange programs for its
employees, from one- to three-month ‘Bubble Assignments’
‘Long-Term-Assignments’. Expert personnel and managers who
participate in this initiative bring special skills and experience to
the new sites and, at the same time, benefit from the know-how
of their local colleagues. Through these projects, NORMA Group
promotes the internal transfer of knowledge, inter-cultural
awareness, the establishment of networks and the individual
development of the participants.
NORMA Group strives to attract and retain qualified and
committed employees. In order to encourage employee interest
in a positive development of the Company’s value and permit
them to participate in its economic success, the remuneration
system at NORMA Group includes a fixed salary as well as a
performance- related variable remuneration component. For tariff
and non- tariff employees in Germany, this is based on important
financial performance indicators or other factors. Moreover, the
personal achievements of employees also play a role in
remuneration.
Feedback culture –
employee opinions are always welcome
In the interest of a continuous analysis and improvement process,
NORMA Group conducts regular employee surveys. The focus of
this central feedback tool is on the Company’s strengths and
weaknesses from an employee perspective, employee satisfaction,
as well as the quality of leadership and cooperation. Further
information can be found in the
2019 CR REPORT.
Healthy team – healthy company
A productive company like NORMA Group depends on having
healthy and satisfied employees. For this reason, NORMA Group
supports its employees’ health by conducting various activities.
Activities are offered at the site in Maintal, for example. In 2019,
these included cardio scans, functional movement analyses, spinal
column screenings, vein checks and nutritional advice.
Internal “Train the Trainer”
program launched
Whether it’s on change management, communication
strategies or conflict management – knowledge at the
NORMA Group is quite comprehensive and already
available at the Group’s various sites. In order to share
its current expertise even better throughout the Com-
pany, NORMA Group has launched a “Train the
Trainer” program in the EMEA region that focuses on
leadership skills. Representatives from various Euro-
pean sites attended a training course where they
learned more about the expectations of the manage-
ment culture at NORMA Group and the strategies and
tools for implementing it. The trained trainers then held
their own workshops at their respective sites where
they passed on this knowledge to the local managers.
The program supports the global
initiative
“LeadershipCulture@NORMA” and will be expanded
in the years to come.
The information in the above box is not part of the Consolidated
Management Report and therefore is not subject to the audit.
79
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Occupational health and safety is of the highest priority
NORMA Group places great importance and emphasis on the
topics of health, safety and the wellbeing of its employees. The
Company complies with the existing legislative and regulatory
requirements relating to health and safety, but also goes further
with a number of activities and initiatives to proactively manage
and minimize potential risks. NORMA Group fully endorses the
industry-recognized occupational health and safety management
system OHSAS 18001 and is currently in transition to the new
integrated standard ISO 45001.
As part of its value-based safety program, NORMA Group
analyzes the actions of its employees in the workplace and
identifies potentially dangerous behaviors as part of regular safety
reviews and instructions. Furthermore, NORMA Group carries out
regular inspections of its plants and facilities and develops action
plans based on the results, the implementation of which is
monitored locally and at the Group level.
Incident rate improved significantly
NORMA Group constantly monitors and analyzes its accident
statistics. The number of work-related accidents, ranging from
near miss incidents to reportable accidents, are recorded and on
a Group-wide basis each month and monitored at the local,
regional and Group levels. All reportable accidents are
communicated to Management Board level and any findings are
systematically shared throughout the Group with the goal of
preventing accidents in the future. NORMA Group’s top priority
is to ensure an accident-free, safe working environment in the
long term.
The accident rate, which is the number of reportable accidents
per 1,000 employees, represents one of the most important
employee indicators. This figure was four for the 2019 reporting
year, a significant improvement compared to the previous year
(2018: eight).
G 22: INCIDENT RATE
NORMA Group’s goal is to increase the efficiency of its production
processes, lower its energy consumption over the long term, and
reduce waste. The long-term cost savings associated with this
contribute to the economic efficiency of the Group.
Incident rate
G022
Reportable incidents per 1,000 employees
22
14
25
20
15
10
5
11
10
10
10
Since 2018, NORMA Group has set quantitative targets for the
reduction of greenhouse gases, water consumption and waste
generated at its production sites. Moreover, NORMA Group inclues
environmental impacts resulting from the supply chain as welll
as from the application of its products in its environmental strat-
egy. These targets are published in the CR roadmap. Progress
towards climate, water and waste targets is reviewed at the local
level through regular management assessments and at the global
level through the reporting of aggregated data to the Manage-
ment Board. Further information on the environmental strategy
can be found in the
2019 CR REPORT.
8
8
6
5
4
Marketing
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Environmental protection and ecological
management
As a manufacturing Company, NORMA Group is well aware of
its environmental, economic, and social responsibility.
Environmentally compatible and sustainable economic activity is
therefore a central element of its corporate strategy. For this
reason, the Company considers it important to systematically
include environmental aspects in its business decisions. Therefore,
NORMA Group has implemented a Group-wide environmental
management system and certifies its production sites in
accordance with ISO 14001.
In order to further increase awareness of NORMA Group’s
products all over the world, boost product sales, strengthen its
customer relationships and thus contribute to the Group’s growth,
NORMA Group’s long-term marketing strategy is based on the
following objectives:
• Building a strong NORMA Group brand image
• Focusing on marketing activities
• Optimizing of the brand portfolio
• Optimizing of the marketing tools
• Gaining a better understanding of market needs
In order to be able to focus on its end markets and customers as
much as possible, NORMA Group aligns all of its marketing
activities to address local market conditions and consumer habits
in its respective regions and markets. The regional marketing units
are responsible for executing the various activities and
synchronizing them with NORMA Group’s operative objectives.
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NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING
Marketing focus in 2019
Marketing expenses 2019 by segment 1
Key marketing activities in fiscal year 2019 included the following:
• Launch of a new corporate website and update of numerous
microsites to increase user-friendliness and a better presen-
tation of NORMA Group’s value proposition
13%
Group
6%
• Revision of the corporate identity to build a strong corporate
Asia-Pacific
image through various channels
• Introduction of a Product Information System (PIM) platform
for the management and cross-system exchange of product
information
• Marketing support for new product launches (among others,
eM-Compact)
Furthermore, in 2019 another focus was on traditional marketing
activities such as organizing fairs and exhibitions in order to pro-
mote NORMA Group’s product solutions to their targeted markets.
Marketing expenditures 2019
Marketing expenditures amounted to a total of EUR 5.4 million in
2019 and were thus above the level of the previous year (2018:
EUR 4.5 million). Marketing expenses as a percentage of sales
amounted to 4.9% in fiscal year 2019 (2018: 4.2%).
1_Excluding personnel expenses.
G023
24%
EMEA
57%
Americas
81
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Forecast Report
The sources of economic institutes used to prepare this Forecast
Report were assuming the following economic forecasts for the
year 2020 prior to the spread of COVID-19. Although the poten-
tial risk in connection with COVID-19 was addressed, the actual
effects and extent of the spread of the virus could not be fully
assessed at the time this report was prepared and are therefore
not reflected in the original forecast prepared by the Management
Board.
General economic and industry-specific conditions
Mixed picture in 2020: stabilization of the global
economy and slight recovery possible but with high risks
closures with substantial production losses are not only burdening
the economy in China, but are also increasingly affecting many
areas and industries in other countries due to the globally
integrated value creation chains. If this epidemic cannot be halted
promptly, it is increasingly unlikely that the production gaps can
be closed as the year progresses. Uncertainties are also caused
by the risk of a potential escalation of geopolitical tensions, espe-
cially between the US and Iran. Other negative factors include
social unrest and a possible deterioration in the United States of
America’s relations with important trading partners, as well as
the still unclear economic consequences of the Brexit in Europe.
Consequently, the global economy is expected to be susceptible
to disruptions in 2020, particularly in Europe.
In 2020, the global economy will most likely be supported by pre-
dominantly continuing loose monetary policy and, in part, expan-
sive fiscal policy. According to the ifo Institute, the decline in
incoming orders in the emerging markets has recently come to a
halt. The decline has slowed noticeably, particularly in the indus-
trialized countries. Based on this positive trend, the International
Monetary Fund (IMF) expects global trade to pick up slightly (2020:
+ 2.9%). Furthermore, the IMF assumes that the global economy
will stabilize, but will remain relatively weak for the time being,
and therefore lowered its GDP growth forecasts again in January
and February 2020 following the revision in the fall 2019. The
global economy is now expected to grow by 3.2% in 2020
(previously 3.3%), and by 3.4% in 2021, which is in each case 20
basis points less than recently published. The IfW (Kiel) currently
sees the spread of the coronavirus (COVID-19) since the beginning
of 2020 as the greatest threat to the global economy and in
extreme cases does not even rule out massive growth losses in
China and the world. The standstill of everyday life and plant
China’s economy is expected to grow by 5.6% (IMF) in 2020 and
thus at a weaker rate than most recently. This takes the effects
of the corona virus in the first quarter of 2020 into account, how-
ever the latest forecast assumes that the Chinese economy will
return to normality again starting in the second quarter of 2020.
The risk associated with this forecast is therefore quite high.
Expected growth could be boosted even more by a further easing
of the trade conflict with the US, although there are no signs yet
of a complete withdrawal of the restrictions currently in place. In
the meanwhile, China is continuing its structural change towards
more high technology and services and stronger domestic
demand. Although this situation is dampening the rate of
expansion, it is making a significant contribution to stabilizing the
country’s economy. Growth of around 4.8% is also expected for
the ASEAN-5 countries, particularly benefiting from high
infrastructure investments and lower interest rates. For India,
Brazil and Russia, the IMF even expects a higher increase in
economic momentum. Thus, a noticeable economic revival can
be expected for the emerging and developing countries, with an
increase in economic output of 4.4% in 2020 (IMF; 2021: + 4.6%).
In contrast, the economic prospects in the industrialized countries
remain subdued. Due to high uncertainties and potential risks, a
noticeable recovery in industrial production and investment
activity in 2020 is hardly feasible. For this group of countries, the
IMF expects the pace of growth to stabilize at only 1.6% in 2020
and 2021 respectively. For the US in particular, the momentum is
expected to decline significantly, especially as exports and invest-
ments tend to be weaker. By contrast, the Federal Reserve’s (FED)
expansionary monetary policy and the robust labor market are
supporting private consumption in the US. Taking into account
the prevailing conditions, the IMF expects the US economy to
grow by 2.0% in 2020 and by 1.7% in 2021. Canada’s economy
is also growing at expected rates of 1.8% in 2020 and 2021
respectively. The UK also remains on a moderate but robust
course, while very weak growth is forecast for Japan.
Although the economy is stabilizing in Europe, the pace of expan-
sion remains slow and subject to risk. The shape of the future
trade rules of the European Union with the UK continues to be an
incalculable factor. A problem that should not be underestimated
could also arise from the trade agreement to be concluded with
the US, especially as the US administration could impose new
trade restrictions on Europe at any time. In conjunction with the
structural problems Italy and France are having, the potential in
Europe remains limited for the time being. On the other hand, the
European Central Bank’s (ECB) loose monetary policy and a
predominantly expansive fiscal policy are having a stimulating
effect. Private and public consumption and the flourishing
construction industry are therefore likely to remain the main pillars
82
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING of the euro zone economy in 2020. A slight recovery in exports is
also expected. In this environment, while the IMF expects moderate
growth for the euro zone in the next two forecast years (2020:
+ 1.3%, 2021: + 1.4%). The cyclical recovery in Germany is still
delayed (IfW, Kiel), primarily due to continuing weak industry. In
2020, for example, investments in equipment will shrink, while
private and public consumption and construction investments will
continue to increase. All in all, GDP growth of 1.1% is expected
in Germany in 2020. Adjusted for possible calendar effects,
however, growth is again expected to be only 0.6%, according to
the German Central Bank (Deutsche Bundesbank).
Forecasts for GDP growth (real)
in %
World 1
USA 2
China 3
Euro zone 4
Germany 5
2019
+ 2.9
+ 2.3
+ 6.1
+ 1.2
+ 0.6
2020e
+ 3.2
+ 2.0
+ 5.6
+ 1.3
+ 1.1
T027
2021e
+ 3.4
+ 1.7
+ 5.8
+ 1.4
+ 1.4
Sources: 1_IMF; 2_US Department of Commerce; 3_National Bureau of
Statistics (NBS); 4_Eurostat, 5_German Federal Statistical Office (Destatis)
Partly clouded environment for NORMA Group’s key
customer industries
Despite the expected stabilization of the international economy
in 2020 and 2021, the prospects for NORMA Group’s key cus-
tomer industries are also partly clouded in view of the restrained
general growth momentum and high economic risks.
Mechanical engineering
In the course of a global economic stabilization in 2020, the down-
turn in the global mechanical and plant engineering industry
should at least slow down, but without generating any new
momentum. Many economic stimuli will stimulate mainly private
consumption and the construction industry. In many other
industrial segments, the brightening of the outlook is still to come.
This is indicated by the fact that the utilization of industrial
capacities in the US and Europe has deteriorated significantly.
Coupled with the high level of uncertainty with regard to crises,
trade restrictions and the unpredictable consequences of Brexit,
there are also no signs of a real trend reversal in favor of more
lively investment. Consequently, the German Engineering Feder-
ation (VDMA) expects 2020 to be a transitional year at best.
Important industry drivers that are independent of cycles include
automation, digitalization and, in many countries, environmental
protection, but also the restructuring of the energy industry. The
VDMA anticipates that real global machinery sales, excluding
China, will decline by 1%. This assumption is made on the
condition that no additional trade restrictions are imposed. At the
level of individual countries, it should be noted that development
in South East Asia and South Korea is picking up. Turkey, Russia
and Latin America are also expected to recover moderately, while
the outlook remains negative in Japan (– 1%), the US (– 1%), the
UK (– 1%), the EU (– 1%) and the euro zone (– 2%). With regard
to Germany’s mechanical engineering industry, the VDMA is
cautious and forecasts a further decline in production and sales
of 2% in real terms for 2020.
Engineering:
real change in industry sales
T028
in %
2018
2019
2020e
Automotive industry
The automotive industry is currently undergoing a major transi-
tion. The reduction of pollutant emissions, which is a political and
social requirement in many countries, and the demand for
climate-neutral means of transport continue to be the main drivers
of the industry. This means that the next few years will be marked
by an accelerated expansion of electromobility (including hybrid
drives). The development of low-consumption combustion engines
and additional, innovative drive technologies will also remain an
important topic. No real trend reversal is expected for the global
automotive market in 2020, especially as there is still a lack of
demand impetus in the volume markets. For example, the German
Association of Automobile Manufacturers (VDA) expects global
passenger car sales to fall by 1% to 78.9 million units in 2020.
For the somewhat more broadly defined market of light vehicles
(LV, up to 6 t), the industry experts at LMC Automotive (LMCA)
expect a stable sales level of LV 90.3 million (+ 0.1%) and are even
slightly confident with regard to global production. After two weak
previous years, this is expected to rise by 1.1% to close to 90.4 mil-
lion LV in 2020. While recovery effects are expected in the US
(+ 5.4%), India (+ 1.3%) and Germany (+ 2.5%), LMCA expects
losses in Japan (– 3.4%) and stagnation in China and Europe
(+ 0.5% each). A decline is forecast for the truck market in 2020.
Global sales and production of trucks and buses are expected to
shrink by 7.7% each. A recovery in the truck sector is then
expected for 2021.
China
USA
Euro zone
World
(excluding China)
81
5
4
51
4
– 1
– 1
-2
1_Revised data according to NBS (VDMA)
Source: Mechanical Engineering Industry Association (VDMA).
2
– 1
– 2
-1
Automotive industry:
global production and development of sales
(light and commercial vehicles)
T029
in %
2018
2019
2020e
2021e
Production of light vehicles
Sales of light vehicles
Sales of commercial vehicles
– 1.0
– 0.8
4.7
– 5.0
– 4.5
–2.3
1.1
0.1
– 7.7
2.6
2.4
3.8
Source: LMC Automotive
83
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Construction industry
Asia’s construction industry (China, India, Southeast Asia) is char-
acterized by a positive trend. Key drivers are the extraordinarily
high demand for residential construction and the rapid expansion
and reconstruction of infrastructure. In addition, investments in
environmental protection and water management are also
gaining importance, particularly in China. For the construction
industry in Europe, the industry network Euroconstruct (including
the ifo Institute) forecasts a steady upswing, which will be favored
by the continuing low interest rate level and the high construction
demand in the housing and infrastructure sectors. Further impetus
is also coming from stricter environmental regulations and higher
subsidy programs. By contrast, companies are rather reluctant to
invest in construction. Real construction output is thus forecast
to increase by 1.1% in 2020 (2021: + 0.9%, 2022: + 1.1%). More
lively construction activity in modernization and maintenance is
replacing new construction as the main driver. In Eastern Europe,
construction output will grow by 3.7% in real terms in 2020, and
by 1.0% in Western Europe. Germany’s construction industry
remains on the upswing: construction investments in Germany
are expected to increase by 2.2% in 2020 and by 2.5% in 2021
(IfW). The DIW (German Institute for Economic Research)
forecasts growth of 6.8% to EUR 264 billion for the nominal
residential construction volume in 2020, with the volume of new
construction rising by 5.8% and construction work on existing
buildings by 7.2%. Other building construction (excluding
residential) is expected to grow by 6.5%, while civil engineering
is expected to increase by 7.1%.
In the US, construction activity in the private sector in particular
had recently lost momentum. In 2019, new construction starts
(+ 3.2%) and building permits (+ 3.9%) rose more slowly than
building completions (+ 5.6%). However, further declining
mortgage rates could lead to a renewed revival of US residential
construction. In addition, public construction in the US is
experiencing a strong upswing, primarily driven by brisk
investment in the renovation and modernization of infrastructure,
including road construction, as well as in sewage and rainwater
systems. According to the industry experts at JBREC (John Burns
Real Estate Consulting), this will be offset by lower new
construction activity in 2020. Overall, JBREC expects that demand
in the market segments relevant to NORMA Group’s NDS activities
will stagnate in 2020 after a steep increase over several years,
and will experience a short cyclical dip in 2021 with a decline of
nearly 5%. New tailwind is then expected to set in again starting
in 2022.
Construction industry:
development of European construction output
T030
in %
Western
Europe
Eastern
Europe
Europe
2018
2019
2020e
2021e
2.6
12.8
3.2
2.0
7.3
2.3
1.0
3.7
1.1
0.8
1.3
0.9
Source: Euroconstruct/ifo Institute (19 core markets in total)
The extent of the negative economic impact of the coronavirus
had not yet been taken into account in the sources that were used
for the macroeconomic outlook for 2020 at the time that the 2019
Annual Report was prepared. Due to most recent developments,
the forecast risk has increased significantly. As a result, it is
assumed that the further spread of COVID-19 will lead to nega-
tive deviations from the forecast for the future development of
NORMA Group SE in fiscal year 2020, which is presented below.
Future development of NORMA Group
For NORMA Group, the main focus is on value creation. The
primary objective is to achieve a sustainable increase in the value
of the Company.
G OA LS A N D ST RAT E GY, P, 4 9 Based on this,
profitable growth and the diversification of the business with
regard to end markets, regions and customers will continue to be
priorities in the future as well. Business activities focus in particular
on the promising areas of water management and electro mobility,
which are also a main focus of NORMA Group’s development
activities.
RESEARCH AND DEVELOPMENT, P. 55
In addition, business activities will be selectively expanded
through further acquisitions. M&A activities will focus mainly on
companies that either convtribute to market consolidation or serve
to enter new high-margin markets. In addition, internationalization
and in particular the expansion of activities in the Asia-Pacific
region will continue to be the focus. The goal is to take advantage
of the opportunities in this important growth market and to use
the added value to the respective regions or countries.
The long-term preservation of the Company’s innovative ability
continues to play an important role in research and development.
The focus of development activities therefore remains focused on
strengthening the Company’s innovative strength and develop-
ing innovative products that help to solve customers’ industrial
challenges. A particular focus is also on developing solutions for
the areas of water management and electromobility (including
hybrid drives).
Furthermore, NORMA Group continues to work intensively on
implementing the sustainability targets defined in the CR
Roadmap 2020. One of the main focal points here is the
quantification of environmental impacts in the supply chain.
2018 CR REPORT
84
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING General statement by the Management Board on
probable development
EMEA region in 2020. Against this backdrop, NORMA Group’s
relevant end markets in the EMEA region were expected to
generate stable organic sales in the current fiscal year.
Sales growth in 2020
Based on the original estimates of the relevant economic research
institutes and industry associations described above and the
currently tense order situation caused by the ongoing difficult
conditions in several of the industries and markets relevant to
NORMA Group, the Management Board had assumed a noticeable
decline in organic sales in fiscal year 2020 before the current
spread of COVID-19 (coronavirus). At that time, this forecast took
into account the fact that the negative effects of COVID-19
(coronavirus) will be particularly evident in the first half of 2020.
The assumptions made were based on the premise that there
will be no global spread of the virus that could lead to a significant
impairment of the global economy beyond the first half of the
year. Although it could not be assumed that the negative effects
that became apparent in the course of the year would be fully
compensated for, the Management Board did not assume such
a dramatic worsening of the situation and the resulting economic
consequences when preparing the original forecast. Nevertheless,
due to its global business activities and broad diversification, the
Management Board believes the Group is well positioned to deal
specifically with the prevailing market trends in the various end
markets and regions in the long-term. Prior to the spread of
COVID-19, the Management Board of NORMA Group expected
solid organic growth for the DS business, whereas it anticipated
a noticeable organic decline in the EJT business in 2020,
particularly due to the development in the area of commercial
vehicles.
Based on the assumptions of a stabilizing economic environment
and key interest rates that remain low and prior to the spread of
COVID-19 the Management Board expected the difficult
conditions in the European automotive industry to improve in the
For the Americas region, the Management Board assumed prior
to the spread of COVID-19 a noticeable year-on-year decline in
organic sales in 2020, with the decline in the US commercial
vehicle end market, which is important to the Group, expected to
be particularly severe. By contrast, based on estimates by industry
experts, the management expected the US passenger car market
to recover in the current fiscal year. The Management Board also
expects strong growth impetus in the water management
segment, albeit slightly weaker than in the previous year. The
Management Board saw risks for the region in the trade conflict
between the US and China that has yet to be resolved and in the
protectionist customs policy of the US government, in particular.
In the Asia-Pacific region, the Management Board of NORMA Group
anticipated prior to the spread of COVID-19 slight organic decline.
The main drivers which had been included in the forecast are the
extremely high demand in residential construction and the rapid
expansion and reconstruction of the infrastructure. For this reason,
the Management Board expected the DS business in particular
to develop very positively, whereas organic sales growth in the
EJT segment was still forecast to decline slightly. The main
burdening factors, as already described before, still remain the
negative effects of the coronavirus as well as the ongoing trade
conflict between the US and China especially since a complete
withdrawal of the implemented restrictions is not yet in sight.
Besides the effects of the further spread of the coronavirus, the
Management Board sees risks that could have a negative impact
on NORMA Group’s sales and earnings primarily in the uncertain
effects of geopolitical crises. These include, for example, the
trade agreement to be concluded between the European Union
and the US.
Without considering the spread of COVID-19 and in light of the
assumptions and uncertainties described, the Management Board
of NORMA Group expected to see a noticeable organic decline in
sales in the range of approximately – 2% to approximately – 4%
for fiscal year 2020, and thus a similar sales development as in
the previous year. The exact extent of the organic decline depends,
in particular, on the further spread of the virus, the necessary
containment measures, for example, the associated production
interruptions. NORMA Group plans to present its forecast in more
detail later this year, once the exact consequences of COVID-19
can be better assessed. Currency effects may have an additional
positive or negative impact on growth, depending on the exchange
rates against the euro.
On the basis of the uncertainties described in connection with the
spread of COVID-19, the originally assumed forecasts with regard
to the key figures listed below will result in noticeable deviations,
which cannot yet be fully assessed at the time of publication of
this report. The original assumptions of the management are
presented below.
Development of the cost of materials ratio
As a result of the continuing difficult economic conditions in certain
industries, in particular the automotive sector, coupled with a
significant decline in global demand, the price level for engineering
plastics had eased in 2019 – before the corona crisis – and the
supply situation has therefore largely stabilized. The possibility
of a recovery of the global economy, which could lead to supply
bottlenecks for engineering plastics and related price increases,
was not foreseeable to date and therefore has been considered
to be unlikely.
85
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING With respect to procurement of steel and metal components,
uncertainties remained with regard to possible further protectionist
measures by the US. These were therefore considered a possible
risk factor for price increases or a sustained higher price level
overall. However, the resulting financial effects could have been
mitigated without the corona crisis by pursuing a steady increase
in the degree of professionalism in purchasing, the conclusion of
long-term contracts, possibly passing on price fluctuations to the
customer and achieving economies of scale within the Group.
Thus, the Management Board of NORMA Group expected – prior
to the spread of COVID-19 – the adjusted cost of materials ratio
to remain more or less unchanged compared to the previous year.
This included the initial positive effects from the “Get on Track”
change program implemented in the fourth quarter of 2019.
In the course of the corona crisis and the associated economic
effects, supply bottlenecks can no longer be ruled out.
Development of the personnel cost ratio
The Management Board expected – prior to the spread of COVID-
19 – personnel costs to remain stable in 2020, although the
Management also expects inflationary costs. The cost level is
likely to benefit from a reduction in additional temporary staff and
additional savings from ongoing efficiency programs, however.
The Management therefore expects the personnel cost ratio in
the current fiscal year to remain at the same level as last year.
Expenses in research and development
To sustain its innovation and competitiveness in the long term,
NORMA Group strives to achieve an annual investment rate of
5% of EJT sales in its R&D activities. These activities will continue
to focus on its strong future markets and developing innovative
products that solve the industrial challenges faced by customers
with a particular focus on developing applications in the area of
water management and for electromobility (including hybrid
drives).
year in which the course would be set for a sustainable increase
in profitability. As in the previous year, the Management Board
therefore expected – prior to the spread of COVID-19 – the
underlying EBITA margin for the current fiscal year to remain at
the level of more than 13.0%. The unforeseeable consequences
of the coronavirus will have a negative impact on NORMA Group’s
adjusted EBITA margin as a result of the measures that have
become necessary, including interruptions in production, for
example, so that the adjusted EBITA margin in fiscal year 2020
will probably be below the previously assumed level of the
previous year.
Adjusted EBITA margin
Maintaining its profitability represents an important focus for
NORMA Group. Therefore, all business activities are strategically
aligned to achieve this goal. In addition to the implementation of
the rightsizing program adopted in the fourth quarter of 2018
and communicated in February 2019, the “Get on Track” program
rolled out and publicly announced in November 2019 focuses on
increasing profitability by optimizing site capacities in all regions,
systematically revising structures and processes – in particular
by optimizing purchasing – and streamlining the product portfolio.
A cumulative total cost volume of around EUR 45 million to EUR 50
million is expected by 2023 for the implementation and execution
of the change program. In contrast to the costs for the
implementation of the rightsizing program, the costs incurred
within the scope of this program are presented completely
unadjusted. From 2020 on, the change program is expected to
lead to cost savings, which will increase to EUR 40 million to
EUR 45 million annually by 2023. The fact that, based on current
information, no further extraordinary costs are expected in
connection with the introduction of the ERP system in Latin
America was assumed to have another positive effect on
profitability. For this reason and taking the difficult market
environment due to the uncertainties regarding economic and
geopolitical conditions into account, the Management Board of
NORMA Group basically viewed 2020 as an important transitional
Adjusted EBIT margin
Based on the development and expectations outlined with regard
to the adjusted EBITA margin, the Management Board of
NORMA Group assumed – prior to the spread of COVID-19 – that
the adjusted EBIT would also be at the level of the previous year
and therefore expected an adjusted EBIT margin of more than
12% for fiscal year 2020. Similar to the forecast for the adjusted
EBITA margin, the Management Board of NORMA Group SE now
also expects the adjusted EBIT margin to deviate negatively from
the original assumptions.
Financial result of up to EUR – 15 million expected
The Management Board expected – prior to the spread of COVID-
19 – a financial result of up to EUR – 15 million in total for 2020.
This includes interest charges on the Group’s gross debt with an
average interest rate of approx. 2.4% as well as other expenses
for currency hedges and transaction costs.
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NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Tax rate of between 26% and 28%
Investment rate of around 5%
Market penetration and innovation capability
The Management Board expected – prior to the spread of
COVID-19 – a tax rate of between 26% and 28% for fiscal
year 2020.
Slight decline in adjusted earnings per share
Based on the developments described above, in particular
triggered by the organic sales decline, the Management Board of
NORMA Group expected – prior to the spread of COVID-19 – to
see a slight decline in adjusted earnings per share in fiscal year
2020.
Adjustments to the result
In fiscal year 2020, like in the previous years, NORMA Group’s
Management Board expected – prior to the spread of COVID-19 –
adjustments from the allocation of purchase prices to depreciable
tangible and intangible assets from the acquisitions made in past
years in the amount of around EUR 25 million. However, the total
costs incurred by the “Get on Track” change program will not be
adjusted. Moreover, no further adjustments related to the
rightsizing program are expected in fiscal year 2020.
NORMA Value Added (NOVA)
For fiscal year 2020, the Management Board of NORMA Group
expected – prior to the spread of COVID-19 – NOVA of between
EUR 10 million and EUR 20 million.
For fiscal year 2020, NORMA Group’s Management Board
expected – prior to the spread of COVID-19 – investments (without
M&A activities) of around 5% of Group sales. This covers both
maintenance investments and investments in expanding the
business. A particular focus will be on the expansion of activities
aimed at future growth, projects on the integration of processes
and functions (insourcing) as well as the expansion of capacities
to localize production.
The degree of market penetration is reflected in medium-term
organic growth. Ensuring the ability to innovate is essential for
the future competitiveness of NORMA Group. NORMA Group
records the number of invention applications per year as an
indicator for measuring and managing the Company’s innovative
strength. More than 20 new invention applications are targeted
each year for the Group.
Net operating cash flow
Due to the expected noticeable decline in sales in fiscal year 2020
and the expected margin level, which is unchanged compared to
the previous year, combined with an unchanged investment ratio,
the payments for the “Get on Track” program as well as the
optimization measures in the area of working capital and the
further reduction of the factoring programs, the Management
Board of NORMA Group expected – prior to the spread of
COVID-19 – net operating cash flow to be around EUR 110 million.
Sustainable dividend policy
If the future economic situation permits, NORMA Group will pur-
sue a sustainable dividend policy, which is based on a dividend
ratio of approx. 30% to a maximum of 35% of the adjusted Group
annual earnings. Due to the current economic developments in
connection with COVID-19, the proposal will be made to the
Annual General Meeting, which has been postponed from May
14 to June 30, 2020, to suspend the dividend for fiscal year 2019.
Employee problem-solving behavior
NORMA Group measures and manages problem-solving behavior,
among other topics, based on the number of customer complaints,
by using the following two performance indicators: effective parts
(parts per million, PPM) rejected by the customer and the number
of quality-related complaints. For the PPM indicator, a value of
less than 20 is the target each year until the end of 2020 depend-
ing on the product group. Customer complaints are also to be
further reduced to fewer than 8 per month on an annual average.
Sustainable company development
NORMA Group has published its CR Roadmap 2020. The objective
of the Group is to continue to achieve the goals and measures
stated therein in a consistent manner and lay even more import-
ant milestones for managing the Company more sustainably in
the current year.
87
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING This forecast for fiscal year 2020 was made before the spread of COVID-19. The Management Board assumes that the consequences
and after-effects of the further spread of the virus, which are currently still difficult to assess, will result in negative deviations from
the forecast originally made here regarding the future development of NORMA Group SE in fiscal year 2020.
Forecast for the fiscal year 2020
T031
Organic group sales growth
Noticeable decline in organic sales of – 2% to – 4%
stable organic sales
EMEA:
Americas: noticeable organic decline
APAC:
slight organic decline
Adjusted cost of materials ratio
Adjusted personnel cost ratio
DS:
EJT:
solid organic growth
noticeable organic decline
Roughly at the same level as in previous year
Roughly at the same level as in previous year
Expenses in R&D (in relation to EJT sales)
Around 5% of EJT sales
Adjusted EBITA margin
Adjusted EBIT margin
More than 13%
More than 12%
NOVA (NORMA Value Added)
Between EUR 10 million and EUR 20 million
Financial result
Tax rate
Adjusted earnings per share
Up to EUR – 15 million
Between 26% to 28%
Slight decline
Investment rate (without acquisitions)
Operative investments of around 5% of Group sales
Net operating cash flow
Dividend/dividend ratio
Number of invention applications
Number of defective parts (parts per million / PPM)
Number of quality-related complaints per month
Around EUR 110 million
Approx. 30% to 35% of adjusted net profit for the period
More than 20
Below 20
Below 8
88
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Risk and Opportunity Report
NORMA Group is exposed to a wide variety of risks and
opportunities, which can have a positive or negative short-term
or long-term impact on its financial, assets and earnings position.
For this reason, opportunity and risk management represents an
integral component of corporate management for NORMA Group,
at both the Group management level and at the level of the
individual companies and individual functional areas. Due to the
fact that all corporate activities are associated with risks and
opportunities, NORMA Group considers identifying, assessing,
and managing opportunities and risks to be a fundamental
component of executing its strategy, securing the short and long-
term success of the Company and sustainably increasing
shareholder value. In order to achieve this over the long-term,
NORMA Group encourages its employees in all areas of the
Company to remain conscious of risks and opportunities.
Risk and opportunity management system
NORMA Group defines risks and opportunities as possible future
developments or events that could have a positive or negative
impact on the Group’s ability to meet its targets and achieve its
business objectives. Analogous to the medium-term planning, the
Management Board’s focus with respect to possible deviations
in specific risks and opportunities covers a period of five years.
Opportunities and risks that affect the Company’s success beyond
this period of time are recorded and managed at the Group man-
agement level and taken into consideration in the Company’s
strategy. Analogous to medium-term planning, the focus with
respect to the valuation of specific risks and opportunities covers
a period of five years, provided that no other period is specified
in the individual categories.
The Management Board of NORMA Group is responsible for
maintaining an effective risk and opportunity management
system. The Supervisory Board is responsible for monitoring the
effectiveness of the Group’s risk management system. Compliance
with the Group’s risk management policy in the individual
companies and functional areas is subject to the internal audit
department’s periodic reviews.
Risk management process
The risk management process at NORMA Group includes the core
elements of risk identification, risk assessment and risk controlling
and monitoring. The risk management process has been fully
integrated into an integrated software solution. The respective
legal units record the identified and assessed risks. Subsequently,
the regional risk officers and, depending on the risk category, the
functional managers at Group level, check and approve the
respective risks with the help of the software. The process of
identifying, evaluating and controlling risks is accompanied by
continuous monitoring and communication of the reported risks
by the risk managers.
Risk identification is carried out bottom-up by the individual
companies as well as top-down by the individuals responsible
for functions at the regional and Group level. Various methods
that correspond to the structure of the organization are used to
identify risks. Such methods include interdisciplinary workshops,
interviews and checklists, but also market and competition
analyses. In certain cases, analyses of the process workflows as
well as results from internal and external audit reports are used.
Risk management system of NORMA Group
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Counterme a s u r e s
Management Board and
Supervisory Board
89
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING
NORMA Group’s risk managers are responsible for verifying on a
regular basis whether all material risks have been recorded.
NORMA Group uses a systematic assessment procedure to
evaluate the risks that were identified, both in terms of their
financial impact and their probability of occurrence. All risks that
can be adequately assessed and specified are reported regardless
of their expected financial impact. The measurement of the gross
expectation value of the risk, i.e. the expected value of the risk
before considering countermeasures, must be based on the
assumption of the most unfavorable outcome of the financial
impact for the Company.
As part of the risk controlling, the appropriate risk mitigating
measures are developed, implemented and their implementation
is monitored. These include, in particular, strategies to avoid,
reduce and secure risks, i.e. measures that minimize the financial
impact of the risks as well as their probability of occurrence. Risks
are managed in accordance with the principles of the risk
management system as described in the Group risk management
policy.
Risk reporting
Group-wide recording and assessment of risks as well as their
reporting to the functional managers and individual companies
by functional areas, the management of the segments, the
Management Board and the Supervisory Board takes place on a
quarterly basis. In addition, risks that are identified within a
quarter and whose expected value have a significant impact on
the results of subgroups of the Group are reported ad hoc to the
Management Board and, if necessary, to the Supervisory Board.
In order to analyze NORMA Group’s overall risk situation and
initiate appropriate countermeasures, individual risks of local
business units, segments and Group-wide risks are aggregated
in a risk portfolio. Here, the scope of consolidation for risk
management corresponds to the scope of consolidation of the
Consolidated Financial Statements. In addition, risks are catego-
rized according to type and the functional area they affect. This
makes it possible to aggregate individual risks into risk groups in
a structured manner. This aggregation can be used not only for
individual risk management but also to identify and control trends
in order to sustainably influence and reduce the risk factors with
certain types of risks. If not indicated otherwise, the risk assess-
ment applies to all regional segments.
Opportunity management process
Operational opportunities are identified during monthly meetings
held at the local and regional level, but also by the Management
Board, and then documented and analyzed. Measures aimed at
capitalizing on strategic and operational opportunities through
local and regional projects are approved during these meetings.
Regular forecasts are developed as part of periodic reporting to
record how successfully potential opportunities are taken
advantage of. Strategic opportunities are recorded and evaluated
as part of annual planning. NORMA Group uses a systematic
assessment procedure to evaluate the opportunities and risks
that were identified, both in terms of their financial impact, i.e.
gross and net impact on planned financial indicators, and their
probability of occurrence.
Internal control and risk management system
with regard to the group accounting process
NORMA Group’s internal control and risk management system
with regard to the Group accounting process can be described
using the following main characteristics: The purpose of this
system is to identify, analyze, evaluate and manage risks as well
as monitor these activities. The Management Board is responsible
for ensuring that this system meets the Company’s specific
requirements. Based on the allocation of responsibilities within
the Company, the CFO is responsible for the Finance and
Accounting divisions. These functional areas define and review
the Group-wide accounting standards within the Group and
compile the information used to produce the Consolidated
Financial Statements. The need to provide accurate and complete
information within predefined timeframes represents a significant
risk to the accounting process. Because of this, requirements must
be clearly communicated and the affected units must be put in a
position to meet these requirements.
Risks that may affect the accounting process arise, for example,
from the late or incorrect recording of business transactions or
non-compliance with accounting rules. The failure to enter
business transactions also represents a potential risk. In order to
avoid errors, the accounting process is based on the segregation
of duties and functions and plausibility checks for reporting. The
preparation of the financial statements of those entities to be
included in the Consolidated Financial Statements as well as the
consolidation measures based on this consolidated group are
characterized by consistent observance of the ‘dual-control prin-
ciple’ Comprehensive and detailed checklists must be completed
before the respective reporting deadlines. The accounting process
is fully integrated into NORMA Group’s risk management system.
This ensures that accounting risks are identified at an early stage,
allowing the Company to implement measures for risk prevention
and risk mitigation without delay.
The
internal control system ensures the accuracy of
NORMA Group’s financial reporting with respect to its accounting
processes. The internal audit department reviews the accounting
processes on a regular basis to ensure that the internal control
and risk management system is effective. External specialists also
support these efforts. Furthermore, the financial statement auditor
conducts audit procedures during the audit of the annual financial
statements based on the risk-based audit approach, whereby
material errors and violations will be uncovered with reasonable
assurance.
90
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING The IFRS accounting standards as they are to be applied in the
European Union are summarized in an accounting manual that
includes an account assignment guideline (IFRS Accounting
Manual). All companies in the Group must base their accounting
processes on the standards described in the accounting manual.
Important accounting and valuation standards, such as the
recognition and measurement of fixed assets, inventories and
receivables, as well as provisions and liabilities, are defined in a
binding manner. The Group also has system-supported reporting
mechanisms to ensure that identical situations are handled in a
standardized way across the Group.
The Consolidated Financial Statements and Consolidated
Management Report are prepared according to a uniform time
schedule for all companies. Each company in the Group prepares
its separate financial statements in accordance with the appli-
cable local accounting guidelines and IFRS. Intra-Group deliveries
and services are recorded in separately designated accounts by
the Group companies. The net balances of Intra-Group offsetting
accounts are reconciled on the basis of defined guidelines and
schedules by means of balance confirmations. The companies in
the Group use the COGNOS reporting system for financial
reporting. In accordance with NORMA Group’s regional
segmentation, technical responsibility for the financial area is
shared by both the financial officers in the Group companies as
well as by the regional CFO for the respective segment. They are
responsible for the quality assurance of the financial statements
of the respective Group companies. The comprehensive quality
assurance of the financial statements of the Group companies
included in the Consolidated Financial Statements is carried out
by Group Accounting, Tax & Reporting, which is responsible for
preparing the Consolidated Financial Statements. In addition, the
data and disclosures of the Group companies as well as the
consolidation measures necessary for the preparation of the
Consolidated Financial Statements are verified through audit
procedures conducted by external auditors under consideration
of the associated risks.
to EBITA. The presented impact always reflects the effects of
countermeasures initiated.
The probability of individual risks and opportunities occurring is
quantified based on the following five categories:
The various IT systems that individual NORMA Group companies
use to perform financial accounting are gradually standardized.
Tiered user access rights are defined for all systems. The type
and design of these access authorizations and authorization
policies are decided on by local management in coordination with
NORMA Group’s central IT department.
• Very unlikely: up to 3% probability of occurrence
• Unlikely: more than 3% and up to 10% probability of
occurrence
• Possible: more than 10% and up to 40% probability of
occurrence
• Likely: more than 40% and up to 80% probability of
Risk and opportunity profile of NORMA Group
occurrence
As part of the preparation and monitoring of its risk and oppor-
tunities profile, NORMA Group assesses risks and opportunities
based on their financial impact and their probability of occurrence.
The financial impacts of risks and opportunities are assessed
based on their relation to EBITA. The following five categories are
used here:
• Insignificant: up to 1% of current EBITA
• Minor: more than 1% and up to 5% of current EBITA
• Moderate: more than 5% and up to 10% of current EBITA
• Significant: more than 10% and up to 25% of current EBITA
• High: more than 25% of current EBITA
The impact of the risk or opportunity generally relates to the EBITA
of the Group. Provided that an individual assessment relates solely
to a specific segment, the EBITA of the respective segment is used
instead. The assessment of opportunities and risks whose
financial impact has an effect on line items in the Statement of
Comprehensive Income below EBITA is also performed in relation
• Very likely: more than 80% probability of occurrence
Financial opportunities and risks
NORMA Group is exposed to various financial risks, including
default, liquidity and market risks. The Group’s financial risk
management strategy concentrates on the identification,
evaluation and mitigation of risks, focusing on minimizing the
potential negative impact on the Company’s financial, asset and
earnings position. Derivative financial instruments are used to
hedge particular risk items. Financial risk management is carried
out by Group Treasury. The Group Management defines the areas
of responsibility and necessary controls related to the risk
management strategy. Group Treasury is responsible for identi-
fying, evaluating and hedging financial risks in close consultation
with the Group’s operating units. In this context, various processes
and organizational structures work together to measure and eval-
uate opportunities and risks on a regular basis, and to initiate
appropriate measures if necessary. Group Treasury regularly
conducts analyses of default risks, interest rate risks, currency
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NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING
risks and liquidity risks. The results are then discussed internally
and actions are defined. Group Treasury also advises the
management of relevant departments in monthly committee
meetings and discusses how to handle these risks and the
potential impact on NORMA Group
NOTES, P. 14 2
Capital risk management
NORMA Group’s objective when it comes to managing its capital
is primarily the long-term servicing of its debts and remaining
financially stable. In connection with most of its financing
agreements, the Company is obliged to maintain the financial
covenant total net debt cover (debt divided by adjusted
consolidated EBITDA). This key figure and its maintenance, but
also net debt and the maturity structure of financial debt, are
continually monitored. Changes in the value of the amounts
included in this financial indicator are limited by employing long-
term hedging strategies.
Default risks
Default risks are risks of contractual partners not meeting their
obligations arising from business and financial transactions. Due
to the nature of the respective assets and business relationships,
as well as the soundness of its current banking partners, default
risks with respect to deposits and other transactions concluded
with credit and financial institutions currently do not represent a
major risk category for NORMA Group. Nevertheless, the credit-
worthiness of contract partners is continuously monitored and
discussed at regular senior management meetings.
Relevant default risks can arise, however, with respect to business
relationships with customers and relate to outstanding receivables
and committed transactions. NORMA Group reviews the
creditworthiness of new customers to minimize the risk of default
on trade receivables. Customers whose credit ratings are below
Group standards or who have defaulted on payment are only
supplied if they pay in advance. Additionally, a diversified customer
portfolio reduces the financial repercussions of default risks.
Default risks are still considered to be unlikely due to the measures
referred to above. The potential financial effects of default risks
are judged to be insignificant considering the relevant factors,
such as bad debt losses experienced in the past, and due to the
countermeasures taken.
Liquidity opportunities and risks
Prudent liquidity risk management requires holding sufficient cash
funds and marketable securities, having sufficient financing from
committed lines of credit and being able to close out market posi-
tions. Due to the dynamic nature of the underlying business, of
NORMA Group, Group Treasury aims to maintain flexibility in
financing by keeping committed credit lines available. Therefore,
NORMA Group’s primary objective is to ensure the uninterrupted
solvency of all Group companies. Group Treasury is responsible
for liquidity management and therefore for minimizing liquidity
risks. As of December 31, 2019, NORMA Group’s liquid assets
(cash and cash equivalents) amounted to EUR 179.7 million (2018:
EUR 190.4 million). Furthermore, NORMA Group has a high level
of financial flexibility thanks to a committed revolving credit line
with national and international credit institutions in the amount
of EUR 50 million. This line was not drawn down at all as of
December 31, 2019. In the course of the refinancing in 2019, a
further flexible accordion line was negotiated, which has further
increased NORMA Group’s ability to take strategic action.
Furthermore, a commercial paper program with a total volume of
EUR 300 million was launched in 2019, which can be used flexibly
to cover short-term liquidity requirements. These money market
papers, which are equivalent to bearer bonds, are issued on a
revolving basis for a short-term period of 1 to 24 weeks and thus
allow the Group’s own liquidity to be managed in line with
requirements.
Financial opportunities are seen, among other areas, in
NORMA Group’s high creditworthiness as well as its solid finan-
cial, assets and earnings position, which enable the Company to
gradually reduce its capital costs. Against this backdrop,
NORMA Group successfully refinanced the maturing promissory
note tranche from 2014 and the bank loan negotiated in 2015 in
full in the past fiscal year. The new financing is characterized by
even more committed degrees of freedom and lower interest costs.
This new bank loan of EUR 250 million also includes a sustainability
component linked to an external rating. By further improving its
sustainability rating, NORMA Group has the opportunity to further
reduce its external interest burden. In addition to the revolving
credit line, which was not used at the end of the year, a flexible
accordion line was negotiated, which grows with the success of
NORMA Group. The liquidity-related opportunities are considered
likely, in particular due to the positive assessment by the banking
partners and the resulting reputation on the capital market. In
light of the refinancing measures carried out in the recent past,
by which the borrowing costs have already been reduced quite
considerably, the potential financial effects of liquidity-related
opportunities on NORMA Group’s earnings are considered to be
only minor.
FINANCIAL POSITION, P. 69
92
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Most of the Group’s financing agreements contain typical terms
for credit lines (financial covenants). If NORMA Group does not
adhere to these terms, the banks would be entitled to re-evaluate
the agreements and demand early repayment. Failure to comply
with these loan covenants would have high potential financial
repercussions. For this reason, NORMA Group continuously
monitors its compliance with the financial covenants in order to
implement suitable measures in advance and prevent the terms
from being violated. In order to hedge balance positions in foreign
currencies whose valuation leads to fluctuations in the profit and
loss account, NORMA Group partly uses rolling hedging
transactions. Group Treasury ensures that sufficient liquidity or
granted credit lines are available at all times to cover possible
cash outflows related to these hedging measures. This is
continuously monitored by means of risk simulation and discussed
in senior management meetings. The probability of liquidity risks
having a negative impact on NORMA Group’s activities is very
unlikely given the high level of financial flexibility provided by
committed and unused bank credit lines. The risk of non-
compliance with financial covenants is still considered very
unlikely due to high profitability and a strong operating cash flow.
In the event of (short-term) increased liquidity requirements that
exceed currently negotiated lines, the possibilities of raising funds
at market conditions, by issuing new bonds on the commercial
paper capital market, for example, are considered to be very good.
Foreign currency trends
As an internationally operating company, NORMA Group is active
in more than 100 countries and is thus exposed to foreign currency
risks. The US dollar, British pound, Swiss franc, Chinese renminbi,
Polish zloty, Swedish krona, Czech koruna, Singapore dollar, Indian
rupee and Serbian dinar are regarded to be the main risk-prone
currency positions.
Foreign currency risks that cannot be offset against each other
are hedged using futures and options whenever reasonable. The
high volatility of many major currencies and the particular
influence of the US dollar on the Group’s financial, assets and
earnings position represent a considerable risk that can be only
partially hedged for a short-term period. In the medium term,
NORMA Group reduces foreign currency risks by increasing
regional production.
PRODUCTION AND LOGISTICS, P. 74
Because the Group’s subsidiaries operate in the most important
countries with currencies other than the euro, it has sufficient
cash-in and cash-out capabilities to absorb short-term exchange
rate fluctuations via targeted income and expenditure manage-
ment. The syndicated bank loan refinanced in fiscal year 2019
has further increased flexibility in foreign currency management.
The syndicated bank loan provides for credit lines in various cur-
rencies to be utilized (e.g. US dollars and euro tranches). In addi-
tion, the US dollar promissory note tranches issued lead to a bet-
ter congruence of the payment profiles in US dollars. The
remaining foreign currency risks are continuously monitored within
the Group and, in the event of any exceedance of risk limits, are
transferred to the euro on a rolling basis using derivative hedging
instruments. Translation risks are constantly monitored by Group
Treasury, but are not hedged using derivative hedging instruments
in the current environment. As a result, items in the Statement of
Financial Position and Statement of Comprehensive Income of
subsidiaries in foreign currency areas are translated into euros.
The potential financial effects of opportunities and risks related
to exchange rate changes are considered to be moderate based
on the sensitivity analyses that have been performed. The
probability of the incidence of these risks and opportunities is
assessed to be possible in light of recent exchange rate fluctuations
and the uncertainties with regard to the further development of
relevant exchange rates.
Changes in interest rates
Changes in global market interest rates affect future interest
payments for variable interest liabilities and can therefore have
an adverse effect on the Group’s asset, financial and earnings
position. NORMA Group’s interest change risk arises in particular
from long-term loans.
Many of the current loans have fixed interest rates and are there-
GOALS REGARDING FINANCE
fore not subject to interest rate risk.
AND LIQUIDIT Y MANAGEMENT, P. 55
Loans that initially had variable interest rates were partly
synthetically converted into fixed interest rate positions using
derivative instruments. NORMA Group has hedged over 60% of
its variable interest rate loans in USD valued at USD 171 million
in total. On the other hand, variable rate loans denominated in
euros in the amount of EUR 165 million are for the most part
unhedged.
93
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Due to the fact that there are currently no signs of a more
restrictive monetary policy in the euro zone, NORMA Group views
the risk of interest rate increases in the short term to be unlikely
and in the medium term as possible. In view of the current low
interest rate level in the euro zone, the chances of a further
reduction in interest rates are considered unlikely in the short and
medium term. In the US dollar zone, on the other hand, the
probability of further interest rate cuts is considered possible in
both the short and medium term, which would lead to
corresponding opportunities for NORMA Group. NORMA Group
considers the risk of rising US interest rates to be unlikely in the
short term and possible in the medium term. Against the
background of the measures already implemented to optimize
the financing structures, the financial effects associated with
these risks and opportunities are assessed as low.
In summary, NORMA Group assesses the opportunities and risks
arising from interest rate changes as possible in principle, although
risks from rising interest rates are even considered to be unlikely
in the short term. The possible effects are classified as low in all
scenarios, both in the short and medium term.
Economic and cyclical opportunities and risks
The success of NORMA Group largely depends on macroeconomic
trends on its sales markets and its customers’ sales markets.
Therefore, important indicators of economic development
worldwide are taken into account both in planning as well as in
risk and opportunities management. In order to gauge the
macroeconomic trend, NORMA Group mainly uses the forecasts
of widely regarded institutions such as the IMF, the Bundesbank
and reputable economic research institutes. Accordingly, global
growth of 3.2% can be expected in 2020.
In the previous year, in addition to the uncertain outcome of the
Brexit process and the consequences of a continuing rise in
protectionism, the resulting geopolitical risks were identified as
significant risk factors with regard to economic development. In
addition, a flattening of the pace of expansion of the Chinese
market and the high level of government debt in Italy and France
and their negative impact on economic development in Europe
are seen as further potential risks. For the current fiscal year,
relevant risk factors include the negotiations on the design of
future trade rules with the EU following the Brexit, protectionist
activities in connection with the possible conclusion of a trade
agreement between the US and the EU, and other geopolitical
crises. In addition, the structural problems in Italy and France,
among others, could have a negative impact on how the economy
in Europe develops. In addition, NORMA Group considers the
coronavirus (COVID-19), which first appeared in China, to be a
major burden on the development of the global economy in fiscal
year 2020. The further spread of the virus and the associated
containment and quarantine measures could lead to substantial
production losses due to plant closures and slumps in demand,
particularly in the first half of the year, and increasingly affect
areas and industries in countries outside China that are initially
only indirectly affected due to globally integrated value chains. In
this context, the global economy is not expected to be significantly
impaired beyond the first half of 2020. However, if the further
spread of this epidemic is not halted promptly, it is increasingly
unlikely that the negative effects, such as production and demand
gaps, can be closed as the year progresses.
In light of the possible overall economic impact of these
developments, NORMA Group is of the opinion that a negative
development of the global economy compared to the planning
assumptions is currently classified as likely taking these risks into
account. Should these factors lead to a deterioration in global
demand, the financial deviations from planning are considered
to be moderate. A positive development of the global economy
that goes beyond the planning assumptions would represent an
opportunity for NORMA Group. Thanks to its flexible production
structures, NORMA Group is able to expand capacities in the short
term and thus respond to a generally increased demand. The
Company believes it is unlikely that the global economic situation
and thus NORMA Group’s earnings will improve beyond the
Climate change: an eye on
opportunities and risks
Dealing with the consequences of climate change and
the increasing scarcity of resources properly is becom-
ing increasingly important. NORMA Group’s main objec-
tive is to identify risks and opportunities arising from
the changing environment and to recognize potential.
The growing electromobility market is a consequence of
the ongoing demand for a reduction in greenhouse gas
emissions. Opportunities have arisen for NORMA Group
in this area, in the development of innovative systems in
the fields of thermal management for batteries and
water, for example, when it comes to landscape irriga-
tion, rainwater management and infrastructure solutions.
Nevertheless, NORMA Group also keeps a close eye on
the risks that could arise, an increase in the cost of
production processes that could result if greenhouse
gas emissions were to be priced, for example. Potential
losses of business in the automotive sector in connection
with conventional drives are also monitored closely on
an ongoing basis and appropriate steps are taken in
good time as required.
The information embedded in this box is not part of the Consolidated
Management Report and thus not subject to audit.
94
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING planning assumptions. In the overall view of the current
macroeconomic climate and the prospects based thereon, the
potential financial impact of these opportunities is considered
minor as in the previous year.
Industry-specific and technological risks and
opportunities
Industry-specific and technological opportunities and risks for
NORMA Group are closely linked to the conditions and develop-
P RO D U CTS A N D
ments in the respective customer industries.
END MA RKETS, P. 4 7 It should be borne in mind, however, that the
customer industries in the regions relevant to NORMA Group,
EMEA, the Americas and Asia-Pacific, have partly specific char-
acteristics and challenges.
Business activities with OEMs for passenger cars and commercial
vehicles as well as customers in the aftermarket segment still
represent the most important end markets for NORMA Group. In
this area, the ever-stricter emission standards as well as the
increasing use of more environmentally friendly drive technologies
represent a development that is associated with various
opportunities and risks for NORMA Group. NORMA Group’s
current product portfolio includes a variety of solutions that help
reduce emissions in passenger cars and commercial vehicles
equipped with an internal combustion engine, including hybrid
vehicles, and thus help customers meet ever-stricter emission
requirements.
NORMA Group is also in a good position to meet the challenges
of ever more relevant electromobility through its future-proof prod-
uct portfolio. Accordingly, research and development activities
relating to purely battery-powered electric vehicles as well as
hybrid vehicles represent a strategic focus, within the framework
of which new product solutions are being developed and existing
products constantly enhanced. Regulatory measures such as
stricter exhaust gas standards and the resulting increased
demand for environmentally friendly products and technologies
thus open up a variety of opportunities for NORMA Group.
On the other hand, risks for NORMA Group may arise from the
ongoing discussion of compliance with emission standards for
vehicles with combustion engines. NORMA Group counters these
risks through continuous initiatives aimed at securing and
expanding its technological and innovative leadership and by
focusing on customers and markets. Accordingly, NORMA Group
systematically analyzes current market developments in the area
of future technologies and consistently develops new products
based on this analysis. The first products for fuel cell powered
vehicles have already been successfully launched on the market.
For example, NORMA Group has already been supplying a line
system for a fuel cell vehicle in series production since 2018, which
could lead to further research and follow-up projects. Even in the
context of a steadily increasing share of purely battery-powered
electric vehicles, it will be important for NORMA Group to continue
to be able to offer suitable innovative product solutions in this
dynamic environment.
RESEARCH AND DEVELOPMENT, P. 55
The water management segment, which has been consistently
strengthened by the acquisitions carried out in past years,
represents another strategically important customer industry for
NORMA Group. The increasing scarcity of water and the
responsible handling of this important resource in this context are
leading to business opportunities.
NORMA Group’s strong diversification in terms of customers in
different industries is another element of the Company’s risk and
opportunity management. NORMA Group counters long-term,
industry-specific risks and opportunities through a consistent
innovation policy and regular market analyses.
In summary, the industry-specific and technological opportunities
and risks are assessed as possible with a moderate financial
impact.
Risks and opportunities associated with corporate
strategy
The strategic goal of NORMA Group is to achieve a sustained
increase in the Company’s value. In view of this goal, NORMA Group
is pursuing the strategy of profitably expanding its business
activities through organic growth as well as selective value-
enhancing acquisitions and achieving broad diversification with
respect to its products, regions and end markets, thus becoming
less dependent on individual products, regions and end markets.
NORMA Group’s aim is to grow with innovations, superior product
quality and strong brands in existing end markets, to open up
new end markets and to continuously improve the efficiency of
its business processes in all functional areas and regions.
GOALS AND STRATEGY, P. 49
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Besides the Company’s strategic activities aimed at continuing
to develop the business organically, NORMA Group sees
considerable opportunities to sustainably increase the Group’s
financial result, particularly through its strategy of profitably
expanding its business activities by making selective, value -
adding acquisitions. NORMA Group has been able to demonstrate
the success of this strategy several times in the past by completing
its acquisitions. If, however, in individual cases, the development
of the acquired companies falls behind the expectations at the
time of acquisition or if integration progresses more difficultly than
assumed, risks could also arise from acquisitions for NORMA Group.
However, NORMA Group believes that the Company’s goals for
the profitability of potential acquisitions, careful due diligence
measures in the run-up to the acquisition, and agreed integration
plans form the basis for mitigating these risks accordingly.
In addition, opportunities to achieve its financial targets arise for
NORMA Group from the broad diversification with respect to its
products, regions and end markets. Should the demand in
individual regions and end markets or the demand for individual
products temporarily lag behind planning, NORMA Group will
have the chance to compensate for this via other regions, end
markets or products. Nevertheless, the broad diversification with
respect to products, regions and end markets also implies a certain
complexity, which can be associated with risks for NORMA Group.
Because NORMA Group’s diversification efforts are being carried
out step by step with regard to the regions and end markets as
well as its products, these risks can be adequately limited by
means of an appropriate adaptation of the organization to the
changed circumstances. Accordingly, NORMA Group is addressing
the reduction of complexity and streamlining of its current product
portfolio via an independent field of action as part of its “Get on
Track” change program.
With respect to the efficiency of its business processes,
NORMA Group is able to settle production processes that require
a higher degree of manual assembly effort in countries with lower
labor costs, thus securing and further increasing its profitability.
However, there are inevitably risks associated with making these
types of decisions on locations and related investments if
significant assumptions made in the investment decision are not
fulfilled. NORMA Group addresses these risks by conducting
careful analyses in the run-up to investment decisions and uses
graded approval procedures. Future risks from the location
decisions already made will be evaluated in fiscal year 2020 as
part of the “Get on Track” program and be included in decisions
on optimizing the capacities of Group sites.
When the corporate strategy initiatives of NORMA Group are
combined, the financial impact of the opportunities associated
with NORMA Group’s Company strategy is assessed as moderate
and a positive deviation from planning as possible. Based on the
measures taken to limit the risks associated with NORMA Group’s
corporate strategy, the probability of the occurrence of strategic
risks is considered unlikely, while the potential financial impact of
corporate strategy risks is considered moderate.
The Company strategy is adapted to the individual market
conditions in the individual segments. For instance, acquisitions
are made particularly in those countries and regions that offer
attractive growth opportunities for NORMA Group. Nevertheless,
the general assessment of corporate strategy opportunities and
risks in the regions is identical.
Operational risks and opportunities
Commodity prices
The materials that NORMA Group uses, in particular the raw
materials steel and plastics, are subject to the risk of price
fluctuations. The price trend is also influenced indirectly by the
further development of the global economic situation as well as
by institutional investors. NORMA Group limits the risk of rising
purchase prices through systematic material and supplier risk
management. Thanks to a powerful global Group purchasing
structure, economies of scale are being used to purchase the most
important commodity groups FASTEN, FLUID und WATER as
competitively as possible. This Group purchasing structure also
enables NORMA Group to balance out the risks of individual
segments with each other. NORMA Group also constantly strives
to secure permanently competitive procurement prices by
continuously optimizing its selection of suppliers and applying
the best-landed-cost-approach. The Company also tries to reduce
dependency on individual materials through constant technological
advances and tests of alternative materials. Protection against
commodity price volatility is done by forming procurement
contracts with a term of up to 24 months, whereby material supply
risks are minimized and price fluctuations can be calculated more
accurately.
The high price level for purchasing steel and metal components
remained largely unchanged due to the increasing protectionist
measures in the US. The steel procurement markets in Europe
and Asia (China) showed a decline in prices due to the economic
slowdown. The alloy surcharges relevant for stainless steel rose
sharply during the year after the Indonesian government
announced an early ban on nickel ore exports. As a result of
weaker demand and high inventories, especially in China, prices
declined again at the end of the year. Analysts continue to assume
a risk of rising nickel prices and a volatile market in the future.
This is due to the use of nickel in batteries for electromobility.
96
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING In the procurement market for plastics, NORMA Group recorded
rising procurement prices at the beginning of the past fiscal year.
This was initially due to the continuing high demand for
engineering plastics. As a result, producers in some cases initially
continued to allocate material. Due to the economic downturn,
particularly in the automotive sector, this led to a significant global
decline in demand for engineering plastics. As a result, the supply
situation has eased to a large extent. The possibility of a recovery
in the global economy, which could lead to supply bottlenecks for
engineering plastics and the associated price increases, is not yet
foreseeable. Taking into account NORMA Group’s procurement
portfolio, price increases for raw materials are considered likely
overall. However, the associated financial impact is estimated to
be minor. Similarly, the opportunities arising from declining raw
material prices are also considered to be minor in terms of their
financial impact. Against the backdrop of the complete procure-
ment spectrum and taking into account the prevailing volatility
on the raw material markets, potential price reductions are still
considered unlikely overall.
Suppliers and dependencies on key suppliers
The loss of suppliers and dependencies on single suppliers can
lead to material shortages and thus to negative impacts on the
Group’s activities. In order to minimize this risk, NORMA Group
only works with reliable and innovative suppliers who meet its
high quality requirements. In the area of production material, the
ten most important suppliers are responsible for approximately
28% of the purchasing volume.
M A N AG E M E N T, P. 7 6 These and other key suppliers are regularly
observed and assessed as part of quality management. If the
loss of a supplier appears imminent, NORMA Group evaluates
P U R C H A S I N G A N D S U P P L I E R
alternatives immediately. As a result, the loss of suppliers is
considered possible, but the potential financial impact is regarded
as minor. However, NORMA Group also sees opportunities in this
area as a result of its proactive approach both in terms of existing
supplier relationships as well as identification of new suppliers
and raw materials. Since further optimization in the area of
purchasing can also be anticipated in the medium term due to
the “Get on Track” change program rolled out in November,
NORMA Group estimates the potential of the implemented
measures for a positive deviation from planning to be possible
with a minor impact.
Quality and processes
NORMA Group’s products are often mission-critical with respect
to the quality, performance and reliability of the final product.
Quality defects can lead to legal disputes, liability for damages
or the loss of a customer. Therefore, the reliable guarantee of
product quality is a key factor to ensuring NORMA Group’s long-
term success, so that its products provide crucial added value for
QUALIT Y MANAGEMENT, P. 75 Maintaining the right
its customers.
balance between cost leadership and quality assurance is a
constant challenge. To reduce this risk, far-reaching quality
assurance measures and uniform Group-wide quality standards
are used. Furthermore, NORMA Group focuses on innovative and
value-added joining solutions tailored to meet customer
requirements. For this reason, the Company believes that it is
possible for quality risks to occur, while the potential financial
repercussions would be minor due to the existing insurance
coverage.
NORMA Group takes every opportunity to realize cost advantages
to improve its competitive position. The Company develops and
implements initiatives focused on cost discipline, the continuous
improvement of processes in all functions and regions and the
optimization of supply chain management and production
processes. These initiatives are expected to have a positive impact
on NORMA Group’s business.
PRODUCTION AND LOGISTICS, P. 74
Since NORMA Group pursues a continuous process of
improvement, there are opportunities over and above planning
for positive deviations in the area of these processes. This applies
for all regions in which NORMA Group is active. The Company
estimates the likelihood of cost savings to be possible. Since-
planning already allows for continuous optimization of production
processes and NORMA Group’s processes are already extremely
efficient, the short-term financial impact of a deviation from the
plan as a result of improved production processes is minor.
Customers
Customer risks result from a company being dependent on
important buyers for a significant proportion of its sales. They
could take advantage of their bargaining power, which can lead
to increased pressure on the Company’s margins. Decreases in
demand from these customers or the loss of these customers can
have a negative impact on the Company’s earnings. For this
reason, NORMA Group continuously monitors incoming orders
and customer behavior so as to identify customer risks early. Due
to its diversified customer portfolio, financial repercussions of
customer risks are reduced. Accordingly, no single customer
accounted for more than 4% of sales in fiscal year 2019. Therefore,
it is considered possible that customer risks could have a negative
impact on NORMA Group’s business, however the financial effects
would be minor due to the diversified customer structure.
97
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Based on NORMA Group’s strategy and the goal of further
expanding its markets, the Company managed to expand its
customer portfolio compared to the previous year. Innovative
solutions were used to gain new customers for NORMA Group
products in all regions. Therefore, NORMA Group estimates the
opportunities for positive deviations from planning to be possible
with a minor impact on earnings based on a growing number of
customers.
Risks and opportunities of personnel management
NORMA Group’s success is largely dependent on its employees’
enthusiasm, commitment to innovation, expertise and integrity.
The Group’s personnel management serves to retain and expand
this core expertise. The resignation of employees with crucial skills
as well as a shortage of suitable workers can have a negative
impact on operations. The competition for the most talented
employees as a result of demographic developments and the
shortage of skilled labor in Western industrial nations is becoming
more and more intense.
NORMA Group counters these risks with far-reaching basic and
advanced training as well as employee development programs.
NORMA Group also encourages its employees to focus on the
Company’s success through variable remuneration systems. In
return, the employees contribute to the continuous further
development of the Company in connection with employee
surveys and improvement initiatives. Comprehensive represen-
tation rules and a division of responsibilities that promotes mutual
exchange secure the Group from risks that can arise due to the
departure of employees. When identifying potential new
employees who can make a crucial contribution to performance,
NORMA Group seeks the advice of external human relations
advisors.
While the Company regards the probability of personnel risks
occurring as possible overall, the potential financial impact is
considered insignificant due to its sustainable personnel policy.
In addition, opportunities arise from the consistent further
development of employees. NORMA Group fosters its employees
and offers them incentives to further develop their personal
expertise through educational and training opportunities as well
as the targeted search for talent within the Group. Furthermore,
NORMA Group offers its employees flexible and family-friendly
working time models. Through the above-mentioned measures,
NORMA Group actively supports the preservation and collection
of knowledge within the Company, which will thus offer
opportunities for the future development of NORMA Group. The
occurrence of these opportunities is considered likely, whereby
the associated financial success is considered to be minor.
IT-related risks and opportunities
The use of functional and high-performance IT systems is of
central importance for an innovative and global Company such
as NORMA Group with regard to the efficiency of its business
processes. In this context, it is critical for the Company’s success
to support the business processes of NORMA Group, which are
partly organized across corporate and national boundaries along
the value chain with stable and powerful IT systems that provide
the management at all levels with the necessary information in
a timely manner and allow for efficient organization of workflows.
For the exchange of information with customers and suppliers of
NORMA Group, tailor-made IT solutions connected to the respec-
tive ERP systems are likewise of great importance. With regard
to this business-critical IT infrastructure, there is a risk that an
extensive computer system failure, e.g. due to technical
malfunctions of the systems or attacks by hackers, could seriously
disrupt the Company’s operations.
In addition, NORMA Group sees the risk that external users could
gain unauthorized access to sensitive Company information and
misuse it. In this context, unauthorized access to information about
production processes as well as financial, customer and employee
data could have a negative impact on the Company.
For this reasons, NORMA Group has implemented appropriate
measures to avoid and reduce this type of risk. These measures
are embedded in the IT risk management process and are
adjusted continously in this context to changing conditions. For
example, NORMA Group manages the IT risks it identifies by
arranging for redundant provision of business-critical applications
and databases via physically separated data center areas, using
decentralized data storage and outsourced data archiving to a
certified external provider, and by using up-to-date firewalls and
e-mail filters, including permanent network monitoring. The
access of employees to sensitive information is ensured by means
of authorization systems customized for the respective positions,
taking into account the principle of segregation of duties. Finally,
employees are trained to be more aware of data security aspects.
The gradual transfer of old ERP systems into new, uniform Group
systems, which will be further advanced in 2019, also harbors
risks. During the necessary process changes in the respective
plants and distribution centers, adjustment problems may arise
at the process level that could result in additional shifts or special
freight requirements, for example. If necessary, redundant inter-
nal and external resources are kept available to mitigate these
risks.
NORMA Group estimates the probability of IT-related risks
occurring in all regions despite the countermeasures implemented
to be probable (possible in the previous year) and the potential
financial impact to be moderate (low in the previous year).
98
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING The risks arising from the migration from the old ERP systems to
uniform new systems for the entire Group are also offset in the
medium term by opportunities arising primarily from the potential
for process standardization and optimization across all companies
in the NORMA Group. The opportunities that may result from this
standardization are regarded as probable. The related financial
effects are expected to be at a low level.
claims of NORMA Group companies against customers.
NORMA Group has asserted claims against suppliers in connection
with defective deliveries. Another focus was on legal proceedings
concerning its own- or third-party IP rights. In addition,
NORMA Group was involved in proceedings relating to tax and
customs law issues.
Legal risks and opportunities
Risks related to standards and contracts
Future changes to legislation and requirements, especially liability
law, environmental law, tax law, customs law and labor law, as
well as changes in related standards, could have a negative
impact on NORMA Group’s development. Violations of laws and
regulations, but also of contractual agreements, can lead to
penalties, regulatory requirements or claims from injured parties.
Conversely, NORMA Group can be adversely affected by legal or
contractual breaches by third parties. In addition, defective
products may result in legal disputes and liability for damages.
Likewise, the results of tax audits can lead to tax payments,
including penalties and interest.
In 2019, litigations in most cases involved labor disputes. Here,
the respective NORMA Group companies were sued in connection
with the termination of employment relationships. Disputes with
customers concerned both alleged product defects and payment
NORMA Group uses its current compliance and risk management
systems to ensure that it complies with constantly changing laws
and regulations and meets its contractual obligations.
NORMA Group counters the risk of product defects through its
Group-wide quality assurance program. In addition, NORMA Group
is also insured against claims arising from certain defective
products.
Due to the current significant changes in international tax law
(e.g. the OECD BEPS Initiative), in particular, which can lead to
unanswered legal questions, as well as the increased auditing
intensity of tax audits that can be seen in many countries, the
likelihood of risks related to standards and contracts is considered
possible. However, due to the current risk management measures,
the potential financial impact of risks in connection with standards
and contracts is still considered to be moderate.
Social and environmental standards
Violating social and environmental standards could damage the
reputation of NORMA Group and result in restrictions, claims for
damages or disposal obligations. NORMA Group has therefore
implemented Corporate Responsibility as an integral part of the
Group strategy. In this context, a systematic Environmental
Management System was introduced at NORMA Group so that
corporate decisions can always be evaluated also considering
the goal of avoiding emissions and conserving resources. The
Company also invests in the area of occupational health and
safety for its continuous improvement.
EMPLOYEES, P. 77
The probability of occurrence of negative developments due to
social and environmental risks is still estimated as possible and
their potential financial impact as moderate.
However investments in the area of Corporate Responsibility
serve not only to ward off risks. The measures and initiatives are
also seen as having the potential to positively impact both the
business environment as well as NORMA Group and its
stakeholders. Therefore, NORMA Group estimates the
opportunities in this area to be possible and assumes that the
measures and initiatives will have a minor impact on its planning.
Known legal risks to which NORMA Group is exposed and whose
occurrence is sufficiently specified are adequately taken into
account by provisions in the Consolidated Financial Statements.
Intellectual property
Violations of intellectual property rights could lead to lost sales
and reputation. For this reason, the Company ensures that its
technologies and innovations are legally protected. NORMA Group
also minimizes the potential impact by developing customer-
specific solutions and through its speed of innovation. At the same
time, it is also possible for NORMA Group to violate the intellectual
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NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING property of third parties. For this reason, developments for
potential patent violations are reviewed at an early stage. There-
fore, it is considered possible for the intellectual property to be
violated. In view of the increase in IP disputes, the associated
potential effects and possible other legal infringements are
assessed as moderate in contrast to the previous year. In addition,
NORMA Group also sees opportunities as possible that can lead
to a minor deviation from the medium-term plan as a result of the
consistent defense of the intellectual property and the expansion
of legal unique selling points.
Assessment of the overall profile of risks and
opportunities by the Management Board
General economic risks remain for NORMA Group in all areas,
which is why setbacks on the way to long-term realization of the
growth and profitability targets cannot be ruled out. In contrast,
there are clear opportunities that NORMA Group is taking
advantage of through its strategy and consistent opportunity
management, so that it is possible that the Company might even
exceed its profitability targets.
The changes in the individual opportunities and risks shown in
the overview have no significant impact on NORMA Group’s
overall risk profile. NORMA Group has therefore concluded that
the Group’s overall profile has not changed significantly compared
to the previous year.
The Group’s overall situation results from the aggregation of
individual risks and opportunities from all categories of the
business units and functions. After assessing the likelihood of
risks occurring and their potential financial impact as well as in
light of the current business outlook, NORMA Group’s Management
Board does not believe that there is any individual risk or group
of risks with the potential to jeopardize the continued existence
of the Group or individual Group companies as a going concern.
Taking the aggregated opportunities into account, NORMA Group
is in a very good position with respect to both the medium and
long terms to further expand its market position and grow globally.
This assessment is reinforced by the good opportunities to cover
the financing requirements. Therefore, NORMA Group has not
made any effort to obtain an official rating from a leading rating
agency.
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NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Risk and opportunity portfolio of NORMA Group 1
very unlikely
unlikely
possible
likely
very likely
Change comp.
to 2018
insigni ficant minor
moderate
significant
high
Probability of occurrence
Financial impact
T032
Change comp.
to 2018
Financial risks and opportunities
Default risk
Liquidity
Currency
Risks
Opportunities
Risks
Opportunities
Change in interest rates Risks
Opportunities
Economic and cyclical risks and opportunities
Risks
Opportunities
Industry-specific and technological risks and opportunities
Risks
Opportunities
Risks and opportunities associated with corporate strategy
Risks
Opportunities
Operational risks and opportunities
Commodity pricing
Suppliers
Quality and processes
Customers
Risks
Opportunities
Risks
Opportunities
Risks
Opportunities
Risks
Opportunities
Risks and opportunities of personnel management
Risks
Opportunities
IT-related risks and opportunities
Risks
Opportunities
Legal risks and opportunities
Risks related to stan-
dards and contracts
Social and environ-
mental standards
Property rights
Risks
Risks
Opportunities
Risks
Opportunities
1_If not indicated differently, the risk assessment applies for all regional segments.
101
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING
Remuneration Report
This Remuneration Report describes the basic principles of the
remuneration system for the members of the Management Board
and the Supervisory Board of NORMA Group SE in fiscal year
2019 and provides information on the remuneration granted and
paid in 2019. In accordance with the recommendation of the
German Corporate Governance Code, the Supervisory Board
regularly reviews the amount of benefits granted to the members
of the Management Board as well as the resulting annual and
long-term expenses and adjusts the remuneration as necessary.
In this context, attention is drawn in advance to the changes to
the remuneration policy and remuneration system planned for
2020.
New remuneration system 2020
The Supervisory Board has initiated a complete revision of the
remuneration system for the Management Board members
following the predominantly negative vote on the approval of the
remuneration system for the Management Board members at the
2019 Annual General Meeting and has therefore engaged in an
open and cooperative dialogue with investors and voting rights
advisors. In accordance with the Company’s Rules of Procedure
and applicable German law, the General and Nomination
Committee of the Supervisory Board is responsible for drawing
up the remuneration system, which includes both the remuneration
of the Management Board and the Supervisory Board. The
objective of the General and Nomination Committee is to provide
the Supervisory Board with a well-founded proposal for a
resolution that is appropriate in accordance with all relevant
national and international standards. The recommendations of
the German Corporate Governance Code (GCGC), the requirements
of the German Commercial Code (HGB) and Stock Corporation
Act (AktG) as well as the International Financial Reporting
Standards (IFRS) are taken into account. The proposed resolution
also takes into account the practice in the markets relevant to
NORMA Group and the requirements of voting rights advisors
and investors with regard to the remuneration of Management
Board members. On the basis of this recommendation, the
Supervisory Board decides on the Company’s remuneration policy
at its own discretion.
In addition to the criteria of the Company’s performance and future
prospects, the decision on the appropriateness of the remuneration
is also based on the general levels of remuneration paid by
comparable companies. NORMA Group’s peer group complies
with German law and the amended requirements of the German
Corporate Governance Code and is composed of 15 companies
whose size, industry and structure are comparable to those of
NORMA Group. The peer group comprises Bertrandt AG, Deutz
AG, DMG Mori AG, ElringKlinger AG, Gerresheimer AG, Jungheinrich
AG, König & Bauer AG, Leoni AG, SAF-Holland S.A., Schaeffler
AG, SGL Carbon SE, Stabilus S.A., Vossloh AG, Wacker Neuson
SE and Washtec AG. The proposal for Management Board
remuneration is approved by the Supervisory Board, which
regularly reviews the appropriateness of the total remuneration
of the Management Board, including the individual components,
and makes adjustments it deems necessary. The Management
Board and the Supervisory Board intend to submit the new
2020 compensation system to the Annual General Meeting on
June 30, 2020 for approval.
NORMA Group SE. As a result, more than 50% of the target
amount of the payout of the variable remuneration is either
invested in shares of NORMA Group SE by the members of
the Management Board or granted by NORMA Group SE on
a share-based basis.
• The short-term variable remuneration may be increased or
reduced by up to 20% depending on the total shareholder
return of NORMA Group SE compared to the total shareholder
return of a predefined group of 15 other listed companies.
• Within the long-term variable compensation, a future amount
of a maximum of 20% of the fixed annual salary depends on
meeting sustainability goals, e.g. the reduction of CO2 emissions.
• The Company has introduced a clawback regulation.
• The possibility of a special bonus being granted has been
deleted from the employment contracts.
• The change of control clause that provides for a severance
payment in the amount of three years’ remuneration to be
paid upon departure in the event of a change of control has
been abolished for new members of the Board of Management.
• New members of the Management Board receive a defined
contribution pension commitment instead of the previous
defined benefit pension commitment.
Remuneration of the Management Board in 2019
The following content adjustments are part of the new
compensation system 2020:
Basic principles of the remuneration system
• Within variable remuneration, the share of long-term
incentives has been increased compared to the share
of short-term incentives.
• The members of the Management Board have a share pur-
chase and retention obligation for an amount equal to 75%
of the amount paid out from the LTI and 100% of the amount
paid out from the ESG-LTI. The Company may also opt to
paythis amount either completely or in part in shares of
The purpose of NORMA Group’s remuneration system is to provide
the members of the Management Board with adequate
remuneration for their activities and areas of responsibility. The
remuneration of the Management Board members is based on
the short and long-term success of the Company and rewards
the Management Board members for their performance in
accordance with the applicable legal regulations. In accordance
with their roles and performance, the individual achievement of
objectives is taken into account by distinguishing individually
102
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING between the fixed remuneration of the Management Board
members.
Due to the limited number of Management Board members, their
performance is regarded as a joint effort and responsibility as a
body and no further individual targets have been included in the
remuneration system.
In accordance with the recommendations of the German Corporate
Governance Code, the remuneration comprises a fixed component
as well as a short-term variable and a long-term variable
component.
EBITA (adjusted for acquisitions) of the last three fiscal years.
Each Management Board member receives an individually
determined percentage of the amount of the three-year average.
The short-term variable remuneration is limited to a maximum of
250% of the annual basic salary (Dr. Klein: 200% of the annual
basic salary). The short-term variable remuneration for the past
fiscal year is paid in the following year after the Supervisory Board
approves the Consolidated Financial Statements. If the
Management Board member has not worked for the Company
for a full twelve months in a fiscal year, the annual bonus is
reduced accordingly.
The following table provides an overview of the annual bonus:
Long-term variable remuneration
The long-term variable remuneration is designed as a so-called
NORMA Value Added Bonus and represents a part of the variable
remuneration of the Management Board aligned toward sustained
positive business development and value creation. This long-term
variable remuneration component provides a long-term incentive
for the Management Board to manage the Company successfully
and in a value-enhancing and value-adding manner. The NORMA
Value Added Bonus corresponds to the percentage defined for
each member of the Management Board as a percentage of the
average increase in value from the current and the two previous
fiscal years. The annual increase in value is calculated according
to the following formula:
Annual bonus
Assessment basis
% rate
T033
Cap
NORMA Value Added =
(adjusted EBIT x (1 – t)) – (WACC x capital employed)
Performance-independent components
Fixed salary
The basic remuneration consists of a fixed cash payment for the
entire year based on the respective Management Board mem-
ber’s area of responsibility. This basic remuneration is paid in the
form of a monthly salary.
Performance-related components
The performance indicators used for the short-term and long-
term variable remuneration are derived from the corporate strat-
egy of NORMA Group and are based on a three-year observation
period. For Management Board members entering into service
from 2015 onwards, or, in the case of new Management Board
contracts, from 2015 onwards – this applies to Mr. Kleinhens (until
July 31, 2019), Dr. Schneider and Dr. Klein – the variable remu-
neration consists of the following components:
Short-term variable remuneration
Dr. Michael
Schneider
Dr. Friedrich
Klein
The short-term variable remuneration is a compensation
component which refers to NORMA Group’s average adjusted
Bernd Kleinhens
Adj. EBITA of last
three years
(arithmetic mean)
Calculation: 0.35% x
EUR 163.4 million =
EUR 0.57 million
Adj. EBITA of last
three years
(arithmetic mean)
Calculation: 0,25% x
EUR 163.4 million =
EUR 0.41 million
Adj. EBITA of last
three years
(arithmetic mean)
Calculation: 0.60% x
EUR 163.4 million x
7 / 12
= EUR 0.57 million
The calculation of the first component is based on the adjusted
consolidated earnings before interest and taxes (NORMA Group
EBIT) for the fiscal year and the average corporate tax rate. The
second component is calculated from the Group WACC multiplied
by the capital employed. The WACC is derived from the following
assumptions:
Two and a half
times the fixed
salary
0.35
Two and a half
times the fixed
salary
0.25
Assumptions for calculating WACC
in %
Risk-free interest rate
Market risk premium
Beta factor of NORMA Group
Cost of equity
Two times the fixed
salary
0.60
Cost of debt capital after taxes
Cost of capital (WACC) after taxes
2019
0.20
7.50
1.33
11.01
1.79
8.09
T034
2018
0.39
6.50
1.28
9.41
1.85
7.14
103
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING
The base interest rate is derived from the interest rate structure
data of the Deutsche Bundesbank (three-month average –
October 1 to December 31, 2019). The market risk premium
represents the difference between the expected return on a risky
market portfolio and the risk-free interest rate. NORMA Group
relies on the recommendation of the Institute of Public Auditors
in Germany (IDW) to determine this. The beta factor represents
the individual risk of a share compared to a market index. It is ini-
tially determined as the average value of the unindebted beta
factors of the peer group and is then adjusted to the individual
capital structure of NORMA Group. The cost of equity is calculated
as the sum of the following three components: risk-free interest
rate, weighted country risk of NORMA Group, product of market
risk premium and indebted beta factor of the peer group. The
credit spread used to calculate the cost of debt was determined
on the basis of the current external financing conditions of
NORMA Group. Invested capital is calculated as Group equity
plus net financial liabilities as of January 1 of the fiscal year.
The NORMA Value Added Bonus is limited to a maximum of 150%
(or 100% in the case of Dr. Klein) of the fixed annual salary. 75%
or 90 % of the amount attributable to the long-term incentive (LTI)
is to be paid to the respective member of the Management Board
the following year. The Company then uses the remaining 25%
or 10% attributable to the long-term variable compensation to
purchase shares of NORMA Group in the name and on behalf of
the individual Board members. Alternatively, the Company may
pay out the remaining balance to the Management Board member.
In this case, the Management Board member obligates himself
to purchase shares of NORMA Group with the balance of this
amount within 120 days after the Annual Financial Statements
are approved at the Supervisory Board meeting. The Management
Board member may not dispose of the shares for four years.
Dividends and subscription rights are to be made freely available
to the Management Board member. If a Management Board
member takes office in the current fiscal year or does not work
for the Company for a full twelve months in a fiscal year, the LTI
NOVA of the
last three years
(arithm. mean)
Calculation:
EUR 43.7 million
x 1,0 % =
EUR 0.44 million
NOVA of the
last three years
(arithm. mean)
Calculation:
EUR 43.7 million
x 0,5 % =
EUR 0.22 million
NOVA of the
last three years
(arithm. mean)
Calculation:
EUR 43.7 million
x 1,0 % x 7 / 12 =
EUR 0.26 million
Dr. Michael
Schneider
Dr. Friedrich
Klein
Bernd
Kleinhens
will be reduced proportionately (pro rata). Upon termination of
the employment contract, a Management Board member may
dispose of his share only after 12 months of leaving the Company.
The following table provides an overview of the NORMA Value
Added Bonus:
NORMA Value Added bonus / LTI
Assessment
basis % rate
Cap
T035
Payment /
acquisition of
shares
Share-based compensation
For members of the Management Board who were appointed to
the Management Board before 2015 – this only applies to Mr.
Kleinhens, who left the Management Board in fiscal year 2019 –
tranches of share-based compensation (allotment in 2015, 2016
and 2017) are exercisable in 2019, 2020 and 2021. The
emuneration is composed of the following components:
Overview of the Matching Stock Program
(MSP) at the time of allotment
Tranches
Option
factor
Number of
options
Exercise
price in EUR
T036
End of the
retention
period
One and a half
times the fixed
annual salary
1.00
75% / 25%
2017
2016
2015
1.5
1.5
1.5
128,928
128,928
128,928
41.60
46.62
44.09
2021
2020
2019
0.50
One annual
salary
75% / 25%
One and a half
times the fixed
annual salary
1.00
90% / 10%
The Matching Stock Program (MSP) provided a share price-based
long-term incentive to commit to the success of the Company.
The MSP is a share-based option right. For this purpose, the
Supervisory Board specified a number of stock options to be allot-
ted each fiscal year with the reservation that the Management
Board member makes a corresponding personal investment in
the Company. The MSP was split into different tranches. The first
tranche was allotted on the day of the initial public offering of
NORMA Group (April 8, 2011). The other tranches were allotted
on March 31 each following year, whereby the last allotment took
place on March 31, 2017 (no allotment in fiscal years 2018 and
2019). The stock options related to those shares allotted or
acquired and qualified in accordance with the MSP stipulated in
the Management Board contract. The number of stock options is
calculated by multiplying the number of qualified shares held on
104
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING
the grant date (for the years 2015 – 2017, 85,952 shares per year)
by the option factor determined by the Supervisory Board. The
option factor was or will be recalculated for each tranche and
amounts or amounted to 1.5 for each of the tranches in the years
2015, 2016 and 2017. 128,928 shares are or were to be taken
into account in fiscal years 2015, 2016 and 2017. Each tranche
was or will be recalculated taking into account changes in the
influencing factors and was settled pro rata temporis over the
holding period.
The holding period was and continues to be four years and ended
or will end on March 31, 2019, 2020 and 2021 for the 2015, 2016
and 2017 tranches. Exercise of the options of a tranche can take
place only within an exercise period of two years after the end of
the holding period. As a prerequisite for exercise, the share price
at the time of exercise (basis: weighted average of the last ten
stock exchange trading days before exercise) must be above the
relevant exercise hurdle. The exercise hurdle is determined by the
Supervisory Board when the respective tranche is allocated and
amounts to at least 120% of the exercise price. The exercise hurdle
was set at 120% of the exercise price for the 2015, 2016 and
2017 tranches. The exercise price of the tranches is determined
on the basis of the weighted average of the closing prices of the
Company’s shares on the last 60 trading days immediately
preceding the allocation of the respective tranche. Dividend
payments by the Company during the holding period are to be
deducted from the exercise price of the respective tranche. The
value of the stock option is calculated on the basis of valuation
models recognized by business management.
The Company is free to decide at the time of exercise whether
the option will be settled in shares or in cash. Based on the history
of NORMA Group, a settlement in the form of a cash payment is
expected in the future. Further information can be found in the
NOT ES P. 18 4.
Pension agreements
In addition, there is an entitlement to a pension upon commence-
ment of service or signing of the contract as of 2015, which is
measured as a percentage of the pensionable income (fixed
salary). The pension entitlement arises when the contract has
expired, but not before the person has reached the age of 65 or
if that person is unable to work. The percentage depends on the
number of years of service as a Management Board member. The
percentage amounts to 4% of the last yearly fixed salary prior to
leaving for each completed year of service. The percentage can
increase to a maximum of 55% of the last annual salary.
Furthermore, a survivors’ pension will be paid as well.
Severance payments
In the event of premature termination of the employment contract
without an important reason, any payments to the Management
Board are not to exceed the value of two annual remunerations
and correspond at most to the value of the remuneration for the
remaining term of the employment contract. If a special right of
termination is exercised in the event of a change of control, the
Management Board receives compensation of three years’
remuneration, but no more than the value of the remuneration for
the remaining term of the employment contract. The annual
remuneration includes the current annual fixed salary as well as
short- and long-term variable remuneration components from
the past fiscal year.
Other benefits
The members of the Management Board are additionally
compensated with a company car, which they can also use for
personal purposes. Furthermore, Management Board members
are reimbursed for any expenses and travel costs incurred while
performing their duties for the Company in accordance with the
Company’s respectively applicable guidelines. Inventor’s bonuses
are also granted. The board members also receive employer
grants for health and nursing care insurance. The statutory
deductible in the amount of 10% of the damage amount of the
D&O insurance taken out for the managers of NORMA Group is
borne or insured privately by the members of the Management
Board.
Retirement of the chairman of the Management Board
Bernd Kleinhens, the Chairman of the Management Board of
NORMA Group SE, left the Management Board with effect from
July 31, 2019. The termination agreement concluded in this con-
text provides for the service agreement to be continued until
March 31, 2020 (date of termination) and that Bernd Kleinhens
will be available as an advisor to the future CEO until the end of
his service agreement. Bernd Kleinhens will receive his fixed
salary until the date of termination. The Company will grant
Bernd Kleinhens his full annual bonus for 2019; the annual bonus
for 2020 will be reduced pro rata temporis to the date of
termination. In addition, Bernd Kleinhens will receive the NORMA
Value Added Bonus from the Long-Term Incentive Program for
the performance period 2017-2019, which will be reduced pro
rata temporis to July 31, 2019. The retirement benefit claims
granted remain unchanged.
Remuneration for the period until July 31, 2019, is shown in the
following tables. Benefits promised or granted for the period after
July 31, 2019, amount to a total of EUR 1,480 thousand and are
composed as follows: non-performance-related component
thousand, performance-related component
EUR 636
EUR 645 thousand, long-term incentive components EUR 0 thou-
sand and pension expense EUR 199 thousand (disclosure
pursuant to Section 314 (1) no. 6a sentence 6 letter dd) HGB).
105
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Remuneration of the Management Board in
fiscal year 2019
Management Board remuneration in 2019 according to the
accounting standard DRS 17
The Management Board’s remuneration for fiscal year 2019 is
reported in accordance with the appliable accounting principles
(DRS 17) and the recommendations of the German Corporate
Governance Code.
The total remuneration of the Management Board pursuant to
Section 315e in connection with Section 315a (2) and Section
314 (1) no. 6a sentence 5 of the Germany Commercial Code (HGB)
is distributed among the individual members of the Management
Board as shown in
TABLE 037.
Management Board remuneration in 2019
in EUR thousands
Fixed components
Performance-related components
Long-term incentive effect
Total remuneration
Dr. Michael Schneider
Dr. Friedrich Klein
(since Oct 1, 2018)
Bernd Kleinhens
(until July 31, 2019)
2019
423
572
438
1,433
2018
387
590
591
1,568
2019
334
409
219
962
2018
83
106
74
263
2019
310
572
181
1,063
2018
524
1,011
591
2,126
John Stephenson
(until Jan 31, 2018)
2019
2018
n/a
n/a
n/a
n/a
24
0
8
32
Total
2019
1,067
1,553
838
3,458
T037
2018
1.018
1.707
1.264
3.989
Expenses in the amount of EUR 1,480 thousand were also
incurred for Mr. Kleinhens in fiscal year 2019 in connection with
the cessation of his activities in the current fiscal year (2018:
EUR 298 thousand in expenses for Mr. Deggim in connection with
the cessation of his activities).
The performance-related components include only the short-term
annual bonuses. All other bonuses and the MSP are listed under
long-term incentives.
A provision was recognized for the variable compensation ele-
ments. The stock options associated with the MSP are assessed
on an ongoing basis and included in other provisions in the income
statement.
The benefits promised to the members of the Management Board
in the event of the regular termination of their activities
(cf. Section 315e in connection with Section 315a (2) and Section
314 (1) no. 6a sentence 6 HGB) are distributed among the
individual members of the Management Board as shown in
TABLE 038.
Overview of the promised pensions of the Board members
in EUR thousands
Present value of pension
Expended/accrued amount
Dr. Michael Schneider
Dr. Friedrich Klein
(since Oct 1, 2018)
Bernd Kleinhens
(until July 31, 2019)
2019
1,843
838
2018
1,005
526
2019
367
314
2018
53
53
2019
847
279
2018
371
371
Total
2019
3,057
1,431
T038
2018
1,429
950
The present value of all pension commitments to former members of the Management Board and their surviving dependents amounted to EUR 847 thousand as of December 31, 2019 (2018:
EUR 0 thousand).
106
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Remuneration of the Management Board in 2019 in accordance with the German Corporate Governance Code
In accordance with the German Corporate Governance Code in the version dated February 7, 2017, the remuneration of the Management Board is broken down by grant for the year under review and
inflow in or for the year under review as follows – the models recommended in the Code are used for presentation:
Remuneration granted to the Management Board
Dr. Michael Schneider
2019 (Min)
2019 (Max)
2018
2019
2019 (Min)
2019 (Max)
2018
2019
2019 (Min)
2019 (Max)
Dr. Friedrich Klein
(since Oct 1, 2018)
Bernd Kleinhens
(until July 31, 2019)
in EUR thousands
Fixed remuneration
Benefits
Total
One-year variable
remuneration
Multi-year variable
remuneration
Other perennial
remuneration
Subtotal
Pension expenses
Total remuneration
2019
396
27
423
572
438
1,010
357
1,790
396
27
423
0
0
0
357
780
396
27
423
990
594
1,584
357
2,364
360
27
387
590
591
1,181
225
1,793
324
10
334
409
219
628
266
1,228
324
10
334
0
0
0
266
600
324
10
334
648
324
972
266
1,572
81
2
83
106
74
180
65
328
in EUR thousands
2019
2019 (Min)
2019 (Max)
2018
2019
2019 (Min)
2019 (Max)
2018
Werner Deggim
(until Dec 31, 2017)
John Stephenson
(until Jan 31, 2018)
Fixed remuneration
Benefits
Total
One-year variable
remuneration
Multi-year variable
remuneration
Other perennial
remuneration
Subtotal
Pension expenses
Total remuneration
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
230
4
234
0
0
0
0
234
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
23
1
24
0
0
0
0
24
294
16
310
572
256
828
279
1,417
2019
1,014
53
1,067
1,553
913
2,466
902
4,435
294
16
310
0
0
0
279
589
294
16
310
735
441
1,176
279
1,765
Total
2019 (Min)
2019 (Max)
1,014
53
1,067
0
0
0
902
1,969
1,014
53
1,067
2,373
1,359
3,732
902
5,701
T039
2018
504
20
524
1,011
591
1,602
473
2,599
2018
1,198
54
1,252
1,707
1,256
2,963
763
4,978
107
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Inflow from Management Board member remuneration
T040
in EUR thousands
Fixed remuneration
Benefits
Total
One-year variable remuneration
Multi-year variable remuneration
LTI tranche 2016 – 2017
LTI tranche 2015 – 2017
Matching Stock Program
2014 – – 2018
Other perennial remuneration
Subtotal
Pension expenses
Total remuneration
Dr. Michael Schneider
Dr. Friedrich Klein
(since Oct 1, 2018)
Bernd Kleinhens
(until July 31, 2019)
John Stephenson
(until Jan 31, 2018)
Total
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
396
27
423
572
0
0
0
438
1,010
357
1,790
360
27
387
590
0
0
0
591
1,181
225
1,793
324
10
334
409
0
0
0
219
628
266
1,228
81
2
83
106
0
0
0
74
180
65
328
294
16
310
572
113
0
0
256
941
279
1,530
504
20
524
1,011
0
230
718
591
2,550
473
3,547
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
23
1
24
0
0
217
670
0
887
0
911
1,014
53
1,067
1,553
113
0
0
913
2,579
902
4,548
968
50
1,018
1,707
0
447
1,388
1,256
4,798
763
6,579
Furthermore, the former members of the Management Board Mr. Kleinhens, Mr. Deggim and Mr. Stephenson received a total of EUR 1,144 thousand in fiscal year 2019 (payments made in 2018:
EUR 1,662 thousand to Mr. Deggim).
108
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Remuneration of the Supervisory Board
The remuneration for the Chairman and the Vice Chairman of the
Supervisory Board was calculated separately in accordance with
the recommendations of the German Corporate Governance Code
in the version dated February 7, 2017. The Chairman is paid
double the remuneration of the other members of the Supervisory
Board, and the Vice Chairman is paid one and a half times this
amount. In addition, the Chairman and members of the Supervisory
Board’s committees are remunerated separately. The Supervisory
Board members will be remunerated for their activities on the day
after the 2020 Annual General Meeting as follows:
Remuneration of the Supervisory Board in 2019
T041
Supervisory Board member
Membership / Chairman of a committee
Remuneration in EUR
Lars M. Berg
Chairman of the Supervisory Board
Erika Schulte
Vice Chairwoman of the Supervisory Board
Chairman of the General and Nomination
Committee
Rita Forst
Günter Hauptmann
Member of the Audit Committee
Member of the Strategy Committee
(since May 22, 2019)
Member of the Strategy Committee
(since May 22, 2019)
Member of the Audit Committee
(until May 21, 2019)
Chairman of the Strategy Committee
(since May 22, 2019)
Member of the General and Nomination
Committee
Dr. Knut J. Michelberger
Chairman of the Audit Committee
Mark Wilhelms
Total
Member of the General and Nomination
Committee
Member of the Audit Committee
(since May 22, 2019)
110,000.00
91,136.99
60,000.00
75,342.47
95,000.00
56,136.99
487,616.45
No remuneration was paid to Supervisory Board members in fiscal
year 2019 for services personally rendered (in particular advisory
and brokerage services).
Furthermore, the Supervisory Board members are reimbursed for
any expenses and travel costs incurred while performing their
duties for the Company in accordance with the Company’s
respectively applicable guidelines. The members of the Supervisory
Board arrange private insurance or are personally responsible for
the statutory deductible of 10% of the amount of loss up to a limit
of 1.5 annual salaries for the D&O insurance policy carried for the
Management Board and the Supervisory Board of NORMA Group.
109
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Other Legally Required Disclosures
An overview of the information required under Section 315a para-
graph 1 of the German Commercial Code (Handelsgesetzbuch,
HGB) is presented below:
same way as other shareholders in accordance with applicable
legislation and the Articles of Association.
Section 315a (1) no. 1 HGB
NORMA Group SE’s share capital totalled EUR 31,862,400.00 on
December 31, 2019. This is divided into 31,862,400 registered
shares with no par value. Each share entitles the bearer to one
vote. There are no other classes of shares. NORMA Group SE
holds no treasury shares.
Section 315a (1) no. 2 HGB
The Management Board of NORMA Group SE is not aware of any
restrictions affecting voting rights or the transfer of shares or any
agreements between shareholders which could result in such
restrictions.
Section 315a (1) no. 3 HGB
There are no direct or indirect capital holdings exceeding one
tenth of the voting rights other than those voting rights listed in
the Notes to the Consolidated Financial Statements.
Section 315a (1) no. 4 HGB
There are no shares in NORMA Group SE that confer special con-
trol rights to the holder.
Section 315a (1) no. 5 HGB
There are no employee share plans through which employees
can acquire shares of NORMA Group SE. Employees with
shareholdings in NORMA Group SE exercise control rights in the
Section 315a (1) no. 6 HGB
Management Board members are appointed and dismissed in
accordance with Section 84 et seq. of the German Stock
Corporation Act (Aktiengesetz, AktG). The Articles of Association
of NORMA Group SE do not contain any provisions related to this
issue that contradict the applicable legislation. The Supervisory
Board is responsible for determining the concrete number of
members on the Management Board. It can nominate a Chairman
and Vice Chairman of the Management Board or a Management
Board spokesperson and a deputy spokesperson.
Changes to the Articles of Association are to be decided on by
the Annual General Meeting in accordance with Section 179 (1)
AktG. In accordance with Section 179 (1) sentence 2 AktG, the
Annual General Meeting can authorize the Supervisory Board to
make changes which affect only the wording of the Articles of
Association. The Annual General Meeting of NORMA Group SE
has chosen to do so: According to Article 14 (2) of the Articles of
Association, the Supervisory Board is authorized to make changes
to the Articles of Association which only affect their wording. In
accordance with Article 20 sentence 3 of the Articles of
Association, a simple majority of votes submitted is sufficient for
a resolution on changing the Articles of Association if at least half
of the share capital is represented when the resolution is adopted
and a different majority is not required under the law.
The Supervisory Board is authorized to amend the wording of
article 6 of the Articles of Association to reflect the issue of the
new shares from Conditional Capital 2015. The same will apply
insofar as the authorization to issue convertible bonds, bonds
with warrants, and / or participation rights with or without
conversion or option rights or conversion or option obligations in
accordance with the Annual General Meeting’s resolution of May
20, 2015, is not exercised during the term of the authorization or
the corresponding option or conversion rights or option or
conversion obligations have lapsed because the exercise periods
have expired or for another reason.
The Supervisory Board is authorized to amend the wording of
Article 5 of the Articles of Association in accordance with the
issuance of new shares from Authorized Capital 2015 and,
provided that Authorized Capital 2015 has not been utilized or
not been fully utilized by May 19, 2020, adjust the authorization
after that deadline has expired.
The Management Board may determine that the share capital is
to remain unchanged in the event that shares will be withdrawn
and, instead, be increased by withdrawing a percentage of the
remaining shares in the share capital pursuant to Section 8 (3)
German Stock Corporation Act. In this case, the Management
Board is authorized to adjust the number of shares in the Articles
of Association.
Section 315a (1) no. 7 HGB
Authorized capital
In accordance with the resolution passed at the Annual General
Meeting on May 20, 2015, the Management Board is authorized,
with the Supervisory Board’s consent, to increase the Company’s
share capital once or repeatedly by up to a total of EUR 12,744,960
on or before May 19, 2020, by issuing up to 12,744,960 new
registered shares against cash and / or noncash contributions
(Authorized Capital 2015).
The Management Board is authorized, with the Supervisory
Board’s consent, to exclude the shareholders’ subscription rights
110
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING wholly or in part, once or repeatedly, in accordance with the
following provisions:
• to exclude the shareholders’ subscription rights for fractional
amounts;
• if and to the extent that it is necessary to grant the bearers or
creditors of conversion or option rights and / or the bearers or
creditors of financing instruments carrying conversion or
option obligations which were or are issued by
NORMA Group SE, or by a domestic or foreign Company in
which NORMA Group SE holds directly or indirectly the
majority of the votes and capital;
• in the case of a capital increase against cash contributions
pursuant or according to Section 186 (3), sentence 4 AktG,
if the par value of the new shares is not substantially lower
than the stock exchange price of the already listed shares in
the Company and if the new shares which were issued under
exclusion of the subscription right do not exceed a propor-
tional amount of 10% of the share capital in total;
• in case of capital increases against non-cash contributions,
in particular for the purpose of acquiring enterprises, parts
of enterprises or interests in enterprises.
The Authorized Capital 2011/II which was resolved by the Annual
General Meeting on April 6, 2011, has thus been cancelled by
resolution of the Annual General Meeting on May 20, 2015. Article
5 of the Articles of Association of NORMA Group SE has been
changed accordingly.
Conditional capital
The Management Board is authorized to issue, with the
Supervisory Board’s consent, once or repeatedly on or before
May 19, 2020, bearer or registered convertible bonds and / or
bonds with warrants and / or participation rights carrying a
conversion or option right and / or conversion or option obligation
(or a combination of these instruments) in a total nominal amount
of up to EUR 200,000,000 with or without a limited maturity term
(hereinafter referred to collectively as ‘bonds’) and to grant the
creditors of bonds conversion / option rights and / or lay down for
the creditors of bonds conversion / option obligations to subscribe
to a total of up to 3,186,240 new registered shares of the Company
with a pro rata amount of the share capital of a total of up to
EUR 3,186,240 in accordance with the terms and conditions of
the bonds.
The share capital of the Company is conditionally increased by
up to EUR 3,186,240 through an issuance of up to 3,186,240 new
registered shares (Conditional Capital 2015).
The purpose of Conditional Capital is to issue shares to the
creditors of convertible bonds and / or bonds with warrants
and / or participation rights carrying an option / conversion right
and / or a conversion / option obligation (or a combination of such
instruments), which will be issued based on the authorizations
granted by the Annual General Meeting of NORMA Group SE on
May 20, 2015, or domestic or foreign companies in which
NORMA Group SE directly or indirectly holds the majority of the
votes and the capital.
New shares are issued at the conversion or option price to be
determined in each case in accordance with the respective
authorization. The conditional increase in capital will be performed
only insofar as the bearers of conversion or option rights based
on the aforementioned bonds or participation rights exercise their
conversion or option rights or conversion or option obligations
that are based on such bonds are fulfilled, and insofar as the
conversion or option rights and / or conversion or option obligations
are not satisfied through own shares, shares from authorized
capital or other consideration.
The new shares will participate in the profit as of the beginning
of the fiscal year in which they are issued; notwithstanding the
above, the Management Board may, if permitted by law, resolve
with the consent of the Supervisory Board that the new shares
be able to participate in the profit as of the beginning of an earlier
fiscal year for which, at the time of their issue, the Annual General
Meeting has not yet resolved on the appropriation of the net
retained profit.
The authorization of the Management Board to issue warrants
and convertible bonds and participation rights with warrants and
convertible rights and Conditional Capital 2011 resolved by the
Annual General Meeting on April 6, 2011, were cancelled by
shareholder resolution on May 20, 2015. Article 6 of the Articles
of Association of NORMA Group SE has been amended
accordingly.
Authorization to acquire own shares
Pursuant to the resolution of the Annual General Meeting on May
20, 2015, NORMA Group SE is authorized to acquire up to a total
of 10% of its own share capital at the time at which the resolu-
tion was adopted or – in the event that this value is lower – at the
time that the authorization is exercised via the stock exchange or
via a public purchase offer on or before May 19, 2020, for any
permissible purpose. This authorization may be exercised by
NORMA Group SE in whole or in partial amounts, once or
repeatedly, in pursuit of one or more purposes, but also be carried
out by companies that are dependent on NORMA Group SE or in
which NORMA Group SE holds a majority of the shares, or on its
or their account. If the shares are acquired on the stock exchange,
the equivalent value per share that is paid (without ancillary
acquisition costs) may not exceed the price of the share in
NORMA Group SE in the Xetra trading system (or a comparable
successor system), as determined on the trading day in
Frankfurt / Main by the opening auction, by more than 10% and
not fall below it by more than 20%. If the acquisition is effected
by way of a public purchase offer, the purchase price offered or
the threshold values of the purchase price margin (excluding
ancillary acquisition costs) may not exceed the closing price of
111
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING • to issue in connection with share-based payments and
employee share participation programs. The purchase right
of shareholders to these own shares is excluded in the event
of an appropriate use.
NORMA Group SE is authorized to acquire its own shares within
the framework of the aforementioned, related to the share capital
limits, and by using derivatives such as put options, call options,
forward purchases or a combination of these instruments and to
take out derivative transactions. The acquisition of shares by using
derivatives is limited to a number of shares that does not exceed
a proportionate amount of 5% of the existing share capital at
the time.
Section 315a (1) no. 8 HGB
NORMA Group’s financing agreements including the contracts
for the promissory notes include the typical Change of Control
Clause. In the event of a takeover by a third party, the possibility
that NORMA Group would not be able to finance itself at similarly
favorable terms and conditions cannot be ruled out.
Section 315a (1) no. 9 HGB
NORMA Group SE has no agreements in place that provide com-
pensation for members of the Management Board or employees
in the event of a takeover bid. Please see the Remuneration Report
for further details.
REMUNERATION REPORT, P. 102.
the NORMA Group SE share in the Xetra trading system (or a
comparable successor system) on the third trading day in
Frankfurt / Main prior to the day of the public announcement of
the offer by more than 10% and not fall below it by more than
20%. Should the relevant price vary by a not inconsiderable extent
following the publication of the public purchase offer, the offer
may be adjusted. In this case, the closing price on the third trading
day in Frankfurt / Main prior to the public announcement will be
based on any adjustment that has been made.
The Management Board is authorized to use shares of the
Company for any legal purpose, once or repeatedly, in whole or
in part, and also through dependent or majority-owned
NORMA Group SE related companies or through third parties
acting on their behalf or on behalf of NORMA Group SE. In
particular, the shares acquired may be redeemed without such
redemption or its implementation requiring a shareholder
resolution. The cancellation leads in principle to a capital reduction.
The Management Board may alternatively determine that the
share capital is to remain unchanged upon redemption. In addition,
the Management Board is expressly authorized to use the shares
acquired under this authorization on one or more occasions, in
whole or in part, individually or jointly, and also by dependent or
majority-owned NORMA Group SE related companies or, on their
account or third parties acting on the account of NORMA Group
SE as follows:
• for sale against cash, provided that the price is not significantly
below the stock market price of shares of the Company at the
time of sale (simplified exclusion of subscription rights in accor-
dance with Sections 186 (3) sentence 4, 71 (1) no. 8 sentence
5 half-sentence 2, AktG, is limited to a maximum of 10% of the
share capital),
• for sale against payment in kind, particularly for the acquisi-
tion of companies, parts of companies or participations in
companies,
• to meet obligations under conversion or option rights or
obligations to act or option,
Report on Transactions with
Related Parties
In fiscal year 2019, there were no significant transactions with
related companies or persons besides the minority activities of
members of the Management Board described in the Corporate
Governance Report.
112
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Con sol idated
Fin an c ial Statements
114
115
116
117
118
203
205
206
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Cash Flows
Consolidated Statement of Changes in Equity
Notes to the Consolidated Financial Statements
Appendix to the Notes to the Consolidated Financial Statements
Responsibility Statement
Independent Auditor’s Report
Con solidated State me nt of Co m p reh e n si ve In com e
Consolidated Statement of Comprehensive Income
in EUR thousands
Revenue
Changes in inventories of finished goods and work in progress
Other own work capitalized
Raw materials and consumables used
Gross profit
Other operating income
Other operating expenses
Employee benefits expense
Depreciation and amortization
Operating profit
Financial income
Financial costs
Financial costs – net
Profit before income tax
Income taxes
Profit for the period
Other comprehensive income for the period, net of tax
Other comprehensive income that can be reclassified to profit or loss, net of tax
Exchange differences on translation of foreign operations
Cash flow hedges, net of tax
Costs of hedging, net of tax
Other comprehensive income that cannot be reclassified to profit or loss, net of tax
Remeasurements of post-employment benefit obligations, net of tax
Other comprehensive income for the period, net of tax
Total comprehensive income for the period
Profit attributable to
Shareholders of the parent
Non-controlling interests
Total comprehensive income attributable to
Shareholders of the parent
Non-controlling interests
(Un)diluted earnings per share (in EUR)
Note
(8)
(9)
(10)
(11)
(12)
(18, 19)
(13)
(16)
(24)
(21, 24)
(21, 24)
(24, 26)
2019
1,100,096
3,045
4,910
– 477,628
630,423
13,630
– 157,879
– 312,376
– 77,116
96,682
1,460
– 16,950
– 15,490
81,192
– 22,743
58,449
7,210
8,893
– 1,750
67
– 1,519
– 1,519
5,691
64,140
58,422
27
58,449
64,236
– 96
64,140
(15)
1.83
T042
2018
1,084,140
10,383
5,197
– 473,551
626,169
15,589
– 162,016
– 282,768
– 63,429
133,545
2,703
– 14,371
– 11,668
121,877
– 30,089
91,788
10,749
10,068
748
– 67
– 214
– 214
10,535
102,323
91,873
– 85
91,788
102,540
– 217
102,323
2.88
114
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Con solidated State me nt of F in a n c i a l Po sit ion
Consolidated Statement of Financial Position
T043
Note
Dec 31, 2019
Dec 31, 2018
in EUR thousands
Note
Dec 31, 2019
Dec 31, 2018
Equity and Liabilities
Assets
in EUR thousands
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Other non-financial assets
Derivative financial assets
Income tax assets
Deferred income tax assets
Current assets
Inventories
Other non-financial assets
Other financial assets
Derivative financial assets
Income tax assets
Trade and other receivables
Contract assets
Cash and cash equivalents
Total assets
1,514,340
1,471,686
(18)
(18)
(19)
(23)
(21)
(17)
(22)
(23)
(21)
(21)
(21)
(8)
(29)
393,087
265,407
290,843
2,792
120
1,173
9,375
962,797
173,249
21,933
4,792
330
8,607
162,386
525
179,721
551,543
389,505
283,394
243,326
2,404
2,180
878
6,571
928,258
178,107
17,984
5,231
584
6,807
143,138
1,185
190,392
543,428
Equity attributable to equity holders of the parent
Subscribed capital
Capital reserve
Other reserves
Retained earnings
Equity attributable to shareholders
Non-controlling interests
Total equity
Liabilities
Non-current liabilities
Retirement benefit obligations
Provisions
Borrowings
Other non-financial liabilities
Contract liabilities
Lease liabilities
Other financial liabilities
Derivative financial liabilities
Deferred income tax liabilities
Current liabilities
Provisions
Borrowings
Other non-financial liabilities
Contract liabilities
Lease liabilities
Other financial liabilities
Derivative financial liabilities
Income tax liabilities
Trade and other payables
Total liabilities
Total equity and liabilities
31,862
210,323
9,850
375,843
627,878
1,576
629,454
15,890
5,984
495,927
356
103
30,168
1,630
684
69,562
620,304
8,543
45,971
36,665
420
8,427
17,496
229
3,712
143,119
264,582
884,886
(24)
(26)
(27)
(21)
(28)
(8)
(21)
(21)
(17)
(27)
(21)
(28)
(8)
(21)
(21)
(21)
31,862
210,323
2,517
356,022
600,724
1,717
602,441
12,804
7,260
455,759
431
149
0
1,992
605
73,099
552,099
8,750
113,332
26,984
453
0
18,866
153
6,580
142,028
317,146
869,245
1,514,340
1,471,686
115
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING
Con solidated State me nt of Ca s h F l ows
Consolidated Statement of Cash Flows
in EUR thousands
Operating activities
Profit for the period
Depreciation and amortization
Gain (–)/loss (+) on disposal of property, plant and equipment
Change in provisions
Change in deferred taxes
Change in inventories, trade account receivables and other receivables, which are not attributable to investing or financing activities
Change in trade and other payables, which are not attributable to investing or financing activities
Change in reverse factoring liabilities
Payments for share-based payments
Interest expenses in the period
Income (–)/expenses (+) due to measurement of derivatives
Other non-cash expenses (+)/income (–)
Cash flow from operating activities
thereof interest received
thereof income taxes
Investing activities
Payments for acquisitions of subsidiaries, net
Investments in property, plant and equipment and intangible assets
Proceeds from the sale of property, plant and equipment
Cash flow from investing activities
Financing activities
Payments for the acquisition of non-controlling interests
Interest paid
Dividends paid to shareholders
Dividends paid to non-controlling interests
Proceeds from borrowings
Repayment of borrowings
Proceeds from/ repayment of derivatives
Repayment of lease liabilities
Cash flow from financing activities
Net change in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effect of foreign exchange rates on cash and cash equivalents
Cash and cash equivalents at the end of the period
Note
2019
(18, 19)
(26, 27)
(17)
(21, 22, 23)
(21, 28)
(29)
(29)
(18, 19)
(24)
(21)
(21)
(29)
58,449
77,116
17
364
– 5,254
– 15,299
5,557
2,135
– 1,045
15,008
73
– 38
137,083
1,007
– 32,879
0
– 57,784
751
– 57,033
0
– 15,070
– 35,049
– 43
263,664
– 296,600
– 83
– 10,058
– 93,239
– 13,189
190,392
2,518
179,721
T044
2018
91,788
63,429
184
777
– 5,401
– 2,651
– 20,960
– 6,198
– 3,513
13,218
436
– 266
130,843
484
– 33,072
– 69,797
– 60,842
1,131
– 129,508
– 1,121
– 13,676
– 33,456
– 134
117,467
– 37,266
– 409
– 123
31,282
32,617
155,323
2,452
190,392
116
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Con solidated State me nt of C h an g e s in E q uit y
Consolidated Statement of Changes in Equity
in EUR thousands
Balance as of December 31, 2017 (as reported)
Effects of IFRS 9
Balance as of January 1, 2018
Result for the period
Exchange differences on translation of foreign operations
Cash flow hedges, net of tax
Remeasurements of post-employment benefit obligations, net of tax
Total comprehensive income for the period
Dividends paid
Dividends paid to non-controlling interests
Acquisition of non-controlling interests
Total transactions with owners for the period
Balance as of December 31, 2018 (as reported)
Effects of IFRS 16
Balance as of January 1, 2019
Changes in equity for the period
Result for the period
Exchange differences on translation of foreign operations
Cash flow hedges, net of tax
Remeasurements of post-employment benefit obligations, net of tax
Total comprehensive income for the period
Dividends paid
Dividends paid to non-controlling interests
Total transactions with owners for the period
Attributable to equity holders of the parent
Subscribed
Note
capital Capital reserve Other reserves
31,862
210,323
– 8,364
31,862
210,323
– 8,364
0
0
0
0
0
31,862
210,323
10,200
681
10,881
0
2,517
Retained
earnings
298,077
– 600
297,477
91,873
– 214
91,659
– 33,456
342
– 33,114
356,022
– 2,033
Total
531,898
– 600
531,298
91,873
10,200
681
– 214
102,540
– 33,456
0
342
– 33,114
600,724
– 2,033
31,862
210,323
2,517
353,989
598,691
9,016
– 1,683
7,333
58,422
– 1,519
56,903
– 35,049
0
– 35,049
58,422
9,016
– 1,683
– 1,519
64,236
– 35,049
0
– 35,049
0
0
0
0
(21)
(24, 26)
(24)
(24)
(21)
(24, 26)
(24)
T045
Non- controlling
interests
Total equity
2,423
– 13
2,410
– 85
– 132
– 217
– 134
– 342
– 476
1,717
– 2
1,715
27
– 123
– 96
– 43
– 43
534,321
– 613
533,708
91,788
10,068
681
– 214
102,323
– 33,456
– 134
0
– 33,114
602,441
– 2,035
600,406
58,449
8,893
– 1,683
– 1,519
64,140
– 35,049
– 43
– 35,092
Balance as of December 31, 2019
31,862
210,323
9,850
375,843
627,878
1,576
629,454
117
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Notes to the Con so l idate d Fin ancial Sta tem en ts
General information
1. Group information
NORMA Group SE is the ultimate parent Company of
NORMA Group. Its headquarters are located at 63477 Maintal,
Edisonstrasse 4, in the vicinity of Frankfurt, Germany, and the
Company is registered in the commercial register of Hanau under
the number HRB 94473. NORMA Group SE and its affiliated Group
subsidiaries operate in the market as ‘NORMA Group’.
NORMA Group has been listed in the Prime Standard of Frankfurt
Stock Exchange’s Regulated Market since April 8, 2011. For a
detailed overview of NORMA Group’s shareholdings, please refer
to the
APPENDIX TO THE NOTES: ‘ VOTING R IGHTS’.
NORMA Group SE was established in 2006 as a result of the
merger of Rasmussen GmbH and the ABA Group. Rasmussen
was founded in 1949 as Rasmussen GmbH in Germany. It
manufactured connecting and retaining elements as well as fluid
conveying conduits such as monolayer and multilayer tubes and
corrugated tubes. All products were marketed globally under the
NORMA brand. ABA Group was founded in 1896 in Sweden. The
Group has since developed into a leading multinational company
specializing in the design and production of hose and pipe clamps,
as well as connectors for many worldwide applications.
NORMA Group markets its products to its customers via two
different market channels: Engineered Joining Technology (EJT)
and Distribution Services (DS).
law as set forth in Section 315e of the German Commercial Code
(HGB) for the year ended December 31, 2019.
For Engineered Joining Technology (EJT) customers, NORMA Group
offers tailor-made solutions and special engineered joining
systems. To effectively fulfill special requirements, NORMA Group
builds on extensive industry and application knowledge, a
successful track record of innovation and long-standing
relationships with all its key customers.
The Consolidated Statement of Comprehensive Income has been
prepared in accordance with the total cost method.
The Consolidated Financial Statements of NORMA Group SE were
prepared by the Management Board on March 23, 2020, and are
scheduled to be released for publication after approval by the
Supervisory Board on March 24, 2020.
For Distribution Services (DS) customers, NORMA Group offers a
wide range of standard fastening and fixing products. Further-
more, NORMA Group offers a broad technological and innovative
product portfolio which includes brands like ABA®, Breeze®,
Clamp-All®, CONNECTORS®, FISH®, Five Star®, Gemi®, NDS®,
NORMA®, Raindrip®, R.G.RAY®, Serflex®, TORCA and TRUSTLENE®.
2. Basis of preparation
The principal accounting policies applied in the preparation of
these Consolidated Financial Statements are set out below. These
policies have been consistently applied to all the years presented,
unless otherwise stated.
The Consolidated Financial Statements of NORMA Group are
being filed with and published in the German Federal Gazette
(Bundesanzeiger).
The preparation of financial statements in conformity with IFRS
requires the Management Board the use of certain accounting
estimates. It is also required to exercise its judgment in the pro-
cess of applying the Group’s accounting policies. The areas involv-
ing a higher degree of judgment or complexity or areas where
assumptions and estimates are significant to the Consolidated
Financial Statements are disclosed in
N OT E 6 ‘ C R I T I C A L
ACCOUNTING ESTIMATES AND JUDGMENTS’.
In past decades, NORMA Group has, driven by its successful
acquisitions and continuous technological innovation with
products and operations, developed into a Group of companies
of global importance.
The Consolidated Financial Statements of NORMA Group have
been prepared in accordance with International Financial
Reporting Standards and the relevant interpretations as adopted
by the EU (IFRS) as well as with the regulations under commercial
118
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING reclassification within the Statement of Comprehensive Income
of the leasing installments previously recognized as operating
expenses to depreciation and interest expense and thus an
increase in EBITDA (by the full reclassification effect) as well as
EBITA and EBIT (by the reclassification effect attributable to
interest). In the Statement of Cash Flows, the cash flows from
operating activities attributable to the payments for capitalized
leases have been reclassified from cash flow from operating
activities to cash flow from financing activities.
The effects of the first-time application of IFRS 16 on the
Consolidated Statement of Financial Positions as of Janu-
ary 1, 2019, and the effects on the Consolidated Statement of
Comprehensive Income and the Consolidated Statement of Cash
Flows for the period from January 1 to December 31, 2019 are
presented in the following:
Accounting standards applied for the first time in the
current fiscal year
• The recognition of leases with a remaining term of less than
12 months as of January 1, 2019 as current leases.
IFRS 16
Due to the first-time adoption of IFRS 16 since January 1, 2019,
the Group’s Consolidated Financial Statements have been
affected by changes in accounting policies in the following areas.
NORMA Group applied the modified retrospective method for the
first time adoption as of January 1, 2019, for accounting purposes
as lessee, i.e. the cumulative adjustment effects at the time of
first-time application have been recognized as a charge to equity
against retained earnings and the comparative figures for the
previous year’s periods have not been adjusted. For previous
operating leases that do not end in 2019, the Group recognizes
a lease liability at the present value of the future lease payments
(taking into account any extension options) as of January 1, 2019.
The weighted avarage interest rate applied in the NORMA Group
was 3.08%.
• The non-inclusion of initial direct costs in the measurement of
rights of use on the date of initial application.
• Subsequent consideration of the current state of knowledge
when determining the term of leases for contracts with
renewal or termination options.
The Group has elected not to change the original carrying amounts
of assets and liabilities under finance leases existing on the date
of first-time adoption of IFRS 16.
The effects of the first time adoption of IFRS 16 on retained
earnings are as follows:
Retained earnings reconciliation:
IFRS 16
T046
in EUR thousands
Retained earnings
The corresponding rights of use are calculated as if IFRS 16 had
been applied since the beginning of the lease. Both, the rights of
use and the future lease payments are mainly discounted using
the lessee’s marginal borrowing rate at the date of initial
application.
Retained earnings as of December 31, 2018
Effects of IFRS 16
of which deferred taxes
Retained earnings as of January 1, 2019
356,022
– 2,033
614
353,989
Applied simplifications
The Group made use of the following simplifications when IFRS
16 was applied for the first time:
• Assumption of the previous assessment of whether a lease is
encumbered.
For the majority of leases, the Group as lessee recognizes a right
of use asset under IFRS 16 and a corresponding lease liability.
The lease liability must be compounded in the subsequent
valuation and the right of use must be depreciated. Besides the
resulting balance sheet extension, under IFRS 16, there is a
119
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Reconciliation Consolidated Statement of Financial Position IFRS 16
T047
in EUR thousands
Non-current assets
Property, plant and equipment
Deferred income tax assets
Other non-current assets
Current assets
Other current assets
Total assets
Equity
Retained earnings
Other equity
Liabilities
Non-current liabilities
Lease liabilities
Other financial liabilities
Deferred income tax liabilities
Other non-current liabilities
Current liabilities
Lease liabilities
Other financial liabilities
Other current liabilities
Total liabilities
Total equity and liabilities
Dec 31, 2018
as originally
presented
IFRS 16
Jan 1, 2019
restated
243,326
6,571
678,361
928,258
543,428
543,428
1,471,686
356,022
246,419
602,441
0
1,992
73,099
477,008
552,099
0
18,866
298,280
317,146
869,245
1,471,686
31,980
620
32,600
0
32,600
– 2,033
– 2
– 2,035
26,180
– 16
6
26,170
8,481
– 16
8,465
34,635
32,600
275,306
7,191
678,361
960,858
543,428
543,428
1,504,286
353,989
246,417
600,406
26,180
1,976
73,105
477,008
578,269
8,481
18,850
298,280
325,611
903,880
1,504,286
The difference between the nominal values of the payments
expected as of December 31, 2018; for operating leases in the
amount of EUR 21,905 thousand and the lease liabilities of
EUR 34,661 thousand recorded in the opening balance sheet is
mainly due to the reassessment of the lease terms in accordance
with the requirements of IFRS 16. Sufficiently secure extension
or termination options were taken into account when determin-
ing the lease payments to be recognized as liabilities and resulted
in net in a higher value to be recognized. The non- inclusion of
lease payments for certain low-value and short-term leases and
the discounting of the lease liability in accordance with IFRS 16
had the opposite effect.
The Right of use relate to the following types of assets:
Carrying amounts rights of use
T048
Carrying amounts
in EUR thousands
Dec 31, 2019
Jan 1, 2019
Land and buildings
36,834
27,778
Machinery and tools
Forklifts and warehouse
Office and IT equipment
Company cars
Total
247
1,429
233
2,170
182
1,691
291
2,038
40,913
31,980
120
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING In contrast to the previous approach, according to which expenses
for operating leases were shown in full in operating profit, under
IFRS 16, for capitalized leases, only the amortization of rights of
use is allocated to operating profit. Interest expenses from the
compounding of lease liabilities are shown in the financial result.
Compared to the previous method, this relieves the operating
profit by EUR 1,031 thousand in 2019.
Reconciliation for Consolidated Statement of Comprehensive Income IFRS 16
T049
in EUR thousands
Revenue
Changes in inventories of finished goods and work in progress
Other own work capitalized
Raw materials and consumables used
Gross profit
Other operating income
Other operating expenses
Employee benefits expense
Depreciation and amortization
Operating profit
Financial income
Financial costs
Financial costs – net
Profit before income tax
Income taxes
Profit for the Period
Other comprehensive income for the period, net of tax
Other comprehensive income that can be reclassified to profit or loss, net of tax
Exchange differences on translation of foreign operations
Cash flow hedges, net of tax
Other comprehensive income that cannot be reclassified to profit or loss net of tax
Remeasurements of post-employment benefit obligations net of tax
Other comprehensive income for the period, net of tax
Total Comprehensive Income for the Period
Profit attributable to
Shareholders of the parent
Non-controlling interests
Total comprehensive income attributable to
Shareholders of the parent
Non-controlling interests
(Un)diluted earnings per share (in EUR)
2019
1,100,096
3,045
4,910
– 477,628
630,423
13,630
– 157,879
– 312,376
– 77,116
96,682
1,460
– 16,950
– 15,490
81,192
– 22,743
58,449
7,210
8,893
– 1,683
– 1,519
– 1,519
5,691
64,140
58,422
27
58,449
64,236
– 96
64,140
1.83
Effects of
IFRS 16
2019 without
IFRS 16
1,100,096
3,045
4,910
– 477,628
630,423
13,554
– 169,175
– 312,376
– 66,775
95,651
1,460
– 15,694
– 14,234
81,417
– 22,811
58,606
7,210
8,893
– 1,683
– 1,519
– 1,519
5,691
64,297
58,579
27
58,606
64,393
– 96
64,297
1.83
76
11,296
– 10,341
1,031
– 1,256
– 1,256
– 225
68
– 157
– 157
– 157
– 157
– 157
– 157
– 0.0
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NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Reconciliation Consolidated Statement of Cash Flows IFRS 16
in EUR thousands
2019
Effects of IFRS 16
Operating activities
Profit for the period
Depreciation and amortization
Gain (–) / loss (+) on disposal of property, plant and equipment
Change in provisions
Change in deferred taxes
Change in inventories, trade account receivables and other receivables, which are not attributable to investing or financing activities
Change in trade and other payables, which are not attributable to investing or financing activities
Change in reverse factoring liabilities
Payments for share-based payments
Interest expenses in the period
Income (–) / expenses (+) due to measurement of derivatives
Other non-cash expenses (+) / income (–)
Cash flows from operating activities
thereof interest received
thereof income taxes
Investing activities
Investments in property, plant and equipment and intangible assets
Proceeds from the sale of property, plant and equipment
Cash flows from investing activities
Financing activities
Interest paid
Dividends paid to shareholders
Dividends paid to non-controlling interests
Proceeds from borrowings
Repayment of borrowings
Proceeds from / repayment of derivatives
Repayment of lease liabilities
Cash flows from financing activities
Net change in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effect of foreign exchange rates on cash and cash equivalents
Cash and cash equivalents at the end of the period
58,449
77,116
17
364
– 5,254
– 15,299
5,557
2,135
– 1,045
15,008
73
– 38
137,083
1,007
– 32,879
– 57,784
751
– 57,033
– 15,070
– 35,049
– 43
263,664
– 296,600
– 83
– 10,058
– 93,239
– 13,189
190,392
2,518
179,721
– 157
10,341
– 68
1,260
– 58
11,318
0
– 1,260
– 10,058
– 11,318
0
0
T050
2019
without IFRS 16
58,606
66,775
17
364
– 5,186
– 15,299
5,557
2,135
– 1,045
13,748
73
20
125,765
1,007
– 32,879
– 57,784
751
– 57,033
– 13,810
– 35,049
– 43
263,664
– 296,600
– 83
0
– 81,921
– 13,189
190,392
2,518
179,721
122
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Due to the changed recognition of lease expenses from operating
leases in the Statement of Cash Flows, the cash inflow from
operating activities improved by EUR 11,318 thousand in 2019.
The cash outflow from financing activities decreased accordingly.
The effects on the key performance indicators of NORMA Group
can be seen in the
MA NAG EM ENT GROU P R EPORT P. 6 5 .
IFRIC 23: uncertainty over income tax treatments
In June 2017, the IASB issued IFRIC 23, Uncertainty over Income
Tax Treatments. The interpretation clarifies the recognition and
measurement requirements when there is uncertainty over income
tax treatments. In assessing the uncertainty, an entity shall
consider whether it is probable that a taxation authority will
accept the uncertain tax treatment.
Amendments to IAS 19: plan amendment, curtailment or
settlement
On February 7, 2018, the IASB issued amendments to IAS 19 –
plan amendment, curtailment or settlement. The amendments to
IAS 19 Employee Benefits now explicitly state that after an
amendment, curtailment or settlement of a pension plan during
the year, the current service cost and the net interest for the
remaining period must be recalculated. The actuarial assumptions
valid at the time of the planned event must be used for this
recalculation.
Annual improvement project 2015 – 2017
In December 2017, the IASB conducted the cycle as part of the
Annual Improvement Project 2015 – 2017, which provides various
amendments to existing standards. The cycle: 2015 – 2017
contains clarifications for three standards, IFRS 3 and IFRS 11,
IAS 12 and IAS 23. The amendments and IAS are effective for
annual periods beginning on or after January 1, 2019.
Standards, amendments and interpretations of existing
standards that are not yet effective and have not been
adopted earlier by the group
The following standards and amendments to existing
standards have been published and application is mandatory
for all accounting periods beginning on or after Janu-
ary 1, 2019. The Group has decided against early adoption.
regulations also include an optional ‘concentration test,’ which
should enable a simplified identification of a business operation.
These amendments shall be applied for acquisitions occurring
during annual periods beginning on or after January 1, 2020, while
earlier application is permitted. However, first-time adoption
within the EU prior to endorsement is not permitted.
The IASB has published a number of other pronouncements.
These recently translated accounting pronouncements as well as
the pronouncements which have not yet been implemented have
no material effect on the Consolidated Financial Statements of
NORMA Group.
3. Summary of significant accounting principles
Consolidation
1) Standards, amendments and interpretations to existing
(a) Subsidiaries
standards that have not been endorsed by the EU:
Amendments to IFRS 3: definition of a business
On October 22, 2018, the IASB issued amendments to the
guidance in IFRS 3, ‘Business Combinations’ that revises the
definition of a business.
Subsidiaries are all entities (including structured entities) over
which the Group has control. The Group controls an entity when
the Group is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect those
returns through its power over the entity. Consolidation of an
investee begins from the date the Group obtains control of the
investee and ceases when the Group loses control of the investee.
With this amendment, the IASB clarifies that a business comprises
a group of activities and assets that include at least one resource,
input, and one substantive process, which together significantly
contribute to the ability to create outputs. Furthermore, in terms
of outputs, now the focus is on goods and services provided to
customers; the reference to cost reductions is omitted. The new
The Group uses the acquisition method of accounting to account
for business combinations. The initial value for the acquisition of
a subsidiary is recognized at fair value of the assets transferred,
the liabilities incurred and the equity interests issued by the Group.
The initial value recognized includes the fair value of any asset
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NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING or liability resulting from a contingent consideration arrangement.
On the acquisition date, the fair value of the contingent
consideration is recognized as part of the consideration transferred
in exchange for the acquiree. Acquisition-related costs are
expensed as incurred. Identifiable assets acquired and liabilities
and contingent liabilities assumed in a business combination are
measured initially at their fair value on the acquisition date.
According to IFRS 3, for each business combination, the acquirer
shall measure any non-controlling interest in the acquiree either
at fair value (full goodwill method) or at the non-controlling
interest’s proportionate share of the acquiree’s net assets. The
Group measures the non-controlling interest in the acquiree at
the non-controlling interest’s proportionate share of the acquiree’s
net assets.
The excess of the consideration transferred, the amount of any
non-controlling interest in the acquiree and the acquisition date
fair value of any previous equity interest in the acquiree over the
fair value of the Group’s share of the identifiable net assets
acquired, is recorded as goodwill. If this is less than the fair value
of the net assets of the subsidiary acquired in the case of a bargain
purchase, the difference is recognized immediately in the
Consolidated Statement of Comprehensive Income.
In a business combination achieved in stages, the Group
remeasures its previously held equity interest in the acquiree at
its acquisition date fair value and recognizes the resulting gain
or loss, if any, in profit or loss.
Intercompany transactions, balances and unrealized gains or losses
on transactions between Group companies are eliminated.
Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with the policies adopted by the
Group.
(b) Non-controlling interests
Non-controlling interests have a share in the earnings of the
reporting period. Their interests in the shareholders’ equity of sub-
sidiaries are reported separately from the equity of the Group.
The Group treats transactions with non-controlling interests that
do not result in a loss of control as transactions with equity owners
of the Group. For purchases from non-controlling interests, the
difference between any consideration paid and the relevant share
acquired of the carrying value of net assets of the subsidiary is
recorded in equity.
(c) Disposal of subsidiaries
When the Group ceases to have control, any retained interest in
the subsidiary is remeasured at its fair value, with the change in
the carrying amount recognized in profit or loss. The initial carrying
amount is the fair value for the purposes of subsequently
accounting for the retained interest as an associate, joint venture
or financial asset. In addition, any amounts previously recognized
in other comprehensive income in respect of that entity are
accounted for as if the Group had directly disposed of the related
assets or liabilities. This may mean that amounts previously
recognized in other comprehensive income are reclassified to
profit or loss.
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NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Valuation methods
The following table shows the most important valuation methods:
Valuation methods
Position
Assets
Goodwill
Other intangible assets (except goodwill) – finite useful lives
Other intangible assets (except goodwill) – indefinite useful lives
Property, plant and equipment
Derivative financial assets:
Classified as cash flow hedge
Classified as fair value hedge
Without hedge accounting
Inventories
Other non-financial assets
Other financial assets
Trade and other receivables
Trade receivables, available for sale
Contract assets
Cash and cash equivalents
Liabilities
Pensions
Other provisions
Borrowings
Other non-financial liabilities
Lease liabilities
Other financial liabilities:
Financial liabilities at cost (FLAC)
Derivative financial liabilities:
Classified as cash flow hedge
Classified as fair value hedge
Without hedge accounting
Contingent consideration
Trade and other payables
Valuation method
Acquisition costs less potential impairment
Amortized costs
Acquisition costs less potential impairment
Amortized costs
At fair value in other comprehensive income
At fair value through profit or loss
At fair value through profit or loss
Lower of cost or net realizable value
Amortized costs
Amortized costs
Amortized costs
At fair value through profit or loss
Percentage of completion method less potential impairment
Nominal amount
Projected unit credit method
Present value of future settlement amount
Amortized costs
Amortized costs
Valuatiion based on IFRS 16.36
Amortized costs
At fair value in other comprehensive income
At fair value through profit or loss
At fair value through profit or loss
At fair value through profit or loss
Amortized costs
T051
125
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Fair value estimation
Foreign currency translation
IFRS 7 requires for financial instruments that are measured in the
Statement of Financial Position at fair value in accordance with
IFRS 13 a disclosure of fair value measurements by level using the
following fair value measurement hierarchy:
Level 1: Quoted prices (unadjusted) in active markets for identical
assets or liabilities,
Level 2: Inputs other than quoted prices included within Level 1
that are observable for the asset or liability, either
directly (that is as prices) or indirectly (that is derived
from prices), and
Level 3: Inputs for the asset or liability that are not based on
observable market data (that is unobservable inputs).
The level in the fair value hierarchy within which the fair value
measurement is categorized in total is determined on the basis
of the lowest level input that is significant to the fair value
measurement in total. The different hierarchy levels demand
different amounts of disclosure.
On December 31, 2019, and 2018, the Group’s derivative financial
instruments carried in the Statement of Financial Position at fair
value (e. g. derivatives used for hedging) are categorized in total
within Level 2 of the fair value hierarchy. The fair value of interest
rate swaps is calculated as the present value of the estimated
future cash flows. The fair value of forward foreign exchange
contracts is determined using a present value model based on
forward exchange rates.
(a) Functional and presentation currency
Items included in the financial statements of each of the Group’s
entities are measured using the currency of the primary economic
environment in which the entity operates (‘the functional
currency’). The Consolidated Financial Statements are prepared
in ‘euros’ (EUR), which is NORMA Group SE’s functional and the
Group’s presentation currency.
• Assets and liabilities for each Consolidated Statement of
Financial Position presented are translated at the closing rate
on the date of that Consolidated Statement of Financial
Position;
• Income and expenses are translated at average exchange
rates (unless this average is not a reasonable approximation
of the cumulative effect of the rates prevailing on the
transaction dates, in which case income and expenses are
translated at the actual rate on the dates of the transactions);
and
• All resulting exchange differences are recognized as a
(b) Transactions and balances
separate component of equity.
Goodwill and fair value adjustments arising through the acquisition
of a foreign entity are treated as assets and liabilities of the foreign
entity and translated at the closing rate.
Foreign currency transactions are translated into the functional
currency using the actual exchange rates on the dates of the
transactions or valuation where items are remeasured. Foreign
exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates
of monetary assets and liabilities denominated in foreign
currencies are recognized in profit or loss.
Foreign exchange gains and losses that relate to borrowings and
cash and cash equivalents are presented in profit or loss within
‘financial income / costs’. All other foreign exchange gains and
losses are presented in profit or loss within ‘other operating
income / expenses’.
(c) Group companies
The results and financial position of all the Group entities (none
of which has the currency of a hyper-inflationary economy) that
have a functional currency different from the presentation currency
are translated into the presentation currency as follows:
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NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING The exchange rates of the currencies affecting foreign currency
translation are as follows:
Intangible assets
(a) Goodwill
Exchange rates
per EUR
Australian dollar
Brazilian real
Chinese renminbi yuan
Swiss franc
Czech koruna
British pound sterling
Indian rupee
Japanese yen
South Korean won
Malaysian ringgit
Mexican peso
Polish złoty
Serbian dinar
Russian ruble
Swedish krona
Singapore dollar
Thai baht
Turkish lira
US dollar
T052
Spot rate
Average rate
Dec 31,
2019 Dec 31, 2018
2019
2018
1.5995
4.5157
7.8205
1.0854
1.6220
1.6103
4.4440
4.4147
7.8751
7.7329
1.1269
1.1126
1.5803
4.3071
7.8065
1.1550
25.4080
25.7240
25.6680
25.6468
0.8508
0.8945
0.8774
0.8847
80.1870
79.7298
78.8145
80.6760
121.9400
125.8500
122.0522
130.3588
Goodwill represents the excess of the cost of an acquisition over
the fair value of the Group’s share of the net identifiable assets
of the acquired subsidiary on the date of acquisition. Goodwill on
acquisitions of subsidiaries is included in ‘intangible assets’.
Goodwill is tested annually for impairment and carried at cost
less accumulated impairment losses. Impairment losses on
goodwill are not reversed. Gains and losses on the disposal of an
entity include the carrying amount of goodwill relating to the entity
sold.
Goodwill is allocated to cash-generating units for the purpose of
impairment testing. The allocation is made to those cash-
generating units or groups of cash-generating units that are
expected to benefit from the business combination in which the
goodwill arose.
1,296.2800
1,277.9300
1,304.6216
1,298.7919
(b) Development costs
4.5953
4.7317
4.6370
4.7630
21.2202
22.4921
21.5534
22.7001
4.2568
4.3014
4.2968
4.2612
117.5700
118.2690
117.8292
118.2359
69.9563
79.7153
72.4412
74.0428
10.4468
10.2548
10.5853
10.2611
1.5111
1.5591
1.5271
1.5924
33.4150
37.0520
34.7642
38.1559
6.6843
1.1234
6.0588
6.3606
1.1450
1.1195
5.6960
1.1810
Costs of research activities undertaken with the prospect of
gaining new scientific or technical knowledge and understanding
are expensed as incurred.
Costs for development activities, whereby research findings are
applied to a plan or design for the production of new or
substantially improved products and processes, are capitalized
if development costs can be measured reliably, the product or
process is technically and commercially feasible and future
economic benefits are probable.
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NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Furthermore, NORMA Group intends, and has sufficient resources,
to complete development and use or sell the asset. The costs
capitalized include the cost of materials, direct labor and other
directly attributable expenditure that serves to prepare the asset
for use. Such capitalized costs are included in profit or loss in line
‘own work capitalized’. Capitalized development costs are stated
at cost less accumulated amortization and impairment losses
with an amortization period of generally three to five years.
Development costs which did not meet the requirements are
expensed as incurred.
(c) Other intangible assets
Separately acquired other intangible assets are shown at historical
cost less accumulated amortization. Intangible assets acquired
in a business combination are recognized at fair value on the
acquisition date. Other intangible assets which have a finite useful
life will be amortized over their estimated useful life. Amortization
is calculated using the straight-line method to allocate their cost.
Other intangible assets which are determined to have indefinite
useful lives as well as intangible assets not yet available for use
are not amortized, but instead tested for impairment at least
annually. Furthermore, other intangible assets which are
determined to have indefinite useful lives and therefore are not
amortized, will be reviewed each period to determine whether
events and circumstances continue to support an indefinite useful
life assessment for these assets.
In general, the Group’s other intangibles are not qualifying assets
in accordance with IAS 23 and borrowing costs eligible for
capitalization therefore do not exist.
The useful lives of other intangible assets acquired in a business
combination are estimates based on the economics of each
specific asset which were determined in the process of the
purchase price allocation. The major part of these assets are
brand names and customer lists.
The estimated useful lives for other intangible assets are as
follows:
• Patents: 5 to 10 years
• Customer lists: 4 to 20 years
• Technology: 10 to 20 years
• Licenses, rights: 3 to 5 years
• Trademarks: indefinite or 20 years
• Software: 3 to 5 years
• Development costs: 3 to 5 years
Other intangible assets with indefinite useful lives are essentially
brand names, for which the end of usability is not foreseeable
and therefore indeterminable. These brand names result from
acquisitions. For these brand names, an indefinite useful life is
assumed. Based on a market perspective, there are no clear
indications for a definite useful life of these brand names as they
have been well-established in the market for many years.
Property, plant and equipment
All property, plant and equipment are stated at historical cost less
depreciation and impairment loss, if substantial. Historical cost
includes expenditure that is directly attributable to the acquisition
of the items and, if any, the present value of estimated costs for
dismantling and removing the assets, restoring the site on which
it is allocated. Borrowing costs eligible for capitalization in the
sense of IAS 23 were not available.
Subsequent costs are included in the asset’s carrying amount or
recognized as a separate asset, as appropriate, only when it is
foreseeable that future economic benefits associated with the
item will flow to the Group and the cost of the item can be
measured reliably. The carrying amount of the replaced part is
derecognized. All other repairs and maintenance expenses are
charged to profit or loss during the financial period in which they
are incurred.
Land is not depreciated. Depreciation on other assets is calculated
using the straight-line method to allocate their cost to their
residual values over their estimated useful lives.
The assets’ residual values and useful lives are reviewed and
adjusted, if appropriate, on each balance sheet date.
Gains and losses on disposals are determined by comparing the
proceeds with the carrying amount and are recognized within
‘other operating income / expenses’.
The estimated useful lives for property, plant and equipment
(excluding rights of use under IFRS 16) are as follows:
128
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING • Buildings: 8 to 40 years
• Machinery and technical equipment: 3 to 18 years
• Tools: 3 to 10 years
• Other equipment: 2 to 20 years
Leasing activities of the Group and their accounting
treatment (from January 1, 2019)
NORMA Group has significant leases for the rental of land and
buildings. In addition, the Group maintains leases for various
company cars and technical equipment under non-cancellable
lease agreements. Besides the usual extension options, the leases
include, to a minor extent, purchase and termination options that
are not taken into account. The lease terms per asset class are
as follows:
• Right of use assets – land and buildings: 1 month to 78 years
• Right of use assets - machinery and tools : 3 to 6 years
• Right of use assets – forklifts and warehouse: > 1 to 7 years
• Right of use assets – office and IT equipment: > 1 to 6 years
• Right of use assets – company cars: > 1 to 9 years
The Group’s leases generally do not contain credit terms, how-
ever, leased assets may not be used as collateral for borrowings.
As of January 1, 2019, leases are recognized as rights of use and
corresponding lease liabilities at the time when the leased asset
is available for use by the Group. Each lease payment is divided
into repayment and financing expenses. Finance expenses are
charged to the income statement over the lease term. The right
of use asset is amortized on a straight-line basis over the shorter
of the useful life and the lease term.
Right of use asset and lease liabilities are initially recognized at
present value. The lease liabilities generally include the present
value of the following lease payments:
• fixed payments (including de facto fixed payments, less any
leasing incentives to be received)
• variable lease payments linked to an index or interest rate
• expected residual value payments from residual value
guarantees of the lessee
• the exercise price of a purchase option, if it is sufficiently
certain that the lessee will exercise it
• penalties for terminating the lease, if the lease term takes
into account that the lessee will exercise a termination option
Lease payments are discounted at the interest rate underlying
the lease if this can be determined. Otherwise, they are discounted
at the lessee’s incremental borrowing rate. Rights of use assets
are measured at cost, which is comprised as follows:
• amount of the initial measurement of the lease liability
• all leasing payments made at or before the commencement
date, less any lease incentives received
• all initial direct costs incurred by the lessee, and
• the estimated costs incurred by the lessee in dismantling or
removing the underlying asset, restoring the site on which it
is located, or returning the underlying asset to the condition
required by the lease agreement.
Exceptions in the form of accounting options exist for short-term
leases (minimum term of a maximum of twelve months if no
purchase option has been agreed) and for low-value assets. The
lease payments resulting from these leases are therefore to
continue to be included in operating expenses in the future.
NORMA Group has made use of these simplified application
options as a lessee, with the exception of leased assets that are
allocated to the asset class ‘Right of use assets – land and build-
ings’. Furthermore, lessees are granted an accounting option not
to separate leasing and non-leasing components, which
NORMA Group has made use of, except for the asset classes
‘Right of use assets – land and buildings’ and ‘Right of use assets –
company cars’.
i. Extension and termination options
Some of NORMA Group’s real estate leases contain extension
options. Termination options are included to a very limited extent
in the area of real estate leasing. Such contractual terms and
conditions are used to provide the Group with operational flexibility
with respect to the contract portfolio. The majority of the current
extension and termination options can only be exercised by the
Group and not by the respective lessor.
In determining the term of leases, all facts and circumstances that
provide an economic incentive to exercise extension options or
not to exercise termination options are taken into account.
Changes to the term of the lease resulting from the exercise of
extension and termination options are only included in the term
of the lease if an extension or non-exercise of a termination option
is reasonably certain.
The following considerations are taken into account when deter-
mining the term of the leases or the inclusion or non-inclusion of
extension and termination options:
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Contract-related
Market-related
• existence of renewal or purchase options and their conditions,
• an obligation to dismantle installations or restore them to
• legal and local regulations to be observed for the
(permanent) obligation,
their original condition,
• alternative lease payments for comparable assets.
• amount of lease payments (including all variable payments)
for an optional period compared to customary market
payments.
Asset-based / Company-based
• the existence of significant leasehold improvements that
would be lost in the event of (premature) termination or
non-extension of the contract,
• costs in connection with a loss of production upon
termination of the lease,
• costs associated with the acquisition of an alternative asset,
• dependence of the business activity (core business) on the
continued use of the asset,
• financial consequences of the extension or termination of the
lease,
• nature of the leased asset (specific vs. generic / general
The assessment will be reviewed if a significant event or significant
change in circumstances occurs that could influence the previous
assessment, provided this is within the lessee’s control.
As of December 31, 2019, potential additional cash outflows from
extension options in the amount of EUR 1,516 thousand and
potential reduced cash outflows from termination options in the
amount of EUR 626 thousand were not recognized in the lease
liability as it is not reasonably certain that the leases will be
renewed or terminated prematurely.
Adjustments to the lease liabilities / right of use assets due to
changes in estimates of the term or amount of the expected lease
payments (index-based payments) amount to EUR 15 thousand
(an increase).
leased asset; extent to which the leased asset is critical to
the lessee’s operations).
Leases and their accounting treatment
(until December 31, 2018)
Leases in which substantially all the risks and rewards incidental
to ownership remain with the lessor are classified as operating
leases. Payments made under operating leases (less incentives
received from the lessor) are recognized as an expense on a
straight-line basis over the lease term. Leases where the Group
bears substantially all the risks and rewards incidental to
ownership are classified as finance leases. A finance lease is
capitalized at the inception of the lease at the fair value of the
leased property or, if lower, at the present value of the minimum
lease payments.
Each lease payment is divided into an interest and a repayment
portion so that the lease liability carries a constant interest rate.
The net lease liability is reported under liabilities in accordance
with its term. The interest portion of the lease payment is recog-
nized in profit or loss. Property, plant and equipment held under
a finance lease is depreciated over the shorter of the following
two periods: the economic life of the asset or the lease term.
The Group has both operating leases and finance leases, which
mainly relate to property, plant and equipment.
Impairment of non-financial assets
(a) Assets with finite useful lives
An impairment test must be carried out for assets with a
determinable useful life if there are indications of a possible
impairment. If there are any such indications, the amortized car-
rying amount of the asset is compared with the recoverable
amount, which represents the higher of fair value less costs to
sell and value in use. The value in use is equivalent to the present
value of the future cash flows expected from the continuing use
of the asset. In the event of impairment, the difference between
the amortized carrying amount and the lower recoverable amount
is recognized as an expense. The impairment loss is reversed as
soon as there are indications that the reasons for impairment no
longer exist. These may not exceed the amortized cost of
acquisition.
13 0
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING
The classification depends on the business model according to
which NORMA Group manages its financial assets and the char-
acteristics of the contractual cash flows of these financial assets.
NORMA Group reclassifies debt instruments only when the
business model for managing such financial assets changes.
Recognition and derecognition
Regular purchases and sales of financial assets are recognized
on the trade date – the date on which the Group commits to pur-
chase or sell the asset. Financial assets are derecognized when
the rights to receive cash flows have expired or been transferred
and the Group has transferred substantially all risks and rewards
of ownership.
(b) Goodwill and other assets with an indefinite useful life
Moreover, other intangible assets with an indefinite useful life,
other intangible assets not yet ready for use or advance payments
on such assets as well as goodwill must be tested for impairment
annually. A test is also performed whenever there is any indication
that an asset might be impaired. Where the reasons for an
impairment no longer exist, the impairment loss is reversed, except
in the case of goodwill.
The recoverable amount is determined for each individual asset,
unless an asset generates cash inflows that are not largely
independent of those from other assets or other groups of assets
or cash-generating units. In these cases, the impairment test is
performed at the relevant level of cash-generating units to which
the asset is attributable.
Goodwill acquired in a business combination is allocated at the
acquisition date to the cash-generating unit or group of cash-
generating units that are expected to profit from the synergies
deriving from the business combination. This also represents the
lowest level at which goodwill is monitored for internal
management purposes. These are the operating and reportable
segments EMEA, Americas and Asia-Pacific.
For cash-generating units, NORMA Group first determines the
relevant recoverable amount as fair value less costs to sell, which
it compares with the respective carrying amounts, including
allocated goodwill in the case of impairment tests on goodwill.
For further details regarding the determination of the fair value
less costs to sell and the underlying assumptions, we refer to.
NOTE 18. ‘GOODWILL AND OTHER I NTANGI BLE ASSETS’.
Inventories
Inventories are stated at the lower of cost or net realizable value.
Net realizable value is the estimated selling price in the ordinary
course of business, less the estimated costs of completion and
the estimated variable selling costs. Cost is determined using the
weighted average method. The cost of finished goods and work
in progress comprises design costs, raw materials, direct labor,
other direct costs and related production overheads (based on
normal operating capacity). Inventories of the Group are not qual-
ifying assets in accordance with IAS 23, so that the acquisition
or production costs do not include capitalized borrowing costs.
Financial instruments
(a) Financial assets
There is currently no goodwill in the Group that can be directly
allocated to an individual entity because this reflects the enter-
prise value of the acquired entity regardless of the transaction.
Classification
From January 1, 2018, on, the Group classifies its financial assets
in the following measurement categories:
The Company normally determines the recoverable amount using
measurement methods based on discounted cash flows.
• Debt instruments measured at amortized cost (AC);
• Debt instruments measured at fair value through equity
Brand names with indefinite useful lives acquired in business
combinations are tested for impairment at the level at which a
recoverable amount, which is based on the fair value less costs
to sell, can be determined.
(FVOCI), with cumulative gains and losses reclassified to the
income statement when the financial asset is derecognized;
• Debt, derivative and equity instruments at fair value through
profit or loss (FVTPL);
• Equity instruments classified as FVOCI, with gains and losses
remaining in other comprehensive income (OCI) (without
reclassification).
131
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Measurement
Financial assets are initially recognized at fair value plus trans-
action costs for all financial assets not carried at fair value through
profit or loss.
Debt instruments
The subsequent measurement of debt instruments depends on
the Group’s business model for managing the financial asset and
the cash flow characteristics of the financial asset.
A debt instrument is measured at amortized cost if the objective
of the business model is to hold the financial asset in order to
collect the contractual cash flows and the contractual cash flows
from the financial asset represent only principal and interest
payments and the fair value option is not exercised at inception.
Interest income from these financial assets is reported under
financial income using the effective interest method. Gains and
losses from derecognition, impairment and currency translation
are recognized directly in the Consolidated Statement of
Comprehensive Income and reported in other operating
income / expenses.
A debt instrument that is held in a business model in which both
the contractual cash flows of financial assets are received and
financial assets are sold, and in which the contractual cash flows
include only principal and interest payments, is measured at fair
value with no effect on income, unless the fair value option is
exercised upon initial recognition. Changes in the carrying amount
are recognized in other comprehensive income, except for
impairment gains or losses, interest income and gains and losses
on currency translation, which are recognized directly in the
Consolidated Statement of Comprehensive Income. When the
financial asset is derecognized, the cumulative gain or loss
recognized in other comprehensive income is reclassified from
equity to the Consolidated Statement of Comprehensive Income.
Interest income from these financial assets is recognized in
financial income using the effective interest method. Gains and
losses from currency translation are recognized directly in the
Consolidated Statement of Comprehensive Income and reported
in other operating income / expenses.
Impairments
Since January 1, 2018, NORMA Group assesses on a forward -
looking basis the expected credit losses associated with its debt
instruments, which are measured at amortized cost or at fair value
with no effect on income.
The Group has three types of financial assets subject to this new
model:
• Trade receivables from the sale of goods and the rendering of
services,
The impairment losses recognized in the Consolidated Statement
of Comprehensive Income are disclosed separately in the section
“Notes to the Statement of Comprehensive Income.”
• Contract assets from research and development activities;
and
• Other debt instruments measured at amortized cost
All other debt instruments that do not meet these two conditions
must be measured at fair value through profit or loss (FVTPL).
Equity instruments
All equity instruments are subsequently measured at fair value.
If an equity instrument is not held for trading purposes,
NORMA Group may, at the time of initial recognition, make the
irrevocable decision to measure it at fair value with recognition
of changes in value in other comprehensive income (FVTOCI),
whereby only income from dividends is recognized in profit or loss
for the period unless it represents a capital repayment.
Changes in the fair value of financial assets at fair value through
profit or loss are recognized in the Consolidated Statement of
Comprehensive Income under other operating income / expenses.
In the case of trade receivables, NORMA Group applies the
simplified approach provided for in IFRS 9, which requires the
recognition of expected credit losses over the term of the
receivables from their initial recognition; further details can be
found in
NOTE 21. (A) ‘ TRADE AND OTHER RECEIVABLES’.
Receivables which are significantly overdue, which can be more
than 180 days due to the customer structure , or those whose
debtors were subject to insolvency or similar proceedings, are
individually tested for impairment.
13 2
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING The criteria that the Group uses to determine if there is objective
evidence of an impairment loss include:
• A breach of contract, such as a default or delinquency in
interest or principal payments;
• The Group, for economic or legal reasons relating to the
borrower’s financial difficulty, granting to the borrower a
concession that the lender would not otherwise consider;
• It becomes probable that the borrower will enter bankruptcy
or other financial reorganization.
For cash and cash equivalents, receivables from the ABS program
and factoring (both from purchase price retentions), and other
receivables, mainly from banker’s acceptance bills for trade
receivables, NORMA Group applies the general impairment
approach. As it is our policy to only invest in high-quality assets
of issuers with a minimum rating of at least investment grade so
as to minimize the risk of credit losses, we use the low credit risk
exception. Thus, these assets are always allocated to stage 1 of
the three-stage credit loss model and, if material, a loss allowance
for an amount equal to 12-month expected credit losses will be
recorded. This loss allowance is calculated based on our exposure
as of the respective reporting date, the loss given default for this
exposure, and the credit default swap spread as a measure of
the probability of default. To ensure that during their lifetime, our
investments always fulfill the requirement of being
investment-grade, we monitor changes in credit risk by tracking
published external credit ratings.
Financial liabilities that are measured at amortized cost
After initial recognition, financial liabilities are carried at amor-
tized cost using the effective interest method. Trade payables,
liabilities to banks and other financial liabilities, in particular, are
classified to this category.
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss include
derivative financial instruments and contingent purchase price
liabilities. Gains or losses on financial liabilities that are measured
at fair value through profit or loss are included in profit or loss.
(c) Derivative financial instruments and hedging activities
Derivatives are initially recognized at fair value on the date a
derivative contract is entered into and are subsequently remea-
sured at their fair value. The method of recognizing the resulting
gain or loss depends on whether the derivative is designated as
a hedging instrument, and if so, the nature of the item being
hedged.
Derivative financial instruments not designated as hedges
Gains and losses from derivatives that are not designated as
hedges (trading derivatives) are recognized in profit or loss.
Trading derivatives are classified as non-current assets or
liabilities in accordance with IAS 1.68 and IAS 1.71 if they have
a remaining term of more than one year; otherwise they are
classified as current.
Derivative financial instruments designated as hedges
Derivatives included in hedge accounting are generally designated
as either:
• Hedges of the fair value of recognized assets or liabilities or
firm commitments (fair value hedge);
• Hedges of a particular risk associated with a recognized
asset or liability or a highly probable forecast transaction
(cash flow hedge); or
• Hedges of a net investment in a foreign operation (net
investment hedge).
At the inception of the transaction, NORMA Group documents
the relationship between the hedging instruments and the hedged
item, including whether changes in the cash flows of the hedging
instruments offset changes in the cash flows of the hedged item.
The Group documents the risk management objectives and
strategies for undertaking the hedging transaction.
Further information on the instruments used by the Group and the
NOTE 5 ‘FINANCIAL RISK MANAGEMENT’
hedging can be found in
and
21. (F ) ‘DERIVATIVE FINANCIAL INST RUMENTS’.
The development of the hedging reserve in equity can be found
in
NOTE 21. (F ) ‘DERIVATIVE FINANCIAL INSTRUMENTS’.
(b) Financial liabilities
Financial liabilities primarily include trade payables, liabilities to
banks, derivative financial liabilities and other liabilities.
133
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING
Offsetting financial instruments
Financial assets and liabilities are offset and the net amount is
reported in the Consolidated Statement of Financial Position when
there is a legally enforceable right to offset the recognized
amounts and an intention to settle on a net basis, or realize the
asset and settle the liability simultaneously. At NORMA Group,
arrangements exist which do not meet the criteria for netting in
the Consolidated Statement of Financial Position according to
IAS 32.42, as they allow netting only in the case of future events
such as default or insolvency on the part of the Group or the
counterparty.
The following tables present the recognized financial instruments
that are offset, or subject to enforceable master netting
arrangements and other similar agreements but not offset, as of
December 31, 2019, and 2018:
Offsetting financial instruments
T053
in EUR thousands
Dec 31, 2019
Financial assets
Derivative financial instruments (b)
Trade and other receivables (a)
Other financial assets
Cash and cash equivalents
Total
Financial liabilities
Borrowings
Derivative financial instruments (b)
Trade and other payables (a)
Other financial liabilities
Total
Dec 31, 2018
Financial assets
Derivative financial instruments (b)
Trade and other receivables (a)
Other financial assets
Cash and cash equivalents
Total
Financial liabilities
Borrowings
Derivative financial instruments (b)
Trade and other payables (a)
Other financial liabilities
Total
Gross amounts of
financial
assets / financial
liabilities offset in
the statement of
financial position
Net amounts
recognized in the
statement of
financial position
Amounts that are
not offset in the
statement of
financial position
Financial
instruments
Gross amounts of
financial assets /
financial liabilities
Net amount
450
162,888
4,792
179,721
347,851
541,898
913
143,621
19,126
705,558
2,764
143,604
5,231
190,392
341,991
569,091
758
142,494
20,858
733,201
0
502
0
0
502
0
0
502
0
502
0
466
0
0
466
0
0
466
0
466
450
162,386
4,792
179,721
347,349
541,898
913
143,119
19,126
705,056
2,764
143,138
5,231
190,392
341,525
569,091
758
142,028
20,858
732,735
100
0
0
0
100
0
100
0
0
100
335
0
0
0
335
0
335
0
0
335
350
162,386
4,792
179,721
347,249
541,898
813
143,119
19,126
704,956
2,429
143,138
5,231
190,392
341,190
569,091
423
142,028
20,858
732,400
13 4
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING (a) Offsetting arrangements
NORMA Group gives volume-based rebates to selected customers.
Under the terms of the supply agreements, the amounts payable
by NORMA Group are offset against receivables from the
customers and only the net amounts are settled. The relevant
amounts have therefore been presented net in the balance sheet.
(b) Master netting arrangements – not currently enforceable
Agreements with derivative counterparties are based on an
ISDA Master Agreement and other corresponding national
master agreements, such as the corresponding German
Framework Agreement. These arrangements do not meet the
offsetting criteria because they allow netting only in the case of
future events such as default or insolvency on the part of the
Group or the counterparty. The table above shows the impact
on the Group’s balance sheet if all set-off rights were exercised.
Current and deferred income tax
Deferred income tax is recognized using the liability method on
temporary differences arising between the tax bases of assets
and liabilities and their carrying amounts in the Consolidated
Financial Statements and on tax losses carried forward and not
yet used tax credits. Deferred income tax is determined using tax
rates (and laws) that have been enacted or substantially enacted
by the balance sheet date and are expected to apply when the
related deferred income tax asset is realized or the deferred
income tax liability is settled.
Deferred income tax assets and liabilities are offset when there
is a legally enforceable right to offset current tax assets against
current tax liabilities and when the deferred income tax assets
and liabilities relate to income taxes levied by the same taxation
authority on either the taxable entity or different taxable entities
where there is an intention to settle the balances on a net basis.
A surplus of deferred income tax assets is recognized only to the
extent that it is probable that future taxable profit will be avail-
able against which the temporary differences can be utilized.
The tax expenses for the period are comprised of current and
deferred tax. Tax is recognized in profit or loss, except to the extent
that it relates to items recognized in other comprehensive income
or directly in equity. In this case, the tax is also recognized in other
comprehensive income or directly in equity, respectively.
For taxable temporary differences arising on investments in
subsidiaries and associates, deferred tax liabilities are recognized,
except where the timing of the reversal of the temporary difference
is controlled by the Group and it is probable that the temporary
difference will not reverse in the foreseeable future.
The current income tax charge is calculated on the basis of the
tax laws enacted on the balance sheet date in the countries where
the Group’s subsidiaries operate. Management periodically
evaluates positions taken in tax returns with respect to situations
in which applicable tax regulation is subject to interpretation. It
establishes provisions where appropriate on the basis of amounts
expected to be paid to the tax authorities.
Employee benefits
(a) Pension obligations
Group companies operate different pension schemes.
NORMA Group has both defined benefit and defined contribution
plans. A defined contribution plan is a pension plan under which
the Group pays fixed contributions to a separate entity. The Group
has no legal or constructive obligations to pay further contributions
if the fund does not hold sufficient assets to pay all employees
the benefits relating to employee service in the current and prior
periods. A defined benefit plan is a pension plan that is not a
defined contribution plan. The major defined benefit plan is the
German benefit plan which defines the amount of pension benefit
that an employee will receive on retirement to depend on years
of service and compensation.
The liability recognized in the Consolidated Statement of Financial
Position with respect to defined benefit pension plans is the
present value of the defined benefit obligation on the balance
sheet date less the fair value of plan assets. The defined benefit
obligation is calculated annually by independent actuaries using
the projected unit credit method. The present value of the defined
benefit obligation is determined by discounting the estimated
future cash outflows using interest rates of high-quality corporate
bonds that are denominated in the currency in which the benefits
will be paid and that have terms to maturity approximating the
terms of the related pension liability.
Remeasurement gains and losses arising from experience
adjustments and changes in actuarial assumptions, as well as
returns on plan assets, which are not included within the net
interest on the defined benefit liability, are recognized within
retained earnings in other comprehensive income (OCI).
135
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Past service costs are recognized fully in the period of the related
plan amendment.
For defined contribution plans, the Group pays contributions to
publicly or privately administered pension insurance plans on a
mandatory, contractual or voluntary basis. The Group has no fur-
ther payment obligations once the contributions have been paid.
The contributions are recognized as employee benefits expense
when they are due. Prepaid contributions are recognized as an
asset to the extent that a cash refund or a reduction in the future
payments is available.
(b) Termination benefits
Termination benefits are payable when employment is terminated
by the Group before the normal retirement date, or whenever an
employee accepts voluntary redundancy in exchange for these
benefits. The Group recognizes termination benefits as a liability
and expense on the earlier date of: (a) when the entity can no
longer withdraw the offer of those benefits; or (b) when the entity
recognizes costs for a restructuring that is within the scope of
IAS 37 and involves the payment of termination benefits. Benefits
falling due more than 12 months after the balance sheet date are
discounted to their present value.
(c) Short-term employee benefits
Provisions
Employee benefits with short-term payment dates include wages
and salaries, social security contributions, vacation pay and
sickness benefits and are recognized as liabilities at the repay-
ment amount as soon as the associated job has been performed.
Provisions are recognized when the Group has a present legal or
constructive obligation to third parties as a result of past events;
it is probable that an outflow of resources will be required to settle
the obligation; and the amount has been reliably estimated.
(d) Provisions for other long-term employee benefits
Provisions for obligations similar to pensions (such as anniversary
allowances and death benefits) are comprised of the present value
of future payment obligations to the employee less any associ-
ated assets measured at fair value. The amount of provisions is
determined on the basis of actuarial opinions in line with IAS 19.
Gains and losses from the remeasurement are recognized in profit
or loss in the period in which they are incurred.
Share-based payment
Share-based payment plans issued at NORMA Group are
accounted for in accordance with IFRS 2 ‘Share-based Payment’.
In accordance with IFRS 2, NORMA Group in principle distinguishes
between equity-settled and cash-settled plans. The financial
interest from equity-settled plans granted on the grant date is
generally allocated over the expected vesting period against
equity until the exit event occurs. Expenses from cash-settled
plans are generally also allocated over the expected vesting period
until the exit event occurs, but against accruals. A description of
the plans existing within NORMA Group can be found in
NOTE 25 ‘SHARE-BASED PAYMENTS’.
Where there are a number of similar obligations, the likelihood
that an outflow will be required in settlement is determined by
considering the class of obligations as a whole. A provision is
recognized even if the likelihood of an outflow with respect to any
one item included in the same class of obligations may be small.
Provisions are measured at the present value of the expenditures
expected to be required to settle the obligation taking into account
all identifiable risks. Provisions are discounted using a pre-tax
rate that reflects current market assessments of the time value
of money and the risks specific to the obligation.
The increase in the provision due to passage of time is recognized
as interest expense.
In addition to the expected amount of cash outflows, uncertain-
ties also exist regarding the time of outflows. If it is expected that
the outflows will take place within one year, the relevant amounts
are reported in the short-term provisions.
When the Group expects a refund for a provision, this refund is
recognized in accordance with IAS 37.53 as a separate asset. If
the refund is in a close economic relationship with the recognized
provision, the expenses from the provision are netted with the
income from the corresponding refund in profit or loss.
Income from the release of non-utilized provisions from prior years
is recorded within other operating income.
136
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Revenues from contracts with customers
(revenue recognition)
(a) Sale of goods
NORMA Group recognizes revenue, when or as control over
distinct goods or services is transferred to the customer; i. e. when
the customer is able to direct the use of the transferred goods or
services and obtains substantially all of the remaining benefits,
provided a contract with enforceable rights and obligations exists
and amongst others collectability of consideration is probable
taking into account our customer’s creditworthiness. Revenue is
the transaction price NORMA Group expects to be entitled to.
Variable consideration is included in the transaction price if it is
highly probable that a significant reversal of revenue will not occur
once associated uncertainties are resolved. The amount of
variable consideration is calculated by either using the expected
value or the most likely amount depending on which is expected
to better predict the amount of variable consideration.
Consideration is adjusted for the time value of money if the period
between the transfer of goods or services and the receipt of
payment exceeds twelve months and there is a significant
financing benefit either to the customer or NORMA Group. If a
contract contains more than one distinct good or service, the
transaction price is allocated to each performance obligation
based on relative stand-alone selling prices. If stand-alone selling
prices are not observable, the Company reasonably estimates
those. Revenue is recognized for each performance obligation
either at a point in time or over time.
Revenues are recognized at a point in time when control of the
goods passes to the buyer, usually upon delivery of the goods.
Invoices are issued at that point in time and are usually payable
within 30 to 90 days. For the sale of goods, retrospective volume
discounts, which usually apply to a calendar year, are often agreed
to. Revenues from these sales are recognized at the amount of
the consideration set in the contract less the estimated volume
discounts. The estimate of the refund liabilities recognized for
these volume rebates is based on experience and revenue
recognized in the fiscal year.
(b) Engineering services
Revenues are recognized over time under the percentage-of-
completion method, based on the percentage of costs incurred
to date compared to total estimated costs. An expected loss on
the contract is recognized as an expense immediately. Payment
terms are usually 30 to 90 days from the date of invoice issued
according to the contractual terms.
The percentage of completion method places considerable
importance on accurate estimates of the extent of progress
towards completion and may involve estimates on the scope of
deliveries and services required for fulfilling the contractually
defined obligations. These estimates include total contract costs,
total contract revenues, contract risks, including technical risks
and other judgments. Under the percentage of completion method,
changes in estimates may lead to an increase or decrease in
revenue. The creditworthiness of our customers is taken into
account in estimating the probability that economic benefits
associated with a contract will flow to the Company.
Contract assets, contract liabilities, refund liabilities and
considerations payable to a customer
When either party to a contract with customers has performed,
NORMA Group presents a contract asset, a contract liability or a
trade receivable depending on the relationship between NORMA’s
performance and the customer’s payment.
A contract asset represents NORMA Group’s right to consider-
ation in exchange for goods or services that have been transferred
to the customer. The impairment of contract assets is measured,
presented and reported on the same basis as for financial assets
within the scope of IFRS 9.
Trade receivables are recognized if NORMA Group’s right to
consideration are unconditional.
Considerations received, which are expected to be reimbursed to
the customer, are shown as refund liabilities. These liabilities are
included in the balance sheet in the item ‘Trade and other
payables’. These amounts typically relate to expected volume
discounts and annual customer bonuses.
Consideration payable to a customer that cannot be directly
allocated to a service or good received by NORMA Group are
recognized as a reduction of the transaction price. If this reduction
relates to future revenue, this part is recognized in other non-
financial assets as consideration payable to a customer.
137
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Government grants
4. Scope of consolidation
Government grants are not recognized until there is reasonable
assurance that the conditions attached to them are complied with
and that the grants will be received.
With NORMA Group SE, the Consolidated Financial Statements
contain all domestic and foreign companies which NORMA Group
SE controls directly or indirectly.
Government grants for the compensation of expenses incurred
are recognized in profit or loss as part of the other operating
income on a systematic basis over the periods in which the related
costs are expensed that the grants are intended to compensate
for.
Grants related to non-depreciable assets are recognized in profit
or loss as part of the other operating income over the periods that
bear the cost of meeting the obligations.
Grants related to depreciable assets are recognized in profit or
loss over the periods that bear the expense related to the depre-
ciation of the underlying assets and are recognized as deferred
income in the Statement of Financial Position. The deferred income
is recognized in profit or loss on a straight-line basis over the
expected useful life of the underlying asset and reported as part
of other operating income.
The Consolidated Financial Statements for 2019 include 8
domestic (Dec 31, 2018: 8) and 44 foreign (Dec 31, 2018: 44)
companies.
The composition of the Group changed as follows:
Change in scope of consolidation
T054
As of January 1
Additions
of which newly founded
of which acquired
Disposals
of which no longer consolidated
of which mergers
As of December 31
2019
2018
Total
Domestic
Foreign
Total
Domestic
Foreign
52
0
0
52
8
0
0
8
44
0
0
48
5
2
3
1
1
0
44
52
7
1
0
1
0
0
0
8
41
4
2
2
1
1
0
44
There were no additional acqusitions or establishments during
2019.
138
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING
For a detailed overview of NORMA Group’s share holdings, please refer to the following chart:
List of Group companies of NORMA Group as of December 31, 2019
T055
No.
Company
Central functions
Registered address
held by
company of NORMA Group SE
Currency
Equity 1
Result 1
Share in %
Direct parent
01
02
03
NORMA Group SE
Maintal, Germany
NORMA Group APAC Holding GmbH
Maintal, Germany
NORMA Group Holding GmbH
Maintal, Germany
Segment EMEA
04
05
06
07
08
09
10
11
12
13
14
15
NORMA Distribution Center GmbH
Marsberg, Germany
DNL GmbH & Co KG
NORMA Germany GmbH
NORMA Verwaltungs GmbH
STATEK Stanzereitechnik GmbH
DNL France SAS
NORMA Autoline France SAS
Maintal, Germany
Maintal, Germany
Maintal, Germany
Maintal, Germany
Briey, France
Guichen, France
NORMA Distribution France SAS
Croissy Beaubourg, France
NORMA France SAS
DNL UK Ltd.
NORMA UK Ltd.
NORMA Italia SpA
Briey, France
Newbury, Great Britain
Newbury, Great Britain
Gavardo, Italy
01
01
03
03
03
03
03
03
09
09
09
03
13
03
100.00
100.00
94.80
100.00
94.90
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
kEUR
kEUR
kEUR
kEUR
kEUR
kEUR
kEUR
kEUR
kEUR
kEUR
kEUR
kGBP
kGBP
kEUR
24
106,814
2,175
6,227
56,306
20
4,467
29,801
26,066
2,471
6,068
15,958
18,630
6,210
– 7
0 2
0 2
– 85
0 2
0 2
0 2
– 4,398
– 244
596
– 20
7,000
8,077
1,878
CONTINUED ON NEXT PAGE
13 9
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING List of Group companies of NORMA Group as of December 31, 2019
(continued)
T055
No.
Company
Registered address
held by
company of NORMA Group SE
Currency
Equity 1
Result 1
Share in %
Direct parent
16
17
18
19
20
21
22
23
24
25
26
27
28
Groen Bevestigingsmaterialen B.V.
Purmerend, Netherlands
NORMA Netherlands B.V.
Purmerend, Netherlands
NORMA Polska Sp. z.o.o.
Sławniów, Poland
NORMA Group Distribution Polska Sp. z.o.o.
Sławniów, Poland
Lifial – Indústria Metalúrgica de Águeda, Lda.
Águeda, Portugal
NORMA Group CIS LLC
Togliatti, Russian Federation
DNL Sweden AB
NORMA Sweden AB
Stockholm, Sweden
Stockholm, Sweden
Connectors Verbindungstechnik AG
Wallisellen, Switzerland
NORMA Grupa Jugoistocna Evropa d.o.o.
Subotica, Serbia
Fijaciones NORMA S.A.U.
NORMA Czech, s.r.o.
NORMA Turkey Bağlantı ve Birleştirme Teknolojileri
Sanayi ve Ticaret Limited Şirketi
L’Hospitalet de Llobregat,
Spain
Hustopeče, Czech Republic
Kadıköy / İstanbul, Turkey
Segment Americas
29
30
31
32
33
34
NORMA do Brasil Sistemas De Conexão Ltda.
Atibaia, Brazil
NORMA Group Mexico, S. de R.L. de C.V. 3
Monterrey, Mexico
NORMA Distribution and Services S. de R.L. de C.V.
Juarez, Mexico
Craig Assembly, Inc.
Auburn Hills, MI, USA
National Diversified Sales, Inc.
Woodland Hills, CA, USA
NG AM FinSrv, LLC
Auburn Hills, MI, USA
03
22
03
18
03
03
03
22
03
03
03
03
07
37
36
36
37
37
36
70.00
100.00
100.00
100.00
99.99
99.96
100.00
100.00
100.00
100.00
100.00
100.00
100.00
98.20
99.40
99.00
100.00
100.00
70.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
kEUR
kEUR
kPLN
kPLN
kEUR
kRUB
kSEK
kSEK
kCHF
kRSD
kEUR
kCZK
kTRL
kBRL
kUSD
kMXN
kUSD
kUSD
kUSD
5,057
509
5,060
497
147,192
24,833
12,687
5,495
226,149
86,422
207,413
3,146
4,500
– 133
20,061
77,617
64,640
– 1,188
4,635,411
186,584
5,024
437
369,947
7,762
31,061
3,447
4,620
2,944
– 3,189
72,998
– 7,717
– 1,262
2,174
8,471
314,174
31,033
– 202
59
CONTINUED ON NEXT PAGE
140
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING List of Group companies of NORMA Group as of December 31, 2019
(continued)
No.
Company
Registered address
held by
company of NORMA Group SE
Currency
Share in %
Direct parent
NORMA Manufacturing NA SW, LLC
Auburn Hills, MI, USA
35
36
37
38
39
NORMA Michigan, Inc.
NORMA Pennsylvania, Inc.
NORMA U.S. Holding LLC
R. G. RAY Corporation
Segment Asia-Pacific
40
NORMA Pacific Pty. Ltd.
Auburn Hills, MI, USA
Auburn Hills, MI, USA
Auburn Hills, MI, USA
Auburn Hills, MI, USA
Dandenong South, Victoria,
Australia
41
42
43
44
45
46
47
48
49
50
51
52
Fengfan Fastener (Shaoxing) Co., Ltd.
Shaoxing City, China
NORMA China Co., Ltd.
Qingdao, China
NORMA EJT (Changzhou) Co., Ltd.
Changzhou, China
NORMA EJT (Wuxi) Co., Ltd.
NORMA Group Products India Pvt. Ltd.
Wuxi, China
Pune, India
Kimplas Piping Systems Ltd.
Nashik, Maharashtra, India
Kimplas Ltd.
NORMA Japan Inc.
NORMA Products Malaysia Sdn. Bhd.
(formerly Chien Jin Plastic Sdn. Bhd.)
Essex, Great Britain
Tokyo, Japan
Ipoh, Malaysia
NORMA Korea Inc.
Seoul, Republic of Korea
NORMA Group Asia Pacific Holding Pte. Ltd.
Singapore, Singapore
NORMA Pacific (Thailand) Ltd.
Chonburi, Thailand
36
37
01
37
37
51
51
03
51
51
51
51
46
51
51
51
01
51
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
kUSD
kUSD
kUSD
kUSD
kUSD
T055
Result 1
– 6,147
2,426
– 2,730
– 936
2,498
Equity 1
– 6,135
95,670
109,779
21,804
122,930
100.00
100.00
kAUD
15,183
2,695
80.00
100.00
100.00
100.00
99.99
100.00
100.00
60.00
100.00
100.00
100.00
99.99
80.00
100.00
100.00
100.00
100.00
100.00
100.00
60.00
100.00
100.00
100.00
100.00
kCNY
kCNY
kCNY
kCNY
kINR
kINR
kGBP
kJPY
kMYR
37,126
237,420
103,149
211,739
557,533
1,892,354
703
4,108
17,150
36,927
2,758
25,236
69,861
232
118,688
– 3,638
31,325
248
kKRW
575,046
43,437
kSGD
kTHB
207,207
– 28,303
115,183
27,867
1_ Reported values according to IFRS as of December 31, 2019; except for NORMA Group Holding GmbH, NORMA Germany GmbH, STATEK Stanzereitechnick GmbH and NORMA Distribution Center GmbH; these values are prepared
according to German GAAP as of December 31, 2019, but not yet finally audited. The values are translated with the exchange rates according to
NOTE 3.
2_A profit pooling contract exists.
3_Maquiladora operation of company No. 36.
141
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING 5. Financial risk management
Financial risk factors
The Group’s operations expose it to a variety of financial risks,
including market, credit and liquidity risks. The Group’s financial
risk management focuses on the unpredictability of the financial
markets and is designed to mitigate potential adverse effects on
the Group’s financial performance. The Group uses derivative
financial instruments to hedge certain exposures.
Overview of financial risks
T056
Risk
Risks from
Assessment
Management
Market risk – Foreign
exchange risk
Future transactions and recognized
financial assets and liabilities
Cash flow projections and sensitivity
analysis
Forward exchange contracts and
natural hedges
Market risk – Interest
rate risk
Long-term borrowings at variable
interest rates
Default risk
Cash and cash equivalents, deriva-
tive financial instruments, trade
receivables and contractual assets
Sensitivity analysis
Interest rate swaps
Age structure analysis and credit
rating
Diversification of bank balances,
credit limits and letters of credit
Liquidity risk
Payment obligations arising from
borrowings and other liabilities
Rolling cash flow forecasts
Availability of committed credit lines
and facilities and trade working cap-
ital management
Financial risk management is carried out by a central Treasury
department (Group Treasury). The responsibilities and necessary
controls related to risk management are defined by the Group’s
management. The Treasury department is responsible for
identifying and assessing financial risks in close consultation with
the Group’s operating units. In a close dialogue, Group Treasury
informs and trains the companies and technically handles the
hedging process. The use of derivative and non-derivative
financial instruments and the investment of liquidity surpluses
are governed by policies established by Group management.
(a) Market risk
Foreign exchange risk
NORMA Group operates as an internationally active Company in
100 different countries and is exposed to the currency risk
resulting from various foreign currency positions in respect of the
most important currencies: the US dollar, British pound, Chinese
renminbi, Indian rupee, Polish Złoty, Swedish krona, Swiss franc,
Czech koruna, Serbian dinar and Singapore dollar.
Taking into account the respective risk-bearing capacity of the
subsidiaries, Treasury Risk Management strives to achieve a
reasonable degree of hedging of net foreign currency risks (as a
result of taking into account incoming and outgoing foreign
currency transactions). Highly fluctuating net foreign currency
risks are thus hedged with increased hedging ratios. The external
financial liabilities denominated in US dollars are repaid with US
dollar receipts resulting from the externally financed investments
in the US. The foreign currency position of these liabilities was
therefore not hedged.
The Group uses forward exchange contracts to hedge the foreign
exchange risk arising from its operating activities. The risk arises
from a possible change in future cash flows from a highly probable
forecasted transaction in a non-functional currency, which is due
to a change or fluctuation in the exchange rate. The hedging
relationship is designated as a cash flow hedge. The Group only
designates the spot component as a hedging element. Gains or
losses on the effective portion of the change in the spot component
of the forward contract are recognized in the hedging reserve as
a component of equity. Changes in the forward component of the
hedging instrument relating to the hedged item (“aligned forward
element”) are recognized in other comprehensive income in the
hedging reserve as a component of equity.
142
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING
In addition, the Group uses forward exchange contracts to hedge
intercompany financing transactions that involve foreign exchange
risk arising from intercompany loans denominated in non-func-
tional currencies. The Group designates such loans and hedging
instruments as fair value hedges in order to achieve the offsetting
effects of hedged items and hedges in the same income statement
line item. The Group designates only the spot component as a
hedging element. Gains or losses from the effective portion of the
change in the spot component of the forward transaction are
recognized in the financial result, analogous to those of the
underlying item. The changes in the forward component of the
hedging instrument, which relate to the hedged underlying trans-
action (“aligned forward element”) are also included in this item.
For more information on the foreign currency risk hedging
instruments used by the Group, please refer to
N OT E 2 1 . ( F )
‘DERI VATIVE FIN ANCIAL INSTR UM E NTS ’.
In accordance with the Group guideline, the essential contractual
conditions of the forward transactions for all hedging relation-
ships must correspond to the hedged underlying transactions.
The effects of changes in the exchange rates of financial assets
and financial liabilities denominated in foreign currencies are
presented below.
Foreign exchange risk
T057
Dec 31, 2019
Dec 31, 2018
in EUR thousands
+ 10 %
– 10 %
+ 10 %
– 10 %
Currency relation
EUR / USD
Profit before tax
– 607
743
– 681
833
EUR / GBP
Profit before tax
121
– 148
308
– 376
EUR / CNY
Profit before tax
– 634
776
– 567
693
EUR / INR
Profit before tax
– 62
76
– 208
255
EUR / PLN
Profit before tax
890
– 1,088
727
– 888
EUR / SEK
Profit before tax
339
– 415
256
– 313
EUR / CHF
Profit before tax
63
– 77
123
– 151
EUR / CZK
Profit before tax
273
– 334
233
– 285
EUR / RSD
Profit before tax
– 63
77
– 91
111
EUR / SGD
Profit before tax
– 136
167
– 465
568
Interest rate risk
NORMA Group’s interest rate risk arises from long-term borrow-
ings with variable interest rates. Borrowings issued at variable
interest rates expose the Group to cash flow interest rate risk
which is partially offset by hedges (interest rate swaps). As there
are currently no signs of a more restrictive monetary policy in the
euro zone, NORMA Group considers the risk of interest rate
increases for the euro to be unlikely in the short term. In the longer
term, however, the risk of interest rate increases is considered
possible. On the other hand, in view of the current low interest
rate level in the euro zone, the opportunities that could result from
a further decline in interest rates are considered unlikely. In the
USD area, on the other hand, further interest rate reductions are
considered more likely, which would lead to corresponding
opportunities for NORMA Group. Against the backdrop of the
measures already implemented to optimize financing, the financial
impact of these opportunities is considered to be insignificant.
Currently swaps cover around 34% (2018: 71%) of outstanding
variable interest rate loans. Further information on the instruments
used to hedge the interest rate risk used by the Group can be
found under
NOTE 21. (F ) ‘DERIVATIVE FINANCIAL INSTRU MENTS’.
Below, the effects of changes in interest rates are analyzed for
bank borrowings which bear variable interest rates, and for
interest rate swaps included in hedge accounting. Borrowings
that bear fixed interest rates are excluded from this analysis.
Due to the current low level of interest rates in those markets that
are relevant for NORMA Group’s funding, the likelihood of rising
interest rates is higher than that of declining interest rates – this
has been addressed in the sensitivity analysis.
143
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING In fiscal year 2019, if interest rates on euro and US dollar
denominated borrowings had been 100 basis points (BPS) (2018:
100 BPS) higher with all other variables held constant, profit
before tax for fiscal year 2019 would have been EUR 1,183 thou-
sand lower (2018: EUR 503 thousand lower) and other
comprehensive income would have been EUR 1,531 thousand
higher (2018: EUR 2,716 thousand higher with a 100 basis points
shift).
In fiscal year 2019, if interest rates on euro and US dollar
denominated borrowings had been 50 basis points (2018:
50 BPS) lower with all other variables held constant, profit before
tax for fiscal year 2019 would have been EUR 84 thousand
higher (2018: EUR 63 thousand higher). Other comprehensive
income would have been EUR 786 thousand lower (2018:
EUR1,437 thousand lower).
Other price risks
As NORMA Group is not exposed to any other material economic
price risks, such as stock exchange prices or commodity prices,
an increase or decrease in the relevant market prices within
reasonable margins would not have an impact on the Group’s
profit or equity. The raw material risk is mainly based on alloy
surcharges, which can be passed on to customers to a certain
extent via price passing clauses. Therefore, the Group’s exposure
to other price risks is considered probable, but with low financial
impact
RIS K A ND OPPORTUN IT Y R EPORT.
(b) Credit risk
The credit risk incurred by the Group is the risk that counterpar-
ties fail to meet their obligations arising from operating activities
and from financial transactions. Credit risk arises from cash and
cash equivalents and deposits with banks and financial institu-
tions, as well as credit exposures to customers, including
outstanding receivables and committed transactions.
Credit risk is monitored on a Group basis. To minimize credit risk
from operating activities and financial transactions, each
counterparty is assigned a credit limit, the use of which is
monitored regularly.
Credit risk exposure from cash and cash
equivalents and other financial assets
T058
As of December 31, 2019
Equivalent
to External
Rating
Gross Carry-
ing Amount
Not Credit-
Impaired
Gross Carry-
ing Amount
Credit -
Impaired
AAA – BBB–
193,378
0
in EUR thousands
Risk class 1 –
low risk
As of December 31, 2018
In order to reduce the credit risk arising from our investing activities
and derivative financial assets, in accordance with our internal
treasury policy, we have entered into all transactions only with
recognized, large financial institutions and issuers, each with high
external credit ratings.
in EUR thousands
Risk class 1 –
low risk
Equivalent
to External
Rating
Gross Carry-
ing Amount
Not Credit-
Impaired
Gross Carry-
ing Amount
Credit -
Impaired
AAA – BBB–
202,990
0
In operational business, default risks are continuously monitored.
The aggregate carrying amounts of financial assets represent
the maximum default risk. Given the Group’s heterogeneous
customer structure, there is no risk concentration.
As of December 31, 2019, the credit exposure for the gross
carrying amounts of cash and cash equivalents and other financial
assets was as follows:
Further details on the credit risk positions for trade receivables
can be found under
‘ T R A D E A N D OT H E R
N OT E S 2 1 . ( A )
RECEIVABLES’.
(c) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient
cash and marketable securities, the availability of funding through
an adequate amount of committed credit facilities and the ability
to close out market positions. Due to the dynamic nature of the
underlying businesses, Group Treasury maintains flexibility in
funding by maintaining availability under committed credit lines.
144
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING In July 2013, NORMA Group issued a promissory note loan of
EUR 50 million with terms of 7 and 10 years. The two fixed-
interest annual tranches will be repaid in July 2020 and July 2023.
Yet another promissory note loan was issued in December 2014,
also with 7- and 10-year terms in both euro and dollar tranches.
This promissory note loan has a total volume of approximately
EUR 80 million and has both fixed and variable interest tranches.
These promissory notes will be redeemed in December 2021 and
December 2024. A third promissory note with 5-, 7- and 10-year
maturities has a total volume of approximately EUR 149 million
and was issued in August 2016. The different tranches also
consist of both fixed and variable interest rate tranches and will
be repaid in 2021, 2023 and 2026.
In December 2019, NORMA Group repaid a promissory note in
the amount of approximately EUR 108 million. In addition, the
syndicated bank loan with a total volume of approximately
EUR 183 million, consisting of euro and dollar tranches, and an
accordion facility of EUR 102 million included in the total volume,
Maturity structure of non-derivative financial liabilities
Dec 31, 2019
in EUR thousands
Borrowings
Trade and other payables
Other financial liabilities
Dec 31, 2018
in EUR thousands
Borrowings
Trade and other payables
Finance lease liabilities
Other financial liabilities
was refinanced before maturity in 2022. Due to the current
favorable market environment, this refinancing was achieved via
a new syndicated bank loan and a commercial paper program.
The refinancing in December 2019 promises the Group even
greater security and flexibility. In addition, the annual financing
costs were reduced significantly. Furthermore, the new syndicated
bank loan includes a sustainability component. This links the
financing conditions to NORMA Group’s commitment to Corporate
Responsibility. By further improving its sustainability rating, the
Company has the opportunity to further reduce the interest burden
of its financing. With the conclusion of the new loan agreement,
the Group has secured approximately EUR 250 million in debt
financing capital, consisting of both euro and dollar tranches. In
addition, a EUR 50 million revolving facility and a leveraged
flexible accordion facility were included. The loan agreement has
been concluded for a term of five years and includes the option
to extend it twice for a further year each.
The newly launched commercial paper program with a total
volume of up to EUR 300 million consists of short-term
(2 – 12 weeks) bearer bonds. The revolving issuance of such
short-term bonds enables the Group to manage and optimize its
short-term financing requirements even more flexibly via the
money and capital markets in addition to its existing credit lines
with various banks.
Liquidity is monitored on an ongoing basis with regard to the
Group’s business performance, planned investment and
redemption of loans.
The amounts disclosed in the table below are the contractual,
undiscounted cash flows. Financial liabilities denominated in
foreign currencies are translated at the closing rate on the balance
sheet date. Interest payments on financial instruments with
variable interest rates are calculated on the basis of the interest
rates applicable as of the reporting date.
up to 1 year
> 1 year up to
2 years
> 2 years up to
5 years
57,594
143,119
17,496
218,209
110,813
0
0
110,813
379,415
0
1,631
381,046
up to 1 year
> 1 year up to
2 years
> 2 years up to
5 years
127,305
142,028
17
18,850
288,200
44,624
355,739
5
0
44,629
13
1,976
357,728
T059
> 5 years
43,160
0
0
43,160
> 5 years
90,115
90,115
145
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING The maturity structure of the derivative financial instruments based on cash flows is as follows:
Maturity structure of derivative financial instruments
T060
As of Dec 31, 2019
in EUR thousands
Derivative receivables – gross settlement
Cash outflows
Cash inflows
Derivative liabilities – gross settlement
Cash outflows
Cash inflows
Derivative receivables – net settlement
Cash inflows
Derivative liabilities – net settlement
Cash outflows
As of Dec 31, 2018
in EUR thousands
Derivative receivables – gross settlement
Cash outflows
Cash inflows
Derivative liabilities – gross settlement
Cash outflows
Cash inflows
Derivative receivables – net settlement
Cash inflows
Derivative liabilities – net settlement
Cash outflows
up to 1 year
> 1 year up to
2 years
> 2 years up to
5 years
> 5 years
– 940
955
– 578
576
406
– 268
151
30
– 644
– 614
0
0
up to 1 year
> 1 year up to
2 years
> 2 years up to
5 years
> 5 years
– 31,221
31,414
– 5,385
5,302
1,746
– 216
1,640
608
– 418
190
217
– 41
176
0
146
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING
Capital risk management
Estimated impairment of goodwill
Pension benefits
NORMA Group’s objectives when managing capital are to ensure
that it will continue to be able to repay its debt and remain finan-
cially sound.
The Group is subject to the financial covenant total net debt cover
(net debt in relation to adjusted Group EBITDA), which is monitored
on an ongoing basis. This financial covenant is based on the
Group’s Consolidated Financial Statements as well as on special
definitions of the bank facility agreements. There were no
covenant breaches in 2019 and 2018.
In the case of a covenant breach, the facility agreement includes
several ways to remedy a potential breach by rules of exemption
or shareholder actions. If a covenant breach occurs and is not
remedied, the syndicated loans may be, but are not required to
be, withdrawn.
6. Critical accounting estimates and judgments
Estimates and judgments are continually evaluated and are based
on historical experience, and expectations regarding future events
that are believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning the
future. The resulting accounting estimates will, by definition, sel-
dom equal the respective actual results. The estimates and
assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within
the next fiscal year are addressed below.
NORMA Group tests annually whether goodwill has suffered any
impairment in accordance with the accounting policy stated in
N OT E 3 . ‘ S U M M A R Y O F S I G N I F I CA N T ACCO U N T I N G P R I N C I P L E S –
IMPAIRMENT OF NON- FINANCIAL ASSETS’. The recoverable amounts
of cash-generating units have been determined based on fair
value less costs to sell calculations. These calculations are based
on discounted cash flow models, which require the use of esti-
mates.
NOTE 18. ‘GOO DWILL AND OTHER INTANGIBLE ASSETS’
In 2019 and 2018, no impairment of goodwill, which amounted
to EUR 393,087 thousand on December 31, 2019 (Dec 31, 2018:
EUR 389,505 thousand), was necessary.
Income taxes
The Group is subject to income taxes in numerous jurisdictions.
Significant judgments are required in determining the worldwide
provision for income taxes. There are transactions and calcula-
tions for which the ultimate tax determination is uncertain. The
Group recognizes liabilities for anticipated tax audit issues based
on estimates of whether additional taxes will be due. Where the
final tax outcome of these matters differs from the amounts that
were initially recorded, such differences will impact the current
and deferred income tax assets and liabilities in the period in
which such determination is made. On December 31, 2019,
income tax liabilities were EUR 3,712 thousand (Dec 31, 2018:
EUR 6,580 thousand) and deferred tax liabilities were EUR 69,562
thousand (Dec 31, 2018: EUR 73,099 thousand).
The present value of the pension obligations depends on a number
of factors determined on an actuarial basis using a number of
assumptions. The assumptions used in determining the net cost
(income) for pensions include the discount rate. Any changes in
these assumptions will impact the carrying amount of pension
obligations.
The present value of the defined benefit obligation is calculated
by discounting the estimated future cash outflows using the
interest rates of high-quality corporate bonds.
The Group determines the appropriate discount rate on the bal-
ance sheet date. In determining the appropriate discount rate, the
Group considers the interest rates of high-quality corporate bonds
that are denominated in the currency in which the benefits will
be paid, and that have terms to maturity approximating the terms
of the related pension liability.
Other key assumptions for pension obligations are based in part
on current market conditions. Additional information is disclosed
in
NOTE 3. ‘SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES –
EMPLOYEE BENEFITS’.
Pension liabilities amounted to EUR 15,890 thousand on Decem-
ber 31, 2019 (Dec 31, 2018: EUR 12,804 thousand).
Useful lives of property, plant and equipment and
intangible assets
The Group’s management determines the estimated useful lives
and related depreciation / amortization charges for its property,
plant and equipment and intangible assets. This estimate is based
on projected lifecycles. These could change as a result of technical
innovations or competitor actions in response to severe industry
cycles. Management will increase the depreciation charge where
useful lives are less than previously estimated lives, or it will
147
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING write-off or write-down technically obsolete or non-strategic
assets that have been abandoned or sold.
Accounting for leases
• Subseqeunt changes in the estimated fair values of liabilities
and provisions may result in additional expense (if increasing
the estimated fair value) or additional income (if decreasing
the estimated value).
In connection with the accounting for leases, estimation uncer-
tainties and discretionary decisions arise, which are described in
N OT E 3 . ‘ S U M M A R Y O F S I G N I F I CA N T AC C O U N T I N G P R I N C I P L E S –
LEASING ACTIVITIES OF THE GROUP AND THEIR ACCOUNTING TREATMENT
(FROM JANUARY 1 , 20 19 )’.
Business combinations
In our accounting for business combinations, judgment is required
in determining whether an intangible asset is identifiable, and
should be recorded separately from goodwill. Additionally,
estimating the acquisition-date fair values of the identifiable
assets acquired and liabilities assumed involves considerable
judgment. The necessary measurements are based on information
available on the acquisition date and are based on expectations
and assumptions that have been deemed reasonable by
management. These judgments, estimates, and assumptions can
materially affect our financial position and profit for several
reasons, including the following:
• Fair values assigned to assets subject to depreciation
and amortization affect the amounts of depreciation
and amortization to be recorded in operating profit in
the periods following the acquisition.
• Subsequent negative changes in the estimated fair values
ofassets may result in additional expense from impairment
charges.
7. Adjustments
Certain expenses are adjusted for operational management
purposes. Hence, the following results which are adjusted by
these expenses, reflect the Management Board’s perspective.
In fiscal year 2019, net expenses of EUR 13,431 thousand in total
were adjusted within EBITDA (earnings before interest, tax,
depreciation and amortisation) (2018: EUR 4,390 thousand).
These relate to other operating expenses (EUR 2,920 thousand),
employee benefit expenes (EUR 9,935 thousand) and material
costs (EUR 213 thousand). Those are linked to the rightsizing
program which was initiated in the fourth quarter 2018 for
optimizing organizational structures. The adjustmends of
employee benefit expenses are attributable to costs for internal
project hours of permanent staff, to costs for temporarily hired
employees and to severance payments made.
Furthermore, integration costs of EUR 310 thousand within other
operating expenses and EUR 53 thousand within employee
benefit expenses were adjusted. These are directly contributable
to the acquired companies Kimplas and Statek in fiscal year 2018.
The adjustments made within EBITDA in fiscal year 2018 are
related in the amount of EUR 389 thousand to costs of materials
that resulted from the valuation of the inventories acquired as
part of the purchase price allocation for the acquisition of Kimplas.
The adjustments for acquisition-related costs within other
operating expenses amounting to EUR 1,190 thousand are related
to the acquisitions of Kimplas and Statek. In addition, expenses
for the integration of the companies acquired in the current fiscal
year amounting to EUR 426 thousand were adjusted in other
operating expenses and within employee benefit expenses
(EUR 152 thousand).
Furthermore, adjustments were made in connection with the
rightsizing project launched in the fourth quarter of 2018 to
optimize the Group’s structure within employee benefit expenses
in the amount of EUR 1,771 thousand, within other operating
expenses in the amount of EUR 443 thousand and within costs
of materials in the amount of EUR 19 thousand.
Besides the adjustments mentioned, depreciation of property,
plant and equipment from purchase price allocations in the
amount of EUR 3,998 thousand (2018: EUR 3,993 thousand)
within EBITA (earnings before interest, taxes and amortization of
intangible assets) and amortization of intangible assets in the
amount of EUR 22,484 thousand (2018: EUR 21,124 thousand)
from purchase price allocations within EBIT were adjusted as in
past years.
Furthermore, an impairment loss of EUR 1,433 thousand in the
area of capitalized customer relationships was adjusted in fiscal
year 2018 within amortization of intangible assets. This related
to the Chinese company Fengfan.
148
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING
The theoretical taxes resulting from the adjustments are calculated
using the respective tax rate of each Group entity and are taken
into consideration in adjusted earnings after taxes.
Profit and loss net of adjustments
in EUR thousands
Revenue
Changes in inventories of finished goods and work in progress
Other own work capitalized
Raw materials and consumables used
Gross profit
Other operating income and expenses
Employee benefits expense
EBITDA
Depreciation
EBITA
Amortization
Operating profit (EBIT)
Financial costs – net
Profit before income tax
Income taxes
Profit for the period
Non-controlling interests
Profit attributable to shareholders of the parent
Earnings per share (in EUR)
The following table shows profit or loss net of these expenses:
2019
unadjusted
1,100,096
3,045
4,910
– 477,628
630,423
– 144,249
– 312,376
173,798
– 45,891
127,907
– 31,225
96,682
– 15,490
81,192
– 22,743
58,449
27
58,422
1.83
Integration costs
Step-up effects
from purchase
price allocations
‘Rightsizing /
Footprint’ Total adjustments
0
310
53
363
363
363
363
– 80
283
0
0
3,398
3,398
22,484
25,882
25,882
– 6,379
19,503
213
213
2,920
9,935
13,068
63
13,131
13,131
13,131
– 3,525
9,606
0
0
0
213
213
3,230
9,988
13,431
3,461
16,892
22,484
39,376
0
39,376
– 9,984
29,392
0
T061
2019
adjusted
1,100,096
3,045
4,910
– 477,415
630,636
– 141,019
– 302,388
187,229
– 42,430
144,799
– 8,741
136,058
– 15,490
120,568
– 32,727
87,841
27
283
19,503
9,606
29,392
87,814
2.76
CONTINUED ON NEXT PAGE
149
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Profit and loss net of adjustments (continued)
in EUR thousands
Revenue
Changes in inventories of finished goods and work in progress
Other own work capitalized
Raw materials and consumables used
Gross profit
Other operating income and expenses
Employee benefits expense
EBITDA
Depreciation
EBITA
Amortization
Operating profit (EBIT)
Financial costs – net
Profit before income tax
Income taxes
Profit for the period
Non-controlling interests
Profit attributable to shareholders of the parent
Earnings per share (in EUR)
2018
unadjusted
M&A related
costs
Integration costs
Step-up effects
from purchase
price allocations
‘Rightsizing /
Footprint’ Total adjustments
0
1,190
1,190
1,190
1,190
1,190
– 305
885
0
426
152
578
578
578
578
– 148
430
389
389
389
3,993
4,382
22,557
26,939
26,939
– 6,903
20,036
19
19
443
1,771
2,233
2,233
2,233
2,233
– 572
1,661
0
0
0
408
408
2,059
1,923
4,390
3,993
8,383
22,557
30,940
0
30,940
– 7,928
23,012
0
1,084,140
10,383
5,197
– 473,551
626,169
– 146,427
– 282,768
196,974
– 32,175
164,799
– 31,254
133,545
– 11,668
121,877
– 30,089
91,788
– 85
91,873
2.88
T061
2018
adjusted
1,084,140
10,383
5,197
– 473,143
626,577
– 144,368
– 280,845
201,364
– 28,182
173,182
– 8,697
164,485
– 11,668
152,817
– 38,017
114,800
– 85
885
430
20,036
1,661
23,012
114,885
3.61
150
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Notes to the Consolidated Statement of Comprehensive Income
8. Revenue from contracts with customers
Revenue recognized during the period related to the following:
Revenue by distribution channel
T062
in EUR thousands
2019
2018
2019
2018
2019
2018
2019
2018
EMEA
Americas
Asia-Pacific
Consolidated Group
Engineered Joining Technology (EJT)
359,776
368,671
205,001
219,958
100,681
95,947
665,458
684,576
Distribution Services (DS)
Other revenues
123,052
123,112
244,679
219,219
62,439
51,510
430,170
393,841
3,142
3,021
1,088
2,337
238
365
4,468
5,723
485,970
494,804
450,768
441,514
163,358
147,822
1,100,096
1,084,140
Total revenues increased by 1.5% to EUR 1,100,096 thousand
compared to the previous year (2018: EUR 1,084,140 thousand).
The increase is due to negative organic growth which was
compensated by positive currency effects and acquisitions.
Revenue by category
in EUR thousands
2019
T063
2018
Revenues from the sale of goods
1,093,903
1,077,338
Other revenue mainly consists of revenue from the sale of
production residues in metal production.
Revenues in 2019 include income of EUR 1,758 thousand from
the reversal of reimbursement liabilities recognized in the previous
period. The reversals represent the difference between the
expected volume discounts and annual bonuses recognized for
customers in the previous period and the actual payment in the
fiscal year. In 2018, EUR 2,719 thousand in revenues from
construction contracts are included.
incurred to the estimated total costs. The contract liabilities
represent advance payments received for goods to be supplied
by NORMA Group. Contract assets and contract liabilities in the
amounts of EUR 525 thousand and EUR 420 thousand respec-
tively (2018: EUR 1,185 thousand and EUR 453 thousand respec-
tively) are expected to be realized or settled within the next twelve
months. The contract liabilities from advance payments
received in the amount of EUR 453 thousand recognized as of
January 1, 2019, were recognized as sales revenues, net of any
sales taxes, in the fiscal year.
Revenues from engeneering
services
Revenues from other services
Other revenue
0
1,750
4,443
425
1,204
5,173
1,100,096
1,084,140
For the analysis of sales by region, please refer to
N OT E 3 0 .
Transaction price of unsatisfied performance obligations
‘SEGMENT REPORTING.’
Contract assets and liabilities
Contract assets represent revenues from development services
rendered, which were realized based on the ratio of costs already
NORMA Group applies the practical expedient of IFRS 15 and
does not disclose the transaction price allocated to unsatisfied
performance obligations as of the balance sheet date, as the
outstanding obligations are part of a contract with an initial term
of up to twelve months.
151
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING 9. Raw materials and consumables used
10. Other operating income
11. Other operating expenses
Raw materials and consumables used comprised the following:
Other operating income comprised the following:
Other operating expenses comprised the following:
Raw materials and consumables used
T064
Other operating income
T065
Other operating expenses
in EUR thousands
2019
2018
in EUR thousands
Cost of raw materials,
consumables and supplies
– 444,876
– 438,985
Cost of purchased services
– 32,752
– 34,566
– 477,628
– 473,551
The raw materials and consumables used lead to a decreased
ratio of 43.4% (2018: 43.7%). In relation to the total value, raw
materials and consumables used are, with a ratio of 43.1%, at
the same level as last year (2018: 43.1%).
Currency gains operational
Reversal of provisions
Reversal of accruals
Grants related to employee
benefits expense
Reimbursement of vehicle costs
Other income from disposal of
fixed assets
Foreign exchange derivatives
Government grants
Refund other taxes
Others
2019
6,092
1,516
2,491
27
874
246
412
606
147
2018
in EUR thousands
2019
7,567
Consulting and marketing
– 18,129
– 17,136
616
3,258
Expenses for temporary workforce
and other personnel-related costs
Freights
– 32,554
– 32,958
– 31,363
– 29,109
23
IT and telecommunications
– 17,326
– 15,788
873
Rentals and other building costs
– 5,364
– 12,528
Travel and entertainment
– 10,907
139
700
603
359
Currency losses operational
Research & development
Vehicle costs
Maintenance
Commission payable
Non-income-related taxes
Insurance
1,219
13,630
1,451
15,589
Income from the reversal of liabilities and unused provisions is
mainly due to the reversal of personnel-related obligations.
Office supplies and services
Other administrative expenses
Others
T066
2018
– 9,591
– 8,475
– 3,837
– 4,583
– 3,504
– 6,114
– 2,574
– 2,532
– 2,495
– 5,776
– 5,016
– 6,330
– 3,099
– 2,856
– 3,652
– 6,150
– 3,052
– 3,161
– 2,734
– 6,949
– 4,253
– 157,879
– 162,016
152
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Other operating expenses for 2019 (EUR 157,879 thousand)
were 2,6% lower than other operating expenses for 2018
(EUR 162,016 thousand). This is mainly because of a decrease
for rent and other property costs in conjunction with the first
time adoption of IFRS 16 of EUR 9,114 thousand. Without
the total effects of IFRS 16, other operating expenses would
have been EUR 11,296 thousand higher and would have
increased by 4.4% to EUR 169,175 thousand compared to the
previous year.
In relation to the total value, other operating expenses increased
disproportionately lower with a ratio of 14.2% (2018: 14.7%).
Without the first time adoption effects of IFRS 16, the ratio would
be above the previous year level, amounting 15.3%.
In 2019, employee benefits expense amounted to EUR 312,376
thousand compared to EUR 282,768 thousand in 2018. The
increase of 10.5% is mainly due to an increase in the average
headcount in 2019 compared to 2018. Furthermore, expenses
for the rightsizing program, started in fourth quarter 2018, were
reported. The additional employee expenses summed up to
EUR 9,935 thousand in 2019 (2018: EUR 1,771 thousand). Cur-
rency effects had a negative effect on employee benefits expenses.
In relation to the total value, employee benefits expense increased
disproportionately higher with a ratio of 28.2% (2018: 25.7%). In
2018, the ratio was positively influenced by lower additions to
accruals for employee bonuses.
In 2019, the average headcount was 6,798 (2018: 6,614).
12. Employee benefits expense
Employee benefits expense comprised the following:
Employee benefits expense
in EUR thousands
2019
T067
2018
Wages and salaries and other
termination benefits
– 256,715
– 230,815
Social security costs
– 42,339
– 39,748
Pension costs – defined
contribution plans
Pension costs – defined benefit
plans
– 11,692
– 11,016
– 1,630
– 1,189
– 312,376
– 282,768
13. Financial income and costs
Financial income and costs comprised the following:
Financial income and costs
in EUR thousands
2019
T068
2018
Financial costs
Interest expenses
Bank borrowings incl. hedging
instruments
– 13,340
– 13,282
Leases (2018: finance lease)
– 1,260
Expenses for interest accrued on
provisions
– 82
– 6
8
Expenses for interest accrued on
pensions
– 162
– 124
Foreign exchange result on
financing activities
Result on valuation of derivatives
– 212
– 74
715
– 436
Other financial cost
– 1,820
– 1,246
– 16,950
– 14,371
Financial income
Interest income on short-term bank
deposits
Other financial income
1,007
453
1,460
484
2,219
2,703
Net financial cost
– 15,490
– 11,668
153
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING The interest expenses from bank borrowings include in
2019 EUR 14,067
(2018:
EUR 13,344 thousand) and EUR 727 thousand are related
to interest income from hedging derivatives (2018: interest
expenses of EUR 62 thousand).
from borrowings
thousand
14. Net foreign exchange gains / losses
Earnings per share in 2019 and 2018 were as follows:
The exchange differences recognized in profit or loss are as
follows:
Earnings per share
2019
T070
2018
The increase of interest expenses for leasing is attributable to the
first time adoption of IFRS 16.
Net foreign exchange gains / losses
in EUR thousands
Note
2019
T069
2018
Profit attributable to shareholders
of the parent (in EUR thousands)
58,422
91,873
In fiscal year 2019, net losses from the valuation of derivatives
amount to EUR 74 thousand compared to net losses in the amount
of EUR 436 thousand in fiscal year 2018.
The development of losses on valuation of derivatives as well as
of foreign exchange result on financing activities results from the
hedging of the US dollar financial liabilities and from the
development of the US dollar compared to the prior year. The
hedging relationship is classified as a fair value hedge, hence the
valuation effects of the derivatives and of the financial liabilities
are both reflected in the financial result. The net effect is disclosed
in
NOTE 14. ‘NET FOR EIGN EXCHAN GE G AINS / LOSSES.’
Other financial income mainly includes income from the adjustment
of the liability from the option to acquire the outstanding non-
controlling interests of a subsidiary.
N OT E 2 1 . ( E ) ‘ F I N A N C I A L
LI AB IL ITIES AND NET DEBT ’
Transaction costs in connection with financing are netted with
the bank borrowings. They are amortized over the financing period
of the respective debt using the effective interest method. As of
December 31, 2019, the value of transaction costs recognized in
the balance sheet and amortized over the maturities of the bank
borrowings amounted to EUR 1,129 thousand (2018: EUR 810
thousand).
Currency gains
operational
Currency losses
operational
Foreign exchange
result on financing
activities
Result from foreign
exchange
rate derivatives
(10)
6,092
7,567
Earnings per share (un)diluted
(in EUR)
1.83
2.88
Number of weighted shares
31,862,400
31,862,400
(11)
– 6,330
– 8,475
(13)
– 212
715
16. Income taxes
The breakdown of income taxes is as follows:
(10, 13,
21)
– 72
– 522
– 343
– 536
Income taxes
in EUR thousands
2019
T071
2018
15. Earnings per share
Earnings per share are calculated by dividing net income for the
period attributable to NORMA Group’s shareholders by the
weighted average number of shares issued during the period
under review. NORMA Group has only issued common shares. In
2019, as in the previous year, the average weighted number of
shares was 31,862,400 (2018: 31,862,400).
As of December 31, 2019, and 2018, there were no dilutive effects
on earnings per share.
Current tax expenses
– 27,936
– 34,629
Deferred tax income
5,193
4,540
Total income taxes
– 22,743
– 30,089
The combined income tax rate for the German companies for
2019 amounted to 30.1% (2018: 30.1%), comprising corporate
income tax at a rate of 15%, the solidarity surcharge of 5.5% on
corporate income tax, and trade income tax at an average rate
of 14.2%. The taxation of the foreign subsidiaries is calculated
on the basis of the tax rate applicable in the respective country
of domicile. Deferred taxes, calculated using the tax rates which
apply respectively, are expected to apply in the various countries
at the time of realization.
154
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING
The income tax expense of the Group actually reported differs
from the theoretical income tax expense based on the German
combined income tax rate of 30.1% for 2019 as follows:
The item ‘Other’ consists mainly of other income-based taxes
(e. g. withholding tax) in 2019 and 2018.
Tax reconciliation
in EUR thousands
Profit before tax
Group tax rate
2019
81,192
30.1%
T072
2018
121,877
30.1%
Expected income taxes
– 24,439
– 36,685
The income tax charged / credited directly to other comprehen-
sive income during the year is as follows:
Income tax charged / credited to other
comprehensive income
T073
2019
in EUR thousands
Cash flow hedges
gains / losses
Remeasurements
of post-employ-
ment benefit obli-
gations
Other comprehen-
sive income
Before tax
amount
Tax
charge / credit
Net of tax
amount
– 2,363
680
– 1,683
– 2,066
547
– 1,519
– 4,429
1,227
– 3,202
– 674
– 861
5,658
9,203
Tax effects of:
Tax losses and tax credits from
the actual year for which no
deferred income tax is recog-
nized
Effects from the deviation of the
Group tax rate resulting mainly
from different foreign tax rates
Non-deductible expenses for tax
purposes
Other tax-free income
Tax effect of changes in tax
rates regarding deferred taxes
Income taxes related to prior
years
Impairment of tax assets
Other
Income taxes
– 2,773
432
– 1,692
1,088
2018
– 150
– 260
557
– 21
158
– 9
– 1.333
– 1,031
– 22,743
– 30,089
in EUR thousands
Cash flow hedges
gains / losses
Remeasurements
of post-employ-
ment benefit obli-
gations
Other comprehen-
sive income
Before tax
amount
Tax
charge / credit
Net of tax
amount
948
– 267
681
– 265
51
– 214
683
– 216
467
155
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING The movement in deferred income tax assets and liabilities during
the year is as follows:
Deferred income tax assets
T076
in EUR thousands
Dec 31, 2019
Dec 31, 2018
Notes to the Consolidated
Statement of Financial Position
17. Deferred income tax
The analysis of deferred tax assets and deferred tax liabilities due
to maturity is as follows:
Deferred tax assets and deferred tax liabilities
(gross)
in EUR thousands
Dec 31, 2019
Dec 31, 2018
Movement in deferred tax assets and liabilities
T075
Intangible assets
in EUR thousands
T074
2019
2018
Property, plant and equipment
Deferred tax liabilities (net) –
as of January 1
Deferred tax income
Tax charged to other
comprehensive income
9,516
8,105
Foreign exchange rate differences
7,274
First time adoption of IFRS 16
7,785
17,301
66,528
– 5,193
– 1,227
705
– 626
55,698
– 4,540
216
1,123
Other assets
Inventories
Trade receivables
Retirement benefit obligations /
pension liabilities
Provisions
0
Borrowings
15,379
Acquisition of subsidiaries
0
14,031
Other liabilities, incl. derivatives
Deferred tax liabilities (net) –
as of December 31
60,187
66,528
Deferred tax assets
Deferred tax assets to be recov-
ered after more than 12 months
Deferred tax assets to be
recovered within 12 months
Deferred tax assets
Deferred tax liabilities
Deferred tax liabilities to be recov-
ered after more than 12 months
75,038
77,276
Deferred tax liabilities to be
recovered within 12 months
Deferred tax liabilities
2,450
77,488
4,631
81,907
The analysis of deferred income tax assets and deferred income
tax liabilities without taking into consideration the offsetting of
balances within the same tax jurisdiction is as follows:
Trade and other payables
Tax loss carry forward and tax
credits
Deferred tax assets (before
valuation allowances)
Valuation allowance
Deferred tax assets (before
offsetting)
Offsetting effects
Deferred tax assets
4,146
585
1,005
2,560
909
2,937
490
176
2,656
651
2,556
692
806
1,812
1,291
2,205
491
1,347
2,505
559
3,430
2,962
19,546
– 2,245
17,301
– 7,926
9,375
17,226
– 1,847
15,379
– 8,808
6,571
156
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Deferred income tax liabilities
T077
In 2019 and prior years, the Group had tax losses at several
subsidiaries in several countries.
The expiration of tax loss carry forwards not recognized for tax
purposes is as follows:
Deferred income tax assets are recognized for tax loss carry
forwards as far as it is expected that the deferred tax assets will
be utilized in the foreseeable future.
Expiry of not recognized tax losses
T079
in EUR thousands
Dec 31, 2019
Dec 31, 2018
Deferred income tax assets for unused tax losses and unused tax
credits developed as follows:
up to 1 year
> 1 year up to 5 years
> 5 years
Expiry of recognized tax losses
T078
Unlimited carry forward
in EUR thousands
Dec 31, 2019
Dec 31, 2018
Total
0
0
0
6,516
6,516
1,546
0
0
4,643
6,189
up to 1 year
> 1 year up to 5 years
> 5 years
Unlimited carry forward
Total
35
1,623
1,698
7,828
11,184
2,505
450
1,671
4,643
9,269
The Group did not recognize deferred income tax assets in respect
of tax loss carry forwards amounting to EUR 6,516 thousand on
December 31, 2019 (Dec 31, 2018: EUR 6,189 thousand).
Regarding taxable temporary differences amounting to
EUR 419,395 thousand on December 31, 2019 (Dec 31, 2018:
EUR 365,100 thousand), associated with investments in
subsidiaries, no deferred tax liabilities are recognized since the
respective parent is able to control the timing of the reversal of
the temporary difference and it is probable that the temporary
difference will not reverse in the foreseeable future.
18. Goodwill and other intangible assets
The acquisition costs as well as accumulated amortization and
impairment of intangible assets consist of the following:
in EUR thousands
Dec 31, 2019
Dec 31, 2018
Intangible assets
Property, plant and equipment
Other assets
Inventories
Trade receivables
Retirement benefit obligations /
pension liabilities
Borrowings
Provisions
Other liabilities, incl. derivatives
Trade and other payables
57,406
15,171
1,603
60,287
14,703
3,801
162
198
6
200
90
394
3
179
325
0
6
255
30
41
Untaxed reserves
2,254
2,280
Deferred tax liabilities (before
offsetting)
Offsetting effects
Deferred tax liabilities
Deferred tax liabilities (net)
77,488
– 7,926
69,562
60,187
81,907
– 8,808
73,099
66,528
Deferred income tax assets are recognized for all deductible
temporary differences to the extent that it is probable that future
taxable profits will be available against which the deductible
temporary difference can be utilized. As of December 31, 2019,
and also in the previous year, deferred tax assets were recognized
for all deductible temporary differences because sufficient taxable
income will most likely be available to utilize these deductible
temporary differences.
157
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Development of goodwill and other intangible assets
in EUR thousands
Acquisition costs
Goodwill
Customer lists
Licenses, rights
Software acquired externally
Trademarks
Patents & technology
Internally generated intangible assets
Intangible assets, other
Total
Amortization and impairment
Goodwill
Customer lists
Licenses, rights
Software acquired externally
Trademarks
Patents & technology
Internally generated intangible assets
Intangible assets, other
Total
As of Jan 1, 2019
Additions
Deductions
Transfers
Changes in
consolidation
Currency effects
As of
Dec 31, 2019
T080
423,918
272,509
1,920
43,281
55,859
70,395
23,113
8,551
899,546
34,413
87,645
1,771
35,539
12,889
35,899
11,528
6,963
0
0
40
822
0
816
6,692
853
9,223
0
16,768
26
3,650
1,552
4,895
4,334
0
226,647
31,225
0
0
– 24
– 146
0
0
– 188
– 26
– 384
0
0
– 24
– 144
0
0
– 188
– 26
– 382
0
0
– 26
400
0
0
247
– 621
0
0
0
– 33
182
0
0
247
– 396
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
4,078
4,654
8
282
1,000
590
296
– 41
427,996
277,163
1,918
44,639
56,859
71,801
30,160
8,716
10,867
919,252
496
1,776
7
164
236
500
207
– 118
3,268
34,909
106,189
1,747
39,391
14,677
41,294
16,128
6,423
260,758
CONTINUE ON NEXT PAGE
158
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Development of goodwill and other intangible assets (continued)
in EUR thousands
Acquisition costs
Goodwill
Customer lists
Licenses, rights
Software acquired externally
Trademarks
Patents & technology
Internally generated intangible assets
Intangible assets, other
Total
Amortization and impairment
Goodwill
Customer lists
Licenses, rights
Software acquired externally
Trademarks
Patents & technology
Internally generated intangible assets
Intangible assets, other
Total
As of Jan 1, 2018
Additions
Deductions
Transfers
389,962
243,447
1,900
41,056
51,667
49,541
16,948
7,788
802,309
33,245
67,753
1,711
30,864
10,941
30,715
7,625
7,009
0
0
7
1,576
0
669
5,758
1,010
9,020
0
17,500
50
4,444
1,430
4,021
3,729
80
189,863
31,254
0
0
0
– 44
0
0
0
0
– 44
0
0
0
– 38
0
0
– 3
0
– 41
0
0
5
171
0
0
16
– 121
71
0
0
0
0
0
0
0
0
0
Changes in
consolidation
Currency effects
As of
Dec 31, 2018
T080
23,822
20,228
0
244
1,865
18,782
0
0
10,134
8,834
8
278
2,327
1,403
391
– 126
423,918
272,509
1,920
43,281
55,859
70,395
23,113
8,551
64,941
23,249
899,546
0
0
0
0
0
0
0
0
0
1,168
2,392
10
269
518
1,163
177
– 126
5,571
34,413
87,645
1,771
35,539
12,889
35,899
11,528
6,963
226,647
159
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Goodwill and other intangible assets –
carrying amounts
T081
Significant individual intangible assets
T082
useful lives are fully allocated to the cash-generating unit (CGU)
Americas.
Carrying amounts
in EUR thousands
Dec 31, 2019
Dec 31, 2018
Carrying amounts
in EUR thousands
Dec 31, 2019
Dec 31, 2018
393,087
389,505
170,974
184,864
NDS – Customer
lists
109,801
114,994
15
Remaining
Useful Life
(in years)
Trademarks with an unknown term of use are subjected to an
annual impairment test pursuant to IAS 36 on the basis of the
recoverable amount pursuant to the procedure described in
N OT E 3 . ‘ S U M M A R Y O F S I G N I F I C A N T A C C O U N T I N G P O L I C I E S –
IMPAIRMENT OF NON- FINANCIAL ASSETS.’
171
5,248
42,182
30,507
14,032
2,293
149
7,742
42,970
34,496
11,585
1,588
The change in goodwill, customer lists and patents & technology
results from positive foreign exchange differences, mainly from
the US dollar area.
The change in goodwill is summarized as follows:
On December 31, 2019, and 2018, the intangible assets were
unsecured.
Impairment tests for goodwill
Goodwill is allocated to the Group’s cash-generating units (CGUs)
identified according to geographical areas. A summary of the
goodwill allocation is presented below:
Goodwill
Customer lists
Licenses, rights
Software acquired externally
Trademarks
Patents & technology
Internally generated intangible
assets
Intangible assets, other
Total
658,494
672,899
Change in goodwill
in EUR thousands
The item ‘patents and technology’ on December 31, 2019, con-
sists of patents worth EUR 8,494 thousand (Dec 31, 2018:
EUR 9,797 thousand) and technology worth EUR 22,013 thou-
sand (Dec 31, 2018: EUR 24,699 thousand).
Balance as of December 31, 2018
Currency effect
Balance as of December 31, 2019
T083
389,505
3,582
393,087
Internally generated intangible assets include development costs
for technologies in the amount of EUR 9,071 thousand (Dec 31,
2018: EUR 8,078 thousand) as well as internally generated soft-
ware in the amount of EUR 4,960 thousand (Dec 31, 2018:
EUR 3,507 thousand).
The item ‘Intangible assets, other’ consists mainly of prepayments.
Besides the goodwill, there are intangible assets within trade-
marks with an indefinite useful life in the amount of EUR 28,396
thousand (2018: EUR 27,860 thousand) resulting from the
acquisition of NDS in 2014. From a market perspective,
NORMA Group assumed an indefinite useful life for these acquired
trademarks, which mainly include the corporate brand NDS®,
because these brands have been established in the market for a
number of years and there is no foreseeable end to their useful
life, therefore useful lives are indefinite. Trademarks with indefinite
160
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING
Goodwill allocation per segment
T084
in EUR thousands
Dec 31, 2019
Dec 31, 2018
CGU EMEA
CGU Americas
178,484
178,540
180,030
176,500
CGU Asia-Pacific
34,573
34,465
393,087
389,505
Goodwill for the CGU Americas increased in 2019 mainly due to
currency effects.
The recoverable amount of a CGU is determined based on fair
value less costs to sell, which is calculated by discounting
projected cash flows. Based on the inputs used for this valuation
technique, fair values are classified as level 3 fair values.
NOTE
3 ‘ S U M M A R Y O F S I G N I F I CA N T AC C O U N T I N G P O L I C I E S – FA I R VA LU E
EST IMATION’ These calculations use cash flow projections based
on financial budgets approved by the management covering a
five-year period. Cash flows beyond the five-year period are
extrapolated using the estimated growth rates stated below.
The growth rate does not exceed our expectations for the long-
term average growth rate for the geographical area of the
respective CGU.
The discount rates used are after tax rates and reflect the specific
risk of each CGU. The respective before tax rates are 11.71%
(2018: 10.61%) for the CGU EMEA, 9.82 % (2018: 8.86%) for the
CGU Americas and 11.88% (2018: 10.74%) for the CGU
Asia-Pacific.
A sensitivity analysis for the individual CGUs takes into account
any changes in the key assumptions that are considered possi-
ble. The sensitivity analysis was performed in isolation for all sig-
nificant influencing factors, i.e. a change in the fair value of a
cash-generating unit is only caused by a reduction or increase in
the respective influencing factor.
The key assumptions used for fair value less costs to sell
calculations are as follows:
Impairment losses on other intangible assets
No significant impairment losses or reversals of impairment losses
were recognised for intangible assets in fiscal year 2019.
19. Property, plant and equipment
The acquisition and manufacturing costs as well as accumulated
depreciation of property, plant and equipment consist of the fol-
lowing:
Goodwill per segment – key assumptions
T085
December 31, 2019
CGU
EMEA
CGU
Americas
CGU
Asia-Pacific
Terminal value
growth rate
Discount rate
Costs to sell
1.00%
9.19%
1.00%
1.00%
8.14%
1.00%
1.00%
9.28%
1.00%
December 31, 2018
CGU
EMEA
CGU
Americas
CGU
Asia-Pacific
Terminal value
growth rate
Discount rate
Costs to sell
1.50%
8.40%
1.00%
1.50%
7.15%
1.00%
1.50%
8.44%
1.00%
The assumptions are based on management’s expectations
regarding future developments.
161
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Development of property, plant and equipment
T086
in EUR thousands
Acquisition costs
Land and buildings
Machinery & tools
Other equipment
Assets under construction
Right of Use Assets
Land and buildings
Machinery & tools
Forklifts and warehouse
Office and IT equipment
Company cars
Total
Depreciation and impairment
Land and buildings
Machinery & tools
Other equipment
Assets under construction
Right of Use Assets
Land and buildings
Machinery & tools
Forklifts and warehouse
Office and IT equipment
Company cars
Total
adjustments from
changes in accounting
policies (Note 2, basis of
preparation)
As of
Dec 31, 2018
As of Jan 1, 2019
(adjusted)
Additions
Deductions
Transfers
Changes in
consolidation
Currency effects
As of
Dec 31, 2019
120,700
343,606
69,628
36,716
0
0
0
0
0
570,650
54,132
219,781
53,378
33
0
0
0
0
0
327,324
– 5,452
61,497
206
2,949
458
3,321
62,979
– 182
28,449
24
1,258
167
1,283
30,999
115,248
343,606
69,628
36,716
61,497
206
2,949
458
3,321
633,629
53,950
219,781
53,378
33
28,449
24
1,258
167
1,283
358,323
1,391
16,346
2,945
24,938
11,907
133
408
57
1,465
59,590
3,290
26,522
5,643
0
8,297
68
656
121
1,294
45,891
776
21,138
1,683
– 23,597
– 29
– 3,342
– 2,693
– 72
– 3,956
0
– 299
0
– 388
569
2,794
321
317
412
11
5
26
117,955
380,542
71,884
38,302
69,860
339
3,069
520
4,424
– 10,779
0
0
4,455
686,895
– 28
– 2,887
– 2,602
– 7
– 3,639
0
– 274
0
– 333
– 9,770
0
0
161
1,312
214
– 7
– 81
0
0
– 1
10
1,608
57,373
244,728
56,633
19
33,026
92
1,640
287
2,254
396,052
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NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Development of property, plant and equipment (continued)
in EUR thousands
Acquisition costs
Land and buildings
Machinery & tools
Other equipment
Assets under construction
Total
Depreciation and impairment
Land and buildings
Machinery & tools
Other equipment
Assets under construction
Total
Property, plant and equipment – carrying
amounts
As of Jan 1, 2018
Additions
Deductions
Transfers
Changes in
consolidation
Currency effects
T086
As of
Dec 31, 2018
111,560
302,020
65,565
22,021
501,166
51,181
196,162
48,641
29
296,013
2,332
15,459
2,998
33,446
54,235
3,098
23,365
5,708
4
32,175
– 312
– 1,367
– 1,205
– 242
– 3,126
– 53
– 951
– 959
0
– 1,963
1,912
17,059
1,171
– 20,213
– 71
0
0
0
0
0
5,112
8,121
1,030
1,309
15,572
0
0
0
0
0
96
2,314
69
395
2,874
– 94
1,205
– 12
0
1,099
120,700
343,606
69,628
36,716
570,650
54,132
219,781
53,378
33
327,324
in EUR thousands
Land and buildings
Machinery & tools
Other equipment
Assets under construction
Total
Carrying amounts
Dec 31,
2019
Dec 31, 2018
60,582
66,568
135,814
123,825
15,251
38,283
16,250
36,683
249,930
243,326
On December 31, 2019, the item ‘Machinery and tools’ included
tools valued at EUR 30,688 thousand (Dec 31, 2018: EUR 28,166
thousand).
T087
No material impairment and no material write-ups were
recognized on property, plant and equipment in 2019 and 2018.
Right of use assets – carrying amounts
T088
On December 31, 2019, and 2018, property, plant and equipment
were unsecured.
20. Leases
The following disclosures contain
information about
NORMA Group’s leases following the first-time adoption of IFRS
16 in fiscal year 2019.
(i) Amounts recognized in the Consolidated Statement of
Financial Position
The following items related to leases are shown in the Consolidated
Statement of Financial Position:
in EUR thousands
Land and buildings
Machinery & tools
Forklifts and warehouse
Office and IT equipment
Company cars
Total
Carrying
amounts
Dec 31,
2019
36,834
247
1,429
233
2,170
40,913
Carrying amounts as of January 1, 2019 (moment of first time
adoption) are shown under
NOTE 2 ‘BASIS OF PREPARATION’.
163
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING The maturities of the nominal values and the carrying amounts
of the lease liabilities as of December 31, 2019, are as follows:
Leases in the statement of profit or loss
in TEUR
Maturity of lease liabilities Dec 31, 2019
T089
Depreciation charge of right-of-use assets
in EUR thousands
Lease liabilities – Nominal
value
Lease liabilities – Carrying
amount
up to 1
year
> 1 year
up to 2
years
Land and buildings
> 5 years
Machineries and technical equipments
11,369
26,366
16,983
Forklifts and warehouse equipments
Office and IT equipments
8,427
17,790
12,378
Company cars
(ii) Amounts recognised in the income statement
Finance costs
Interest expenses
Currency gains / -losses
The following amounts relating to leases are recognised in the
income statement:
Other operating expenses
Expenses relating to short-term leases for which
no RoU asset was recorded
Expenses relating to leases of low-value assets
that are not shown above as short-term leases
Expenses relating to variable lease payments that
were not included in the measurement of the lease
liability
(iii) Amounts recognised in the cash flow statement
EUR 15,781 thousand in total are recognised as cash outflows
in the cash flow statement because of right-of-use assets. Of this,
EUR 11,318 thousand were recognised under cash flows from
financing activities and EUR 4,463 thousand were recognised
under cash flows from operating activities.
21. Financial instruments
The following disclosures provide an overview of the financial
instruments held by the Group, detailed information about each
type of financial instrument held and information about the
accounting policies used.
T090
2019
10,436
8,297
68
656
121
1,294
– 1,256
– 1,260
4
Financial instruments according to classes and categories were
as follows:
4,463
3,614
849
0
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NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Financial instruments – classes and categories
T091
in EUR thousands
Financial assets
Derivative financial instruments – hedge accounting
Interest rate swaps – cash flow hedges
Foreign exchange derivatives – fair value hedges
Trade and other receivables
Trade receivable – ABS / Factoring program (mandatorily measured at FVTPL)
Other financial assets
Cash and cash equivalents
Financial liabilities
Borrowings
Derivative financial instruments – hedge accounting
Interest rate swaps – cash flow hedges
Foreign exchange derivatives – fair value hedges
Trade and other payables
Finance lease liabilities
Other liabilities
Totals per category
Financial assets at amortized cost
Financial assets at fair value through profit or loss (FVTPL)
Financial liabilities at amortized cost (FLAC)
Note
21. (f)
21. (a)
21. (b)
21. (d)
21. (c)
21. (e)
21. (f)
21. (e)
20
21. (e)
Category
IFRS 7.8 according
to IFRS 9
Carrying
amount
Dec 31, 2019
Fair value
through profit or
loss
Derivatives
used for
hedging
Measure-
ment basis
IFRS 16
Fair value
Dec 31, 2019
Amortized cost
Measurement basis IFRS 9
n/a
n/a
Amortized Cost
FVTPL
Amortized Cost
Amortized Cost
435
15
140,258
22,128
4,792
179,721
140,258
4,792
179,721
22,128
FLAC
541,898
541,898
n/a
n/a
FLAC
n/a
FLAC
911
2
143,119
38,595
19,126
324,771
22,128
704,143
143,119
19,126
324,771
704,143
22,128
435
15
911
2
38,595
435
15
140,258
22,128
4,792
179,721
556,309
911
2
143,119
n/a
19,126
324,771
22,128
718,554
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NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Financial instruments – classes and categories (continued)
T091
in EUR thousands
Financial assets
Derivative financial instruments – hedge accounting
Interest rate swaps – cash flow hedges
Foreign exchange derivatives – cash flow hedges
Foreign exchange derivatives – fair value hedges
Trade and other receivables
Trade receivable – ABS / Factoring program (mandatorily measured at FVTPL)
Other financial assets
Cash and cash equivalents
Financial liabilities
Borrowings
Derivative financial instruments – hedge accounting
Interest rate swaps – cash flow hedges
Foreign exchange derivatives – cash flow hedges
Foreign exchange derivatives – fair value hedges
Trade and other payables
Other financial liabilities
Other liabilities
Finance lease liabilities
Totals per category
Financial assets at amortized cost
Financial assets at fair value through profit or loss (FVTPL)
Financial liabilities at amortized cost (FLAC)
Note
21. (f)
21. (a)
21. (b)
21. (d)
21. (c)
21. (e)
21. (f)
21. (e)
21. (e)
Measurement basis IFRS 9
Category
IFRS 7.8 according
to IFRS 9
Carrying
amount
Dec 31, 2018
Fair value
through profit or
loss
Derivatives
used for
hedging
Measure-
ment basis
IAS 17
Fair value
Dec 31, 2018
Amortized cost
2,571
151
42
675
45
38
n/a
n/a
n/a
Amortized Cost
FVTPL
Amortized Cost
Amortized Cost
2,571
151
42
128,485
14,653
5,231
190,392
128,485
5,231
190,392
14,653
FLAC
569,091
569,091
n/a
n/a
n/a
FLAC
FLAC
n/a
675
45
38
142,028
20,826
32
324,108
14,653
731,945
142,028
20,826
324,108
731,945
32
14,653
2,571
151
42
128,485
14,653
5,231
190,392
582,624
675
45
38
142,028
20,826
32
324,108
14,653
745,478
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NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING 21. (a) Trade and other receivables
Trade receivables
T093
Trade and other receivables were as follows:
in EUR thousands
Dec 31, 2019
Dec 31, 2018
Trade and other receivables
Trade receivables
T092
in EUR thousands
Dec 31, 2019
Dec 31, 2018
Less allowances for doubtful
accounts
155,158
137,425
– 1,637
– 1,654
153,521
135,771
Trade receivables
Other receivables
153,521
135,771
8,865
7,367
162,386
143,138
Other receivables mainly include banker’s acceptance bills for
trade receivables for customers in China. These financial assets
are generally required to collect contractual cash flows and are
allocated to the “hold” business model accordingly and are initially
recognized at fair value plus transaction costs and are
subsequently carried at amortized cost using the effective interest
method less any impairment losses.
On the balance sheet date, trade receivables were as follows:
i. Classification as trade receivables
Trade receivables are amounts payable by customers for goods
sold or services rendered in the ordinary course of business. If the
receivables are expected to be settled within twelve months, they
are classified as current assets. If this is exceptionally not the
case, they are reported as non-current assets. Trade receivables
are classified in accordance with IFRS 9. They are generally
required to collect the contractual cash flows and are allocated
to the “hold” business model accordingly. They are recognized
initially at the amount of the unconditional consideration and are
subsequently carried at amortized cost using the effective interest
method less any impairment losses. If trade receivables contain
a significant financing component, they are initially recognized at
fair value.
ii. Impairment and write-offs of trade receivables
For trade receivables, the simplified approach, which is based on
the expected credit losses over the respective terms, is used. Loss
rates calculated on the basis of historical and forecast data are
used, taking into account the business model, the respective cus-
tomer and the economic environment of the geographical region.
For this purpose, NORMA Group considers in particular the credit
default swaps of the respective client’s home countries as well
as industry-specific default probabilities derived from external
sources. In addition, loss rates from customer-specific credit
default swaps (CDS) are used, if available.
On this basis, the allowance for trade receivables and contract
assets as of December 31, 2019 was determined as follows:
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NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Credit risk exposure trade receivables
As of December 31, 2019
in EUR thousands
Trade receivables – before allowances
ECL allowance
Trade receivables – after allowances
As of December 31, 2018
in EUR thousands
Trade receivables – before allowances
ECL allowance
Trade receivables – after allowances
The impairment losses on trade receivables developed as follows
from the opening balance sheet value as of January 1, 2019, to
the closing balance sheet value as of December 31, 2019:
Impairment reconciliation
in EUR thousands
Impairment allowance as of Jan 1, 2019 – based on IFRS 9
Additions
Reversals
Consumption
Translation effect
Impairment allowance as of Dec 31, 2019
Credit loss rate
< 1%
Credit loss rate
≥ 1% ≤ 2.5%
Credit loss rate
> 2.5%
78,072
704
77,368
48,907
723
48,184
6,051
210
5,841
Credit loss rate
< 1%
Credit loss rate
≥ 1% ≤ 2.5%
Credit loss rate
> 2.5%
66,895
488
66,407
47,694
892
46,802
8,183
274
7,909
Impairment losses on trade receivables, together with those on
contract assets, are recognized in operating profit as net impair-
ment losses. Unused amounts reversed are included in the same
line item. The net expenses recognized in fiscal year 2019 from
these impairment losses amounted to EUR 53 thousand (2018:
62 thousand).
Receivables with significant arrears, which may be more than
180 days due to the customer structure, or those for which insol-
vency or similar proceedings have been initiated, are individually
tested for impairment. If, on the basis of an appropriate assess-
ment, it cannot be assumed that these can be realized, they are
written off directly. In the fiscal year, the following losses resulted
from the write-off of trade receivables:
T094
Total
133,030
1,637
131,393
Total
122,772
1,654
121,118
Gains / losses arising from derecognition
IFRS 7.20A
T096
in EUR thousands
2019
2018
Reasons for
derecognition
Gains arising from
derecognition
T095
Impairments on trade
receivables
Losses arising from
derecognition
0
893
0
Write-off
(IFRS 9.5.4.4)
507
1,654
1,293
– 1,240
– 89
19
1,637
Losses on the disposal of trade receivables through write-offs
are recognized in operating profit as impairment losses, net.
Unused amounts reversed are included in the same line item.
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NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING iii. Fair value of trade receivables
Trade receivables have short-term maturities, therefore the
carrying amounts on the balance sheet date correspond to their
fair values, as the effects of discounting are not material.
21. (b) Trade receivables transferred or available for
transfer
Transferred trade receivables
i.
Subsidiaries of NORMA Group in the EMEA and Americas
segments transfer trade receivables to external purchasers as
part of factoring and ABS transactions. The details and effects
of the respective programs are presented below.
a) Factoring transactions
In the factoring agreement concluded in 2017, that has a
maximum volume of receivables of EUR 18 million, NORMA Group
subsidiaries in Germany and Poland sell trade receivables directly
to external purchasers. As part of this factoring program,
receivables of EUR 6.4 million were sold as of December 31, 2019,
(Dec 31, 2018: EUR 8.6 million) whereof EUR 0.6 million
(Dec 31, 2018: EUR 0.0 million) are purchase price retention that
are maintained as a cintingency reserve and not paid out, but
recognized as other financial asset.
The requirements for a receivables transfer were met in
accordance with IFRS 9.3.2.1 since the receivables were
transferred in accordance with IFRS 9.3.2.4 a). Verification in
accordance with IFRS 9.3.2.6 shows that nearly all opportunities
and risks were neither transferred nor retained. It follows in
accordance with IFRS 9.3.2.16 that NORMA Group recognizes
remaining continuing involvement.
NORMA Group is continuing to perform receivables management
(servicing) for the receivables sold.
Although NORMA Group is only entitled to act as a servicer, the
Company retains the right to dispose of the sold receivables, as
purchasers do not have the right to resell the receivables acquired.
NORMA Group is continuing to recognize the sold trade receivable
to the extent of its continuing involvement, i. e., at the maximum
amount to which it continues to be liable for the late payment risk
inherent in the receivables sold. Hence, NORMA Group is
recognizing a corresponding financial liability.
The requirements for the derecognition of receivables in
accordance with IFRS 9.3.2.1 are met, as the receivables are
transferred in accordance with IFRS 9.3.2.4 a). The examination
of IFRS 9.3.2.6 shows that essentially all opportunities and risks
have been transferred.
NORMA Group continues to service the receivables sold.
Although NORMA Group is not entitled to dispose of the
receivables sold in any other way than within the framework of
receivables management, the Company retains control over the
receivables sold as the buyers do not have the actual ability to
resell the acquired receivables.
The remaining continuing involvement in the amount of EUR 59
thousand (Dec 31, 2018: EUR 79 thousand) was recognized as
a financial liability and considers the maximum potential loss for
NORMA Group resulting from the late payment risk of receivables
sold as of the reporting date. The fair value of the guarantee / inter-
est payments to be assumed has been estimated at
EUR 5 thousand (Dec 31, 2018: EUR 7 thousand) , taken through
profit or loss and recognized under other liabilities.
b) ABS transactions
In 2014, NORMA Group entered into a revolving asset purchase
agreement (Receivables Purchase Agreement) with Weinberg
Capital Ltd. (special purpose entity). Within the agreed structure,
NORMA Group sold trade receivables in the context of an ABS
transaction which was successfully initiated in December 2014.
Receivables are sold by NORMA Group to a special purpose entity.
In 2018, NORMA established a further factoring program. Under
the factoring agreement concluded in December 2018 with a
maximum receivables volume of USD 16 million, a subsidiary of
NORMA Group in the US sells trade receivables directly to external
purchasers. As part of this factoring program, receivables
amounting to EUR 11.8 million were sold as of December 31, 2019
(Dec 31, 2018: EUR 15.4 million). Of this amount, EUR 2.4 million
(Dec 31, 2018: EUR 3.2 million) were treated as purchase price
retentions and not paid out, but rather held as security reserves
and recognized as other financial assets.
As of December 31, 2019, domestic NORMA Group entities had
sold receivables in an amount of EUR 14.0 million (Dec 31, 2018:
EUR 15.2 million) under this asset-backed securities (ABS)
program with a maximum volume of EUR 25 million. From the
receivables sold, EUR 0.6 million (Dec 31, 2018: EUR 0.6 million)
were retained as loss reserves and not paid out. These assets
were recognized as other financial assets. The basis for this
transaction is the transfer of trade receivables of individual
NORMA Group subsidiaries to a special purpose entity with a
framework of undisclosed assignment. This special purpose entity
(SPE) is not consolidated under IFRS 10 because neither the power
169
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING over the SPE is attributable to NORMA Group nor does
NORMA Group have an essential self-interest and no connection
between power and variability of the returns of the special
purpose entity exists.
The requirements for a receivables transfer according to
IFRS 9.3.2.1 are met, since the receivables are transferred accord-
ing to IFRS 9.3.2.4 a). Verification in accordance with IFRS 9.3.2.6
shows that a substantial share of all risks and rewards were nei-
ther transferred nor retained. Therefore, according to IFRS 9.3.2.16,
NORMA Group’s continuing involvement must be recognized.
This continuing involvement in the amount of EUR 251 thousand
(Dec 31, 2018: EUR 272 thousand) includes the maximum amount
that NORMA Group could conceivably have to pay back under
the default guarantee and the expected interest payments until
the payment is received for the carrying amount of the receivables
transferred. The fair value of the guarantee / interest payments
to be assumed has been estimated at EUR 205 thousand
(Dec 31, 2018: EUR 215 thousand), taken through profit or loss
and recognized under other liabilities.
NORMA Group entered into another agreement with Weinberg
Capital Ltd. (program special purpose entity) in fiscal year 2018
by concluding a further revolving receivables purchase agreement
on the sale of trade receivables. The agreed structure provides
for the sale of trade receivables of NORMA Group as part of an
ABS transaction and was successfully initiated in December 2018.
The receivables are sold to a special purpose entity by
NORMA Group.
As part of this ABS program with a volume of up to USD 30 mil-
lion, US American Group companies of NORMA Group sold receiv-
ables amounting to EUR 19.5 million as of December 31, 2019
(Dec 31, 2018: EUR 22.0 million), of which EUR 0.8 million (Dec
31, 2018: EUR 0.9 million) were not paid out as purchase price
retentions, but rather held as security reserves and recognized
as other financial assets. The basis for the transaction is the
assignment of trade receivables of individual NORMA Group
companies to a program special purpose entity as part of a silent
assignment. According to IFRS 10, this program special purpose
entity is not to be consolidated, as NORMA Group is not assigned
any decision-making power, nor is there any material self- interest
or link between decision-making power and the variability of
returns from the program special purpose entity.
The requirements for derecognition of receivables in accordance
with IFRS 9.3.2.1 are met, as the receivables are transferred in
accordance with IFRS 9.3.2.4 a). The audit of IFRS 9.3.2.6 shows
that almost all opportunities and risks have neither been
transferred nor retained. In accordance with IFRS 9.3.2.16,
NORMA Group must therefore recognize the remaining continuing
involvement.
A continuing involvement of EUR 619 thousand (Dec 31, 2018:
EUR 813 thousand) was recognized as other financial liability
and comprises the maximum amount that NORMA Group might
have to repay under the assumed default guarantee and the
expected interest payments until receipt of payment in respect
of the carrying amount of the receivables transferred. The fair
value of the guarantee or of the interest payments to be assumed
was included in the carrying amount and recognized as other
liabilities in the amount of EUR 227 thousand (Dec 31, 2018:
EUR 287 thousand).
ii. Trade receivables available for transfer
In the opinion of the Group, trade receivables included in these
programs but not yet disposed of at the end of the reporting period
cannot be allocated to either the “hold” or the “hold and sell”
business models. They are therefore included in the fair value
through profit and loss (FVTPL) category.
21. (c) Cash and cash equivalents
Cash and cash equivalents are measured at their nominal value
and include cash in hand, deposits held at call with banks, and
other short-term highly liquid investments with original maturities
of three months or less and which are subject only to insignificant
risk of change in value. Bank overdrafts are shown within
borrowings in current liabilities in the Consolidated Statement of
Financial Position.
21. (d) Other financial assets
Other financial asstes were as follows:
Other financial assets
T097
in EUR thousands
Dec 31, 2019
Dec 31, 2018
Receivables from ABS program
Receivables from factoring
Other assets
1,426
3,010
356
4,792
1,521
3,204
506
5,231
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NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Receivables from the ABS program and from factoring include
reserves for the trade receivables sold.
N OT E 2 1 . ( B ) ‘ T R A D E
REC EIVA BLES T RA NSFERR ED OR AVAILA BLE FOR TRAN SF E R ’
Other financial assets are generally required to collect the con-
tractual cash flows and are accordingly allocated to the “hold”
business model. They are initially recognized at fair value plus
transaction costs and are subsequently carried at amortized cost
using the effective interest method less impairment.
21. (e) Financial liabilities and net debt
Trade and other liabilities
i.
Trade and other payables are as follows:
Trade and other payables
T098
in EUR thousands
Dec 31, 2019
Dec 31, 2018
Trade payables and other
payables
Reverse factoring liabilities
Refund liabilities
109,385
109,193
21,335
12,399
19,200
13,635
143,119
142,028
Trade payables are obligations to pay for goods or services that
have been acquired in the ordinary course of business from
suppliers. Accounts payable are classified as current liabilities if
payment is due within one year or less. If not, they are presented
as non-current liabilities.
All reimbursement liabilities are due to third parties within one
year. The carrying amounts on the balance sheet date therefore
correspond to their fair values, as the effects of discounting are
not material.
Trade payables are recognized initially at fair value and
subsequently measured at amortized cost using the effective
interest method.
NORMA Group participates in a reverse factoring program. The
liabilities included in this program are reported under trade
payables and similar liabilities, as this corresponds to the economic
content of the transactions.
All trade payables and liabilities from reverse factoring programs
are due to third parties within one year. As a result, these have
short-term maturities, therefore the carrying amounts on the bal-
ance sheet date correspond to their fair values, as the effects of
discounting are not material.
Refund liabilities
Reimbursement liabilities are recognized for volume discounts
and similar bonus agreements payable to customers. These arise
from retrospective volume rebates or similar agreements that are
based on total sales or on a specific product sale of a 12-month
or shorter period. Refund liabilities are recognized for discounts
expected to be payable to the customer for sales completed by
the end of the reporting period. For further details, please refer to
NOTE 3 ‘SUMMARY OF SIGNIFICANT ACCOUNTING P RINCIPLES.’
ii. Bank borrowings
The borrowings were as follows:
Borrowings
T099
in EUR thousands
Dec 31, 2019
Dec 31, 2018
Non-current
Bank borrowings
Current
Bank borrowings
495,927
455,759
495,927
455,759
45,971
45,971
113,332
113,332
Total borrowings
541,898
569,091
Borrowings are recognized initially at fair value, net of directly
attributable transaction costs incurred. Borrowings are subse-
quently stated at amortized cost; any difference between the
proceeds (net of transaction costs) and the redemption value is
recognized in profit or loss over the period of the borrowings using
the effective interest method.
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NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Fees paid on the establishment of loan facilities are recognized
as transaction costs of the loan to the extent that it is probable
that some or all of the facility will be drawn down. In this case,
the fee is deferred until the draw-down occurs. To the extent that
there is no evidence that it is probable that some or all of the facil-
ity will be drawn down, the fee is capitalized as a pre-payment
for liquidity services and amortized over the period of the facility
to which it relates.
Borrowings are classified as current liabilities unless the Group
has an unconditional right to defer settlement of the liability for
at least 12 months after the balance sheet date.
The maturity of the syndicated bank facilities and the promissory
note on December 31, 2019, is as follows:
a) Fair value of bank borrowings
The fair value calculation of the fixed-interest promissory note,
which is recognized at amortized cost and for which the fair value
is stated in the notes, was based on the market yield curve
according to the zero coupon method considering credit spreads
(level 2). Interest accrued on the reporting date is included.
Maturity bank borrowings 2019
in EUR thousands
Syndicated bank facilities, net
Promissory note, net
Commercial paper
Total
up to 1 year
> 1 year up to
2 years
> 2 years up to
5 years
0
99,739
247,740
108,072
0
29,000
15,000
44,000
99,739
355,812
41,500
T100
> 5 years
41,500
The maturity of the syndicated bank facilities and the promissory
note on December 31, 2018, is as follows:
Maturity bank borrowings 2018
in EUR thousands
Syndicated bank facilities, net
Promissory note, net
Total
up to 1 year
> 1 year up to
2 years
> 2 years up to
5 years
4,839
106,103
110,942
4,839
29,000
33,839
174,590
161,635
336,225
T101
> 5 years
0
86,500
86,500
b) Financial covenant
The Group is subject to the financial covenant total net debt cover
(net debt in relation to adjusted Group EBITDA), which is moni-
tored on an ongoing basis. This financial covenant is based on
the Group’s Consolidated Financial Statements as well as on spe-
cial definitions of the bank facility agreements.
In the event of non-compliance with a financial ratio, the credit
agreement provides for several possibilities of cure in the form of
exemption provisions of the shareholder measures. If there is a
breach of a condition which is not remedied, the syndicated loan
may possibly be called in.
There were no covenant breaches in 2019 and 2018.
172
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING iii. Other financial liabilities
Other financial liabilities were as follows:
Future minimum lease payments
non-cancellable finance leases
Other financial liabilities
in EUR thousands
T102
T103
Dec 31, 2018
in EUR thousands
Dec 31, 2019
Dec 31, 2018
Gross finance lease liabilities – minimum lease
payments
Non-current
Lease liabilities
Other liabilities
Current
Lease liabilities
Acquisition liability
n/a
1,630
1,630
n/a
0
Liabilities from ABS and factoring
16,043
Other liabilities
Total other financial liabilities
1,453
17,496
19,126
Up to 1 year
> 1 year up to 5 years
> 5 years
Future finance charges on finance lease
Present value of finance lease liabilities
Up to 1 year
> 1 year up to 5 years
> 5 years
16
1,976
1,992
16
546
17,141
1,163
18,866
20,858
17
18
0
35
3
16
16
0
32
a) Lease liabilities as of Dec 31, 2018
To a minor extent, the Group leases property, plant and equipment
and land under finance leases with terms of between 1 and 5
years.
The future aggregate minimum lease payments under non-
cancellable finance leases and their respective present values
are as follows:
The fair values of finance lease liabilities are calculated as the
present values of the payments associated with the debts based
on the applicable yield curve and NORMA Group’s credit spread
curve (level 2).
The information on NORMA Group’s leasing liabilities for fiscal
year 2019 is presented under
NOTE 20. ‘LEASES’.
b) Liabilities from the ABS and factoring
The liabilities from the ABS and factoring include liabilities from
continuing involvement in the amount of EUR 929 thousand
(Dec 31, 2018: EUR 1,164 thousand), liabilities from fair values
of default and interest guarantees in the amount of EUR 438
thousand (Dec 31, 2018: EUR 509 thousand) recorded under the
ABS and factoring programs and liabilities from customer
payments for receivables already sold under the ABS and
factoring programs in the amount of EUR 14,676 thousand
(Dec 31, 2018: EUR 15,468 thousand) as part of the
debtor / receivables management performed by NORMA Group.
c) Other liabilities
As of December 31, 2019, other non-current liabilities include lia-
bilities of EUR 1,631 thousand (2018: EUR 1,976 thousand) for
the option to acquire the remaining minority interest in connection
with the acquisition of Fengfan Fastener (Shaoxing) Co., Ltd.
(Fengfan) in the second quarter of 2017. This option gives
NORMA Group the right to acquire the remaining 20% of the
shares in Fengfan. The risks and rewards of the remaining shares
are not transferred to NORMA Group due to the contractual
structure. Consequently, the present value of the estimated future
payment of EUR 3,946 thousand at the time of acquisition is
reported under other financial liabilities. Changes in the estimate
of the amount to be paid are recognized in the income statement
under the financial result in the Consolidated Statement of
Comprehensive Income. Current liabilities include liabilities from
bills of exchange amounting to EUR 146 thousand and other
liabilities.
173
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING iv. Maturity of financial liabilities
The financial liabilities of NORMA Group have the following
maturity:
Maturity of financial liabilities
v. Net debt
Net debt of NORMA Group is as follows:
Net debt
T104
in EUR thousands
T105
Dec 31,
2019
Dec 31, 2018
Dec 31, 2019
in EUR thousands
Borrowings
Trade and other payables
Other financial liabilities
Dec 31, 2018
in EUR thousands
Borrowings
Trade and other payables
Finance lease liabilities
Other financial liabilities
up to 1 year
> 1 year up to
2 years
> 2 years up to
5 years
> 5 years
45,971
143,119
17,496
206,586
99,208
355,247
41,472
1,630
Bank borrowings, net
541,898
569,091
Derivative financial liabilities –
hedge accounting
Lease liabilities (2018: finance
lease liabilities)
Other financial liabilities
913
38,595
19,126
758
32
20,826
99,208
356,877
41,472
Financial debt
600,532
590,707
up to 1 year
> 1 year up to
2 years
> 2 years up to
5 years
> 5 years
113,332
142,028
16
18,850
274,226
33,348
335,977
86,434
4
12
1,976
33,352
337,965
86,434
Cash and cash equivalents
179,721
190,392
Net debt
420,811
400,315
At EUR 600,532 thousand, the financial liabilities of NORMA Group
were 1.7% higher than on December 31, 2018 (EUR 590,707
thousand). The decrease in loans is attributable to the net
repayment due to the refinancing in December 2019
‘FINANCIAL RISK MANAGEMENT ’. Contrary, the effects of exchange
rate changes on the US dollar tranches of the syndicated loans
and the promissory note loan increased the loans item. In the area
of derivatives, there was an increase in the negative market values
of hedging derivatives.
NOTE 5.
The increase of lease liabilities is due to the first time recogni-
tion of liabilites for recognised right of use assets because
of the first time adoption of IFRS 16 in fiscal year 2019
(EUR 38,595 thousand).
174
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING On the other hand, other liabilities decreased due to the payment
of liabilities resulting from ABS and factoring and the adjustment
of the recognised liabilities for the option to acquire minority inter-
ests in the amount of EUR 1,631 thousand (2018: 1,976 thou-
sand) in connection with the acquisition of Fengfan.
Net debt increasd by EUR 20,496 thousand, an increase of 5.1%,
to 420,811 compared to the previous year (2018: 400,315). This
is because of the first time adoption effects of IFRS 16 as described
before. In addition, cash neutral exchange rate effects on foreign
currency loans and interest expenses increased net debt in fiscal
year 2019.
21. (f) Derivative financial instruments
Derivative financial instruments held for hedging purposes are
carried at fair value. They are fully classified in level 2 of the fair
value hierarchy.
Derivative financial instruments
T106
in EUR thousands
Assets
Liabilities
Assets
Liabilities
Dec 31, 2019
Dec 31, 2018
Interest rate swaps – cash flow hedges
Foreign exchange derivatives – cash flow hedges
Foreign exchange derivatives – fair value hedges
Total
Less non-current portion
Interest rate swaps – cash flow hedges
Non-current portion
Current portion
435
0
15
450
120
120
330
911
0
2
913
684
684
229
2,571
151
42
2,764
2,180
2,180
584
675
45
38
758
605
605
153
The derivative financial instruments are as follows:
Further details on the use of hedging instruments can be found
in
NOTE 5. ‘FI NANCIAL RISK MANAGEMENT.’
i.
Effects of accounting for cash flow hedges on the net
assets, financial position and results of operations
The effects of foreign currency and interest rate-related hedging
instruments on the net assets, financial position and results of
operations are as follows:
175
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING in EUR thousands
Hedging interest rate risk CFH
Interest rate swap USD
Interest rate swap USD
Interest rate swaps EUR
in EUR thousands
Currency risk hedging CFH
Currency forwards EUR – CZK
Currency forwards EUR – PLN
Currency forwards EUR – GBP
Currency forwards EUR – CNY
The effects of cash flow hedge accounting on financial position and performance
Net book value as of
Dec 31, 2019
(+Derivative financial
assets / - Derivative
financial liabilities)
Nominal amount Average hedging rate
Hedging ratio
Maturity
435
– 684
– 227
160,353
60,600
76,753
23,000
1.25
2.01
1.54
1:1
1:1
1:1
2020-2021
2021
2020
T107
Change in fair value
of the hedged item
used as the basis for
recognizing hedge
ineffectiveness for the
period
Change in fair value
of the hedging item
since 1 Jan
Book value of hedged
item as of Dec 31,
2019
– 1,646
1,646
160,353
Net book value as of
Dec 31, 2018
(+ Derivative financial
assets / -Derivative
financial liabilities)
105
17
30
– 33
Nominal amount
(+Buy / -Sell)
– 9,600
– 600
– 6,000
2,500
Average hedging rate
Hedging ratio 1
Maturity
Change in fair value
of the hedging item
since Jan 1
Change in fair value of the
hedged item used as the
basis for recognizing
hedge ineffectiveness for
the period
26.29
4.42
0.90
8.05
1:1
1:1
1:1
1:1
≤ 1 year
≤ 1 year
≤ 1 year
≤ 1 year
115
8
53
10
– 115
– 8
– 53
– 10
1_The forward foreign exchange contracts are denominated in the same currency as the highly probable future transactions, therefore the hedge ratio is 1: 1
in EUR thousands
Hedging interest rate risk – interest rate
swap
Interest rate swap USD
Interest rate swap USD
Interest rate swaps EUR
Net book value as of
Dec 31, 2018
(+ Derivative financial
assets / -Derivative
financial liabilities)
Nominal amount Average hedging rate
Hedging ratio
Maturity
2,571
– 70
– 605
193,042
126,403
43,639
23,000
1.57
0.00
1.54
1:1
1:1
1:1
2019–2021
2021
2020
Change in fair value
of the hedged item
used as the basis for
recognizing hedge
ineffectiveness for the
period
Change in fair value
of the hedging item
since Jan 1
Book value of hedged
item as of
Dec 31, 2018
1,300
– 1,300
193,042
176
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING The effective part, as well as the accrued and recognized costs
of hedging recognized in other comprehensive income excluding
taxes developed as follows:
Change in hedging reserve before tax
in EUR thousands
Balance as of January 1, 2018
Foreign currency translation effects
Reclassification to profit or loss
Net fair value changes
Accrued and recognized costs of hedging
Balance as of December 31, 2018
Foreign currency translation effects
Reclassification to profit or loss
Net fair value changes
Accrued and recognized costs of hedging
Balance as of December 31, 2019
Amounts due to interest rate swaps recognized in the hedging
reserve in equity will be released in profit or loss before the repay-
ment of the loans.
In fiscal year 2019 and 2018, no ineffective portion of cash flow
hedges relating to foreign exchange derivatives and interest rate
swaps was recognized in profit or loss.
Reserve for costs
of hedging
Spot component
of foreign
exchange
derivatives
Interest rate
swap
0
– 67
– 67
67
0
279
– 2
– 279
59
0
57
0
11
– 68
660
– 63
1,300
1,897
– 727
– 1,646
0
– 476
T108
Total
939
– 2
– 342
1,359
– 67
1,887
0
– 716
– 1,714
67
– 476
177
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING ii.
Effects of accounting for fair value hedges on the net
assets, financial position and results of operations
The effects of foreign currency-related hedging instruments on
the net assets, financial position and results of operations are as
follows:
The effects of fair value hedge accounting on financial position and performance
Net book value as of
Dec 31, 2019
( +Derivative financial
assets / -Derivative
financial liabilities)
Nominal amount
(+Buy / -Sell)
Average hedging rate
Hedging ratio
Maturity
T109
Change in fair value of
the hedged item used as
the basis for recognizing
hedge ineffectiveness for
the period
Change in fair value of
the hedging item since
Jan 1
in EUR thousands
Currency risk hedging FVH
Currency forwards PLN – EUR
Currency forwards JPY – SGD
15
– 2
940
574
4.36
80.28
1:11
1:11
≤ 1 year
≤ 1 year
15
– 2
– 15
2
1_ The foreign exchange forward contracts for USD-EUR hedging are denominated in the same currency and have the same volume as the hedged net foreign exchange risk from external USD loans and intragroup monetary items in USD,
therefore the hedge ratio is 1:1
in EUR thousands
Currency risk hedging FVH
Currency forwards USD – EUR
Currency forwards GBP – EUR
Currency forwards SEK – EUR
Currency forwards PLN – EUR
Currency forwards JPY – SGD
Net book value as of
Dec 31, 2018
(+Derivative financial
assets / -Derivative
financial liabilities)
– 20
– 10
23
19
– 7
Nominal amount
(+Buy / -Sell)
– 8,734
2,236
3,413
3,022
556
Average hedging rate
Hedging ratio
Maturity
Change in fair value
of the hedging item
since Jan 1
Change in fair value of the
hedged item used as the
basis for recognizing
hedge ineffectiveness for
the period
1.16
0.89
10.33
4.36
79.41
1:1 1
1:1 2
1:1 2
1:1 2
1:1 2
≤ 1 year
≤ 1 year
≤ 1 year
≤ 1 year
≤ 1 year
28
17
25
11
4
– 28
– 17
– 25
– 11
– 4
1_ The foreign exchange forward contracts for USD-EUR hedging are denominated in the same currency and have the same volume as the hedged net foreign exchange risk from external USD loans and intragroup
monetary items in USD, therefore the hedge ratio is 1:1
2_The forward exchange contracts are denominated in the same currency and volume as the hedged risk from intra-group monetary items, therefore the hedge ratio is 1:1
178
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING 21. (g) Financial instruments at fair value
The tables below provide an overview of the classification of
financial assets and liabilities measured at fair value in the fair
value hierarchy under IFRS 13 as of December 31, 2019, as well
as December 31, 2018:
An overview of the gains and losses arising from the hedging of
fair value changes that were recognized in the financial result is
shown below:
Gains and losses fair-value hedges
in EUR thousands
Losses (–) / Gains (+) on hedged
items
Losses (–) / Gains (+) on hedging
instruments
2019
– 39
– 44
– 83
T110
2018
531
– 892
– 361
Financial instruments – fair value hierarchy
in EUR thousands
Recurring fair value measurements
Assets
Interest rate swaps – cash flow hedges
Foreign exchange derivatives – fair value hedges
Trade receivable – ABS / factoring program (mandatorily measured at FVTPL)
Total
Liabilities
Interest rate swaps – cash flow hedges
Foreign exchange derivatives – fair value hedges
Total
Level 1 1
Level 2 2
Level 3 3
T111
Total as of
Dec 31, 2019
435
15
22,128
22,578
911
2
913
0
0
435
15
22,128
22,578
911
2
913
0
0
CONTINUE ON NEXT PAGE
179
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Financial instruments – fair value hierarchy
(continued)
in EUR thousands
Recurring fair value measurements
Assets
Interest rate swaps – cash flow hedges
Foreign exchange derivatives – cash flow hedges
Foreign exchange derivatives – fair value hedges
Trade receivable – ABS / Factoring program (mandatorily measured at FVTPL)
Total
Liabilities
Interest rate swaps – cash flow hedges
Foreign exchange derivatives – cash flow hedges
Foreign exchange derivatives – fair value hedges
Total
Level 1 1
Level 2 2
Level 3 3
T111
Total as of
Dec 31, 2018
2,571
151
42
14,653
17,417
675
45
38
758
0
0
0
0
1_Fair value measurement based on quoted prices (unadjusted) in active markets for these or identical assets or liabilities.
2_Fair value measurement for the asset or liability based on inputs that are observable on active markets either directly (i. e. as priced) or indirectly (i. e. derived from prices).
3_Fair value measurement for the asset or liability based on inputs that are not observable market data.
2,571
151
42
14,653
17,417
675
45
38
758
180
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING No transfers between the different levels occurred in 2019 and
2018.
The fair value of interest swaps is calculated as the present value
of estimated future cash flows. The fair value of forward foreign
exchange contracts is determined using a present value model
based on forward exchange rates.
Trade receivables held for sale as part of the factoring and ABS
transaction and measured at fair value through profit or loss have
short-term maturities. In addition, the calculated credit risk of the
counterparty is not material, therefore the carrying amounts at
the balance sheet date correspond to their fair values.
21. (h) Net gains and losses on financial instruments
The net gains or losses on financial instruments (by measurement
category) in accordance with IFRS 7.20 (a) are as follows:
Financial instruments – net gains and losses
in EUR thousands
2019
T112
2018
Net gains or net losses on
financial assets
measured at amortized costs
61
191
Net gains or net losses on
financial liabilities
measured at amortized cost
– 13,968
– 11,481
– 14,457
– 11,290
Net gains and losses on financial assets measured at amortized
cost include impairment losses on trade receivables and interest
income from short-term deposits with banks. Net gains and losses
on financial liabilities measured at cost include interest expense
and fees from loans and borrowings.
Currency effects from the translation of financial assets and
liabilities according to IAS 21 are shown within
FOREI GN EXCHANGE GAINS / LOSSES.’
NOTE 14 ‘NET
22. Inventories
Inventories were as follows:
Inventories
T114
in EUR thousands
Dec 31, 2019
Dec 31, 2018
Raw materials, consumables and
supplies
21. (i) Total interest income and expense from financial
Work in progress
instruments
Finished goods and goods for
resale
49,795
17,659
48,220
20,978
105,795
108,909
173,249
178,107
Interest expenses / income from financial
assets and liabilities (IFRS 7.20(b))
T113
in EUR thousands
2019
2018
Interest income
financial assets at cost
1,007
484
Interest expenses
financial liabilities at cost
– 14,280
– 13,578
On December 31, 2019, impairments were made on inventories
amounting to EUR 7,672 thousand (Dec 31, 2018: EUR 6,561
thousand).
On December 31, 2019, and 2018, the inventories were not
collateralized with the exception of the customary business
reservations of title.
181
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING 23. Other non-financial assets
Authorized and conditional capital
Other non-financial assets were as follows:
Other non-financial assets
T115
in EUR thousands
Dec 31, 2019
Dec 31, 2018
3,450
10,550
5,024
3,388
2,313
3,679
8,237
4,289
2,933
1,250
24,725
20,388
Deferred costs
VAT assets
Prepayments
Consideration payable to a
customer
Other assets
24. Equity
Subscribed capital
The subscribed capital of the Company on December 31, 2019,
and 2018 amounted to EUR 31,862 thousand and was fully paid
in. It is divided into 31,862,400 shares with no par value and a
notional value of EUR 1. The liability of the shareholders for the
obligations of the company to its creditors is limited to this capital.
The amount of the subscribed capital is not permitted to be
distributed by the Company to its shareholders.
The Management Board is entitled to increase the share capital
by up to EUR 12,744,960 until May 19, 2020, by issuing up to
12,744,960 new no-par value registered shares in exchange for
cash and / or contributions in kind either once or several times by
resolution of the Annual General Meeting held on May 20, 2015,
with the approval of the Supervisory Board, whereby the sub-
scription rights of shareholders may be restricted (Authorized
Capital 2015).
The share capital is being increased by up to EUR 3,186,240 by
resolution of the Annual General Meeting on May 20, 2015, by
issuing up to 3,186,240 new no-par value registered shares to
grant convertible bonds and / or bonds with warrants (Conditional
Capital 2015).
The resolutions of the Annual General Meeting of April 6, 2011,
Authorized Capital 2011 and Conditional Capital 2011, were
repealed.
Capital reserve
The capital reserve contains:
• amounts (premiums) received for the issuance of shares,
• premiums paid by shareholders in exchange for the granting
of a preference for their shares,
• amounts resulting from other capital contributions of the
owners.
182
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Retained earnings
Retained earnings consisted of the following:
Development of retained earnings
T116
in EUR thousands
Retained
earnings
Remeasurements of
post-employment
benefit obligations
IPO costs
directly netted
with equity
Reimbursement
of IPO costs by
shareholders
Acquisition of
non-controlling
interest
Effects from
the application
of IAS 19R
Effects
of IFRS 9
Effects of
IFRS 16
Total
Balance as of December 31, 2017 (as reported)
306,623
– 2,496
– 4,640
4,681
– 6,930
Balance as of Jan 1, 2018
Profit for the year
Dividends paid
306,623
91,873
– 33,456
– 2,496
– 4,640
4,681
– 6,930
Acquisition of non-controlling interests
342
Effect before taxes
Tax effect
– 265
51
Balance as of December 31, 2018 (as reported)
365,040
– 2,710
– 4,640
4,681
– 6,588
Balance as of Jan 1, 2019
Profit for the year
Dividends paid
Effect before taxes
Tax effect
365,040
58,422
– 35,049
– 2,710
– 4,640
4,681
– 6,588
– 2,066
547
839
839
0
– 600
0
298,077
0
297,477
91,873
– 33,456
342
– 265
51
839
839
– 600
0
356,022
– 600
– 2,033
353,989
58,422
– 35,049
– 2,066
547
Balance as of December 31, 2019
388,413
– 4,229
– 4,640
4,681
– 6,588
839
– 600
– 2,033
375,843
A dividend of EUR 35,049 thousand (EUR 1.10 per share) was
paid to the shareholders of NORMA Group after the Annual
General Meeting in May 2019.
183
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING
Other reserves
Other reserves consisted of the following:
Development of other reserves
in EUR thousands
Cash flow hedges
Balance as of January 1, 2018
Effect before taxes
Tax effect
Balance as of December 31, 2018
Effect before taxes
Tax effect
657
948
– 267
1,338
– 2,363
680
Foreign exchange
rate differences on
translating foreign
operations
– 9,021
10,200
1,179
9,016
Balance as of December 31, 2019
– 345
10,195
T117
Total
– 8,364
11,148
– 267
2,517
6,653
680
9,850
25. Share-based payments
Management incentive schemes
The Matching Stock Program
The Matching Stock Program (MSP) for the Management Board
provides a long-term incentive to commit to the success of the
Group. The MSP is a share-based option. To this end, the
Supervisory Board specifies a number of share options to be
granted each fiscal year with the proviso that the Management
Board member make a corresponding personal investment in
the Group. In line with the new Management Board contracts,
the MSP was closed. The last allotment of options was in fiscal
year 2017.
The shares involved in the share options are those shares
allocated or acquired and qualified as part of the MSP defined in
the Management Board contract. The number of share options is
calculated by multiplying the qualified shares held at the time of
allotment by the option factor specified by the Supervisory Board.
A new option factor is set for every tranche. The first tranche was
allocated on the day of the IPO.
The other tranches will be allocated on March 31 each following
year. The holding period is four years (on March 31, 2021, for the
2017 tranche, on March 31, 2020, for the 2016 tranche and on
March 31, 2019, for the 2015 tranche).
Non-forfeitable claims out of the options are earned pro rata over
the respective performance period. The exercise price for the
outstanding tranches will be the weighted average of the
respective closing price of the Group’s share on the 60 trading
days directly preceding the allocation of each tranche. Dividend
payments by the Group during the vesting period are deducted
from the exercise price of each tranche.
The options of a tranche can only be exercised within a period of
two years following the expiration of the holding period. In order
for an option to be exercised, the weighted average of the last
ten trading days must be at least 1.2 times that of the exercise
price. The pay-out is limited to 2% of the average (adjusted) EBITA
(tranches 2014, 2015, 2016 and 2017) or to 2% of the average
(adjusted) EBITDA (tranche 2013) during the holding period (cap).
When the option is exercised, the Group can decide whether
to settle the option in shares or cash. NORMA Group classified
the stock options as a cash settlement analogues to the
previous year.
The determination of fair value, which is the basis for determining
the pro rata provision on the balance sheet date, was carried out
using a Monte Carlo method. The expected volatilities are set to
be the historical volatility of the three-year period before the
valuation date. Due to the cash settlement, the options are valued
on each balance sheet date and the resulting changes in fair value
are recognized through profit or loss, whereby the prorated
expenses were ratably recognized over the performance period.
184
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING The option rights granted under the MSP changed as follows in
the 2019 and 2018 fiscal years:
Development of the MSP option rights
Long-term incentive plan
T118
In fiscal year 2013, NORMA Group installed a share-based,
long-term, variable compensation component for executives and
certain other groups of employees (Long-Term Incentive Plan).
Expected duration until exercise in years
1.25
2.25
1.25
Proportional fair value per outstanding “share units” in EUR as of December 31, 2019
347,045.00
306,021.00
179,494.00
Tranche MSP
2015
Tranche MSP
2016
Tranche MSP
2017
Fair value per “share unit” in EUR as of December 31, 2019
Exercise price in EUR
Balance as of December 31, 2017
Tentatively granted “share units”
Exercised
Lapsed
Balance as of December 31, 2018
Balance as of December 31, 2018
Tentatively granted “share units”
Exercised
Lapsed
3.57
4.11
40.09
42.62
4.25
38.50
97,322
74,465
51,607
97,322
74,465
51,607
97,322
74,465
51,607
9,375
Balance as of December 31, 2019
97,322
74,465
42,232
In fiscal year 2019, income in the amount of EUR 115 thousand
(2018: income of EUR 526 thousand) resulting from the MSP were
recognized in employee benefits expense against a correspond-
ing net reversal within the provisions. Furthermore, no payment
was made for the exercised option rights (2018: disbursement
from the tranche 2014 EUR 2,468 thousand).
The total provision for the MSP amounts to EUR 833 thousand
as of December 31, 2019 (Dec 31, 2018: EUR 948 thousand).
The Long-Term Incentive Plan (LTI) is a share-based payment,
cash settled plan that takes into account both the performance
of the Company and the share price development.
The participants receive a preliminary number of share units
(virtual shares) at the start of the performance period based on
a percentage of the respective base salary multiplied by a
conversion rate. The conversion rate is determined based on the
average share price of the previous 60 trading days of the
calendar year prior to the grant date. Once four years have
elapsed, the number of share units granted at the start of the
performance period is adjusted based on the performance the
Company has achieved, incorporating both the targets defined
during the performance period and the Company / regional factor.
The goal achievement factor, measured by adjusted EBITA, as
well as the Company / regional factor are applied as performance
targets. The goal achievement factor is based on the adjusted
EBITA of NORMA Group. The absolute adjusted EBITA target is
determined for every year of the performance period based on
the budgeted value. After conclusion of the four-year period, the
yearly recorded adjusted EBITA values are defined as a percent-
age in relation to the target values and averaged out over the four
years. Allocation occurs above a goal achievement ratio of 90%.
Between 90% and 100% goal achievement, every percentage
point amounts to 10 percentage points of goal achievement factor.
Between 100% and 200% goal achievement, the goal
achievement factor grows by 1.5 percentage points per percentage
point of goal achievement.
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The share units granted under the LTI changed as follows in the
2019 and 2018 fiscal years:
Development of LTI
Expected duration until exercise in years
Fair value per “share unit” in EUR as of
December 31, 2019
Share price when granted in EUR
Balance as of December 31, 2018
Tentatively granted “share units”
Exercised
Lapsed
Balance as of December 31, 2019
Expected duration until exercise in years
Fair value per “share unit” in EUR as of December 31, 2017
Share price when granted in EUR
Balance as of December 31, 2017
Tentatively granted “share units”
Exercised
Lapsed
Balance as of December 31, 2018
3rd Tranche LTI
2015
4th Tranche LTI
2016
5th Tranche LTI
2017
6th Tranche LTI
2018
T119
7th Tranche
LTI 2019
n/a
n/a
1.00
2.00
3.00
n/a
36.89
30,930
–
30,930
0
35.62
48.57
26,464
–
–
940
25,524
37.38
39.77
36.59
56.27
37,631
28,808
–
2,582
35,049
–
2,568
26,240
35.72
48.25
0
38,352
–
38,352
2rd Tranche LTI
2014
3rd Tranche LTI
2015
4th Tranche LTI
2016
5th Tranche
LTI 2017
6th Tranche
LTI 2018
n/a
n/a
36.40
18,567
–
18,567
–
0
n/a
48.25
36.89
31,029
–
–
99
30,930
1.00
42.47
48.57
27,394
–
–
930
26,464
2.00
41.47
39.77
41,184
–
3,553
37,631
3.00
40.70
56.27
0
29,259
–
451
28,808
The Company factor is determined by the Group Senior
Management based on the Company’s development, as well as
the development in relation to comparable companies. In addition
to this, the development of free cash flows is taken into account
when determining the factor. At the discretion of the Group Senior
Management, unanticipated developments can also be taken into
account and the Company factor corrected either downward or
upward accordingly. The factor can assume values between 0.5
and 1.5.
The factor takes into account the results of the region as well as
the region-specific characteristics and is used as an adjustment
factor for plan participants with regional responsibility.
The value of the share units is then determined at the end of the
fourth calendar year based on the average share price of the last
60 days of trading in this fourth year. In case the calculated
Long-term Incentive pay-out exceeds 250% of the initial grant
value, the maximum pay-out is capped at 250%. The value
determined is paid out to the participants in cash in May of the
fifth year.
The LTI is a Group-wide and global compensation instrument with
a long-term orientation. Due to the coupling to the development
not only of the stock price, but also the Company’s performance,
the LTI provides an additional incentive to create value through
value-based action, aligned with the goals of NORMA Group.
The determination of fair value, which is the basis for determining
the pro rata provision on the balance sheet date, was performed
using a Monte Carlo simulation. Due to the cash settlement of the
virtual share units, the fair value is measured on each balance
sheet date and the resulting changes in the fair value are
recognized in income or loss. The allocation of the expenses is
made on a pro rated basis over the performance period.
186
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In fiscal year 2019, expenses resulting from the LTI in the amount
of EUR 334 thousand (2018: EUR 360 thousand) were recorded
under personnel expense and within a corresponding provision.
Furthermore, a payment amounting to EUR 1,045 (2018: tranche
2014: EUR 1,045 thousand) was made for exercised options
(tranche 2014).
In total, the provision for the LTI amounts to EUR 2,271 thousand
as of December 31, 2019 (Dec 31, 2018: EUR 2,982 thousand).
26. Retirement benefit obligations
Retirement benefit obligations result mainly from two German
pension plans and a Swiss post-employment benefit plan.
The German defined benefit pension plan for NORMA Group
employees was closed for new entrants in 1990 and provides
benefits in case of retirement, disability, and death as life-long
pension payments. The benefit entitlements depend on years of
service and salary. The portion of salary that is above the income
threshold for social security contribution leads to higher benefit
entitlements compared to the portion of the salary up to that
threshold. Even if no further benefits can be earned from these
old commitments, NORMA Group is still exposed to certain
actuarial risks associated with defined benefit plans, such as
longevity and compensation increases. Due to the amount of the
obligation and the composition of the plan participants,
approximately 96% being pensioners, a significant change in the
actuarial assumptions would have no significant effects on
NORMA Group.
Employees hired after 1990 are eligible under a defined
contribution scheme. The contributions are paid into an insurance
contract providing lump sum payments in case of retirements and
deaths.
Furthermore, a plan for members of the Management Board was
established in fiscal year 2015. This second German defined
benefit plan is based on a direct commitment to an annual
retirement payment for members of the Management Board of
NORMA Group. The annual retirement payment is measured as
a percentage of the pensionable income. The pension entitlement
arises when the contract has expired, but not before reaching the
age of 65, or if that individual is unable to work. The percentage
depends on the number of years of service as a Management
Board member. The percentage amounts to 4% of the last fixed
annual salary prior to leaving for each completed year of service.
The percentage can increase to a maximum of 55%. Furthermore,
a survivor’s pension will be provided as well.
The obligations arising from the plan are subject to certain
actuarial risks associated with defined benefit plans, such as
longevity and compensation increases. Please see the
Remuneration Report for further details with regard to this plan
REMUNERATION REPORT.
Besides the German plans, there is a further benefit plan in
Switzerland resulting from the Swiss ‘Berufliches Vorsorgegesetz’
law (BVG). According to the BVG, each employer has to grant
post-employment benefits for qualifying employees. The plan is
a capital-based plan under which the Company has to make
contributions equivalent to at least the limits specified in the plan
conditions for employee contributions. These plans are
administered by foundations that are legally separated from the
entity and subject to the BVG. The Group has outsourced the
investment process to a foundation, which sets the strategic asset
allocation in its group life portfolio. All regulatory granted
obligations out of the plan are reinsured by an insurance company.
This covers risks of disability, death and longevity. Furthermore,
there is a 100% capital and interest guarantee for the retirement
assets invested. In the case of a shortfall, the employer and plan
participants’ contribution may be increased based on the decisions
of the relevant foundation board. Strategies of the foundation
boards to make up for potential shortfalls are subject to approval
by the regulator.
Besides the plans described in Germany and Switzerland,
NORMA Group also participates in a multi-employer pension plan
in the US for the benefit of employees of one of its US-based
plants. NORMA Group’s obligation to participate in the fund arises
from the agreement with the employees’ labor organization. The
multi-employer pension plan is governed by US federal law under
which the plan funds are held in trust and the plan administration
and procedures substantially governed by federal regulation. The
multi-employer pension plan is a defined benefit plan, and would
normally be treated as such based on its associated actuarial
estimates; however, the plan trustees do not provide the
participating employers with sufficient information to individually
account for the plan (or their portioned participation therein) as
a defined benefit plan. For this reason, the plan is being treated
in accordance with the rules for defined contribution pension plans
(IAS 19.34). The share of contributions that NORMA Group paid
to the pension schemes in the previous fiscal year amounts to
EUR 1.4 million (2018: EUR 1.3 million). Contributions to the plan
are recognized directly in personnel expenses for the period.
Future changes to the contributions, if any, would be determined
through negotiations with the workers’ organization, as they may
be slightly modified from time to time by regulation, and except
for which NORMA Group has no other fixed commitment to the
plan. Conditionally, in the unlikely event that NORMA Group
withdraws from the fund or a significant employer in the fund
experiences a major solvency event, additional future contribution
payment obligations could arise. The funded status of the
multi-employer plan is reported annually by the US Department
of Labor, and is influenced by various factors, including investment
performance, inflation, changes in demographics and changes in
the participants’ levels of performance. Based on the information
provided by the plan administrator, the plan is undercapitalized.
The value of the undercapitalization amounts to USD 1,195 mil-
lion for all plan participants (over 150 companies). The portion of
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NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING NORMA Group to this shortfall is 3.0% (based on information
provided for 2018). The expected employer contributions to the
pension schemes for the following year 2020 amount to EUR 1,486
thousand.
The reconciliation of the net defined benefit liability (liability in the
balance sheet) is as follows:
A detailed reconciliation of the changes in the DBO is provided in
the following table:
Reconciliation of defined benefit obligations (DBO) and
plan assets
in EUR thousands
2019
2018
Reconciliation of the net defined benefit
liability
T121
Reconciliation of the changes in the DBO
The amounts included in the Group’s Consolidated Financial
Statements arising from its post-employment defined benefit
plans are as follows:
As of January 1
Current service cost
Administration costs
Components pension liability
T120
Interest expenses
in EUR thousands
Dec 31, 2019
Dec 31, 2018
Remeasurements:
Present value of obligations
Fair value of plan assets
Liability in the balance sheet
20,495
4,605
15,890
17,786
4,982
12,804
Return on plan assets excluding
amounts included in net interest
expenses
Actuarial (gains) losses from
changes in demographic
assumptions
Actuarial (gains) losses from
changes in financial assump-
tions
Experience (gains) losses
Employer contributions
Benefits paid
Business combinations, disposals
and other
Foreign currency translation effects
As of December 31
15,890
12,804
12,804
1,630
17
162
12,127
1,189
16
124
23
– 94
in EUR thousands
As of January 1
Current service cost
Administration costs
Interest expenses
Remeasurements:
Actuarial (gains) losses from
changes in demographic
assumptions
Actuarial (gains) losses from
changes in financial assump-
tions
– 17
– 29
Experience (gains) losses
Plan participants contribution
1,592
468
– 229
– 640
6
74
120
Benefits paid
268
Transfers
Business combinations, disposals
and other
Foreign currency translation effects
– 224
– 836
98
45
2019
17,786
1,630
17
210
T122
2018
15,537
1,189
16
157
– 17
– 29
1,592
468
108
– 709
– 807
6
211
120
268
120
– 865
– 86
1,174
185
As of December 31
20,495
17,786
188
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING The total defined benefit obligation at the end of fiscal year 2019
includes EUR 11,963 thousand for active employees, EUR 243
thousand for former employees with vested benefits and
EUR 8,288 thousand for retirees and surviving dependents.
The transfer in the amount of EUR 807 thousand (2018: EUR 86
thousand) relates to the benefit plan in Switzerland and is a result
of the legally required transfer of net defined benefit obligation
to the new employer upon the departure of an employee.
Disaggregation of plan assets
The allocation of the plan assets of the benefit plans is as follows:
Disaggregation of plan assets
in EUR thousands
2019
T124
2018
Asset class
Insurance contracts
4,543
4,937
Experience gains and losses recognized in fiscal year 2019 are
also a result of the described transfers within the benefit plan in
Switzerland and a result of changes in the number of participants
of the Manangement Board within the plan in Germany.
Cash deposit
Equity securities
9
53
38
7
A detailed reconciliation of the changes in the fair value of plan
assets is provided in the following table
Reconciliation of changes in the
fair value of plan assets
in EUR thousands
As of January 1
Interest income
Remeasurements:
Return on plan assets excluding
amounts included in net interest
expenses
Employer contributions
Plan participants contributions
Benefits paid
Transfers
Business combinations, disposals and
other
Foreign currency translation effects
Fair value of plan assets at end of year
2019
4,982
48
– 23
229
108
– 69
– 807
0
137
4,605
T123
2018
3,410
33
94
224
120
– 29
– 86
1,076
140
4,982
Total
4,605
4,982
Cash deposits and equity securities have quoted prices in active
markets. The values for insurance contracts represent the
redemption value. No quoted prices in an active market are
available for these.
Actuarial assumptions
The principal actuarial assumptions are as follows:
Actuarial assumptions
in %
Discount rate
Inflation rate
Future salary increases
Future pension increases
2019
0.43
1.52
1.90
1.60
T125
2018
1.13
1.51
2.28
1.59
The biometric assumptions are based on the 2018 G Heubeck
life-expectancy tables for the German plan and on the life-
expectancy tables of the BVG 2015 G for the Swiss plan. The
tables are generation tables and hence differ according to gender,
status and year of birth.
Sensitivity analysis
If the discount rate were to differ by + 0.25% / – 0.25% from the
interest rate used on the balance sheet date, the defined benefit
obligation for pension benefits would be an estimated EUR 634
thousand lower or EUR 794 thousand higher. If the future pension
increase used were to differ by + 0.25% / − 0.25% from
Management’s estimates, the defined benefit obligation for
pension benefits would be an estimated EUR 370 thousand higher
or EUR 356 thousand lower. The reduction / increase in the
mortality rates by 10% results in an increase / deduction in life
expectancy depending on the individual age of each beneficiary.
That means, for example, that the life expectancy of a male
NORMA Group employee age 55 years as of December 31, 2019,
increases / decreases by approximately one year. In order to
determine the longevity sensitivity, the mortality rates were
reduced / increased by 10% for all beneficiaries. The effect on
DBO as of December 31, 2019, due to a 10% reduction / increase
in mortality rates would result in an increase of EUR 966 thou-
sand or a decrease of EUR 945 thousand.
When calculating the sensitivity of the defined benefit obligation
to significant actuarial assumptions, the same method (present
value of the defined benefit obligation calculated with the
projected unit credit method) has been applied as when calculating
the post-employment benefit obligation recognized in the
Consolidated Statement of Financial Position. Increases and
decreases in the discount rate or rate of pension progression
which are used in determining the DBO do not have a symmetrical
effect on the DBO due to the compound interest effect created
when determining the net present value of the future benefit.
189
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING If more than one of the assumptions are changed simultaneously,
the combined impact due to the changes would not necessarily
be the same as the sum of the individual effects due to the
changes. If the assumptions change at a different level, the effect
on the DBO is not necessarily in a linear relation.
Expected payments from post-employment
benefit plans
in EUR thousands
Expected benefit payments
Future cash flows
Employer contributions expected to be paid to the post-employ-
ment defined benefit plans in fiscal year 2020 are EUR 235 thou-
sand (2018: EUR 240 thousand).
The expected payments from the plans for post-employment
benefits are distributed as follows for the next 10 financial years,
whereby the last 5 years are shown as a total:
2020
2021
2022
2023
2024
2025 – 2029
in EUR thousands
Expected benefit payments
2019
2020
2021
2022
2023
2024 – 2028
T126
2019
850
817
826
953
867
5,208
2018
836
1,074
827
834
960
4,674
The weighted average duration of the defined benefit obligation
is 14.64 years (2018: 12.0 years).
190
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING 27. Provisions
The development of provisions is as follows:
Development of provisions
T127
in EUR thousands
Guarantees
Severance
Early retirement
Other personnel-related
obligations
Outstanding invoices
Others
Total provisions
As of
Jan 1, 2019
Additions
Amounts used
Unused amounts
reversed
Interest accrued
Changes in
consolidation
Transfers
Foreign currency
translation
As of
Dec 31, 2019
1,560
25
2,412
9,703
1,012
1,298
16,010
917
89
477
4,681
994
859
8,017
– 562
– 56
– 1,115
– 4,476
– 1,049
– 881
– 8,139
– 257
– 40
0
– 1,105
– 6
– 108
– 1,516
0
0
6
76
0
0
82
0
0
0
0
0
0
0
0
6
0
– 2
0
0
4
12
0
0
27
18
12
69
1,670
24
1,780
8,904
969
1,180
14,527
in EUR thousands
As of Jan 1, 2018
Additions
Amounts used
Unused amounts
reversed
Interest accrued
Changes in
consolidation
Transfers
Foreign currency
translation
As of
Dec 31, 2018
Guarantees
Severance
Early retirement
Other personnel-related
obligations
Outstanding invoices
Others
Total provisions
1,128
408
3,075
12,164
730
1,279
18,784
690
56
743
3,302
1,000
705
6,496
– 156
– 368
– 1,405
– 5,541
– 747
– 513
– 8,730
– 161
– 98
0
– 234
– 3
– 120
– 616
0
0
0
– 8
0
0
– 8
51
0
0
0
0
34
85
0
24
– 1
– 5
0
– 74
– 56
8
3
0
25
32
– 13
55
1,560
25
2,412
9,703
1,012
1,298
16,010
191
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Provisions – split current / non-current
T128
in EUR thousands
Guarantees
Severance
Early retirement
Other personnel-related obligations
Outstanding invoices
Others
Total provisions
Dec 31, 2019
Dec 31, 2018
Total
1,670
24
1,780
8,904
969
1,180
thereof
current
thereof
non-current
1,464
24
671
4,709
969
706
206
0
1,109
4,195
0
474
Total
1,560
25
2,412
9,703
1,012
1,298
14,527
8,543
5,984
16,010
thereof
current
thereof
non-current
1,363
25
0
5,500
1,012
850
8,750
197
0
2,412
4,203
0
448
7,260
Early retirement contracts
Employees at NORMA Group in Germany can in general engage
in an early retirement contract (‘Altersteilzeit’). In the first phase,
the employee works 100% (‘Arbeitsphase’). In the second phase,
he / she is exempt from work (‘Freistellungsphase’). The employees
receive half of their pay for the total early retirement-phase as
well as top-up payments (including social security costs paid by
the employer). The duration of the early retirement is a maximum
of six years.
Accounting for early retirement (‘Altersteilzeit’) is based on actu-
arial valuations taking into consideration assumptions such as a
discount rate of – 0.24 % p.a. (2018: 0.02% p.a.) as well as the
2018 G life-expectancy tables by Dr. Klaus Heubeck. For signed
early retirement contracts, a liability has been recognized. The
liability includes top-up payments (‘Aufstockungsbeträge’) as well
as deferred salary payments (‘Erfüllungsrückstände’). The
expected payments out of the early retirement provisions amount
to EUR 671 thousand for fiscal year 2020.
Severance payments
Provisions for severance payments include expected severance
payments for NORMA Group employees due to circumstances
where a final agreement has not yet been reached. The provi-
sions will be paid out in the following fiscal year and are therefore
reported under current provisions.
Guarantees
Provisions for guarantees include provisions due to circumstances
where a final agreement has not yet been reached and provisions
based on experience (customer claim quota, amount of damage,
etc.). Future price increases are considered if material.
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NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Other personnel-related provisions
Other personnel-related provisions are as follows:
Provisions – other personnel-related
T129
Dec 31, 2019
Dec 31, 2018
in EUR thousands
Notes
Total
thereof
current
thereof
non-current
LTI – Board Members
LTI – Management
STI – Board Members
Matching Stock Program (MSP)
NORMA-VA-Bonus
Anniversary provisions
Other personnel-related
(25)
(25)
59
2,271
2,198
833
913
1,203
1,427
8,904
59
348
2,198
347
913
0
844
0
1,923
0
486
0
1,203
583
4,709
4,195
Total
706
2,982
1,706
948
1,256
1,098
1,007
9,703
thereof
current
thereof
non-current
617
852
1,706
268
1,256
0
801
5,500
89
2,130
0
680
0
1,098
206
4,203
The Company’s Long-Term Incentive Plan (LTI) for the Management
Board consists of two different long-term compensation elements.
The variable compensation is designed differently depending on
the time when a Board member took office. For the Board
members in office before 2015, it consists of an EBITA component
and an operating free cash flow before external use (FCF)
component, each of which is observed over a period of three years
(performance period). A new three-year performance period
begins every year. Both components are calculated by multiplying
the average annual adjusted EBITA and FCF values actually
achieved in the performance period by the adjusted EBITA and
FCF bonus percentages specified in the employment contract. In
the second step, the actual value of a component is compared to
the medium-term plan approved by the Supervisory Board to
evaluate the Company’s performance and adjustments are made
to the LTI plan. The LTI plan is limited to two and a half times the
amount that would be arrived at on the basis of the figures in the
Company’s medium-term plan. If the actual value is lower than
the planned value, the LTI plan is reduced on a straight-line basis
down to a minimum of EUR 0 if the three-year targets are missed
by a significant amount. Due to the calculation of the variable
remuneration based on future results of the Group, uncertainties
exist regarding the amount of the future outflows. Parts of the
long-term compensation component will be paid out in the first
half of the following fiscal year and are therefore reported under
the current provisions.
When entering service as of reporting year 2015, the variable
compensation of the Management Board consists of the
NORMA VA Bonus. This variable remuneration for the members
of the Management Board who are not part of the MSP provides
a long-term incentive for the Management Board to work hard to
make the Company successful. The LTI is an appreciation bonus
that is based on the Group’s performance. The Board member
receives a percentage of the calculated increase in value. The
NORMA Value Added Bonus corresponds to the percentage of
the average increase in value from the current and the three
previous fiscal years. The annual increase in value is calculated
using the following formula:
NORMA Value Added = (adjusted EBIT × (1 – t))
– (WACC × invested capital)
The calculation of the first component is based on the consolidated
earnings before interest and taxes (Group EBIT) for the fiscal year
and the average corporate tax rate (t). The second component is
calculated from the Group cost of capital (WACC) multiplied by
the capital invested. The Group’s weighted average cost of capital
(WACC) is derived from the base interest rate, the market risk
premium and the beta factor. The base interest rate is derived
from the interest rate structure data of Deutsche Bundesbank
(three-month average - October 1 to December 31). The market
risk premium represents the difference between the expected
return of a risky market portfolio and the risk-free interest rate.
NORMA uses the recommendation of the Institut der
Wirtschaftsprüfer (IDW) to determine this risk premium. The beta
factor represents the individual risk of a share compared to a
market index. It is first determined as the average value of the
unindebted beta factors of the peer group and then adjusted to
NORMA’s individual capital structure. The cost of equity is
calculated by adding the risk-free interest rate and the weighted
country risk of NORMA Group with the product of the market risk
premium and the indebted beta factor of the peer group. The
credit spread used to calculate the cost of debt was determined
193
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING on the basis of the terms of the current external financing of
NORMA Group. Invested capital is calculated from consolidated
equity plus net financial liabilities as of January 1 of the fiscal year.
The NORMA Value Added Bonus is limited to a fixed annual
salary. 75% or 90% of the amount attributable to the LTI is paid
to each Management Board member the following year. The
Company then uses the remaining 25% or 10% attributable to
the LTI to purchase shares of NORMA Group SE in the name and
on behalf of the individual Board members. Alternatively, the
Company may pay out this balance to the Board member. In this
case, the Management Board obligates itself to purchase shares
of NORMA Group SE with the balance of this amount within
120 days after the annual financial statements are approved at
the Supervisory Board meeting. The Management Board member
may not dispose of the shares for four years. Dividends and
subscription rights will be made freely available to the
Management Board member. If a Board member takes office in
the current fiscal year or does not work for the Company for a full
twelve months in a fiscal year, the LTI will be reduced proportionally
(pro rata). Upon termination of the employment contract, a
Management Board member may dispose of his shares only after
12 months of leaving the Company. With the termination of the
executive position upon request of the Management Board or on
the basis of an important reason, future claims for the variable
part of the LTI lapse.
The LTI for Management (Long-Term Incentive Plan) is a variable
compensation component based on the share price of
NORMA Group. A detailed description can be found in
NOTE
25 ‘SHA RE-BASED PAYMEN TS.’
The STI of the Management Board (Short-Term Incentive Plan)
results from short term variable cash payment. A description can
be found in the
REMUNERATION REPORT.
28. Other non-financial liabilities
Other non-financial liabilities are as follows:
As of December 31, 2019, provisions for the Matching Stock
Program (MSP) for NORMA Group’s Management Board amount
to EUR 833 thousand (2018: EUR 948 thousand). There was no
payment for exercised options in fiscal year 2019. In fiscal year
2018, EUR 2,468 thousand were paid for exercised options from
the 2014 tranche
NOTE 25 ‘SHARE-BASED PAYMENTS’.
Anniversary provisions are based on actuarial valuations taking
into account assumptions such as a discount rate of 0.57 % p. a.
as well as the 2018 G Heubeck life-expectancy tables.
Other personnel-related provisions mainly include payable income
tax and social security contributions in foreign countries.
Other non-personnel-related provisions
Provisions for outstanding invoices in the amount of EUR 969
thousand (2018: EUR 1,012 thousand) include expected
obligations for the audit and advisory services. There are
uncertainties regarding the amount and timing of the outflows.
However, it is expected that this results in payments within a year.
Other provisions mainly include obligations for other taxes.
Other non-financial liabilities
T130
in EUR thousands
Non-current
Government grants
Other liabilities
Current
Government grants
Non-income tax liabilities
Social liabilities
Personnel-related liabilities
(e.g. vacation, bonuses, premiums)
Other liabilities
Total other non-financial liabilities
Dec 31, 2019
Dec 31, 2018
266
90
356
1.230
2.119
4.484
28.118
714
36.665
37.021
391
40
431
1.068
2.398
4.521
18.671
326
26.984
27.415
The increase in personnel-related liabilities is mainly due to the
increase in liabilities from employee bonuses and outstanding
severance payments in connection with the rightsizing program.
NORMA Group received government grants of which EUR 1,496
thousand were not recognized in profit or loss. They consist of
grants in cash as well as land. The grants are bound to capital
expenditures, employees and the supply of equity of the respec-
tive local entities. NORMA Group recognizes the government
grants as income over the period in which related expenses occur.
In 2019, EUR 606 thousand were recognized as income (2018:
EUR 603 thousand).
194
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Other Notes
29. Information on the Consolidated Statement of
Cash Flows
In the statement of cash flows, a distinction is made between
cash flows from operating activities, investing activities and
financing activities.
Net cash provided by operating activities is derived indirectly from
profit for the period. The profit for the period is adjusted to
eliminate non-cash expenses such as depreciation and amorti-
zation as well as expenses and payments for which the cash
effects are investing or financing cash flows and to eliminate other
non-cash expenses and income. Net cash provided by operating
activities of EUR 137,083 thousand (2018: EUR 130,843 thou-
sand) represents changes in current assets, provisions and lia-
bilities (excluding liabilities in connection with financing activities).
As in the prior year, the Group participates in a reverse factoring
program, a factoring program and an ABS program. Liabilities in
the reverse factoring program are reported under trade and other
payables. As of December 31, 2019, reverse factoring liabilities
in the amount of EUR 21,335 thousand are recognized (Dec 31,
2018: EUR 19,200 thousand).
PAYABLES’ The cash flows from the reverse factoring, the factoring
and the ABS program are shown under the cash flow from
operating activities as this corresponds to the economic substance
of the transactions.
NOTE 2 1. ( E ) ‘ TRA DE AND OTHE R
The total amount of trade receivables sold within the factoring
and ABS program can be found in
N OT E 2 1 . ( B ) ‘ T R A D E
REC EIVA BLES AVAILAB LE FOR TRAN SF E R ’.
Net cash provided by operating activities includes in 2018 cash
outflows from the payments of the cash-settled share-based
payments in the amount of EUR 1,045 thousand (2018: EUR 3,513
thousand), which result from the MSP tranche (2018: tranche
2014) for the Management Board of NORMA Group and from the
Long-Term Incentive Plan (LTI) for NORMA Group employees.
EUR 54,843 thousand (2018: EUR 63,255 thousand), expendi-
tures in the amount of EUR 33,009 thousand (2018: EUR 42,793
thousand) relate to growth and expenditures amounting to
EUR 21,834 thousand (2018: EUR 20,462 thousand) to mainte-
nance and continuous improvements.
The correction of expenses due to measurement of derivatives in
the amount of EUR 73 thousand (2018: expense in the amount
of EUR 436 thousand) relates to fair value gains and losses
recognized within the income statement assigned to the cash
flows from financing activities.
In fiscal year 2018, net payments for acquisitions of subsidiaries
in the amount of EUR – 69,797 thousand which result from the
payments due to the acquisition of Kimplas and Statek as well
as from payments in connection with the acquisition of Fengfan
acquired in the second quarter of 2017 are also included in the
cash flows from investing activities.
Other noncash income (–) / expenses (+) in net cash provided by
operating activities mainly include foreign exchange rate gains
and losses on external debt and intragroup monetary items in the
amount of EUR – 341 thousand (2018: EUR – 716 thousand).
Furthermore, other noncash income (–) / expenses (+) include non
cash interest expenses from the amortization of accrued costs,
amounting to EUR 356 thousand (2018: EUR 303 thousand).
Cash flows from financing activities mainly comprise outflows
resulting from the payment of the dividend to shareholders of
NORMA Group, amounting to EUR 35,049 thousand (2018:
EUR 33,456 thousand), cash outflows resulting from interest paid
(2019 EUR 15,070 thousand; inclusively interest paid for lease
liabilities of EUR 1,260 thousand; 2018: 13,676) as well as repay-
ments of derivatives in the amount of EUR 83 thousand (2018:
proceeds of EUR 409 thousand).
Cash flows resulting from interest paid are disclosed as cash flows
from financing activities.
Cash flows from investing activities include net cash outflows
from the acquisition and disposal of property, plant and equip-
ment and intangible assets amounting to EUR 57,033 thousand
(2018: EUR 59,711 thousand) including the change of liabilities
from investments in property, plant and equipment and intangi-
ble assets amounting to EUR 2,941 thousand (2018: EUR – 2,412
thousand). From the investments in non-current assets of
Furthermore, net repayments for loans amounting to EUR 32,936
thousand (2018: net proceeds of EUR 64,734 thousand)
N OT E 5 . ( C ) ‘ L I Q U I D I T Y R I S KS ’ dividend payments to non-
controlling interests in the amount of EUR 43 thousand (2018:
EUR 134 thousand), repayments for liabilities of ABS and
factoring in the amount of EUR 791 thousand (2018: proceeds of
EUR 15,467 thousand) and repayments for lease liabilities in the
amount of EUR 10,058 thousand (2018: EUR 123 thousand),
disclosed as cash flows from financing activities.
N OT E 2 0 .
‘LEASES’ AND 21. (E ) ‘FINANCIAL LIABILITIES AND NET DEBT ’
195
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING In addition, payments for the acquisition of shares in a subsidiary
from the acquisition of non-controlling interests in the amount of
EUR 1,121 thousand are included in the cash flow from financing
activities in fiscal year 2018.
The changes in balance sheet items that are presented in the
Consolidated Statement of Cash Flows cannot be derived directly
from the balance sheet, as the effects of currency translation are
non-cash transactions and changes in the consolidated Group
are shown directly in the net cash used in investing activities.
Cash is comprised of cash on hand and demand deposits of
EUR 174,918 thousand on December 31, 2019 (Dec 31, 2018:
EUR 185,870 thousand), as well as cash equivalents with a value
of EUR 4,803 thousand (Dec 31, 2018: EUR 4,522 thousand).
Cash from China, India, Russia, Brazil and Malaysia (Dec 31, 2019:
EUR 43,364 thousand, Dec 31, 2018: EUR 29,999 thousand)
cannot currently be distributed due to restrictions on capital
movements.
Reconciliation of debt movements to cash flows from
financing activities
The following table represents the reconciliation from the opening
balance sheet values of the financial statements of debt arising
from financing activities for the relevant closing balance sheet
items and which led to changes in equity.
196
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Reconciliation of changes in assets and liabilities to cash flows from financing activities
T131
Financial liabilites
Borrowings
from the ABS /
factoring
programs
Long-term
loans payable
Short-term
loans payable
Note
Derivatives held to hedge
financial liabilities
(assets (-) / liabilites(+))
Equity
Lease
liabilities
Liabilities
from put / call
option for NCI
Interest rate
swaps – cash
flow hedge
Foreign currency
derivatives –
fair value hedge
Retained
earnings
Other
Reserves
Non-
controlling
interests
Total
113,332
455,759
15,467
32
1,976
– 1,897
– 4
356,022
2,517
1,717
944,921
(21. (e))
(21. (e))
(21. (f))
(21. (e))
(24)
15,000
– 114,830
248,664
– 180,979
– 791
– 13,774
– 1,260
– 10,058
– 83
727
263,664
– 296,600
– 83
– 14,307
– 10,058
– 35,049
– 43
– 35,092
(29)
– 113,604
3,031
67,685
1,627
13,712
356
29,500
– 29,500
43,212
– 29,144
– 791
– 11,318
0
727
– 83
– 35,049
0
– 10
1,260
34,661
13,970
49,891
n/a
38,595
– 378
33
33
1,631
1,646
74
– 1,645
n/a
n/a
n/a
n/a
54,870
375,843
– 727
n/a
n/a
– 727
9,705
9,850
0
n/a
476
0
n/a
– 13
Other changes related to equity
(24)
n/a
n/a
Balance as of December 31, 2019
45,971
495,927
14,676
0
n/a
in EUR thousands
Balance as of December 31, 2018
Changes in cash flow from
financing activities
Loan proceeds
Loan repayments
Inflow (+ )/ outflow (–) from
hedging derivatives
Interest paid
Repayment of debts from leases
Dividends paid
Total change in cash flow
from the financing activities
Effects of changes in exchange rates
Changes in the fair value
Other changes
Based on debt
Interest expense
First time adoption of IFRS 16
New leases
Transfer
Other changes related to debt
– 43
– 123
– 92,476
4,525
75
n/a
n/a
n/a
n/a
25
14,634
34,661
13,970
0
63,265
54,870
1,576
975,180
197
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING
30. Segment reporting
Segment reporting
T132
in EUR thousands
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
EMEA
Americas
Asia-Pacific
Total segments
Central functions
Consolidation
Consolidated Group
Total revenue
523,199
543,126
460,320
451,171
166,639
151,293 1,150,158
1,145,590
26,545
26,554 – 76,607
– 88,004 1,100,096
1,084,140
thereof inter- segment revenue
37,229
48,322
9,552
9,657
3,281
3,471
50,062
61,450
26,545
26,554 – 76,607
– 88,004
Revenue from external customers
485,970
494,804 450,768
441,514 163,358
147,822 1,100,096
1,084,140
0
0
0
0 1,100,096
1,084,140
Contribution to consolidated Group
sales
44%
46%
41%
41%
15%
13%
100%
100%
Adjusted gross profit 1
296,828
306,174
257,378
254,089
76,007
67,234
630,213
627,497
n/a
n/a
Adjusted EBITDA 1
90,815
95,534
79,606
87,175
28,012
22,977 198,433
205,686 – 11,116
– 4,025
Adjusted EBITDA margin 1, 2
17.4%
17.6%
17.3%
19.3%
16.8%
15.2%
422
– 89
– 920
630,635
626,577
– 297 187,228
201,364
17.0%
18.6%
Depreciation without PPA
depreciation 3
– 17,201
– 13,162 – 15,585
– 8,886
– 7,909
– 4,712 – 40,695
– 26,760
– 1,734
– 1,422
– 42,429
– 28,182
Adjusted EBITA 1
73,614
82,372
64,021
78,289
20,103
18,265 157,738
178,926 – 12,850
– 5,447
– 89
– 297 144,799
173,182
Adjusted EBITA margin 1, 2
14.1%
15.2%
13.9%
17.4%
12.1%
12.1%
13.2%
16.0%
632,012
624,446
655,301
649,757
258,943
250,416 1,546,256
1,524,619
301,560
361,153 – 333,476
– 414,086 1,514,340
1,471,686
204,606
198,342
271,858
291,204
53,732
54,814
530,196
544,360
631,795
671,394 – 277,105
– 346,509
884,886
869,245
Assets 4
Liabilities 5
CAPEX
25,003
28,275
18,041
21,103
12,352
11,707
55,396
61,085
1,510
2,170
Number of employees 6
3,612
3,613
1,735
1,727
1,340
1,160
6,687
6,500
111
114
1_For details regarding the adjustments, refer to
2_Based on segment sales.
3_Depreciation from purchase price allocations.
4_Including allocated goodwill, taxes are shown in the column ‘consolidation’.
5_Taxes are shown in the column ‘consolidation’.
6_Number of employees (average headcount).
NOTE 7 .
n/a
n/a
n/a
n/a
56,906
63,255
6,798
6,614
198
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING NORMA Group segments the Group at a regional level. The
reportable segments of NORMA Group are EMEA, the Americas
and Asia-Pacific. NORMA Group’s vision includes regional growth
targets. Distribution Services are focused regionally and locally.
EMEA, the Americas and Asia-Pacific have linked regional
intercompany organizations with different functions. As a result,
the Group’s management reporting and controlling system has a
regional focus. The product portfolio does not vary significantly
between these segments.
Revenues of each segment are generated from the three product
categories clamps (CLAMP), joining elements (CONNECT) and
fluid systems / connectors (FLUID).
NORMA Group measures the performance of its segments
through profit or loss indicators which are referred to as ‘adjusted
EBITDA’ and ‘adjusted EBITA’.
’Adjusted EBITDA’ comprises revenue, changes in inventories of
finished goods and work in progress, other own work capitalized,
raw materials and consumables used, other operating income
and expenses, and employee benefits expense, adjusted for
material one-time effects. EBITDA is measured in a manner
consistent with that used in the Consolidated Statement of
Comprehensive Income.
Inter-segment revenue is recorded at values that approximate
third-party selling prices.
External sales per country
in EUR thousands
2019
T133
2018
Segment assets comprise all assets less (current and deferred)
income tax assets. Taxes are shown in the reconciliation. Segment
assets and liabilities are measured in a manner consistent with
that used in the Consolidated Statement of Financial Position.
Assets of the ‘Central Functions’ include mainly cash and
intercompany receivables.
Segment liabilities comprise all liabilities less (current and deferred)
income tax liabilities. Taxes are shown in the consolidation.
Segment assets and liabilities are measured in a manner
consistent with that used in the Consolidated Statement of
Financial Position. Liabilities of the ‘Central Functions’ include
mainly borrowings.
Germany
186,834
203,820
USA, Mexico, Brazil
450,768
441,514
Other countries
462,494
438,806
1,100,096
1,084,140
Non-current assets per country include non-current assets less
deferred tax assets, derivative financial instruments, and shares
in consolidated related parties and are as follows:
Capex equals additions to non-current assets (property, plant
and equipment and other intangible assets).
Non-current assets per country
T134
in EUR thousands
Dec 31, 2019
Dec 31, 2018
Current and deferred tax assets and liabilities are shown in the
consolidation. On December 31, 2019, EUR 19,155 thousand
(Dec 31, 2018: EUR 14,256 thousand) in tax assets and
EUR 73,274 thousand (Dec 31, 2018: EUR 79,679 thousand) in
tax liabilities were shown in the consolidation.
‘Adjusted EBITA’ includes, in addition to EBITDA, the depreciation
adjusted for depreciation from purchase price allocations.
External sales per country, measured according to the place of
domicile of the company which manufactures the products, are
as follows:
In 2019 and 2018, expenses for special impacts were adjusted.
An overwiew of those adjustments and a reconciliation from
unadjusted to adjusted income statement is explained under
NOT E 7. ‘A DJU STM ENTS’
Germany
134,946
132,109
USA, Mexico, Brazil
470,872
449,366
Sweden
Other countries
Consolidation
31. Contingencies
48,303
48,501
313,776
299,932
– 14,595
– 10,401
953,302
919,507
The Group has contingent liabilities in respect of legal claims aris-
ing in the ordinary course of business (e.g. warranty obligations).
NORMA Group does not believe that any of these contingent lia-
bilities will have a material adverse effect on its business or any
material liabilities will arise from contingent liabilities.
199
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING 32. Commitments
Capital commitments
Capital expenditure (nominal value) contracted for on the balance
sheet date but not yet incurred is as follows:
Compensation of members of the
Management Board (IFRS)
in EUR thousands
Short-term benefits
Other long-term benefits
Commitments
in EUR thousands
T135
Termination benefits
Dec 31, 2019
Dec 31, 2018
Share-based payment
T136
2018
3,989
10
763
– 526
2019
3,458
0
902
– 31
Property, plant and equipment
5,386
8,774
Total compensation according to
IFRS
4,329
4,164
There are no material commitments concerning intangible assets.
33. Related party transactions
Sales and purchases of goods and services
In 2019 and 2018, no management services were bought from
related parties.
There were no material sales or purchases of goods and services
from non-consolidated companies, from the shareholders of
NORMA Group, from key management or from other related
parties in 2019 and 2018.
Compensation of members of the Management Board
Compensation of the members of the Management Board
according to IFRS is as follows:
In the 2019 financial year, additional termination benefits
amounting to EUR 1,480 thousand (2018: EUR 298 thousand)
were recognised.
Provisions for the compensation of the members of the
Management Board are as follows:
Provisions for compensation of the
Management Board members
in EUR thousands
Note Dec 31, 2019
Dec 31, 2018
LTI – Management
Board
STI – Management
Board
Matching Stock
Program (MSP)
NORMA VA Bonus
Total
(27)
(27)
(25)
(27)
59
706
2,198
1,706
833
913
4,003
948
1,256
4,616
Details regarding the individual provisions can be found in the
respective notes.
Besides the provisions shown above, a defined benefit obligation
exists for the Management Board. The present value of the obli-
gation amounts to EUR 4,114 thousand as of December 31, 2019
(Dec 31, 2018: EUR 1,776 thousand).
N OT E 2 6 . ‘ R E T I R E M E N T
BENEFIT OBLIGATIONS’.
Details regarding the compensation of the Management Board
can be found un the
REMUNERATION REPORT P. 103
34. Additional disclosures pursuant to section
315e (1) of the German Commercial Code (HGB)
Compensation of Board members
The remuneration of the Management Board and Supervisory
Board was as follows:
Compensation of Board members
in EUR thousands
T137
Total Management Board
Total Supervisory Board
2019
3,458
488
3,946
T138
2018
3,989
446
4,435
In the 2019 financial year, additional termination benefits amount-
ing to EUR 1,480 thousand were recognised.
200
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING The remuneration of the members of the Management Board was
as follows:
Compensation of members of the Management Board
T139
The defined benefit obligation of pension commitments to prior
members of the Management Board and their dependants
was EUR 847 thousand as of December 31, 2019 (2018:
EUR 0 thousand)
Dr. Michael
Schneider
Dr. Friedrich Klein
(since Oct 1, 2018)
Bernd Kleinhens
(until July 31, 2019)
John Stephenson
(until Jan 31, 2018)
Total
Fees for the auditor
in EUR thousands
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
Fees for the auditor, PricewaterhouseCoopers GmbH Wirtschafts-
prüfungsgesellschaft, Frankfurt / Main were expensed as follows:
Fixed compensation
Variable compensation
Long-term incentives
423
572
438
387
590
591
334
409
219
83
106
74
310
572
181
524
1,011
591
Total compensation
1,433
1,568
962
263
1,063
2,126
0
0
0
0
24
1,067
1,018
0
8
1,553
1,707
Fees for the auditor
838
1,264
in EUR thousands
32
3,458
3,989
Auditing services
Other confirmation services
Other services
2019
603
35
37
675
T141
2018
662
38
116
816
In the fiscal year 2019, expenses for the termination of
Mr. Kleinhen’s activities, in total EUR 1,480 thousand, are
recognised (2018: EUR 298 thousand expenses for Mr. Deggim
for termination of his activities).
Besides these expenses, expenses for a defined benefit obliga-
tion were recognized in 2019 as follows
NOTES 26. ‘RETIREMENT
BENEFIT OBLIGATIONS’:
Section 314 para 1 No 6a HGB: retirement benefit obligations
In addition to auditing services, the auditor provided confirmation
services for financial covenants audit. Other services include audit
of the Nonfinancial Statement.
Headcount
T140
The average headcount breaks down as follows:
Dr. Michael Schneider
Dr. Friedrich Klein
(since Oct 1, 2018)
Bernd Kleinhens
(until July 31, 2019)
Total
in EUR thousands
2019
2018
2019
2018
2019
2018
2019
2018
Present value of the obligation
1,843
1,005
Amount spent / deferred
838
526
367
314
53
53
n/a
277
371
371
2,210
1,429
1,429
950
201
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Average headcount
Number
Direct labor
Indirect labor
Salaried
2019
3,291
1,294
2,213
6,798
T142
2018
3,226
1,239
2,149
6,614
The category ‘direct labor’ consists of employees who are directly
engaged in the production process. The numbers fluctuate
according to the level of output. The category ‘indirect labor’
consists of personnel that does not directly produce products, but
rather supports production. Salaried employees are employees
in administrative / sales / central functions.
Consolidation
Name, place of domicile and share in capital pursuant to section
313 (2) No. 1 HGB of the consolidated group of companies is
presented in
NOT E 4 . ‘S COPE OF CONS OLIDAT ION ’.
Proposal for the distribution of earnings
The Management Board and Supervisory Board of NORMA Group
SE propose to the Annual General Meeting, which has been post-
poned from May 14, 2020, to June 30, 2020, to suspend the div-
idend for fiscal year 2019. This proposal takes into account the
forecast for fiscal year 2020 that has been adjusted in connection
with COVID-19.
Corporate Governance (section 161 AktG)
The Management Board and Supervisory Board have issued a
Corporate Governance Declaration pursuant to section 161 of the
German Stock Corporation Act (Aktiengesetz) and made it
available to shareholders on the website of NORMA Group.
WWW.NORMAGROUP.COM/CORP/EN/I NVESTORS /
35. Exemptions under section 264, paragraph 3 of
the German Commercial Code (HGB)
In 2019, the following German subsidiaries made use of disclosure
exemptions pursuant to section 264, paragraph 3 of the German
Commercial Code (HGB):
• NORMA Group Holding GmbH, Maintal
• NORMA Distribution Center GmbH, Marsberg
• NORMA Germany GmbH, Maintal
• NORMA Verwaltungs GmbH, Maintal
• STATEK Stanzereitechnik GmbH, Maintal
36. Events after the balance sheet date
The global spread of the novel COVID-19 has increased contin-
uously in the first weeks and months of fiscal year 2020. The
forecast prepared in this Consolidated Management Report was
made before the drastic spread of COVID-19 and thus at a time
when the economic effects of the virus could not yet be reflected.
In light of this situation, there are noticeable uncertainties with
regard to the negative effects on future macroeconomic devel-
opment in the further course of the current financial year. How-
ever, the Management Board of NORMA Group assumes that,
should it be impossible to contain this pandemic in a timely man-
ner, its further spread will lead to significant losses and negative
effects on the markets relevant to NORMA Group and thus also
on the business development of NORMA Group.
202
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Appendix to the Notes to the Consolidated Financial Statements
Voting rights notifications
Voting rights notifications
According to section 160 (1) No. 8 AktG, information regarding
voting rights that have been notified to the Company pursuant
to section 33 (1) or (2) of the German Securities Trading Act
(Wertpapierhandelsgesetz – WpHG) must be disclosed.
The following table gives an overview of all voting rights
notifications that have been sent to the Company as of
March 9, 2020. It contains the information of the last notification
of each shareholder. The percentage and shares may have
changed in the meantime.
All notifications of shareholder voting rights in the year under
review and beyond are available on the website of NORMA Group.
WWW. N ORM AG ROUP.COM/COR P/E N/IN VESTORS /
Notifying party
Allianz Global Investors GmbH, Frankfurt / Main,
Germany 1
T. Rowe Price International Ltd, London, United
Kingdom 2
T. Rowe Price International
Discovery Fund, Baltimore, Maryland, USA 2
BNP Paribas Asset Management Holding S.A.,
Paris, France
BNP Paribas Asset Management France S.A.S.,
Paris, France
Allianz Global Investors Fund SICAV,
Senningerberg, Luxembourg 1
AXA S.A., Paris, France
Ministry of Finance on behalf of the State of
Norway, Oslo, Norway 3
Atlantic Value General Partner Limited, London,
United Kingdom
The Capital Group Companies, Inc., Los Angeles,
California, USA
Threadneedle Management Luxembourg SA,
Bertrange, Luxembourg 4
Impax Asset Management Group plc, London,
United Kingdom
Allianz SE, Munich, Germany
Achievement of
voting rights
Touched or exceeded
reporting threshold
Share in %
Shares
Pursuant to WpHG
T143
Feb 18, 2020
more than 15%
15.20%
4,843,141
section 33, 34 WpHG
Feb 11, 2020
more than 5%
5.01%
1,596,572
section 33, 34 WpHG
Feb 05, 2020
more than 3%
3.08%
982,752
section 33, 34 WpHG
Feb 04, 2020
less than 3%
0.00%
0
section 33, 34 WpHG
Feb 04, 2020
more than 3%
3.90%
1,242,634
section 33, 34 WpHG
July 19, 2019
June 25, 2019
more than 3%
less than 3%
3.30%
2.99%
1,050,330
953,618
section 33, 34 WpHG
section 33, 34 WpHG
May 13, 2019
less than 3%
2.68%
852,437
section 33, 34 WpHG
May 05, 2019
more than 3%
3.10%
986,195
section 33, 34 WpHG
Apr 03, 2019
less than 3%
2.85%
907,240
section 33, 34 WpHG
Feb 28, 2019
more than 5%
5.004%
1,594,389
section 33, 34 WpHG
Feb 12, 2019
Oct 25, 2018
more than 5%
more than 3%
5.08%
3.04%
1,617,656
968,681
section 33, 34 WpHG
section 33, 34 WpHG
1_ The 15.20% of Allianz Global Investors GmbH (Frankfurt / Main, Germany) contain the 3.30% of the selfreportable Allianz Global Investors Fund SICAV
(Sennigerberg, Luxembourg).
2_ Looking at the entire corporate chain, T. Rowe Price Group Inc. (Baltimore, USA) through its subsidiaries T. Rowe Price International Ltd (London, United
Kingdom) and T. Rowe Price International Funds and T. Rowe Price International Discovery Funds (both Baltimore, USA) holds 5.01%.
3_ The Ministry of Finance on behalf of the State of Norway holds 2.68% direct voting rights and 0.51% indirect voting rights through instruments, for a
total of 3.18%.
4_ Looking at the entire corporate chain, Ameriprise Financial Inc. (Wilmington, USA) holds a total of 8.35%. The two subsidiaries Threadneedle Asset
Management Limited (London, Great Britain) and Threadneedle Management Luxembourg SA (Bertrange, Luxembourg) hold 6.79% and 5.004%,
respectively.
203
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Corporate bodies of NORMA Group SE
Members of the Management Board
Members of the Supervisory Board
Dr. Michael Schneider
PhD in Economics
Chief Executive Officer (CEO) since November 14, 2019 and
Chief Financial Officer (CFO) since November 14, 2019 ad interim
Lars M. Berg (Chairman)
• Consultant
• Chairman of the Supervisory Board of Greater Than AB,
Stockholm, Sweden (listed on the stock exchange)
• Member of the Supervisory Board of Leitwerk AG,
Appenweier, Germany
Erika Schulte (Vice chairwoman)
• Managing Director of Hanau Wirtschaftsförderung GmbH,
• Member of the Supervisory Board of accuris AG, Munich,
Hanau, Germany
Dr. Knut J. Michelberger
• Consultant
• Member of the Supervisory Board of Weener Plastics Group,
Ede, The Netherlands (not listed on the stock exchange)
• Member of the Advisory Board (Deputy Chairman) of Racing
TopCo GmbH, Troisdorf, Germany (not listed on the stock
exchange)
• Member of the Advisory Board of Kaffee Partner Holding
GmbH, Osnabrück, Germany (not listed on the stock exchange)
• Member of the Advisory Board of Tegimus Holding GmbH,
Germany
• No seats on other boards or comparable committees
Frankfurt, Germany (not listed on the stock exchange)
Dr. Friedrich Klein
Master’s degree in Mechanical Engineering
Chief Operating Officer (COO), since October 1, 2018
Bernd Kleinhens
Master’s degree in Mechanical Engineering,
Chief Executive Officer (CEO)
until July 31, 2019
Rita Forst
• Consultant
• Member of the Supervisory Board (Non-Executive Director) of
AerCap Holdings N.V., Dublin, Ireland (listed on the stock
exchange) – since April 2019
• Member of the Advisory Board of Joh. Winklhofer
Beteiligungs GmbH & Co. KG, Munich, Germany (not listed on
the stock exchange)
• Member of the Supervisory Board of ElringKlinger AG,
Dettingen, Germany (listed on the stock exchange)
• Member of the Advisory Board of Westport Fuel Systems Inc.,
• Member of the Advisory Board of Moon TopCo GmbH, Poing,
Germany (not listed on the stock exchange)
• Member of the Advisory Board of Rena Technologies GmbH,
Gütenbach, Germany (not listed on the stock exchange) –
until January 2019
Mark Wilhelms
• Chief Financial Officer at Stabilus S.A., Luxembourg
• No seats on other boards or comparable committees
Maintal, March 9, 2020 / March 23, 2020
Vancouver, Canada (listed on the stock exchange)
NORMA Group SE
• Member of the Advisory Board of Metalsa, S.A. de C.V.,
Monterrey, Mexico (not listed on the stock exchange) – until
May 2019
The Management Board
Günter Hauptmann
• Consultant
• Member of the Advisory Board of Moon TopCo GmbH, Poing,
Germany (not listed on the stock exchange)
Dr. Michael Schneider
Chief Executive Officer (CEO)
Dr. Friedrich Klein
Chief Operating Officer (COO)
204
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING
R esponsibilit y Statemen t
To the best of our knowledge, and in accordance with the
applicable reporting principles, the Consolidated Financial
Statements give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Group, and the Conso-
lidated Management Report includes a fair review of the devel-
opment and performance of the business and the position of the
Group, together with a description of the principal opportunities
and risks associated with the expected development of the Group.
Maintal, March 9, 2020 / March 23, 2020
NORMA Group SE
The Management Board
Dr. Michael Schneider
Chief Executive Officer (CEO)
Dr. Friedrich Klein
Chief Operating Officer (COO)
205
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Ind ependent A ud ito r ’s Re por t
To NORMA Group SE, Maintal
Report on the Audit of the Consolidated Financial Statements and of the Consolidated Management Report
Audit opinions
We have audited the Consolidated Financial Statements of
NORMA Group SE, Maintal, and its subsidiaries (the Group), which
comprise the Consolidated Statement of Financial Position as at
31 December 2019 and the Consolidated Statement of
Comprehensive Income, consolidated statement of profit or loss,
Consolidated Statement of Changes in Equity and Consolidated
Statement of Cash Flows for the financial year from 1 January to
31 December 2019, and Notes to the Consolidated Financial
Statements, including a summary of significant accounting
policies. In addition, we have audited the Consolidated Manage-
ment Report of NORMA Group SE for the financial year from 1
January to 31 December 2019. We have not audited the content
of those parts of the Consolidated Management Report listed in
the “Other Information” section of our auditor’s report.
In our opinion, on the basis of the knowledge obtained in the audit,
• the accompanying Consolidated Financial Statements com-
ply, in all material respects, with the IFRSs as adopted by the
EU, and the additional requirements of German commercial
law pursuant to § [Article] 315e Abs. [paragraph] 1 HGB
[Handelsgesetzbuch: German Commercial Code] and, in
compliance with these requirements, give a true and fair view
of the assets, liabilities, and financial position of the Group as
at 31 December 2019, and of its financial performance for
the financial year from 1 January to 31 December 2019 and
• the accompanying Consolidated Management Report as a
whole provides an appropriate view of the Group’s position.
In all material respects, this Consolidated Management
Report is consistent with the Consolidated Financial State-
ments, complies with German legal requirements and appro-
priately presents the opportunities and risks of future devel-
opment. Our audit opinion on the Consolidated Management
Report does not cover those parts of the Consolidated Man-
agement Report listed in the “Other Information” section of
our auditor’s report.
Pursuant to § 322 Abs. 3 Satz [sentence] 1 HGB, we declare that
our audit has not led to any reservations relating to the legal
compliance of the Consolidated Financial Statements and of the
Consolidated Management Report.
under those requirements and principles are further described in
the “Auditor’s Responsibilities for the Audit of the Consolidated
Financial Statements and of the Consolidated Management
Report” section of our auditor’s report. We are independent of
the group entities in accordance with the requirements of Euro-
pean law and German commercial and professional law, and we
have fulfilled our other German professional responsibilities in
accordance with these requirements. In addition, in accordance
with Article 10 (2) point (f) of the EU Audit Regulation, we declare
that we have not provided non-audit services prohibited under
Article 5 (1) of the EU Audit Regulation. We believe that the audit
evidence we have obtained is sufficient and appropriate to pro-
vide a basis for our audit opinions on the Consolidated Financial
Statements and on the Consolidated Management Report.
Key audit matters in the audit of the Consolidated
Financial Statements
Basis for the audit opinions
We conducted our audit of the Consolidated Financial Statements
and of the Consolidated Management Report in accordance with
§ 317 HGB and the EU Audit Regulation (No. 537/2014, referred
to subsequently as “EU Audit Regulation”) and in compliance with
German Generally Accepted Standards for Financial Statement
Audits promulgated by the Institut der Wirtschaftsprüfer [Insti-
tute of Public Auditors in Germany] (IDW). Our responsibilities
Key audit matters are those matters that, in our professional judg-
ment, were of most significance in our audit of the Consolidated
Financial Statements for the financial year from 1 January to
31 December 2019. These matters were addressed in the context
of our audit of the Consolidated Financial Statements as a whole,
and in forming our audit opinion thereon; we do not provide a
separate audit opinion on these matters.
206
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING In our view, the matter of most significance in our audit was as
follows:
1. Recoverability of goodwill
Our presentation of this key audit matter has been structured in
each case as follows:
a) Matter and issue
b) Audit approach and findings
c) Reference to further information
Hereinafter we present the key audit matters:
Recoverability of goodwill
executive directors and adopted by the Supervisory Board
forms the starting point for future projections based on
assumptions about long-term rates of growth. In doing so,
expectations relating to future market developments and
country-specific assumptions about the performance of
macroeconomic indicators are also taken into account. The
discount rate used is the weighted average cost of capital for
the relevant cash-generating unit. The outcome of this
valuation is dependent to a large extent on the estimates
made by the executive directors with respect to the future
cash inflows from the respective group of cash-generating
units, the discount rate used, the rate of growth and other
assumptions, and is therefore subject to considerable
uncertainty. Against this background and due to the complex
nature of the valuation, this matter was of particular
significance in the context of our audit.
a)
In the Consolidated Financial Statements of NORMA Group SE
a total amount of EUR 393.1 million, representing around 26%
of total assets, is reported under the balance sheet item
“Goodwill”. The Company allocates goodwill to the groups of
cash-generating units, which correspond to the Group’s
operating segments. Goodwill is tested for impairment
(“impairment test”) on an annual basis or if there are indications
that goodwill may be impaired, to determine any possible
need for write-downs. For the purposes of the impairment
test the carrying amount of the relevant cash-generating unit
is compared with its fair value less costs of disposal. This
measurement is generally based on the present value of the
future cash flows of the relevant cash-generating unit to which
the respective goodwill is allocated. Present values are
calculated using discounted cash flow models. For this
purpose, the Group’s five-year financial plan prepared by the
b)
As part of our audit, we evaluated the methodology used for
the purposes of performing the impairment test, among other
things. We also assessed whether the future cash inflows
underlying the measurements and the discount rates used on
the whole provide an appropriate basis for the impairment
tests of the individual cash-generating units. We assessed
the appropriateness of the future cash inflows used in the
calculation, inter alia, by comparing this data with the current
budgets in the five-year financial plan prepared by the
executive directors and approved by the Supervisory Board,
and by reconciling it with general and sector-specific market
expectations. In addition, we assessed whether the basis for
including the costs of Group functions was appropriate. In the
knowledge that even relatively small changes in the discount
rate applied can have a material impact on the value of the
entity calculated using this method, we focused our testing
in particular on the parameters used to determine the discount
rate applied, and assessed the calculation model. Further-
more, in addition to the analyses carried out by the Company
we performed our own sensitivity analyses and, taking into
account the information available, determined that the
carrying amounts of the cash-generating units, including the
allocated goodwill, were adequately covered by the discounted
future net cash inflows. Overall, the measurement parameters
and assumptions used by the executive directors are com-
prehensible.
c) The Company’s disclosures on goodwill are contained in
sections 3 and 18 of the Notes to the Consolidated Financial
Statements.
Other information
The executive directors are responsible for the other information.
The other information comprises the following non-audited parts
of the Consolidated Management Report:
• the group statement on corporate governance pursuant to
§ 289f HGB and § 315d HGB included in section “Principles
of the group” of the Consolidated Management Report
• the corporate governance report pursuant to No. 3.10 of the
German Corporate Governance Code
• the separate non-financial report pursuant to § 289b Abs. 3
HGB and § 315b Abs. 3 HGB
The other information comprises further the remaining parts of
the annual report– excluding cross-references to external
information – with the exception of the audited Consolidated
Financial Statements, the audited Consolidated Management
Report and our auditor’s report.
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NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING
Our audit opinions on the Consolidated Financial Statements and
on the Consolidated Management Report do not cover the other
information, and consequently we do not express an audit opin-
ion or any other form of assurance conclusion thereon.
In connection with our audit, our responsibility is to read the other
information and, in so doing, to consider whether the other
information
• is materially inconsistent with the Consolidated Financial
Statements, with the Consolidated Management Report or
our knowledge obtained in the audit, or
• otherwise appears to be materially misstated
Responsibilities of the executive directors and the
Supervisory Board for the Consolidated Financial
Statements and the Consolidated Management
Report
The executive directors are responsible for the preparation of the
Consolidated Financial Statements that comply, in all material
respects, with IFRSs as adopted by the EU and the additional
requirements of German commercial law pursuant to § 315e Abs.
1 HGB and that the Consolidated Financial Statements, in com-
pliance with these requirements, give a true and fair view of the
assets, liabilities, financial position, and financial performance of
the Group. In addition the executive directors are responsible for
such internal control as they have determined necessary to enable
the preparation of Consolidated Financial Statements that are
free from material misstatement, whether due to fraud or error.
continue as a going concern. They also have the responsibility for
disclosing, as applicable, matters related to going concern. In
addition, they are responsible for financial reporting based on the
going concern basis of accounting unless there is an intention to
liquidate the Group or to cease operations, or there is no realistic
alternative but to do so.
Furthermore, the executive directors are responsible for the prepa-
ration of the Consolidated Management Report that, as a whole,
provides an appropriate view of the Group’s position and is, in all
material respects, consistent with the Consolidated Financial
Statements, complies with German legal requirements, and
appropriately presents the opportunities and risks of future devel-
opment. In addition, the executive directors are responsible for
such arrangements and measures (systems) as they have con-
sidered necessary to enable the preparation of a Consolidated
Management Report that is in accordance with the applicable
German legal requirements, and to be able to provide sufficient
appropriate evidence for the assertions in the Consolidated Man-
agement Report.
The Supervisory Board is responsible for overseeing the Group’s
financial reporting process for the preparation of the Consolidated
Financial Statements and of the Consolidated Management
Report.
Auditor’s responsibilities for the audit of the
Consolidated Financial Statements and of the
Consolidated Management Report
In preparing the Consolidated Financial Statements, the execu-
tive directors are responsible for assessing the Group’s ability to
Our objectives are to obtain reasonable assurance about whether
the Consolidated Financial Statements as a whole are free from
material misstatement, whether due to fraud or error, and whether
the Consolidated Management Report as a whole provides an
appropriate view of the Group’s position and, in all material
respects, is consistent with the Consolidated Financial Statements
and the knowledge obtained in the audit, complies with the Ger-
man legal requirements and appropriately presents the opportu-
nities and risks of future development, as well as to issue an audi-
tor’s report that includes our audit opinions on the Consolidated
Financial Statements and on the Consolidated Management
Report.
Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with § 317 HGB
and the EU Audit Regulation and in compliance with German
Generally Accepted Standards for Financial Statement Audits
promulgated by the Institut der Wirtschaftsprüfer (IDW) will
always detect a material misstatement. Misstatements can arise
from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these
Consolidated Financial Statements and this Consolidated Man-
agement Report.
We exercise professional judgment and maintain professional
skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of
the Consolidated Financial Statements and of the Consoli-
dated Management Report, whether due to fraud or error,
design and perform audit procedures responsive to those
risks, and obtain audit evidence that is sufficient and appro-
priate to provide a basis for our audit opinions. The risk of not
detecting a material misstatement resulting from fraud is
higher than for one resulting from error, as fraud may involve
208
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING collusion, forgery, intentional omissions, misrepresentations,
or the override of internal control.
• Obtain an understanding of internal control relevant to the
audit of the Consolidated Financial Statements and of
arrangements and measures (systems) relevant to the audit
of the Consolidated Management Report in order to design
audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an audit opinion on the
effectiveness of these systems.
• Evaluate the appropriateness of accounting policies used by
the executive directors and the reasonableness of estimates
made by the executive directors and related disclosures.
• Conclude on the appropriateness of the executive directors’
use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast
significant doubt on the Group’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we
are required to draw attention in the auditor’s report to the
related disclosures in the Consolidated Financial Statements
and in the Consolidated Management Report or, if such dis-
closures are inadequate, to modify our respective audit opin-
ions. Our conclusions are based on the audit evidence
obtained up to the date of our auditor’s report. However,
future events or conditions may cause the Group to cease to
be able to continue as a going concern.
• Evaluate the overall presentation, structure and content of
the Consolidated Financial Statements, including the disclo-
sures, and whether the Consolidated Financial Statements
present the underlying transactions and events in a manner
that the Consolidated Financial Statements give a true and
fair view of the assets, liabilities, financial position and finan-
cial performance of the Group in compliance with IFRSs as
adopted by the EU and the additional requirements of
German commercial law pursuant to § 315e Abs. 1 HGB.
• Obtain sufficient appropriate audit evidence regarding the
financial information of the entities or business activities
within the Group to express audit opinions on the Consolidated
Financial Statements and on the Consolidated Management
Report. We are responsible for the direction, supervision and
performance of the group audit. We remain solely responsible
for our audit opinions.
• Evaluate the consistency of the Consolidated Management
Report with the Consolidated Financial Statements, its con-
formity with German law, and the view of the Group’s posi-
tion it provides.
• Perform audit procedures on the prospective information
presented by the executive directors in the Consolidated
• Management Report. On the basis of sufficient appropriate
audit evidence we evaluate, in particular, the significant
assumptions used by the executive directors as a basis for the
prospective information, and evaluate the proper derivation of
the prospective information from these assumptions. We do
not express a separate audit opinion on the prospective infor-
mation and on the assumptions used as a basis. There is a
substantial unavoidable risk that future events will differ mate-
rially from the prospective information.
We communicate with those charged with governance regard-
ing, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a state-
ment that we have complied with the relevant independence
requirements, and communicate with them all relationships and
other matters that may reasonably be thought to bear on our
independence, and where applicable, the related safeguards.
From the matters communicated with those charged with
governance, we determine those matters that were of most
significance in the audit of the Consolidated Financial Statements
of the current period and are therefore the key audit matters. We
describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter.
Other legal and regulatory requirements
Further information pursuant to article 10 of the EU
audit regulation
We were elected as group auditor by the annual general meeting
on 21 May 2019. We were engaged by the Supervisory Board
on 29 November 2019. We have been the group auditor of the
NORMA Group SE, Maintal, without interruption since the financial
year 2010.
We declare that the audit opinions expressed in this auditor’s
report are consistent with the additional report to the audit-
committee pursuant to Article 11 of the EU Audit Regulation (long-
form audit report).
Reference to supplementary audit
We issue this audit report on the amended financial statements
and the amended management report on the basis of our audit,
duly completed as at 9 March 2020, and our supplementary audit
completed as at 23 March 2020, related to the amendments of
disclosures in the notes to the financial statements and the man-
agement report. Due to the consideration of new facts concern-
ing the consequences of the coronavirus the forecast and the
proposal of the distributions of earnings have been amended. We
refer to the presentation of the amendments by the executive
directors in the amended notes to the financial statements, sec-
tion “Events after the balance sheet date” and “Proposal of the
distributions of earnings”, as well as the amended Consolidated
Management Report, section “Forecast Report”.
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NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING German public auditor responsible for the engagement
The German Public Auditor responsible for the engagement is
Stefan Hartwig.
Frankfurt / Main, March 9, 2020
Limited to the amendments stated in the “Reference to
Supplementary Audit” section above: 23 March 2020.
PricewaterhouseCoopers GmbH
Wirtschaftsprüfungsgesellschaft
sgd. Stefan Hartwig
Wirtschaftsprüfer
(German Public Auditor)
sgd. ppa. Richard Gudd
Wirtschaftsprüfer
(German Public Auditor)
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Informa ti on
212
216
217
220
221
223
Glossary
List of Graphics
List of Tables
Overview by Quarter
Multi-year Overview
Financial Calendar, Contact and Imprint
Fur the r Informa tion
Glossary
5S Methodology
5S is a method for organizing a work space for efficiency and
effectiveness in order to reduce industrial accidents.
Aftermarket segment
The market concerned with the maintenance / repair of investment
goods or long-life final goods (e.g. vehicles) or the sale of
replacement parts or complementary parts for the goods. This
involves the sale of services and / or parts that are directly related
to the previous sale of the goods.
APAC
Abbreviation for the Asia-Pacific region.
Asset backed securities (ABS) program
A specific way of converting payment claims into negotiable secu-
rities with a financing company.
Best landed cost approach
Assessment of the total costs of a product including the price of
the product as well as the charges for shipping, taxes and / or
duties.
Brexit
In a referendum on June 23, 2016, the citizens of the United King-
dom voted against the country remaining in the European Union
(EU). The collective consequence of the EU exit has taken on the
popular, unofficial term of Brexit.
Bubble assignment
Short-term exchange program for employees to promote internal
knowledge transfer, intercultural awareness, the development of
networks and the individual development of participants.
Cash-pooling
Consolidating liquidity within the Group through central financial
management with the purpose of compensating for excess liquid-
ity or liquidity shortfalls.
Code of conduct
A set of policies which can and should be applied in a wide range
of contexts and environments depending on the situation. In
contrast to a rule, the target audience is not obliged to always
comply with the Code of Conduct. A Code of Conduct is more of
a personal commitment to follow or abstain from certain patterns
of behavior, ensuring that nobody gains an unfair advantage by
circumventing these patterns.
Commercial Paper
Commercial Paper (CP) is a short-term bond issue with a money
market character.
Compliance
Conforming to rules: a company and its employees adhering to
Codes of Conduct, laws and guidelines.
Corporate governance
A set of all international and national rules, regulations, values
and principles which apply to companies and determine how these
companies are to be managed and monitored.
Corporate responsibility
A form of corporate self-regulation integrated into a business
model by taking societal and environmental aspects into account.
Coverage
The regular assessment of the economic and financial situation
of a listed company by banks or financial research institutions.
Cross-selling effects
The action or practice of selling an additional product or service
to an existing customer.
Distribution Services (DS)
One of NORMA Group’s two ways to market, providing a wide
range of high-quality, standardized joining products for a broad
range of applications and customers.
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NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING Elastomers
Stable but elastic plastics which are used at a temperature above
their glass transition temperature. The plastics can deform under
tensile or compressive load, but then return to their original shape.
Gemba walk
Daily walk through the production halls, inspecting individual
processes in the opposite order of workflow and analyzing
potential opportunities for improvements.
EMEA
Abbreviation for the economic area of Europe (comprising Western
and Eastern Europe), the Middle East and Africa.
Global excellence program
A cost optimization program. It coordinates and manages all of
NORMA Group’s sites and business units.
Engineered Joining Technology (EJT)
One of NORMA Group’s two ways to market. It provides
customized, highly Engineered Joining Technology products
primarily, but not exclusively, for industrial OEM customers.
IATF 16949
An international standard that combines the existing general
demands on quality management systems of the (mostly North
American and European) automotive industry.
Earnings before interest, taxes and amortization (EBITA)
EBITA describes earnings before interest, taxes and amortization
of intangible assets. For long-term comparison and a better
understanding of business development, NORMA Group adjusts
the EBITA for certain one-time expenses. These are described
in the Management Report as well as in the Notes to the
Consolidated Financial Statements.
Earnings before interest, taxes, depreciation and
amortization (EBITDA)
Earnings before interest, taxes, depreciation (of property, plant
and equipment) and amortization (of intangible assets). It is a
measure of a company’s operating performance before investment
expenses. For long-term comparison and a better understanding
of its business development, NORMA Group adjusts the EBITDA
for certain one-time expenses. These are described in the
Management Report as well as in the Notes to the Consolidated
Financial Statements.
EBITA margin (adjusted)
The adjusted EBITA margin is calculated from the ratio of adjusted
EBITA to sales and is an indicator of the profitability of
NORMA Group’s business activities.
Equity ratio
Equity in relation to total assets.
European market infrastructure regulation (EMIR)
EU regulation that regulates the over-the-counter market with
derivative products. The main stipulation of this regulation obli-
gates market participants to clear their over-the-counter stan-
dard derivative transactions through a central counterpart and
report these transactions to a trade repository.
EBITDA margin (adjusted)
The adjusted EBITDA margin is calculated from the ratio of
adjusted EBITDA to sales.
Fiat Chrysler Automobiles (FCA)
An automobile manufacturer formed from the merger of the Italian
Fiat S.p.A. and the Us-Based Chrysler Group LLC.
Economies of scale
Indicates the ratio of the production volume to the production
factors used. In the case of positive scale effects, the production
output is also increased with the intensification of production
factors.
Free cash flow
Indicates the amount of money that is available to pay dividends
to shareholders and / or repay loans.
Gearing
Gearing is a measure of a company’s debt level. Gearing is
calculated from the ratio of net debt to equity.
IDW
The Institute of Auditors in Germany (Institut der Wirtschaftsprüfer
in Deutschland e. V.)
Initial public offering (IPO)
First offering of shares of a company on the regulated capital
market.
Innovation roadmapping
Systematic approach to adapt company-specific product
innovations to future market and technological developments.
Innovation scouting
Structured observation of changes, potentials and relevant
knowledge of technological developments and processes.
International securities identification number (ISIN)
12-digit alphanumerical code used to identify a security traded
on the stock market.
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An international environmental management standard that
specifies the internationally accepted requirements for an
environmental management system.
Matching Stock Program (MSP)
The Matching Stock Program (MSP) provided a share price-based
long-term incentive to commit to the success of the Company.
The MSP is a share-based option right.
ISO 9001
International standard that defines the minimum requirements
that quality management systems must meet.
ISO 45001
Health and Safety Management that replaces the current
Occupational Health and Safety Assessment Series 18001
(OHSAS 18001)
Lean manufacturing
A systematic method for the elimination of waste within a
manufacturing process. An integrated socio-technical system
reduces or minimizes supply-side, customer-side and internal
fluctuations.
Leverage
Leverage is a measure of a company’s debt and is calculated as
the ratio of net debt (without hedging instruments) to adjusted
EBITDA over the last 12 months (LTM). For the purpose of a bet-
ter comparison, adjusted EBITDA LTM includes the companies
acquired during the year.
Long-term assignment
Long-term exchange program for employees to promote internal
knowledge transfer, intercultural awareness, the development of
networks and the individual development of participants.
Material cost ratio
The material cost ratio of NORMA Group results from the ratio of
material expenses to sales.
Net debt
Net debt is the sum of financial liabilities less cash and cash equiv-
alents. Financial liabilities also include liabilities from derivative
financial instruments that are held for trading purposes or as
hedging instruments.
Net operating cash flow
Net operating cash flow is calculated on the basis of EBITDA plus
changes in working capital, less investments from operating
activities. Net operating cash flow is a key financial control figure
for NORMA Group and serves as a measure for the Group’s
liquidity.
NORMA Value Added (NOVA)
A key financial control figure for NORMA Group that serves as a
measure for the annual rise in corporate value.
OHSAS 18001
Occupational Health and Safety Assessment Series; certification
of occupational health and safety management systems.
Original equipment manufacturer (OEM)
A company that retails products under its own name.
Peugeot Société Anonyme PSA
A French car manufacturer group that includes the Citroen, DS,
Opel, Peugeot and Vauxhall brands.
Prime standard
A segment of the regulated stock market with higher inclusion
requirements than the General Standard. It is the private law
segment of the Frankfurt Stock Exchange with the highest
transparency standards. All companies listed in the DAX, MDAX,
TecDAX and SDAX must be included in the Prime Standard.
Reverse factoring
A financing solution initiated by the ordering party in order to help
its suppliers finance their receivables more easily and at a lower
interest rate than they would normally be offered.
Roadshow
Series of corporate presentations made to investors by an issuer
at various financial locations to attract investment in the company.
Securities ID number (WKN)
A six-character combination of numbers and letters used in
Germany to identify securities.
Selective catalytic reduction (SCR)
Selective catalytic reduction is a method used to reduce particle
and nitric oxide emissions..
SMED (Single Minute Exchange of Die)
Optimization of set up times of processes through both
organizational and technical measures.
Societas europaea (SE)
Legal form for stock companies in the European Union and the
European Economic Area. With the SE, the EU started allowing
for companies to be founded in accordance with a largely uniform
legal framework at the end of 2004.
Thermoplasts (also known as plastomers)
Plastics which become elastic (thermoplastic) in a particular
temperature range, whereby this process is reversible.
214
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The weighted average cost of capital (WACC) represents a
company’s total costs of capital for liabilities and equity depending
on the individual capital structure.
Working capital
Trade working capital describes the Group’s current net operating
assets and is calculated as the sum of inventories and trade
receivables minus trade payables.
Xetra
An electronic trading system operated by Deutsche Börse AG for
the spot market.
215
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Graphic
To our Shareholders
G001
Index-based comparison of NORMA Group’s
share price performance in 2019 with DAX,
MDAX, SDAX and MSCI World Automobiles
G002
Distribution of trading activity in 2019
G003
Free float by region
G004
Analyst recommendations
G005
Share price development of the NORMA Group
share since the IPO compared to the SDAX
Consolidated Management Report
G006
NORMA Group (simplified structure)
G007
Organizational structure of NORMA Group
G008
Sales by distribution channel
G009
Strategic goals of NORMA Group
G010
Important financial control parameters
G011
Development of sales 2019
Page
Graphic
Page
G012
Adjusted cost of materials and cost of
materials ratio
G013
Adjusted EBITA and adjusted EBITA margin
G014
Asset and capital structure
G015
Maturity profile by currency
G016
Maturity profile by financial instruments
G017
Breakdown of sales by segments
G018
Development of nickel prices and the alloy
surcharge 1.4301
G019
Purchasing turnover in 2019 by material groups
G020
Development of personnel figures at
NORMA Group
G021
Breakdown of employees by group
G022
Incident rate
G023
Marketing expenses 2019 by segments
G024
Risk management system of NORMA Group
28
29
29
30
31
48
49
50
51
52
65
66
67
68
70
70
71
76
77
78
78
80
81
89
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Table
Introduction
T001
Financial Figures 2019
To our Shareholders
T002 Overview of the voting rights notifications
T003 Analysts covering NORMA Group
T004
Key figures for the NORMA Group share since the
IPO in 2011
T005
Responsibilities of the Management Board
T006 Other mandates of the Supervisory Board members
T007 Directors’ dealings
Consolidated Management Report
T008 Adjusted EBIT after taxes
T009
Capital employed as of beginning of the year
(Jan 1)
T010 Assumptions for the calculation of the WACC
T011
Financial control parameters
T012 Non-financial control parameters
T013
R&D key figures
T014 GDP growth rates (real)
T015 Actual business development compared to the
forecast
T016 Adjustments
T017
Effects from the first-time adoption of IFRS 16 on
key financial control parameters
T018
Effects on group sales
Page
Table
Page
Table
Page
2
30
30
32
38
41
43
53
53
53
54
54
57
58
63
64
65
65
T019 Development of sales channels
T020
Return on capital employed (ROCE)
T021
T022
T023
Effects from the first-time application of IFRS 16
in EMEA
Effects from the first-time application of IFRS 16
in Americas
Effects from the first-time application of IFRS 16
in Asia-Pacific
T024 Development of segments
T025
Strategic investment highlights 2019
T026
Core workforce by segments
T027
Forecasts for GDP growth (real)
T028
Engineering: real change in industry sales
T029
Automotive industry: global production and
development of sales (light and commercial
vehicles)
66
67
71
72
72
73
74
78
83
83
83
T038 Overview of the promised pensions of the Board
106
members
T039
Remuneration granted to the Management Board
T040
Inflow from Management Board member
remuneration
107
108
T041
Remuneration of the Supervisory Board in 2019
109
Consolidated Financial Statements
T042
Consolidated Statement of Comprehensive Income
T043
Consolidated Statement of Financial Position
T044
Consolidated Statement of Cash Flows
T045
Consolidated Statement of Changes in Equity
T046
Retained earnings reconciliation: IFRS 16
T047
Reconciliation Consolidated Statement of
Financial Position IFRS 16
T048
Carrying amounts rights of use
T030
Construction industry: development of European
construction output
84
T049
Reconciliation for Consolidated Statement of
Comprehensive Income IFRS 16
T031
Forecast for the fiscal year 2020
T032
Risk and opportunity portfolio of NORMA Group
T033 Annual bonus
T034 Assumptions for calculating WACC
T035 NORMA Value Added bonus / LTI
88
101
103
103
104
T036 Overview of the Matching Stock Program (MSP) at
104
the time of allotment
T037 Management Board remuneration in 2019
106
T050
Reconciliation Consolidated Statement of Cash
Flows IFRS 16
T051 Valuation methods
T052
Exchange rates
T053 Offsetting financial instruments
T054
Change in scope of consolidation
T055
List of Group companies of NORMA Group as of
December 31, 2019
T056 Overview of financial risks
114
115
116
117
119
120
120
121
122
125
127
134
138
139
142
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Page
Table
Page
Table
Page
T057
Foreign exchange risk
143
T078
Expiry of recognized tax losses
157
T100 Maturity bank borrowings 2019
T058
Credit risk exposure from cash and cash equivalents
and other financial assets
144
T079
Expiry of not recognized tax losses
157
T101 Maturity bank borrowings 2018
T080 Development of goodwill and other intangible
158
T102 Other financial liabilities
T059 Maturity structure of non-derivative financial
145
assets
liabilities
T060
Maturity structure of derivative financial
instruments
T061
Profit and loss net of adjustments
T062
Revenue by distribution channel
T063
Revenue by category
T064
Raw materials and consumables used
T065 Other operating income
T066 Other operating expenses
146
149
151
151
152
152
152
T081 Goodwill and other intangible assets –
carrying amounts
T082
Significant individual intangible assets
T083
Change in goodwill
T084 Goodwill allocation per segment
T085 Goodwill per segment – key assumptions
T103
Future minimum lease payments non-cancellable
finance leases
T104 Maturity of financial liabilities
T105 Net debt
T106 Derivative financial instruments
T107
The effects of cash flow hedge accounting on
financial position and performance
160
160
160
161
161
T086 Development of property, plant and equipment
162
T108
Change in hedging reserve before tax
T087
Property, plant and equipment – carrying
amounts
163
T109
The effects of fair value hedge accounting on
financial position and performance
T067
Employee benefits expense
153
T088
Right of use assets – carrying amounts
163
T110
Gains and losses fair-value hedges
T068
Financial income and costs
153
T089 Maturity of lease liabilities Dec 31, 2019
164
T111
Financial instruments – fair value hierarchy
T069 Net foreign exchange gains / losses
154
T090
Leases in the statement of profit or loss
164
T112
Financial instruments – net gains and losses
154
T091
Financial instruments – classes and categories
165
T113
Interest expenses / income from financial assets
and liabilities (IFRS 7.20(b))
T070
Earnings per share
T071
Income taxes
T072
Tax reconciliation
T073
Income tax charged / credited to other
comprehensive income
154
T092
Trade and other receivables
155
T093
Trade receivables
155
T094
Credit risk exposure trade receivables
T095
Impairment reconciliation
T074 Deferred tax assets and deferred tax liabilities
156
(gross)
T096 Gains / losses arising from derecognition IFRS 7.20A
T075
Movement in deferred tax assets and liabilities
T076 Deferred income tax assets
T077 Deferred income tax liabilities
156
156
157
T097 Other financial assets
T098
Trade and other payables
T099
Borrowings
167
167
168
168
168
170
171
171
T114
Inventories
T115 Other non-financial assets
T116 Development of retained earnings
T117 Development of other reserves
T118 Development of the MSP option rights
T119 Development of LTI
T120
Components pension liability
172
172
173
173
174
174
175
176
177
178
179
179
181
181
181
182
183
184
185
186
188
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201
202
203
220
221
223
Table
Page
Table
T121
Reconciliation of the net defined benefit liability
188
T141
Fees for the auditor
T122
Reconciliation of the changes in the DBO
188
T142 Average headcount
T123
Reconciliation of changes in the fair value of plan
assets
189
T143 Voting rights notifications
Further Information
T144 Overview by Quarter
T145 Multi-Year Overview
T146
Financial calendar 2020
T124 Disaggregation of plan assets
T125 Actuarial assumptions
T126
Expected payments from post-employment
benefit plans
T127 Development of provisions
T128
Provisions – split current / non-current
T129
Provisions – other personnel-related
T130 Other non-financial liabilities
T131
Reconciliation of changes in assets and liabilities
to cash flows from financing activities
T132
Segment reporting
T133
External sales per country
T134 Non-current assets per country
T135
Commitments
T136
T137
Compensation of members of the Management
Board (IFRS)
Provisions for compensation of the Management
Board members
T138
Compensation of Board members
T139
T140
Compensation of members of the Management
Board
Section 314 para 1 No 6a HGB: retirement benefit
obligations
189
189
190
191
192
193
194
197
198
199
199
200
200
200
200
201
201
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Overview by Quarter 1
Income statement
Revenue
Adjusted gross profit
Adjusted EBITA
Adjusted EBITA margin
EBITA
Adjusted profit for the period
Adjusted EPS
Profit for the period
EPS
NOVA (NORMA Value Added) 3
Cash flow
Cash flow from operating activities
Net operating cash flow
Cash flow from investing activities
Cash flow from financing activities
Balance sheet
Total assets
Equity
Equity ratio
Net debt 4
EUR million
EUR million
EUR million
%
EUR million
EUR million
EUR
EUR million
EUR
EUR million
EUR million
EUR million
EUR million
EUR million
EUR million
EUR million
%
EUR million
Q1 2019 2
Q2 2019 2
Q3 2019 2
275.6
161.3
39.6
14.4
36.9
25.2
0.79
19.2
0.60
10.9
9.8
– 0.3
– 16.6
– 13.9
289.0
167.1
40.9
14.2
32.8
25.7
0.81
15.6
0.49
10.5
27.0
28.8
–11.6
– 40.8
274.0
159.0
38.7
14.1
35.0
23.3
0.73
16.4
0.52
8.1
38.4
37.4
– 11.3
– 8.1
T144
Q4 2019 2
261.4
143.3
25.5
9.8
23.3
13.7
0.43
7.3
0.23
– 4.5
61.9
57.0
– 17.5
– 30.4
Mar 31, 2019
Jun 30, 2019
Sep 30, 2019
Dec 31, 2019
1,533.7
631.6
41.2
455.5
1,505.8
602.5
40.0
479.0
1,553.7
634.9
40.9
464.2
1,514.3
629.5
41.6
420.8
220
1_Minor deviations may occur due to commercial rounding for the full year 2019 compared with the summation of the corresponding quarterly amounts.
2_The adjustments are described in the Notes.
3_NOVA for Q1 bis Q3 2019 as reported on the corresponding reporting dates.
4_Including derivative hedging instruments.
NOTES, P. 1 48
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Multi-Year Overview
Multi-Year Overview 1
Order situation
Order book (Dec 31)
Income statement
Revenue
thereof EMEA
thereof Americas
thereof Asia-Pacific
EJT
DS
Adjusted gross profit
Adjusted EBITA
Adjusted EBITA margin
EBITA
EBITA margin
Adjusted profit for the period
Profit for the period
Adjusted EPS
EPS
Financial result
Adjusted tax rate
R&D expenses
R&D ratio (in relation to EJT sales)
(Adjusted) cost of materials
(Adjusted) cost of materials ratio
(Adjusted) Personnel expenses
(Adjusted) personnel cost ratio
NOVA (NORMA Value Added)
2019 2
2018
2017
2016
2015
2014
2013
T145
2012 3
EUR million
358.3
379.2
329.1
302.4
295.8
279.6
236.7
215.4
EUR million
EUR million
EUR million
EUR million
EUR million
EUR million
EUR million
EUR million
%
EUR million
%
EUR million
EUR million
EUR
EUR
EUR million
%
EUR million
%
EUR million
%
EUR million
%
EUR million
1,100.1
486.0
450.8
163.4
665.5
430.2
630.6
144.8
13.2
127.9
11.6
87.8
58.4
2.76
1.83
– 15.5
27.1
31.2
4.7
477.4
43.4
302.4
27.5
17.3
1,084.1
494.8
441.5
147.8
684.6
393.8
626.6
173.2
16.0
164.8
15.2
114.8
91.8
3.61
2.88
– 11.7
24.9
30.5
4.5
473.1
43.6
280.8
25.9
60.8
1,017.1
485.9
411.3
119.9
638.2
372.3
601.3
174.5
17.2
166.8
16.4
105.0
119.8
3.29
3.76
– 16.1
30.0
29.4
4.6
418.6
41.2
269.6
26.5
54.9
894.9
432.0
381.6
81.3
535.9
354.5
545.6
157.5
17.6
150.4
16.8
94.6
75.9
2.96
2.38
– 14.6
28.9
28.8
5.4
352.9
39.4
243.9
27.3
53.1
889.6
416.0
395.3
78.2
540.3
344.1
533.1
156.3
17.6
150.5
16.9
88.7
73.8
2.78
2.31
– 17.2
32.1
25.4
4.7
362.9
40.8
234.1
26.3
48.3
694.7
394.5
237.8
62.5
481.0
211.5
405.6
121.5
17.5
113.3
16.3
71.5
54.9
2.24
1.72
– 14.5
33.3
25.7
5.3
289.9
41.7
188.3
27.1
n/a
635.5
388.0
191.5
56.0
443.9
193.6
371.4
112.6
17.7
112.1
17.6
62.1
55.6
1.95
1.74
– 15.6
32.6
21.9
4.9
269.4
42.4
169.7
26.7
n/a
604.6
367.5
193.3
43.8
427.6
174.5
344.4
105.4
17.4
105.1
17.4
61.8
56.6
1.94
1.78
– 13.2
30.3
22.1
5.1
263.5
43.6
156.5
25.9
n/a
CONTINUED ON NEXT PAGE
221
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING
Multi-Year Overview 1
(continued)
Cash flow
Cash flow from operating activities
Net operating cash flow
Cash flow from investing activities
Cash flow from financing activities
Balance sheet
Total assets
Equity
Equity ratio
Net debt 4
Working capital
Working capital ratio
Employees
Core workforce
Total workforce incl. temporary workers
Share
Number of shares (weighted)
Number of shares (year-end)
2019 2
2018
2017
2016
2015
2014
2013
EUR million
EUR million
EUR million
EUR million
EUR million
EUR million
%
EUR million
EUR million
%
137.1
122.9
– 57.0
– 93.2
1,514.3
629.5
41.6
420.8
192.5
17.5
6,523
8,521
130.8
124.4
– 129.5
31.3
1,471.7
602.4
40.9
400.3
179.2
16.5
6,901
8,865
146.0
132.9
– 70.8
– 77.7
1,312.0
534.3
40.7
344.9
158.2
15.6
6,115
7,667
149.2
148.5
– 133.8
49.6
1,337.7
483.6
36.2
394.2
144.5
16.1
5,450
6,664
128.2
134.7
– 44.5
– 70.4
1,167.9
429.8
36.8
360.9
151.9
17.1
5,121
6,306
96.4
109.2
– 265.1
57.7
1,078.4
368.0
34.1
373.1
141.8
20.4
4,828
5,975
115.4
103.9
– 43.4
51.7
823.7
319.9
38.8
153.5
110.8
17.4
4,134
4,947
T145
2012 3
96.1
81.0
– 58.1
– 34.1
691.8
289.2
41.8
199.0
115.9
19.2
3,759
4,485
31,862,400
31,862,400
31,862,400
31,862,400
31,862,400
31,862,400
31,862,400
31,862,400
31,862,400
31,862,400
31,862,400
31,862,400
31,862,400
31,862,400
31,862,400
31,862,400
1_Key figures prior to the IPO are not shown due to lack of comparability between HGB and IFRS. For this reason, the multi-year-overview includes only the years from 2010 onwards.
2_ In 2019, adjustments were made which especially relate to the acquisitions and the rightsizing program which was initiated in the fourth quarter of 2018. The adjustments are described in the Notes.
NOTES, P. 14 8 The adjustments of prior years can be found in the corresponding Annual Reports.
3_ 2012: The accounting rules changed in 2013 due to the first-time application of IAS 19R. In order to better compare the earnings, assets and financial positions, the 2012 figures have been adjusted to suit the new
accounting rules and may therefore deviate from the figures published in the 2012 Annual Report.
4_Including derivative hedging instruments.
222
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING
Financial Calendar, Contact and
Imprint
Financial Calendar 2020
Date
Event
T146
May 6, 2020
June 30, 2020
Aug 5, 2020
Nov 4, 2020
Publication of Interim Statement
Q1 2020
Ordinary Annual General Meeting 2020,
Frankfurt
Publication of Interim Report
Q2 2020
Publication of Interim Statement
Q3 2020
The financial calendar is constantly updated. Please visit
the Investor Relations section on the Company website
WWW. NORMAGROUP.COM /COR P/E N/IN VESTORS /
Editor
NORMA Group SE
Edisonstraße 4
63477 Maintal
Phone: + 49 6181 6102740
E-mail: info@normagroup.com
www.normagroup.com
Contact
E-mail: ir@normagroup.com
Contact persons
Andreas Trösch
Vice President Investor Relations
Phone: + 49 6181 6102741
E-mail: andreas.troesch@normagroup.com
Vanessa Wiese
Senior Manager Investor Relations
Phone: + 49 6181 6102742
E-mail: vanessa.wiese@normagroup.com
Chiara von Eisenhart Rothe
Manager Investor Relations
Phone: + 49 6181 6102748
E-mail: chiara.voneisenhartrothe@normagroup.com
Ivana Blazanovic
Manager Investor Relations
Phone: + 49 6181 61027603
E-mail:
ivana.blazanovic@normagroup.com
Design and Realization
MPM Corporate Communication Solutions, Mainz
Editing
NORMA Group
MPM Corporate Communication Solutions, Mainz
Photo credits
P. 8: Adobe Stock, #167630104, SasinParaksa
P. 10: Adobe Stock, #249121004, Kalyakan
P. 11: Adobe Stock, #19971063, LVDESIGN
P. 12 Adobe Stock, #143487869, danielkay
P. 14: Adobe Stock, #246144443, Olivier Le Moal
P. 18: Adobe Stock, #36644589, kalafoto
P. 19: Bernd Euring
P. 20: Adobe Stock (formerly Fotolia) #121322457, von Jurga Jot
P. 25: Bernd Euring
P. 33: Eckhard Stein
P. 57: Adobe Stock, #105359401, ramoncarretero
P. 93: Adobe Stock, #82672538, Romolo Tavani
P. 9, 13, 16, 17, 22, 23, 79: NORMA Group
Note on the Annual Report
This Annual Report is also available in German. If there are differences between
the two, the German version takes priority.
Note on rounding
Please note that slight differences may arise as a result of the use of rounded
amounts and percentages.
Forward-looking statements
This Annual Report contains certain future-oriented statements. Future- oriented
statements include all statements which do not relate to historical facts and
events and contain future-oriented expressions such as ‘believe,’ ‘estimate,’
‘assume,’ ‘expect,’ ‘forecast,’ ‘intend,’ ‘could’ or ‘should’ or expressions of a similar
kind. Such future-oriented statements are subject to risks and uncertainties
since they relate to future events and are based on the Company’s current
assumptions, which may not in the future take place or be fulfilled as expected.
The Company points out that such future-oriented statements provide no
guarantee for the future and that the actual events including the financial
position and profitability of NORMA Group SE and developments in the economic
and regulatory fundamentals may vary substantially (particularly on the down
side) from those explicitly or implicitly assumed in these statements. Even if the
actual assets for NORMA Group SE, including its financial position and
profitability and the economic and regulatory fundamentals, are in accordance
with such future-oriented statements in this Annual Report, no guarantee can
be given that this will continue to be the case in the future.
Date of publication
March 25, 2020
223
NORMA Group SE – Annual Report 20193 TO OUR SHAREHOLDERS4 CONSOLIDATED MANAGEMENT REPORT5 CONSOLIDATED FINANCIAL STATEMENTS6 FURTHER INFORMATION1 INTRODUCTION2 TIMES ARE CHANGING NORMA Group SE
Edisonstraße 4
63477 Maintal, Germany
Phone: + 49 6181 6102-740
info@normagroup.com
E-mail:
Internet: www.normagroup.com